DE FRANCESCO v BARNUM • The contract between P and D (a minor) for apprentice dancer included such terms that she could not marry, not receive any payment and not dance for other person. • Held: The terms were so harsh and unreasonable therefore the contract cannot be enforce against minor.
Cont … 2. STATE OF MIND A meetings of mind and free consent is the basis of a contract. A person suffering from mental disability, either permanently or temporarily, at the time of the contract obviously lack the capacity. S.12(1) of the Contracts Act 1950 provides that: “ 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 forming a rational judgment as to its effect upon his interests. ” A person who is competent to enter into a contract is a person who is of sound mind. An unsound mind person refers to person who is mentally disorder as well as those of a person incapacitated through sickness, alcohol or other drugs.
The General Rule: a contract can be made orally, in writing or by conduct. In Diamond Peek Sdn. Bhd & Anor v D.R Tweedie  Gunn Chitt Tuan J. observed: ”Under our law, as in India, an oral contract for the sale of immovable property is valid and enforceable. The mere fact that the parties desired to have that agreement put in writing and drawn up in proper form does not affects its validity. ” 7.FORMALITIES
Cont... However, there are exceptions to the general rule: S.10(2) CA provides that : “ Nothing herein contained shall affect any law by which any contract is required to be made in writing or in presence of witnesses, or any law relating to the registration of documents. ” For example: The Hire-Purchase Act 1967 requires hire- purchase agreements to be in writing and signed by the hirer or by his agent and all other parties to the agreement. Under the Contracts Act 1950: S.26(a) and S.26(b) requires that these two agreements need to be in writing; -agreement made out of natural love and affection and a promise to pay statute- barred debt.
What is VOID AND ILLEGAL CONTRACTS? Void contract: S.2(g) provides that : “ an agreement not enforceable by law is said to be void . ” A contract will be void if the consideration / objects are unlawful- it must be permitted by law S.10 (1) provides that: 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.
The court will refuse its aid to a person who found his or her cause of action upon an immoral or illegal act (maxim: ex dolo malo non aritur actio ) S.24 of the Contracts Act 1950: The consideration/object of an agreement is unlawful if: a) It is forbidden by a law b) It is of such nature, that, if permitted, it would defeat any law c) It is fraudulent d) It involves or implies injury to the person or property of another e) The court regards it as immoral, or opposed to public policy.