Contracts Act 1950 - Capacity Overview

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Questions and Answers

Which of the following conditions does not indicate that a person is competent to contract?

Being of the age of majority

Being of sound mind

Being married (correct)

Being capable of understanding the contract

What is the status of a contract entered into by a minor?

Valid until the minor turns eighteen

Valid and enforceable

Void from the beginning (correct)

Valid if both parties agree

Under which condition can a person who is usually of unsound mind make a contract?

When they are under pressure

When they are of sound mind (correct)

When they have witnesses present

When they are of the age of majority

Which of the following contracts is an exception to the rule that contracts entered by minors are void?

Employment contracts Signup and view all the answers

What must a person be capable of to be considered competent to contract?

Understanding and forming a rational judgment about the contract Signup and view all the answers

What is the legal status of a contract if one party is deemed incompetent due to infancy?

The contract is considered void ab initio. Signup and view all the answers

What must be true for contracting parties according to the Indian Contracts Act?

All parties must be competent to contract. Signup and view all the answers

In the context of contracts with minors, what is meant by 'necessaries'?

Items that are needed for survival. Signup and view all the answers

What remedy is available when a minor vacates property they occupied illegally?

The minor should be refunded any deposit paid. Signup and view all the answers

What happens if a person provides necessaries to someone deemed incapable of contracting?

The provider is entitled to reimbursement from the incapable person's property. Signup and view all the answers

What must A prove if he has misrepresented his age to enter into a contract?

That he would not have entered the contract but for his lie. Signup and view all the answers

In what situation can a minor declare himself to be a minor in court?

When he has misrepresented his age to enter into a contract. Signup and view all the answers

Which of the following statements is NOT true regarding the minor who misrepresented his age?

He can be held accountable for his deception in every situation. Signup and view all the answers

According to the principles discussed, which party can challenge the truth of a statement made under false pretenses?

The other party involved in the contract. Signup and view all the answers

What concept prevents A from denying his age in court after misleading B?

Estoppel by representation. Signup and view all the answers

Under what condition can a contract of service be terminated without notice?

If there is a wilful breach by the other party Signup and view all the answers

What happens if a contract is entered into by a person who is not of the age of majority?

It becomes void ab initio Signup and view all the answers

In what circumstances can a minor seek remedies despite their contract being void?

If the contract involves benefits such as scholarships Signup and view all the answers

What is required for the court to direct a minor to make payment when an agreement is void?

The court must see it as just and equitable Signup and view all the answers

What should a person do if an agreement is discovered to be void and they have received an advantage?

Restore the advantage or make compensation Signup and view all the answers

Which section of the Indian Contracts Act is in pari materia with the Contracts Act regarding void agreements?

Section 65 Signup and view all the answers

What must occur for either party to terminate a contract of service without notice after giving notice?

An indemnity equal to pending wages must be provided Signup and view all the answers

What type of contracts are exceptions to being declared void ab initio when entered into by a minor?

Employment contracts Signup and view all the answers

What must be taken into account when determining if something qualifies as 'necessaries' for a minor?

The minor's condition in life Signup and view all the answers

In the context of minor contracts, which example illustrates a situation considered as necessaries?

Professional training to become a teacher Signup and view all the answers

Which of the following is a valid condition for a contract entered into on behalf of a minor?

The guardian must have capacity in law Signup and view all the answers

According to the principles established in 'Chapple v Cooper', which factor influences the nature and extent of necessities provided to a minor?

The minor's position in society Signup and view all the answers

What is the consequence of a minor misrepresenting his age in contractual agreements?

The minor may be estopped from declaring true age Signup and view all the answers

The classification of necessaries is largely based on which aspect of the minor's life?

The condition and circumstances of their life Signup and view all the answers

In the case of 'Sri Kakulam Subramanyam v Rurra Subba Rao', which factor validates a contract on behalf of a minor?

It is for the minor's benefit Signup and view all the answers

What should be considered when assessing the type of clothing categorized as necessaries for a minor?

The minor’s rank and social position Signup and view all the answers

What did the High Court conclude regarding the scholarship agreement involving a minor?

The agreement was void but payment could still be claimed. Signup and view all the answers

Which age group is classified as 'children' under the Children and Young Persons Employment Act 1966?

Anyone who has not completed their fifteenth year. Signup and view all the answers

Which of the following is considered a permissible form of employment for young persons?

Light work suitable to their capacity. Signup and view all the answers

What does section 13 of the Employment Act 1955 state regarding minors entering contracts?

Children or young persons can enter into contracts of service under this Act. Signup and view all the answers

Which of the following does NOT restrict employment of young females in specific establishments?

Employment in educational institutions. Signup and view all the answers

Under the Children and Young Persons Employment Act 1966, what is a young person?

A person who has completed 15 years but not 18 years. Signup and view all the answers

What is a necessary condition for employing a female young person in certain establishments?

The establishment must be under the management of her parent or guardian. Signup and view all the answers

Which type of work is explicitly encouraged for children and young persons?

Artistic performance related to public entertainment. Signup and view all the answers

Which of the following is NOT a provision mentioned for minors when entering service contracts?

Minors can recover damages for contract breaches. Signup and view all the answers

What is one limitation placed on young persons in terms of employment opportunities?

They are restricted from working in certain hospitality venues unless approved. Signup and view all the answers

Study Notes

Capacity

Agreements made by competent parties are contracts (Contracts Act 1950, s.10)
Competency to contract requires being of the age of majority and of sound mind (Contracts Act 1950, s.11)
Majority is 18 years old in Malaysia (subject to section 4)

Age of Majority

Minority ceases at 18 years old in Malaysia (subject to section 4)

Sound Mind

At the time of contract, a person must be able to understand the contract and form a rational judgment (Contracts Act 1950, s.12)
A person usually of unsound mind can make a contract when of sound mind
A person usually of sound mind cannot make a contract when of unsound mind

General Rule for Minority

A contract entered into by a minor is void ab initio.
Exceptions to the rule include:
- Marriage contracts
- Scholarship contracts
- Employment contracts (including insurance)

Exceptions

Nothing in the Age of Majority Act (applicable for Malaysia) affects the capacity of any person to act in matters like marriage, divorce, dower and adoption.

Marriage Contracts

Any marriage purported to be solemnised in Malaysia is void if either party is under 18 on the date of marriage (Law Reform (Marriage and Divorce) Act 1976, s.10)

Scholarships

Scholarship agreements are not invalidated if the scholar is not of the age of majority (Contracts (Amendment) Act 1976, s.4(a))

Employment Contracts

"Child" is anyone under 15 years old
"Young person" is anyone over 15 and under 18
Children may only be employed in suitable light work (s.2(2) Employment Act 1966)
Young persons can hold jobs suitable for their capacity under section s.2(3) of Employment Act 1966
Female young persons cannot work in hotels, bars, restaurants, boarding houses, or clubs unless under the management or control of their parent/guardian.
A child or young person can be an employer or be a party to a contract of service under the law. This means they can enter into employment contracts. (Employment Act 1955, s.13)

Remedies

If a contract is entered into by a person who is not of age (minor), the contract is void ab initio.
Exceptions include marriage, scholarship, and employment contracts.
A minor can still make a claim for a remedy, despite the contract being void.
The court has the discretion to direct a minor to make a payment for a remedy. (s.40 Specific Relief Act)
A fiduciary relationship is needed in some cases (Tan Hee Juan v Teh Boon Keat [1934] MLJ 96)

S.66 Contracts Act 1950

If an agreement or contract is found to be void, any party receiving an advantage must restore it or compensate the other party.

Mohori Bibee v DharmodasGhose

Contract entered into by a minor is void ab initio.
Section 65 of the Indian Contracts Act is similar to section 66 of the Contracts Act.

Leha bte Jusoh v Awang Johari bin Hashim

A minor's contract is void ab initio.

S.69 Contracts Act 1950

If a person incapable of making a contract receives necessaries suitable for their condition in life, the person providing those necessaries can be reimbursed from the property of the incapable person

Necessaries

What constitutes "necessaries" is determined by the minor's particular circumstances, life, and needs. (Government of Malaysia v Gurcharan Singh)

Suited to his condition in life

"Necessaries" are dependent upon the minor's life and circumstances and are determined on their particular facts. Factors like clothing, education, and healthcare are significant in determining the kinds of things suitable for their life. (Chapple v Cooper)

Other Issues

Contracts entered into on behalf of a minor: A guardian with the legal capacity can enter into a contract on the minor's behalf if the contract benefits the minor. (Sri Kakulam Subramanyam v Rurra Subba Rao AIR [1948] PC 95)
Effect of a minor misrepresenting his age: Whether a minor is estopped from declaring their true age if they misled others (s.115 Evidence Act 1950). While generally a minor is not barred from proving their age, misrepresentation doesn't always prevent a minor from disavowing the contract (Natesan v Than Letchumi & Anor [1953] MLJ 1).

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Description

This quiz covers the essential elements of capacity under the Contracts Act 1950 in Malaysia. It discusses the criteria for competency to contract, including age of majority and sound mind, as well as the general rule for minority and its exceptions. Test your knowledge on the legal stipulations regarding contracts and competency in Malaysia.