CAPACITY
INTRODUCTION
Who are competent person?
MINOR
Age of Majority
necessaries
English law
Marriage, divorce, dower and adoption
insurance
apprenticeship
Unsound mind
RECOVERY OF PROPERTY transferred under a minor’s contract
GENERAL RULE
Every person is competent to enter into contract
He is free to contract upon such terms as he thinks fi as long as
The consideration is lawful
The object of the agreement is lawful and not expressly declared as void
The contract was entered freely and voluntarily
EXCEPTION
The law however placed limitations upon the capacity of certain persons to bind themselves by a promise or to enforce a promise made to them.
These persons include
minors,
insane persons and
bankrupts.
Contract must be entered into by person who has full capacity to do so.
S.11 CA
Section 10 of the CA
Section 11 of the CA
Section 12 of the CA
Section 2 of Age of Majority Act 1971
Age of Majority Act 1961 (repealed) – muslims attain the age of majority at 18 while non muslims attain it at 21.
S.2 of Age of Majority Act 1971 :a person who does not reach the age of minority i.e. below 18 years old
General rule: all contracts entered into by a minor are void.
S 10 CA
The Contracts Act 1950 does not expressly provide for the effect of an agreement that have been made or entered into by a person who are not competent to contract.
Mohori Bibee v Durmodas Ghose (1903)
Facts: the appellant throughout his agent lent the infant (respondent) a sum of money and secured the loan by way of mortgage executed by the infant in favour of the app. on some houses belonging to the infant.
The agent knew that the resp. was infant.
Later, the infant, by his mother, as his guardian and next friend, commenced action for a declaration that the mortgage was void for lack of capacity.
The app. contended that following the position of English common law, the contract was voidable and that the infant should return to him the sum lent
Held: contract was void
Tan Hee Juan v The Boon Keat (1934) MLJ 96
Facts: the plantiff (infant) executed transfers of land in favour of the defendent and transfers were witnessed and registered.
Then the plantiff Applied to the court for an order setting aside the transfers and for incidental relief.
Held: transactions were void and ordered the restoration of the property to the minor
MINOR
VALID
Necessaries
Marriage, divorce, dower,a doption
Insurance
Apprenticeship
VOID
Sec 69
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 word necessaries is not defined in the CA 1950 nor under the Sale of Goods (Malay State) Ordinance 1957
S.69 only stated that what is supplied must be suited to the minor’s condition in life .
A minor is liable in contracts for necessaries.
Necessary Goods
Contracts (amendment) act 1976 Sec 4 (a)
No scholarship agreemnt shall be invalidated on the ground that the scholar entering into such agreement is not of the age of majority (a scholarship agreement entered into by a mino is valid)
Scholarship agreements have been defined rather widely as any:-contract or agreement between an 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
GOVERNMENT OF MALAYSIA V GURCHARA SINGH
The government had spent an amout of money in educating the D who was a minor at the time of the contract
The D now had served the gov for 3 years and 10 months out of the contractual period of 5 years
Thus it was pleaded by the D that the claim for 11500 was excessive and not reasonable compensation
H: Education was necessaries. The provision of professional or vocational training for the minor in a Teacher’s Training Institution to enable him to qualify for and accept the appointment as a teacher is a provision for necessaries.
Thus the def. was liable for the repayment of a reasonable amount spent on him.
Necessary services
Sec 2 English SOGA 1893
Ryder v Wombwell
A contract for necessaries is binding not for the benefit of the tradesman who may trust the infant but for the benefit of the infant himself.
If a man satisfies the needs of an infant by supplying to him necessaries, the law will imply an obligation to repay him for the services rendered and will enforce that obligation against the estate of the infant
Include education, medical and legal advice
Goods suitable
The condition in life of such an infant, and
His actual requirements at the date of the sale and delivery
Nash v Inman
Facts: the def. (21 years old) ordered certain clothes from the ptf ( a tailor) including 11 fancy waistcoats and the ptf claim the cost of the clothes supplied.
Evidence given by the father showed that the def. already had adequate supply of clothes suitable and necessary for his condition of life.
Chapple v Cooper (1844)
Provision of a funeral for the minor’s deceased husband was a necessary
Flower v London & North Western Rly Co [1894]
Season ticket for rail travel to and from work was a necessity
S.4(a) Age of Majority Act 1971:
Nothing in the act shall effect the capacity of any person to act in the following matters, namely marriage, divorce, dower and adoption.
Promise of marriage entered into by minors or their parents on their behalf have been held to be valid.
A minor may sue or be sued for such a breach. For Muslims, the various Islamic Family law Enactments of the States in Malaysia provides for remedies for breach of promise to marry.
Rajeswary & Anor v Balakrishnan & Ors [1958]
Facts: both parties were Ceylonese Hindus. According to the customary practice, a marriage agreement was entered into with the provisions for a dowry and a penalty of breach. The parties proposed marriage went through a customary ceremony ratifying the betrothal. The def. write letter to repudiate the promise. Ptf. claim for damages for breach of marriage. Def. pleaded incapacity of the 1st ptf. To enter into a contract to marry, she being a minor.
Held: the age of minority for entering into a marriage contract is different from other contracts entered into by minor.
Thus, ptf. may sue for breach of promise to marry
allows a minor to enter into a valid agreement
Insurance Act 1963 (revised 1972):
a minor over 10 years may enter into a contract of insurance but if under 16 years old, must have the written consent of the parent/guardian.
This exception is based on the presumption that it is in a minor’s best interest to insure himself or his property against contingencies.
There are two main legislation enabling a minor to enter into a contract of service or apprenticeship.
The Employment Act 1955
Children & Young Persons (Employment) Act 1966:
Contract of apprenticeship or services a necessaries.
Child: below 14 years, young person: 14-16 years.
Child and young person may sue or defend under such contracts of service but not damages or indemnity can be recovered from him for breach of contract.
CLEMENTS V LONDON AND NORTH WESTERN RLY (1894) 2 QB 482,
the P, while under age, became a porter employed by the D railway company. While at work, he suffered an injury for which he now claimed damages
The Company’s defence was that under the P’s employment contract he was entitled to certain payments in the event of injury but not to any further damages.
Held: this was a contract for the employment of the minor. Taking the contract as a whole, it was for the minor’s benefit. In those circumstances, the contract was enforceable and binds the minor.
ROBERTS V GRAY (1913) 1 KB 520
The D wished to become a professional billiards player and entered into an agreement with the P, a leading professional, to go on a joint tour. The P went to some trouble in order to organize the tour, but a dispute arose between the parties and the D refused to go, The P now sued for damages of $6,000.
Held: the contract was for the minor’s benefit being in effect for his instruction as a billiards player. Therefore, the P could sustain an action for damages for breach of contract, and damages of $1, 500 were awarded.
Any contract made by a person of unsound mind is void.
Section 12 (1)
Section 12 (2)
Section 12 (3)
Ilustration (a) and (b)
Sim Kong Sang Peter v Datin Shim Tok Keng [1994]
Held: since Section 11 of CA covers not only cases relating to age of majority but also unsoundness of mind, the decision in TAN HEE JUAN v TEH BOON KIAT, though a decision in respect of want of age, applies equally to a case relating to unsoundness of mind
Any contract made by a person of unsound mind is void.
Sec 66:
Any person who has received any advantage under an agreement that is discovered to be void must restore it or make compensation for it to the person whom he received it
Mohari Bibee v Dhurmodas Ghose [1903]
H: the contract was void , and the A cannot recover the money lent to the infant under S 65 or 66
Privy Council prevents an adult who contracts with a minor not only from enforcing it, but if he had transferred any property to the minor, he cannot recover it.
S66 like s65 starts from the basis of there being an agreement or contract btw competent parties and has no application in the case of an infant in which the person was, and never could have been, any contract.
Therefore, the A could not recover the money lent to the infant either under s65 or 66
Hart v O'Connor
Chemsource (M) Sdn Bhd v Udanis bin Mohammad Nor
the appellant contracted to buy farmland in New Zealand which was the subject of a testamentary settlement
the agreement was expressed to be between the appellant and one Jack O'Connor, who was then the sole trustee of the estate
Subsequently, the respondents, the trustees and beneficiaries of the estate, applied to set aside the agreement on the ground, inter alia, that Jack O'Connor had been of unsound mind when he entered into the contract
the Privy Council held that the contract was not voidable as Jack O'Connor's unsoundness of mind was not apparent to the other contracting party when he entered into the contract
the defendant suffered from Parkinson's disease and it caused physically as well as mental disabilities
the plaintiff was said to be fully aware of the defendant's condition at all material times
it was the defendant's case that the plaintiff took advantage of the defendant's disease and had induced the defendant to execute various agreements for the benefit of the plaintiff and to the detriment of the defendant
the HC referred to s 11 and 12 of CA and the case of Imperial Lan v Stone and concluded that the issues of Parkinson's disease and the capacity of the defendant to contract were triable issues that needed a full trial.