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?.
LAW IS A SET OF RULES THAT GOVERN AND REGULATE HUMAN BEHAVIOUR
JUSTICE IS AN ABSTRACT IDEA OF RIGHT AND WRONG, FAIRNESS AND EQUALITY
MINISTER WILL BRING THE PAPER
TO THE CABINET
APPROVAL FROM THE CABINET
AG WILL PREPARE A
DRAFT TO BE TABLED
THE SUBSIDIARY LAW CAN ONLY BE MADE IF THE RESPECTIVE ACT (KNOWN AS ENABLING ACT) GIVES POWER
THE PROCESS OF MAKING RWH BY-LAWS: A TYPICAL TCPD EXAMPLE
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
NEW PRINCIPLES CREATED IN COURT
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
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
TWO CONDITIONS FOR THE APPLICATION:-
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’
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)
CONTRACT IS THE NUCLEUS OF ALL COMMERCIAL TRANSACTIONS
CONTRACT IS AN AGREEMENT WHICH IS ENFORCEABLE IN LAW
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
NOT ALL AGREEMENTS ARE CONTRACT. THERE ARE SOME AGREEMENTS WHICH ARE NOT CONSIDERED AS CONTRACT
EG. SOCIAL AGREEMENTS
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
IT IS AN OFFER OR A PROMISE TO BE BOUND BY HIS/HER TERMS IF THEY ARE ACCEPTED BY THE OTHER
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
THE STATEMENT SHOULD SHOW A CLEAR WILLINGNESS TO BE BOUND BY HIS/HER TERMS IF ACCEPTED BY THE OTHER PARTY
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 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
A PROPOSAL CAN BE ADDRESSED TO A PARTICULAR PERSON OR TO A GENERAL PUBLIC
A PROPOSAL MAY BE WRITTEN, SPOKEN OR IMPLIED FROM CONDUCT
EVERY PROPOSAL MADE SHOULD BE COMMUNICATED TO THE OTHER PARTY
THE OTHER PARTY SHOULD HAVE THE KNOWLEDGE BEFORE ACCEPTING A PROPOSAL
‘There cannot be assent without knowledge of the offer’
‘THE COMMUNICATION OF A PROPOSAL IS COMPLETE WHEN IT COMES TO THE KNOWLEDGE OF THE PERSON TO WHOM IT IS MADE’
SECTION 4 (1)
AN ACCEPTANCE IS AN ACT WHICH SHOWS THAT THE PERSON TO WHOM THE PROPOSAL IS MADE GIVES HIS/HER ASSENT TO THE PROPOSAL
TO CONVERT A PROPOSAL INTO A PROMISE THE ACCEPTANCE SHOULD BE ABSOLUTE AND UNQUALIFIED
SECTION 7 (a)
THE LEGAL PRINCIPLE IS THAT THE ACCEPTANCE SHOULD BE A ‘MIRROR IMAGE’ TO THE PROPOSAL
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.
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
Butler Machine Tool v Ex-Cell-O-Corporation  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.
‘SILENCE’ SHOULD NOT BE ACCEPTED AS A FORM OF ACCEPTANCE
FELTHOUSE V BINDLEY
AN ACCEPTANCE SHOULD BE MADE KNOWN (COMMUNICATED) TO THE PERSON TO WHOM THE PROPOSAL IS MADE
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
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’
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
ALL REVOCATIONS MUST BE MADE KNOWN TO THE OTHER PARTY
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 IS THE SYMBOL OF BARGAIN AND RECIPROCAL OBLIGATIONS
CONSIDERATION IS A ‘PRICE’ GIVEN IN RETURN FOR A PROMISE
‘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’
‘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’
A promise is made in return for a promise
A performance is made in return for a promise
A promise is made subsequent to and in return for an act that has already been performed
Y FINDS X’S PERSIAN CAT
Y RETURNS THE CAT TO X
X PROMISES TO REWARD Y RM 100
Past consideration is not valid because it has been done without reference to the existing promise
Re McArdle  Ch 669
Lampleigh v Brathwait (1615) Hob 105
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 …”
- 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
- PUBLIC DUTY IMPOSED BY LAW
Glassbrook Bros. v Glamorgan County Council  AC 270
- PERFORMANCE OF A DUTY OWED TO PROMISOR
Stilk v Myrick (1809) 2 Camp 317
Explanation 2 of Section 26
An arrangement to sell a piece of land for RM500 which worth more than that
- 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
THE PARTIES CONTEMPLATE THAT THE AGREEMENT BE ENFORCEABLE IN LAW
THE COURT WILL DECIDE UPON CASES AND THE PRINCIPLE OF ‘REBUTTABLE PRESUMPTION’
REBUTTABLE PRESUMPTION MEANS A SUGGESTION HOLDS GOOD SO LONG AS THERE IS NO EVIDENCE TO THE CONTRARY
THERE IS AN INTENTION TO CREATE LEGAL RELATIOSHIPS UNLESS IT IS PROVEN OTHERWISE
Carlill v Carbolic Smoke Ball (1892) 2 QB 484
Jones v Vernons Pools  2 All ER 626
Rose and Frank v Crompton Bros  2 KB 261
THERE IS NO INTENTION TO CREATE LEGAL RELATIONSHIPS UNLESS PROVEN OTHERWISE
Balfour v Balfour  2 KB 571
Jones v Padavatton  2 All ER 616
Merritt v Merritt  2 All ER 760
Simpkins v Pays  1 WLR 975
Parker v Clark  1 WLR 286
Tanner v Tanner  1 WLR 1346
THE PARTIES WHO INTEND TO ENTER INTO AN AGREEMENT SHOULD HAVE FULL CONTRACTUAL CAPACITY
THE PARTIES SHOULD BE LEGALLY COMPETENT
THE AGREEMENT WILL BE RENDERED VOID
- Mohori Bibee v Dharmodas Ghose (1903)ILR 30 Cal 539
- Tan Hee Juan v The Boon Keat  MLJ 96
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
PROMISE OF MARRIAGE HAS BEEN HELD TO BE VALID. A MINOR MAY SUE OR BE SUED FOR BREACH.
RAJESWARY V BALAKRISHNAN
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
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
THE MINOR IS NOT ESTOPPED FROM PLEADING MINORITY IN AVOIDING A CONTRACT
NATESAN V THANALETCHUMI
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
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’.
AGREEMENTS, THE MEANING OF WHICH IS NOT CERTAIN OR CAPABLE OF BEING MADE CERTAIN, IS VOID
SECTION 30 CONTRACT ACT 1950
- 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.
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.
- Undue Influence
With the exception of ‘mistake’ the effect of those elements to contract is that it will render that contract to be voidable.
- Kesarmal s/o Lecthman Das v Valiappa Chettiar  MLJ 119
- Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & 4 Ors  2 MLJ 117
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
The repudiation of contract should be made within a reasonable time.
Wong Ah Fook v Kerajaan Negeri Johor  MLJ Rep 121
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’.
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
There should be at least THREE important points that exist within that arrangement before a particular contract could be rescind;
A person is said to have been in a position to dominate the will of the other when;
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
The burden of proof lies upon the defendants who have ‘a confidential relationship’ with the plaintiff.
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 is being committed when one person makes a ‘false representation’, which;
with the intention of causing any person to enter into a contract.
Section 17 Contract Act 1950
- 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.
Fraud has not been committed even if one person failed to disclose the true fact. A mere non-disclosure is not a fraud.
- 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.
Vyramuthu v Kerajaan Negeri Pahang THE LAW.
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.
- Contract of Insurance
- Sale Through Prospectus
- The Creation of Partnership
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.
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.
A false statement has been made without the intention to deceive another.
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.
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.
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
‘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
What has been agreed in an agreement is the content of a contract. It is also known as the TERMS of contract.
- 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
- Express Term
- Implied Term
- To give effect to the commercial practice
- To realize the intention of the contracting parties
- Required by law
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’.
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.  1 MLJ 221
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.  2 MLJ 22
“the keeping of the first film negative and the cost of printing”
‘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.  2 MLJ 30
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  2 MLJ 98
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
- 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.
Same contract being made to different persons.
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.
The main purpose of Exemption Clause is either;
The Exemption Clause would be considered as part of contract/valid term of contract if it has been properly;
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.  2 KB 394
The notice should be made either before or at the time the contract being made.
Olley v Marlborough Court Ltd  1 KB 532
Thornton v Shoe Lane Parking  2 QB 163
Regular as a Notice – ‘Course of Dealing’
Spurling v Bradshaw  1 WLR 461
The Ticket Rule
Chapelton v Barry UDC  1 KB 532
Parker v South Eastern Railway Co.  2 CPD 416
The Principle of Contra Proferentem
An Oral Statement
Curtis v Chemical Cleaning and Dyeing Co.  1 KB 805
Chin Hui Nam v Comprehensive Motor Cleaning & Corporation
Misrepresentation or Fraud
Curtis v Chemical Cleaning and Dyeing Co  1 KB 805
- 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
- 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
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)
- Complete performance
- Substantial performance
- Quantum Meruit
- ‘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
- 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
A claim can be made on the basis of what has been done
Haji Hasnan v Tan Ah Kian
Performance must be made within the period that has been fixed
Failure to comply with the time result to repudiation
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
An agency is a tripartite contract that involves ‘principal’, ‘agent’ and ‘third party’.
Section 135 Contract Act
- Express Appointment
- Implied Appointment
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.
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.
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.
- The relationship that exists between a husband and wife
- The relationship that exists between partners in a contract of partnership.
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
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
- 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
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
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
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
- 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
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
- Actual Authority
The power that is stated in the agreement
- Apparent Authority
The power that is implied by a third party
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.  2 QB 711
- 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
- To pay the commission
- Not to prevent the agent from earning his commission
- To reimburse the agent
- Contract made under a named principal
- Contract made under a disclosed principal
- Contract made under an undisclosed principal
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
- By the Act of the Parties
- By Operation of Law
- The principal revoking his authority
- The agent renouncing the business of agency
The principal cannot revoke the contract when; 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.
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.
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.
If the period of the business of the agency has been fixed, the contract could not be terminated unless the time has lapsed.
- 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 Act 1957 (Revised 1989)
The SGA applies to contracts for the sale of all types of goods;
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
- A contract of sale
- An agreement to sale
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
Under a Contracts Act 1950 consideration can be anything of values (in the eyes of the law)
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 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
Section 12(2) SOGA
Section 12(3) SOGA
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
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.
These consumer protection schemes are discussed under the topic of implied terms
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
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
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
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
There is no implied condition unless:-
Section 16 SOGA
In the case of a contract for sale by sample there is an implied condition:-
Section 17 SOGA
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 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
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?
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?
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
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.
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
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
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
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
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:-
Section 24 SOGA
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.
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
PARTNERSHIP IS THE RELATION WHICH SUBSISTS BETWEEN PERSONS CARRY ON A BUSINESS IN COMMON WITH A VIEW OF PROFIT.
SECTION 3(1) PARTNERSHIP ACT
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
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.
TWO ADVANTAGES OF WRITTEN AGREEMENT:-
THE BASIS OF THE RELATIONSHIP SHALL BE BASED UPON THE POWER THAT THE PARTNERS HAVE
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
THEREFORE A PARTNER COULD BIND THE FIRM IF THE FOLLOWING CONDITIONS ARE FULFILLED:-
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
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 IS A PERSONAL LIABILITY OF THE PARTNER WHO COMMITS THE CRIME
IN GARRETT V HOOPER  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  2 MLJ 246
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
SECTION 19 PARTNERSHIP ACT
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
THERE ARE TWO WAYS OF DETERMINING A PARTNERSHIP PROPERTY:-
1) EXPRESS AGREEMENT
2) INTENTIONS OF THE PARTNERS
PONNUKON V JEBARATNAM  1 MLJ 283