Sec.
2(i)
- plaintiff supplied goods
to defendant
- they did so because the
defendant has gave them
oral guarantee, that they
would pay for the goods
- however, defendant
failed to pay
- plaintiff then got the
defendant to sign a
written guarantee, and [Nuri Asia Sdn Bhd v
went on to sue the Fosis Corp Sdn Bhd]
defendant (coerced, no
free consent) (assault
under Sec. 349-352
Penal Code)
- court held that the
defendant was coerced
into signing the written
guarantee
- plaintiff’s claim against
defendant was dismissed
- defendant told the
purchaser to pay an
additional $4,000 &
threatened to cancel
their bookings if they did
not do so
- purchaser paid the
money & later claimed for
its return as it was paid
under coercion
- court held that the
payment was NOT a
voluntary payment as the
parties were NOT in equal
terms (plaintiff paid it to
prevent the threat
consequences)
- respondent successfully
proved that the
appellants has received
independent legal advice
throughout 10 years of
transaction with
respondent
- court dismissed the
appellant’s claim for
undue influence
- respondent bought half
share of a piece of land
from appellant & he paid
the purchase price
- the respondent was
induced to sign into
another agreement,
under which he gave up
part of the land he has
previously purchased, in
exchange for another
land which was much
smaller
- respondent alleged that
he was induced by false
representation to sign
the 2nd agreement
- court held that the
misrepresentation was
fraudulent and hence, the
agreement was
VOIDABLE
- plaintiff purchased a
land from defendant
- but the defendant did
not inform plaintiff that a
part of the land was
being used for water
pipelines & other part of
the land were being used
for transmission cables
- plaintiff sued defendant
after he discovered about
it
- defendant knew the
existence of these
structure prior to signing
the agreement
- court held that this
amounted to fraud under
Sec. 17(a)(b)
- plaintiff rented out
premises to 1st
defendant
- plaintiff claimed that
the 2nd defendant
(executive chairman of
1st defendant) has
promised, if the plaintiff
allowed 1st defendant to
continue with the
occupation of the
premises, the 1st
defendant will be
responsible to plaintiff for
any loss or damage
resulting from the
tenancy
- relying on the
misrepresentation, the
plaintiff allowed 1st
defendant to remain in
occupation
- plaintiff suffered loss
- court held that this
amounted to fraud
- the appellant (land
broker) persuaded
respondent to exchange
the lands
- but the appellant was
not being honest with the
true value of the Sibu
land
- court held that this
amounted to fraud
- NZ first nation people
brought an action for the
return of land because it
has been taken away
fraudulently
- but the company
claimed that the previous
owner has properly
registered & they were
bona fide purchasers
- company has obtained
title properly & thus,
were not fraudulent
- appellant (hirer) has
entered into an
agreement, with the
respondent as the seller
- the respondent did not
inform the appellant the
year of the manufacture
of the machine & the fact
that it has been
previously been involved
in an accident
- court held that this
does not amount to fraud
as there was no active
duty on the part of the
seller to inform the hirer
about these matters
- a marriage was
conducted btwn two
persons
- father of the groom
conducted the
negotiations on behalf of
his son & 3rd party acted
on behalf of the bride
[Haji Ahmad Yarkhan v
- the father later
Abdul Ghani Khan]
discovered that the bride
suffered from epileptic
fits
- court held that there
was a duty to disclose
the fact, as this contract
was a contract uberrimae
fidei
- when there’s lack of
free consent entering
into the agreement
- when there’s serious
breach of terms of the
contract
Sec. 15
- where one of the
parties is forced to enter
into contract
i. Threat to Commit any act Forbidden by the Penal Code
1. Coercion
- it doesn’t need to be
2 Types of Coercion
forbidden by Penal Code
- property detained may
belong to other person
(not necessarily victim),
as long as it caused
victim to enter into
agreement
ii. Unlawful Detention of
Property
[Chin Nam Bee
Development Sdn Bhd v
Tai Kim Choo & 4 Ors]
Sec. 16
- when a person enters
into contract because of
influence of others
i. Domination of the will
by one party over the
other. Elements
ii. Obtaining an unfair
advantage.
- influence must be
UNDUE
- where the dominant
person has used that Will ‘influence’ per se
position, to obtain an suffice?
unfair advantage for
himself & caused injury to
person who rely on his
authority
i. Party who holds a real
authority over the other.
ii. Party who stands in a
fiduciary relation to the
Person who are deemed
other. (ex: solicitor-client,
to be in DOMINANT
doctor-patient)
position. Sec. 16(2)
iii. Party who makes a
contract with a person
whose mental capacity is
affected.
i. The other party has the
capacity to influence him.
ii. The influence is
exercised. Party alleging under
iii. The exercised is influence must show that:
undue.
iv. The exercise brought
about the transaction.
- plaintiff bcm a member
of a sisterhood & bound
to observe the rules of
poverty, chastity &
obedience
- rules as to poverty
required the member to
surrender all her property
either to her relatives /
poor / sisterhood itself
- plaintiff made a will
leaving all her properties
to defendant (Lady
Superior)
[Allcard v Skinner]
- plaintiff also made gifts
to the value of about
$7,000 to defendant
- plaintiff later left the
sisterhood, revoked the
will & wished to claim all
her properties back
- court held that the
contract btwn them is
VOID due to undue
influence
- but the case failed due
to time barred (lapse of
time) 2. Undue Influence
- respondent's brother-in-
law has overdraft facility
& respondent's property
is required as security for
the overdraft
- appellants asked
respondent to sign
various documents, but
nothing was said that the
property was to be used
as security for the
overdraft
- appellant said the
security was by the way
of transfer
- the transfer of land
went from the
respondent and ended to
appellant's company
- the land later was sub-
divided into housing lots
& was sold to individual
buyers
- respondent claimed that [Datuk Jaginder Singh &
when the land was Ors v Tara Rajaratnam]
transferred, there were 2
undertakings which were
i. the land would not be
sold to anyone w/o the
consent from respondent,
and ii. the land would be
transferred back to her
after repaying the
overdraft
- court held that there
was undue influence as
appellants used their
professional position in
exercising undue
influence to respondents
(there was solicitor-client
r/ship btwn them)
- appellants were not
being honest as all they
wanted was to get the
respondent to sign the
transfer form so that
they could lay their hands
on the property
i. By showing that the
[Pangiran Othman Shah v transaction was the
Karambunai Resorts Sdn result of the free exercise
Bhd] of the victim’s
independent will.
Dominant party may
rebut the presumption:
- respondent successfully
proved that the appellant
ii. By showing that the
has fully understood not
victim understood that he
just the nature of
was doing.
transaction, but also its
full significance & effects
Sec. 17
Lord Herschell: Fraud is
when it’s shown that
false representation has
been made knowingly /
without believe in the
truth / carelessly whether
it’s true or false.
- appellant sued
respondent for fraudulent
misrepresentation
relating to a no. of rubber
trees in an estate
- the no. of trees
represented was in
excess from which
actually existed in the [Weber v Brown]
estate
- court held that the
appellant has made
fraudulent
misrepresentation & has
caused the respondent to
exercise the right of
purchase
i. Deceitful act done by a
party to a contract.
Elements
ii. State of mind
(intention).
Sec. 17(a)
- when parties enter into
contract with their full &
free consent & they
1. Untrue facts
agreed upon the same
represented as true & the
[Kheng Chwee Lian v thing in the same sence
presenter believes it to
Wong Tak Thong] be untrue. - free from any pressure
- all agreements are
contracts if they’re made
Sec. 10(1)
by free consent of parties
Elements
competent to contract
DEFINITION
VOIDABLE CONTRACT - two or more persons
LAW436 - Free Consent are said to consent when
Sec. 13 they agree upon the
(Void / Voidable Contract) same thing in the same
sense
- consent is said to be
Sec. 17(b)
free when it’s not caused
by coercion / undue
Sec. 14
influence / fraud /
misrepresentation /
mistake
Sec. 2(g) & 24
2. Active concealment of
[Tay Tho Bok & Anor v
Segar Oil Palm Estate Sdn the fact.
Bhd]
Sec. 17(c)
5 Acts of Fraud (Sec. 17)
3. Promise made with no
[Mui Plaza Sdn Bed v
intention to perform it.
Hong Leong Bank Bed &
Ors]
Sec. 17(d)
3. Fraud
4. Any acts fit to
[Loi Hein Chion v Kon Tek deceive.
Shin]
Sec. 17(e)
5. Any act / omission
that the law declares to
[Assets Company Ltd v
be fraudulent.
Mere Roihi & Ors]
- false representation
does not per se give rise
to cause of action
- represented must have
relied on the statement
- defendant made a
fraudulent
misrepresentation to
plaintiff (indian woman
rubber tapper) & induced
her to enter into an S&P
agreement
- defendant has Sec. 19 Exception to Fraud
fraudulently represented
to plaintiff that the
document that she was [Latchemy Arumugam v
required to sign was for a Annamalay]
loan she took & to free
the land from charge
- however, the document
she signed included a sale
agreement relating to a
transfer of the land
- court held that the
agreement was fraud and
hence voidable
- mere silence as to facts
likely to affect the
willingness of a person to
enter into a contract is
not fraud (Sec. 17)
- caveat emptor (let the
buyer beware) (principle
that the buyer alone is
responsible for checking
the quality of the goods
before a purchase is
made)
Silence is not fraud
[Lau Hee Teah v Hargill
Engineering Sdn Bhd]
Does silence amount to
fraud?
1. Where there exists a
duty for persons to
speak. [illustration sec.
17(b)] (ex: insurance
contract) Exceptions to the rule:
2. Where silence is
equivalent to speech.
[illustration sec. 17(c)]
- false statement made
by a party to induce
other party to enter into
a contract
i. There's intention to Diff. btwn Fraud &
deceive in fraud. Misrepresentration
1. Fraudulent
Misrepresentation [Sec.
17]
2. Innocent Misrepresentation under
Misrepresentation Common Law
3. Negligent
Misrepresentation [Sec.
18(b)]
- there must be (+)
statement / conduct
- mere SILENCE does NOT
constitute
MISREPRESENTATION
- if a person makes a
representation which is i. There must be a false
true at the time when it's representation.
made, but subsequently
bcm false & this has
come to his knowledge,
he must disclose the
change of the
circumstances to other
party
- false statement made
must not be based
ii. The representation
merely on a person's own
must be one of fact.
opinion, it must be a
statement of fact 4 Conditions for
Misrepresentation
- false statement must
have been directed to the
party, who later relied on
the false statement to 4. Misrepresentation
enter into a contract
- person who obtained
the false statement iii. Addressed to the
INDIRECTLY CANNOT misled party.
RELY on the false
statement, to bring an
action for
misrepresentation as the
statement was not
directed to him
- mere representation
which does not induce a iv. The representation
person's decision to enter must induce the misled
into contract, does not party to enter into
cause the contract to be contract.
voidable
Sec. 19
Effect of Fraud &
Exception of Sec. 19 Misrepresentation
(illustration b)
- right to affirm the
contract & put in the
position in which he
Sec. 19(2)
would have been, if the
representation made has
been true
- restoration of any
Sec. 65 Remedies
benefit received
Sec. 66
- appropriate Sec. 37 of Specific Relief
compensation Act 1950
Sec. 34(1)(a) of Specific
- right to rescind
Relief Act 1950
[Sim Thong Realty Sdn
Bhd v The Kim Dar]
A) Innocent party has the
option to avoid the
contract by terminating
it. Relief for Voidable
Contract
B) Innocent party also
has the option to carry
on with the contract.