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Malayan Law Journal Articles/2007/Volume 3/DOCTRINE OF UNCONSCIONABILITY: ITS DEVELOPMENT AND POSSIBILITIES [2007] 3 MLJ xliv Malayan Law Journal Articles 2007

DOCTRINE OF UNCONSCIONABILITY: ITS DEVELOPMENT AND POSSIBILITIES

Zahira bte Mohd Ishan LLB (Hons) (IIUM); LLM (London) Lecturer, Faculty of Economics and Management, Universiti Putra Malaysia Introduction The term `unconscionability' is protean and used in different ways by different judges and commentators to address a fundamentally similar problem1 that is unfairness2. The issue of unfairness in the law of contract is important due to the nature of modern contracts, which are no longer simple or straightforward but of multifarious types and purposes. Although the application of the doctrine of good faith appears to be more popular in the common law courts than the doctrine of unconscionability, it should be noted that both doctrines are still vague and have different reasons for their existence and application in the common law system. The positive development of unconscionability in common law jurisdictions, such as in the United States and Australia, currently resists uniformity in formulating the doctrine due mainly to the varying legislative approaches in both countries. In Malaysia, the development of unconscionability as an independent doctrine is still debatable3. The reasons apparently related to the uncertainty over the definition or scope of the doctrine4as well as the reluctance of the English courts to develop it into a wider doctrine of general application. 3 MLJ xliv at xlv In relation to this matter, the development of unconscionability from the historical point of view and the influence it received from the contract theories is considered important. The aim of this paper is to propose that there can be an independent doctrine of unconscionability and that the doctrine of good faith is insufficient to deal with the problem of unfairness. It is also agreed that good faith can be subsumed under the general doctrine of unconscionability5. The Early Doctrine of Unconscionability According to JR Peden, the early stage of unconscionability dates from the second half of the seventeenth century. He also states that the following philosophies provide the basis for the Chancery court's discretionary powers in dealing with all kinds of unfair transactions: the Aristotelian concept of justice; the Roman law concept of `lesio enormis'; and the medieval church's concept of a just price and condemnation of usury6. The doctrine was first developed by the Chancery court to provide relief to a party in usurious transactions7. According to Lord Ellesmere LC in the Earl of Oxford's Case:

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The cause why there is a Chancery is, for that men's actions are so diverse and infinite, that it is impossible to make any general law which may aptly meet with every particular act, and not fail in some circumstances. The office of the Chancellor is to correct men's consciences for frauds, breach of trusts, wrongs and oppressions, of what nature soever they be, and to soften and mollify the extremity of the law, which is called Summum Jus8.

This statement served to justify the cause for equity to develop doctrines to provide relief to individuals. Correcting men's consciences is the reason for the doctrine's existence. Two commentators appear to lend their views on this statement. One view refers only to the word `oppressions' as unconscionable transactions9. This view, however, could be viewed as very narrow and selective 3 MLJ xliv at xlvi because the notion of unconscionability is subjective and `oppressions' is one of its categories. Another view relates to the aim of equitable doctrines. According to Mason, those developed equitable doctrines, which were known as `the rules of equity and good conscience' aimed to prevent or to remedy unconscionable conduct10. In other words, the focus of the early equitable doctrines was upon remedying conducts or behaviours that were unconscionable. Parkinson appears to assert the same statement and adds that prevention of `fraud' was the historic basis of equity's concern with unconscionability11. In Earl of Chesterfield v. Janssen12, Lord Hardwicke laid down five species of fraud; the first one being a plain case of fraud, which may be actual, while the rest of the species were presumed frauds. His Lordship analysis received approval and was followed by Lord Selborne in Earl of Aylesford v Morris13. The equitable fraud does not mean deceit or circumvention but unconscientious use of the power from the circumstances and conditions of the parties contracting14. Apparently, the various forms of equitable fraud could be subsumed under unconscionable conducts and bargains.15 Some commentators appear to accept that the early doctrine of unconscionability was made up of two parts; first, equity in favour of heir and expectants, and second, equity granted general relief from unconscionable bargains16. For both parts, the early doctrine of unconscionability was identified as unconscionable bargains. Browne-Wilkinson J in Multiservice Book-binding Ltd v Marden summarized the type of classical cases that fell under unconscionable bargains category:

the classic example of unconscionable bargain is where advantage has been taken of a young, inexperienced or ignorant person to introduce a term which no sensible well-advised person or party would have accepted 17.

The modern version of unconscionability is often seen from the perspectives of unconscionable conduct or behaviour, and unconscionable bargains or 3 MLJ xliv at xlvii unconscientious dealings18. The Privy Council in Boustany v. Pigott appears to lend that view by giving the following observation:

[i]t is not sufficient to attract the jurisdiction of equity to prove that a bargain is hard, unreasonable or foolish'Unconscionable' relates not merely to the terms of the bargain but to the behaviour of the stronger party objectively unreasonable terms provide no basis for equitable interference in the absence of unconscientious or extortionate abuse of power19.

The court in Boustany observes that both `bargain' and `conduct' are interrelated subject matters of unconscionability. The conduct of the parties, which is unconscientious or extortionate abuse of power, is an important factor to substantiate the objective unreasonable terms as unconscionable. As noted by Waters, controlling unconscionable behaviour has always been the purpose of equity in order to compel people to honour their obligations20. However, the demarcation line between unconscientious or extortionate abuse of power and choice for entering a contract is quite thin. Finn observes that:

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even where a person suffers adversely from the conduct of another, even where that other has acted unfairly and unjustly, there may still be no basis for complaint - not because of an absence of unfair dealing, but because the injured party nonetheless is, or remains, responsible for the ill that has befallen him or her21.

The above statement, of course, reflects the general standing of the post-nineteenth century contract law adherence to freedom of contract and inference of the presence of consent in the agreement, which basically denies recognition of unfair agreement. This particular matter will be discussed again later. At present, the issue at hand is tracing the development of unconscionability prior to the freedom of contract era. Equitable relief in favour of heirs and expectants was granted initially on the basis of unconscientious use of power in making a hard bargain or misrepresentation and not against `voluntary foolish bargains22`. During the time of Lord Jeffreys, cases on relief to heirs and expectants during his appointment as Lord Chancellor from 1685 to 1688 were granted upon proof of extravagant nature of the transaction only. `Voluntary foolish bargains' or transaction entered under pressure was immaterial. However, minor modification 3 MLJ xliv at xlviii to Lord Jeffreys' liberal form of relief was made post 1688 by relying on rebuttable presumption of unconscionable bargains23. Parties at special disadvantage in contractual dealings, which was the second part of the early doctrine, also received general equitable relief from unconscionable bargains. The party against whom the complaint was made must have sufficient awareness of the other party's special disadvantage24. Special disadvantage includes poor and ignorant; insanity or drunkenness; old age, sickness or disability; lack of assistance or explanation where assistance and explanation is necessary25. It is said that the doctrine of unconscionability granted relief to a much greater extent than common law's non est factum, duress, misrepresentation and mistake as well as the equitable doctrine of undue influence26. At this instance, the early doctrine of unconscionability appears to provide greater chance of preventing or remedying unfairness in contract. It should be noted that the development of the doctrine is also influenced by the development of the contractual theory. As JR Peden stated:

The history of unconscionable contracts provides a useful focus for tracing the general development of contract theory, and in particular the ongoing conflict between freedom of contract and the desire for fairness27.

Thus, identifying the relationship between unconscionability and the related theories, doctrines and concepts in law are pertinent in order to uncover the nature and other possible scope of the doctrine of unconscionability. Some Theories of Contract (i) Freedom of Contract The evolution of freedom of contract from basic human rights to classical economic theory to classical theory of contract was very much related to the philosophy that freedom was vital for the continuance of trade and industry. During the nineteenth century, the domination of the philosophy of laissez-faire was resulted from the work of a number of socio-political commentators; most notable was Sir Henry Maine's Ancient Law28. Formulation of freedom of contract as a judicial doctrine appears to uphold rigid contract principles. The parties are seen as the best judges of their own interests that interference by 3 MLJ xliv at xlix courts is not necessary. This is the point where legal paternalism was taken over by private autonomy. The terms of the agreement should also be so certain that contractual duty would not arise outside the terms

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agreed upon. In freedom of contract, the only function of law is to enforce contract that was entered into freely and voluntarily29.

Undeniably, it led to a detrimental effect over the development or growth of the doctrine of unconscionability. `Most of the English cases in which equity set aside unconscionable bargains, arose in the eighteenth and nineteenth centuries, ending with Fry v Lane30.' The doctrine of unconscionability does not require proof of consent, which is material under the consensual theory of freedom of contract. Even though unconscionability `manifested the external indicia of free consent, [it] was not so easy to reconcile with freedom or sanctity of contract31.'

However, the rise of freedom of contract does not remove the doctrine of unconscionability altogether. It should be noted that not all judges were proponents of a completely free market economy32. It have been argued by a number of commentators that first, the need for stability, certainty and predictability as emphasized by freedom of contract are not absolute33; second, an inflexible approach by the courts to unconscionable situations is faced only in England not elsewhere34; and third, freedom of contract is a retreat from interest in substantive justice or fairness35. In other words, the contract law globally faces a transition from a strict adherence to a more flexible application of the theory of freedom of contract. The flexible 3 MLJ xliv at l application of the theory was due to the growing acceptance of the concept of contractual justice in common law. This situation suggests that freedom of contract co-exist with contractual justice but operate in their own way in a case by case basis. (ii) Will Theory In line with the theory of freedom of contract is a theory that holds that contractual obligations are created from the will or intention of the parties. The emphasis upon individual choice or mere wills of the parties that created obligations are traceable to the works by Natural Lawyers especially Grotius and Pufendorf36. Their works had influenced many classical theorists such as Savigny, Windschied, Pothier, Planiol, Pollock, Salmond and Langdell37. According to Atiyah, Pothier's translated version of Trait des Obligations had influenced English legal theorists to develop this classical theory in the nineteenth century38. Under the classical theory, a contract is enforceable if both parties mutually agreed or consented to the same thing voluntarily. As Kindersley VC stated, `When both parties will the same thing, and each communicates his will to the other, with a mutual agreement to carry it into effect, then an engagement or contract between the two is constituted39.' Impliedly it means that the will theory is consistent with the consensual theory of freedom of contract. It is also explicit that the classical theory placed bilateral executory agreement at the forefront in contract. Atiyah remarks that the will theory growing emphasis on `the executory contract contributed to the development of new rules regarding contract of continuous nature such as contracts of employment, leases, licences, partnership and so forth40` should not ignore the relevancy of the doctrine of unconscionability in preventing or protecting against unfair or unjust agreements in contract of continuous nature. The list could also be added to include franchising. In relation to the above statement, the revival of the doctrine of unconscionability albeit in a subtle manner is traceable when the pure will theorists failed in providing `very satisfactory way to deal with the variety of influences that formed part of the setting in which a contract was made and influenced its content41.' Indeed, the vague explanation of the will theory led 3 MLJ xliv at li later theorists to find explanation of the theory42in the form of bargain theory. The bargain theory was supposed to guarantee that the content of the contract is fair. Nonetheless, the bargain theory failed to explain some important reasoning behind two important facts - the unequal bargaining power and standard form contracts43. It seems that the subtle revival of unconscionability or `renewed inclination on the part of the courts' can be witnessed from the judgment of Lord Denning in Lloyds Bank Ltd. v. Bundy44. Lloyd's case, which is frequently cited and criticised by commentators,45 revives unconscionability based on inequality of bargaining power.

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(iii) Reasonable Expectation The expectation notion is traceable to the works of Hume, Adam Smith and Bentham. They hold that `the binding nature of promises was coming to depend on the idea that the expectations thereby created were entitled to protection,' which inclined to expectations allied to present rights, especially rights of property46. It follows that the nineteenth century's transition from partly executed contract to wholly executory contract had changed the legal perception over the notion. Insurgence of the will theory during the mid-nineteenth century had encouraged lawyers to insist upon greater judicial protection over any loss of bargain contrary to the promisee's expectation47. Later developments on the notion mostly attempt to uncover the reasoning for the bindingness of executory contracts in relation to expectations. Legal theorists such as Pollock, Cohen, Fuller and Purdue emerged to explain the basis for enforcing promises and claiming contract damages for loss. However, one of Pollock's argument in this matter is criticised by Atiyah in his work, `The Rise and Fall of the Freedom of Contract', published in 197948, while Cohen, and Fuller and Purdue, best known as the injurious reliance theorists, fail to explain why `promises that induced reliance to the detriment 3 MLJ xliv at lii of the promisee ought to be made the basis of liability49` and `why the measure of damages in most cases was expectation interest50`. Of particular interest are the reasonable expectations of the parties. Adam Smith had earlier declared `that the foundation of contract is the reasonable expectation which the person who promises raises in the person to whom he binds himself51.' This statement leads to several questions: what is reasonable expectation, who can make such expectation, and why such expectation is valuable or needed. The expectation apparently needs to be `reasonable'. However, the meaning of `reasonable' cannot exactly be definable, although its concept is recognizable52. Rogers mentioned that it is capable of differing explanations53, which is true because its explanation has to depend upon the context it is used. In National Steel & Shipbuilding Company v The United States, the court states:

The great function in the law of the word reasonable is to enable a standard of decision to be accommodated to all circumstances54.

Waddams mentioned in passing that reasonable expectations `have an understandable content55,' which implies that the notion is quite straightforward. Waddams' view apparently is valid because an expectation can only be reasonable when it is made by a reasonable man. A reasonable man, according to Lord Bowen is `the man on the Clapham omnibus56,' which, according to Rogers, indicates any man who possesses the skill or expertise of an ordinary man57. In Mckinnon v Secretary, Department of Treasury, the Federal Court of Australia contemplated that ``the man on the Clapham omnibus'' meant a person whose state of mind was reasonable even though other persons might come to a different view which was also reasonable58. According to Lord Steyn, reasonable expectations are often implicit in the court's decision using the concept of reasonable man, or honest men59. 3 MLJ xliv at liii However, using honest man as synonymous with reasonable man seems to be questionable. Waddams, for example, does not depict reasonable man as the honest man. He considers that motive is immaterial for reasonable expectation because `an unreasonable expectation is not protected however much the promisee honestly and in good faith believes that he is entitled to it60.' It is also often found that honest is merely an ingredient for reasonableness. For example, in the National Steel & Shipbuilding Company case:

`Reasonable' means that which is proper, fair, equitable and honest in the judgment of a reasonable man, and is

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suitable and appropriate to the end in view in the light of the facts and circumstances61.

In Takacs v The Guardian Life Insurance Company of America62 reasonable is not synonymous with honest. In Malaysia, Abdul Malik Ishak J in Prism Leisure Sdn Bhd v Lumut Marine Resort Bhd. appeared to have expressed a view similar to Lord Steyn and added `subjective expectations and the unexpressed mental reservations of the parties' practically has no place in law63. However, in Preston Corp Sdn Bhd v Edward Leong, it seems that reasonable person does not necessarily means an honest person as the judge use the two terms conjunctively to determine the test of reasonableness:

the test of reasonableness is what a reasonable, honest and right-minded person considers the usage concerned to be fair and proper64.

Apparently, the judge put three kinds of person; those are the reasonable or ordinary person, an honest person and right-minded person. It seems therefore that the court here suggests that reasonableness requires that an ordinary man or person must be honest and right-minded to consider the usage concerned to be fair and proper. In short, an honest man is usually a reasonable man but in assessing whether reasonable expectation is made, honesty and good faith may be left out. It is found that in the law of contract the term reasonable expectation has sometimes been used interchangeably with legitimate expectation65. Whether the term reasonable expectation in the law of contract has to be differentiated from legitimate expectation? Reasonable expectation ought to mean expectation 3 MLJ xliv at liv that arise from the fact that the promisee is willing to enter into the contract, so it is reasonable for him to expect the result of the contract. On the other hand, legitimate expectation may not mean reasonable. In Government of the State of Sabah v. Suwiri66, it is found that the Court of Appeal's discussion of `legitimate expectation' implies that the term is used in contract with government or its agencies. There is no implication of the term to reasonable expectation. Apparently, the court correctly applies the term because `legitimate' somehow implies there are some expectations which are illegitimate. It has been said in R v Devon County Council, Ex Parte Baker and Another, R v Durham County Council, Ex Parte Curtis and Another that the phrase `legitimate expectation' has a various distinct sense of usage, such as denoting a substantive right; retaining interest; expectation of fairness either in the form of a fair procedure or a promised procedure67. It appears to be very narrowly used, whereas the term reasonable expectation is more realistic that the commonly or universally adopted test is reasonable man. Therefore, reasonable expectation is when a reasonable man expected such a result. The reasonable man is always the core test in determining reasonable expectations. `Reasonable' is also related to the position of the promisee, nature of the contract and the practices within the industry. So whether that reasonable person, given in the framework of the industry, would he reasonably expect such a result. There is a view that reasonable expectation depends upon one's criterion of reasonableness such as community standards of fair dealing and normal trade practices. The relationships between good faith, unconscionability and reasonable expectations have also been discussed by some writers. Waddams, for example, views that good faith is not the basis for reasonable expectations because the expression `reasonable expectations' has nothing to do with the promisee's honesty and good faith. He disagrees with the expansive views of good faith given by Sir Frederick Pollock and Lord St Leonards who apparently considered that `good faith underlay the whole of contract law, and that it was the enforcement of contracts that primarily manifested respect for good faith'. The element of good faith will influence whether it is legitimate for a party to expect because good faith has something to do equity: `He who comes to equity must come with clean hands.' If a party do not exercise a good faith, he could not expect somebody to come to his aid. Therefore good faith has to do more with legitimate

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expectation rather than reasonable expectation. Alternatively, if a person does not show good faith, he is not behaving reasonably, but that does not include him under the test of 3 MLJ xliv at lv reasonable man. While good faith is a mere tool for such purpose, it is undeniable that unconscionability is the reason for equity to protect the reasonable expectations of the parties68. Contractual Justice There seems to be no necessity to address the age-old problem of determining the meaning of justice69 or discuss the broad philosophical review of justice in law70. The tendency of some writers is to accept theoretically that within the law of contract, certainty and predictability are opposing values to justice or fairness71. In practice, these opposing values have become parts of the law of contract where the doctrine freedom of contract which promotes certainty and predictability co-exists with contractual justice. This is explicable from the writings on this issue72. Justice or fairness is said as examinable using the procedural and substantive frameworks73. The doctrine of unconscionability is being associated with the substantive fairness of the terms74, which concerns with granting relief against unfair contractual terms. This doctrine is also referable to the procedural justice75, which only gives way to the requirements of free consent. Procedural justice at common law, according to Shaik, stresses on discovering consent and determining its voluntariness. In this matter, the common law and equity jointly develop rules to help ascertain the presence and voluntariness of consent such as misrepresentation, duress, undue influence and mistake76. In Malaysia, the rules are provided in the Contracts Act 1950 3 MLJ xliv at lvi under s 15 (coercion), s 16 (undue influence), s 17 (fraud) and section 18 (misrepresentation)77. However, the joint efforts of equity in procedural justice are merely supportive in nature in order to `give effect to values other than efficiency78.' Moreover, as Shaik states, `the free consent approach is insufficient to safeguard against very obviously unfair and unequal dealings between two contracting parties by more subtle pressure of non-physical duress79.' As contract law globally is now moving towards achieving fairness in contract with the common claim that unconscionability is the basis for equitable remedies, not only substantive but also procedural fairness ought to rely upon it to ensure fairness in contract is achieved both at the pre and post-contractual stages. Good Faith and Fair Dealing A discussion on contractual justice is incomplete without a discussion on the concept of good faith and fair dealings. The legal obligation of good faith in commercial transactions has existed as early as Roman times80. The duty of good faith, or bona fides principle, and fair dealings are of general application in the law of contract under the civil jurisdictions. It exists in the civil codes of many countries, most notably in Germany, and applies to both contract formation and performance. It is said that the judiciary in some codified systems of law, including the Germans law, use it as a means to support the developments of doctrines not expressly included in the code81. The legal obligation of good faith is found as working in accordance with acceptable standards of moral behaviour. According to Teubner, historically, the civil law bona fides principles had been used to remedy any morally unacceptable results of the application of strict formal contract rules82. Under the English law, the principle of good faith was introduced by Lord Mansfield in Carter v Boehm83 in latter half of the eighteenth century. Although this 3 MLJ xliv at lvii case ruled that the duties of utmost good faith, or uberrimae fides principle, impose mutual duties of good faith on the parties in an insurance contract, Lord Mansfield contends that this principle extended to all contracts. This view was rejected84and the principle of good faith was considered by Atiyah as a `stillborn principle85.'

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The development of the principle was held back due to the traditional law of contract greater recognition to economic liberalism that gave rise to the philosophy of caveat emptor in the second half of the nineteenth century86. In Bell v. Lever Bros87, it was stated that the philosophy of caveat emptor is a principle of universal validity. Under this rule, a person who is about to enter into a contract is under no duty to disclose material facts known to him alone. However, the uncertain scope of disclosure in any particular case causes the rule of caveat emptor to appear harsh thereby allowing the principle of utmost good faith to step in. The uberrimae fides principle managed to survive in insurance contract88. Throughout its development, there have been several attempts by the jurists and judges to find the suitable formulation to the principle of good faith. The formulations suggested are the concepts of cooperation and loyalty, reasonableness, proper purpose, legitimate interest, and excluder analysis89. The US is the common law country that has prominently included good faith in its statutory regime. Apparently, the US has adopted an amalgamation of common law and civil law traditions. The influence of civil law traditions in the Uniform Commercial Code [Section 1-203] and the Restatement of Contracts, Second [Section 205] is in relation to the principle of good faith in contract performance. The statutes explicitly provide that parties are obliged to observe good faith in the performance and enforcement of a contract90. The term is defined as `honesty in fact in the conduct and transaction concerned.' The need for good faith in commercial transactions is also recognised in other common law countries such as in Australia, Canada and New Zealand. Although they do not have a similar concept of good faith as in the US, some commentators have suggested that their contract law is headed towards 3 MLJ xliv at lviii recognizing good faith91. In Malaysia, good faith and fair dealing played a limited role just like England but there is a claim that Malaysian judges are more ready to apply good faith well beyond the requirements of the Contracts Act, 195092. It is found that commentators on good faith seldom provide the link between unconscionability and good faith. There are views that hold the impossible reconciliation between the two concepts but they largely concern over the uses of the two93. According to Waddams, the concepts of good faith, reasonable expectations and unconscionability are `sometimes used together to signify a flexible approach to contract law, avoiding rigid rules, and emphasising justice in the individual case94.' According to E Peden, the use of unconscionability is in a variety of ways, while the use of good faith is in the implementation of the parties' agreements to ensure adherence to their original agreement and respecting the interests of the other party95. Indeed, unconscionability is being used in various ways including compelling the parties to honour their obligation by controlling the unconscionable behaviour96. It seems that unconscionability can also be used as a compulsion, whereas good faith is limited to implementation although both have a similar aim. Although Waddams appears to echo the same observation in terms of the different ways of each concept, he notes that good faith do not have an understandable concept however attractive it seems to explain certain result, such as avoiding signed documents or preventing a party from taking advantage of a clerical error in a document, as an instance of good faith doctrine's application. The former example does not require `proof of lacking in good faith' while the latter example that gives rise to `the right to rectification does not depend on the bad faith of the promisee. A promisee wholly ignorant of an error in an agreement, and therefore, morally speaking, wholly innocent, still cannot enforce the contract97.' It also appears that those who argue against acknowledging or reconciling the relationship between the two doctrines have been analysing unconscionability from a limited viewpoint such as unconscionable bargain in cases of special disability98 and recognising unconscionability as only a general defence99. In relation to the latter, the question would be whether 3 MLJ xliv at lix unconscionability can also be a means and not just an ends. It seems that Clark agree that unconscionability should also be a means by saying that the contract should be set aside when it is unconscionable at the time it was made.100He argues that the same position can be found in s 2-302 of the UCC and A Schroeder Music Publishing Co Ltd v Macaulay101. In addition to that, Leff's category of procedural and substantive unconscionability102, although the former category being claimed as wasting by Waddams103, may be taken as a signal that prevention of unfairness in transaction is also achievable

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through unconscionability and that its enforcement is not impossible in law. The popular use of good faith in common law courts is the implication of terms such as cooperation of parties with each other, and obligation that renders operation of contract in a way that is fair and reasonable. According to Harper, good faith provides confidence in the formation of contracts between the parties104. It is found, however, that confidence in good faith alone is not enough in the implication of contractual term. According to Waddams, it requires the support of reasonable expectation and of fairness105. It implies here that, there is a relationship between unconscionability and good faith. Certain points discussed under the topic reasonable expectation above are also applicable here. Thus, as Carter and Harland states, `the possibility of good faith as a factor in unconscionability is not absurd106.' Malaysian Development Unconscionability is also a protean concept in Malaysia. It has been shown in many cases that unconscionability was used to support the finding of undue influence, equitable estoppel107, constructive trust108, equitable fraud or sharp practice in relation to land109 and insurance110, and others111. Of particular interest is the relationship between the doctrine of unconscionability and the doctrine of undue influence, which will be discussed below. 3 MLJ xliv at lx It is found that term `unconscionable' was not defined by the Malaysian courts. Rather, the circumstances of the case seem to become the self-explaining factor for the finding of the unconscionable conduct or bargain. For example, in Lim Yoke Kong v. Sivapiran a/l Sabapathy112, Mohamed Azmi SCJ accepts that the special relationship between the insured and the insurer, and the delaying tactics employed by the insurer were the cause for the finding of fraud based on unconscionable conduct of an insurer according to s 29(b) of the Limitation Act 1953. Similarly, the presumption of unconscientious use of power arising out of the circumstances and conditions was raised by the Federal Court in Loi Hieng Chiong v Kon Tek Shin113 based on the relative position of the parties. In Zubaidah v Zulkathar, the term `unconscionable' was used in passing in order to justify the extent of the plaintiff entitlement inclusive of judgment of capital sum of $4,070 and reasonable interest of 10 per centum per annum. Adams J said that:

it would clearly be unconscionable to permit the plaintiff to obtain possession of the defendant's share merely because the condition of the contract as to the time of repayment had been brokenthe plaintiff would be obtaining very much more than the sum lent114.

Azhar Ma'ah J in Kemayan Engineering (Sea) Pte Ltd v Sunyap Development Sdn Bhd [2002] 1 CLJ 22, at p 28 refers to Multiservice Bookbinding Ltd & Ors v Marden [1978] 2 All ER which decides that any terms of transaction which is `morally reprehensible so much so it affects the person's conscience' will lead to unfair and unconscionable conduct. 3 MLJ xliv at lxi In Malaysia, the application of the doctrine of unconscionability was traceable to Chia Keng Beng & Anor v MTA Taynappa Chitty115. The case concerned an action to set aside a mortgage dated 23 March 1899 on the ground that it was unconscionable bargain made with expectant heirs. At the lower court, Mr. Justice Hyndman Jones held that the bargain was unconscionable although the defendants were unaware of the fact that the plaintiffs were expectants. However, on appeal, this finding was set aside by both Cox CJ and Law J. Apparently, both judges agreed that the position of the parties at the time of the transaction was an important fact in determining the conscionability of the bargain. The court held that the high interest charged in the series of dealings between the parties in this case was not sufficient to warrant the doctrine of unconscionable bargain to enter into the transaction116. It appears that the judges in Chia Keng Beng's case considered the equitable doctrine of unconscionable bargain according to the development of the doctrine in England. No reference was made by the judges in

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Chia Keng Beng's case to the Contract Enactment 1899 (`the 1899 Enactment'), suggesting that the 1899 Enactment was not yet operative117. It seems that this case had marked the Malaysian legal history in terms of the independency of the doctrine of unconscionability from the doctrine of undue influence, although the impact or presence of this case is impecunious. It should be noted that the 1899 Enactment was the forerunner of the Contracts Ordinance 1950 and modelled on the Indian Contracts Act 1872 (`the 1872 Act'). According to Lord Brightman in Ooi Boon Leong v Citibank NA, the Contracts Act 1950 is modelled on the Indian Contracts Act 1872 and many of the sections are in identical language118. This includes s 16(3)(a) of the 1950 Act, which language is identical with s 16(3) of the 1872 Act. Section 16(3)(a) reads:

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 adduced, 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.

3 MLJ xliv at lxii Section 16(3) of the 1872 Act placed unconscionable bargain as a mere part of proving undue influence. The Privy Council decision in an Indian case of Poosathurai v Kannappa Chettiar119, observed that an agreement is considered `unconscionable' when the lender is in a position to dominate the will of the borrower, and the bargain was `unconscionable' within the meaning of s 16(3). Similarly, in Ragunath Prasad v Sarju Prasad120, the Privy Council opined that the question of whether the lender was in a position to dominate the will of the borrower must first be resolved before determining whether the bargain was unconscionable. In National Westminster Bank plc v Morgan121, Lord Scarman referred to Poosathurai case and said that the Board recognized that an undervalued sale could be a transaction which a court could set aside as unconscionable if it was shown or could be presumed to have been procured by the exercise of undue influence. The decision in Poosathurai was further reaffirmed by Visu Sinnadurai J in Polygram Records Sdn Bhd v The Search & Anor122. Whether it is possible for unconscionable bargain or transaction to exist separately from the doctrine of undue influence? Apparently, there are several Malaysian cases that provide this answer in positive. To start with, the early case of Chait Singh v Budin b Abdullah123, showed how Mr Justice Innes was willing to justify the existence of unconscionable bargain on the basis of the position of the parties, without the need to prove the requirement under section 16(1). Like their English counterpart, illiteracy of the weaker party in this case was the main reason for the courts to consider setting aside their agreements.124 He held that a presumption of unconscionability occurred in a money lending transaction with a good collateral security which the defendant, an illiterate farmer, had to provide to the plaintiff because the interest charged was at a rate of 36 per cent per annum. Shaik correctly views that this case apparently suggests the independency of the doctrine of unconscionable bargain from the doctrine of undue influence in s 16125. Gopal Sri Ram JCA suggests in Saad Marwi v Chan Hwan Hwa & Anor126 that it is possible for Malaysia to import the wider doctrine of unconscionability independent of the doctrine of undue influence into the Malaysian contract law. The proposed wider doctrine is according to the English doctrine but tailored 3 MLJ xliv at lxiii to the broad and liberal Canadian way because of the vulnerability of many Malaysians in matters of commerce and of the insufficiency of statutory protection afforded to Malaysian consumers. The learned judge looked at the doctrine of inequality of bargaining power in England, Australia, New Zealand, Canada, India and Malaysia in supporting his proposition. However, in American International Assurance Co Ltd v Koh Yen Bee, majority of the Court of Appeal decides that:

The applicability of the doctrine of inequality of bargaining power or unconscionable contract under the common law of Malaysia is still doubted because:

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(i) (ii) (iii) (iv)

s 14 of the Contract Act 1950 only recognizes coercion, undue influence, fraud, misrepresentation and mistake as the factors that affect free consent; s 3(1) of the Civil Law Act 1956 - in particular its opening words, the cut-off dates therein and the proviso thereto- is couched in restrictive language; the courts are hesitant about `legislating' on substantive law with retrospective effect; and of the uncertainty in the law that may be caused. The courts should scarcely interfere with the freedom of parties to contract unless the bargain is contrary to the clear provisions of the law, in particular the Act127.'

In other words, the possibility of Malaysia to have a general rule of unconscionability is still open. This is because Abdul Hamid Mohamad JCA, representing the majority of the Court of Appeal, has only voiced his doubt and not setting it aside in toto. It is worth to point that Saad Marwi is held in Koh Yen Bee to be correctly decided based on the merits of the case. There is the possibility that Saad Marwi and Koh Yen Bee have looked at the doctrine of unconscionability from a narrow perspective. It should be noted that the Court of Appeal in Saad Marwi and Koh Yen Bee interchangeably uses the term `inequality of bargaining position' as `unconscionability'. Prior to Koh Yen Bee, the decision in Saad Marwi was questioned by the High Court in Yewpam Sdn Bhd v Mohd Salleh bin Sheikh Ahmad & Anor Suit128. Ian HC Chin J made a valid remark on Saad Marwi's loose usage of inequality of bargaining position and unconscionable bargain. The learned judge acutely observed that Black v Wilcox129actually placed `inequality of bargaining power' as just one element or feature of unconscionability130. Historically, the doctrine of inequality of bargaining position as a broader principle was enunciated by Lord Denning in Lloyds Bank v Bundy where he stated the law: 3 MLJ xliv at lxiv

English law gives relief to one who without independent advice, enters into a contract upon terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influence or pressures brought to bear on him by or for the benefit of the other. When I use the word `undue' I do not mean to suggest that the principle depends on proof of any wrongdoing131.

This case was about an elderly farmer who mortgaged his farmhouse to Lloyds Bank upon their insistence that without this assurance they would no longer continue to support his son's business. Although all judges agreed that the bank had breached its fiduciary duty to Bundy, the minority view by Lord Denning considered the guarantee and charge were voidable on the larger ground of inequality of bargaining power. His Lordship reviewed these five categories of transaction, namely duress of goods, undue influence, unconscionable transaction, undue pressure, and maritime salvage132 and concluded that inequality of bargaining power is a characteristic they have in common. However, commentators have different views. They argue that there are wide situational differences which the five categories cover133, and a common theme for all five categories is not inequality of bargaining position but `the exploited party has been deprived of a choice which the law deems it proper he should have134' and `an abuse of a position of dominance135.' The first modified theme appears to be a concept of `interpersonal exploitation', which concept itself being attack by Bigwood as inaccurate and should be replaced by a concept of `transactional neglect136'. The other modified theme apparently is a phrase common in undue influence, which is also a reason in inequality of bargaining position. Therefore, inequality of bargaining position as a mere characteristic in the doctrine of unconscionability should not be denied. In the doctrine of unconscionability, equity seeks to remedy the unconscientious or extortionate abuse of power. Such abuse of power leads to unequal bargaining position if

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3 MLJ xliv at lxv the one being abused has to abide only to the terms of the other without much choice. Mere inequality does not give rise to unconscionable transaction. This means that the doctrine of inequality of bargaining position should be subsumed under a broader doctrine of unconscionability. It is interesting to note that Koh Yen Bee has not been cited by Clement Skinner J in Standard Chartered Bank Malaysia Bhd v Foreswood Industries Sdn Bhd & Anor137 when he decides on the issue of unconscionability and unequal bargaining position. Yet, the learned judge refers to Saad Marwi. Whether the learned judge overlooked Koh Yen Bee's decision or chose to leave the case aside due to dissimilar fact of case cannot be answered here. Apparently, the idea of having the wider doctrine of unconscionability in Malaysia is growing. Conclusion Unconscionability as an independent doctrine or as a doctrine of wider application is still at its infancy despite the historical evidence that it had been used to correct men's conscience in cases involving equitable frauds. There were several setbacks in its growth, which was hindered particularly by the common law's adherence to the doctrine of freedom of contract and the will theory. Even though the purpose of the doctrine is different from freedom of contract, it contributes towards ensuring security of the contract. The modern contract law's appreciation towards achieving contractual justice calls for the recognition of several laid back equitable doctrines including unconscionability. In paving its way towards an independency, some commentators claim that good faith is the wider doctrine that subsumes unconscionability, or that unconscionability is full of drawbacks that hindered it from becoming a doctrine. However, the above discussion shows otherwise. Therefore, the doctrine of unconscionability should receive either a more formal recognition in term of legislative intervention or even a strong judicial approval since the ultimate purpose of the doctrine is to correct men's conscience. 3 MLJ xliv at lxvi

1 SM Waddams `Good Faith, Unconscionability and Reasonable Expectations' (1995) 9 JCL 55, 57. 2 Ibid; SM Waddams `Unconscionability in Contracts' (1976) 39 MLR 369. 3 Gopal Sri Ram JCA apparently approves the application of an independent notion of unconscionability in Saad Marwi v Chan Hwan Hwa & Anor [2001] 3 CLJ 98; followed by Clement Skinner J in Standard Chartered Bank Malaysia Bhd v Foreswood Industries Sdn Bhd & Anor [2004] 6 CLJ 320; but in American International Assurance Co Ltd v Koh Yen Bee (f) [2002] 4 MLJ 301, the majority of the Court of Appeal decide otherwise. 4 E Peden `Contractual Good Faith: Can Australia Benefit From The American Experience?'(2003) 15 BLR 175, 189; P Benson (ed) The Theory of Contract Law: New Essay (Cambridge Uni. Press N.Y 2001) 184; SR Enman `Doctrines of Unconscionability in Canadian, English and Commonwealth Contract Law' (1987) 16 AALR 191, 217. 5 Proponents of this view includes A Phang `Security of Contract and the Pursuit of Fairness' (2000) JCL LEXIS 15; Carter and Harland Contract Law in Australia (4th Ed, Butterworths Australia 2002) p 521. 6 JR Peden The Law of Unjust Contracts Including the Contracts Review Act 1980 (NSW) (Butterworths Sydney 1982) p 28. 7 The usury legislation was first introduced in England in 1545. It permitted interest on loans of money, credit granted in sale transactions and mortgages but only up to the rate permitted by the statute. 8 Earl of Oxford's Case (1615) 1 Chan. Rep. 1 at pp 6-7; 21 ER 485 at p 486. 9 DC Ford and EEJ Ford `Unconscionable Conduct - A Matter For The Courts or The Legislatures?' (1985) 13 ABLR 307, 308. There is a possibility that Ford and Ford inclination is related to their discussion at pp 333-339 on selected legislative provisions in Australia, New Zealand, the UK and the US. 10 A Mason `The Impact of Equitable Doctrine on the Law of Contract'(1998) 27 AALR 1. 11 P Parkinson `The Conscience of Equity' in P Parkinson (ed) The Principles of Equity (Thomson Information (SE Asia)

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Singapore and Malaysia 1996) 30. 12 (1751) 2 Ves Sen 157; 28 ER 82. 13 (1873) LR 8 Ch App 484. 14 Ibid pp 490-491. 15 Ibid pp 100-101. 16 M Cope `The Review of Unconscionable Bargains in Equity' (1983) 57 ABLJ 279; KL Fletcher `Review of Unconscionable Transactions' (1973) 8 UQLJ 45. 17 [1979] Ch. 84 at p 110. 18 A commentator views that unconscionable is applied to the contract itself, or a clause of it in the older usage, and that of the UCC, not to the conduct of the party seeking enforcement: SM Waddams (n1) p 60. 19 [1993] EGCS 85; (1993) 42 W.I.R. 175 at p 180. 20 DWM Waters `Where Is Equity Going? Remedying Unconscionable Conduct' (1988) 18 WALR 3, 5. 21 P Finn `Unconscionable Conduct' (1994) 8 JCL 37, 43. 22 JR Peden (n 6) p 18. 23 Ibid 19; M Cope (n 16) p 279. 24 AJ Duggan `Is Equity Efficient' (1997) 113 LQR 601, p 612. 25 Ibid; NA Shariff and ZA Ayub `Unconscionable Contracts: The Courts' Approach Towards Substantive Fairness' (2003) 4 MLJ clxv. 26 Ibid pp 285-286. 27 Ibid p 9. 28 PS Atiyah The Rise and Fall of Freedom of Contract (Clarendon Press Oxford 1979) 259; PS Atiyah An Introduction to the Law of Contract (4th Ed, Clarendon Press Oxford 1989) pp 8-9; AG Guest Anson's Law of Contract (26th Ed, Oxford University Press Singapore 1985) p 4; A Peter Consumer Protection, Freedom of Contract and the Law (Juta & Co Ltd Kenwyn 1979) pp 5-6. 29 F Kessler and E Fine `Culpa in Contrahendo, Bargaining in Good Faith and Freedom of Contract: A Comparative Study' (1964) 77 Harv LR 401, p 409; J Cooke and D Oughton The Common Law of Obligations (3rd Ed, Butterworths London 2000) p 27; JH Pratt and PC Biddle A Comparison of the Common Law and Civil Law in the International Franchise Arena' (paper presented at IBA/IFA Joint Conference 8 -9 May 2001) pp 18-19. 30 DC Ford and EEJ Ford (n 9) 310; Fry v Lane (1888) 40 Ch. Div 312. 31 JR Peden (n 6) p 9. 32 Notable proponents of the freedom of contract were Sir George Jessel MR in Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462; Lord Bramwell in The Manchester, Sheffield and Lincolnshire Railway Co v H W Brown (1883) 8 AC 703 (HL). 33 SM Waddams 1976 (n 2) p 369; A Phang (n 5); ML Movsesian `Two Cheers For Freedom of Contract' (2002) 23 Cardozo LR 1529, p 1545. 34 SR Enman (n 4) p 219. 35 PS Atiyah 1979 (n 28) p 402. 36 Ibid p 406. 37 SMN Alam Contracts and Obligations: The Law in Selected ASEAN Countries (DBP KL 1994) p 29.

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38 Ibid p 406; J Cooke and D Oughton (n 29) p 26. 39 Ibid p 407. 40 PS Atiyah 1979 (n 2) p 443. 41 AV Mehren A General View of Contract: VIII International Encyclopedia of Comparative Law (Martinus Nijhoff Hague 1982) p 27. 42 Later theorists used objective and subjective approaches. 43 Ibid p 27; A commentator postulates parties' `presumed intentions to transact for equal value': P Benson (ed) (n 4) pp 187-190. 44 [1975] QB 326. 45 C Carr `Inequality of Bargaining Power' (1975) 38 Mod LR 463; PH Clarke `Unequal Bargaining Power in the Law of Contract' (1975) 49 ALJ 229, p 230; D Tiplady `The Judicial Control of Contractual Unfairness' (1983) 46 Mod LR 601, pp 610-612; S Greenfield and G Osborn `Unconscionability and Contract: The Creeping Shoots of Bundy' (1992) Denning LJ 65, pp 66-69; MP Roch `Enforcing the Unconscionability Doctrine in Favour of Indigent Parties: A Theoretical Evaluation' (1996) 11 JCL 27, p 36. 46 PS Atiyah 1979 (n 28) p 428. 47 Ibid pp 426-428. 48 Ibid p 430. 49 SMN Alam (n 37) p 37. 50 Ibid p 42. 51 Ibid p 83. 52 J Steyn `Contract Law: Fulfilling the Reasonable Expectations of Honest Men' (1997) 113 LQR 433, p 434. 53 WVH Rogers Winfield and Jolowicz on Tort (13th Ed, London Sweet and Maxwell 1989) p 47. 54 190 Ct. Cl. 247; 419 F 2d 863 at p 876; 1969 US Ct Cl LEXIS 167. 55 SM Waddams (n 1) p 59. 56 McQuire v. Western Morning News [1903] 2 KB 100. 57 Ibid. 58 2005 FCAFC 142 at p 165. 59 J Steyn (n 52) p 434. 60 Ibid. 61 n 54 at p 876. 62 2004 US Dist LEXIS 10363. 63 [2002] 5 CLJ 391 at p 413. This position, basically, reflects the standing of common law judges on the objective theory of contract as a standard to promote certainty and predictability in the resolution of contractual disputes. 64 [1982] CLJ 302; [1982] CLJ (Rep) 272 at p 283. 65 C Mitchell `Leading a Life of its Own? The Role of Reasonable Expectation in Contract Law' (2003) 23 OJLS 639. 66 [2005] 4 CLJ 727 at p 746. 67 [1995] 1 All ER 73 at pp 88-89; cf Suwiri case [2005] 4 CLJ 727 at p 746.

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68 P Parkinson (n 11) pp 47-48; D Tiplady (n 45) p 603; P Finn (n 21) pp 40-41 and 45. 69 JR Peden (n 6) p 3. 70 According to HLA Hart, `a minimum of justice is necessarily realized whenever human behaviour is controlled by general rules publicly announced and judicially applied'. This statement was used to answer the argument on the distinction between `good legal system' and a legal system that does not conform at certain points on morality and justice. Apparently, his explanation was on application of justice in laws, although the laws are harsh: HLA Hart The Concept of Law (Oxford University Press London 1961) 156, p 202. 71 J Cooke and D Oughton (n 29) p 468; SM Waddams (n 2) p 369. 72 A Phang (n 5). 73 SMN Alam (n 37) p 202; ibid. 74 NA Shariff and ZA Ayub (n 25); PJ Millett `Equity's Place in the Law of Commerce' (1998) 114 LQR 214, p 220; A Phang Cheshire, Fifoot and Furmston's Law of Contract: Second Singapore and Malaysian Edition (Butterworths Asia Malaysia 1998) 558; M Chen-Wishart `O'Brien Principle and Substantive Unfairness' [1997] CLJ 61, p 63. 75 Ibid p 533. 76 Ibid pp 202-219; see also A Phang ibid. 77 Ibid pp 231-244. 78 AJ Duggan (n 24) p 602. 79 SMN Alam `Implying Good Faith in Contracts: Some Recent Developments' (1993) 3 CLJ xii. 80 PJ Powers `Defining the Undefinable: Good Faith and the United Nations Convention on Contracts for the International Sale of Goods' (1999) 18 Journal of Law and Commerce 333, p 334. 81 SM Waddams (n 1) p 57. 82 G Teubner `Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences' (1998) 61 Mod LR 11, p 23. 83 (1766) 3 Burr. 1905; 97 ER 1162. 84 J Steyn `The Role of Good Faith and Fair Dealing in Contract Law: A Hair-Shirt Philosophy?' (1991) Denning LJ 131, p 138. 85 PS Atiyah (n 28) p 168. 86 Ibid; Ibid p 136; AF Mason `Contract, Good Faith and Equitable Standards in Fair Dealing'(2000) 116 LQR 66. 87 [1932] A.C. 161 at p 227. 88 J Steyn 1991(n 84) p 138. 89 E Peden (n 4) 175; M Harper `The Implied Duty of `Good Faith' in Australian Contract Law' (2004) 11[3] ELaw at: http:www.murdoch.edu.au/elaw/issues/v11n3/harper113nf.html 90 Ibid pp 133-134; PJ Powers (n 80) p 334. 91 Ibid; ibid p 134; ibid 341; AF Mason (n 86) pp 67-68. 92 SMN Alam (n 79) xiii. 93 Ibid p 189; Ibid p 136. 94 SM Waddams (n 1) p 58. 95 E Peden (n 4) 175. 96 DWM Waters (n 20) p 5.

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97 Ibid p 59. 98 Ibid p 189; Ibid p 60. 99 Ibid. 100 PH Clarke (n 45) p 229. 101 [1974] 3 All ER 616. 102 Cf MP Roch (n 45) p 29. 103 SM Waddams Unconscionable Conduct: Competing Perspectives' (1999) 62 Sask LR 1, 4. 104 M Harper (n 89). 105 Ibid 62. 106 Carter and Harland (n 5) p 521. 107 Samanda Holdings Bhd v Sakullah Holdings Sdn Bhd & Ors [2006] 4 MLJ 381; Prima Union Plywood (M) Sdn Bhd v Sri Kemajuan Sdk Sdn Bhd [2005] 1 LNS 79; Sabil Mulia (M) Sdn Bhd v Pengarah Hospital Tengku Ampuan Rahimah & Ors [2005] 3 MLJ 325, [2005] 2 CLJ 122; Sri Kelangkota-Rakan Engineering JV Sdn Bhd & Ors v Arab-Malaysian Prima Realty Sdn Bhd & Ors [2001] 1 MLJ 324, [2001] 1 CLJ 779. 108 Sabil Mulia (M) Sdn Bhd (ibid); Transfield Projects (M) Sdn Bhd v Malaysian Airline Systems Bhd [2000] 7 MLJ 583; Cheng Hang Guan & Ors v Perumahan Farlim (Penang) Sdn Bhd& Ors [1993] 3 MLJ 352; Holee Holdings (M) Sdn Bhd v Chai Him & Ors [1997] 4 MLJ 601; Kheng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd (Bhagat Singh s/o Surian Singh& Ors, Interveners) [1996] 2 MLJ 431. 109 Rasiah Munusamy v Lim Tan & Sons Sdn Bhd [1985] 2 MLJ 291 (FC); Buxton & Anor v Supreme Finance (M) Bhd [1992] 2 MLJ 481 (SC); Tan Say Geok & Ors v HG Warren [1963] 1 MLJ 179. 110 Lim Yoke Kong v Sivapiran a/l Sabapathy [1992] 2 MLJ 571, (SC KL). 111 Kok Swee Chin v General Factoring & Credit Sdn Bhd [2004] 6 MLJ 276: on claim against excessive interest charged by a non-licenced moneylender; K Umar Kandha Rajah v EL Magness [1985] 1 MLJ 116: on claims against forfeiture of deposit; Government of Malaysia v Thelma Fernandez & Anor [1967] 1 MLJ 194: on claims for damages for breach of a scholarship agreement. 112 Ibid. 113 [1983] 1 MLJ 31. References were made to Earl of Aylesford v Morris (n13) and Fry v Lane (n 30). 114 [1963] MLJ 63 at p 65. 115 (1900 & 1901) 6 SSLR 6. 116 Chia Keng Beng (n 115) pp 9 and 11. 117 The 1899 Enactment was applicable to four states: Perak, Selangor, Pahang and Negeri Sembilan, and the operative dates varied from state to state. See SMN Alam (n 37) p 3. 118 [1984] 1 MLJ 222 at p 224. See ibid pp 1-5; A Phang 1998 (n 74) pp 31-35 for the historical development of the Malaysian contract law. 119 (1919) LR 47 IA. 1 120 AIR 1924 PC 60. See ibid p 240. 121 as referred to by Lord Scarman in National Westminster Bank plc v Morgan [1985] AC 686 122 [1994] 3 MLJ 127. 123 (1918) 1 FMSLR 348.

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124 LA Sheridan (1961); SMN Alam (n 37) p 239; A Phang 1998 (n 74) p 533. 125 Ibid. 126 [2001] 3 CLJ 98. 127 [2002] 4 CLJ 49. 128 [2001] 1 LNS 43. 129 (1976) 70 DLR (3d) 192. This case was referred by Gopal Sri Ram in Saad Marwi at p 109. 130 Ibid at line 15. 131 [1975] QB 326 at p 329. 132 D Tiplady (n 45) 611; JR Peden (n 6) p 23; Carter and Harland (n 5) only focus on the first three basis. 133 DC Ford and EEJ Ford (n 9) p 314. 134 Ibid 613. 135 PH Clarke (n 45) p 229. 136 R Bigwood `Contracts by Unfair Advantage: From Exploitation to Transactional Neglect'(2005) 25 OJLS 65: the commentator use this term which subsume the exploitation concept only for undue influence and unconscionable dealing cases as the prevailing justification for interference with apparent contracts in pure `unfair advantage' situations. 137 [2004] 6 CLJ 320.