UNIVERSITY OF TEKNOLOGI MARA

DEPARTMENT OF ENVIRONMENTAL STUDIES AND TECHNOLOGY

DIPLOMA IN BUILDING

AP116

BGN352

BUILDING LAW

ASSIGNMENT 2

Prepared by:

Nor Wardina Bt Yaakob (2019298548)

Nurul Najihah Binti Rohaizat (2019258378)

Seri Nuraliah Binti Adzmi (2019296934)

Nur Syuhada Binti Suhaimi (2019424634)

Prepared for:

Dr. Nor Asma Hafizah Binti Hadzaman

 ACKNOWLEDGEMENT

Firstly, we would like to thank to our lecturer Dr. Nor Asma Hafizah Hadzaman who gave us
her valuable suggestions and ideas when we were in need. Besides, we also like to thank to her
for her guidance and encouragement regarding this assignment.

We are also grateful to our group members for their cooperation for complete this task
given on time and submit this assignmnet by time also to our colleges for giving us the
opportunity to work with them and providing us the necessary resources for the assignment.
We would also like to thank to all of them who helped us to complete this project.

We are immensely grateful to all involved in this task without their inspiration and
valuable suggestion it would not have been possible to develop or submit this project report
within the prescribed time.

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QUESTION
Dato’ Herman, a well-known contractor, wants to give his son a parcel of land situated in
Petaling Jaya worth RM800,000 for his coming birthday. As his son will not be paying any
money to him, Dato’ Herman is worried that the contract may be void by virtue of Section 26
of the Contracts Act 1950 which states that an agreement made without consideration is void.
Dato’ Herman seeks your explanation on the validity of the agreement.
(100 marks)

ANSWER
The legal framework governing contracts in Malaysia is outlined in the Malaysian Contracts
Act 1950 (Act 136). It is composed of 10 Parts and 191 Sections. Part 3 describes contracts,
voidable contracts, and void agreements. Part 2 deals with the communication, acceptance, and
rejection of proposals. A proposition becomes a promise when it is accepted, according to
Section 2(b), and Section 2(h) supports the legal bindingness of promises by stating that "an
agreement enforceable by law constitutes a contract”. As stated in Section 10(1), "All
agreements are contracts if they are made by the free consent of parties competent to contract,
for a lawful consideration and with a lawful object, and are not hereby expressly declared to be
void," agreements are defined as ones that are made with the consent of parties who are able to
enter into legal agreements. Free consent is further described in Section 14 as consent that is
not the result of fraud, deceit, deception, compulsion, or a mistake According to Section 19(1),
a contract is voidable at the discretion of the party whose assent was obtained through coercion,
fraud, or deception. Contract performance is covered in Part 5. According to Section 38(1) of
the Contracts Act of 1950, unless otherwise provided by law, the parties to a contract must
either perform or propose to perform their respective promises. The relationships that resemble
those established by contract are covered in Part 6. Part 7 makes provisions on the
consequences of breach of contract such as compensation for loss or harm brought on by
violations, compensation for failure to fulfil obligations similar to those set by contracts, and
many more.

According to the contract Act of 1950 Part 3, Contracts, Voidable Contracts and Void
Agreement, is stated that A formal contract that is effectively void and unenforceable from the
moment it is created is known as a void contract. A void contract is different from a voidable
contract because voidable contracts have the potential to become legally enforceable if
underlying contractual flaws are fixed, whereas void contracts were never legally valid to begin
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with and will never be enforced in the future. Contracts that are void and contracts that are
voidable can both be annulled for related grounds. For more understanding about the void
agreement, it basically explained that if an agreement cannot be enforced in its original form,
it may be ruled void. Such agreements are void contracts (sometimes known as "void
agreements") since they are either unlawful in nature or go against fairness or public policy.
When one of the parties cannot completely understand the ramifications of the agreement, a
void contract may result. For instance, a person who is mentally ill or intoxicated might not be
able to comprehend the terms of the agreement clearly, making it null and void. Additionally,
contracts made by juveniles may be void; nevertheless, some agreements involving children
that have parental or guardian consent may be enforceable.

Generally, a gift is typically thought of as the willing transfer of ownership of a piece

of property by the sender without payment or any consideration of monetary value. It could be
movable or immoveable property, and the parties could be two live people, or the transfer could
happen only after the transferor's demise. Gift also considered as transfer of an existing
moveable or immovable property, according to Section 122 of the Transfer of Property Act.
Such transfers must be freely given without receiving anything in return. The transferee is
referred to as the donee and the transferor as the donor. The donee is required to accept the gift.
According to this Section, a gift is the gratuitous transfer of ownership in an existing property.

Inter vivos refers to transfers made between two live parties, while testamentary refers
to transfers made after the death of the transferor. Only inter vivos transactions are referred to
as gifts under this Act since testamentary transfers are not covered by Section 5 of the Transfer
of Property Act. A gift given between vivos is only valid if three conditions are met. The first
requirement is that the person transferring the property must truly intend to make a gift; it must
be shown that the donor's goal in transferring the property was to make a gift. The second need
is that the recipient accepts the gift that has been made to them; they must consent to the
property transfer that the donor has made in their favour. The third need, which is the delivery
of the property that is the subject of the transfer by the donor to the donee, is typically what
triggers the assumption of such acceptance.

Property transfer can be shown in a way love and affection. However, according to the
Contracts Act of 1950, a contract must contain the "consideration" element in order to be
enforceable. Either party must be obligated to provide the other party something of value,
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which is frequently done with money as the form of consideration. Conversely, if you give a
property to your loved ones without expecting payment, there is no seller or buyer; instead, the
recipient benefits from the donor. According to Section 26(a) of the Contracts Act of 1950, a
contract created without consideration is lawful if it is expressed in writing, registered, and
based on natural love and affection between persons who are close to one another. There is no
definition of "natural love and affection" in the Contracts Act of 1950, hence case law can be
cited to interpret the provision. Reference is made to Section 26(a) of the Contract Act 1950
which stated that, “an agreement without consideration is void unless it is in writing and
registered” (a) it is expressed in writing and registered under the law (if any) for the time being
in force for the registration of such documents and is made on account of natural love and
affection between parties standing in near relation to each other.

According to the court's ruling in Chua Eng Wei v. Liow Eng Keong & Anor [2015] 4
CLJ 1027, the term "near relatives" refers to those who are closely linked to one another, such
as parents, siblings, or other blood relatives. ‘Natural love and devotion' cannot be read in
isolation, the court ruled in Tang Meng Hock v. Tang Ming Seng [2010] 1 MLJ 33. It must be
connected to the necessity of the parties "being in a near connection to each other." Because
they are biological brothers, both parties in this scenario are obviously "standing in a close
relation to one another." Cases appear to support the idea that Section 26's definition of
"immediate family" includes blood relatives (a). In other words, when property is transferred
out of love and affection, it is not necessary to give a particular sum of money as consideration.
This indicates that the transfer is being made between members of the same immediate family,
which is recognised by law as a good indication of natural love and devotion.

Based on Section 26 of the Contracts Act 1950, the contract between Dato’ Herman
and his son can be under an agreement made without consideration is void, illustration (b).
Illustration (b) where A, for natural love and affection, promises to give his son, B,
RM1,000.00. A put his promise to B into writing and registers it under a law for the time being
in force for the registration of such documents. It called as contract. For the agreement made
without consideration is void unless it is in writing and registered, the document is made on
account of natural love and affection between parties standing in a near relation to each other.
For the agreement made without consideration is void unless it is a promise to compensate for
something done, a person who has already voluntarily done something for the promisor, or
something which the promisor was legally compellable to do. For the agreement made without
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consideration is void unless it is a promise to pay a debt barred by limitation law, it made in
writing and signed by the person to be charged therewith, or by his agent generally or specially
authorized in that behalf, to pay whole or part, a debt of which the creditor might have enforced
payment but for the law for the limitation of suits.

There are many cases and in any of these cases, such an agreement is a valid contract.
There are two explanations. The first one is nothing in this section shall affect the validity, as
between the donor and done, of any gift made. The second one is an agreement to which the
consent of the promisor is freely given is not void merely because the consideration is
inadequate, but the inadequacy of the consideration may be taken into account by the court in
determining the question whether the consent of the promisor was freely given.

Natural love and affection are valid consideration. In Section 26 of the Contracts Act
1950, agreement without consideration is void, unless it is in writing and registered, made on
account of natural love and affection, and parties standing near relations. For the agreement
made without consideration is void unless it is in writing and registered, the document is made
on account of natural love and affection between parties standing in a near relation to each
other. For example, Tan Soh Sim, Chan Law Keong and Ors verses Tan Saw Keow (1951)
case. It started when a woman on her deathbed expressed her intention to leave all her
properties to her four adopted children. As a result, the court held that the claims of the adopted
children were not effective as it was contrary to Section 26 (a). It was not in writing and there
was no natural love and affection between parties standing near relation to each other since the
four children were adopted and did not have natural relation which is blood ties to that woman.

Based on explanation above, it can be concluded that agreement made is valid. This is
because the relation between Dato’ Herman and his son is acceptable as it is categorized as
natural love and affection which is valid consideration. Hence, Dato’ Herman may without fear
an in light of the case law ruled in favour of his position, offer his son the use of his land
without receiving any compensation from the son, as allowed by Section 26 of the Contracts
Act 1950.

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 REFERENCES

Andrew Bloomenthal. (July 2022). Void Contract. Laws & Regulations, Investopedia.
Available at: https://www.investopedia.com/terms/v/void-contract.asp

United Nations Environment Programme. (Jan 2016). Contract Act (Act 136). Available at:
https://leap.unep.org/countries/my/national-legislation/contracts-act-1950-act-136

Pleaders Intelligent Legal Solutions. (August 2020). Concept of gift under the Transfer of
Property Act, 1882. Available at: https://blog.ipleaders.in/concept-of-gift-under-the-
transfer-of-property-act-1882/

Canada, Department of Justice. The Concept of a Gift/Don Comparative Study – Civil Law
Common Law – Tax Law. Retrieved at: https://www.justice.gc.ca/eng/rp-pr/csj-
sjc/harmonization/siroi/gift3-don.html (5 July 2022)

Halim Hong Quek, (April 2022). Property Transfer by Way of Love and Affection. Available
at: https://hhq.com.my/publications/property-transfer-by-way-of-love-and-
affection/?arc=1

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