acca f4 malaysia variant contract act

8/12/2019 ACCA F4 MALAYSIA Variant Contract Act

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Law Principles : Based on English Law1.

The Contracts Act govern the Law of contracta.Principal Statute : Contracts Act 19502.

However, not all aspects covered by the Act3.

Common law : Cases decided in the court.a.Common law can only be replaced by statutory lawb.

Common law applies when there's a lacuna in the law.4.

English Law may be used to fill in the gap of the Act.5.

Cases:

Bagher Singh v Charan Sing & Anor - English law may only come intooperation to rectify a lacuna in the law.

i.

Gurcharan Singh v Govt of Malaysia - The court are free to adopt thecommon law

ii.

What's a contract?

S2 (g) an agreement IS enforceable by lawS2 (h) an agreement not enforceable by law IS voidS2 (j) a contract which ceases to be enforceable by law becomes void when itceases to be enforceable

An AGREEMENT between 2 or more parties, which is legally binding in the eyes of law

GoodHardJob

What made up a contract? (8) ***

Agreement (Offer & Acceptance)1.Consideration2.Legality3.Capacity4.Intention5.Certainty6.Free consent7.Form8.

Outline of a contract : Law of contract divided to 3 part

Is there a contract? These mustA.

exist. (Formation of contracts)

Agreementi.Considerationii.Intentioniii.Capacityiv.Formv.

Does the law recognize and is it

enforceable? Are there anyvitiating factors which may makethe contract void / voidable.

B.

Legalityi.Certaintyii.Free consentiii.

When do the

obligations end? Ifthere's a breach , arethere any remedies?

C.

Formation of Contracts

*Vitiating : nullifying, to make ineffective

Agreement : Offer @ Proposal @ Promise1.

Offer - An undertaking, certain and definite. It's made with the intention that itshall be legally binding on the person (offeror,proposer, promisor) as soon as it isaccepted by the person whom it is made to.

a.

S2(a) When one person signifies to another his willingness to do/to abstain fromdoing anything, with a view to obtain the assent(approval) of that other to the actor abstinence, he is said to make a proposal .

b.

S2(e) Every promise and set of promises , forming the consideration of each otheris an agreement.

c.

Offer/Proposal/Promise must be communicated to theofferee/proposee/promisee.d.

S3 Communication of the proposal is deemed to be made by any act or omission ofthe proposer, by which he intends to communicate the proposal (intention), orwhich has the effect of communicating it. *(also can be used for acceptance &revocation of proposals pov)

e.

Therefore, an offer must be communicated.f.S4(1) Communication of a proposal is complete when it comes to the knowledge ofthe person to whom it is made to. This only applies to instantaneouscommunication

g.

Therefore, offeree must have knowledge of it.h.

ITT - it's a preliminary stage of negotiations. It's an effort to invite othersto make an offer. It is not capable of being accepted. The offer is madeby the other party, not the one making the invitation.

i.

Generally, advertisements, price list, price tags, t enders and circulars areITT

ii.

An offer is not an I.T.T ***i.

Revocationi.Lapse of timeii.Failure to fulfill a conditioniii.

An offer can be terminated. How? ***i.

Tan Geok Khoon & Gerard Robless vPaya Terubong Estate Sdn Bhd - An offeris definite and unequivocal statement ofwillingness to be bound.

i.

Gunthing v Lynn - A lucky horse is toovague @ not definite/certain

ii.

Cases:

Tips to answer: as in the case of etcetc

Equivocal : leaving no doubt

R v Clarke - The person must haveknowledge of the offer/reward.

i.Case:

Coelho v The Public Service Commission(Malay mail issue) - confirming thatadvertisements are ITT. The applicants aremaking an offer

i.

Harvey v Facey - Supply of info Offerii.

Case:

Byrne v LeonVan Tienhoven - Revocation cani.Case:

*** Examined beforeContracts & OfferFriday, 27 July, 20126:00 PM

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Revocationi.Lapse of timeii.Failure to fulfill a conditioniii.Death of a partyiv.Rejectionv.

An offer can be terminated as long as it has not been accepted. j.S5(1) A proposal may be revoked at anytime before the communication of itsacceptance is complete as against the proposer.

k.

S6(a) Deals with the direct revocation , that communication of revocation should bedone by the proposer or his agent acting on his behalf.

l.

S6(b) Deals with lapse of time, where there is time has been prescribed, by lapse ofreasonable time, a contract is revoked.

m.

Where there is no time prescribed, by lapse of reasonable timei.Lapse of time occurring upon the expiration of the time prescribed in theproposal

ii.

Reasonable time depends on the nature of the subject matter

There are 2 situation for lapse of time :n.

S6(c) Deals with the failure to fulfill a necessary condition, where a proposal maybe revoked where the acceptor fails to fulfill a condition precedent to itsacceptance.

o.

S6(d) Deals with death or mental disorder of the proposer. This however, mustcome to the knowledge of the acceptor before the acceptance. As in the case of :-

p.

Rejection - An offer can be rejected, then it's automatically lapsed. If any variationare made to the offer it'll amount to a counter offer. A counter offer has the effectof rejecting/destroying the original offer.

q.

Byrne v LeonVan Tienhoven - Revocation canbe done directly or indirectly by the proposer.The third party has to be a reliable source.

i.Case:

Ramsgate Victoria Hotel Co v Montefiore (share

applied, no news, suddenly said been allotted andasked to pay)

i.Case:

Aberfoyle Plantation v Khaw Bian Chengi.Case:

(purchase is conditional on the vendorobtaining a renewal of 7 leases. If unable tofulfill then the agreement is void) ; conditionwas not fulfilled.

Hyde v Wrench - No acceptance by rejecting the originaloffer. Instead the plaintiff has made a new offer (counter-offer) (farm - counter offer, then wanna accept originalprice again)

i.Case:

Case: Bradbury v Morgan

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Agreement : Acceptance2.

S2(b) When a person to whom the proposal is made to signifies his assent thereto, theproposal is said to be accepted.

a.

Acceptance must be in reliance of the offer ( the acceptor must be aware of the offer)b.S7(a) Acceptance must be complete and unqualified ( no further negotiations nor any new

terms)

c.

Conditional acceptance is no acceptance.d.S4(1) - Communication of proposal is complete when it comes to the knowledge of the personwhom it is made to. This applies only for instantaneous communication. However for non-instant @ Postal rule, the rules state that when the promisee put the letter into a post box,then the agreement is binding on the promisor.

e.

The letter has to be adequately stamped, registered, addressed,f.S4(2)(a) Communication of an acceptance is complete against the proposer when it is put inthe course of transmission to him, as it to be out of the power for the acceptor.

g.

S4(2)(b) It is complete against the acceptor when it comes to the knowledge of the proposer.h.S5(2) Acceptance may be revoked at anytime before the communication of the acceptance iscomplete against the acceptor.

i.

Revocation must be communicated j.

Against proposer : when it comes to his knowledgei.Against the acceptor : When It is out in the course of transmission to whom it wasmade, as it to be out of the power of the acceptor.

ii.

S4(3) Communication of revocation of acceptance is complete :-k.

Silence does not mean acceptance.l.Case: Felthouse v Bindley (uncle say if I don'thear from you means u accept)

Case: Neale V Merrit

Case: Entores Ltd v Miles Far East Corp (Postal Rule)***

AcceptanceWednesday, August 29, 20122:41 PM

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Consideration3.

S2(d) When, at the desire of the promisor, the promisee or any other person hasdone/abstained from doing something, or does/abstains from doing, or promises to do/ toabstain from going something; such act or abstinence is called consideration of the promise.

a.

Consideration can be seen from 2 main angles:b.

A contract must either beneficial to the proposer or detrimental to the proposeeto constitute consideration

The traditional theory - benefit and detriment theoryi.

The contract is the product of an exchange (price) / bargainThe contemporary theory - the price theoryii.

S26 states that an agreement made without consideration is void. ( General rule )c.There are certain exceptions to the GR. They are:- ***d.

S26(a) Natural love and affectioni.

Def: An agreement made on account of natural love and affection between partiesstanding in near relation to each other. Such agreement must be expressed in writingand duly registered if the law requires such registration

S26(b) Past consideration is good considerationii.

Def: A promise to compensate wholly or in part, a person who has already voluntarydone something for the promisor, or something which the promisor was legallycompellable to do.

S26(c) Statute Barred Debtiii.

Def: A promise to pay wholly or in part a statute barred debt, provided that it ismade in writing and signed by the person to be charged therewith or by his dulyauthorized agent.

Consideration can be executed or executorye.

Adequacy of a consideration is a matter for the parties to decide, not for the courtsi.S26 exp 2 - an agreement which the consent of the promisor is freely given is notvoid merely because the consideration is inadequate;

ii.

But the inadequacy of the consideration may be taken into account by the court indetermining the question whether the consent of the promisor was freely given.

iii.

Consideration need not be adequate ***f.

Consideration must be of some valuei.

Consideration is insufficient when the promisee is merely performing a contractualduty/legal duty already imposed upon him. (performing an existing obligation)ii.

Must promise to do something more/above then existing duty (perform extra)iii.

Subpoena (legal duty) - i nsufficient-Police gave more protection than what would have been under normalcircumstances (extra) - sufficient

-

Performance of an existing duty (legal duty / public duty)1.

Performance of an existing contractual duty owed to the promisor2.

Depends on case by case basis-Was there a legal obligation?-Did the promisee suffered any detriment?-

Performance of an existing duty imposed by a contract with a 3rd party3.

3 situations to consider :-iv.

Consideration must be sufficient ***g.

South East Asia Insurance Bhd v Nasir Ibrahim

Re Tan Soh Sim (1951) MLJ21

Case: Kepong Prospecting v Schmidt

Case: Phang Swee Kim v Beh I Hock

Glasbrook Brothers v Glamorgan Country Council

Case: Stilk v Myrick (consideration isinsufficient )

Case: Hartley v Ponsonby (sufficient)

Case: Shadwell v Shadwell - suffereddetriment (sufficient)Case: Ward v Byham (not a woman's

Case: Collins v Godefroy

ConsiderationWednesday, August 29, 20122:42 PM

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. 'promisee or any other person" - s2(d)A party to an agreement can enforce a promise even though he has given noconsideration, so long somebody else has done so.

Consideration need not move from the promiseeh.

only parties to a contract can bring an action against each other3rd party cannot interfere even if the party is benefiting under the contractHowever due to S2(d), consideration need not move from the promisee, thus thisdoctrine does not strictly apply in Malaysia

Doctrine of privity of contracti.

A debt can be discharged if there is "accord and satisfaction"Accord = an agreement by which the obligation is dischargedSatisfaction = the consideration which makes the agreement operativeS64 : Every promisee may dispense with or remit, wholly or in part, the performance

of the promise made to him, or may extend the time for such performance, or mayaccept instead of it any satisfaction that he thinks fit.S64 applies as long as there is an acceptance by the creditor / promisee.

Waiver of performance j.

Case: Shadwell v Shadwell - suffereddetriment (sufficient)Case: Ward v Byham (not a woman'slegal duty, sufficient)

Case: Venkata Chinnaya v Verikata'ma'ya

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Intention to create legal relations ***4.

The parties to an agreement intend for it the be legally enforceable.a.Intention can be expressed or implied.b.

It is presumed that there is an intention to create legal relationsCommercial/Business contracti.

It is presumed that there is no intention to create legal relationsDomestic Contractsii.

The law is silent on this matter, thus common rule apply:-c.

Commercial ContractsI.

There are exception to the general presumptions-Case: Rose & Frank Co v J.R.Crompton &Bros Ltd : binding in honor only, rebutted by thelanguage used

-

Case: Jones v Vernons Pools Ltd : the use of subject to contract clause indicates theparties do not intend to enter into a contractual r/s yet.

-

Domestic ContractsII.3categories: -

Agreement btwn spouses (Bal4 v Bal4); (Meritt v Meritt)Agreement btwn parent & child (Jones v Padavatton)Agreements btwn friends, relations etc (Choo Tiong Hin & Ors. v Choo Hock Swee)

Balfour v Balfour

Husband and wife was in Ceylon due to husband's occupation. Went back to Englandduring leave. Wife was ill and could not accompany husband back to Ceylon. Husbandhowever agreed to pay maintenance fee to wife. Husband defaulted and wife sues. Courtheld that there was no enforceable agreement.

Merritt v Merritt

Agreement made when husband and wife was estranged. They made an agreement andsigned, whereby husband would pay wife a monthly maintenance sum and wouldeventually transfer the house to wife if the wife kept up with the monthly mortgagepayments. Husband defaulted after mortgage was paid. The court held that there was anagreement as it was more than a domestic agreement (Signed).

Jones v Padavatton

A mother, agreed with daughter that if daughter would give up her job and pursue bar inLondon, the mother would pay maintenance. The mother paid, and then also bought alondon house where both of them would stay. However, they had a quarrel and whiledaughter was completing her bar exams the mother brought an action for possession ofthe house. The daughter argued they had a binding agreement. The court held otherwiseas there was insufficient evidence to rebut the general presumption.

Choo Tiong Hin & Ors v Choo Hock Swee

The plaintiff has started a farm with his wife. They have 2 daughters and adopted 5 sons.Everyone helped out in the farm and it grew into a successful business. Wife died, anddifferences arose. Father remarried and moved out of the house. Thereafter, he broughtan action claiming possession of the farm from his sons. Sons claimed they were entitledfor an equal share as they had helped out in the creation of the family wealth. Decision ofthe court was in favor of the father, claiming there was no intention to create legalrelation.

Capacity5.

General presumption : A person who enters into a contract must have the contractual capacityto contract.

a.

S10 All agreements are contract if they are made by the free consent of parties competent tob.

Intention + CapacityWednesday, August 29, 20122:43 PM

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contractS11 Every person is competent to contract who is of the age of majority according to the lawwhich he is subject, and who is of sound mind and is not disqualified from contracting by anylaw which he is subject to.

c.

Minors (below 18)i.Unsound mind (insane)ii.Disqualified from contracting (bankrupt)iii.

MinorsI.

Def: Age of Majority Act 1971 states that a minor is a person who has not reached the ageof majortiy (duh?) ie 18 yrs old .

General rule (GR) : All contracts entered by a minor are voidWhy? : Minor are presumed to have lack of judgement; thus to protect them from beingtaken advantage of.

Exceptions to this GR (3) :-

Marriage Contracts1)Marriage contracts entered by minors are not void.-

Contracts for Necessities2)The important thing to note is the term necessities.-

Literali)Implies the bare essentials of life

Legalii)Covers more than just bare essentials of life.

Includes good s and services reasonably necessary to the minor'sactual requirements . These will be tested against the minors'background in life.

Nature of the goods/servicesa.The minor's actual needs and background in lifeb.The actual requirements at the time of sale and deliveryc.

Test of necessities :

2 main interpretation :--

S69 : If a person, incapable of entering into a contract or anyone whom he islegally bound to support is supplied by another person with necessaries suitedhis condition in life, the person who has furnished such supplies is entitled to bereimbursed from the property of such incapable person.

-

(i) The necessaries must be already supplied to the minor(ii)The minor's liability includes necessaries supplie to anyone whom he islegally bound to support ie wife & child(iii) Supplier may only claim a reasonable price ( not contract price); hencethe word reimbursed used.

(iv) The minor is only obliged to pay if he has the property to do so

Thus, limitation to capacity (3) :d.

Scholarship agreements (The Act = Contracts (Amendment) Act 1976 )3)By virtue of the Contracts (Am..)76; S4(A) : scholarship agreement betweena minor and an appropriate authority cannot be invalidated on the ground of hisminority.

-

Appropriate auth. = The Federal govt, the s tate govt, statutory auth, educationalinstitution.

-

Sound Mind ***II.

A person suffering from mental disability (permanently/temporarily) lacks the capacity tocontract

S12(1) A person is said to be of sound mind for the purpose of making a contract, if at thetime when he makes it, he is capable of understanding it and forming a rational judgment

as to its effect s upon his interests.

S12(2) A person who is usually of unsound mind, but occasionally of sound mind, maymake a contract when he is of sound mind

S12(3) A . Usually of sound mind..occasionally of unsound mind, may NOT make a

Case: Tan Hee Juan v Teh Boon Keat

Case: Rajeswary & Anor V Balakrishnan and others

Literal interpretation :The basic essentials : Air, water , food & shelter

Legal : Basic essentials + good, services & education In short:if it's a necessities, then the contract is VALIDIf it's a luxury, contract is VOID.

Case: Nash v Inman

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contract when he is of unsound mind.

Contracts are avoidable at the option of the person who is of unsoundmind.If the facts that the person is unsound is known to the other partyThe person of the unsound mind carries the burden of proof. (he has toshow he is unsound at the point of time of contracting)Can't proof = contract is binding

The Act does not specify whether such contracts are void or voidable. Therefore, a lacunaexist. Hence, English law applies:-

Imperial Lone Co v Stone

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Forms of contract6.

A contract can be made orally, in writing or by conduct.-There are exceptions to this GR; basically created by the statutes-Therefore, if the statutes emphasize it to be in written form, the contract then has to be

in written form.

-

Ie. S26(a) & S26(c)-

Writinga.Oralb.Conductc.Combinations of aboved.

Void and Voidable Contracts7.

General presumption :- Once a contract is formed, it is deemed to be valid and recognizedby law

-

Voidi.Voidableii.Illegaliii.

However, this can be rebutted due to various reasons. They are classified as :--

Void & Voidable Contracts ( Touch N Go)I.

S2(g), S2(h), S10a.Void contractsb.

Forbidden by law-It's nature in such way if permitted , it'd defeat any law-Fraudulent-

Involves/Imply injury-Immoral-

S24 of CA 1950, consideration /object of an agreement is lawful unless:

S25 - if one /part of the consideration is partly unlawfulS26 - (check consideration)S27 - agreement restraining marriage (other than a minor)S28 - agreement which restrain trade/profession/business. Certain exceptions applyS29 - agreement restraining legal proceedingsS30 - agreements that are uncertainS31 - agreement by way of wager (betting)S21 - agreement is void where both parties are under mistake as to matter of fact

Effect of void contracts :c.

S66 - When an agreement is discovered to be void, or when a contract becomes void, anyperson who have received any advantage under the agreement, is bound to restore it/compensate to the person from whom he received it.

Voidable contract - s2(i) : An agreement is enforceable by law at the option of one ormore of the parties thereto, but not at the option of the other/others, is a voidablecontract.

d.

S15 Coercion1)S16 Undue Influence2)S17 Fraud3)S18 Misrepresentation4)S23 Unilateral Mistakes5)

Examples of voidablee.

Consent Clauses8.

S13 defines consent as : 2 / more persons are said to consent when they agree upon thesame thing in the same sense

a.

Form & Void and Voidable & ConsentWednesday, August 29, 20122:43 PM

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Consent must be given freely. It is said to be free when it is not caused by :b.

S15 Coercion1)S16 Undue Influence2)S17 Fraud3)S18 Misrepresentation4)S23 Unilateral Mistake5)

S15

Coercion

Coercion is the committing, or threatening to commit any act forbidden by the

Penal Code, with the intention of causing any person enter into an agreement.S16 UndueInfluence

An agreement is said to be induced by undue influence where the relationssubsisting between the parties are such that one of the parties is in a positionto dominate the will of the other and uses that position to obtain an unfairadvantage over the other

A person is said to be in a position to .. :

He holds a real / apparent authority over the other in a fiduciary relation( doctor/patient )

-

Make a contract with a person where mental capacity is temporarily /permanently affected ( old age, illness, mental / bodily distress )

-

S17 Fraud+S18Misinterpration

There are 3 main types of misinterpretation :

Fraudulent misint (S17)i.Negligent misint (S18(b))ii.Innocent misint (S18(a))iii.

S17 Fraud @Fraudulentmisinterpretation ***

Fraud is defined to include certain acts, which are committed with the intent todeceive another party/ to induce him to enter into a contract.

When the maker makes a statement knowing it to be false-Does not believe in the truth of his statement-The main intention is to deceive the other contracting party.-

In short, fraud is:

However, a fraud which did not cause the consent to a contract of the party onwhom the fraud was practiced, does not render a contract voidable.

A person must have relied on the fraudulent statement and then entered intoa contract to actually sought an action based on fraud.

S18Misinterpretation

Innocent Misinterpretationa.

There is no element of fraud or negligence present. The maker of the falsestatement honestly believes that his statements is true on reasonablegrounds, however it turns out to be untrue.

Negligent Misinterpretation (it is safe to assume negligence and tort aresimilar)

b.

There is no intention to deceive the other party, and the maker honestlybelieves in what he had represented; but he carelessly makes arepresentation while having no reasonable basis to believe it to be true as inthe case of Hedly Byrne v Heller Partners .

Undue influence is voidable at the option of theaggrieving party. Such agreement may be voidand set aside or, if the aggrieving party hasreceived any benefit there under, then theterms and conditions is adjusted as the courtmay see fit.

Action must be brought within a reasonableperiod of time. Otherwise, it may be deemed tobe a sign of affirmation / waiver.

Burden of proof lies with the plaintiff; provingthat the representor made a statement eitherbefore or at the time of making the contractwith the intention of inducing the representeeto enter into a contract.

S19(1) Voidable at the option of the aggrieving party.

Damagesa.Rescission (unmaking of a contract between parties)b.

Remedies for both S17 & S18:

Affirmation (express/implied)i.Lapse of timeii.Rights of third partiesiii.Inability of the plaintiff to restore the subject matter of the contract to theoriginal position

iv.

Bars to rescission

S19(1) Voidable at the option of the aggrieving party.

Kesarmal v Valiappa Chettiar

Chait Singh v Budin Bin Abdullah

Weber v Brown

Hedley Byrne v Heller Partners

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Can be divided into 3 categories :1.Common mistakea.Mutual mistakeb.Unilateral mistakec.

Common MistakeA.Where both parties to a contract make a similar mistake as to a fact which is fundamental to theagreement

-

Eg. Where both parties were unaware of the subject matter of the contract was no longer in existence,but unaware of that fact, the parties enter into a contract.

-

Mutual MistakeB.Where both parties make a mistake, but it is a different type of mistake which is fundamental to thecontract

-

Eg. A wants to sell Volkwagen TSI but B believes that the offer was related to Volkwagen GTI which alsoowned by A.

-

Unilateral MistakeC.Only one party is mistaken, while the other know the truth.-Eg. A wants to buy a painting believing painted by Van Gogh from B, when in truth, it was only paintedby an imitator. B knows the truth, that the painting is an imitation while A doesnt.

-

General Rule : Mistake does not affect the validity of the contract. Unless it is an operative mistake(condition of the contract)

2.

Mutual mistakea.Common mistakeb.

S21 - Agreement is void when both parties are under mistake as a matter of fact. Covers:-3.

Mistake as to the existence of the subject matter of the contracta.Mistake as to the identity of the subject matterb.Mistake as to a matter of fact essential to the contractc.

Mistake of fact examples :-4.

Unilateral mistakea.

A contract is not void merely because it was caused by one of the parties to it being under a mistake asto a matter of face. A contract would still regarded to be valid under the law. Covers:

5.

Mistake as to the quality of the subject matter (quality = as much as u had bargained for)a.

Face 2 face - agreement will be bindingi.Not face 2 face - Agreement will be voidable (fraudulent)ii.

Mistake as to the identity of the other partyb.

Mistake as to the natures of the document (not content of documents). ie. You signed a documentbelieving it to be referee when in actual fact u are signing a form of guarantee. (this is nature). Onthe other hand, if you had signed a document as u had intended, but mistaken the CONTENT ofthe documents, the law will not assist you. The contract would not be void. (this is content)

c.

Mistake of fact examples :-6.

Effects of mistake - contract is deemed void (unless unilateral)7.

Galloway v Galloway

Raffles v Wichelhaus

Sheikh Bros v Ochsner

Consent - Law of MistakeFriday, 5 October, 20123:15 PM



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Remedies :- Rescission, specific performance, rectification8.



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Illegal Contracts

Forbidden by lawa.

The nature , if permitted would defeat any lawb.Fraudulentc.Involves or implies injury to the person or property of anotherd.Court regard it as immorale.

The consideration or object of an agreement is lawful UNLESS :-

Term and Representation (Contracts Act did not provide for this, but theSales of Goods Act 1957 does)

A term a representation1.Term refer to the stipulations which give efficacy to the intention of the parties2.Term is part and parcel of a contract.3.A breach of term would entitle the inured party to an action for breach of contract4.

A REPESENTATION IS NOT PART OF A CONTRACT.5.A representation induces the formation of a contract but which does not becomethe term of the contract.

6.

It is important to distinguish as different remedies are available depending onwhether a term is broken or if a representation turns out to be untrue.

7.

If the law of misrepresentation has been satisfied, then the injured party has aright of action under the law of misrepresentation (S17 & 18)

8.

Conditiona.Warrantyb.Innominate/intermediate termsc.

Terms can be classified to:7.

ConditionA.

S12(2) Sale of Goods Act - A condition to a contract may me referred to be a termof a contract, which is so essential to the main purpose of the contract that it'sbreach by one party will entitle the other party to terminate the contract.

Ie. A car to be sold for 100,000. However the car comes without a gearbox or asteering. The car therefore could not be used for which it is bought. Thus, theterm of the contract has been breached. As this amounts to a serious breach, it isrecognized as breach of a condition

A breach of condition can be converted to a breach of warranty - S13(1) Sale ofGoods Act 1957 at the option of the aggrieved party; and let the contract besubsisting.

Warranty (S12(3))B.

A warranty may be regarded as a term, which is not essential to the main purposeof the contract as its breach would only give rise to a claim for damages.

The contract would therefore be continuing, but damages are claimable.IE. You bought a car whereby the contract stated a red car. When in true fact, theyhave delivered you a white car instead. The contract will be subsisting, but you

can claim for damages.

Efficacy - capacity to produce an effect; effectivenessStipulation - an agreement ; in a p. rocedural manner

Poussard v Spiers

Tham Cheow Toh v Associated Metal Smelters Ltd

Bettini v Gye

Certainty of terms

Illegal Contracts, Term & Representation, Certainty and ExclusionClausesMonday, 8 October, 20124:02 PM



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When a contract has been discharged, the parties are released of their obligations1.Aggrieved party will have a right of recourse to the courts2.

Agreementa.Breachb.

Frustration / Reason of impossibility of performancec.Performanced.

Contract may be discharged in the following ways :-3.

Discharge by agreementA.

GR - parties to a contract must perform it in accordance with its termsI.However, the contracting parties may by agreement , decide to terminate thecontract. There must be accord and satisfactio

II.

Such agreement may be made at the time of the making the contract orsubsequently

III.

It also may be done by expressly providing in the contract itself that the contract isto be terminated on the occurrence of a particular event

IV.

S63 CA1950 - The original contract need not be performed if the parties to thecontract agree to substitute a new contract for it (novation); rescind it or alter it.

V.

S64 CA1950 (refer consideration : waiver of performance)VI.

Discharge by breachB.

Contracts may be terminated as a result of failure of a party to fulfill his obligationunder the contract.

I.

Breaches may occur at the time when the performance is due, during performanceor even before the time of the performance.

II.

S56(1) CA 1950 - Contracts become voidable at the option of the aggrieving party, iftime was of the essence of the contract. ( the aggrieving party can choose torescind / continue with the contract )

III.

S56(2) - If time was not of the essence, the aggrieving party only entitled tocompensation. ( compensate and continue with the contract )

IV.

Where there exists a breach of condition (as oppose to breach of warranty) thiswill enable the innocent party the right to repudiate the contract (bring thecontract to an end) in addition to claiming damages. A contract cannot bedischarged by a breach of warranty .

V.

To bring an action immediately Hochester v De la Tour

Or to wait for time of performance to arrive Avery v Bowdena.

A breach also may occur before the time of performance. This is called anticipatorybreach. The aggrieving party has 2 option:

VI.

Discharge by frustration - S57 CA 1950C.

S57(1) - An agreement to do an act which is impossible in itself is void. Ie. A agreeswith B to discover treasure by magic.

I.

S57(2) - A contract to do an act which, after the contract is made, becomesimpossible or by reason of some event which the promisor could not prevent,unlawful becomes void when the act becomes impossible or unlawful. (in short :becomes impossible, becomes unlawful or could not be prevented)

II.

When a contract is discharged by frustration, the contract is void.III.

The subject matter of the contract has been TOTALLY DESTROYED (partiallydoes not count, if the subject matter is still available to carry out)

a.

Where the purpose or object of the contracts has been defeated by asupervening event. (however, if partial of the term can be fulfilled or if there is

b.

A contract may said to have been discharged by frustration in the followingcircumstances :

IV.

Discharged - to release from dutyRecourse - the right to demand payment

Choo Yin Loo v Visuvalingam Pillay

When performance is due

During performance

Anticipatory breach

Taylor v Caldwell

Krell v Henry + Herne Bay Steamboat v Hutton

Lee Kin v Chuan Suan Eng

Discharge of ContractsMonday, 8 October, 20124:58 PM



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,Where the purpose or object of the contracts has been defeated by asupervening event. (however, if partial of the term can be fulfilled or if there isan alternative way to perform the contract, then the contract is VALID)

b.

Change in the law that made the performance of the contract unlawfulc.Where the undertaken party, who has undertaken a personal obligation hasdied or suffers an incapacity.

d.

Inability of the promisor to obtain a licensee.Grant of an injunctionf.

It is more difficult or expensive to performa.Impossibility of performance is the fault of either of the partiesb.Where the frustrating event could be foreseenc.

Self induced frustration does not amount to cases of frustration ( ie. Shortage ofworkers, weather conditions; as they amount to bad planning). Eg:

V.

Consequences of frustration - contract is terminated automaticallyVI.

Compensation if available for the non performance of the frustrationa.S57(3) - When one person has promised to do something which he knew, orwith reasonable diligence, might have known, and which the promisee did notknow to be impossible or unlawful, the promisor must make compensation tothe promisee for any of loss which the promisee sustains through the non-performance of his promise.

b.

S66 applies (refer to void & voidable)c.The party who breaches are not bound to compensate the loss of the profitsthat could have been made. But he must refund whatever was paid in advanceto him to the aggrieving party.

d.

Discharge by performanceD.

This is the usual method for the discharge of a contract.I.Parties to the contract has performed what they have agreed in the contract; orII.Parties offered to perform their respective promises, unless the performance isdispensed with or excused under the law

III.

The promisor must be prepared to perform his obligations at the time andplace at which he has undertaken to do.

a.

If the time is fixed, then it must be perform within tht time, otherwise itamounts to breach.

b.

When no time is fixed, the promise must be performed within a reasonabletime.

c.

If time is essential refer S56 (discharge by breach)d.

Time and place of performance4.

Lee Kin v Chuan Suan Eng

Condor v Barron Knights

Ong Ung Kai v Enting



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In the event of breach, the aggrieving party can claim any or more of the below remedies:(cont'd)

1.

SpecificPerformance

c. An order from the court requiring the party who is in breachto perform his part of the contract exactly as he promised

Governed by the Specific relief Act 1950

When the act agreed to be done is in the performance,wholly or partly, of a trust.

i.

When there exists no standard for ascertaining the actualdamage caused by the non-performance of the actagreed to be done.

ii.

When the act agreed to be done is such that pecuniary(monetary) compensation for its non-performance wouldnot afford adequate relief.

iii.

S11(1) SRA1950 - specific performance may be granted at the

discretion of the court in the following circumstances :

S11(2) SRA1950 - until the contrary (opposite) is approved, thetransfer of immovable property cannot be adequately relievedby compensation in money AND that the breach of contract to

transfer MOVABLE property can be relieved.

Injunction /PreventiveRelief

d. Order of the court directing the defendant to refrain fromdoing something in breach of the contract.

Injunctions can be permanent @perpetual OR temporary@interlocutory@interim

Governed by SRA1950S50(1) SRA1950 - Preventive relief is granted at the discretionof the court by injunction, temporary or perpetual.

S51(1) SRA1950 - A temporary injunction is granted at thediscretion of the court pending the final outcome of the trialproper. This injunction serves to preserve the status quo ofthe parties until then (until result)

S51(2) . - A perpetual injunction is granted only after thecase has been heard on its merits at a full trial. This injunctionserves to permanently prohibit the defendant from doingsomething.

A mandatory injunction is to compel the performance ofa term of the contract.

i.

S54(f) provides that an injunction may not be granted ifits effect is to enforce a contract that cannot bespecifically enforced. Ie. A contract that cannot beenforced by specific performance cannot also besubjected to an injunction.

ii.

A prohibitory injunction is to restrain the defendant frombreaching his obligations under the contract.

iii.

Noted that a prohibitory injunction may only be grantedto enforce a negative promise, e.g. a contract not to sellcomputers other than that produced by the plaintiff. Thisis the effect of S55 SRA1950 which appliesnotwithstanding S54(f) mentioned above.

iv.

Injunctions may also be classified as either mandatory orprohibitory.

Quantum

Meruit

e. TO BE INSERTED LAST MINUTE AS THERE HAS BEEN NO

QUANTUM MERUIT QUESTIONS SINCE 2007

American Cynamid Co v Ethicon



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No general satisfactory definition1.Salmond, a well known author on torts defined it as a civil wrong forwhich the remedy is a common law action for unliquidated damage s,and which is not exclusively breach of a contract or the breach of trust or

other merely equitable obligations.

2.

In short, a tort is a civil wrong which arises by operation of the law, notthrough the agreement of contracting parties.

3.

The basis of liability in tort - no one has a right to injure other persons orcause damage to their property

4.

Person suffering has a right to claim compensation from the party whocauses such injury

5.

Examples : Defamation, trespass, negligence6.

There must be a wrongful acta.The above act must affect the interests of rights of othersb.The victim must have a right to the claim of damagesc.

3 main features:7.

Function of law of torts : Compensation8.

Unliquidated damages - Sums of money notestablished in advance by the contracting parties as acompensation for a breach, but determined by a courtafter such breach occurs.

Negligence

The failure of a person to do what a reasonable man would do or the doingof something that a reasonable man would not do

1.

The defendant owe the plaintiff a duty of carea.The defendant breached that duty of careb.The plaintiff suffered as a result of that duty of carec.

To succeed a tort of negligence, these elements must be present :2.

Defendant duty to take reasonable steps to avoid acts or omissionswhich he can reasonably foresee is likely to injure your neighbour /someone else. '

i.

The term neighbour here refers to any person who are so closely anddirectly affected by the defendant's act or omission that the defendantmust have him(the neighbour) in mind when he does the act inquestion.

ii.

Ie. a road user owes other road users a duty of care. He has the duty toavoid acts or omissions which he can reasonably foresee will causeinjury to other road users.

iii.

The damage is reasonably foreseeable1)There is a close and direct r/s of proximity btwn tortfeasor andplaintiff

2)

The circumstances as a whole must be such that it's just andequitable for the imposition of duty of care (as in the case ofHedley Byrne v Heller Partners)

3)

Duty of care arises if: -iv.

Duty of careA.

Reasonable man test : What a reasonable man would have done under

the circumstances of the given case?

i.

Breach occur when defendant has failed to do what a reasonableperson would have done or has done something which a reasonableperson would not have done.

ii.

This is a test of reasonableness. If defendant falls under that standardiii.

Breach of DutyB.

As in the case of Blyth v Birmingham Waterworks Co

Donoghue v Stevenson

Tort - Negligence, Defences ***Friday, 12 October, 20127:23 PM



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then he is said to have breached. Whether or not the defendant hasbreached that duty is a matter of fact to be determined by the court.

Professionals and Skills1)Level of intelligence and knowledge2)Capacity of defendant3)Probability of the injury occurring4)Seriousness of the injury5)Issues or practicality and cost6)

Factors to take into consideration whether a breach of duty exists @ thestandard of care:

iv.

Person who possess a particular skill shall be judged on what areasonable person possessing the same skill would do in theparticular situation.

Even if a profession takes a different view from anotherprofessional in the same profession, he may not be in breach aslong as his action is in accordance with that is regarded as properby a body of the same professionals

Professionals and Skills1.

The standard of care must be based on the current knowledge atthe time of the alleged breach and not at the time of the trial

Knowledge and skill2.

Presumed reasonable man take greater precautions when the riskis high

When risk is high, defendant must do more than meet his duty

Probability of the injury occurring3.

Young/old/sickly are more prone to injury

A higher degree of care would be imposed in such cases

Seriousness of the injury4.

Not always reasonable to ensure all possible precautions havebeen taken

Measures taken must be weighed against the cost and currentsituation

Issues of practicality and cost5.

Plaintiff has to prove damage or injury was caused by the breach of thedefendant

i.

The damages must be foreseeable and not too remoteii.

DamageC.

Defences to an action for negligence

Defendant may have some defences to a cause of action for negligence1.

Volenti non fit injuria (consent)a.Contributory negligenceb.Inevitable accidentc.

They are :2.

It means no wrong can be done to a person who voluntarily consents toit.

i.

Consent to the risk1.

Need to prove 3 elements :ii.

Volenti non fit injuria (consent)A.

Wagon Mound Case



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Consent to the risk is voluntarily2.The plaintiff must have full knowledge of the risk3.

Consent to the risk1.The plaintiff must have agreed that if injury befell on him theloss should be on him and not on the defendant

Consent must be voluntarily2.Plaintiffs consent must be free and voluntary

Full knowledge of the events3.Mere knowledge of the existence of the risk is not enough

Damage suffered was result of negligence by the plaintiff i.Defendant has to prove that the injury was cause by the failure of theplaintiff to take reasonable precaution to avoid a risk which he couldforesee

ii.

The plaintiff has a duty of care for himself to act reasonably so

as to avoid damage to himself

1.

The plaintiff had breached this duty by acting unreasonable2.The act must be the cause of his injury3.

Elements must be present:iii.

When the sole reason for the plaintiff's injury is himself, then nocompensation shall be awarded. If it was partially, then the plaintiff'sclaim will be proportionately reduced at the discretion of the court

iv.

Contributory NegligenceB.

Defendant has to prove that he has acted reasonably under thecircumstance and the accident would have happened anyway as thedamage is not one that is foreseeable nor can it be avoided

i.Inevitable accidentC.

Stanley v Powell



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Governed by The Defamation Act 19571.Defamation may be described as the publication of a statement which tends to lower the reputation of a person in the eyes of rightthinking members of society

2.

Libela.Slanderb.

There are 2 types of defamation:-3.

It is made in writingi.Permanent form made for public exhbition (publication) ie. Film, Radio Broadcastingii.Actionable per se; therefore no need to prove any damage on the plaintiff iii.

LibelA.

Typically spokeni.In a temporary form ie. Gestures, Spoken wordsii.GR : Not actionable per se, therefore plaintiff need to prove damage ie. Financial losses, or others in monetary termiii.

SlanderB.

The statement complained must be defamatorya.It was understood to refer to the plaintiff b.Was published so that 3rd parties are aware of itc.

To succeed a tort of defamation, these elements must be present :4.

What is defamatory?A.Statements that tends to lower the reputation of a person in the eyes of right thinking members of societyIntention of the maker of the statement is irrelevantThe importance are the effect on a reasonable and ordinary readerStatement must be false

Was it understood to refer to the plaintiff?B.Intention of the maker of the statement is irrelevantWhat was understood by the persons to whom the statement was made is importantIe. Those who know the plaintiff believe that he is the person referred to

The words must be publishedC.There must be publication

Defences to an action of defamation

Volenti non fit injuria1.if plaintiff consent for publicationIe. Grants interview for magazine

It may be expressed or implied

Justification2.Defendant must prove that the statements made were trueNeed not prove the whole truth, only need to prove the facts that cause such statementIe. Plaintiff is imprisoned for 2 weeks, but the statement stated that he was imprisoned for 4 weeks

Apology3.

The defendant has published the statement w/o maliceThe defendant has sinced published a full apologyPaid a sum of money into court as an offer of compensation

May only be raised if :-

Tort - Defamation ***Sunday, 14 October, 20128:11 PM

acca f4 malaysia variant contract act

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