LAW OF CONTRACT

Executive summary

The present study intends to present the various factors of Contract act 1950 of Malaysia. Four
factors regarding the discharge of the above-mentioned law such as discharge in terms of
performances, discharge in terms of frustration, discharge in terms of agreement and discharge in
terms of breaches of contract has been discussed in this study. Various section of the Contract
Act 1950 has also been discussed in this study along with the help of the various types of case
examples of Malaysia. A detail discussion regarding the decision of the case has also been
presented in this study to prove different commercial aspects of Malaysian court cases depicts
different aspects of contract termination.
 Table of Contents
Introduction ..................................................................................................................................... 4

Findings and analysis ...................................................................................................................... 4

Relevant laws and case related to performance discharge .......................................................... 4

Agreement discharge related to Malaysian Laws and cases ....................................................... 5

Breach discharge in relation to different cases and laws ............................................................ 6

Frustration discharge ................................................................................................................... 7

Conclusion ...................................................................................................................................... 8

Bibliography ................................................................................................................................... 9
Introduction

Discharge indicates the act of removing responsibility or burden or obligation from breaches of
the law. It refers to the fact that a person is not responsible for not being able to carry out any
activities as per the contract. The person is liable to be discharged of all the charges in terms of
breaching a contact within the country. This study is going to be discussing on the various case
laws and contact laws of Malaysia. Moreover, discussion regarding the discharge regarding the
agreement, breaches, frustration, and performance in relation to the Contract Act 1950 (CA) of
Malaysia is also going to be discussed in this study.

Findings and analysis

Discharge in general terms indicates the actions of being free from an acquisition or other
operations. Based on legal aspects, discharge can be of various types. It includes performance
discharge, breach discharge, agreement discharge, and frustration discharge (Abdullah F. C.,
2019). In respect to the various types of discharges, case laws and acts regarding contract laws
will be discussed below.

Performance discharge and supportive cases

Performance discharge mainly occurs at the time when an individual related to a particular
contract fails to execute the operations and perform effectively. In the case of willing to perform
by the first-party and not accepting it by the second party leads to discharge in terms of
performance by the first party. According to section 38 (1) of the CA 1950, an individual related
within a contract must be able to perform the duties that are being assigned in order to execute
specific operations within the business domain (agc.gov.my, 2019). It includes the fact that the
individual must be willing to perform the assigned duties or offer to perform the duties.
However, based on this discussion it can be stated that if the other person involved in the same
contract refuses to accept the performance that is being offered by the other party then the
situation can lead to discharge in terms of assigned duties or performances within a contract
(Abdullah F. C., 2019).
In relation to the above-mentioned section of the law, it is also being stated that there are certain
elements need to be fulfilled to have efficient performance. These are offer or proposal,
consideration, acceptance, intention, free consent, and many others. Therefore, an individual
carrying the above-mentioned elements are expected to be discharged in terms of performance in
spite of having breached the contract law. In order to be precise, the case of KTL Sdn Bhd &
Anor v Leong Oow Lai [2014] involves the measures of performance within the contract
(foongchengleong.com, 2014). As per this case, the second party involved within the case does
not involve authenticity within its performance. As a result of the fact, the individual failed to
achieve the desired criteria mentioned within the third contract as was not able to meet the
targeted goals within the business environment. From this case, it can also be considered that as a
result of the circumstances the participant was unable to fulfill the desired criteria. However, as
per section 38 (1) of the CA 1950, individuals within the contract must be able to fulfill the
duties to fulfill the desired actions (agc.gov.my, 2019). Therefore, as per this case, it can be
noticed that the plaintiffs were not able to fulfill the performance criteria.

Agreement discharge and supportive cases

Discharge of agreement in terms of the contract appears in the case if the contract has been
ended in good terms with successfully meeting all the requirements and criteria. Apart from this,
the contract can also be terminated before it is being fulfilled with the agreement of both the
parties involved within the contract in terms of primary terms (Ayub, 2016). In addition to this,
agreements can also be discharged with the opinion of both the parties involved within the
contract of the contract fails to meet the generally desired contracts that are intended to be
fulfilled by the contracts.

The Section 11 of the CA 1950, states that every individual is eligible for agreement within a
contract if the individual is capable of understanding the general criteria of the agreement
(agc.gov.my, 2019). Moreover, Section 12 (1) of the CA 1950 also states the same fact regarding
the agreement within a contract and thus, mentions the agreement to be valid in this criteria. In
addition to this, Section 63 of CA 1950 states the general criteria to be stated in the agreement
within a contract (agc.gov.my, 2019). This section involves the effect of the novation, contract
alteration as well as recession within an agreement within a contract. In this respect, agreement
of both the parties related to the substituting the operations or the contract to a new contract then
it neglects the need of performing the actual contract with due permission of both the parties
involved within the contract. On the other hand, Section 64 of CA 1950 involves the fact that
promises made by the individual with respect to the contract can be dispensed based on the
performance criteria of the individual. Therefore, based on the above-mentioned facts, the
agreement within a contract can be discharged (Hamid, 2018).

This situation can be analyzed based on the case of Berjaya Times Square Sdn Bhd v. M-Concept
Sdn Bhd [2010] involves largely with the agreement of sale within the building (hba.org.my,
2010). The issue was to unable to deliver the vacant possession in the due amount of time.
Therefore, as a result of the un-fulfillment of the general criteria of the business within the
Malaysian domain, the court decided to come to an agreement in regard to both the parties
concerning with the case. As per Section 64 of CA 1950, the individual involved with the
contract needs to be able to fulfill all the promises as well as choose a substitute operation that
can be able to compensate for the incomplete actions (agc.gov.my, 2019). Therefore, based on
the above-mentioned section, the decision of the court can be justified.

Breach discharge in relation to different cases and laws

Breach discharge relates to the circumstances that relate to excusing the breaches that have taken
place within a contract. In this case, if the person related to the contract does not claim any
damages by the contract breach then the breaches are discharged (Harun, 2018). There are
various types of consequences in terms of breaching a contract that mainly includes restitution,
liquidated damages, punitive damages, compensatory damages, and many others. In addition to
this, if the person is willing to perform the duties but is not able to complete it due to several
reasons, then also it discharges the breaches within a contract. According to Section 74 of CA
1950, damages can be claimed by an innocence party within a contract in case of any breaches.
The damages can be substantial or nominal (agc.gov.my, 2019). Nominal breaches are being
awarded in terms of facing no loses in terms of contract breach. On the other hand, substantial
breaches are awarded in terms of monetary compliance.

Based on this discussion it can be stated that breaches within a contract can be discharged if the
party does not face any consequences or major harm due to the breach. In addition to this, if the
other party related to the contract seems to be understanding and not demanding any
consequences, then the breaches are also considered to be discharged. In this respect, the case of
Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd & Another Appeal (2018) intends to involve
the termination of the contract with respect to the opinion of both the parties that are involved
with the agreement(Ibrahim, 2015). The termination of the contract seems to be accepted by both
parties within the contract due to the consequences that are faced by the contract in terms of its
operations. The case also states the fact that due to the termination of the contract there were
certain claims to the contract that include the determination of the sum of money that was due to
the party that was left unpaid. Therefore, the judgment of the court was to pay the unpaid
workers involved within the contract. Based on the decision that was provided in this case,
Section 74 of CA 1950 is justified in these criteria (agc.gov.my, 2019).

Frustration discharge and supportive cases

A contract may be subjected to be discharged on the basis of frustration in terms of performance

as well as circumstances of the particular situation (Mohamed, 2017). This also indicates the fact
that neither of the parties involved with the contract is solely responsible for the breaches taking
place within the contract. However, frustration mainly occurs from the unsuccessful events that
are impossible to be carried out as per the contract. According to Section 57 of CA 1950, a
contract is subjected to be discharged in terms of frustration due to the supervening of the events
within the contract that further involves impossibility in the successful execution of the
operations as per the contract (agc.gov.my, 2019). In addition to this, this also makes the action
illegal as well as radically different from that of the original action that resulted due to decision
by both the parties involved within the contract. Therefore, based on the above discussion it can
be stated that the situation that has been mentioned results in the frustration within the individual
related to the contract.

It can further be focused clearly based on the case of Aseambankers Malaysia Bhd & Ors v
Shencourt Sdn Bhd & Anor [2014], it is being noticed that frustration arises as a result of the
unfinished actions based on the contract (kehakiman.gov.my, 2014). It was also noticed in the
case that the aspects of frustration were not mentioned in the pleading of the contract. As it was
being seen from the present case study that the frustration was not mentioned in the pleading of
the contracts, therefore, the court failed in taking the necessary division for the benefit of the
company and the individual involved with the contract. Therefore, the individual involved with
this case that is the Aseambankers Malaysia Bhd and Shencourt Sdn Bhd & Anor was frustrated
with the actions that were not executed on the basis of the contract. Thus, based on the
discussion that has been provided in the case, it can be stated that Section 74 of CA 1950, is
justified as per this case (agc.gov.my, 2019).

Conclusion

Overall, the study involves the analysis regarding the discharge of the contract as per CA 1950 of
Malaysia. Four different forms of the discharge as per the contract law have been discussed in
this study. It includes discharge by agreement, frustration, performances, and breaches within a
contract. Discharge of agreement involves the un-fulfillment of the desired criteria that are being
set by the contract. Section 11, 12(1), 63 and 64 are largely involved with the discharge of
agreement within the law. The above-mentioned sections also state the fact that agreement can
be viable for both parties involves in the mutual understanding of the aim of the contract that
needs to be executed. The case of Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd [2010]
provided a clear understanding of the matter.

On the other hand, agreement of frustration involves the unfilled desired fo the contract. Section
57 of the law is involved with the general aspects and criteria of the discharge of frustration. It
can further be analyzed from the case of Aseambankers Malaysia Bhd & Ors v Shencourt Sdn
Bhd & Anor [2014]. Apart from that, discharge in terms of performance states the inability to
performing and not leading to any consequences as a result of it. Section 38(1) of the law
involves the general criteria regarding it. It can further be analyzed from the case of KTL Sdn
Bhd & Anor v Leong Oow Lai [2014]. Lastly, discharge in terms of the breach has also been
discussed in this study. Section 74 of CA 1950, along with the case of Martego Sdn Bhd v Arkitek
Meor & Chew Sdn Bhd & Another Appeal (2018) provides a clear understanding of the criteria
leading to discharge in terms of breaches within a contract.
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