LAW1014 Business Law Answer Sheet AUGUST2021 FINAL Examination

3 DEC 2021 (11:00 AM) - 4 DEC 2021 (11:00AM)

Name : Ivan Goh Tat Wei

Student I.D. : 20017570
Programme : BBA

Write your answer here. You may add as many pages as you need to write your answers. Examiner
Keep in mind the word count for the entire paper is 3,500 words i.e., 500 words per Comments
question. Please number your answers to correspond with your questions.

1a. According to section 2(d) of the Malaysian Contracts Act 1950, consideration is
differentiated into three parts being past consideration, executed consideration, and
executory consideration. For past consideration, the promisor will be requested to have the
promisee to be restricted from doing something. For executed, a restriction is being
imposed on someone currently doing something. For executory, a party promises to do or to
restrict themselves from doing something. Consideration must be sufficient but needs to be
adequate because courts are not concerned for what is being discussed and agreed on as
concerns are based on bargains and not law. Therefore, consideration needs to be adequate
for it to be valid. For example, in the case of Phang Swee Kim v Beh I Hock, sale of land
that was RM500 was sufficient consideration. However, it was not a proportionate value
with the subject matter. Next, in English Law, past consideration is not valid. However, in
Malaysian law it is considered valid. According to South East Asia Insurance Bhd V
Nasir Ibrahim, consideration is a promise that carries a burden or detriment. To explain
this, only goods are applied. According to case law Currie v Misa, benefit & detriment
analysis is used. For example, if company A is selling goods to company B for money, the
goods that were sold to company B is considered a detriment while the money earned is a
benefit. For company B, it would be vice versa as money will be detriment and goods will
be a benefit to the company. For services, shares and copyrights it has another definition.
According to Macon Works Trading Sdn Bhd V Phang Hon Chin, consideration is the
price paid for a promise to do something. To elaborate, price for promise analysis is used.
According to Dunlop Pneumatic Tyre Co Ltd v Selfridge, person A has promised person B
to not sue them. Therefore, person A is giving up their legal right for the price of person B
giving money to person A. Furthermore, there is a general rule in section 26, Contracts Act
of 1950. Whereby, an agreement without consideration is void. However, there are three

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3 DEC 2021 (11:00 AM) - 4 DEC 2021 (11:00AM)

exceptions. The first exception is only applied if it is registered. For example, the transfer of
land from person A to person B, a person’s will and the transfer of interest. These examples
do not require consideration. The second exception is a promise to make up for something
that has been done. This will be applied only to past consideration. Lastly, the third
exception is a promise to pay a debt barred by limitation. This means that every debt has a
limitation period which a claim must be made. Chia Foon Tau v Lim Pey Lin [1998] is an
example for section 26, contracts act 1950.

1b. Yes, Charlotte can successfully sue George for the additional RM50,000.00. This is
because of performance of an existing duty. According to Stilk v Myrick, agreements
cannot be altered without the provision of fresh consideration that are bind to the parties. In
the case of George and Charlotte, it has been agreed on that Charlotte will get an additional
RM50,000.000 if she finishes the project by the given deadline. Next, according to the case
of Hartley v Ponsonby, if another party does more than what needs to be done then it would
be a valid consideration for the additional sum promised to be given. To add, in the case of
Williams v Roffery Bros, performing and existing duty under the contract can be valid
consideration if there is practical benefit. According to section 10, Contracts Act 1950,
between two parties, the promisor made the promise. In this case, the promisor being
George and the defendant being Charlotte. There is an existing contract as George agreed to
pay Charlotte an additional RM50,000 if she would complete the project on time in which
she did. Moving on, there is a practical benefit towards George. As George did receive the
practical benefit of getting his project completed on time as Charlotte has stopped working
on all her other projects just to complete George’s project by the given deadline. Therefore,
Charlotte can claim the RM50,000.00.

2a. Yes, Finn has breached his warranty of authority to Tom. A breach of warranty of
authority is when an agent breaches his warranty of authority to the principals, as well as
the third party with people he contracts on the principal’s behalf. When there is a breach,
the agent could face consequences to the principal for not acting within the strict guidelines
of the principal and the contract in some way binds the principal according to section 18
CA 1950. If the principal is not bound to section 181 CA 1950, the agent will be vulnerable

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3 DEC 2021 (11:00 AM) - 4 DEC 2021 (11:00AM)

to the third party because by contracting with the third party, the agent represents he has
authority to do so. For example, in the case of Yonge v Toynbee, the agents which were
lawyers, were liable to the third party because they represented their clients which had
capacity to bring the litigation against the defendants. Since the principal was discovered to
not have capacity, the agents had breached their warranty of authority to the third parties. In
this case, Finn is the agent and Tom is the principal. An agent is defined as “a person
employed to do any act for another or to represent another in dealings with third persons”.
The principal is defined as “the person for whom such an act is done, or who is so
represented” (Section 135 CA 1950). To determine if an agent goes beyond their authority
is to see under section 164, if an agent is duty-bound to follow his principal’s guidelines.
An agent should act according to the business practices in the area where the business is
conducted. If failed to do so, the agent will have to compensate for any profits and losses
accounted to the principal. Additionally, under section 165, an agent is to carry out his tasks
with the skills and diligence. If an agent fails to meet the requirements, it will result in the
agent having to make up for any loss suffered from the principal. For example, in the case
of Wong Mun Wai v Wong Tham Fatt, the agent sold to his own wife below market value
the principal’s share of the land. The court has spoke where the agent took advantage of the
situation by profiting at the principal’s expense and sabotaging his principal’s interest. In
Pernas Trading Sdn Bhd v Persatuan Peladang Bakti Melaka, FC, the agents ordered
chemicals and fertilisers for themselves instead of the principal. When it came to the
payment of the items, the agents refused to pay and insist they had ordered the items for the
principal. The federal Court said that the agents were held personally liable as they entered
into the contract for themselves and not behalf of their principal.

3a. Duty of care is when the act of one person directly affects another person. According to
the case of Donoghue v Stevenson, Lord Atkin, when a person’s actions have the capability
to harm or damage the property of another, the person owes the other a duty of care to
ensure reasonable steps are taken to avoid or minimize the damage or harm. Next,
according to Caparo Industries plc v Dickman, to prove that a person owes another duty of
care, three factors need to be proved. The three factors being, foreseeability of harm,
proximity between the parties and whether it was fair, just and reasonable to impose the

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duty of care. Additionally, harm is reasonably foreseeable means that an objective

assessment of the defendant’s act reflects harm is a consequence because of the behaviour
of the defendant towards the prosecutor. For example, in the case of Langley v Dray, the
defendant’s reckless and careless driving was found to have a risk of harm to other people
on the road including the prosecutor. Moreover, in the case of Haley v London Electricity
Board, the court said that leaving equipment in a public place created a danger to others
who walked near or by the area the equipment was placed. The signs of danger showed that
harm was present and thus foreseeable. Next, proximity is defined as a sufficient
relationship between prosecutor and defendant for the courts to impose a duty of care on the
defendant. According to the case Sutradhar v Natural Environment Reseach Council,
while the decision of whether there is proximity between the parties, the courts will
consider if the defendant had control over the circumstances which led to harm to the
prosecutor. According to the case of Hedley Byrne v Heller & Partners, if the court
handles the case appropriately, the defendant is said to take full responsibility over the
prosecutor. Lastly, fair, just and reasonable is meant that the courts are considering if any
policy considerations which can be used to deny the claim against defendant are
implemented. According to the case law of McFarlene v Tayside Health Board, the court
uses the say as a policy claim to deny liability. Therefore, the defendant’s treatment to
prevent the prosecutor pregnancy failed. Which resulted in the prosecutor getting pregnant,
thus the prosecutor sued the defendant. According to the court, they found that it was fair,
just and reasonable to deny the claim because children were not considered liabilities. In
this case, Seth has to have duty of care towards Bob and Karyn.

3b. To determine if there is a breach in duty of care, the court will consider if the defendant
has fallen below the standard of care. The standard of care requires the court to consider
what a reasonable person would or wouldn’t do in certain and similar circumstances. The
court will consider several factors to determine whether the defendant has fallen below the
standard such as probability of risk (Bolton v Stone), degree of harm (Paris v Stepney BC),
and the procedure taken to prevent harm (Latimer v AEC). First, the court uses probability
of risk to measure standard of care when the defendant’s act increases the risks around
people. This means that it is likely that the defendant’s moral standard has fallen below the

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average standard of care. For example, in the case law of Bolton v Stone, the court held that
by putting up fences around the field while the defendant was playing cricket ball, the risk
of the cricket ball flying out of the field has been reduced. However, in the case law of
Miller v Jackson, the defendant did not take the necessary procedures to prevent the ball
from going out of the field therefore causing harm to the people around them. Next, when
the court uses degree of harm in a situation where harm cannot be avoided but may be
reduced to cause minimal damage. Thus, the court will consider the procedures to try to
minimize harm. For example, in the case law of Paris v Stepney BC, the court found the
defendant liable because they knew the prosecutor only had one functioning eye. The work
given to him was a dangerous environment and had a risk of him getting an injury. Thus, by
not supplying protection like googles for him to work, the defendant had not done much to
help reduce the exposure of risk that could occur to the worker. Thus, in this case there is a
breach of duty of care as Seth who was new to the construction site did not have a proper
briefing and was not given the proper safety procedures like closing the road before
operating on the crane. Therefore, creating an unsafe environment for people around the
construction site like Bob and Karyn to get injured, increasing the risk of harm.

4a. With response to Kevin’s comments, it is clear that the behaviour falls within the
definition of section 2 Employment Act 1955 (EA 1955) for sexual harassment. Section 2
covers the behaviours that reflects unwanted sexual misconduct directed towards Jaqueline
which is offensive, unfair and a threat to her well being arising from the course of
employment. Kevin, and the Human Resource Department of the company are treating
Jaqueline unfairly without a valid reason. Kevin is being unreasonable for commenting
suggestive remarks about her appearance, dress code, making her work overtime and
making sexual comments. This can be seen as a verbal sexual harassment to her which is
considered offensive to her well being because of the effects that could affect her mental
state of mind. The sexual comments which were being directed at her is offensive and is an
unfair verbal conduct. Therefore, Kevin’s sexual conduct falls under section 2. Jaqueline
made a complaint to the Human Resources Department of the company. However, they
replied saying that her complaint was not in the required format, therefore no further action
has been taken to this day 81B(1) EA 1955. Jaqueline should direct her complaint to the

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Director General of Labour (Section 81B(4) EA 1955). The DGL could direct an
investigation (section 81D (1) EA 1955) and find out the truth or he can investigate himself
(section 81D (2) EA 1955). A written reasoning must be given to Jaqueline in the next 30
days. If Kevin is found to have committed these acts, then he will be dismissed, demoted or
suspended without any further notice (section 81C EA 1955). If there is a case of sexual
harassment, and the DGL informs Jaqueline in writing within the next 30 days but the
company does not take action against Kevin, then she has the right to terminate without
notice (section 81E(2) EA 1955). Since Jaqueline falls under the Industrial Relations Act
1967, she could treat herself as constructively dismissed and take legal action against the
company under section 20 IRA 1967. A fine of RM10,000 will be issued to the company
for not having to take actions after receiving a complaint.

4b. With the process under section 81A – F employment act 1955 (EA 1955), Jaqueline
cannot proceed to treat herself as constructively dismissed and proceed with an action under
section 20 Industrial Relations Act 1967 (IRA 1967). Constructive dismissal is when an
employer’s behaviour is so unreasonable that it causes employees to leave. However, even
if an employer’s behaviour is unreasonable, it depends on the individual. She must bring the
case within 60 days after leaving employment (section 20(1A) IRA 1967). This then comes
down to if the employer had a valid reason for their behaviour. For example, in the case law
of Wong Chee Hong v Cathay Organisation (M) Sdn Bhd, an employee got demoted for
negotiating terms with the employee trade union. The court was in view of this as it was
within the scope of position. Thus, the employer did not have a valid reason to demote the
employee considered the circumstances and with constructive dismissal being present. In
order for Jaqueline to set up for constructive dismissal, she must include four conditions.
Firstly, the employer breached the term in the contract of employment. This can only be
proceeded if the employer did not cooperate with the investigation for a prohibited act.
Since sexual harassment is forbidden by law under section 81A EA 1955, if action is not
taken, it will be considered a breach of the terms of employment. Secondly, the breach must
be a major term of the contract. Sexual harassment is not a joke in working environments,
as failing to address it in the work place is a breach of a major term in the contract. Lastly,
Jaqueline must leave without wasting anymore time as a result of the unreasonable

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behaviour. Jaqueline can argue that leaving after the outcome of the process under section
81A-F EA 1955 is a matter to be resolved by the employer. According to the case law of
Sitt Tatt Berhad v Flora a/p Gnanapragasam, in which a female employee successfully
claimed against her employer where an investigation of the complaint letter of sexual
harassment was not conducted against her supervisor.