Malaysian

MALAYSIAN BUSINESS MALAYSIAN BUSINESS LAWLAW

DR SUHAIMI AB RAHMANDR SUHAIMI AB RAHMANDEPARTMENT OF MANAGEMENT AND MARKETINGDEPARTMENT OF MANAGEMENT AND MARKETING

FACULTY OF ECONOMICS AND MANAGEMENTFACULTY OF ECONOMICS AND MANAGEMENTUPMUPM

LABORATORY OF POLICY AND MANAGEMENTLABORATORY OF POLICY AND MANAGEMENTHALAL PRODUCTS RESEARCH INSTITUTEHALAL PRODUCTS RESEARCH INSTITUTE

UPM UPM

Tel: 03-89467656/03-89437951Tel: 03-89467656/03-89437951e-mail: [email protected]: [email protected]

NATURE OF BUSINESS LAWNATURE OF BUSINESS LAW

THE LAW SHOULDTHE LAW SHOULD

- CORRESPOND TO MODERN SITUATIONCORRESPOND TO MODERN SITUATION

- PRAGMATIC AND RESPONSIVEPRAGMATIC AND RESPONSIVE

- NOT STATICNOT STATIC

WHAT IS LAW?WHAT IS LAW?

LAW IS A SET OF RULES THAT GOVERN LAW IS A SET OF RULES THAT GOVERN AND REGULATE HUMAN BEHAVIOUR AND REGULATE HUMAN BEHAVIOUR

THE PHILOSOPHY OF LAWTHE PHILOSOPHY OF LAW

WHAT IS THE TRUE NATURE OF LAW?WHAT IS THE TRUE NATURE OF LAW?

CONTENTCONTENT

FUNCTIONFUNCTION

THREE MAIN FACTORS THAT THREE MAIN FACTORS THAT CONTRIBUTE TO THE CONTRIBUTE TO THE

DISAGREEMENTDISAGREEMENT

- LAW ONLY PART OF THE SOCIETY’S LAW ONLY PART OF THE SOCIETY’S NORMATIVE SYSTEMNORMATIVE SYSTEM

- SOURCES OF THE LAWSOURCES OF THE LAW

- THE PREFERENCE THAT A WRITER HASTHE PREFERENCE THAT A WRITER HAS

1. LAW AS PART OF SOCIETY’S 1. LAW AS PART OF SOCIETY’S NORMS NORMS

SOCIETY’S NORMATIVE SYSTEM

LEGAL RULES

MORAL RULES SOCIAL RULES

2. ORIGINS2. ORIGINS

- TIMESTIMES

- CULTURESCULTURES

- BELIEFS (RELIGIOUS)BELIEFS (RELIGIOUS)

3. PERSONAL PREDILECTION3. PERSONAL PREDILECTION

- OBJECTIVE OF THE LAWOBJECTIVE OF THE LAW- EG. ENFORCEMENT OF JUSTICEEG. ENFORCEMENT OF JUSTICE

- SOURCES OF THE LAWSOURCES OF THE LAW- CUSTOMCUSTOM- THE WILL OF THE PEOPLETHE WILL OF THE PEOPLE

- AUTHORITY TO ENFORCE THE LAWAUTHORITY TO ENFORCE THE LAW

LAW AND THE JURISTLAW AND THE JURIST

- NATURALISTNATURALIST

- POSITIVISTPOSITIVIST

NATURAL SCHOOL OF THOUGHTNATURAL SCHOOL OF THOUGHT

- LAW SHOULD BE BASED UPON GOOD LAW SHOULD BE BASED UPON GOOD MORALMORAL

- THE JUDGMENT ON WHAT IS LAW IS BASED THE JUDGMENT ON WHAT IS LAW IS BASED UPON THE PRINCIPLE OF WHAT IS GOOD UPON THE PRINCIPLE OF WHAT IS GOOD AND WHAT IS WRONGAND WHAT IS WRONG

- ‘‘BAD LAW’ IS NOT A LAWBAD LAW’ IS NOT A LAW

POSITIVIST SCHOOL OF THOUGHTPOSITIVIST SCHOOL OF THOUGHT

- LAW IS DEFINED AS THE COMMAND OF THE LAW IS DEFINED AS THE COMMAND OF THE SOVEREIGN AUTHORITY IN A SOCIETYSOVEREIGN AUTHORITY IN A SOCIETY

- LAW IS ALSO DEFINED AS THE BODY OF LAW IS ALSO DEFINED AS THE BODY OF PRINCIPLES RECOGNISED AND APPLIED BY PRINCIPLES RECOGNISED AND APPLIED BY THE STATE IN THE ADMINISTRATION OF THE STATE IN THE ADMINISTRATION OF JUSTICEJUSTICE

COMMAND

DUTY TO OBEY

SANCTION

THREE IMPORTANT ELEMENTS OF LAW

LAW

POSITIVIST VIEWPOSITIVIST VIEW

A ‘BAD LAW’ COULD BE LAW UNDER THE A ‘BAD LAW’ COULD BE LAW UNDER THE POSITIVIST VIEW SO LONG AS IT IS POSITIVIST VIEW SO LONG AS IT IS ENFORCEABLE IN THE COURT OF LAWENFORCEABLE IN THE COURT OF LAW

WHAT IS LAW?WHAT IS LAW?

BASIC FUNCTION OF LAWBASIC FUNCTION OF LAW

- TO SECURE THE ORDER IN A SOCIETYTO SECURE THE ORDER IN A SOCIETY

- TO ACHIEVE THE GREATEST HAPPINESS OF TO ACHIEVE THE GREATEST HAPPINESS OF THE LARGEST NUMBER OF PEOPLETHE LARGEST NUMBER OF PEOPLE

- TO PROMOTE RECONCILIATION OF THE TO PROMOTE RECONCILIATION OF THE WILL OF ONE PERSON WITH THE LIBERTY WILL OF ONE PERSON WITH THE LIBERTY OF ANOTHEROF ANOTHER

- TO REGULATE CONDUCT OF PEOPLETO REGULATE CONDUCT OF PEOPLE

- TO PROVIDE MEANS OF SETTLING TO PROVIDE MEANS OF SETTLING DISPUTEDISPUTE

LAW AND OTHER FORMS OF LAW AND OTHER FORMS OF SOCIAL CONTROLS SOCIAL CONTROLS

LAW IS DISTINGUISHABLE FROM OTHER LAW IS DISTINGUISHABLE FROM OTHER FORMS OF SOCIAL CONTROLS SUCH FORMS OF SOCIAL CONTROLS SUCH AS JUSTICE, ETHICS AND MORALITYAS JUSTICE, ETHICS AND MORALITY

JUSTICEJUSTICE

JUSTICE IS AN ABSTRACT IDEA OF JUSTICE IS AN ABSTRACT IDEA OF RIGHT AND WRONG, FAIRNESS AND RIGHT AND WRONG, FAIRNESS AND EQUALITYEQUALITY

JUSTICE

LAW

MORALITY

ETHICS

- LAW IS A FORMAL SYSTEM THAT EMBODIES LAW IS A FORMAL SYSTEM THAT EMBODIES EXPLICIT RULES OF CONDUCTEXPLICIT RULES OF CONDUCT

- LAW GIVES POWER TO THE COURTS TO LAW GIVES POWER TO THE COURTS TO RESOLVE DISPUTERESOLVE DISPUTE

- LAW ENABLES INDIVIDUALS TO MAKE WILL LAW ENABLES INDIVIDUALS TO MAKE WILL OR CONTRACTOR CONTRACT

TERMS OF TERMS OF REFERENCEREFERENCE

LAWLAW JUSTICEJUSTICE ETHICSETHICS MORALITYMORALITY

COMMANDCOMMAND // // // //

DUTY TO OBEYDUTY TO OBEY // // // //

SANCTIONSANCTION // XX XX XX

MACHINERY FOR MACHINERY FOR ENFORCEMENTENFORCEMENT

// XX XX XX

COMPARISON BETWEEN LAW, JUSTICE, ETHICS AND MORALITY

DEFINITION OF ETHICSDEFINITION OF ETHICS

ETHICS IS A STANDARD OF VALUES THAT ETHICS IS A STANDARD OF VALUES THAT INVOLVE A CONCEPT OF RIGHT AND INVOLVE A CONCEPT OF RIGHT AND WRONG, GOOD AND EVIL, AND WRONG, GOOD AND EVIL, AND RESPONSIBILITYRESPONSIBILITY

LAW ETHICS

RELATIONSHIP BETWEEN LAW AND ETHICS

LAW & ETHICS

SOURCES OF LAWSOURCES OF LAW

- HISTORICAL SOURCESHISTORICAL SOURCES

- PLACES WHERE THE LAW COULD BE PLACES WHERE THE LAW COULD BE FOUNDFOUND

- LEGAL SOURCES (THE LEGAL RULES THAT LEGAL SOURCES (THE LEGAL RULES THAT MAKE UP THE LAW)MAKE UP THE LAW)

MALAYSIAN LEGAL SOURCESMALAYSIAN LEGAL SOURCES

- WRITTEN LAWWRITTEN LAW

- UNWRITTEN LAWUNWRITTEN LAW

WRITTEN LAWWRITTEN LAW

- FEDERAL CONSTITUTIONFEDERAL CONSTITUTION

- FEDERAL LEGISLATIONFEDERAL LEGISLATION

- STATE LEGISLATIONSTATE LEGISLATION

- SUBSIDIARY LEGISLATIONSUBSIDIARY LEGISLATION

FEDERAL CONSTITUTIONFEDERAL CONSTITUTION

- SUPREME LAW OF THE LANDSUPREME LAW OF THE LAND

- PRESCRIBES THE RELATIONSHIP PRESCRIBES THE RELATIONSHIP BETWEEN STATE AND FEDERAL BETWEEN STATE AND FEDERAL

NINTH SCHEDULENINTH SCHEDULE

- LIST I :- FEDERAL LISTLIST I :- FEDERAL LIST- LIST II :- STATE LISTLIST II :- STATE LIST- LIST III :- CONCURENT LISTLIST III :- CONCURENT LIST

FEDERAL LEGISLATIONFEDERAL LEGISLATION

- LAWS MADE BY THE PARLIAMENTLAWS MADE BY THE PARLIAMENT

- BEFORE INDEPENDENT ALL FEDERAL BEFORE INDEPENDENT ALL FEDERAL LEGISLATIONS WERE KNOWN AS LEGISLATIONS WERE KNOWN AS ORDINACESORDINACES

POLICY

GAZZETTED

MINISTER WILL BRING THE PAPER TO THE CABINET

CABINET MEETING

APPROVAL FROM THE CABINET

CABINET PAPER

AG WILL PREPARE A DRAFT TO BE TABLED

IN PARLIAMENT

APPROVAL FROM THE PARLIAMENT(LEGISLATIVE PROCESS)• HOUSE OF REPRESENTATIVE• HOUSE OF SENATE•THE KING

THE PROCESS OF MAKING RWU POLICY INTO AN ACT OF PARLIAMENT

LEGISLATIVE PROCESLEGISLATIVE PROCES1) FIRST READING: MINISTER INTRODUCES 1) FIRST READING: MINISTER INTRODUCES THE BILL – READ THE SHORT TITLE – TEXT THE BILL – READ THE SHORT TITLE – TEXT PRINTED AND DISTRIBUTED AFTER THE BILL PRINTED AND DISTRIBUTED AFTER THE BILL IS PASSEDIS PASSED

2) SECOND READING: MEMBERS WILL 2) SECOND READING: MEMBERS WILL DEBATE ON THE GENERAL PRINCIPLES OF DEBATE ON THE GENERAL PRINCIPLES OF THE BILL AND VOTETHE BILL AND VOTE

3) COMMITTEE STAGE: DETAILED 3) COMMITTEE STAGE: DETAILED EXAMINATION OF THE BILL AND MAY AMEND EXAMINATION OF THE BILL AND MAY AMEND IT – SUBMIT REPORT TO THE HOUSEIT – SUBMIT REPORT TO THE HOUSE

4) THIRD READING: FURTHER DEBATE AND 4) THIRD READING: FURTHER DEBATE AND AMENDMENTS PUT TO A NOTE – THE HOUSE AMENDMENTS PUT TO A NOTE – THE HOUSE EITHER PASSES OR DEFEAT THE BILLEITHER PASSES OR DEFEAT THE BILL

5) OTHER HOUSE: SIMILAR PROCEDURES – 5) OTHER HOUSE: SIMILAR PROCEDURES – AMENDMENT NEEDS APPROVAL OF THE AMENDMENT NEEDS APPROVAL OF THE FIRST HOUSEFIRST HOUSE

6) ROYAL ASSENT: THE BILL PASSED IN 6) ROYAL ASSENT: THE BILL PASSED IN BOTH HOUSES IS SENT TO YDPA FOR BOTH HOUSES IS SENT TO YDPA FOR ROYAL ASSENT – THE BILL BECOMES A LAW ROYAL ASSENT – THE BILL BECOMES A LAW UPON PUBLICATION/GAZETTEUPON PUBLICATION/GAZETTE

STATE LEGISLATIONSTATE LEGISLATION

- LAW MADE BY THE STATELAW MADE BY THE STATE

- KNOW AS ENACTMENT EXCEPT KNOW AS ENACTMENT EXCEPT SARAWAKSARAWAK

SUBSIDIARY LEGISLATIONSUBSIDIARY LEGISLATION

- RULESRULES- REGULATIONSREGULATIONS- BY-LAWSBY-LAWS- ORDERSORDERS

SUBSIDIARY LAWSUBSIDIARY LAW

THE SUBSIDIARY LAW CAN ONLY BE THE SUBSIDIARY LAW CAN ONLY BE MADE IF THE RESPECTIVE ACT MADE IF THE RESPECTIVE ACT (KNOWN AS ENABLING ACT) GIVES (KNOWN AS ENABLING ACT) GIVES POWERPOWER

EMPOWERING CLAUSE

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA PERLAKSANAAN AKTA MEETING

TECHNICAL COMMITTEE

DRAFT

THE DRAFT WILL BE DISCUSSED AT THE TCPD STATE DIRECTORS MEETING

LEGAL DEPARTMENT

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA PERANCANGAN & PEMBANGUNAN (TCPD)

THE DRAFT WILL BE DISCUSSED AT THE JAWATANKUASA PERANCANGAN & PEMBANGUNAN (MINISTRY)

THE DRAFT WILL BE PRESENTED AND APPROVED AT THE MAJLIS PERANCANGAN FIZIKAL NEGARA

MPFN WILL HAND THE DRAFT TO THE STATE AUTHORITY MPFN WILL HAND THE DRAFT TO THE MINISTER

LEGAL ADVISOR (MINISTRY) WILL GAZZETT THE DRAFTLEGAL ADVISOR (STATE ) WILL GAZZET THE DRAFT

BY-LAWS

THE PROCESS OF MAKING RWH BY-LAWS: A TYPICAL TCPD EXAMPLE

REVISED BY LEGAL ADVISOR

CONTROLS OVER SUBSIDIARY LAWCONTROLS OVER SUBSIDIARY LAW

- CONSULTATIONCONSULTATION- PUBLICITYPUBLICITY- PARLIAMENTARY CONTROLPARLIAMENTARY CONTROL- JUDICIAL REVIEWJUDICIAL REVIEW

JUDICIAL DECISIONJUDICIAL DECISION

NEW PRINCIPLES CREATED IN COURTNEW PRINCIPLES CREATED IN COURT

JUDICIAL DECISIONJUDICIAL DECISION

- PREVIOUS DECISION MADE BY PREVIOUS PREVIOUS DECISION MADE BY PREVIOUS COURT IN A SIMILAR FACTCOURT IN A SIMILAR FACT

- FAILURE TO FOLLOW THE PRECEDENT FAILURE TO FOLLOW THE PRECEDENT WOULD RESULT TO REVERSE ON APPEALWOULD RESULT TO REVERSE ON APPEAL

- PRECEDENT IS OBTAINED FROM THE PRECEDENT IS OBTAINED FROM THE DECISION OF THE SUPERIOR COURTDECISION OF THE SUPERIOR COURT

HOW JUDICIAL PRECEDENT HOW JUDICIAL PRECEDENT WORKSWORKS

- THE COURT WILL ONLY FOLLOW THE THE COURT WILL ONLY FOLLOW THE PRECEDENT WHEN THE FACT IS SIMILARPRECEDENT WHEN THE FACT IS SIMILAR

- IF THE FACT IS NOT SIMILAR THE COURT IF THE FACT IS NOT SIMILAR THE COURT WILL DISTINGUISH THE CASE AND NEED WILL DISTINGUISH THE CASE AND NEED NOT TO FOLLOW THE EARLIER DECISIONNOT TO FOLLOW THE EARLIER DECISION

- THE COURT CAN OVERULE THE THE COURT CAN OVERULE THE PRECEDENT IF IT IS PROVED THAT THE PRECEDENT IF IT IS PROVED THAT THE PREVIOUS DECISION WAS WRONGPREVIOUS DECISION WAS WRONG

ENGLISH COMMON LAW AND ENGLISH COMMON LAW AND EQUITYEQUITY

S 3(1)(a) CIVIL LAW ACT 1956, ‘ THE COURT S 3(1)(a) CIVIL LAW ACT 1956, ‘ THE COURT SHALL IN WEST MALAYSIA OR ANY PART SHALL IN WEST MALAYSIA OR ANY PART THEREOF, APPLY THE COMMON LAW OF THEREOF, APPLY THE COMMON LAW OF ENGLAND AND THE RULES OF EQUITY AS ENGLAND AND THE RULES OF EQUITY AS ADMINISTERED IN ENGLAND ON THE 7ADMINISTERED IN ENGLAND ON THE 7THTH APRIL 1956 APRIL 1956


ANY CHANGES OR DEVELOPMENT AFTER 7ANY CHANGES OR DEVELOPMENT AFTER 7THTH APRIL 1956 THE ENGLISH COMMON LAW APRIL 1956 THE ENGLISH COMMON LAW AND EQUITY WILL NOT BECOME THE LAWS AND EQUITY WILL NOT BECOME THE LAWS OF MALAYSIA, IT ONLY ACTS AS OF MALAYSIA, IT ONLY ACTS AS PERSUASIVE AUTHORITYPERSUASIVE AUTHORITY


TWO CONDITIONS FOR THE APPLICATION:-TWO CONDITIONS FOR THE APPLICATION:-

I.I. ABSENCE OF LOCAL STATUTE ABSENCE OF LOCAL STATUTE COVERING THE SAME MATTERCOVERING THE SAME MATTER

II.II. ONLY IF SUITED TO LOCAL ONLY IF SUITED TO LOCAL CIRCUMSTANCESCIRCUMSTANCES

ENGLISH COMMERCIAL LAWENGLISH COMMERCIAL LAW

S 5(1) CIVIL LAW ACT 1956, ‘IN ALL QUESTIONS OR ISSUES S 5(1) CIVIL LAW ACT 1956, ‘IN ALL QUESTIONS OR ISSUES WHICH ARISE OR WHICH HAVE TO BE DECIDED IN THE WHICH ARISE OR WHICH HAVE TO BE DECIDED IN THE STATES OF WEST MALAYSIA OTHER THAN MALACCA AND STATES OF WEST MALAYSIA OTHER THAN MALACCA AND PENANG WITH RESPECT TO THE LAW OF PARTNERSHIPS, PENANG WITH RESPECT TO THE LAW OF PARTNERSHIPS, CORPORATIONS, BANKS AND BANKING, PRINCIPALS AND CORPORATIONS, BANKS AND BANKING, PRINCIPALS AND AGENTS, CARRIERS BY AIR, LAND AND SEA, MARINE AGENTS, CARRIERS BY AIR, LAND AND SEA, MARINE INSURANCE, AND WITH RESPECT TO MERCHANTILE LAW INSURANCE, AND WITH RESPECT TO MERCHANTILE LAW GENERALLY, THE LAW TO BE ADMINISTERED SHALL BE THE GENERALLY, THE LAW TO BE ADMINISTERED SHALL BE THE SAME AS WOULD BE ADMINISTERED IN ENGLAND IN THE LIKE SAME AS WOULD BE ADMINISTERED IN ENGLAND IN THE LIKE CASE AT THE DATE OF THE COMING INTO FORCE OF THIS CASE AT THE DATE OF THE COMING INTO FORCE OF THIS ACT, IF SUCH QUESTION OR ISSUE HAD ARISEN OR HAD TO ACT, IF SUCH QUESTION OR ISSUE HAD ARISEN OR HAD TO BE DECIDED IN ENGLAND, UNLESS IN ANY CASE OTHER BE DECIDED IN ENGLAND, UNLESS IN ANY CASE OTHER PROVISION IS OR SHALL BE MADE BY ANY WRITTEN LAW’PROVISION IS OR SHALL BE MADE BY ANY WRITTEN LAW’

CUSTOMSCUSTOMS

EACH RACIAL AND RELIGIOUS GROUP IS GOVERNED BY THEIR EACH RACIAL AND RELIGIOUS GROUP IS GOVERNED BY THEIR OWN SET OF PERSONAL LAWS, EG. ISLAMIC LAW FOR OWN SET OF PERSONAL LAWS, EG. ISLAMIC LAW FOR MUSLIM, IRRESPECTIVE OF THEIR ETHNICITY, NATIVE LAW MUSLIM, IRRESPECTIVE OF THEIR ETHNICITY, NATIVE LAW FOR THE NATIVES (KHADAZAN, BIDAYUH, MURUT, ETC.)FOR THE NATIVES (KHADAZAN, BIDAYUH, MURUT, ETC.)

CHINESE AND INDIAN CUSTOMARY: PREVIOUSLY JUDICIAL CHINESE AND INDIAN CUSTOMARY: PREVIOUSLY JUDICIAL RECOGNITION ON VARIOUS CUSTOMARY LAW ON RECOGNITION ON VARIOUS CUSTOMARY LAW ON MARRIAGESMARRIAGES

LAW REFORM (MARRIAGE AND DIVORCE) ACT 1976 GOVERNS LAW REFORM (MARRIAGE AND DIVORCE) ACT 1976 GOVERNS MARRIAGES AMONG NON-MUSLIM (ABOLISHMENT OF MARRIAGES AMONG NON-MUSLIM (ABOLISHMENT OF POLYGAMOUS MARRIAGES)POLYGAMOUS MARRIAGES)

LAW OF CONTRACT: SOURCES LAW OF CONTRACT: SOURCES

- STATUTESSTATUTES- CONTRACT ACT 1950CONTRACT ACT 1950

- CASE LAWSCASE LAWS- CASES DECIDED IN COURTSCASES DECIDED IN COURTS

- ENGLISH COMMON LAWENGLISH COMMON LAW- BEFORE 7BEFORE 7THTH APRIL 1956 APRIL 1956

LAW OF CONTRACT: LAW OF CONTRACT: INTRODUCTIONINTRODUCTION

CONTRACT IS THE NUCLEUS OF ALL CONTRACT IS THE NUCLEUS OF ALL COMMERCIAL TRANSACTIONSCOMMERCIAL TRANSACTIONS

WHAT IS CONTRACT?WHAT IS CONTRACT?

CONTRACT IS AN AGREEMENT WHICH CONTRACT IS AN AGREEMENT WHICH IS ENFORCEABLE IN LAWIS ENFORCEABLE IN LAW

WHAT IS AGREEMENTWHAT IS AGREEMENT

MEETING OF THE MINDSMEETING OF THE MINDS

TWO OR MORE PERSONS ARE SAID TO TWO OR MORE PERSONS ARE SAID TO CONSENT WHEN THEY AGREE UPON THE CONSENT WHEN THEY AGREE UPON THE

SAME THING IN THE SAME SENSESAME THING IN THE SAME SENSE

CONSENSUS AD IDEMCONSENSUS AD IDEM

… … BUT …BUT …

NOT ALL AGREEMENTS ARE CONTRACT. NOT ALL AGREEMENTS ARE CONTRACT. THERE ARE SOME AGREEMENTS WHICH THERE ARE SOME AGREEMENTS WHICH ARE NOT CONSIDERED AS CONTRACTARE NOT CONSIDERED AS CONTRACT

EG. SOCIAL AGREEMENTSEG. SOCIAL AGREEMENTS

AGREEMENTS WHICH ARE AGREEMENTS WHICH ARE CONTRACTCONTRACT

- PROPOSALPROPOSAL

- ACCEPTANCEACCEPTANCE

- CONSIDERATIONCONSIDERATION

- INTENTION TO CREATE LEGAL RELATIONSHIPINTENTION TO CREATE LEGAL RELATIONSHIP

- COMPETENCECOMPETENCE

- FREE CONSENTFREE CONSENT

PROPOSALPROPOSAL

A PROPOSAL IS AN ACT THAT SIGNIFIES A A PROPOSAL IS AN ACT THAT SIGNIFIES A PERSON’S WILLINGNESS TO DO OR TO PERSON’S WILLINGNESS TO DO OR TO ABSTAIN FROM DOING SOMETHING WITH A ABSTAIN FROM DOING SOMETHING WITH A VIEW TO OBTAINING THE ASSENT OF VIEW TO OBTAINING THE ASSENT OF ANOTHERANOTHER

PROPOSALPROPOSAL

IT IS AN OFFER OR A PROMISE TO BE BOUND IT IS AN OFFER OR A PROMISE TO BE BOUND BY HIS/HER TERMS IF THEY ARE ACCEPTED BY HIS/HER TERMS IF THEY ARE ACCEPTED BY THE OTHERBY THE OTHER

LEGAL PRINCIPLELEGAL PRINCIPLE

IT IS UPON THIS BASIS THAT A PROPOSAL SHOULD IT IS UPON THIS BASIS THAT A PROPOSAL SHOULD BE MADE CLEAR AND DEFINITEBE MADE CLEAR AND DEFINITE

A PROPOSAL SHOULD NOT BE MADE IN A PROPOSAL SHOULD NOT BE MADE IN UNAMBIGUOUS STATEMENTUNAMBIGUOUS STATEMENT

IF BARGAINING IS STILL POSSIBLE IN THE IF BARGAINING IS STILL POSSIBLE IN THE ARRANGEMENT THE SUPPOSED PROPOSAL ARRANGEMENT THE SUPPOSED PROPOSAL SHOULD NOT BE CONSIDERED AS PROPOSAL AT SHOULD NOT BE CONSIDERED AS PROPOSAL AT ALL ALL

PROPOSALPROPOSAL

THE STATEMENT SHOULD SHOW A THE STATEMENT SHOULD SHOW A CLEAR WILLINGNESS TO BE BOUND CLEAR WILLINGNESS TO BE BOUND BY HIS/HER TERMS IF ACCEPTED BY BY HIS/HER TERMS IF ACCEPTED BY THE OTHER PARTYTHE OTHER PARTY

A RESPONSE TO A REQUEST FOR A RESPONSE TO A REQUEST FOR INFORMATIONINFORMATION

HARVEY V FACEYHARVEY V FACEY

PLAINTIFF: WILL YOU SELL US A BUMPER PLAINTIFF: WILL YOU SELL US A BUMPER HALL PEN? TELEGRAPH LOWEST CASH HALL PEN? TELEGRAPH LOWEST CASH PRICE.PRICE.

DEFENDANT: LOWEST PRICE FOR BUMPER DEFENDANT: LOWEST PRICE FOR BUMPER HALL PEN, GBP 900HALL PEN, GBP 900

INVITATION TO TREATINVITATION TO TREAT

INVITATION TO TREAT IS AN ACT TO INVITE INVITATION TO TREAT IS AN ACT TO INVITE OTHERS TO MAKE AN OFFEROTHERS TO MAKE AN OFFER

INVITATION TO TREAT IS NOT A PROPOSALINVITATION TO TREAT IS NOT A PROPOSAL

IT WILL NOT RESULT TO A CONTRACT IF IT WILL NOT RESULT TO A CONTRACT IF ACCEPTED BY OTHERSACCEPTED BY OTHERS

EXAMPLES OF INVITATION TO EXAMPLES OF INVITATION TO TREATTREAT

- AUCTIONSAUCTIONS- PAYNE V CAVEPAYNE V CAVE

- ADVERTISEMENTSADVERTISEMENTS- COELHO V THE PUBLIC SERVICES COMMISSIONCOELHO V THE PUBLIC SERVICES COMMISSION

- ITEMS DISPLAYED IN SHOPSITEMS DISPLAYED IN SHOPS- PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V

BOOTS CASH CHEMIST LTDBOOTS CASH CHEMIST LTD

PROPOSAL: LEGAL PRINCIPLEPROPOSAL: LEGAL PRINCIPLE

A PROPOSAL CAN BE ADDRESSED TO A A PROPOSAL CAN BE ADDRESSED TO A PARTICULAR PERSON OR TO A PARTICULAR PERSON OR TO A GENERAL PUBLICGENERAL PUBLIC

• BOULTON V JONESBOULTON V JONES• CARLILL V CARBOLIC SMOKE BALLCARLILL V CARBOLIC SMOKE BALL


A PROPOSAL MAY BE WRITTEN, A PROPOSAL MAY BE WRITTEN, SPOKEN OR IMPLIED FROM CONDUCTSPOKEN OR IMPLIED FROM CONDUCT

COMMUNICATION OF PROPOSALCOMMUNICATION OF PROPOSAL

EVERY PROPOSAL MADE SHOULD BE EVERY PROPOSAL MADE SHOULD BE COMMUNICATED TO THE OTHER PARTYCOMMUNICATED TO THE OTHER PARTY

THE OTHER PARTY SHOULD HAVE THE THE OTHER PARTY SHOULD HAVE THE KNOWLEDGE BEFORE ACCEPTING A KNOWLEDGE BEFORE ACCEPTING A PROPOSALPROPOSAL

• R V CLARKER V CLARKE

‘‘There cannot be assent without knowledge of the offer’There cannot be assent without knowledge of the offer’Higgins JHiggins J

COMMUNICATION OF PROPOSAL: COMMUNICATION OF PROPOSAL: WHEN COMPLETEWHEN COMPLETE

‘‘THE COMMUNICATION OF A PROPOSAL IS THE COMMUNICATION OF A PROPOSAL IS COMPLETE WHEN IT COMES TO THE COMPLETE WHEN IT COMES TO THE KNOWLEDGE OF THE PERSON TO WHOM IT KNOWLEDGE OF THE PERSON TO WHOM IT IS MADE’IS MADE’

SECTION 4 (1)SECTION 4 (1)

ACCEPTANCEACCEPTANCE

AN ACCEPTANCE IS AN ACT WHICH SHOWS AN ACCEPTANCE IS AN ACT WHICH SHOWS THAT THE PERSON TO WHOM THE THAT THE PERSON TO WHOM THE PROPOSAL IS MADE GIVES HIS/HER PROPOSAL IS MADE GIVES HIS/HER ASSENT TO THE PROPOSALASSENT TO THE PROPOSAL


TO CONVERT A PROPOSAL INTO A PROMISE TO CONVERT A PROPOSAL INTO A PROMISE THE ACCEPTANCE SHOULD BE ABSOLUTE THE ACCEPTANCE SHOULD BE ABSOLUTE AND UNQUALIFIEDAND UNQUALIFIED

SECTION 7 (a)SECTION 7 (a)


THE LEGAL PRINCIPLE IS THAT THE THE LEGAL PRINCIPLE IS THAT THE ACCEPTANCE SHOULD BE A ‘MIRROR ACCEPTANCE SHOULD BE A ‘MIRROR IMAGE’ TO THE PROPOSALIMAGE’ TO THE PROPOSAL

COUNTER OFFERCOUNTER OFFER

ANY MODIFICATION OR VARIATION OF THE ANY MODIFICATION OR VARIATION OF THE PROPOSAL DOES NOT CONSTITUTE AN PROPOSAL DOES NOT CONSTITUTE AN ACCEPTANCE BUT AMOUNTS TO A ACCEPTANCE BUT AMOUNTS TO A ‘COUNTER OFFER’. A COUNTER OFFER ‘COUNTER OFFER’. A COUNTER OFFER DESTROYS THE ORIGINAL OFFER.DESTROYS THE ORIGINAL OFFER.

HYDE V WRENCHHYDE V WRENCH

DEFENDANT OFFERED TO SELL HIS ESTATE DEFENDANT OFFERED TO SELL HIS ESTATE FOR GBP 1000FOR GBP 1000

PLAINTIFF AGREED TO BUY BUT FOR GBP 950PLAINTIFF AGREED TO BUY BUT FOR GBP 950

DEFENDANT REFUSED TO SELLDEFENDANT REFUSED TO SELL

PLAINTIF AGREED WITH THE ORIGINAL PLAINTIF AGREED WITH THE ORIGINAL OFFEROFFER

BATTLE OF THE FORMSBATTLE OF THE FORMS

Butler Machine Tool v Ex-Cell-O-CorporationButler Machine Tool v Ex-Cell-O-Corporation [1979] 1 All ER 965 – An arrangement to sell a [1979] 1 All ER 965 – An arrangement to sell a machine. Both parties have their own standard machine. Both parties have their own standard terms. A makes an offer with ‘price variation terms. A makes an offer with ‘price variation clause’. B accepts but with its own terms i.e. clause’. B accepts but with its own terms i.e. without ‘price variation clause’ The court give the without ‘price variation clause’ The court give the judgment to the person who last make an offer.judgment to the person who last make an offer.


‘‘SILENCE’ SHOULD NOT BE PRESCRIBED AS A SILENCE’ SHOULD NOT BE PRESCRIBED AS A FORM OF ACCEPTANCEFORM OF ACCEPTANCE

FELTHOUSE V BINDLEYFELTHOUSE V BINDLEY

GENERAL RULEGENERAL RULE

AN ACCEPTANCE SHOULD BE MADE KNOWN AN ACCEPTANCE SHOULD BE MADE KNOWN (COMMUNICATED) TO THE PERSON TO (COMMUNICATED) TO THE PERSON TO WHOM THE PROPOSAL IS MADEWHOM THE PROPOSAL IS MADE

- FACE TO FACE CONTRACTFACE TO FACE CONTRACT- CONTRACT THROUGH TELEPHONECONTRACT THROUGH TELEPHONE- CONTRACT THROUGH TELEXCONTRACT THROUGH TELEX

EXCEPTION TO THE GENERAL EXCEPTION TO THE GENERAL RULERULE

- UNILATERAL CONTRACTSUNILATERAL CONTRACTS

- POSTAL RULEPOSTAL RULE

WHEN COMMUNICATION IS WHEN COMMUNICATION IS COMPLETE?COMPLETE?

4 (2) THE COMMUNICATION OF ACCEPTANCE IS 4 (2) THE COMMUNICATION OF ACCEPTANCE IS COMPLETECOMPLETE

(a) AS AGAINST THE PROPOSER WHEN IT IS PUT IN (a) AS AGAINST THE PROPOSER WHEN IT IS PUT IN A COURSE OF TRANSMISSION TO HIM SO AS TO BE A COURSE OF TRANSMISSION TO HIM SO AS TO BE OUT OF THE POWER OF THE ACCEPTOR; ANDOUT OF THE POWER OF THE ACCEPTOR; AND

(b) AS AGAINST THE ACCEPTOR WHEN IT COMES (b) AS AGAINST THE ACCEPTOR WHEN IT COMES TO THE KNOWLEDGE OF THE PROPOSERTO THE KNOWLEDGE OF THE PROPOSER

POSTAL RULEPOSTAL RULE

ADAMS V LINDSELLADAMS V LINDSELL

DEFENDANT OFFERED TO SELL CERTAIN AMOUNT DEFENDANT OFFERED TO SELL CERTAIN AMOUNT OF WOOL BY LETTER (THE LETTER WAS OF WOOL BY LETTER (THE LETTER WAS MISDIRECTED)MISDIRECTED)

PLAINTIFF ACCEPTED THE OFFER BY LETTERPLAINTIFF ACCEPTED THE OFFER BY LETTER

BEFORE THE LETTER ARRIVED DEFENDANT SOLD BEFORE THE LETTER ARRIVED DEFENDANT SOLD THE WOOL TO A THIRD PARTYTHE WOOL TO A THIRD PARTY

‘‘Communication of acceptance is complete and a contract is concluded Communication of acceptance is complete and a contract is concluded when the acceptor has posted the letter of acceptance’when the acceptor has posted the letter of acceptance’

REVOCATION OF PROPOSALREVOCATION OF PROPOSAL

5(1) A PROPOSAL MAY BE REVOKED AT ANY TIME 5(1) A PROPOSAL MAY BE REVOKED AT ANY TIME BEFORE THE COMMUNICATION OF ITS BEFORE THE COMMUNICATION OF ITS ACCEPTANCE IS COMPLETE AS AGAINST THE ACCEPTANCE IS COMPLETE AS AGAINST THE PROPOSER, BUT NOT AFTERWARDSPROPOSER, BUT NOT AFTERWARDS

COMMUNICATION OF REVOCATIONCOMMUNICATION OF REVOCATION

ALL REVOCATIONS MUST BE MADE KNOWN ALL REVOCATIONS MUST BE MADE KNOWN TO THE OTHER PARTYTO THE OTHER PARTY

BYRNE V VAN TIEN HOVENBYRNE V VAN TIEN HOVEN

The defendants wrote from Cardiff on 1 October offering to The defendants wrote from Cardiff on 1 October offering to sell a quantity of tinplates to the plaintiffs in New York. sell a quantity of tinplates to the plaintiffs in New York.

On 8 October, the defendants posted a letter On 8 October, the defendants posted a letter withdrawing the offer. On 11 October, the offer reached withdrawing the offer. On 11 October, the offer reached

the plaintiffs, who accepted at once by telegram (and the the plaintiffs, who accepted at once by telegram (and the plaintiffs also confirmed this in writing on 15 October). plaintiffs also confirmed this in writing on 15 October).

The defendants’ letter of withdrawal reached the The defendants’ letter of withdrawal reached the plaintiffs on 20 October.plaintiffs on 20 October.

Held: Mere posting of a letter of revocation does not Held: Mere posting of a letter of revocation does not amount to an effective communication to the acceptor.amount to an effective communication to the acceptor.

CONSIDERATIONCONSIDERATION

CONSIDERATION IS THE SYMBOL OF BARGAIN AND CONSIDERATION IS THE SYMBOL OF BARGAIN AND RECIPROCAL OBLIGATIONSRECIPROCAL OBLIGATIONS

THE LAW REQUIRES THAT THE PROMISOR ASKS FOR THE LAW REQUIRES THAT THE PROMISOR ASKS FOR AND RECEIVES SOMETHING IN RETURN FOR HIS AND RECEIVES SOMETHING IN RETURN FOR HIS PROMISEPROMISE

THERE MUST BE SOME ELEMENT OF EXCHANGE – THERE MUST BE SOME ELEMENT OF EXCHANGE – SOME DEGREE OF MUTUALITYSOME DEGREE OF MUTUALITY

WHAT IS CONSIDERATION?WHAT IS CONSIDERATION?

CONSIDERATION IS A ‘PRICE’ GIVEN IN CONSIDERATION IS A ‘PRICE’ GIVEN IN RETURN FOR A PROMISERETURN FOR A PROMISE

CONSIDERATION SHOULD BE SOMETHING OF CONSIDERATION SHOULD BE SOMETHING OF VALUE IN THE EYES OF THE LAW. VALUE IN THE EYES OF THE LAW.

CURRIE V MISACURRIE V MISA

‘‘A VALUABLE CONSIDERATION, IN THE EYES OF THE A VALUABLE CONSIDERATION, IN THE EYES OF THE LAW, MAY CONSISTS EITHER IN SOME RIGHT, LAW, MAY CONSISTS EITHER IN SOME RIGHT, INTEREST, PROFIT, OR BENEFIT ACCRUING TO THE INTEREST, PROFIT, OR BENEFIT ACCRUING TO THE ONE PARTY, OR SOME FORBEARANCE, ONE PARTY, OR SOME FORBEARANCE, DETRIMENT, LOSS, OR RESPONSIBILITY GIVEN, DETRIMENT, LOSS, OR RESPONSIBILITY GIVEN, SUFFERED OR UNDERTAKEN BY THE OTHER’SUFFERED OR UNDERTAKEN BY THE OTHER’

SECTION 2 (d) CONTRACT ACT 1950SECTION 2 (d) CONTRACT ACT 1950

‘‘WHEN, AT THE DESIRE OF THE PROMISOR, THE WHEN, AT THE DESIRE OF THE PROMISOR, THE PROMISEE OR ANY OTHER PERSON HAS DONE OR PROMISEE OR ANY OTHER PERSON HAS DONE OR ABSTAINED FROM DOING, OR DOES OR ABSTAINS ABSTAINED FROM DOING, OR DOES OR ABSTAINS FROM DOING, OR PROMISES TO DO OR TO FROM DOING, OR PROMISES TO DO OR TO ABSTAIN FROM DOING, SOMETHING, SUCH ACT OR ABSTAIN FROM DOING, SOMETHING, SUCH ACT OR ABSTINANCE OR PROMISE IS CALLED A ABSTINANCE OR PROMISE IS CALLED A CONSIDERATION FOR THE PROMISE’CONSIDERATION FOR THE PROMISE’

CLASSIFICATIONCLASSIFICATION

- EXECUTORY CONSIDERATIONEXECUTORY CONSIDERATIONA promise is made in return for a promiseA promise is made in return for a promise

- EXECUTED CONSIDERATIONEXECUTED CONSIDERATIONA performance is made in return for a promiseA performance is made in return for a promise

- PAST CONSIDERATIONPAST CONSIDERATIONA promise is made subsequent to and in return for an A promise is made subsequent to and in return for an

act that has already been performed act that has already been performed

PAST CONSIDERATIONPAST CONSIDERATION

Y FINDS X’S PERSIAN CATY FINDS X’S PERSIAN CATY RETURNS THE CAT TO XY RETURNS THE CAT TO XX PROMISES TO REWARD Y RM 100X PROMISES TO REWARD Y RM 100

- IS THERE ANY CONTRACT?IS THERE ANY CONTRACT?- IS THERE ANY CONSIDERATION?IS THERE ANY CONSIDERATION?

ENGLISH COMMON LAWENGLISH COMMON LAW

Past consideration is not valid because it has Past consideration is not valid because it has been done without reference to the existing been done without reference to the existing promise promise

Re McArdle Re McArdle [1951] Ch 669 [1951] Ch 669 Lampleigh v Brathwait Lampleigh v Brathwait (1615) Hob 105(1615) Hob 105

MALAYSIAN LAWMALAYSIAN LAW

Section 2(d) Contract Act 1950Section 2(d) Contract Act 1950

Past consideration is considered as valid Past consideration is considered as valid “when, at the desire of the promisor, the “when, at the desire of the promisor, the promisee or any other person has done or promisee or any other person has done or abstained from doing …”abstained from doing …”

CONSIDERATION FROM A THIRD CONSIDERATION FROM A THIRD PARTYPARTY

- English Common Law- English Common LawConsideration must move from the Consideration must move from the promisee/acceptorpromisee/acceptor

- Section 2(d) Contract Act 1950- Section 2(d) Contract Act 1950“ … “ … the promisee or the promisee or any other personany other person …” …”Venkata Chinnaya v Verikatara Ma’yaVenkata Chinnaya v Verikatara Ma’ya (1881) (1881)

ILR 4 Mad. 137ILR 4 Mad. 137

PERFORMANCE OF A LEGAL DUTYPERFORMANCE OF A LEGAL DUTY

- PUBLIC DUTY IMPOSED BY LAW- PUBLIC DUTY IMPOSED BY LAWGlassbrook Bros. v Glamorgan County Council Glassbrook Bros. v Glamorgan County Council

[1925] AC 270[1925] AC 270

- PERFORMANCE OF A DUTY OWED TO - PERFORMANCE OF A DUTY OWED TO PROMISORPROMISORStilk v Myrick Stilk v Myrick (1809) 2 Camp 317(1809) 2 Camp 317

CONSIDERATION NEED NOT BE CONSIDERATION NEED NOT BE ADEQUATEADEQUATE

Explanation 2 of Section 26Explanation 2 of Section 26 Phang Swee Kim v Beh I Hock (1964) MLJ Phang Swee Kim v Beh I Hock (1964) MLJ

383383An arrangement to sell a piece of land for RM500 An arrangement to sell a piece of land for RM500

which worth more than thatwhich worth more than that

EXCEPTIONS TO GENERAL RULEEXCEPTIONS TO GENERAL RULE

- Section 26(a)- Section 26(a)An agreement made in writing and registered An agreement made in writing and registered

- Section 26(b)- Section 26(b)An agreement to compensate for something doneAn agreement to compensate for something done

- Section 26(c)- Section 26(c)An agreement to pay a statute barred debtAn agreement to pay a statute barred debt

INTENTION TO CREATE A LEGAL INTENTION TO CREATE A LEGAL RELATIONSHIPRELATIONSHIP

THE PARTIES CONTEMPLATE THAT THE AGREEMENT BE ENFORCEABLE IN LAW

HOW TO PROVE THE PRESENCE HOW TO PROVE THE PRESENCE OF INTENTIONOF INTENTION

THE COURT WILL DECIDE UPON CASES THE COURT WILL DECIDE UPON CASES AND THE PRINCIPLE OF ‘REBUTTABLE AND THE PRINCIPLE OF ‘REBUTTABLE PRESUMPTION’ PRESUMPTION’

REBUTTABLE PRESUMPTIONREBUTTABLE PRESUMPTION

REBUTTABLE PRESUMPTION MEANS A REBUTTABLE PRESUMPTION MEANS A SUGGESTION HOLDS GOOD SO LONG SUGGESTION HOLDS GOOD SO LONG AS THERE IS NO EVIDENCE TO THE AS THERE IS NO EVIDENCE TO THE CONTRARYCONTRARY

AGREEMENTS ARE CATEGORISEDAGREEMENTS ARE CATEGORISED

- COMMERCIAL AGREEMENTSCOMMERCIAL AGREEMENTS

- SOCIAL, DOMESTIC AND FAMILY SOCIAL, DOMESTIC AND FAMILY AGREEMENTSAGREEMENTS

COMMERCIAL AGREEMENTSCOMMERCIAL AGREEMENTS

THE PRESUMPTIONTHE PRESUMPTION

THERE IS AN INTENTION TO CREATE THERE IS AN INTENTION TO CREATE LEGAL RELATIOSHIPS UNLESS IT IS LEGAL RELATIOSHIPS UNLESS IT IS

PROVEN OTHERWISEPROVEN OTHERWISE


PRESUMPTION REMAINSPRESUMPTION REMAINS

Carlill v Carbolic Smoke Ball (1892) 2 QB Carlill v Carbolic Smoke Ball (1892) 2 QB 484484


PRESUMPTION REFUTEDPRESUMPTION REFUTED

Jones v Vernons Pools [1938] 2 All ER 626Jones v Vernons Pools [1938] 2 All ER 626• Express Deny of the IntentionExpress Deny of the Intention

Rose and Frank v Crompton Bros [1923] 2 Rose and Frank v Crompton Bros [1923] 2 KB 261KB 261

• Memorandum of Understanding (MoU)Memorandum of Understanding (MoU)

SOCIAL, DOMESTIC AND FAMILY SOCIAL, DOMESTIC AND FAMILY AGREEMENTSAGREEMENTS

THE PRESUMPTIONTHE PRESUMPTION

THERE IS NO INTENTION TO CREATE THERE IS NO INTENTION TO CREATE LEGAL RELATIONSHIPS UNLESS LEGAL RELATIONSHIPS UNLESS

PROVEN OTHERWISEPROVEN OTHERWISE


PRESUMPTION REMAINSPRESUMPTION REMAINS

Balfour v Balfour [1919] 2 KB 571Balfour v Balfour [1919] 2 KB 571

Jones v Padavatton [1969] 2 All ER 616Jones v Padavatton [1969] 2 All ER 616


PRESUMPTION REFUTEDPRESUMPTION REFUTED

Merritt v Merritt [1970] 2 All ER 760Merritt v Merritt [1970] 2 All ER 760• Have separatedHave separated

Simpkins v Pays [1955] 1 WLR 975Simpkins v Pays [1955] 1 WLR 975• Not a Household AgreementNot a Household Agreement

Parker v Clark [1960] 1 WLR 286Parker v Clark [1960] 1 WLR 286• Truly rely upon the promise; has given up something of valueTruly rely upon the promise; has given up something of value

Tanner v Tanner [1975] 1 WLR 1346Tanner v Tanner [1975] 1 WLR 1346

LEGAL CAPACITYLEGAL CAPACITY

THE PARTIES WHO INTEND TO ENTER THE PARTIES WHO INTEND TO ENTER INTO AN AGREEMENT SHOULD HAVE INTO AN AGREEMENT SHOULD HAVE FULL CONTRACTUAL CAPACITYFULL CONTRACTUAL CAPACITY

THE PARTIES SHOULD BE LEGALLY THE PARTIES SHOULD BE LEGALLY COMPETENTCOMPETENT

‘‘COMPETENT’COMPETENT’SECTION 11 CONTRACT ACT 1950SECTION 11 CONTRACT ACT 1950

- A PERSON WHO IS OF AGE OF A PERSON WHO IS OF AGE OF MAJORITYMAJORITY

- A PERSON WHO IS OF SOUND MINDA PERSON WHO IS OF SOUND MIND

- A PERSON WHO IS NOT DISQUALIFIED A PERSON WHO IS NOT DISQUALIFIED BY ANY LAWBY ANY LAW

LEGAL EFFECT OF INCOMPETENCELEGAL EFFECT OF INCOMPETENCE

THE AGREEMENT WILL BE RENDERED THE AGREEMENT WILL BE RENDERED VOIDVOID

- Mohori Bibee v Dharmodas Ghose - Mohori Bibee v Dharmodas Ghose (1903)ILR 30 Cal 539(1903)ILR 30 Cal 539

- Tan Hee Juan v Teh Boon Keat [1934] - Tan Hee Juan v Teh Boon Keat [1934] MLJ 96MLJ 96

EXCEPTIONS TO GENERAL RULEEXCEPTIONS TO GENERAL RULE

- NECESSARIESNECESSARIES- SCHOLARSHIPSSCHOLARSHIPS- MARRIAGESMARRIAGES- INSURANCESINSURANCES- SERVICESSERVICES

NECESSARIESNECESSARIES

- NECESSARIES INCLUDE EVERYTHING THAT IS NECESSARIES INCLUDE EVERYTHING THAT IS ESSENTIAL AND BENEFICIAL TO THE MINORESSENTIAL AND BENEFICIAL TO THE MINOR

- E.G. FOOD, DRINK, CLOTHING AND EDUCATIONE.G. FOOD, DRINK, CLOTHING AND EDUCATION

- DEFINITION ON WHAT CONSTITUTES NECESSARY DEFINITION ON WHAT CONSTITUTES NECESSARY VARIES AND DEPENDANT UPON CIRCUMSTANCES VARIES AND DEPENDANT UPON CIRCUMSTANCES AND CASESAND CASES

- E.G. WINTER COATE.G. WINTER COAT

- THE MINOR WILL HAVE TO PAY A REASONABLE THE MINOR WILL HAVE TO PAY A REASONABLE PRICE FOR THE NECESSARYPRICE FOR THE NECESSARY

NECESSARIESNECESSARIES- CLAIM FOR NECESSARIES SUPPLIED TO PERSON CLAIM FOR NECESSARIES SUPPLIED TO PERSON

INCAPABLE OF CONTRACTING, OR ON HIS INCAPABLE OF CONTRACTING, OR ON HIS ACCOUNTACCOUNT

- IF A PERSON INCAPABLE OF ENTERING INTO A IF A PERSON INCAPABLE OF ENTERING INTO A CONTRACT, OR ANYONE WHOM HE IS LEGALLY CONTRACT, OR ANYONE WHOM HE IS LEGALLY BOUND TO SUPPORT, IS SUPPLIED BY ANOTHER BOUND TO SUPPORT, IS SUPPLIED BY ANOTHER PERSON WITH NECESSARIES SUITED TO HIS PERSON WITH NECESSARIES SUITED TO HIS CONDITION IN LIFE, THE PERSON WHO HAS CONDITION IN LIFE, THE PERSON WHO HAS FURNISHED SUCH SUPPLIES IS ENTITLED TO BE FURNISHED SUCH SUPPLIES IS ENTITLED TO BE REIMBURSED FROM THE PROPERTY OF SUCH REIMBURSED FROM THE PROPERTY OF SUCH INCAPABLE PERSON.INCAPABLE PERSON.

- SECTION 69 SECTION 69

NECESSARIESNECESSARIES

ILLUSTRATIONSILLUSTRATIONS

- A SUPPLIES B, A MENTALLY DISODERED PERSON, A SUPPLIES B, A MENTALLY DISODERED PERSON, WITH NECESSARIES SUITED TO HIS CONDITION IN WITH NECESSARIES SUITED TO HIS CONDITION IN LIFE, A IS ENTITLED TO BE REIMBURSED FROM B’S LIFE, A IS ENTITLED TO BE REIMBURSED FROM B’S PROPERTYPROPERTY

- A SUPPLIES THE WIFE AND CHILDREN OF B, A A SUPPLIES THE WIFE AND CHILDREN OF B, A MENTALLY DISODERED PERSON, WITH MENTALLY DISODERED PERSON, WITH NECESSARIES SUITABLE TO THEIR CONDITION OF NECESSARIES SUITABLE TO THEIR CONDITION OF LIFE. A IS ENTITLED TO BE REIMBURSED FROM B’S LIFE. A IS ENTITLED TO BE REIMBURSED FROM B’S PROPERTYPROPERTY

SCHOLARSHIPSSCHOLARSHIPS

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE PRINCIPAL ACT, NO SCHOLARSHIP AGREEMENT IN THE PRINCIPAL ACT, NO SCHOLARSHIP AGREEMENT SHALL BE INVALIDATED ON THE GROUND THAT:-SHALL BE INVALIDATED ON THE GROUND THAT:-

A) THE SCHOLAR ENTERING ONTO SUCH AGREEMENT IS A) THE SCHOLAR ENTERING ONTO SUCH AGREEMENT IS NOT OF THE AGE OF MAJORITYNOT OF THE AGE OF MAJORITY

B) SUCH AGREEMENT IS CONTRARY TO ANY PROVISION OF B) SUCH AGREEMENT IS CONTRARY TO ANY PROVISION OF ANY LAW IN FORCE RELATING TO MONEY LENDERS, ORANY LAW IN FORCE RELATING TO MONEY LENDERS, OR

C) SUCH AGREEMENT LACKS CONSIDERATIONC) SUCH AGREEMENT LACKS CONSIDERATION

SECTION 4(a) CONTRACT (AMENDMENT) ACT 1976SECTION 4(a) CONTRACT (AMENDMENT) ACT 1976

MARRIAGESMARRIAGES

PROMISE OF MARRIAGE HAS BEEN PROMISE OF MARRIAGE HAS BEEN HELD TO BE VALID. A MINOR MAY SUE HELD TO BE VALID. A MINOR MAY SUE OR BE SUED FOR BREACH.OR BE SUED FOR BREACH.

RAJESWARY V BALAKRISHNAN RAJESWARY V BALAKRISHNAN

INSURANCESINSURANCES

A MINOR OVER THE AGE OF TEN MAY ENTER A MINOR OVER THE AGE OF TEN MAY ENTER INTO A CONTRACT OF INSURANCE BUT IF INTO A CONTRACT OF INSURANCE BUT IF HE OR SHE IS UNDER THE AGE OF SIXTEEN HE OR SHE IS UNDER THE AGE OF SIXTEEN YEARS, THE WRITTEN CONSENT OF THE YEARS, THE WRITTEN CONSENT OF THE PARENTS OR GUARDIANS IS ESSENTIALPARENTS OR GUARDIANS IS ESSENTIAL

INSURANCE ACT 1963INSURANCE ACT 1963

SERVICESSERVICES

NOTWITHSTANDING ANYTHING TO THE CONTRARY NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE CONTRACTS ACT 1950 OR THE CONTAINED IN THE CONTRACTS ACT 1950 OR THE PROVISIONS OF ANY OTHER WRITTEN LAW, ANY PROVISIONS OF ANY OTHER WRITTEN LAW, ANY CHILD OR YOUNG PERSON SHALL BE COMPETENT CHILD OR YOUNG PERSON SHALL BE COMPETENT TO ENTER INTO A CONTRACT OF SERVICE UNDER TO ENTER INTO A CONTRACT OF SERVICE UNDER THIS ACT OTHERWISE THAN AS AN EMPLOYER , THIS ACT OTHERWISE THAN AS AN EMPLOYER , AND MAY SUE AS PLAINTIFF WITHOUT HIS NEXT AND MAY SUE AS PLAINTIFF WITHOUT HIS NEXT FRIEND OR DEFEND ANY ACTION WITHOUT A FRIEND OR DEFEND ANY ACTION WITHOUT A GUARDIAN AD LITEMGUARDIAN AD LITEM

CHILDREN AND YOUNG PERSONS (EMPLOYMENT) ACT 1966CHILDREN AND YOUNG PERSONS (EMPLOYMENT) ACT 1966

FALSE REPRESENTATION ON AGEFALSE REPRESENTATION ON AGE

THE MINOR IS NOT ESTOPPED FROM THE MINOR IS NOT ESTOPPED FROM PLEADING MINORITY IN AVOIDING A PLEADING MINORITY IN AVOIDING A CONTRACTCONTRACT

NATESAN V THANALETCHUMINATESAN V THANALETCHUMI

CERTAINTYCERTAINTY

IT IS IMPORTANT THAT TERMS AND IT IS IMPORTANT THAT TERMS AND CONDITIONS OF A CONTRACT BE CLEAR CONDITIONS OF A CONTRACT BE CLEAR AND CERTAIN. COURTS WILL NEVER AND CERTAIN. COURTS WILL NEVER ACCEPT TERMS OR CONDITIONS WHICH ACCEPT TERMS OR CONDITIONS WHICH ARE VAGUE AND OBSCUREARE VAGUE AND OBSCURE

Karuppan Chetty v Suah Thian Karuppan Chetty v Suah Thian (1916) 1 FMSLR 300(1916) 1 FMSLR 300

The court declared that the contract was The court declared that the contract was void. The terms used in the contract was void. The terms used in the contract was too vague and too obscure. The parties too vague and too obscure. The parties agreed to a lease of RM 35 per month ‘for agreed to a lease of RM 35 per month ‘for as long as he likes’.as long as he likes’.

LEGAL EFFECT OF UNCERTAINTYLEGAL EFFECT OF UNCERTAINTY

AGREEMENTS, THE MEANING OF AGREEMENTS, THE MEANING OF WHICH IS NOT CERTAIN OR CAPABLE WHICH IS NOT CERTAIN OR CAPABLE OF BEING MADE CERTAIN, IS VOIDOF BEING MADE CERTAIN, IS VOID

SECTION 30 CONTRACT ACT 1950SECTION 30 CONTRACT ACT 1950

EXAMPLESEXAMPLES

-- A agrees to sell to B ‘a hundred tons of oil’. There is nothing A agrees to sell to B ‘a hundred tons of oil’. There is nothing whatever to show what kind of oil was intended. The agreement is whatever to show what kind of oil was intended. The agreement is void for uncertainty.void for uncertainty.

-- A agrees to sell to B one hundred tons of oil of a specified A agrees to sell to B one hundred tons of oil of a specified description, known as an article of commerce. There is no description, known as an article of commerce. There is no uncertainty here to make the agreement void.uncertainty here to make the agreement void.

-- A, who is a dealer in coconut oil only, agrees to sell to B ‘one A, who is a dealer in coconut oil only, agrees to sell to B ‘one hundred tons of oil’. The nature of A’s trade affords an indication of hundred tons of oil’. The nature of A’s trade affords an indication of the meaning of the words, and A has entered into a contract for the the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut oil.sale of one hundred tons of coconut oil.

FREE CONSENTFREE CONSENT

TWO OR MORE PERSON ARE SAID TO TWO OR MORE PERSON ARE SAID TO CONSENT WHEN THEY AGREE UPON THE CONSENT WHEN THEY AGREE UPON THE SAME THING IN THE SAME SENSE. SAME THING IN THE SAME SENSE.

THIS CONSENT SHOULD BE GIVEN FREELY IF THIS CONSENT SHOULD BE GIVEN FREELY IF ONE WOULD LIKE TO MAINTAIN THE ONE WOULD LIKE TO MAINTAIN THE VALIDITY OF A CONTRACT. VALIDITY OF A CONTRACT.

ELEMENTS THAT VITIATE CONSENTELEMENTS THAT VITIATE CONSENT

- - CoercionCoercion-- Undue InfluenceUndue Influence-- FraudFraud-- MisrepresentationMisrepresentation-- MistakeMistake

LEGAL EFFECTLEGAL EFFECT

With the exception of ‘mistake’ the effect of With the exception of ‘mistake’ the effect of those elements to contract is that it will those elements to contract is that it will render that contract to be voidable.render that contract to be voidable.

CASE LAWCASE LAW

-- Kesarmal s/o Lecthman Das v Valiappa Kesarmal s/o Lecthman Das v Valiappa Chettiar [1954] MLJ 119Chettiar [1954] MLJ 119

-- Chin Nam Bee Development Sdn Bhd v Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & 4 Ors [1988] 2 MLJ 117Tai Kim Choo & 4 Ors [1988] 2 MLJ 117

COERCIONCOERCION

Coercion is the committing, or threatening to Coercion is the committing, or threatening to commit any act forbidden by the Penal Code, or commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, the unlawful detaining or threatening to detain, any property, to the prejudice of any person any property, to the prejudice of any person whatever, with the intention of causing any whatever, with the intention of causing any person to enter into an agreementperson to enter into an agreement

Section 15 Contract Act 1950Section 15 Contract Act 1950

REPUDIATIONREPUDIATION

The repudiation of contract should be made The repudiation of contract should be made within a reasonable time.within a reasonable time.

Wong Ah Fook v Kerajaan Negeri Johor [1937] Wong Ah Fook v Kerajaan Negeri Johor [1937] MLJ Rep 121MLJ Rep 121

UNDUE INFLUENCEUNDUE INFLUENCE

A person who has made a contract under A person who has made a contract under ‘undue influence’ may rescind the contract ‘undue influence’ may rescind the contract at his choice. The law gives such right to at his choice. The law gives such right to that person because the contract was not that person because the contract was not made upon ‘free will’. made upon ‘free will’.

WHAT CONSTITUTES UNDUE WHAT CONSTITUTES UNDUE INFLUENCEINFLUENCE

A contract is said to be induced by ‘undue A contract is said to be induced by ‘undue influence’ where the relations subsisting influence’ where the relations subsisting between the parties are such that one of between the parties are such that one of the parties is in a position to dominate the the parties is in a position to dominate the will of the other and uses that position to will of the other and uses that position to obtain an unfair advantage over the other.obtain an unfair advantage over the other.

Section 16 (1) Contract Act 1950Section 16 (1) Contract Act 1950

Ragunath Prasad v Sarju Prasad Ragunath Prasad v Sarju Prasad AIR 1924 PC 60AIR 1924 PC 60

There should be at least There should be at least THREETHREE important points important points that exist within that arrangement before a that exist within that arrangement before a particular contract could be rescind;particular contract could be rescind;

1.1. There exists a situation where one person is in There exists a situation where one person is in a position to dominate the will of the othera position to dominate the will of the other

2.2. That person uses his position to gain an unfair That person uses his position to gain an unfair advantageadvantage

3.3. The gain should be in a manner that is unfair.The gain should be in a manner that is unfair.

SECTION 16 (2) SECTION 16 (2) CONTRACT ACT 1950CONTRACT ACT 1950

A person is said to have been in a position to A person is said to have been in a position to dominate the will of the other when;dominate the will of the other when;

1.1. He holds a real or apparent authority over the He holds a real or apparent authority over the otherother

2.2. He stands in a fiduciary relation to the otherHe stands in a fiduciary relation to the other3.3. A contract is made with a person whose A contract is made with a person whose

mental capacity is temporarily or permanently mental capacity is temporarily or permanently affected by reason of age, illness or mental or affected by reason of age, illness or mental or bodily distressbodily distress

PROVES OF ‘NO DOMINATION’PROVES OF ‘NO DOMINATION’

Where a person who is in a position to dominate Where a person who is in a position to dominate the will of another, enters into a contract with the will of another, enters into a contract with him, and the transaction appears, on the face of him, and the transaction appears, on the face of it or on the evidence adduce, to be it or on the evidence adduce, to be unconscionable, the burden of proving that the unconscionable, the burden of proving that the contract was not induced by undue influence contract was not induced by undue influence shall lie upon the person in a position to dominate shall lie upon the person in a position to dominate the will of the other.the will of the other.

Section 16 (3) (a) Contract Act 1950Section 16 (3) (a) Contract Act 1950

Salwath Haneem v Hadjee Salwath Haneem v Hadjee Abdullah (1894) 2 SSLR 57Abdullah (1894) 2 SSLR 57

The burden of proof lies upon the The burden of proof lies upon the defendants who have ‘a confidential defendants who have ‘a confidential relationship’ with the plaintiff.relationship’ with the plaintiff.

HOW TO PROVEHOW TO PROVE

One way to prove is through the advice of One way to prove is through the advice of someone who has the expertise to do so.someone who has the expertise to do so.

Inche Noriah v Shaik Allie bin Omar (1929) Inche Noriah v Shaik Allie bin Omar (1929) AC 127AC 127

An advice has been given to the dominated An advice has been given to the dominated party by a lawyer.party by a lawyer.

FRAUDFRAUD

Fraud is being committed when one person makes Fraud is being committed when one person makes a ‘false representation’, which;a ‘false representation’, which;

1.1. He believes that it is not true;He believes that it is not true;2.2. He is not confident that the statement is true;He is not confident that the statement is true;3.3. He never care whether the statement is true or He never care whether the statement is true or

notnotwith the intention of causing any person to enter with the intention of causing any person to enter

into a contract.into a contract.Section 17 Contract Act 1950Section 17 Contract Act 1950

EXAMPLESEXAMPLES

-- A, intending to deceive B, falsely represents that five A, intending to deceive B, falsely represents that five hundred gantangs of indigo are made annually at A’s hundred gantangs of indigo are made annually at A’s factory, and thereby induces B to buy the factory. The factory, and thereby induces B to buy the factory. The contract is voidable at the option of Bcontract is voidable at the option of B

-- B, having discovered a vein of ore on the estate of A, B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal, the adopts means to conceal, and does conceal, the existence of the ore from A. Through A’s ignorance B is existence of the ore from A. Through A’s ignorance B is enabled to buy the estate at an undervalue. The contract enabled to buy the estate at an undervalue. The contract is voidable at the option of A.is voidable at the option of A.

ACTIVE FALSE REPRESENTATIONACTIVE FALSE REPRESENTATION

Fraud has not been committed even if one Fraud has not been committed even if one person failed to disclose the true fact. A person failed to disclose the true fact. A mere non-disclosure is not a fraud.mere non-disclosure is not a fraud.

EXAMPLESEXAMPLES

-- A sells, by auction, to B, a horse which A knows A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the to be unsound. A says nothing to B about the horse’s unsoundness. This is not fraud in A.horse’s unsoundness. This is not fraud in A.

-- A and B, being traders, enter upon a contract. A A and B, being traders, enter upon a contract. A has private information of a change in prices has private information of a change in prices which would affect B’s willingness to proceed which would affect B’s willingness to proceed with the contract. A is not bound to inform B.with the contract. A is not bound to inform B.

Vyramuthu v Kerajaan Negeri PahangVyramuthu v Kerajaan Negeri Pahang

Explanation of Section 17Explanation of Section 17

Mere silence as to facts likely to affect the Mere silence as to facts likely to affect the willingness of a person to enter into a willingness of a person to enter into a contract is not fraud, unless the contract is not fraud, unless the circumstances of the case are such that, circumstances of the case are such that, regard being had to them, it is the duty of regard being had to them, it is the duty of the person keeping silence to speak, or the person keeping silence to speak, or unless his silence is, in itself, equivalent to unless his silence is, in itself, equivalent to speech.speech.

‘‘it is the duty of the person keeping it is the duty of the person keeping silence to speak’silence to speak’

-- Contract of InsuranceContract of Insurance

-- Sale Through ProspectusSale Through Prospectus

-- The Creation of PartnershipThe Creation of Partnership

‘‘his silence is, in itself, equivalent to his silence is, in itself, equivalent to speech’speech’

The doctrine of ‘buyers beware’The doctrine of ‘buyers beware’

When a question is being posed to the When a question is being posed to the seller, he is expected to give the answer. seller, he is expected to give the answer. At this point, whether he speaks or not, At this point, whether he speaks or not, both will be regarded as the ‘answer’ for both will be regarded as the ‘answer’ for the question.the question.

EXAMPLESEXAMPLES

B says to A, ‘If you do not deny it, I shall B says to A, ‘If you do not deny it, I shall assume that the horse is sound’. A says assume that the horse is sound’. A says nothing. Here, A’s silence is equivalent to nothing. Here, A’s silence is equivalent to speech.speech.

MISREPRESENTATIONMISREPRESENTATION

A false statement has been made without A false statement has been made without the intention to deceive another.the intention to deceive another.

Section 18 Contract Act 1950Section 18 Contract Act 1950

Misrepresentation includes;Misrepresentation includes;(a)(a) The positive assertion, in a manner not warranted by The positive assertion, in a manner not warranted by

the information of the person making it, of that which is the information of the person making it, of that which is not true, though he believes it to be true;not true, though he believes it to be true;

(b)(b) Any breach of duty which, without an intent to deceive, Any breach of duty which, without an intent to deceive, gives an advantage to the person committing it, or gives an advantage to the person committing it, or anyone claiming under him, by misleading another to anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming his prejudice, or to the prejudice of anyone claiming under him; andunder him; and

(c)(c) Causing, however innocently, a party to an agreement Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing to make a mistake as to the substance of the thing which is the subject of the agreement. which is the subject of the agreement.

The Difference Between Fraud and The Difference Between Fraud and MisrepresentationMisrepresentation

The basic difference between fraud and The basic difference between fraud and misrepresentation is that in fraud the misrepresentation is that in fraud the person making the representation does person making the representation does not himself believe in its truth whereas, in not himself believe in its truth whereas, in cases of misrepresentation, he may cases of misrepresentation, he may believe the representation to be true.believe the representation to be true.

Fraud and Misrepresentation Must Fraud and Misrepresentation Must Influence the Other Party to Make Influence the Other Party to Make

ContractContract

The fraud or misrepresentation is rendered The fraud or misrepresentation is rendered irrelevant if it has not induced or caused irrelevant if it has not induced or caused the other party to enter into the contract. A the other party to enter into the contract. A false statement does not per se give rise false statement does not per se give rise to a cause of action. The representee to a cause of action. The representee must have relied on the statement of the must have relied on the statement of the representator.representator.

The Effect of Fraud and The Effect of Fraud and MisrepresentationMisrepresentation

When consent to an agreement is caused by When consent to an agreement is caused by coercion, fraud, or misrepresentation, the coercion, fraud, or misrepresentation, the agreement is a contract voidable at the agreement is a contract voidable at the option of the party whose consent was so option of the party whose consent was so caused.caused.

Section 19(1) Contract Act 1950Section 19(1) Contract Act 1950

Exception to the General PrincipleException to the General Principle

‘‘If such consent was caused by misrepresentation If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not section 17, the contract, nevertheless, is not voidable, if the parties whose consent was so voidable, if the parties whose consent was so caused had the means of discovering the truth caused had the means of discovering the truth with ordinary diligence’.with ordinary diligence’.

Exception – Section 19 Contract Act 1950Exception – Section 19 Contract Act 1950

CONTENTS OF CONTRACTCONTENTS OF CONTRACT

What has been agreed in an agreement is What has been agreed in an agreement is the content of a contract. It is also known the content of a contract. It is also known as the TERMS of contract.as the TERMS of contract.

Term and RepresentationTerm and Representation

-- Term is a condition or a warranty that is Term is a condition or a warranty that is contained in a contractcontained in a contract

-- Representation is a mere statement that is Representation is a mere statement that is not included in a contractnot included in a contract

Classifications of TermClassifications of Term

-- Express TermExpress Term• The terms that are clearly stated and included in a The terms that are clearly stated and included in a

contractcontract

-- Implied TermImplied Term• The terms that are not expressly stated but the The terms that are not expressly stated but the

court assumes that such terms exist in a contractcourt assumes that such terms exist in a contract

Implied TermsImplied Terms

-- To give effect to the commercial practiceTo give effect to the commercial practice

-- To realize the intention of the contracting To realize the intention of the contracting partiesparties

-- Required by lawRequired by law


An implied term is a term that is not included An implied term is a term that is not included in a contract during negotiation but the law in a contract during negotiation but the law or the court assumes that such term exists or the court assumes that such term exists in the contract.in the contract.

The court, however, will be very careful in The court, however, will be very careful in this case in the sense that ‘the freedom of this case in the sense that ‘the freedom of contract should be preserved’.contract should be preserved’.

Commercial PracticesCommercial Practices

The court will normally imply terms in a contract The court will normally imply terms in a contract when it thinks fit or when it thinks it is important when it thinks fit or when it thinks it is important as to give the effect to commercial practices.as to give the effect to commercial practices.

Pasuma Pharmacal Corpn. v McAlister & Co. Pasuma Pharmacal Corpn. v McAlister & Co. Ltd. [1965] 1 MLJ 221Ltd. [1965] 1 MLJ 221

““Good FaithGood Faith””


Commercial practices mean that the use of such Commercial practices mean that the use of such terms in commercial transactions is very terms in commercial transactions is very common, certain and reasonable.common, certain and reasonable.

Preston Corp. Sdn. Bhd. v Edward Leong & Ors. Preston Corp. Sdn. Bhd. v Edward Leong & Ors. [1982] 2 MLJ 22[1982] 2 MLJ 22

““the keeping of the first film negative and the cost the keeping of the first film negative and the cost of printing”of printing”


‘‘Such practice has been well accepted by Such practice has been well accepted by the court; and it has been part of the law”the court; and it has been part of the law”

Pembangunan Maha Murni Sdn. Bhd. v Pembangunan Maha Murni Sdn. Bhd. v Jururus Ladang Sdn. Bhd. [1986] 2 MLJ Jururus Ladang Sdn. Bhd. [1986] 2 MLJ

3030

Intentions of the Contracting Intentions of the Contracting PartiesParties

The court will also implied a term in a The court will also implied a term in a contract when it thinks that it is important contract when it thinks that it is important as to give effect to the intention of the as to give effect to the intention of the contracting parties.contracting parties.

Yong Ung Kai v Enting [1965] 2 MLJ 98Yong Ung Kai v Enting [1965] 2 MLJ 98

Legal RequirementsLegal Requirements

The court will implied a term in a contract The court will implied a term in a contract when the law requires so.when the law requires so.

-- Sale of Goods (Malay States) Act 1957Sale of Goods (Malay States) Act 1957-- Hire Purchase Act 1967Hire Purchase Act 1967-- National Land Code 1965National Land Code 1965

Categories of TermCategories of Term

-- Condition – an essence of a contract. A Condition – an essence of a contract. A breach of a condition would render to a breach of a condition would render to a recession.recession.

-- Warranty – a supportive factor to a Warranty – a supportive factor to a contract. A breach of a warranty will not contract. A breach of a warranty will not render the contract be rescind but the law render the contract be rescind but the law will allow the injured party to make a claim.will allow the injured party to make a claim.

Standard Form ContractsStandard Form Contracts

Same contract being made to different Same contract being made to different persons.persons.

To expedite the transactionTo expedite the transaction To reduce the costTo reduce the cost

Standard Form ContractsStandard Form Contracts

Come in a package. One side is imposing a Come in a package. One side is imposing a set of terms on the other party. ‘Take it or set of terms on the other party. ‘Take it or leave it’. leave it’.

One problem is the inclusion of an One problem is the inclusion of an ‘exemption clause’ in that particular ‘exemption clause’ in that particular transaction.transaction.

Exemption ClauseExemption Clause

The main purpose of Exemption Clause is The main purpose of Exemption Clause is either;either;

to avoid liability; orto avoid liability; or at least to limit liabilityat least to limit liability

ECs in ContractsECs in Contracts

The Exemption Clause would be considered The Exemption Clause would be considered as part of contract/valid term of contract if as part of contract/valid term of contract if it has been properly;it has been properly;

included in a contractincluded in a contract a proper notice has been given a proper notice has been given

The Incorporation of the ECsThe Incorporation of the ECs

When an exemption clause has been incorporated When an exemption clause has been incorporated into a contract the clause is considered as part into a contract the clause is considered as part of the contract. The fact that the party did not of the contract. The fact that the party did not aware about the term does not affect the validity aware about the term does not affect the validity of the clause.of the clause.

L’Estrange v F Graucob Ltd. [1934] 2 KB 394L’Estrange v F Graucob Ltd. [1934] 2 KB 394

Notice About the ECsNotice About the ECs

The notice should be made either before or The notice should be made either before or at the time the contract being made.at the time the contract being made.

The Effectiveness of an EC in a The Effectiveness of an EC in a ContractContract

NoticeNotice• A notice must be served before or at the time the A notice must be served before or at the time the

contract is madecontract is made

Olley v Marlborough Court Ltd [1949] 1 KB 532Olley v Marlborough Court Ltd [1949] 1 KB 532

Thornton v Shoe Lane Parking [1971] 2 QB 163Thornton v Shoe Lane Parking [1971] 2 QB 163


Regular as a Notice – ‘Course of Dealing’Regular as a Notice – ‘Course of Dealing’• A consistent course of dealing would lead to the A consistent course of dealing would lead to the

application of the principle of noticeapplication of the principle of notice

Spurling v Bradshaw [1956] 1 WLR 461Spurling v Bradshaw [1956] 1 WLR 461


The Ticket RuleThe Ticket Rule• To make the terms that contain in a ticket valid To make the terms that contain in a ticket valid

reasonable steps must be taken so as to informed reasonable steps must be taken so as to informed the other party about the EC before the contract the other party about the EC before the contract being madebeing made

Chapelton v Barry UDC [1940] 1 KB 532Chapelton v Barry UDC [1940] 1 KB 532

Parker v South Eastern Railway Co. [1877] 2 CPD Parker v South Eastern Railway Co. [1877] 2 CPD 416416


The Principle of Contra ProferentemThe Principle of Contra Proferentem• When words used is unclear or ambiguous the When words used is unclear or ambiguous the

term will be interpreted in favor of the other partyterm will be interpreted in favor of the other party


An Oral StatementAn Oral Statement• Where there are two different wordings as regard Where there are two different wordings as regard

to the EC, one in an oral form the other in a written to the EC, one in an oral form the other in a written form, the oral form will take precedent over the form, the oral form will take precedent over the written formwritten form

Curtis v Chemical Cleaning and Dyeing Co. [1951] Curtis v Chemical Cleaning and Dyeing Co. [1951] 1 KB 8051 KB 805


CarelessnessCarelessness• Where a lost or an injury has happened as a result Where a lost or an injury has happened as a result

of carelessness the party sought to avoid liability of carelessness the party sought to avoid liability cannot rely upon the ECcannot rely upon the EC

Chin Hui Nam v Comprehensive Motor Cleaning & Chin Hui Nam v Comprehensive Motor Cleaning & CorporationCorporation

The Effectiveness of an EC in a The Effectiveness of an EC in a Contract Contract

Misrepresentation or FraudMisrepresentation or Fraud• Where one party has misrepresented as to the Where one party has misrepresented as to the

effect of an EC, this will automatically invalidate effect of an EC, this will automatically invalidate the effectiveness of an ECthe effectiveness of an EC

Curtis v Chemical Cleaning and Dyeing Co [1951] Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 8051 KB 805

Discharge of ContractDischarge of Contract

-- Contract will give rise to rights and Contract will give rise to rights and liabilitiesliabilities

-- Discharge – parties to contract will be free Discharge – parties to contract will be free from further obligation under the contractfrom further obligation under the contract

-- Rights and liabilities will be terminatedRights and liabilities will be terminated-- Contract will be terminatedContract will be terminated

Discharge of ContractDischarge of Contract

-- PerformancePerformance-- AgreementAgreement-- BreachBreach-- FrustrationFrustration

Performance Performance

-- Common way of discharging a contractCommon way of discharging a contract

-- Parties have performed their obligationsParties have performed their obligations

-- If only one has performed, he alone is If only one has performed, he alone is discharged, the other will not be discharged discharged, the other will not be discharged until he performs his obligations under the until he performs his obligations under the contractcontract


The parties to a contract must either The parties to a contract must either perform, or offer to perform, their perform, or offer to perform, their respective promises, unless the respective promises, unless the performance is dispensed with or excused performance is dispensed with or excused under this Act, or of any other law.under this Act, or of any other law.

Section 38 (1)Section 38 (1)


-- Complete performanceComplete performance-- Substantial performanceSubstantial performance-- Quantum MeruitQuantum Meruit

Complete PerformanceComplete Performance

-- ‘Entire Contract’ – the performance must ‘Entire Contract’ – the performance must be made wholly – failure to do so will give be made wholly – failure to do so will give the right to the other party to refuse the right to the other party to refuse performanceperformance

-- Cutter v PowellCutter v Powell

Substantial PerformanceSubstantial Performance

-- A plaintiff will be able to recover the sum A plaintiff will be able to recover the sum due under the contract less the sum the due under the contract less the sum the defendant could claim in damagesdefendant could claim in damages

-- Kunchi Raman v Goh Bros. Sdn. BhdKunchi Raman v Goh Bros. Sdn. Bhd

Quantum MeruitQuantum Meruit

A claim can be made on the basis of what A claim can be made on the basis of what has been donehas been done

Haji Hasnan v Tan Ah KianHaji Hasnan v Tan Ah Kian

Time For PerformanceTime For Performance

Performance must be made within the Performance must be made within the period that has been fixedperiod that has been fixed

Section 51Section 51

Time as the EssenceTime as the Essence

Failure to comply with the time result to Failure to comply with the time result to repudiationrepudiation

Section 56(1)(2)(3)Section 56(1)(2)(3)

FRUSTRATIONFRUSTRATION

A CONTRACT TO DO AN ACT WHICH, AFTER A CONTRACT TO DO AN ACT WHICH, AFTER THE CONTRACT IS MADE, BECOMES THE CONTRACT IS MADE, BECOMES IMPOSSIBLE, OR BY REASON OF SOME IMPOSSIBLE, OR BY REASON OF SOME EVENT WHICH THE PROMISOR COULD NOT EVENT WHICH THE PROMISOR COULD NOT PREVENT, UNLAWFUL, BECOMES VOID PREVENT, UNLAWFUL, BECOMES VOID WHEN THE ACT BECOMES IMPOSSIBLE OR WHEN THE ACT BECOMES IMPOSSIBLE OR UNLAWFULUNLAWFUL

SECTION 57(2) CONTRACT ACT 1950SECTION 57(2) CONTRACT ACT 1950

FRUSTRATIONFRUSTRATION- DESTRUCTION OF THE PURPOSEDESTRUCTION OF THE PURPOSE

- KRELL V HENRYKRELL V HENRY- KHOO THAM SOOI V CHAN CHIAU HEEKHOO THAM SOOI V CHAN CHIAU HEE

- DESTRUCTION OF SUBJECT MATTERDESTRUCTION OF SUBJECT MATTER- TAYLOR CALDWELLTAYLOR CALDWELL- KHAN DAU YAU V KIM NAM REALTYKHAN DAU YAU V KIM NAM REALTY

- WHEN THERE IS A NEW LAWWHEN THERE IS A NEW LAW- STANDERED CHARTERED BANK V KUALA LUMPUR LANDMARK

SDN BHD

- WHEN THERE IS A WARWHEN THERE IS A WAR- H A BERNEY V TRONOH MINES

LAW OF AGENCYLAW OF AGENCY

An agency is a tripartite contract that An agency is a tripartite contract that involves ‘principal’, ‘agent’ and ‘third party’. involves ‘principal’, ‘agent’ and ‘third party’.

Section 135 Contract ActSection 135 Contract Act

CREATION OF AGENCYCREATION OF AGENCY

- Express Appointment- Express Appointment- Implied Appointment- Implied Appointment- Ratification- Ratification- Necessity - Necessity


An authority is said to be express when it is An authority is said to be express when it is given by words spoken or written. An given by words spoken or written. An authority is said to be implied when it is to authority is said to be implied when it is to be inferred from the circumstances of the be inferred from the circumstances of the case; and things spoken or written, or the case; and things spoken or written, or the ordinary course of dealing, may be ordinary course of dealing, may be accounted circumstances of the case.accounted circumstances of the case.

Implied AppointmentImplied Appointment

When a person by words or conducts holds out When a person by words or conducts holds out that the other has the authority to act on his that the other has the authority to act on his behalf - that other person will be considered in behalf - that other person will be considered in law as his agent.law as his agent.

IllustrationIllustration

A owns a shop in Kajang, living himself in Kuala Lumpur, and visiting A owns a shop in Kajang, living himself in Kuala Lumpur, and visiting the shop occasionally. The shop is managed by B, and he is in the the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purpose of habit of ordering goods from C in the name of A for the purpose of

the shop, and of paying for them out of A’s funds with A’s the shop, and of paying for them out of A’s funds with A’s knowledge. B has an implied authority from A to order goods from C knowledge. B has an implied authority from A to order goods from C

in the name of A for the purposes of the shop.in the name of A for the purposes of the shop.

Situations Where Contract of Situations Where Contract of Agency are ImpliedAgency are Implied

- The relationship that exists between a - The relationship that exists between a husband and wifehusband and wife

- The relationship that exists between - The relationship that exists between partners in a contract of partnership.partners in a contract of partnership.

Ratification Ratification

Where acts are done by one person on Where acts are done by one person on behalf of another but without his behalf of another but without his knowledge or authority, he may elect to knowledge or authority, he may elect to ratify or disown the acts. If he ratifies ratify or disown the acts. If he ratifies them, the same effects will follow as if they them, the same effects will follow as if they had been performed by his authorityhad been performed by his authority


Example Example

1 Jan P appoints A as agent to buy a car of 1 Jan P appoints A as agent to buy a car of not more than RM 50,000.not more than RM 50,000.

2 Jan T makes an offer to sell a car for RM 2 Jan T makes an offer to sell a car for RM 51,000 to A.51,000 to A.

3 Jan A accepts the offer3 Jan A accepts the offer

Conditions for RatificationConditions for Ratification

-- Unauthorised actUnauthorised act-- The act is for a principalThe act is for a principal- - The principal must be in existenceThe principal must be in existence- - Ratification must not injure a third partyRatification must not injure a third party- - The principal must have full knowledgeThe principal must have full knowledge

The Effect of RatificationThe Effect of Ratification

Ratification validates the unauthorised act, Ratification validates the unauthorised act, and it will operate retrospectively, i.e. it and it will operate retrospectively, i.e. it dates back to the time when the original dates back to the time when the original contract was made, not from the date of contract was made, not from the date of ratification.ratification.

Bolton and Partners v Lambert (1889) 41 Ch Bolton and Partners v Lambert (1889) 41 Ch D 295D 295

Necessity Necessity

An agent has authority, in an emergency, to An agent has authority, in an emergency, to do all such acts for the purpose of do all such acts for the purpose of protecting his principal from loss as would protecting his principal from loss as would be done by a person of ordinary prudence, be done by a person of ordinary prudence, in his own case, under similar in his own case, under similar circumstances.circumstances.


A consigns provisions to B at Taiping, with A consigns provisions to B at Taiping, with directions to send them immediately to C directions to send them immediately to C at Parit Buntar. B may sell the provisions at Parit Buntar. B may sell the provisions at Taiping, if they will not bear the journey at Taiping, if they will not bear the journey to Parit Buntar without spoiling.to Parit Buntar without spoiling.

Great Northern Railway v Swaffield (1874) Great Northern Railway v Swaffield (1874) LR 9 Ex. 132LR 9 Ex. 132

Conditions that Must be SatisfiedConditions that Must be Satisfied

- Attempts have been made to get the - Attempts have been made to get the principal’s instructionprincipal’s instruction

- There exists a state of emergency - There exists a state of emergency - The act is for the benefit of the principal- The act is for the benefit of the principal- The agent has acted in a good faith- The agent has acted in a good faith

The Authority of an AgentThe Authority of an Agent

An agent having an authority to do an act An agent having an authority to do an act has authority to do every lawful thing has authority to do every lawful thing which is necessary in order to do the actwhich is necessary in order to do the act


The Authority of an AgentThe Authority of an Agent

- Actual Authority- Actual AuthorityThe power that is stated in the agreementThe power that is stated in the agreement

- Apparent Authority- Apparent AuthorityThe power that is implied by a third partyThe power that is implied by a third party

Apparent AuthorityApparent AuthorityWhen an agent has, without authority, done acts or When an agent has, without authority, done acts or

incurred obligations to third persons on behalf of incurred obligations to third persons on behalf of his principal, the principal is bound by those acts his principal, the principal is bound by those acts or obligations if he has by his words or conduct or obligations if he has by his words or conduct induced such third persons to believe that those induced such third persons to believe that those acts and obligations were within the scope of the acts and obligations were within the scope of the agent’s authorityagent’s authority


Panorama Development (Guildford) Ltd. V Panorama Development (Guildford) Ltd. V Furnishing Fabric Ltd. [1971] 2 QB 711Furnishing Fabric Ltd. [1971] 2 QB 711

Duties of an AgentDuties of an Agent- To obey the principal’s instruction- To obey the principal’s instruction- To act according to the customs- To act according to the customs- To exercise care and diligence- To exercise care and diligence- To render proper accounts when required- To render proper accounts when required- To pay all sums received- To pay all sums received- To communicate with the principal- To communicate with the principal- Conflict of interest- Conflict of interest- Secret profit- Secret profit- Confidential information- Confidential information- Delegation of authority- Delegation of authority

Duties of a PrincipalDuties of a Principal

- To pay the commission- To pay the commission- Not to prevent the agent from earning his - Not to prevent the agent from earning his

commissioncommission- To reimburse the agent- To reimburse the agent

Effects of Contracts Made by Effects of Contracts Made by AgentsAgents

- Contract made under a named principal- Contract made under a named principal- Contract made under a disclosed principal- Contract made under a disclosed principal- Contract made under an undisclosed - Contract made under an undisclosed

principalprincipal

Termination of AgencyTermination of Agency

An agency is terminated by the principal revoking An agency is terminated by the principal revoking his authority; or by the agent renouncing the his authority; or by the agent renouncing the business of agency; or by the business of the business of agency; or by the business of the agency being completed; or by either the agency being completed; or by either the principal or agent dying or becoming of unsound principal or agent dying or becoming of unsound mind; or by the principal being adjudicated or mind; or by the principal being adjudicated or declared a bankrupt or an insolventdeclared a bankrupt or an insolvent

Section 154Section 154

Termination of AgencyTermination of Agency

- By the Act of the Parties- By the Act of the Parties

- By Operation of Law- By Operation of Law

By the Act of the PartiesBy the Act of the Parties

- The principal revoking his authority- The principal revoking his authority

- The agent renouncing the business of - The agent renouncing the business of agencyagency

The principal cannot revoke the contract The principal cannot revoke the contract when;when;

• Part of the job has been donePart of the job has been done

• The agent has an interest in the contractThe agent has an interest in the contract


Where the agent has himself an interest in the property Where the agent has himself an interest in the property which forms the subject-matter of the agency, the which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.be terminated to the prejudice of such interest.

IllustrationIllustration

A gives authority to B to sell A’s land, and to pay himself, out of the A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this proceeds, the debts due to him from A. A cannot revoke this

authority, not can it be terminated by his unsoundness of mind or authority, not can it be terminated by his unsoundness of mind or death.death.

If the period of the business of the agency If the period of the business of the agency has been fixed, the contract could not be has been fixed, the contract could not be terminated unless the time has lapsed. terminated unless the time has lapsed.

By Operation of LawBy Operation of Law

- The business of the agency being - The business of the agency being completedcompleted

- The death of the principal or agent- The death of the principal or agent- The principal or agent becomes unsound- The principal or agent becomes unsound- The principal becomes insolvent or being - The principal becomes insolvent or being

declared bankruptdeclared bankrupt

Sale of GoodsSale of Goods

Sale of Goods Act 1957 (Revised 1989)Sale of Goods Act 1957 (Revised 1989)

The SGA applies to contracts for the sale of The SGA applies to contracts for the sale of all types of goods;all types of goods;

• Commercial sales/Private sales Commercial sales/Private sales • Wholesale/RetailWholesale/Retail• New/Second-hand goodsNew/Second-hand goods

Contract of SaleContract of Sale

A contract of sale of goods is a contract A contract of sale of goods is a contract whereby the seller whereby the seller transferstransfers or or agrees to agrees to transfertransfer the property in goods to the buyer the property in goods to the buyer for a price.for a price.

Section 4(1) SOGA 1957Section 4(1) SOGA 1957

Sale and Agreement to SellSale and Agreement to Sell

- A contract of sale- A contract of sale• The property in the goods transfers to the buyers The property in the goods transfers to the buyers

at the time the contract is madeat the time the contract is made

- An agreement to sale- An agreement to sale• The property in the goods will transfer at future The property in the goods will transfer at future

time (e.g. when condition has been fulfilled)time (e.g. when condition has been fulfilled)

Sale and Agreement to SellSale and Agreement to Sell

Where under a contract of sale the property in the Where under a contract of sale the property in the goods is transferred from the seller to the buyer, goods is transferred from the seller to the buyer, the contract is called the contract is called a sale [contracta sale [contract], but where ], but where the transfer of the property in the goods is to the transfer of the property in the goods is to take place at a future time or subject to some take place at a future time or subject to some condition thereafter to be fulfilled, the contract is condition thereafter to be fulfilled, the contract is called called an agreement to sellan agreement to sell..

Section 4(3) SOGA 1957Section 4(3) SOGA 1957

ConsiderationConsideration

Under a Contracts Act 1950 consideration Under a Contracts Act 1950 consideration can be anything of values (in the eyes of can be anything of values (in the eyes of the law)the law)

- Can a thing be accepted as consideration?Can a thing be accepted as consideration?- Should it be in the form of money?Should it be in the form of money?- How about thing + money? How about thing + money?

ConsiderationConsideration

Section 4(1) provides that a contract of sale Section 4(1) provides that a contract of sale is a contract whereby the seller transfers is a contract whereby the seller transfers or agrees to transfer the property in goods or agrees to transfer the property in goods to the buyer for a to the buyer for a priceprice. .

GoodsGoods

Goods means every kind of movable property Goods means every kind of movable property other than actionable claims and money; and other than actionable claims and money; and includes stock and shares, growing crops, grass, includes stock and shares, growing crops, grass, and things attached to or forming part of the land and things attached to or forming part of the land which are agreed to be severed before sale or which are agreed to be severed before sale or under the contract of saleunder the contract of sale

Section 2 SOGA 1957Section 2 SOGA 1957

Classification of GoodsClassification of Goods

Goods

Existing Goods Future Goods

Specific Unascertained Specific Unascertained

Conditions and WarrantiesConditions and Warranties

- Condition is a term essential to a contract, a Condition is a term essential to a contract, a breach of which will allow the other party to treat breach of which will allow the other party to treat the contract as repudiatedthe contract as repudiated

Section 12(2) SOGASection 12(2) SOGA

- Warranty is a term collateral to a contract, a Warranty is a term collateral to a contract, a breach of which will give rise to a claim for breach of which will give rise to a claim for damages but not to repudiate the contract damages but not to repudiate the contract

Section 12(3) SOGASection 12(3) SOGA

Breach of ConditionsBreach of Conditions

There are four circumstances where a breach of There are four circumstances where a breach of condition is considered as a breach of warranty, condition is considered as a breach of warranty, hence a contract could not be repudiated:-hence a contract could not be repudiated:-

- the buyer waives the condition- the buyer waives the condition- the buyer chooses to treat the breach of - the buyer chooses to treat the breach of condition as the breach of warrantycondition as the breach of warranty- the buyer has accepted the goods or part - the buyer has accepted the goods or part of itof it- the contract involves the sale of specific goods- the contract involves the sale of specific goods

A Scheme of Consumer ProtectionA Scheme of Consumer Protection

Sections 14-17 SOGA provide a scheme of consumer Sections 14-17 SOGA provide a scheme of consumer protection. protection.

Basically, the sections put some obligations on the seller Basically, the sections put some obligations on the seller whereby he has to ensure that the buyer will have a whereby he has to ensure that the buyer will have a good title of the goods; the buyer will enjoy a quiet good title of the goods; the buyer will enjoy a quiet possession of the goods; the goods are of merchantable possession of the goods; the goods are of merchantable quality and fit for purpose and etc. quality and fit for purpose and etc.


These consumer protection schemes are These consumer protection schemes are discussed under the topic of implied termsdiscussed under the topic of implied terms

Implied Condition as to TitleImplied Condition as to Title

Unless a different intention is shown there is an Unless a different intention is shown there is an implied condition on the part of the seller, that, in implied condition on the part of the seller, that, in the case of a sale, he has the right to sell the the case of a sale, he has the right to sell the goods, and that, in the case of an agreement to goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the sell, he will have a right to sell the goods at the time when the property is to pass.time when the property is to pass.

Section 14(a) SOGASection 14(a) SOGA

Implied Warranty as to Quiet Implied Warranty as to Quiet PossessionPossession

Unless a different intention is shown, there is an Unless a different intention is shown, there is an implied warranty that the buyer shall have and implied warranty that the buyer shall have and enjoy quiet possession of the goodsenjoy quiet possession of the goods

Section 14(b) SOGASection 14(b) SOGA

Implied Warranty that the Goods Implied Warranty that the Goods are Free from Encumbranceare Free from Encumbrance

Unless a different intention is shown, there is an Unless a different intention is shown, there is an implied warranty that the goods shall be free implied warranty that the goods shall be free from any charge or encumbrance in favour of from any charge or encumbrance in favour of any third party not declared or known to the any third party not declared or known to the buyer before or at the time when the contract is buyer before or at the time when the contract is mademade

Section 14(c) SOGASection 14(c) SOGA

Sale by DescriptionSale by Description

Where there is a contract for the sale of goods by Where there is a contract for the sale of goods by description there is an implied condition that the description there is an implied condition that the goods shall correspond with the description; goods shall correspond with the description; and, if the sale is by sample as well as by and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods goods corresponds with the sample if the goods do not also correspond with the description.do not also correspond with the description.

Section 15 SOGASection 15 SOGA

Implied Condition as to Quality or Implied Condition as to Quality or FitnessFitness

There is no implied condition unless:-There is no implied condition unless:-

The buyer makes known to the seller the particular The buyer makes known to the seller the particular purpose he buys the goodspurpose he buys the goods

The transaction was made upon description while at The transaction was made upon description while at the same time the seller always deal with the goodsthe same time the seller always deal with the goods


Sale by SampleSale by Sample

In the case of a contract for sale by sample there is an In the case of a contract for sale by sample there is an implied condition:-implied condition:-

That the bulk shall correspond with the sample in qualityThat the bulk shall correspond with the sample in quality That the buyer shall have reasonable opportunity of comparing That the buyer shall have reasonable opportunity of comparing

the bulk with the samplethe bulk with the sample That the goods shall be free from any defect rendering them That the goods shall be free from any defect rendering them

unmerchantable which would not be apparent on reasonable unmerchantable which would not be apparent on reasonable examination of the sampleexamination of the sample


The Transfer of the PropertyThe Transfer of the Property

- When the property passes to the buyer?When the property passes to the buyer?

- How to determine whether the transfer of How to determine whether the transfer of the property?the property?

- Why is it so important?Why is it so important?

Ownership and the RiskOwnership and the Risk

In principle the person who owns the goods In principle the person who owns the goods shall bear the risk of the goods.shall bear the risk of the goods.

Therefore if the goods damaged and the Therefore if the goods damaged and the ownership was vested in the buyer, that ownership was vested in the buyer, that particular buyer shall bear the loss.particular buyer shall bear the loss.

Risk in GoodsRisk in Goods

Risk prima facie passes with propertyRisk prima facie passes with property

Unless otherwise agreed, the goods remain at the Unless otherwise agreed, the goods remain at the seller’s risk until the property therein is seller’s risk until the property therein is transferred to the buyer, but when the property transferred to the buyer, but when the property therein is transferred to the buyer, the goods are therein is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been at the buyer’s risk whether delivery has been made or notmade or not


Who shall bear the risk?Who shall bear the risk?

Datin Mariam phoned Ah Chong ordering six bottles of ‘sos Datin Mariam phoned Ah Chong ordering six bottles of ‘sos sedap’. Due to the constraint of time Ah Chong has sedap’. Due to the constraint of time Ah Chong has asked his son, Ah Seng to deliver the sauces to Datin asked his son, Ah Seng to deliver the sauces to Datin Mariam’s house. On his way however Ah Seng involved Mariam’s house. On his way however Ah Seng involved in an accident. All the bottles were broken and spoiled. in an accident. All the bottles were broken and spoiled.

Who shall bear the loss? The seller or the buyer? Why?Who shall bear the loss? The seller or the buyer? Why?

Who shall bear the risk?Who shall bear the risk?

Datin Mariam visited Ah Chong’s shop and chose six Datin Mariam visited Ah Chong’s shop and chose six bottles of ‘sos sedap’. Due to the constraint of time Datin bottles of ‘sos sedap’. Due to the constraint of time Datin Marian asked Ah Chong to deliver the six bottles of ‘sos Marian asked Ah Chong to deliver the six bottles of ‘sos sedap’. Ah Seng took the responsibility but on his way sedap’. Ah Seng took the responsibility but on his way however he got involve in an accident. All the bottles however he got involve in an accident. All the bottles were broken and spoiled. were broken and spoiled.

At this time who shall bear the loss? The seller or the At this time who shall bear the loss? The seller or the buyer? Why?buyer? Why?

Unascertained GoodsUnascertained Goods

Where there is a contract for the sale of Where there is a contract for the sale of unascertained goods, no property in the goods unascertained goods, no property in the goods is transferred to the buyer unless and until the is transferred to the buyer unless and until the goods are ascertained.goods are ascertained.


Specific GoodsSpecific Goods

The property in the goods is transferred to the The property in the goods is transferred to the buyer at such time as the parties to the contract buyer at such time as the parties to the contract intend it to be transferred.intend it to be transferred.


Regard has been made to the terms of contract as Regard has been made to the terms of contract as to ascertain the intention of the parties.to ascertain the intention of the parties.

Sections 20-24 also provide guidelines as to Sections 20-24 also provide guidelines as to ascertain the intention of the parties. ascertain the intention of the parties.

Goods in a Deliverable StateGoods in a Deliverable State

Where there is an unconditional contract for the sale of Where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the and it is immaterial whether the time of payment of the price, or the time of delivery of the goods, or both, is price, or the time of delivery of the goods, or both, is postponed.postponed.


Goods to Be Made DeliverableGoods to Be Made Deliverable

Where there is a contract for the sale of specific Where there is a contract for the sale of specific goods and the seller is bound to do something to goods and the seller is bound to do something to the goods for the purpose of putting them into a the goods for the purpose of putting them into a deliverable state, the property does not pass deliverable state, the property does not pass until such thing is done and the buyer has notice until such thing is done and the buyer has notice thereof.thereof.


Something Has to Be Done in order Something Has to Be Done in order to Ascertain the Priceto Ascertain the Price

Where there is a contract for the sale of specific Where there is a contract for the sale of specific goods in a deliverable state, but the seller is goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other bound to weigh, measure, test, or do some other act or thing with reference to the goods for the act or thing with reference to the goods for the purpose of ascertaining the price, the property purpose of ascertaining the price, the property does not pass until such act or thing is done and does not pass until such act or thing is done and the buyer has notice thereof.the buyer has notice thereof.


Future Goods Sold by DescriptionFuture Goods Sold by Description

Where the is a contract for the sale of unascertained or Where the is a contract for the sale of unascertained or future goods by description and goods of that description future goods by description and goods of that description and in a deliverable state are unconditionally and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the seller, the property in the goods thereupon passes to the buyer.buyer.

Such assent may be express or implied, and may be given Such assent may be express or implied, and may be given either before or after the appropriation is madeeither before or after the appropriation is made


Sale or ReturnSale or Return

When goods are delivered to the buyer on approval or ‘on When goods are delivered to the buyer on approval or ‘on sale or return’, or other similar terms, the property sale or return’, or other similar terms, the property there in passes to the buyer:-there in passes to the buyer:-

When he signifies his approval or acceptance to the seller or When he signifies his approval or acceptance to the seller or does any other act adopting the transactiondoes any other act adopting the transaction

If he does not signify his approval or acceptance to the seller If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then if but retains the goods without giving notice of rejection, then if a time has been fixed for the return of goods, on the expiration a time has been fixed for the return of goods, on the expiration of such time, and if no time has been fixed, on the expiration of such time, and if no time has been fixed, on the expiration of a reasonable time.of a reasonable time.


Risk in Goods in the Case of Sale Risk in Goods in the Case of Sale or Returnor Return

Risk lies on the seller until the property has passed Risk lies on the seller until the property has passed to the buyer unless the damage or loss is to the buyer unless the damage or loss is caused by the buyer’s default.caused by the buyer’s default.

LAW OF PARTNERSHIPLAW OF PARTNERSHIP

PARTNERSHIP ACT 1961 (REVISED 1974)PARTNERSHIP ACT 1961 (REVISED 1974)

THE ACT APPLIES THROUGHOUT MALAYSIA (WEST THE ACT APPLIES THROUGHOUT MALAYSIA (WEST MALAYSIA AND SABAH & SARAWAK)MALAYSIA AND SABAH & SARAWAK)

THE PRINCIPLES OF ENGLISH LAW AND THE RULES THE PRINCIPLES OF ENGLISH LAW AND THE RULES OF EQUITY WILL ALSO APPLY SO FAR AS IT IS NOT OF EQUITY WILL ALSO APPLY SO FAR AS IT IS NOT CONTRADICT TO THE EXPRESS PROVISIONS IN CONTRADICT TO THE EXPRESS PROVISIONS IN THE ACTTHE ACT

NATURE OF PARTNERSHIPNATURE OF PARTNERSHIP

PARTNERSHIP IS THE RELATION WHICH PARTNERSHIP IS THE RELATION WHICH SUBSISTS BETWEEN PERSONS CARRY ON SUBSISTS BETWEEN PERSONS CARRY ON A BUSINESS IN COMMON WITH A VIEW OF A BUSINESS IN COMMON WITH A VIEW OF PROFIT.PROFIT.

SECTION 3(1) PARTNERSHIP ACTSECTION 3(1) PARTNERSHIP ACT

SIMILAR BUSINESS ASSOCIATIONSSIMILAR BUSINESS ASSOCIATIONS

- CO-OPERATIVE SOCIETIESCO-OPERATIVE SOCIETIES- COMPANIESCOMPANIES- SOCIETIESSOCIETIES- CLUBSCLUBS

DETERMINATION OF DETERMINATION OF PARTNERSHIPSPARTNERSHIPS

- THROUGH THE READING OF SECTION 3(1) THROUGH THE READING OF SECTION 3(1) PARTNERSHIP ACT 1961PARTNERSHIP ACT 1961

- THROUGH THE READING OF SECTION 4 THROUGH THE READING OF SECTION 4 PARTNERSHIP ACT 1961PARTNERSHIP ACT 1961

- THROUGH OTHER EVIDENCES AND THROUGH OTHER EVIDENCES AND CIRCUMSTANCESCIRCUMSTANCES

REGISTRATION OF PARTNERSHIPREGISTRATION OF PARTNERSHIP

EVERY PARTNERSHIP SHOULD BE EVERY PARTNERSHIP SHOULD BE REGISTERED:-REGISTERED:-

- THE REGISTRATION OF BUSINESSES Act 1956- THE REGISTRATION OF BUSINESSES Act 1956- CAP. 33 (BUSINESS, PROFESSIONS AND TRADE - CAP. 33 (BUSINESS, PROFESSIONS AND TRADE LICENCING)LICENCING)- CAP. 64 (BUSINESS NAMES)- CAP. 64 (BUSINESS NAMES)- TRADES LICENCING ORDINANCE, NO. 16 1948- TRADES LICENCING ORDINANCE, NO. 16 1948

CONTRACTS OF PARTNERSHIPCONTRACTS OF PARTNERSHIP(Articles of Partnership)(Articles of Partnership)

- GENERAL PRINCIPLES OF CONTRACT WILL APPLY GENERAL PRINCIPLES OF CONTRACT WILL APPLY IN PARTNERSHIPIN PARTNERSHIP

- THE CONTRACT MAY BE ORAL OR WRITTEN THE CONTRACT MAY BE ORAL OR WRITTEN

- THE CONTRACT MAY CONTAIN DURATION OF THE CONTRACT MAY CONTAIN DURATION OF PARTNERSHIPPARTNERSHIP

- THE CONTRACT MAY CONTAIN RIGHTS AND THE CONTRACT MAY CONTAIN RIGHTS AND DUTIES OF PARTNERSDUTIES OF PARTNERS

RIGHTS AND DUTIES OF PARTNERSRIGHTS AND DUTIES OF PARTNERS

IF THERE WAS NO AGREEMENT WITH REGARDS TO IF THERE WAS NO AGREEMENT WITH REGARDS TO THE RIGHTS AND DUTIES OF PARTNERS THE THE RIGHTS AND DUTIES OF PARTNERS THE RULES IN SECTIONS 26, 27, 30, 31, 32, AND 33 RULES IN SECTIONS 26, 27, 30, 31, 32, AND 33 SHALL APPLY IN THE PARTNERSHIP.SHALL APPLY IN THE PARTNERSHIP.

WRITTEN AGREEMENTWRITTEN AGREEMENT

TWO ADVANTAGES OF WRITTEN TWO ADVANTAGES OF WRITTEN AGREEMENT:-AGREEMENT:-

1.1. PARTNERS CAN AGREE NOT TO FOLLOW RULES PARTNERS CAN AGREE NOT TO FOLLOW RULES PROVIDED UNDER THE ACTPROVIDED UNDER THE ACT

2.2. HEPLS THE COURT WHILE INTERPRETING THE HEPLS THE COURT WHILE INTERPRETING THE INTENTION OF THE PARTNERSINTENTION OF THE PARTNERS

UNSUITABLE RULESUNSUITABLE RULES

- THE EXISTENCE OF A PARTNERSHIP AT WILL – WHERE ANY THE EXISTENCE OF A PARTNERSHIP AT WILL – WHERE ANY OF THE PARTNERS CAN GIVE NOTICE TO DISSOLVE A OF THE PARTNERS CAN GIVE NOTICE TO DISSOLVE A PARTNERSHIOP, EVEN IF ITS BUSINESS IS THRIVINGPARTNERSHIOP, EVEN IF ITS BUSINESS IS THRIVING

- THE DISSOLUTION OF A PARTNERSHIP UPON DEATH OR THE THE DISSOLUTION OF A PARTNERSHIP UPON DEATH OR THE BANKRUPTCY OF APARTNER UNLESS IT HAD BEEN AGREED BANKRUPTCY OF APARTNER UNLESS IT HAD BEEN AGREED BETWEEN THE PARTNERS, THE DEATH OR BANKCRUPTCY BETWEEN THE PARTNERS, THE DEATH OR BANKCRUPTCY OF ANY OF THE PARTNERS WILL BRING THE PARTNERSHIP OF ANY OF THE PARTNERS WILL BRING THE PARTNERSHIP TO AN END, EVEN WHERE THE PARTNERSHIP IS ACTIVELY TO AN END, EVEN WHERE THE PARTNERSHIP IS ACTIVELY CARRYING ON A SUCCESSFUL BUSINESSCARRYING ON A SUCCESSFUL BUSINESS

- RIGHTS AND LIABILITIES OVER PARTNERSHIP PROPERTY – RIGHTS AND LIABILITIES OVER PARTNERSHIP PROPERTY – MAY CREATE PROBLEMS WHERE PARTNERS DO NOT MAY CREATE PROBLEMS WHERE PARTNERS DO NOT CONTRIBUTE EQUALLY TO THE CAPITAL, AND MAY HAVE NOT CONTRIBUTE EQUALLY TO THE CAPITAL, AND MAY HAVE NOT MEANT FOR PROFITS TO BE SHARED EQUALLYMEANT FOR PROFITS TO BE SHARED EQUALLY

RELATION BETWEEN PARTNERS RELATION BETWEEN PARTNERS AND THIRD PARTIESAND THIRD PARTIES

THE BASIS OF THE RELATIONSHIP SHALL BE THE BASIS OF THE RELATIONSHIP SHALL BE BASED UPON THE POWER THAT THE BASED UPON THE POWER THAT THE PARTNERS HAVEPARTNERS HAVE

PRINCIPLE OF AGENCYPRINCIPLE OF AGENCY

EVERY PARTNER IS AN AGENT FOR THE FIRM AND HIS OTHER EVERY PARTNER IS AN AGENT FOR THE FIRM AND HIS OTHER PARTNERS FOR THE PURPOSE OF THE BUSINESS OF THE PARTNERS FOR THE PURPOSE OF THE BUSINESS OF THE PARTNERSHIP; AND THE ACT OF EVERY PARTNER WHO PARTNERSHIP; AND THE ACT OF EVERY PARTNER WHO DOES ANY ACT FOR CARRYING ON IN THE USUAL WAY DOES ANY ACT FOR CARRYING ON IN THE USUAL WAY BUSINESS OF THE KIND CARRIED ON BY THE FIRM OF WHICH BUSINESS OF THE KIND CARRIED ON BY THE FIRM OF WHICH HE IS A MEMBER BIND THE FIRM AND HIS PARTNERS, HE IS A MEMBER BIND THE FIRM AND HIS PARTNERS, UNLESS THE PARTNER SO ACTING HAS IN FACT NO UNLESS THE PARTNER SO ACTING HAS IN FACT NO AUTHORITY TO ACT FOR THE FIRM IN THE PARTICULAR AUTHORITY TO ACT FOR THE FIRM IN THE PARTICULAR MATTER, AND THE PERSON WITH WHOM HE IS DEALING MATTER, AND THE PERSON WITH WHOM HE IS DEALING EITHER KNOWS THAT HE HAS NO AUTHORITY OR DOES NOT EITHER KNOWS THAT HE HAS NO AUTHORITY OR DOES NOT KNOW OR BELIEVE HIM TO BE A PARTNERKNOW OR BELIEVE HIM TO BE A PARTNER

SECTION 7 PARTNERSHIP ACT 1961SECTION 7 PARTNERSHIP ACT 1961

THEREFORE A PARTNER COULD BIND THE FIRM IF THEREFORE A PARTNER COULD BIND THE FIRM IF THE FOLLOWING CONDITIONS ARE FULFILLED:-THE FOLLOWING CONDITIONS ARE FULFILLED:-

- THE ACT DONE MUST BE OF THE TYPE OF BUSINESS THAT IS THE ACT DONE MUST BE OF THE TYPE OF BUSINESS THAT IS CARRIED OUT BY THE FIRMCARRIED OUT BY THE FIRM

- IT IS CARRIED ON THE USUAL WAYIT IS CARRIED ON THE USUAL WAY

- THE THIRD MUST KNOW OR BELIEVE THE PERSON WITH THE THIRD MUST KNOW OR BELIEVE THE PERSON WITH WHOM HE ENTERS INTO THE TRANSACTION IS A PARTNERWHOM HE ENTERS INTO THE TRANSACTION IS A PARTNER

- THE THIRD PARTY MUST NOT KNOW THE PERSON WITH THE THIRD PARTY MUST NOT KNOW THE PERSON WITH WHOM HE HAS ENTERED INTO THE TRANSACTION HAS NO WHOM HE HAS ENTERED INTO THE TRANSACTION HAS NO AUTHORITY NOR THE PERMISSION OF THE OTHER AUTHORITY NOR THE PERMISSION OF THE OTHER PARTNERS TO ACT ON BEHALF OF THE FIRMPARTNERS TO ACT ON BEHALF OF THE FIRM

CONTRACTUAL LIABILITYCONTRACTUAL LIABILITY

EVERY PARTNER IN THE FIRM IS LIABLE JOINTLY EVERY PARTNER IN THE FIRM IS LIABLE JOINTLY WITH THE OTHER PARTNERS FOR ALL DEBTS AND WITH THE OTHER PARTNERS FOR ALL DEBTS AND OBLIGATIONS OF THE FIRM INCURRED WHILE HE OBLIGATIONS OF THE FIRM INCURRED WHILE HE IS A PARTNER; AND AFTER HIS DEATH HIS ESTATE IS A PARTNER; AND AFTER HIS DEATH HIS ESTATE IS ALSO SEVERALLY LIABLE IN A DUE COURSE OF IS ALSO SEVERALLY LIABLE IN A DUE COURSE OF ADMINISTRATION FOR SUCH DEBTS AND ADMINISTRATION FOR SUCH DEBTS AND OBLIGATIONS, SO FAR AS THEY REMAIN OBLIGATIONS, SO FAR AS THEY REMAIN UNSATISFIED BUT SUBJECT TO THE PRIOR UNSATISFIED BUT SUBJECT TO THE PRIOR PAYMENT OF HIS SEPARATE DEBTSPAYMENT OF HIS SEPARATE DEBTS

SECTION 11 PARTNERSHIP ACTSECTION 11 PARTNERSHIP ACT

TORTIOUS LIABILITYTORTIOUS LIABILITY

WHERE BY ANY WRONGFUL ACT OR OMISSION OF WHERE BY ANY WRONGFUL ACT OR OMISSION OF ANY APRTNER ACTING IN THE ORDINARY COURSE ANY APRTNER ACTING IN THE ORDINARY COURSE OF THE BUSINESS OF THE FIRM OR WITH THE OF THE BUSINESS OF THE FIRM OR WITH THE AUTHORITY OF HIS CO-PARTNERS, LOSS OR AUTHORITY OF HIS CO-PARTNERS, LOSS OR INJURY IS CAUSED TO ANY PERSON NOT BEING A INJURY IS CAUSED TO ANY PERSON NOT BEING A PARTNER IN THE FIRM, OR ANY PENALTY IS PARTNER IN THE FIRM, OR ANY PENALTY IS INCURRED, THE FIRM IS LIABLE THEREFORE TO INCURRED, THE FIRM IS LIABLE THEREFORE TO THE SAME EXTENT AS THE PARTNER SO ACTING THE SAME EXTENT AS THE PARTNER SO ACTING OR OMITTING TO ACTOR OMITTING TO ACT


CRIMINAL LIABILITYCRIMINAL LIABILITY

CRIMINAL LIABILITY IS A PERSONAL LIABILITY OF CRIMINAL LIABILITY IS A PERSONAL LIABILITY OF THE PARTNER WHO COMMITS THE CRIMETHE PARTNER WHO COMMITS THE CRIME

IN GARRETT V HOOPER [1973] Crim.L.R. 61, LORD IN GARRETT V HOOPER [1973] Crim.L.R. 61, LORD WIDGERY STATED;WIDGERY STATED;

‘‘THE GENERAL PRINCIPLE IN CRIMINAL LAW IS THE GENERAL PRINCIPLE IN CRIMINAL LAW IS THAT A PRINCIPAL CANNOT BE MADE LIABLE FOR THAT A PRINCIPAL CANNOT BE MADE LIABLE FOR AN OFFENCE THAT REQUIRES MENS REA SIMPLY AN OFFENCE THAT REQUIRES MENS REA SIMPLY BECAUSE HIS SERVANT OR AGENT HAS THE BECAUSE HIS SERVANT OR AGENT HAS THE NECESSARY MENS REA’NECESSARY MENS REA’

CHUN SHIN KIAN V DPP [1980] 2 MLJ 246CHUN SHIN KIAN V DPP [1980] 2 MLJ 246

MISAPPLICATION OF MONEY OR MISAPPLICATION OF MONEY OR PROPERTY OF A THIRD PARTYPROPERTY OF A THIRD PARTY

IN THE FOLLOWING CASES, NAMELY;IN THE FOLLOWING CASES, NAMELY;

A) WHERE ONE PARTNER, ACTING WITHIN THE SCOPE OF A) WHERE ONE PARTNER, ACTING WITHIN THE SCOPE OF HIS APPARENT AUTHORITY, RECEIVES THE MONEY OR HIS APPARENT AUTHORITY, RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON AND MISAPPLIES IT; ANDPROPERTY OF A THIRD PERSON AND MISAPPLIES IT; ANDB) WHERE A FIRM IN THE COURSE OF ITS BUSINESS B) WHERE A FIRM IN THE COURSE OF ITS BUSINESS RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON, RECEIVES THE MONEY OR PROPERTY OF A THIRD PERSON, AND THE MONEY OR PROPERTY SO RECEIVED IS AND THE MONEY OR PROPERTY SO RECEIVED IS MISAPPLIED BY ONE OR MORE OF THE PARTNERS WHILE IT MISAPPLIED BY ONE OR MORE OF THE PARTNERS WHILE IT IS IN THE CUSTODY OF THE FIRMIS IN THE CUSTODY OF THE FIRM

THE FIRM IS LIABLE TO MAKE GOOD THE LOSSTHE FIRM IS LIABLE TO MAKE GOOD THE LOSS


LIABILITY OF INCOMING AND RETIRING LIABILITY OF INCOMING AND RETIRING PARTNERSPARTNERS

1)1) A PERSON WHO IS ADMITTED AS A PARTNER INTO AN EXISTING FIRM A PERSON WHO IS ADMITTED AS A PARTNER INTO AN EXISTING FIRM DOES NOT THEREBY BECOME LIABLE TO THE CREDITORS OF THE FIRM DOES NOT THEREBY BECOME LIABLE TO THE CREDITORS OF THE FIRM FOR ANYTHING DONE BEFORE HE BECAME A PARTNERFOR ANYTHING DONE BEFORE HE BECAME A PARTNER

2)2) A PARTNER WHO RETIRES FROM A FIRM DOES NOT THEREBY CEASE TO A PARTNER WHO RETIRES FROM A FIRM DOES NOT THEREBY CEASE TO BE LIABLE FOR PARTNERSHIP DEBTS OR OBLIGATIONS INCURRED BE LIABLE FOR PARTNERSHIP DEBTS OR OBLIGATIONS INCURRED BEFORE HIS RETIREMENTBEFORE HIS RETIREMENT

3)3) A RETIRING PARTNER MAY BE DISCHARGED FROM ANY EXISTING A RETIRING PARTNER MAY BE DISCHARGED FROM ANY EXISTING LIABILITIES BY AN AGREEMENT TO THAT EFFECT BETWEEN HIMSELF AND LIABILITIES BY AN AGREEMENT TO THAT EFFECT BETWEEN HIMSELF AND THE MEMBERS OF THE FIRM AS NEWLY CONSTITUTED AND THE THE MEMBERS OF THE FIRM AS NEWLY CONSTITUTED AND THE CREDITORS, AND THIS AGREEMENT MAY BE EITHER EXPRESS OR CREDITORS, AND THIS AGREEMENT MAY BE EITHER EXPRESS OR INFERRED AS A FACT FROM THE COURSE OF DEALING BETWEEN THE INFERRED AS A FACT FROM THE COURSE OF DEALING BETWEEN THE CREDITORS AND THE FIRM AS NEWLY CONSTITUTEDCREDITORS AND THE FIRM AS NEWLY CONSTITUTED


RELATION BETWEEN PARTNERSRELATION BETWEEN PARTNERS

THE RELATIONSHIP BETWEEN PARTNERS SHALL BE THE RELATIONSHIP BETWEEN PARTNERS SHALL BE BASED UPON EXPRESS AGREEMENTBASED UPON EXPRESS AGREEMENT

IF THERE IS NO EXPRESS AGREEMENT THE IF THERE IS NO EXPRESS AGREEMENT THE RELATIONSHIP SHALL BE BASED UPON RULES RELATIONSHIP SHALL BE BASED UPON RULES THAT ARE PROVIDED UNDER SECTION 26 OF THE THAT ARE PROVIDED UNDER SECTION 26 OF THE PARTNERSHIP ACTPARTNERSHIP ACT

PARTNERSHIP PROPERTYPARTNERSHIP PROPERTY

THERE ARE TWO WAYS OF DETERMINING A THERE ARE TWO WAYS OF DETERMINING A PARTNERSHIP PROPERTY:-PARTNERSHIP PROPERTY:-

1) EXPRESS AGREEMENT1) EXPRESS AGREEMENT

2) INTENTIONS OF THE PARTNERS2) INTENTIONS OF THE PARTNERS

PONNUKON V JEBARATNAM [1980] 1 MLJ 283PONNUKON V JEBARATNAM [1980] 1 MLJ 283

OTHER METHODSOTHER METHODS

1)1) THE PROPERTY WAS ORIGINALLY BROUGHT THE PROPERTY WAS ORIGINALLY BROUGHT INTO THE PARTNERSHIP STOCKINTO THE PARTNERSHIP STOCK

2)2) THE PROPERTY WAS OBTAINED FOR THE FIRMTHE PROPERTY WAS OBTAINED FOR THE FIRM

3)3) THE PROPERTY WAS OBTAINED FOR THE THE PROPERTY WAS OBTAINED FOR THE PURPOSE OF PARTNERSHIP BUSINESSESPURPOSE OF PARTNERSHIP BUSINESSES

DISSOLUTION OF PARTNERSHIPDISSOLUTION OF PARTNERSHIP

1)1) DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTIONDISSOLUTION

2)2) DISSOLUTION BY NOTICEDISSOLUTION BY NOTICE

3)3) DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON HIS SHAREHIS SHARE

4)4) DISSOLUTION BY SUPERVENING ILLEGALITYDISSOLUTION BY SUPERVENING ILLEGALITY

5)5) DISSOLUTION BY ORDER OF THE COURTDISSOLUTION BY ORDER OF THE COURT

DISSOLUTION OF PARTNERSHIPDISSOLUTION OF PARTNERSHIP

1)1) DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTION BY EXPIRATION OR AUTOMATIC DISSOLUTIONDISSOLUTION

2)2) DISSOLUTION BY NOTICEDISSOLUTION BY NOTICE

3)3) DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON DISSOLUTION BY DEATH, BANKRUPTCY OR CHARGE ON HIS SHAREHIS SHARE

4)4) DISSOLUTION BY SUPERVENING ILLEGALITYDISSOLUTION BY SUPERVENING ILLEGALITY

5)5) DISSOLUTION BY ORDER OF THE COURTDISSOLUTION BY ORDER OF THE COURT

Hire PurchaseHire Purchase

Hire purchase agreement includes a letting Hire purchase agreement includes a letting of goods with an option to purchase and of goods with an option to purchase and an agreement for the purchase of goods an agreement for the purchase of goods by instalments (whether the agreement by instalments (whether the agreement describes the instalments as rent or hire or describes the instalments as rent or hire or otherwise), but does not include any otherwise), but does not include any agreement:agreement:

a)a) Whereby the property in the goods comprised Whereby the property in the goods comprised therein passes at the time of the agreement or therein passes at the time of the agreement or upon or at any time before delivery of the upon or at any time before delivery of the goods; orgoods; or

b)b) Under which the person by whom the goods Under which the person by whom the goods are being hired or purchased is a person who are being hired or purchased is a person who is engaged in the trade or business of selling is engaged in the trade or business of selling goods of the same nature or description as the goods of the same nature or description as the goods comprised in the agreementgoods comprised in the agreement

Nature of Hire PurchaseNature of Hire Purchase The business is limited to transactions that The business is limited to transactions that

involve the owner and the hirerinvolve the owner and the hirer

The ownership will not transfer at the time the The ownership will not transfer at the time the contract being madecontract being made

[[Cf. Cf. Credit Sale Agreement]Credit Sale Agreement]

Under hire purchase the hirer will have an option Under hire purchase the hirer will have an option to buy the goods upon the completion of the to buy the goods upon the completion of the necessary paymentsnecessary payments

Hire Purchase Act 1967Hire Purchase Act 1967

[Scope of Application][Scope of Application]

Throughout MalaysiaThroughout Malaysia

Goods as listed in the First ScheduleGoods as listed in the First Schedule Kesang Leasing Sdn Bhd v Mohd Yusof bin Kesang Leasing Sdn Bhd v Mohd Yusof bin

Ismail & Anor [1990]Ismail & Anor [1990]

First ScheduleFirst Schedule

1.1. All consumer goods; andAll consumer goods; and2.2. Motor vehicles, namelyMotor vehicles, namely

• Invalid carriagesInvalid carriages• Motor cyclesMotor cycles• Motor cars including taxi cabs and hire carsMotor cars including taxi cabs and hire cars• Goods vehicles (where the maximum permissible Goods vehicles (where the maximum permissible

laden weight does not exceed 2540 kilograms)laden weight does not exceed 2540 kilograms)• Buses, including stage busesBuses, including stage buses

Prior to the 1992 AmendmentPrior to the 1992 Amendment Radio sets, television sets, gramophone Radio sets, television sets, gramophone

sets, tape recorders and any combination sets, tape recorders and any combination thereofthereof

Refrigerators and deep-freeze food Refrigerators and deep-freeze food preservers and any combination thereofpreservers and any combination thereof

Sewing machines other than those used Sewing machines other than those used for industrial purposesfor industrial purposes

Washing machinesWashing machines Vacuum cleanersVacuum cleaners

Cont. Cont. Air-conditioning units other than those Air-conditioning units other than those

used for industrial purposesused for industrial purposes Electric or gas cookers and ovensElectric or gas cookers and ovens Video tapes/cassette recordersVideo tapes/cassette recorders TypewritersTypewriters Organ and pianosOrgan and pianos Photostat machines/copiersPhotostat machines/copiers Hi/fi systemsHi/fi systems

The FormalitiesThe Formalities

Before Agreement [Pre-Contract]Before Agreement [Pre-Contract] Section 4(1) (a) & (b)Section 4(1) (a) & (b)

During Agreement [Contract]During Agreement [Contract] Section 4A, 4B, 4C & 4DSection 4A, 4B, 4C & 4D

After Agreement [After Contract]After Agreement [After Contract] Section 5(1)Section 5(1)

Before AgreementBefore Agreement OwnerOwner

Provide a written document, completed and Provide a written document, completed and signed – Part I of Second Schedulesigned – Part I of Second Schedule

DealerDealer

Provide a written document, completed and Provide a written document, completed and signed – Part I of Second Schedulesigned – Part I of Second Schedule

Provide a written document (i.e. consent), Provide a written document (i.e. consent), completed and signed by both – Part II of completed and signed by both – Part II of Second ScheduleSecond Schedule

Part I of the Second SchedulePart I of the Second ScheduleA summary of the hirer financial obligations; and must set A summary of the hirer financial obligations; and must set

out the following;out the following; Short description of the goodsShort description of the goods New/second handNew/second hand Address the goods will be keptAddress the goods will be kept Cash priceCash price DepositDeposit Freight charges, if anyFreight charges, if any Insurance and registration (motor vehicle)Insurance and registration (motor vehicle) Terms charges (rate per annum, total amount of the terms Terms charges (rate per annum, total amount of the terms

charges)charges) Different between cash price and total amount payableDifferent between cash price and total amount payable The instalment paymentsThe instalment payments

During AgreementDuring Agreement Section 4A – In writing (@ void)Section 4A – In writing (@ void)

Section 4B (2) – Sign the completed form (@ Section 4B (2) – Sign the completed form (@ void)void) Ming Lian Corporation Sdn Bhd v Haji NordinMing Lian Corporation Sdn Bhd v Haji Nordin

Section 4C – Content of the contractSection 4C – Content of the contract

Section 4D – Separate AgreementSection 4D – Separate Agreement

After the AgreementAfter the Agreement

Section 5(1)Section 5(1)

A copy of the agreement should be sent to A copy of the agreement should be sent to the hirer within fourteen (14) days – failure the hirer within fourteen (14) days – failure will result to unenforceablewill result to unenforceable

Repossession Repossession Section 16(1) – ‘two successive defaults of Section 16(1) – ‘two successive defaults of

payments’ or a ‘default in respect of the last payments’ or a ‘default in respect of the last payment’payment’

Serves a notice as set out in the Fourth Serves a notice as set out in the Fourth Schedule – the 21 days has expiredSchedule – the 21 days has expired Public Prosecutor v Mohamed NorPublic Prosecutor v Mohamed Nor

• Without noticeWithout notice Pang Brothers Motors Sdn Bhd v Lee Aik SengPang Brothers Motors Sdn Bhd v Lee Aik Seng

• Notice less than 21 daysNotice less than 21 days Siew Nguong Hin v Mayban Finance BhdSiew Nguong Hin v Mayban Finance Bhd

• Repossession before the 21 days lapsesRepossession before the 21 days lapses

After RepossessionAfter Repossession

Section 16(3) – within 21 days, the owner Section 16(3) – within 21 days, the owner will need to serve a notice [as set out in will need to serve a notice [as set out in the Fifth Schedule] to the hirerthe Fifth Schedule] to the hirer

Section 16(4) – serves a document Section 16(4) – serves a document acknowledging the receipt of the goodsacknowledging the receipt of the goods

Documents

Malaysian