If a minor enters a contract without the other party knowing about the age, and then the minor breaks a term, is it fraud?

Question

A minor who signs a contract can void it at any time, which might cause damage to the other party. Let's consider this scenario:

A minor signs a contract with an adult online with neither party knowing each other's age. So the adult assumes that the contract is legally binding for both. The minor knows that the contract can be voided at any time, but doesn't tell the adult. In the contract, there is a confidentiality agreement which the minor breaks, such as giving out trade secrets to others. The adult decides to file a lawsuit but only then realizes that the contract was never truly valid.

In that case, will the minor face any charges? What can be done?

Answer 1

canada united-kingdom equity

A court exercising its equitable jurisdiction may disallow a minor from impeaching the validity of a contract on the grounds of minority if the minor acted fraudulently: Wilbur v. Jones (1881), 21 N.B.R. 4 (C.A.).

See also Stocks v. Wilson (1913), 2 K.B. 235:

What the Court of Equity has done in cases of this kind is to prevent the infant from retaining the benefit of what he has obtained by reason of his fraud. It has done no more than this, and this is a very different thing from making him liable to pay damages or compensation for the loss of the other party’s bargain. If the infant has obtained property by fraud he can be compelled to restore it; if he has obtained money he can be compelled to refund it. If he has not obtained either, but has only purported to bind himself by an obligation to transfer property or to pay money, neither in a Court of law nor a Court of Equity can he be compelled to make good his promise or to make satisfaction for its breach.

Fraud in this context is not limited to literal misrepresentations at the time of contract formation: "support may be found for the view that the mere fact that the minor wishes to retain the property which he has obtained while at the same time pleading infancy as a defence to a claim for its value, is fradulent conduct in the requisite sense... 'for an infant to attempt to obtain something for nothing is, in effect, fraud in the eye of equity'": John D. McCamus, "Restitution of Benefits Conferred Under Minors' Contract" (1979) 28 U.N.B. Law Journal 89.

In the circumstances you describe, if all is believed by the court, the court may exercise its equitable jurisdiction to require the infant to return any benefit they obtained from the transaction.

I cannot find an example case, but it also seems open for the court to enjoin the minor to stop disclosing the secrets.

Common law and equity

user6726's answer focuses on the limited nature of remedies for this wrong at common law. user6726 is correct that fraudulent misrepresentation has a fairly narrow conception in common law, and it is a good answer for pointing this out. My answer is complementary in that it focuses on potential equitable remedies. This is yet another example where the distinction between common law and equity is significant: common law produces a somewhat harsh result for the wronged party, but equity may step in to return some fairness to the situation.

The common law rule is that a minor is not liable to restore benefits conferred on him under a contract which is unenforceable against him, even if the contract results from his fraudulent misrepresentation of majority.

Chitty on Contracts, §11-056.

Answer 2

united-states

Contract fraud requires that a representation was made, it was false, the defendant knew at the time that the representation was false, and intended that the plaintiff rely on it, in addition plaintiff relied on the misrepresentation and suffered harm as a result. In your scenario, the child does not make a representation, so failure to ask is the responsibility of the plaintiff. In general, there is no duty to speak, except in limited circumstances such as involves a serious defect or serious risk of injury. The plaintiff therefore cannot sue for damages, though if the minor disaffirms the contract in a timely manner, most states will require returning the goods / consideration in their possession. Also, certain contracts can't be disaffirmed by a minor.

Criminal prosecution for fraud is highly unlikely. In the US, most criminal fraud statutes are limited to specific kinds of fraud such as real estate fraud, vehicle fraud, check or credit card fraud, identity fraud, forgery.

Answer 3

Your example isn't fraud

Fraud would require the child to gain assets through deception. Revealing trade secrets is not a crime, and it is explicitly a civil matter. So for starters you need to get your terminology straight.

Moving on from that though...

Parental liability is a thing in civil law

In the majority of countries/states, parents (or legal guardians) are liable under civil law for any damages caused by their children. If the child's actions cause harm, for instance by revealing trade secrets, their parents are liable and can be sued for damages - see this link summarising the situation in the US, for example. This may depend on the country or state though, and there may be limits on the level of liability.

Parental liability is also a thing in criminal law

Some jurisdictions also hold parents liable under criminal law for crimes committed by their children - see this summary for example. This depends on the law broken, the age of the child, and generally on that jurisdiction's attitude to parental liability. It is more likely to be considered if the parent permitted the child to carry out this action, or enabled them through negligence.

In your example, this is a purely civil matter and criminal law does not apply. Had the child been a hacker and broken into your network to get your trade secrets though, a crime would have been committed, and then the parents might be held liable under criminal law. Except...

Juvenile courts are a thing too

If a minor commits a crime and is caught, this is the first step in the criminal law process for them. Sometimes minors can be tried in adult courts instead, if the crimes are particularly heinous and/or the minor is shown to fully understand the criminality of their actions, but more normally they would face juvenile court instead.