Prepared by;

Hajah Alizah Haji Ali

Department of Law
UITM Bandaraya Larkin
Sect 10(1) of CA 1950:
All Agreements are contracts if they are made by
free consent of parties..
Sect 13 of Contract Act 1950

2 Or More Persons
CONSENT

Agreed upon

The same thing in the same sense

Sect 14 of CA 1950: coercion
NOT caused by..
Undue influence

fraud
Effect:
mispresentation
Void/voidable
mistake
 Sect 2(g) CA 1950:
void
“an agreement NOT enforceable by law”
 Mistake

Sect 2(i) CA 1950:

voidable “an agreement which is enforceable by law at the
option of one…of the parties”

 Coercion  Undue influence

 Fraud  Mispresentation
 Definition of coercion
Sect 15:
“Coercion” is the committing, or threatening to commit any act
forbidden by the Penal Code, …with the intention of causing
any person to enter into an agreement.”

Effect of coercion
Sect 15  voidable
Kesarmal s/o Letchman Das vs Valiappa Chettiar

transfer

Chin Nam Bee Dev Sdn Bhd vs Tai Kim Choo

+ $ 4000
 Definition of undue influence
Sect 16(1) CA 1950:
“a contract is said to be induced by “undue influence” where
the relations subsisting between the parties are such that
one of the parties is in position to dominate the will of the
other and uses that position to obtain an unfair advantage
over the other.”

Effect of undue influence

Sect 20  voidable
2 essential elements :
a) The domination of the will by one party over the other
party.
b) The dominating party obtains an unfair advantage in
the contract.
 Presumption of Domination
section 16 (2) (a) :
“…where he holds a real or apparent authority over the

other, or where he stands in a fiduciary relation to the other;

or…
Illustration (a) Sect 16

“A having advances money to his son, B during his minority, upon B’s
coming of age, obtains, by misuse of parental influence, a bond from B for
a greater amount than the sum due in respect of the advance. A employs
undue influence”
Section 16 (2) (b) :
“ where he makes a contract with a person whose mental
capacity is temporarily or permanently affected by reason of
age, illness, or mental or bodily distress.”
Illustration (b) Sect 16
“ A, a man enfeebled by disease or age, is induced by
B’s influence over him as his medical attendant, to
agree to pay B an unreasonable sum for his
professional service. B employs undue influence”
 Case:
 Salwath Haneem vs Hadjee Abdullah

 Datuk Jaginder Singh Vs Tara Rajaratnam

 • Definition of fraud
• Sect 17:
“Fraud” includes any …acts committed by a party to contract …with
intent to deceive another party…

Effect of fraud
Sect 19  voidable
Derry vs Peek
“Fraud is proven when …”

Illustration (a) to section 19 :

“A, intending to deceive B, falsely represents that 500

gantangs of indigo are made annually at A’s factory,
and thereby induces B to buy the factory. The contract
is voidable at the option of B.
 Elements of ‘Fraud’

1. False statement / representation.

2. Given with intention to deceive.
3. The representee must have relied on the
representation.
 Case;
  Kheng Chwee Lian vs Wong Tak Thong

Transfer land
  Letchemy Arumugam vs Annamalay
Burden of proof

On those who claim that there is fraudulent

He has to prove all the elements of

fraud
 Q: Does Silence Constitute Fraud?
Explanation to section 17 :
“Mere silence …is not fraud, unless …it is the duty
of
the person keeping silence to speak, or unless his
silence is …equivalent to speech.”
 Illustration (a) to section 17 :

“A sells, by auction, to B, a horse which A knows to

be unsound. A says nothing to B about the horse’s
unsoundness. This is not fraud.
However, in certain circumstances, silence may
constitute a fraud.
Illustration (c) to section 17 :

“B says to A, “if you do not deny it, I shall assume

that the horse is sound.” A says nothing. Here, A’s
silence is equivalent to speech.”
 Definition of mispresentation
• Sect 18:
It is a false representation given by one of the parties.
However, it was without intention to deceive.

Effect of mispresentation
•Sect 19(1)  voidable
•Sect 19(2) Plf may insist that the contract shall be performed
Elements of ‘Misrepresentation’ :
1. False representation.
2. One of fact, not a mere expression of opinion.
3. Addressed to the party misled.
4. Induce the misled party to enter into the contract.
 Illustration (b) Section 19
 ”A, by a mispresentation, leads B erraneously to
believe that 500 gantangs of indigo are made
annually at A’s factory, which shows that 400
gantangs of indigo have been made. After this, B
buy the factory. The contract does not voidable on
account of A’s mispresentation”

 Duty to exercise diligence

 Case Tan Chye Chew vs Eastern Mining Metals Co
Ltd
 Definition of mistake
• Sect 21:
Where both the parties … are under a mistake as to a matter
of fact essential to the agreement, the agreement is void.”

Effect of mistake
•Sect 21  void
•Sect 66 any advantage bound to restore/make
compensation
Elements of ‘Mistake’
1) made by both parties (mutual mistake)
2) relating to “a matter of fact essential to the
agreement”.
‘ Q : ‘Fact Essential to the Agreement’?

1) Mistake as to the existence of the subject matter.

Illustration (b) to section 21 :
A agrees to buy from B a certain horse. But the
horse was dead at the time of the bargain, though
neither party was aware of the fact. The
agreement is void.
2. Mistake as to the identity of the
subject matter.
Raffles V Wichelhaus

cargo of cotton “The Peerless”

 from Bombay to London

 different times.
• Held : The contract was void
3. Mistake as to the possibility of
performing the contract.
• Sheikh Brothers V Ochsner
• license and authority to cut and manufacture all sisal
growing on 5000 acres of land in Kenya.
• Held : The agreement was void.
 Section 23
• not voidable, valid

 because a person is expected to

take reasonable care to ascertain
what he is contracting about.