CAPACITY

GENRAL RULE: Every person is competent to

contract and is free to contract upon such terms
as he thinks fit.
• So long as the consideration and object of the
agreement is lawful and not expressedly
declared to be void and he enters into the
contract freely and voluntarily his contract shall
be enforced by the courts of justice.
• EXCEPTION:These persons include minors,
insane persons and bankrupts.
Who are competent to contract
• FULL CAPACITY
• S.11 CA:
every person is competent to contract who
is of the age of majority acording to the
law to which he is subject, and who is of
sound mind, and is not disqualified from
contracting by any law to which he is
subject
 MINOR
• 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

• Age of Majority Act 1961 (repealed) –

muslims attain the age of majority at
18 while non muslims attain it at 21.
Effect of contract entered into by a minor

• Definition:
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 :
All agreements are contracts if they are
made by the free consent of parties
competent to contract for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be
void.
• 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 (responden) 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,
contract was voidable and that the
the
infant should return to him the sum
lent
• Held: the contract of loan entered into
by a minor 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.
Exceptions - Where minor may enter into a valid contract

• Exceptions to general rule:

a) Necessities
b) Marriage, divorce, dower, adoption
c) Insurance
d) Apprenticeship
a) Necessaries

– Although all contracts entered into by minors are void, section 69 of

the CA allows a person who was supplied necessaries to the minor
to be reimbursed from the property of the minor.
– S.69 CA:
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.
Goverment of Malaysia v Ghurcharan Singh
[1971]

• The govt. had spent an amount of money in

educating the def. who was a minor at the time
of the contract.
• The def. now had served the govt. for three
years and ten months out of the
contractual period of five years.
• Thus, it was pleaded by the def. that the claim
for $11500 was excessive and not
reasonable compensation
• Held: was necessaries. In the
education this case, the provision
circumstances
professional or vocational
of training for the minor
in of
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.
As a result of the above case, the Contracts
( Amendment) Act 1976 was passed:
• Contracts (Amendment) Act 1976, s. 4(a):
no scholarship agreement 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 minor 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’.
 English law

Ryder v Wombwell (1868)

• 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.
• Necessaries include:
a) goods supplied
b) services rendered
i) Necessary goods

• S.2 English Sale of Goods Act 1893:

Goods suitable to
1) the condition in life of such an infant, and
2)his actual requirements at the date of the sale
and delivery.

• If he is already sufficiently provided for with goods

of the kind in question, even though the supplier
does not know this, the price is not recoverable.
Nash v Inman [1908]

• 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.
• Held: goods supplied were not
the
necessaries because he had
established that the clothes werenotsuitable
to the condition in life of the minor and in
this case the student was already
adequately supplied with clothes and the
ptf.’s action failed.
• Age of minority under English Law at the
time of proceeding was 21 years old.
ii) Necessary services

• Include education, medical and legal

advice
Chapple v Cooper (1844) 13 M&W 252

• Held : provision of a funeral for the minor’s

deceased husband was a necessary.

Flower v London & North Western Rly

Co [1894]

• a season ticket for rail travel to and from work

was a necessary
 b) marriage, divorce, dower,
adoption
• 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
C) Insurance
• 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.
 d) Apprenticeship
• 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 service is
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.
• CHAPLIN V LESLIE FREWIN (1966) CH 71, a contract
was made between a minor and his wife on the one part
and a publisher on the other, by which the publisher
agreed to publish the autobiography of the minor. The
work was to be written by two journalists based on
information provided by the minor and his wife
concerning their disreputable life-style. When the books
was ready for publication the minor did not approve of its
contents and attempted to restrain its publication.
• Held: the publication of the book would be beneficial to
the minor as it would make him money and enable him
to make a start as an author even though the contents of
the book would not exactly enhance his reputation. As
such the contract was binding.
 6. Recovery of property transferred under a void’s minor
contract.

• S.66 CA 1950 :
any who has received
person
advantage under
anyan agreement that is
discovered to be void must restore it or
make compensation for it to the person
whom he received it.
Mohori Bibee v Dhurmodas Ghose [1903]

• Held: the contract was void, and the appellant

cannot recover the money lent to the infant
either under Section 65 or 66 of CA.
• 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.
• Section 66 like section 65 starts from the
basis of there being an agreement or
contract between competent parties and
has no application in the case of an infant
in which there never was, and never could
have been, any contract.
• Therefore, the App could not recover the
money lent to the infant either under
section 65 or 66 of the CA 1950.
7. Misrepresentation of age by minor

• Where a minor has misrepresented

his age and thereby induced a person
to contract with him, the person
cannot sue the minor on the contract.
• The minor can plead minority to avoid
the contract.
• R v Leslie Scheill [1914] 3 KB 607 –the Ps were a firm
of registered moneylenders and they sued the D to
whom they had made two loans of RM 200 each, to
recover $475, being the amount of the loans with
interest. At the time of obtaining the loans, the D was a
minor, but he had falsely represented to the Ps that he
was of full age. The d had spent the money.
• Held: the P could not recover a minor who fraudulently
induces another to give a loan cannot be sued in the tort
of deceit.
Mohamed Syedol Ariffin v Yeoh Ooi Gark [1916]
2 AC 575
• The respondent moneylender sued the appellant
for a sum of money lent. The appellant defended
that at the time of the loan he was still an infant.
He had wrongly misrepresented to the respondent
that he was 21 years old.
• Held : the misrepresentation was not fraudulent
and even if it was, there could not be any
action against the appellant as he was still a
minor.
R Natesan v K Thanaletchumi (1952)
• P sued D on an agreement. The D
pleaded infancy.
• The P argued that the D is estopped from
pleading so as she has represented herself
as being of full age.
• Held : even if an infant had falsely
misrepresented herself to be a major and had
induced a person to enter into a contract,
she is not estopped from pleading infancy to
avoid the contract.
8. Insane/ unsound mind

• Any contract made by a person of unsound mind is void.

 What is a sound mind for the purpose of contracting?
Section 12 (1) – refer

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.
• S.12(1) of CA 1950:
A person is said to be of sound mind for
the purpose of making a contract if, at the
time when he makes it, he is capable of
understanding it and of forming a rational
judgment as to its effect upon his interest.
• Provisions for mental patients who have
lucid intervals
Section 12(2) of CA 1950:
A person who is usually of unsound mind,
but occasionally of sound mind, may make
a contract when he is of sound mind
• Illustration (a)
• Read also Section 12(3) + Illsutration
(b)