Business Law Assignment: Contract Law, Minors, and Illegal Contracts

This business law assignment delves into key aspects of contract law, examining the contractual capacity of minors under Australian law. It begins with a diagram outlining restricted or limited capacity, followed by an analysis of how courts treat contracts involving minors, highlighting exceptions s...Read More

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Question 1
Complete the diagram
Question 2
The general approach of the Court regarding the enforceability of a contract in case of a
minor is that it is assumed that the person has not reached the age of 18( major).Thus at any
circumstances the contract entered with a minor in Australia is void .
The exception to the above rule is that in the following cases the contract entered with a
minor is legal:
1. Contract for the employment (Charles 2014 )
2. Contract entered for the necessities of the minor person
This above fact can also be seen in the case of Blomley vs. Ryan (1954) where the
contract was avoidable since the parties do not have the capacity to contract under the
Australian Law.
Restricted or
Limited Capacity
Person who is
mentally ill
Any
minor
Any person
disqualified by any
law in which they are
subject to
Any person
who is
intoxicated

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Another two prominent cases which can also be cited is the Lyett vs. Lampmann and
Ryder v Wombwell, where it is seen that no person can enter into a contract if the person is a
minor (below the age of 18).
Question 3
As per the case held in Nash vs. Inman, this says that a minor cannot enter any contract
under any circumstances. In the above case it has been discussed as follows:
Issue
In the above case the contract entered by the café owner with John, who is a minor and he
ordered food for party which is worth of $500. The café owner took a deposit of 10% and
accepted the offer, but after the service of food John refuses to pay him the money
Rule
As per the Australian Rule any contract entered with a minor shall be void under any
circumstances until and unless in the exceptional situation where the contract entered is under the
contract of necessities which includes food, accommodation, clothing, education and medicine or
the contract of employment which should be fair and binding upon the minor (Sayed Iqbal 2014).
Application
In the above case the contract entered by the café owner with John, who is a minor is not
enforceable by law. In the following case the café owner enters into a contract with John who is
17 years of age. In the above case if John had not ordered for party food and rather he have
contracted for an amount of $500 on basic groceries for his personal consumption, the following

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transaction would have been enforceable (Hein 2017). This contract would fall under the contract
of necessities and thereby it would bind the minor under the Australian Jurisdiction.
Conclusion
Thus to conclude we can say that John was a minor and did not have the capacity to enter
into any contract under the Australian Regulation.
Question 4
1. When a contract is prohibited by law or statute then it is termed as an illegal contract.
There are some contracts which become illegal by virtue to the Court’s verdict. In the
case of Fitzgerald vs. FJ Leonhardt Pty Ltd it was held that any contract shall be illegal if
it opposes the public policy (Bhana, Deeksha and Visser 2014).
Whereas when a contract is void it has a restraint on one party to act. If a contract is void,
it applies that the contract will exclude or restrict or modify the terms of the contract.
Any void contract is not legally enforceable.
2. A criminal is someone who has performed an illegal work and has been punished for not
repeating the same, thus in case when a criminal is appointed to assault someone it will
be a illegal contract and will be void
3. A contract is illegal if it involves performing an action which involves criminal act or
civil wrong, thus the contract becomes the subject of unlawful purpose. All illegal
contract is not enforceable by law since the statute applies to the rule of ex turpi causa as
per (Liu, Qiao and Ren 2015) which says that no party can claim the damages or any
amount if the contract is illegal.

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4. An example is the case of Gibbons vs. Wright where the term of the contract was declared
as void by the legislation (Rodd, Edwina and Nicholls 2015).

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References
Bhana, Deeksha, and C. J. Visser. "The Capacity of a Minor to Enter into a Consumer Contract:
A Reconciliation of Section 39 of the Consumer Protection Act and the Common Law." (2014).
Kötz, Hein. European contract law. Oxford University Press, 2017.
Liu, Qiao, and Xiang Ren. "Balancing Public Interest with Transactional Security: The Validity
of Contracts Tainted with Corruption Under Chinese Law." In The Impact of Corruption on
International Commercial Contracts, pp. 77-98. Springer International Publishing, 2015.
Mills, Charles W. The racial contract. Cornell University Press, 2014.
Mohamed, Sayed Iqbal. "Seek Advice for Breach of Contract-Determine if Offence is Serious or
a Minor Breach." (2014).
Rodd, Edwina, and Andrew Nicholls. "Enforceability of agreements to negotiate under
MOUs." Australian Resources and Energy Law Journal 34, no. 1 (2015): 71.