Business Law

Q2 (b)

Based on the capacity of contract, it refers to the legal ability to enter a contract and the law generally presumes that everyone has the capacity to contract except for the certain categories. The age of Majority Act of 1971 provides that the age of majority is 18 years. A person who has attained the age of 18 years is not subject to any want of legal capacity only because of the person’s age. As the girl is only seventeen years of age, so she filling off as a minor. The general rule of this contract enter into by minors are void in Malaysia, which is the contract that are not enforceable in law at all. This is based on the case of Mohori Bibee v Dhurmados Ghose (1903) which has been adopted in Malaysia.

There is some exception to the general rule that the contract is void for minor. For the first are contracts for necessaries. In Section 69 Contracts Act 1971, provides that if a minor is supplied by another person with necessaries suitable to the person condition in life, the person who has furnished such suppliers is entitled to be reimbursed from the property of minor. Besides that, in Government of Malaysia v Gurcharam Singh & Ors the court came to the conclusion that the word of necessaries must be construed broadly and in so interpreting. This means that the legal definition must be constitute ‘necessaries’ may vary according to the position of minor.

In another hand, the seventeen years old girl took a state government loan of RM20, 000 for her studies at a university college can be treated as a Scholarship contract which is a valid contract. According to Section 4 of contract (Amendment) Act 1976, it say that a scholarship agreement entered into by an infant is valid when the award, bursary, loan or scholarships granted by the federal or state government a statutory authority, or an education institution such as university. Furthermore, although it can be regard as a valid contract but she also must be tested against the minor’s...