This document discusses key elements of contract formation under Malaysian law, including offer, acceptance, consideration, intention to create a legal relationship, legal capacity, and free consent. It also discusses circumstances that can invalidate a contract such as misrepresentation, undue influence, and mistake. The document analyzes a hypothetical case regarding a minor entering into a contract and concludes the contract would be void due to lack of legal capacity. Relevant cases are also discussed.

1. BUSINESS
LAW
AMIRAH ILYANA MD SAAT
(SUKD 1701989)
MELISSA LO
(SUKD 1702205)
KARYN LINDSEY FOO SHU YEE
(SUKD 1702272)
MUHAMMAD SHAFIQ KAMARUDDIN
(SUKD 1602332)
HARTINA AYU AHMAD
(SUKD 1701629)

2. Formation of
Contract Act
 Offer,
 Acceptance,
 Consideration,
 Intention to create
legal relationship,
 Legal capacity,
certainty, and
 Free consent.
Section 2(h) Contract Act, 1950 defined
contract
“an agreement enforceable by law”.
Contract able to be vitiated
 fraud,
 coercion,
 misrepresentation,
 undue influence, and
 mistake

3. Legal
Capacity
 Section 11 of
Contracts Act
1950
“An individual is competent to
enter contract, according to the
law, who is of the age of majority,
the individual should be of sound
mind, and is not disqualified
from contracting by any law to
which he is subject”
Definition legal capacity
 Refer to minors who
don't have the capacity
to create a contract and
perform it.
A minor who signs a
contract can void it or
honor the deal, but
there are a few
exceptions.
(Capacity in Contract Law, 2019)

4. Case started when Jeremy is
interested to buy Lisa’s used laptop
for RM300. Jeremy paid RM50 as
deposit and took the laptop and
promised to pay remaining but end
up he refused to pay. Jeremy is 15
years old.
Facts from the case
Jeremy is counted as below 18 years
old (minor), therefore contract is
considered to be void. Once the
contract is voided, it is no longer
binding, and the court will attempt to
restore the parties to the position they
were in before the agreement was
made. Means, Jeremy will have to
give back the laptop to Lisa, and Lisa
have to give back RM50 to Jeremy.
Can Lisa sue Jeremy to
get back the money?

5. Relevant case :
Tan Hee Juan v
Teh Boon Keat
(1934)
This case deals
with transfer of
land by an infant
in the favor of the
defendant.
The transfers were
witnessed and
registered.
Plaintiff applied to
court for an order
setting aside the
transfer and for
incidental relief.
Court ruled that the
transactions were void
and ordered the
restoration of the
property to the minor.
(Law of Contract (Capacity to Contract), 2019)

6. Intention to
create legal
relation
Contract Act 1950
“The intention of the parties to the contract to be legally
bound with legal consequences to sue or to be sued in
case of failure to perform”.
Business Agreement
 When two parties entered into
contract/ agreement, English
law presumed the parties have
intention to create legal
intention. binding contract
between the parties.
 If one parties breached
contract/ agreement, the other
party has the right to sue.
Social and Domestic Agreement
 Domestic Agreement: an agreement
made between family members.
 Social Agreement: an agreement made
between friends and so on.
 No intention to create legal relation. No
binding contract between the parties.
 If one of the parties breached the
contract, the other party will not have
the right to sue.

9. Intention to Create
Legal Relation
Advice
The agreement made with Timothy is, the agreement is void as it did
not met the basic elements required in the formation of contract,
under Contract Act 1950.
Based on the facts of the case:
• The intention to create legal
attention between John and
Timothy is social and domestic
agreement due to John is the
Father and Timothy is his son.
• Thus, the agreement was made
between family members.
• The agreement between John
and Timothy is void.
• Similar case Balfour v Balfour.
• Since there was no written
agreement it cannot be rebutted
like the case of Merritt v Merritt.
Facts of the case: What is the intention to create legal
attention between John and Timothy.

12. Relevant Case: Barton v Armstrong [1976]
Armstrong was the
chairman and Barton
was the managing
director.
Armstrong made a
number of death
threats to Barton and
pressure him to signed
an agreement.
Barton agreed due to
the death threat and
pressure applied.
Barton could void the
contract because the
situation he was in.
A verbally threat alone
is enough to void a
contract.
(Law Teacher, 2018)

14. REFERENCES
• Fong, C. M. (2010). Contract Law in Malaysia. Selangor: Sweet & Maxwell Asia.
• Law Teacher. (2018, March 07). Case: Alexander Barton v Armstrong – Summary.
Retrieved from Law Teacher The Law Essay Professionals:
https://www.lawteacher.net/cases/alexander-barton-v-armstrong.php
• Tulsian, P. (2000). Business Law . Tata McGraw-Hill Education .
• Capacity in Contract Law. (2019). Retrieved from
https://www.upcounsel.com/capacity-in-contract-law
• Law of Contract (Capacity to Contract). (2019). [Ebook] (p. 49). Retrieved from
https://asalraac22.files.wordpress.com/2016/10/law-of-contract-capacity-to-
contract.pdf