ELEMENTS OF CONTRACT

CAPACITY

LEGAL CAPACITY
Introduction

Sec. 10(1) - a contract is void if one or both parties lack the legal capacity to contract. Sec. 11 - Every person is competent to contract if he is:
Age of majority Sound mind Not disqualified from contracting by any law

AGE OF MAJORITY
Person of the age of majority (1) Meaning of age of majority Age of Majority Act 1971 Sec.2 - the age of majority is 18 years (2) General rule: contracts made by minors are void Mohori Bibee v Dharmodas Ghose (1903) ILR 30 Cal 539
Tan Hee Juan v Teh Boon Kiat [1934] MLJ 96

EXCEPTIONS TO GENERAL RULECONTRACT BY MINOR

a. Contracts of agency Contract Act 1950, Sec. 137 any person (including a minor) may become an agent b. Contracts for necessities Contract Act 1950, Sec. 69 a minor is liable on contract for necessaries. Contracts for necessaries mean contract for goods and services reasonably necessary to the particular minor and to the 4 minors actual requirements

CONTRACT OF NECESSITY Examples food, clothing,

education, legal advice, medical services & accommodation

Under Sec 69 - minor is obliged to pay if he has property.

Illustration (a) A supplies B, a mentally disordered person, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B's property. In Government of Malaysia v Gurcharan Singh, a minor was liable to pay a reasonable sum

 Contracts for scholarships Contracts (Amendment) Act 1976, S. 4(a) - the scholarship agreement is valid even though the scholar entering into such agreement is a minor. d. Contract of service or apprenticeship The Employment Act 1955 & The Children And Young Persons (Employment) Act 1966 enable a minor to enter into a contract of service or apprenticeship

 Contract of insurance Insurance Act 1996, Sec 153 - Capacity of minor to insure. - A minor (10 17 years) may enter into a valid contract of life insurance - 10 below 16 years need written consent of his parents or guardian - 16 below 18 years can contract on his own capacity
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Sound Mind
Person of sound mind (1) Meaning of sound mind Sec. 12(1) A person is said to be of sound mind for the purpose of making a contract if at the time of making a contract, he is capable of understanding it and forming a rational judgment
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Cont.
Sec. 12(2) - an unsound mind person may make a contract when he is of sound mind (3) Sec. 12(3) - A sound mind person may not make a contract when he is of unsound mind