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Business Law. Contents of a Contract Tutorial 7. Question 1. Contractual terms may be classified in a number of ways. Distinguish condition and warranty. ( 10 Marks ). Answer. The act does not define conditions and warranties

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business law

Business Law

Contents of a Contract

Tutorial 7

question 1
Question 1
  • Contractual terms may be classified in a number of ways. Distinguish condition and warranty.

( 10 Marks )

  • The act does not define conditions and warranties
  • Case:L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC235,held:
  • Legal meaning of ‘condition': it is a term the breach of which by one party gives the breach of which by one party gives to the other an option either to terminate the contract or proceed, if so,can sue damages.
  • Whether a term is a condition or a warranty depends on the intention of the parties.
  • Labelling a particular term a condition or warranty is not conclusive.
  • But the def can be found in the Sale of Good Act 1957
  • Sect 12(2) “A condition is a stipulation essential to the main purpose of the contract, the breach of which give rises to a right to treat the contract as repudiated”


  • In contrast, subsection(3) states:
  • A warranty is a stipulation collateral to the main purpose of the contract, the breach of which give rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated.
  • If the parties regard it as essential/fundamental/important, thus it is a condition. When there is a breach of condition, it will entitle the injured party to terminate the contract or seek for damages if he chooses to continue with the contract
  • If the parties regard it as less important/less essential/subsidiary, therefore, it is a warranty which only gives right to the injured party to seek for damages if there is a breach of warranty. NO right to terminate.
question 2
Question 2

Siti went out for shopping at Sogon Shopping Centre. She drove and entered the parking area behind the building owned by Metrace Parking Sdn Bhd. In order to enter the area, she put coins amounting to RM3.00 into the machine. A printed ticket then came out from the machine. At the back of the ticket, it was stated that:

“The company will not be responsible for any death or personal injury occurring while in this parking area for whatsoever causes.”

She did not bother to read the small printed words as it was too small and unreadable. She then went to shopping complex. After two hours shopping, she entered the parking area to get her car. Suddenly she hit a big stone and suffered a serious fractured right leg. There were some big stones and woods from the construction nearby. She called her father who then sent her to the hospital. Siti wishes to sue the company. Advise Siti.

( 15 Marks )

  • Identification of Issues
  • Whether the exemption clause is valid?/whether the clause is a valid incorporating term?
  • Will Siti succeed in bringing his action?

Explanation of the law

  •  Definition of incorporating term
  • Once the person is signed /approved to buy, they bound by it.
  • If the document is not signed but merely delivered to him, the court requires that the terms of the contract are adequately brought to his notice.
  • In the ticket cases, the person created the exemption clause may rely on it eventhough the readers does not bother to read.
  • Case: Parker v South Eastern Rly co
      • Pf received a ticket stated for condition “see back”
      • Df excludes their liability by limiting the damages up to $10 only
      • But pf’s bag was lost and he claimed for $24
      • Held: df had done what was reasonably sufficient to give the pf notice of the condition
      • The court addressed 3 questions:
      • 1.Did purchaser know that there was writing on it?
      • 2.Did purchaser know that the ticket contained or referred to terms?
      • 3.Were reasonable steps taken to bring notice of the terms to the purchaser’s attention?


Explanation of the law

  • Another case to illustrate in Malaysian Airlines Bhd v Malini Nathan & Anor [1986] 330 SC
  • Held: court satisfies that the df had already did sufficient and reasonable to bring the notice to pf and rely on the said condition.

Application of the Law

  • First requirement is satisfied as Siti knew that there were some writing but she didn’t bother to read
  • Siti would have known if she read but she didn’t read. The second requirement is satisfied as well ( this point is still arguable)
  • The 3rd condition is not satisfied as the font was to small and unreadable. This shows that the company have not taken reasonable step to bring the term to the purchaser’s knowledge
  • Therefore, the clause is not valid and can not be relied upon. Thus, the co cannot rely on the it

Concluding Advice

  • Siti may sue this co..
question 3
Question 3

Alvin is a champion badminton player, and is to compete in the forthcoming world badminton championships representing Malaysia. He decides to update all of her badminton equipment, including his racquets. So, he goes to a shop which specialises in this. As he entered this shop, he did not notice a sign which is placed on the wall behind the counter which says, in medium-sized print:


‘Whilst all possible care is taken with stringing and restringing work entrusted to us we cannot accept responsibility for any defective work or defective products used by us, and we will not be liable for any loss or losses to customers, even if demonstrably caused by negligent workmanship on our part’.

question 3 cont
Question 3 – cont.

Alvin could not have read the notice, even if she had seen it, since he wears contact lenses which he did not have withher at the time. He left his racquet for restringing and was given a docket which he placed in his bag, assuming that it identified his racquets so that he could collect the right racquets on his return. The same words which appeared on the notice behind the counter were also printed on the docked in very fine, but legible, print on the bottom of the docket. A few days later, Alvin collected his racquets which appeared to be correctly strung, paid the costs of restringing, packed the racquets with his other gear and left for the world championships overseas. Whilst competing in the first round of competition, the strings in Alvin’s racquet broke. He selected two replacement racquets in turn and the strings also broke. Subsequent testing of the strings showed that they were suitable for squash racquets, but not for badminton racquets and they should never have been used by the person stringing the racquets for Alvin. Advise Alvin.

(15 marks)


Question 4

  • Chin Shee, a famous Malaysian singer, contracts with Kurry, the manager of a theatre, to perform a ballet dance at his theatre for two nights in every week during the next two months, and Kurry engages to pay her RM 2000 for each nights’s performance. On the sixth night, Chin Shee was intentionally absent from the theatre, and Kurry, in consequence, rescinds the contract. Advise Chin Shee.

( 15 Marks )

question 5
Question 5
  • Robert offered to sell his organ to slyvia for $3000.00 and agreed to keep the offer open until 1pm on 7th of August, Slyvia telephones Robert to tell him that she wished to accept Robert’s offer, but Robert was out at the time and slyvia was merely able to record her acceptance on Robert’s answering machine. At 12:30pm Robert sold the organ to Terence for $3100.00. At 2pm he returned to his office and played back the recorded telephone messages. Advise Robert.

(10 marks)