Business Law

Topics: Contract, Void, Consideration Pages: 7 (2612 words) Published: June 24, 2013

Question 1(a)

The legal issue and problem in this question is whether Micky has a contract with Ureach Mobile Co. Section 11 of Contracts Act 1950 provides who are competent to contract, that is those who are of the age of majority according to the law to which she is subject, have sound mind, and not disqualified from contracting by any law to which he is subject (KrishnanL, RajooL, & VergisA.C,2009). On the other hand, the Age of Majority Act 1971 states that the age of majority is 18 years and above, and anyone below that age would be regarded as a minor (LeeMeiPheng & IvanJeronDetta, 2009). Thus, Micky, who is 17 years old, is regarded as a minor and is not competent to enter any contract. The general rule states that the contract entered into by a minor is not binding on him, that is void ab initio (KrishnanL, RajooL, & VergisA.C, 2009). In the Mohori Bibee v Dhurmodas Ghose (1903) case (KrishnanL, RajooL, & VergisA.C, 2009), the plaintiff loan a sum of money to the respondent, a minor, that secure on a house which was leased to the appellant (SlideShare Inc, 2012). Following that, the minor filed a suit to set aside the mortgage (KrishnanL, RajooL, & VergisA.C, 2009). The council held that the contract is formulated with a minor is void (Reporter, 2010). Besides that, the Tan Hee Juan v Teh Boon Keat (1934) case (KrishnanL, RajooL, & VergisA.C, 2009), the plaintiff Tan Hee Juan had transferred ownership of a piece of land to the defendant Teh Boon Keat. The court held that the contract was void and ownership of the land had to be returned to the plaintiff. Plaintiff Tan Hee Juan who is a minor said that contract that involved a minor is said to be void. So, there is no contract at all (SlideShare Inc, 2012). Thus, based on the rule and these cases, the contract entered into by Micky with Ureach Mobile Co for a 12-month smart phone plan is not binding on him. However, there is an exception to that because the contract he entered could be a contract for necessaries. An example of exceptions to the general rule is the contracts for necessaries. In Section 69 of 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 the necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person (LeeMeiPheng & IvanJeronDetta, 2009). There are 2 fold tests to determine if a contract entered by a minor is a contract to necessaries. Firstly, the status of status, at which if the subject matter suits the minor’s station of life, such as his family background, the contract is binding on him. Secondly, the test of need, whereby if the minor already has enough supply of the item in question and it is not a need to him, the contract is not binding on him. In the Nash v Inman (1908) case (KrishnanL, RajooL, & VergisA.C, 2009), Nash entered into a contract to supply Inman with 11 fancy waistcoats. Inman was a minor who was already adequately supplied with clothes by his father. When Nash claimed the cost of these clothes Inman seek to rely on lack of capacity and succeeded at first instance. The court held that ‘An infant, is incapable of making a contract of purchase but if a man satisfies the needs of the infant 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.’ So the contract is void (ClarkeJ, 2010). The general rule to this is that if the contract for necessaries is binding, the minor must pay a reasonable price, not the full contractual price stated. Based on the two fold test, the smart phone plan suits his status of status whereby in his station of life, he is a son of a wealthy entrepreneur. Besides, he needs the smart phone for his studies. In conclusion, the contract is a...

Cited: LeeMeiPheng, & IvanJeronDetta. (2009). Business Law. US: Oxford University Press.
SlideShare Inc. (2012). Law Of Contract. Retrieved 2012, from SlideShare: http://www.slideshare.net/Elainebang/law-of-contract
Reporter, L. (2010, October 5). Contract Business law: Validity of Contracts by Minors. Retrieved October 26, 2012 , from LawIsGreek: http://www.lawisgreek.com/contract-business-law-contracts-by-minors
Clarke, J. (2010). Nash v Inman. Retrieved from Australian Law Contract: http://www.australiancontractlaw.com/cases/nash.html
Law Teacher. (2012). Consideration in contract formation. Retrieved from Law Teacher: http://www.lawteacher.net/consideration-law/essays/consideration-in-contract-formation.php
KrishnanL, RajooL, & VergisA.C. (2009). Principle of Business and Corporate Law Malaysia. Singapore: CCH Asia Pte Limited.
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