Under Singapore law, the legal age of majority for entering into a contract is 21 years but only 18 in England.

Legally, minors cannot enter into a binding contract. Courts consider a person below 21 to lack the capacity to enter into a binding contract. So prima facie, a minor who signs a contract but later wants out of it can legally do so without any penalty.

Minors are treated differently because the law recognises that young people who are inexperienced can make mistakes. If adults know that minors can 'get out of' a contract, they tend to treat the minors more fairly, and be more careful about a contract with minors. Contract law protects minors from foolishly squandering their wealth through improvident contracts with crafty adults who would take advantage of them in the marketplace.

In the US case of Halbman v Lemke (1980), Lemke agreed to sell Halbman (a minor) a 1968 Oldsmobile for $1,250. Halbman paid $1,000 cash and took possession of the car. Halbman also agreed to pay $25 a week until the remainder of the purchase price was paid off upon which time he would take title to the car.

Later Halbman decided to abrogate the contract and sued for the return of the $1,000 he had paid earlier. The court ruled that a minor who disaffirms a contract for the purchase of a vehicle which is not a necessity is allowed to do so under the 'infancy doctrine'.

Before agreeing to serve as a guarantor, it is important to assess the primary borrower's credit, income and expenses to determine whether or not she is capable of handling the loan or credit facility.

Make certain that you have a copy of the loan contract and that you read and fully understand it before signing because there is no way to back out of a guarantee.

A guarantor may be held liable for the liabilities of the borrower or hire-purchaser and he is only rendered liable under a guarantee if the borrower or hire-purchaser is in default of any payment or outstanding instalments.

It is imperative that a prospective guarantor fully understands what he is contracting for and be aware of the legal implications as well as his rights and liabilities under the guarantee.

Therefore if a shop proprietor contracts with a minor, the contract is voidable by the minor if he does not have an adult guarantor. Voidable means the minor can elect, for any reason whatsoever, not to honour the contract.

Heng Cho Choon