LAW chp 2 : Law of contract (CONTRACTS ACTS 1950)

- just some additional to the acts: electronic

contract

(4th vid)

-interrelated with business and commercial law

- a type of private law : between parties, no govt involved

1.Def
2.Law applicable
3.Elements of contract law
4.Parties to contract
5.Valid, Invalid and Voidable contract
6.Discharge and remedies

1.: Def

what is contract ?
- agreement between 2 parties that is legally binding between them
- Law of contracts 1950
- need to fulfill elements
- all agreement are contract if they are made by FREE CONSENTS, competence to
contract
and lawful purposes with lawful object.

2.Law applicable to contract law

1. contract acts 1960,

2. common law
3. english law
4. malaysian law : BASICALLY NO, but will be given due wattage if talk about
sialmic banking

3.Elements of contract law (must fullfill all )

i. offer and acceptance
ii. intention to create legal relation
iii. consideration
iv. capacity to contract

i. offer and acceptance

def : offer - the one who makes offer (look at slides ) OFFEROR/PROMISOR
: acceptance : the one whom the offer is made OFFEREE/PROMISEE

OFFER
COMMUNICATION
types :
1. oral
2. written
 3. conduct/implied - no speak,no written but conduct,actions

to whom can offer be made ?

1. specific
2. public - eg, carlil and carbolic smoke ball

once the offer have been acknowledge by the offeree, the comunication is
complete.

revocation of offer :
- to whithdraw back the offer
- can do it but :
1. before the acceptance is made
2. offer expired, too long
3. failure to fulfill conditions : damaged items, death of the offeror

(5th vid)
ACCEPTANCE : accepting the final and unqualified amount to the terms of the
offer.

types :
1. verbal, written
2. conduct,sign : nod

*silence is not valid except for some cases under Islamic law
and conditioned : if you silent, you accept says offeror
- cases : Felthouse v Bindley

the accepatnce must be communicated

- acknolwdge by offeror
- cases:ENTORES v Miles Far East Corp

Conditions for acceptance ?

- if the offer still stands
- revoced offer, invalid
- must be made by offeree
- must be communicated

ISSUE : COUNTER OFFER

cases : Hyde v Wench

eg : A offer B for rm 10 , A is the offeror

B counter offer rm 9, so B is the new offeror , eliminate the past
conditions

INVITATION TO TREAT ?
- is not an offer, but an invitation for the other party to make an offer
- eg,
1) display goods in shop w prices
2) advertisement
3) Auctioneer invite bidders to bid (invitation to treat)
the moment the bidders bidding the new price is the offer
6th vid
ii. intention to create legal relation

-intention of both party to create relation

-no forcing

Commercial agreement
-your acts of agreeing to accept condition is a sign of intention

Social and domestic agreement

-husband and wife, a contract if living in bad term when the promise was made
-parent and child (not a contract) eg : jones and padawton cases
- eg husbaand borrow money worth 100 and promise to payback
but, the husband then refuse to pay later on.

eg, cases balfor v balfor,

- both living w good term
- husband promise to pay 30 pound each month
- but then they separated, and husb did not pay

after decided,
- there is no contract between the husb and wife since
they were living in good terms. Although they have fullfiled the contracts
elements,
but since the promise are made when they are happy, there are no intention
to create legal relation.

IF THEY MEADE THE PROMISE WHEN THERE NOT IN GOOD TERMS ,HAVE THE INTENTION
TO CREATE A LEGALLY BINDING RELATIONSHIP AND ONE PARTY ARE RELYING ON THE
PROMISES ,THE CONTRACT IS VALID.

(7th vid)
iii. consideration

-consist of some rights, benefits to the other party

-something in return to the other party
-both party need consideration,benefits to both parties (multilateral contract)
- if no consideration. there is no contract

- eg : A sell handphone for 100 to B

consideration for A : cash 100
consideration for B : handphones

in consideration for A's handphones, B will pay rm 1000

Types of consideration ?
1. Executory - a promise to do an act in FUTURE
2. Executed - consdieration executed by doing an act
3. Past Consideration - a promise which was made after the act is done

explain :
1. Executory - A promise to do an act in FUTURE
eg : B promise to supply books in the future to C who agrees to pay
- the most common type of consideration
cases : Murugesu v Nadarajah
 2.Excuted -consideration executed by an act
eg : A promise for reward
: If you find my cat, I will pay rm 10
the cat was found by x, so he need to pay x rm 10

3.Past consideration :Valid for Malaysia,

invalid for English Law (bsc Bala not relying on the
promise)
promise which was made after the act is done
eg : Ali is drowning, then Bala saves.
and then Ali said, bcs you save me, i will give you rm 100

under malaysian law, consideration due to love affections is not valid

considerations
except :met these conditions
1. in written form
2. registered : if have to register
3. parties must be in close relationship : husband wife, parent child,
siblings which is recog by law

BUT ENGLISH LAW does not recog love and affections considerations.(NOT A
CONTRACT)

Adequacy of considerations :does the consideration adequate

eg :
market value of the house : 1 mil
sold for : 100 rm,
CAN BE A VALID CONSIDERATION as long as mutual consents for both
parties.Suffiecient

what if 3rd party involves:

eg : guarantor (valid as long as mutual consents)
but only party to contract involved if enter into court

8th vid
iv :Capacity to contract

1.Privity of contract :
- refers to the person of the parties of the contracts has the rights,
obligations
- only the parties can sue or be sued

2.Capacity :
- only person who has the capacity can make the contract valid

section 11:
i. attain age of majo (18 years old) previously 21 the moment the contract is
made
 ii. sound mind - a person who can understand the nature (not insane)
and consequences of the contract
iii. does not disqualified by law : declared bankcruptcy

if does not met these req, invalid contracts

but what if a minor want to enter into a contract ?

-generally, under 18 : invalid,void EXCEPT :
i. contracts of necessary : essential things food, shelter, clothes,luxury
excluded dep
: case - nash vs inmend : tailor jacket luxury and
a minor
: NOT VALID

ii. contract of scholarship

iii. contract of insurance :bring benefits to the child, so VALID

vid 9
5.Valid, Invalid and Voidable contract

3.Factors affecting free consent

-may affect the status of the contract
-mutual consent,free will, not forced

what is void contract ?

-invalid

what is voidable contract ?

-valid but may be void due to some reason : if brought over by victim

i. undue influence : influenced by a guy who is more dominant, superior

than you
: eg- lect and boss who takes advantages over
students and employee

: AND old age person - take unfair advantages of old

person since they are forgetful,(they are
protected by law)

: people under distress - they cannot think

rationally, can be easily influenced and taken
advantages over
: eg case - skinner(spiritual advisor) v
alcard(patient,follower)

ii. fraud : cheating, scam, selling a vicious horse,fake item

iii. mistake : some misundertanding, unintentionally

: misconception of one or both parties
: 1.unilateral mistake - one misunderstand
: 2.mutual mistake - both misconception
: 3.common mistake -
: 4.mistake of law - illegal (VOID),invalid
 iv. coercion : forced to sign contract, not free will,
: threats,murder (forbidden acts by penal acts)

iiv. misrepresentation : false representation,exaggerate the marketing,

: cust buy things due to the representation of
beautiful but it turns out that the
representation is not true
: online

vid 10
6.Discharge and remedies
- contract ended, terminated

3 ways a contract can be discharged :

i. performance
ii.breach
iii.frustration

explanation
i. performance
- usual method of concluding a contract
- both parties have done their obligations towards other
- both need to perform, but if one of them died,representative will take
over

ii. breach
-one party fails or refused to perform
- two parties : defaulted ( the one who breached)
: innocent (victim)

-innocent have 2 option : 1) Discharge :

relieved from performance and
entitled to damages

2) x discharge :
continue with performance
and entitled to damages

-remedies (gantirugi) available to the innocent

1) damages : to compensate the victim for his losses
: monetary form only
: amount determined by court EXCEPT defamation

: just to cover losses, no profit made

3 types i : substantial - ordinary compensation

- prove the loss
ii : nominal - small breach
iii : exemplary/lesson - punishment to the breacher

11 vid
2) quantum merit : as much as he earned
: available to contract of services only
: eg, we completed the renovation services,but
the client refused to pay, the renovator can claim
only as much has he earned either agreed bfore/ market
 3) specific performance : happens when the innocent dont want money as
compensation, instead a specific performance
: eg, we have paid the money for ferari, but the
seller refused to deliver the car
: unique item and decided by courts

LIMITATION OF SP : why court refused sp ?

i. compensation of money is adequate
ii. require constant supervision of court
: eg constructions
iii.cause hardship to the breahcer

4) injuction : order by court to prohibit threathened illegal conduct

: 2 conditions- 1. innocent have interest to protect
2. damages must shown to be inadequate

i. interlockary injuction (temporary)

: eg, dispute between two partners, A and B
: A has the rights to do interlockary injuction in which B
cannot use company fund to prevent further misused
: custody of cildren

12 vid
iii. frustration : something that cause the contract imposible to be performed
without mistakes from any parties
: beyond our control, war ,disease , act of god - tsunami