Commercial law mgm 3351
This presentation is the property of its rightful owner.
Sponsored Links
1 / 234

COMMERCIAL LAW MGM 3351 PowerPoint PPT Presentation


  • 68 Views
  • Uploaded on
  • Presentation posted in: General

COMMERCIAL LAW MGM 3351. DR SUHAIMI AB RAHMAN DEPARTMENT OF MANAGEMENT AND MARKETING FACULTY OF ECONOMICS AND MANAGEMENT UPM LABORATORY OF POLICY AND MANAGEMENT HALAL PRODUCTS RESEARCH INSTITUTE UPM Tel: 89467623 / 89417344 email: [email protected] WHAT IS LAW?.

Download Presentation

COMMERCIAL LAW MGM 3351

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Commercial law mgm 3351

COMMERCIAL LAW MGM 3351

DR SUHAIMI AB RAHMAN

DEPARTMENT OF MANAGEMENT AND MARKETING

FACULTY OF ECONOMICS AND MANAGEMENT

UPM

LABORATORY OF POLICY AND MANAGEMENT

HALAL PRODUCTS RESEARCH INSTITUTE

UPM

Tel: 89467623 / 89417344

email: [email protected]


What is law

WHAT IS LAW?

LAW IS A SET OF RULES THAT GOVERN AND REGULATE HUMAN BEHAVIOUR


Justice

JUSTICE

JUSTICE IS AN ABSTRACT IDEA OF RIGHT AND WRONG, FAIRNESS AND EQUALITY


Commercial law mgm 3351

JUSTICE

ETHICS

LAW

MORALITY


Malaysian legal sources

MALAYSIAN LEGAL SOURCES

  • WRITTEN LAW

  • UNWRITTEN LAW


Written law

WRITTEN LAW

  • FEDERAL CONSTITUTION

  • FEDERAL LEGISLATION

  • STATE LEGISLATION

  • SUBSIDIARY LEGISLATION


Federal constitution

FEDERAL CONSTITUTION

  • SUPREME LAW OF THE LAND

  • PRESCRIBES THE RELATIONSHIP BETWEEN STATE AND FEDERAL


Ninth schedule

NINTH SCHEDULE

  • LIST I :- FEDERAL LIST

  • LIST II :- STATE LIST

  • LIST III :- CONCURENT LIST


Federal legislation

FEDERAL LEGISLATION

  • LAWS MADE BY THE PARLIAMENT

  • BEFORE INDEPENDENT ALL FEDERAL LEGISLATIONS WERE KNOWN AS ORDINACES


Commercial law mgm 3351

THE PROCESS OF MAKING RWU POLICY INTO AN ACT OF PARLIAMENT

POLICY

CABINET PAPER

MINISTER WILL BRING THE PAPER

TO THE CABINET

CABINET MEETING

APPROVAL FROM THE CABINET

AG WILL PREPARE A

DRAFT TO BE TABLED

IN PARLIAMENT

  • APPROVAL FROM THE PARLIAMENT

  • (LEGISLATIVE PROCESS)

  • HOUSE OF REPRESENTATIVE

  • HOUSE OF SENATE

  • THE KING

GAZZETTED


Legislative proces

LEGISLATIVE PROCES


State legislation

STATE LEGISLATION

  • LAW MADE BY THE STATE

  • KNOW AS ENACTMENT EXCEPT SARAWAK


Subsidiary legislation

SUBSIDIARY LEGISLATION

  • RULES

  • REGULATIONS

  • BY-LAWS

  • ORDERS


Subsidiary law

SUBSIDIARY LAW

THE SUBSIDIARY LAW CAN ONLY BE MADE IF THE RESPECTIVE ACT (KNOWN AS ENABLING ACT) GIVES POWER


Commercial law mgm 3351

EMPOWERING CLAUSE

THE PROCESS OF MAKING RWH BY-LAWS: A TYPICAL TCPD EXAMPLE

TECHNICAL COMMITTEE

DRAFT

LEGAL DEPARTMENT

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA

PERLAKSANAAN AKTA MEETING

THE DRAFT WILL BE DISCUSSED AT THE TCPD

STATE DIRECTORS MEETING

THE DRAFT WILL BEDISCUSSED AT THE JAWATANKUASA

PERANCANGAN & PEMBANGUNAN (TCPD)

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA

PERANCANGAN & PEMBANGUNAN (MINISTRY)

REVISED BY LEGAL ADVISOR

THE DRAFT WILL BE PRESENTED AND APPROVED AT

THE MAJLIS PERANCANGAN FIZIKAL NEGARA

MPFN WILL HAND THE DRAFT TO THE STATE AUTHORITY

MPFN WILL HAND THE DRAFT TO THE MINISTER

LEGAL ADVISOR (STATE ) WILL GAZZET THE DRAFT

LEGAL ADVISOR (MINISTRY) WILL GAZZETT THE DRAFT

BY-LAWS


Controls over subsidiary law

CONTROLS OVER SUBSIDIARY LAW

  • CONSULTATION

  • PUBLICITY

  • PARLIAMENTARY CONTROL

  • JUDICIAL REVIEW


Judicial decision

JUDICIAL DECISION

NEW PRINCIPLES CREATED IN COURT


Judicial decision1

JUDICIAL DECISION

  • PREVIOUS DECISION MADE BY PREVIOUS COURT IN A SIMILAR FACT

  • FAILURE TO FOLLOW THE PRECEDENT WOULD RESULT TO REVERSE ON APPEAL

  • PRECEDENT IS OBTAINED FROM THE DECISION OF THE SUPERIOR COURT


How judicial precedent works

HOW JUDICIAL PRECEDENT WORKS

  • THE COURT WILL ONLY FOLLOW THE PRECEDENT WHEN THE FACT IS SIMILAR

  • IF THE FACT IS NOT SIMILAR THE COURT WILL DISTINGUISH THE CASE AND NEED NOT TO FOLLOW THE EARLIER DECISION

  • THE COURT CAN OVERULE THE PRECEDENT IF IT IS PROVED THAT THE PREVIOUS DECISION WAS WRONG


English common law and equity

ENGLISH COMMON LAW AND EQUITY

S 3(1)(a) CIVIL LAW ACT 1956, ‘ THE COURT SHALL IN WEST MALAYSIA OR ANY PART THEREOF, APPLY THE COMMON LAW OF ENGLAND AND THE RULES OF EQUITY AS ADMINISTERED IN ENGLAND ON THE 7TH APRIL 1956


English common law and equity1

ENGLISH COMMON LAW AND EQUITY

ANY CHANGES OR DEVELOPMENT AFTER 7TH APRIL 1956 THE ENGLISH COMMON LAW AND EQUITY WILL NOT BECOME THE LAWS OF MALAYSIA, IT ONLY ACTS AS PERSUASIVE AUTHORITY


English common law and equity2

ENGLISH COMMON LAW AND EQUITY

TWO CONDITIONS FOR THE APPLICATION:-

  • ABSENCE OF LOCAL STATUTE COVERING THE SAME MATTER

  • ONLY IF SUITED TO LOCAL CIRCUMSTANCES


English commercial law

ENGLISH COMMERCIAL LAW

S 5(1) CIVIL LAW ACT 1956, ‘IN ALL QUESTIONS OR ISSUES WHICH ARISE OR WHICH HAVE TO BE DECIDED IN THE STATES OF WEST MALAYSIA OTHER THAN MALACCA AND PENANG WITH RESPECT TO THE LAW OF PARTNERSHIPS, CORPORATIONS, BANKS AND BANKING, PRINCIPALS AND AGENTS, CARRIERS BY AIR, LAND AND SEA, MARINE INSURANCE, AND WITH RESPECT TO MERCHANTILE LAW GENERALLY, THE LAW TO BE ADMINISTERED SHALL BE THE SAME AS WOULD BE ADMINISTERED IN ENGLAND IN THE LIKE CASE AT THE DATE OF THE COMING INTO FORCE OF THIS ACT, IF SUCH QUESTION OR ISSUE HAD ARISEN OR HAD TO BE DECIDED IN ENGLAND, UNLESS IN ANY CASE OTHER PROVISION IS OR SHALL BE MADE BY ANY WRITTEN LAW’


Customs

CUSTOMS

EACH RACIAL AND RELIGIOUS GROUP IS GOVERNED BY THEIR OWN SET OF PERSONAL LAWS, EG. ISLAMIC LAW FOR MUSLIM, IRRESPECTIVE OF THEIR ETHNICITY, NATIVE LAW FOR THE NATIVES (KHADAZAN, BIDAYUH, MURUT, ETC.)

CHINESE AND INDIAN CUSTOMARY: PREVIOUSLY JUDICIAL RECOGNITION ON VARIOUS CUSTOMARY LAW ON MARRIAGES

LAW REFORM (MARRIAGE AND DIVORCE) ACT 1976 GOVERNS MARRIAGES AMONG NON-MUSLIM (ABOLISHMENT OF POLYGAMOUS MARRIAGES)


Law of contract sources

LAW OF CONTRACT: SOURCES

  • STATUTES

    • CONTRACT ACT 1950

  • CASE LAWS

    • CASES DECIDED IN COURTS

  • ENGLISH COMMON LAW

    • BEFORE 7TH APRIL 1956


  • Law of contract introduction

    LAW OF CONTRACT: INTRODUCTION

    CONTRACT IS THE NUCLEUS OF ALL COMMERCIAL TRANSACTIONS


    What is contract

    WHAT IS CONTRACT?

    CONTRACT IS AN AGREEMENT WHICH IS ENFORCEABLE IN LAW


    What is agreement

    WHAT IS AGREEMENT

    MEETING OF THE MINDS

    TWO OR MORE PERSONS ARE SAID TO CONSENT WHEN THEY AGREE UPON THE SAME THING IN THE SAME SENSE

    CONSENSUS AD IDEM


    Commercial law mgm 3351

    … BUT …

    NOT ALL AGREEMENTS ARE CONTRACT. THERE ARE SOME AGREEMENTS WHICH ARE NOT CONSIDERED AS CONTRACT

    EG. SOCIAL AGREEMENTS


    Agreements which are contract

    AGREEMENTS WHICH ARE CONTRACT

    • PROPOSAL

    • ACCEPTANCE

    • CONSIDERATION

    • INTENTION TO CREATE LEGAL RELATIONSHIP

    • COMPETENCE

    • FREE CONSENT


    Proposal

    PROPOSAL

    A PROPOSAL IS AN ACT THAT SIGNIFIES A PERSON’S WILLINGNESS TO DO OR TO ABSTAIN FROM DOING SOMETHING WITH A VIEW TO OBTAINING THE ASSENT OF ANOTHER


    Proposal1

    PROPOSAL

    IT IS AN OFFER OR A PROMISE TO BE BOUND BY HIS/HER TERMS IF THEY ARE ACCEPTED BY THE OTHER


    Legal principle

    LEGAL PRINCIPLE

    IT IS UPON THIS BASIS THAT A PROPOSAL SHOULD BE MADE CLEAR AND DEFINITE

    A PROPOSAL SHOULD NOT BE MADE IN UNAMBIGUOUS STATEMENT

    IF BARGAINING IS STILL POSSIBLE IN THE ARRANGEMENT THE SUPPOSED PROPOSAL SHOULD NOT BE CONSIDERED AS PROPOSAL AT ALL


    Proposal2

    PROPOSAL

    THE STATEMENT SHOULD SHOW A CLEAR WILLINGNESS TO BE BOUND BY HIS/HER TERMS IF ACCEPTED BY THE OTHER PARTY


    A response to a request for information

    A RESPONSE TO A REQUEST FOR INFORMATION

    HARVEY V FACEY

    PLAINTIFF: WILL YOU SELL US A BUMPER HALL PEN? TELEGRAPH LOWEST CASH PRICE.

    DEFENDANT: LOWEST PRICE FOR BUMPER HALL PEN, GBP 900


    Invitation to treat

    INVITATION TO TREAT

    INVITATION TO TREAT IS AN ACT TO INVITE OTHERS TO MAKE AN OFFER

    INVITATION TO TREAT IS NOT A PROPOSAL

    IT WILL NOT RESULT TO A CONTRACT IF ACCEPTED BY OTHERS


    Examples of invitation to treat

    EXAMPLES OF INVITATION TO TREAT

    • AUCTIONS

      • PAYNE V CAVE

  • ADVERTISEMENTS

    • COELHO V THE PUBLIC SERVICES COMMISSION

  • ITEMS DISPLAYED IN SHOPS

    • PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMIST LTD


  • Proposal legal principle

    PROPOSAL: LEGAL PRINCIPLE

    A PROPOSAL CAN BE ADDRESSED TO A PARTICULAR PERSON OR TO A GENERAL PUBLIC

    • BOULTON V JONES

    • CARLILL V CARBOLIC SMOKE BALL


    Legal principle1

    LEGAL PRINCIPLE

    A PROPOSAL MAY BE WRITTEN, SPOKEN OR IMPLIED FROM CONDUCT


    Communication of proposal

    COMMUNICATION OF PROPOSAL

    EVERY PROPOSAL MADE SHOULD BE COMMUNICATED TO THE OTHER PARTY

    THE OTHER PARTY SHOULD HAVE THE KNOWLEDGE BEFORE ACCEPTING A PROPOSAL

    • R V CLARKE

      ‘There cannot be assent without knowledge of the offer’

      Higgins J


    Communication of proposal when complete

    COMMUNICATION OF PROPOSAL: WHEN COMPLETE

    ‘THE COMMUNICATION OF A PROPOSAL IS COMPLETE WHEN IT COMES TO THE KNOWLEDGE OF THE PERSON TO WHOM IT IS MADE’

    SECTION 4 (1)


    Acceptance

    ACCEPTANCE

    AN ACCEPTANCE IS AN ACT WHICH SHOWS THAT THE PERSON TO WHOM THE PROPOSAL IS MADE GIVES HIS/HER ASSENT TO THE PROPOSAL


    Legal principle2

    LEGAL PRINCIPLE

    TO CONVERT A PROPOSAL INTO A PROMISE THE ACCEPTANCE SHOULD BE ABSOLUTE AND UNQUALIFIED

    SECTION 7 (a)


    Legal principle3

    LEGAL PRINCIPLE

    THE LEGAL PRINCIPLE IS THAT THE ACCEPTANCE SHOULD BE A ‘MIRROR IMAGE’ TO THE PROPOSAL


    Counter offer

    COUNTER OFFER

    ANY MODIFICATION OR VARIATION OF THE PROPOSAL DOES NOT CONSTITUTE AN ACCEPTANCE BUT AMOUNTS TO A ‘COUNTER OFFER’. A COUNTER OFFER DESTROYS THE ORIGINAL OFFER.


    Hyde v wrench

    HYDE V WRENCH

    DEFENDANT OFFERED TO SELL HIS ESTATE FOR GBP 1000

    PLAINTIFF AGREED TO BUY BUT FOR GBP 950

    DEFENDANT REFUSED TO SELL

    PLAINTIF AGREED WITH THE ORIGINAL OFFER


    Battle of the forms

    BATTLE OF THE FORMS

    Butler Machine Tool v Ex-Cell-O-Corporation [1979] 1 All ER 965 – An arrangement to sell a machine. Both parties have their own standard terms. A makes an offer with ‘price variation clause’. B accepts but with its own terms i.e. without ‘price variation clause’ The court give the judgment to the person who last make an offer.


    Legal principle4

    LEGAL PRINCIPLE

    ‘SILENCE’ SHOULD NOT BE ACCEPTED AS A FORM OF ACCEPTANCE

    FELTHOUSE V BINDLEY


    General rule

    GENERAL RULE

    AN ACCEPTANCE SHOULD BE MADE KNOWN (COMMUNICATED) TO THE PERSON TO WHOM THE PROPOSAL IS MADE

    • FACE TO FACE CONTRACT

    • CONTRACT THROUGH TELEPHONE

    • CONTRACT THROUGH TELEX


    When communication is complete

    WHEN COMMUNICATION IS COMPLETE?

    4 (2) THE COMMUNICATION OF ACCEPTANCE IS COMPLETE

    (a) AS AGAINST THE PROPOSER WHEN IT IS PUT IN A COURSE OF TRANSMISSION TO HIM SO AS TO BE OUT OF THE POWER OF THE ACCEPTOR; AND

    (b) AS AGAINST THE ACCEPTOR WHEN IT COMES TO THE KNOWLEDGE OF THE PROPOSER


    Exception to the general rule

    EXCEPTION TO THE GENERAL RULE

    • UNILATERAL CONTRACTS

    • POSTAL RULE


    Postal rule

    POSTAL RULE

    ADAMS V LINDSELL

    DEFENDANT OFFERED TO SELL WOOL BY LETTER (THE LETTER WAS MISDIRECTED)

    PLAINTIFF ACCEPTED THE OFFER BY LETTER

    BEFORE THE LETTER ARRIVED DEFENDANT SOLD THE WOOL TO A THIRD PARTY

    ‘Communication of acceptance is complete and a contract is concluded when the acceptor has posted the letter of acceptance’


    Revocation of proposal

    REVOCATION OF PROPOSAL

    5(1) A PROPOSAL MAY BE REVOKED AT ANY TIME BEFORE THE COMMUNICATION OF ITS ACCEPTANCE IS COMPLETE AS AGAINST THE PROPOSER, BUT NOT AFTERWARDS


    Communication of revocation

    COMMUNICATION OF REVOCATION

    ALL REVOCATIONS MUST BE MADE KNOWN TO THE OTHER PARTY


    Byrne v van tien hoven

    BYRNE V VAN TIEN HOVEN

    The defendants wrote from Cardiff on 1 October offering to sell a quantity of tinplates to the plaintiffs in New York. On 8 October, the defendants posted a letter withdrawing the offer. On 11 October, the offer reached the plaintiffs, who accepted at once by telegram (and the plaintiffs also confirmed this in writing on 15 October). The defendants’ letter of withdrawal reached the plaintiffs on 20 October.

    Held: Mere posting of a letter of revocation does not amount to an effective communication to the acceptor.


    Consideration

    CONSIDERATION

    CONSIDERATION IS THE SYMBOL OF BARGAIN AND RECIPROCAL OBLIGATIONS


    What is consideration

    WHAT IS CONSIDERATION?

    CONSIDERATION IS A ‘PRICE’ GIVEN IN RETURN FOR A PROMISE


    Commercial law mgm 3351

    CONSIDERATION SHOULD BE SOMETHING OF VALUE IN THE EYES OF THE LAW.


    Currie v misa

    CURRIE V MISA

    ‘A VALUABLE CONSIDERATION, IN THE EYES OF THE LAW, MAY CONSISTS EITHER IN SOME RIGHT, INTEREST, PROFIT, OR BENEFIT ACCRUING TO THE ONE PARTY, OR SOME FORBEARANCE, DETRIMENT, LOSS, OR RESPONSIBILITY GIVEN, SUFFERED OR UNDERTAKEN BY THE OTHER’


    Section 2 d contract act 1950

    SECTION 2 (d) CONTRACT ACT 1950

    ‘WHEN, AT THE DESIRE OF THE PROMISOR, THE PROMISEE OR ANY OTHER PERSON HAS DONE OR ABSTAINED FROM DOING, OR DOES OR ABSTAINS FROM DOING, OR PROMISES TO DO OR TO ABSTAIN FROM DOING, SOMETHING, SUCH ACT OR ABSTINANCE OR PROMISE IS CALLED A CONSIDERATION FOR THE PROMISE’


    Classification

    CLASSIFICATION

    • EXECUTORY CONSIDERATION

      A promise is made in return for a promise

    • EXECUTED CONSIDERATION

      A performance is made in return for a promise

    • PAST CONSIDERATION

      A promise is made subsequent to and in return for an act that has already been performed


    Past consideration

    PAST CONSIDERATION

    Y FINDS X’S PERSIAN CAT

    Y RETURNS THE CAT TO X

    X PROMISES TO REWARD Y RM 100

    • IS THERE ANY CONTRACT?

    • IS THERE ANY CONSIDERATION?


    English common law

    ENGLISH COMMON LAW

    Past consideration is not valid because it has been done without reference to the existing promise

    Re McArdle [1951] Ch 669

    Lampleigh v Brathwait (1615) Hob 105


    Malaysian law

    MALAYSIAN LAW

    Section 2(d) Contract Act 1950

    Past consideration is considered as valid “when, at the desire of the promisor, the promisee or any other person has done or abstained from doing …”


    Consideration from a third party

    CONSIDERATION FROM A THIRD PARTY

    - English Common Law

    Consideration must move from the promisee/acceptor

    - Section 2(d) Contract Act 1950

    “ … the promisee or any other person …”

    Venkata Chinnaya v Verikatara Ma’ya (1881) ILR 4 Mad. 137


    Performance of a legal duty

    PERFORMANCE OF A LEGAL DUTY

    - PUBLIC DUTY IMPOSED BY LAW

    Glassbrook Bros. v Glamorgan County Council [1925] AC 270

    - PERFORMANCE OF A DUTY OWED TO PROMISOR

    Stilk v Myrick (1809) 2 Camp 317


    Consideration need not be adequate

    CONSIDERATION NEED NOT BE ADEQUATE

    Explanation 2 of Section 26

    • Phang Swee Kim v Beh I Hock (1964) MLJ 383

      An arrangement to sell a piece of land for RM500 which worth more than that


    Exceptions to general rule

    EXCEPTIONS TO GENERAL RULE

    - Section 26(a)

    An agreement made in writing and registered

    - Section 26(b)

    An agreement to compensate for something done

    - Section 26(c)

    An agreement to pay a statute barred debt


    Intention to create a legal relationship

    INTENTION TO CREATE A LEGAL RELATIONSHIP

    THE PARTIES CONTEMPLATE THAT THE AGREEMENT BE ENFORCEABLE IN LAW


    How to prove the presence of intention

    HOW TO PROVE THE PRESENCE OF INTENTION

    THE COURT WILL DECIDE UPON CASES AND THE PRINCIPLE OF ‘REBUTTABLE PRESUMPTION’


    Rebuttable presumption

    REBUTTABLE PRESUMPTION

    REBUTTABLE PRESUMPTION MEANS A SUGGESTION HOLDS GOOD SO LONG AS THERE IS NO EVIDENCE TO THE CONTRARY


    Agreements are categorised

    AGREEMENTS ARE CATEGORISED

    • COMMERCIAL AGREEMENTS

    • SOCIAL, DOMESTIC AND FAMILY AGREEMENTS


    Commercial agreements

    COMMERCIAL AGREEMENTS

    THE PRESUMPTION

    THERE IS AN INTENTION TO CREATE LEGAL RELATIOSHIPS UNLESS IT IS PROVEN OTHERWISE


    Commercial agreements1

    COMMERCIAL AGREEMENTS

    PRESUMPTION REMAINS

    Carlill v Carbolic Smoke Ball (1892) 2 QB 484


    Commercial agreements2

    COMMERCIAL AGREEMENTS

    PRESUMPTION REFUTED

    Jones v Vernons Pools [1938] 2 All ER 626

    • Express Deny of the Intention

      Rose and Frank v Crompton Bros [1923] 2 KB 261

    • Memorandum of Understanding (MoU)


    Social domestic and family agreements

    SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

    THE PRESUMPTION

    THERE IS NO INTENTION TO CREATE LEGAL RELATIONSHIPS UNLESS PROVEN OTHERWISE


    Social domestic and family agreements1

    SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

    PRESUMPTION REMAINS

    Balfour v Balfour [1919] 2 KB 571

    Jones v Padavatton [1969] 2 All ER 616


    Social domestic and family agreements2

    SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

    PRESUMPTION REFUTED

    Merritt v Merritt [1970] 2 All ER 760

    • Have separated

      Simpkins v Pays [1955] 1 WLR 975

    • Not a Household Agreement

      Parker v Clark [1960] 1 WLR 286

    • Truly rely upon the promise; has given up something of value

      Tanner v Tanner [1975] 1 WLR 1346


    Legal capacity

    LEGAL CAPACITY

    THE PARTIES WHO INTEND TO ENTER INTO AN AGREEMENT SHOULD HAVE FULL CONTRACTUAL CAPACITY

    THE PARTIES SHOULD BE LEGALLY COMPETENT


    Competent section 11 contract act 1950

    ‘COMPETENT’SECTION 11 CONTRACT ACT 1950

    • A PERSON WHO IS OF AGE OF MAJORITY

    • A PERSON WHO IS OF SOUND MIND

    • A PERSON WHO IS NOT DISQUALIFIED BY ANY LAW


    Legal effect of incompetence

    LEGAL EFFECT OF INCOMPETENCE

    THE AGREEMENT WILL BE RENDERED VOID

    - Mohori Bibee v Dharmodas Ghose (1903)ILR 30 Cal 539

    - Tan Hee Juan v The Boon Keat [1934] MLJ 96


    Exceptions to general rule1

    EXCEPTIONS TO GENERAL RULE

    • NECESSARIES

    • SCHOLARSHIPS

    • MARRIAGES

    • INSURANCES

    • SERVICES


    Necessaries

    NECESSARIES

    • NECESSARIES INCLUDE EVERYTHING THAT IS ESSENTIAL AND BENEFICIAL TO THE MINOR

      • E.G. FOOD, DRINK, CLOTHING AND EDUCATION

  • DEFINITION ON WHAT CONSTITUTES NECESSARY VARIES AND DEPENDANT UPON CIRCUMSTANCES AND CASES

    • E.G. WINTER COAT

  • THE MINOR WILL HAVE TO PAY A REASONABLE PRICE FOR THE NECESSARY


  • Scholarships

    SCHOLARSHIPS

    NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE PRINCIPAL ACT, NO SCHOLARSHIP AGREEMENT SHALL BE INVALIDATED ON THE GROUND THAT:-

    A) THE SCHOLAR ENTERING ONTO SUCH AGREEMENT IS NOT OF THE AGE OF MAJORITY

    B) SUCH AGREEMENT IS CONTRARY TO ANY PROVISION OF ANY LAW IN FORCE RELATING TO MONEY LENDERS, OR

    C) SUCH AGREEMENT LACKS CONSIDERATION

    SECTION 4(a) CONTRACT (AMENDMENT) ACT 1976


    Marriages

    MARRIAGES

    PROMISE OF MARRIAGE HAS BEEN HELD TO BE VALID. A MINOR MAY SUE OR BE SUED FOR BREACH.

    RAJESWARY V BALAKRISHNAN


    Insurances

    INSURANCES

    A MINOR OVER THE AGE OF TEN MAY ENTER INTO A CONTRACT OF INSURANCE BUT IF HE OR SHE IS UNDER THE AGE OF SIXTEEN YEARS, THE WRITTEN CONSENT OF THE PARENTS OR GUARDIANS IS ESSENTIAL

    INSURANCE ACT 1963


    Services

    SERVICES

    NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE CONTRACTS ACT 1950 OR THE PROVISIONS OF ANY OTHER WRITTEN LAW, ANY CHILD OR YOUNG PERSON SHALL BE COMPETENT TO ENTER INTO A CONTRACT OF SERVICE UNDER THIS ACT OTHERWISE THAN AS AN EMPLOYER , AND MAY SUE AS PLAINTIFF WITHOUT HIS NEXT FRIEND OR DEFEND ANY ACTION WITHOUT A GUARDIAN AD LITEM

    CHILDREN AND YOUNG PERSONS (EMPLOYMENT) ACT 1966


    False representation on age

    FALSE REPRESENTATION ON AGE

    THE MINOR IS NOT ESTOPPED FROM PLEADING MINORITY IN AVOIDING A CONTRACT

    NATESAN V THANALETCHUMI


    Certainty

    CERTAINTY

    IT IS IMPORTANT THAT TERMS AND CONDITIONS OF A CONTRACT BE CLEAR AND CERTAIN. COURTS WILL NEVER ACCEPT TERMS OR CONDITIONS WHICH ARE VAGUE AND OBSCURE


    Karuppan chetty v suah thian 1916 1 fmslr 300

    Karuppan Chetty v Suah Thian (1916) 1 FMSLR 300

    The court declared that the contract was void. The terms used in the contract was too vague and too obscure. The parties agreed to a lease of RM 35 per month ‘for as long as he likes’.


    Legal effect of uncertainty

    LEGAL EFFECT OF UNCERTAINTY

    AGREEMENTS, THE MEANING OF WHICH IS NOT CERTAIN OR CAPABLE OF BEING MADE CERTAIN, IS VOID

    SECTION 30 CONTRACT ACT 1950


    Examples

    EXAMPLES

    -A agrees to sell to B ‘a hundred tons of oil’. There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.

    -A agrees to sell to B one hundred tons of oil of a specified description, known as an article of commerce. There is no uncertainty here to make the agreement void.

    -A, who is a dealer in coconut oil only, agrees to sell to B ‘one hundred tons of oil’. The nature of A’s trade affords an indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut oil.


    Free consent

    FREE CONSENT

    TWO OR MORE PERSON ARE SAID TO CONSENT WHEN THEY AGREE UPON THE SAME THING IN THE SAME SENSE. THIS CONSENT SHOULD BE GIVEN FREELY IF ONE WOULD LIKE TO MAINTAIN THE VALIDITY OF A CONTRACT.


    Elements that vitiate consent

    ELEMENTS THAT VITIATE CONSENT

    - Coercion

    -Undue Influence

    -Fraud

    -Misrepresentation

    -Mistake


    Legal effect

    LEGAL EFFECT

    With the exception of ‘mistake’ the effect of those elements to contract is that it will render that contract to be voidable.


    Case law

    CASE LAW

    -Kesarmal s/o Lecthman Das v Valiappa Chettiar [1954] MLJ 119

    -Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & 4 Ors [1988] 2 MLJ 117


    Coercion

    COERCION

    Coercion is the committing, or threatening to commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement

    Section 15 Contract Act 1950


    Repudiation

    REPUDIATION

    The repudiation of contract should be made within a reasonable time.

    Wong Ah Fook v Kerajaan Negeri Johor [1937] MLJ Rep 121


    Undue influence

    UNDUE INFLUENCE

    A person who has made a contract under ‘undue influence’ may rescind the contract at his choice. The law gives such right to that person because the contract was not made upon ‘free will’.


    What constitutes undue influence

    WHAT CONSTITUTES UNDUE INFLUENCE

    A contract is said to be induced by ‘undue influence’ where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

    Section 16 (1) Contract Act 1950


    Ragunath prasad v sarju prasad air 1924 pc 60

    Ragunath Prasad v Sarju Prasad AIR 1924 PC 60

    There should be at least THREE important points that exist within that arrangement before a particular contract could be rescind;

    • There exists a situation where one person is in a position to dominate the will of the other

    • That person uses his position to gain an unfair advantage

    • The gain should be in a manner that is unfair.


    Section 16 2 contract act 1950

    SECTION 16 (2) CONTRACT ACT 1950

    A person is said to have been in a position to dominate the will of the other when;

    • He holds a real or apparent authority over the other

    • He stands in a fiduciary relation to the other

    • A contract is made with a person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress


    Proves of no domination

    PROVES OF ‘NO DOMINATION’

    Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduce, to be unconscionable, the burden of proving that the contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.

    Section 16 (3) (a) Contract Act 1950


    Salwath haneem v hadjee abdullah 1894 2 sslr 57

    Salwath Haneem v Hadjee Abdullah (1894) 2 SSLR 57

    The burden of proof lies upon the defendants who have ‘a confidential relationship’ with the plaintiff.


    How to prove

    HOW TO PROVE

    One way to prove is through the advice of someone who has the expertise to do so.

    Inche Noriah v Shaik Allie bin Omar (1929) AC 127

    An advice has been given to the dominated party by a lawyer.


    Fraud

    FRAUD

    Fraud is being committed when one person makes a ‘false representation’, which;

    • He believes that it is not true;

    • He is not confident that the statement is true;

    • He never care whether the statement is true or not

      with the intention of causing any person to enter into a contract.

      Section 17 Contract Act 1950


    Examples1

    EXAMPLES

    -A, intending to deceive B, falsely represents that five hundred gantangs of indigo are made annually at A’s factory, and thereby induces B to buy the factory. The contract is voidable at the option of B

    -B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal, the existence of the ore from A. Through A’s ignorance B is enabled to buy the estate at an undervalue. The contract is voidable at the option of A.


    Active false representation

    ACTIVE FALSE REPRESENTATION

    Fraud has not been committed even if one person failed to disclose the true fact. A mere non-disclosure is not a fraud.


    Examples2

    EXAMPLES

    -A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horse’s unsoundness. This is not fraud in A.

    -A and B, being traders, enter upon a contract. A has private information of a change in prices which would affect B’s willingness to proceed with the contract. A is not bound to inform B.


    Commercial law mgm 3351

    Vyramuthu v Kerajaan Negeri Pahang


    Explanation of section 17

    Explanation of Section 17

    Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.


    It is the duty of the person keeping silence to speak

    ‘it is the duty of the person keeping silence to speak’

    -Contract of Insurance

    -Sale Through Prospectus

    -The Creation of Partnership


    His silence is in itself equivalent to speech

    ‘his silence is, in itself, equivalent to speech’

    The doctrine of ‘buyers beware’

    When a question is being posed to the seller, he is expected to give the answer. At this point, whether he speaks or not, both will be regarded as the ‘answer’ for the question.


    Examples3

    EXAMPLES

    B says to A, ‘If you do not deny it, I shall assume that the horse is sound’. A says nothing. Here, A’s silence is equivalent to speech.


    Misrepresentation

    MISREPRESENTATION

    A false statement has been made without the intention to deceive another.


    Section 18 contract act 1950

    Section 18 Contract Act 1950

    Misrepresentation includes;

    • The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

    • Any breach of duty which, without an intent to deceive, gives an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him; and

    • Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.


    The difference between fraud and misrepresentation

    The Difference Between Fraud and Misrepresentation

    The basic difference between fraud and misrepresentation is that in fraud the person making the representation does not himself believe in its truth whereas, in cases of misrepresentation, he may believe the representation to be true.


    Fraud and misrepresentation must influence the other party to make contract

    Fraud and Misrepresentation Must Influence the Other Party to Make Contract

    The fraud or misrepresentation is rendered irrelevant if it has not induced or caused the other party to enter into the contract. A false statement does not per se give rise to a cause of action. The representee must have relied on the statement of the representator.


    The effect of fraud and misrepresentation

    The Effect of Fraud and Misrepresentation

    When consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

    Section 19(1) Contract Act 1950


    Exception to the general principle

    Exception to the General Principle

    ‘If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the parties whose consent was so caused had the means of discovering the truth with ordinary diligence’.

    Exception – Section 19 Contract Act 1950


    Contents of contract

    CONTENTS OF CONTRACT

    What has been agreed in an agreement is the content of a contract. It is also known as the TERMS of contract.


    Term and representation

    Term and Representation

    -Term is a condition or a warranty that is contained in a contract

    -Representation is a mere statement that is not included in a contract


    Classifications of term

    Classifications of Term

    -Express Term

    • The terms that are clearly stated and included in a contract

      -Implied Term

    • The terms that are not expressly stated but the court assumes that such terms exist in a contract


    Implied terms

    Implied Terms

    -To give effect to the commercial practice

    -To realize the intention of the contracting parties

    -Required by law


    Implied terms1

    Implied Terms

    An implied term is a term that is not included in a contract during negotiation but the law or the court assumes that such term exists in the contract.

    The court, however, will be very careful in this case in the sense that ‘the freedom of contract should be preserved’.


    Commercial practices

    Commercial Practices

    The court will normally imply terms in a contract when it thinks fit or when it thinks it is important as to give the effect to commercial practices.

    Pasuma Pharmacal Corpn. v McAlister & Co. Ltd. [1965] 1 MLJ 221

    “Good Faith”


    Commercial practices1

    Commercial Practices

    Commercial practices mean that the use of such terms in commercial transactions is very common, certain and reasonable.

    Preston Corp. Sdn. Bhd. v Edward Leong & Ors. [1982] 2 MLJ 22

    “the keeping of the first film negative and the cost of printing”


    Commercial practices2

    Commercial Practices

    ‘Such practice has been well accepted by the court; and it has been part of the law”

    Pembangunan Maha Murni Sdn. Bhd. v Jururus Ladang Sdn. Bhd. [1986] 2 MLJ 30


    Intentions of the contracting parties

    Intentions of the Contracting Parties

    The court will also implied a term in a contract when it thinks that it is important as to give effect to the intention of the contracting parties.

    Yong Ung Kai v Enting [1965] 2 MLJ 98


    Legal requirements

    Legal Requirements

    The court will implied a term in a contract when the law requires so.

    -Sale of Goods (Malay States) Act 1957

    -Hire Purchase Act 1967

    -National Land Code 1965


    Categories of term

    Categories of Term

    -Condition – an essence of a contract. A breach of a condition would render to a recession.

    -Warranty – a supportive factor to a contract. A breach of a warranty will not render the contract be rescind but the law will allow the injured party to make a claim.


    Standard form contracts

    Standard Form Contracts

    Same contract being made to different persons.

    • To expedite the transaction

    • To reduce the cost


    Standard form contracts1

    Standard Form Contracts

    Come in a package. One side is imposing a set of terms on the other party. ‘Take it or leave it’.

    One problem is the inclusion of an ‘exemption clause’ in that particular transaction.


    Exemption clause

    Exemption Clause

    The main purpose of Exemption Clause is either;

    • to avoid liability; or

    • at least to limit liability


    Ecs in contracts

    ECs in Contracts

    The Exemption Clause would be considered as part of contract/valid term of contract if it has been properly;

    • included in a contract

    • a proper notice has been given


    The incorporation of the ecs

    The Incorporation of the ECs

    When an exemption clause has been incorporated into a contract the clause is considered as part of the contract. The fact that the party did not aware about the term does not affect the validity of the clause.

    L’Estrange v F Graucob Ltd. [1934] 2 KB 394


    Notice about the ecs

    Notice About the ECs

    The notice should be made either before or at the time the contract being made.


    The effectiveness of an ec in a contract

    The Effectiveness of an EC in a Contract

    Notice

    • A notice must be served before or at the time the contract is made

      Olley v Marlborough Court Ltd [1949] 1 KB 532

      Thornton v Shoe Lane Parking [1971] 2 QB 163


    The effectiveness of an ec in a contract1

    The Effectiveness of an EC in a Contract

    Regular as a Notice – ‘Course of Dealing’

    • A consistent course of dealing would lead to the application of the principle of notice

      Spurling v Bradshaw [1956] 1 WLR 461


    The effectiveness of an ec in a contract2

    The Effectiveness of an EC in a Contract

    The Ticket Rule

    • To make the terms that contain in a ticket valid reasonable steps must be taken so as to informed the other party about the EC before the contract being made

      Chapelton v Barry UDC [1940] 1 KB 532

      Parker v South Eastern Railway Co. [1877] 2 CPD 416


    The effectiveness of an ec in a contract3

    The Effectiveness of an EC in a Contract

    The Principle of Contra Proferentem

    • When words used is unclear or ambiguous the term will be interpreted in favor of the other party


    The effectiveness of an ec in a contract4

    The Effectiveness of an EC in a Contract

    An Oral Statement

    • Where there are two different wordings as regard to the EC, one in an oral form the other in a written form, the oral form will take precedent over the written form

      Curtis v Chemical Cleaning and Dyeing Co. [1951] 1 KB 805


    The effectiveness of an ec in a contract5

    The Effectiveness of an EC in a Contract

    Carelessness

    • Where a lost or an injury has happened as a result of carelessness the party sought to avoid liability cannot rely upon the EC

      Chin Hui Nam v Comprehensive Motor Cleaning & Corporation


    The effectiveness of an ec in a contract6

    The Effectiveness of an EC in a Contract

    Misrepresentation or Fraud

    • Where one party has misrepresented as to the effect of an EC, this will automatically invalidate the effectiveness of an EC

      Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805


    Discharge of contract

    Discharge of Contract

    -Contract will give rise to rights and liabilities

    -Discharge – parties to contract will be free from further obligation under the contract

    -Rights and liabilities will be terminated

    -Contract will be terminated


    Discharge of contract1

    Discharge of Contract

    -Performance

    -Agreement

    -Breach

    -Frustration


    Performance

    Performance

    -Common way of discharging a contract

    -Parties have performed their obligations

    -If only one has performed, he alone is discharged, the other will not be discharged until he performs his obligations under the contract


    Performance1

    Performance

    The parties to a contract must either perform, or offer to perform, their respective promises, unless the performance is dispensed with or excused under this Act, or of any other law.

    Section 38 (1)


    Performance2

    Performance

    -Complete performance

    -Substantial performance

    -Quantum Meruit


    Complete performance

    Complete Performance

    -‘Entire Contract’ – the performance must be made wholly – failure to do so will give the right to the other party to refuse performance

    -Cutter v Powell


    Substantial performance

    Substantial Performance

    -A plaintiff will be able to recover the sum due under the contract less the sum the defendant could claim in damages

    -Kunchi Raman v Goh Bros. Sdn. Bhd


    Quantum meruit

    Quantum Meruit

    A claim can be made on the basis of what has been done

    Haji Hasnan v Tan Ah Kian


    Time for performance

    Time For Performance

    Performance must be made within the period that has been fixed

    Section 51


    Time as the essence

    Time as the Essence

    Failure to comply with the time result to repudiation

    Section 56(1)(2)(3)


    Frustration

    FRUSTRATION

    A CONTRACT TO DO AN ACT WHICH, AFTER THE CONTRACT IS MADE, BECOMES IMPOSSIBLE, OR BY REASON OF SOME EVENT WHICH THE PROMISOR COULD NOT PREVENT, UNLAWFUL, BECOMES VOID WHEN THE ACT BECOMES IMPOSSIBLE OR UNLAWFUL

    SECTION 57(2) CONTRACT ACT 1950


    Frustration1

    FRUSTRATION

    • DESTRUCTION OF THE PURPOSE

      • KRELL V HENRY

      • KHOO THAM SOOI V CHAN CHIAU HEE

    • DESTRUCTION OF SUBJECT MATTER

      • TAYLOR CALDWELL

      • KHAN DAU YAU V KIM NAM REALTY

    • WHEN THERE IS A NEW LAW

      • STANDERED CHARTERED BANK V KUALA LUMPUR LANDMARK SDN BHD

    • WHEN THERE IS A WAR

      • H A BERNEY V TRONOH MINES


    Law of agency

    LAW OF AGENCY

    An agency is a tripartite contract that involves ‘principal’, ‘agent’ and ‘third party’.

    Section 135 Contract Act


    Creation of agency

    CREATION OF AGENCY

    - Express Appointment

    - Implied Appointment

    - Ratification

    - Necessity


    Section 140 contract act

    Section 140 Contract Act

    An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.


    Implied appointment

    Implied Appointment

    When a person by words or conducts holds out that the other has the authority to act on his behalf - that other person will be considered in law as his agent.

    Illustration

    A owns a shop in Kajang, living himself in Kuala Lumpur, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purpose of the shop, and of paying for them out of A’s funds with A’s knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.


    Situations where contract of agency are implied

    Situations Where Contract of Agency are Implied

    - The relationship that exists between a husband and wife

    - The relationship that exists between partners in a contract of partnership.


    Ratification

    Ratification

    Where acts are done by one person on behalf of another but without his knowledge or authority, he may elect to ratify or disown the acts. If he ratifies them, the same effects will follow as if they had been performed by his authority

    Section 149 Contract Act


    Example

    Example

    1 Jan P appoints A as agent to buy a car of not more than RM 50,000.

    2 Jan T makes an offer to sell a car for RM 51,000 to A.

    3 Jan A accepts the offer


    Conditions for ratification

    Conditions for Ratification

    -Unauthorised act

    -The act is for a principal

    - The principal must be in existence

    - Ratification must not injure a third party

    - The principal must have full knowledge


    The effect of ratification

    The Effect of Ratification

    Ratification validates the unauthorised act, and it will operate retrospectively, i.e. it dates back to the time when the original contract was made, not from the date of ratification.

    Bolton and Partners v Lambert (1889) 41 Ch D 295


    Necessity

    Necessity

    An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances.

    Section 142 Contract Act


    Commercial law mgm 3351

    A consigns provisions to B at Taiping, with directions to send them immediately to C at Parit Buntar. B may sell the provisions at Taiping, if they will not bear the journey to Parit Buntar without spoiling.

    Great Northern Railway v Swaffield (1874) LR 9 Ex. 132


    Conditions that must be satisfied

    Conditions that Must be Satisfied

    - Attempts have been made to get the principal’s instruction

    - There exists a state of emergency

    - The act is for the benefit of the principal

    - The agent has acted in a good faith


    The authority of an agent

    The Authority of an Agent

    An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do the act

    Section 141 Contract Act


    The authority of an agent1

    The Authority of an Agent

    - Actual Authority

    The power that is stated in the agreement

    - Apparent Authority

    The power that is implied by a third party


    Apparent authority

    Apparent Authority

    When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by those acts or obligations if he has by his words or conduct induced such third persons to believe that those acts and obligations were within the scope of the agent’s authority

    Section 190 Contract Act

    Panorama Development (Guildford) Ltd. V Furnishing Fabric Ltd. [1971] 2 QB 711


    Duties of an agent

    Duties of an Agent

    - To obey the principal’s instruction

    - To act according to the customs

    - To exercise care and diligence

    - To render proper accounts when required

    - To pay all sums received

    - To communicate with the principal

    - Conflict of interest

    - Secret profit

    - Confidential information

    - Delegation of authority


    Duties of a principal

    Duties of a Principal

    - To pay the commission

    - Not to prevent the agent from earning his commission

    - To reimburse the agent


    Effects of contracts made by agents

    Effects of Contracts Made by Agents

    - Contract made under a named principal

    - Contract made under a disclosed principal

    - Contract made under an undisclosed principal


    Termination of agency

    Termination of Agency

    An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated or declared a bankrupt or an insolvent

    Section 154


    Termination of agency1

    Termination of Agency

    - By the Act of the Parties

    - By Operation of Law


    By the act of the parties

    By the Act of the Parties

    - The principal revoking his authority

    - The agent renouncing the business of agency


    Commercial law mgm 3351

    The principal cannot revoke the contract when;

    • Part of the job has been done

    • The agent has an interest in the contract


    Section 155 contract act

    Section 155 Contract Act

    Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

    Illustration

    A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, not can it be terminated by his unsoundness of mind or death.


    Commercial law mgm 3351

    If the period of the business of the agency has been fixed, the contract could not be terminated unless the time has lapsed.


    By operation of law

    By Operation of Law

    - The business of the agency being completed

    - The death of the principal or agent

    - The principal or agent becomes unsound

    - The principal becomes insolvent or being declared bankrupt


    Sale of goods

    Sale of Goods

    Sale of Goods Act 1957 (Revised 1989)

    The SGA applies to contracts for the sale of all types of goods;

    • Commercial sales/Private sales

    • Wholesale/Retail

    • New/Second-hand goods


    Contract of sale

    Contract of Sale

    A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.

    Section 4(1) SOGA 1957


    Sale and agreement to sell

    Sale and Agreement to Sell

    - A contract of sale

    • The property in the goods transfers to the buyers at the time the contract is made

      - An agreement to sale

    • The property in the goods will transfer at future time (e.g. when condition has been fulfilled)


    Sale and agreement to sell1

    Sale and Agreement to Sell

    Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale [contract], but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.

    Section 4(3) SOGA 1957


    Consideration1

    Consideration

    Under a Contracts Act 1950 consideration can be anything of values (in the eyes of the law)

    • Can a thing be accepted as consideration?

    • Should it be in the form of money?

    • How about thing + money?


    Consideration2

    Consideration

    Section 4(1) provides that a contract of sale is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.


    Goods

    Goods

    Goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale

    Section 2 SOGA 1957


    Classification of goods

    Classification of Goods

    Goods

    Existing Goods

    Future Goods

    Specific

    Unascertained

    Specific

    Unascertained


    Conditions and warranties

    Conditions and Warranties

    • Condition is a term essential to a contract, a breach of which will allow the other party to treat the contract as repudiated

      Section 12(2) SOGA

    • Warranty is a term collateral to a contract, a breach of which will give rise to a claim for damages but not to repudiate the contract

      Section 12(3) SOGA


    Breach of conditions

    Breach of Conditions

    There are four circumstances where a breach of condition is considered as a breach of warranty, hence a contract could not be repudiated:-

    - the buyer waives the condition

    - the buyer chooses to treat the breach of condition as the breach of warranty

    - the buyer has accepted the goods or part of it

    - the contract involves the sale of specific goods


    A scheme of consumer protection

    A Scheme of Consumer Protection

    Sections 14-17 SOGA provide a scheme of consumer protection.

    Basically, the sections put some obligations on the seller whereby he has to ensure that the buyer will have a good title of the goods; the buyer will enjoy a quiet possession of the goods; the goods are of merchantable quality and fit for purpose and etc.


    Implied terms2

    Implied Terms

    These consumer protection schemes are discussed under the topic of implied terms


    Implied condition as to title

    Implied Condition as to Title

    Unless a different intention is shown there is an implied condition on the part of the seller, that, in the case of a sale, he has the right to sell the goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.

    Section 14(a) SOGA


    Implied warranty as to quiet possession

    Implied Warranty as to Quiet Possession

    Unless a different intention is shown, there is an implied warranty that the buyer shall have and enjoy quiet possession of the goods

    Section 14(b) SOGA


    Implied warranty that the goods are free from encumbrance

    Implied Warranty that the Goods are Free from Encumbrance

    Unless a different intention is shown, there is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made

    Section 14(c) SOGA


    Sale by description

    Sale by Description

    Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

    Section 15 SOGA


    Implied condition as to quality or fitness

    Implied Condition as to Quality or Fitness

    There is no implied condition unless:-

    • The buyer makes known to the seller the particular purpose he buys the goods

    • The transaction was made upon description while at the same time the seller always deal with the goods

      Section 16 SOGA


    Sale by sample

    Sale by Sample

    In the case of a contract for sale by sample there is an implied condition:-

    • That the bulk shall correspond with the sample in quality

    • That the buyer shall have reasonable opportunity of comparing the bulk with the sample

    • That the goods shall be free from any defect rendering them unmerchantable which would not be apparent on reasonable examination of the sample

      Section 17 SOGA


    The transfer of the property

    The Transfer of the Property

    • When the property passes to the buyer?

    • How to determine whether the transfer of the property?

    • Why is it so important?


    Ownership and the risk

    Ownership and the Risk

    In principle the person who owns the goods shall bear the risk of the goods.

    Therefore if the goods damaged and the ownership was vested in the buyer, that particular buyer shall bear the loss.


    Risk in goods

    Risk in Goods

    Risk prima facie passes with property

    Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not

    Section 26 SOGA


    Who shall bear the risk

    Who shall bear the risk?

    Datin Mariam phoned Ah Chong ordering six bottles of ‘sos sedap’. Due to the constraint of time Ah Chong has asked his son, Ah Seng to deliver the sauces to Datin Mariam’s house. On his way however Ah Seng involved in an accident. All the bottles were broken and spoiled.

    Who shall bear the loss? The seller or the buyer? Why?


    Who shall bear the risk1

    Who shall bear the risk?

    Datin Mariam visited Ah Chong’s shop and chose six bottles of ‘sos sedap’. Due to the constraint of time Datin Marian asked Ah Chong to deliver the six bottles of ‘sos sedap’. Ah Seng took the responsibility but on his way however he got involve in an accident. All the bottles were broken and spoiled.

    At this time who shall bear the loss? The seller or the buyer? Why?


    Unascertained goods

    Unascertained Goods

    Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.

    Section 18 SOGA


    Specific goods

    Specific Goods

    The property in the goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

    Section 19 SOGA

    Regard has been made to the terms of contract as to ascertain the intention of the parties.

    Sections 20-24 also provide guidelines as to ascertain the intention of the parties.


    Goods in a deliverable state

    Goods in a Deliverable State

    Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price, or the time of delivery of the goods, or both, is postponed.

    Section 20 SOGA


    Goods to be made deliverable

    Goods to Be Made Deliverable

    Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.

    Section 21 SOGA


    Something has to be done in order to ascertain the price

    Something Has to Be Done in order to Ascertain the Price

    Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof.

    Section 22 SOGA


    Future goods sold by description

    Future Goods Sold by Description

    Where the is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer.

    Such assent may be express or implied, and may be given either before or after the appropriation is made

    Section 23 SOGA


    Sale or return

    Sale or Return

    When goods are delivered to the buyer on approval or ‘on sale or return’, or other similar terms, the property there in passes to the buyer:-

    • When he signifies his approval or acceptance to the seller or does any other act adopting the transaction

    • If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then if a time has been fixed for the return of goods, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time.

      Section 24 SOGA


    Risk in goods in the case of sale or return

    Risk in Goods in the Case of Sale or Return

    Risk lies on the seller until the property has passed to the buyer unless the damage or loss is caused by the buyer’s default.


    Law of partnership

    LAW OF PARTNERSHIP

    PARTNERSHIP ACT 1961 (REVISED 1974)

    THE ACT APPLIES THROUGHOUT MALAYSIA (WEST MALAYSIA AND SABAH & SARAWAK)

    THE PRINCIPLES OF ENGLISH LAW AND THE RULES OF EQUITY WILL ALSO APPLY SO FAR AS IT IS NOT CONTRADICT TO THE EXPRESS PROVISIONS IN THE ACT


    Nature of partnership

    NATURE OF PARTNERSHIP

    PARTNERSHIP IS THE RELATION WHICH SUBSISTS BETWEEN PERSONS CARRY ON A BUSINESS IN COMMON WITH A VIEW OF PROFIT.

    SECTION 3(1) PARTNERSHIP ACT


    Similar business associations

    SIMILAR BUSINESS ASSOCIATIONS

    • CO-OPERATIVE SOCIETIES

    • COMPANIES

    • SOCIETIES

    • CLUBS


    Determination of partnerships

    DETERMINATION OF PARTNERSHIPS

    • THROUGH THE READING OF SECTION 3(1) PARTNERSHIP ACT 1961

    • THROUGH THE READING OF SECTION 4 PARTNERSHIP ACT 1961

    • THROUGH OTHER EVIDENCES AND CIRCUMSTANCES


    Registration of partnership

    REGISTRATION OF PARTNERSHIP

    EVERY PARTNERSHIP SHOULD BE REGISTERED:-

    - THE REGISTRATION OF BUSINESSES Act 1956

    - CAP. 33 (BUSINESS, PROFESSIONS AND TRADE LICENCING)

    - CAP. 64 (BUSINESS NAMES)

    - TRADES LICENCING ORDINANCE, NO. 16 1948


    Contracts of partnership articles of partnership

    CONTRACTS OF PARTNERSHIP(Articles of Partnership)

    • GENERAL PRINCIPLES OF CONTRACT WILL APPLY IN PARTNERSHIP

    • THE CONTRACT MAY BE ORAL OR WRITTEN

    • THE CONTRACT MAY CONTAIN DURATION OF PARTNERSHIP

    • THE CONTRACT MAY CONTAIN RIGHTS AND DUTIES OF PARTNERS


    Rights and duties of partners

    RIGHTS AND DUTIES OF PARTNERS

    IF THERE WAS NO AGREEMENT WITH REGARDS TO THE RIGHTS AND DUTIES OF PARTNERS THE RULES IN SECTIONS 26, 27, 30, 31, 32, AND 33 SHALL APPLY IN THE PARTNERSHIP.


    Written agreement

    WRITTEN AGREEMENT

    TWO ADVANTAGES OF WRITTEN AGREEMENT:-

    • PARTNERS CAN AGREE NOT TO FOLLOW RULES PROVIDED UNDER THE ACT

    • HEPLS THE COURT WHILE INTERPRETING THE INTENTION OF THE PARTNERS


    Unsuitable rules

    UNSUITABLE RULES

    • THE EXISTENCE OF A PARTNERSHIP AT WILL – WHERE ANY OF THE PARTNERS CAN GIVE NOTICE TO DISSOLVE A PARTNERSHIOP, EVEN IF ITS BUSINESS IS THRIVING

    • THE DISSOLUTION OF A PARTNERSHIP UPON DEATH OR THE BANKRUPTCY OF APARTNER UNLESS IT HAD BEEN AGREED BETWEEN THE PARTNERS, THE DEATH OR BANKCRUPTCY OF ANY OF THE PARTNERS WILL BRING THE PARTNERSHIP TO AN END, EVEN WHERE THE PARTNERSHIP IS ACTIVELY CARRYING ON A SUCCESSFUL BUSINESS

    • RIGHTS AND LIABILITIES OVER PARTNERSHIP PROPERTY – MAY CREATE PROBLEMS WHERE PARTNERS DO NOT CONTRIBUTE EQUALLY TO THE CAPITAL, AND MAY HAVE NOT MEANT FOR PROFITS TO BE SHARED EQUALLY


    Relation between partners and third parties

    RELATION BETWEEN PARTNERS AND THIRD PARTIES

    THE BASIS OF THE RELATIONSHIP SHALL BE BASED UPON THE POWER THAT THE PARTNERS HAVE


    Principle of agency

    PRINCIPLE OF AGENCY

    EVERY PARTNER IS AN AGENT FOR THE FIRM AND HIS OTHER PARTNERS FOR THE PURPOSE OF THE BUSINESS OF THE PARTNERSHIP; AND THE ACT OF EVERY PARTNER WHO DOES ANY ACT FOR CARRYING ON IN THE USUAL WAY BUSINESS OF THE KIND CARRIED ON BY THE FIRM OF WHICH HE IS A MEMBER BIND THE FIRM AND HIS PARTNERS, UNLESS THE PARTNER SO ACTING HAS IN FACT NO AUTHORITY TO ACT FOR THE FIRM IN THE PARTICULAR MATTER, AND THE PERSON WITH WHOM HE IS DEALING EITHER KNOWS THAT HE HAS NO AUTHORITY OR DOES NOT KNOW OR BELIEVE HIM TO BE A PARTNER

    SECTION 7 PARTNERSHIP ACT 1961


    Commercial law mgm 3351

    THEREFORE A PARTNER COULD BIND THE FIRM IF THE FOLLOWING CONDITIONS ARE FULFILLED:-

    • THE ACT DONE MUST BE OF THE TYPE OF BUSINESS THAT IS CARRIED OUT BY THE FIRM

    • IT IS CARRIED ON THE USUAL WAY

    • THE THIRD MUST KNOW OR BELIEVE THE PERSON WITH WHOM HE ENTERS INTO THE TRANSACTION IS A PARTNER

    • THE THIRD PARTY MUST NOT KNOW THE PERSON WITH WHOM HE HAS ENTERED INTO THE TRANSACTION HAS NO AUTHORITY NOR THE PERMISSION OF THE OTHER PARTNERS TO ACT ON BEHALF OF THE FIRM


    Contractual liability

    CONTRACTUAL LIABILITY

    EVERY PARTNER IN THE FIRM IS LIABLE JOINTLY WITH THE OTHER PARTNERS FOR ALL DEBTS AND OBLIGATIONS OF THE FIRM INCURRED WHILE HE IS A PARTNER; AND AFTER HIS DEATH HIS ESTATE IS ALSO SEVERALLY LIABLE IN A DUE COURSE OF ADMINISTRATION FOR SUCH DEBTS AND OBLIGATIONS, SO FAR AS THEY REMAIN UNSATISFIED BUT SUBJECT TO THE PRIOR PAYMENT OF HIS SEPARATE DEBTS

    SECTION 11 PARTNERSHIP ACT


    Tortious liability

    TORTIOUS LIABILITY

    WHERE BY ANY WRONGFUL ACT OR OMISSION OF ANY APRTNER ACTING IN THE ORDINARY COURSE OF THE BUSINESS OF THE FIRM OR WITH THE AUTHORITY OF HIS CO-PARTNERS, LOSS OR INJURY IS CAUSED TO ANY PERSON NOT BEING A PARTNER IN THE FIRM, OR ANY PENALTY IS INCURRED, THE FIRM IS LIABLE THEREFORE TO THE SAME EXTENT AS THE PARTNER SO ACTING OR OMITTING TO ACT

    SECTION 12 PARTNERSHIP ACT


    Criminal liability

    CRIMINAL LIABILITY

    CRIMINAL LIABILITY IS A PERSONAL LIABILITY OF THE PARTNER WHO COMMITS THE CRIME

    IN GARRETT V HOOPER [1973] Crim.L.R. 61, LORD WIDGERY STATED;

    ‘THE GENERAL PRINCIPLE IN CRIMINAL LAW IS THAT A PRINCIPAL CANNOT BE MADE LIABLE FOR AN OFFENCE THAT REQUIRES MENS REA SIMPLY BECAUSE HIS SERVANT OR AGENT HAS THE NECESSARY MENS REA’

    CHUN SHIN KIAN V DPP [1980] 2 MLJ 246


    Misapplication of money or property of a third party

    MISAPPLICATION OF MONEY OR PROPERTY OF A THIRD PARTY

    IN THE FOLLOWING CASES, NAMELY;

    A) WHERE ONE PARTNER, ACTING WITHIN THE SCOPE OF HIS APPARENT AUTHORITY, RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON AND MISAPPLIES IT; AND

    B) WHERE A FIRM IN THE COURSE OF ITS BUSINESS RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON, AND THE MONEY OR PROPERTY SO RECEIVED IS MISAPPLIED BY ONE OR MORE OF THE PARTNERS WHILE IT IS IN THE CUSTODY OF THE FIRM

    THE FIRM IS LIABLE TO MAKE GOOD THE LOSS

    SECTION 13 PARTNERSHIP ACT


    Liability of incoming and retiring partners

    LIABILITY OF INCOMING AND RETIRING PARTNERS

    • A PERSON WHO IS ADMITTED AS A PARTNER INTO AN EXISTING FIRM DOES NOT THEREBY BECOME LIABLE TO THE CREDITORS OF THE FIRM FOR ANYTHING DONE BEFORE HE BECAME A PARTNER

    • A PARTNER WHO RETIRES FROM A FIRM DOES NOT THEREBY CEASE TO BE LIABLE FOR PARTNERSHIP DEBTS OR OBLIGATIONS INCURRED BEFORE HIS RETIREMENT

    • A RETIRING PARTNER MAY BE DISCHARGED FROM ANY EXISTING LIABILITIES BY AN AGREEMENT TO THAT EFFECT BETWEEN HIMSELF AND THE MEMBERS OF THE FIRM AS NEWLY CONSTITUTED AND THE CREDITORS, AND THIS AGREEMENT MAY BE EITHER EXPRESS OR INFERRED AS A FACT FROM THE COURSE OF DEALING BETWEEN THE CREDITORS AND THE FIRM AS NEWLY CONSTITUTED

      SECTION 19 PARTNERSHIP ACT


    Relation between partners

    RELATION BETWEEN PARTNERS

    THE RELATIONSHIP BETWEEN PARTNERS SHALL BE BASED UPON EXPRESS AGREEMENT

    IF THERE IS NO EXPRESS AGREEMENT THE RELATIONSHIP SHALL BE BASED UPON RULES THAT ARE PROVIDED UNDER SECTION 26 OF THE PARTNERSHIP ACT


    Partnership property

    PARTNERSHIP PROPERTY

    THERE ARE TWO WAYS OF DETERMINING A PARTNERSHIP PROPERTY:-

    1) EXPRESS AGREEMENT

    2) INTENTIONS OF THE PARTNERS

    PONNUKON V JEBARATNAM [1980] 1 MLJ 283


    Other methods

    OTHER METHODS

    • THE PROPERTY WAS ORIGINALLY BROUGHT INTO THE PARTNERSHIP STOCK

    • THE PROPERTY WAS OBTAINED FOR THE FIRM

    • THE PROPERTY WAS OBTAINED FOR THE PURPOSE OF PARTNERSHIP BUSINESSES


    Dissolution of partnership

    DISSOLUTION OF PARTNERSHIP

    • DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTION

    • DISSOLUTION BY NOTICE

    • DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON HIS SHARE

    • DISSOLUTION BY SUPERVENING ILLEGALITY

    • DISSOLUTION BY ORDER OF THE COURT


  • Login