Minors, undue influence, mutual mistake, reformation, and nondisclosure (Dodson, Odorizzi, MacKay, Hylton, Laidlaw)

Black-letter propositions

1. 01

   A minor's contract is voidable at the minor's election, and the common-law rule protects minors from squandering their wealth through improvident contracts with adults.

2. 02

   In Tennessee, when a minor has not been overreached, there has been no undue influence, the contract is fair and reasonable, and the minor has paid money and used the item, the minor may not recover the amount paid without allowing the seller reasonable compensation for use, depreciation, and willful or negligent damage.

3. 03

   That modified rule does not apply if the seller committed fraud or imposition, the contract is unfair, or unfair advantage was taken of the minor, and whether there was overreaching is a question of fact.

4. 04

   Undue influence is the use of excessive pressure to persuade a person vulnerable to it, so that the apparent will of the influenced person is in fact the will of the dominant person, and it combines undue susceptibility with excessive pressure.

5. 05

   Undue susceptibility need not be total incapacity and may be a lesser weakness, such as a lack of full vigor from age, physical condition, or emotional anguish, and a confidential relationship is not required when unfair advantage is taken of another's weakness or distress.

6. 06

   A contract may be avoided for mutual mistake of fact when the mistake is common to both parties and each has done what neither intended, and the mistake must be of an existing or past material fact that enters into and forms the basis of the contract.

7. 07

   The parol evidence rule does not bar proof of facts that render a writing inoperative, so it may be shown that there was a mutual mistake preventing formation of a contract or making the writing subject to reformation or rescission.

8. 08

   A written instrument may be reformed for mutual mistake or inadvertence, including a scrivener's or clerical error, when the writing does not state the agreement the parties actually made, and the evidence of the mistake must be clear, strong, and convincing.

9. 09

   A vendee is not bound to communicate to the vendor intelligence of extrinsic circumstances within the vendee's exclusive knowledge that may affect the price, when the means of intelligence are equally accessible to both.

10. 10

    A party who has no duty to speak must still take care not to say anything tending to impose on the other party, so an affirmative misrepresentation differs from silence.

Use this attack sequence under time

Common wrong turns

• A minor may disaffirm even after the purchased item has been damaged, but some states reduce the refund for use.
• Silence is not misrepresentation, though an affirmative false statement is.
• A mistake about an expected future event or about mere value is not the existing-fact mistake that avoids a contract.
• The parol evidence rule does not stop proof of mutual mistake that supports reformation.

Worked example

A seller sells a used truck to a 16-year-old for $4,900 cash. The engine fails nine months later, and the minor tries to rescind and demand a full refund, though the seller made no misrepresentation.

Practice this topic

Minors and undue influence

Dodson v. Shrader involved a 16-year-old who paid $4,900 for a used truck and sought a full refund after the engine failed, and the Tennessee Supreme Court adopted a modified rule that, where the minor was not overreached, there was no undue influence, the contract was fair and reasonable, and the minor paid and used the item, the minor may not recover the price without allowing the seller reasonable compensation for use, depreciation, and willful or negligent damage, while the rule does not apply where there was fraud or unfairness.

Odorizzi v. Bloomfield School District held that a teacher who resigned the day after his arrest stated a claim for rescission based on undue influence, and it explained that undue influence involves excessive pressure applied by a dominant person to a vulnerable one, that the susceptibility may be a lesser weakness from age, physical condition, or emotional anguish, and that a confidential relationship is not required when unfair advantage is taken of another's weakness or distress.

Mistake and reformation

MacKay v. McIntosh held that a contract may be avoided for mutual mistake of fact when the mistake is common to both parties and each has done what neither intended, when the mistake is of an existing or past fact that is material and forms the basis of the contract, and that the parol evidence rule does not preclude proof that a mutual mistake prevented formation of a contract or made the writing subject to reformation or rescission, in a case where both sides believed the land was zoned for business.

Northwestern Mutual Insurance Co. v. Hylton held that a mistake or clerical error may be approached as a scrivener's error or a mutual mistake and that reformation is available to make a written instrument speak the true agreement, and it said that the evidence of mutual mistake must be clear, strong, and convincing and that whether it is so in a particular case is for the jury.

Nondisclosure

Laidlaw v. Organ held that a buyer of merchandise is not bound to communicate to the seller intelligence of extrinsic circumstances exclusively within the buyer's knowledge that may affect the price, because it would be difficult to circumscribe the contrary doctrine when the means of intelligence are equally accessible to both, but each party must take care not to say anything tending to impose on the other.

Frequently asked questions