TAN CHONG & SONS MOTOR COMPANY(SDN) BERHAD Vs ALAN McKNIGHT Fact :

The respondent was a squadron leader in the Royal Australian Air Force. He wanted to buy a car and get the benefit of exemption from duty in Malaysia and Australia. He would have obtained the exemption if the motor car was taken out of Malaysia and if it compiled with the Australian Design Regulations (after this known as ADR). He agreed to buy a car from the Appellants and signed a Buyers Order which contained a condition that no guarantee or warranty of any kind whatsoever was given by the company. However, the Respondent only bought the car on the representation of the appellants salesman that the car conformed to the ADR. The car supplied did not comply with the Regulations and the respondent had to sell the car thereby incurring a loss. The respondent also lost the fiscal advantage of importing the car to Australia duty free. The respondent claimed damages for breach of warranty. The learned trial judge found that there had been a warranty and this was breached by the appellants. The appellants then appealed to the Federal Court.

Issues :
i. ii. iii. Whether the representation made by the appellants expressed by words and conduct consider as a breach of warranty in term of collateral? Whether there is an evidence shows that the respondent enter into the agreement based on the appellant salesman promise? Whether the salesman representation binding to the appellants?

Judgment :
The court held that:i. The representations by the salesman expressed by words and conduct led to the respondent to enter into the agreement to purchase the car. There was abundance of evidence showing that the representations were not innocent and on the contrary could even be considered to be deceitful and plain lies. ii. There was clear evidence that had it not been for the promise of the salesman to deliver him a car complying with the ADR, the respondent would have not signed the buyers order. iii. The representations made by the salesman was binding on the appellants.

In this case, the word warranty is refer to the separate pre-contract statement during the negotiation between the salesman, Mr. Sze (appellants salesman) and the buyer, Mr Alan McKnight(respondent) and make the respondent entered into a contract with appellants. Such pre-contract statements are binding and enforceable as a collateral warranty. It is referred to as collateral because it is external and subsidiary to the main contract. Issue of liability- warranty It is in the context of the collateral warranty that the respondent found his cause of action in this case, although he referred to it in Paragraph 5 of his statement of claim as an express warranty. It is attach no legal significance to the word express here other than indicating or referring to the manner in which the warranty was communicated or expressed to the respondent. It was expressed by words of mouth and by conduct of Mr. Sze. There is a test to determine whether the words and conduct amount to a warranty enforceable at the suit of the respondent. The test laid down by Lord Denning, MR in Dick Bentley Production Ltd & Anor v Harold Smith (Motors). The test is: Looking at the cases once more, as we have done so often, it seems to me that if the representation is made in the course of dealing for a contract for the very purpose on inducing the other party to act on it, and it actually induces him to act on it by entering into the contract, that is prima facie ground for inferring that the representation was intended as warranty. It is not necessary to speak of it as being collateral. Suffice if that the representation was intended to be acted on and was in fact acted on. But the maker of the representation can rebut this inference if he can show that it really was an innocent misrepresentation, in that he was in fact innocent of fault of making it, and that it would not be reasonable in the circumstances for him to be bound by it. Admissibility of pre-contract statements and section 92 of Evidence Act (EA) There is a rule of evidence contained in Sec.92 of EA to the effect that no oral evidence will be admissible to contradict,vary,add or subtract the terms of the written agreement unless the oral evidence comes within one of the exceptions or illustration contained in the sec.Perhaps, the short answer to the objection can be given in that the prohibition against admissibility of evidence under sec.92 only applies where all-as opposed to some only-of the terms of the contract are written into the agreement. Thus where some terms are given orally and some in writing, oral evidence could be given to prove the terms are agreed to orally. Therefore that the oral representations made by Mr.Sze were admissible.

Reference Cases : De Lassale v Guildford (1902) 2 KB 215 Erskin v Adeane (1873) LR 8 Ch App 756 Chess(Oscar) Ltd v Williams (1957) 1 All ER 325 Wong Wai Cheng v AG,Singapore (1979) 1 MLJ 59,62 Damu Jadhao v Paras Nath Singh (1965) 2 MLJ 38,39

Prepared by : NURUL HIDAYAH BINTI AMAN Student No : 2009819398