CAPACITY TO

CONTRACT
(MINOR)
(UNSOUND MIND)
BY:
PROF. DR. NORHASHIMAH MOHD
YASIN

1
 Scope/contents
1) General principle
2) Effect of a contract entered into by
minor under CA (if any) and case law
3) Exceptions
4) Any remedies available
-position in India & Msia
-position in UK (diff btw void n voidable)
5) Misrepresentation of age by minor under
Msian and English law
2
 Generally, every person is competent to
enter into a contract.
 The law however imposed limitations
upon the capacity of some persons to
bind themselves by a promise or to
enforce a promise made to them.
 These persons include minor, insane
persons and bankrupts.
 Why? To protect them against their
inexperience, immaturity, taking advantage,
inducement, duress, improvident(spendrift)
 . 3
 MINOR & STATUTE
 Under Sec 10 of CA:
 “ All agreements are contracts if they
are made by the free consent of
parties competent to contract”
 

4
 Sec 11 provides that “ a person is said
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 form contracting by
any law to which he is subject.”

5
 Sec 2 of the Age of Majority Act 1971;
“ All persons in Malaysia attain the age
of majority at 18”
 Previously : Age of Majority Act 1961 :
age of majority for Muslim 18 years
 Non Muslim 21 years

6
 EFFECT OF A CONTRACT ENTERED BY MINOR
 As regard Malaysian Law, we apply the
Privy Council’s decision from India,
Mohori Bibee’s case (1903) for
example in the case of Leha b.
Jusoh(1978) Awang , Johari
Hashim(1978) Tan Hee
and
Juan(1934), GOM v Gucharan
ingh(1971). In Malaysia the general
rule is that ct or agt entered into by a
minor is void. A minor cannot sue or
be sued in ct. 7
 There is no provision in the Contracts
Act which specified the effect of a
contract entered by minor. However in
Mohori Bibee v
the case of
Dhurmodas Ghouse (1903) 30 Cal 539
the Privy Council held that ‘
agreements entered by minor are
void….’
8
 In this case of Mohori, the Appellant
lent the Respondent (i.e. a minor) 20,
000 rupees at 12% interest by way of
mortgage secured by some houses
belonged to the minor. Later, the minor’s
mother, as his guardian commenced an
action against the Appellant and claim
for a declaration that the mortgage was
void on the ground of lack of capacity.
 Privy Council: The contract entered by
the minor was void.
9
 EXCEPTIONS

1) contract of service(apprenticeship)
2) contract of marriage
3) scholarship agreement
NECCESSITY ?

10
 EXCEPTIONS
 1) Contracts of service or apprenticeship
 Apprentice: someone who has agreed to
work for a skilled person for a particular
period of time and often for low payment in
order to learn that person’s skill (On the job
training).
 The Children and Young Persons
(Employment) Act 1966 (CYPA) enables a
minor to enter into a contract of workmen/
service/apprenticeship. See s13 of CYPA
1966 which states:
11
“Not withstanding anything to the contrary
contained in the CA 1950 or the provisions of
any written law, any child or young person
shall be competent to enter into a ct of service
under this Act otherwise as an employer and
may sue as plaintiff w/o his next friend or
defend any action w/o a guardian ad litem.
Provided that no damages and no indemnity
under s13 of the Employment Act 1955 shall
be recoverable from a child or young person
for a breach of any contract of service”.

12
 The Act in a way legitimises child labour
 They have the right to enter into
employment and to sue for wages
 At the same time, they are protected from
being sued for damages and indemnity
under s13 of the Employment Act 1955
 For employment of the minor the 1966 Act
renders s11 of CA and s2 of AMA and
Mohon Bibee’s case inapplicable.

13
 The Children and Young Persons
(Employment) Act 1966 (“Act”) was
passed to regulate any labour of a
child or young person. Under the Act, a
“child” is a person who is under the
age of 15 and a “young person” is a
person who is 15 but below the age of
18 (15-17)
14
 On 1 February 2019, amendments to
the Act (“Amendments”) came into
force. Here are some of the key
changes:

15
  Light work
 Previously, under the Act, a child may engage in employment
involving light work which is suitable to his capacity in any
undertaking carried on by his family. Prior to the Amendments,
light work was defined as  “any work performed by a worker
while sitting with moderate movement of the arm, leg and
trunk; or while standing with mostly moderate movement of
the arm.”
 The Amendments now state that a child or young person with
a minimum age of 13 may perform any light work, which is
redefined as “any work not likely harmful to his health be it,
mentally or physically or any work which will not prejudice his
attendance at school that includes any place which teaches
any religion, his participation in vocational orientation or
training programmes approved by the competent authority or
his capacity to benefit from the instruction received.”

16
 List of hazardous work
 The Amendments now provide an extensive list of hazardous
work in which a child or young person is not permitted to
engage in:
1)Any work related to machines, installations and other
equipment which may pose high risk such as drilling
machines; grinding machines; steam boiler; installations of
pressure pipe; electricity; and electricity transmission lines;
2)Any work that is conducted in hazardous environment such
as any underground work; or working at a height which can
lead to serious bodily injury; or working in an environment with
noise or vibration where the intensity exceeds permissible
exposure limits; or
3)Any work that contains certain hazardous nature and
condition such as construction work including the
construction of building; work in timber industry such as
cutting, transporting and unloading trees; or any offshore work
such as working in a petroleum platform. 17
 List of work not permitted to be engaged by a child or young person
A new Schedule was also introduced in the Amendments, which
specifically prohibits the employment of a child or young person in
any of these areas:
1)Any employment which offer children or young persons for prostitution;
2)Any employment as social escorts, hostesses and other related
activities;
3)Any employment which require children or young persons to involve in
the production or trade of alcoholic beverages;
4)Any employment which require children or young persons to work in
any activities related to massage or reflexology services;
5)Any employment that offer children or young persons for any job
related to pornography; and
6)Any employment which involve children or young persons for the
production and trade of drugs which are prohibited under the law in
operation.

18
 Contravention of the Act
 Under the Amendments, penalties or fines for contravening any of the
provisions under this Act have been enhanced to imprisonment not
exceeding two years and / or a fine not exceeding RM 50,000.00 for
the first offence. In the event of a second or subsequent offence, the
penalty is imprisonment not exceeding five years and / or a fine not
exceeding RM 100,000.00.
 The Act still allows for children and young person to be employed, but
in limited capacities. For example, in addition to light work, children
and young persons can also be employed in any public entertainment
in accordance with the terms and conditions of the license granted, or
to be employed as an apprentice under a written apprenticeship
contract approved by the Director General. A child and young person
may also be employed in any office, shop (including hotels,
restaurants , supermarkets and stalls), factory, workshop, store,
boarding house, theatre, cinema or association.
 The Act has placed limitations as to the number of days of work and
hours of work for children and young persons and this has remained
unchanged by the Amendments. For example, no child engaged in
any employment shall be required or permitted:
19
 to work between the hours of 8 o’clock in the evening and 7 o’clock in
the morning (8pm-7am);
 to work for more than 3 consecutive hours without a period of rest of
at least 30 minutes;
 to work for more than 6 hours in a day or, if the child is attending
school, for a period which together with the time he spends attending
school, exceeds 7hours; or
 to commence work on any day without having had a period of not less
than 14 consecutive hours free from work.
 (There are different limitations in the hours of work for a young
person)(to find out)
 As these Amendments were introduced to be in line with the
International Labour Organisation (ILO) standards, it is evident that
the authorities are committed to ensure that children’s labour rights
are protected and employers would have a higher accountability for
their employees who are children or young persons

20
Clement v London & North Western
Railway [1894] 2 QB 482
 A minor who worked as a railway
porter agreed to join an insurance
scheme to which his employers
contributed and to give up any claim
for personal injury under Employer’s
Liability Act 1880.
 Held: As the insurance scheme was
on the whole beneficial to the minor,
the minor was bound by it. However if
the service contract was harsh, the
minor is not bound by it. 21
 JUDGE SAID:

 Contracts of apprenticeship wth

regard to labour are not contracts to
an action on which a plea of infancy is
a complete defence .The question,
both at law and equity, has been
whether the contract as a whole, is for
he benefit of the infant. If it is, the
ourt will not allow the infant to
pudiate it. 22
 Not all types of ct beneficial to minor
is binding on him.
 See the discussion by Prof Alsagoff at
p. 366-367.

23
In Doyle v White City Stadium Ltd (1955) I KB
110

 P (minor) (professional boxer) was

licensed by British Boxing Board and
was subject to its Rules tht a
disqualified boxer is not entitled to
receive the prize money. On one
occasion, P was disqualified, the D
refused to give him a prize money.
 Ct held: The ct was on the whole
benefit to P and it was binding on him.24
 See also:
 Chaplin [1966)(COA) (TB p. 363) – the
minor ct was binding on him as it
involved a service contract. Compared
to
 Denmark Production Ltd (2006)(HC) –
Rodney’s case- the representation agt
was not binding on minor (15 yrs)
25
2) Marriage Contract Entered by Minor
 In Malaysia, a marriage contract is an
exception towards the general principle
applicable to a minor.
 A minor can enter into a marriage
contract and is bound by it.
 A minor can sue and be sued for breach
of promise to marry.
 This exception is pursuant to Sec 4(a) of
the Age of Majority Act 1971 which
states that the Contract Act does not
apply to contract dealings with marriage,
divorce, dower and adoption.
 Relevant case, Rajeswary v Balakrishnan
(1958) 3 MC 178 26
 Rajeswary & Anor v
Balakrishnan (1958)
 D is an Hindu. He broke a promise to
marry P, also a Hindu.
 P claimed damages for breach of
contract.
 Court granted damages although P
was a minor.

27
 For Muslims, contractual issues
relating to matters such as marriage,
divorce, adoption are provided under
various Islamic Family law Acts (IFLA)
Eg: see S8 of IFLA (FT) Act 1984: age
limit of marriage for man is 18, for
women 16 (unless with the consent pf
the Shariah judge).
 For non-Muslims, the Law Reform
(M&D) Act 1976, the same.
 Compared to Age of Majority Act 1971
which specifies 18.
28
 In Malaysia Act 303 Islamic Family
Law Act (IFLA),Federal Territories
1984 on Part II about Engagement
contained in section 15 states:
“ If any person has, either orally or in
writing, and either personally or
through an intermediary, entered into a
bethrotal in accordance with Hukum
Syarak, and subsequently refuses
without lawful reason to marry the
other party, the other party being
willing to marry, the party in default
29
shall be liable to return the bethrotal
gift, if any, or the value thereof and to
pay whatever moneys have been
expended in good faith by or for the
other party in preparation for the
marriage, and the same may be
recovered by action in the Court.”

30
CONTRACT OF NECESSARIES: SOME ISSUES
What constitute ‘necessaries’?
Those things without which a person cannot
reasonably exist, include food, clothing, lodging.
Education, training, legal advice, medical health, etc
(human right).
S2 of the English Sale of Goods Act 1893 defines it
as “goods suitable to the condition in life of such an
infant and to his actual requirements at the date of
the sale and delivery”(Q of fact/depends).
Refer to Nash v Inman [1908] 2 KB 1.A tailor sued a
minor for the (fancy)waistcoat for 22 pds 19s 6d.
Held: The suit failed as the tailor cannot prove that
the coats were necessary (p.60).
See Chappel v Cooper and Flower v London (p361) .
 Flower v London Western Rly Co [1894]
held: season ticket for rail travel to n
from work was necessary.

 In Chappel v Cooper [1844] held

provisions for funeral for the minor’s
deceased husband was necessary.

32
Govt of Malaysia v Gucharan Singh and Oths
[1971] 1 mlj 211

 GS , aged 17 was given a scholarship

from GM to study at Malayan Teachers
Training Institute. After completion of
his studies (ended up being sent to UK)
, GS was bound to work wth GM for 5
yrs as a teacher which he failed (only
served for 3 yrs 10 mths).
 GM sued GS and his sureties for
breach of contract and claimed for
compensation for RM11,500 money
spent.
33
 The court have to decide whether
scholarship for GS amounted to a contract
of necessaries (p358).
 Chang Ming Tat J: Whether the articles
supplied is necessary for the infants
concerned is a question of fact and law
and the fact must be found in the evidence
adduced. Each case therefore stands to be
decided on the facts pertaining to it and
whether what is supplied is a necessary
suited to the infant’s condition becomes as
much a question of law as of fact.
 The word ‘necessaries’ must be
construed broadly having regards to
 (a) facts of the case

 (b) condition and circumstances

where the supply is made
 (c) the purpose its serve

35
 The judge in this case held that as a
minor is incompetent to enter into a
contract, there is no contract
between the court and the minor.
Thus the government’s claim for
breach of contract failed.
 However, the judge referred to S69
CA which deals with reimbursements
for necessaries not withstanding the
ct entered into by minors for
necessaries are void.
 Held: In the circumstances of this
case, the provision of professional or
vocational training to enable him to
qualify as a teacher is a provision of
necessaries.
 Therefore the government can claim
for the reimbursement from the
minor.
 S69 CA liability of a minor against his
property only (action in rem) not
against himself(action in personam)
See S69 illustrations (insane person)
 As a result of this case, Sec 4(a) of
the Contract (Amendment) Act 1976
was passed which provides no
scholarship agreement shall be
invalidated on the ground tht the
scholar entering into such agt is not
of the age of majority.
 Scholarship is an exception to this
COC rule.
 Recovery of Property transferred under
a (void) minor’s contract
 Section 65 of CA 1950 :
 Party rescinding a voidable contract who
has received any benefit – will need to
restore the benefit.
 Section 66: any person who received
advantages under void contract has to
restore it or to make compensation for it to
the person from whom he received it.

39
Different position in the case
of minor.
 InMohori Bibee’s case the Appellant
claimed under the Indian equivalent of Sec
65 & 66 of the CA 1950 and Sec 37 & 40 of
Specific Relief Act 1950 (SRA) for the
property which has been transferred to the
minor.
 The PC held that Sec 65 does not apply as
contract entered by minor is void and not
voidable. (Sec 65 provides remedies for
voidable contract only)
40
 The court also held that although Sec
66 provides remedies for void contract,
it also cannot be applied because it is
for breach of a contract between
competent parties and as a minor is
not a competent person, Sec 66 is
thus not applicable.

41
 The appellant was also prevented from
asking the court to give remedy under equity
to the party of the contract when the other
party has the right to rescind/cancel the
contract upon the minor refunds the borrowed
money.
 The judge held that as the appellant in this
case knew that the respondent is a minor
when they entered into the contract, it was not
equitable for the court to give the relief. In the
circumstances of the case, justice did not
require the minor to refund the money.
42
However , In Malaysia in the case ofLeha b
Jusoh [1978] 1 MLJ 202 the Federal Court
applied Sec 66 of the CA and ordered the
minor to refund the purchase price to the
adult (depart from PC decision).
 In ths case, the minor (respondent) had entered
into an agreement to purchase a land belonging to
an estate where the Appellant was the
administratrix. Later the court held the agreement
was void.
 The Federal Court applied Sec 66 of the CA and
ordered the adult App to refund the purchase price
of the land to the minor upon which the minor
vacating the occupied land.
 Depart from PC decision. Restoration was applied.
43
 But, inTan Hee Juan [1934] MLJ 96 (advantage of
both world case) the court held that Sec 40 of the
Specific Relief Act may be applied but before
exercising such discretion, it must be established
that the parties have fiduciary relationship between
each other.
 P (minor/seller) executed a transfer of land to D
(buyer).
 The transfer was witnessed and registered.
 Later, P (by his rep) applied to the court for an order
setting aside the transfer.
 -Court held: the transaction was void and ordered
the land to be transferred to the minor and have the
advantage of not returning the money’s received.
(adv of bth worlds)
44
 In Msia, so far, no discretion of S40
SRA has bn exercised by the courts.
 In Indian case of Dattarran v
Vinayah(1903,COA) had exercised
such discretion by asking the minor to
refund money received upon a
mortgage.

45
 S40 SRA stipulates:
“On adjudging the cancellation of
an instrument, the court may
require the party to whom the
relief is granted to make any
compensation to the other which
justice may require”

46
 In short, as far as the minor is concern,
the law confirms that contract entered
by minor is void and it depends upon
the discretion of the Court to provide
relief/remedy to others/adult party:
 (a) under Sec 66 of the CA

 (b) if necessaries – S69 CA or

 (c)S40 (formerly S41) of SRA

47
 ENGLISH LAW
 Under the common law, agreement
entered by minor is either valid or
voidable.

 If the contract entered by the minor is a

contract for necessaries then the
contract is valid but if the contract is for
non-necessaries, the contract will
become voidable at the minor’s option.

48
 Under the English law, necessaries
includes goods and services.
 Sec 2 of English Sale of Goods Act
1893 define necessary goods as ‘
goods suitable to the condition in life
of such an infant and to his actual
requirement at the date of the sale and
delivery’.

49
 As far as services is concerned, what
are necessaries depends on
circumstances of each case.
 From the case law, education, medical
and legal advices are considered as
services which are necessaries.

50
 In England, when a minor has paid the
money in a non-binding contract, he cannot
recover the money so paid if he has
received some benefit under the contract.
 In Valentini v Canali (1889) 24 QBD 166

 A minor agreed to pay £102 for the furniture

in the flat which he leased. He paid the
landlord £68 and promised to pay the
balance by way of a promissory note. Later,
he sought an action to set aside the lease
and to claim back the money which he paid
for the furniture. 
51
 Held:
 The lease and the promissory note
were cancelled but the money paid(68
pds) cannot be recovered as the minor
had received some benefits from
using the furniture. It is contrary to
natural justice,

52
Misrepresentation of Age by
a minor

 Under the M’sian law of contract even

if a minor misrepresented their age
when they entered the contract, the
other party cannot enforce the
contract.

53
R.Natesan v Thavalecthumi & Anor
[1952] MLJ 1
 The minor entered into a contract and
misrepresented her age as a major. P sued D
(minor) for BOC. D pleaded infancy on her
defence, P argued D as estopped as she
misrepresented her age.
 High Court held: Although the minor
misrepresented her age when she entered
the contract and had induced the other to
enter the contract, she was not estopped
from pleading infancy. 
54
Mohamad Syedol Ariffin v Yeoh Ooi
Gark[1916] 2 AC 575

 The respondent a minor misrepresented his

age to be a major (21) when entering into a
contract of loan with the appellant(induced.
 Federal Court: As the misrepresentation was
not fraudulent and even if it was, no action
could be enforced against the respondent as
he was still a minor.

55
 Misrepresentation of Age by a
minor (English Law)
 The English law however applied the law of
restitution in the case where a minor
misrepresented his age when he entered
into a contract. 
 Under the common law, if the minor
misrepresented his age and received any
money or benefits from the contract, he
must restore it to the person whom he
received it from provided that it is still
identifiable and within his possession.
56
 Leslie Ltd v Shields [1914] 3 KB 607
 The court may discharge the party deceived
from further obligation to perform the
contract when the contract was entered by
minor’s fraud or misrepresentation.
 Ps (Money lenders) gave loans to D (minor ho
falsely represented himself as a major), later
sued D for the loan money hich he has spent it
all.
 COA held: Ps got nothing as the money was
not able to be restored.

57
 Lemprieve v Lange (1879) 12 Ch D 675
 A minor obtained a lease by falsely
representing himself as an adult.
 Ct : Set aside the lease and ordered the minor
to give up possession of property

 In Clarke v Cobley (1789) – the Court ordered

the return of promissory notes as the minor
has misrep his age in return of a void bond
executed by him.

58
 UNSOUND MIND
 Section 12.  
 What is a sound mind for the purposes
of contracting?
 (1) 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 interests.
59
 RULES
 Any contract made by person of
unsound mind is VOID.
 Tan Hee Juan v The Boon Kiat [1934]
MLJ 96 :
 The decision applies equally to cases
relating to unsoundness of mind

60
 Sim Kon Sang Peter v Datin Shi Tok Keng
[1994] 2 MLJ 517.

The plaintiff is claiming in his capacity as the

administrator of the estate of Chong Yu Tai ('the
deceased') against the defendant. The plaintiff
claimed that the deceased, when she was alive,
transferred to the defendant certain undivided
shares of her land ('the land') when she was, as
the defendant well knew, of unsound mind at the
time of executing the transfers and incapable of
understanding the same.
The plaintiff therefore claimed that the transfers
were void and of no effect.
61
The issues before the court were:
 (1)   whether the deceased was of unsound
mind at the time of the transfers;
 (2)   whether the defendant at the relevant time
knew the deceased was of
unsound mind;
 (3)   whether the claim is statute-barred; and
 (4)   what, if any, damages were recoverable by
the plaintiff.

62
Judgment :
 As the transfers took effect before the
Contracts Act 1950 ('the Act')
came into force in Sabah, the law to be applied
was the English common law.

The transfers were not void but voidable if the

defendant knew at the time of the transfers
that the deceased was of unsound mind.

63
 Under the common law, the plaintiff must prove not
only that the deceased was at the relevant time of
unsound mind but must also prove that the
defendant knew the deceased was at the relevant
time of unsound mind.
 If the defendant was unaware that the deceased
was, at the relevant time, of unsound mind, the
plaintiff's claim would fail even if the deceased was
at
that time in fact of unsound mind.
The deceased had appeared normal to
the defendant and therefore, the defendant was not
aware that the deceased was unsound mind.
So, P’s claim failed, transfer was valid.

64
 Lucid intervals

 Section 12 (2)
 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)

 A patient in a mental hospital, who is at

intervals of sound mind, may contract during
those intervals.

65
 Section 12(3) :
 A person who is usually of sound mind, but
occasionally of unsound mind, may not
make a contract when he is of unsound
mind.
 Illustration(b)

 A sane man, who is delirious from fever, or

who is so drunk that he cannot understand
the terms of a contract, or from a rational
judgment as to its effect on his interests,
cannot contract whilst such delirium or
drunkenness lasts (the end).
66