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Table of content

Page
1.0- Introduction
01
1.1.1-

Definition of contract

........02
1.1.2Elements of contract
02

offer

02
acceptance.03
Intention to create legal relations......
.03 Consideration ..
... 04 certainty
.....04
Capacity .05
1.1.3Why the low restricts the minors contracting
ability?.....................06
1.1.4Exceptions to contract with
minors...06
Contract of
necessaries...06
Scholarship contracts
......07
Insurance
contracts..07
Contracts of employment (apprenticeship)......
08
Contract of marriage or
divorcement....08
1.1.5Enforceability of law on
minors.08
1.1.6The void and voidable
contracts....09-10

2.0- References ..
11

1.0- Introduction:
The low of contract governs the daily activities and the legal transactions of
different people in different fields. Contracts are constantly being entered
into by individuals with other individuals or businesses, as we as businesses
with other businesses entities for various purposes such as transfer of
property and provide and receive services.
The contract must involve at least two parties. The offeror the person who
propose the contract, and the offeree the person to whom the proposal is
made.
The term agreement is often used to mean the same thing as contract, but
there are differences between them. Every contract involves a term of
agreement but not every agreement results in a contact. There are various
types of contracts each according to its purpose, terms and obligations. For
instance, sales and purchase of goods and services on sales contracts, hiring
employees required employment contract, and rental, lease and property
transfer contracts.
In Malaysia the contracts Act 1950 governs the law of contracts, the
Malaysian law of contract was originally evolved from the British common
law upon the colonization era. And the Indian contracts Act 1872.
According to the Malaysian law of contract Act 1950 there are six elements
has to be satisfied in the contract to be legally binding. Many people enter
into contract without being aware and conscious of the legal rights and
obligations that resulted from accepting the contracts. Difficulties rise
especially when minors and incompetent people involve in contracts.

1.1.1-

Definition of contract:

According to oxford dictionary the world contract means; a written or spoken


agreement, especially the agreements concerning employment, sales, or
tenancy that is intended to be enforceable by law. It can also be defined as
agreement between two or more person of entities in which there is a
promise has been made and obligations to be fulfilled, and enforced by law.
Under the Malaysian law of contracts, section 2(h) contracts Act 1950; the
contract is an agreement enforceable by law which is legally binding
between the parties of the contract.

1.1.2-

Elements of contract:

There are six elements of the contract which are;


1- Offer:
Offer is also known as proposal under the Malaysian contracts Act 1950.
The offer is something that is capable to be converted into agreement upon
its acceptance. Section 2(a) of the Malaysian contract Act 1950; provides
that when one person signifies to another his willingness to do or to abstain
from doing anything, with a view to obtaining the assent of that other to the
act or abstinence, he is said to make a proposal. The person who makes the
proposal known as promisor and the person to whom the proposal is made
with the ability to accept it or reject it is known as promisee this as
provided in section 2(c) of contracts Act 1950.
The proposal is said to be expressed if it made in words, which can be written
or oral, or implied if it made in other than words. Section 9 of contract Act
1950. Proposal also has to be definite promise in order to be bound. The
promisor must have declared his willingness to undertake the obligation,
leaving the promisee with options of accepting the proposal or refuse it.

Case law : {Affin Credit (Malaysia) Sdn. Bhd v Yap Yuen Fui} , in this case
there was lake of offer and acceptance, the purported agreement was
declared void ab initio, or void from the beginning.
2- acceptance:
Under the contract Act 1950 section 2(b), the proposal is said to be accepted
when the person to whom the proposal was made declares his assent
thereto.
Section 9 of Act 1950; provides that, as acceptance of a proposal is made in
words, the acceptance is said to be expressed, or implied if the acceptance is
made other than in words. In order for the proposal to be converted into
promise the acceptance must be: a- absolute and unqualified.
b- Expressed in some usual and reasonable manner. Section 7 Act 1950-.
The acceptance of a proposal must be absolute and unqualified so that there
is complete consensus. If the negotiations between the parties of the
contract still being discussed, the agreement is not yet formed.
Case law: (Lau Brothers & Co v China Pacific Navigation Co. Ltd.)
3- Intention to create legal relations:
Even though the contract Act 1950 is silent on the intention to create legal
relationship as a requirement of a valid contract, case-law dictates the
importance and necessity of intention to create legal relations as an element
of a contract. However, in some cases no intention to create legal
relationship can be imputed.
Case law: ( Choo Tiong Hin & Ors v Choo Hock Swee and Phiong Khon v
Chonh Chai Fah) in this cases the agreements were merely represent family
arrangements. And (Yap Eng Thong & Anor v Faber Union Ltd) this is a case
where the concession made in course of business negotiations, and there

was a clause states subject to contract the court held there is no valid
contract.
4- Consideration:
As a general rule an agreement without consideration is said to be voidsection 26 of 1950 contact Act. The word consideration is defined in
section 2(6) 1950 Act. It means any desire, action, abstinence or promise
between the promisor and promisee.
Under the Malaysian law, contract Act 1950, the consideration need not be
adequate. In section 26 contracts Act 1950 states; the agreement is not void
merely because of inadequate consideration. For instance, A agrees to sell
car worth $5000 for RM 100, the agreement is a contract notwithstanding
the inadequacy in the consideration.
Case law: (HERCULES MOTORS PTY LTD v SCHUBERT)- 1953) 53SR (NSW)
301. FACTS: Schubert purchased new car from Hercules Motors, the
paintwork of the car was faulty. Hercules Motors acknowledge that, and they
agreed to repaint the car under supervision of paint company representative.
The representative report was unfavourable.
HELD: the agreement to repaint the car was a compromise to the dispute,
and the compromise was a consideration for new contract.
5- certainty:
It refers to the terms of the contract as to be certain and clear. An agreement
is said to be invalid if its uncertain or not capable to be certain. The parties
of the contract must have clearly understood the terms and obligations
provided in the contract, or the contract might be subject to be void.
Illustration: if Mohd agrees to sell his car to John for RM 50,000 or RM 60,000,
this kind of agreement is void because its uncertain in terms of declaring a
specific price.

Case law : (Karuppan Chetty v Suah Thian) the certainty in the contract was
not met when the parties of the contract agreed upon a lease agreement at
RM 35.00 monthly as long as he likes.
6- capacity:
The parties of the contract must have full capacity to enter into a contract
that is legally binding. Capacity is required as an element of a valid contract
because it determine who is competent to enter into a legally binding
contract. Capacity also discusses the minors contracts, age of majority, and
exceptions that allow contracts with minors.
The capacity is the ability of the parties of the contract to fully understand
the terms and obligations. According section 11 of the contract Act 1950, any
person is competent to enter into a contract as long as he or she of the age
of majority, mentally fit or sound mind, and not prevented by low from
entering into a contract.
From section 11, the people who are not competent to enter into a contract
are:
1- Minors, who are below the age of majority.
2- Unsound mind.
3- People who are prevented by law from engaging in contracts.
In Malaysia the age majority is 18 years and above, as provided in majority
Act 1971. Any one below the age of majority is consider as minor and bound
by law from entering into a contract. In the Indian law section 3 Act 1875,
the minor is defined as a person who has not attained the age of 18years.
Case law: (Mohori Bibee v Dharmodas Ghose)
In Malaysia the general rule provides that the contract made by infant is said
to be void.

1.1.3-

Why the low restricts the minors contracting ability?

Courts require the parties of the contract to be competent and to have the
capacity to enter into contracts that is legally binding. As provided in section
11 of contracts Act 1950, an infant or unsound mind people cannot enter into
a legally binding contract. Any contract that was involved incompetent
person such as minors is consider as void.
There some reasons to prevent minors from entering into contracts:
1- A minor cannot clearly understand the terms of the contract and what
are his rights and obligations, and what the legal implications of the
contract are.
2- A minor doesnt have the ability to make a long term assumptions and
analysis of the consequences of entering into contract.
3- Minors lack of experience may lead the minors to enter into contracts
that have inadequate benefits compare to what is granted.
4- To protect the minors from being exploited by the experienced people
and businessmen who might take advantage of entering into a contract
with minor.
In the British law sales of good Act 1979 section 3, states that the
person who supplied minor with necessary good or service must
receive a reasonable price. This section protect the minor from being
exploited as unexperienced person .

1.1.4-

Exceptions to contract with minors:

Law provide some exceptions where minors can enter into a legal binding
contract, which are;
1-contract of necessaries:
Section 69 of the contract Act 1950 defines necessaries contract as; any
contract that incompetent person or any one whom is legally bound to
support, has enter into with another person supplier to supply his
necessary needs according to life the condition. The person who has
furnished such supplies is entitled to be reimbursed from the property of
such incapable person. The necessity is anything that is essential to
survival of the person (cloth, food, shelter etc)
This Act illustrates that the minor is legally liable to pay for his necessary
needs render to him by who is legally bound to support. Necessaries is not
only confined for specific items, it depends on the life condition of the
infant because, what can be a luxury for an infant A can be a necessity
for infant B each according to the life conditions and life styles. So the
necessaries depend on the life conditions and the actual needs of the
infant.
Case law: (SCARBOROUGH v STURZAKER)

2- Scholarship contracts:
The contract of scholarship between infant and government organization
or non-government educational institute to provide the infant with
educational loan , award , bursary or scholarship is said to be valid under
section 4(a) of contract (amendment) Act 1976. Infant in this contract is
any one below the age of majority.
Case law: (government of Malaysia v GURCHARAN SINGH& ORS) in this
case education was held to be classified as necessaries.

3- insurance contract:
Infants below the age of majority and above 10 years can enter into a
legal binding contract of insurance for their own benefits. Insurance Act
1963 (revised 1972) require a written consent from the infant parents or
guardians if the infant is below 16 years.
4- Contract of employment (apprenticeship):
As provided in section 13 of children employment Act 1966, an infant
below the age of 16 is competent to enter into an employment contract
to provide service. This Act states that the minor can sue or defend any
action against him. However, in case that infant breaches the contract, no
damages to recover from him.
1.1.5-

Enforceability of law on minors:

Due to the following reasons courts prevent minors from contracting;


1- A minor cannot clearly understand the terms of the contract and what
are his rights and obligations, and what the legal implications of the
contract are.
2- A minor doesnt have the ability to make a long term assumptions and
analysis of the consequences of entering into contract.
3- Minors lack of experience may lead the minors to enter into contracts
that have inadequate benefits compare to what is granted.
4- To protect the minors from being exploited by the experienced people
and businessmen who might take advantage of entering into a contract
with minor.
And because of these same reasons, courts consider the minors
contracts as void which means other parties cannot sue minor for breach
of contract, except in the exception contracts previously mentioned
where minors are liable. The protection that the courts provide to minors

doesnt mean minors can evade their obligation and liabilities arbitrarily
in every case.
In the contracts of necessaries minors are liable to pay the supplier
a reasonable price for the good or service received. The term
reasonable price is determined by the court, it is neither the
market price nor the contract price.

Minor cannot ratify a contract on attaining the age of majority that


was entered into when he was still minor.
Minor can sue the other party in the contract if he didnt carry out
his obligations.
A minor can plead minority to evade obligations in a contract.
Illustration: a minor borrow money from an adult misrepresenting
his age as major.
If the contract is in favour of minors benefit is consider to be valid.
1.1.6-

The void and voidable contracts:

The terms void and voidable although they seem similar, they are completely
different from each others.
When the contract is said to be void it means it cannot be enforced by either
party.
A voidable contract, only one party in the contract is bound to the terms and
obligations in the contract. The unbound party in the voidable contract can
cancel or revoke the contract which makes the contract void.

The general rule based o section 11 of contract Act 1950, states that the
contract entered into by minors is said to be void, Which cannot be enforced
legally.
The contact also can be voidable if there is a lack of capacity, for instance
minors contract.

2.0- References
Lee mei pheng & ivan jeron detta (November 2009). Business law
,oxford university press, oxford Fajar Sdn. Bhd. Malaysia.

Low of contract, (n.d) in scribd.com, retrieved 23 August 2014,


http:// http://www.scribd.com/doc/52117434/Law-of-Contract

Low of contract, (27TH OCTOBER 2011) in slideshar.net, retrieved 25


August 2014,
http:// http://www.slideshare.net/Elainebang/law-of-contract

Minors in contracts,(5th December 2006) in hba.org.my, retrieved 27


August 2014,
http://
http://www.hba.org.my/articles/bhag_singh/2006/minors_in_contract
s.htm