Capacity to Contract

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Capacity to Contract Door Mind Map: Capacity to Contract

1. Section 10 of Contract Act 1950

1.1. parties to the contract must have full capacity to enter into legally binding contract

1.2. must be competent/capable

1.3. if lack of capacity, contract is void

2. Section 11 of Contract Act 1950

2.1. Age of majority: not underaged

2.2. Natural & Legal: property registered

2.3. Sound mind: not mentally disordered

2.4. Not prohibited by law: bankcruptcy

3. Contract by minor

3.1. generally void

3.2. minor cannot be sued under void contract

4. Contract between minor & adult

4.1. consequences

4.1.1. adult cannot enforce the contract

4.1.2. adult cannot recover property transferred to minor

4.1.3. Case Law: Mohori Bibee v. Dharmodas Ghose

4.2. transfer property by a minor

4.2.1. minor who had transferred his property, may get the contract declared void

4.2.2. minor have the advantage of not returning monies received from adult

4.2.3. Case Law: Tan Hee Juan v. Teh Boon Kiat

4.3. purchase of property by minor

4.3.1. a minor who paid the money to an adult, can recover the money upon returning the property transferred to him.

4.3.2. Case Law: Leha Jusoh v. Awang Johari

5. Age of majority

5.1. Section 2 Age of Majority Act 1971

5.2. 18 years old

6. misrepresentation of age

6.1. when a minor has misrepresentated his age, thereby induced a person to contract with him

6.2. the person cannot sue the minor

6.3. minor can plea minority to avoid contract

6.4. Case Law: Natesan v. Thanaletchumi & Anor

7. Exceptions whereby a minor can enter into a valid contract

7.1. Contracts for Necessaries

7.1.1. Section 69 of Contract Act 1950

7.1.2. minor is liable on contract of necessaries

7.1.3. Eg: food, shelter, education, clothing, medical services except luxurious articles.

7.2. Contracts of Scholarship

7.2.1. a scholarship entered into by an infant is valid

7.2.2. Eg: loan, sponsorship for the purpose of learning

7.2.3. Case Law: Government of Malaysia v. Gucharan Singh

7.3. Insurance Contract

7.3.1. Insurance Act 1963: a 10 years old child may enter insurance contract

7.3.2. if below 16 years old: must have written consent from parents/guardian

7.3.3. valid because it is in a minor's best interest to insure himself/ his property.