DIL 1103: Contract Law

Tutorial 3: Q&A
Question 1
Explain the situations where a contract can be set aside for want of capacity.
Question 1
1. Minors England Below 18
Voidable – can be repudiated/terminated by the minor only
Misrepresentation of age – equity can compel him to restore the property to the person deceived provided that it is
identifiable and in his possession.
Exception: Necessaries (benefit, necessary and subject to the station of life of the minor), beneficial contracts of
service (employment)
Malaysia Below 18
Void – not legally enforceable, s.10 CA (only competent parties may contract), s.11 CA (competent means a person who
is the age of majority and who is of sound mind)
Misrepresentation of age – recoverable by way of s.66 CA, subject to whether the courts follow the decision of Mohori
Bibee (not recoverable) or Leha bte Jusoh (recoverable)
Exception: Necessaries (s.69 CA – necessaries suited to his condition in life, s.4 CA (Amendment) – scholarships)
2. Mental Capacity England GR: Valid
Voidable – can be repudiated/terminated by the person suffering mental incapacity subject to the CONDITIONS:
1. The person was incapable of understanding the nature of the transaction AND
2. The other party knew of this
MIA 2005 – a person lacks mental capacity if, at the material time (formation of the contract), he is unable to make a
decision for himself due to an impairment or disturbance in the functioning of the mind or brain which can be either
temporary or permanent
Necessaries – mentally incapacitated person must pay a reasonable price for the goods or services (SOGA 1979)
Malaysia Void – not legally enforceable, s.10 CA (only competent parties may contract), s.11 CA (competent means a person who
is the age of majority and who is of sound mind)
Sound mind is defined as “at the time when he makes it, he is capable of understanding it and of forming a rational
judgment as to its effect on his interests” (s.12(1) CA). Therefore, a person who is generally of unsound mind can
competently contract if he contracts during lucid/sound mind intervals (s.12(2) CA).
Question 1 (Cont.)
3. Drunkenness England GR: Valid
Voidable – can be repudiated/terminated by the drunken party subject to the CONDITIONS:
1. The person was incapable of understanding the nature of the transaction AND
2. The other party knew of this
Necessaries – reasonable price to be paid for goods and services, SOGA 1973
Malaysia Below 18
Void – not legally enforceable, s.10 CA (only competent parties may contract), s.11 CA (competent means
a person who is the age of majority and who is of sound mind)
Sound mind is defined as “at the time when he makes it, he is capable of understanding it and of forming
a rational judgment as to its effect on his interests” (s.12(1) CA).
Illustration (b) to S. 12 CA 1950:
“A sane man, who is delirious from fever, or who is so drunk that he cannot understand the terms of a
contract, or form a rational judgment as to its effect on his interests, cannot contract whilst such delirium
or drunkenness lasts.”
4. Companies England Valid – s.20 Companies Act 2006
Malaysia Valid – s.20(1) Companies Act 1965
Question 2
What are age are minors in both English and Malaysian law?
Question 2
• Below 18 (refer to the answer to Q1)
Question 3
What is the difference between the law on minors in English and Malaysia?
Question 3
• England: Voidable
• Malaysia: Void
• (Refer to the answer to Q1)
Question 4
What is the difference between the decision made in Mohori Bibee v Dhurmodas
Ghose and Leha bte Jusoh v Awang Johari bin Hashim?
Question 4
Mohori Bibee Minor contracts are void
S.65 ICA (s.66 CA) presupposes that minors need not restore or compensate the other party as
minors were never competent contracting parties to begin with – only competent parties can seek
restoration.
Therefore, in Mohori Bibee, s.66 CA is not applicable for minor contracts.
Leha Minor contacts are void
HOWEVER, s.66 was allowed to be applied, and the minor was ordered to vacate the land he
occupied and the other party reimburse the minor the purchase price.
In Leha, s.66 CA was applicable for minor contracts.

Mohori How to apply to questions:

Leha
Bibee You will be required to explain both scenarios where:
1. If the court follows Mohori Bibee (s.66 inapplicable) AND
2. If the court follows Leha (s.66 applicable)
VOID VOID AND note that the Fifth Indian Law Commission felt that the Privy Council in Mohori
Bibee misinterpreted s.65 ICA (s.66 CA) and should allow s.65 ICA (s.66 CA) to apply
S.66 CA in situations where the minor has misrepresented his age.
S.66
Inapplicabl
Applicable Therefore, the law is unclear and decisions will be subject to the court’s
e interpretation and discretion.
Question 5
Universiti of Malaya (UM) offers a contract of scholarship with Daniel, then 16 years old, to fully waive his four year business
course on the condition that upon the completion of his course, he will be bonded to the Business faculty of UM for a period
of 5 years as a researcher and lecturer. Daniel accepts the offer, completes his course and works as a UM researcher and
lecturer. Finding the working conditions and staff unbearable, he accepts an invitation to teach at a university in Singapore.
UM brings and action against Daniel for the value of RM 50,000 – RM 10,000 for each year of his course and the 1 year he had
spent working for them. Daniel denies a breach of contract, defending that the contract had not been valid at all, since he had
signed the papers when he was only 16. Advise UM if they have legal grounds to succeed in their claim. (Malaysian law only).
Question 5
Issue 1. Capacity of minors – is the contract valid and will Daniel be liable for breach of contract?
2. Was the employment a necessary?
Rule S.10(1) CA 1950: provides that contracts can be made only by “parties competent to contract”
S.11 CA 1950: “Every person is competent to contract who is of the age of majority according to the law…and who is of sound mind…”
S.2 Age of Majority Act 1971: provides that all persons in Malaysia attain the age of majority at 18.
GR: Contract with a minor is VOID
S.69 CA: embodies the common law of England regarding liability for necessaries supplied to an infant – exception to the rule where an
agreement with a minor MAY be valid if the provision of necessaries which are “suited to his condition in life”
Government of Malaysia v Gurcharan Singh & Anors – “necessaries” can be construed broadly. Education to appoint D for employment
constituted as a necessary. In this case, s.69 applied and D was liable for the claim, in this case, the sum restored to P was lower after
taking into account the years D had spent working for them.
Further, s.4 Contracts (Amendments) Act 1976 has introduced that: Notwithstanding anything to the contrary contained in the principal
Act, no scholarship agreement shall be invalidated on the ground that the scholar entering into such agreement is not of the age of
majority
Application Applying the abovementioned to the facts:
Daniel was a minor within the meaning of the CA 1950 – contracts with minors in Malaysia are VOID
However, s.69 CA allows for necessaries supplied to an infant to be reimbursed to the person furnishing such necessaries – it can be
argued that the waiver of education for Daniel was for his benefit as it guaranteed him training and employment for the future. The word
“necessary” has been construed broadly by courts; the scholarship can be construed as a necessary for the facts of the case. Further, the
Contracts Amendments Act 1976 not validates contracts formed with minors on basis that the agreement was one pertaining to
scholarships and the minor was the scholar. Applying Gurcharan Singh, the reimbursement to UM would be RM40,000 – deducting the
RM10,000 for the one year Daniel had spent working for them.
Conclusion Daniel will be liable for a breach of contract as the employment was a necessary and on the basis that no scholarship agreements shall be
invalidated by the scholar being a minor – Daniel owes a reimbursement of RM40,000, not RM50,000 as the 1 year spent working for UM
(worth RM10,000) has been deducted.
Question 6
Under Malaysian law, what makes a contract valid?
Question 6
• Parties have to be competent:
• S11 CA 1950: “Every person is competent to contract…who is of
sound mind”
• S12(1) CA 1950: “A person is…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 on
his interests.”
• In other words, a parties who are aged 18 or above AND of sound
mind (at the time of the formation of the contract)
Question 7
Ikram, a 17-year-old student who looks much older than he is, walks into his local café and orders £500 worth
of food for a party. The café owner who has seen Ikram before as a regular customer who has bought coffees in
his shop, is happy to provide the catering, taking a 10% deposit which Ikram pays. It is agreed the balance will
be paid within ten days after the party. The food is duly delivered and consumed. In spite of a bill being sent to
him and reminders, Ikram refuses to pay. Advise the café owner whether the contract with is enforceable.
Question 7
Issue Is the contract valid? 2 different positions – English and Malaysian
Rule English Minors – Voidable at the behest of the minor only
Under the age of 18 (Family Law Reform Act 1969)
Exceptions – necessaries (benefit, necessary and subject to the station of life of the minor), and beneficial contracts of service
Necessaries - Nash v Inman: Necessaries must be suitable to the condition of the life of the infant and the actual requirements of
the infant at the time of the sale
Misrepresentation of age – S.3 Minors’ Contracts Act 1987 provides protection for parties contracting with a minor by way of
restitution. S.3 Minors’ Contract Act 1987, states where the contract is unenforceable or terminated by a minor, any property
acquired by the minor may be given back to the adult, even if the minor has not acted fraudulently. If he has sold the property, the
minor may have to pay the cost or give up any property received in exchange for them. The court may, if it is just and equitable to do
so, require the defendant to transfer to the plaintiff any property acquired by the defendant under the contract, or any property
representing it. Origin of the equitable remedy: R Leslie Ltd v Shields
Malaysian Minors – Void
S.10(1) CA 1950: provides that contracts can be made only by “parties competent to contract”
S.11 CA 1950: “Every person is competent to contract who is of the age of majority according to the law…and who is of sound
mind…”
S.2 Age of Majority Act 1971: provides that all persons in Malaysia attain the age of majority at 18.
Application English Ikram is a minor, therefore, the agreement between Ikram and the café owner is voidable. This would mean that Ikram may
terminate or repudiate the agreement. The café owner cannot enforce the agreement as £500 worth of food for a party is clearly
not a necessary – Ikram had only bought coffees from the café before. This seems to suggest that he is in no station of life where a
party requiring £500 worth of food as a necessary or suitable to his condition. However, as Ikram appears older than he looks, and
the café owner had believed Ikram was of age of majority. The café owner can seek restitution by way of s.3 Minors’ Contracts Act
1987 – while the food may have been consumed, the provision allows restitution of any property representing it. The café owner can
seek to claim £450 (less the 10% deposit paid by Ikram).
Malaysian Ikram is a minor. In Malaysia, the agreement would be void as minors are classified to be not competent. This would mean that the
agreement would be legally enforceable. The café owner may seek restoration for the money by way s.66 CA – the case of Leha.
However, there is a conflicting decision in the Indian case of Mohori Bibee which remains binding on the Federal Court. It is up to
courts to interpret the facts of the case and which decision should be adopted. S.69 CA only allows for restoration of necessaries –
which is unlikely in this scenario.
Question 7 (Cont.)
Conclusion England The café owner may seek restitution by way of s.3 Minors’ Contracts Act 1987 which provides relief where there has been a
misrepresentation of age by a minor. As the food has been consumed, the café owner may claim restoration by payment of
£450.
Malaysia The Malaysian position is less certain due to the conflicting decisions of Mohori Bibee and Leha. The general rule is that
contracts with minors are void – the decision in Mohori Bibee explains that relief by way of s.66 CA is inapplicable as minors
are not competent parties to contract. However, the decision in Leha allowed the application of s.66 and the plaintiff was
allowed restoration. Therefore, it is up to the courts’ discretion as to which case is to be followed – if Mohori Bibee
followed, the café owner will not be restored. If Leha is applied, the café owner will be restored.

However, guidance can be given to the courts that the café owner should be entitled to s.66 relief as the Fifth Indian Law
Commission felt that Privy Council had incorrectly interpreted S.65 Indian Contracts Act (s.66 CA) and recommended that
the section should be applicable to a void minor’s contract where the minor has misrepresented his age when entering into
the contract.
Question 8
What is the difference between a contract that is void and a contract that is
voidable?
Question 8
• Void – not enforceable by law
• Voidable – can be terminated/repudiated by the wronged party
Question 9
In England, how are parties who have contracted with minors protected?
Question 9
• S.3 Minors’ Contracts Act 1987 provides protection for parties
contracting with a minor by way of restitution.
• It states that where the contract is unenforceable or terminated by a
minor, any property acquired by the minor may be given back to the
adult, even if the minor has not acted fraudulently.
• If he has sold the property, the minor may have to pay the cost or give up
any property received in exchange for them. The court may, if it is just and
equitable to do so, require the defendant to transfer to the plaintiff any
property acquired by the defendant under the contract, or any property
representing it. Origin of the equitable remedy: R Leslie Ltd v Shields
Question 10
Jeremy and Brian are at the local pub. Brian, who has a low tolerance of alcohol, offers to “I will give you my house if you give me £10,000
right now.” Jeremy notices that Brian is slurring in his speech, but decides to roughly draw up a written contract at the pub on loose paper.
Both parties sign the written document and Jeremy transfers £10,000 right away. The next morning, Jeremy appears at Brian’s house to
remind Brian to begin moving his belongings out. Brian denies making an agreement with Jeremy, saying that he was not in the right mind
at the time of the signing and immediately transfers the £10,000. Jeremy refuses the payment and states that they had formed an
agreement which has been signed upon, showing him the proof of the written document bearing the signatures of both parties. Advise
Brian if he has formed a valid contract with Jeremy and will be required to give up his house.
Question 10
Issue Capacity – drunkenness
Did Brian have capacity to contract?

Rule English GR: Valid

Voidable – can be repudiated/terminated by the drunken party subject to the CONDITIONS:
The person was incapable of understanding the nature of the transaction AND
The other party knew of this

Malaysian Below 18
Void – not legally enforceable, s.10 CA (only competent parties may contract), s.11 CA (competent
means a person who is the age of majority and who is of sound mind)
Sound mind is defined as “at the time when he makes it, he is capable of understanding it and of
forming a rational judgment as to its effect on his interests” (s.12(1) CA).
• Illustration (b) to S. 12 CA 1950:
“A sane man, who is delirious from fever, or who is so drunk that he cannot understand the terms of a
contract, or form a rational judgment as to its effect on his interests, cannot contract whilst such
delirium or drunkenness lasts.”
Sound mind is defined as “at the time when he makes it, he is capable of understanding it and of
forming a rational judgment as to its effect on his interests” (s.12(1) CA). Therefore, a person who is
generally of unsound mind can competently contract if he contracts during lucid/sound mind intervals
(s.12(2) CA).
• S66 CA 1950:
“When an agreement is discovered to be void, or when a contract becomes void, any person who has
received any advantage under the agreement or contract is bound to restore it, or to make
compensation for it, to the person from whom he received it.”
Question 10 (Cont.)
Application English Brian stated that he was not of “the right mind” during the formation of the contract – the
law states that a person who was incapable of understanding the nature of the transaction
cannot contract provided that the other party knew of this. On the facts, Jeremy had
noticed Brian had slurred in his speech – objectively, a reasonable person would presume
that Brian was not in a competent capacity to contract. Brian may be able to repudiate or
terminate the contract and restore £10,000.
Malaysian Application of the provisions of s.12 CA.
As Brian was not a competent party at the time of the formation of the contract (not a
competent person at the time), the contract is void. Brian make seek restoration of the
£10,000 by way of s.66 (both are at the age of majority – no need to discuss Mohori Bibee
or Leha).
Conclusion English The contract is voidable – Brian can repudiate/terminate the contract and restore £10,000.
Malaysian The contract is void – Brian can seek restitution under s.66 CA for the £10,000.
Question 11
Scala is a 15 year-old girl from a wealthy family. Without her parents’ consent, she entered into the following contracts:
a) The purchase of a copy of Treitel on The Law of Contract for £30 from EMO bookstore.
b) The purchase of a pair of luxury Jimmy Choo heels for £5,000 from Luxury Hills Ltd.
c) Took up an apprenticeship with Madame Roxanne whereby the latter would train the former to become a professional ballet dancer for a monthly
fee of £200.
Scala now decides to return the purchased goods and end the apprenticeship. Advise Scala. Would your answer be different based on Malaysian law?
Question 11
Issue 1. Will Scala be liable for the copy of Treitel on The Law of Contract for £30 from EMO bookstore;
2. The purchase of a pair of luxury Jimmy Choo heels for £5,000 from Luxury Hills Ltd; and
3. The termination of the apprenticeship with Madame Roxanne?

Rule English Minors – Voidable at the behest of the minor only

Under the age of 18 (Family Law Reform Act 1969)
Exceptions – necessaries (benefit, necessary and subject to the station of life of the minor), and beneficial contracts
of service
Necessaries - Nash v Inman/Peters v Flemming: Necessaries must be suitable to the condition of the life of the
infant and the actual requirements of the infant at the time of the sale
Employment contracts – Clements v London and North Western Railway Co: valid if for the benefit of the minor
De Francesco v Barnum – Courts will have regard to the contract as a whole and the circumstances of the case,
stipulations of an unusual character placing excessive power in the party’s hands would constitute an invalid
contract
Malaysian Minors – Void
S.10(1) CA 1950: provides that contracts can be made only by “parties competent to contract”
S.11 CA 1950: “Every person is competent to contract who is of the age of majority according to the law…and who is
of sound mind…”
S.2 Age of Majority Act 1971: provides that all persons in Malaysia attain the age of majority at 18.
S.66 – restoration for parties
S66 CA 1950:
“When an agreement is discovered to be void, or when a contract becomes void, any person who has received any
advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person
from whom he received it.”
HOWEVER – note the conflicting positions in Mohori Bibee (s.66 inapplicable) and Leha (s.66 applicable)
Malaysian case on necessaries/employment contracts – Government of Malaysia v Gurcharan Singh
S.69 CA – necessaries – “If a person, incapable of entering into a contract, or anyone whom he is legally bound to
support, is supplied by another with necessaries suited to his condition in life, the person who has furnished
supplies is entitled to be reimbursed from the property of such incapable person.”
Question 11 (Cont.)
Application English 1. Treitel book
Question of necessaries – is the book necessary to Scala’s station in life? Scala is a ballet student – is a law book
necessary?. Per Alderson B: “the articles must be for real use and such as would be necessary and suitable to the
degree and station in life of the infant.” Refer to the case of Nash v Inman. Under S.2 Sale of Goods Act 1893, a
minor must pay a reasonable price for necessaries sold and delivered to him. The seller of the book must show
that he supplied ‘necessaries’ that of suitable condition and to her requirements at the time. Unlikely that this
was a necessary – voidable at Scala’s option.
2. Jimmy Choo shoes
The case of Peters v Fleming is similar to that of Scala. The defendant was a minor from a wealthy family. The
claimant brought action to recover price of goods supplied including a gold ring, watch and pins. The defendant
pleaded infancy and that the good and services were not considered necessaries. The claimant contended that
the goods and services were necessaries suitable to defendant’s “degree, estate and condition”. Therefore, Scala
will be bound to the contract of the purchase of the luxury heels.
3. Apprenticeship
Refer to the case of De Francesco v Barnum. Apprenticeship deed between minor and De Francesco, a dancing
master, for 7 years to be instructed in stage dancing. Deed included many terms. In this case, the child was not
bound. The court regarded the contract as a whole and the circumstances of the case. The contract contained
stipulations of an unusual character which placed an inordinate power in the hands of the master and the
contract was not for the benefit of the infant. This CANNOT be applicable to Scala. Scala is able to afford the fee
of 200 pounds and gains benefit from the apprenticeship.
Malaysian 1. Treitel book
(Refer to arguments above) However, in Malaysia – void. It is not voidable at Scala’s option.
2. Jimmy Choo shoes
(Refer to arguments above) The GR = void. Luxury Hills Ltd may seek restoration of the shoes or the value of
£5,000 (if they have been worn/not the same condition as when bought) under s.69 CA.
3. Apprenticeship
(Refer to arguments above) – the case of Government of Malaysia v Gurcharan Singh. It can be argued that the
training is for her benefit.
Question 11 (Cont.)
Conclusion English 1. Treitel Book
Not liable
2. Jimmy Choo shoes
Liable
3. Apprenticeship
Liable
Malaysian 1. Treitel Book
Not liable
2. Jimmy Choo shoes
Liable
3. Apprenticeship
Liable