Intention to create legal relations To be determined based on the circumstances

1. Intention to create legal relations To be determined based on the circumstances surrounding the contract. The intention – express / implied. Two rebuttable presumptions i- business agreement-the parties are presumed to have intended to enter into legal relationship; ii- social, domestic or family agreement–the parties are presumed not to have an intention to enter into legal relationship

2. Domestic, social or family arrangement The party claiming the existence of the contract must prove that they intent to enter into legal relationship. O/wise no contract. Balfour v Balfour W could not, for medical reasons, accompanied her husband from England back to Ceylon where he was posted. H promised to pay W monthly allowance. He failed to pay and the wife sued for breach of contract.

3. Q- was there a contract? Was there an intention? Held-they was no contract .. because the parties did not intend to enter into a legally enforceable arragement Merrit v Merrit The couple jointly owned a house. Husband left the wife. Both agreed (signed written document) that Mr M would pay Mrs M a monthly sum, and eventually transfer the house to her, if Mrs M kept up the monthly mortgage payments. The mortgage was paid but Mr M refused to transfer the house to Mrs M.

4. Q- was there a contract? Did the parties intent to enter into a legally enforceable contract? Held- the fact that Mr and Mrs M were separated when they signed the contract, allowed the court to assume that this was more than a mere domestic arrangement

5. Business Arrangement The parties must prove that there was no intention to enter into a legally enforceable agreement. o/wise bound by the contract. Edwards v Skyways Ltd The airline company promised to make an "ex gratia" payment to its redundant pilots. The amount was approximately close to the company's contributions for each member of the pension and superannuation fund

6. Q- was the promise to make the ex gratia payment a legally binding promise? Held - The company failed to prove that there was no intention to create legal relation. [failed to rebut the presumption that there was an intention to contract]. Company must pay the amount promised to the pilots

7. Capacity to contract to entitle to contractual rights and to enforce legal obligation – a party must have capacity to enter into a contract. Two types of person Natural & legal person Related to mental capacity Age - s. 11 Sound mind – s. 11 & s.12

8. Capacity to contract: - Age of majority, - Sound mind i- contract of a minor Age of majority - s.21 Age of majority Act 1971 – 18 yrs for everybody What happen to a contract entered by a minor– Mohori Bibee v Dhurmodas Ghose Based on s. 10 and 11 of Indian Contract Act – contract entered into by minor – void

9. s. 10 and 11 of Malaysian Contracts Act – contract void. Applied in Tan Hee Juan v The Boon Keat Plf. an infant executed a transfer of land to the def. Witnessed and registered. Plf. applied to the court to set aside the transfer.

10. Q- What was the status of the contract? Held – void for lack of capacity to contract and ordered the land to be returned to the Plf. Some other contracts wh. cannot be entered into by a minor. i- agency contract – cannot become a principal. May acts as agent – but not personally liable to the principal in their r/ship as agent and principal.

11. ii- Minor cannot be – a transferee of land, chargee, or registered holder of lease or easement. Exception 1- contract relating to marriage, divorce, dower and adoption Rajeswary & anor v Balakrishnan A marriage agreement was concluded with provision for dowry and penalty for breach. A customery ceremony was held to confirm the Betrothal.

12. Def. sent letters to the plf’s father to repudiate the promise of mariage to the plf’s. Plf. Claimed inter alia damages for breach of the promise. Q- was there a valid contract?

13. Held- marriage contracts differ from other types of contracts and did not come w/in the principles laid down in Mohori Bibee case. There was a valid contract 2- Contract for necessaries s. 69 of the Contracts Act - a person supplying necessaries to an infant or to whom the infant is legally responsible is entitled to be reimbursed Necessaries = goods and services reasonably necessary for the minor/ lunatic

14. Take into account the minor’s/lunatic’s actual needsand his station in life Nash v Inman The claimant (C) was a tailor carrying on business in Savile Row, London. He had supplied clothes to a Cambridge student including 11 fancy waistcoats. He owed £122 to a tailor.

15. Q-was there a valid contract? Held - Not personally liable but the law will enforce that obligation against the estate of the minor or lunatic. h/ever the action failed as he was already well supplied with such clothing, despite his wealthy station in life. G’ment of Malaysia v Gucharan Singh & Ors Necessaries - to be determined based on the facts of the case, the conditions and -

16. circumstances in wh. the supply was made and the purpose wh. was served. Contract for training as teacher in teacher training college – in return 5 years contract of service. Quit after 3 years & 10 months. G’ment claimed expenses spent on giving training to G.

17. Q- was there a valid contract? Held- contract void. But education was held to be necessaries. G was ordered to reimburse the g’menst’s for the cost of training G as a teacher. 3- religion and religious rites 4- any other written laws wh. fix age qualification e.g. election. Art 119(1) of the Federal Constitution 21 years old qualified to cast ballot at election

18. 5- Contract (Amendments) Act 1976 – contract scholarship bet. gov and minor 6- Children and Young Persons (Employment) Act 1966 provides the capacity for a minor to enter into a contract of apprenticeship or service 7- a minor may enter into a contract of insurance pursuant to the Insurance Act 1996.

19. Performance and Recovery of benefit i- recovery under s. 66 contracts Act – void contract- advantage received under the contract bound to be restored or to make compensation for it Leha Jusoh v Awang Johari Resp. a minor entered into a contract to purchase lands belonging to an estate of which the appellant was the administratrix

20. Q- was there a valid contract? Held – the contract was void. Court set aside the contract and ordered the appl. to return the purchase price to Resp. ii- recovery s. 37 and s. 40of the Specific Relief Act 1950 At the discretion of the court • To order a party upon whom a relief is granted to compensate the other party when justice requires

21. ii- sound mind s. 11 & s. 12 unsound mind + contract = contract void Incapable of understanding the contract & of forming a rational as to its effect upon his interests – at the time of contracting. At times when the mental capacity is perfect - may contract Unsoundness - can be caused by mental disorder, sickness, alcohol, or drugs.

22. Sim Kon Sang Peter (Administrator of the Estate of Chong Yu Tai, Decd) v Datin Shim Tok Keng “Since s 11 of the [Contracts]Act covers not only cases relating to the age of majority but also cases of unsoundness of mind, the decision in Tan Hee Juan v Teh Boon Keat & Anor, though a decision in respect of a want of age, applies equally to a case relating to unsoundness of mind. Therefore, if the Act applies to the present case, it means that any contract made by a person of unsound mind is void and not merely voidable”

23. iii- company/corporations Legal person. Capacity determined by looking at the objects of the company. s. 18 (1)(b) Companies Act 1965 Common law – ultra vires action-void ab initio M’sian law s. 20(1) of the Companies Act – valid action.