Cancellation of Applications in E-commerce by Minors

How is it determined when a minor, who is the applicant in an e-commerce transaction, claims cancellation?

Regarding the contract application by a minor, it is stated in Article 5, Paragraphs 1 and 2 of the Japanese Civil Code,

Japanese Civil Code (Legal Acts by Minors)

Article 5: A minor must obtain the consent of his/her legal representative to perform a legal act. However, this does not apply to legal acts that merely acquire rights or evade obligations.

1: A legal act contrary to the provisions of the preceding paragraph may be cancelled.

Therefore, it is generally possible to cancel a contract application made by a minor without the consent of the legal representative (parent or guardian), even in the case of electronic contracts.

Cases Where Contract Cancellation by Minors is Not Permitted

However, it is not the case that a contract application can be cancelled in any situation simply because it was made by a minor.

Contract cancellation on the grounds of being a minor is not permitted in the following cases: “When the minor has obtained the consent of their legal guardian”, “In the case of property or other assets that the minor is allowed to dispose of”, and “When the minor has used deception to apply”. We will explain these points in detail.

When a Minor Has Obtained Consent from a Legal Guardian

As stated in Article 5, Paragraph 1 of the Japanese Civil Code (民法第5条1項), a contract application made by a minor with the consent of their legal guardian cannot be cancelled. Therefore, in electronic contracts, it is more difficult to confirm the consent of a legal guardian compared to face-to-face or written transactions. However, it is necessary for businesses to consider appropriate application acceptance steps for age verification of the applicant and confirmation of the legal guardian’s consent.

Typically, the method of confirming the consent of a legal guardian involves stating in the application steps or in the terms of use that “the consent of a legal guardian is required for applications made by minors”. However, it is considered that consent cannot be assumed solely based on this statement. Therefore, it is necessary to determine the presence or absence of consent in conjunction with other factors, such as confirmation through methods other than online, like phone calls or mail.

Also, when a minor themselves makes an application, since the minor is the one operating on the screen, it is necessary to obtain the consent of a legal guardian. When displaying a warning that the consent of a legal guardian is required, it is necessary to provide an appropriate screen (considering the size of the text, color, expression of the sentence, and easy-to-understand display considering the small screen display on mobile phones).

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Furthermore, when a business specifies a credit card as a means of payment, if the contract applicant, who is a minor, and the credit card holder are the same, it is considered that the consent of the legal guardian for the creation of the credit card has been strictly confirmed by the card issuer at the time of card creation. Therefore, for contracts for sale and purchase, etc., where it is assumed that the legal guardian consented at the time of card issuance, if the minor uses that card for card payment at a credit card affiliated store, it is generally possible to presume that there was comprehensive consent from the legal guardian for each contract for sale and purchase, etc., within the card limit.

However, there may be cases where transactions that the legal guardian did not anticipate at the time of card issuance are conducted. An example would be a minor using a credit card for payment on a dating site. In this case, the presence or absence of the legal guardian’s consent will be judged considering the subject of the transaction for each contract for sale and purchase, etc.

The same concept applies to electronic contracts made using mobile phone devices. If the contract applicant is a minor, the same considerations apply.

In the case of electronic contracts made using mobile phones, it is common to use the billing system provided by the mobile phone operator (so-called carrier billing, where the service usage fee, etc., is charged to the mobile phone contract holder along with the mobile phone usage fee). However, each electronic contract is ultimately established separately between each user (applicant) and the service provider, separate from the mobile phone subscription contract. If the user is a minor, it is necessary to judge the presence or absence of the legal guardian’s consent for each electronic contract, so caution is required.

Regarding carrier billing, in cases where the minor is the mobile phone contract holder, or even if the parent is the contract holder but the minor is registered as the user, there may be cases where the usage limit is set lower than for adults, or where the limit can be set to a lower amount at will. In such cases, if steps have been taken to confirm that the legal guardian has clearly recognized and set the limit, it is highly likely that it can be presumed that they have given comprehensive consent in advance for individual service usage contracts within the limit.

Case of Property Allowed to be Disposed of

Article 5, Paragraph 3 of the Japanese Civil Code states:

Japanese Civil Code (Legal Acts of Minors) Article 5

3 Despite the provisions of paragraph 1, property that a legal representative has allowed to be disposed of for a specific purpose can be freely disposed of by the minor within the scope of that purpose. The same applies when a minor disposes of property that has been allowed to be disposed of without a specific purpose.

This means that if a legal representative has allowed the disposal of property for a specific purpose, the minor can freely dispose of it within the scope of that purpose.

“Allowing disposal for a specific purpose” refers to cases where, for example, the disposal is allowed for a specific use such as tuition or travel expenses. Also, when a minor disposes of property that the legal representative has “allowed to be disposed of without a specific purpose”, such as pocket money given without limiting its use, the consent of the legal representative is not required.

However, when a minor claims cancellation, it is often difficult for the business side to verify these facts. Even in the case of paid online services used by minors, where the monthly usage fee is set relatively low in the terms of service, etc., whether it falls under “property allowed to be disposed of” depends on the circumstances between the individual legal representative and the minor, making it difficult to judge.

Furthermore, Article 6 of the Japanese Civil Code states:

Japanese Civil Code (Permission for Minors to Conduct Business) Article 6

1 A minor who has been permitted to conduct one or several types of business has the same capacity to act as an adult in relation to that business.

This means that if it involves property transactions related to the permitted business, cancellation cannot be claimed on the grounds of being a minor.

Also, Article 753 of the Japanese Civil Code states:

Japanese Civil Code (Adulthood by Marriage) Article 753

When a minor gets married, they are considered to have reached adulthood.

This means that even if a minor is married, cancellation cannot be claimed on the grounds of being a minor. However, with the lowering of the age of adulthood on April 1, 2022 (Gregorian calendar) due to the revision of the Civil Code, Article 753 will be deleted and adulthood by marriage will be abolished.

When a Minor Uses Deception to Apply

Article 21 of the Japanese Civil Code (民法第21条) states:

(Deception by a person with limited capacity to act) Article 21

If a person with limited capacity to act uses deception to make others believe that they have full capacity to act, they cannot cancel their actions.

In the Japanese Civil Code, lying is referred to as “deception”. If a minor uses “deception” to make the other party in a transaction believe that they are an adult or that they have the consent of their legal representative, the minor cannot cancel their expression of intent.

This “use of deception” is not limited to cases where a person with limited capacity to act actively uses tactics to make others believe that they have full capacity to act. It is also interpreted to include cases where a person with limited capacity to act uses ordinary words and actions sufficient to deceive others, inducing or strengthening their misbelief (Supreme Court judgment, February 13, 1969 (1969)).

For example, during an electronic contract, the applicant is asked to enter their date of birth (or age) on the screen, and if they are a minor, a message is displayed stating that “parental consent is required”, and measures are taken to ensure parental consent and prevent minors from entering into transactions without parental consent. However, if a minor enters a false date of birth (or age), causing the business operator to mistakenly believe that the other party is an adult, the minor may be considered to have used “deception”. In such cases, if the minor is deemed to have used “deception”, there is a high possibility that the minor will lose the right to cancel.

However, whether or not “deception” has been used cannot be uniformly or mechanically determined based solely on the fact of the display measures and false input. It is not judged solely by the fact that a minor entered their date of birth (or age) pretending to be an adult, but whether the minor’s intentional false input can be considered an act “sufficient to deceive others” is judged from a substantive perspective, taking into account other facts and considering the specific circumstances of each case.

In cases where the user is simply asked “Are you an adult?” and clicks the “Yes” button, or where the terms of use only state “If you are a minor, you need the consent of your legal representative”, it is likely to be interpreted that the action can be cancelled (i.e., it does not constitute deception).

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After the Cancellation of Electronic Commerce by Minors

If an electronic contract concluded by a minor is cancelled, the contract is considered to have been invalid from the beginning. Under the contract, the minor has an obligation to pay the price, and the business operator has an obligation to provide the service (or deliver the goods in the case of a sale). However, if the transaction has not been performed, these obligations will disappear.

If the transaction has been performed, each party has an obligation to restore the original state by returning the benefits they received.

Japanese Civil Code (Obligation to Restore the Original State) Article 121-2

1. A person who has received a benefit as performance of an obligation based on an invalid act has an obligation to restore the other party to the original state.

3. Notwithstanding the provisions of paragraph 1, a person who did not have the capacity to act at the time of the act has an obligation to return the benefit to the extent that he or she has actually benefited from the act. The same applies to a person who was a person with limited capacity to act at the time of the act.

The business operator has an obligation to refund the price, but if a payment operator other than the direct parties to the electronic contract, such as a credit card or carrier billing, is involved in the settlement of the price, the relationship with the payment operator after the cancellation of the electronic contract will be determined by the contract between the credit card operator and the cardholder, the mobile phone operator and the mobile phone contract holder, etc.

The minor has an obligation to return the goods if they have received them, but the scope of the minor’s obligation to return is limited to the extent that they have actually benefited (within the scope of existing benefits). Therefore, if the service received by the minor was the provision of information assets such as digital content, the minor will not be able to use the information assets afterwards as an obligation to restore the original state, and to ensure this, it is considered that the paid service provider can demand the deletion of the information assets from the minor.

However, for example, if a minor applied for a contract with the intention of cancelling it from the beginning, received and used the goods, and then cancelled the contract, resulting in damage to the business operator due to a decrease in the value of the goods, the minor may be liable for damages based on a tort (Article 709 of the Japanese Civil Code). Even if a minor causes damage to a business operator, the minor himself/herself will not be liable for a tort if he/she does not have the capacity to be responsible (Article 712 of the Japanese Civil Code). However, the parent or other supervisor may be liable for a tort as a violation of the duty of supervision (Article 714 of the Japanese Civil Code). Also, even if the minor has the capacity to be responsible, if it is recognized that there is a reasonable causal relationship between the violation of the duty of supervision by the parent or other supervisor and the damage caused to the business operator by the tort of the minor, the supervisor may be liable for damages (Article 709 of the Japanese Civil Code, Supreme Court judgment of March 22, 1974 (Showa 49)).

Summary

The Japanese Civil Code protects individuals with limited legal capacity, such as minors and adults under guardianship. Special protection is provided for minors, so businesses must handle these cases with caution.

Furthermore, due to the amendment of the Japanese Civil Code, the age of adulthood will be lowered to 18 years old from April 1, 2022 (Gregorian calendar). After the reduction of the adult age, young adults aged 18 to 19 will no longer be subject to the cancellation of minor status.

Introduction to Our Firm’s Measures

Monolith Law Office is a legal office with high expertise in both IT, particularly the Internet, and law. With the lowering of the age of adulthood, it is necessary to review various contracts. Our firm handles the creation and review of contracts for various cases, from companies listed on the Tokyo Stock Exchange Prime Market to venture companies. If you have any trouble with contracts, please refer to the article below.