Capacity

Farah Suhaila binti Ahmad

Roshdan
Siti Nor Aishah binti Ismail

Past Year Questions

Part A
Generally all contracts entered into by minors are void. By virtue
of section 69 of the Contracts Act 1950, if a minor is supplied
with necessaries by another person, such person is entitled to
reimbursed from the property of the infant. With reference to
relevant cases, define the term necessaries.(Q5,Dec 2013)
Zul,who is 16 years old, rides his bicycle to work for a distance
of 8km everyday. He recently bought a new bicycle and traded
his old one as part payment. With reference to relevant statutory
provisions and relevant cases, discuss Zuls liability, if any.
(Q4,June 2015)
With reference to relevant authorities, state three(3) exceptions
to the general rule that contracts made by minors are void.
(Q6,Dec 2015)
Ashraf, a 14 year old boy, agreed to purchase a bicycle from
Encik Malik but failed to pay for it. With reference to relevant
authorities, explain the consequences of Alis refusal to pay.
(Q4,Jan 2013)

Part B Past Year Questions

Stefanie, a 14 year old, is a talented dancer. She persuaded her mother to allow her to
train under Madam Dora, a very popular dance instructor. Stefanie then entered into a
contract of apprenticeship to be taught stage dancing by Madam Dora for five years. The
contract provided that Stefanie would not accept any professional engagements or marry
during the term of five years without the consent of Madam Dora. There were also other
restrictions imposed by Madam Dora. A year later, Stefanie entered into a professional
engagement to perform as a stage dancer with Free Lance Dancers Sdn Bhd.
Disappointed with Stefanies action, Madam Dora decided to sue Stefanie for breach of
contract and claim for damages. With reference to relevant authorities, discuss if
Stefanie could be liable for breach of contract.(20 marks)(Q2 Dec 2014)
Encik Ibrahim is the owner of a company which conducts training sessions for dancers
and organize performance for classical Indian dance internatioanally. He works closely
with the Ministry of Tourism and his dancers have represented Malaysia in many
international events. Recently, Jothi aged 16, a classical Indian dancer signed a contract
with Encik Ibrahim. The contract involves training sessions and travelling to various parts
of the world on tour. She will be paid a reasonable amount whilst on tour. The contract
also states that she will be supervised at all times and will not socialize outside the
group. Jothis father, Mr Prasad, wants to know whether the said contract is enforceable.
With reference to relevant authorities, advise Mr Prasad.(20 marks)(Q1,Jun 2013)
Shortly before his death, Dato Samy had transferred to Mr Rajagopal, his personal
assistant, a major part of his property. Patma, Dato Samys only daughter, claims that
Dato Samy suffered from Parkinsons disease which caused him to be physically and
mentally disabled.With reference to statutory provisions and relevant cases, advise
Patma as to the validity of the said transfer.(10 marks)(Q2,Dec 2013)

Part A Q6 Dec 2013

Generally all contracts entered into
by minors are void. By virtue of
section 69 of the Contracts Act 1950,
if a minor is supplied with
necessaries by another person, such
person is entitled to reimbursed from
the property of the infant. With
reference to relevant cases,
define the term necessaries.
(Q5,Dec 2013)

 Section 69 of the Contracts Act provides:

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 legal interpretation of necessaries is thus wider
than bare essentials of life- it includes goods and
services reasonably necessary to the minors actual
requirement such as food, shelter, clothing, medical
services and even education but the must be tested
against the particular minors station in life.

 Nash v Inman
In the case of Nash v Inman (1908), it was decided that
waistcoats supplied to a student could have been considered
as necessaries, but in this case they were not necessaries
because the students father had already provided the
student with many waistcoats. When something is considered
necessaries and the minor liable to pay a reasonable price,
this would depend on the income of the minor and whether
the goods and services are actually necessaries and are
needed by the minor. It would also depend on the supply,
even if the minor needed something and can afford it, the
good or service would not be considered necessaries if the
minor already has a supply of it.

 Government of Malaysia v Gurcharan Singh & Ors.

(1971)
Facts: the Government sued the 1st defendant as the
promisor and the 2nd and 3rd defendants as sureties
for breach of contract. The claim was RM 11,500.00
alleged to be the sum actually spent by the
Government in educating the 1st defendant. At the
time of the contract the 1st defendant was a minor.
Held: the contract was void but since education was
necessaries the 1st defendant was liable for the
repayment of a reasonable sum spent on him.

PART A
Q4 JUNE 2015

Zul, who is 16 years old, rides his bicycle

to work for a distance of 8km every day.
He recently bought a new bicycle and
traded in his old one as part payment. Zul
failed to settle the balance of payment.
With reference to relevant statutory
provisions and relevant cases, discuss
Zuls liability, if any.

 Section 10(1) : All agreements are contract if

they aremade 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.
Section 11 : 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 to which he is subject.

 Meanwhile, Section 2 of the Age of Majority Act

1971 provides that the age of majority of persons in
Malaysia is 18 years old.
In general, all contracts entered by a minor are void.
However, there are some exceptions created by the
Contract Act such as contracts for necessaries and
contracts of scholarship.
Section 69 of the Contract Act provides that :
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 of life the person who has
furnished such supplies is entitled to be
reimbursed from the property of such incapable
person.

 So, even though Zul is a minor, the contract entered by

him is valid as it is provided in Section 69 of Contract
Act 1950.
It is found that the bicycle is a necessaries as he rides
his bicycle to work for a distance of 8km every day.
As conclusion, the contract is binding upon Zul and the
seller of the bicycle however the seller cannot sued Zul
for the breach of contract and he is not entitled to the
balance of payment.

Case for necessaries:

Nash v Inman (1908)
Government of Malaysia v Gurcharan Singh & Ors (1971)

PART B
Q2 (b) DEC 2013
Shortly before his death, Dato Samy
had transferred to Mr Rajagopal, his
personal assistant, a major part of his
property. Patma, Dato Samys only
daughter, claims that Dato Samy
suffered from Parkinsons disease
which caused him to be physically and
mentally disabled.
With reference to statutory provisions
and relevant cases, advise Patma as to
the validity of the said transfer.(10
marks)

 Issue:
Whether the property transferred to Mr Rajagopal is
valid.
Legal Principles:
i) According to Section 10(1) of CA :
All agreements are contract 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.
ii) Meanwhile, Section 11 of CA states 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 to which he
is subject.

 iii) In general, person of mental disorder, and

person incapacitated through sickness, alcohol or
drugs are not competent to contract.
Section 12(1) of Contract Act clearly stated that
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 judgement as to its effect upon his interests.
Iv) The effect of contract entered by a person who
is unsound mind is voidable at the option of the
person of unsound mind if :i) the fact of mental disorder or intoxication can be
proved
ii) the other party knows of his condition

 Case : Imperial Loan Co. v Stone

Per Lopes LJ:
A contract made by a person of unsound
mind is not voidable at that persons option if
the other party to the contract believed at the
time he made the
contract that the person
with whom he was dealing was of sound mind.
In order to void a fair contract on the ground of
insanity, the mental incapacity of the
one
must be known to the other party. The
defendant must plead and prove both his
insanity and the knowledge of the plaintiff; the
burden of proof of both facts lies on the D.
Sim Kok Sang Peters v Datin Shim Tok Keng

 Application:
By referring to the Section 10(1), Section 11
and Section 12 of Contract Act 1950,
- Dato Samy is not competent to the
contract as at the time he transfers his
property to Mr Rajagopal, he was suffered
Parkinsons disease which caused him to be
physically and mentally disabled.
We can assume that Dato Samy is not
capable of understanding and make a
rational judgement at the time of the said
transfer takes place.
So, the said transfer is invalid and void.

 Conclusion:
Patma, the only Dato Samys daughter
may claimed that the contract between
her father and Mr Rajagopal is invalid
and void.
Mr Rajagopal was not entitled to the
property.

Part B Q2 Dec 2014

Stefanie, a 14 year old, is a talented dancer. She persuaded
her mother to allow her to train under Madam Dora, a very
popular dance instructor. Stefanie then entered into a contract
of apprenticeship to be taught stage dancing by Madam Dora
for five years. The contract provided that Stefanie would not
accept any professional engagements or marry during the
term of five years without the consent of Madam Dora. There
were also other restrictions imposed by Madam Dora. A year
later, Stefanie entered into a professional engagement to
perform as a stage dancer with Free Lance Dancers Sdn Bhd.
Disappointed with Stefanies action, Madam Dora decided to
sue Stefanie for breach of contract and claim for damages.
With reference to relevant authorities, discuss if
Stefanie could be liable for breach of contract.(20 marks)

Issue: The issue is whether Stefanie could be held liable for

breach of contrac under capacityt.
Law: i) S11 CA
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 to which he is subject.
ii) S2 of the age of majority act
The minority of all males and females at the age of eighteen
years and every such male and female attaining that age shall
be of the age of majority
iii)S13 of the Children and Young Person(Employment) Act
1966:
minor (below 14) and young person(between 14 & 16) may
enter into a contract of apprenticeship
iv)S18 of the Children and Young Person(Employment) Act
1966
-they may sue or defend under such contracts of service, but no
damages or indemnity can be recovered from him for breach

 De Francesco v Barnum
-In De Francesco v Barnum (1890 ,a 14 year old minor
entered into a contract with a Choreographer. A clause in the
contract stated that the minor could not take any paid work
while the contract of apprenticeship was in existence. In
addition, she was not allowed to marry during the course of
the apprenticeship. However, she was entitled to receive
payments for performances arranged by the Choreographer,
but there was no guarantee that the choreographer would
organize performances.
-The court held that this contract was not for the benefit of
the minor. There were too many detriments for the minor and
the plaintiff could not succeed in suing the minor for breach
of contract.

 In Doyle v White City Stadium [1935]

- A contract between a minor and White City
Stadium for boxing was upheld as valid and
binding on the minor because the contract as a
whole was for the benefit of the minor.
- The contract had been enforced in the case of
Doyle v White City Stadium (1935), this is where
there was an agreement to train a boxer. There
was no money paid, but the contract was
enforceable because it was considered that the
contract was beneficial because of the training.

 Application:
ii) Section 2 CA & Section 11
- In general, all contracts entered by a minor are void.
However, there are exceptions that a minor may enter into a
contract if the contract is beneficial as in the case of Stefanie.
ii) Section 13
-The contract had been enforced in the case of Doyle v White
City Stadium (1935), this is where there was an agreement to
train a boxer. There was no money paid, but the contract was
enforceable because it was considered that the contract was
beneficial because of the training.
-In the current situation, Stefanie who is a talented dancer
may enter the contract even though she is a minor. The
contract was enforceable because it was considered that the
contract was beneficial because of the training provided by
Madam Dora.

iii) Section 18
-In De Francesco v Barnum, The court held that this contract was
not for the benefit of the minor. There were too many detriments
for the minor and the plaintiff could not succeed in suing the minor
for breach of contract.
-Per Fry Lj
that an infant cannot bind himself to a penalty; that the contract
to impose a penalty on an infant is voidI think it may be taken
that, wherever you find extraordinary or unusual stipulations
contained in a contract, either of apprenticeship of service, there
the Court at least must be on the watch lest the infant should be
held to be bound by a contract which is not reasonable and which is
not good in law and which is not maintainable.
-In the current situation, it is found that the contract entered by
Stefanie is binding upon herself but Madam Dora would not be able
to claim for the breach of contract as Stefanie is a minor.
Conclusion : Stefanie cannot be held liable for breach of contract
and therefore Madam Dora cannot sue her and not entitled for the
damages.