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Question 1:

The term fraud is different include


certain acts which are committed
with intent to deceive another party
to induce him enter into a contract.

Section 17 lays down 5 different act of


the defrauder that may constitute
fraud
1) Section 17 (a) Contract Act 1950
-Representation as to the fact.
-The maker of the statement does not believe it to be true.
-Illustration (a) of Section 19 of Contract Act 1950
[Kheng Chwee Lian v Wong Tak Thong]
Facts: R bought half share of land from A.R build a biscuit factory
on part of the land with knowledge and consent of A.Later A
share

the

induce R to sign another agreement that give R smaller

of land which is smaller than the area occupied by the said


factory.
Held: Where on party induce the other to contract on the face of
representation made to him,anyone of which is untrue,the
whole contract is considered as having been obtained

2)Section 17 (b) Contract Act 1950


-Active concealment of a fact by one having knowledge.
-Illustration (c) & (d) of Section 19 Contract Act 1950.
[Horsfall v Thomas]
Facts:D conceal a defect in breach of gun by inserting a metal plug into the
weak spot and sold it to P.P eventually found out about the defect and
sough to recover damages.P failed.
Held: P fail because he had not inspected the gun and as a matter of
logic,could not have been deceived.The concealment of defect did not
affect the decision to purchase.

3) Section 17 (c) Contract Act 1950


-Promise made without intention to perform.
[MUI Plaza Sdn Bhd v Hong Leong Bank Berhad]
Facts: 2nd D was the executive chairman of 1st D.2nd D represent to the P
that he would be responsible to P for any loss and damages caused by
allowing the bank to remain in occupation of the P's premises.P
relied on 2nd D's representation thus suffered a detriment by the loss
of the possible bargaining power with prospective tenants.P sued D
on the promise.2nd D contented that since its in the nature of a
promise,it would not capable of having the character of true or false.
Held: 2nd D had no actual intention of fulfilling his representtion at the
time he gave it.It relates to his present state of mind and his particular
intention at the time he made it.Since P claimed the representation
was false,P has a cause of action to recover damages for fradulent
misrepresentation and tort of deceit.

4) Section 17 (d) Contract Act 1950


-Any other act fitted to deceive
[Loi Hieng Chiong v Kon Tek Shin]
Fact: A is a land broker exchanged his land at Sibu worth $55000 for R's
land in Kuching which R wanted to sell for $115000.A had
deliberately and falsely told R that there was an offer on his land for
$175000.Although R do not believe,but he had led by the A to believe
both land were about the same value.A deliberately suppress the value
of Sibu land and pretend that he was not interested in Kuching land.He
also led R to believe there will be futher payment after the transaction
was done but in fact there was none.
Held: A was not honest as to the true value of his land.Even if the court
accepts the A's allegation that R's was worth $55000 and not
$115000,the exchange is still unfair and reasonable having regard to
the accepted value of A's land.A had perpertrated fraud in the
exchange of land titles.

5) Section 17 (e) Contract Act 1950


-Act or omission as the law specially declares as fraud.
-There will be other act that the law declares as fraud which is not
listed in Section 17 of Contract Act 1950.

Question 2:
Amar was looking for an apartment and he came
across a pamphlet about Sri Desa, a new
condominium situated in a new township of Setiajaya.
According to the pamphlet, the condominium is under
the management of Elite Sdn Bhd with 24 hours
security guard and regular bus services available to
the LRT station. Amar went to the office of Elite Sdn
Bhd and met the manager who basically confirmed
what was stated in the pamphlet. Amar agreed to rent
an apartment to the condominium.

After living there for two months, Amar realised


that there were no guards at night and there was
no bus services to the LRT station either. Amar
had to spend some money to park his car at the
LRT station. Last week a thief broke into his
house and stole his CD and DVD player. Amar
wants to sue Elite Sdn Bhd for fraud.
Advise Amar.

Question 2
Issues 1

Whether the manager committed fraud by giving confirmation to the


fact provided in pamphlet of Sri Desa Condominium,
to induce Amar entered into contract ?
Authority
Section 17 of Contract Act 1950
Fraud, includes any acts which committed by a party with the intent to deceive
another party or to induce the other party to enter into a contract.
Section 17 (a) of Contract Act 1950
The suggestion as to the fact of which is not true, and the maker of the statement
does not believe it to be true.

Case
[Kheng Chwee Lian v Wong Tak Thong]
Facts
R bought half share of land from A.R build a biscuit factory on
part of the land with knowledge and consent of A.
Later A induce R to sign another agreement that give R smaller
share of land which is smaller than the area
occupied by the said factory.
Held
Where on party induce the other to contract on the face of the
representation made to him,anyone of which is untrue,the whole
contract is considered as having been obtained fraudulently
within the meaning mentioned in Section 17 (a) and (d).

Application
In applying Amar's case,the pamphlet contained the false statement regarding
to the facilities provided by the Elite Sdn Bhd at Sri Desa
Condominium.As the manager of the company,it is the manager's
knowledge regarding to any details on facilities provided to the
condomunium.But the managers makes a representation on behalf of the
company to misled Amar to buy the condominium which the representation
was by him believed to be untrue.
Conclusion
The manager's representation was falls under Section 17 (a) of Contract Act
that he was induce Amar to enter into the contract of purchasing the
condomunium by using a false statement as to the fact of the facilities
provided by the condomunium.

Issue 2

Whether Amar can sue Elite Sdn Bhd for fraud and claim for
damages?
Authority
Section 19 (1) of Contract Act 1950
When consent to an agreement is caused by coercion,fraud or
misrepresentation,the agreement is a contract voidable at the option of the
party whose consent was so caused.
Section 19 (2) of Contract Act 1950
A party to contract,whose consent was caused by fraud or misrepresentation
may he thinks fit insists the contract shall be performed and he shall put in
the position which he would have been if the representation made had been
true.
Limitation on Right to Rescind-Affirmation
The misled party may affirm the contract by express or action shows his
intention of affirm,he cannot later rescind the contract.Where the misled
party fails to exercise his rights for a considerable time after discovering
the representation to be untrue,the lapse of time may amout to acceptance
of goods or affirmation.

Case
[ Long v Lloyd]
Facts
P bought a lorry from D.When it was delivered P become aware that there was
something seriously wrong with the vehicle and that its condition had been
misrepresented to him.This knowledge,however did not prevent P from
driving the lorry next morning.When he took the lorry out for second
time,the engine stop working completely.P sued to rescind the contract.
Held
By taking the lorry out for second time after acquiring the knowledge that it
was defective,P had affirmed the contract.His application for rescission
was dismissed.

Application
As apply to the Amar's case,after living for two months,Amar realize that all
the information provided by the manager was false.But he still continue to
live there although he need to spend some money to park his car at LRT
station.Until his house was broke in by a thief.Amar's action of continue
living at the condominium shows his intention of affirming the contract
and he wants to sue the company when his house was broke in by thief but
not when he realize the fact provided by Elite Sdn Bhd to be untrue.
Conclusion
By continue living in the condominum after he realize all information
provided by Elite Sdn Bhd is false,Amar had affirmed the contract.His
application for rescission could be dismissed.