Capacity

Certainty
1

CAPACITY
(The ability to enter into a contract)

Capacity to Make a
Every
person is competent to contract
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.
[Section 11, Contracts Act]

Three factors that affect

capacity
a)

Age : a person must be above the age of

18 in order to enter into a contract.
b)
Sound mind: must be mentally competent
i.e. he must have the capacity to understand
the terms of the contract, and the ability to
form a rational
judgement as to its effect
upon his interests. : S.12
of the CA 1950.
c)
Disqualification not disqualified by the
law e.g. Undischarged bankrupt, aliens.
4

MAJORITY
Under the Age of Majority Act 1971, the age
of majority in Malaysia is 18 years. Anyone below
the age of 18 is known as a minor or an infant.
The general rule is that contracts entered into by
a minor are void.

Case: Dharmodas Ghose v

Mohiri Bibi
Dharmodas Ghose, a minor, entered into a contract

to borrow a certain sum of money. The minor

executed mortgage of property in favour of the
lender. Subsequently, the minor sued to set aside
the mortgage. The court held that the minors
contract is void. The lender also requested for the
refund of the money by the minor. The court
further held that as a minors contract is void, any
money advanced to a minor cannot be recovered.

The prohibition against contractual

capacity is to protect minors who are

seen to lack maturity in
understanding the legal
consequences of contract law.
However, there are exceptions which
are provided by the law that basically
state despite S.11, minors are bound
by certain contracts they enter into.

EXCEPTIONS

Contracts
for
necessaries
S.69 CA
1950

Contracts of
Scholarship
S. 4 Contracts
(Amendment) Act
1976

Contracts of
Insurance
Insurance Act 1963
(revised) 1972

Section 69 of the Contracts Act 1950 : a person

may supply to a mentally disordered person or a
minor necessaries suited to their condition in life
and that person is entitled to be reimbursed from
the property of such incapable persons.
Necessaries are things which are essential to the
existence and reasonable comfort of the infant,
e.g. food, books and clothes. Luxurious articles
such as gold chains are excluded from necessaries.
What the court would look at is whether the goods
are suited or vital to the persons condition in life.
Could education be considered as a necessary?
9

I, a minor, was studying B.Com., in a

college. He ordered 11 fancy coats for
about 45 with N, the tailor. The tailor
sued I for the price. Is father proved that
his son had already a number of coats
and had clothes suitable to his condition
in life when the clothes made by the
tailor were delivered. Held, the coats
supplied by the tailor were not
necessaries and, therefore, the action
failed.

10

11

CONTRACT OF
SCHOLARSHIP
Government of Malaysia v. Gurcharan
Singh
Fact: Government spent RM 11,500 for the
defendant for his education purpose when
he was a minor student. So, a contract
was made with the defendant. Later the
defendant refused to pay back the money.
Held: The court held that the money given
for education came under necessaries and
therefore the defendant was bound to pay
back.
12

Contracts for Insurance

Contracts for Insurance: In Malaysia a minor

can enter into insurance contract with the

insurance company under the Insurance Act 1963
(Revised 1972). However, if the minor is below
sixteen years old, he/she can only make insurance
contract after taking written consent from his/her
parents or guardians.

13

14

Certainty
Agreements, the meaning of which is not

certain, or capable of being made certain,

are void. [Section 30, Contracts Act]
Example 1: A agrees to sell to B 50 crates

of toys.
What toys? The kind and type of the toys
are not specifically mentioned. Here the
contract is uncertain and vague and
therefore void.
15

Example 2
A agrees to sell to B my white horse for RM

500 or RM 1000. There is nothing to show

which of the two prices apply. The agreement
is therefore void.
S. 30. Illustration Example (f).

16

Case: Karuppan Chetty v. Suah

Thian

Fact: The parties agreed for a lease at RM

35.00 per month for as long as the leasee

likes.
Held: The contract is void since the term
as long as the leasee like is vague.

17