PSI New Jersey Real Estate State Practice Exam

Which option describes a situation where a buyer has a completed contract but discovers he is not of legal age?

1. The contract is entirely valid

2. The contract is void

3. The contract is voidable

4. The contract must be signed by a guardian

The correct answer is: The contract is voidable

In this scenario, when a buyer has a completed contract but is not of legal age, the contract is considered voidable. This means that the buyer has the option to affirm or reject the contract due to their age, as they lack the legal capacity to enter into a binding agreement. In many jurisdictions, contracts made by minors (individuals who are not yet of legal age) can be voided at the discretion of the minor. This legal principle exists to protect younger individuals from entering into potentially disadvantageous agreements without sufficient understanding or maturity. The minor may choose to void the contract, thereby releasing themselves from any obligations contained within it. However, this does not mean that the contract is entirely void from the onset; rather, it remains valid until the minor decides to exercise their right to void it. Given this understanding, while options that suggest the contract is entirely void or must be signed by a guardian mischaracterize the nature of the situation, voidability provides the flexibility and legal framework for addressing contracts entered into by minors.