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.
• ALW Car Workshop Sdn Bhd v AXA Affin General Insurance Bhd [2019] 4 MLJ
561
• 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.
• Lee Cheong Fah v Soo Man Yoke [1996] 2 MLJ 627; [1996] 2 BLJ 356:
Fraudulent misrepresentation refers to false representation which made
intentionally or unintentionally, irresponsbible and uncontrolled,regardless it is
true or false.
• 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 factual question
that must be deduced from surrounding circumstances. Mispresentation occur
when a false statement is mislead, claim that it is true.While frudulent
mispresentation is the act of making a false statement with the intention of
knowing it is false or unbelieve it to be true.
• 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 factual question inferred from the context 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.
• There must be a representation of fact which is false
• The representation is should be acknowledge that it is false
• The representation should made to the party misled with the intention to induce
the contract
• The claimant acted upon the false statements to enter into contract
• The claimant suffered from damage beyond this

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: Silence does not constitute to fraud unless: the one remaining
silent has an obligation to speak; or his silence, in itself is equivalent to speech
 • General rule is that mere silent is not fraud due to the caveat emptor's rule (let
the buyer beware) - it is not seller's duty to disclose a consumer about the
condition of selling product, it is the buyer's responsibility to make informed
decision 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.
• 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 over typical buyer and seller relationship.
• Karuppannan v Chong Lee Chin [2007] 7 CLJ 265: The proposition in law
proposed that no trustee relation bounded by a customer and vendor.
• Solid Investments Ltd v Alcatel-Lucent (M) Sdn Bhd [2014] 3 MLJ 785: The case
law indicates that the courts are hard to identify a fiduciary relation between
businessmen who engage in commercial activities….This is due to business
activity do not result in fiduciary responsibility because they does not fit the
requierments to be classified as fiduciary in nature
• 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 – To
landlord, the agent served as a conduit pipe and both party, landlord and
appelant has signed a tenancy agreement.
• Lau Hee Teah v Hargill Engineering [1980] 1 MLJ 145: Hire-purchase agreement.
Held that the non-informing on the year of the machine was manufactured and its
past involvement in an accident is not misrepresentation because the hirer does
not have responsbility to remind seller such 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:
• there is a room for the fiduciary to utilise some authority or discretion;
• the fiduciary can utilise authority or discretion to influence the beneficiary's
practical or legal interest;
• the beneficiary is mercy or vulnerable to the fiduciary, with authority or
discretion.

• 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.
• 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 engage in
the agreement – 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 suffered from damage beyond this
• 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 – The
contract may be upheld or revolk by the innocent party. 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.

ABC Electronics – Malaysia (Plaintiff)

XYZ Tech – Taiwan (Defendant)
Contract – Assumption that Malaysian law applies
Force majeure clause – No mention of whether it is provided for in the contract

Force majeure
• Clause have to be declared clearly in the contract – is it wide enough to include events in
Taiwan?
• CA case: BIG Industrial Gas Sdn Bhd v Pan Wijaya Property Sdn Bhd and Another Appeal
[2018] 3 MLJ 326
• Upheld in a HC case: Goyung Fusion Restaurant (KLCC) Sdn Bhd & Ors v Suria KLCC Sdn
Bhd [2021] MLJU 2345:
 • “It is trite law that for a party to rely on an alleged Force Majeure event, the said
event must be specifically provided in the contract and is not implied by law..”

• CA widen the explanation of Force Majeure events – involved business distruptions that are
caused by differents events and acts
• CA case: Malaysia Land Properties Sdn Bhd v Tan Peng Foo [2013] 1 MLRA
• “The words force majeure have been held in many cases to have a more
extensive meaning than ‘act of God’ or ‘vis major’… while the concept of force
majeure does not encompass conditions of business or economic climate
leading to a depressed economy, it would include dislocation of business by
various actions and events
• Assuming a contract contains a force majeure clause and based on precedent, likely that
the court would lean towards XYZ Tech where employees’ absence from the factory due
to the disasters constitutes a force majeure event

• Next, look at mitigation obligation

• Depends on whether the obligation to mitigate is stated in the contract
• If yes, then has XYZ Tech worked towards the standards as stated in the contract
i.e. take reasonable steps etc
• If no,
• Given precedence is that the court might amplify such obligation
• HC case: Intan Payong Sdn Bhd v Goh Saw Chan Sdn Bhd [2005]
1 MLJ 311
• “it is trite that a party relying upon a force majeure
clause must prove the facts bringing the case within the
clause. He must therefore prove the occurrence of one of
the events referred to in the clause and that he has been
prevented, hindered or delayed, as that case may be
from performing the contract by reason of the event. He
must further prove that his non-performance was due
to circumstances beyond his control and that there
were no reasonable steps that he could have taken to
avoid or mitigate the event or its consequence”.
• Force majeure clause unlikely to be interpret alone. Other provisions
within the contract will be considered and looked at. The court would
determine the underlying purpose of the contract, i.e. for XYZ Tech to
supply microchips, on a consistent basis, to ABC Electronics and see
whether XYZ Tech has taken steps to mitigate the situation, e.g. ramp up
their existing machine’s production capacity where possible, before
allowing them to fall on the force majeure clause
• HC case: Crest Worldwide Resources Sdn Bhd v Fu Sum Hou dan
satu lagi [2019] MLJU 512
• Also consider whether XYZ Tech is capital-intensive or labour-intensive. If it is the
latter, XYZ Tech would have more leeway regarding enforcing the force majeure
clause

• Only applicable while the event is in progress, unless there is a clause that provides for auto-
termination or termination when the counterparty apply it's contractual authority.

Doctrine of frustration
• Absence of a force majeure clause
• When there is an unavoidable or extraneous event, force a contract to end and make it
impossible or illegal to continue performing. Hence, contract is frustrated.
• Section 57(2) of the Contracts Act 1950:
• “[a] contract to do an act which, after the contract is made, becomes impossible,
or by reason of some event which the promisor could not prevent, unlawful,
becomes void when the act becomes impossible or unlawful.”
• Would the consistent supply of microchips be considered impossible at that point in
time?

• Guan Aik Moh (KL) Sdn Bhd v Selangor Properties Bhd [2007] 4 MLJ 201
• The circumstance that the parties attribute to the contract's frustrated had to be one for
which neither party had been allocated a provision in the agreement;

• The party invoking the doctrine is not responsible for the event, it is not a self-induced
frustration;
• 2-folds: irresponsible for the event & not a self-induced frustration
• XYZ Tech is not responsible for the natural disasters or the reason
behind their employees not coming in
• Not a self-induced frustration? XYZ Tech has to show that they did not
induce the delay in supplying microchips
• Whether XYZ Tech has made reasonable efforts to transport
employees to the factory via a different route
• Whether XYZ Tech had other workarounds besides depending
on the same employees to complete the task, e.g. employing
others closer to the factory based on short-term contracts etc

• The intervening circumstances must result in the performance of a contract being

fundamentally differ from the terms that originally agreed upon the contract
• Take note:
• FC case: Pacific Forest Industries Sdn Bhd & Anor v Lin Wen-Chih & Anor
[2009] 6 MLJ 293
• A contract is not frustrated merely because its performance has
been rendered more difficult to perform
• Seems that a delay in supplying microchips leans towards a mere “more difficult
to perform” contract rather than a fundamental difference
• The act of supplying can still be completed after
• But..
• Would the performance of the contract be the consistent supply
of microchips – and a delay in supply is fundamentally different
from the upon agreed original contract?

• Other things to consider: ABC Electronics would want to determine the practical
effects of using this doctrine
• Once the contract is frustrated, it will permanently end the contract's
performace.
• Hence, ABC Electronics would need to either find a different supplier or
draft a new contract with XYZ Tech (taking into account their animosity
against one another due to the pursuance of legal action)
• Would ABC Electronics have sufficient time for this considering
that they are currently unable to meet the production deadlines
for its computers?
• Would ABC Electronics be able to find another supplier for their
cutting-edge computers with the same quality and cost?
Conclusion
• Force majeure – XYZ Tech may be able to rely on the clause
• Doctrine of frustration – XYZ might not be able to rely