2 parties to conract
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LAWTRANSCRIPT
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PARTIES TO CONTRACT
•Privity •Capacity•Factors affecting free consent
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Privity of Contract
GR-only party to contract can sue and be sued
3rd party x sue/be sued although for his benefit
S.2(d) – though consideration may move from 3rd party, he x enforce contract
Except in certain situations causing injustice
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Schmidt v. Kepong Prospecting
Offer RM100
B
agree
A
Cut grassC
(3rd party)
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Capacity to contract
S.10(1) : Agreement are contract if made -by free consent -competent party -for lawful consideration -with lawful object -and x declares as void
S.11 : who is competent? -age of majority -sound mind -x disqualified e.g. bankrupt
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Age of majority
Person attaining age of majority can affect a valid contract
S.2 of Age of Majority Act 1971 : 18yrs
Below 18 = minor
Contract made by minor is void
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Sound mind
S.12 : defines sound mind
-can understand the nature & effects of contract
-at the time of contract
Temporary sound mind can make contract
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consent
S.13
-2 or more persons
-agree upon same thing
-in the same sense
S.14
-consent is free when x affected by
-coercion
-undue influence
-fraud
-misrepresentation
-mistake
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Who can make valid contract?
Adult – above 18 years old
Sane
qualifiedIndicate that party consents to the contract
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Issue of minor
General rule: Contracts made by minor are void Mohari Bibee v. Dhurmodas Ghose (1903) -minor x make a valid contract Tan Hee Juan v. Teh Boon Keat (1934) -Transfer of land by minor was void
Exceptions:-contracts for necessaries-contract of scholarship-contract of insurance
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Contract for necessaries
Necessaries: essential things to existence and reasonable comfort, e.g. food, clothes
Luxurious things are excluded
Government of M’sia v. Gucharan Singh
-education is included under necessaries
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Contract for necessaries
S.69 : allows the supplier to be reimbursed from minor’s property
Conditions :
1. Necessaries actually supplied
2. Claim reasonable amount
3. Minor is x personally liable – obliged to pay it If only he has property
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Contract of Insurance
16 years above: can make insurance contract
10 years – 16 : with guardian’s consent
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Coercion
S.15 – do/threat to do any act forbidden by Penal Code
-unlawful detaining/ threat to detain any property
-with intention to cause him to enter into any agreement
Applicable where PC is not applied, e.g. threat to kill on high seas
Kesarmal s/o Letcman Das v. Valiappa Chettiar
-consent x freely given, thus agreement was voidable
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Undue Influence
S.16 – influence by one of dominant position to obtain unfair advantage
Alcard v. Skinner
-gifts of stock & will to spiritual advisor were voidable
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Fraud
S.17 – deceitful act which induce person to make a contract
E.g. selling a vicious horse
Wong Cheong Kong v. Prudential Assurance
-involved alleged fraudulent insurance claim
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Misrepresentation
S.18 : causing a person to make contract by making false representation
Peek v. Gurney
-appellant sued promoter of Co
-purchase shares of Co after relying on false statement in the prospectus
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Fraud v. Misrepresentation
Misrepresentation
-maker believe that representation is true
-no intention to cause misrepresentation
Fraud
-maker himself x believe in the truth
-have intention to cause misrep & cheating
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Mistake
When make a contract under some misunderstanding in certain circumstances
Can allege that the contract is defective coz if they had known the true facts, would never entered into the agreement
S.21,22 and 23
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1) Common Mistake
Both parties make mistake to a fact which is fundamental to agreement
E.g. both unaware tt SM had already perished at the time of contract
Effect – there is consent, but because of mistake, consent is nullified. Mistake nullify consent
Oh Hiam v. Tham Kong
-oral contract for sale of rubber land in Gombak
-written contract include a land and house in Setapak
-held : set aside coz x intention to buy Setapak property
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2) Mutual Mistake
Parties misunderstand each other & at a cross-purpose
E.g.
Ali intends to offer his Proton Saga Sedan for sale
But Bala believes that the offer relates to Proton Aeroback also owned by Ali
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3) Unilateral Mistake
Only 1 party is mistaken
The other party knows of the mistake
E.g. –Ali agrees to buy from Bala a specific picture which Ali believes to be a genuine Lat. But in fact, it is painted by an amateur artist, Cico
If Bala ignorant of Ali’s erroneous belief = MM
If Bala knows = MM
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Effect of Mutual Mistake & Unilateral Mistake There is apparent consent
But mistake negatives such consent
In fact, there never is any agreement at all between the parties
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Mistake Of Law
S.22: contract valid
Mistake as to law is no excuse
E.g. Ali and Bala make a contract on erroneous belief tt a particular debt is barred by limitation
The contract is not voidable