Section 3 Age of Legal Capacity (Scotland) Act 1991 allows for prejudicial transactions to be set aside. What is a “prejudicial transaction” in Scotland? Who can apply, when, and what orders can the court make under Section 3 of the Age of Legal Capacity (Scotland) Act 1991?
Where Section 3 fits in
Section 3 provides a safety-net for young people who entered a legally binding transaction between ages 16 and 18. Even though 16–17 year-olds generally have capacity (see your Section 1 guide), the court can still set aside certain deals if they are prejudicial.
Who can apply — and by when?
- The applicant: the person who made the transaction, if they are under 21 at the time of applying.
- Deadline: application must be before the applicant turns 21.
- If the applicant has died or is insolvent: the executor, trustee in bankruptcy, trustee under a trust deed for creditors or (historically) curator bonis may apply on their behalf, but still before the 21st birthday would have occurred.
Note: the curator bonis office is now obsolete in practice following the Adults with Incapacity (Scotland) Act 2000 and later reforms; modern routes include guardianship/judicial factor.
What is a “prejudicial transaction”?
A transaction is “prejudicial” only if both tests are met:
- Prudence test: An adult, exercising reasonable prudence, would not have entered into that transaction in the applicant’s circumstances at the time; and
- Harm test: the transaction has caused or is likely to cause substantial prejudice to the applicant.
This is a fact-sensitive assessment: price/terms, pressure, information asymmetry, complexity, alternatives, and the applicant’s circumstances at the time all matter.
Statutory exclusions – when Section 3 does not apply
You cannot use Section 3 to set aside:
- using will-making powers (testamentary acts) or exercising a power of appointment;
- consenting to adoption of the applicant;
- bringing/defending civil proceedings;
- consenting to medical/dental treatment;
- transactions done in the course of the applicant’s trade, business, or profession;
- transactions where the other party was induced by the applicant’s fraud (e.g., lying about age);
- transactions ratified by the applicant after turning 18 with knowledge they could be challenged under Section 3;
- transactions ratified by the court under Section 4.
(For the medical/adoption/solicitor exceptions that begin at age 12 or apply under 16, see your Section 2 guide.)
Procedure and court powers
- How to apply:
- raise an action in the Court of Session or sheriff court, or
- make an incidental application in ongoing proceedings.
- What the court can do:
- make an order setting aside the transaction, and
- make any further order needed to adjust the parties’ rights (e.g., repayment/restoration).
Practical examples (illustrative)
- High-cost finance at 17: A 36-month, high-interest loan sold on aggressive terms may be set aside if a prudent adult wouldn’t have agreed in the same circumstances, and the deal substantially prejudices the young person.
- Cosmetic procedure at 16 with informed consent: Not challengeable under Section 3 if it falls within medical consent (which Section 3(3)(e) excludes).
Evidence and strategy tips
- Timing: Miss the 21st birthday and the Section 3 remedy is gone.
- Prove both limbs: gather pricing comparisons, expert opinion on fairness, sales scripts, records of pressure/misrepresentation, and the applicant’s personal/financial context at the time.
- Consider alternatives: consumer protection routes (misrepresentation, unfair terms/credit), but Section 3 is often the cleanest path for 16–17 transactions.
How Section 3 interacts with Sections 1 & 2
- Section 1 gives full capacity at over 16yo; Section 3 recognises some deals made at 16–17 may still be unfair enough to unwind.
- Section 2 carves out under-16 exceptions (everyday deals, wills at 12, medical consent, instructing a solicitor, etc.). Those specific areas are excluded from Section 3 challenges.
Read more: Section 1 overview and Section 2 exceptions.
FAQs
Is a bad bargain enough?
Not by itself. You must show both that a prudent adult wouldn’t have entered it in those circumstances and that it caused/likely causes substantial prejudice.
Can I challenge after turning 21?
No — the statute imposes a hard stop at 21 (with the representative-applicant options only up to the same date).
What if I ratified the deal at 18?
If you knowingly ratified after 18, Section 3 is not available.
Why does the Act mention “curator bonis”?
It’s historic language. In practice, curators bonis are no longer appointed; the Adults with Incapacity (Scotland) Act 2000 and later reforms replaced that role with modern mechanisms.
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