1. Question 1:
Can a minor and an insane person enter into a valid
contract? Explain.

2. MINOR
• A minor is a person who has not reached the age of majority that below the age
of 18 and is competent to make a contract.
• Section 10(1) of the Contracts Act 1950 :
• “All agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and
are not hereby expressly declared to be void.”
• Section 11 of the Contracts Act 1950 :
• “Every person is competent to contract who is of the age of majority according to
the 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.”
• Sections 2 of the Age of Majority Act 1971
• that all persons in Malaysia attain the age of majority at 18. Previously the
repealed Age of Majority Act 1961 provided that Muslims attain the age of
majority at 18 while non-Muslims attain is at 21.

3. CASES
•Tan Hee Juan v The Boon Keat
•Mohori Bibee v Dhurmodas Ghose
•Leha bte Jusoh v Awang Johari bin Hashim

4. CONCLUSION
• Based on the cases above, any contracts that entered
by a minor was void under the Section 10 and 11 in
Contracts Act 1950 that stipulates every person is
competent to contract who is the age of majority
according to law and they have to be controlled under
the parent’s guidance.

5. EXCEPTION TO MINOR-contract is valid
• Contract for Necessaries + Scholarship
• Case: Nash v Inman
• Contract for Services/Apprentice
• Case: Clements v London and North Western Rly
• Contract for Insurance
• Contract for Marriage
• Case: Rajeswary & Anor v Balakrishnan & Ors

6. INSANE/UNSOUND MIND PERSON
• An insane or unsound mind person is a person suffering from a mental disability, either
permanently or temporarily, at the time of contract obviously lack of capacity. A meeting of minds
and free consent is the basis of a contract.
• Sections 11 of the Contracts Act 1950:
• “every person is competent to contract who is of the age of majority according to the 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.”
• Sections 12 of the Contracts Act 1950:
• 12 (1) : The definition of when a person is of sound mind is a person is said to be of sound mind
for the purpose of making a contract if, at the time when he makes it, he is capable of
understanding it and of forming a rational judgment as to its effect upon his interests.
• 12 (2) : Makes provisions for mental patients who have lucid intervals to make a contract is a
person who is usually of unsound mind, but occasionally of sound mind, may make a contract
when he is of sound mind.
• 12 (3) : A person who is usually of sound mind, but occasionally of unsound mind, may not make a
contract when he is of unsound mind.

7. CASE:
Sim Kon Sang Peter v Datin Shim Tok Keng

8. Ian Chin J held that since section 11 of the Contracts Act 1950
covers not only cases relating to the age of majority but also cases
of unsoundness of mind. The question when is a person regarded
to be of unsound mind finds the answer in section 12(1) of the
Contracts Act 1950.
In Sim Kon Sang’s case, the plaintiff claimed in his capacity as the
administrator of the estate of the deceased against the defendant. The
plaintiff claimed that the deceased when she was alive, transferred to
the defendant certain shares of her land when she was, as the
defendants well knew, of unsound mind at the same time of executing
the transfers and incapable of understanding the same.
The court held that since the transfers took effect before the Contracts
Act 1950 came into force in Sabah, the English common law applied.
The transfers were not void but voidable if the defendant knew at the
time of the transfers that the deceased was of unsound mind. The court
found that the deceased had appeared normal to the defendant and
therefore, the defendant was not aware that the deceased was of
unsound mind.

9. CONCLUSION
• In conclusion, the contract is void when the person who make the
contract in unsound mind such as unconscious or having mental
illness for a period of time. But, the contract is valid when the
person is competent to contract who is of the age of majority
according to law to which he is subject, and who is of sound mind
according to Section 11 and 12 of Contracts Act 1950.

10. Question 2:
The principle of past consideration was applied in
Kepong Prospecting Ltd. & S.K. Jagathesan & Ors v
A.E Schmidt & Marjorie Schmidt (1968). Discuss

11. • One of the part in consideration
• Consists of something wholly performed before the
making of the promise.
• The past act was done or omitted not in respond to the
promise
• The promise is subsequent to the act or omission and
dependent of it

12. KEPONG PROSPECTING LTD & S.K.
JAGATHEESAN & ORS. V. A.E. SCHMIDT &
MARJORIE SCHMIDT (1968).

13. 1953 1954 1955
the company and Tan
made an agreement
whereby the company
took over Tan
obligations to pay
Schmidt 1% of all ore
that might be
produced and sold.
the company and Schmidt
made an agreement
wherein the company
agreed to pay Schmidt 1%
of all ore that might be won
from any land comprised in
1954 agreement in
‘consideration of the
services by the consulting
engineer for an on behalf of
the company (1) prior to its
formation, (2) after
incorporation and (3) for
the future services’
After the permit was
granted, Tan wrote to
Schmidt promising to
him 1% of the selling
price of all ore that
might be sold in
payment for the work
Schmidt had done
and might do in
starting mining
operations.
Tan applied for a
prospecting
permit for iron ore
and Schmidt, a
consulting
engineer, assisted
in negotiation in
1953
Schmidt
continued
to provide
services to
the
company.

14. ISSUED
• September 1955, an argument
happened between Schmidt and
the company, and Schmidt quit
the job as managing director.
• SCHIMDT claims the money
under the agreement on 1954
and 1955
COURT HELD
• The services given by Schmidt
before the establishment of the
company was not a consider as
consideration.
• The services after incorporation
was consider as consideration.
• The privy council ruled that it did
constitute a valid consideration.
• Schmidt was entitled to his claim
on the amount.

15. Question 3:
Question: Explain invitation to treat and support
your answer with cases.

16. Invitation to treat
What Is Invitation to Treat?
Whether Invitation to treat is a contract?

17. What are the cases that related to the invitation to treat?

18. Case 1: Pharmaceutical Society of Great Britain v. Boots Cash Chemist Ltd.
Issue: The Issue is that, is putting the drugs from the shelves in the basket is
considered as accepting an offer which leads to the binding of the contract?
The second issue appeared when the customer went to the cashier to settle
up the payment, unfortunately the pharmacist prevent the sales after the
drug was supervised. Thus, is there any contract occurs?
Court Held: The court held that the rules for this case is, placing goods on
shelves from the retail self-service sales is assumed as an invitation to treat,
while the acceptance of the offer can only take place at the cashier when the
cashier accept the offer.

19. Case 2: Fisher v. Bell
Issue: The defendant displayed flick knives in his shop windows which is
against the law. He later was prosecuted for criminal offence for offering
such knives for sale. The issue is that, is the defendant can be sue for
displaying the flip-knives at the shop window?
Court Held: The court held that display of and goods with a price tag in a
shop window is not an offer but rather it is an invitation to treat. Lord Parker
declared that displaying of an article with a price on it in a shop window is
merely an invitation to treat.

20. Case 3: Carlill v. Carbolic Smoke Ball Company.
Issue: The Issue is that, the defendants advertised to the whole world that they would pay
anyone who use their product as prescribed manner and caught influenza, £100 and make
safe by saying that they will deposit £1,000 in the bank account as to express their good
faith. Therefore, the plaintiff had accept the offer of the company by performing the acts
wished by the company. Is there any binding contract between parties?
Court Held: The court of appeal held that, for an offer to be capable of becoming binding
on acceptance, the offer must be definite, clear, and final. The statement of CSBC in the
ads was clearly shows that there is intention of entering into legal relation by expressing
the promise to pay the amount of money. Therefore, the defendant was contractually
obliged to pay £100 to any person who performed the requested acts.

21. Question 3:
Question: Define contract and explain the essential
elements of a contract

22. According to Contracts Act 1950,
section 2 (h) ,contract refer to an
agreement between two or more
parties enforceable by law.

23. • PROPOSAL is 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 proposal.
• ACCEPTANCE is the person who accepting the offer which
called as offeree or promise

24. • Proposal can be made to an
individual,class of
person,firm,company or public
• through any form like
writing,orally , by conduct or
combination of these methods.

25. •According to Contracts Act section 2 (d) when,at the
desire of the promisor,the promise or any other
person has done or abstained from doing ,or does or
abstains from doing,or promises to do or to abstain
from doing,something,such act or abstinence or
promise is called a CONSIDERATION of the promise.

26. • CONSIDERATION also may be view as a sort of bargain when a
promisor promises to do or to abstain from doing something, the
promise must pay a price for it
• CONSIDERATION can be classified into three types which is executory,
executed and past consideration.

27. •Through the Contracts Act 1950 is silent
on the question of intention to create
legal relations ,there seems to be no
doubt that a vital requirement of a valid
contract is that the parties must have the
intention to enter into such relationship.

28. • The condition of an offer must be in the condition of CERTAIN and
communicated. CERTAIN means clear, complete , final and detail to
avoid any doubt

29. Legal capacity of
human are related
to worship,
transaction, family
law, criminal law
and other fields
The legality of
an ‘ibadah
depends on the
state of maturity
of the
performances
At common law, it
is presumed that a
person who enters
into a contract has
full capacity to do
so

30. Free consent is the basis of a contractual relationship.
Based on the Contact act section 10(1), all ‘agreements are
contracts if they are made by the free consent of parties
competent to contract…’.

31. Legality of object is an
essential component of
a valid contract must be
for a legal purpose and
in compliance with
public policy
If the object or
consideration is unlawful
for one or the other of the
reasons mentioned in
section 23, the agreement
is illegal and therefore void
Section 10 lays down
that all agreements are
contracts if made for
lawful consideration
and with a lawful object

32. General rule is that a contract can be made orally, in writing or by conduct.
Section 10 (2) of the Contract Act provides that ‘Nothing herein contained
shall affect any law by which any contract is required to be made in writing
or in the presence of witnesses, or any law relating to the registration of
documents
In section 26(a) ‘Agreements
made on account of natural love
and affection between parties
standing in near relation’
In section 26(c) ‘Agreement to
pay a statute-barred debt’