You have requested information and advice concerning the ability of a minor to enter
into an oral loan under Oregon law.
A woman applied for SSI approximately one year ago and her claim was recently allowed.
During the year since her application she alleged no income other than money borrowed
from her daughter who is 14 years old. The daughter was receiving $710 per month in
child support from the claimant's ex-husband. According to the claimant there was
nothing in writing and the daughter was unaware that she was loaning money to her
You have asked whether Oregon law would recognize an oral loan agreement where the
lender is a minor.
In Oregon, contracts made by minors are voidable, i.e., a minor may enter into a contract,
but may disaffirm the contract upon reaching the age of eighteen. Olshen v. Kaufman,
385 P.2d 161, 166 (Or. 1963); Williams v. Briggs, 502 P.2d 245 (Or. 1972). An exception
exists for the right to contract for a dwelling unit and utilities; a minor may not
disaffirm such a contract. Or. Rev. Stat. § 109.697 (1993).
However, the loan in question is not valid for two reasons. The primary reason is
that the daughter was unaware that her mother was borrowing money. A contract must
have a meeting of the minds. Phillips v. Johnson, 266 Or. 544, 514 P.2d 1337 (1973).
Even if the daughter was aware of the loan, the loan was unenforceable because of
the uncertainty of its material terms, i.e., the amount to be loaned or the terms
of repayment. An agreement is too indefinite to be enforced if, because of uncertainty,
the reasonable intention of the parties cannot be ascertained. Desler v. Twelfth Street
Development Corp., 115 Or.App. 549, 839 P.2d 266, 268 (1992).
Although the daughter in this situation could contract to loan her mother money, there
was no enforceable contract here.