Generally, everyone of us is eligible for entering into a contract. “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, three categories of people do not have the legal capacity to contracts based on Section 11 of Contracts Act. They are :
1) Minor
According to the Age of Majority Act, 18 years old is the age of majority in Malaysia. Thus anyone who is aged below 18 do not have the legal capacity to enter into a contract.
2) Of unsound mind
Examples are insanity, madness, mental problems, schizophrenia, epilepsy, intoxication, drunken, unconscious either permanently or intermittently. These person cannot act rationally and think logically therefore they are ineligible to be involved in a contract.
3) Specifically barred by law
Persons who are being limited under bankruptcy law, political law and law of war against enemy citizens. For instance, Company A is suffering financial distress. Few days later, Company A declares to be barred under the bankruptcy law and in consequence its business operations got disrupted. In the end, they had to withdraw its engagement in the business contract with company K.
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