LAW 503

MOHD RAZMAN BIN MOHD ZAMRI

2010585961
ABDUL HAKIM BIN NASHARUDIN
2010356877

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 April 2010-Question 1
• Desa Permai Bhd has distributed pamphlets of its latest
development project in project in Port Dickson called Indah
Villa. The pamphlet gave among others, the following details:
– The house will be three storey's
– It is freehold property
– The houses comes with swimming pool
– The houses will have clear view of the nearby sea

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• The pamphlet also mentioned that the government had
approved the plans to build railways lines near the housing
area, which will operates as daily commuter service. After
reading the pamphlet, Melor became very interested and went
to the sales office to confirm the detail stated in the pamphlet.
Upon her enquiry, the officer in charge assured her that the
property is freehold. Melor immediately paid a deposit of
RM30,000 and managed to secure a housing loan from a bank.
• Two month later, the government announced that it had
scrapped the idea of building commuter service near Indah
Villa as it was too expensive. At the same time, the City
Council approved an application to build a hotel near Indah
Villa, which overlooked their sea view. Melor also found that
the houses are actually leasehold property and had no
swimming pool.

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 Introduction

• Every contract made in Malaysia is govern mainly

under Contract Act 1950.
• All agreements are contracts if they are made by the
free consent of parties competent to contract, for a
lawful consideration and with a lawful object, and are
not hereby expressly declared to be void.

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 1st Issue
• Whether Melor can take legal action due to breach of
term made by Desa Permai Bhd.
Rule of Law

• The detail statement of freehold property is a term

A term in contract law refers to stipulation which give
efficacy to the intention of the parties. It would determine the
liabilities of the parties and in the event of a breach, the term
of the contact would be the basis as to whether the party who
is not fault may rescind the contract or obtain any relief as a
result of the breach.

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• Case:
Schawel V Reade – The plaintif, while examining a horse
with a view to buying it for stud purposes, was told by the
defendant: “You need not look for anything; the horse is
perfectly sound. If there was anything the matter with the
horse, I should tell you.” In reliance upon this statement, the
plaintif bought the horse without examining it. It was
subsequently discovered that the horse was totally unfit for
stud purposes and it was held that the defendant statement was
a term of the contract.

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 Application
• As according to the case of Schawel V Reade, Melor went to
the sales office to confirm that the property is freehold. Upon
her enquiry, the officer in charge assured her that the property
is freehold. Thus, the statement is a term because the
assurance is granted. However, Melor find out that the status
of the property is leasehold and lead to the breach of contract.
Conclusion
The Desa Permai Bhd is liable for breach of contract. Thus,
Melor may rescind the contract or obtain any relief as a result
of the breach.

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 2nd Issue
• Whether Melor can take legal action against Desa Permai Bhd
for the breach of condition done by the developer.

Rule of Law
• The houses comes with the swimming pool is consider as
promissory condition.
• A condition is an essential term of the contract which goes to
the root of the contract. It means some event which the
existence of the contract depends. A promissory condition is a
term of contract under which one party promises to do
particular thing and a failure on his part to perform the
promised act constitute a breach of contract.

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• Case:
Behn V Burness – The court held that a ship which was stated
in a contract and charter party to now in port of Amsterdam
and the fact that the ship was not in port at the date of the
contract, discharged the charterer from further performance of
the contract. The statement was a condition because of the
commercial importance which charterers attach to such
descriptive statement.

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 Application
• As according to the case of Behn V Burness, Melor has been
promise by the Desa Permai Bhd in the pamphlet given that
the house comes with swimming pool. However, later Melor
find out that the house had no swimming pool. Thus, this is
actually lead to the breach of contract because the developer
failed to provide the swimming pool as in the pamphlet.
Conclusion
Melor can take legal action towards the Desa Permai Bhd for
breach of contract. She may to terminate performance of the
contract or to affirm the contract and recover damages for the
breach.

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 3rd Issue
• Whether Melor can take legal action against Desa Permai Bhd
due to breach of representation.
Rule of Law
• The detail statement of the house will have clear view of
the nearby sea is a representation.
It must distinguished a contractual term and mere
representation. The basis of the distinction between a
representation and a term is the intention of the parties and to
determine this, it must be judged objectively by looking at
various factors such as the language used, the expertise or
knowledge of the parties and the precision of the statement.

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• Case:
Baker V Asia Motor Co Ltd – The court decided that a
statement made by the defendants that a car was a 1958 model
when in fact it was 1953 model and had become a term of the
contract of sale. Therefore, the action against the defendant for
damages for breach of contract was allowed.

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 Application
• By applying the case of Baker V Asia Motor Co Ltd, the
developer which is Desa Permai Bhd had distribute a pamphlet
stating that the houses will have clear view of the nearby sea.
Unfortunately, the City Council approved an application to
build a hotel near Indah Villa. This had actually create
distraction and prevent them from having a clear view of the
nearby sea. Thus, this is consider as a representation because
the developer did not take consider the project near the Indah
Villa which could prevent the houses to have clear view of the
nearby sea.
Conclusion
• Melor can take legal action towards the Desa Permai Bhd for
breach of contract due to false representation.

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 4th Issue
• Whether Melor can take legal action on behalf of the
misrepresentation done by Desa Permai Bhd.
Rule of Law
• The statement in the pamphlet that mention that the
government had approved plans to build railway lines near
the housing area is a misrepresentation.
• Misrepresentation is a false statement made by a representor
and which includes the other party to enter into a contract. The
English law divides misrepresentation into fraudulent
misrepresentation, innocent misrepresentation, and negligence
misrepresentation. Misrepresentation is defined under S.18 of
the Contract Act 1950.

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• Case:
Peek V Gurney – The promoter on a company were sued by
the appellant who had purchased shares on the faith of false
statement contained in the prospectus issued by them. The
appellant was not a person to whom shares had been alloted –
he purchased the shares from allottees. It was held that the
prospectus was only addressed to the first applicant for shares
and hence, there was no misrepresentation.

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 Application
• As according to the case of Peek V Gurney, the Desa Permai
Bhd is actually making a misrepresentation in the pamphlet
which had attract the interest of Melor. The pamphlet mentioned
about the government had approved plan to build railway lines
near the housing area. However, two months later, the
government announced that it had scrapped the idea of building
commuter service. This clearly show that the idea of building the
facility is still under evaluation and no approval granted during
the moment the pamphlet distributed. So, the developer is
actually simply state that the government had approved the plan
in order to improve the sale of the house.
Conclusion
In a conclusion, Melor can take legal action towards Desa
Permai Bhd.

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