Contract Law - Capacity & Consideration

Question 1

Capacity Definition

Answer 1

person’s legal ability to enter into a contract

S10(1) - agreements are contracts if made by free consent of parties competent to contract, for lawful consideration & with lawful object.
S11 - competent people are of age of majority, sound mind & not disqualified by law

Question 2

Consideration Definition

Answer 2

benefit that each party recieves/expects to recieve
S2(d) - promisee has done/abstained, does/abstains, or promises to do/abstain at desire of promisor is consideration
S26 - agreement without consideration is void

Question 3

S26(a)

Exception to S26

Answer 3

valid without consideration when:
* written agreement registered under law
* on account of natural love & affection
* between parties in near relation

Question 4

S26(b) - past consideration

Exception to S26

Answer 4

valid without consideration when:
* an agreement to compensate a person who has already done something for promisor

Question 5

S26(b) - past consideration

Exception to S26

Answer 5

valid without consideration when:
* an agreement to compensate a person who has already done something for promisor

Question 6

S26(c)

Exception to S26

Answer 6

valid without consideration when:
* agreement to pay statute barred debt
* new agreement (written & signed by debtor)

Question 7

Adequacy of Consideration

Answer 7

consideration need not be adequate
S26 (Explanation 2) - contract is not void due to inadequate consideration if there is free consent

Question 8

Phang Swee Kim v Beh I Hock

Answer 8

The respondent agreed to sell to the appellant a land for RM 5000 although the land was worth much more. The respondent later refused to honour the promise.
Held: the agreement was valid even though consideration was inadequate.