PROBLEM 1

I) IDENTIFY OF ISSUES

Whether Daniel is competent to enter into a legally binding contract and is that
capacity to contract of minor with Jegan, Shetty and the Government of
Malaysia.

II) EXPLANATION OF LAW

The valid contract is known as an agreement enforceable by law is a contract, in

section 2(h) of the Contract Act 1950. Besides that, an agreement which is not
enforceable by law is said to be void in section 2(g). Contract also can be
defined as the term “contract” in a legal sense refers to an agreement between
two or more parties that is legally binding between them.

According to section 10 (1) of Contract Act 1950, is about what agreement

are contract. “All agreement is contracts if they are made by the free consent of
parties competent to contract, for a lawful consideration and with a lawful
object, and are not hereby expressly declared to be void.” So that mean the
agreement of two parties will become contract if two of them agree with free
consent. Who are competent to contract. Section 11 provides that “every person
is competent to contract who is of the age of majority according to the law to
which he is subject, and who is of sound mind, and is not disqualified from
contracting by any law to which he is subject”. These two sections are relating
about capacity to contract. The general rule of capacity is that in order to enter
into a valid contract, the parties of the contract should be competent to the
contract. For example, they must have legal capacity. The person who wants to
enter the contract must reach the age of majority and sound mind.

Capacity of minor is define in the age of majority for contracts are 18 years
old according to section 2 of the Age of Majority Act 1971. The minor, therefore
incompetent to contract because of below 18 years old of age. If the party is
minor, it will bring some of the effect to enter the contract. Effects of contract
made by those who are incompetent are not specified under the Act and the
contract will become void. Some of the cases are relating the contract with minor
will become void. In Mohari Bibie v. Dharmodas Ghose [1903] 1 L.R. 30 Cal.
539, agent of defendant advanced money to plaintiff, an infant, fully knowing
his incompetency of plaintiff to contract, against mortgage of property belonging
to defendant. The court held that every agreement entered into by a minor is void
as initio. A minor is deemed as incompetent to contract and is not liable for any
necessaries supplied. In Tan Hee Huan v. Teh Boon Keat [1934] 1 MLJ 96, the
plaintiff, an infant, executed transfer of land in favour of the defendant. The
transfer were witnessed and subsequently registered. The plaintiff later, by his
representatives, applied to the court for an order setting aside the transfer. The
court made a rule that the transactions were void and ordered restoration of the
land to the minor and has the advantage of not returning the money’s received.

According to section 69 Contract Act, 1950 it is explained about exception

to the general rule. Minor can enter the contract when is contract for
‘necessaries’. “If a person, incapable of entering into a contract, or anyone
whom he is legally bound to support, is supplied by another person with
necessaries suited to his condition in life, the person who has furnished such
supplies is entitled to be reimbursed from the property of such incapable
person.” The contract for necessaries is a statutory liability and not a contractual
liability. Necessaries are things which are essential to the existence and
reasonable comfort of the infant and world, include item such as food, lodging,
clothing medicine and medical care, and basic education and vocation. The
necessaries items are the thing that human needs and continues their life, not the
thing for enjoying and letting the life more comfortable. In Nash v. Inman [1908]
2 KB 1, A tailor supplied 13 waistcoats and other things of that kind to an
undergraduate student when latter was a minor. Student refused to pay for the
goods supplied and tailor brought this suit against him for recovery of price of
those goods. The court held action by Plaintiff failed because tailor failed to
show any evidence to show that clothes suitable for infant’s station in life.
 Besides that, scholarship agreement is one of the capacities of necessaries of
contract. Example of the related case of this situation is Gurcharan Singh v.
Government of Malaysia [1971] 1 MLJ 211 HC. Malaysian Government (M)
provided Gurcharan Singh (G) scholarship for his study at Malayan Teacher’s
Training Institution with an agreement that he will serve the government
inconsideration for being trained as a teacher for duration of 5 years. But G
served only for 3 years and 10 months. G was a minor while the contract was
completed. Government of Malaysia claim for compensation for $11,500. The
court held that an infant is totally incompetent and unable of enter into a contract
and there is no contract on which he can be sued.

III) APPLICATION OF LAW

Daniel borrowed a sum of RM5,00 from Jegan, when he is minor. He spent that
money to buy expensive thing and has a tour with his girlfriend.

The agreement between Daniel and Jegan was when Daniel is an infant, they
executing a promissory note. However, Daniel refused to repay the loan to Jegan.
In the age of 17, Daniel is not competent into contract such as Mohori Bibee
section 2 of the Age of Majority Act 1971, every agreement entered into minor
is void. Agent of defendant (Jegan) advanced money to plaintiff (Daniel), an
infant, fully knowing his incompetency of plaintiff to contract.

As a minor 17 age can enter contract, but need to see first “necessaries” or
not. Daniel spending money on a sight-seeing tour with his girlfriend. This
contract is not necessaries. Therefore, still may follow the main rules, the
contract is void. If a person incapable to enter into a contract, or is a legally
bound to support such as the person is minor. However, if another person
supplied with necessaries suited to the minor condition in life. The person who
has furnished such supplies is entitled to be reimbursed from the property of
such incapable person. According to the contract of Daniel and Jegan, Daniel
spent money for girlfriend is not a necessaries, so that the contract become void.
 Apart from that, Daniel is below 18 years old, which shows that he is a minor and
with section 2 of the Age of Majority Act 1971 only 18 years old and above are
accords to the contract. Daniel promised his girlfriend Shetty that he would be
marrying her after they returned back in Malaysia. The general rule in Malaysia is
that, contracts made by minor are void and by virtue of section 2(g) of the
Contract Act 1950, a void contract cannot be enforceable by law. This means that
Daniel can refuse to marry Shetty.

Furthermore, Daniel offered a scholarship from the Government of Malaysia

to study economics at Oxford University, London with an agreement that after
he completed his studies should return back to Malaysia from London and work
with under Malaysia Government for 3 years [Contract (Amendment) Act 1976].
Daniel agreed this contract and signed a written contract and he successfully
completed his studies. But he didn’t return back to Malaysia and he start work in
London. In same time, it was further agreed were to breach the agreement, he
shall be required to pay on demand to the Government an agreed sum of
RM 90,000 as compensation. At last, Daniel failed to respect his scholarship
agreement with the Government of Malaysia because of incompetent to contract
same as case of Gurcharan Singh v. Government of Malaysia [1971] 1 MLJ 211
HC.

IV) CONCLUSION

There is not contract between Daniel and Jegan, such as case Mohori Bibee v.
Dharmodas Ghose according to necessaries. On the other hand, Shetty is advised
that she cannot marry to Daniel. This is because the promise given by a minor
does not count as a contract, it is void. According to under Section 10 (1) of
Contract Act 1950, there is no void contract on which Daniel can be sued. The
court held that an infant is totally incompetent. The Government of Malaysia
threatened to take legal actions against Daniel because of he breach the
agreement and he did not work under Government after finish his studies.
Reference

The case of Gurcharan Singh v. Government of Malaysia [1971], Retrieved 27th February
2017, From
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The section of capacity of parties in contract act 1950, Retrieved 27th February 2017,
From http://itslaw.blogspot.my/2011/02/minors-capacity-to-contract.html

https://indiancaselaws.wordpress.com/2013/01/17/mohori-bibee-v-dharmodas-ghose/

http://uniten.weebly.com/uploads/5/3/7/3/53736891/topic_2_law_of_contract.pdf

https://indiancaselaws.wordpress.com/2013/01/17/nash-v-inman/

http://www.australiancontractlaw.com/cases/nash.html

https://www.coursehero.com/file/6893204/Nash-v-Inman/

http://legaldictionary.lawin.org/roberts-v-gray/
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http://law.justia.com/cases/north-carolina/court-of-appeals/1983/8226sc999-1.html
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https://en.wikipedia.org/wiki/Stevenson,_Jacques_%26_Co_v_McLean
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