Business Law 4 (1)

DEBRE BIRHAN UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS

DEPARTNENT OF ACCOUNTING FINANCE
AND
INDIVIDUAL ASSIGNMENT
Course title: Business Law
Name: Molla Abera
ID: 1500897
Submitted to: Tsgereda

Submission date: 16/01/2025
Question
Sophie, a 17-year-old high school student, and her 16-year-old friend, Jake, decide to start a small
business selling handmade crafts online. Sophie, who is emancipated, has the legal capacity to enter into
contracts. However, Jake is not emancipated and still relies on his parents for financial support and
decision-making. They sign a contract with a supplier to purchase materials for their business. Later,
Jake's parents discover the contract and refuse to allow him to continue with the business, claiming that
he lacks the capacity to enter into such an agreement. In this scenario, analyze the implications of lack of
capacity in contract law. How does the distinction between an emancipated minor and a non-
emancipated minor affect the validity of the contract? What remedies might be available to Sophie and
Jake and the other contracting parties.
In Ethiopia, as in many other jurisdictions, minors (individuals under the age of 18) generally have
limited legal capacity to enter into binding contracts. However, the Ethiopian Civil Code provides specific
provisions that govern the capacity of minors to contract, which can help us understand the implications
of Sophie and Jake's situation in the Ethiopian legal context.
 Legal Capacity of Minors

Under Ethiopian law, the Civil Code (Article 5) provides that a person who has not yet attained the age of
majority (18 years old) is considered a minor. In principle, minors do not have the legal capacity to
engage in contracts unless they are emancipated.
The Ethiopian Civil Code provides specific guidelines on when minors can engage in contracts:
Emancipation: An emancipated minor, meaning one who has been granted legal autonomy by a court or
through marriage, is allowed to enter into contracts without parental consent. This is similar to other
jurisdictions that provide some form of legal recognition for emancipated minors.
Non-emancipated Minors: A non-emancipated minor generally cannot enter into binding contracts
unless the contract is for their necessary living (i.e., contracts for basic needs like food, shelter, or
education). In other cases, contracts entered into by non-emancipated minors are generally voidable.
 Sophie and Jake’s Situation in Ethiopia
 Sophie (Emancipated Minor)

Sophie, being an emancipated minor, has the legal capacity to enter into contracts on her own.
According to Ethiopian law, an emancipated minor is treated similarly to an adult when it comes to
contractual obligations, meaning that Sophie is legally bound by the contract she entered into with the
supplier for the business. Therefore, Sophie can proceed with the contract and continue to engage with
the supplier as the principal party.
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 Jake (Non-Emancipated Minor)
Jake, being a non-emancipated minor, does not have the legal capacity to bind himself to a contract
without the consent of his parents or guardians. According to Ethiopian contract law, since Jake is not
emancipated, his contract with the supplier is voidable, meaning that Jake or his parents could disaffirm
the contract and void it at any time before he reaches the age of majority (18 years)
Even if the contract is voidable, the supplier may not be able to enforce the contract against Jake unless
he ratifies it once he reaches the age of majority or is granted emancipation. In this case, Jake’s parents
may argue that they had the right to prevent Jake from continuing the business since he is not legally
capable of making such a decision on his own.
 The Distinction between Emancipated and Non-Emancipated Minors

In the Ethiopian context, the distinction between an emancipated minor (like Sophie) and a non-
emancipated minor (like Jake) is critical in determining the validity of the contract:
Emancipated Minor: As Sophie is emancipated, she can legally enter into a contract without needing
parental consent, and she would be bound by the terms of the agreement. The supplier would be able
to enforce the contract against Sophie.
Non-Emancipated Minor: Since Jake is not emancipated, he lacks the full legal capacity to enter into a
contract. This means that the contract may be voidable by Jake or his parents. In practice, Jake’s parents
have the legal right to disaffirm or cancel the contract, which would prevent the supplier from holding
Jake liable.
 . Implications for the Contract’s Validity
Given the Ethiopian legal framework, the contract’s validity and enforceability depend on Jake’s status
as a minor:
Sophie’s Side: Sophie’s portion of the contract is valid and enforceable because she is emancipated. The
supplier can hold her accountable for fulfilling the terms of the agreement, and Sophie can continue to
pursue the business venture as originally planned, assuming that the contract terms are adhered to.
Jake’s Side: The contract may be voidable by Jake or his parents. Since Jake is a non-emancipated minor,
his parents could disaffirm the contract and void it. This is in line with the Ethiopian Civil Code, which
provides protection for minors by allowing them to void contracts that they lack the capacity to fully
understand or fulfill. In this case, if Jake’s parents intervene, they could potentially cancel the agreement
with the supplier.
 Remedies Available to Sophie, Jake, and the Supplier
 Sophie’s Remedies:
Against the Supplier: Since Sophie is emancipated, she can fully enforce the contract against the
supplier. If Jake’s parents disaffirm the contract on his behalf, Sophie could attempt to continue the
contract or renegotiate the terms with the supplier, excluding Jake if necessary.
2
Against Jake: Sophie could seek to continue the business alone, but this would depend on how the
business is structured. If the contract was joint and both Sophie and Jake are listed as parties, the
supplier might still look to Sophie for performance. Sophie could seek legal action against Jake for any
damages incurred from the disaffirmation, but this would largely depend on whether Sophie or Jake is
seen as the primary business operator.
 Jake’s Remedies:
Disaffirmation: Jake, with the support of his parents, can disaffirm the contract. As a minor, Jake has the
legal right to cancel the contract, as it is voidable. This would release him from any contractual
obligations and allow him to exit the agreement with no further liability.
Ratification: If Jake reaches the age of majority (18 years old), he could choose to ratify the contract.
This means that he could affirm the contract and make it binding upon him. If he chooses to continue
with the business after turning 18, he would be held accountable for the contract.
 Supplier’s Remedies:
Against Sophie: The supplier can hold Sophie accountable, as she is emancipated and legally capable of
entering into the contract. If the supplier has already delivered goods or services, they can enforce
payment from Sophie.
Against Jake: The supplier cannot force Jake to perform the contract, as he is a non-emancipated minor
and has the right to disaffirm the contract. If the supplier has already provided materials, they could face
difficulty recovering from Jake, unless he ratifies the contract later.
 Conclusion
In legal context, the distinction between an emancipated minor (Sophie) and a non-emancipated
minor (Jake) is crucial in determining the validity of contracts. Sophie’s contract is enforceable,
while Jake’s contract is voidable by his parents. Sophie can continue the business with the
supplier, but Jake’s ability to do so depends on whether his parents choose to disaffirm the
contract. If the contract is voided, Sophie may need to renegotiate the terms with the supplier or
continue the business alone. The supplier’s remedies will depend on who is legally bound by the
contract and whether Jake disaffirms or ratifies it later.
This case highlights the importance of understanding the legal rights and limitations of minors
under Ethiopian law, especially when it comes to business contracts.

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DEBRE BIRHAN UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

Submitted to: Tsgereda

 Legal Capacity of Minors

 Sophie and Jake’s Situation in Ethiopia

 Sophie (Emancipated Minor)

 The Distinction between Emancipated and Non-Emancipated Minors

 . Implications for the Contract’s Validity

 Remedies Available to Sophie, Jake, and the Supplier

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