FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES

LAW299 – BUSINESS LAW

TOPIC:
LAW299 ASSIGNMENT

PREPARED BY:
NO. STUDENT NAME STUDENT GROUP
ID
1 ELLY ELLYANA AQILAH BINTI MOHD ELIAS 2020653756 AAMP5A
2 NUR ATIKAH BINTI WAGIMAN 2020647028 AAMP5A

PREPARED FOR:
MADAM ROSMAWATI BINTI KAMIS

DATE OF SUBMISSION:
20 MAY 2024
LAW ASSIGNMENT - QUESTIONS

Q1: Explain three exceptions to the general rule that contracts made by minors are void.
Support your answers by given relevant sections and decided cases.

Q2: Philip wants to sell his house and advertises it in the local newspaper at RM370,000.
giving his telephone number. Jim sees the advertisement and rings Philip and makes an
appointment to see the house.

Jim likes the house but cannot agree a price with Philip. His highest offer being RM367,000.
While Philip insists on RM370,000. On the on the following Monday, Jim receives a letter
from Philip offering him the house for RM368,500 and saying that Jim can have until noon
on Friday to think about it.

On Wednesday evening, Jim meets his brother Garrett in their local. Garrett tells him that
Philip's son-in-law bought the house earlier that day for RM367,000. Jim goes straight home
and writes a letter to Philip, accepting his offer to sell at RM368,500. He posts the letter
immediately and Philip receives it on Thursday morning, but replies by return saying “You
are too late. I have sold the house to my son-in-law”.
QUESTION 1 - ANSWERS

The Contract Act 1950 essentially governs contract law in Malaysia. Furthermore, Section 10
of the Contracts Act 1950 states that children are incapable of forming legally binding
contracts since they lack capacity. The Mohori Bibee v. Dharmodas Ghose case provides
more evidence in support of this claim. Certain people's ability to commit themselves by a
promise or to carry out a promise made to them is restricted by law. These individuals include
minors, the mentally unsound, and bankrupts. According to section 2 of the Age of Majority
Act 1971, a person who is younger than 18 is considered a minor in Malaysia. Stated
differently, the age of 18 marks the attainment of the age of majority. As a result, only those
of this age can legitimately engage into contracts.

However, the general rule is not without exceptions. Contracts for services and necessities are
the exceptions to the general rule. The latter are accepted as legal contracts, while the former
imposed liability, the nature of which has been debated. I would want to go into further detail
about the following exclusions today: contracts for necessities, contracts of service that
benefit recipients, and contracts for scholarships.

In this case, contracts for necessaries would imply that minors are legally obligated to pay for
items that are required for their care, though even in that case, they would only be asked to
pay a fair price for any necessities that they acquire. In legal terms, "necessaries" are
described as contracts that provide minors with products and services that are deemed
required or useful to them; in these cases, the minors are legally bound. Items and services
required for a minor's survival are considered necessities. This was demonstrated in the Nash
and Imran case, where the plaintiff gave the defendant clothing worth $145 and subsequently
demanded reimbursement from the defendant. The defendant argued that the clothing were
not necessary since his father had already given him appropriate clothing for his life
circumstances and that he was still a minor at the time the clothes were given to him. The
court determined that the defendant did not require any of the clothes that were given to him
since his father had already supplied him with appropriate and required clothing. As a result,
the agreement was void and unenforceable and the defendant was released from its
obligations.

Subsequently, regarding Beneficial contracts of service, under this exemption, a minor is

obligated to fulfil the terms of an apprenticeship or employment contract, provided that the
contract includes a component of education or training and is primarily for their benefit. This
regulation acknowledges the significance of providing a minor with the means to support
themselves. As an illustration, consider the Doyle v. White City Stadium case, in which a
minor's boxing contract with White City Stadium was deemed legitimate and enforceable
against the juvenile due to the contract's overall benefit to the minor. Under Children and
Young Persons (Employment) Act 1966, the permitted age to enter into contracts is below the
age of 18 years old and it also stated that any child or young person may enter into a contract
of service and be employed, however, such person cannot be an employer.

Last but not least, Section 4(a) of the Contract (Amendment) Act 1976 governs contracts for
scholarships, which are the next exception to the rule that no contract for a minor may be
invalidated because the scholar entering into the agreement is not of legal age. The
Government of Malaysia filed a lawsuit in the case of Government of Malaysia v. Gurcharan
Singh, alleging that the first defendant was a promisor and the second and third defendants
were sureties, for their breach of an agreement to provide training at a Malayan teachers'
training institution in 1960–1961. The first defendant breached his obligation to work as a
government teacher for five years following his training, which served as the basis for the
cause of action. The first defendant claimed that because the agreement was made when he
was still a juvenile, it was void. The court ruled that Gurcharan must pay back the money he
spent on his training and schooling. This is due to Section 69 of the Contract Act, which
states that a contract is deemed legal when it corresponds with the minor's genuine
requirements, circumstances, and the nature of the products.

In conclusion, a minor by law is recognized to lack the capacity to contract. The rationale is
that minors lack a full understanding of the consequences of their contracts. It is after all a
basic rule to contract that all parties must have the capacity to contract. Plus, free consent is
required to make a contract valid. As provided in Section 10 (1), “All agreements are
contracts if they are made by the free consent of parties competent to contract..”. However,
minors do not fulfil any of these requirements. But, that does not mean they do not have the
right to make decisions. Therefore, voidable contracts like these exists. These may be avoided
by the minor, but if no steps are taken to repudiate the contract during the time of their
minority, or within a reasonable time after reaching the age of majority, then they are binding
and cannot be avoided subsequently. The principle behind this rule is that if a minor enters
into such a contractual duty, it “remains until he thinks proper to put an end to it”.
QUESTION 2 – ANSWERS

The issues arising in this case would be Invitation to treat, the status of a promise to keep an
offer open, revocation and the postal rule. Section 38 (1) of the Contracts Act 1950 provides
that the parties to a contract must perform six elements including acceptance and
consideration. In the case of Jim and Phillip, these elements are fulfilled however there are a
few issues and questionable moves made by both parties involved.

First of all, over the years the courts have held that certain situations constitute invitations to
treat rather than offers; for example goods in a shop window as portrayed in the Fisher v. Bell
case where goods are displayed in a shop, such display is treated as an invitation to treat by
the seller and not an offer., Auctions as it was in the Payne v. Cave case which stands for the
proposition that an auctioneer's request for bids is not an offer but an invitation to treat., And
even advertisements like in the Partridge v. Crittenden case where the court held that the
advertisement was not an offer but an invitation to treat, and as such the defendant was not
guilty.

The point of this is to say that when Phillip told Jim that he has until noon on Friday to think
about accepting the invitation to buy the house for RM368,500. Taking the Payne v. Cave
case as a prime example here, Phillip’s letter to Jim is considered an invitation to offer as “the
bidders make the offers which can be accepted by the auctioneer”. Phillip is the auctioneer,
and Jim is the bidder in their situation. In the example case, the defendant made the highest
bid for the plaintiff’s goods at an auction sale, but he withdrew his bid before the fall of the
auctioneer’s hammer. It was held that the defendant was not bound to purchase the goods. His
bid amounted to an offer which he was entitled to withdraw at any time before the auctioneer
signified acceptance by knocking down the hammer. So, in Phillip and Jim’s case, the
invitation should still be up for other “Bidders” to offer and accept. It makes sense why
Phillip’s son-in-law purchased the house.

However, there is the issue of the postal rule in Phillip and Jim’s case, as Jim had posted his
letter of acceptance before the deal between Phillip and his son-in-law was even made, and
before the deadline stated in Jim’s letter. In general, the offeree’s acceptance of the offer must
be communicated to the offeror. However, in this situation, there is an exception – the postal
rule. This applies to if the acceptance is posted, the official acceptance is complete the
moment the letter is placed in the mailbox to post off to the offeror. The first case to address
the postal rule would be the Adams v. Lindsell case. This case is very similar to Phillip and
Jim’s case as the defendants sold their wool to someone else when the plaintiff had mailed his
acceptance in time but the letter did not arrive on time. The judgement for this case concluded
that the acceptance did not arrive in course of post strictly speaking. But because the delay
was the fault of the defendant it was taken that the acceptance did arrive in course of post.
Therefore, Jim’s acceptance to Phillips offer by letter should still be considered. Additionally,
according to the Household fire insurance v. Grant case – where the defendant issued an offer
to take an insurance policy, and the insurance company posted its acceptance which never
arrived. Nevertheless, it was held that the defendant was liable to pay the premiums – the
acceptance should apply even if the letter never arrives. Unless, the letter was not properly
stamped or addressed.

Lastly, in Phillip and Jim’s case, it is important to note that an offeror is entitled to revoke his
offer at any time until it has been accepted. In The Guardians of the Navan Union v.
McLoughlin case, the defendant was held to be entitled to revoke his offer because the
plaintiff’s acceptance had not yet been communicated to him. Even if the offeror promises to
keep his offer open for a certain period, he is still entitled to revoke it at any given time. This
means that even to Phillip’s defense he is allowed to sell the house to whoever he pleases.
However, as mentioned in my previous points, Phillip did not necessarily offer Jim anything
as his “offer” can be considered a mere invitation. But even so, Phillip did say “You are too
late. I have sold the house to my son-in-law” indicating that he did have the intention to
contract. This can be used to Jim’s advantage.

To conclude, I would advise Jim to challenge Phillip for the postal rule. Jim posted his letter
of acceptance before the Friday noon deadline stipulated by Philip. This act of posting the
letter, according to the postal rule, signifies the completion of his acceptance of Philip's offer
to sell the house at RM368,500. Therefore, legally, a binding contract was formed at the
moment Jim placed the letter in the mailbox. Philip's subsequent sale of the house to his son-
in-law can be seen as a breach of this contract. In summary, Jim has a strong legal basis to
challenge Philip using the postal rule.