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CERTAINTY OF TERMS, CAPACITY OF THE PARTIES, Test of necessaries :
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CERTAINTY OF TERMS
Common Law
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In Malaysia, these are covered by S.30.- Illustration (a) - (f).
If this element is absent, contract is VOID.
Example :
Karuppan Chetty v Suah Thian
Parties agreed to a lease for as long as he likes.
Held : There was uncertainty in the contract and thus the contract is VOID.
CAPACITY OF THE PARTIES
Definition
- S.10(1) - "all agreement are contracts.... parties competent to contract..."
- Meaning : party must be age of majority, have sound mind and **not being disqualified by law to enter into contract.
If there elements are absent, contract is VOID
Example :
Mohori Bibee v Dharmodas Ghose
(1) Age of Majority
- S.2 of Age of Majority Act 1971 is 18 years old and above.
- Thus, a minor is a person whose age is below 18.
- General rule : Contract entered by minors are VOID. (to protect the minors against consequences of their own actions as they are presumed lack of judgement in their action.
- However, there are EXCEPTIONS to the general rule.
Exceptions
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c) Scholarship
- Minors can enter into a scholarship agreement with government bodies.
- Scholarship agreement: any contract between appropriate authority and any person, with respect to any scholarship, award, bursary,loan,sponsorship or appointment to a course of study, the provision of leave with or without pay or any other facility for the purpose of education or learning.
- Appropriate authority includes : Federal govt or State govt, a statutory authority or educational institution.
- The amendment does not affect the general law relating to contracts including scholarship agreement between minors and private organizations.
d) Other exceptions
- Contract of insurance - minor between 10 and 16 must **obtain parents/guardian/consent.
- Contract of apprenticeship or service - valid. Any child or young persons is competent to enter into a contract of service other than as an employee.
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(4) Person not disqualified by law
- A bankrupt & wound up companies cannot enter into certain types of contract (eg transfer of land).
- Corporation & companies can only contract in transaction within their powers given by the statutes under which they are incorporated or licensed constitution.
( co xcreated - registered/incorporated, co is insolvent, co is winding up)
Test of necessaries :
- Depends on the nature of goods/service supplied, minor's actually needs and his station of life.
- Eg. clothes could be necessaries but if the minor is already adequately stocked, they may treated as 'mere luxury'.
Under S69 - minor is bound to pay for necessaries.
- Illustration (a) & (b) is applicable if :
(a) Necessaries must have been actually supplied;
(b) Minor's liability includes necessaries supplied to anyone whom he is legally bound to support such as his wife or child.
(c) Supplier of necessaries can only claim reasonable price and which may not be the same as the contract price;
(d) Minor is bound to pay only if he has the property to do so.
Minor has misrepresented his age, he can still avoid contract by pleading minority!!