Let’s find out what are the essential elements of a contract! We’ll give you a simple example for each element so it’s easier for you to understand!
– Offer
Ali made an offer to Samad to sell his land in the village.
– Acceptance
Samad agrees to accept the sale and purchase offer of the land.
– Intention to create legal relation
This element will be fulfilled when Ali and Samad intend to make the contract valid.
– Consideration
In return for Ali’s land purchase, Samad paid Ali an agreed price of RM100,000.
– Certainty
Ali and Samad must agree on the essential terms of their contract with reasonable certainty.
– Capacity
Ali and Samad must be individuals over the age of 18 and healthy before entering into the sale and purchase contract of the said land.
SIMPLE TIPS THAT YOU NEED TO KNOW BEFORE SIGNING A CONTRACT!
– Understand the contents of the contract. Don’t just sign.
– Indicate the date on which you signed the contract in the contract document.
– Sign all pages of the contract document (usually at the end of the page).
– If the contract is still in draft form, there’s no need to sign yet.
– Request a copy of the complete original contract for your own safe keeping.
– Keep safe your contract document. Do not misplace it.
CAN A MINOR ENTER INTO A CONTRACT?
In general, contracts can only be entered into by adults and of sound mind. This is based on Section 11 of the Contracts 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 subject.”
However, there are exceptions where minors can enter into contracts and such contracts are valid, among them:
– Scholarship contract
– Insurance contract
– Contracts for essentials (such as buying food, drinks, clothing)
DOES A CONTRACT NEED TO BE SIGNED IN THE PRESENCE OF WITNESSES?
An agreement or commercial contract is not necessarily signed in the presence of a witness. What is important is that the parties entering into the contract are obliged to sign the contract to ensure that the contract is valid.
There are several types of documents which it is necessary to sign in the presence of witnesses, among them:
– Statutory form under the National Land Code 1965
– Statutory form under the Companies Act 2016
– Statutory form under the Statutory Declaration Act 1960
– Power of attorney under the Powers of Attorneys Act 1949
– Will under the Will Act 1959
COURT CASE REGARDING CONTRACT: MOHD RIDZUAN BIN ABD HALIM LWN MOHD RIDZUAN BIN ADANAN [2022] MLJU 2478
In this case, the Appellant was appointed by the Respondent as the contractor for the wiring works, installation of air conditioning channels and the installation of air conditioners for the project in a hotel. 4 agreements have been made with a total contract value of RM119.076.00.
However, the Appellant has breached the Contracts after failing to complete the work as promised. The Respondent also gave notice of termination to the Appellant.
The Court found that the Appellant had indeed breached his contract when not completing his work and the Respondent has the right to terminate the contract in accordance with Section 40 of the Contracts Act 1950.
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