GLUL2023 (A 171)

BUSINESS LAW

HOW TO ANSWER EXAM QUESTIONS

Question can be divided into two types:

1. Essay question/Structures question

- Discuss the law/rule/principle/provision/section/
- Support with cases

2. Problem solving question

i. ISSUE - Identify the issue
ii. RULE/AUTORITIES/CASES (i.e sources) - Discuss the principle / rule / law
iii. APPLICATION apply the law into the problem given to you
iv. CONCLUSION make a decision to the issue that you have identified earlier

The example of essay/structured question:

Question One

Explain THREE (3) exceptions to the general rule that contracts made by minors are void. Support your
answer by given relevant sections and decided cases.

Suggested answer:

S.10 of the Contract Acts 1950 provides that the parties entering into a contract should be
competent to contract. S.11 explains that every person is competent to contract who is of the age of
majority according to the law to which he is subject and who is of sound mind, and is not disqualified
from contracting by any law which he is subject. According to the Majority Act 1971, the age of majority
in Malaysia is eighteen years. The general principle as to the effect of the contracts made by minors are
void, as illustrated in the case of Tan Hee Juan v The Boon Keat. However, there are exceptions to the
general rule. The three exceptions are in respect of:
i. contracts for necessaries
ii. contracts of scholarship; and
iii. contracts of insurance
Necessaries are things which are essential to the existence and reasonable comfort of the
minor, for example food and clothes. And in the case of Government of Malaysia v Gucharan Singh &
ors, education was held to be necessaries.
The Contracts (Amendment) Act 1976 provides that a scholarship agreement entered into by a
minor is valid when the scholarship, award, bursary, loan or sponsorship is granted by the Federal or
State Government, a statutory authority or an educational institution such as a university. The cases of
University of Malaya v Lee Ming Choo and Government of Malaysia v Gucharan Singh & ors, upheld
the same principle.
Under the Insurance Act 1963 (Revised 1972), an infant over the age of ten may enter into a
contract of insurance. However, if he is below the age of sixteen, he can only do so with the written
consent of his parent or guardian.

Example of problem solving question:

QUESTION TWO

Muhammad Fahmi, a 17-year-old Jordanian came to Malaysia to study law at the Universiti
Utara Malaysia (UUM). In order to continue his studies and maintain his living in Malaysia, Muhammad
Fahmi obtained a loan of RM6,000.00 from Jamal by executing a promissory note. The loan was to be
paid within three months.

Muhammad Fahmi spent RM1,000.00 to buy his law books and RM3,000.00 on a laptop
computer to help him do his assignments. The balance of RM2,000.00 was spent on vacation and
sightseeing tours to Bangkok, Thailand. After three months lapsed, Muhammad Fahmi is yet to repay
the loan and Jamal threatened to take legal action against him. Discuss.

Suggested answer:

ISSUES:

1. Whether Muhamad Fahmi is competent to contract? OR

2. Whether Jamal can enforce the contract/loan against Muhamad Fahmi who is still a minor?
LAW/RULES:

S.10 CA 1950 states: Every person who is competent is free to contract

S. 11 CA 1950 states: That only a person who is of the age of majority is competent to contract A
minor, is a person who has not attained that age of majority for the purposes of entering into a valid
contract. By virtue of the Age of Majority Act 1971, the age of majority for purposes of contractual
capacity is 18 years.

The general rule under Malaysian law is that a contract entered into by a minor is void Mohori
Bibee v Dhurmados Ghose (1903); Tan Hee Juan v Teh Boon Keat (1934). However, this general rule
that minors cannot validly enter into a contract is subject to a number of exceptions and one of it is
contracts for necessaries.

This exception provided for under s.69 Contracts Act 1950 states:

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.

Necessaries would include bare essentials such as food, clothing, shelter and medical attention,
what constitutes necessaries would vary from case to case depending on the minors life. Education has
also been held to be included in the term, necessaries as shown in the cases of Govt of Malaysia v
Gurcharan Singh and University of Malaya v Lee Ming Choo.

ANALYSIS:

Based on facts of the case given, under the general rule as stated in cases of Mohori Bibee v Dhurmados
Ghose; and Tan Hee Juan v Teh Boon Keat - the loan of RM6,000 provided by Jamal to Muhammad
Fahmi is void. Likewise, the balance RM2,000 spent on vacation and sightseeing tour to Bangkok,
Thailand can be considered as luxury and is void.

However, some of the money used falls under the exception of necessaries as they were for his
education; such as the RM1,000 he spent to buy his law books and RM3,000 on a laptop computer to
help him do his assignments. Thus, under s.69 Contracts Act 1950, Jamal is entitled to be reimbursed on
these necessaries items.
CONCLUSION:

Although the general rule provides that the loan of RM6,000 provided by Jamal to Muhammad Fahmi is
void, but since some of the money spent falls under the exception of necessaries i.e. for his education;
thus, under s.69 Contracts Act 1950, Jamal is entitled to be reimbursed on these necessaries items.