Business Law

Other ElementsTutorial 6

Question 1

The contract (s) of necessaries entered into by a minor is (are) valid in Malaysia

Answer - Points for proposer Contracts Act 1950 is silent as to whether the

contract of necessaries entered into by a minor is valid or void or voidable.

We only have Sec 69 which does not define the word “ necessaries”, thus we can refer to English Law on this matter as Sec 3 & 5 of Civil Law Act 1956 state that when there is a gap in our local law we can refer to English Law.

Answer - Points for proposer Under English Law, based on the case of Nash v Inman,

the contract of necessaries entered into by a minor is valid and the minor is liable to pay whatever necessaries provided to him or her.

Sec 69 tells us that the minor is liable. What is the basis of the liability?

Thus the contract must be valid to make the minor liable for contract of necessaries.

As we refer to English law on necessaries, the basis of the liability of the minor is the validity if the contract.

The contract is valid and the minor is liable to pay.

Answer - Points for opponents Sec 10 & 11 of CA 1950 state very clear that the parties

to a contract must be competent. Competent means of full age, of sound mind and not

being disqualified by law. Minor is not competent, therefore the contract entered

into by a minor is void. Case : Tan Hee Juan v The Boon Keat. Eventhough the

word necessaries was not defined in our local law, we may refer to English Law as to the definition of necessaries only not necessarily apply their law regarding this matter

Answer - Points for opponents In Gov of Malaysia v Gurcharan Singh, the court

made it very clear the contract made by a minor is void but Sec 69 of Ca 1950 stands as a protection to the supplier of necessaries.

Sec 10& 11 and Sec 69 is 2 different provision. The contract entered into by an incompetent person is void and Sec 69 is meant for reimbursement as the law attempt to protect both minor and supplier of necessaries equally.

Question 2

Ann, aged 15 is the youngest daughter of a rich businessman. She ordered and received from T’sar Boutique, a silk dress, a pair of shoes and matching accessories at a cost of RM5,000, to be worn to a friend’s birthday party. T’sar Boutique has to date not been paid. Advise T’sar Boutique as to the validity of the contract with Ann.

(10 marks)

Answer

Issue – Can T’sar boutique sue Ann for breach of contract?

Legal Principles S11 CA 1950 – general principles a minor is not competent

to enter into contracts S69 CA 1950 – exception to the general rule i.e. Contract

for necessaries, a minor is liable to reimburse the supplier for the necessaries supplied

Cases – Nash v Inman; Government of Malaysia v Gurcharan Singh

Application of the law and conclusion By applying s69 CA 1950 discuss whether the silk dress,

shoes and accessories is a contract for necessaries

Question 3

Malek stayed with Uncle Sam since 1998. Uncle Sam has a son, Amri. They are just like a happy family. They were following a contest, “Buy & Win” sponsored by Nostle Limited for seven weeks. The entry form must be attached with a receipt of any Nostle products worth $40 and above. Malek, Uncle Sam and Amri made an arrangement whereby Uncle Sam will buy the product and attach the receipt, Malik will answer all the questions and Amri will post the entry. The entry form was under Amri’s name. The entry was posted as agreed. Three moths later, Amri was contacted by Nostle Limited stating that he has won the grand prize of a Proton Perdana. Amri collected the car and sold it to settle his debt. He refused to share the prize. Advise Malek and Uncle Sam.

(10 marks)

Answer

Issue Whether there is a contract? (any other acceptable issue)

Law Meaning of intention to create legal relations and its importance Two rebuttable presumptions

Domestic – no intention to create legal relations Commercial - intention to create legal relations

Case - Balfour v Balfour Case - Meritt v Meritt

Answer

Application There was an intention to create legal relations

between them by having such an arrangement There was a valid contract

Conclusion Both Malek and Uncle Sam can claim.

Question 4

Tan decided to grant a lease of his farm to Lim. The period of the lease was stipulated as ‘for as long as Lim wishes’.

Tan now has second thoughts about granting the lease. He wishes to know if the validity of the lease could be challenged on any ground.

Advise Tan.

(10 marks)

Answer

Issue Whether there is a contract? (any other acceptable

issue) Law

s.30 Contracts Act 1950 provides that agreements, the meaning of which is not certain, or capable of being made certain, are void.

Karuppan Chetty –v- Suah Thian (1916) 1 FMLR 300, where the parties had agreed to a lease at a rent of $35 a month “for as long as he likes”

Answer

Application The terms of an agreement cannot be vague but

must be certain. Therefore, Tan may not be able to enforce a

contract which is void for uncertainty. Conclusion

There is no contract here.

Q & A