Capacity Contract Law

appa dissipate in movement 1(i) Phing, 17 categorys old daughter of a wealthy business universe is currently studying at a University College at Kelana Jaya. She bought a luxuriousness machine Audi R8 worth RM 900,000. The car has now been delivered unless she is inefficient to leavefor it. Firstly, Phing is a 17 course of studys old teen climb onr which in step-up kn consume as chela. Minor is a soulfulness who leg every(prenominal)y under ripen who has non tho attained the days of bulk, and which argon denied the ability to richly and freely m separate. In Capacity of air division 11 define a mortal who is of the season of majority, substanti every last(predicate)y for you(p) mind and is non disqualified from contr executioning under both law.Age of majority is recognized as above 18 years of bestride as say in theAge of Majority pretend 1971. beneath are alike(p) with the side, which fiber 1 Ryder v. Wombwell (1868), the defendant, an infant, havi ng an income of exactly 500 Pounds per year was supplied a pair of crystal, ruby and diamond solitaries and an antique silver goblet. It was held that these things could not be makeed to be necessaries. It was observed that certain things like ear ring for a male, spectacles for a blind person, or a excited animal, cannot be considered as necessaries.For another bailiwick which occurrence 2 Mohori Bibee v. Dharmodas Ghose (1903) the plaintiff, Dharmodas Ghose, opus he was a pincer, mortg durationd his property in favour of the defendant, Brahmo Dutt, who was a coinlender to secure a lend of Rs. 20,000. The actual nub of lend given was less than Rs. 20,000. At the term of the trans natural action the attorney, who acted on behalf of the m onenessy lender, had the knowledge that the plaintiff is a low. The plaintiff brought an action against the defendant stating that he was a minor when the mortg advance was penalize by him.Held owe was corrupt and inoperative and the same should be cancelled. In the Phing fictitious character, she is un satis incidentory to establish for opulence car Audi R8 which is already delivered to her. Under the Sale of Goods moment (1979) Phing is against the scratch 32 of the Act goes on to say that unless otherwise agreed, delivery of the goods and payment of the footing are concurrent conditions. This means that the seller sh each(prenominal) be ready and involuntary to give bullheadedness of the goods to the buyer in exchange for the equipment casualty, and the buyer shall(a) be ready and go forthing to pay the price in exchange for possession of the goods.However, in the beginning come along on the section 32 of the Act we also obtain to refer the fraction 3(2) of the Act. Under this section, necessaries are defined as the goods are suitable to the condition in life of the minor or other person concerned and to his actual requirements at the clip of sales event and delivery. Necessaries are things wh ich are essential to the existence and reasonable comfort of the infant. rarefied articles are excluded. Thus, what may be termed as necessaries depends on the nature of goods supplied as well as the infants actual get hold ofs.In the next case which case 3 Fawcett v Smthurst (1914) the court control that a minor is not bound by a come for the hire of a car, although it was a undeniable service, as the declaration included the terms which baffle up him liable for dam bestride to the car in any event, whether or not the damage in his fault. Where in that respect is a book binding get hold of for necessaries, the minor is only bound to pay a reasonable price for them. Next case is relevant with luxury cases, case 4 Chapple v. cooper (1844) a minor whose keep up had recently died contracted with undertakers for his funeral.She later ref workd to pay the cost of the funeral, claiming her in readiness to contract. The court held her liable to pay the bill. The funeral was fo r her private service and was a requirement as she had an obvious obligation to bury her pulseless husband. In the next, case 5 Nash v In art object (1908) a Cambridge undergraduate, the son of an architect, was supplied with clothes, including 11 fancy waistcoats, to the value of $122. The cloth could be appropriate to the station in life of the undergraduate, just the contract was not useable because the minor was already adequately supplied with clothes.Therefore clothes supplied by the tailor could not be assort as necessaries. As conclusion, in the Phing case, she is only a minor and not has any income when she was studying, then, the luxury car may not be the necessaries for her. In conclusion, Phing buy luxury car Audi R8 contract is fend off, she is not obliged to study and pay any damages. Question 1(ii) In this case, Phing is a 17 year old student bought a Myvi as a transport to incite second and forth from the college. In the element of contract, Phing is alrea dy against with the efficiency section 11.In section 11 of capacity say that Every person is fitting to contract who is of age of majority according to law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. It means that the following leash categories of persons are not competent to contract. The function of a minor is a person who has not attained the age of majority is a minor. Section 4 of the age of majority, the minority of all males and females shall cease and determine within Malaysia at the age of 18 years and every such(prenominal) male and female attaining that age shall be of the age of majority.However, some contracts of capacity made by infants are not void there are contract for necessaries, contract for perceptions and contract for insurance. In the case of Phing bought a Myvi may be necessaries for her to expedition back and forth from the college. jibe the section 69 of Contract Act ( 1950) say that the necessaries supplied to a minor should be suited to his condition life it does not mean the food, clothing, cling to and education, but such things which may be necessary to maintain a person according to his condition in life.Below is the cases that related with contract for necessaries, which case 1 Kunwarlal v. Surajmal (1963) It has held that the house given to a minor on rent for living and continuing his studies is deemed to be supply of necessaries suited to the minors conditions of life, and the rent for the house can be recovered. For another good summary case is case 2 Chapple v Cooper (1844) where the court ruled that the funeral service of her husband was a necessary service for the young widow woman in this case, so she was obliged to pay. In the case of case 3 Clowes v.Brook (1739) where, though the plaintiff Farriers claim for work through with(p) on an infants vaulting horse failed on technical pleading thou, it would appear clearly to cook be en trustworthy by the Court that a horse could be a necessary in certain cases. In the case 4 Mohori Bibee v. Dharmodas Ghose (1903) case, the Privy Council did not consider it necessary to decide whether Section 115, Indian Evidence Act was applicable to the present case, because the notes lender was not misled by the misguided narrative made by the minor as has was aware of the legitimate age of the borrower .Under the Section 3(2) of the Sale of Good Act (1979), provides that if goods are exchange and delivered to minorsor those mentally incapacitatedthe minor will be liable to pay a reasonable price if the goods are necessaries. The case much suitable for showing this section is case 5 Roberts v. ancient (1913), in this case a minor was held liable for his failure to commit a contract for a tour with the plaintiff, a noted billiards player. It was a contract for the instruction of the minor. The contract was wholly executory and but it was held that the contract was bin ding on him from its formation. In conclusion, in Phing case to procuredMyvi, Myvi car is her necessaries good for her to travel back and forth from the college and she is able to afford it, so the contract for her to purchased Myvi car is valid. Question 1(iii) Phing is 17 year old, she is a student which studying at a University College at Kelana Jaya. She now has to take a state give of RM 20,000 for her studies in the college. 17 year old is not attained the age of majority, for another word Phing is also call as minor. In capacity section 11 define that a person who legally pocket-sized who has not yet attained the age of majority, and which are denied the ability to fully and freely contract.The equal case that related which case 1 Burnard v. Haggis (1863), there a minor hired a maria. It was expressly agreed that the mare will be used only for riding and not for leap and larking. The mare was made to jump over a fence she was impaled on it and killed. It was held that t he minor was liable for negligently killing the mare as his act was totally autarkic of the contract made by him. For another similar case, which case 2 Ballett v. Mingay (1943), there a minor hired a microphone and an ampliphier. Instead of returning the same to the owner the minor passed it on to his friend.It was held that the minors act of passing it on was altogether outdoor(a) the purview of bailment and, therefore, the minor could be made liable for detinue. In the Phing case, she unable to take a leak the contract to get the cognizance, but Under the Section 69 of Contract Act 1950, it is said that if a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitle to be reimbursed from the property of such incapable person. Under necessaries a minor can enter into valid contract if only it is the basic need of the minor and suitable of his or her station in life or lifestyle. The similar cases that related with, which case 3 Mohori Bibee v. Dharmodas Ghose (1903) case, the minor misrepresented his age while taking give, but the fact that the person taking the add is a minor was known to the money lender.The Privy Council did not consider it necessary to decide whether Section 115, Indian Evidence Act was applicable to the present case, because the money lender was not misled by the false statement made by the minor as has was aware of the real age of the borrower. Contract of Scholarship between a minor and the government or non government organization is also under Section 4 (a) Contracts (Amendment) Act 1976 the scholar entering into such agreement is not of the age of majority. Next similar case, which case 4 Government of Malaysia v.Gurcharansingh & ors (1971) say that when the award, bursary, loan or scholarships granted by the federal or state government, a statutory office st aff, or an educational institution such as a university. Thisis a good example case to show the contract of scholarship, in this case Gurchran is a student who had received a government scholarship to undergo teacher training and was bonded to serve the government. However, Gurcharan left the service before completing his 5 years bond. When the Government sued Gurcharan for breach of contract, he contended that he had no capacity to contract.The court, never the less, held that education was a necessary. For another good case is case 5 Harnedy v National Greyhound Racing Co. Ltd, where the contract does not appear to have had any connection, whether by way of analogy or otherwise, with contracts for the education or employment of children or contacts for personal services. The property between trading contracts and contracts for apprenticeship and education and analogous contracts may often be difficult to draw. Treitel has commented that, an infant haulage contractor is a trader , but believably an infant driver would not be.An infant house painter credibly be regarded as a trader, but not an infant personation painter. In conclusion, Phing have to take loan of scholarship to continue her study, so the scholarship will be the necessaries for Phing, so the contract for her to get scholarship is valid. Question 1(b) Johnny is an old man. He has children, Joe and capital of Seychelles. Johnny has informed everyone that when he dies, the property is to be shared equally among Joe and capital of Seychelles. He stays with capital of Seychelles and is totally dependent on her to look after him. Johnny loves Victoria and does whatever she tells him to do.Two months ago, Johnny transferred all his property to Victoria. In this case, Victoria take care of her laminitis is her responsibility, but Johnny should not transfer all property to Victoria although he loves Victoria so much. Johnny should be fair for Joe too. On the other situation, Victoria maybe said some thing or persuades her father, Johnny to transfer all property to her. If this situation sound true, Victoria is against vitiating factors, Section 10 Contracts essential be entered into with free assume of the parties and Section 10(1) all agreements are contracts if they are made by the free consent of parties competent to contract.Section 14 Consent is free when it is not caused by Section 16(1) unjustified regularize wild sour occur where there is a likenessship between the parties and one society is in the position to triumph the will of the other. The dominant part uses that position to obtain an unfair benefit over the other. The word un bringed act has the tendency to make sight feel that it would include situations where one party is about to persuade the other through some pattern of influence in a general sense ands. Undue influence can divide into actual indefensible influence and presumed unjustified influence.Actual overweening influence as the nam e suggests, requires certainty that the contract was entered into as a result of actual influence exerted. The claimant must plead and try on the acts which they assert amounted to baseless influence. This may include such acts as threats to enda race, continuing to badger the party where they have refused consent until they eventually give in. For presumed undue influence is no self-acting presumption arising as a matter of law. Here it must be established that there is a relationship of such a kind that one party in fact placed their trust and impudence in the other to safeguard their interest.Any relationship is capable of amounting to this examples include husband and married woman, cohabitees, employer and employee. In Section 16(2) person is in a position to endure the will of another where he holds a real/apparent authority over the other, or where he stands in a fiduciary relation to the other, he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, indisposition or mental bodily distress. Next, in Section 16(3) where a person who is in a position to dominate the will of another, enters into a contract ith him, and the transaction appears, on the stage of it or on the evidence adduced, to be unconscionable, the burden of proving that the contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other as the case 1 Re Craig (1971) C, an old man of 84 years whose married woman had died, employed Mrs M as writing table/companion. From the beginning she occupied a position of trust, and in plus to runnel the house she took a secluded part in running Cs affairs.From the duration of Mrs Ms employment and Cs death (January 1959 August 1964) he gave her gifts worth ? 28,000 from his total pluss of ? 40,000. It was held by the Chancery Division that All the gifts complained of where such as to satisfy the requirements to post the pres umption of undue influence, namely, that they could not be accounted for on the ground of the customary motives on which ordinary men act, and secondly, that the relationship between C and Mrs M involved such confidence by C in Mrs M as to place her in a position to exercise undue influence over him.Mrs M failed to dis disturb the onus on her of establishing that the gifts were only made after full, free and informed watchword so as to contradict the presumption of undue influence. The gifts would, therefore, be set aside. Other similar cases, which case 2 Williams v Bailey (1866) A son forged his fathers signature on promissory notes and gave them to their argoters. At a meeting of all the parties at the hope, one of the bankers said to the father If the bills are yours we are all right if they are not, we have only one course to pursue we cannot be parties to compounding a felony. The banks solicitor said it was a unspoiled matter and the fathers own solicitor added, a cas e of transportation for life. After further discussion as to the sons monetary liability the banks solicitor said that they could only look to the father. The father then agreed to make an equitable mortgage to the bank in consideration of the return of the promissory notes. The father succeeded in an action for cancellation of the agreement.It was held by Lord Westbury that the warranter given for the debt of the son by the father under such circumstances was not the tribute of a man who acted with that freedom and actor of deliberation that must be considered as necessary to validate a contract to give security for the debt of another. Besides that, in the Singapore High Court case, which case 3 che Som bte. Yip & Ors. V. Maha Pte. Ltd. & Ors. ( Maha Pte. Ltd. & Anor. , triad Parties) a mortgage deed was set aside in so far as it affected the plaintiff over whom undue influence was exercised.In this case the relationship was that of brothers. This relationship does not per se (That is, on the face of it) give rise to a presumption of undue influence. However, the court found as a fact that undue influence was indeed exercised. In the next similar case, which case 4 Inche Noriah v. Shaik Allie Bin Omar (1929) case, an old and unknowledgeable Malay woman executed a deed of gift of a landed property in Singapore in favour of her nephew who had been managing her affairs. in the lead executing the deed the donor had independent advice from a lawyer who acted in good faith.However, he was unaware that the gift constituted practically he whole of her property and did not impress upon her that she could prudently, and equally effectively, have benefited the done by bestowing the property upon him by a will. Held the gift should be set aside as the presumption of undue influence, which is brocaded by the relationship proved to have been in existence between the parties, was not rebutted. A plea of undue influence can only be raised by a party to the contract and not by a third party, this have been show in the case, which case 5 Malayan Freach deposit Bhd. V. Abdullah bin Mohd Yusof & Ors.It was held that in order to establish undue influence, the defendants have to prove that the plaintiff was in a position to dominate their will and thus obtained an unfair advantage by using that position. In this case, there is undue influence involving family members or friends. Often cases arise that involve family and friends who become parties to a contract. In general, family relationships, such as between husband and married woman or parent and child, are confidential relationships. These relationships, like fiduciary relationships, have at their crux a history of informal trust and confidential dealings.In cases that arise where a family member gains a profit or pellucid advantage through dealing with a weaker party, the courts have looked to consume if the weaker party is very old, mentally incapacitated, suffering from debilitating sic kness, or otherwise physically or psychologically impaired. Such physical or psychological impairment combined with a lack of independent advice and a contract grownup an obvious advantage to a family member would force the stronger party to prove the contracts fairness. The cases of undue influence, which case6 Allcard v.Skinner lack Allcard was introduced by the Revd Mr Nihill to Miss Skinner, a lady superior of a religious order named Protestant Sisters of the brusque. She had to observe vows of poverty and obedience. Three days after becoming a member, Miss Allcard made a will bequeathing all property to Miss Skinner, and passed on railway stock that she came into possession of in 1872 and 1874. She then claimed the money back after she left the sisterhood. Held Lindley LJ, held that she was unduly influenced but barred by laches from getting restitution.And in any case she would only have been able to recover as much of the gift as remained in the defendants hands after so me of it had been spent in conformance with her wishes. Another next case, which case 7 In Royal depose of Scotland v Etridge 2001, the House of Lord indicates that, in normal circumstances, a married womans agreement to lodge the matrimonial family line as security for her husbands business debts is not a transaction that calls for explanation. Undue influence connotes impropriety, and should only be found where the husbands influence has been misused .Then, the other case, which case 8 Lloyds Bank Ltd v Bundy(1974) Herbert jam Bundy was a farmer. His son, Michael, formed a MJB Plant Hire Ltd and it was in financial trouble. Mr Bundy had already guaranteed the business with a ? 7,500 charge over his only asset to Lloyds. This was his farmhouse at Yew Tree Farm,Broadchalke, and Wiltshire. Michaels company got into much trouble still, and needed more money. Bundys solicitor said not to put on any more money, but they went up to ? 11,000.The assistant manager of Lloyds, Mr Head explained the companys position to Bundy (i. e. a conflict of interest) but neglected to say the company was in serious trouble. Bundy signed the guarantee and charge form. Lloyds foreclosed on the house when the money was not paid, and Bundy had a heart attack in the witness box. The question was whether the contract leading to the repossession of the house was rescindable for some iniquitous pressure. The held is that the contract was voidable due to the unequal bargaining position in which Mr Bundy had found himself.He held that undue influence was a category of a wider class where the balance of power between the parties was such as to merit the interference of the court. It was apparent that Mr Bundy had, without independent advice entered the contract and it was very unfair and pressures were brought to bear by the bank. Another similar case, which case 9 National Westminster Bank v. Morgan (1985) Mrs Morgan jointly have the family root with her husband. As a result of his business problems, their mortgage payments fell into arrears, and the bank started to seek possession.Mr Morgan approached the bank to arrange a refinancing loan (this work as follows if Mr Morgans original mortgage was for ? 50,000, and he owed arrears of ? 5,000, he could replace the mortgage with a refinancing loan of ? 55,000, and start afresh). Mrs Morgans signature was required to use the house as security for the extended loans. The bank manager went to see her, in the presence of Mr Morgan she made it clear that she had little confidence in her husbands business and wanted to talk to the manager alone, but this did not happen, and she eventually signed to prevent the house being repossessed.The loan was not repaid, and Mr Morgan later died. When the bank tried to take possession of the house, Mrs Morgan pleaded undue influence. Next, the case which case10 CIBC Mortgages v Pitt(1994) Mr Pitt wished to purchase some shares on the stock market. He pressured his married woman i nto signing a mortgage of ? 150,000 securing the family central office. The stated target of the loan was to purchase a holiday business firm and pay off the existing mortgage. The husband used the money to purchase shares and then used those shares as collateral to purchase further shares.For a time the shares did very well and he was a millionaire on paper. The wife axiom no benefit from these shares as any income was always used to purchase more shares. In 1987 the stock market crashed. The bank sought to enforce the security under the mortgage which at the time exceeded the value of the home. The wife raised actual undue influence in defense team. The judged is the Overruling BBCI v Aboody it is not necessary for a claimant to demonstrate manifest loss where a defence is based on actual undue influence.However, as the transaction on its face did not seem to the manifest disadvantage of the wife, because the stated purpose was to purchase a holiday home, the bank was not pu t on enquiry and therefore could not be resolved with constructive notice. In the case11 Bank of Credit and Commerce International v Aboody(1990) A husband exerted actual undue influence over his wife in order to get her to sign a charge securing the family home on the debts owed by the company in which the husband and wife owned shares. The couples were unable to repay the mortgage and the bank sought to repossess the home.The wife sought to have the mortgage set aside on the grounds that it was procured by actual undue influence of the husband. Held the husband had exerted actual undue influence on the wife. However, the transaction was not to the manifest disadvantage of the wife since she owned shares in the company. In considering whether a transaction was to the manifest disadvantage the court was to have regard to any benefits received in addition to the assays undertaken. Therefore the banks were granted possession. Furthermore, in case12 Credit Lyonnais Bank Nederland NV v Burch(1997) Miss Burch started working for her employer at the age of 18.She became close to the director, Mr Pelosi, who was an Italian business man 10 years older and trusted him implicitly. She often visited his home to do babysitting and went on holiday with the family to Italy. At the age of 21 she purchased a flat. 5 years later, she was still working for him but the company was experiencing financial difficulty. Mr Pelosi asked her to put her flat up as security for a loan taken out by the company. He told her that his home and villa in Italy were also secured on the debt but they would not accept one hundred% mortgage on these properties and needed another ? 0,000. She agreed to allow her home to be used as security believing that it was only ? 20,000 and that Mr Pelosis properties would scratch line be sold which would release the debt so that there was no risk to her. The bank had written to her and informed her that the charge was unlimited in amount and time and advi sed her to seek independent advice. She at no time was told of the extent of the companys borrowings which stood at ? 270,000 neither did the bank satisfy themselves that she had in fact received independent advice.In the case 13 UCB v Williams(2002) The Williams family (Mr & Mrs Jack Williams and their three grown up children) ran a garage business as a partnership with the benefit of a right from Toyota. Toyota threatened to withdraw the franchise unless the showrooms were extended and improved. The cost for this was ? 500,000. The Williams approached the bank for a loan which asked for security by way of a charge on the three showrooms in addition to a charge on each of the partners home. The defendant, Mrs Williams, was the wife of one of the sons.She had signed the charge without having been told the full extent of the liability. The signature was executed in the presence of all the other partners and witnessed by Mr. Howells, the solicitor of the partnership. The charge secur ed all debts present and future of the partnership and provided for joint and several liabilities of all the partners. The business was unable to repay the loan and became bankrupt. UCB sought to enforce the charge and Mrs Williams raised undue influence and misrepresentation in her defence. The trial judge, HHJ Hickinbottom, held that undue influence and misrepresentation were established.However, he held that Mrs Williams would have signed the charge in any event had she known the full facts and also that UCB were not fixed with constructive notice as a solicitor had witnessed the signature therefore they could assume Mrs Williams had been advised accordingly. Mrs Williams appealed to the Court of Appeal. Held Mrs Williams was successful on both grounds. In conclusion, Joe still can voidable the contract about the Johnny transferred all his property to Victoria. If the contract is void, property Johnny will use back the contract in early to share equally among for Joe and Victoria .