WEEK 4 CONTRACT TUTO

LAW 486 TUTORIAL

TOPIC: IMPLIED TERMS AND EXCLUSION CLAUSE
QUESTION 1
Captain Hero Security (CHS) entered into an agreement with Milky Industrial dated 1
February 2017 where it was agreed between the parties that the former was to provide
services as specified under the schedule of service of the said agreement which stated
as follows:
Being the services of two unarmed guard for twelve hours and one-armed guard
for eight hours a day at the rate of RM 3.50 per man hour.
On 22 November 2017, there was a report made by Milky Industrial to CHS regarding an
incident of break-in causing two main substations at the factory being severely damaged
and copper wiring stolen from both sub-stations. Milky Industrial claimed that CHS had
breached the contract by failing to conduct patrols in the vicinity of the factory and to
observe for signs of criminal activities through patrolling and to immediately report any
security incidents to the respondents. CHS in defence argued that the guards were not
required under the terms of the agreement to conduct patrols as alleged by Milky
Industrial.

a) Advise CHS as to whether they had breached the contract.

- CHS COULD BE DEFENDANT
- WHETHER CHS BREACHED ANY TERMS IN THE CONTRACT.
- EXPRESS TERM- THERE WAS NO EXPRESS TERM, THERE ARE NO BREACHED
OF CONTRACT.
- INVESTIGATE WHETHER THERE IS AN IMPLIED TERM, IMPOSSING AN
OBLIGATION ON THE SECURITY GUARD TO CONDUCT PETROL ACTIVITY AS
ALLASHED BY MILKY
ISSUE- whether a term imposing obligation on the security guard on chs can be implied as the
contract between chs and milky industrial.
LAW- INTRO
1. DEFINE- THERE ARE TWO TYPES
-IMPLIED AND EXPRESS TERMS.
-WHAT IS IMPLIED TERM
2. THERE ARE THREE WAYS TERMS IMPLIED BY LAW, CUSTOM AND COURT.
BASED ON THIS QUESTION THE ONLY RELEVENT WAY IS IMPLIED TERMS BY COURT.
-THREE TEST TO BE FULFILLED IN IMPLIED TERMS BY COURT
EXPLAIN ALL THREE TEST (INCLUDE 1 MALAYSIA CASE FOR EACH)
I) BUSINESS EFFICACY
 II) OFFICOUS BYSTANDER
III) A COMBINED TEST, THE POSITION IN MALAYSIA EXPLAINING THE FEDERAL
COURT IN SABAH BUMI, AND HOW IT APPLIED THE COMBINED TEST.
4. ESTABLISHING THE LEGAL PRINCIPLE. CONSEQUNECE / RELIEF
THE CONSEQUENCE WHEN THE TERM IS IMPLIED, FAILURE OR NON COMPLIENCE
OF ONE-PARTY LEADS TO BREACH OF CONTRACT.
APPLICATION
FOR THE TEST, APPLY STRAIGHT AWAY THE COMBINES TEST IN REFER TO THE
CASE SABABUMI BCS WE LIVED IN MALAYSIA.
UPON BEING SUGGESTED BY OB, WOULD IT MAKE SENSE IF SECURITY GUARD
MST ALSO CONDUCT PETROL ACTIVITIES. CHS AND MILKY INDUSTRIAL WOULD
RESPOND OH OF COURSE, OR OTHERWISE WE WOULD NOT HIRED CHS TO
PROVIDE A SERVICES. AS THIS WILL IMPROVE THE BUSINESS EFFICACY IN A WAY
OF TIGHTEN THE SECURITY AND ESURE THE SAFETY OF THE FACTORY BELONG
TO MILKY INDUSTRY.
THERE IS A HIGH POSIBILITY FOR THE COURT TO IMPLIED THE TERM IN THE
CONTRACT INDICATING OF THE IMPOSSING THE PETROL ACTIVITIES.
FAILURE TO COMPLY WITH THE IMPLIED TERMS IS LEAD FOR THE CFS TO BREACH
THE CONTRACT.

(15 marks)

b) Would your answer be different if the term of the agreement read as follows:
being the services of two unarmed static guard for twelve hours and one unarmed
static guard for eight hours a day at the rate of RM 3.50 per man hour.
- NO BREACHED AS IT IS STATED STATIC GUARD, THE IMPLIED TERM MUST NOT
BE INCONSISTENT WITH THE EXPRESS TERM

- PAROL EVIDENCE RULE, THE GOLDEN PRINCIPLE WHERE THE COURT WILL
NOT IMPLIED THE TERM BCS THE IT WILL BE INCONSISTENT WITH THE
EXPRESS TERM.
- THEN APPLY.
(5 marks)
QUESTION 2
On Monday, 26 June 2018, at about 7 p.m., Azmi attended to Le Mans’ racing track with his
friend, Bella. Bella was an employee of a local radio station, 3MP, which had booked the Le
Mans' racing track for a corporate promotion night for staff members, their families and friends.
Azmi and Bella were members of the group attending the promotion night, to compete and have
fun on the super-kart go-kart track. When Bella and himself arrived at the track, he was told to
write his name in a form for him to be able to do a lap of the go-kart race. The four opening
lines at the top of the form, in prominent, bold capitals, began with “TO HELP WITH OUR
ADVERTISING …” were printed in red, the rest being in black.
Both Azmi and Bella drove go-karts at the track on that night. However, Azmi engaged in an
accident where in the course of a race his vehicle overturned, and he suffered a fracture of his
arm. When Azmi asked for compensation for the injury suffered, Le Mans’ reminded Azmi, a
paragraph in the form which reads; ‘Le Man shall not be held liable any special, indirect,
consequential, incidental, or punitive damages for the injuries suffered.”
Advise Azmi.
(20 marks)

QUESTION 3
Heather owns a bakery business. She sells an assortment of cakes, biscuits and pastries and
delivers them. Laila purchased two dozens of biscuits and a cake, shared them with friends.
Tragically, Laila’s dog died after being fed the biscuits. An autopsy revealed there was a deadly
poison present in the biscuits. Laila decides to sue Heather for negligence, but there is a clause
in the contract which states “notwithstanding anything to the contrary, in no event will the
measure of damages payable by the seller for any loss or damage incurred nor will the seller be
liable for any death or personal injury or any indirect, incidental consequential exemplary
punitive or special damages expressly claimed.”

Discuss the applicable rules of construction in interpreting the validity of the above exclusion
clause. Support your discussion with relevant legal authorities.

(20marks)

QUESTION 4
a) i) Seema bought 20 pieces of ceramic plates after she was shown sample
by Chee. 10 plates delivered to Seema were of the same color as sample but the
other 10 were different.
-SECTION 17.
-SECTION 17 (II) (A)
-SECTION 12(2)
 ii) Assuming, the 20 pieces delivered correspond with the sample, Seema used the
plates for her son’s birthday party but when hot sauce was poured onto the
plates, they cracked into pieces.
Advise Seema.
-SECTION 12 (2)

b) Ning Que recently purchased some flooring tiles from a local builders’ merchant.
However, it turned out that most of the tiles were cracked and unusable. Ning Que was
in a hurry when he bought them and only had a quick look at them. He had not noticed
that they were cracked. Ning Que now wishes to return the tiles.

Advise Ning Que on his rights under the Sale of Goods Act 1957.

- S16(1)
- CAVEOT EMPTOR PRINCIPLE
- THE BUYER MUST EXERCUSE CARE MEANS SHOULD INSPECT THE GOODS
FIRST, IF NOT THE BUYER MUST BEAR THE CONSEQUENCES.
- HE CANNOT RETURN THE TILES, AS IT DOES NOT FIT WITH THE
MERCHANTABLE QUALITIES.

c) Lili, a model, consulted a famous hair stylist for her opinion on the most suitable hair
care product that would make her hair shiny and healthy. Three weeks after using the
product supplied by the stylist, Lili suffered a serious problem of dandruff and hair loss.
Lili now wishes to bring legal action against the hair stylist.

Advise Lili.
-S 16(1)
-S 16 (1) (A)
-DISCUSSED ALL THE 4 REQUIREMENTS
-S 12 (2) COMES IN THE CONSEQUENCE

d) Mr and Mrs Chong ordered carpet for their home from a carpet manufacturer. They
specified that the carpet was to be a particular colour to match the interior décor of the
house and the internal walls which were exposed brick. The carpet was supplied and
there was no complaint as to its quality as carpet, but the colour of the carpet was
different in patches and different from the colour specified. This was due to "pile
reversal" or "watermarking"; a result of the manufacturing process.

Must Mr and Mrs Chong accept the carpet?