MAJORITY

This is to protect the minors against the consequences of their own actions and presumed lack of judgment in contract matters. There are case laws to support this objective as well. See Tan Hee Juan v. The Boon Keat [1934] MLJ 96.

MAJORITY

A minor cannot be personally held responsible for a contract which was drawn by an agent to complete a contract.

MAJORITY
The Majority Act outlines certain exceptions:
The capacity of any person to act in matters relating to marriage, divorce, dower and adoption; The religion and religious rites and usages of any class of persons within Malaysia; Any other written law fixing the age of majority.

MAJORITY
To vote one must be 21 years of age. To join a trade union, a worker must be above the age of 16. For the purposes of marriage, a nonMuslim who is under the age of 21 must obtain an written consent of their parents or guardian.

MAJORTIY
There are other exceptions:
Contract for necessaries Contract of scholarships. Contract of Insurance Contract of Apprenticeship

NECESSARIES
Under common law, a minor is liable on contracts for necessaries. If someone satisfies the need of necessaries of a minor it does not fall under the contract law rather it is an obligation of the minor to pay fairly to that someone.

NECESSARIES
What is necessaries? It is not defined in the Contracts Act. We must look at the Common law to determine the parameter of necessaries. The court looks at the facts a circumstances and interprets necessaries as the conditions and circumstances in which the supply was made and he purpose which was served.

NECESSARIES
The concept of necessaries is a relative one and may vary considerably according to the position of the particular individual. Education falls under the definition of necessaries.

SCHOLARSHIPS
No scholarship agreements can be invalidated on the ground of being minor. This applies only to the governments. The general law relating to contracts including scholarship agreements between minors and private organization is still intact.

INSURANCE
Under the insurance Act 1963 (revised 1972), a minor over the age of 10 may enter into a contract of insurance but if he or she is under 16 years of age, parental or guardian consent if required. This is under the presumption that it is in the best interest of the minor to insure himself or his property against contingencies.

APPRENTICESHIP
Under The Children and Young Persons (Employment) Act 1966 outlines the necessary capacity of a minor to enter into a contract of apprenticeship or service. For this purpose, a child is defined as any person below the age of 14 and a young person is one who is between the ages of 14 and 16.

APPRENTICESHIP
Although the child or young person may sue or defend under such contract of service, no damages or indemnity can be recovered from him for breach. So the minor has the right to sue base on this contract and not to sue him for any breach.

RATIFICATION OF VOID CONTRACT

Ratification (approved) occurs when a person confirms what he has earlier promised to do. The general rule appears to be that a minor on reaching the age of majority cannot ratify (approve) a void agreement contracted during minority.

RATIFICATION OF VOID CONTRACT

There are differences in opinion and arguments have been made that the ratification is unenforceable because the past act must have been done for a promise who is competent to contract at the time when the act was done. Therefore, some case law suggest that a later ratification is unenforceable. But one court case, Arunasalam Chetty v. Aziz Khan [1941] MLJ 159, held that it is enforceable. See page 60 of the text book.

RATIFICATION OF VOID CONTRACT

This was so because the Court reasoned that the plaintiff did his part of the bargain and there is no fraud, undue influence or mistake, it was a good contract and the recovery of the full amount was ordered. The Court considered the new agreement as a fresh contract rather than a ratification of a previous contract.

SOUND MIND
Meeting of minds and free consent is the basis of a contract. A person suffering from mental disorder at the time of the contract lacks capacity. Section 11 of the Contracts Act requires competency. Section 12(1) provides that a person is in sound mind for the purposes of making a contract if, at the time of the contract, he is

SOUND MIND
Capable of understanding it and of forming a rational judgment as to its effect upon his interests. This rule also applies when a person in incapacitated by sickness, drug or alcohol. Read pages 60 and 61 of the text book.

CERTAINTY
The uncertainty could stem from a couple of aspects.
The language of the contract could be too vague; in this case the court is likely to hold that there is no concluded agreement and that the contract is void of uncertainty. Failure to reach agreement on a vital or fundamental term of an agreement. In this circumstance, the contract also fails because of the incompleteness even though there is no problem with the clarity of the language.

CERTAINTY
A contract could be unclear because it is incomplete. See the judicial statement on page 45. Also see the example on page 45. In the Contracts Act, uncertainty is covered by section 30. It states: Agreements, the meaning of which is not certain, or capable of being made certain are void.

CERTAINTY
Must specify what kind of product one is selling or how much it will cost. For example, A agrees to sell to B one thousand kilos of rice at a price to be fixed by C. As the price is capable of being made certain, there no uncertainty here to make the agreement void. If, however, C refuses or unable to fix the price the agreement will become void.

CERTAINTY
A contract will be void if the contract state that we agree to lease the house for $50 month for as long as the tenant likes. This contract would be void. See Karuppan Chetty v. Suah Thian (1916) 1 FMSLR 300. Courts would not impose terms unintended by parties and also sometimes it upholds a loosely worded agreement.

CONSENT OF PARTIES
Free consent is the basis of a contractual relationship. There must be a meeting of the minds as to the nature and scope of the contract. Section 10(1) provides that all agreements are contracts if they are made by the free consent of parties competent to contract. What is a consent? When two parties agree on the same thing in the same sense.

CONSENT OF PARTIES
Consent must be free from fraud, coercion, undue influence or misrepresentation or mistake. If it is proven that the consent is not free from all the above, it is not a free consent and therefore could be void.

CONSENT OF PARTIES
Although a contract may contain all the essentials of a contract, the courts or the legislation may declare it void, voidable, unenforceable or unlawful. The Contracts Act provides an agreement not enforceable by law is considered to be void. See section 2(g). Section 25 provides that If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. Under the English law, when a contract is void it means that no rights or obligation is created. There is no distinction is made under current law in Malaysia between a contract that is void and unenforceable.

CONSENT OF PARTIES
A voidable contract is one that refers to an agreement that gives one or more parties an option or a choice to either affirm or reject it. See section 2(i). Certain rights and duties may arise under a voidable contract and third parties, in good faith, without any knowledge, can acquire these rights stemming from a voidable contract provided that contract has not been earlier avoided.

CONSENT OF PARTIES
For an example, A obtains goods from B under fraudulent circumstances which entitles B to avoid the contract. Afterwards, if A sells these goods to C, an innocent party acting in good faith, C will then acquire a good title as against B unless B has earlier exercised his option to avoid the original contract between him and A prior to the resale to C.

CONSENT OF PARTIES
On the other hand, if the contract was void instead of voidable, then C does not acquire any title to the goods simply because A cannot pass it to C because A does not have those rights or title to the goods. Under common law for the sale of goods, the rule meaning no one can give what he does not have.

CONSENT OF PARTIES
The Contracts Act uses terms un-enforceable by and not enforceable by law. They mean a more extensive meaning than the English law. Under English law, unenforceable means-a Contract could be valid but cannot be enforced by legal action because of its not complying with certain technicalities required by law.

CONSENT OF PARTIES
Paragraph (g) section 2 states that an agreement not enforceable by law is said to be void, and paragraph (h) of the same states that an agreement enforceable by law is a contract.

COERCION
A consent is free if it is not caused by coercion. Coercion is defined in section 15 as:
Coercion is the committing, or threatening to commit any act forbidden by the Penal Code (criminal code), or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.

UNDUE INFLUENCE
A plaintiff may rescind (delete) a transaction on the grounds that he was pressured to enter into it by the influence the other was able to exercise over him. Section 16 provides that where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

UNDUE INFLUENCE
The two essential ingredients are: (1) the domination of the will by one party over the other and (2) obtaining an unfair advantage. The law in section 16 is same as the English law and applies to both contracts and gift law.

UNDUE INFLUENCE
Illustration in (b) of section 16:
A, being in debt to B, the moneylender of his village, contracts a fresh loan on terms which appear to be unconscionable (more than it should be). It lies on B to prove that the contract was not induced by undue influence.

UNDUE INFLUENCE
In some circumstances, a party is deemed to be in a position to dominate the will of another. Section 16(2) provides three such circumstances.
Where one party holds a real or apparent authority over the other. Such as a parents authority over a child.

UNDUE INFLUENCE
- Where one party stands in a fiduciary (agent) relation to the other as in the case of a confidential relationship. Such as lawyer and client, trustee and beneficiary, religious advisor. - Where a party makes a contract with a person whose mental state is temporarily or permanently affected because of age, illness, or mental or bodily distress.

EFFECTS OF UNDUE INFLUENCE

According to section 20 of the Contracts Act, a contract is voidable at the option of the party whose consent was so cuased. Any such contract may be set aside either absolutely or if the party who was entitled to avoid it has received any benefit thereunder upon such terms and conditions as to the court may seem just.

EFFECTS OF UNDUE INFLUENCE

A party is not precluded (prevented) from rescinding a contract if he is entitled simply because he has received a benefit under it. The court is empowered to exercise its discretion and impose terms and conditions as it sees just.

FRAUD
Fraud is an act or acts committed by a party to the contract with the intent to deceive the other party. Section 17 provides:
Fraud includes any of the following acts committed by a party to a contract, or with his responsibility, or by his agent, with the intent to deceive another party thereto or his agent, or to induce him to enter into the contract:

FRAUD
1. The suggestion, as to a fact of which is not true by one who does not believe it to be true; 2. The active concealment (hiding) of a fact by one having knowledge of belief of the fact; 3. A promise made without any intention of performing it; 4. Any other act fitted to deceive; and 5. Any such act or omission as the law specially declares to be fraudulent.

FRAUD
As a general rule, fraud within the meaning of this section requires intention to deceive. The definition also includes deceitful acts intended to induce the other party to enter into a contract. False representation is fraud as outlined in Derry v. Peek (1889) 14 App Cas 337.

FRAUD
False representation is made
Knowingly; Without belief in its truth; or Recklessly, careless whether it be true or false.

FRAUD
Where there is an allegation of fraud, the burden of proving fraud lies on the party making the claim and standard of proof required is higher than is normally in a civil case. Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud.

FRAUD
In certain cases, failure to speak out amounts to fraud. Due to certain circumstances and the nature of the contract, there is positive duty to disclose facts. For example, an insurance contract requires an insured to disclose facts. Failure to do so may cause the insurer to rescind the contract.

FRAUD
This duty of disclosure is dictated by the principle of utmost good faith applicable to contracts of insurance.

MISREPRESENTATION

Misrepresentation refers to certain false statements made by a party and which induces the other party to enter into a contract.

MISREPRESENTATION
Misrepresentation includes:
1. The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; 2. Any breach of duty which, without an intent to deceive, gives an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him; and 3. Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

MISREPRESENTATION
There is a lack of local cases on the interpretation of this section. An honest belief in the truth of a statement made is no defense to the misrepresentation. A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

MISREPRESENTATION
For example, when a person buys a watch in the mistaken belief that it is a certain quality and later discovers that it is not, he has no remedy in the absence of any vitiating factors. If the mistake had been committed by the other party, it is a voidable for misrepresentation within the meaning of paragraph at the option of the innocent party.

MISREPRESENTATION
Exception is that if the party whose consent was so caused had the means of discovering the truth with ordinary diligence, the contract is not voidable. This is different comparing to the English law. Please read the example on page 99 of the text book to illustrate.

MISREPRESENTATION
Sections 19(2), 65, and 66 of the Contracts Act and section 37 of the Specific Relief Act 1950 deals with the remedies for misrepresentation. Section 19(2) provides that:
A party to a contract, whose consent was caused by fraud or misrepresentation, may if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position he would have been if the representations made had been true.

MISTAKE UNDER LAW OF CONTRACT

Mistake of one more parties at the time of the formation of the contract; It is unclear whether the English law classification of mistake into common, mutual, and unilateral mistakes is applicable in Malaysia; If a person is mislead by a misrepresentation to make a mistake as to the quality of the subject matter of a contract, the remedy lies with fraud or misrepresentation rather than in mistake unless it is the mistake of both parties and is as to the existence of some quality which makes the thing without the quality. The legal meaning of mistake is more restricted than the meaning in common parlance (idiom or manner of speaking).

MISTAKE OF FACT
A Contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact. Mistake subject to sections 21, 22, 23 should be read with reference to fee consent. If there is operative mistake with the meaning of these sections, there is not free consent and the contract is void.

MISTAKE BY ONE PARTY

Section 23 deals with unilateral mistake. If a contract is clear, unilateral mistake will not affect the validity of a contract because a person expected to take reasonable care to ascertain what he is contracting about. It is unclear as to what extent English law should be applied in this area of the law.

UNILATERAL MISTAKE
Where equitable principle is applied, the court may treat the contract voidable. Case laws in Australia suggest this approach. Page 114 of the text book.

MISTAKE AS TO DOCUMENT
It is possible that one party signed a document and made a mistake as to what he or she has signed. Generally, a person is bound by what is signed. This position is firmly established in English law. There are exceptions. In a circumstance where a person signs or executes a deed under a mistaken belief as to the character and class of documents and mistake is caused by either illiteracy, blindness, or senility or the fraudulent conduct of the other party (non est factum).

MISTAKE AS TO DOCUMENT
Foster v. Mackinnon (1869) LR 4 CP 704, where a signatory to a document signs it under a genuine mistake as to its nature, he is not bound by the terms of it because his mind has not gone with his action. The same principle is applied in Malaysian courts. Read Awang bin Omar v. Haji Omar & Anor [1949] MLJ Supp 28 on page 115 of the text book.

EFFECT OF MISTAKE
Where a contract is void for mistake under section 14 of the Contracts Act, no title or rights could pass under it, and neither party is under any obligations to perform it. All advantage must be restored or compensation for it to be paid to the other party. See example on page 116 of the text book. Read the Illustrations on pages 117-119 of the text book.

UNLAWFUL AND VOID CONTRACTS

A contract could be declared void because of the illegality or other reasons such as lack of considerations or operative mistakes. English law makes a distinction between a contract merely void and those that are illegal at common law or statute. The Contracts Act does not make such distinction.

UNLAWFUL AND VOID CONTRACTS

Section 2(g) provides that an agreement not enforceable by law is said to be void. Section10(1) provides that a contract must be made by the free will of competent parties, for a lawful consideration and with lawful object.

UNLAWFUL AND VOID CONTRACTS

Section 24 provides: The consideration or object of an agreement is lawful unless:
It is forbidden by law; It is of such a nature that if permitted it would defeat any law; It is fraudulent; It involves or implies injury to the person or property of another; or The court regards it as immoral, or opposed to public policy.

UNLAWFUL AND VOID CONTRACTS

In each of the above situation the consideration or object of an agreement is considered to be unlawful. Therefore, any agreement that is unlawful is void. There are agreements not necessarily illegal but void under common law. Please read page 121 of the text book.