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Question 1

Mr Mojo, Datin Nony and Mr Tojo formed a partnership business under the name of
Monoto & Partners to develop a land since two (2) years ago. To expand their
business, Mr Tojo, the managing partner had approached Berbunga Finance Berhad
(BFB) for financial assistance. BFB has agreed to grant the loan of RM1.3 million only
for the purposes of expanding the business to Monolito & Partners. Mr Tojo was not
disclosed the lending transaction to the other partners. As the loan granted by BFB
was insufficient to part finance their project, Mr Tojo bought the land with his own
money under his own name.

Dispute arose between all of the partners and Mr Tojo decided to leave the business.
Mr Tojo claimed that as the land was bought under his own name, it is his own property
and not a partnership property and hence wants to take it away with him.

Mr Mojo and Datin Nony claimed that since the objective of the partnership was formed
for land development, the land must be regarded as held in trust for the partnership,
although it is under Mr Tojo’s name. Mr Tojo is very unhappy and strongly disagree
with his partners’ opinion.

A year later, BFB had initiated a legal proceeding against Monoto & Partners and all
the partners for recovery of the money owed. Mr Mojo and Datin Nony had denied their
liability as they claimed that they are not managing partners. Pursuant to that, Mr Mojo
and Datin Nony had insisted Mr Tojo to surrender the business accounts to them for
the purposes of auditing. Mr Tojo said all book keeping and accounts were at his home.

(a) Advise Mr Tojo on the status of the land under his own name. (20 marks)
(b) Discuss Mr Mojo and Datin Nony on their liabilities under the law of
partnership. (40 marks)
(c) Explain the principle of uberrimae fidei in Monoto & Partnership. (40 marks)

Support your answer with relevant decided cases.

(Total: 100 marks)


Question 2

Jamil appointed Haris to deliver Musang King durians from Bentong to Singapore.
He agreed to pay Haris RM1,500. Unfortunately, the lorry broke down in Malacca
and had to be repaired. The mechanic, Amin told Haris that the repair would take
approximately 2 (two) days and that the durians had to be unloaded. Amin told
Haris to sell the durians as there was no place in the workshop to store the durians.
Haris took Amin’s advice and sold the durians outside the workshop for RM30,000.
Haris gave the RM30,500 to Jamil. He kept RM500 as his commission for selling
the durian. Jamil was furious as he could have sold the durians in Singapore for
RM50,000.

Haris tried to contact Jamil. Unfortunately, Jamil had gone to Phuket for a holiday
and had switched off his mobile. So, Haris took the advise of Amin and sold the
durian outside the workshop for RM10,000. Haris gave the RM10,000 to Jamil.
Jamil was furious as he could have sold the durians in Singapore for RM50,000.

Discuss on the following legal issues:-


(1) Whether there is any creation of agency between Jamil and Haris. (40 marks)
(2) To what extend that Haris has an authority under the law of agency. (20 marks)
(3) Did Haris has breached his duties? (20 marks)
(4) What are the remedies available to Jamil? (20 marks)

(Total: 100 marks)

Question 3
(a) Meena was offered to work at a manufacturing company, Star Quality Sdn Bhd.
She accepted the offer as a Production Assistant Manager. Her probation was
for 6 months. She signed an employment contract with Star Quality Sdn Bhd
on the first day where she had to undergo a training of safety and health for a
month. 20% of Meena’s salary will be used to pay for the training. During the
course, Meena found that the content of the course did not reach to a certain
standard and was irrelevant to the objective of the training. Meena also found
out that other companies which conducted the same training only affected 3%
of the employees’ salary. Meena recalled that she asked Mr. Karuppan, the
Human Resource Manager, whether she could be excused from the training
because she is a certified officer in OSHA. But, Mr. Karuppan did not give any
response to her question and gave a sarcastic remark. At the same time, she
is worried that she will not be confirmed for the post of Production Assistant
Manager after the probation period lapses if she were to skip the training. She
believed that she had been cheated and she was worried over her position as
a Production Assistant Manager at Star Quality Sdn Bhd. She wishes to claim
back her 20% of her salary. Advise Meena pursuant to the Law of Contract.
(60 marks)

(b) Discuss with decided cases, some contracts can declared void and
unenforceable due to prohibited by statute as mentioned in the Section 24(a),
(b) and (c) of the Contracts Act, 1950.
(40 marks)

(Total: 100 marks)

Question 4
BJU & Co entered into a contract of sale with LEH Enterprise for the supply of T-shirt
for purposes of printing and re-selling to the end users. Among others the salient terms
of the contract are as follows:-
(a) That the T-shirt to be supplied must be made by polyester material or other
materials of the same kind (in view of reducing the whole contract sum);
(b) That payment shall be made upon delivery of the goods supplied at the
warehouse, as and when the order is being placed by the buyer to the seller;
and
(c) That the delivery of the goods shall be effected by the seller within seven (7)
working days upon proper order being placed by the buyer which could be done
personally and/or to be transmitted via facsimile transmission.
BJU & Co has been appointed as the sole supplier of T-shirts, bearing the logo and
special slogan in relation to the upcoming humanitarian campaign by an NGO, meant
for all supporters of the said NGO. LEH Enterprise has been consistently supplying the
goods to BJU & Co even though BJU & Co has failed to make certain payments upon
delivery of the goods as agreed pursuant to the said contract, due to some financial
issues.
The facts have shown that:-
(i) the T-shirts supplied had caused rashes, itchiness and/or skin irritation to most
users; and
(ii) the logo and slogan printed on the T-shirts run down immediately upon contact
with water.
Due to these serious issues, the said NGO refused to make any payment whatsoever
unless BJU & Co could replace the goods supplied with new ones and further pay
certain amount of damages to them. BJU & Co was annoyed with the situation and
shifted the blame to LEH Enterprise for not supplying goods ‘up to the standard and
specification required’ pursuant to the contract entered into earlier.
On the hand, LEH Enterprise claimed that BJU & Co had used cheap colouring
materials and methods in printing the said logo and slogan, materials of which could
not remain on any polyester items. They further claimed that the skin irritation problem
occurs only to those users with sensitive skin. Hence, they deny any liability
whatsoever. Discuss the legal issues arising from the facts of the case given under
Law of Sale of Goods.

(Total: 100 marks)

Question 5
Robert is the new Human Resource Director at Thunder Wonder Sdn Bhd. When he
first joined the company, he was shocked to discover that there was no record keeping
of the employees’ performance indicators nor was there a clear policy on employee
misconduct. In trying to implement standard rules of employee conduct, he discovered
that one of the senior expatriate managers in the company, Anthony, has unusually
high travelling claims. Upon further investigation, he discovered that Anthony, being
the International Sales & Marketing Manager for South East Asia Region had also
claimed for travels to Ceylon and San Francisco. Not only were these routes beyond
his scope of work, Robert discovered that he was actually travelling with Patricia, the
General Manager of Corporate Communication on at least three occasions in the last
four months even though they have no common projects, sales exhibitions, seminars
or work-related meetings scheduled during that time. Advise Robert on his next course
of action and procedure of domestic inquiry.

(Total: 100 marks)

(END OF QUESTIONS)
Answer scheme
QUESTION 1
a. Whether the land of Mr Tojo can be considered as partnership
property?
 Section 22(1) of Partnership Act 1961
 Case: Ponnukon v. Jebaratnam/Davis & Davis (fact & decision)
Asset bought using personal money is personal property unless can prove
it to be partnership property. (name of case, fact & decision, able to
extract principle of law from the case).
 There was no agreement between the Mr Tojo and Monoto & Partners that
the land was to be purchased or treated as partnership property Need to
prove the ownership either belongs to Mr Tojo or partnership’s property
 Object of the firm being land development, need not necessarily mean the
firm must own the land for it to carry on the business.
 The land was not paid from the partnership fund but with funds raised by
Mr Tojo on his separate act and the partnership.
 Conclusion :The land cannot be declared as partnership property and not
joint owned by the partnership or property held in trust of the partnership.
(deliberation and conclusion)
(max 20 marks)
b. Liabilities of every partnership
 Section 7 – every partner is an agent for the firm and other partners for the
purpose of the business of partnership. Unless the partner has no authority
or unauthorized to act for the firm and 3rd party knows that the partner has
no authority or does not know or believe him to be a partner.
 Section 8 – an act or instrument relation to the business of the firm and
done or executed in the firm’s name or in any other manner showing an
intention to bind the firm. Case: Chan King Yue v. Lee & Wong (fact and
decision)
 Mr Tojo had signed a loan agreement under the firm’s name, therefore
binding other partners. (reality: the bank documents requires all partners
or authorise partner to sign).
 Discuss Section 9 – the provision does not affect any personal liability
incurred by an individual partner. The loan for the firm’s continuous
Monoto’s business.
 Liability of partner-Section 11 –joint liability of partners. Whether
managing/active/sleeping partner, the partner to be jointly and severally
would be held liable fir the suit against the firm. Case: Osman b Hj
Mohamed Usop v. Chang Kang Swi (fact & decision)
*correct provision, principle law & case, and application.

(max 40 marks)

c. Obligations of partners to act in utmost good faith based on the principle


of uberrimae fidei.

(1) Section 30 of the Partnership Act 1961 – every partner is obliged to


render true accounts and full information on all things affecting the
partnership.
 Case: Law v. Law/Tham Kim Fai @ Tham Kim Fay v. Ng Kon Seong
(fact & decision)
 Mr Tojo owes a duty to act honestly because the relationship
between partners is based on the principle of uberrimae fidei
(utmost good faith).

(2) Section 31- Every partner who uses the partnership property,
name or business connection or involve in any transaction
concerning the partnership without the consent of other
partners must account to the firm for any secret profit or benefit
derived by him .

 Case: Pathirana v. Ariya Pathirana – the defendant had used the


firm’s goodwill to obtain the new contract before the
partnership was dissolved.
 Mr Tojo must obtain consent from other partners concerning the
loan transaction.
(3) Section 32 of the Partnership Act 1961 -Obligation of the partner
not to compete with the firm in business of the same nature without
consent of the other partner and he must account for and render all
profits made by him to the firm.
 Mr Tojo must render true acccount whenever required by the
partners. Account must be kept at the registered add of business
or business is conducted not at home.

*each provision, law & application. (max 40 marks)

QUESTION 2
(a) Issue : Whether there is a creation of agency by necessity?
 Law: Agency by necessity arises when a person becomes the agent of anotther
under certain circumstances without having been appointed as such. A person
is entrusted with another’s property and it becomes necessary to act on order
to preserve that property although he has no authority to do so.
 Section 142 of Contracts Act 1950; Case: Great Northern Railway v Swaffield
(fact and decision of the case)

 3 Requirements must be fulfilled before agency by necessity can be applied:-


1. Impossible to get principal’s instruction;
2. Agenct’s act is necessary to prevent loss to principal but
NOT to the extend which will benefit the principal
monetary;
3. The agent of necessity haas acted in good faith.

 Springer v Great Western Railway Company (fact & decision)


 Application and conclusion.
 (Max 40 marks)

(b) 2 kind of agent’s authority: Actual and Apparent authority.


Define: actual: express – verbal or in writing and implied authority:arise
from the circumstances of the case, custom or usage of trade and conduct
of parties.
Apparent authority: although the prinicipal may not have consented to his
exercising authority – where the principal by his word or conducts, leads
third party believe his agent has authority to make contracts for him.
Application and conclusion: Haris has no implied and apparent authority.
Express : only to deliver the durian to the destination only. Not to the
extend of selling it. (20 marks)

(c ) Law: Section 164: to obey the principal’s instruction. If not, agent


liable for loss suffered by the principal. He supposed to act based
on the instruction given by the principal. Case: Turpin v Bilton
(case and decision)
Application: Haris breached his duty not to obey’s principal instruction.

OR
Law: Section 168- not to keep secret profit. Case: Mahesan
Must disclose to the principal, if any.
Application and conclusion. ( 20 marks)

(d) Remedies available:


1. Dismiss the agent;
2. Sue the agent and the third party;
3. Not to pay his commission;
4. Claim the loss;
5. Repudiate the contract.
(Deliberation on Mahesan’s case) (20 marks)
QUESTION 3
Issue No. 1
Whether there is a fraud?
Define fraud, misrepresentation, coercion
Meena has to prove intention to commit fraud by Star Quality Sdn Bhd, but proving
fraud (s. 17) is difficult in this case.

Issue No. 2
Whether Mr Karuppan’s silence is equivalent to speech.
(a) Silence is not a fraud but silence can become fraud if there is duty to
speak or silence is equivalent to speech (Explanation to s.17)(1m)
(b) The relationship between Meena and Mr. Karuppan/Star Quality Sdn
Bhd does not give rise to a duty on Mr. Karuppan to speak or his silence
is equivalent to speech.

Issue No. 3
Whether there is coercion?
(c) There is no coercion because the elements of coercion is not found in
the above case – not a crime or unlawful detention of property.
(d) Alternatively, Meena can use (s.73) coercion by showing that she is at
lower position and had to sign with no alternative as an employee.
(e) KanhaLal’s case/ Chin Nam Bee’s case (fact and decision)
Each issue carry maximum 20marks.
Max 60 marks.
( b) Contracts void under Section 24(a), (b) and (e).
 Section 2(g) – a void contract is an agreement not enforceable by law.
 Section 24 provides that the consideration or object of an agreement is
unlawful if it falls within any of the following subsections:-
(a) it is forbidden by a law;
(b) it is of such a nature that, if permitted, it would defeat any law;
(e) the court regards it as immoral or opposed to public policy.
 Section 24(a) and (b)–
 Cases (at least 2 cases for each Section 24(a) and (b)(fact and decision
of the case)- Manang Lim Native Sdn Bhd v. Manang Selaman/Chung
Khiaw Bank Ltd v.Hotel Rasa Sayang Sdn Bhd/Sababumi (Sandakan)
Sdn Bhd v. Datuk Yap Pak Leong/Hee Cheng v. Krishnan/Tan Bing Hock
v. Abu Samah
 Section 24(e)- Illustration (k), Section 24
 Case: Arromogum Chitty v. Lim Ah Hang (fact and decision of the case)
 Consequences of void and illegal contract-Section 66 – Since Section
2(g) provides that such an agreement is not enforceable by law, Section
66 provides that when an agreement is discovered to be void or
becomes void, the person who received any advantage under such
agreement is bound to restore it to the other party or to pay adequate
compensation for the same.
 Case: Menaka v. Lum Kum Chum – right for restitution –contract
entered was forbidden by Section 8(b) of Moneylenders Ordinance
1951.
 One case under sub-section together with deliberation.
(max 40 marks)
Question 4

Issues

1. Is the contract, contract of sale of goods falls under the relevant provision
of SOGA 1957?
- Sect. 2 of SOGA – definition of goods – movable property not actionable
claim – t-shirts fit this definition.

2. Implication of having written agreement laying down the terms and


conditions of the contract?
- Sect. 62 of SOGA allows exclusion or verification of implied terms as under
the law.
- it must be expressly agreed upon and/or in written form – ‘by express
agreement’.
- hence the terms as stated under the contract shall be taken as verifying the
original position and the impact of implied terms under SOGA.
- all terms must be observed accordingly as consented between parties.

3. Failure of BJU & Co to make the necessary payment upon delivery of the
goods (Clause (b) of the Contract) – Can LEH repudiate the contract?
- Term as to payment – section 11 of SOGA – ‘stipulations as to time of
payment are not deemed to be of essence of a contract of sale’. Unless
otherwise stated.
- Hence, failure of BJU & Co to make prompt payment to LEH does not
automatically entitle LEH to repudiate.
- Further – LEH condoned by continue supplying the goods even payment
was made on and off!
- Sect (55) (1) – right to sue – by right.
4. When does the property of the goods consider transferred?
- Issue of transfer of property of the goods – related issue – transfer of risk.
- General rule-section 19 of SOGA  refer to the relevant provision of
section 20, 21 and 22 of SOGA – explaining the law on transfer of property
of specific or ascertained goods.
- generally by referring to clause 19 to be read together with section 20 of
SOGA – property of the goods shall transferred to BJU & Co when the
contract is made – as the goods are in a ‘deliverable state’.

5. Issue of the provision under Clause (a) of the Contract. Does this clause
deny the implied clause as to fitness for particular purposes? – Could LEH
be held responsible for the ‘running down’ of colour for the logo and
slogan?
- rule under the latin maxim of caveat emptor – the buyer must beware – not
the seller.
- however – for the seller to be held responsible – section 16 (1) lays down
4 requirements, one of which:-
 buyer must make known to the seller before contract is made-
particular purpose for which goods are required –
- however-BJU & Co made it very clear that the material to be used by LEH
for the t-shirt shall be of polyester material – assuming that LEH could rely
prove that under normal circumstances – with the said material proper
embossment or printing could be made properly-LEH is not responsible for
the ‘running down of the colour of the logo and slogan – as claimed that BJU
& Co had used cheap material for that purposes –
- in this instance it is for the NGO to sue BJU & Co for that action and LEH
could not be dragged into the legal battle.

6. Can LEH be held responsible for the issue of the t-shirt causing itchiness
and/or skin irritation to most users of the said NGO?
- By looking at the requirements set by section 16 (1) (a) of SOGA – BJU & Co
must show to the court that LEH is well aware of the ‘particular purpose
for which the goods are required’ – ref Griffiths v Peter Conway Ltd [1939]
– t-shirts could seen as not suitable for wearing as MOST of the users have
the skin irritation. – hence we can also conclude that the goods sold are not
of merchantable quality – section 16 (1) (b) – “merchantable quality” –
goods sold are fit for the particular use to which they are sold – if defective
– unmerchantable!
- further BJU can always say that they are relying on LEH’s skill to provide t-
shirts for wearing safely – ref to Grant v Australian Knitting Mills [1936]
- hence – in this instance – LEH could be held responsible for the skin
irritation issue.

7. Can BJU & Co shift the blame to LEH for the two issues faced by them in
relation to the goods sold to the NGO?
- only up to the issue of the skin irritation – assuming that LEH could prove
that they had used cheap colouring material for the logo and slogan – LEH
however could escape liability if the skin irritation issue only occurs among
few of the users or one or two of the NGO’s supporters.

Students are expected to argue at least 5 issues from the above Case.
5 x 20 marks each = 100 marks

Question 5

50 marks for issues and application. 50 marks for procedure of domesic inquiry.

Issue: - Whether there is misconduct on the part of Anthony and Patricia.

Law: Define- misconduct- improper behavior, intentional wrongdoing or


deliberate violation of a rule or standard of behavior. Case: Holiday Inn v Elizabeth
Lee /B.N. Railway v Moolji Sicka & Co.

Misconduct is related to 3 matters (i) duty – breach express or implied terms; (ii)
discipline – breach rules or policy; (iii) morality.

Law: Employer has a right to dismiss employee for misconduct - must apply Rules
of Natural Justice – conduct investigation to establish full facts of misconduct,
conduct fair hearing and hearing must be fair.

-Disciplinary action can only be taken justifiably against the employee on the
grounds in the charge sheet and the conclusions of the domestic inquiry. Nothing
beyond that.

-Employer may recommend dismissal, downgrade or suspension from work or


other lesser punishments as deem fit and if suspension without pay, cannot be for
more than 2 weeks.

-Past offences cannot be taken into consideration.

-Before conducting D.I., employers must also consider whether acts had been
“condoned” before, any mitigating circumstances, consider lesser punishment for
past good conduct and sufficiency of evidence.

Application: -S.14 of Employment Act 1955– employer may discipline the


employee for misconduct but must have proof.

-Albert should investigate the matter further and obtain proof of any suspected
misconduct through documentation and witnesses.

-Interview both Anthony and Patricia to inform them of the investigation findings
and ask them to answer the allegations.

-If warranted, Robert may issue letter of warning to both. Both perpetrators may
be required to undergo counseling and rehabilitation. Periodic reviews of their
progress are carried out and recorded with all parties’ acknowledgement over a
period of time.

 If misconduct persists or escalates after 3 warnings, then the company can


proceed to Domestic Inquiry - S.14(1) of Employment Act 1955. If
employee governed by Employment Act, MUST ensure procedural fairness
ie hold proper DI, even if sufficient grounds for dismissal – Said
Dharmalingam v Malayan Breweries (Malaya) Sdn Bhd but here employees
are senior management so not within Employment Act but good industrial
relations practice and code of conduct usually practiced by employers
demands an inquiry.
 There is a general rule that failure to hold domestic inquiry or holding
defective one is not automatically fatal to an employee’s dismissal (for
those falling outside scope of Employment Act) – Poon Kam Yoong v Tew
Lai Eng

1. Domestic Inquiry
a. Firstly, Albert should issue a "show cause" letter to Anthony and
Patricia outlining the allegations and asking them to provide
reasons as to why their services should not be terminated for failing
to improve or for persistent misconduct after 3 warnings.

b. If the reasons given are not satisfactory, Albert may then convene a
"Domestic Inquiry". Albert must ensure that the Rules of Natural
Justice is upheld – Eastern Plantation Agency (Johore) Sdn Bhd v
Association of West Malaysian Plantation – 2 basic components: (i)
rules requiring fair hearing and (ii) rule against bias. (Perusahaan
Kemas Maju v Ramli bin Abu Hassan; Surinder Singh Kanda v
Government of Malaysia cited in Audio Electronics Sdn Bhd v Kuldip
Singh.

c. Rule of fair hearing - ensure that the two employees are given every
opportunity of being heard fully to defend themselves against the
charges made against them and that the “hearing” must arrive at a
fair decision based on the evidence brought forward then – Sawmill
& Timber Industry Workers Union v Asia Plywood Company Sdn Bhd,
Sg Petani

d. Rule against bias – people involved or have interest in the matter


cannot be on inquiry panel. Should pick independent panel to hear
the Domestic Inquiry – Malayan Banking Berhad v Association of
Bank Officers, Malaysia
e. If misconduct proven, may hand down an appropriate punishment
based on facts.
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