S.
10(1) Contract Act 1950:
BUSINESS LAW
-CAPACITY-
S. 11 Contract Act 1950:
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Who are competent to contract:??
“Every person is competent to contract ... of THE
AGE OF MAJORITY according to law..., and who
is of SOUND OF MIND, and is NOT
DISQUALIFIED from contracting by any law to
which he is subject.”
(i) THE AGE OF MAJORITY (cont.)
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 In Malaysia: age of majority: 18 yrs (Child Act 2001);
(Age of Majority Act 1971).
 Election Act: 21 yrs; Criminal liabilities: 21 etc.
 Recent issues: ? (voting age in Malaysia?)
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The parties entering into a contract should also be
COMPETENT TO CONTRACT.
Parties -- the LEGAL CAPACITY TO CONTRACT:
S 11 CA 1950
Examples: ???
Issue: of ALL APPLICANTS --- QUALIFIED
CANDIDATES only....
(i) THE AGE OF MAJORITY
 Q: Why?
 A: A contract is about rights & liabilities -- must be
of a rational person – understand:
(i) the nature of agreements; and
(ii) the legal consequences of all actions.
A Contract by A Minor
 Q: Legal Effect to a contract entered by a person
of < 18 yrs/Minor/an Infant?
 Tan Hee Juan vs. Teh Boon Keat
 F: The transfers of land-executed by an infant
were void.
 H: A minor cannot make any valid contracts.
 The general rule re. a contract by MINORS:
contracts made by an infant are Void ab initio:
void from the beginning.
 A Contract by A Minor (cont.)
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 However, there are exceptions to the general
rule:
 i. Contracts for necessaries.
 ii. Contracts of scholarship.
 iii. Contracts for insurance.
 iv. Contracts of marriage.
A Contract by A Minor (cont.)
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 ii. Contracts of scholarship.
 S 4 (a) Contract Act (Amendment 1976):
scholarship - the scholarship contract is valid
even the recipient is a minor – only for
govt./Fed or State Govt./govt.
agencies/educational institutions (exclude
private organizations)
 S.5(a): Contract Act (Amendment 1976):
Remedies claimable if minors breach the
contract
A Contract by A Minor (cont.)
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 iii. Contracts of insurance
 Insurance Act 1963 (Revised 1972):
 A Minor can enter into an insurance contract
for himself/herself and/or for his/her
properties
 A minor: > 10 yrs; < 16: with a written consent
of parents/guardians.
A Contract by A Minor (cont.)
 i. Contracts of marriage.
 Rajeswary & Anor. vs Balakrishnan & Ors.
 F: R + B: A contract of marriage – B breached – A
sued B – B’s argument: R was still a minor at the
time of contract so she had no capacity to
contract.
 H: R had a capacity to contract – c/o/Marriage is
one of the exceptions to the general rule.
A Contract by A Minor (cont.)
 ii. Contracts of scholarship (cont.).
 Govt. of Malaysia vs. Gurcharan Singh &
Ors.
 F: ?
 H:?
A Contract by A Minor (cont.)
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 iv. Contracts for necessaries
 Definition of ‘necessaries’: Govt. of Malaysia
vs. Gurcharan Singh & Ors
 E.g. Things which are essential to the existence
& reasonable comfort of the infant: food,
clothes, house etc. include education.
 A Contract by A Minor (cont.)
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 iv. Contracts for necessaries (cont.)
 S. 69 Contract Act 1950: 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.
A Contract by A Minor (cont.)
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 Contracts for necessaries (cont.)
 5 requirements provided under S. 69
Contract Act 1950:
 iii. Necessaries supplied suited to his condition
in life; see: Nash vs. Inman
 iv. The reimbursement should not be taken
from the pocket money of the minor; and,
 v. Necessaries supplied should be charged at a
reasonable price.
 Examples: ???
A Contract by a Minor: Issue 1: MISTAKE OF
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 Contracts for necessaries (cont.)
 Q: Other groups of incapable person(s) acc. S
69 CA 1950?
 A: A mentally disordered person etc.
A Contract by A Minor (cont.)
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 Contracts for necessaries (cont.)
 5 requirements provided under S. 69
Contract Act 1950:
 i. The contract is made by a minor or at least
one party is a minor;
 ii. The minor/anyone whom he is legally bound
to support is supplied by another person with
necessaries;
A Contract by A Minor (cont.)
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 Contracts for necessaries (cont.)
 Anything DEEMED by law as necessaries to
children is legitimate - so the contract is valid
– any breach from the side of a minor: the
minor will be liable for any legal
implications for the contract he/she entered.
FACT OF THE AGE OF MINORS
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 Natesan vs. Thanaletchumi & Anor
 F: Children influence / deceive others about
their ages.
 H: DECEIVED parties may NOT take action
over it because the person was a child when the
contract was made.

A Contract by a Minor: Issue 2: Restitution
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 Q: What are the consequences if one of the
contracting parties (adults) has delivered
benefits to the other party (children), but later
found the contract void?
 A: S.66 CA 1950: Anyone who has received a
benefit from a contract declared void, shall
return any benefits received from / to
compensate the other party.
(ii) MENTALLY SOUND (S 12)
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 S 12 (1), (2) & (3) Contract Act 1950:
 During the execution of the contract,
he/she should be able to understand the
contract made.
 E.g: intoxicated persons; senile persons;
dementia??
A Contract by a Minor: Issue 2: Restitution
(cont.)
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 S 66 Contract Act 1950 should be read together
with S. 37 and S.40 Specific Recovery Act 1950.
 S. 37 and S.40 Specific Recovery Act 1950: it is
a discretion of the Court to decide whether to
grant a recovery or not. (Read: Tan Hee Juan
vs. Teh Boon Keat AND Leha Jusoh vs.
Awang Johari Hashim)
(iii) NO LEGAL DISQUALIFICATION
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 A person will be disqualified for the contract if
prohibited by any law in particular.
 E.g: a bankrupt person cannot apply loans from
any financial institutions? Blacklisted??