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Running an online business or store can be a good source of revenue and a convenient way to make money. However, there are certain legal regulations your online business has to follow, such as when you sell to minors. It is difficult to verify the person on the other side of the screen conducting a transaction with your business, so the way you fulfil these contractual obligations may differ. You also need to consider who you are contracting with as operating online entails a broader range of customers, including people under 18. There are different rules around contracting with minors, and you may need to reflect this in the transaction process to avoid potential legal issues. This article will explain the New Zealand regulations your online business has to follow when you sell to minors.

Selling Online

Just like a brick and mortar business, every time your online business sells something to a customer (including when you sell to minors), you enter into a contract with that customer. This is the same whether you are selling physical goods, streaming service subscriptions, or other online services. There are three essential elements to a contract:

  • an offer: you offer your goods or services to a customer;
  • acceptance: the customer accepts your offer of a good or service; and
  • consideration: the customer exchanges something of value for your goods or services. For your online business, this would usually be a monetary payment of some sort.

If you are selling online, you set out your contract terms with a customer in your terms and conditions. When the customer accepts your offer, such as ticking an “I Agree” box on your web page, then they accept your terms and conditions as you have set them.

This way of contracting has been adapted for commerce in a broad online space and is sufficient for the majority of transactions that your business would conduct. It allows for a wide range of customers to purchase your goods or services. This broad nature also means that minors can engage with your products and services, and you may unknowingly contract with them.

Can Minors Enter Into Contracts?

For your contract with a customer to be enforceable (meaning you can make them comply), both parties to the agreement have to have legal capacity. This means that they have the ability to sign a contract legally, and they are bound by it. For example, someone who is drunk does not have the legal capacity to sign a contract.

Whether a minor has this legal capacity can depend on:

  • the context of when they entered into the contract; and
  • what kind of contract it is.

Under the law, any contract that a minor is a party to is presumably unenforceable. This means that you cannot force them to comply with their obligations under the contract. You can still contract with a minor, but you are at a disadvantage because you cannot enforce the contract against them. There are a couple of exceptions to this rule, which are:

  • life insurance contracts; and
  • contracts of service, like an apprenticeship.

There is also the option to apply to the District Court to approve a contract as fair and reasonable, binding the minor to their obligations under the said contract. This is a time-consuming and potentially costly process, and not realistic for a lot of small online businesses that sell to minors.

How Can I Enforce a Contract With a Minor?

Creating an enforceable contract with a minor in an online space can be difficult. There are, however, ways that your online business can manage it. For example, when you sell to minors, you can request a guarantee from their parents or someone over the age of 18 that the minor will fulfil the contract’s obligations. This could be a checkbox on your webpage, or through the use of an identity verification service.

It is also a good idea to make sure that the terms and conditions of your business’s online transactions are comprehensive and straightforward.

Selling of Age-Restricted Items

If you sell items with age restrictions online, such as:

  • alcohol;
  • tobacco products; and
  • vaping products.

It is a legal requirement that you take extra reasonable measures to make sure that your customers are over 18. If you do not, your business could be liable for providing these age-restricted products to minors. If you are a remote seller, you have to take “reasonable steps” to verify a buyer’s age under the law. This could include:

  • asking your customers to tick a box confirming they are over 18 when they enter your website; and
  • including a second age confirmation checkbox just before the sale of an age-restricted item is completed.

Key Takeaways

In New Zealand, contracts with minors are usually unenforceable, meaning that you cannot force them to fulfil their obligations under said contract unless you can go to court and prove that your contract was fair and reasonable. If you can get a guarantee from an adult that the minor will fulfil their obligations, you can enforce the contract. If you would like more information or help with your online business, contact LegalVision’s online business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What does age verification mean?

Age verification is a way of checking someone’s age online. This can range in intensity, from ticking a box saying “I am over 18” to filling in your birth date online.

Can a minor buy things online?

As long as they have a method for paying for things online, then minors can buy online products and services. However, some sites will require permission from someone over 18 to guarantee that they can pay.

Will I be liable if I unknowingly sell alcohol to a minor online?

If you do not take reasonable steps to confirm someone’s age if you sell alcohol online, then you could be liable. Reasonable steps could include requiring users to tick a box saying they are over 18 when they enter your site, and right before they complete payment.

What does legal capacity mean?

Legal capacity refers to someone’s ability to legally sign a contract and fulfil their obligations under a contract. A minor does not usually have legal capacity, nor does someone under the influence of alcohol or drugs.

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