Business Law Case Study

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Jonathan, a moneylender makes a loan of $1,000 to Sheba on Sheba’s representation that she is 19 years old. Sheba is in fact 17 years old. She enrolled for diploma course with a private college for $500, spent $200 on a holiday, and the balance of $300 on a mini hi-fi set. She now refuses to pay Jonathan.

In this case, we are acting for Jonathan (plaintiff). Jonathan sues Sheba (defendant) because of free consent and capacity. Free consent that we talk is about misrepresentation whereas capacity is about her being a minor.

“Free consent is one of the essential elements of a valid contract which provides that all agreements are contract if they are made by the free consent of the parties….” (Tulsian, 1998, p.53)

“Capacity is legal power to enter into binding obligations or to enjoy the privileges of a legal status.”(Sinha & Dheeraj, 1996, p. 30)

“…misrepresentation is a falsely made statement of material fact not opinion (Bisset V Wilkinson) nor future intention made by one party to another before the formation of contract intended to induce one party to enter the contract” (Tuner, C., 2001)

“…a minor is a person under the age of 18 years…” (Law essays UK, 2006). Or a minor is a person who has not attained majority (Tulsian, 1998, p.40) and from this case, the minor is Sheba who is 17 years old.

The legal issues to be looked at are as follow:
1) Sheba’s representation to Jonathan that she is above age when she is actually not thus misrepresentation her age. 2) Sheba being a minor cannot enter into a contract only for essential items. Is the contract valid? 3) The loan was spent on three items. Firstly, paying for enrollment fee. Is this sum claimable? Secondly, she spent RM 200 on a holiday and thirdly, purchases RM 300 for mini hi-fi set. 4) The lent two items are definitely not essential items. Whether Jonathan should have checked her age by verifying her documents first?

The law is clear on contract as to the age of the parties. Only those who are above the age of majority can enter into a contract. Since, Sheba was below the age of majority the contract is void. However, there is an exception where minor can enter into contract to purchase essential items.

Jonathan gave loan to Sheba upon her representation she is 19 years old when actually she was only 17 years old. So, Sheba misrepresented to Jonathan as to her age thus inducing Jonathan to enter into the contract. Therefore, on the face gist the contract is voidable by Jonathan. Had he know Sheba’s actual age he would not had given her the loan. However the matter gets complicated as the loan that was taken was used for three purposes.

The first purpose was to pay for enrollment for a Diploma course. The law says that a minor can enter into a contract for essential or necessary items.”Necessaries are items required to sustain existance, such as food, shelter, clothing, medical services, and some types of schooling.” (Emerson & Hardwicke, 1997, pg. 101). The enrollment into the course essential or not is not so clear. Essential items includes food, drinks, clothes, bedding, books that is, those items essential for the child. The sum paid to enroll for Diploma course? Does this sum come under essential? Paying school fees, boarding fees are essential items. We would think that paying fees for enrollment to a Diploma course to pursue her studies would come under essential items. Therefore, Sheba cannot refuse to pay Jonathan the sum of RM 500 as this sum is claimable by Jonathan despite the fact that Sheba was a minor at the time of contract.

As for the two others spending, Sheba will claim that they are not essential items therefore Jonathan would not succeed in claiming the sums paid for those two items. However, Jonathan will argue that the question of essential or not essential items those not arise in this case simply because he was mislead by Sheba into entering a contract with her. What is the law on...
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