De Facto Contract Law and Legal Definition

De facto contract refers to a contract that intends to convey property form one individual to another but is defective in one respect. For example, a contract without consideration. A de facto contract is legally binding provided the contract does not violate public policy.

In the following case the court discussed the effect of a minor’s de facto contract.

“The general rule is that when a minor ratifies a contract after he becomes of age it becomes valid and in full force from the beginning. From the rule that the general contracts of an infant are not void, but voidable, that is, they are de facto contracts, though subject to the possibility of disaffirmance, it logically follows that, when the infant has come of age and ratified a contract made in infancy its sole infirmity is removed, and it should be treated as having been validly in force from the beginning. The ratification is not to be considered a new contract, but merely the definite abandonment of the optional right to disaffirm”. [Dickert v. Aetna Life Ins. Co., 176 S.C. 476 (S.C. 1935)]