Business Law

Only available on StudyMode
  • Download(s) : 201
  • Published : March 8, 2012
Open Document
Text Preview
Business Law Tutorial 6
1. Void contract is defined in Section 2(g) of Contracts act, 1950 as an agreement which is not enforceable by the law, which gives rise to no rights or obligations.

Under Section 11 of Contracts Act, 1950, every person is competent to contract who is of age of majority, and who is of sound mind and is not disqualifying from contracting by any law to which he is subject to.

The Age of Majority Act, 1971 states that the age of majority is 18. The Privy Council in MOhori Bibee v. Dhurmodas Ghose held that a minor cannot make a valid contract since such a contract is void. However there are exceptions:

• Contracts for necessaries
• Contracts of scholarships
• COntracts of insurance
Section 69 of Contracts Act, 1950 states that Necessaries are things that are essential to the existence and reasonable comfort of the minor and a minor must pay a reasonable price for necessaries that are suitable to the social status unless one can prove that one has adequate supply of it-Nash v. Inman. The COntracts (Amendment) Act, 1976 provides that a scholarship agreement entered into by a minor is valid when it is granted by the federal or state government, a statutory anthority, or an educational institution such as a university. Under the Insurance Act, 1963(Revised 1972), a minor above age of 10 may enter into a contract of insurance. HOwever, if he is below age of 16, he can only do so with the written consent of his parent or guardian. In conclusion, contracts made by minor are generally void but there are exceptions for contracts for necessaries, contracts of scholarships, and contracts of insurance.

2. According to Section 11 of Contracts Act, 1950, every person is competent to contract who is of the age of majority, and who is of sound mind and is not disqualifying from contracting by any law to which he is subject to. According to Age of Majority Act, 1971, the age of majority is 18. Seow Tee is 15, therefore he is a minor. The Privy Council in MOhori Bibee v. Dhurmodas Ghose held that a minor cannot make a valid contract since such contract is void. HOwever, there are exceptions: • Contracts for necessaries

• Contracts of scholarships
• COntracts of insurance

(a) When Seow Tee ordered 3 piece suits worth RM3000, is it a necessary? Under Section 69 of Contracts Act, 1950, necessaries are things that are essential to the existence and reasonable comfort of the minor and a minor must pay a reasonable price for necessaries that are suitable to the social status unless one can prove that one has adequate supply of it-Nash v. Inman. If Seow Tee need the 3 piece suits, then it is a necessary, and he would have to pay a reasonable price for it. However, the price might not be the contract price of RM3000 as it is up to the judge to decide what is the reasonable price. If Seow Tee can prove that he has plenty of suits at home, then he does not need to pay for it- Nash v. Inman because it is not a necessary to have the 3 piece suits. (b) When Seow Tee spent Rm1000 for lunch, is it a necessary? Under Section 69 of COntracts Act, 1950, necessaries are things that are essential to the existence and reasonable comfort of the minor and a minor must pay a reasonable price for the necessaries that are suitable to the social status unless one can prove that one has adequate supply of it-Nash v. Inman. Here, lunch is a necessarry, therefore he has to pay a reasonable price for it, however the reasonable price might not be the contract price of RM1000. (c) Under The Contracts(Amendment) Act, 1976, a scholarships entered by a minor is valid when it is granted by the federal or state government, a statutory authority, or an educational institution such as an university. Here, the contract is valid and binding because the scholarship is granted by the Government.

3.Section 11 of COntracts Act, 1950 states that every person is competent to contract who is of the age of majority, and...
tracking img