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
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CORRESPOND TO MODERN SITUATION PRAGMATIC AND RESPONSIVE NOT STATIC

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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
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LAW ONLY PART OF THE SOCIETY‟S NORMATIVE SYSTEM SOURCES OF THE LAW
THE PREFERENCE THAT A WRITER HAS

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1. LAW AS PART OF SOCIETY‟S NORMS SOCIETY‟S NORMATIVE SYSTEM MORAL RULES LEGAL RULES SOCIAL RULES .

ORIGINS - TIMES CULTURES BELIEFS (RELIGIOUS) - - .2.

ENFORCEMENT OF JUSTICE - SOURCES OF THE LAW . PERSONAL PREDILECTION - OBJECTIVE OF THE LAW .CUSTOM .EG.3.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 - - .

ETHICS AND MORALITY TERMS OF REFERENCE COMMAND LAW JUSTICE ETHICS MORALITY / / / / DUTY TO OBEY / / / / SANCTION / X X X MACHINERY FOR ENFORCEMENT / X X X .COMPARISON BETWEEN LAW. JUSTICE.

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 - .

CONCURENT LIST .FEDERAL LIST LIST II :.STATE LIST LIST III :.NINTH SCHEDULE - LIST I :.

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 - - .

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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. APPLY THE COMMON LAW OF ENGLAND AND THE RULES OF EQUITY AS ADMINISTERED IN ENGLAND ON THE 7TH APRIL 1956 . „ THE COURT SHALL IN WEST MALAYSIA OR ANY PART THEREOF.

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.

CORPORATIONS. AND WITH RESPECT TO MERCHANTILE LAW GENERALLY. PRINCIPALS AND AGENTS. CARRIERS BY AIR. MARINE INSURANCE. UNLESS IN ANY CASE OTHER PROVISION IS OR SHALL BE MADE BY ANY WRITTEN LAW‟ . „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.ENGLISH COMMERCIAL LAW S 5(1) CIVIL LAW ACT 1956. LAND AND SEA. BANKS AND BANKING. IF SUCH QUESTION OR ISSUE HAD ARISEN OR HAD TO BE DECIDED IN ENGLAND. 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.

BIDAYUH. ISLAMIC LAW FOR MUSLIM. NATIVE LAW FOR THE NATIVES (KHADAZAN. EG. ETC. MURUT.CUSTOMS EACH RACIAL AND RELIGIOUS GROUP IS GOVERNED BY THEIR OWN SET OF PERSONAL LAWS. IRRESPECTIVE OF THEIR ETHNICITY.) 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) .

BEFORE 7TH APRIL 1956 .CASES DECIDED IN COURTS - ENGLISH COMMON LAW .LAW OF CONTRACT: SOURCES - STATUTES .CONTRACT ACT 1950 - CASE LAWS .

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 .

THERE ARE SOME AGREEMENTS WHICH ARE NOT CONSIDERED AS CONTRACT EG.… BUT … NOT ALL AGREEMENTS ARE CONTRACT. 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 PERSON‟S 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 .

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

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 .PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMIST LTD .COELHO V THE PUBLIC SERVICES COMMISSION - ITEMS DISPLAYED IN SHOPS .PAYNE V CAVE - ADVERTISEMENTS .

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 .

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

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

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‟ .

BUT NOT AFTERWARDS .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.

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. The defendants‟ letter of withdrawal reached the plaintiffs on 20 October. On 11 October. . the offer reached the plaintiffs. On 8 October. Held: Mere posting of a letter of revocation does not amount to an effective communication to the acceptor. who accepted at once by telegram (and the plaintiffs also confirmed this in writing on 15 October). the defendants posted a letter withdrawing the offer.

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.

PROFIT. OR BENEFIT ACCRUING TO THE ONE PARTY. IN THE EYES OF THE LAW. INTEREST. OR RESPONSIBILITY GIVEN. SUFFERED OR UNDERTAKEN BY THE OTHER‟ . MAY CONSISTS EITHER IN SOME RIGHT. DETRIMENT.CURRIE V MISA „A VALUABLE CONSIDERATION. LOSS. OR SOME FORBEARANCE.

SOMETHING. SUCH ACT OR ABSTINANCE OR PROMISE IS CALLED A CONSIDERATION FOR THE PROMISE‟ . AT THE DESIRE OF THE PROMISOR. OR PROMISES TO DO OR TO ABSTAIN FROM DOING. THE PROMISEE OR ANY OTHER PERSON HAS DONE OR ABSTAINED FROM DOING.SECTION 2 (d) CONTRACT ACT 1950 „WHEN. OR DOES OR ABSTAINS FROM DOING.

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 X‟S 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 .

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

Section 2(d) Contract Act 1950 “ … the promisee or any other person …” Venkata Chinnaya v Verikatara Ma’ya (1881) ILR 4 Mad.CONSIDERATION FROM A THIRD PARTY . 137 .English Common Law Consideration must move from the promisee/acceptor .

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 .PERFORMANCE OF A LEGAL DUTY .

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(b) An agreement to compensate for something done .Section 26(a) An agreement made in writing and registered .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 .

DOMESTIC AND FAMILY AGREEMENTS - .AGREEMENTS ARE CATEGORISED - COMMERCIAL AGREEMENTS SOCIAL.

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) .

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.

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 .

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

EXCEPTIONS TO GENERAL RULE

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NECESSARIES SCHOLARSHIPS MARRIAGES INSURANCES SERVICES

NECESSARIES
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NECESSARIES INCLUDE EVERYTHING THAT IS ESSENTIAL AND BENEFICIAL TO THE MINOR
- E.G. FOOD, DRINK, CLOTHING AND EDUCATION

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

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

NECESSARIES
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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.
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SECTION 69

NECESSARIES
ILLUSTRATIONS
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A SUPPLIES B, A MENTALLY DISODERED PERSON, WITH NECESSARIES SUITED TO HIS CONDITION IN LIFE, A IS ENTITLED TO BE REIMBURSED FROM B‟S 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 B‟S PROPERTY

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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

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

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 .

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

. 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‟.Karuppan Chetty v Suah Thian (1916) 1 FMSLR 300 The court declared that the contract was void.

THE MEANING OF WHICH IS NOT CERTAIN OR CAPABLE OF BEING MADE CERTAIN. IS VOID SECTION 30 CONTRACT ACT 1950 .LEGAL EFFECT OF UNCERTAINTY AGREEMENTS.

- - . agrees to sell to B „one hundred tons of oil‟. 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.EXAMPLES A agrees to sell to B „a hundred tons of oil‟. The nature of A‟s trade affords an indication of the meaning of the words. who is a dealer in coconut oil only. There is no uncertainty here to make the agreement void. A. There is nothing whatever to show what kind of oil was intended. and A has entered into a contract for the sale of one hundred tons of coconut oil.

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

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. .

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 .CASE LAW .

any property.COERCION Coercion is the committing. to the prejudice of any person whatever. or threatening to commit any act forbidden by the Penal Code. or the unlawful detaining or threatening to detain. with the intention of causing any person to enter into an agreement Section 15 Contract Act 1950 .

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

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

Section 16 (1) Contract Act 1950 .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.

1.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. . 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. 3. 2.

SECTION 16 (2) CONTRACT ACT 1950 A person is said to have been in a position to dominate the will of the other when. illness or mental or bodily distress . 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. 3. 2. 1.

Section 16 (3) (a) Contract Act 1950 . on the face of it or on the evidence adduce.PROVES OF „NO DOMINATION‟ Where a person who is in a position to dominate the will of another. and the transaction appears. 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. to be unconscionable. enters into a contract with him.

.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.

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

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

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

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

Vyramuthu v Kerajaan Negeri Pahang .

or unless his silence is. unless the circumstances of the case are such that. . regard being had to them.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. in itself. it is the duty of the person keeping silence to speak. equivalent to speech.

Contract of Insurance .The Creation of Partnership .Sale Through Prospectus .„it is the duty of the person keeping silence to speak‟ .

. whether he speaks or not.„his silence is. in itself. he is expected to give the answer. both will be regarded as the „answer‟ for the question. equivalent to speech‟ The doctrine of „buyers beware‟ When a question is being posed to the seller. At this point.

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

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

in a manner not warranted by the information of the person making it. however innocently. or anyone claiming under him. a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement. and (c) Causing. (b) Any breach of duty which. (a) The positive assertion. by misleading another to his prejudice. or to the prejudice of anyone claiming under him. without an intent to deceive. gives an advantage to the person committing it. of that which is not true. though he believes it to be true. .Section 18 Contract Act 1950 Misrepresentation includes.

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

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

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

Classifications of Term .Implied Term • The terms that are not expressly stated but the court assumes that such terms exist in a contract .Express Term • The terms that are clearly stated and included in a contract .

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

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. . will be very careful in this case in the sense that „the freedom of contract should be preserved‟. The court. however.

v McAlister & Co. [1965] 1 MLJ 221 “Good Faith” . Pasuma Pharmacal Corpn. Ltd.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.

Sdn. certain and reasonable.Commercial Practices Commercial practices mean that the use of such terms in commercial transactions is very common. Preston Corp. 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. Bhd. Bhd. v Jururus Ladang Sdn. and it has been part of the law” Pembangunan Maha Murni Sdn. [1986] 2 MLJ 30 .

Yong Ung Kai v Enting [1965] 2 MLJ 98 .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.

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

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

  To expedite the transaction To reduce the cost .Standard Form Contracts Same contract being made to different persons.

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

Exemption Clause The main purpose of Exemption Clause is either. or at least to limit liability .   to avoid liability.

  included in a contract a proper notice has been given .ECs in Contracts The Exemption Clause would be considered as part of contract/valid term of contract if it has been properly.

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

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 .

[1877] 2 CPD 416 .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.

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. [1951] 1 KB 805 . the oral form will take precedent over the written form Curtis v Chemical Cleaning and Dyeing Co.

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

Discharge of Contract Performance Agreement Breach Frustration .

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

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

Performance .Quantum Meruit .Complete performance .Substantial performance .

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

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

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. UNLAWFUL. OR BY REASON OF SOME EVENT WHICH THE PROMISOR COULD NOT PREVENT. AFTER THE CONTRACT IS MADE. BECOMES IMPOSSIBLE. 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 .

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

Express Appointment .Implied Appointment .Ratification .CREATION OF AGENCY .Necessity .

Section 140 Contract Act An authority is said to be express when it is given by words spoken or written. or the ordinary course of dealing. An authority is said to be implied when it is to be inferred from the circumstances of the case. . and things spoken or written. may be accounted circumstances of the case.

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

.Situations Where Contract of Agency are Implied .The relationship that exists between partners in a contract of partnership.The relationship that exists between a husband and wife .

If he ratifies them.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. the same effects will follow as if they had been performed by his authority Section 149 Contract Act .

000 to A.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. 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 principal‟s 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 .

without authority.Apparent Authority When an agent has. [1971] 2 QB 711 . done acts or incurred obligations to third persons on behalf of his principal. V Furnishing Fabric Ltd. 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 agent‟s authority Section 190 Contract Act Panorama Development (Guildford) Ltd.

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

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

Contract made under a named principal .Contract made under an undisclosed principal .Contract made under a disclosed principal .Effects of Contracts Made by Agents .

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 A‟s 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.

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

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

• Commercial sales/Private sales • Wholesale/Retail • New/Second-hand goods .Sale of Goods Sale of Goods Act 1957 (Revised 1989) The SGA applies to contracts for the sale of all types of 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 give rise to a claim for damages but not to repudiate the contract Section 12(3) SOGA . 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.

the buyer waives the condition .the contract involves the sale of specific goods .the buyer has accepted the goods or part of it . hence a contract could not be repudiated:- .the buyer chooses to treat the breach of condition as the breach of warranty .Breach of Conditions There are four circumstances where a breach of condition is considered as a breach of warranty.

the goods are of merchantable quality and fit for purpose and etc. the buyer will enjoy a quiet possession of the 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.

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. in the case of a sale. he will have a right to sell the goods at the time when the property is to pass. that. in the case of an agreement to sell. Section 14(a) SOGA . and that. he has the right to sell the goods.

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 .

if the sale is by sample as well as by description. Section 15 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. it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

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? - - .

. that particular buyer shall bear the loss.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.

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

All the bottles were broken and spoiled. On his way however Ah Seng involved in an accident. Ah Seng to deliver the sauces to Datin Mariam‟s house.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. Who shall bear the loss? The seller or the buyer? Why? .

Who shall bear the risk? Datin Mariam visited Ah Chong‟s shop and chose six bottles of „sos sedap‟. At this time who shall bear the loss? The seller or the buyer? Why? . 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.

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

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. .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.

or the time of delivery of the goods. or both. and it is immaterial whether the time of payment of the price.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. Section 20 SOGA . is postponed.

Section 21 SOGA . the property does not pass until such thing is done and the buyer has notice thereof.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.

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. or do some other act or thing with reference to the goods for the purpose of ascertaining the price. test. measure. the property does not pass until such act or thing is done and the buyer has notice thereof. Section 22 SOGA . but the seller is bound to weigh.

the property in the goods thereupon passes to the buyer.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. Such assent may be express or implied. and may be given either before or after the appropriation is made Section 23 SOGA .

and if no time has been fixed. on the expiration of a reasonable time. or other similar terms.Sale or Return When goods are delivered to the buyer on approval or „on sale or return‟. then if a time has been fixed for the return of goods. Section 24 SOGA . on the expiration of such time. 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.

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 buyer‟s 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 .

CLUBS - .SOCIETIES .SIMILAR BUSINESS ASSOCIATIONS CO-OPERATIVE SOCIETIES .COMPANIES .

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 - - .

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

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 - - .

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

.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.

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. 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.UNSUITABLE RULES - THE EXISTENCE OF A PARTNERSHIP AT WILL – WHERE ANY OF THE PARTNERS CAN GIVE NOTICE TO DISSOLVE A PARTNERSHIOP. AND MAY HAVE NOT MEANT FOR PROFITS TO BE SHARED EQUALLY - - . THE DEATH OR BANKCRUPTCY OF ANY OF THE PARTNERS WILL BRING THE PARTNERSHIP TO AN END.

RELATION BETWEEN PARTNERS AND THIRD PARTIES THE BASIS OF THE RELATIONSHIP SHALL BE BASED UPON THE POWER THAT THE PARTNERS HAVE .

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.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 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 .

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 .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.

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 .

R. „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 .L.CRIMINAL LIABILITY CRIMINAL LIABILITY IS A PERSONAL LIABILITY OF THE PARTNER WHO COMMITS THE CRIME IN GARRETT V HOOPER [1973] Crim. LORD WIDGERY STATED. 61.

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 . A) WHERE ONE PARTNER. ACTING WITHIN THE SCOPE OF HIS APPARENT AUTHORITY. NAMELY.MISAPPLICATION OF MONEY OR PROPERTY OF A THIRD PARTY IN THE FOLLOWING CASES.

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) .

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) .DISSOLUTION OF PARTNERSHIP 1) DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTION DISSOLUTION BY NOTICE DISSOLUTION BY DEATH.

but does not include any agreement: .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).

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 .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.

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] .

2. and Motor vehicles.First Schedule 1. 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. All consumer goods. including stage buses .

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 . gramophone sets.Prior to the 1992 Amendment  Radio sets. television sets.

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 .

4C & 4D  After Agreement [After Contract]  Section 5(1) .The Formalities  Before Agreement [Pre-Contract]  Section 4(1) (a) & (b)  During Agreement [Contract]  Section 4A. 4B.

completed and signed – Part I of Second Schedule  Dealer   Provide a written document. completed and signed by both – Part II of Second Schedule .e. completed and signed – Part I of Second Schedule Provide a written document (i. consent).Before Agreement  Owner  Provide a written document.

if any Insurance and registration (motor vehicle) Terms charges (rate per annum.           Short description of the goods New/second hand Address the goods will be kept Cash price Deposit Freight charges. total amount of the terms charges) Different between cash price and total amount payable The instalment payments . and must set out the following.Part I of the Second Schedule A summary of the hirer financial obligations.

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 .