Credit Card Contract Null and Void without Consent of Parents

The Seoul District Court ruled that the contract a minor made with a credit card company without the consent of his guardian or parent is automatically null and void. The court further ruled, "Therefore, the minor plaintiffs are not liable for any amount they spent by the credit card made in such manner."

The court, however, decided that the minors are still liable for the principle of their purchase amounts, although each of the credit card contracts is not enforceable, since the minor plaintiffs had obtained benefits by purchasing items by the cards without any consideration for them. The court has provided a new way to reinstate numerous minors whose credit records have been ruined due to the credit card debt by denying the liability of a minor to a credit card company if the minor`s credit card is made without the consent of his/her legal guardian.

Civil Division 23 of the Seoul District Court, which is presided by three judges, ruled yesterday for the plaintiffs in a case where 44 plaintiffs had filed a lawsuit against 7 banks and credit card companies, alleging that they were not liable for the credit card debts. The court held, "The Civil Code provides that a minor under the age of 20 should obtain the consent of his/her parent or legal guardian to enter into a contract. Entering into the contracts at issue herein, the minor plaintiffs did not obtain the consents of their parents. Therefore, the court finds the contracts in question null and void."

The court further held, "Once the contracts are found not enforceable in the court of law, the minor plaintiffs are not liable to pay for the late-payment and other fees. Therefore, the defendant banks and companies shall return the payments they received for late payment and other fees."

The court, however, ruled, "The minors have obtained monetary benefits from the defendants without any consideration by purchasing products using the credit cards at issue herein. The defendants may file a separate lawsuit to collect on the purchase amounts that the defendants had paid on behalf of the plaintiffs."

In April, 44 plaintiffs commenced a civil action against credit card issuers, alleging that the issuers should return to them an amount of \350 million (or approximately $300,000) that they have paid to the companies, and that they are not liable for the remaining \180 million.

In the meanwhile, according to the official report of the National Association of Banks, as of the end of November, 3,500 minors are registered insolvent due to the credit card debts.

Jin-Kyun Kil leon@donga.com