KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACADEMIC YEAR 2020/2021

APRIL/MAY EXAMINATION

BBBL2023 COMMERCIAL LAW

FRIDAY, 7 MAY 2021 TIME: 9.00 AM – 12.00

NOON
(3 HOURS)

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Answer ALL questions.

Question 1

Based on the Contracts Act 1950 and/or any case law, examine whether the following contracts are
valid, voidable, or void.

(a) Patricia owns a car rental business. She was approached by Julius who wanted to rent a car
from her for a business trip to Penang for a day since his car was at the workshop. Patricia
said to Julius “Usually, I will charge RM120 per day, but for you there is no charge”, since
Julius had helped her finding her missing cat last week. Patricia informed Julius that he can
pick up the car the next day. When Julius went to pick up the car on the next day, he was told
by Patricia that the car has been rented to a customer. (7 marks)

(b) Farouk offered to sell his original Manchester United jersey to Danish for
RM1,000. He told Danish that the jersey was worn by Cristiano Ronaldo himself
and it was confirmed by its previous owner on eBay, an e-commerce corporation,
where he bought the jersey for much higher price. Danish, without any
hesitation, agreed to buy it and he immediately made payment. However, Danish
was informed by his friend that the jersey was never worn by the legendary
footballer. Danish confronted Farouk but Farouk believed what he read about
the Jersey was true. Danish insisted for a refund of his money. (8 marks)
Answer:

The issue of this question is whether Danish can refund his money.

The law applicable in this question is Section 18(a) and 19(1) of Contracts Act (CA).
According to Section 18(a) CA, it defines misrepresentation as the positive assertion, in a
manner not warranted by the information of the person making it, of that which is not true,
though he believes it to be true. Furthermore, Section 19(1) CA states that when consent to
an agreement is caused by coercion, fraud, or misrepresentation, the agreement becomes a
voidable contract at the option of the innocent party.

In this case, based on Section 18(a) CA, Farouk has conducted misrepresentation because he
believes that the jersey was worn by Cristiano Ronaldo but the jersey actually was never by
him. However, Farouk never had an intention to tell a lie as he believes that the jersey was
really worn by the legendary footballer and he also honestly believes that his statement is
true, but however it turns out to be untrue. Hence, according to Section 19(1) CA, the
contract between Farouk and Danish will become voidable.

In conclusion, Danish has the right to reject the contract and insist for a refund of his money.
(Correct already)

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(c) Raja is a supplier for baking ingredients. Hanif ordered 50 bags of flour from
Raja since Raja was expecting delivery of 1,000 bags of flour from Johor.
However, the delivery was cancelled by the courier the day before the contract
between Hanif and Raja was made. This is because the courier’s employees were
on a strike and both Raja and Hanif were ignorant of this fact.
(6 marks)
Answer:
The law applicable in this question is discharge by frustration.

According to Section 57(1) Contracts Act, it states that an agreement to do an act impossible
itself is void. Illustration (a) states that A agrees with B to discover treasure by magic. The
agreement is void.

Likewise, in the question above, before the contract between Hanif and Raja was made, the
delivery was already cancelled by the courier due to the courier’s employees were on strike.
Hence, based on Section 57(1) Contracts Act, when the contract to do an act impossible itself
will be considered as void.

In conclusion, the contract between Hanif and Raja is a void contract.

OR

This question is regarding mistake of both parties.

According to Section 21 Contracts Act (CA), when both parties make a mutual mistake on the
contract, the contract can be considered as a void contract. As per Section 2(g) CA, void
contract is unenforceable contract.

Likewise, in this question, at the time when Hanif ordered 50 bags of flour from Raja, both
of them though that the delivery is still exist. But the truth is the delivery has been cancelled
by the courier due to the courier’s employees were on a strike. As such, by applying Section
21 CA, there is a mutual mistake and the agreement between Hanif and Raja will be
considered as void contract. Hence, according to Section 2(g) CA, the agreement of Hanif
and Raja is not enforceable by law.

In conclusion, the contract between Hanif and Raja is a void contract. (Correct already)

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(d) Following sub-question 1(c) above, would your answer be different if the delivery
was cancelled the day after Raja and Hanif made the contract to purchase 50
bags of flour and both were unaware of this fact? (4 marks)

Answer:
The law applicable in this question is discharge by frustration.

According to Section 57(2) Contracts Act, it states that an agreement to do an act which
subsequently becomes impossible to perform or unlawful is void. Illustration (b) states that A
and B contract to marry each other. Before the time fixed for the marriage, A goes mad. The
contract becomes void.

Likewise, in the question above, although the contract between Hanif and Raja to purchase 50
bags of flour had been made, but the delivery was cancelled the day after due to the courier’s
employees were on strike. Hence, based on Section 57(2) Contracts Act, when the contract to
do an act which subsequently becomes impossible to perform or unlawful will be considered
as void.

In conclusion, the contract between Hanif and Raja is still a void contract.

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Question 2

Mark ordered 10 gunny sacks of paddy from Helena’s granary for RM3.20 per kilogram (kg).
However, all the paddy in her granary are yet to be packed in gunny sacks. As such, the total price of
each gunny sack of paddy is unknown until the paddy in her granary is packed and weighed by
Helena. Nevertheless, Mark insisted on his order and Helena agreed to it. With reference to the Sale of
Goods Act 1957 and/or any case law, consider the following separate and independent situations.

(a) Helena’s paddy mill near her granary exploded and all the paddy and gunny
sacks were burnt before she could finish packing and weighing. Mark refused to
pay Helena and claimed that Helena should bear all the losses for the paddy.
Advise Helena. (12 marks)
Answer:
The question is regarding Section 26 and 22 of Sales of Goods Act (SOGA) 1957.

Section 26 SOGA provides that unless otherwise agreed, the seller will have to bear the risk
of the goods until the property therein is transferred to the buyer. But when the property of
goods has been transferred from the seller to the buyer, the goods will then be at the buyer’s
risk whether the delivery has been made or not. Section 22 SOGA states that a specific goods
must be put into the deliverable state, but the seller is bound to weigh, measure, test or to do
some other act or thing with reference to the goods for the purpose of ascertaining the price,
the property passes after such act is done and the buyer has notice of it. Hence, if the seller
did not finish the act and inform the buyer, the ownership of the goods will remain with the
seller until the seller had finished the act and inform the buyer.

Likewise, in the question, Helena had to pack and weigh the paddy to ascertain the total price
of each gunny sack of paddy. As such, by applying Section 22 SOGA, until Helena had
packed and weighted all the 10 gunny sacks of paddy ordered by Mark and informed him
about the total price, the ownership of the paddy will remain with Helena. Hence, at the time
when all the paddy and gunny sacks were burnt, Helena is still the owner of the paddy. As a
result, by applying Section 26 SOGA, Helena will bear the losses of the paddy.

In conclusion, Helena will bear the losses of the paddy because at the time the paddy and
gunny sacks were burnt, she is still the owner. (Correct already)

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(b) Helena has packed and weighed all 10 gunny sacks of paddy and calculated the total
price is RM2,560. She immediately notified Mark about the price. However, before
the delivery was made to Mark, Helena received a phone call from Prince who
frantically asked her to sell those 10 sacks of paddy to him. Helena agreed to sell the
10 sacks of paddy and allowed Prince to take possession after payment made without
knowing that they were kept for Mark’s order. Advise Mark whether he still have the
title of the 10 sacks of paddy. (13 marks)

Answer:
The law that is applicable in this question is Section 22, 27 and 30(1) of Sale of Good Act
(SOGA) 1957.

Section 22 SOGA states that a specific goods must be put into the deliverable state, but the
seller is bound to weigh, measure, test or to do some other act or thing with reference to the
goods for the purpose of ascertaining the price, the property passes after such act is done and
the buyer has notice of it. Hence, if the seller did not finish the act and inform the buyer, the
ownership of the goods will remain with the seller until the seller had finished the act and
inform the buyer. Furthermore, Section 27 SOGA mentions that no one can give a better title
than he has himself. Section 30(1) SOGA states about seller in possession after sale. Where a
person, having sold goods, continues or is in possession of the goods or of the documents of
title to the goods, the delivery or transfer by that person or by a mercantile agent acting for
him, of the goods or documents of title under any sale, pledge or other disposition thereof to
any person receiving the same in good faith and without notice of the previous sale shall have
the same effect as if the person making the delivery or transfer were express.

Likewise, in this question, the first issue is Helena has already packed and weighed all 10
gunny sacks of paddy and calculated the total price of RM2,560. After that, she has
immediately notified Mark about the price. As such, by applying Section 22 SOGA, the
property of the paddy will pass to Mark when Helena had finished her acts of packing and
weighting the gunny sacks of paddy and also informed Mark about the total price. Hence,
Mark will become the owner of the paddy.

For the second issue in this question, originally based on Section 27 SOGA, only Mark can
sell the 10 gunny sacks of paddy as he is the rightful owner. However, there is an exception
under Section 30 SOGA. Helena who is the seller still owns the possession of the paddy after
notifying Mark about the price. Hence, Helena could pass a good title to Prince. Therefore,
based on Section 30(1) SOGA, Mark is unlikely to be able to claim back the paddy from
Prince as he was in good faith and without notice about the previous sale.

In conclusion, Mark will lose the title of the 10 sacks of paddy, while Prince will get a good
title for the paddy.

(Cannot use Section 30(1), use Section 22 and 27)

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Question 3

Chun Hau owns a retail shop in Kuala Lumpur selling various designer clothes. He appointed
Jonathan as the manager of his shop as well as his personal assistant. Chun Hau is currently staying in
Penang to manage his new retail shop in Georgetown. In his absence, Chun Hau gives the following
instructions to Jonathan:

• To collect monthly rent of RM1,200 from Chun Hau’s tenant, John, who is renting Chun
Hau’s apartment in Taman Melati, Kuala Lumpur.

• To prepare a job vacancy advertisement on JobStreet.com for a manager position for Chun
Hau’s retail shop in Penang. Jonathan is also authorised to short list and arrange any potential
candidate to be interviewed by Chun Hau.

• To purchase three new steamers for ironing clothes costing not more than RM1,000 each.

On 30 April 2020, Jonathan sent a letter of demand to John requesting RM1,500 for April 2020 rental
payment. In his letter, Jonathan explained to John that the rent has increased due to the increasing cost
of maintenance of the apartment, which was completely untrue. Jonathan deposited RM1,200 into
Chun Hau’s account and kept the remainder.

Meanwhile, Jonathan worries that he is unable to find any qualified candidate for the manager
position. He then called Aishah, who worked at a recruitment agency to help him find some job
seekers.

In May 2020, Jonathan ordered 3 steamers from Nancy, Jonathan’s sister for the price of RM1,200
each.

When Chun Hau returned to Kuala Lumpur, he was upset with Jonathan’s acts and refused to pay his
salary. With reference to the Contracts Act 1950 and/or any case law, consider the following
questions:

(a) Advise Chun Hau whether Jonathan has breached his duties as an agent.
(15 marks)

(b) Chun Hau is considering to terminate Jonathan’s service as his agent. Elaborate
how an agency relationship can be terminated by Chun Hau. (6 marks)

Answer:
An agency relationship can be terminated by act of parties.
(i) By mutual consent
- When both parties desire and agree that the agency shall be terminated, the agency will be
terminated.

(ii) By revocation by principal under Section 154 Contract Act 1950.

- Principal may revoke anytime before authority is exercised so as to bind the principal.

(iii) By renunciation by the agent under Section 154 Contract Act 1950.
- The agent had resigned as do not want to do agency anymore.

The agency can also be terminated by operation of law. The law intervenes into the contract of agency
between principal and agent.
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i. By the performance of the contract of agency:

- The transaction which has been undertaken is performed.
- Section 154 Contract Act 1950 states that an agency is terminated when the business of the
agency being completed.

ii. By expiration of the period fixed/implied in the contract:

- Where the duration is expressly fixed or may be implied in the contract or trade, the agency is
terminated when the period for which it was created to endure has expired, even if the
business has not been completed, unless there are other terms to the contrary.

iii. By the death of either principal or agent:

- An agency is terminated by either the principal or agent dying. This is because the
relationship between the principal and agent is confidential and personal.

iv. By the subsequent insanity of either principal or agent:

- Section 151 Contract Act 1950 states that the insanity of either party will terminate the agency
as a person of unsound mind cannot validly contract to appoint or act as an agent.

v. By the bankruptcy or insolvency of principal: Section 154 Contract Act 1950.

(c) Recommend TWO (2) most appropriate remedies for Chun Hau? Support your
answer with reasons. (4 marks)

Answer:
(i) Repudiate the contract
- Terminate or cancel the contract with the agent.

(ii) Recover secret profit

- When the agent had made secret profit while working for the principal, the principal can
demand the agent to surrender the secret profit.
- Eg: The house cost RM300k. The agent managed to sell it for RM340k but he only
informed to the principal that the house is sold at RM330k. The agent had made secret
profit for RM10k.

(iii) Refuse to pay the remuneration or commission.

(iv) Dismissal
- Fired
(v) Sue for damages
- Principal sue the agent for monetary compensation.

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Question 4

FYP Sdn. Bhd. (“FYP”) is a company selling cosmetic products. Its most popular lipstick brand,
“Blossom” is the talk of the town. FYP designed Blossom lipstick tube to imitate the shape of a red
rose bud as its unique characteristic. FYP’s director, Sara seeks your advice on the following matters.

(a) With reference to the relevant intellectual property laws, analyse any THREE (3) differences
between ‘trademark’, ‘patent’ and ‘copyright’. (12 marks)

(b) Based on the Trademarks Act 2019, examine whether Blossom is a registrable
trademark. (6 marks)

Answer:
The issue in this question is whether Blossom is a registrable trademark.

This question is regarding to Section 3(1) and Section 2 of Trademarks Act (TMA) 2019.
Section 3(1) TMA 2019 defines “trademark” as any sign capable of being represented
graphically which is capable of distinguishing goods or services of one undertaking from
those of other undertakings. Section 2 TMA 2019 defines sign to include letter, name, word,
signature, numeral, device, brand, heading, label, ticket, shape of goods or their packaging,
color, sound, scent, hologram, positioning, sequence of motion or any combination thereof.

Likewise, in this question, Blossom can be considered as a registrable trademark under

Section 3(1) TMA 2019 because of its unique shape of lipstick tube that resembles a rose bud
which can be considered graphic representation of the trademark and it is capable to
distinguish Blossom from other lipstick brands in the market. In addition, based on Section 2
TMA 2019, the shape of a red rose bud of Blossom is also a ‘sign’ for trademarks.

In conclusion, Blossom is a registrable trademark. (Add Section 17 TMA)

(c) A company called Eternal Sunshine launched a new lipstick brand called
“Bellosom” and its tube also resembles a rose bud. However, the tube comes with
different colours which correspond with the colour of the lipstick. Assuming that
Blossom’s unique tube shape is now a registered trademark, advise Sara whether
Eternal Sunshine’s Bellosom infringed FYP’s Blossom’s trademark according to
the Trademarks Act 2019. (7 marks)
Answer:
Whether Eternal Sunshine’s Bellosom infringed FYP’s Blossom’s trademark.
A trademark is infringed if a person, without the consent of the owner, uses in the course of
trade, a similar sign but identical with/ similar to goods/ services of the registered trademark
likely to confuse the public. (S. 54(2) TMA)

S. 54 TMA further explains the meaning of “use of a sign” to include “application of the
sign to goods or their packaging”.
Based on S. 54(2) TMA, Bellosom can be considered using ‘a similar sign’ to Blossom’s sign
because the shape of the tube is similar to (not identical with) Blossom’s tube as there are
some only minor differences in terms of the brand name (Bellosom vs. Blossom) and the
choice of colours for the tube (multiple colour vs red). However, the goods are identical since

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both trademarks are applied for the same products i.e. lipstick. Therefore, it is likely to cause
confusion to the consumers.
The infringing sign (Bellosom) used the sign by applying it to its lipstick. Thus, it falls under
S. 54 TMA.Eternal Sunshine’s Bellosom has infringed FYP’s Blossom’s trademark.

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