Module: | Fundamentals of Contracts
Q1: Which of the following statements, regarding a minor's capacity to contract, are correct?
1. A minor is legally considered incompetent to enter into a contract of debt.
2. A loan contract with a minor is void, prohibiting banks from granting such loans.
3. A minor is permitted to open a deposit account, which is typically operated by a guardian.
4. A minor is legally permitted to act as a guarantor for a loan.
2. A loan contract with a minor is void, prohibiting banks from granting such loans.
3. A minor is permitted to open a deposit account, which is typically operated by a guardian.
4. A minor is legally permitted to act as a guarantor for a loan.
✅ Correct Answer: B
A minor is legally incompetent to enter a contract of debt (void ab initio). Therefore, a minor cannot borrow, pledge assets, or act as a guarantor (making Statement 4 incorrect). A minor can, however, open a deposit account operated by a guardian.