Circumstances and Exceptions in Which a Contract with a Minor is Binding

Pages: 9 (2989 words) Published: August 10, 2014
As the Law stands, minors cannot make contracts. State the circumstances and exceptions, if any, in which a contract with a minor is binding.

1. Introduction

Contracts play an important role in the daily operation of the society. In fact, contract is a mechanism that governs the relationship of the offeror and offeree through ensuring the performance of the offeror for the promised task in return of receiving considerations from the offeree. According to English Common Law, contract is defined as a voluntary and legally binding agreement entered between two or more competent parties for a consideration. However, it is not that all contracts are valid and some maybe void or voidable1. Nonetheless, a valid contract is a contract that usually comes with the following elements namely an invitation to treat or offer, acceptance, intention to create legal relations, consideration and capability to contract which will be explained the following paragraphs.

In Malaysia, a country which shares the similar jurisdiction system, namely the Comman Law System, has its contract law written in the statutory form that is the Contracts Act 1950 (“CA”). The written form of law has no doubt gives more certainty to the judges and lawyers in terms of legal clarification, yet the case laws are also needed to be referred to for further clarification and justification. For this essay, the general question is as follows, “As the Law stands, minor cannot make contracts. State the circumstance and exceptions, if any, in which a contract with a minor is binding.” and it shall be answered by firstly on a discussion of the elements of contract, followed by a discussion on why is minor not allow to contract and lastly a discussion on exceptions to this general rule, if any.

2. Formation of Contract
According to Section 10 of CA, all agreements constitute to contracts if they are made with the free consent of parties who are competent to contract, for a lawful consideration. In a simple language, it means that all five abovementioned elements shall present for the formation of valid contract. For example, on behalf of Party A, Party B has entered into contract with Party C but it is later found that there is no prior consent given by Party A, it is said that no contract is formed between Party A and Party C as Party A has not given its consent for the formation of contract, thus lack of the element of Intention to create legal relations. Similarly, lacking of any other of the said element will render the contract void.

2.1 Offer/ Invitation to treat
Agreement is normally reached by the way of offer and acceptance and the law requires certainty of the terms in the offer 2. According to the Law of Malaysia, CA defines offer as proposal in Section 2(b) in which it stated that when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal. The essence of the contract in pertaining to the issue of offer and acceptance has been clearly articulated in both the cases of Carlil v. Carbolic Smoke Ball Co.3and Fisher v Bell4.

In the case of Carbolic Smoke Ball, the defendant listed advertisements and offered 100 pounds as reward to any person who used the smoke ball three times per day as directed contracted influenza. The plaintiff purchased a ball and used it as instructed. The plaintiff contracted influenza and sued. The issue before the court was that does one who made a unilateral offer for the sale of goods by means of advertisement impliedly waive notification of acceptance. Justice Lindley held that a unilateral offer for the sale of goods by means of an advertisement impliedly waives notification of acceptance if his purpose is to sell as much product as possible. Her Ladyship further held that an advertisement is considered to be an offer and if such offer requires performance, the offeree is...
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