Introduction

 Definition of misrepresentation. Misrepresentation is statutorily provided under s.17

and s.18 Contracts Act 1950 (“CA”).
 Difference of misrepresentation under s.17 and s.18 – main difference is the intent to
deceive.
o ALW Car Workshop Sdn Bhd v AXA Affin General Insurance Bhd [2019] 4
MLJ 561
o Contract Law in Malaysia, Cheong May Foong pg 261-262, 280
 States that the focus of this case is on fraudulent misrepresentation under
s.17(a) of CA because there is intent to deceive. Also argue that negligent and
innocent misrepresentation is not relevant here.
o Lee Cheong Fah v Soo Man Yoke [1996] 2 MLJ 627; [1996] 2 BLJ 356:
Fraudulent misrepresentation is said to be a false representation made
knowingly or without believing its truth, or recklessly, carelessly whether it is
true or false.
o Shri @ Indran Ram a/l Ramasamy v Wong Yew Kee [2021] 10 MLJ 376:
Whether any particular claim is tainted with fraudulent intent is a question of
fact to be inferred from the surrounding circumstances. Making a false
statement in the belief that it is true constitutes misrepresentation However,
making a false statement with the knowledge that it is false or not believing it
to be true and the intention to deceive amounts to fraudulent
misrepresentation
o Shri @ Indran Ram a/l Ramasamy v Wong Yew Kee [2021] 10 MLJ 376 and
ALW Carworkshop Sdn Bhd v AXA Affin General Insurance Bhd [2019] 4 MLJ
561: The question as to whether an act constitutes fraud and fraudulent
misrepresentation is a question of fact, to be deduced from the circumstances
of the case.

Elements of fraudulent misrepresentations

 Collective reading of s.17 CA and Sim Thong Realty Sdn Bhd v Teh Kim Dar @ Tee
Kim [2003] 3 MLJ 460 and further supported by article.
o There must be a representation of fact which is false
o The representation must be made with knowledge that it is false
o The representation must be made to the party misled with the intention to
induce the contract
o The claimant acted upon the false statements to enter into contract
o The claimant has sustained damage by doing so

Element 1: There must be a representation of fact which is false

 The representation of fact in contention here is “the rose bouquets needed to be of
the highest quality and must consist of rare blue roses, as requested by the bride.
However, Mark was silent on that point.
 Hence, the question is whether mere silence amounts to fraud.
 Explanation of s.17 CA: Mere silence is not fraud unless: it is the duty of the person
keeping silent to speak; or his silence, in itself is equivalent to speech
 o General rule is that mere silent is not fraud due to the rule of caveat emptor
(let the buyer beware) - seller does not have the duty to inform a buyer the
condition of goods he is selling, it is on the buyer to satisfy himself before
making the purchase – unless it falls under the 2 exceptions.
 Argue that it does not fall under the first limb – “it is the duty of the person keeping
silent to speak” because the relationship between Linda and Mark is merely buyer
and seller.
o S.17 Illustration (a) read together with S.17 Illustration (b):
 Contract Law in Malaysia, Cheong May Foong pg 268-269: The
relationship must be more than the ordinary relationship if seller and
buyer.
o Karuppannan v Chong Lee Chin [2007] 7 CLJ 265: The proposition in law Is
that there is no fiduciary relationship between a vendor and purchaser
o Solid Investments Ltd v Alcatel-Lucent (M) Sdn Bhd [2014] 3 MLJ 785: Case
law shows that the courts are quite reluctant to find a fiduciary
relationship between businessmen who enter into commercial dealings….This
is because commercial transactions often do not give rise to fiduciary duties
because they do not meet the criteria for characterization as fiduciary in natur
o Nepline Sdn Bhd v Jones Lang [1995] 1 CLJ 865: Distinguished this case
because it is not a contract case, it is a case involving registered real estate
agents and chartered valuer in where there is no privity of contract – agent
merely acted as a conduit pipe for the landlord and tenancy agreement was
signed between the appellant and landlord
o Lau Hee Teah v Hargill Engineering [1980] 1 MLJ 145: Hire-purchase
agreement. Held that the non-informing on the year of manufacture of the
machine and its past involvement in an accident is not misrepresentation
because there is no active duty on part of the hirer to inform seller of these
matters.
If you want to argue that there is special relationship, it is possible to explore the flexible
approach of establishing fiduciary relationship since this case does not fall under the
traditional categories of fiduciary relationship. See Solid Investments Ltd v Alcatel-Lucent
(M) Sdn Bhd [2014] 3 MLJ 785. In Solid Investment, the court refer to Frame v Smith which
provides a guideline of the general characteristics of fiduciary relationship, which in my
opinion is hard to prove in this case:
- the fiduciary has scope for the exercise of some discretion or power;
- the fiduciary can unilaterally exercise that power or discretion so as to
affect the beneficiary's legal or practical interest;
- the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary
holding the discretion or power.

 Argue that it does not fall under the second limb – “whether the silence itself is
equivalent to speech” because Linda’s statement is not the type of speech that
require a response in this case.
o S.17 Illustration (c):
 Contract Law in Malaysia, Cheong May Foong pg 271: Content of the
speech require a response
 Sub-conclusion: Element 1 is not fulfilled
Most likely can skip because one element is not fulfilled – not necessary to discuss others
Element 2: The representation must be made with knowledge that it is false
Element 3: The representation must be made to the party misled with the intention to
induce the contract
 Argue that as a renowned floral supplier, Mark most certainly has access to the stock
count of the type and quantity of roses. Hence, Mark must be taken to know that he
is not able to supply Linda with blue roses and his silence is to induce Linda to enter
into the contract – if Linda known that Mark does not have the rare blue roses she
would have contracted another floral supplier.
 Can also argue on the “significant deposit” to highlight the importance of rare blue
roses to Linda and the fact that

Element 4: The claimant acted upon the false statements to enter into contract
Element 5: The claimant has sustained damage by doing so
 As a result of the contract with Mark, Linda’s business and reputation is affected.

Conclusion: There is no misrepresentation under s.17

Linda’s and Mark’s contractual rights and legal recourse

 S.19 CA provides for the effect and relief for fraudulent misrepresentations – an
innocent party has the option to rescind or affirm the contract. When contract is
rescinded, s.65 and s.66 of CA apply.
 However, in this case, since Linda most likely will fail to prove fraudulent
misrepresentation and hence, Linda will not have be entitled to any legal recourse.
 As for Mark, since Linda fails to prove misrepresentation, the contract is valid and
standing. He is entitled to the remaining amount of the contract (the facts only state
that deposit is paid) and if Linda refuses to comply, Mark can sue Linda for breach of
contract.