6.

CAPACITY

Capacity refer to the ability other parties to understand the terms and conditions of the contract. A contract
will only be considered valid in court if the offeror and offeree had the capacity to understand what they
were agreeing to. A person is said to be or have the ability to contract if;

i. The person must be 18 or 18 years old and above.

Mean that if we sell products to people under 18 years of age, they can not be sued or does not
have the capacity to enter into a valid contract.
ii. Not a sound mind or mental disability
For example, under the influence of drug or drug overdose. It can not be a contract because at that
time when person make a acceptend they were not a sound mind. They also was ont able to
understand the temms and conditions of the contract.
iii. When a person is incapacitated by reason of old age, disability or infirmy.
For example, old folks who have dementia, almost senility too, sickness or diseases cancer 4 or
earache causes hearing loss.

Based on Melissa and Mary Jane cases, the contract between the two parties are not valid. This is
because Mary Jane age is below 18 years old. Reffering under section 11,Anyone with a developmental
disability, impaired judgment, or who is under the age of under 18 does not have the capacity to enter into a
valid contract.

A minors can not make a contract. Everyone cannot contract to them becouse they don’t have a capacity
base on section 11. However, there are some exception to this rule;

a) Contracts for necessities

b) Contracts of scholorship
c) Contracts of insurans

a) Contract for necessaries.

An exception to this rule is for the necessities of life such as food, clothing, shelter and others. If a
person under the age of 18 go buy necessities of living. if he does not pay, the seller can sue the
boy, but this kind of necessaries depends on his standard of living with his parents.
 For example, Ali's mother worked as a school canteen chef while Ali's father worked as a school
gardener. so they are poor. one day, Ali bought a bike at Mr.Chin's store and he promised to pay
tomorrow. Mr. Chin to sue Ali Although Ali was 14 years old, because Ali did not pay the next day.
in this situation, yes because the contract of bicycle purchases is a necessity for Ali. but in order to
know whether it is necessity or not, we have look at his background and the brand of the bicycle.

b) Contract of Scholorship
A scholarship agreement entered into by an infant is valid such loan, sponsorship for the purpose
of learning by government or educational institution. No scholarship agreement shall be invalidated
on the ground that the scholar entering into such agreement is below than 18 years old. Based on
cases Government of Malaysia v Gucharan Singh. Gurbachan received scholarship from
government to attend trainings, as a teacher and for that he is to serve with government for 5 years
after graduated. Gurbachan left before full term. When sued, he claims that the contract is void. He
was lack of capacity during the time. Education is a necessities to a minor. Gurbachan is in breach
of contract

c) Contract of Insurance
Under Insurance Act 1963, an infant over the age of ten may enter into a contract of insurance.
However, if he or she is below sixteen, the infant can only do so with the written consent of his
parents or guardian. It is because it is in a minor best interest to insure himself or his property.

In a situation where a minor purposely about his capacity, his action does not make the
contract to be valid. Based on Melissa and Mary Jane cases Mary Jane is a minor and the reward
of RM3, 000 is not her necessities. In this cases, Mary Jane can not sue Melissa. She also has no
intention to any create legal relations at all.