LAW OF CONTRACT

Executive summary
This report has been composed by keeping the prime focus over the aspects of the contract law
of Malaysia. In the introduction, the importance of the legal system in the management of formal
contracts has been stated. After that, in the main content of the report, the discharges from
contract has been analysed from different legal angles. The discharge by performance,
agreement, frustration and breach has been done discussed with supportive case examples. In
conclusion, the entire finding and the analysis have been presented. The report has proved the
systematic approach of the legal system of the country in the management of the dismissal of
contracts.
 Table of Contents
Introduction ..................................................................................................................................... 4

Content ............................................................................................................................................ 4

Different types of discharges- explanation with relevant cases .................................................. 4

Discharge by performance ....................................................................................................... 4

Discharge by agreement .......................................................................................................... 5

Discharge by breach ................................................................................................................ 6

Discharge by frustration .......................................................................................................... 7

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

Reference list .................................................................................Error! Bookmark not defined.

Introduction
Legal structure of a nation is an ultimate solution to tackle different aspects of lawlessness and
the government of Malaysia has prior attention to construct and enforce different laws to
maintain a fair environment within the territory. The legal system of Malaysia has shown its
interest to standardise different professional and formal contracts and has enacted ‘The Contract
Act’, in the year 1950. In part- II and III of this law, the basic concept of the contract along with
formal agreements have been stated. On the other hand, the relief from a contract has also been
mentioned from different angles and different aspects which included performance, breach,
agreement and frustration and more. In the case of different discharges, the participants of the
contract behave differently and in every case, the participation of both parties are not been
observed. In this report, the analysis of the discharges by performance, breach, frustration and
agreement will be analysed in the light of the case studies.
Content
Different types of discharges- explanation with relevant cases
Discharge by performance
Performance and its relationship with discharge have been informed in the Contract Act-1950
(CA). Section 38 of part V of CA has mentioned that the parties tagged with a contract have to
perform their promises (agc.gov.my, 2006). The performance should be continued until it is
excused or dispensed by the CA. Hence, it can be deduced from this statement that the promises
which have been made formally in the contract should be kept and completed. On the other hand,
the performance has further been differentiated in the legal terms like substantial performance,
performance prevented and partial performance. It has further been identified that all the said
sub-divisions of the performance provides relief from the strict following of the performances as
per the legal terms of the contract.
The fact of substantial performance has also got aligned with this contract law and the aspects of
its discharge on the ground of performance. It has been noticed that substantial performance
should be conducted even the contract is an entire one. In legal terms, the entire contract is the
type of formal promise, where both parties of the contract have to keep the promises (Ali, 2014).
The application of substantial performance in the case of discharge is granted by analysing the
ratio of performance. In the case, where they performed task is greater in the ratio than that of the
unperformed task which has been promised in the contract, the consideration of the substantial
performance for the discharge of the contract is granted.
On the other hand, section 39, of CA-1950 have stated clearly about the fact of refusal of the
offer of performance (agc.gov.my, 2006). It has been mentioned that, in the context of refusal of
the promises done by the promisor of the contract to the promisee, the promisor is not liable to
keep the promise. Hence, it can be stated that in this case, the performance is not mandatory. The
promisor may get relief from performing the promise in the case where the promisee is not
interested to accept the offers of promises done by the promisor.
Apart from this, time is one of the crucial factors adhered with a contract and performance is
dependent over the same. Time stipulation is noticed for every contract where the performance
should be done within the given time period of the contract (Bakar, 2016). The fact of
unreasonable delay and the providence of reasonable time are tagged with the contact law of
Malaysia which has also provided a standardised format for the performance of the parties within
a contract. The application of the aspect of discharge by performance has been noticed for the
case ‘KRISHNAN RENGASAMY, EX P ARAB MALAYSIAN CREDIT BHD (2001) 4 CL J 797’
(quizlet.com, 2019). The stipulated time and the performance of the promisor have got involved
with this case which also includes the approach of the discharge in the basis of performance.
Discharge by agreement
The discharge of a contract may be done on the basis of agreement and it has been approved by
the Malaysian law regarding formal and legal contracts. The release of a contract may be done
with the approval of both the parties involved in the contract. Hence, it can be analysed that the
mutual agreement is the main thing which acts majorly behind the discharge of a contract. On the
other hand, free of consent is another attribute adhered with this type of discharge. The fact of
reinforcement is also there which can hinder the occurrence of discharge in legal terms. In the
case of reinforcement, either party of the contract may reinforce the conditions of the contract
with the change of mind (Yusoff, 2016). This appearance of reinforcement cannot be hindered as
the discharge has no legal ground. This fact is arguable, as legally valid discharge on the basis of
mutual agreement can be done which have the power to dissolve the provision of re-enforcement
of the contract.
Additionally, it has been noticed that the parties can get released from the contract with mutual
agreement and this release should be legally enabled by signing a separate contract. In this case,
the chance of reappearance of the terms and conditions which have been mentioned in the former
contract is nil (Nachatar, 2011). However, the obligation of one party is also noticed where the
only party have to perform and keep the promise as per the deal of the contract. The usual format
of the release as per agreement should not be valid for this case. Section 45 of Contract Act-1950
has cast light upon the release of a single party from a contract, which has a relationship with the
fact of obligation of one party (agc.gov.my, 2006). The enforcement of separate deed is needed
for this type of release.
On the other hand, the dissolution of the contract may also be performed without a formal
discharge deed or a separate contract. The contract law for Malaysia has kept the provision to
undergo to a new contract with altogether new types of terms and condition without formal
dismissal of the previous contract. The enforcement of the new contract simultaneously drives
the previous contract to discharge (Yusoff, 2016). Hence, from this point, it can be analysed that
this is a different approach to be released from the bindings of a contract for both parties with
mutual consent.
The partial discharge is also noticed in the context of ‘discharge by agreement’. The promisor
may get partial discharge from its promise which has been done in the contract only by serving
or performing unwanted terms which have not been included in the main contract. The
replacement of the term or promise of the contract may be done in the formal format or just
leaving the terms of the contract unaltered. The case of ‘Jatidiri Sdn Bhd v Ban Thong Realty
Sdn Bhd [2010]’ is able to prove the dismissal of a contract due to mutual agreement
(static1.1.sqspcdn.com, 2012). Both the parties have mutually participated to terminate the
agreement and to be freed from the conditions. No defence has been found in this case.
Discharge by breach
Breach is an important aspect associated with the contract and its discharge as well. Breach is the
failure of the parties in performing or keeping the promises which have been fixed in the terms
of a contract (Chen-Wishart, 2016). The failure may be shown by either or both of the parties
which may be granted under the category of breach. The contract Act 1950 has considered this
action of breach with importance and has clearly stated about the consequences of breach for a
legally enabled contract. Part VII of Contract Act has clearly stated the consequences under
Sections 74, 75, 76. Section 75 of the contract law informs about monetary compensation for the
breach of promises made in the contract (agc.gov.my, 2006). The compensation for damage and
loss has also been accounted under this section of CA-1950.
The analysis of the types of breach has been systematically constructed under the Malaysia
contract law which helps to analyse the degree of breach and to take consecutive action about the
same (Ling, 2018). The types and obligation associated with a breach along with the involvement
of the parties have been done by the repudiator breaches. On the other hand, in the case of
release under the context of breach, the precedent and subsequent conditions and warranties are
re-analysed.
The condition in the discharge of agreement is the fact where the breach of the main terms and
conditions of the contract is analysed. The alteration of the basic nature of the contract is
analysed in this case (Chen-Wishart, 2016). Hence, it can further be synthesised that this type of
analysis helps in the identification of the degree of breach regarding the discharge of the parties
from a contract due to breach. The analysis of the condition helps to terminate the entire contract
or to discharge both the parties from the bindings of the contract.
The case of ‘Wang Yunzhen v Unico-Desa Plantations Bhd (Ngan) [2010]’ can effectively
analyse the aspect of discharge of contract on the ground of breach (Meikeng, 2010). The case
informs that Nagan being the chairman of the company Unico-Desa Plantations Bhd, have
breached the terms and conditions of the agreement of the Xi’an Qujiang project which resulted
in the filing of the case by plaintiff Wang Yunzhen for the compensation of 13 million RM.
Discharge by frustration
In every case, the promise cannot be kept by the promisor. This failure of keeping the promise
may happen due to the appearance of any unforeseen event or factor. The purpose of the
agreement cannot be achieved due to the appearance of such an event within the course of the
contract (O'Sullivan, 2018). In such condition, either one or both parties cannot keep their
promises which results in the dismissal of the contract. This unforeseen event or factor which is
creating hindrance to the performance of duty as per the statement of the contract cannot be
helped by any of the party. In this case, the contract gets discharged and the parties get released
from the contract on the ground of frustration (Ashworth, 2018). The factor of ‘Void ab initio’ is
adhered with this type of discharge and drives the release of the contract. Void from the initial
stage creates the chance of frustration.
The discharge by frustration includes the appearance of discharge by performance, breach of
agreement as in this case either or both of the party fails to maintain their accountability. The
Contract Act-1950 has included the fact of void in Section 57 which further provided detailed
description about the performance of the promisor in the context of any void in the contract
under Subsection 57 (2) (agc.gov.my, 2006). It has been stated that the performance turned to
unlawful or impossible in the case of appearance of void.
The case of ‘Aseambankers Malaysia Bhd & Ors v Shencourt Sdn Bhd & Anor [2014]’ has the
attributes to prove the condition of release of the parties from a contract for the appearance of
frustration (shooklin.com.my, 2014). This case has happened in the organisation of the
investment bank of Malaysia and the federal court of Malaysia has dismissed the leave
application due to the frustration.
Conclusion
At the end of the report, it can be concluded that the termination of a contract can be done
systematically and it is guided by the legal structure of Malaysia. The contract law has been
enacted in the year 1950 which has encompassed the major aspects of the dismissal of the
contract. The discharge can be done based on the four aspects such as agreement, breach,
frustration and performance as well. The discharge by performance is the case, where the party
or parties have not kept the promises. On the other hand, breach helps to identify the degree of
condition which has not been kept by the parties associated with the contract. On the contrary, in
case of agreement, the disposal of the contract takes place with the consent of both the parties.
Frustration is the case where the participants of the agreement are not able to perform their
promises due to some unavoidable circumstances which cannot be helped by both or either of
them.
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