Capacity under Malaysian law

In Affin Credit Malaysia v Yap Yuen Fui) the court highlighted the importance of an offer and consideration in a contract. It held that where a contract was not supported by consideration and offer, it is usually considered void ab initio. Under Section 2(a) of the Contracts Act 1950, an offer is the willingness by one of the party to an agreement to do or abstain from doing something. However, such communication of an offer through a proposal must come to the person to whom it is intended to be completed as enumerated under Section 4(1) of the Contract Acts 1950. Section 2(b) of the Contracts Act 1950 defines acceptance as an assent of the promisee on the offer. In the law of contract, capacity is the legal competence that an individual has to enter into a legally binding agreement.

Therefore, anyone who intends to make a legally binding agreement must have capacity to do so; otherwise such a contract would be regarded voidable. Under Section 10 of the 1950 Act, it provides that parties entering into a contract must be competent which is translated to capacity under Section 11. Section 11 of Contracts Act 1950 indicates that everyone is competent to enter into a contract provided that; they have attained the age of majority, sound mind and no law has disqualified such a person under any law. Therefore, Section 11 outlines the class of people who are exempted from entering into a contract by virtue of incompetence. Among classes of people considered of unsound mind includes drunken people. In Matthews v. Baxter the plaintiff entered into an agreement to buy a house from the defendant.

At the time of the agreement, the plaintiff was drunk such that he was incapable of knowing what he was doing. However, when he became sober, he went ahead to ratify and confirm the agreement. Contracts entered by minors Under Section 2 of the Majority Age Act 1971 indicates that minority age for both male and females in Malaysia cease after each has attained 18 years (Lee, 2005, 106). Such persons will be considered to be of majority age. However, in instance where such the majority age has not been attained, such a person is a minor thus attracting certain consequences in contract. For instance, in regards to the contractual capacity of minors, the common law and Malaysian law provides that such contract are not binding unless under specific circumstances.

It is important to note that under contracts entered by minors, they are considered void as opposed to be merely voidable. Secondly, under any Malaysian religion or the rites of a religion minors have capacity to contract and lastly in cases where the law has fixed the age of majority in a written form. The High Court in Rajeswary & Anor v. Balakrishnan & Others indicated that the Marriage contracts age of majority is different from minor contracts and thus could not be affected by the general principle recognized in the case of Mohori Bibee. In Tan Hee Juan v. Teh Boon Keat, the plaintiff in this case was a minor who had executed some transfers in defendant’s favor. m to work.

He later bought a bike but used his older one as part of the payment for the new bike. This was before the new bike was delivered. The minor tried to avoid the contract later on. It was held that the bike would be categorized as among the class of goods of necessaries. Nevertheless, the courts in Malaysia and English Law have assumed that necessaries include shelter, clothing and foods. This assumption was extended further by the court in Government of Malaysia v. Gurcharan Singh where it was declared that education was also part of the necessaries. In this case the necessaries need to be construed from a broader view and must be guided by the facts presented in each case.

It was held in this case that all contracts that contained instruction for instance a scholarship, the same is considered ineluctable since such instruction can be categorized as a “necessary” enumerated under Section 69 of the 1950 Act. Inman case. In the English case of Roberts v. Gray the defendant entered into a contract with the claimant to become a professional billiards player. In one occasion, the defendant decided to go into a joint tour. The claimant experienced some troubles while organizing the tour and a dispute arose between the defendant and the parties which led to his (defendant) refusal to attend the tour. Prior to breach of contract, the parties had entered into agreement to marry under the customary law which advocated for dowry and penalties in case of breach.

The defendant repudiated the marriage promise which leads to an action being brought against him by the plaintiff. Held: after consideration that the P be granted damages as the contract was valid until the time of breach. However, the Law Reform Act 1976 (Miscellaneous Provision) under subdivision 12 requires that in marriage contract involving a person below the 21 years, a parent’s written consent (father) must be obtained (Abdul & Arjunan, 2014, 177). Scholarship An infant who enters into a scholarship agreement which maybe in the form of sponsorship or loan offered by an educational institution or the government is valid. The court further stated that the minor was liable to make repayments on a sum that the government had spent on him which was RM2, 683 from the initial RM 11,500.

This was so because the minor had already served the government for a period close to four years as part of the agreed five years term. However, the rule is inapplicable in cases where the contract was agreed between a minor and a private institution. Insurance contracts A minor above the age of ten years has the capacity to enter into an insurance contract according to Insurance Act 1963. However, according to Section 153 of the Act there is an exception to infants who are below sixteen years of age. This was succinctly outlined in Natesan v. Thanaletchumi & Anor where the defendant made a false statement in regards to his age to the plaintiff. The defendant was sued as a result of his actions on the contract and relied on lack of capacity as reason not to be sued.

The plaintiff on his part claimed that the defendant by misrepresenting his age could no longer use the reason (lack of capacity. However, the court held that; misrepresentation cannot be used as means of obstructing a minor use of capacity as a defense. As enumerated above, the Contracts Act 1950 seems to provide a broad scope for contracts entered by minor and consider the same to be null even in instances where a minors have imitated a person of majority age save for contract for necessities. Therefore, it is true as outlined under the Malaysian Evidence Act under subdivision 115 provides that in cases where a minor has deliberately made another person to believe any false, such actions cannot be enforceable in the court of law.

In general, according to the court a minor who has misrepresented their ages in contract cannot be held liable for a tort of deceit is to avoid enforcing the contract indirectly. Therefore, the Contracts Act 1950 with exception to contract of necessities considers other contract void. Conclusion In conclusion, in regards to capacity of the contracting parties, the Contracts Act 1950 has precisely provided the rules for capacity despite minimal loopholes. References Arvind, T. T. Contract Law. New York: Oxford University Press. Abdul, M. Stone, R.  The modern law of contract (7th ed. London. Routledge-Cavendish Stone, R. , & Devenney, J. White Stadium [1935] 1 KB 110 Natesan v. Thanaletchumi & Anor [1952] MLJ 1 22 Leslie Ltd v Sheil [1914] 3 KB 607 Statutes Contracts Act of 1950 Age of Majority Act 1971 Children and Young Persons (Employment) Act 1966.