Voidable Contract

Section 10: What agreements are contracts

Section 11: Who are competent to contract

Section 12: What is a sound mind for the purposes of contracting

Section 13: Consent

Section 14: Free consent

Section 15: Coercion

Section 16: Undue influence

Section 17: Fraud

Section 18: Misrepresentation

Section 19: Voidability of agreements without free consent

Section 20: Power to set aside contract induced by undue influence

Section 21: Agreement void where both parties are under mistake as to matter of fact

Section 22: Effect of mistake as to law

Section 23: Contract caused by mistake of one party as to matter of fact

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CAPACITY TO
CONTRACT

CAPACITY

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Every person who is competent to contract is free to contract

upon such terms which he may think fit.

But there are some limitations.

Minor

Insane Person

Bankrupts.

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Section 10 (1):

All agreements are contracts if they are made by the free

consent of parties competent to contract, for a lawful
consideration and with a lawful object, and are not hereby
expressly declared to be void.

Malaysia : Section 11

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Who are competent to contract?

Every person is competent to contract who is of *the age of

majority according to the law to which he is subject, and *is of
sound mind, and *is not disqualified from contracting by any law
to which he is subject

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Section 11

Does not expressly stipulate the effect of contract entered by

incompetent party.

Indian Case: Mohori Bibee v Dhurmodas Ghose (1903) I.L.R

30 Cal 539 :

PC : Effect of section 10 & 11 of Indian Contract Act in pari

materia to sections 10 & 11 of the Malaysia Contract Actrendered
the contracts void.

Mohari Bibee v Dhurmodas Ghose (1903) 30

Cal 539

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Respondent : a minor executed a mortgage in favour of a money

lender Dutt : to secure a repayment of RS20,000 at 12% interest
on some land belong to the Resp.

Entire transaction was executed by Dutts attorney, Kedar Nath :

he had knowledge that the respondent was still a minor.

Infant by his mother & guardian commenced an action for a

declaration that the mortgage was void and inoperative

Judgment

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Privy Council : Considered the effect of contract entered by

minor.

Dismissed the appeal .

Indian Contract Act makes it essential that all contracting parties

should be competent.

Expressly provide that a person by reason of infancy is

incompetent to contract.

The contract entered into by the respondent in this case is void.

Provisions involved

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1) Section 2 of Indian Contract Act :

(e) every promise and every set of promises, forming the

consideration for each other, is an agreement;

(g) an agreement not enforceable by law is said to be void;

(h) an agreement enforceable by law is a contract;

(i) an agreement which is enforceable by law at the option of one

or more of the parties thereto, but not at the option of the other
or others, is a voidable contract

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2) Section 10 (1) of the Indian Contract Act 1872

All agreements are contracts if they are made by the free
consent of parties competent to contract, for a lawful
consideration and with a lawful object, and are not hereby
expressly declared to be void.

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3) Section 11 of the Indian Contract Act 1872

Every person is 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 from contracting by any
law to which he is subject.

According to his Lordships

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Looking at these sections, their Lordships are satisfied that the

Act makes it essential that all contracting parties should be
competent to contract and expressly provides that a person who
by reason of infancy is incompetent to contract cannot make a
contract within the meaning of the Act.

Effect of the decision

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Rendered

all contracts entered

by infants to be void

Position under English Law

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Based on two principles:

1) the law must protect the minor against his experience

2) The law should not cause unnecessary hardship to adults who

deal fairly with minor

English Law

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A contract entered by a minor is either valid OR voidable.

Valid :if SM are necessaries

Voidable at the minors option : if SM are not necessaries.

The Minors Contract Act 1987.

English Law

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Voidable in two senses

1)

Contract in which minors acquired interest of a permanent and

continuous in nature

2)

Contract not continuous in nature : not binding unless he

ratified them within reasonable time after majority.

Cases in Malaysia

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1)

Tan Hee Juan v The Boon Keat [1934] MLJ 96

Hereford J : The Privy Council have held that the effect of sections
10 and 11 of the Contract Act of India is that an infant cannot
make a contract within the meaning of the Act and that a
contract made by an infant is not only voidable but also void..
The decision of the PC is binding on this court, and therefore
there can be no doubt that those transfer are void.

Cases in Malaysia

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Leha Jusoh v Awang Johari [ 1978] 1 MLJ 202

Appellant : an adminitratix

Respondent : minor.

1) Minor

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A person who has not reached the age of majority

Age of Majority Act 1971 : 18 years

All contracts entered by minor shall be void.

Served as protection for minor against any consequences of its

own action

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Exceptions;

1) the capacity of any person to act in matters relating to

marriage, divorce, marriage, dower and adoption

2) The religion and religious rites and usages of any class of

person within Malaysia

3) any other written law fixing the age of majority

Necessaries

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- where a minor enters into a contract of necessaries, eg for food,

clothing, medical services and education

Section 69 : If a person, incapable of entering into a contract, or

anyone whom is legally bound to support, is supplied by another
person with necessaries suited to hiscondition in life, the person
who has furnished such supplies is entitled to be reimbursed
from the property of such incapable person.

Necessaries

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Word necessaries was not defined in the Contract Act.

Under section 69 : what is supplied must be suited to the minors

condition in life.

Government of Malaysia v Gucharan Singh &

Ors [ 1971] 1 MLJ 211

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Validity of a scholarship agreement entered by minor with

Government of Msia.

Chang Min Tat : Definition of necessaries :

In my view, the word necessaries must be construed broadly

and in any decision involving whether what are supplied are or
are not necessaries, it is incumbent to have regards to the facts
of the case, the conditions and circumstances in which the supply
was made and the purpose which is served,

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A minors liability to pay for necessaries supplied under section

69 does not arised from contract.

However, the provision for professional or vocational trainign for

the minor in a Teachers Training Institution to enable him to
qualify for and accept the appointment as teacher is a provision
of necessaries.

Scholarships

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Sec 4 (a) Contract Amendment Act 1976

Notwithstanding anything to the contrary contained in the

principal act, no scholarship agreement shall be invalidated on
the ground that

(a) the scholarship entering into such agreement is not of the age
of majority

(b) Such agreement is contrary to any provisions of any law in

force relating to money lenders

(c) such agreement lacks consideration

Dr. Zuraidah Ali

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Scholarships

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Section 5 : Remedy in the event of breach

Necessary Goods

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Section 2 of English SOGA 1893 : goods suitable to the condition

in life of such and infant and to his actual requirements at the
date of sale and delivery.

Nash v Inman [1908} 2 KB 1

Contract of Employment

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1) The Employment Act 1955

2) the Children and Young Persons (Employment) Act 1966

Section 13 : any child or young person shall be competent to

enter into a contract of service under this Act other wise than as
an employer and may sue as plaintiff without his next friend or
defend any action without a guardian ad litem.

Marriage Contract

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Exception to the general rule

Rajeswary v Balakrishnan (1958) 3 MC 178 : a contract to

marry entered into by minor are distinguishable form other
classes of contract and do not come with the principle laid down
in Mohari Bibee

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Section 4 (a) of the Age of Majority Act 1971

nothing in the Act shall effect the capacity of any person to act
in the following matters, namely marriage, divorce, dower and
adoption.