PS 01415.041 Oregon

A. PS 99-106 Oral Loan Agreement with a Minor -- Oregon

1. SYLLABUS

The issue is whether Oregon law recognizes an oral loan agreement when the lender is a minor. It also addresses the enforceability of the "so-called" oral loan. The Regional Chief Counsel states that 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. Also, an exception exists for the right to contract for a dwelling unit and utilities. A minor may not disaffirm such a contract.

2. OPINION

You have requested information and advice concerning the ability of a minor to enter into an oral loan under Oregon law.

FACTUAL BACKGROUND

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 mother.

ISSUE PRESENTED

You have asked whether Oregon law would recognize an oral loan agreement where the lender is a minor.

DISCUSSION

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).

CONCLUSION

Although the daughter in this situation could contract to loan her mother money, there was no enforceable contract here.


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http://policy.ssa.gov/poms.nsf/lnx/1601415041
PS 01415.041 - Oregon - 06/27/2002
Batch run: 01/27/2009
Rev:06/27/2002