Professional Documents
Culture Documents
In legal sense :
An agreement between 2 or more
parties that is legally binding between
them.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Proposal (offer).
Acceptance.
Consideration.
Intention to create legal relations.
Certainty.
Legal Capacity.
Free consent.
Legality of the objects.
Formalities.
Example :
A offers to sell his house to B for RM 10,000.
Thus, A by offering to sell his house to B for RM
10,000 in the hope that B will accept it, A is said
to have made a proposal.
Section 2(c) of the CA : the person making the proposal is called the
promisor and the person accepting the proposal
is called the promisee.
10
Elements:-
11
Facts:
The defendants were charged under the
Pharmacy and Poisons Act 1933 which made
it unlawful to sell certain poisons unless
such
sale was supervised by registered
pharmacist.
12
Issue:
Whether there was a sale when a customer
selected
items he wished to buy and placed them in his
basket?
Held:
The display was only an ITT. A proposal to buy
was
made when the customer put the articles in the
basket. Payment was to be made at the
cashiers desk
and a pharmacist was stationed to supervise the
transaction. Hence, the contract was only
concluded
at the cashiers desk.
13
Facts:
The applicant had applied for a post
advertised in
a newspaper by the respondent. He was later
informed that his application had been
accepted.
After sometimes, the respondent decided to
terminate the applicant assuming that he
was on
probation.
14
Held:
1. The advertisement was an ITT and the
application from the applicant was a proposal.
2. The letter of acceptance by the respondent was
an unqualified acceptance of the proposal.
Therefore, the termination was invalid.
15
Facts:
16
Held:
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19
20
Facts:
21
Held:
The Def was liable to pay the reward as the
advertisement was an offer to the public at
large. The
Ptf had accepted the offer by performing the
prescribed conditions.
22
R v. Clark
An Australian Government offered a reward for
information in regard of murder of two police
officers.
X and Clarke were arrested. Clarke gave some
information to the police resulted in the arrest of
another person(Y). Clarke was later found not
guilty. He claimed for the reward.
Held: His claim failed because although he has
seen the offer, it was not present to his mind to
get the reward when he gave the info to the
police. (he wants to clear himself only)
23
24
Facts:
The Def. offered to sell his estate to the ptf on
June 6
for 1,000. The Ptf replied on June 8 that he
would
give 950. The Def refused and the Ptf then
said he
would give 1,000. The Def later refused to sell
and
the Ptf then sued the Def.
25
Held:
The Ptf had rejected the original offer by
offering to
buy the estate at 950. Thus, the refusal
amounts to a
counter-offer and therefore the Def was no
longer
bound to sell the estate to the Ptf.
Byrne v. Tienhoven
D offered to sell 1000 boxes of tinplates to P.
1st Oct D posted a letter of offer to the P in New York.
8th Oct D posted a letter revoking the offer of Oct 1 st.
11th Oct P received the letter of offer posted 1 st Oct and
sent acceptance by telegram on the same day.
20th Oct Ds letter of revocation received by P
Held: There was a contract between the parties because
the revocation of the offer posted on 8th was not effective
till 20th Oct when it was received by the P. P had already
accepted the offer on 11th Oct when the telegram was sent.
(postal rule)
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1. Notice of Revocation.
Sec 6(a) of CA :
2. Lapse of Time.
Sec 6(b) of CA :
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Definition : S 2 ( b )
when the person to whom the proposal is made signifies his
assent thereto, the proposal is said to be accepted: a
proposal, when accepted, becomes a promise
S 7
(a) --- must be absolute &
unqualified
(b) --- must be expressed in some usual and
reasonable manner.(method of
acceptance)
30
Chillingworth v Esche
Parties agreed on the sale of certain property
subject to a proper contract prepared by the
vendors solicitor
Held: there was no contract between the parties
32
Felthouse v Bindley
F offered by letter to buy his nephews horse and said: if I
hear no more about him, I shall consider the horse is mine
His nephew did not give any answer, but the nephew to
(the auctioneer) to keep the horse out of the auction, as he
intended to reserve it for his uncle. B however sold the
horse by mistake.
Held: no contract between F and his nephew since nephew
did not communicate his acceptance
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Section 26 :
An agreement made without consideration is void, unless(b) or is a promise to compensate for something
done;
it is a promise to compensate, wholly or in part, a person
who has already voluntarily done something for the
promisor, or something which the promisor was legally
compellable to do;
Thus, under Msian law past consideration is sufficient to
support a contract in contrast with English law which
provides otherwise.
(Case after this)
41
Facts:
Schmidt had assisted another in obtaining a permit
for
mining ore in Johor. He then helped the formation of
the company and was appointed managing
director. Later, an agreement was entered into
between them whereby the company undertook to
pay him 1% of the value of all ore sold from the
mining land. This was in consideration of the
services rendered by Schmidt prior to its formation,
after incorporation and for future services.
42
Issue:
Whether services rendered after
incorporation but before agreement were
a valid consideration.
Held:
The services did constitute a valid
consideration and Schmidt was entitled to
his claim.
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46
47
Facts:
The respondent agreed to transfer to the appellant
a parcel of land on payment of Japanese Currency
20,000 when the land was subdivided although
the land was worth much more. The respondent
later refused to honor the promise.
Held:
The Federal Court by applying Explanation 2 and
Illustration (f) of Section 26 ruled that the
agreement was valid despite the inadequacy of
the consideration.
48
49
Facts:
A sister agreed to pay an annuity of Rs 653 to her
brothers
who provided no consideration for the promise. On the
same
day their mother had given the sister some land
stipulating
that she must pay the annuity to her brothers. The
sister failed
to fulfill her promise and the brothers sued for the
annuity.
Held:
She was liable on the promise as there was a valid
consideration for the promise from her mother though
not
from the promisee.
50
Sec 64 of the CA :
Every promisee may dispense with or remit,
wholly or in part, the performance of the promise
made to him, or may extend the time for such
performance, or may accept instead of it any
satisfaction which he thinks fit.
Illustration (b) : Payment of smaller in discharge of
larger sum.
A owes B RM 5,000. A pays to B, and B accepts, in
satisfaction of the whole debt, RM 2,000 paid at
the time and place at which the RM 5,000 were
payable. The whole debt is discharged.
51
52
Facts:
The respondent owed the appellant RM 8,869.94
under a judgment debt. The respondents son wrote
a letter to the appellant offering RM 4,000 in full
satisfaction of the respondent debt. And if the
appellant refused to accept, the cheque should be
returned to him. Later the appellants lawyer, having
cashed the cheque, proceeded to ask the balance of
the debt by taking bankruptcy notice on the
respondent
53
Held:
The Federal Court ruled that the acceptance of the
cheque from the respondents son in full
satisfaction precluded them from claiming the
balance.
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55
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57
58
Facts:
The App. (agent) entered into an agency
agreement with the Resp. (principal) in 1913
to sell and distribute certain goods in U.S. One
of the clause in the agreement stated that
or legal agreement and shall not be subject to legal
jurisdiction in the Courts of U.S. and England .
Held:
Though the agreement was based on
commercial arrangement the Resp.
managed to prove that both parties have
no intentions to create legal relations
based on the clause in the said agreement.
Thus the said agreement was not legally
binding because it lacked the element of
ICLR
60
Presumption :
The parties are presumed not to have
intended legal relations. However, the
presumption is rebuttable based on
circumstances of each case.
Case : Balfour v. Balfour
Meritt v. Meritt
61
Facts:
The Def (husband) was a civil servant stationed in
Ceylon. He Had promised to pay the Ptf (wife) a
monthly allowance as maintenance Later he
defaulted and the Ptf sued him for breach of
contract.
Held:
There was no enforceable agreement because the
agreement was based on domestic arrangement.
Further there was no evidence that both parties
have intentions to create legal relation.
62
Facts:
The Def. (husband) left the matrimonial home
which was in the joint names of Def. and Ptf (wife)
and subject to a mortgage. The Def agreed to pay
certain amount of money per month and she
would pay the outstanding mortgage payments.
When payments had been completed, he would
transfer the house to her. The agreement was
recorded in writing. Upon completion
of the payment, the Def. refused to transfer the
house to her.
63
Held:
Based on the circumstances of the case, the
parties had intended to create legal
relation by putting the agreement in
writing. The court held that the agreement
should be a legally binding contract and
ordered the house to be transferred to the
Ptf (wife).
64
Sec 30 of the CA :
Agreements, the meaning of which is not
certain, or capable of being made certain,
are void.
65
Sec 11 of the CA :
Every person is competent to contract :
1. Who is of the age of majority,
2. Who is of sound mind,
3. Who is not disqualified from contracting by any law
to which he is subject.
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71
72
Facts:
The ptf entered into scholarship agreement
with the def (minor at that time) to study
abroad.
Held:
Education was held to be included under
necessaries. Therefore the contract with
the def (minor) was valid.
73
2. Contract of Scholarship
Sec 4 of the Contracts (Amendment) Act,
1976 :
Notwithstanding anything to the contrary
contained in the principal Act, no scholarship
agreement shall be invalidated on the ground
that
(a) the scholar entering into such agreement
is not of the age of majority;
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75
Sec 12 :
(2) A person who is usually of unsound mind,
but
occasionally of sound mind, may make a
contract
when he is of sound mind.
(3) A person who is usually of sound mind, but
occasionally of unsound mind, may not make a
contract when he is of unsound mind.
76
Illustrations :
(a) A patient in a mental hospital, who is at intervals of
sound mind, may contract during those intervals.
(b) A sane man, who is delirious from fever, or who is so
drunk that he cannot understand the terms of a
contract, or
form a rational judgment as to its effect on his interests,
cannot contract whilst such delirium or drunkenness
lasts.
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Sec 10 of the CA :
All agreements are contracts if they are made
by the free
consent of parties competent to contract
Sec 13 of the CA :
Two or more persons are said to consent when
they
agree upon the same thing in the same sense
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Sec 14 of the CA :
Consent is said to be free when it is not caused by
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Sec 20 of the CA
When consent to an agreement is caused by
undue
influence, the agreement is a contract voidable
at the option of the party whose consent was so
caused.
82
Sec 15 of the CA :
Coercion is the committing, or threatening
to commit any act forbidden by the Penal
Code, or the unlawful detaining or threatening to
detain, any property, to the prejudice of any
person whatever, with the intention of causing
any person to enter into an agreement.
84
85
Sec 17 of the CA :
Fraud includes any of the following acts
committed by a party to a contract, or with his
connivance, or by his agent, with intent to
deceive another party thereto or is agent, or to
induce him to enter into the contract :
(a) the suggestion, as to a fact, of that which is
not true by one who does not believe it to be true;
(b) the active concealment of a fact by one
having knowledge of belief of the fact;
(c) a promise made without any intention of
performing it;
86
Facts :
The ptf sued the def for damages relating to
fraudulent misrepresentation of the number of
trees of an estate which the ptf had purchased.
The number of trees represented was in excess of
the actual number existed on the estate.
Held :
The def had made a fraudulent misrepresentation to
the ptf and as a result the ptf had acquired the
estate i.e. the consent was not freely given.
88
Facts :
The respondent had been persuaded to enter into
the second contract with the appellant on the
fraudulent representation that the area of land
was of the same size as the land under the first
agreement.
Held :
The respondent was induced by fraud into signing
the second agreement. Therefore, the second
contract was voidable at the option of the
respondent.
89
Sec 18 of the CA :
Misrepresentation includes(a) the positive assertion, in a manner not
warranted by the information of the person
making it, of that which is not true, although he
believes it to be true;
(b) any breach of duty which, without an intent
to deceive, gives an advantage to the person
committing it, or anyone claiming under him, by
misleading another to his prejudice, or to the
prejudice of anyone claiming under him; and
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Sec 21 of the CA :
Agreement void where both parties are
under mistake as to matter of fact.
Sec 22 :
Mistake as to law in Msia not voidable.
Mistake as to foreign law void contract.
Sec 23 :
Mistake by one party as to matter of fact
not voidable.
93
Sec 21 of the CA :
Where both parties to an agreement are under a
mistake
as to a matter of fact essential to the agreement, the
agreement is void.
94
Sec 23 of the CA :
A 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.
96
Sec 24 of the CA :
The consideration or object of an agreement is lawful, unless
(a) it is forbidden by law;
(b) it is of such nature that, if permitted, it would defeat any
law;
(c) it is fraudulent;
(d) it involves or implies injury to the person or property of
another; or
(e) the court regards it as immoral, or opposed to public policy.
Facts :
Loans were extended by the appellants to the respondent and
secured by several documents and guarantees. It was found that
the documents evidencing the loans showed that the hotel
whose
shares were being purchased by a company had given financial
assistance to a company contravening Companies Act.
Held :
The transactions were tainted with illegality therefore void.
98
Sec 25 of the CA :
If any part of a single consideration for one or
more objects, or any one or any part of any one
of several considerations for a single object, is
unlawful, the agreement is void.
Illustration.
A promises to superintend, on behalf of B, a
legal manufacture of indigo, and an illegal traffic
in other articles. B promises to pay to A a salary
of $10,000 a year. The agreement is void, the
object of As promise and the consideration for
Bs promise, being in part unlawful.
99
Sec 28 of the CA :
Every agreement by which anyone is
restrained from exercising a lawful profession,
trade or business of any kind, is to that extent
void.
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Example:
1.
1.
2.
3.
4.
performance.
agreement.
breach of contract.
frustration.
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3
Example:
If Ali has agreed to deliver certain goods to Abu on
payment on RM 100, once Abu paid the price and
Ali delivered the goods, the contract is discharged.
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Section 63 of the CA :
If the parties to a contract agree to substitute a new
contract for it, or to rescind or alter it, the original
contract need not be performed.
i.e. with the creation of a new contract, the original
contract will be discharged.
E.g.
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Section 40 of the CA :
When a party to a contract has refused to
perform, or disabled himself from performing,
his promise in its entirety, the promisee may put
an end to the contract, unless he has signified,
by words or conduct, his acquiescence in its
continuance.
10
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Section 57 of the CA :
(1) An agreement to do an act impossible in itself is
void.
(2) A contract to do an act which, after the contract
is
made, becomes impossible, or by reason of some
event
which the promisor could not prevent, unlawful,
becomes
void when the act becomes impossible or unlawful.
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110
112
Section 74(1) of the CA inter alia provides :An injured party is entitled to claim :
i. Damages arising naturally from the breach.
ii. Special damages if he can show that the
other party knew at the time of making the
contract that the special loss is likely to result
from the breach.
Case : Tham Cheow Toh v Associated Metal
Smelters Ltd
(detail of case after this.)
113
Facts:
The def agreed to sell a metal melting furnace to the ptf and had
given an undertaking that the furnace would have a
temperature of
at least 2,600 degrees Fahrenheit. The furnace supplied by the
defs
did not meet the required temperature. The ptf sued the defs for
breach of condition and claimed damages including loss of
profit.
Held:
The def was liable to the payment for loss of profits as the def
knew the requirement to deliver a furnace capable of producing
the
special temperature not lower than 2,600 degrees Fahrenheit.
114
It is a discretionary remedy
i.e. the court has a discretion either to
grant or to refuse such decree.
115
Example:
A has agreed to sell a piece of land to B and B
has agreed to pay the price in full. However,
after B having paid the price in full, A breached
the contract by refusing to sell the land to B.
B can apply for specific performance to compel
A to sell the land to him.
116
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Example :
A has breached a contract with B for nondelivery of certain books to B. In such a
case, normally the court will award damages
and not a decree of specific performance.
118
119
Fact:
The respondent (singer) had signed a contract to sing
at the appellants club. The contract also provided
that in the event of a breach, the respondent should
not perform in KL during the fixed period of the
contract. The respondent later breached the contract
and attempted to sing in a rival club.
Held:
The court granted an interlocutory injunction
restraining the
respondent from singing in a rival club.
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