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Coercion

Kesarmal & Anor v. Valliappa Chettiar & Anor


Chin Nam Bee Development Sdn Bhd v Tai Kim Choo &
Ors
C.M. Naested v. The State of Perak
Kanhaya Lal v National Bank of India Ltd

C.M. Naested v. The State of Perak


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Kesarmal & Anor v. Valliappa Chettiar & Anor


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Held:
-

Invalid a transfer executed under the orders of the Sultan, issued in


the ominous presence of 2 Japanese officers during the Japanese
Occupation of Malaysia.
Since the consent was not given voluntarily/consent was not free, the
agreement to be voidable at the instance or the consent of the options
available so the requirement or option obtained the consent of such.

Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & Ors
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Held:
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Held:
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The respondents purchase homes off the plan to be constructed by


the appellants.
Each of the respondents had signed a sale and purchase agreement to
purchase a house at $29,500. Subsequently, the respondent was made
to pay an additional payment was made to pay an additional $4,000.
The court was asked to determine if the additional payment was
made voluntarily or under threat by the appellants to cancel the
respondents booking for their houses.
The appeal dismissed by the High Court which ruled that there was
coercion as defined in section 15 of the Contract Act. It further added
that the definition in section 15 should only apply for the purpose
contained in section 14, and not for the entire Act.

The plaintiffs application for a grant of 23,000 acres of land was


approved by defendant. He then paid a certain sum for survey fees
calculated upon the area approved as being one block
Yet, the land was cut up into 16 blocks, but plaintiff was not
informed.
Upon demand made by the District Officer the plaintiff's agents paid
a further sum for survey fees, the calculation of the amount being
based upon the 16 blocks.
The plaintiff sued to recover the sum so paid by the agents.
Under these circumstances, it is impossible to consider the payment
as a voluntary one. The parties were not on equal terms. I think that
the plaintiff is entitled to recover the money as a payment made
without consideration, and under coercion, within the meaning of s.
72 [s.73] of the Contract Enactment.

Kanhaya Lal v National Bank of India Ltd


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the word `coercion' as defined under s. 15 of the Indian Contract Act,


(Act IX of 1872) should be confined to the interpretation of the
word`coercion' as found under s. 14 of the Indian Act, and that the
word `coercion' as found in s. 72 of the Indian Contract Act should
be given its ordinary meaning.

Undue influence
Morris v Burroughs
Cooke v Lamotte
Morley v Loughnan
Lloyds Bank v Bundy
Tate v Williamson
Satwath Haneem v Hadjee Abdullah
Datuk Jaginder Singh and Ors v Tara Rajaratnam
Inche Noriah v Shaik Allie
Chait Singh v Budin bin Abdullah
Letchemy Arumugan Iwn Annamalay
Tan Chye Chew v Anor Iwn Eastern Mining & Metals
Co Ltd

Morris v Burroughs
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as a reminder to parents to watch their exercise of authority over


their children

Tate v Williamson
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Cooke v Lamotte
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being used to cover possibility of improper or misuse of influence by


guardian and those in loco parentis, solicitor, spiritual adviser, doctor,
medical attendant, and may be said to apply to every case in which
two persons are so situated, that one may obtain considerable
influence over another

Morley v Loughnan
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unnecessary to show existance of special r/ship between dcsd and D,


for he has took possession, so to speak , of the whole life of the dcsd.,
& the gift were not the result of the dcsds own free will, but the
effect of that influence and domination.

Lloyds Bank v Bundy


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Plaintiff : Bundry, dependant : Llyods Bank


Defendant was an old farmer who had little knowledge of the
business world. He had to mortgage her farm three times to the bank
as security against overdrafts taken by his company.
Even if the bank knows that the company is experiencing financial
difficulties, this situation is not explained to the defendant was
completely dependent on advice from the bank.

Held :
- when the company went bankrupt, the court to decide, the bank is
not entitled to exercise its right to such collateral. This is because,
the failure of the bank to make sure the defendant to seek advice
from an independent party cannot deny the assumption that the
collateral contract entered into on the basis of the influence not
affordable.
- Later, Mr.Bundy claim bek the land n stating he is under influenced.
- Unfair advantages, domination of will

T is a student intends to sell some property to settle the tuition fees.


He has found a defendant who is a lawyer for advice on the sale.
Later defendant has buy property T at 7.000 without informing that
the actual value of the property is 20,000.

Held :
- The Court held, the contract must be set aside because there is trust
between the defendant's relationships with T. This is because T has
referred to the defendant to obtain counsel and by the defendant was
not entitled to buy the property without making the disclosure.

Satwath Haneem v Hadjee Abdullah


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Held:
-

P beneficiary, D- trustee of the family


The plaintiffs husband executed a conveyance of property belonging
to himself and the plaintiff to B and C, his brothers. The plaintiff
agreed to the conveyance but after her husbands death, she bought
an action seeking to set aside the agreement and the conveyance.
A confidential relationship existed between the plaintiff and B and C.
The burden of proof therefore lay on B and C to show that the
plaintiff fully understood the transaction and executed the
conveyance freely and without being subject to undue influence.
Since both B and C failed to discharge the burdem

Datuk Jaginder Singh and Ors v Tara Rajaratnam


- The respondent who was the registered proprietor of land, claimed
that she was induced by the fraud and under influence of the 1st and
2nd appellant to transfer her land to the 2nd appellant.
Held:
- The appellants and respondent were in a solicitor-client relationship,
the transaction was unconscionable, the burden was on the
appellants to rebut the presumption of undue influence. Since thay
had not discharged that burden, the transaction was set aside. In
addition to undue influence, the trail court also found that the
appellants conduct had been fraudulent and exercised its discretion in
awarding damages which was upheld by the appellate court.
Inche Noriah v Shaik Allie
- Point to be proved is that the other party has to act independently
without any influence and fully understand the thing done by him.

1) Representation of certain fact, not opinion


Chait Singh v Budin bin Abdullah
- Farmer borrowed money from P, a financial company
- Land of D was mortgage and a high interest of 63% is charged.
- Defendant was an illiterate.
Held:
- Bargain is unconscious bargain therefore contract is voidable.
Letchemy Arumugan Iwn Annamalay
- Plaintiff who is a female rubber tappers are illiterate request to
cancel the sale and purchase agreement has been entered by the
defendant who was a developer.
- According to plaintiff, the defendant with the help of his solicitor has
taken advantage of his ignorance by calling on him to sign some
documents in English. Plaintiff signed the documents without
knowing and realizing that in fact he signed an agreement to sell its
land in Port Dickson.
Held:
- Defendant claimed that the agreement was signed was witnessed by
a lawyer who has explained everything to the plaintiff. The Court
held evidence clearly shows that the defendant has committed a
fraud on plaintiff. Thus, the painted is entitled to cancel the
agreement.

Tan Chye Chew v Anor Iwn Eastern Mining & Metals Co Ltd
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although the geological experts have been brought by the respondent


to check a second appellant land not included in the contract,
because the respondent has adequate facilities to conduct its own
investigation to determine whether the land is examined, including in
the contract, the court ruled, the appellant not do any indirection.

Representation
1) Representation of certain fact, not opinion
2) Addressed to innocent party
3) Induce the other party to enter into contract

Bisset v Wilkinson

Bisset v Wilkinson
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Held:
-

The claimant purchased a piece of farm land to use as a sheep farm.


He asked the seller how many sheep the land would hold. The seller
had not used it as a sheep farm but estimated that it would carry
2,000 sheep. In reliance of this statement the claimant purchased the
land. The estimate turned out to be wrong and the claimant brought
an action for misrepresentation.
The Privy Council held that the statement was only a statement of
opinion and not a statement of fact and therefore not an actionable
misrepresentation. The claimant's action was therefore unsuccessful.

2) Induce the other party to enter into contract

3) Induce the other party to enter into contract


Mothoolal v. Life Insurance Corp

Mothoolal v. Life Insurance Corp


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the Indian Supreme Court in reference to the Explanation to section


19 of the Indian Contract Act stated that a false representation,
whether fraudulent or innocent, is irrelevant if it has not induced the
party to whom it is made to act upon it by entering into the contract.

Duty of disclosure
Keates Iwn Lord Cadogen

Goh Chooi Leong v Public Life Assurance Co. Ltd.

Keates Iwn Lord Cadogen


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Plaintiff knew defendant in desperate need of homes, has led to the


plaintiff that nearly destroyed a house without telling the condition
of the plaintiff.

Held :
- Plaintiff claim for compensation has been denied because the court
did not regard this as an indirection in the defendant.

Derry v Peek
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Goh Chooi Leong v Public Life Assurance Co. Ltd.


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The high Court ruled that there was a deliberate non-disclose when
in a life insurance contract, the assured had failed to disclose that he
had previously suffered from Tuberculosis. It is trite law that a
contract of insurance is a contract uberrimae fidei which can be
voided for non-disclose of material facts.

The defendants were directors of the Plymouth, Devonport and


District Tramways Co. Ltd., which was authorised by statute to run
tramways by animal power, or with the consent of the Board of
Trade, by steam power.
The prospectus issued by the company indicated that steam power
would be used, but the Board of Trade refused its consent.
The plaintiffs, on the strength of the representation in the prospectus,
had obtained shares in the company, but in the absence of any
evidence that the defendants believed the statement in the prospectus
to be untrue

Held :
- The House of Lords that they had not committed the tort of deceit.

Weber v Brown
Nocton v Lord Ashburton
*is a leading English tort law case concerning professional negligence and
the conditions under which a person will be taken to have assumed
responsibility for the welfare of another.
- Lord Ashburton was buying a property for 60,000 on Church Street,
Kensington, London. His solicitor was Mr Nocton. Mr Nocton
advised Lord Ashburton to release part of the mortgage security.
This was a bad idea, because as Mr Nocton in fact knew, this meant
that the security would become insufficient. Lord Ashburton alleged
the advice was not given in good faith, but rather in Mr Nocton's self
interest.
Held:
- Viscount Haldane LC for the House of Lords held that despite Derry
v Peek (which had disallowed any claim for misstatements apart
from in the tort of deceit) Mr Nocton was liable for his bad advice
given the fiduciary relationship between the solicitor and client.

Lau Hee Teah v Hargill Engineering Sdn Bhd


Held:
-

The plaintiff-appellant attempted to rescind an agreement to take a


loader on hire-purchase alleging fraudulent misrepresentation.
In dismissing the appeal, held that the appellant had failed to
discharge the burden of proof required of him on the question of
fraud.

Held:
-

Plaintiff-respondent sued the defendant-appellant for damages in


respect of an alleged false and fraudulent misrepresentation relating
to the number of rubber trees on an estate over which the latter had
the right of purchase, which right he transferred for valuable
consideration to the former. The number of trees represented was in
excess of the number which actually existed on the estate.
The defendant-appellant had made the alleged misrepresentation
falsely and fraudulently and that it had caused the plaintiffrespondent to acquire and subsequently to exercise the rights to
purchase.

Datuk Jaginder Singh v Tara Rajaratnam


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Held:
-

The respondent who was the registered proprietor of land, claimed


that she was induced by the fraud and undue influence of the 1st and
2nd appellant to transfer her land to the 2nd appellant.
Appellants and respondent were in a solicitor-client relationship, the
transaction was unconscionable, and in therefore, the burden was on
the appellants to rebut the presumption of undue influence.
Since they had not discharged that burden, the transaction was set
aside. In addition to undue influence, the trial court also found that
the appellants conduct had been fraudulent and exercised its
discretion in awarding damages which was upheld by the appellate
court.

S24 Unlawful agreement


(a) It is forbidden by law
(b) It is of such a nature that if permitted, it would defeat any law
(c) It is fraudulent
(d) It involves or implies injury to the person or property of
another
(e) Courts regards it as immoral, or opposed to public policy
(a) It is forbidden by law
(b) It is of such a nature that if permitted, it would defeat any law
Hee Cheng v Krishnan
Menaka v Lum Kum Chum
Murugesan v Krishnasamy & Anor
Ahmad b. Udoh & Anor v Ng Aik Chong

Hee Cheng v Krishnan


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Held:
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Plaintiff entered into a contract with defendantto purchase a house


built by the defendant on the ground temporary occupation license.
The defendant and the plaintiff claiming breach of promise of
specific performance. the contract is contrary to Rule 41 rules the
land, in 1930that temporary occupation licenses shall not be
transferred.
The court decides, the contact is an attempt to sell and purchase
the defendant's rights under temporary occupation license.
Therefore, if the contract is allowed, it would defeat the provisions
of relevant laws.

Murugesan v Krishnasamy & Anor


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Held:
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Held:
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The appellant was a registered moneylender and through her


attorney she lent money to the respondent on the security of a charge
of certain lands belonging to the respondent.
Contract was discovered vopid only after the proceedings had been
started.

The promise to allow the purchaser to enter the lands and occupy it
was an attempt to transfer to him a part of the promisors rights
under the TOL and therefore void.
Illegal promise could be severed from other provisions, and held that
the sale agreement was good but had become impossible to perform
so that the plaintiff was entitled to recover the purchase money.

Ahmad b. Udoh & Anor v Ng Aik Chong


- R leased padi land from A for 6 years & $1500 was paid therein.
This agreement contravened s.3(1) of PCO. A then disallowed R to
till the land & R claimed the return of the $.
Held:
- both were ignorant of the illegality at the time of executing the
agreement, s.66 would apply.

(d) It involves or implies injury to the person or property of another


Syed Ahamed Alhabshee v Puteh binte Sabtu
Mohd Ali Jahn b Yusop Sahibjahn & Anor v Zaleha bt
Mat Zin & Anor

Syed Ahamed Alhabshee v Puteh binte Sabtu


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Menaka v Lum Kum Chum:

P bought TOL land from dependant who had applied for permanent
title. They entered into an agreement with the plaintiff as soon as
titles were issued. When application was unsuccessful, P claimed the
return of money paid.

Trustee of the land belonging to a child has agreed to sell the land to
the plaintiff. If the purchase is allowed, it would be detrimental to the
interests of the children and therefore, the court ruled that the
transaction is void.

Mohd Ali Jahn b Yusop Sahibjahn & Anor v Zaleha bt Mat Zin &
Anor
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Held:
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In 1948, the plaintiffs father, who was registered as guardian in the


title of a piece of land, sold the said land to the defendants father By
this agreement the plaintiffs father guaranteed that the plaintiffs,
who were minors then, would execute the transfer of the land to the
purchaser when they attained the age of majority. Title to the land
and possession thereof were then given to the purchaser, whose
family, including the defendants, started and continued to occupy the
land until this day. Quit rent was paid by the purchaser's family until
1990 and by the plaintiffs as well since 1984.
Minors contract is void; court will protect minors interest; as
guardian failed to seek leave of a Court or a Judge in order to deal
with the land, the sale is void & the agreement therefore is
unenforceable.

(e) Courts regards it as immoral, or opposed to public policy


Pearce v Brooks
Aroomogum Chitty v Lim Ah Hang
MAA Holdings v Ng Siew Wah

Pearce v Brooks
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Contract of hire of vichicle for purpose of prostitution

Aroomogum Chitty v Lim Ah Hang


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Whom the plaintiff to claim back money lent to


the defendant to operate a brothel. court decides a sum of
money loaned to conduct business of prostitution cannot be
claimed back for the real purpose of the contract is immoral

Theresa Chong v. Kin Khoon & Co


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The court ruled that the appellant-defendant must settle on a contract


though made in contravention of the by-laws of the Stock Exchange
which imposed a penalty on the plaintiffs respondents. The
plaintiffs-respondents might have breached the by-laws of the Stock
Exchange by dealing with an unregistered remisier but such dealing
did not make the contract illegal as being opposed to public policy.

MAA Holdings v Ng Siew Wah


- A contract for the sale of all shares of a company owning land
contained a clause to the effect that the purchaser would apply
to Foreign Investment Committee for approval of the
transaction and should approval within three (3) months from
the date of agreement. The defendants-vendors refused to
complete, pleading among other things that they were not
bound by the agreement as approval of the F.I.C had not been
sought.
Held
- The failure to apply for approval was not a breach that went to
the root of the contract and the parties had in fact expressly
provided fir that in the agreement.
- The defendants-vendors were therefore not entitled to consider
themselves discharged from their obligations under the contract
because if the purchasers breach, which at best, merely entitles
them to a claim for damages.
Restraints of Trade, S.28
Wrigglesworth v Anthony Wilson
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P & D agreed that D was restrained from practicing as advocate &


solicitor within 5 miles of Kota Bahru town for period of 2 years
after the termination of his service contract with P.
However, contrary to what was promised after the service, the
defendant opened his firm in the Kota Bahru. Former employer to
apply for an injunction from the courts to prevent the
defendants from doing so.

Held :
- The Court held, because the agreement is null, the application for an
injunction denied.

Consequently of illegality
Ahmad b. Udoh & Anor v Ng Aik Chong
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Held:
-

R leased padi land from A for 6 years & $1500 was paid therein.
This agreement contravened s.3(1) of PCO. A then disallowed R to
till the land & R claimed the return of the $.
both were ignorant of the illegality at the time of executing the
agreement, s.66 would apply.

Menaka v Lum Kum Chum


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contract was discovered void only after the proceedings had been
started.

Yeap Mooi v Chu Chin Chua & Ors


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only one party unaware of illegality, she only can recover her money
(innocently depositing $).

Discharge of contract
Sumpter v Hedges
- The claimant agreed to build two houses and stables for the
defendant. It was agreed that 565 would be payable on
completion. The claimant commenced performance and then
ran out of money and was unable to complete. He had
performed just over half of the contract. The defendant
completed the work himself. The claimant sought to recover
333 representing the value of the work he had completed. He
argued that in completing the work himself, the defendant had
thereby accepted partial performance and prevented the
claimant from completing the contract.
Held:
- The claimant's action failed. The court held that the defendant
had no choice but to accept partial performance as he was left
with a half completed house on his land.
-

D had no option but to accept the building partly erected on his land.

Wong Kup Sing v Jeram Rubber Estate Ltd


- Defendants had failed to give reasonable notice to the plaintiff that
intended to terminate the contract after having agreed to n extension
of time for performance in a contract for the purchase of a rubber
estate.
Frustration
There is Frustration if:
a) The essence of frustration is that the extraneous event is outside the
control of the parties, not caused by one of them
Ramli Zakaria & Ors v Government of Malaysia

Ramli Zakaria & Ors v Government of Malaysia


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Taylor v. Caldwell
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Yeow Kim Pong v Ng Kim Pong


Eng Mee Yong & Ors v Letchumanan
Sy. Eastern Plastic Industry v Sy. Lam Seng Trading
Wong Kup Sing v Jeram Rubber Estate Ltd
Louinder v Leis

Yeow Kim Pong v Ng Kim Pong


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Held:
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His lordship stated that if in a contract in which time is of the


essence, a party fails to perform it by the stipulated time, the
innocent arty has the right either to rescind the contract, or to treat as
still subsiting. If he treats it either expressly or by cobduct as still
continuing, the contract exists but time cease to be of the essence and
become at large.
The respondent had wavied his right to rescind the contract and
consequently was deemed to have opted tto treat the contract as
subsiting.

Court held that an agreement containing the provisions of a specific


salary is not to be disappointed when the salary is then removed and
replaced with a new salary scale.
Court stated that a contract will not be released solely on the basis of
the influence of frustration itself ("self-induced frustration")

P entered into a contract with D where P would pay D 100


pounds/day to use D's music hall to give a concert.
After making the agreement but before the first performance, D's
music hall was destroyed by fire. Neither party was at fault in the fire.
P sued D for breach of contract.

Held :
- contract rescinded.
- A contract may be rescinded if a key provision in the contract
becomes impossible to perform due to no fault of either party.
- If a person signs a contract to act as a servant of another, the
executors of the servant's estate are not liable when the servant dies.
- The excuse that a contract does not have to be enforced upon the
destruction of a person or thing is implied by law though it may not
be explicit in the contract.
Object of contract destroyed/ non-occurrence of a particular event

Krell v Henry
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D agreed to hire a flat from P for June 26 &27, 1902, the contract
contained no reference to the coronation processions, but they were

to take place on those days and to pass the flat. The processions were
cancelled. 2/3 of the rent had not been paid and the COA held that
the P cannot recover it.
Death or incapacitating illness: contract for personal services.
Robinson v Davison:
- Wife D, famous pianist, for the presentation promised for the concert,
but could not implement it because of dangerous diseases

Berney v Tronoh Mines Ltd


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Employment contract released by the disappointment when the


Japanese invaded Malaya at that time. This means that the events
that lead to frustration must be something that cannot be expected to
be reasonable by both parties.

d) Becomes more onerous or costly


Davis Contractor v Fareham UDC
Davis Contractor v Fareham UDC
- The Court held that a construction contract not to be disappointed
just because of shortage of labor and construction work becomes
more difficult.
a) Void from the very beginning
Goh Yew Chew v Soh Kian Tee

Lee Kin Suan Eng v Chan


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5-year lease renewal at all frustrated with the existence of the new
enactment that sets the annual renewal.

Not frustration if
a) Void from the very beginning
b) Can be expected to happen / foreseeable
c) Collateral object achievable
d) Becomes more onerous or costly
c) Collateral object achievable
Herne Bay Steam Boat v Hutton

Herne Bay Steam Boat v Hutton


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Held:

The defendant hired out the claimant's steamship. The purpose of the
contract was to take paying passengers to view the Naval Review
which was part of King Edward VII's coronation celebrations. The
defendants were also offering a days cruise for the passengers. The
Naval Review was cancelled as the King was ill. The defendant did
not use the steamship and the claimant brought an action for the
agreed contract price. The defendant argued the contract had become
frustrated due to the cancellation of the Naval Review.

The contract was not frustrated. The contract had not been deprived
of its sole commercial purpose as it was still possible to perform the
days cruise. The Naval Review was not the only commercial purpose
of the contract.

The appellant contractor had undertaken to construct two buildings


on land belonging to the respondent employer.
The sum of $5,000 was paid by the respondent to the appellants as
earnest money. It was found that, owing to the encroachment of a
neighbors house into the lot, there was not sufficient area to
construct the buildings according to the plans.
In his action the respondent claimed the return of the sum of $5,000
as money paid for a consideration which had failed.

Held
- The respondent was entitled to the balance of the deposit of $5,000
after deduction of all reasonable expenses incurred by the appellants.
b) Can be expected to happen / Foreseeable
Khoo Than Sui v Chan Chiau Hee

Khoo Than Sui v Chan Chiau Hee


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The defendant has contracted to recuse logs from the river Sugut
plaintiff to Sandakan. Defendants are required to attract eighty two
logs, but only eleven arrived safely only because of strong riut at sea.
Plaintiff has made a claim for damages for any loss of logs wood, but
the defendant refused to pay damages on the grounds that the natural
disasters that have occurred that caused the contract to be frustrated.

Held:
-

The defendants reason that natural disasters that cause the contract to
be disappointed not acceptable due tempest that occurred have not
reached the stage of natural disasters and should be in such weather
conditions, the defendant should take precautions to face all
eventualities.

c) Becomes more onerous or costly


Davis Contractor v Fareham UDC

Davis Contractor v Fareham UDC


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Davis were contractors - to build 78 houses over 8 months. There


was a labor shortage at the time, delayed completion of contract
actually nearly 22 months. Davis claimed a larger sum of money
on a Quantum Mires basis.

Held :
- Was the contract still a binding one? House of Lords said is this
contract frustrated? Due to extraneous events? Originally, the
contract was not binding, since:
a) There was adequate labour
b) The contract would be frustrated if there was a labour shortage
- No - not going to look for an implied term, no frustration. Merely,
there is a performance obligation more onerous than conceived to be.
Lord Reed said that the doctrine of frustration was not based on
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an implied term notion, instead there were two facts to be considered:


1) Nature of the contract itself
2) Circumstances surrounding the contract at the time of its
formation.
- The doctrine of frustration addresses the problem of the frustrating
arising after formation. The distinction may turn on the question of
timing, as is illustrated in the following case:
*The Court held that a construction contract not to be disappointed just
because of shortage of labor and construction work becomes more difficult.