Halbman v. Lemke

Supreme Court of Wisconsin · 1980 · Contracts

ContractsMinorsDisaffirmanceInfancy doctrineRestitutionminorinfancy doctrinedisaffirmance

Facts

James Halbman, a minor, agreed to buy a 1968 Oldsmobile from Michael Lemke for $1,250, paid $1,100, and took possession while title was to be transferred after full payment. About five weeks later the engine suffered a broken connecting rod; the car was repaired at a garage at a cost of $637.40, but the bill was never paid. Lemke later transferred title to Halbman to avoid liability associated with the vehicle, and Halbman then returned the title by letter disaffirming the contract and demanding return of the money he had paid. The garage eventually removed the engine and transmission to satisfy its lien, and the vehicle was later vandalized and became unsalvageable.

Issue

When a minor disaffirms a contract for the purchase of an item that is not a necessity and tenders back the property, must the minor make restitution to the seller for damage or depreciation sustained by the property before disaffirmance?

Rule

A minor has an absolute right to disaffirm a contract for non-necessaries. Upon disaffirmance, the minor is required to return only so much of the consideration as remains in the minor's possession, and absent misrepresentation or tortious damage to the property, the minor may recover the purchase price without liability for use, depreciation, damage, or other diminution in value.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Sixteen-year-old Noah Mercer bought a used jet ski from Tara Jensen in Milwaukee, Wisconsin, for weekend recreation and paid the full price. Two weeks later, after the engine began failing through ordinary use, Noah sent Tara a letter disaffirming the contract and offered to return the jet ski in its damaged condition.

If Tara refuses to refund the purchase price unless Noah first pays for the jet ski’s reduced value, who is likely to prevail?

Explanation. The majority rule is that a minor has an absolute right to disaffirm a contract for non-necessaries. Upon disaffirmance, the minor need return only so much of the consideration as remains in the minor’s possession. Absent misrepresentation or tortious damage, the seller cannot offset the refund by ordinary use, depreciation, or damage in value. The fact that Noah is suing for the refund does not change the rule.