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LEGAL EFFECT OF AGREEMENT: VOID, VOIDABLE, & UNENFORCEABLE CONTRACT  (1) Void  S 2(g) - not enforceable by law  Does not give rise to rights & obligations  S 25 if consideration is unlawful  (ii) Voidable  S 2(i) gives parties the choice either affirming/rejecting  Agreement is valid & binding until avoid by party entitled
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 (iii) Unenforceable Failure to comply with certain mandatory technicalities required by law.

VOIDABLE CONTRACT  (1) COERCION S 15 where a party to the agreement commits or threatens to commit any act forbidden by the Penal Code, i.e any criminal offence, or the unlawful detention or threat of detention of any property. These act must be done with the intention of causing the other party to enter into the contract.
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CASE: TECK GUAN TRADING SDN BHD V HYDROTEK ENGINEERING ORS [1966] Held: 2 ways of committing coercion as defined by S 15 CA 1950:The threat of an act forbidden by the Penal Code Unlawful detention or the threat of such to the prejudice of any person with the intention of causing any person to enter into an agreement.
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 Duress to goods also recognized as coercion CASE: KESARMAL V VALIAPPA CHETTIAR [1954]  Sultan had executed a transfer, issued in the ominous presence of 2 Japanese officers during the Japanese Occupation of Malaysia. Held:  Sultans consent was not free, the transfer becomes voidable at the will of the aggrieved party (sultan).

CASE: CHIN NAM BEE DEVELOPMENT SDN BHD V TAI KIN CHOO [1988] Resp was made to pay an additional payment to purchase a house. Held: The additional payment of $4000 was not voluntary but had made under threat.

EFFECT &REMEDIES FOR COERCION S 19(1) CA contract becomes voidable at ptfs option. S 65 & 66 mutual restitution can be ordered. S 76 can sue to recover compensation for any losses suffered due to his entry into the agreement because of coercion.
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 (2) UNDUE INFLUENCE  S 16 a contract will be tainted by UI where the relationship between the parties to the contract is such that one party is in a position to dominated the will of the other party and this position of dominance is used to obtain an unfair advantage over the party so dominated.  2 things should be established by ptf:  Relationship between ptf & def was such that the def was in a position to dominate his will  Def had used this position of dominance to obtain an unfair advantage over him
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 Situations where a person is deemed to be in a position to dominate the will of anor.  S 16(2)  (a) where the dominating party holds a real or apparent authority over the dominated party; or,  Where the former stands in a fiduciary relation to the latter.  (b) where the dominating party entered into the contract with the dominated party while the latter was under a temporary or permanent mental capacity by reason of age, illness or mental or bodily distress.
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BURDEN OF PROOF S 16(3) the burden is on the dominant to prove affirmatively that no domination was practiced. i.e to show the contract was not induced by UI.

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SALWATH HANEEM V HADJEE ABDULLAH (1894) Facts: Ptfs husband executed a conveyance of property belonging to himself & the ptf to B & C, his brothers. Ptf agreed to the conveyance but after her husbands death, sought to set aside the agreement & the conveyance claimed induced by UI.

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Ct: Burden of proof on B & C to show that ptf fully understood the transaction& not induced by UI. Failed to discharge the burden, transaction set aside.

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CASE: CHAIT SINGH V BUDIN BIN ABDULLAH (1918) Facts: Moneylender sued borrower on a loan at 36% interest, an excessive rate. Borrower was an illiterate. Ct presumption of UI on the grounds of unconscionable bargain, reduced the interest charged from the original claim for 36% to 18%.
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EFFECTS OF UNDUE INFLUENCES S 20 contract voidable at the option of the innocent party Contract set aside absolutely

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FRAUD Committing any acts specified in para (a) (e) S 17 CA.  (a) fraudulent party makes a suggestion as to a fact which is not true when he himself does not believe the fact to be true.

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 (b) fraudulent party actively conceals a facts which he has knowledge of Illustration (c) S 19:B, having discovered a vein of ore on As estate does conceal the existence of ore from A. Through As ignorance, B is enabled to buy the estate at an undervalue. The contract is voidable at As option.

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 (c) fraudulent party makes a promise without any intention of performing it  (d) fraudulent party commits any act for the purpose of deceiving the other party.

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 (e) fraudulent party commits any act or omission which the law specifically declares to be fraudulent.

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CASE: DERRY V PEEK (1889) Lord Hershell fraud is proved when it is shown that false representation has been made: (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false.

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Gen prin: A false statement does not per ser give rise to a cause of action. Explanation to S 19 a fraud or misrepresentation which did not cause the consent to a contract of the party on whom the fraud was practiced does not render a contract voidable. If a person knows about the false statement, he cannot later seek to repudiate the contract.
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 Gen prin: mere silence by one party cannot constitute fraud.  Exceptions: ( Explanation S17)  (1) The party keeping silence has a duty to speak:  (a) earlier statement no longer true  (b) nature of contract or relationship between parties there is a positive duty on one party to disclose facts eg: insurance contract (nature of contract); solicitor & client (relationship between parties)
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(2) the silence of the party is in itself equivalent to speech. BURDEN & STANDARD OF PROOF Lies on the party who alleges fraud. The allegation of fraud must be proved beyond any reasonable doubt CASE EASTERB & ORIENTAL HOTEL {1951} SDN BHD V ELLARIOUS GEORGE FERNANDEZ & ANOR [1989] 1 MLJ 35.
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EFFECT & REMEDIES FOR FRAUD S 19 voidable contract S 66 - restitution

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MISREPRESENTATION Committing any one of the acts specified in para (a) (c), S 18 CA: (a) a positive assertion in a manner which is not warranted by the information he has. Representation turns out to be false even though the maker believes it to be true.
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(b) without intention to deceive, acts in breach of a duty which he owes & thereby misleads the other party The misrepresentation must have given some advantage to the misrepresenting party (c) misrepresentation made by one party to the contract causes, however innocently, the other party to to make a mistake as to the substance of agreement
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EFFECTS 7 REMEDIES FOR MISREPRESENTATION S 19 CA Voidable contract Exception S 19 CA contract not voidable: if that party could discovered the truth by due diligence.

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CASE: WEBER V BROWN (1908) Facts: Def agreed to sell his estate to ptf and wrote the total number and age of rubber trees in the estate. After the transaction, ptf discovered the actual number of the trees, claimed to avoid the contract. Held: Ptf had not use his diligence to find out the actual number, could not avoid the contract.
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Remedies:  S 19(2) party induced by fraud or mispresentation may:  Insist contract shall be performed  Shall be put in position in which he would have been if the representation made had been true.  S 65 restore any benefit received  S 66 restore any benefit or compensate  S 37 Specific Relief Act 1950 ct may require the party granted relief, to make compensation to the other party which justice may require.
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MISTAKE S 21 23 CA 1950  (1) S 21 MISTAKE AS TO FACT Both parties under a mutual mistake to essential fact the agreement void

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 S 21, to be operative:  (i) It must be mistake of both parties to CASE: RAFFLES V WICHELHAUS (1864) Facts: Two parties agreed to a sale of a cargo of cotton arriving in London by a ship called The Peerless, sailing from Bombay. Unknown to both parties, two ships of the same name both leaving from Bombay at different times. They were both negotiating under a mistake & had in mind different ships. Held: Agreement void for mutual mistake.
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 (ii) A matter of fact essential to the agreement CASE: SHEIKH BROTHERS LTD V OCHSNER [1957] AC 136 CASE: COUTURIER V HASTIE Facts: Ptf & def entered into contract of sale of corn. Both parties believed that the corn was shipping from Salonica to England. Actually, the corn has been sold in Tunis because of the problem with the store equipment.
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Held: No contract exist, both parties under a mutual mistake for the fact essential to the agreement, i.e corn.

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 S 22 MISTAKE AS TO LAW APPLICABLE IN MALAYSIA Parties to contract are under a mistake as to laws which are in force in Malaysia - contract valid. However, if mutual mistake as to any law which is not in force in Malaysia, would be treated as a mutual mistake as to a fact -contract void.

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 S 23 Unilateral Mistake One party entered into a contract under a mistake as to a matter of fact contract valid. Gen Prin A unilateral mistake does not avoid contract.

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CASE: TAMPLIN V JAMES (1898) Facts: B made a successful bid at an auction for the sale of a public house under a mistaken belief that a certain field was included, in fact, it was not. Held: Valid contract.

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 EXCEPTIONS:  (I) Mistake as to identity  Contract can be avoided by the party making mistake, provided:  (a) other partys identity is essential to the contract  (b) the other party knows that he is not the actual person who should enter the contract  (c) the party making mistake had taken reasonable step to identify the other partys identity
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(ii) Mistake as to Document One party made mistake as to the nature of document he has signed. Gen prin CASE: LESTRANGE V GRAUCOB [1934] 2 KB 394 Held: A person is bound by the agreement he signed even though he has not read it.
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CASE: SUBRAMANIAM V RETNAM [1966] 1 MLJ 172 Held: Def bound by the agreement he had signed regardless of his ignorant of the language, as there was no fraud or misrepresentation.

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 Exception Common Law non est factum not my deed.  Applied where person signs the agreement under a mistaken belief as to character or class of document & mistake was caused by illiteracy, blindness, senility of the person fraudulent conduct of other party. CASE: FOSTER V MACKINNON (1869) Held: where a signatory to a document signs it under a genuine mistake as to its nature, he is not bound because his mind has not gone with his action.
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LOCAL AUTHORITY: CASE: AWANG BIN OMAR V HJ OMAR & ANOR [1949] 3 elements must be fulfilled: Document is radically different from what he intended to sign Sign document without negligence Impaired/under disability whether temporary or permanent
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EEFECT & REMEDIES FOR MISTAKE S 14 CA voidable contract, coz no free consent S 66 CA - restore any benefit or compensate S 37 SPA restore benefits for justice Claim compensation for loss S 30 SPA Continue to contract with rectifications
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