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Capacity To Contract. DR . ZAHIRA BT. MOHD. ISHAN JPP, FEP. Situation 1. X aged 12 borrowed some money from Y, a moneylender, and a promissory note for that purpose. Whether X was bound to return the money to Y?. Situation 2. Xi aged 12 went to Yi’s shop and bought 1 kg of flour on credit.

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capacity to contract

Capacity To Contract

DR. ZAHIRA BT. MOHD. ISHAN

JPP, FEP

situation 1
Situation 1
  • X aged 12 borrowed some money from Y, a moneylender, and a promissory note for that purpose.

Whether X was bound to return the money to Y?

situation 2
Situation 2
  • Xi aged 12 went to Yi’s shop and bought 1 kg of flour on credit.

~used the flour to play games with his friends ;

~ Xi’s mother requested Xi to buy the flour;

~ Xi is a married person and bought the flour for his family needs.

Consider Xi’s liability under the law of contract.

parties competent to contract
Parties Competent to Contract
  • s.10(1): agreements are contracts when parties are competent to contract, for lawful consideration, with lawful object & not declared void.
  • S.11: competent to contract who is of age of majority according to the law which he is subject, of sound mind & not disqualified from contracting by any law to which he is subject.
  • S. 12: sound mind for the purpose of contracting.
age of majority
Age of Majority

s. 11: “…age of majority according to the law which he is subject…”

age of majority1
Age of Majority
  • Age of Majority Act 1971: 18 years old.

~will not affect:

a) the capacity of any person to act in marriage, divorce, dower & adoption;

(b) the religion and religious rites and usages of any class of persons within Malaysia;

(c) any provision in any other written law contained fixing the age of majority for the purposes of that written law (S.4 AMA )

contracts that minor can make
Contracts that Minor can make:
  • Necessaries: s.69 - definition & scope

Nash v Inman ; Ryder v Wombwell;

GOM v Gurcharan Singh

  • Scholarship: s 4(a) of Contracts (Amendment) Act 1976 (Act A329) : GOM v Gurcharan Singh
  • Marriage: s.4(a) of AMA & Law Reform (Mg & Dv) Act 1976 [ female above 16 authorised by licence]: Rajeswary v Balakrishnan
  • Insurance: s.153(1) &(2) of Insurance Act 1996 [10-16 yrs old with parent/guardian’s written consent]
  • Apprenticeship & Employment: Children & Young Person (Employment) Act 1966 (Revised 1988):

De Francesco v Barnum; Doyle v White City Stadium; Chaplin v Leslie Frewin (Publishers), Ltd

capacity of minor to insure
Capacity of minor to insure.
  • S. 153 IA 1996

   (1)   Notwithstanding any law to the contrary, a minor who has attained the age of ten years but has not attained the age of sixteen years, with the consent in writing of his parent or guardian—

  • may effect a life policy upon his own life or upon another life in which he has an insurable interest; or
  • may assign the life policy on his own life.  

(2)   A minor who has attained the age of sixteen years—

  • may effect a life policy upon his own life or upon another life in which he has an insurable interest; or
  • may assign the life policy on his own life, and is as competent in all respects to have and exercise the powers and privileges of a policy owner in relation to a life policy of which he is the owner as he would be if he had attained the age of majority.
liability of minors in tort
Liability of Minors in Tort
  • Generally liable for his torts but a breach of contract may not be treated as a tort…; the tort must be more than a misfeasance in the performance of the contract & must be separate & independent of it (Anson, 1989:198)

~Jennings v Rundall(1799): minor hired a mare to ride & injured her by over riding. Held: not liable because its an action arising out of contract, not of tort.

~Fawcett v Smethurst(1914): minor hired a car to take his luggage from station not liable in tort if he used the car to drive several miles further from the station, & there met with an accident.

~Burnand v Haggis (1863): “one cannot make an infant liable for the breach of a contract by changing the form of action to one ex delicto”.

liability of minors in tort1
Liability of Minors in Tort
  • If the wrongful action is the one not contemplated by contract, minor may be exposed to tortious liability:

Burnand v Haggis: D minor hired a mare for riding. He was given strict instructions ‘not to jump or lark with her’. He lent her to a friend who jumped & killed her. Held: the minor was liable as riding the mare into the place that killed her was as much a trespass, notwithstanding the hiring for another purpose as if without hiring at all the D had gone to a field & taken the mare out & hunted her & killed her. It was a bare trespass, not within the object & purpose of hiring.

fraudulent misrepresentation of full age
Fraudulent Misrepresentation of Full Age

~ R. Leslie v Shiell: minor obtains loan by falsely representing his age cannot be made to repay the amount in the form of damages for deceit.

Mohamed SyedolAriffin v YeohOoiGark [1916] LR 2 AC 575.

Natesan v K. Thanaletchumi & Anor[1952]: 1st D signed an agreement while still a minor.. “[E]ven if the 1st defendant had induced the plaintiff to enter into the the agreement with her and the 2nd defendant by falsely representing that she was of full age she is not estopped from avoiding the agreement by pleading her minority”

points to ponder
Points to ponder
  • Find out the capacity of the followings to enter into contracts:

i- bankrupt person

ii- corporation

iii- unincorporated association