## Facts

- A 16-year-old buyer purchased a used 1984 pickup truck from an auto dealer for $4,900 cash.
- The sellers did not ask the buyer’s age, and the buyer did not misrepresent it; the seller assumed he was older.
- After about nine months, the truck developed serious engine problems; the buyer continued to drive it without making repairs.
- The engine later failed, leaving the truck inoperable; the buyer tendered the truck and sought to rescind and recover the purchase price.
- The sellers refused to accept the tender or refund the money.
- While the truck sat parked at the buyer’s home, a hit-and-run collision damaged the left front fender; the seller claimed the truck’s value was greatly reduced.

## Issues

1. When a minor disaffirms a non-necessary goods contract, must the seller refund the full purchase price, or may the seller receive an offset for the minor’s use, depreciation, or damage to the goods?
2. What role do adult overreaching, fraud, or unfair advantage play in determining whether an offset applies?

## Decision

- The Tennessee Supreme Court reversed the judgment awarding the minor a full refund and remanded.
- The court held that, absent overreaching, fraud, or unfair advantage by the adult, a minor who disaffirms a fair and reasonable contract is not automatically entitled to full restitution.
- The seller may receive reasonable compensation for the property’s use, depreciation, and willful or negligent damage while in the minor’s possession.
- On remand, the trial court was directed to determine (1) whether the sellers acted unfairly (fraud, overreaching, unfair advantage) and, if not, (2) the appropriate amount of compensation/offset, including whether the minor’s conduct amounted to gross negligence or willful damage affecting the loss.

## Legal Principles

- The traditional rule allowing minors to disaffirm contracts is limited to prevent shifting the entire loss to good-faith adult sellers when the minor has received benefits and the contract was fair.
- If the adult seller has committed fraud, overreaching, or taken unfair advantage, the minor retains the traditional protection and may rescind without an offset for depreciation or damage.
- If the transaction is fair and reasonable and the adult acted in good faith, rescission by the minor is subject to a setoff for reasonable compensation reflecting (1) use, (2) depreciation, and (3) willful or negligent damage attributable to the minor while the goods were held.

## Conclusion

Tennessee modified the minors’ disaffirmance remedy by permitting an equitable offset for use, depreciation, and willful or negligent damage when the adult seller dealt fairly and in good faith, and it remanded for factual findings on seller misconduct and the amount of any setoff.


Dodson v. Shrader, 824 S.W.2d 545 (Tenn. 1992)