THE LAW RELATING TO MINORS-CAPACITY

By virtue of Section 11 of the Contracts Act, only persons who are of the age of majority according to the law to which they are subject are competent to contract.

However, there are certain statutory exceptions to the rule that all contracts entered into by minors are void. These exceptions are found in the Age of Majority Act 1971 Contracts(Amendment) Act 1976,relating to scholarship agreements,and the Children and Young Persons(Employment) Act 1966.

A Minor is a person who has not reached the age of majority, i.e 18 years as provided in the Age of Majority Act 1971. The general presumption is that a person must have contractual capacity. Such a protection is given because minors are presumed to have as they are young and they could be taken advantage of , thus the need for statutory protection. This is the whole basis of the law.

However there are situations in which the minor will be held accountable for contracts made in exceptional situations and will be binding on the person executing such a contract even though he may not meet the legal requirements.

The general rule is that persons entering into a contract must have contractual capacity.Section 10 Contracts Act states that ‘all agreements are contracts if they are made by the free consent of the parties competent to contract.

And Sect 11 Contracts Act states that “ Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of a sound mind and is not disqualified from contracting by any law to which he is subject.

The law places some limitations on minors, insane persons and bankrupts. Under the Age of Majority Act a minor is a person who is below 18 years of age.

Effect of Contracts entered into by Minors

It was held by the Privy Council, on appeal from India, in the case of Mohori Bebee v Dhurmodas Ghose (1903)30 Cal 539: 30 IA 114 PC that the combined effect of Sections 10 and 11 of the Contracts Act was that an agreement entered into by parties,including a minor, who are not competent to contract are void. This Privy Council decision in Mohori Bebee has been followed by the Malaysian Courts in the cases.

MOHORI BEBEE V DHURMODAS GHOSE (1903) 30 CAL 539; 30 IA 114(PRIVY COUNCIL)INDIA
The Respondent who was an infant executed a mortgage in favour of Dutt, a moneylender, to secure the repayment of Rs20,000 at 12% interest on some land belonging to the respondent. Throughout the transaction, Dutt, was not present but the entire transaction was carried through his attorney, Kedar Nath.It was established in the lower Court that Kedar Nath had knowledge that the respondent was still a minor. Subsequently,the infant, by his mother and guardian as next friend, commenced an action praying for a declaration that the mortgage was void and inoperative and should be canncelled, stating that he was an infant when he executed the mortgage.

Held: Dismissing the appeal.(1) the Indian Contracts Act makes it essential that all contracting parties should be competent to contract, and expressly provides that a person who by reason of infancy in incompetent to contract cannot make a contract within the meaning of the Act. Therefore the contract entered into by the respondent was void.

Tan Jee Huan v Teh Boon Keat[1934]MLJ 96
Leha binti Jusoh v Awang Awang Johari bin Hashim[1978]1 MLJ 202 FC.

Marriage Contracts

Rajeshwary & Anor v Balakrishnan & Ors [1958]3 MC 178 HC, it was held that a contract to marry entered into by a minor was not void.

The parties to this action were Celonese Hindus. The second defendant, father of the first defendant, through a go between approached the second plantiff father of the first plaintiff in order to arrange a marriage between his son and the second plaintiff daughter. A few days later, members of the two families met and drew up a written agreement (with provisions for a dowry of RM3,000 and RM5,000 for breach of the agreement known as the penalty clause) to effect the marriage.

Next morning,the ceremony of Nichayartham, the customary manner of rectifying a betrothal was performed and at which the second plaintiff presented the first defendant with a gold sovereign about two weeks later the second plaintiff also presented the first defendant with a shirt, a dhoti and a shawl, and the first defendant in return presented the first plaintiff with a sari and a piece of material for making a blouse to go with it.

Subsequently, the first defendant repudiated his promise to marry the first plaintiff. In the present proceedings, the plaintiff claimed, inter alia, damages against the first defendant for breach of promise of marriage. The first defendant pleaded, inter alia the incapacity of the first plaintiff to enter into the contract to marry she being a minor then.

Held- marriage contracts entered into my minors are different from other classes of contracts and do not come within the principle laid down in Mohori Bebee. The first plaintiff could maintain an action on the agreement entered into between her father acting as a guardian and on her behalf and the firt defendant whereby the latter promised to marry the first defendant.

Section 69 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 necessaries suited to his condition in life, the person who has furnished such furnished such supplies is entitled to be reimbursed from the property of such incapable person."

The law was stated rather strangely by Chan Ming Tat J in Goverment of Malaysia v Gucharan Singh & Ors as follows,

"An infant, like a lunatic, is incapable of making a contract of purchase in the strict sense of the word, but if a man satisfies the needs of the infant or lunatic by supplying to him necessaries, the law will imply an obligation to repay him for the services so rendered and will enforce that obligation against the estate of the infant or lunatic."
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Charles , a minor has

(a) been eating on credit in a certain restaurant
(b) received a scholarship from the Goverment of Malaysia.
(c) ordered 3 pieces of expensive suits for RM3,000


Discuss the law in relation to the above fictional situation.

Charles must pay the restaurant for the food consumed because even though he is a minor, food is necessary to maintain himself. Sect 69 CA 1950 states, if a person is supplied with necessaries, he must pay for it. This principle was also stated in the English case of Nash v Inman.

In this case, a minor, Inman ordered 11 waistcoats from a taylor and later refused to make payment. The Court held that the waistcoats were not necessaries to his station in life and therefore the contract was void. For Charles to be made liable, it must be proven that the goods or services supplied were necessaries to his station in life.

However there are exceptions to the general rule. On the facts of this case, Charles has received 3 piece suits for RM3,000. If this is a contract for necessaries, Charles will be bound by the contract. (S69 CA 1950, and the English case of Nash v Inman) There are 2 interpretations to necessaries.

Literal interpretation implies the bare essentials of life. The legal interpretation includes the minors particular station in life. If Charles is the son of a prominent businessman, then the situation would be different, then Charles would be liable. If the legal interpretation is used, they can be considered as necessaries, because Charles is the son of a rich businessman and therefore he must pay for them.

Scholarship agreement with the Government Of Malaysia.

Sect 4(a) Contracts (Amendment) Act 1976 provides that scholarship agreement shall not be invalidated on the ground that the scholar entering into such agreement is not of the age of majority.

In view of this section, Charles is bound by the contract and therefore he must repay the money received under the scholarship. This principle was also illustrated in the case of Government of Malaysia v Gucharan Singh.

However there are situations in which the minor will be held accountable for contracts made in exceptional situations and will be binding on the person executing such a contract even though he may not meet the legal requirements.

Summary of Law Relating to Capacity

Capacity

General Rule- Sect 10 = free consent
Sect 11= competent ---age of majority, sound mind, not disqualified.
(this section explains who is competent)

Limitation- minors, insane persons, bankrupts.

Minors = Age of Majority 1971= not 18 years yet.

Tan Jee Huan v The Boon Keat - transfer of land by minor = void.

EXCEPTIONS : 1. Marriage contracts – Rajeshwary v Balakrishnan

Exam area 2. Contracts for necessaries - Sect 69 Ca 1950, Nash v Inman.
Literal Interpretation= bare essential of life
Legal interpretation = look at the persons background

Exam area 3. Scholarship Agreements= Contracts ( Amendment) Act 1976
Case= Government of Malaysia v Gucharan Singh

4. Contracts of insurance = Insurance Act 1963( revised 1972)
10-16- need parents consent

5. Contracts of service – Children & Young Persons ( Employment) Act

OTHER EXCEPTIONS:

6.Parliamentary Act – age of voting is 21years.

7. Trade Unions Act 1959 – above 16 can join a TU

8. National Land Code-Minors cannot hold land.