CASE STUDY

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Running Head: Case Study

Table of Contents
Introduction ................................................................................................................................ 3

Issues .......................................................................................................................................... 3

Explanation of the Malaysian Contract Rules and Regulations................................................. 4

Malaysian Contract Law ........................................................................................................ 4

Scenario of Violation of Contract .......................................................................................... 5

Minor’s Capacity to Contract ................................................................................................. 5

Reference Case studies and Discussion ................................................................................. 6

Application of Rules and Contract Law..................................................................................... 6

Conclusion ................................................................................................................................. 7

Reference List ............................................................................................................................ 9

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Running Head: Case Study

Introduction

The case study deals with the violation of contract act and related laws applicable in

Malaysia. This case study reflects light upon the breach of contract by a person named James.

He went into the sound agreement with the Malaysian car manufacturing company, Good Car

Sdn Bhd who and his sister Jane.

Issues

A boy named James, aged about 16 years who is a popular singer and influencer in the social

site named as Instagram. In accordance to his age, James is a minor but still he entered into a

contract with his sound mind. James entered into a contract to buy a brand new car named as

Proton X70 from the renowned car company named as Good Car Sdn Bhd. In the Malaysian

value the car costs RM120000. It can be observed that James is a popular singer and must

have a public identity. He must have used this in his disposal of influence and entered into the

contract.

On the other hand, there can be disparity in his actual age and that is known by the public.

Hence, there lies a high chance of misinterpreting the age of James and once, he is a major,

he is liable to enter into the contract as per Age of Majority Act, 1971. He wanted to use

RM70000 of his money to purchase the car. James also borrowed a certain amount of money

from his sister and promised to pay her back within one year or twelve months. Although

James failed to pay the amount back and spent all the money to lead a luxurious lifestyle.

James failed in both the said contracts. Therefore, Jane wanted to step forward to take legal

action against James.

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Running Head: Case Study

Explanation of the Malaysian Contract Rules and Regulations

Malaysian Contract Law

The Malaysian Contract law is governed by the Contract Act 1950. Contract is an agreement

which legally bounds between two or more competing parties. The nature of contract is

voluntary and deliberate. Contracts can be of two types; expressed and implied. Contract has

an ideal value and needs in our daily lives. Contract is beneficiary in nature. Contracts and

agreements are interlinked with each other. Every person is competent and capable to enter

into the contract. As per Section 10 of the Malaysian Contract Act 1950, all agreements are

said to be contracts if they are made under the will of the interested party. Section 11 states

that, when a person attains the age of majority and is of sound mind is competent and capable

to enter into a contract and should not be subject to disqualify (Hrmars.com, 2019).

There are three parameters for the fulfillment for the formation of contract.

Offer-According to the Contract Act 1950, Section 2(a) explains offer as an utterance or

willingness of the person who is bound by the implied promises and the assent and utterances

of the other person. There are two parties in the offer - offeror and offeree. Offeror is the

person who gives the proposal of the contract and offeree is the person who accepts the given

proposal by the offeror (Hrmars.com, 2019).

Acceptance- According to the Contract Act 1950, Section 2(b) explains acceptance as the

second part of the offer. Acceptance can be stated as when the person shows his or her assent

at the time of the offer therefore it can be said that it is knowingly accepted. Acceptance can

be of two types - expressed and implied and also depends on the conduct made by the offeree.

Acceptance must be valid and enforceable in nature.

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Running Head: Case Study

Scenario of Violation of Contract

According to Section 75 of the Contract Act 1950, violation of contract takes place when

both parties are not capable and competent to perform the contract. It can be also said as the

breach of contract. Violation also occurs when one of the either party is a minor and of

unsound mind or is insolvent in nature. It also happens when the time period of the contract

gets over or the contract is terminated. When either of the parties is not liable and is unable to

perform the said contract becomes invalid. Payment of damages also results in breach of

contract. Violation of contract takes place when force is applied such as coercion, fraud,

misrepresentation, undue influence. Discharge of frustration also leads to breach of contract.

False statement, mistake of fact is the prior factors for the formation of breach of contract.

Innocent are duly affected by the breach of contract. Incapacity of mind or lunatic is unable

to enter into any contract.

Minor’s Capacity to Contract

In accordance to the Contract Act 1950, there are various issues with minor’s capacity of

contract. Minors cannot be sued if any misrepresentation, fraud has taken place on behalf of

his/her part. Minors can appeal on behalf of minority to avoid the contract. In this point, it is

said that any minor when entered into the contract is said to be void. Though there are some

exceptions when a contract entered into by the minor is said to be valid (Hrmars.com, 2019).

In Malaysia, marriage contract entered into by the minor is said to be valid and legally bound.

In the marriage contract, promises are made by their respective parents on behalf of the minor

and is said to be valid in nature. When a minor enters into any employment contract it is

regulated by the Children and Young Persons (Employment) Act 1966.

This Act states that any minor or child can enter into a service contract and is capable to be

employed. In this Act, a young person refers to any person who is between the age group of
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Running Head: Case Study

14-16.Minors are capable of entering into the Scholarship agreement but it can rise to breach

of contract. A minor can enter into a Contract of insurance if he/she is above the age of 10,

however have to submit a parental consent if the minor is below the age of 16. Minors are

also capable of entering into any electronic contracts (Hrmars.com, 2019).

Reference Case studies and Discussion

As per law referring to the case study, Mohammed Syedol Ariffin v Yeoh Ooi Gark [1916] 2

AC 575, the Court is of the opinion that a minor cannot be held liable for misrepresentation

and fraudulent action. The appellant cannot be forced to be sued in the case. Minors can enter

into a contract and hence they are also declared as innocent in nature. According to the

referred case, R Natesan v K Thanaletchumi(1952) MLI 1, the High Court is of the opinion

that misrepresentation had occurred on behalf of the infant who falsely referred herself

represented as a major and insisted another person to enter into a contract. However, she is

not restricted from pleading on terms of the liability of the contract.

Application of Rules and Contract Law

According to the Age of Majority 1971 of Malaysia, application of section 2 can be explained

as, James who is regarded as a minor is having his occupation as a popular singer and an

influence on the Instagram. However, after borrowing RM 50,000 from his sister, he has

spent the amount on maintaining his luxurious life. This is evident from the case of Roberts v.

Gray [1931] 1 KB 520 where contract was held in favor of the client. However, since James

is a n influential personality, he might have to compensate and pay the bill after he turns into

a major. All parties of sound mind must be competent to enter into a valid contract. The

setting up of contract with the minor person who has not attained the age of 18 is termed as

void contract (Agc.gov.my, 2019). In regard to the misrepresentation of the age ,it is not
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Running Head: Case Study

bound by the Contract Act. But misrepresentation regarding age is a major factor which leads

to huge injustice on behalf of the party who has attained the age of majority. According to the

Contract Act 1950, Section 11 states that act fails to provide applicable provisions to the

minor who misrepresent their age to enter into a valid contract. Though minor should be

restricted from doing such kind of conduct or behavior. In the referred case, Tasneem, 2011,

Mat Jusoh, Borhan and Zakaria, 2015 it depicts that the seller must be capable and of sound

mind to verify the age of the buyer or the purchaser who is in need of buying things. The

required transaction must take place between the buyer and the seller. The seller must acquire

sound knowledge to acknowledge the actual customer (Pdfs.semanticscholar.org, 2015). Any

kind of misrepresentation takes place in such cases is henceforth subjected to legal terms and

action. Misrepresentation should be strictly taken into consideration so that no such fraud and

injustice can occur.

Conclusion

For the fulfillment of the valid, essential conditions of the contract, James is legally bound by

the legal action. However, according to the Age as he misrepresented his age to be a major

from minor and entered into a contract with the famous car company and took huge amount

from his sister and spends all the money on his lavish lifestyle. t can be said that, James has

misinterpreted his age and entered into a contract with the famous car company. James is

unable to fulfill the conditions of the contract. In such case, James can no longer be bound to

the contract. This is evident from the fact that James has entered into an agreement and as per

Malaysian law, this is not possible until James is above 18 years of age. Hence, it can be said

that James has tampered with his identification certificate in front of the Car Company to buy

Proton X70. James can escape from the bound of contract if he shows to the court actual age

prove. This will make him a minor as he is 16 years of age.

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Reference List

Agc.gov.my, 2019, LAWS OF MALAYSIA, Retrieved from:

http://www.agc.gov.my/agcportal/uploads/files/Publications/LOM/EN/Act%20400%2
01%2005%202015.pdf > [Retrieved on: 11/11/2019]
Contracts, Retrieved from:
<://pdfs.semanticscholar.org/7dd7/5ee94c4b0f2848177124502acbd0abfd0a84.pdf> >
[Retrieved on: 11/11/2019]
Hrmars.com, 2019, Minor’s Capacity to Contract in Malaysia: Issues and Challenges,
Retrieved
from:<http://hrmars.com/hrmars_papers/Minor%E2%80%99s_Capacity_to_Contract
_in_Malaysia_Issues_and_Challenges.pdf> [Retrieved on: 11/11/2019]
Mohammed Syedol Ariffin v Yeoh Ooi Gark [1916] 2 AC 575
Pdfs.semanticscholar.org, 2015, The Application of Contract Law Principles in Domestic
R Natesan v K Thanaletchumi(1952) MLI 1
Roberts v. Gray [1931] 1 KB 520