Contracts Act 1950: Capacity to Contract

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Questions and Answers

Which of the following defines a person who is competent to contract?

A person who has no prior contracts

A person who can speak multiple languages

A person who has a college degree

A person who is of the age of majority and of sound mind (correct)

What is the legal status of a contract entered into by a person who is not of the age of majority?

Enforceable with parental consent

Void ab initio (correct)

Automatically valid at age eighteen

Valid after a trial period

Which of the following is an exception to the general rule regarding contracts made by minors?

Scholarship contracts (correct)

Product warranties

Employment contracts

Loan agreements

When can a person who is usually of unsound mind make a contract?

When they are of sound mind Signup and view all the answers

What is the age threshold for a marriage to be solemnized legally in Malaysia according to the Marriage and Divorce Act?

Eighteen years Signup and view all the answers

What implications arise if a minor intentionally lies about their age to enter into a contract?

The minor can prove their true age to vary the enforcement of the contract. Signup and view all the answers

In the context of misrepresentation of age by a minor, which statement is true?

The minor retains the right to declare themselves a minor to void the contract. Signup and view all the answers

What does the case NATESAN V THAN LETCHUMI & ANOR establish regarding minors and contracts?

Minors can declare their actual age to avoid obligations from misrepresented contracts. Signup and view all the answers

If a minor misrepresents their age and enters a contract, which of the following statements is correct?

They can call into question the validity of the contract based on their actual age. Signup and view all the answers

What is the restriction placed on a minor regarding the denial of their true age after a misrepresentation?

A minor can deny their misrepresented age if they prove their true age. Signup and view all the answers

What must a party do to terminate a contract of service without notice?

Pay an indemnity equal to the wages that would have accrued during the notice period. Signup and view all the answers

Under what condition is a contract entered into by a minor considered void ab initio?

If both parties are minors. Signup and view all the answers

What kind of remedy may a court require upon adjudging the cancellation of a contract?

The party must make compensation as justice requires. Signup and view all the answers

In the case of a void agreement, what is required of a party who has received an advantage?

They are bound to restore the advantage or make compensation. Signup and view all the answers

What does a fiduciary relationship require?

A relationship built on trust and confidence. Signup and view all the answers

Which of the following contracts is NOT exempt from being void ab initio when entered into by a minor?

Leisure contracts Signup and view all the answers

What is the main principle of Section 66 of the Contracts Act 1950?

People receiving advantages under void agreements must return them. Signup and view all the answers

What may a court require from a minor if deemed necessary in relation to a contract?

The minor can be required to make payment. Signup and view all the answers

What does the term 'void ab initio' imply in the context of contracts?

The contract is never valid. Signup and view all the answers

According to the Privy Council in Mohori Bibee, what factor makes a contract void if one party is a minor?

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

What does section 69 of the Contracts Act 1950 provide for a person incapable of entering into a contract?

They are entitled to a refund for necessities received. Signup and view all the answers

In the context of necessaries, which case illustrates the importance of considering individual circumstances?

Gurcharan Singh Signup and view all the answers

Which of the following would likely be classified as 'necessaries' for a minor according to legal precedents?

Food and educational materials. Signup and view all the answers

What was the outcome regarding the purchase price in the case of Leha Bte Jusoh?

The appellant was ordered to refund the purchase price. Signup and view all the answers

Which statement accurately reflects the legal view on contracts made by minors?

Minors can void contracts at any time. Signup and view all the answers

Which of the following expenditures was recognized as necessaries in Chapple v Cooper?

Burial expenses. Signup and view all the answers

What should be taken into account when determining the 'necessaries' for a minor?

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

How should the subject matter and extent of the contract vary for a minor?

It should depend on the state and condition of the minor Signup and view all the answers

If an item is considered luxurious, how does it classify in terms of necessities?

It cannot be classified as a necessity Signup and view all the answers

What is the distinction between 'necessities' and 'necessaries'?

Necessities are a subset of necessaries but not limited to them Signup and view all the answers

What happens if a minor misrepresents their age before entering a contract?

The minor may be bound by the contract if someone relied on the lie Signup and view all the answers

Under S.115 of the Evidence Act 1950, what is required for a party to deny the truth of their representation?

They cannot deny the truth if another acted on their declaration Signup and view all the answers

What implications does a minor's condition in society have on their necessities?

Necessities vary by the minor's social and economic status Signup and view all the answers

In legal terms, what is meant by 'act or omission' in S.115 of the Evidence Act?

An intentional behavior causing belief in another Signup and view all the answers

What does the Contracts (Amendment) Act 1976 state about scholarship agreements entered into by minors?

Such agreements can be validated if claimed under specific sections. Signup and view all the answers

According to the Children and Young Persons Employment Act 1966, what is the age range for a 'young person'?

Between 15 and 18 years of age. Signup and view all the answers

Which of the following types of work can a child perform under the Children and Young Persons Employment Act?

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

What stipulation is placed on female young persons regarding employment in hotels, bars, and restaurants?

They can work if the establishment is managed by their parent/guardian. Signup and view all the answers

Which of the following correctly describes the ability of children to enter into contracts according to S.13 of the Employment Act 1955?

Children and young persons can enter contracts of service but not as employers. Signup and view all the answers

What happens if a child breaches a contract of service in relation to recoverable damages, according to the Employment Act?

No damages or indemnities can be recovered from the child. Signup and view all the answers

Which of the following is NOT a condition under which a child may be employed according to the employment provisions?

Work in a private enterprise without restrictions. Signup and view all the answers

What does S.1A of the Children and Young Persons Employment Act 1966 define as a 'child'?

A person who has not completed their 15th year of age. Signup and view all the answers

In which type of employment is a young person prohibited from engaging, unless specific conditions are met?

Work in bars and restaurants. Signup and view all the answers

What is a requirement for a minor to be validated in an employment contract under current legislation?

Approval by the Director-General is needed for certain jobs. Signup and view all the answers

Study Notes

Capacity to Contract

All agreements are contracts if made by competent parties.
Section 10 of the Contracts Act 1950 discusses this.
A person is competent to contract if they are of the age of majority and of sound mind.
Section 11 of the Contracts Act 1950 further defines competency.

Age of Majority

Subject to section 4, the minority of all males and females in Malaysia ends at 18 years old.
Individuals attaining this age are considered of the age of majority.

Sound Mind

Section 12 defines sound mind as the ability to understand the contract and form rational judgments about its impact on one's interests.
Someone generally considered to be of unsound mind can contract when of sound mind.
Someone generally considered to be of sound mind cannot contract when of unsound mind.

General Rule and Exceptions

If a contract is entered into by someone who is not of the age of majority, the contract is void ab initio.
Exceptions include:
- Marriage contracts
- Scholarship contracts
- Employment contracts
- Insurance contracts (possibly)

Marriage Contracts

Section 4 of the Age of Majority Act ensures that the capacity of any person to act in matters of marriage, divorce, dower, and adoption is not affected by the Act.
The case of Rajeswary and Anor v Balakrishnan & Ors [1958] 3 MC 178 highlights a betrothal ceremony followed by arranged marriage plans, where one party repudiated the promise and sought damages for breach.

Scholarship Contracts

Section 4(a) of the Contracts (Amendment) Act 1976 states that no scholarship agreement can be invalidated because the scholar is underage.
Government of Malaysia v Gurcharan Singh & Ors involved a valid scholarship claim despite the scholar being a minor at the time the contract was made.

Employment Contracts

The Children and Young Persons Employment Act 1966 differentiates between 'child' (under 15) and 'young person' (15-18).
Section 1A of the Act defines specific employment limitations for children and young persons.
Exemptions to the general rule of employment contracts exists for children and young persons (S.2).
Section 13 of the Employment Act 1955 allows termination of contracts without notice with the payment of indemnity equal to the wages during the notice period or remaining notice period.
Section 13 of the Employment Act 1955 states that no damages or indemnity could be recovered from a child or young person for a breach of contract of service.

Remedies

When a contract is made by a minor, and is void ab initio, remedies may still be sought in certain cases.
Section 40 of the Specific Relief Act gives courts discretion to direct minors to make payments.
The case of Tan Hee Juan v Teh Boon Keat [1934] MLJ 96 highlights the need for fiduciary relationships.

S.66 of the Contracts Act 1950

When an agreement or contract is deemed void, any person who received an advantage must return it or compensate for it to the other party.
Mohori Bibee v Dharmodasghse is in pari materia with s66, emphasizing the void ab initio status of contracts with minors.

S.69 of the Contracts Act 1950

If someone incapable of contracting receives necessaries, the provider can be reimbursed from the incapable person's property.
Necessaries must be suited to the person's life circumstances (not luxurious), as per Government of Malaysia v Gurcharan Singh. This case highlights that decisions of what constitutes necessaries are considered on specific circumstances.

Misrepresentation of Age

A minor who intentionally misrepresents age to enter a contract isn't automatically prevented from seeking redress under the law, though they aren't given any specific rights due to deception.
Section 115 of the Evidence Act 1950 explains when a party is prevented from denying a fact they have led another party to believe.
The cases Mahomed Syedol Ariffin v Yeoh Ooi Gark [1916] 2 AC 575 and Natesan v Than Letchumi & Anor [1953] MLJ 1 highlight how a minor can still assert a contractual claim in certain circumstances despite knowingly entering a contract as an adult).

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Description

Explore the key concepts of capacity to contract as outlined in the Contracts Act 1950, focusing on the age of majority and sound mind. Understand the implications of these criteria on agreements and the exceptions that apply. This quiz will deepen your knowledge of legal competencies in contract formation.