Contracts with minors: what children can and cannot do

Mobile phone contracts, subscriptions, in-app purchases, buying products advertised on social media - when minors enter into contracts (on the internet), the question arises whether they or their parents have to foot the bill.

The question arises because the law imposes restrictions on the legal capacity of persons under the age of 18.

We look at the problems that can arise for minors and their parents when contracts are concluded at a young age.

German law distinguishes between the legal capacity of minors under the age of 7 and minors between the ages of 7 and 18.

Children under the age of 7 are legally incapable, § 104 No. 1 BGB. This means that a declaration of intent made by a child under the age of 7 is invalid. This means that a child under the age of 7 cannot enter into a contract.

Minors between the ages of 7 and 18 have limited legal capacity, § 106 BGB.

Limited legal capacity refers to two cases in which valid contracts can be concluded. In addition, there is the so-called pocket money clause as a special feature and third possibility.

The first case is described in the law as a transaction that is "only legally advantageous" for the minor. This means that the minor must not suffer any legal disadvantage as a result of the transaction. A legal disadvantage is, for example, an obligation to pay the purchase price. 

As there is always an obligation to pay the purchase price in a contract of sale, such a contract can never be legally advantageous to a minor.

However, there are situations in which minors can enter into sales contracts and other transactions that are not legally binding. This is the case, for example, if the parents have given their consent or if the minor has paid the purchase price in full with his or her pocket money.

However, it is legally irrelevant whether the minor has made a 'bargain' in economic terms. For example, if the minor buys a product for €400 that actually costs €700, the minor would still have to pay the purchase price of €400. This is a legal disadvantage, even if the transaction appears to be economically advantageous.

As a general rule, minors are not legally disadvantaged if they are given something as a gift.

If the transaction is not only of legal advantage to the minor, a 7 to 17 year old can enter into a valid contract if his or her legal representative has given his or her consent. This is usually both parents.

The parents can give their consent in two ways - before the contract is concluded or afterwards.

If the parents have given their consent beforehand - known as consent - the minor's contract is valid. However, the mere fact that the parents consent to the child's use of a smartphone does not mean that they also consent to, for example, in-app purchases.

If the parents have not given their prior consent, it depends on whether they subsequently agree to the contract - the law refers to this as authorisation. Authorisation makes the contract valid. If the parents refuse to give their consent, the contract is invalid.

A special case is regulated by the pocket money paragraph, § 110 BGB. It stipulates that under certain conditions a contract concluded by a minor can be considered valid even if the contract is legally disadvantageous and the parents have not expressly consented to the specific contract.

On the one hand, the law presupposes that the minor has been given pocket money, either for the specific contract (in many cases this will be a contract of sale) or for free disposal. The pocket money can be given by the parents or by the grandparents, for example, if the parents agree.

However, 'freely available' does not mean that minors can enter into any (sales) contract with their pocket money. As a rule, it cannot be assumed that parents would consent to the purchase of, for example, violent computer games.

The pocket money paragraph therefore does not cover cases where parental consent cannot reasonably be assumed. Parents can also stipulate that their children may not buy certain goods with their pocket money.

Secondly, the law requires that the minor has fulfilled his obligation in full.

For example, if the minor has only paid €50 of the €80 purchase price, the contract is not yet valid. The pocket money paragraph therefore does not apply to instalment payments.

Nor does it apply to a subscription that requires the minor to make regular payments.

A minor cannot therefore take out a mobile phone contract or subscription without parental consent.

In this case, it is important to remain calm and check what the website operator is claiming. If they claim that the minor has entered into a contract with them that is subject to a fee, German law, as described above, will depend on whether the transaction is merely advantageous from a legal point of view, whether the parents have given their consent, or whether the pocket money paragraph applies.

If none of these cases applies, a minor cannot enter into a valid contract on his or her own behalf.

If it is a subscription that the minor claims to have concluded, the parents must have given their consent. If they inform the website operator that they do not authorise the conclusion of the contract, the contract is invalid. The operator is then not entitled to any payment.

Even if the minor has previously declared that he or she is of age, this does not constitute a valid contract. This is because Legally, only the actual age counts.

If a minor repeatedly uses his or her parent's account to make in-app purchases, for example, this can be interpreted as the parent's consent to the purchases. It is therefore possible that in this case a valid contract has been concluded, which requires payment.

Parents can only be held liable for their children in exceptional cases. As a rule, parents cannot be accused of breaching their duty of supervision.

The German Federal Court of Justice (BGH) has ruled on claims for damages against parents for "breach of duty of supervision" in connection with the participation of minors in an Internet file-sharing platform that infringed copyrights. The judgement of the BGH.

The Federal Court of Justice (BGH) has ruled that parents generally fulfil their duty of supervision if they inform their child about the illegality of participating in an internet file-sharing platform and prohibit them from doing so. However, it is not sufficient to merely instruct the child to observe general rules of behaviour.

Parents are not obliged to monitor the child's use of the Internet, to check the computer or to (partially) block the child's access to the Internet. However, they are obliged to do so if there are concrete indications that the child is not complying with the prohibition.

According to the decision of the BGH, the monitoring measures that parents are obliged to take depend on the child in question, and the child's compliance with educational measures plays a decisive role.