Legal Defense Strategies | The Legal Edge: NIL
Issue Date: April 17, 2026 | Issue #41
Last week, we analyzed the "Federal Funding" bomb dropped by the White House. This week, we’re moving from the West Wing to the high school locker room.
As the House settlement stabilizes and the College Sports Commission (CSC) tightens its grip on the "Valid Business Purpose" rule, brands are hunting for "prodigy" value.
There is a surge of six-figure offers to high school students. But there is a massive legal "trapdoor" that brands and collectives often forget: The Power of Disaffirmance. In most states, a contract with a minor isn't just a "deal,” it’s a legal gamble.
Sincerely,
Rebekah Ballard, 3L
This Week’s Strategic Insight
The Lead: The "Under-18" Risk
The market for high school NIL is exploding. However, under long-standing common law, minors (usually those under 18) lack the legal capacity to be bound by a contract.
The Reality: In many jurisdictions, a minor can "disaffirm" (cancel) a contract at any time before they turn 18, and for a "reasonable time" thereafter. This means an athlete could take a $50k signing bonus from a collective, wait six months, decide they don't want to fulfill the activation requirements, and legally walk away.
The "Voidable" Checklist for Families
If you are a parent of a high school athlete, you need to understand where the "leaks" are in these contracts:
1. The Disaffirmance Trap
For the Brand: If the athlete walks away, the brand often loses its investment and has very little recourse to "sue" a 16-year-old for breach of contract.
For the Athlete: If you disaffirm, you might have to return any "benefits" you still have (like unspent money), but you are generally protected from being forced to perform the work.
2. The "Co-Signer" Illusion
The Red Flag: Brands often ask parents to "co-sign" or "guarantee" the minor’s performance.
The 3L Analysis: While the minor might be able to walk away, the parent who co-signed usually cannot. In 2026, we are seeing "Parental Indemnity" clauses where the collective, or brand, can sue the mom or dad if the athlete stops posting.
3. Court-Approved Protections (The "Coogan" Standard)
In states like California, New York, and Florida, there are specific "Coogan Laws" (originally for child actors) that allow a court to "approve" a minor's contract.
The Benefit: Once a judge signs off, the contract becomes binding and cannot be disaffirmed.
The Cost: It requires a legal filing and often requires that 15% of the earnings be placed in a blocked trust account (a "Coogan Account") until the athlete turns 18.
State-by-State "Minority" Rules (April 2026 Update)
State | Status of Minor NIL | Court Approval Available? |
California | Highly Regulated | Yes. Mandatory 15% Coogan set-aside for many deals. |
New York | High Protection | Yes. Requires UGMA/UTMA compliant trust accounts. |
Illinois | Growing Market | Yes. Blocked Trust Accounts required for performers/athletes. |
Texas | Emerging Market | No. Minor contracts are generally voidable unless "for necessities." |
The "Valid Business Purpose" (VBP) Conflict
The NIL Go clearinghouse now reviews every deal for Valid Business Purpose. * The 2026 Problem: If a collective pays a 15-year-old $100k, the CSC may flag it as a "Recruiting Inducement" rather than a real marketing deal.
The Vulnerability: If the CSC rejects the deal, and the minor tries to sue the collective for the money, the collective may argue the contract is "void" anyway due to the athlete's age. It’s a double-edged sword.
In the eyes of the law, a contract with a minor isn't a locked door, it's a revolving one. Until that minor turns eighteen, the brand is the only one truly bound.
NIL Quick Hits
College Football Eligibility and Scheduling Shifts
A judge granted Oklahoma LB Owen Heinecke an extra year of eligibility via preliminary injunction—a high-profile case amid ongoing debates. The NCAA is recommending an earlier football season start, and Duke extended coach Manny Diaz through 2031. BYU star faced charges related to a 2025 incident.
Read the full story here: https://www.espn.com/college-football/
First Amendment challenge
General Washington Productions (a media/content entity) sued state officials in federal court, arguing the law unconstitutionally restricts commercial speech around NIL deal promotions, booster communications, and public disclosures.
Read the full complaint here: https://drive.google.com/file/d/1p8Zx36yVmjZuhrvUTUlbp_8T545UHUs6/view
The Breakdown
The "Sophomore Slump" Exit
In 2025, "NextGen Collectives" signs a 16-year-old star QB (Min-Ho) to a three-year, $300,000 NIL deal. Min-Ho receives a $50,000 signing bonus. By 2026, Min-Ho decides he wants to focus entirely on his junior season and stops attending the required autograph sessions and posting the branded content. The collective threatens to sue for the $50,000 back and damages for breach of contract.
The Legal Edge’s Take
This is a classic case of Disaffirmance. Because Min-Ho is still a minor, he can likely "void" the contract without being liable for breach of contract. Under the "Restoration Rule," he may have to return whatever portion of the $50,000 he still has in his possession, but if he spent it on "necessaries" (like training or school), the collective might be out of luck.
The collective’s only real move would have been to seek Court Approval (like a Coogan Law filing) at the start of the deal. Without that judge’s signature, the collective didn't buy a contract; they bought a "gift" that Min-Ho can walk away from at any time.
Legal Lingo Explained
What is ‘Infancy Doctrine’?
A long-standing legal principle that allows minors to disaffirm most contracts they enter into, regardless of whether the contract is fair or if the other party acted in good faith.
Why Does This Matters?
While we often call these "Minority Rules," the Infancy Doctrine is the underlying "why." It exists to protect children from their own lack of judgment and from predatory adults. In the 2026 NIL landscape, this doctrine is the "Undo Button" for athletes.
However, there is a catch: if the athlete turns 18 and continues to accept money or perform the work, they have "Ratified" the contract. Once ratified, the "Infancy Doctrine" protection disappears, and the contract becomes fully binding as if they had signed it on their 18th birthday.
Your Toolkit
Athlete Pro Tip
If a brand offers you a life-changing sum of money while you are still in high school, insist on Court Approval. While it sounds like a hassle, it protects you from the brand claiming the deal was 'invalid' later, and it ensures a portion of your wealth is protected in a trust that no one, not even your parents or a predatory agent, can touch until you're an adult.
What’s Next?
Help Us Spread the Word!
Keep The Legal Edge Sharp!
If you found this newsletter valuable, consider forwarding it to an athlete, parent, or sports professional who could benefit!
Follow Rebekah for daily thoughts and 'NIL Shorts.'
Follow The Legal Edge company page for overarching brand updates.
What would you like to know more about? Hit reply and let me know!
Disclaimer: This newsletter provides educational insights and general information related to the legal side of Name, Image, and Likeness (NIL). It does not constitute legal, financial, or professional advice, and should not be relied upon as such. This content is for informational purposes only, and you should always consult with a qualified professionals for advice tailored to your specific situation.
NIL laws are constantly evolving, and the information provided might not be the most current at all times.