ALW 10103 Business Law Group Assignment 2 Lecturers Name Ms. Koeh BL (Janet) Content NoDetailsPage1.0Issue Statement32.0Legal Rules4-63.0Citations74.0Application/Advice85.0Summary9 1.0 Issue Statement The issue statement in this assignment in scenario 1 is Trump chose to buy the latest Macbook Pro notebook for RM2500 from Wacky and Trump placed the order on the spot, but Trumps father did not have sufficient money for him to purchase the notebook. Trumps father advised him to postpone or cancel the notebook order. Trump is having dilemma on proceeds with the purchase or face the legal consequences now. In scenario 2, Soo agreed to sell her mountain bike to zoo. Soo has changed her mind about selling her adventure road bike. Soo is just turning seventeen. 2.0 LEGAL RULE 2.1 LAW OF CONTRACT The law of contract is the body of law that governs oral and written agreements and subjects, such as agency relationships, commercial paper, employment, and business organizations. The basic principles of contract law is a legal binding agreement which intends to create a legal obligation between two parties. An agreement is normally constituted by one party making an offer and the other party is accepting that offer. The legislation in Malaysia governing contract is the Contracts Act 1950 (Act 136) (Revised 1974). The six elements for form a valid contract 2.1.1 Offer The offer is one of the elements that make for a valid contract between two parties, offeror and offeree. The offer can be money or another thing of value in exchange for performance by the other party. There are two types of contract such as bilateral contract and unilateral contact. Bilateral contract is an agreement formed by an exchange of a promise in which the promise of one party is consideration supporting the promise of the other party. Unilateral contract is a contract in which only one party makes an express promise, or undertakes a performance without first securing a reciprocal agreement from the other party. 2.1.2 Acceptance An express act or implication by conduct that manifests assent to the terms of an offer in a manner invited or required by the offer so that a binding contract is formed. In the law of contracts, acceptance is one persons compliance with the terms of an offer made by another. There are three types of acceptance such as conditional acceptance, express acceptance and implied acceptance. 2.1.3 Intention to create a legal relation Intention to create a legal relation is an intention to enter a legally binding agreement or contract. When say that two parties have the intention to create legal relations, it means that they intend to be legally bound by the agreement. Thus, if the one party fails to fulfill his contractual obligation, the other party can enforce the contract in court. To determine the parties intention, we can apply an objective test. We can consider whether a reasonable person looking at the parties words and conduct, would consider there to be an intention to create legal relation. If there is no intention to create legal relations the contract would not be enforceable, legal and binding Without intention to create legal relations, the parties cannot sue each other, the contract may become a mere promise and the contract may lack the binding effect. 2.1.4 Consideration Consideration is the value that a person gives for the offerors promise. So long as the consideration is of value in the eyes of the law, it is a good consideration. Note that Malaysian law is different from English law in some aspects Past consideration is acceptable under the Contract Act and a third party can give the consideration for the offerors promise. There are various rules governing the law of consideration The consideration must not be past. The consideration must be sufficient but need not be adequate. The consideration must move from the promise. An existing public duty will not amount to valid consideration. An existing contractual duty will not amount to valid consideration. Part payment of a debt is not valid consideration for a promise to forego the balance. 2.1.5 Certainty A legal requirement of a valid offer to contract that it must be precise and definite in order to be subject to acceptance. For instance, An agreement may lack contractual force because it is so vague or uncertain that no definite meaning can be given to it without adding further terms. 2.1.6 Capacity The general presumption of the law is that all people have a capacity to contract. When we say that a person who has legal capacity to contract, it means that he has the ability to understand the terms of the contract. He also understands that failure to fulfill his contractual obligations can result in legal liability. A person who is trying to avoid a contract would have to plead his or her lack of capacity to contract against the party who is trying to enforce the contract. A person of unsound mind is someone who is incapable of understanding the agreement and cannot rationally judge the effect of the agreement on his interests. A mental patient is certainly someone of unsound mind. A drunk can also be considered a person of unsound mind if he cannot weigh the effect of the agreement during the period of his drunkenness. A minor is a person below 18 years old ( s 2 of the Age of Majority Act 1971 ). A contract entered into by a minor is void, any party that receives any benefit from such contract must restore the benefit received. A minor can, however, contract for necessaries ( s 69). Necessaries are things or service suited to the minors condition in life at the time of the sale or delivery. Food, clothing and basic medical treatment would be considered necessaries. Ornamental object like jewellery would not qualify as necessaries. Whether the goods or services are necessaries also depends on a minors personal circumstances. 3.0 Citation Capacity to contract According to section 11 of the contract act Every person is competent to contract who is of the age of majority according to the law to which he is subject, who is of sound mind , and is not disqualified from contracting by any law to which he is subject. People disqualified from entering into the contract -Minor, who are not of the age of majority -Persons of unsound mind, -Person disqualified to contract by any law. Rules relating to an agreement with a minor First rule is law protects minors against their own inexperience and against the possible improper designs of those more experienced. Second rule is the law should not cause unnecessary hardship to person who deal with minors. In Malaysia, the age of majority is recognized as above eighteen years of age as stated in the Age of Majority Act 1971 The minority of all males and females at the age of eighteen years and every such male and female attaining that age shall be of the age of majority. In effect of section 10 and 11 of contract Act 1950, the courts held in the cases of Mohori Bibee V Dharmodas Ghose (1903), Tan Hee Juan V Teh Boon Kiat (1934) and Government of Malaysia V Gurcharan Singh (1971) that all such agreements are void. Therefore, all contracts entered by a minor is generally void and a minor cannot sue or be sued on such void contracts. 4.0 Application Refer to general rules, only the persons of full age and sound mind have the capacity to contract. Parties who entry into a contract should be competent to contract according to the law to which he is subject and of sound mind. Based on the section 11 contract 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 subjected. The age of majority in Malaysia is 18 years old refer to the Age of Majority Act 1971. A major of 18 years old can enter into a valid contract. Trump will celebrate teen birthday tomorrow so the contract is not valid. Soo is only 17 years old so the contract not valid. So they can withdraw back the agreement. 5.0 Summary According to the scenario one, Trump scared getting sue by Wacky who is the computer shop owner, because at the beginning he ordered high performing notebook at Wacky computer shop. Why Trump scared get suing by Wacky is because he cancelled the order because of the insufficient of the money and he scared that shop owner Wacky will take legal action on him. For the scenario 2, at the beginning Soo want to sell her mountain bike to Zoo, but after that Soo changed her mind, now she realize that she still need the mountain bike. So, she want to withdraw back the contract but she scared about the buyer Zoo will take legal action on her. According to the section 10 and 11 Contracts Act 1950, the capacity to contract and ages of majority, Trump are below 18 years old and Soo are not even 17 years old. So, trump wont get sued by Wacky in this cases and Soo can withdraw back her contract because both of them are below 18 years old. PAGE MERGEFORMAT 9 Page g(gwLT071oUX
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