Analysis of Legal Issues According to Business Law

Analysis, Pages 10 (2450 words)

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Question 1(a) The legal issue and problem in this question is whether Micky has a contract with Ureach Mobile Co. Section 11 of Contracts Act 1950 provides who are competent to contract, that is those who are of the age of majority according to the law to which she is subject, have sound mind, and not disqualified from contracting by any law to which he is subject (KrishnanL, RajooL, & VergisA.

C,2009). On the other hand, the Age of Majority Act 1971 states that the age of majority is 18 years and above, and anyone below that age would be regarded as a minor (LeeMeiPheng & IvanJeronDetta, 2009).

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Thus, Micky, who is 17 years old, is regarded as a minor and is not competent to enter any contract. The general rule states that the contract entered into by a minor is not binding on him, that is void ab initio (KrishnanL, RajooL, & VergisA. C, 2009). In the Mohori Bibee v Dhurmodas Ghose (1903) case (KrishnanL, RajooL, & VergisA. C, 2009), the plaintiff loan a sum of money to the respondent, a minor, that secure on a house which was leased to the appellant (SlideShare Inc, 2012). Following that, the minor filed a suit to set aside the mortgage (KrishnanL, RajooL, & VergisA. C, 2009).

The council held that the contract is formulated with a minor is void (Reporter, 2010). Besides that, the Tan Hee Juan v Teh Boon Keat (1934) case (KrishnanL, RajooL, & VergisA. C, 2009), the plaintiff Tan Hee Juan had transferred ownership of a piece of land to the defendant Teh Boon Keat.

The court held that the contract was void and ownership of the land had to be returned to the plaintiff. Plaintiff Tan Hee Juan who is a minor said that contract that involved a minor is said to be void. So, there is no contract at all (SlideShare Inc, 2012).

Thus, based on the rule and these cases, the contract entered into by Micky with Ureach Mobile Co for a 12-month smart phone plan is not binding on him. However, there is an exception to that because the contract he entered could be a contract for necessaries. An example of exceptions to the general rule is the contracts for necessaries. In Section 69 of Contracts Act 1950, if a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with the necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be eimbursed from the property of such incapable person (LeeMeiPheng & IvanJeronDetta, 2009).

There are 2 fold tests to determine if a contract entered by a minor is a contract to necessaries. Firstly, the status of status, at which if the subject matter suits the minor’s station of life, such as his family background, the contract is binding on him. Secondly, the test of need, whereby if the minor already has enough supply of the item in question and it is not a need to him, the contract is not binding on him. In the Nash v Inman (1908) case (KrishnanL, RajooL, & VergisA. C, 2009), Nash entered into a contract to supply Inman with 11 fancy waistcoats. Inman was a minor who was already adequately supplied with clothes by his father.

When Nash claimed the cost of these clothes Inman seek to rely on lack of capacity and succeeded at first instance. The court held that ‘An infant, is incapable of making a contract of purchase but if a man satisfies the needs of the infant by supplying to him necessaries, the law will imply an obligation to repay him for the services so rendered, and will enforce that obligation against the estate of the infant.

So the contract is void (ClarkeJ, 2010). The general rule to this is that if the contract for necessaries is binding, the minor must pay a reasonable price, not the full contractual price stated. Based on the two fold test, the smart phone plan suits his status of status whereby in his station of life, he is a son of a wealthy entrepreneur. Besides, he needs the smart phone for his studies. In conclusion, the contract is a contract for necessaries and is binding on Micky. He needs to pay Ureach Mobile Co a reasonable price, not the full contractual price of RM1500.

If he does not pay, he can be blacklisted by the company. Question 1(b) The legal issue and problem is whether Micky has a contract with the State government. According to Section 11 of Contracts Act 1950, those who are of the age of majority according to the law to which he is subject, have sound mind, and not disqualified from contracting by any law to which he is subject, are competent to contract (KrishnanL, RajooL, & VergisA. C, 2009). Besides, the Age of Majority Act 1971 states that the age of majority is 18 years and above, and anyone below that age would be regarded as a inor (LeeMeiPheng & IvanJeronDetta, 2009).

Micky, who is 17 years old, is regarded as a minor and is not competent to enter any contract. Based on the general rule, the contract entered into by a minor is not binding on him and is void ab initio (KrishnanL, RajooL, & VergisA. C, 2009). In the Mohori Bibee v Dhurmodas Ghose (1903) case (cch), the plaintiff loan a sum of money to the respondent, a minor, that secure on a house which was leased to the appellant (SlideShare Inc, 2012). Following that, the minor filed a suit to set aside the mortgage ((KrishnanL, RajooL, & VergisA. C, 2009)).

The council held that the contract is formulated with a minor is void (SlideShare Inc, 2012). Other than that, the Tan Hee Juan v Teh Boon Keat (1934) case (cch), the plaintiff Tan Hee Juan had transferred ownership of a piece of land to the defendant Teh Boon Keat. The court held that the contract was void and ownership of the land had to be returned to the plaintiff. Plaintiff Tan Hee Juan who is a minor said that contract that involved a minor is said to be void. So, there is no contract at all (SlideShare Inc, 2012).

Thus, the contract entered into by Micky with the State government for a state loan should not be binding on him. However, there is an exception to that because the contract he entered is a contract of scholarship whereby loan is within the section related. Based on Section 4 of Contracts (Amendment) Act 1976, for scholarships or loans given by the government or a statutory body or an educational institution, the scholarship agreement entered into by a minor is valid (KrishnanL, RajooL, & VergisA. C, 2009).

For example, in the Government of Malaysia v Gurcharan Singh & Ors case (LeeMeiPheng & IvanJeronDetta, 2009). In conclusion, the contract is a valid contract of scholarship and is binding on Micky. He needs to pay the State government the amount he borrowed when it is due. Question 2 The problem or legal issue to this question is whether a valid contract is formed between June, Yuna and Joanne with Phil, and whether Phil is obliged to pay them.

In Section 2(d) of Contracts Act 1950, it is stated that when, at the desire of the promisor, the promisee 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 for the promise (LeeMeiPheng & IvanJeronDetta, 2009). Due to the section stated above, there is a consideration to constitute a contract between June, Yuna and Joanne with Phil, because as requested by Phil, the three students performed at his daughter’s wedding party.

However, Phil never promised them that he will compensate them in a form of payment for their performance. So, Section 26(b) of Contracts Act 1950 is not applicable, in which a promise by a promisor to compensate the promisee for something the promisee has already done for the promisor, or for something which the promisor was legally compelled to do, is not void even though there is no consideration. (KrishnanL, RajooL, & VergisA. C, 2009). For example, Stilk v Myrick (1809) (KrishnanL, RajooL, & VergisA. C, 2009), two sailors out of eleven deserted a ship and from that the captain of the ship promised to pay rest of the crew extra money if they sail the ship back. However, he refused to pay.

It was held that the captain need not pay them because they were already bound by their contract to sail back thus promising to sail back in this situation is not considered a valid consideration (Law Teacher, 2012). Phil, also, never had the intention to create legal relations with the three music academy students because he is merely giving them an opportunity to practise in public.

It is generally stated about what constitutes intention to create legal relations, that is whereby an agreement reached between an offeror and an offeree will be a legally binding contract only if the parties intended that they should be legally bound (KrishnanL, RajooL, & VergisA. C, 2009). For social and domestic agreements, there is a presumption that these agreements are not meant to be legally binding unless the contrary can be proven. An example of these agreements is between friends or remote members of the family (KrishnanL, RajooL, & VergisA. C, 2009).

In June’s case, Phil is her uncle, who is a remote member of her family, and the agreement between them can only be regarded as a social and domestic agreement that not meant to be legally binding. As for business and commercial agreements, there is a presumption that there is intention to create legal relations and is regarded as legally binding because they are more formal in nature unless the contrary is proven (KrishnanL, RajooL, & VergisA. C, 2009). For example, as shown in the Edwards v Skyways (1964) case, a pilot was laid off and informed that he would be given an ex gratia payment. He sued when he failed o receive the payment.

The court held that this agreement relates to business matters and is binding. The words “ex gratia” are simply to indicate that the party agreeing to pay does not admit any pre-existing liability on his side (Law Teacher, 2012). . The performance by June, Yuna and Joanne in Gaya Street Sunday Market to entertain tourists and visitors are not profit seeking thus their performance is not considered as a business situation and the agreement made by them with Phil would not be regarded as a business and commercial agreement. In conclusion, the contract between June, Yuna and Joanne with Phil is not valid.

Phil is not liable to pay them the RM600 that they want to claim from him. Question 3 The problem or issue that relates to this question is whether Ian can keep the properties that he received from Ah Yun prior to her death. The principles that being applied are Section 2(d) of Contracts Act 1950, stating that when or at the desire of the promisor, the promisee 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 for the promise (LeeMeiPheng & IvanJeronDetta, 2009).

Past consideration is where a promise is performed before the formation of the contract. For example, in the Lampleigh v Brathwait case, Braithwait request Lampleigh to get a pardon for him after Braithwait killed someone. Lampleigh got the pardon and gave it to Braithwait who promised to pay lampleigh ? 100 for his trouble. But Braithwait in fact never pay him. The court held that althought it is a past consideration, but the service requested by the promisor eventhough there is no amount of money mentioned, but it is clear that promisor enter to the agreement that he would pay.

So Braithwait should have pay (SlideShare Inc, 2012). Beside that, Section 26(b) of Contracts Act 1950 also relate to this case whereby a promise by a promisor to compensate the promisee for something the promisee has already done for the promisor, or for something which the promisor was legally compelled to do, is not void even though there is no consideration (KrishnanL, RajooL, & VergisA. C, 2009). Therefore, past consideration exists if Ian promised to look after Ah Yun, in which he did, and in return she transfers all her property to Ian to compensate him for what he done.

According to Section 26(a) of Contracts Act 1950 is state that if an agreement made without consideration is void unless it is expressed in writing and registered under the law (if any) for the time being in force for the registration of such documents, and is made on account of natural love and affection between parties standing in a near relation to each other (LeeMeiPheng & IvanJeronDetta, 2009). For example, the Tan Soh Sim, Chan Law Keong & Ors v Tan Saw Keow & Ors case, in her last moment Ms. Tan Soh Sim expressed her wish to divide her estate among her four adopted children.

Her sisters and brothers renounced their rights in favour of the adopted children of Tan Soh Sim but the court held that the four adopted children could not get it because the contract was made on account of natural love and affection which could not be made valid due to facts that the four adopted children are not in near relation to the deceased. If it is in the case whereby there is an agreement between Ah Yun and Ian made in account of natural love and affection, the agreement will be void because Ian is an adopted son, thus prove that they are not standing in a near relation to each other.

Kay, who is Ah Yun’s son, have every right to claim back all the property that Ah Yun already transferred to Ian but he should, representing his mother, compensate Ian for everything he did for Ah Yun or any advantages Ah Yun got from Ian prior her death, which is in relation to Section 66 of Contracts Act 1950, When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it (LeeMeiPheng & IvanJeronDetta, 2009).

In conclusion, If it is a past consideration, Ian can keep the property that Ah Yun transferred to him and If it is an agreement made in account of natural love and affection, the agreement will be void and Ian cannot keep any of the property given to him by Ah Yun but he can be compensated for looking after Ah Yun prior her death.