BT20403/Topic3

Outline
Introduction
The doctrine of freedom of contract
Elements of a valid contract
Terms of a contract
 Exemption Clauses

Doctrine of Privity

Discharge of contract

Remedies

LAW OF CONTRACT
BT20403 COMMERCIAL LAW
TOPIC 3

ismk/B20403/Topic3

INTRODUCTION
DISCHARGE

ELEMENT

Contract law is a collective body of legal rules

LAW OF
CONTRACT

Offer
Acceptance
Consideration
Capacity
Intention
Certainty
Consent
Legality

relating to legally binding agreements made

between persons in society.

Performance
Agreement
Frustration
Breach

Contracts in Malaysia are governed by

Contracts Act 1950 and the common law.

REMEDIES







In interpreting the provisions of the Contracts

Act, English law may also be relied upon when

there is lacunae in the law, and limited to that
part of English law which is suited to local
circumstances (s.3 and s.5 of the Civil Law Act
1956)) refer to JM Weatherspoon Ltd v Henry
1956
Agency House [1962]

Rescission
Damages
Specific Performance
Injunction
Quantum Meruit
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CONT.

CONT.

It is important to note that though reference

Contract law forms the basis of

is made to the English law, it will only be

applicable as guidance or persuasive
authority and will not bind the decisions of
the courts in Malaysia.

understanding many other legal subjects i.e.

employment law, consumer law, property
law, banking law etc .

The modern law of contract developed from

There are times decisions of the court in

India may be referred to since some of the

provisions of the Indian Contracts Act are in
pari materia with our Malaysian Contracts
Act.

the old law

law merchant
merchant or lex
lex mercatoria
mercatoria,
,
i.e. the customs and rules established over
the centuries and adhered to by early
traders and business people.

However, it will be regarded as a source of

reference only.

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CONT.

CONT.

During 19th century, expansion of trade and

Thus, when persons freely enter into a

the impact of the Industrial Revolution led

to a vast increase in the number of contracts
made the emergence of consumer society.

contract by which they intend to be bound,

then they are strictly bound.
bound.

A court will not interfere in that agreement

 laissez
laissez-- faire
faire,, which depends heavily on

if it was made freely.

the freedom of the individual.

This approach is known as the doctrine of

freedom of contract and it forms the basis

of modern contract law.

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What is a Contract?

Cont.

A contract is:

Contract has been defined as a legally

enforceable agreement.
agreement.

.. an agreement, enforceable at law,

law,
between two or more persons to do or
refrain from doing some act or acts;
acts; the
parties must intend to create legal
relations and must have given something or
promised to give something of value as
consideration in return for any benefit
derived from the agreement.

According to s.2(h) of the Contracts Act

1950 An agreement enforceable by law is

a contract.

There is an implied assumption that not all

agreements are contracts.

Thus, there must be a legal body of rules a

yardstick, by which to decide whether an

agreement is a contract or not.

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Cont.

10

ELEMENTS OF A VALID
CONTRACT

The basic elements constituting a contract

S.10 of the Contracts Act provides some of

are as follows:

the basic elements for a valid contract.

1.
2.
3.
4.
5.
6.
7.

According to s.10 - All agreements are

contracts if they are made by the free

consent of parties competent to contract,
for a lawful consideration and with a lawful
object,, and are not hereby expressly
object
declared to be void.
void.

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11

Agreement (offer and acceptance);

Intention to create legal relations;
Consideration;
Certainty;
Capacity;
Legality;; and
Legality
Consent

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Elements of a Valid Contract

Cont..

ACCEPTANCE
OFFER/
PROPOSAL

LEGALITY

FREE CONSENT

CONSIDERATION

ESSENTIAL
ELEMENTS
FOR A
CONTRACT

INTENTION
TO CREATE
LEGAL
RELATIONS

CAPACITY
CERTAINTY
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Explanation

Capacity to
contract

Every party to a contract must have the

capacity to enter into a contract namely,
must be of age of majority, of sound mind
and not prohibited from contracting.
Every party must enter into a contract with
free consent and not secured through
means of fraud, coercion, undue influence,
misrepresentation or mistake.
The contract must be certain, i.e. not
ambiguous or vague.
The contract must be legal.

Legality

Offer/Proposal
Acceptance

When you signifies your willingness to be

bound by a contract with the other party.
When you agree to accept the offer or
proposal made by the other party who
makes the proposal.

Offeror/
Proposer

A person who makes the offer.

Acceptor
Consideration
Intention to
create legal
relations

A person who accepts the offer.

A value to be paid for a promise made.
Every party to a contract must have the
intention to create legal relation.

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14

CONT
Important!!!

Elements of
Contract

Certainty

Explanation

13

Cont..

Free consent

Elements of
Contract

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In the absence of one/ more of these

essentials, a contract may be void
void,, voidable
or unenforceable
unenforceable..
 Void : A void contract has no legal effect at all.
A void contract is often described as void ab
initio (void from the outset).
 Voidable : A voidable contract is legally
binding, but one of the parties has the option
to set is aside if he so chooses.
 Unenforceable : An unenforceable contract is
valid in all respects except that it cannot be
enforced in a court of law.
15

cont

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16

Element No. 1: Agreement

It is also important to distinguish a

A contract is a legally enforceable

Unilateral contract e.g. X promises to so

Agreement is often described as requiring

unilateral contract and a bilateral

contract..
contract

agreement (s.2(h)
s.2(h))) creating rights and
obligations for the parties to it.

something in return for an act by Y. Y is not

bound to do anything at all. Xs promise
becomes enforceable only if Y carries out
the act.

consensus ad idem (a meeting of minds) Sri Kajang Rock Products Sdn Bhd v
Maybank Finance Bhd [1992]

All contracts must be built upon an

agreement, but not all agreements are

contracts!

Bilateral contract e.g. X promises to do

something for Y if Y will promise to do

something for X in return.

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...cont

Condition
Definition

Thus, social and domestic agreements are

not generally enforceable, unless there is a

clear evidence of an intention to create
legal relations.

OFFER/
PROPOSAL

Underlying the idea of agreement is, Offer

and Acceptance
Acceptance,, one party proposes or
offers or makes a offer, and if the other
party accepts the offer in its entirety then
the parties have agreed.

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Revocation
ITT

19

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(i) Offer/Proposal

Clear

Sect. 2(a)
Condition

Introduction

What is an offer or a proposal?

Specific offer and general offer

20

Communicated
s.4(1)

Acceptor aware

S.2(a) - When one person signifies to another

his willingness to do or to abstain from doing

anything, with a view to obtaining the assent of
that other to the act or abstinence, he is said to
make a proposal.

Sect. 5(1)
Rule of ITT

Revocation

ITT
Guideline

It is an intimation by words or conduct, of a

Types of revocation

willingness to enter into a legally binding

contract,, specifying the terms of the binding
contract
agreement which will be formed should the
offer be accepted by the party to whom it is
addressed.
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Effective revocation
sect.4(3)(a) &(b)

Notice
Lapse of time
Not fulfill condition
Unsound mind/death
21

...cont

Advertisement
Display of goods
Tender
Quotation
auction
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22

An offer must be distinguished

from an invitation to treat

For an offer to be valid there must be:

i. An offeror / promissor - the person

An offer once accepted creates an

agreement.

making the offer - s.2(c)

ii. An offeree - the person accepting the
offer.

An offer can be contrasted with an invitation

to treat.

If these two are absent, then the agreement

is void ab initio (no effect from the

beginning) - Affin Credit (Malaysia) Sdn
Bhd v Yap Yuen Fui [1984].

An invitation to treat is an invitation to enter

negotiations. The acceptance of an

invitation to treat does NOT create an
agreement .

An offer can either be expressed (words

oral or writing) or implied (other than

words) - s.9.

ismk/B20403/Topic3

It is not always easy to distinguish between

an offer and an invitation to treat.

23

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Offer or Invitation to Treat?

Offer or Invitation to Treat (ITT)?

What is an invitation to treat?

treat?

In certain types of standard transactions

(e.g. display of goods, advertisements).

An invitation to treat is not an offer.

offer. It is an

expression of willingness to negotiate.

negotiate.

There are some general rules that apply as

to whether or not an offer has been made

(can be rebutted).

A person making an invitation to treat does

not intend to be bound as soon as it is

accepted by the person to whom the
statement is addressed.

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25

...cont

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26

...cont

The negotiation stage:

stage:

A statement/ information as of price is not an

 Harvey v Facey (cont.)

 The Privy Council held that no contract

existed between the 2 parties. The first

telegram was simply a request for
information, so at no stage did the respondent
make a definite offer that could be accepted.
The statement of price was merely the
provision of information.
 In its judgment, the court pointed out that had
asked 2 questions in the first telegram - as to
the respondent's willingness to sell and the
lowest price. The respondent only answered
the 2nd question and did not reply as to his
willingness to sell. Thus he had made no offer.
The last telegram of the appellants was an
offer to buy but was never accepted by the
respondent.

offer.

 Harvey v Facey [1893] AC - The appellants

telegraphed the respondent Will you sell us

Bumper Hall Pen (a property in Jamaica)?
Telegraph lowest cash price. The respondent
replied, Lowest price for Bumper Hall Pen is
900. The appellants then replied in the
following words: "We agree to buy Bumper
Hall Pen for the sum of 900 asked by you.
Please send us your title deed in order that we
may get early possession. The respondent
however refused to sell at that price. He
denied his reply was an offer.
ismk/B20403/Topic3

27

...cont

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28

...cont

Shop and self service situations:

situations:

Display of goods on shelves in a self service shop
is not an offer but merely an invitation to treat.

The offer is made by the customers when they
take the goods to the counter at which point the
seller decides whether to accept the offer or not.

Boots Cash Chemists [1953] The display of

goods on shelves in a selfself-service store is not
an offer to sell the goods. No contract was
formed merely by customer taking goods off
the shelf.

 Held: Customers select the item they wish

to purchase, and then take it to the assistant,

who accepts it and completes the contract....
The plaintiff contends that the defendant has
offered to sell the goods by displaying them
on the shelves, and that the plaintiff accepts
the offer by taking them from the shelf. If this
is correct, then a person who takes something
from the shelves cannot then replace the item
if they see something which they would prefer
more. It seems clear that the sale takes place
at the cash register.

 Fisher v Bell [1960] The display of knife in

shop window, is not an offer. It was held that

where goods are displayed in a shop together
with a price label, such display is treated as an
invitation to treat by the seller, and not an
offer. The offer is instead made when the
customer presents the item to the cashier
together with payment. Acceptance occurs at
the point the cashier takes payment.
ismk/B20403/Topic3

 Pharmaceutical Society of Great Britain v

29

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...cont

...cont

Advertisement and circulars:
circulars:

Advertisements are generally regarded as

 Coelho v the Public Services Commission

[1964] Held: The advertisement in the

newspaper was an invitation to qualified
persons to apply for the post and the
resulting applications were offers.

invitations to treat, especially if the

advertisement occurs in a newspaper or
catalogues.

Reason
Reason:: No one could ever offer to supply an
infinite quantity of a product to everyone.

 This view was supported in Majumder v AG

of Sarawak [1967] Held: An advertisement

in the newspaper of a vacancy for the
position of a doctor was an invitation to treat.

 Patridge v Crittenden [1968] The def was

charged with unlawfully offering certain wild

birds, the bramblefinch
bramblefinch,, for sale. He placed
the advertisement in a bird magazine. Held:
The advertisement did not constitute an offer,
but was merely an invitation to treat.
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an offer - see Carlill v Carbolic Smoke Ball

Co Ltd [1893] 1 QB 256 Court of Appeal.

31

Carlill v Carbolic Smoke Ball Co. [1893]

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The advert also stated that the def had

deposited 1000 in a bank to show their

sincerity in the matter.

The plaintiff bought one of the smoke balls

and despite using the smoke ball properly, she

still caught flu. She claimed the reward but the
def refused to pay.

They advertised that

that
if anyone could show
that they have
correctly used a
smoke ball yet still
caught flu, they would
be paid 100 reward.

Held: There was a valid contract between the

plaintiff and the def. The deposit showed a

willingness to be bound by terms of the
advertisement, making it an offer.

33

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...cont

...cont

Auction sales:
sales:

In an auction, the auctioneer makes the

Tenders
Tenders::

invitation to the bidders who come to the

public auction to make a proposal. The
proposal to bid at a certain price will come
from the bidders.

34

 Harvela Investments v Royal Trust Co. of

Canada [1985] - Held: Goods advertised for

tender is an invitation to treat because the
owners of the goods request for offers to
purchase the goods.

 Payne v Cave (1789) - The defendant made

the highest bid for the plaintiff's goods at

an auction sale, but he withdrew his bid
before the fall of the auctioneer's hammer.
Held: The defendant was not bound to
purchase the goods. His bid amounted to
an offer which he was entitled to withdraw
at any time before the auctioneer signified
acceptance by knocking down the hammer.
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32

Carlill v Carbolic Smoke Ball Co. (cont.)

Facts:

The def company
claimed that the
smoke balls which
they manufactured
cured many illnesses
and made it
impossible to catch
flu.

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However, advertisement may also amount to

 Spencer v Harding (1870)

35

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Rewards are often offers

Example 1:

Zack entered into a shoe store, Happy Feet, in

Gibbons v Proctor

IBorneo. He wanted to buy a leather shoe for

IBorneo.
himself. He saw an array of various types, colours
colours,,
brands as well as sizes of shoes. He tried 3 pairs of
shoes before he decided not to buy any shoes at all.
The shop attendant was not happy and he asked
Zack to pay for the shoes that he has tried on.

Here, contract has yet to exist between Zack and
Happy Feet. The display of shoes the shelves in the
store is merely an invitation to treat (the store is
inviting potential buyer(s) to make an offer to buy
the shoe(s)). Offer will be made by Zack when he
take the shoes to the counter and prepare to pay for
them. Here, offer is yet to be made as Zack was
merely trying the shoes (in order to check its
suitability etc).

(1891)

Fitch v Snedaker (1868)

Taylor v Allon [1966]

R v Clarke (1927)

Williams v Cawardine

(1833)

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37

Communication of Offer

38

Communication of Offer (2)

The offer must be communicated to the

It is a requirement that an acceptance is made

offeree before an acceptance can be made.

in reliance or pursuance of an offer - R v

Clarke (1927).

Thus, an action without the knowledge of the

The communication of an offer is complete

offer is no acceptance.

when it comes to the knowledge of the person

to whom it is made (promisee
(promisee//offeree
offeree))- s.4(1).

Hence, acceptance cannot be made unless

the offeree knew about the existence of

the offer - Fitch v Snedaker (1868).

In Lalman Shukla v Gauri Datt (1913), the

plaintiffs claim was unsuccessful although

he fulfilled the requirement for acceptance as
he had no knowledge of the offer.
ismk/B20403/Topic3

39

Example 2:

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40

...cont

Nina lost her purse and she placed an advertisement

in the daily newspaper offering a reward of RM300 to

anyone who can find her purse and return it to her.
Alex found the purse, recognising it as Ninas purse
as it contains her identity card and her driving
licence. When he returned the purse to Nina, she is
delighted but said nothing. The next day, Alex read
the advertisement in the newspaper about the
reward. Alex then asked Nina about the reward. Nina
now refused to pay the reward.

Here the advertisement constitute an offer as
rewards are often held to be offers (see Gibbons v
Proctor).
Proctor
). However, for an offer to be effective, it
must be communicated to the intended recipient
(potential offeree
offeree)) (s.4(1)
(s.4(1)).Although,
).Although, Alex found and
returned the purse to Nina (constituting an
acceptance), it is not effective as Alex has no
knowledge about the offer at the time he made the
purported acceptance.
41

An offer has to be communicated:

Expressed in writing
or verbally

Implied through
conduct

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...cont

...cont

To whom an offer may be made?

Boulton v Jones [1957] A sold his steel pipe

business to B. Actually A owed a debt to J. J
made an offer to book steel pipes from A. B
accepted Js offer and supplied the pipes to J. J
refused to pay for the pipes. Held: There was no
contract between B and J. Js offer (i.e. to buy
the steel pipes) was intended for A and not B.

An offer may be made to:

specific person(s)

the world at large

Boulton v Jones

Carlill v Carbolic Smoke

Ball Co Ltd [1893]

[1957]

ismk/B20403/Topic3

Carlill v Carbolic Smoke Ball Co Ltd [1893] A

company advertised that it will give 100 to
anyone who catch flu after consume its
medicine. C took the medicine according to the
instruction prescribed but she still caught flu.
Held: There is a valid offer made generally to
the world at large.
43

When offer lapses?

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44

S.5 & S.6 - Revocation of Offer

An offer is effective for a specific period

General rule:
rule:

only.

The offeror may revoke his offer at any time

before acceptance.

An offer will lapse once an acceptance is

made.

According to s.5(1)
s.5(1),, the offer may be

revoked at any time before

communication of its acceptance is
complete as against the offeror
offeror..

An offer will lapse once it is revoked by

the offeror - s.5 and s.6

However, such revocation is ineffective

until communicated to the offeree (s.6).

s.6).

ismk/B20403/Topic3

45

...cont.

46

...cont.

Offer can be revoked:

1.

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Under s.6(a)
s.6(a),, communication of revocation

of offer must come from the offeror or his

agent.

S.6(a): by communication of notice of

S.6(a):
revocation by the offeror to offeree
offeree..

However, the position under common law is

provided in the case of Dickinson v Dodds

(1876)

Routledge v Grant [1828]: Def offered to

take a lease of the pls premises, and

promised to keep the offer open for 6
weeks. After 3 weeks, the def purported
to revoke his offer, while at the end of six
weeks, the pl purported to accept it.

In this case, the Court of Appeal held that

the manner of communication was

irrelevant provided that claimant knew
without doubt that the def no longer
intended to sell his property to him by the
time the purported acceptance was made.

Byrne v Van Tienhoven (1880)

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47

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...cont.
2.

...cont.

S.6(b):: Offeree did not response within the

S.6(b)
time stipulated, or if there is no time
stipulation, the offer lapses after a reasonable
time.

Ramsgate Victoria Hotel Co v Montefiore

(1866) - The def offered to take shares in
the company by a letter dated 8 June 1864.
The company did not reply until 23
November 1864, when it allotted shares to
the def. The def refused to take up the
shares. The court held that the defs refusal
was justified because the offer had lapsed
due to the companys delay in accepting
the offer within a reasonable time.
ismk/B20403/Topic3

3.

S.6(c):: By the failure of the offeree to fulfil a

S.6(c)
condition precedent to acceptance. E.g. An
employer offers to employ an applicant on
the condition that he passes certain test. If
the applicant fails the test, then the offer is
revoked.

4.

S.6(d): By the death or mental disorder of

the offeror
offeror,, if the fact of his death or
mental disorder comes to the knowledge of
the offeree before acceptance
Bradbury v Morgan (1862)
Re Whelan (1897)

49

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Definition

50

Sect. 2(b)

Condition
Sect. 7(a)

Condition Absolute and unqualified

Definition

COUNTER OFFER

Exceptions to
communication

Acceptance

exception

Sect. 7(b)
Usual way and reasonable manner

communication
Time
Manner

Exceptions to No need to communicate

communication
Sect. 5(2)

Revocation

Postal rule

Reciprocal promise

Revocation

Effective revocation
sect.4(3)(a) &(b)
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51

(ii) Acceptance

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52

Cont.

There must be a meeting of mind between

the offeror and offeree (consensus ad idem).

idem).

What is an acceptance?

If parties are still negotiating, thus an

According to s.2(b)
s.2(b):: When the person to

agreement is not yet formed - Lau Brothers

& Co v China Pacific Navigation Co. Ltd.
[1965] 1 MLJ 1.

whom the offer is made signifies his

assent thereto,
thereto, the offer is said to have
been accepted.

Another situation where a contract is not yet

Person accepting the offer is called the

concluded is when there is a conditional

acceptance. It happens when the acceptance
is qualified by the term subject
subject to a
contract or subject
contract
subject to a formal contract
being drawn up by the solicitors
solicitors Low Kar
Yit & Ors v Mohd Isa & Anor [1963].

promisee
promisee (or offeree
offeree)) - s.2(c)

Acceptance can either be expressed (made

in words) or implied, s.9.

s.9.

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53

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Principles of Acceptance

...cont.

1) The acceptance must be made within the

2)
3)

4)

5)

1. Acceptance must be made within the

specified time, or within reasonable time

(s.6(b)
s.6(b));
);
The acceptance must be absolute and
unqualified (s.7(a)
(s.7(a));
);
The acceptance must be expressed in some
usual and reasonable manner, unless the
proposal prescribes the manner in which it
is to be accepted (s.7(b)
(s.7(b));
);
Acceptance can be made by performing
conditions or receiving consideration (s.8
(s.8);
);
and
Acceptance must be communicated to the
offeror..
offeror
ismk/B20403/Topic3

specified time, or within reasonable time.

time.
S.6(b) provides that: An offer is revoked:
... by the lapse of the time prescribed in
the offer for its acceptance,
acceptance, or, if no time
is so prescribed, by the lapse of a
reasonable time, without communication of
the acceptance
 Ramsgate Victoria Hotel Co v Montefiore
(1866)
 Fraser v Everett (1889)
 Macon Works and Trading Sdn Bhd v
Phang Hon Chin (1976)

55

...cont.

ismk/B20403/Topic3

Hyde v Wrench [1840]

56

OFFEREE

FARM
1,000

2. S.7(a): The acceptance must be absolute and

unqualified..
unqualified

 Mirror image rule.

rule. Any modification or

OFFER

variation of the offer amounts to counter

offer..
offer

OFFEROR

 Counter offer amounts to a rejection of

SOLD TO ANOTHER

the original offer:

offer: Hyde v Wrench (1840)
(1840)..

 Counter offer differs from request for

further information:
information: Stevenson, Jacques
& Co v McLean (1880)
ismk/B20403/Topic3

NO ACCEPTANCE BY OFFEREE
NO CONTRACT CREATED

57

NOT ACCEPTANCE
- COUNTER OFFER

ismk/B20403/Topic3

...cont.

58

...cont.

Hyde v Wrench (1840) Wrench offered to sell

his farm in Luddenham to Hyde for 1200, an
offer which Hyde declined. On 6 June 1840
Wrench wrote to Hyde's agent offering to sell the
farm for 1000, stating that it was the final offer
and that he would not alter from it. Hyde offered
950 in his letter by 8 June, and after examining
the offer Wrench refused to accept, and informed
Hyde of this on 27 June. On the 29th Hyde
agreed to buy the farm for 1000 without any
additional agreement from Wrench, and after
Wrench refused to sell the farm to him he sued
for breach of contract.
Held: There was no contract between them. The
plaintiff had rejected the original offer on 8 June
that he was no longer capable of accepting it
later.
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59

3.

S.7(b) the acceptance must be expressed

in some usual and reasonable manner,
manner,
unless the offer prescribes the manner in
which it is to be accepted.
accepted. If the offer
prescribes the manner in which it is to be
accepted, and the acceptance is not made
in that manner, the offeror may, within a
reasonable time after the acceptance is
communicated to him, insist that his offer
shall be accepted in the prescribed manner,
and not otherwise, but if he fails to do so,
he accepts the acceptance.

ismk/B20403/Topic3

60

10

BT20403/Topic3

...cont.

...cont.

What is the position if the offeree deviates

from the prescribed method?

 Acceptance may be made in a different
method may be effective if there is no
prejudice to the offeror,
offeror, as where the
method used is as quick and as suitable as
the method prescribed.
 Yates Building Co v RJ Pulleyn & Son
(1975)

Felthouse v Bindley (1862) The court held

that silent acceptance was not

communicated to the offeror
offeror,, and as such,
such acceptance cannot be treated as an
agreement. It was held not binding upon
either parties.

Fraser v Everett (1889) the court held

Offeror cannot prescribe silence as a manner

that there
there was no such phrase in law
that silence means agreement.
agreement.

of acceptance.

The general rule that the offeror cannot bind
the offeree by stating that if he does nothing
he well be bound to a contract.
ismk/B20403/Topic3

61

ismk/B20403/Topic3

...cont.

62

...cont.
4. S.8: Acceptance can be made by performing
conditions of a proposal or the acceptance
acceptance
of any consideration for a reciprocal
promise.

However there may be exceptions to this rule.

1. If an offeree himself stipulate that his

silence shall constitute an acceptance .

2. Silence may also amount to an acceptance

if there are other facts like the conduct of

the offeree to indicate acceptance.

Weatherby v Banham [1832] it was
held that the receipt and reading of a
periodical after the expiry of a
subscription amounted to an
acceptance. However, there may be
exceptions to this rule.
ismk/B20403/Topic3

Carlill v Carbolic Smokeball (1893) - it

was held that a valid contract existed
between the parties and that satisfying
conditions for using the smoke ball
constituted acceptance of the offer. Her
communication of acceptance of the offer
was ruled to be not necessary.




Lalman Shukla v Gauri Datt (1913)

Fitch v Snedaker (1868)

63

ismk/B20403/Topic3

64

Postal Rule

...cont.

Postal rule (also known as the

5. Acceptance must be communicated to the

offeror.. In some cases, however, the
offeror
communication of acceptance may not be
necessary see Carlill v Carbolic Smoke Ball
Co.
Co. [1893]

mailbox rule, is an exception to the

general rule.

Under the English law, if the post is a

proper and reasonable method of

communication between the parties,
then acceptance is deemed complete
immediately the letter of acceptance
is posted,
posted, even if it is delayed or is
lost or destroyed in the post so that it
never reaches the offeror
offeror..

The acceptance cannot be recalled
once it has been posted, even though
it has not reached the offeror at the
time of recall.

General Rule: Acceptance has no effect until

it is communicated to the offeror - s.4(2):
s.4(2):

Expressed

Implied

However, there is an exception to the general

rule, whereby the acceptance is made in

writing and using the postal system (Postal
(Postal
rule).
ismk/B20403/Topic3

65

ismk/B20403/Topic3

66

11

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Cont.

Cont.

Adams v Lindsell (1818): The

The defs wrote to the
plaintiffs on 2 Sept, offering to sell them some
wool and requested that the plaintiffs reply in
course of post. The offer letter was wrongly
addressed and therefore the plaintiffs did not
receive it until 5 Sept. As a result, the letter of
acceptance was not received until 9 Sept by the
defs,, and this was 2 days later than the defs
defs
would have expected to receive it. Because of
this, on 8 Sept the defs had sold the wool to a 3rd
person.

Held: The offer had been accepted as soon as
the letter had been posted.
posted. Thus, there was
indeed a contract in existence before the sale of
rd
the wool to the 3 party, although the letter had
not actually been received by the defs
defs.. The defs
were therefore liable in breach of contract.
ismk/B20403/Topic3

However, it was not until Henthorn v Fraser

[1892] that the court determined the precise

timing of the acceptance, i.e. the moment the
letter of acceptance is posted.

The postal rule in Adams v Lindsell has since

been confirmed in many cases including in:

 Dunlop v Higgins (1848)
 Household Fire & Carriage Accident

Insurance Co v Grant (1879)

 Byrne v Van Tienhoven (1880)

67

Cont.

ismk/B20403/Topic3

68

Cont.

In Household Fire & Carriage Accident

However, the postal rule only applies when,

Insurance Co v Grant (1879) Def applied

for shares in the plaintiffs co. The company
allotted the shares to the def, and duly
addressed to him, posting a letter containing
the notice of allotment. The letter was lost in
the post. Later, the company went bankrupt,
and asked the def for the outstanding
payments on the shares, which he refused
saying there was no binding contract.

impliedly or explicitly, the parties have in

contemplation post as a means of
acceptance..
acceptance

It excludes contracts involving land, letters

incorrectly addressed and instantaneous

modes of communication.

It was held that there was a valid contract,

because the rule for the post is that

acceptance is effective even if the letter never
arrives.
ismk/B20403/Topic3

69

Cont.

ismk/B20403/Topic3

70

Cont.

The Malaysian position differs from the UK

The Contract Act 1950 provides that the

position. This is provided in s.4(2)(a) and (b)

of the Contracts Act 1950.

offeror and the offeree are bound by the

acceptance at different times.

S.4(2)(a): The communication of an

 Ignatius v Bell [1913] - The court applying

acceptance is complete as against the

offeror when it is put in a course of
transmission to him so as to be out of the
power of the acceptor.

s.4 of the Contracts Act held that

communication of acceptance was
complete when the notice of acceptance
was posted on 16 August 1912 although
the def did not know about the acceptance.

S.4(2)(b): The communication of an

acceptance is complete as against the

acceptor when it comes to the knowledge
of the offeror.
offeror.
ismk/B20403/Topic3

71

ismk/B20403/Topic3

72

12

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Example 3:

Cont.

Allen wrote to Jim on 1 October 2013 and offered

to sell his land for RM100,000. Jim received

Allens letter on 3 October 2013. Since Allen did
not receive any reply from Jim, on 28 October
2013, he signed a contract to sell the land to Chan.
Unknown to Allen, Jim had posted a letter of
acceptance on 25 October 2013. Allen only
received Jims letter on 30 October 2013.

To apply the postal rule, the parties must have in
contemplation of using post as a means of
acceptance. Under s.4(2)(a) Allen is bound since
the letter of acceptance is already put in the course
of transmission to him (the moment it is
posted/put into the mailbox on 25/10). As for Jim,
he is bound the moment the letter reached Allen
(s.4(2)(b). As such, Allen may be sued for breach of
contract as the contract between Allen and Jim is
already concluded on 25 October 2013.

However, the rule that acceptance is complete

upon posting may be excluded by the

express terms of the offer.
offer.

 Holiwell Securities Ltd v Hughes [1974]

where the offer prescribed that the

acceptance must be by notice in writing to
the intending vendor. Thus, it was held that
in such a case, the mere posting of the
letter of acceptance was not sufficient.

73

ismk/B20403/Topic3

Postal Rule

74

Postal Rule

Section

Sect.2(a)

Offer

Sect.2(a) When one person signifies his willingness

Communication of
offer (effective/
complete)

Sect.4(1) When the offer comes to the knowledge of

an acceptor (or offeree)

Acceptance

Sect.2(b) When one person accepts the offer

Offer
Sect.4(1)

Revocation of
offer

Communication of
Sect.4(2) When the acceptor posts the letter of
acceptance
(a)(b)
acceptance
(complete/ effective)
Revocation of offer

Sect.5(1) Can be made at any time before the

acceptance is complete

Effective of
revocation of offer

Sect.4(3) Notice of revocation of offer must come to

(a)(b)
the knowledge of the acceptor before the
acceptance if complete as against the
offeror
ismk/B20403/Topic3

Sect.5(2)
Revocation of
acceptance
Sect.4(3)(a)(b)

Sect.5(1)

Sect.4(3)(a)(b)

Acceptance

Sect.2(b)

Sect.4(2)(a)(b)
75

Instantaneous Communication

ismk/B20403/Topic3

76

Instantaneous Communication

Another exception to the general rule as

regards to acceptance through the post lies in

cases of instantaneous communication e.g.
telephone, telex and fax.

The courts are yet to decide whether ee-mail

 Entores Ltd v Miles Far East Corporation

If the offeree were to convey acceptance by

should be regarded as an instantaneous

form of communication.

[1955] - the Court held that the posting rule

did not apply to an acceptance by telex as the
Court regarded it as an instantaneous form of
communication. The general principle that
acceptance takes place when communicated
applies to instantaneous forms of
communication.

commercially unreasonable means e.g. by

cross--country pony express, the acceptance
cross
would not be effective until it had actually
been received.

 Tenax Steamship Ltd v The Brimmes [1973]

ismk/B20403/Topic3

77

ismk/B20403/Topic3

78

13

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Element No. 2: Intention to

Create Legal Relations

Revocation of Acceptance

An acceptance may be revoked at any time

before the communication of its acceptance

is complete as against the acceptor,
acceptor, but not
afterwards-- s.5(2).
afterwards

An agreement in itself does not create a

contract. For a valid and binding contract to

exist, the parties must have the intention to
create legal relations.

The communication of a revocation is dealt with

under s.4(3):
The communication of a revocation is complete:
(a) as against the person who makes it when it
is put into a course of transmission to the
person to whom it is made,
made, so as to be out
of the power of the person who makes it;
and
(b) as against the person to whom it is made,
made,
when it comes to his knowledge.
knowledge.
ismk/B20403/Topic3

Although the Contracts Act 1950 is silent on

the intention to create legal relations as one of

the requirements of a valid contract, casecase-law
clearly dictates the necessity of this
requirement - Visu Sinnadurai (1979).

The words used in s.2 impliedly provides the

requirement for intention for a valid contract.

79

Cont.

ismk/B20403/Topic3

80

Cont.

Contract requires evidence that parties to an

In business agreements,
agreements, the parties are

agreement implicitly or explicitly intend that

the agreement to be legally enforceable.

presumed to have the intention to create legal

relations, unless the parties specify otherwise.

 Weeks v Tybald [1605] - A perfectly precise

 Esso Petroleum Co Ltd v Customs & Excise

statement may nevertheless not be binding if

the court thinks it was not seriously
intended.
 Express exclusion of ITCLR: Rose & Frank Co
v Crompton Bros Ltd [1925] AC: The
agreement expressly provided that ...This
arrangement is not entered into as a
formal legal arrangement, and shall not be
subject to a legal jurisdiction in the law
courts. As such, there is no contractual
relationship between them.
ismk/B20403/Topic3

Commissioner [1946]

 Koh Kia Hong v Guo Enterprise Pte Ltd

81

Cont.

ismk/B20403/Topic3

82

Element No. 3: Consideration

In social, domestic or family agreements,

agreements, it

is implied that no legal relations are

contemplated, but such presumption may be
rebutted.

General rule: An agreement without

Balfour v Balfour [1919]: H promised to pay

S.2(d): Definition of consideration:

consideration is void s.26

s.26..

W allowance but then defaulted. Court said

agreement not legally enforceable, since
parties did not intend to be legally bound.

Merritt v Merritt [1970]: H put in writing to

give money to W for mortgage payment &

transfer house to W upon completion of
payments. He then refused. It was held that in
light of all surrounding circumstances, parties
intended to create legal relations.
ismk/B20403/Topic3

83

When, at the desire of the promissor

promissor,, the
promisee or any other person has done or
abstained from doing, or does or abstains
from doing , or promises to or to abstain
from doing, something, such act or
abstinence or promise is called a
consideration of promise.
ismk/B20403/Topic3

84

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BT20403/Topic3

Executory
(promise/promise

Sect.2(d)

Categories

Definition

Categories

Past
[act/promise]

Definition

Executed
[promise/act]

Exceptions
General rule

Consideration

Sect.2(d) and 26

Exceptions
Natural love
Compensate past
voluntary act
Legally compellable
to do
Statute barred debt

Rules

ismk/B20403/Topic3

Rules
Need not be adequate
Need not come from the
promisee
Waiver performance

85

ismk/B20403/Topic3

86

Cont.
CATEGORIES OF CONSIDERATION

Consideration was defined by Lush, J in

Currie v Misa (1875

1875)):

EXECUTORY
PROMISE IS MADE
IN RETURN FOR
ANOTHER PROMISE

EXECUTED
PROMISE IS MADE
IN RETURN FOR
THE PERFORMANCE
OF AN ACT

A valuable consideration, in the sense of

the law, may consist 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.

PAST
PROMISE MADE
IN RETURN FOR
AN ACT WHICH
HAS BEEN
PERFORMED

ismk/B20403/Topic3

87

Principles of Consideration
1.
2.
3.
4.

88

Cont.
1. An agreement made without consideration
is void.

S.26 - An agreement made without
consideration is void unless it is in writing
and registered, or is a promise to compensate
for something done, or is a promise to pay a
debt barred by limitation law.

An agreement made without consideration

is void;
void;
Only lawful consideration can make the
contract lawful and valid;
Consideration must be of value but it need
not be adequate; and
Consideration need not move from the
promisee// offeree
promisee
offeree..

ismk/B20403/Topic3

ismk/B20403/Topic3

2. Only lawful consideration can make the

contract lawful and valid.

S.10(1) All agreements are contracts if
they are made by the free consent of parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be void.
89

ismk/B20403/Topic3

90

15

BT20403/Topic3

Cont.

Cont.

S.24 The consideration or object of an

agreement is lawful unless:

unless:
a) It is forbidden by a law (Manang
(Manang Lim
Native Sdn Bhd v Manang Selaman
[1986]);
b) It is of such a nature that, if permitted, it
would defeat any law (Hee
(Hee Cheng v
Krishnan [1955]
[1955]);
);
c) It is fraudulent;
d) It involves or implies injury to the person or
property of another (Syed
(Syed Alhamed
Alhabshee v Puteh bt Sabtu (1922)
(1922));
); or
e) The court regards it as immoral, or opposed
to public policy (Pearce
(Pearce v Brooks [1861]
[1861]).
).
ismk/B20403/Topic3

91

Cont.

ismk/B20403/Topic3

92

Exceptions to the rules of

consideration

4. Consideration need not move from the

promisee /offeree.
offeree.

Consideration need not move from
promisee (which differs from English Law)

Under the Contracts Act 1950, a party to an
agreement can enforce the promise even if
he himself has given no consideration as
long as someone else has done so.

S.2(d) reads:
when..the promisee or any other
person has done.something..is called
a consideration for the promise.

Venkata Chinnaya v Verikatara Maya
[1881]
ismk/B20403/Topic3

There are 3 exceptions to the general rule

that an agreement without consideration is

void, namely:

1)

Agreement made in writing and registered

under the law on account of natural love
and affection;
E.g. A, for natural love and affection,
promises to give his son, B RM1000 and he
puts his promise to B in writing. This is a
contract.

Re Tan Soh Sim [1951]

93

Cont.
2)

3. Consideration must be of value but it need

need
not be adequate;
adequate; and

Under the Msian Law, consideration must
be of value but need not be adequate.

E.g. A agrees to sell a horse worth
RM1000 for RM10. As consent to the
agreement is freely given. The agreement
is a contract despite the inadequacy of the
consideration.

Explanation 2 to s.26 : An agreement is
not void merely because the consideration
is inadequate.

Phang Swee Kim v Beh I Hock [1964]

Chapell & Co Ltd v Nestle Co Ltd [1960]

ismk/B20403/Topic3

94

Cont.

Agreement to compensate a past voluntary

act done for the promissor
promissor,, or something
which the promissor was legally
compellable to do.
E.g. A supports Bs son for his education. B
promises to pay As expenses in so doing.
This is a contract and A can enforce Bs
promise.

3)

Written agreement to pay a statutestatute-barred

debt.
E.g. A owes B RM1000 but the debt is
barred by limitation. A signs a written
promise to pay B RM500 on account of the
debt. This is a contract.

See Illustration (c) to s.26 : A finds Bs

purse and gives it to him. B promises to
give A RM50. This is a contract.
 J.M Wotherspoon & Co Ltd v Henry
Agency House [1962]
 Kepong Prospecting & Ors v A.E. Schmidt
& Marjorie Schmidt [1968]
ismk/B20403/Topic3

95

ismk/B20403/Topic3

96

16

BT20403/Topic3

Element No. 4: Certainty

...cont.

E.g. see illustrations in s.30
s.30::

The terms of the contract cannot be vague

but must be certain.

1. 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 (see Illustration (a)).
(a)).

If the terms are vague and ambiguousambiguous-

contract is void s.30

s.30..

2. A agrees to sell to B my
my white horse for

Karuppan Chetty v Suah Thian [1916]

five hundred ringgit or one thousand

ringgit.
ringgit
. There is nothing to show which of
the 2 prices was to be given. The
agreement is void. (see Illustration (f)).
(f)).

the requirement of certainty was not met

when the parties agreed upon the granting
of a lease at RM35 per month for as long as
he likes....

ismk/B20403/Topic3

97

Element No. 5: Capacity

ismk/B20403/Topic3

98

...cont.

The parties entering into a contract should also

be competent to contract i.e. they must have

the legal capacity to do so.

S.11
S.11:: Every person is competent to contract

who is of the age of majority according to

the law to which he is subject,
subject, who is of
sound mind,
mind, and is not disqualified from
contracting by any law to which he is
subject.
subject
.

It refers to the ability of a party to fully

understand the rights and obligations of an

agreement he/she has made. Lacking capacitycapacitynot bound by the contract.

According to the Age of Majority Act 1971,

1971,

the age of majority in Malaysia is 18 years.

S.10 reads:

All agreements are contracts if they are made

by the free consent of parties competent to
contract,, for a lawful consideration and with a
contract
lawful object, and are not hereby expressly
declared to be void.
ismk/B20403/Topic3

99

10
0

Mohori Bibee v Dharmodas Ghose

(1903) ILR 30 Cal 539

(i) Minors

ismk/B20403/Topic3

With regards to the minors contractual

capacity, the general rule is that all contracts
entered into by a minor is not merely void but
void ab initio (void from the outset).

 The Appellant lent the Respondent (Infant) the

sum of 20,000 rupees at 12% interest and

secured the loan by way of mortgage executed
by the infant in favour of the Appellant.

Mohori Bibee v Dhurmodas Ghose [1903]

The Privy Council held that the combined

effects of s.10 and s.11 of the Indian
Contracts Act (which is similar to the
Malaysian Contracts Act 1950), rendered
the contracts void.

 Later the mother of the children claim that the

mortgage was void for lack of capacity.

 The court held that the contract was void and

so as to the mortgage and the A cannot

recover the money from the infant.

The local case that applied the decision in

Mohori Bibees case was the case of Tan

Hee Juan v Teh Boon Keat [1934].
ismk/B20403/Topic3

10
1

17

BT20403/Topic3

Tan Hee Juan v Teh Boon Keat

[1934] MLJ 96

Cont

If there is a contract between minor & adult:

 The Plaintiff (an infant) executed transfer of

 A minor who had transferred his property on

 The Plaintiff later, by his representatives,

land in favour of the Defendant. The transfer

were witnessed and subsequently registered.
applied to the court for an order setting aside
the transfer.

receipt of the purchase money, may get the

contract declared void and at the same time,
have the advantage of not returning the
moneys received.

 The court rule that the transactions were void

and ordered restoration of the land to the

minor and have the advantage of not
returning the moneys received.

Cont

Cont.

Normally, when a contract is discovered to be

If there is a contract between minor & adult:

void or becomes void, under s.66 of the

Contracts Act 1950,
1950, any person who has
received any advantage under the agreement or
contract is bound to restore it, or to make
compensation for it, to the person to whom he
received it.

A minor who paid the money to an adult, can

recover the money upon returning the

property transferred to him.

However, the Privy Council in Mohori Bibees

case (followed in Tan Hee Juans case) held that

a party who is a minor cannot be compelled to
repay any moneys which he has received in the
contract.

Distinguish the decision in Tan Hee Juan from

the decision in Leha bt Jusoh v Awang Johari

bin Hashim .
ismk/B20403/Topic3

Exceptions to Minor (valid

contracts)

Cont.
1)

Certain exceptions available to contracts

entered into by a minor including those

exceptions under the:
 Age of Majority Act 1971 (including
matters relating to marriage, divorce,
dower, adoption, religion and religious
rites and usage of any class of persons);
 Contracts Act 1950 (contract for
necessaries);
 Contracts (Amendment) Act 1976
(contract for scholarships);
 Insurance Act 1963 (Revised 1972)
(contract of insurance).
ismk/B20403/Topic3

10
6

Contract or promise to marry

 Rajeswary & Anor v Balakrishnan & Ors
[1958] - The plaintiff (minor) brought an
action against the def for breach of promise
of marriage. The def claimed that the
plaintiff lacked contractual capacity and
thus no valid contract existed. Ct held: such
contract is valid.

2) Contracts for necessaries

 A minor who enters into


10
7

a contract for
necessaries is liable for the contract.
S.69 Contracts Act 1950 allows a person
who has supplied necessaries to the minor
to receive reimbursement from the property
of the minor.
ismk/B20403/Topic3

108

18

BT20403/Topic3

Cont.
2)

Cont.
2)

Contracts for necessaries (cont.)

 S.69 reads:
If a person, incapable of entering into a
contract, or anyone whom he is legally
bound to support, is supplied by another
person with necessaries suited to his
condition in life, the person who has
furnished such supplies is entitled to be
reimbursed from the property of such
incapable person.
 Services

rendered to a minor that may be

considered as necessaries include
education, medical and legal advice.
ismk/B20403/Topic3

Contracts for necessaries (cont.)

 Nash v Inman [1908]


Government of Malaysia v Gurcharan

Singh & Ors [1971] The Government
sued the 1st def (the minor) and the 2nd
and 3rd defs (the sureties) for RM11,500
being the sum spent by the Government
for the minors education. At the time of
contract was made, the 1st def was a
minor.

The court held that the contract was void

but since education was necessaries, the
minor was liable for the repayment of a
reasonable sum spent on him.

109

ismk/B20403/Topic3

Nash v Inman [1908] 2 KB 1

110

Cont.
3)

 A tailor (the Plaintiff) sued a

Contracts of scholarship
The rule relating to scholarship
agreements is now provided in the
Contracts (Amendment) Act 1976. S.4(a)
of the Act provides that no scholarship
agreements shall be invalidated on the
grounds that the scholar entering into such
agreement is not of the age of majority.

minor (the Defendant) to whom

he had supplied clothes
including fancy waistcoats which
worth 22 pound).

 The court held that, although

the clothes were suitable

according to the minors life,
they were not necessary as he
already had sufficient clothing.

4)

Contracts of insurance
 S.153 of the Insurance Act 1963 provides
that a minor over the age of 10 may enter
into a contract of insurance but if he or she
is under 16 years, the written consent of
the parents or guardian is essential.
ismk/B20403/Topic3

Cont.

112

(ii) Sound Mind

Contracts entered by minor will become void

With regards to capacity, it is important that

ab initio by virtue of s.10 and s.11 CA.

CA.

at the time of making the contract, the

contracting party must not suffer form
mental disability s.11 Contracts Act.

 Mohori Bibee v Dhurmodas Ghose

 The question is whether the minor is liable

for the money/goods received from the

other party?

S.11 is followed by s.12

s.12..

S.12 reads: A person is said to be of sound

Not necessity:
minor is not liableliable-

Nash v Inman

mind for the purpose of making a contract if

at the time when he makes it, he is capable
of understanding it and of forming a rational
judgment as to its effect upon his interests.

Necessity-s.69
NecessityContracts ActAct- minor
is liable
ismk/B20403/Topic3

113

ismk/B20403/Topic3

114

19

BT20403/Topic3

Element No. 6: Consent

Cont.

Free consent is needed in order for a

contract to be valid, refer s.10 of the

Contracts Act.

Further, s.12(2) and (3) state that a person

who is usually of unsound mind, but

occasionally of sound mind, may make a
contract during the period when he is
sound.

S.10 reads:

All agreements are contracts if they are

made by the free consent of parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be
void.

Conversely, a person who is usually of

sound mind, but occasionally of unsound

mind, may not make a contract when he is
of unsound mind.

S.13 provides the meaning of consent i.e. :

2 or more persons are said to consent

when they agree upon the same thing in
the same sense.
sense.

Matthews v Baxter (1873)

ismk/B20403/Topic3

115

ismk/B20403/Topic3

cont.

116

Void &
voidable

Introduction

Therefore, under s.14

s.14,, consent must be

free and not caused by:

 Coercion or Duress (paksaan
(paksaan))- s.15
 Undue influence (pengaruh
(pengaruh tidak wajar
wajar))s.16
 Fraud (frod
(frod))- s.17
 Misrepresentation (salah
(salah nyata
nyata))- s.18
 Mistake (khilaf
(khilaf))- s.21, s.22 and s.23

Sect.10
Sect.13
Sect.14

Free consent
Voidable
contract

Coercion
Undue influence
Fraud
Misrepresentation
Mistake
ismk/B20403/Topic3

117

ismk/B20403/Topic3

118

In absence of genuine consent

Consent is not free when..

FACTORS WHICH
AFFECTS FREE
CONSENT

Void ab initio:
initio:
 Common law considers that the contract

never took place and that the parties

should be restored to their original
positions (prior to the contract).
contract).

Coercion
S.15

Undue Influence
S.16

Fraud
S.17

Mistake
S.21, 22, 23

Voidable:
Voidable:
 The aggrieved party/the innocent party

has the right to rescind (terminate) the

contract and/or sue for damages.
damages.

Misrepresentation
S.18

ismk/B20403/Topic3

119

ismk/B20403/Topic3

120

20

BT20403/Topic3

1. Coercion (Paksaan
(Paksaan)) - S.15

Coercion (2)

Coercion (or duress) is the committing,

 Kesarmal a/l Letchumanan Das v

threatening to commit any forbidden act, or

the unlawful detaining of property with the
intention of causing a person to enter into
an agreement S.15

Valiappa Chettiar [1954]

The court held that a transfer executed
under the order of the Sultan, issued
under duress of 2 Japanese officers during
the Japanese Occupation of Malaysia was
invalid.

Effect: S.19
S.19-- Such contract is voidable

When consent to an agreement is caused by

coercion the agreement is a contract
voidable at the option of the party whose
consent was so caused.

ismk/B20403/Topic3

121

 Chi Nam Bee Development Sdn Bhd v Tai

Kim Chooi & Ors [1988]

ismk/B20403/Topic3

2. Undue influence (Pengaruh

(Pengaruh Tak
wajar)) - S.16
wajar

Undue influence (2)

Undue influence occurs where a person uses

Further, in s.16(2)
s.16(2),, a person is said to be in a

a position of influence to persuade someone

to enter a contract that provides the
stronger person with a direct or indirect
benefit usually in a fiduciary relationship s.16.

According to s.16(1)
s.16(1):: A contract is said to

be induce 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.
ismk/B20403/Topic3

123

Undue influence (3)

122

position to dominate the will of another

where:
a) He holds a real or apparent authority over
the other (e.g. Parents authority over a
child);
b) He stands in a fiduciary relation
relation to the
other (e.g. the relationship of a solicitorsolicitorclient, or doctordoctor-patient) see Datuk
Jaginder Singh & Ors v Tara Rajaratnam
[1983]; or
c) He makes a contract with a person whose
mental capacity is temporarily or
permanently affected by reason of age,
illness, or mental; or bodily distress.
ismk/B20403/Topic3

124

3. Fraud (Tipuan
(Tipuan)) - S.17

Effect: s.20 Such contract is voidable at the

option of the party whose consent was so

caused.

Fraud is defined as certain acts which are

committed with intent to induce another

party to enter into a contract s.17

 Datuk Jaginder Singh & Anor v Tara

The statement made which the maker

Rajaratnam [1983]

himself does not believe to be true .

 Ragunath Prasad v Sarju Prasad [1924]

 Inche Noriah v Shaik Allie bin Omar

Effect: s.19 Such contract is voidable.

[1929]
 Allcard v Skinner (1887)

When consent to an agreement is caused

by ..fraud the agreement is a contract
voidable at the option of the party whose
consent was so caused.
Weber v Brown
ismk/B20403/Topic3

125

ismk/B20403/Topic3

126

21

BT20403/Topic3

4. Misrepresentation (Salahnyata
(Salahnyata))
- S.18

Common law defines a misrepresentation as

Misrepresentation includes:

a untrue statement of fact which induces a

party to enter a contract but which is not
itself part of the contract.

1) 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;
true;

There must therefore be a statement of

some kind, although a representation need

not always be verbal; it may also be implied.

ismk/B20403/Topic3

Misrepresentation (2)

1) 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.
(S.18 CA)
CA)

127

128

ismk/B20403/Topic3

Misrepresentation (3)

5. Mistake (Khilaf
(Khilaf)) s.21, s.22,
s.23

Basic difference between misrepresentation

Mistake means a misunderstanding between

and fraud is that in fraud the person making

the representation does not himself believe
in its truth, whereas, in case of
misrepresentations, he may believe the
representation to be true.

parties to a contract about a fact.

Effect from s.21 contract is void.

However, s.22 to 23 exception where a

Effect: s.19 contract is voidable.

When consent to an agreement is caused

by ..misrepresentation
..misrepresentation
the agreement is a
contract voidable at the option of the party
whose consent was so caused.
caused.

With v OFlanagan
ismk/B20403/Topic3

contract is not voidable merely because

there is a mistake of law or because one of
the party is under a mistake as to a matter
of fact.

Distinguish mutual mistake, common

mistake and unilateral mistake.

129

Mistake (2)

130

ismk/B20403/Topic3

Mistake (3)

A common mistake is where both parties

A mutual mistake occurs when the parties

hold the same mistaken belief of the facts.

to a contract are both mistaken but about

the same material fact within their contract.
They are at crosscross-purposes. As such, there
is no consensus ad idem,
idem, and this overlaps
with the objective theory of contract, and
there is no offer and acceptance. Hence the
contract is void.

The House of Lords in the case of Bell v

Lever Brothers Ltd [1932] - established that

common mistake can void a contract only if
the mistake of the subject matter was
sufficiently fundamental to render its identity
different from what was contracted, making
the performance of the contract impossible.

For a mutual mistake to be void, then the

item the parties are mistaken about must be

material - Raffles v Wichelhaus [1864].
ismk/B20403/Topic3

131

Couturier v Hastie [1856] - mistake as to the

existence of the subject matter, contract is

void.
ismk/B20403/Topic3

132

22

BT20403/Topic3

Mistake (5)

Mistake (4)

A unilateral mistake is where only one party

It is also possible for a contract to be void if

to a contract is mistaken as to the terms or

subject matter contained in a contract.

there was a mistake in the identity of the

contracting party.

Governed under s.23

s.23,, which provides that a

Lewis v Avery [1971] - the contract can be

contract is not voidable merely because it

was caused by one of the parties to it being
under a mistake as to a matter of fact.
 Smith v Hughes [1871]
 Hartog v Colin & Shields [1939]

avoided only if the plaintiff can show, that at

the time of agreement, the plaintiff believed
the other party's identity was of vital
importance. A mere mistaken belief as to the
credibility of the other party is not sufficient.

Cundy v Lindsay [1878]

Conversely, when a party is guilty of an error

in business judgment, there is no relief.

ismk/B20403/Topic3

133

ismk/B20403/Topic3

Mistake (6)

134

Mistake (7)

Non est factum is difficult to claim as it does

Mistake as to document.

not allow for negligence on the part of the

signatory. i.e. failure to read a contract before
signing it will not allow for non est factum.
factum.

Non est Factum ("it is not [my] deed)

allows a signing party to escape performance

of the agreement.

In a successful case, the fundamental basis

of the signed contract must be completely

different from what was intended.
intended.
 Foster v Mckinnon
 Awang b Omar v Hj Omar v Anor [1949]
 LEstrange v F Graucob Ltd
 Saunders v Anglia Building Society

A claim of non est factum means that the

signature on the contract was signed by

mistake, without knowledge of its meaning,
but was not done so negligently.
negligently.

A successful plea would make the contract

void ab initio
initio..

ismk/B20403/Topic3

135

ismk/B20403/Topic3

136

Element No. 7:
7: Legality

Mistake (8)

An agreement enforceable by law is a

Ignorantia legis neminem excusat -

contract s.2(h)

ignorance of law is not excused.

A void contract is an agreement not

S.22 : A contract is not voidable because it

enforceable by law - s.2(g)

was caused by a mistake as to any law in

force in Malaysia; but a mistake as to a law
not in force in Malaysia has the same effect
as a mistake of fact.

S.10 All agreements are contracts if they

are made by the free consent of parties

competent to contract, for a lawful
consideration and with a lawful object,
object, and
are not hereby expressly declared to be void.

Seck v Wong & Lee

S.24 explains what objects are lawful, and

what not.

ismk/B20403/Topic3

137

ismk/B20403/Topic3

138

23

BT20403/Topic3

TERMS OF A CONTRACT

Express & Implied Terms

Term in law of contract refers to stipulation

A term is express if it has been specifically

which gives efficacy to the intention of the

parties.

agreed upon by parties to a contract & it

could be in oral or in writing or both.

Statements made in the negotiation stage

Express terms are identified by looking at

leading to a contract may be incorporated

into a contract and become terms of the
contract. A term of the contract can either be
express / implied.
implied.

the document. If no document, then look

back at the negotiations between the parties
to see which oral statements were intended
to be terms.

A term is legally binding statement or

promise contained in a contract, and helps to

indicate how a contract is to be performed.
ismk/B20403/Topic3

139

ismk/B20403/Topic3

Cont.

Cont.
(1) Conditions (terma syarat)
syarat)

Where terms in a contract are crucial (vital) to
the operation of the contract, they are known
as conditions.

In Wallis v Pratt (1910) Condition was
defined as an obligation which goes so directly
to the substance of the contract, or in other
words, is so essential to its very nature ,that
its nonnon-performance will fairly be considered
by the other party as a substantial failure to
perform the contract at all.

A term is implied if it is read into the

contract by the court or by the legislature. It

is an integral part of the contract;

A





140

term is implied by:

Previous dealings or conduct
Custom or usage
By statute
Courts

Terms can be classified as conditions,

(2) Warranty (terma

(terma waranti)
waranti)

warranty or innominate terms.

Terms of lesser importance (side issues to the

main thrust of the contract.

ismk/B20403/Topic3

141

ismk/B20403/Topic3

Cont.

142

Why do we have to
distinguish these terms?

(3) Innominate Terms

A contract may include terms that are not
easily classified as conditions or warranties
until they are breached.

When this happens, the ct will often determine
the legal effect of these terms, i.e.
intermediate or innominate terms.

The court will ask:
 How serious an effect will the breach of this
term have on the innocent party?

If the effect is grave/serious: it will be
regarded as the equivalent of a breach of a
condition.

If the effect is not so serious: breach of
warranty.
ismk/B20403/Topic3

143

Remedies;
 Under common law, an innocent party who

has suffered a breach of a condition has two

rights:

To rescind (terminate) the contract and

claim damages;
damages; (rescission/termination)
or
2. To affirm (maintain) the contract and
claim damages.
damages.
1.

Poussard v Spiers (1876)

Bettini v Gye (1876)
ismk/B20403/Topic3

144

24

BT20403/Topic3

The test for conditions vs

warranties

Exemption Clause

Exemption Clause (or disclaimer) is a term

of a contract that attempts either:

 To modify principal obligation(s) arising
under contract of that particular type; or
 To limit or exclude liability of a party
which would otherwise arise a result of a
breach by that party of his obligation to
perform the contract.

The ct will determine the intention of the

parties in regard to terms by applying one or

both test as follows:
 Was the term essential to the contract?

Yes: the term is a condition

No: the term is a warranty

The Contracts Act 1950 contains no

 Will the breach cause a serious loss or

provision dealing with exemption clauses

and as such, the Malaysian courts have
followed the English common law when
considering this aspect of the law.

problem for the innocent party?

Yes: indicates that term is a condition

No: the term is a warranty

ismk/B20403/Topic3

145

Cont.

ismk/B20403/Topic3

146

(1) Notice must be contemporaneous

with the contract

The courts have tried to protect the position

of the recipient of documents containing
exemption clauses by requiring certain
standards of notice in respect of the terms,
including:

For an exemption clause to be effective, it

must be brought to the notice of the

contracting parties before or at the time
the contract is made.

1. Notice must be contemporaneous with

Olley v Marlborough Court Hotel [1949]

2. Notice must be reasonably sufficient

Thornton v Shoe Lane Parking [1971]

the contract

3. The terms must be part of contractual

documents

ismk/B20403/Topic3

147

..Cont.

ismk/B20403/Topic3

148

(2) Notice must be reasonably

sufficient

Olley v Marlborough Court Hotel - Mrs

If the plaintiff knew that there was writing on

Olley left a fur coat at the coat

coat--check of the
Marlborough Court Hotel. The coat was
stored in a locked room but was stolen. The
Hotel argued that they were protected
against the suit under a contract of service
where they had disclaimed liability for theft.
Within each bedroom there was a notice
stating the hotel would not be liable for
theft.

The court held that the disclaimer was not
part of the contract and the hotel could not
rely upon it. The contract for the storage of
the coat was formed at the reception desk.
ismk/B20403/Topic3

the ticket but did not know or believe that the

writing contained conditions, he will
nevertheless be bound if the party seeking to
rely on the clause has done what is reasonably
sufficient in the circumstances to bring it to
his notice.
notice.

The court has generally adopted the rule of

proposal and acceptance as applying to

consumer transactions, such as travel
transactions.The issue of the ticket is regarded
as a proposal and the acceptance of the ticket
an acceptance of that proposal.

149

ismk/B20403/Topic3

150

25

BT20403/Topic3

..Cont.

..Cont.

The result is that a contract is formed on the

Thompson v LMS Railway Co.

Co. [1930]

terms stated in the ticket or referred to in it,

irrespective of whether the purchaser has
read the terms.

constructive knowledge

Malaysian Airlines System Bhd v Malini

Nathan & Anor [1986]

Parker v SouthSouth-Eastern Railway Co (1877)

the requirements of incorporation by ticket

were stated:
1. Did the purchaser of the ticket know that
there was writing on it?
2. Did the purchase know that the ticket
contained or referred to terms?
3. Were reasonable steps taken to bring notice
of the terms to the purchasers attention?

151

ismk/B20403/Topic3

(3) The terms must be part of

contractual documents

152

..Cont.

The exclusion clause must be an integral

The question that needs to be asked is

whether reasonable steps have been taken

to bring the contents to the notice of the
other party.

part of the contract.

The issue of whether the notice is in the

nature of a receipt or voucher becomes

crucial on the basis that if it is a receipt /
voucher, it would not form an integral part
of the contract.

Chapelton v Barry Urban District Council

[1940] it was held that a ticket issued by

an attendant to hirers of Council deck chairs
did not constitute a contractual document.
It was considered a means whereby a user
of a deck chair could prove that he had
fulfilled the obligation of paying the
appropriate charge of its hire.

The contents have come too late because

the contract containing the terms has been

completed.

ismk/B20403/Topic3

ismk/B20403/Topic3

153

ismk/B20403/Topic3

154

Rules of Construction

..Cont.

In the event of dispute, the courts play an

Causer v Browne [1952] a customer took a

important role in the interpretation of

exemption or exclusion clause.

dress to the dry cleaners and received a

docket, the terms of which protected the dry
cleaners from claims for negligence. The
court held hat the cleaners could not rely on
the terms in the docket. There was no
evidence that the customer knew of the
terms and a reasonable person, in the
circumstances, would not have regarded the
document as containing terms but treated is
as no more that a receipt for the dress.

At common law, the operation of such

clauses depends on the construction of the

contract, i.e. it depends on the intention of
the parties as disclosed in the contract.

The judicial technique of strict interpretation

of a clause that seeks to limit or exclude

liability is well established. The Contra
Proferentum principle is an integral part of
this technique.

Sze Hai Tong v Rambler Cycle Co Ltd

(1959)

ismk/B20403/Topic3

155

ismk/B20403/Topic3

156

26

BT20403/Topic3

Cont.

PRIVITY OF CONTRACT

Where an exclusion clause is ambiguous, the

interpretation that would be placed on it is

that of least advantage to the proferens
proferens,,
that is the party for whose benefit the clause
was designed, who required its insertion in the
contract and who is seeking to rely upon its
protection.

that a contract is a private relationship

between those persons who are a party to it.
Thus a person who is not party to the contract
can neither acquire rights nor incur liabilities
under the contract.

Anyone who wishes to enforce a contract must

The Contra Proferentum principle may be

illustrated by reference to:

 Wallis Son & Wells v Pratt & Haynes [1911]
AC
 Hollier v Rambler Motors Ltd [1972]

ismk/B20403/Topic3

The doctrine of privity of contract recognises

show that he is both party to the contract and

has given consideration in return for the
promise which he seeks to enforce (unless the
contract be by deed).
 Tweedle v Atkinson (1831)
 Beswick v Beswick [1968] AC

157

CONT.

ismk/B20403/Topic3

158

DISCHARGE OF A CONTRACT

The conditions and warranties implied in a

contract of sale of goods bind the contracting

parties, that is the buyer and seller.

A contract is discharged when it is

terminated, i.e. the contracting parties are

free from further obligations arising thereof.

Where a 3rd party uses goods purchased by

another and suffers injuries caused by some

defects, under common law, he cannot sue the
seller in the contract simply because there is
no contractual relationship between them.
the plaintiff can prove negligence as in the
celebrated case of Donoghue v Stevenson
[1932] AC 562.

159

(1) By Performance

ismk/B20403/Topic3

160

...Cont.

S.38
38((1) Parties to a contract must either

Performance is the usual method for the

perform or offer to perform their respective

promises, unless such performance has been
dispensed with by any law
law..

discharge of a contract.

When the parties have performed exactly

what they have promised to do, there is a

complete discharge. If only one party
performs his part of the contract then it is
only him who will be discharged.

Performance must be strictly in

accordance with the terms of the contract

unless the parties have agreed otherwise.

If one party to a contract refuses to perform

General rule: performance of a contract

or disables himself from performing his

entire obligation, the aggrieved party may
discharge the contract unless he acquiesces
in its continuance.

must be exact and precise and should be in

accordance with what the parties had
promised.
ismk/B20403/Topic3

parties

 By impossibility
 By breach
 By enforcement of law

However, the remedy may lie in tort provided

ismk/B20403/Topic3

A contract may be discharged:

 By performance
 By consent or agreement between the

161

ismk/B20403/Topic3

162

27

BT20403/Topic3

...Cont.

(2) Discharge by Agreement

Time for performance

Both parties agree to end/discharge

themselves mutually.

At the time and place as agreed in the

contract s.48 and s.49

If no time is fixed for performance, to be

performed within reasonable time - s.47

Whether time is of essence of contract S. 56

 Tan Ah Kian v Haji Hasnan [1962]
 Haji Nik Ishak bin Haji Nik Daud v Nik

Zainab bte Nik Jaafar

ismk/B20403/Topic3

163

(3) Discharge by Impossibility

ismk/B20403/Topic3

164

...Cont.

Also known as frustration of contract: Occurs

when an event takes place that substantially

changes the way a contract can be performed
s.57(2)

It occurs:
 When subject matter was destroyed by fire;

Taylor v Caldwell (1863)

 When an event (the substantial purpose of

the contract) was cancelled - Krell v Henry

[1903]
 A substantial change in circumstances
means that the performance will be
fundamentally different from the
performance agreed to under the original
contract
 Frustration through illegality
 Personal services are unavailable.

Main requirements:
 Was not anticipated by the contracting

parties;

 Significantly changed the rights and

obligations under the contract;

 Was not caused by the contracting parties;

and

 It would be unjust to hold the parties to the

contractual terms.

ismk/B20403/Topic3

165

Effect of frustration

166

(4) Discharge by Breach

Occurs when a party to a contract fails to

complete what has been agreed to in the

contract s.40

The contract will be discharged (future

obligation only)
 Any rights and obligations up to the time
of the frustration are still enforceable at
common law.
 S.66 Contracts Act
 S.15 & s.16 Civil Law Act 1956

ismk/B20403/Topic3

ismk/B20403/Topic3

E.g.
 A failure by one party to perform strictly in

accordance with the terms of the contract;

 Repudiation, where one party to the

contract expressly lets it be known to the

other party that he does not intend to
perform his promise under the contract
 Delay in the performance, where time is of
an essence.
 S.65 Contracts Act
167

ismk/B20403/Topic3

168

28

BT20403/Topic3

(5) Discharge by Operation of

Law

REMEDIES

Occurs when a contract is discharged without

1.
2.
3.
4.
5.

either party wishing it to be so, such as:

 A material alteration of a written document






without the consent of the other party

makes the contract unenforceable by the
party making the alteration.
Bankruptcy;
Merger
Death of either party
Lapse of time under Limitations Act

ismk/B20403/Topic3

Rescission of contract
Damages
Specific Performance
Injunction
Quantum Meruit

169

ismk/B20403/Topic3

Remedies (1)

Remedies (2)
2. Damages

1. Rescission of Contract:
Contract:




 Damages are granted to party as monetary

A rescission is granted to an innocent

party to put an end to the contract where
there is a breach of a condition
It makes the contract void
Each party has the right to recover any
benefits that they passed to the other
s.64 and s.65

compensation for the damage, loss or injury he

has suffered through a breach of contract
s.74.. Its purpose is to restore the innocent
s.74
party to the position he would have occupied if
the breach has not occurred.

 The party may also recover damages for other

expenses incurred as a result of the breach, for

the loss of profits arising as a result of the
breach; and for the difference between the
price of goods as contracted for and the actual
price the goods were sold for as a result of the
breach Illustrations to s.74.
s.74.

HOWEVER, a right to rescission may be lost

if the innocent party:
-chooses to affirm the contract
-waits too long before seeking rescission
ismk/B20403/Topic3

171

ismk/B20403/Topic3

...cont

172

cont
Classification of damages

A contract is breached if one party fails to

satisfy a condition, a warranty or an
intermediate term.
Hadley v Baxendale [1854]
Tan Ah Theam & Ors v Ong Han Meng

[2000] COA

170

S.75 Compensation of breach of contract

where penalty stipulated for.
Wearne Brothers (M) Ltd v Jackson
[1966]

ismk/B20403/Topic3

173

General
Damages

Not specifically pleaded. Assessed and

awarded by court. E.g. for pain,
inconvenience or disappointment etc.

Special
Damages

Must be specifically pleaded and proved.

E.g. loss of profit, loss of interest etc.

Nominal
Damages

Awarded where there is a technical

breach although there is no actual loss.

ismk/B20403/Topic3

174

29

BT20403/Topic3

cont

cont

Classification of damages (cont.)

Classification of damages (cont.)

Substantial It is a pecuniary compensation that put

Damages
the plaintiff in the position he would
have enjoyed if the contract had been
performed.
Exemplary

Liquidated
Damages

Unliquidated Unascertained damages that need to

Damages
be proved. Dependent on the
circumstances of the case.

A sum awarded which is far greater than

the actual pecuniary loss suffered by the
plaintiff. It is commonly given upon the
breach of any duty that has been
prescribed by the statute.

ismk/B20403/Topic3

Agreed and ascertained at the time of

contracting. Expressly stipulated in the
contract (s.75 Contracts Act 1950).

175

cont

176

ismk/B20403/Topic3

cont

Mitigation of Loss

Mitigation of Loss (cont.)

The party seeking damages in under a duty

E.g. If a seller fails to deliver goods as

to mitigate the loss Explanation to s.74

CA 1950

promised, the purchaser should try to obtain

similar goods at a reasonable price
elsewhere, and if a purchaser refuses to
accept delivery, the vendor should try to sell
it to someone else at the market price.

Hence, where D is in breach of contract, the

law expects P to take reasonable steps to

mitigate any loss resulting from the breach,
and although this is not a positive duty, he
is unlikely to be awarded damages in
respect of additional loss resulting from his
failure to mitigate.
ismk/B20403/Topic3

Kabatasan Timber Extraction Co v Chong

Fah Shing [1969]

177

Remedies (3)

ismk/B20403/Topic3

178

...cont

S.11(2) SRA a specific performance may be
granted in respect of breach of a contract to
transfer immovable property cannot be
adequately relieved by compensation in money
Zaibun Sa bt Syed Ahmad v Loh Koon Moy &
Anor [1982] PC.

3. Specific Performance
 A court order: it directs a party to

perform (carry out) a contract - a

discretionary remedy
 Specific Relief Act 1950

However, the court will exercise its discretion not

to decree specific performance where damages
will provide adequate remedy - s.20(1)(a) Yeo
Long Seng v Lucky Park Pte Ltd [1971].

S.21 SRA the court has a discretion to

refuse specific performance where the

granting of it would cause undue hardship
to the defendant Venkatachalom
Chettiar v Arunasalam Chettiar [1953]
ismk/B20403/Topic3

Specific performance will also be refused where

the terms of the contract are uncertain
uncertains.20(1)(c)
(Lim Nyuk Chan v Wong Sz Tsin [1964])
179

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180

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BT20403/Topic3

Remedies (4)

cont

4. Injunction

It is granted at the discretion of the court

and it can be either temporary

temporary or
perpetual
perpetual (s.50
(s.50 and s.51 SRA).
SRA).

An injunction is a court order that directs a

party:
 to cease (stop) some action, such as
conduct that a breaches a contract, which
could harm the legal interests of another;
or
 to perform an obligation, usually a
contractual obligation.

Injunction as a remedy is classified under Part
III of the Specific Relief Act 1950 as
Preventive Relief.
Relief.

Sivaperuman v Heah Seok Yeong Realty

[1979]

181

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ismk/B20403/Topic3

cont

182

...cont

S.55 further provides that where a contract

Pertama Cabaret Nite Club v Roman Tam

consists of affirmative agreement and

negative agreement, the court cannot compel
specific performance of the affirmative
agreement but shall grant injunction to
perform the negative agreement.

[1981] - A singer had signed a contract to

appear and sing at the appellants night
club for a number of days, and the contract
provided that in the event of a breach, the
respondent should not perform in Kuala
Lumpur during the fixed period of the
contract. Later, the singer dishonoured the
contract by singing in a rival club.

Illustration - A contract with B to sing for

twelve months at Es theatre and not to sing

elsewhere. B cannot obtain specific
performance of the contract to sing but he
may be able to secure an injunction to
restrain A from singing at any other place of
public entertainment.
ismk/B20403/Topic3

The court had granted an interlocutory

injunction.

183

Remedies (5)

ismk/B20403/Topic3

184

...cont

In Craven
Craven--Ellis v Canons Ltd [1936] - The

5. Quantum Meruit

claimant was employed as managing director

by the company under a deed which provided
for remuneration. The articles provided that
directors must have qualification shares, and
must obtain these within 2 months of
appointment. The claimant and other
directors who appointed him never obtained
the required number of shares so that the
deed was invalid. However, the claimant had
rendered services, and he now sued on a
quantum meruit for a reasonable sum by way
of remuneration.
Held: He succeeded on a quantum meruit,
meruit,
there being no valid contract.

Means for as much as he has earned.

It recognises that a plaintiff has the right to

be paid a reasonable amount for goods or

services that he has provided to another
party.

Normally based on propro-rate or
proportionate.
- Upton RDC v Powell
- Tan Ah Kian v Hj Hasnan [1962]
ismk/B20403/Topic3

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