Sunteți pe pagina 1din 5

In Malaysia, contract law is governed and enforced by the Contract Act 1950.

It is the promise
made between two or more parties and a legally binding agreement which the law will enforce.
Thus, all the parties involved in the contract have to keep the promises that they have agreed
upon. The law will consider a contract to be valid if the agreement contains all the following
elements which are offer and acceptance, intention to create legal relations, consideration, legal
capacity, genuine consent of the parties and legality of the agreement. An agreement which is
lack one or more elements listed is not a valid contract. Hence, a party to a contract is said to
be liable not because they have made a promise, but because they have made a bargain that
they have agreed upon.

The first issue in this question is whether Jessy has the legal capacity to enter into valid contract
of buying the motorcycle with Tommy. One of the elements to constitute a valid contract is
that the parties entering the contract are those who are competency to contract. By referring to
Section 10(1) of the Contract Act 1950 which states all agreements are contracted 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, competency here means the
capacity of being an adult, having a sound mind and are not forbidden by law to enter any
contract. It is based on section 11 of the Contract Act 1950 which states that every person is
competent to contract who is of the 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. In this scenario, Jessy is a 17 years old Malaysian who buys a motorclycle from
Tommy, the salesman. In Malaysia, the age of majority is recognized as above eighteen years
of age as stated in the Age of Majority act 1971 which states that The minority of all males
and females at the age of eighteen years and every such male and female attaining that age
shall be of the age of majority. Thus, it is clear that Jessy, who is 17 years old, is regarded as
a minor and is not competent to enter any contract. Therefore, the contract entered into by Jessy
is not binding on her and is void ab initio and she had to return back the motorcycle. The view
that the minors agreement is absolutely void was provided in firstly, a landmark judgement
Mohori Bibee V Dharmodas Ghose (1903) where agent of defendant advanced money to
plaintiff who was an infant, plaintiff commenced this action to get the mortgage declared as
void and the Supreme Court held that since minor is not competent to contract, hence every
agreement entered into by a minor is void ab initio. Secondly, in Tan Hee Juan v The Boon
Keat where the plaintiff had transferred ownership of a land to the defendant and the court held
that the contract was void and the ownership of the land had to be returned to the plaintiff since
plaintiff was a minor hence there was no contract formed. Thirdly, in Leha binti Jusoh v Awang
Johari bin Hashim [1978] 1 MLJ 202, the respondent had alleged that he entered into an
agreement for purchasing lands belonging to an estate which the appellant was the
administratix but at the time of the said agreement the respondent was a minor. The learned
judge held that the agreement was void and an order should be made for the purchase price to
be repaid on the respondent vacating the lands. Fourthly, in the case of Leslie Ltd v Sheill, a
minor borrowed money by lying about his age and the loan contract was unenforceable because
of his age. The moneylender, knowing that he could not sue the minor for breach of contract
to recover the money, brought an action for damage in tort. The court held that the action was
unsuccessful because it was an attempt to enforce a contract on which the minor was not liable.

The second issue is whether it is allowed by law looking at James age to accept the delivery
of the motorcycle. It is clear that every contract entered by minor is void ab initio but there is
an exception to it because the contract entered by him could be a contract for necessaries.
According to Section 69 of the Contracts Act 1950, if a person incapable of entering into a
contract, or anyone whom he is legally bound to support, is supplied by another person with
the necessaries suited to his condition in life, the person who has furnished such supplies in
entitled to be reimbursed from the property of such incapable person. In this scenario, James
needed a motorcycle for him to ride to school hence it was a need to him, therefore the contract
is binding on him since it was a contract to necessaries. This can be seen in Nash v Inman
where Nash entered into a contract to supply Inman, a minor with 11 fancy waistcoasts. His
father already adequately supplied him clothes. Nash refused to pay for the goods supplied and
tailor brought this suit against him for recovery of price of those goods. According to Buckley
LJ, a minor may enter a contract for the supply at a reasonable price necessary for his support
in his life if he has not achieved a sufficient supply and to render a minors contract for
necessaries an enforceable contract there are two conditions must be satisfied firstly, the
contract must be for goods reasonably necessary for his support in his station in life and
secondly, he must not have already a sufficient supply of these necessaries. Hence, the court
held that since plaintiff could not prove that the clothes were needed as necessity, court
observed that the contract was not for necessity and thus it was void ab initio. In Chapple v
Cooper, a minor whose husband had died contracted with undertakers for his funeral. She then
refused to pay for the cost of the funeral, claiming her incapacity to the contract. The court held
that the funeral was for her private benefit and was a necessary as she had an obligation on her
dead husband. Hence, she was liable to pay the bill. In the case of Clements v London & North
Western Railway Co, a minor was taken up employment as a porter with the railway company.
He agreed to join the companys insurance scheme and the insurance gave him a greater benefit
because it covered a wider range of accidents but in a lesser amount. Hence, it renounces any
rights he may have in the Employers Liability Act 1880. As the minor tried to claim that he
was not bound by the employers scheme, he failed as the court held that it was generally to
his benefit. In the case of Doyle v White City Stadium Ltd, the minor was a professional boxer
and entered into a contract with the British Boxing Board of Control. In the agreement, the
minor would lose his payment of the fight if he was disqualified. The court held that the
agreement was held to be binding at law since it was to encourage clean fighting and also
proficiency in boxing which gave benefit to the minor. In conclusion, the contracts are for
necessaries and beneficial contracts of service are enforceable against the minor.

The third issue is whether Jessy has the intention to create legal relations with her uncle, Johny.
Intention to create legal relations is made up of readiness of parties to accept the legal
sequences of having a contract. A contract made between an offeror and offeree will be
considered legally binding only if the parties intended that they should be legally bound.
However, for social and domestic agreements, there is a presumption that they are not meant
to be legally binding unless the contrary can be proven. For instance, agreements between
friends or between remote family members. In this scenario, Johny is Jessys uncle, who is a
remote member of her family. Hence, the agreement between Jessy and Johny can only be
regarded as a social and domestic agreement that is not considered to be legally binding.
Therefore, the contract between them is not valid. According to the case of Balfour v Balfour,
the husband agreed to pay his wife monthly support up to the time she rejoined him in Sri
Lanka but the reunion did not happen thus the husband failed to honour the arrangement. The
wife sued for breach of contract and the court held that their agreement involved matters of a
social or domestic nature and there were no facts to rebut the presumption applies. In the case
of Parker v Clarke, an agreement was made that Parkers would sell their house and live with
the Clarkes. The Parkers sold their house and moved in. Mr Clarke changed his will leaving
the house to Parkers and later the couples fell out and the Parkers were asked to leave. They
then claimed damages for breach of contract. The court held that the exchange of letters showed
that the agreement was intended to be legally binding because the Parkers had sold their home
as they were serious. In the case of Jones v Padavatton, Mrs Jones offered a monthly allowance
to her daughter if she would give up her job in America and come to England and study to
become a barrister. Mrs Jones then bought a house where the daughter lived and received rents
from other tenants. In 1967, they fell out and Mrs Jones claimed the the house. The court held
that the agreement was a family agreement and not intended to be binding at law. Therefore,
the mother was not liable on the maintenance agreement. In the case of Simpkins v Pays, the
defendant, her granddaughter, and the plaintiff shared a house. They all contributed one-third
of the stake in entering a competition in the defendants name. They then won a prize of $750
but the defendant refused to share the prize. Thus, the plaintiff sued. The court held that the
presence of the outsider rebutted the presumption that it was not intended to be binding because
it was a family agreement. In the case of Lens v Devonshire Club, it was held that the winner
of a competition could not sue for his prize where no one concerned with that competition
ever intended that there should be any legal results flowing from the conditions posted and the
acceptance by the competitor of those conditions.

The fourth issue is whether Johny can restore the money from Jessy . An agreement entered
with a minor is void ab initio , void from the very beginning. It absolutely null and void and
and destitute of any legal effects. So, there is no room for a legal consequence. It can be further
stated that any contract entered into with a minor is not contract at all, it is rather an agreement
which is not enforceable by law and hence it can be categorized as void agreement and such
agreements do not enjoy any legal effect. According to section 65 of Malaysian Contracts Act
1950, when a person at whose option a contract is voidable rescinds it, the other party thereto
need to perform any promise therein contained in which he is promisor. The party rescinding
a voidable contract shall, if he /she has received any benefit thereunder from another party to
such contract ,restore the benefit , so far as may be , to the person whom it was received. Based
on section 66 of Malaysian Contracts Act 1950, agreements that are discovered to be void or
when a contract becomes void, the person who received any kind of advantage when being
under the agreement or contract is compelled to the restoration or compensation for it, to the
person from whom he received it. This means that it is a must for the party receiving benefits
from the agreement that is discovered or proven to be void, to restore the benefits. Section 65
of the Indian Contracts Act that corresponds to Section 66 of the Contracts Act is being used
in the case of Mohori Bibee v Dharmodas Ghose where the Privy Council held that the contract
is void ab initio. All contracting parties should be competent to contract which it goes in line
with the fact that any person that is not of the age of majority is not competent to contract by
the reason of infantry. Although Section 10 and Section 11 of the Indian Contracts Act do not
provide the effect of any agreement being entered with a minor or an infant, but the Privy
Council ruled that minors are not competent to contract and therefore any agreement entered
into by minors are not enforceable and thus be void. The decision made by Privy Council in
the case of Mohori Bibee v Dharmodas Ghose, the Fifth Indian Law Commission criticized
that the interpretation of Section 65 of the Indian Contracts Act by the Judicial Committee had
not been interpreted correctly and that it should be applicable in cases where minor enters into
an agreement on false representation that he is a major.However, in Section 66 of the Contracts
Act that provides that the party receiving benefit out of the agreement or contract must restore
the benefit received, uses the words of an agreement that is discovered to be void or when a
contractbecomes void. It does not come into the meaning of that it becomes void during the
realization of the fact or when the agreement or contract is found out to be illegal. The fact that
any of the parties in the contract or agreement is incompetent to contract, or, the consideration
of the contract is unlawful, thus it is void ab initio for the reason that there is no breach of
promise but the agreement is already wrongful from the very beginning. In this scenario ,
Jessy who is 17 years old , borrowed a loan of RM 8000 from her uncle Johny to buy a
motorcycle for her brother , James. The contract is void as Jessy is a minor and not competent
to enter any contract. So, she need to restore the money to Johny. Johny is liable to get his
money back from Jessy. In the case of Yeep Mooi v Chu Chin Chua & Ors, the appellant
deposited some money with a person carrying out a business of lending money and because
the person is not a public company and nor does he had the license to lend money thus the
transaction was illegal and void. Although the appellant only realized that the transaction failed
to comply with the Contracts Act after she filed sue against the estate, the moment she received
the statement of defense claiming the transaction to be void and unenforceable, the Federal
Court held that:
An agreement,discovered to be void does not mean that the contract is void on discovery or
void because of discovery of illegality. It means what it says, in that the contract was void ab
initio without the parties at the time being aware of the true legal position. It is only later that
the contract is found to be void .We are of the view, therefore, that Section 66 of the Contracts
Act applied to this, and the appellant is entitled to the restitution of her money by the pawnshop
which received an advantage from its use.In the judgment in the case of Ahmad bin Udoh v
Ng Aik Chong, Sufian LJ stated said there is no evidence that the plaintiff was in pari delicto
and that he knew when he entered into the agreement that it was forbidden by the law, the
illegality of the agreement was discovered subsequently to the making of it. Meaning, a person
who was not aware with the illegality at first has the right to be compensated or the parties that
received benefits have to restore it. Thus, since there is no breach of promise the case of Leha
Binte Jusoh v Awang Johari Bin Hashim, and that the contract is void ab initio, Section 66 is
applicable in this case. In the case of Tan Hee Juan next friend Tan See Book and Lai Soon v
Teh Boon Keat, ownership of a piece of land by the plaintiff is transferred to the defendant.
The minor however intended to cancel the transfer. The court decided that the transfer was void
in accordance to Section 10(1) and Section 11 of the Contracts Act as well as the case of Mohori
Bibee v Dharmodas Ghose. However the court ruled that the land should be returned to the
plaintiff. Thus, the judgment in the case of Leha binte Jusoh v Awang Johari bin Hashim was
not wrong. In fact, the court in this case, has come out with a decision different from the case
of Mohori Bibee v Dharmodas Ghose, which of course the court agrees that the contract in
Leha binte Jusoh v Awang Johari bin Hashims case is void but the court decided to apply
Section 66 of the Contracts Act resulting the order of refund of the purchase price to the minor
provided that the minor vacate the land that he had occupied.

Jessy bought a new motorcycle from Tommy the salesman from AB Motor Sdn Bhd on 15 th
May 2017 for her brother, James. The issue here is whether the communication of acceptance
is completed because in order an acceptance to be effective it must be communicated. In
Section 3 of the Contracts Act provides for the communication of offer and acceptance as
follows: The communication of proposals, the acceptance of proposals, and the revocation of
proposals and acceptance, respectively, are deemed to be made by any act or omission of the
party proposing, accepting, or revoking, by which he intends to communicate the proposals,
acceptance, or revocation, or which has the effect of communicating it. Furthermore, in
section 4(1) of the Contract Act 1950, the communication of proposal is completed when it
comes to the knowledge of the person to whom it is made. The acceptance by the promisee
needs to be communicated to the promisor. In Section 4(2) of the Contract Act provides that
the communication of an acceptance is complete:- (a) as against the proposer, when it is put in
a course of transmission to him, so as to be out of the power of the acceptance; and (b) as
against the acceptor, when it comes to the knowledge of the proposer. In this case, the
communication of acceptance between Jessy and Tommy is completed because Jessy agreed
to buy the motorcycle from Tommy and Tommy had assured Jessy that the motorcycle will be
deliver to her house on 18th May 2017. This case can be relate to the case of Entorres v Miles
Far East [1955], The claimant sent a telex message from England offering to purchase 100 tons
of Cathodes from the defendants in Holland. The defendant sent back a telex from Holland to
the London office accepting that offer. The question for the court was at what point the contract
came into existence. If the acceptance was effective from the time the telex was sent the
contract was made in Holland and Dutch law would apply. If the acceptance took place when
the telex was received in London then the contract would be governed by English law. It was
held that to amount to an effective acceptance the acceptance needed to be communicated to
the offeree. Therefore the contract was made in England.

The last issue for the question is whether there is a breach of a condition. A condition is a basic
term of the contract which goes to the origin of the contract. A failure to perform a condition
may result in the termination of the contract. In this case, Tommy had assured Jessy of the
excellent quality of the motorcycle to be deliver to her house but the motorcycle that she
received came with different colour from what she ordered and she also was informed by James
that the motorcycle failed to function. Jessy asked Tommy to replace it with a new motorcycle
or refund her money back but Tommy refused because once James received the goods by
signing the receipt, his company would not be responsible to any of her loss. In section 16 (3)
of Sales of Goods Act 1923 stated that where a contract of sale is not severable and
the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by
the seller can only be treated as a breach of warranty and not as a ground for rejecting
the goods and treating the contract as repudiated, unless there be a term of the contract express
or implied to that effect. Therefore, the condition is to be treated as warranty and Tommy is
not reliable for breach of condition. Poussard v Spiers and Pond [1876] is an example of a
case were a breach of a condition took place. In this case an actress was hired to sing in the
opera, but she got ill and could not perform until a couple of weeks after the premiere. It was
held at the court that this breach went to the root of the contract, and therefore the opera could
repudiate the contract and hire a new actress.

For the conclusion, the usual remedy for breach of contract is an award of damages. The claim
for damages of contract breach is given under Sections 74 to 76 of Contract Act 1950.
Compensation for loss or damages caused by breach of contract. Compensation for failure to
discharge obligations resembling those created by the contract.