MALAYSIAN BUSINESS LAW

DR SUHAIMI AB RAHMAN DEPARTMENT OF MANAGEMENT AND MARKETING FACULTY OF ECONOMICS AND MANAGEMENT UPM LABORATORY OF POLICY AND MANAGEMENT HALAL PRODUCTS RESEARCH INSTITUTE UPM

Tel: 03-89467656/03-89437951 e-mail: suhaimi@econ.upm.edu.my

NATURE OF BUSINESS LAW

THE LAW SHOULD
-

CORRESPOND TO MODERN SITUATION PRAGMATIC AND RESPONSIVE NOT STATIC

WHAT IS LAW?

LAW IS A SET OF RULES THAT GOVERN AND REGULATE HUMAN BEHAVIOUR

THE PHILOSOPHY OF LAW

WHAT IS THE TRUE NATURE OF LAW?

CONTENT
FUNCTION

THREE MAIN FACTORS THAT CONTRIBUTE TO THE DISAGREEMENT

-

LAW ONLY PART OF THE SOCIETYS NORMATIVE SYSTEM SOURCES OF THE LAW
THE PREFERENCE THAT A WRITER HAS

1. LAW AS PART OF SOCIETYS NORMS

SOCIETYS NORMATIVE SYSTEM

MORAL RULES LEGAL RULES

SOCIAL RULES

2. ORIGINS
-

TIMES CULTURES
BELIEFS (RELIGIOUS)

3. PERSONAL PREDILECTION
-

OBJECTIVE OF THE LAW

- EG. ENFORCEMENT OF JUSTICE

SOURCES OF THE LAW

- CUSTOM - THE WILL OF THE PEOPLE

AUTHORITY TO ENFORCE THE LAW

LAW AND THE JURIST

-

NATURALIST POSITIVIST

NATURAL SCHOOL OF THOUGHT

LAW SHOULD BE BASED UPON GOOD MORAL THE JUDGMENT ON WHAT IS LAW IS BASED UPON THE PRINCIPLE OF WHAT IS GOOD AND WHAT IS WRONG
BAD LAW IS NOT A LAW

POSITIVIST SCHOOL OF THOUGHT

LAW IS DEFINED AS THE COMMAND OF THE SOVEREIGN AUTHORITY IN A SOCIETY LAW IS ALSO DEFINED AS THE BODY OF PRINCIPLES RECOGNISED AND APPLIED BY THE STATE IN THE ADMINISTRATION OF JUSTICE

THREE IMPORTANT ELEMENTS OF LAW

COMMAND

DUTY TO OBEY

SANCTION

LAW

POSITIVIST VIEW

A BAD LAW COULD BE LAW UNDER THE POSITIVIST VIEW SO LONG AS IT IS ENFORCEABLE IN THE COURT OF LAW

WHAT IS LAW?

BASIC FUNCTION OF LAW

-

TO SECURE THE ORDER IN A SOCIETY TO ACHIEVE THE GREATEST HAPPINESS OF THE LARGEST NUMBER OF PEOPLE TO PROMOTE RECONCILIATION OF THE WILL OF ONE PERSON WITH THE LIBERTY OF ANOTHER

TO REGULATE CONDUCT OF PEOPLE TO PROVIDE MEANS OF SETTLING DISPUTE

LAW AND OTHER FORMS OF SOCIAL CONTROLS

LAW IS DISTINGUISHABLE FROM OTHER FORMS OF SOCIAL CONTROLS SUCH AS JUSTICE, ETHICS AND MORALITY

JUSTICE

JUSTICE IS AN ABSTRACT IDEA OF RIGHT AND WRONG, FAIRNESS AND EQUALITY

JUSTICE

LAW

ETHICS

MORALITY

LAW IS A FORMAL SYSTEM THAT EMBODIES EXPLICIT RULES OF CONDUCT LAW GIVES POWER TO THE COURTS TO RESOLVE DISPUTE LAW ENABLES INDIVIDUALS TO MAKE WILL OR CONTRACT

COMPARISON BETWEEN LAW, JUSTICE, ETHICS AND MORALITY

TERMS OF REFERENCE COMMAND LAW JUSTICE ETHICS MORALITY

DUTY TO OBEY

SANCTION

MACHINERY FOR ENFORCEMENT

DEFINITION OF ETHICS
ETHICS IS A STANDARD OF VALUES THAT INVOLVE A CONCEPT OF RIGHT AND WRONG, GOOD AND EVIL, AND RESPONSIBILITY

RELATIONSHIP BETWEEN LAW AND ETHICS

LAW

ETHICS

LAW & ETHICS

SOURCES OF LAW
-

HISTORICAL SOURCES
PLACES WHERE THE LAW COULD BE FOUND LEGAL SOURCES (THE LEGAL RULES THAT MAKE UP THE LAW)

MALAYSIAN LEGAL SOURCES

WRITTEN LAW UNWRITTEN LAW

WRITTEN LAW
-

FEDERAL CONSTITUTION
FEDERAL LEGISLATION STATE LEGISLATION SUBSIDIARY LEGISLATION

FEDERAL CONSTITUTION
-

SUPREME LAW OF THE LAND PRESCRIBES THE RELATIONSHIP BETWEEN STATE AND FEDERAL

NINTH SCHEDULE
-

LIST I :- FEDERAL LIST LIST II :- STATE LIST LIST III :- CONCURENT LIST

FEDERAL LEGISLATION
-

LAWS MADE BY THE PARLIAMENT BEFORE INDEPENDENT ALL FEDERAL LEGISLATIONS WERE KNOWN AS ORDINACES

THE PROCESS OF MAKING RWU POLICY INTO AN ACT OF PARLIAMENT

POLICY

CABINET PAPER

MINISTER WILL BRING THE PAPER TO THE CABINET

CABINET MEETING

APPROVAL FROM THE CABINET

AG WILL PREPARE A DRAFT TO BE TABLED IN PARLIAMENT

APPROVAL FROM THE PARLIAMENT (LEGISLATIVE PROCESS) HOUSE OF REPRESENTATIVE HOUSE OF SENATE THE KING

GAZZETTED

LEGISLATIVE PROCES
1) FIRST READING: MINISTER INTRODUCES THE BILL READ THE SHORT TITLE TEXT PRINTED AND DISTRIBUTED AFTER THE BILL IS PASSED 2) SECOND READING: MEMBERS WILL DEBATE ON THE GENERAL PRINCIPLES OF THE BILL AND VOTE

3) COMMITTEE STAGE: DETAILED EXAMINATION OF THE BILL AND MAY AMEND IT SUBMIT REPORT TO THE HOUSE

4) THIRD READING: FURTHER DEBATE AND AMENDMENTS PUT TO A NOTE THE HOUSE EITHER PASSES OR DEFEAT THE BILL

5) OTHER HOUSE: SIMILAR PROCEDURES AMENDMENT NEEDS APPROVAL OF THE FIRST HOUSE

6) ROYAL ASSENT: THE BILL PASSED IN BOTH HOUSES IS SENT TO YDPA FOR ROYAL ASSENT THE BILL BECOMES A LAW UPON PUBLICATION/GAZETTE

STATE LEGISLATION
-

LAW MADE BY THE STATE KNOW AS ENACTMENT EXCEPT SARAWAK

SUBSIDIARY LEGISLATION
-

RULES REGULATIONS BY-LAWS ORDERS

SUBSIDIARY LAW
THE SUBSIDIARY LAW CAN ONLY BE MADE IF THE RESPECTIVE ACT (KNOWN AS ENABLING ACT) GIVES POWER

THE PROCESS OF MAKING RWH BY-LAWS: A TYPICAL TCPD EXAMPLE

EMPOWERING CLAUSE TECHNICAL COMMITTEE LEGAL DEPARTMENT

DRAFT

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA PERLAKSANAAN AKTA MEETING THE DRAFT WILL BE DISCUSSED AT THE TCPD STATE DIRECTORS MEETING

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA PERANCANGAN & PEMBANGUNAN (TCPD) THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA PERANCANGAN & PEMBANGUNAN (MINISTRY) THE DRAFT WILL BE PRESENTED AND APPROVED AT THE MAJLIS PERANCANGAN FIZIKAL NEGARA

REVISED BY LEGAL ADVISOR

MPFN WILL HAND THE DRAFT TO THE STATE AUTHORITY

MPFN WILL HAND THE DRAFT TO THE MINISTER

LEGAL ADVISOR (STATE ) WILL GAZZET THE DRAFT BY-LAWS

LEGAL ADVISOR (MINISTRY) WILL GAZZETT THE DRAFT

CONTROLS OVER SUBSIDIARY LAW

CONSULTATION PUBLICITY PARLIAMENTARY CONTROL JUDICIAL REVIEW

JUDICIAL DECISION
NEW PRINCIPLES CREATED IN COURT

JUDICIAL DECISION
-

PREVIOUS DECISION MADE BY PREVIOUS COURT IN A SIMILAR FACT FAILURE TO FOLLOW THE PRECEDENT WOULD RESULT TO REVERSE ON APPEAL PRECEDENT IS OBTAINED FROM THE DECISION OF THE SUPERIOR COURT

HOW JUDICIAL PRECEDENT WORKS

-

THE COURT WILL ONLY FOLLOW THE PRECEDENT WHEN THE FACT IS SIMILAR IF THE FACT IS NOT SIMILAR THE COURT WILL DISTINGUISH THE CASE AND NEED NOT TO FOLLOW THE EARLIER DECISION THE COURT CAN OVERULE THE PRECEDENT IF IT IS PROVED THAT THE PREVIOUS DECISION WAS WRONG

ENGLISH COMMON LAW AND EQUITY

S 3(1)(a) CIVIL LAW ACT 1956, THE COURT SHALL IN WEST MALAYSIA OR ANY PART THEREOF, APPLY THE COMMON LAW OF ENGLAND AND THE RULES OF EQUITY AS ADMINISTERED IN ENGLAND ON THE 7TH APRIL 1956

ENGLISH COMMON LAW AND EQUITY

ANY CHANGES OR DEVELOPMENT AFTER 7TH APRIL 1956 THE ENGLISH COMMON LAW AND EQUITY WILL NOT BECOME THE LAWS OF MALAYSIA, IT ONLY ACTS AS PERSUASIVE AUTHORITY

ENGLISH COMMON LAW AND EQUITY

TWO CONDITIONS FOR THE APPLICATION:I.

ABSENCE OF LOCAL STATUTE COVERING THE SAME MATTER ONLY IF SUITED TO LOCAL CIRCUMSTANCES

II.

ENGLISH COMMERCIAL LAW

S 5(1) CIVIL LAW ACT 1956, IN ALL QUESTIONS OR ISSUES WHICH ARISE OR WHICH HAVE TO BE DECIDED IN THE STATES OF WEST MALAYSIA OTHER THAN MALACCA AND PENANG WITH RESPECT TO THE LAW OF PARTNERSHIPS, CORPORATIONS, BANKS AND BANKING, PRINCIPALS AND AGENTS, CARRIERS BY AIR, LAND AND SEA, MARINE INSURANCE, AND WITH RESPECT TO MERCHANTILE LAW GENERALLY, THE LAW TO BE ADMINISTERED SHALL BE THE SAME AS WOULD BE ADMINISTERED IN ENGLAND IN THE LIKE CASE AT THE DATE OF THE COMING INTO FORCE OF THIS ACT, IF SUCH QUESTION OR ISSUE HAD ARISEN OR HAD TO BE DECIDED IN ENGLAND, UNLESS IN ANY CASE OTHER PROVISION IS OR SHALL BE MADE BY ANY WRITTEN LAW

CUSTOMS
EACH RACIAL AND RELIGIOUS GROUP IS GOVERNED BY THEIR OWN SET OF PERSONAL LAWS, EG. ISLAMIC LAW FOR MUSLIM, IRRESPECTIVE OF THEIR ETHNICITY, NATIVE LAW FOR THE NATIVES (KHADAZAN, BIDAYUH, MURUT, ETC.) CHINESE AND INDIAN CUSTOMARY: PREVIOUSLY JUDICIAL RECOGNITION ON VARIOUS CUSTOMARY LAW ON MARRIAGES
LAW REFORM (MARRIAGE AND DIVORCE) ACT 1976 GOVERNS MARRIAGES AMONG NON-MUSLIM (ABOLISHMENT OF POLYGAMOUS MARRIAGES)

LAW OF CONTRACT: SOURCES

-

STATUTES
- CONTRACT ACT 1950

CASE LAWS
- CASES DECIDED IN COURTS

ENGLISH COMMON LAW

- BEFORE 7TH APRIL 1956

LAW OF CONTRACT: INTRODUCTION

CONTRACT IS THE NUCLEUS OF ALL COMMERCIAL TRANSACTIONS

WHAT IS CONTRACT?

CONTRACT IS AN AGREEMENT WHICH IS ENFORCEABLE IN LAW

WHAT IS AGREEMENT
MEETING OF THE MINDS
TWO OR MORE PERSONS ARE SAID TO CONSENT WHEN THEY AGREE UPON THE SAME THING IN THE SAME SENSE CONSENSUS AD IDEM

 BUT
NOT ALL AGREEMENTS ARE CONTRACT. THERE ARE SOME AGREEMENTS WHICH ARE NOT CONSIDERED AS CONTRACT
EG. SOCIAL AGREEMENTS

AGREEMENTS WHICH ARE CONTRACT

-

PROPOSAL
ACCEPTANCE

CONSIDERATION
INTENTION TO CREATE LEGAL RELATIONSHIP

COMPETENCE
FREE CONSENT

PROPOSAL

A PROPOSAL IS AN ACT THAT SIGNIFIES A PERSONS WILLINGNESS TO DO OR TO ABSTAIN FROM DOING SOMETHING WITH A VIEW TO OBTAINING THE ASSENT OF ANOTHER

PROPOSAL

IT IS AN OFFER OR A PROMISE TO BE BOUND BY HIS/HER TERMS IF THEY ARE ACCEPTED BY THE OTHER

LEGAL PRINCIPLE
IT IS UPON THIS BASIS THAT A PROPOSAL SHOULD BE MADE CLEAR AND DEFINITE
A PROPOSAL SHOULD NOT BE MADE IN UNAMBIGUOUS STATEMENT IF BARGAINING IS STILL POSSIBLE IN THE ARRANGEMENT THE SUPPOSED PROPOSAL SHOULD NOT BE CONSIDERED AS PROPOSAL AT ALL

PROPOSAL

THE STATEMENT SHOULD SHOW A CLEAR WILLINGNESS TO BE BOUND BY HIS/HER TERMS IF ACCEPTED BY THE OTHER PARTY

A RESPONSE TO A REQUEST FOR INFORMATION

HARVEY V FACEY
PLAINTIFF: WILL YOU SELL US A BUMPER HALL PEN? TELEGRAPH LOWEST CASH PRICE. DEFENDANT: LOWEST PRICE FOR BUMPER HALL PEN, GBP 900

INVITATION TO TREAT
INVITATION TO TREAT IS AN ACT TO INVITE OTHERS TO MAKE AN OFFER INVITATION TO TREAT IS NOT A PROPOSAL
IT WILL NOT RESULT TO A CONTRACT IF ACCEPTED BY OTHERS

EXAMPLES OF INVITATION TO TREAT

-

AUCTIONS
- PAYNE V CAVE

ADVERTISEMENTS
- COELHO V THE PUBLIC SERVICES COMMISSION

ITEMS DISPLAYED IN SHOPS

- PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMIST LTD

PROPOSAL: LEGAL PRINCIPLE

A PROPOSAL CAN BE ADDRESSED TO A PARTICULAR PERSON OR TO A GENERAL PUBLIC
BOULTON V JONES CARLILL V CARBOLIC SMOKE BALL

LEGAL PRINCIPLE

A PROPOSAL MAY BE WRITTEN, SPOKEN OR IMPLIED FROM CONDUCT

COMMUNICATION OF PROPOSAL
EVERY PROPOSAL MADE SHOULD BE COMMUNICATED TO THE OTHER PARTY
THE OTHER PARTY SHOULD HAVE THE KNOWLEDGE BEFORE ACCEPTING A PROPOSAL
R V CLARKE
There cannot be assent without knowledge of the offer Higgins J

COMMUNICATION OF PROPOSAL: WHEN COMPLETE

THE COMMUNICATION OF A PROPOSAL IS COMPLETE WHEN IT COMES TO THE KNOWLEDGE OF THE PERSON TO WHOM IT IS MADE

SECTION 4 (1)

ACCEPTANCE

AN ACCEPTANCE IS AN ACT WHICH SHOWS THAT THE PERSON TO WHOM THE PROPOSAL IS MADE GIVES HIS/HER ASSENT TO THE PROPOSAL

LEGAL PRINCIPLE

TO CONVERT A PROPOSAL INTO A PROMISE THE ACCEPTANCE SHOULD BE ABSOLUTE AND UNQUALIFIED SECTION 7 (a)

LEGAL PRINCIPLE

THE LEGAL PRINCIPLE IS THAT THE ACCEPTANCE SHOULD BE A MIRROR IMAGE TO THE PROPOSAL

COUNTER OFFER

ANY MODIFICATION OR VARIATION OF THE PROPOSAL DOES NOT CONSTITUTE AN ACCEPTANCE BUT AMOUNTS TO A COUNTER OFFER. A COUNTER OFFER DESTROYS THE ORIGINAL OFFER.

HYDE V WRENCH
DEFENDANT OFFERED TO SELL HIS ESTATE FOR GBP 1000
PLAINTIFF AGREED TO BUY BUT FOR GBP 950 DEFENDANT REFUSED TO SELL

PLAINTIF AGREED WITH THE ORIGINAL OFFER

BATTLE OF THE FORMS

Butler Machine Tool v Ex-Cell-O-Corporation [1979] 1 All ER 965 An arrangement to sell a machine. Both parties have their own standard terms. A makes an offer with price variation clause. B accepts but with its own terms i.e. without price variation clause The court give the judgment to the person who last make an offer.

LEGAL PRINCIPLE
SILENCE SHOULD NOT BE PRESCRIBED AS A FORM OF ACCEPTANCE
FELTHOUSE V BINDLEY

GENERAL RULE
AN ACCEPTANCE SHOULD BE MADE KNOWN (COMMUNICATED) TO THE PERSON TO WHOM THE PROPOSAL IS MADE
- FACE TO FACE CONTRACT - CONTRACT THROUGH TELEPHONE - CONTRACT THROUGH TELEX

EXCEPTION TO THE GENERAL RULE

-

UNILATERAL CONTRACTS POSTAL RULE

WHEN COMMUNICATION IS COMPLETE?

4 (2) THE COMMUNICATION OF ACCEPTANCE IS COMPLETE (a) AS AGAINST THE PROPOSER WHEN IT IS PUT IN A COURSE OF TRANSMISSION TO HIM SO AS TO BE OUT OF THE POWER OF THE ACCEPTOR; AND (b) AS AGAINST THE ACCEPTOR WHEN IT COMES TO THE KNOWLEDGE OF THE PROPOSER

POSTAL RULE
ADAMS V LINDSELL DEFENDANT OFFERED TO SELL CERTAIN AMOUNT OF WOOL BY LETTER (THE LETTER WAS MISDIRECTED) PLAINTIFF ACCEPTED THE OFFER BY LETTER BEFORE THE LETTER ARRIVED DEFENDANT SOLD THE WOOL TO A THIRD PARTY
Communication of acceptance is complete and a contract is concluded when the acceptor has posted the letter of acceptance

REVOCATION OF PROPOSAL

5(1) A PROPOSAL MAY BE REVOKED AT ANY TIME BEFORE THE COMMUNICATION OF ITS ACCEPTANCE IS COMPLETE AS AGAINST THE PROPOSER, BUT NOT AFTERWARDS

COMMUNICATION OF REVOCATION

ALL REVOCATIONS MUST BE MADE KNOWN TO THE OTHER PARTY

BYRNE V VAN TIEN HOVEN

The defendants wrote from Cardiff on 1 October offering to sell a quantity of tinplates to the plaintiffs in New York. On 8 October, the defendants posted a letter withdrawing the offer. On 11 October, the offer reached the plaintiffs, who accepted at once by telegram (and the plaintiffs also confirmed this in writing on 15 October). The defendants letter of withdrawal reached the plaintiffs on 20 October.
Held: Mere posting of a letter of revocation does not amount to an effective communication to the acceptor.

CONSIDERATION
CONSIDERATION IS THE SYMBOL OF BARGAIN AND RECIPROCAL OBLIGATIONS
THE LAW REQUIRES THAT THE PROMISOR ASKS FOR AND RECEIVES SOMETHING IN RETURN FOR HIS PROMISE

THERE MUST BE SOME ELEMENT OF EXCHANGE SOME DEGREE OF MUTUALITY

WHAT IS CONSIDERATION?

CONSIDERATION IS A PRICE GIVEN IN RETURN FOR A PROMISE

CONSIDERATION SHOULD BE SOMETHING OF VALUE IN THE EYES OF THE LAW.

CURRIE V MISA

A VALUABLE CONSIDERATION, IN THE EYES OF THE LAW, MAY CONSISTS EITHER 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

SECTION 2 (d) CONTRACT ACT 1950

WHEN, AT THE DESIRE OF THE PROMISOR, THE PROMISEE OR ANY OTHER PERSON HAS DONE OR ABSTAINED FROM DOING, OR DOES OR ABSTAINS FROM DOING, OR PROMISES TO DO OR TO ABSTAIN FROM DOING, SOMETHING, SUCH ACT OR ABSTINANCE OR PROMISE IS CALLED A CONSIDERATION FOR THE PROMISE

CLASSIFICATION
-

EXECUTORY CONSIDERATION
A promise is made in return for a promise

EXECUTED CONSIDERATION
A performance is made in return for a promise

PAST CONSIDERATION
A promise is made subsequent to and in return for an act that has already been performed

PAST CONSIDERATION
Y FINDS XS PERSIAN CAT Y RETURNS THE CAT TO X X PROMISES TO REWARD Y RM 100
-

IS THERE ANY CONTRACT? IS THERE ANY CONSIDERATION?

ENGLISH COMMON LAW

Past consideration is not valid because it has been done without reference to the existing promise
Re McArdle [1951] Ch 669 Lampleigh v Brathwait (1615) Hob 105

MALAYSIAN LAW
Section 2(d) Contract Act 1950
Past consideration is considered as valid when, at the desire of the promisor, the promisee or any other person has done or abstained from doing

CONSIDERATION FROM A THIRD PARTY

- English Common Law
Consideration must move from the promisee/acceptor

- Section 2(d) Contract Act 1950

the promisee or any other person Venkata Chinnaya v Verikatara Maya (1881) ILR 4 Mad. 137

PERFORMANCE OF A LEGAL DUTY

- PUBLIC DUTY IMPOSED BY LAW

Glassbrook Bros. v Glamorgan County Council [1925] AC 270

- PERFORMANCE OF A DUTY OWED TO PROMISOR

Stilk v Myrick (1809) 2 Camp 317

CONSIDERATION NEED NOT BE ADEQUATE

Explanation 2 of Section 26

Phang Swee Kim v Beh I Hock (1964) MLJ 383

An arrangement to sell a piece of land for RM500 which worth more than that

EXCEPTIONS TO GENERAL RULE

- Section 26(a)
An agreement made in writing and registered

- Section 26(b)
An agreement to compensate for something done

- Section 26(c)
An agreement to pay a statute barred debt

INTENTION TO CREATE A LEGAL RELATIONSHIP

THE PARTIES CONTEMPLATE THAT THE AGREEMENT BE ENFORCEABLE IN LAW

HOW TO PROVE THE PRESENCE OF INTENTION

THE COURT WILL DECIDE UPON CASES AND THE PRINCIPLE OF REBUTTABLE PRESUMPTION

REBUTTABLE PRESUMPTION

REBUTTABLE PRESUMPTION MEANS A SUGGESTION HOLDS GOOD SO LONG AS THERE IS NO EVIDENCE TO THE CONTRARY

AGREEMENTS ARE CATEGORISED

COMMERCIAL AGREEMENTS SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

COMMERCIAL AGREEMENTS
THE PRESUMPTION THERE IS AN INTENTION TO CREATE LEGAL RELATIOSHIPS UNLESS IT IS PROVEN OTHERWISE

COMMERCIAL AGREEMENTS
PRESUMPTION REMAINS Carlill v Carbolic Smoke Ball (1892) 2 QB 484

COMMERCIAL AGREEMENTS
PRESUMPTION REFUTED
Jones v Vernons Pools [1938] 2 All ER 626
Express Deny of the Intention

Rose and Frank v Crompton Bros [1923] 2 KB 261

Memorandum of Understanding (MoU)

SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

THE PRESUMPTION THERE IS NO INTENTION TO CREATE LEGAL RELATIONSHIPS UNLESS PROVEN OTHERWISE

SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

PRESUMPTION REMAINS Balfour v Balfour [1919] 2 KB 571
Jones v Padavatton [1969] 2 All ER 616

SOCIAL, DOMESTIC AND FAMILY AGREEMENTS

PRESUMPTION REFUTED
Merritt v Merritt [1970] 2 All ER 760
Have separated

Simpkins v Pays [1955] 1 WLR 975

Not a Household Agreement

Parker v Clark [1960] 1 WLR 286

Truly rely upon the promise; has given up something of value

Tanner v Tanner [1975] 1 WLR 1346

LEGAL CAPACITY
THE PARTIES WHO INTEND TO ENTER INTO AN AGREEMENT SHOULD HAVE FULL CONTRACTUAL CAPACITY
THE PARTIES SHOULD BE LEGALLY COMPETENT

COMPETENT SECTION 11 CONTRACT ACT 1950

-

A PERSON WHO IS OF AGE OF MAJORITY

A PERSON WHO IS OF SOUND MIND

A PERSON WHO IS NOT DISQUALIFIED BY ANY LAW

LEGAL EFFECT OF INCOMPETENCE

THE AGREEMENT WILL BE RENDERED VOID
- Mohori Bibee v Dharmodas Ghose (1903)ILR 30 Cal 539 - Tan Hee Juan v Teh Boon Keat [1934] MLJ 96

EXCEPTIONS TO GENERAL RULE

NECESSARIES SCHOLARSHIPS MARRIAGES INSURANCES SERVICES

NECESSARIES
-

NECESSARIES INCLUDE EVERYTHING THAT IS ESSENTIAL AND BENEFICIAL TO THE MINOR

- E.G. FOOD, DRINK, CLOTHING AND EDUCATION

DEFINITION ON WHAT CONSTITUTES NECESSARY VARIES AND DEPENDANT UPON CIRCUMSTANCES AND CASES
- E.G. WINTER COAT

THE MINOR WILL HAVE TO PAY A REASONABLE PRICE FOR THE NECESSARY

NECESSARIES
-

CLAIM FOR NECESSARIES SUPPLIED TO PERSON INCAPABLE OF CONTRACTING, OR ON HIS ACCOUNT 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.
-

SECTION 69

NECESSARIES
ILLUSTRATIONS
-

A SUPPLIES B, A MENTALLY DISODERED PERSON, WITH NECESSARIES SUITED TO HIS CONDITION IN LIFE, A IS ENTITLED TO BE REIMBURSED FROM BS PROPERTY A SUPPLIES THE WIFE AND CHILDREN OF B, A MENTALLY DISODERED PERSON, WITH NECESSARIES SUITABLE TO THEIR CONDITION OF LIFE. A IS ENTITLED TO BE REIMBURSED FROM BS PROPERTY

SCHOLARSHIPS
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE PRINCIPAL ACT, NO SCHOLARSHIP AGREEMENT SHALL BE INVALIDATED ON THE GROUND THAT:A) THE SCHOLAR ENTERING ONTO SUCH AGREEMENT IS NOT OF THE AGE OF MAJORITY B) SUCH AGREEMENT IS CONTRARY TO ANY PROVISION OF ANY LAW IN FORCE RELATING TO MONEY LENDERS, OR C) SUCH AGREEMENT LACKS CONSIDERATION
SECTION 4(a) CONTRACT (AMENDMENT) ACT 1976

MARRIAGES
PROMISE OF MARRIAGE HAS BEEN HELD TO BE VALID. A MINOR MAY SUE OR BE SUED FOR BREACH.
RAJESWARY V BALAKRISHNAN

INSURANCES
A MINOR OVER THE AGE OF TEN MAY ENTER INTO A CONTRACT OF INSURANCE BUT IF HE OR SHE IS UNDER THE AGE OF SIXTEEN YEARS, THE WRITTEN CONSENT OF THE PARENTS OR GUARDIANS IS ESSENTIAL
INSURANCE ACT 1963

SERVICES
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE CONTRACTS ACT 1950 OR THE PROVISIONS OF ANY OTHER WRITTEN LAW, ANY CHILD OR YOUNG PERSON SHALL BE COMPETENT TO ENTER INTO A CONTRACT OF SERVICE UNDER THIS ACT OTHERWISE THAN AS AN EMPLOYER , AND MAY SUE AS PLAINTIFF WITHOUT HIS NEXT FRIEND OR DEFEND ANY ACTION WITHOUT A GUARDIAN AD LITEM
CHILDREN AND YOUNG PERSONS (EMPLOYMENT) ACT 1966

FALSE REPRESENTATION ON AGE

THE MINOR IS NOT ESTOPPED FROM PLEADING MINORITY IN AVOIDING A CONTRACT

NATESAN V THANALETCHUMI

CERTAINTY

IT IS IMPORTANT THAT TERMS AND CONDITIONS OF A CONTRACT BE CLEAR AND CERTAIN. COURTS WILL NEVER ACCEPT TERMS OR CONDITIONS WHICH ARE VAGUE AND OBSCURE

Karuppan Chetty v Suah Thian (1916) 1 FMSLR 300

The court declared that the contract was void. The terms used in the contract was too vague and too obscure. The parties agreed to a lease of RM 35 per month for as long as he likes.

LEGAL EFFECT OF UNCERTAINTY

AGREEMENTS, THE MEANING OF WHICH IS NOT CERTAIN OR CAPABLE OF BEING MADE CERTAIN, IS VOID
SECTION 30 CONTRACT ACT 1950

EXAMPLES
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. A agrees to sell to B one hundred tons of oil of a specified description, known as an article of commerce. There is no uncertainty here to make the agreement void. A, who is a dealer in coconut oil only, agrees to sell to B one hundred tons of oil. The nature of As trade affords an indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut oil.

FREE CONSENT
TWO OR MORE PERSON ARE SAID TO CONSENT WHEN THEY AGREE UPON THE SAME THING IN THE SAME SENSE.
THIS CONSENT SHOULD BE GIVEN FREELY IF ONE WOULD LIKE TO MAINTAIN THE VALIDITY OF A CONTRACT.

ELEMENTS THAT VITIATE CONSENT

Coercion Undue Influence Fraud Misrepresentation Mistake

LEGAL EFFECT

With the exception of mistake the effect of those elements to contract is that it will render that contract to be voidable.

CASE LAW
- Kesarmal s/o Lecthman Das v Valiappa Chettiar [1954] MLJ 119
- Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & 4 Ors [1988] 2 MLJ 117

COERCION
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
Section 15 Contract Act 1950

REPUDIATION
The repudiation of contract should be made within a reasonable time.
Wong Ah Fook v Kerajaan Negeri Johor [1937] MLJ Rep 121

UNDUE INFLUENCE
A person who has made a contract under undue influence may rescind the contract at his choice. The law gives such right to that person because the contract was not made upon free will.

WHAT CONSTITUTES UNDUE INFLUENCE

A contract is said to be induced 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.
Section 16 (1) Contract Act 1950

Ragunath Prasad v Sarju Prasad AIR 1924 PC 60

There should be at least THREE important points that exist within that arrangement before a particular contract could be rescind;
1. 2. 3.

There exists a situation where one person is in a position to dominate the will of the other That person uses his position to gain an unfair advantage The gain should be in a manner that is unfair.

SECTION 16 (2) CONTRACT ACT 1950

A person is said to have been in a position to dominate the will of the other when;
1. 2. 3.

He holds a real or apparent authority over the other He stands in a fiduciary relation to the other A contract is made with a person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress

PROVES OF NO DOMINATION
Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduce, to be unconscionable, the burden of proving that the contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.
Section 16 (3) (a) Contract Act 1950

Salwath Haneem v Hadjee Abdullah (1894) 2 SSLR 57

The burden of proof lies upon the defendants who have a confidential relationship with the plaintiff.

HOW TO PROVE
One way to prove is through the advice of someone who has the expertise to do so.
Inche Noriah v Shaik Allie bin Omar (1929) AC 127 An advice has been given to the dominated party by a lawyer.

FRAUD
Fraud is being committed when one person makes a false representation, which; 1. He believes that it is not true; 2. He is not confident that the statement is true; 3. He never care whether the statement is true or not with the intention of causing any person to enter into a contract.
Section 17 Contract Act 1950

EXAMPLES
- A, intending to deceive B, falsely represents that five hundred gantangs of indigo are made annually at As factory, and thereby induces B to buy the factory. The contract is voidable at the option of B
- B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal, the existence of the ore from A. Through As ignorance B is enabled to buy the estate at an undervalue. The contract is voidable at the option of A.

ACTIVE FALSE REPRESENTATION

Fraud has not been committed even if one person failed to disclose the true fact. A mere non-disclosure is not a fraud.

EXAMPLES
- A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horses unsoundness. This is not fraud in A.
- A and B, being traders, enter upon a contract. A has private information of a change in prices which would affect Bs willingness to proceed with the contract. A is not bound to inform B.

Vyramuthu v Kerajaan Negeri Pahang

Explanation of Section 17
Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.

it is the duty of the person keeping silence to speak

- Contract of Insurance - Sale Through Prospectus
- The Creation of Partnership

his silence is, in itself, equivalent to speech

The doctrine of buyers beware When a question is being posed to the seller, he is expected to give the answer. At this point, whether he speaks or not, both will be regarded as the answer for the question.

EXAMPLES
B says to A, If you do not deny it, I shall assume that the horse is sound. A says nothing. Here, As silence is equivalent to speech.

MISREPRESENTATION

A false statement has been made without the intention to deceive another.

Section 18 Contract Act 1950

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, though 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 (c) 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.

The Difference Between Fraud and Misrepresentation

The basic difference between fraud and misrepresentation is that in fraud the person making the representation does not himself believe in its truth whereas, in cases of misrepresentation, he may believe the representation to be true.

Fraud and Misrepresentation Must Influence the Other Party to Make Contract
The fraud or misrepresentation is rendered irrelevant if it has not induced or caused the other party to enter into the contract. A false statement does not per se give rise to a cause of action. The representee must have relied on the statement of the representator.

The Effect of Fraud and Misrepresentation

When consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
Section 19(1) Contract Act 1950

Exception to the General Principle

If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the parties whose consent was so caused had the means of discovering the truth with ordinary diligence.
Exception Section 19 Contract Act 1950

CONTENTS OF CONTRACT

What has been agreed in an agreement is the content of a contract. It is also known as the TERMS of contract.

Term and Representation

- Term is a condition or a warranty that is contained in a contract
- Representation is a mere statement that is not included in a contract

Classifications of Term
- Express Term
The terms that are clearly stated and included in a contract

- Implied Term
The terms that are not expressly stated but the court assumes that such terms exist in a contract

Implied Terms
- To give effect to the commercial practice - To realize the intention of the contracting parties - Required by law

Implied Terms
An implied term is a term that is not included in a contract during negotiation but the law or the court assumes that such term exists in the contract.
The court, however, will be very careful in this case in the sense that the freedom of contract should be preserved.

Commercial Practices
The court will normally imply terms in a contract when it thinks fit or when it thinks it is important as to give the effect to commercial practices.
Pasuma Pharmacal Corpn. v McAlister & Co. Ltd. [1965] 1 MLJ 221 Good Faith

Commercial Practices
Commercial practices mean that the use of such terms in commercial transactions is very common, certain and reasonable.
Preston Corp. Sdn. Bhd. v Edward Leong & Ors. [1982] 2 MLJ 22 the keeping of the first film negative and the cost of printing

Commercial Practices
Such practice has been well accepted by the court; and it has been part of the law
Pembangunan Maha Murni Sdn. Bhd. v Jururus Ladang Sdn. Bhd. [1986] 2 MLJ 30

Intentions of the Contracting Parties

The court will also implied a term in a contract when it thinks that it is important as to give effect to the intention of the contracting parties. Yong Ung Kai v Enting [1965] 2 MLJ 98

Legal Requirements
The court will implied a term in a contract when the law requires so. - Sale of Goods (Malay States) Act 1957 - Hire Purchase Act 1967 - National Land Code 1965

Categories of Term
- Condition an essence of a contract. A breach of a condition would render to a recession.
- Warranty a supportive factor to a contract. A breach of a warranty will not render the contract be rescind but the law will allow the injured party to make a claim.

Standard Form Contracts

Same contract being made to different persons.

To expedite the transaction To reduce the cost

Standard Form Contracts

Come in a package. One side is imposing a set of terms on the other party. Take it or leave it.
One problem is the inclusion of an exemption clause in that particular transaction.

Exemption Clause
The main purpose of Exemption Clause is either;

to avoid liability; or at least to limit liability

ECs in Contracts
The Exemption Clause would be considered as part of contract/valid term of contract if it has been properly;

included in a contract a proper notice has been given

The Incorporation of the ECs

When an exemption clause has been incorporated into a contract the clause is considered as part of the contract. The fact that the party did not aware about the term does not affect the validity of the clause. LEstrange v F Graucob Ltd. [1934] 2 KB 394

Notice About the ECs

The notice should be made either before or at the time the contract being made.

The Effectiveness of an EC in a Contract

Notice
A notice must be served before or at the time the contract is made Olley v Marlborough Court Ltd [1949] 1 KB 532

Thornton v Shoe Lane Parking [1971] 2 QB 163

The Effectiveness of an EC in a Contract

Regular as a Notice Course of Dealing
A consistent course of dealing would lead to the application of the principle of notice Spurling v Bradshaw [1956] 1 WLR 461

The Effectiveness of an EC in a Contract

The Ticket Rule
To make the terms that contain in a ticket valid reasonable steps must be taken so as to informed the other party about the EC before the contract being made Chapelton v Barry UDC [1940] 1 KB 532 Parker v South Eastern Railway Co. [1877] 2 CPD 416

The Effectiveness of an EC in a Contract

The Principle of Contra Proferentem
When words used is unclear or ambiguous the term will be interpreted in favor of the other party

The Effectiveness of an EC in a Contract

An Oral Statement
Where there are two different wordings as regard to the EC, one in an oral form the other in a written form, the oral form will take precedent over the written form Curtis v Chemical Cleaning and Dyeing Co. [1951] 1 KB 805

The Effectiveness of an EC in a Contract

Carelessness
Where a lost or an injury has happened as a result of carelessness the party sought to avoid liability cannot rely upon the EC Chin Hui Nam v Comprehensive Motor Cleaning & Corporation

The Effectiveness of an EC in a Contract

Misrepresentation or Fraud
Where one party has misrepresented as to the effect of an EC, this will automatically invalidate the effectiveness of an EC Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805

Discharge of Contract
- Contract will give rise to rights and liabilities - Discharge parties to contract will be free from further obligation under the contract - Rights and liabilities will be terminated - Contract will be terminated

Discharge of Contract
Performance Agreement Breach Frustration

Performance
- Common way of discharging a contract
- Parties have performed their obligations - If only one has performed, he alone is discharged, the other will not be discharged until he performs his obligations under the contract

Performance
The parties to a contract must either perform, or offer to perform, their respective promises, unless the performance is dispensed with or excused under this Act, or of any other law.
Section 38 (1)

Performance
- Complete performance - Substantial performance - Quantum Meruit

Complete Performance
- Entire Contract the performance must be made wholly failure to do so will give the right to the other party to refuse performance - Cutter v Powell

Substantial Performance
- A plaintiff will be able to recover the sum due under the contract less the sum the defendant could claim in damages
- Kunchi Raman v Goh Bros. Sdn. Bhd

Quantum Meruit
A claim can be made on the basis of what has been done
Haji Hasnan v Tan Ah Kian

Time For Performance

Performance must be made within the period that has been fixed
Section 51

Time as the Essence

Failure to comply with the time result to repudiation

Section 56(1)(2)(3)

FRUSTRATION

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
SECTION 57(2) CONTRACT ACT 1950

FRUSTRATION
-

DESTRUCTION OF THE PURPOSE

-

KRELL V HENRY KHOO THAM SOOI V CHAN CHIAU HEE

DESTRUCTION OF SUBJECT MATTER

-

TAYLOR CALDWELL KHAN DAU YAU V KIM NAM REALTY

WHEN THERE IS A NEW LAW

-

STANDERED CHARTERED BANK V KUALA LUMPUR LANDMARK SDN BHD

WHEN THERE IS A WAR

-

H A BERNEY V TRONOH MINES

LAW OF AGENCY
An agency is a tripartite contract that involves principal, agent and third party.
Section 135 Contract Act

CREATION OF AGENCY

- Express Appointment - Implied Appointment - Ratification - Necessity

Section 140 Contract Act

An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.

Implied Appointment
When a person by words or conducts holds out that the other has the authority to act on his behalf - that other person will be considered in law as his agent.
Illustration A owns a shop in Kajang, living himself in Kuala Lumpur, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purpose of the shop, and of paying for them out of As funds with As knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.

Situations Where Contract of Agency are Implied

- The relationship that exists between a husband and wife
- The relationship that exists between partners in a contract of partnership.

Ratification
Where acts are done by one person on behalf of another but without his knowledge or authority, he may elect to ratify or disown the acts. If he ratifies them, the same effects will follow as if they had been performed by his authority
Section 149 Contract Act

Example
1 Jan P appoints A as agent to buy a car of not more than RM 50,000. 2 Jan T makes an offer to sell a car for RM 51,000 to A. 3 Jan A accepts the offer

Conditions for Ratification

Unauthorised act The act is for a principal The principal must be in existence Ratification must not injure a third party The principal must have full knowledge

The Effect of Ratification

Ratification validates the unauthorised act, and it will operate retrospectively, i.e. it dates back to the time when the original contract was made, not from the date of ratification. Bolton and Partners v Lambert (1889) 41 Ch D 295

Necessity
An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances.
Section 142 Contract Act

A consigns provisions to B at Taiping, with directions to send them immediately to C at Parit Buntar. B may sell the provisions at Taiping, if they will not bear the journey to Parit Buntar without spoiling. Great Northern Railway v Swaffield (1874) LR 9 Ex. 132

Conditions that Must be Satisfied

- Attempts have been made to get the principals instruction - There exists a state of emergency - The act is for the benefit of the principal - The agent has acted in a good faith

The Authority of an Agent

An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do the act
Section 141 Contract Act

The Authority of an Agent

- Actual Authority
The power that is stated in the agreement

- Apparent Authority
The power that is implied by a third party

Apparent Authority
When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by those acts or obligations if he has by his words or conduct induced such third persons to believe that those acts and obligations were within the scope of the agents authority Section 190 Contract Act

Panorama Development (Guildford) Ltd. V Furnishing Fabric Ltd. [1971] 2 QB 711

Duties of an Agent
- To obey the principals instruction - To act according to the customs - To exercise care and diligence - To render proper accounts when required - To pay all sums received - To communicate with the principal - Conflict of interest - Secret profit - Confidential information - Delegation of authority

Duties of a Principal
- To pay the commission - Not to prevent the agent from earning his commission - To reimburse the agent

Effects of Contracts Made by Agents

- Contract made under a named principal - Contract made under a disclosed principal - Contract made under an undisclosed principal

Termination of Agency
An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated or declared a bankrupt or an insolvent
Section 154

Termination of Agency

- By the Act of the Parties - By Operation of Law

By the Act of the Parties

- The principal revoking his authority - The agent renouncing the business of agency

The principal cannot revoke the contract when;

Part of the job has been done The agent has an interest in the contract

Section 155 Contract Act

Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
Illustration
A gives authority to B to sell As land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, not can it be terminated by his unsoundness of mind or death.

If the period of the business of the agency has been fixed, the contract could not be terminated unless the time has lapsed.

By Operation of Law
- The business of the agency being completed - The death of the principal or agent - The principal or agent becomes unsound - The principal becomes insolvent or being declared bankrupt

Sale of Goods
Sale of Goods Act 1957 (Revised 1989) The SGA applies to contracts for the sale of all types of goods;
Commercial sales/Private sales Wholesale/Retail New/Second-hand goods

Contract of Sale
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. Section 4(1) SOGA 1957

Sale and Agreement to Sell

- A contract of sale
The property in the goods transfers to the buyers at the time the contract is made

- An agreement to sale
The property in the goods will transfer at future time (e.g. when condition has been fulfilled)

Sale and Agreement to Sell

Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale [contract], but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
Section 4(3) SOGA 1957

Consideration
Under a Contracts Act 1950 consideration can be anything of values (in the eyes of the law)
-

Can a thing be accepted as consideration? Should it be in the form of money? How about thing + money?

Consideration
Section 4(1) provides that a contract of sale is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.

Goods
Goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale
Section 2 SOGA 1957

Classification of Goods
Goods

Existing Goods

Future Goods

Specific

Unascertained

Specific

Unascertained

Conditions and Warranties

-

Condition is a term essential to a contract, a breach of which will allow the other party to treat the contract as repudiated
Section 12(2) SOGA

Warranty is a term collateral to a contract, a breach of which will give rise to a claim for damages but not to repudiate the contract
Section 12(3) SOGA

Breach of Conditions
There are four circumstances where a breach of condition is considered as a breach of warranty, hence a contract could not be repudiated:-

- the buyer waives the condition - the buyer chooses to treat the breach of condition as the breach of warranty - the buyer has accepted the goods or part of it - the contract involves the sale of specific goods

A Scheme of Consumer Protection

Sections 14-17 SOGA provide a scheme of consumer protection. Basically, the sections put some obligations on the seller whereby he has to ensure that the buyer will have a good title of the goods; the buyer will enjoy a quiet possession of the goods; the goods are of merchantable quality and fit for purpose and etc.

Implied Terms

These consumer protection schemes are discussed under the topic of implied terms

Implied Condition as to Title

Unless a different intention is shown there is an implied condition on the part of the seller, that, in the case of a sale, he has the right to sell the goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.
Section 14(a) SOGA

Implied Warranty as to Quiet Possession

Unless a different intention is shown, there is an implied warranty that the buyer shall have and enjoy quiet possession of the goods
Section 14(b) SOGA

Implied Warranty that the Goods are Free from Encumbrance

Unless a different intention is shown, there is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made
Section 14(c) SOGA

Sale by Description
Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.
Section 15 SOGA

Implied Condition as to Quality or Fitness

There is no implied condition unless:

The buyer makes known to the seller the particular purpose he buys the goods The transaction was made upon description while at the same time the seller always deal with the goods
Section 16 SOGA

Sale by Sample
In the case of a contract for sale by sample there is an implied condition:

That the bulk shall correspond with the sample in quality That the buyer shall have reasonable opportunity of comparing the bulk with the sample That the goods shall be free from any defect rendering them unmerchantable which would not be apparent on reasonable examination of the sample Section 17 SOGA

The Transfer of the Property

-

When the property passes to the buyer? How to determine whether the transfer of the property? Why is it so important?

Ownership and the Risk

In principle the person who owns the goods shall bear the risk of the goods.
Therefore if the goods damaged and the ownership was vested in the buyer, that particular buyer shall bear the loss.

Risk in Goods
Risk prima facie passes with property Unless otherwise agreed, the goods remain at the sellers risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyers risk whether delivery has been made or not
Section 26 SOGA

Who shall bear the risk?

Datin Mariam phoned Ah Chong ordering six bottles of sos sedap. Due to the constraint of time Ah Chong has asked his son, Ah Seng to deliver the sauces to Datin Mariams house. On his way however Ah Seng involved in an accident. All the bottles were broken and spoiled.
Who shall bear the loss? The seller or the buyer? Why?

Who shall bear the risk?

Datin Mariam visited Ah Chongs shop and chose six bottles of sos sedap. Due to the constraint of time Datin Marian asked Ah Chong to deliver the six bottles of sos sedap. Ah Seng took the responsibility but on his way however he got involve in an accident. All the bottles were broken and spoiled.
At this time who shall bear the loss? The seller or the buyer? Why?

Unascertained Goods
Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.
Section 18 SOGA

Specific Goods
The property in the goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
Section 19 SOGA

Regard has been made to the terms of contract as to ascertain the intention of the parties.

Sections 20-24 also provide guidelines as to ascertain the intention of the parties.

Goods in a Deliverable State

Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price, or the time of delivery of the goods, or both, is postponed. Section 20 SOGA

Goods to Be Made Deliverable

Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof.
Section 21 SOGA

Something Has to Be Done in order to Ascertain the Price

Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing is done and the buyer has notice thereof.
Section 22 SOGA

Future Goods Sold by Description

Where the is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer.
Such assent may be express or implied, and may be given either before or after the appropriation is made Section 23 SOGA

Sale or Return
When goods are delivered to the buyer on approval or on sale or return, or other similar terms, the property there in passes to the buyer:

When he signifies his approval or acceptance to the seller or does any other act adopting the transaction If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then if a time has been fixed for the return of goods, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time. Section 24 SOGA

Risk in Goods in the Case of Sale or Return

Risk lies on the seller until the property has passed to the buyer unless the damage or loss is caused by the buyers default.

LAW OF PARTNERSHIP
PARTNERSHIP ACT 1961 (REVISED 1974)
THE ACT APPLIES THROUGHOUT MALAYSIA (WEST MALAYSIA AND SABAH & SARAWAK) THE PRINCIPLES OF ENGLISH LAW AND THE RULES OF EQUITY WILL ALSO APPLY SO FAR AS IT IS NOT CONTRADICT TO THE EXPRESS PROVISIONS IN THE ACT

NATURE OF PARTNERSHIP

PARTNERSHIP IS THE RELATION WHICH SUBSISTS BETWEEN PERSONS CARRY ON A BUSINESS IN COMMON WITH A VIEW OF PROFIT.
SECTION 3(1) PARTNERSHIP ACT

SIMILAR BUSINESS ASSOCIATIONS

CO-OPERATIVE SOCIETIES - COMPANIES - SOCIETIES - CLUBS

-

DETERMINATION OF PARTNERSHIPS
-

THROUGH THE READING OF SECTION 3(1) PARTNERSHIP ACT 1961 THROUGH THE READING OF SECTION 4 PARTNERSHIP ACT 1961
THROUGH OTHER EVIDENCES AND CIRCUMSTANCES

REGISTRATION OF PARTNERSHIP
EVERY PARTNERSHIP SHOULD BE REGISTERED:- THE REGISTRATION OF BUSINESSES Act 1956 - CAP. 33 (BUSINESS, PROFESSIONS AND TRADE LICENCING) - CAP. 64 (BUSINESS NAMES) - TRADES LICENCING ORDINANCE, NO. 16 1948

CONTRACTS OF PARTNERSHIP (Articles of Partnership)

-

GENERAL PRINCIPLES OF CONTRACT WILL APPLY IN PARTNERSHIP

THE CONTRACT MAY BE ORAL OR WRITTEN THE CONTRACT MAY CONTAIN DURATION OF PARTNERSHIP THE CONTRACT MAY CONTAIN RIGHTS AND DUTIES OF PARTNERS

RIGHTS AND DUTIES OF PARTNERS

IF THERE WAS NO AGREEMENT WITH REGARDS TO THE RIGHTS AND DUTIES OF PARTNERS THE RULES IN SECTIONS 26, 27, 30, 31, 32, AND 33 SHALL APPLY IN THE PARTNERSHIP.

WRITTEN AGREEMENT
TWO ADVANTAGES OF WRITTEN AGREEMENT:1.

PARTNERS CAN AGREE NOT TO FOLLOW RULES PROVIDED UNDER THE ACT HEPLS THE COURT WHILE INTERPRETING THE INTENTION OF THE PARTNERS

2.

UNSUITABLE RULES
-

THE EXISTENCE OF A PARTNERSHIP AT WILL WHERE ANY OF THE PARTNERS CAN GIVE NOTICE TO DISSOLVE A PARTNERSHIOP, EVEN IF ITS BUSINESS IS THRIVING THE DISSOLUTION OF A PARTNERSHIP UPON DEATH OR THE BANKRUPTCY OF APARTNER UNLESS IT HAD BEEN AGREED BETWEEN THE PARTNERS, THE DEATH OR BANKCRUPTCY OF ANY OF THE PARTNERS WILL BRING THE PARTNERSHIP TO AN END, EVEN WHERE THE PARTNERSHIP IS ACTIVELY CARRYING ON A SUCCESSFUL BUSINESS RIGHTS AND LIABILITIES OVER PARTNERSHIP PROPERTY MAY CREATE PROBLEMS WHERE PARTNERS DO NOT CONTRIBUTE EQUALLY TO THE CAPITAL, AND MAY HAVE NOT MEANT FOR PROFITS TO BE SHARED EQUALLY

RELATION BETWEEN PARTNERS AND THIRD PARTIES

THE BASIS OF THE RELATIONSHIP SHALL BE BASED UPON THE POWER THAT THE PARTNERS HAVE

PRINCIPLE OF AGENCY
EVERY PARTNER IS AN AGENT FOR THE FIRM AND HIS OTHER PARTNERS FOR THE PURPOSE OF THE BUSINESS OF THE PARTNERSHIP; AND THE ACT OF EVERY PARTNER WHO DOES ANY ACT FOR CARRYING ON IN THE USUAL WAY BUSINESS OF THE KIND CARRIED ON BY THE FIRM OF WHICH HE IS A MEMBER BIND THE FIRM AND HIS PARTNERS, UNLESS THE PARTNER SO ACTING HAS IN FACT NO AUTHORITY TO ACT FOR THE FIRM IN THE PARTICULAR MATTER, AND THE PERSON WITH WHOM HE IS DEALING EITHER KNOWS THAT HE HAS NO AUTHORITY OR DOES NOT KNOW OR BELIEVE HIM TO BE A PARTNER SECTION 7 PARTNERSHIP ACT 1961

THEREFORE A PARTNER COULD BIND THE FIRM IF THE FOLLOWING CONDITIONS ARE FULFILLED:-

THE ACT DONE MUST BE OF THE TYPE OF BUSINESS THAT IS CARRIED OUT BY THE FIRM

IT IS CARRIED ON THE USUAL WAY

THE THIRD MUST KNOW OR BELIEVE THE PERSON WITH WHOM HE ENTERS INTO THE TRANSACTION IS A PARTNER

THE THIRD PARTY MUST NOT KNOW THE PERSON WITH WHOM HE HAS ENTERED INTO THE TRANSACTION HAS NO AUTHORITY NOR THE PERMISSION OF THE OTHER PARTNERS TO ACT ON BEHALF OF THE FIRM

CONTRACTUAL LIABILITY
EVERY PARTNER IN THE FIRM IS LIABLE JOINTLY WITH THE OTHER PARTNERS FOR ALL DEBTS AND OBLIGATIONS OF THE FIRM INCURRED WHILE HE IS A PARTNER; AND AFTER HIS DEATH HIS ESTATE IS ALSO SEVERALLY LIABLE IN A DUE COURSE OF ADMINISTRATION FOR SUCH DEBTS AND OBLIGATIONS, SO FAR AS THEY REMAIN UNSATISFIED BUT SUBJECT TO THE PRIOR PAYMENT OF HIS SEPARATE DEBTS
SECTION 11 PARTNERSHIP ACT

TORTIOUS LIABILITY
WHERE BY ANY WRONGFUL ACT OR OMISSION OF ANY APRTNER ACTING IN THE ORDINARY COURSE OF THE BUSINESS OF THE FIRM OR WITH THE AUTHORITY OF HIS CO-PARTNERS, LOSS OR INJURY IS CAUSED TO ANY PERSON NOT BEING A PARTNER IN THE FIRM, OR ANY PENALTY IS INCURRED, THE FIRM IS LIABLE THEREFORE TO THE SAME EXTENT AS THE PARTNER SO ACTING OR OMITTING TO ACT
SECTION 12 PARTNERSHIP ACT

CRIMINAL LIABILITY
CRIMINAL LIABILITY IS A PERSONAL LIABILITY OF THE PARTNER WHO COMMITS THE CRIME IN GARRETT V HOOPER [1973] Crim.L.R. 61, LORD WIDGERY STATED; THE GENERAL PRINCIPLE IN CRIMINAL LAW IS THAT A PRINCIPAL CANNOT BE MADE LIABLE FOR AN OFFENCE THAT REQUIRES MENS REA SIMPLY BECAUSE HIS SERVANT OR AGENT HAS THE NECESSARY MENS REA CHUN SHIN KIAN V DPP [1980] 2 MLJ 246

MISAPPLICATION OF MONEY OR PROPERTY OF A THIRD PARTY

IN THE FOLLOWING CASES, NAMELY; A) WHERE ONE PARTNER, ACTING WITHIN THE SCOPE OF HIS APPARENT AUTHORITY, RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON AND MISAPPLIES IT; AND B) WHERE A FIRM IN THE COURSE OF ITS BUSINESS RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON, AND THE MONEY OR PROPERTY SO RECEIVED IS MISAPPLIED BY ONE OR MORE OF THE PARTNERS WHILE IT IS IN THE CUSTODY OF THE FIRM

THE FIRM IS LIABLE TO MAKE GOOD THE LOSS

SECTION 13 PARTNERSHIP ACT

LIABILITY OF INCOMING AND RETIRING PARTNERS

1)

A PERSON WHO IS ADMITTED AS A PARTNER INTO AN EXISTING FIRM DOES NOT THEREBY BECOME LIABLE TO THE CREDITORS OF THE FIRM FOR ANYTHING DONE BEFORE HE BECAME A PARTNER A PARTNER WHO RETIRES FROM A FIRM DOES NOT THEREBY CEASE TO BE LIABLE FOR PARTNERSHIP DEBTS OR OBLIGATIONS INCURRED BEFORE HIS RETIREMENT A RETIRING PARTNER MAY BE DISCHARGED FROM ANY EXISTING LIABILITIES BY AN AGREEMENT TO THAT EFFECT BETWEEN HIMSELF AND THE MEMBERS OF THE FIRM AS NEWLY CONSTITUTED AND THE CREDITORS, AND THIS AGREEMENT MAY BE EITHER EXPRESS OR INFERRED AS A FACT FROM THE COURSE OF DEALING BETWEEN THE CREDITORS AND THE FIRM AS NEWLY CONSTITUTED SECTION 19 PARTNERSHIP ACT

2)

3)

RELATION BETWEEN PARTNERS

THE RELATIONSHIP BETWEEN PARTNERS SHALL BE BASED UPON EXPRESS AGREEMENT

IF THERE IS NO EXPRESS AGREEMENT THE RELATIONSHIP SHALL BE BASED UPON RULES THAT ARE PROVIDED UNDER SECTION 26 OF THE

PARTNERSHIP ACT

PARTNERSHIP PROPERTY
THERE ARE TWO WAYS OF DETERMINING A PARTNERSHIP PROPERTY:1) EXPRESS AGREEMENT
2) INTENTIONS OF THE PARTNERS
PONNUKON V JEBARATNAM [1980] 1 MLJ 283

OTHER METHODS

1)

THE PROPERTY WAS ORIGINALLY BROUGHT INTO THE PARTNERSHIP STOCK THE PROPERTY WAS OBTAINED FOR THE FIRM THE PROPERTY WAS OBTAINED FOR THE PURPOSE OF PARTNERSHIP BUSINESSES

2)

3)

DISSOLUTION OF PARTNERSHIP
1)

DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTION

DISSOLUTION BY NOTICE DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON HIS SHARE

2)

3)

4)

DISSOLUTION BY SUPERVENING ILLEGALITY

DISSOLUTION BY ORDER OF THE COURT

5)

DISSOLUTION OF PARTNERSHIP
1)

DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTION

DISSOLUTION BY NOTICE DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON HIS SHARE

2)

3)

4)

DISSOLUTION BY SUPERVENING ILLEGALITY

DISSOLUTION BY ORDER OF THE COURT

5)

Hire Purchase
Hire purchase agreement includes a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments (whether the agreement describes the instalments as rent or hire or otherwise), but does not include any agreement:

a)

b)

Whereby the property in the goods comprised therein passes at the time of the agreement or upon or at any time before delivery of the goods; or Under which the person by whom the goods are being hired or purchased is a person who is engaged in the trade or business of selling goods of the same nature or description as the goods comprised in the agreement

Nature of Hire Purchase

The business is limited to transactions that involve the owner and the hirer The ownership will not transfer at the time the contract being made
[Cf. Credit Sale Agreement]

Under hire purchase the hirer will have an option to buy the goods upon the completion of the necessary payments

Hire Purchase Act 1967

[Scope of Application]
Throughout Goods

Malaysia

as listed in the First Schedule

Kesang Leasing Sdn Bhd v Mohd Yusof bin Ismail & Anor [1990]

First Schedule
1.
2.

All consumer goods; and Motor vehicles, namely

Invalid carriages Motor cycles Motor cars including taxi cabs and hire cars Goods vehicles (where the maximum permissible laden weight does not exceed 2540 kilograms) Buses, including stage buses

Prior to the 1992 Amendment

Radio

sets, television sets, gramophone sets, tape recorders and any combination thereof Refrigerators and deep-freeze food preservers and any combination thereof Sewing machines other than those used for industrial purposes Washing machines Vacuum cleaners

Cont.
Air-conditioning

units other than those used for industrial purposes Electric or gas cookers and ovens Video tapes/cassette recorders Typewriters Organ and pianos Photostat machines/copiers Hi/fi systems

The Formalities

Before Agreement [Pre-Contract]

Section 4(1) (a) & (b)

During Agreement [Contract]

Section 4A, 4B, 4C & 4D

After Agreement [After Contract]

Section 5(1)

Before Agreement
Owner

Provide a written document, completed and signed Part I of Second Schedule

Dealer

Provide a written document, completed and signed Part I of Second Schedule Provide a written document (i.e. consent), completed and signed by both Part II of Second Schedule

Part I of the Second Schedule

A summary of the hirer financial obligations; and must set out the following;

Short description of the goods New/second hand Address the goods will be kept Cash price Deposit Freight charges, if any Insurance and registration (motor vehicle) Terms charges (rate per annum, total amount of the terms charges) Different between cash price and total amount payable The instalment payments

During Agreement

Section 4A In writing (@ void) Section 4B (2) Sign the completed form (@ void)

Ming Lian Corporation Sdn Bhd v Haji Nordin

Section 4C Content of the contract Section 4D Separate Agreement

After the Agreement

Section 5(1) A copy of the agreement should be sent to the hirer within fourteen (14) days failure will result to unenforceable

Repossession
Section 16(1) two successive defaults of payments or a default in respect of the last payment Serves a notice as set out in the Fourth Schedule the 21 days has expired

Public Prosecutor v Mohamed Nor

Without notice

Pang Brothers Motors Sdn Bhd v Lee Aik Seng

Notice less than 21 days

Siew Nguong Hin v Mayban Finance Bhd

Repossession before the 21 days lapses

After Repossession
16(3) within 21 days, the owner will need to serve a notice [as set out in the Fifth Schedule] to the hirer Section 16(4) serves a document acknowledging the receipt of the goods
Section