INTRODUCTION TO

CONTRACT LAW
Discussion
Definition of contract
Function of contract law
Historical Background of
Contracts Act 1950
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DEFINITION OF
CONTRACT
CONTRACT
◉ A bargain, or a deal
◉ A contract is an agreement
between two parties imposing
rights and obligations which may be
enforced by law
◉ However, not all agreements are
contracts because not all
agreements are legally enforceable

”
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◉ Not all contracts govern by Contracts Act
1950
◉ Rules governing contractual transaction
between the Federal government and by the
government of the various states are embodied
in the Government Contracts Act 1949
◉ Remedies: Specific Relief Act 1950

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◉ Judge Made
The “law of contracts is al most entirely judge
made law.” Waddams

Why have our rules of contract been created

by courts rather than Parliament?

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 ◉ Two reasons:
1. Tradition.
2. Practicalities:

“Human conduct is infinitely variable,

and no codifier can foresee every
problem that will arise, especially in the
area covering so many different kinds of
human interaction.” Waddams

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Two reasons:
1. Tradition.
2. Practicalities:

“Human conduct is infinitely

variable, and no codifier can foresee
every problem that will arise,
especially in the area covering so
many different kinds of human
interaction.” Waddams

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◉ WHAT IS A CONTRACT?
I promise to bring chocolates to the whole class. Is there a
contract?
I promise to give you RM100 if you ride your bike to from
here to the city in 2 hours. Is there a contract?
I give you RM2 for your Pepsi. Is there a contract?
Nikah?

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 FUNCTIONS OF
CONTRACT LAW
1. Its purpose is to 3. Facilitates exchange
settle arguments -Provides each party with a
between individuals reasonable assurance that the
2. It helps people to other party will be held to his
find remedies or her promise.
-it doesn’t really punish -In situations of simultaneous
people small exchanges, this is not
that important. Ex. purchase of
hand. Can we go
against it? a radio.
-More important in situations
where performance is not
immediate
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4.Separates Legal from Moral
The rules of contract tell us
which promises will be enforced
and which will not.
 Atiyah: “Nobody can seriously
propose that all promises should
be enforceable; to abolish [the
rules of contract formation],
therefore is simply to require the
courts to figure out what promises
are enforceable”.
 INTRODUCTION TO
CONTRACTS ACT 1950
 INTREPETATION of CONTRACTS ACT 1950

Interpretation Section
• Section 2 of CA : special meaning given to words
• CONTRACTS ACT 1950
used within the statute
Governs all contractual transactions in • If different definition with English Law, English
Malaysia. Law definition is irrelevant

Prior to 1st July 1974: The Long Title

-Common law of England (Penang,
Detailed provision of a statute by describing the
Malacca, Sabah & Sarawak)
-Contracts (Malay States) Ordinance objectives of the statute
1950 (remaining 9 states)
The Parts of CA 1950
CA divided into several parts containing sections
dealing with similar or related matter
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Headings that usually introduce
Parts of the CA 1950
Cannot use any othe rmeaning other
than as stated

Illustrations:
- do not form part of the section
- but cannot be ignored

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HISTORICAL BACKGROUND
OF CONTRACTS ACT 1950
a) Before the coming of colonial power to
Malay States
◉ Rules:
- Malay legal codes
- customary laws
- Islamic Law
◉ No established legal codes.
◉ Most disputes settled by Sultan or chiefs.
◉ Disputes were settled according to the facts of the individual case.

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b) After the coming
◉ 1786: Penang ceded to British – 1st Charter of Justice (CoJ) 1809

◉ 1826: Formation of Strait Settlements - 2nd CoJ 1826

◉ 1878: Introduction of English Commercial Law – S. 6 Civil Law Ordinance 1878

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 ◉ History:
c) Contract (Malay - 1872: British enacted Indian CA –
State) Ordinance 1950 included few provisions form Draft Civil
Code for New York
- 1874: British controlled FMS
- 1899: Extend Indian CA with minor
◉ Applicable to nine states:
modification to Contract Enactment 1899
- Federated Malay States (FMS):
- 1950: Contracts (Malay States) Ord 1950
Pahang, Perak, Selangor, and Negeri
was passed by Federal Legislative Council
Sembilan
of Malaya and applicable to UFMS
- Unfederated Malay States
-1974: revised and extended to all states
(UFMS): Johor, Terengganu,
including Penang, Malacca, Sabah &
Kelantan, Kedah Perlis.
Sarawak.
- 1st July 1974: CA 1950
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d) Application of English Law and its
extent
◉ Ss. 3 & 5 Civil Law Act (CLA) 1956:
“EL shall apply in Malaysia, unless ‘other provisions’ has been or shall be made by
any written law…”
◉ S. 1(2)CA 1950:- Nothing herein contained shall affect any written law or any usage
or custom of trade, or an incident of any contract, not inconsistent with this act.
◉ This means that the Malaysian courts may apply English common law generally (s.3)
in all commercial and mercantile (s.5) matters where:-
i. there is an absence of any local provisions on that particular issue or matter
ii. it is not inconsistent with the Contracts Act.
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Bagher Singh v Chanan Singh [1961]
◉ CA:- s.3(1) CLA only comes into
operation to repair a lacuna in the
law. In the instant case dealing with
fraudulent dispositions of land the
FMS Land Code made sufficient
provisions and so English law was
inapplicable.
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Wrigglesworth v Wilson Anthony
◉ In a matter dealing with restraint of
trade it was held that English cases
were inapplicable as the s.28
Contracts Ordinance 1950 dealt
with the matter and so English law
was inapplicable.
Govt. of Malaysia v Gurcharan Singh Tan Mooi Liang v Lim Soon Seng
& Ors. [1971] [1974]
◉ In a matter relating to a partnership
◉ Where the Contracts Act is silent on – question was whether a member of
a definition, meaning or the partnership could issue a notice
interpretation the courts in Malaysia of his intention to dissolve the
are not bound to follow the meaning partnership. FC held this would
as given in the English Common come within the ambit of ‘other
Law. They are free to adopt or provisions’ as it was adequately
develop the common law of dealt with under the Contracts
Malaysia. Ordinance.
◉ [** Today this would come under
the Partnership Act 1961]
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THANK YOU