"LAW436 - CONTRACTS (2019) Semester 1": (Past Year Questions Analysis, Sample Answers & Framework)

“LAW436 – CONTRACTS (2019)
SEMESTER 1”
(PAST YEAR QUESTIONS ANALYSIS,
SAMPLE ANSWERS & FRAMEWORK)
LECTURER: DR SHEELA JAYABALAN

AS OF 19/12/2019
“Some questions were left intentionally as answering them were

redundant and some for you guys to try them out”
Assalmualaikum and hey what’s up guys, this is me Aman, a mundane, average guy who
misses his Justin Bieber hair (now botak *sniffs *sniffs ☹) and only listens to music as a form
of entertainment, reads online news, jalan-jalan tengok museum, galleries, kadang-kadang at
the PTAR PUU, catch up with latest current issues and lay in bed all day hahaha (questioning
the existence of my life and why I am sometimes feel kinda pathetic). Here are some sample
answers, analysis of questions and frameworks I devised while verified by our beloved
lecturer Dr. Sheela Jayabalan, who motivates us with her warm-tender advices and exuberates
spirit to us when we seem like we’re just slipping down the slope. I wanna thank Nabilah for
her sheer support to finalize and answer questions on legal intent and capacity too.
ARIGATOU HAIT!
With this collective effort made, I hope that it could tremendously benefit everyone for their
finals and I pray that all of you succeed with flying colours. I heard many seniors saying that
many students fail their finals. I just wanna tell you guys, whatever anybody say about the
finals, imagine that you’re in a battlefield surrounded by flaking cannons and the constant
torrent of bullets churning in the air. It may seem scary yet daunting at first, but once the
commander ordains his charge, you’ll be facing the gates of hell. Your life is at the verge of
death.I’m not trying to scare you or anything, but little did you guys know, it is all worth it.
Reaching the other side of ‘no man’s land’ and managing to capture the flag of the enemy is a
daring experience and oh sure do I really mean it. Once you’re there, you’d be thinking from
the very beginning and say, “how did I get here? And what did I do that took me here in the
first place?”
First, it’s pure effort. If you put effort into everything, you will slowly progress to reach your
goals. Take some time to focus on that long-term and short-term goal while balancing to do
the stuff that you really love the most.
Secondly, it’s all about taking risks and sacrifices. If you’re not willing to do those things,
then how can progress be made? albeit a small motion. Risks and sacrifices revolves around
our lives, but if you have the courage and strength, some morale carried in your bags, then
surely things will get smooth along the way. You will stand firm in the face of fear.
Finally, what you need is are prayers, redemption and the blessings from your parents. I
know, it may sound really cliché and stuff for some people, but the reality is, it’s true. After
thinking, there is a silver lining in all of this. When I finished SPM, I applied for architecture
and History courses on my UPU. Law never crossed my mind. But after persuasions from my
parents that they say, law suited me the best, I allowed my mom to alter my UPU list and
made her do all the decisions. In fact, when I’m in law school, I got to say… it’s not that bad
after all. Until this day, I still question, maybe I’m in law school as something is predestined
in store for me. If I were in a different course, beautiful yet wonderful things had not
transpired in my life, including having friends, lecturers and memories carved. Making
mistakes and selecting the wrong doors, doesn’t make you foolish or weak. It makes you
stronger day by day, inch by inch and you just need some faith in yourself and ignoring toxic
people is one of it too.
Because by the end of the day, when you graduate and get that LL.B, 9 months chambering,
admit to the High Court during the long call as an advocate and solicitor, get that Bar Council
Certificate, you’ll soon realize that once you’re in that law robe, you’d be representing
marginalized people and your family is counting on you. If not, you might have a law degree
but singing on stage, starting your own business or venturing the world in your own savour
and taste. The future is broad, and if you’re up to it, you can transcend boundaries and break
limits!
OFFER & ACCEPTANCE
FRAMEWORK FOR OFFER & ACCEPTANCE
FUNDAMENTALS THE LAWS NOTES
OF OFFER &
ACCEPTANCE
Offer Provisions: Section 2(a) of CA 1950
Case:
1) Preston Corporation Sdn Bhd v Edward Leong
(Definition and mere supply of information)
2) Carlill v Carbolic Smoke Ball (made to the public)
3) Harvey v Facey (an answer to query)
4) Ayer Hitam Dredging Malaysia Bhd v YC Chin Enterprise
Sdn Bhd (Subject to Contract)
5) Daiman Development Sdn Bhd v Matthew Lui Chin Teck
I.T.T (Invitation to Case:

Treat) 1) Pharmaceutical Society of Great Britain v Boots
Cash Chemist
2) Fisher v Bell
3) Coelho v The Public Services Commission
Communication of Provisions: Section 3 & 4(1) of the CA 1950
Offer
Case: R v Clarke
Revocation of Offer Provisions: Section 5(1) & 6 of the CA 1950
Cases:
1) Dickinson v Dodds (communication of revocation by
the proposer to the other party)
2) Ramsgate Victorian Hotel v Montefiore (by the lapse of the
time prescribed in the proposal)
3) PYM v Campbell (by failure of the acceptor to fulfil
a condition precedent to acceptance)
4) Bradbury v Morgan (by the death or mental disorder of the
proposer, if the fact of his death or mental disorder comes to the
knowledge of the acceptor)
Option Agreement Case: Voo Syun Mui v Yap Mooi Mooi Certain amount of
money given to
keep the contract
open for a
specified period
of time
Acceptance Provisions: Section 2(b) of the Contracts Act 1950
Communication of Provisions: Section 3, 4(2)(a)&(b) / Postal Rule

Acceptance
Case:
1) Ignatius v Bell
2) Adam v Lindsell
Acceptance Provisions: Section 7(a) Changes or
absolute & variations.
Unqualified Case: Terminates
1) Hyde v Wrench original offer
2) Malayan Flour Mills Bhd v Saw Eng Chee Must be positive
act
Acceptance made Provisions: Section 7(b)

by usual &
prescribed manner Case:
1) Felthouse v Bindley
2) Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd
Revocation of Provisions: Section 5(2), Illustrations under s.5, Section
Acceptance 4(3)(a)&(b) and illustrations (b) & (d) under s.4(3)
LIST OF AUTHORITIES FOR ACCEPTANCE

Offer,
Section 2(a), when one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is
said to make a proposal;
In Preston Corporation Sdn Bhd v Edward Leong, the respondents were a firm of printers.
The parties entered into a business relationship regarding the printing of school textbooks.
There was an exchange of letters which commenced with the respondents submitting
quotations for the printing of the books. This was followed by the appellants issuing the
printing orders. The Court held that the quotations were never to be intended to be binding
offer, but was merely a supply of information. The offer in this case was actually constituted
by the printing offers issued by the appellants.
Definition of offer, per Abas FJ stated, An offer is an intimation of willingness by an offeror
to enter into a legally binding contract.
In Carlill v Carbolic Smoke Ball, the facts were that the defendants issued an advertisement in
which they offered to pay $100 to any person who affected to influenza after having used one
of their smoke balls in a specific manner and for a specified period. The plaintiff, Mrs. Carlill
bought and used the smoke balls as prescribed and still caught influenza. The plaintiff who
suffered from influenza after using the product then sued the company for breach of contract.
The defendants argued that the contract cannot be made to the entire world. It was held that
an offer could be made to the entire world because the contract will only be made with that
limited portion of the public who came forward and performed the condition on the faith of
the advertisement.
In Harvey V Facey, the case was that the plaintiff telegraphed the defendant ‘will you sell us
Bumper Hall Pen? Telegraph lowest cash price.’ Defendant telegraphed the reply, ‘Lowest
price for Bumper Hall Pen $900.’ Plaintiff then telegraphed, ‘We agree to buy the Bumper
Hall Pen to Plaintiff. Plaintiff claimed that a contract had been made, the second telegraph
being an offer. The court held that there was no contract; the second telegram being merely an
indication of what Defendant would sell for, if and when, he decided to sell. Defendant was
supplying information in response to a question or query by Plaintiff.
Ayer Hitam Dredging Malaysia Bhd v YC Chin Enterprise Sdn Bhd, the facts were that YC
Chin Enterprise where contractors and made an agreement by offering to build low-cost
houses and shophouses for the defendant (appellant) AHTD with certain conditions which are
‘subject to contract’. The plaintiff obliged themselves and continued with the construction of
the project but the defendant had contended that there was no written contract to be executed
in order for both parties to be legally bound. The plaintiff sued for breach of contract and was
held that there was a binding contract. Therefore, the defendant had appealed. It was held, that
in the appeal the wordings ‘subject to contract’ was merely an expression to negotiate and
determine the terms required before a formal instigation of a legally binding contract could be
performed. In regards, it was the intent to pursue a future contract but not at the present
moment of agreement where there are still room for further exchange of information and
negotiations.
Invitation to Treat,
Pharmaceutical Society of Great Britain v Boots Cash Chemist, In this case Boots operated a
self-service shop, with a qualified pharmacist present at the checkout, but not at the shelves
were drugs were displayed. The precise location of the place was therefore relevant to
determine whether or not an offence was committed. It was held that the display was an
invitation to treat, the customer’s tender of the drugs was the offer, and the taking of the
money by the pharmacist was the acceptance. The sale therefore took place at the checkout.
Boots therefore did not commit an offence.
Fisher v Bell, a shopkeeper was prosecuted because he offered for sale an offensive weapon
by exhibiting a flick knife in his shop window. The court held that the display of goods with
price tag attached amounts to an invitation to treat and not an offer. Thus, no offence was
committed.
Section 3, The communication of proposals, the acceptance of proposals, and the revocation
of proposals and acceptances, respectively, are deemed to be made by any act or omission of
the party proposing, accepting, or revoking, by which he intends to communicate the
proposal, acceptance, or revocation, or which has the effect of communicating it.
Section 4(1), The communication of a proposal is complete when it comes to the knowledge
of the person to whom it is made.
In R v Clarke, The Australian Government offered a reward for information leading to the
arrest and conviction of persons responsible for the murder of 2 police officers. X and Clarke
were arrested and charged with murders but shortly after, Clarke gave information, which led
to the arrest of another person, Y. X & Y were later convicted, and Clarke claimed the
reward. It was held, that his claim failed because it was not present to his mind about the
reward when he gave the information to the police. He gave information just to clear himself
from the murder charge & not in reliance on the offer of reward.
Option Agreement,
Where consideration such as a small sum of money is given to the proposer to keep the
proposal open for the duration of time stated, the promise as to fixed time becomes binding.
An option legally binding promise which gives the promise the right to decide whether to
accept or reject the proposal. Therefore, if a promisor revokes a proposal where there is an
option, the promisor is liable for the option agreement.
In Voo Syun Mui v Yap Mooi Mooi, the appellant in consideration of the sum of RM300 gave
the respondent a 2 week option to purchase her property for RM270,000. The respondent
exercised the option by letter delivered to the appellant’s house. The letter was later returned
to the respondent who then applied for specific performance of the contract. The trial judge
held that the respondent had validly exercised the option and there was a binding contract of
sale which was confirmed by the Federal Court on appeal.
Section 5(1), A proposal may be revoked at any time before the communication of its
acceptance is complete as against the proposer, but not afterwards.
Section 6, A proposal is revoked—
(a) by the communication of notice of revocation by the proposer to the other party;
In Dickinson v Dodds, Dodds offered to sell a house to Dickenson for $800, and the offer was
to be left open until 9am, Friday. On Thursday however, Dodds sold the house to one Mr.
Allan, and Mr. Berry told Dickenson of this sale. Dickinson nevertheless wrote a letter of
acceptance which he handed to Dodds before 9am Firday. It was held that there was no
contract, the offer having been withdrawn before acceptance and the communication by a
third party being valid.
(b) by the lapse of the time prescribed in the proposal for its acceptance, or, if no time is so
prescribed, by the lapse of a reasonable time, without communication of the acceptance;
In Ramsgate Victorian Hotel v Montefiore, the defendants offered to take shares in plaintiff’s
hotel in June 1864. Plaintiff did not reply to this offer, but in November he allocated shares to
defendant, which the defendant refused to take. It was held that the refusal was justified since
the plaintiff’s delay had caused defendant’s offer to lapse.
(c) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
In PYM v Campbell, the parties negotiated for the sale of a certain invention on condition
that a third party approves the invention. It was held that since no third party had approved
the invention, there was no agreement.
(d) by the death or mental disorder of the proposer, if the fact of his death or mental disorder
comes to the knowledge of the acceptor before acceptance.
In Bradbury v Morgan, Joseph Leigh wrote to the plaintiffs, requesting them to give credit to
his son and guaranteeing payment of the running balance of the account of $100. The
plaintiffs extended credit on that basis. Joseph Leigh then died but the plaintiffs, in ignorance
of that fact, continued giving the son credit. When the son defaulted in payment, the plaintiffs
sued Leigh’s executor Morgan on the guarantee. Morgan denied liability, arguing that the debt
arose out of transactions entered into after Leigh’s death. The court held that the estate was
liable. The guarantee could continue after death, at least until the plaintiff had notice of it,
because the continued existence of the offer was really only dependent upon the continuation
of the credit arrangement, not the continued life of the deceased.
Acceptance,
Section 2(b), when the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted: a proposal, when accepted, becomes a promise;
Section 4(2) The communication of an acceptance is complete—
(a) as against the proposer, when it is put in a course of transmission to him, so as to be out of
the power of the acceptor; and
(b) as against the acceptor, when it comes to the knowledge of the proposer.
Ignatius v Bell, the defendant, Bell gave an option to the plaintiff to purchase a piece of land
on the condition that the option must be exercised on or before 20 August 1912 by notice in
writing. The plaintiff exercised the option by posting a letter on 16 August. The defendant
only received the letter on 25 August. The plaintiff sued the defendant for specific
performance.It was held that the parties had contemplated the use of the post as a means of
communication. The acceptance was complete as against the proposer, Bell when it is put in
course of transmission to him as to be out of the power of the acceptor.
Adam v Lindsell, L made an offer by letter to A requiring an answer ‘in course of post’. The
letter of offer was misdirected and somewhat delayed in the post. A posted a letter of
acceptance immediately. But L assumed that the absence of a reply within the expected
period indicated non acceptances and sold their goods to another buyer. It was held that since
the acceptance was made ‘in course of post’ and no time limit was imposed, acceptance was
effective upon posting.
Section 7, In order to convert a proposal into a promise the acceptance must—
(a) be absolute and unqualified;
Hyde v Wrench, the defendant wrote to plaintiff on June 6 offering to sell him his farm for
$1000. The plaintiff immediately called on the defendant and offered to purchase the farm for
$950. On June 27, the defendant replied to the plaintiff that he was unable to accept the
plaintiff’s offer. Upon receipt of the letter on June 29, the plaintiff immediately wrote to the
defendant accepting the defendant’s earlier offer of $1000. Defendant refused and plaintiff
sued for specific performance. The court held that there was no contract as the plaintiff had
rejected the earlier offer
Malayan Flour Mills Bhd v Saw Eng Chee, it was held by the High Court that since the
promise had added new terms to his acceptance, the acceptance was not valid. It merely
amounted to counter offer.
(b) be expressed in some usual and reasonable manner, unless the proposal prescribes the
manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be
accepted, and the acceptance is not made in that manner, the proposer may, within a
reasonable time after acceptance is communicated to him, insist that his proposal shall be
accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the
acceptance.
Felthouse v Bindley, the plaintiff had discussed with his nephew, John, on the purchase of the
nephew’s horse amd wrote to him offering to buy the horse and added ‘If I hear no more
about him, I consider the horse is mine at $30.15s. However, John did not reply. Six weeks
later, whilst selling his farming stock, the nephew told the auctioneer to keep the horse out of
the sale. The auctioneer sold it by mistake and the plaintiff sued the auctioneer. It was held
that there was no acceptance of the plaintiff’s proposal by John. Therefore, the plaintiff had
no right to impose upon his nephew a sale of his horse by silence.
Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd, the respondent granted the appellants
options to purchase three portions of land. The option shall be exercisable by notice in
writing… such notice registered or recorded delivery. However, it was only sent by ordinary
post. Lord Denning held that where the offeror has prescribed a particular method of
acceptance, but not in terms insisting that only acceptance in that mode shall be binding,
acceptance communicated to the offeror by any other mode which is no less advantageous to
him will conclude the contract.
Section 5(2) An acceptance may be revoked at any time before the communication of the
acceptance is complete as against the acceptor, but not afterwards.
Section 4(3)(a)&(b), The communication of a revocation is complete—
(a) as against the person who makes it, when it is put into a course of transmission to the
person to whom it is made, so as to be out of the power of the person who makes it; and
(b) as against the person to whom it is made, when it comes to his knowledge.
JANUARY 2013
PART A – QUESTION 1
Ali went to an exclusive boutique to buy a ‘kebaya nonya’ as a birthday gift for his wife.
After selecting one, which he thought his wife would like, he walked towards the
cashier’s desk to make payment. Upon approaching the cashier, he noticed that the
dress had a little tear on one sleeve. He decided not to buy it. He went to return the dress
to the rack but the boutique owner insisted that he pay for it. Ali refused to do so and
the boutique owner threatened to sue him.
Advise Ali whether he should pay for the ‘kebaya nyonya’ (6 marks)
Issue: Whether the Invitation to Treat of displaying the kebaya nonya is an offer an became
an enforceable binding contract
Law:
In Preston Corporation Sdn Bhd v Edward Leong, the definition of offer per Abas FJ stated,
an offer is an intimation of willingness by an offeror to enter into a legally binding contract.
In this case, there involves invitation to treat where it encourages or invites people to enter
into a contract by offering and an acceptance to that offer. There is no legal intent involved
until both parties signify their willingness to do and achieve the assent to the proposal. An
invitation to treat involves display of goods, advertisement and auction.
In Pharmaceutical Society of Great Britain v Boots Cash Chemist, In this case Boots operated
a self-service shop, with a qualified pharmacist present at the checkout, but not at the shelves
were drugs were displayed. The precise location of the place was therefore relevant to
determine whether or not an offence was committed. It was held that the display was an
invitation to treat, the customer’s tender of the drugs was the offer, and the taking of the
money by the pharmacist was the acceptance. The sale therefore took place at the checkout.
Boots therefore did not commit an offence.
Application:
In this case, there is a display of goods as it is an ITT. The baju kebaya nonya is only
displayed to attract and encourage people to buy the clothing and never intended to be an
offer when taken. The offer only exists when the baju kebaya nonya is brought to the counter
by Ali to pay and there exists and acceptance when the cashier receives the money. In the
case of Pharmaceutical Society of Great Britain v Boots Cash Chemist, It was held that the
display was an invitation to treat, the customer’s tender of the drugs was the offer, and the
taking of the money by the pharmacist was the acceptance. The sale therefore took place at
the checkout. Boots therefore did not commit an offence.
Conclusion: Ali is not legally bound to the contract to purchase the kebaya nonya as it is only
an invitation to treat and not an offer to render legal intent of both parties.
QUESTION 2
Section 7(a) of the Contracts Act 1950 provided that, in order to convert a proposal into
a promise, the acceptance must be absolute and unqualified.
Explain the above statement. (6 marks)
Since there is an offer and acceptance, the acceptance to that offer must be absolute and
unqualified,
Section 7(a), In order to convert a proposal into a promise the acceptance must, be absolute
and unqualified that is it cannot alter the original offer which if amended would case that
original offer to be terminated and a new offer is made.
In Hyde v Wrench, the defendant wrote to plaintiff on June 6 offering to sell him his farm for
rejected the earlier offer.
PART B – QUESTION 1
a) On 1st March, Wak Dogol wrote to Alina offering to sell his motorcycle and
giving Alina until 31st March to accept the offer. The letter, however was
misdirected and reached Alina on 30th March. Upon receiving the letter, Alina
immediately posted her acceptance letter. Meanwhile, Wak Dogol, thinking that
Alina was not interested in the offer, sold the motorcycle to Yusop on 1st April.
With reference to relevant authorities, advise Alina whether a valid contract is

constituted between her and Wak Dogol. (10 marks)
Issue: Whether Alina had already accepted the offer and had been in course of transmission to
Wak Dogol even though the letter of offer was misdirected
Law:
The offer when accepted must be communicated and complete. In this case, the acceptance
was made due to ‘Post’ as it is viewed under the principle of ‘Postal Rule’ where once the
letter is posted, it is indeed accepted.
Under Section 3, The communication of proposals, the acceptance of proposals, and the
revocation of proposals and acceptances, respectively, are deemed to be made by any act or
omission of the party proposing, accepting, or revoking, by which he intends to communicate
the proposal, acceptance, or revocation, or which has the effect of communicating it.
In the case of Adam v Lindsell, L made an offer by letter to A requiring an answer ‘in course
of post’. The letter of offer was misdirected and somewhat delayed in the post. A posted a
letter of acceptance immediately. But L assumed that the absence of a reply within the
expected period indicated non acceptances and sold their goods to another buyer. It was held
that since the acceptance was made ‘in course of post’ and no time limit was imposed,
acceptance was effective upon posting. Under section 4(2)(a) posting the letter already
constituted an acceptance which affirmed this case for Postal Rule.
Application: In this case, there was an offer made by Wak Dogol to Alia to sell his
motorcycle and Alia accepted the offer. Alia accepted the offer as it has been communicated.
That communication of acceptance was complete as she had posted the letter of acceptance
and it was put in course of transmission to Wak Dogol. This is affirmed in the case of Adam v
Lindsell where it was held that since the acceptance was made ‘in course of post’ and no time
limit was imposed, acceptance was effective upon posting.
Conclusion: There was a valid binding contract between Alia and Wak Dogol, as Alia had
accepted the offer through postal rule by posting the letter.
PART C – QUESTION 1
Adam is the registered owner of three pieces of land located at the seafront at Kuala
Terengganu. Adam is married to Hawa but they have no children. Three months ago,
Adam was diagnosed with cancer and doctors have indicated that his condition was very
critical. Upon hearing that, he decided to sell two of three pieces of his land to Datuk
Amir who has been interested in his land for quite sometime. Adam on 1st October sent
his offer by way of telex to Datuk Amir, stating that the purchase price was RM2 million
for the two pieces of his land and his offer was valid till 20 October. Datuk Amir did
nothing until 20 October when he decided to discuss the sale of all three pieces of
Adam’s land. On that day, they discussed the sale of all three pieces of land and after the
negotiation, drew up a formal letter of offer. However, the said letter was not signed by
either party.
b) Whether Datuk Amir has any rights to the three pieces of land (15 marks)
Issue: Whether Datuk Amir has any rights to the three pieces of land without a letter being
signed by either party.
Law:
In the case of Carlill v Carbolic Smoke Ball, the defendant company manufactured a patent
medicine, called ‘smoke ball’. In various advertisements they offered to pay $100 to any
person who caught influenza after having sniffed the smoke ball three times a day for two
weeks. This is an executed promise as Carlill had performed the offer made by the company
and that reward for it is the $100 which shows the positive act of acceptance.
In the case of Felthouse v Bindley, the plaintiff had discussed with his nephew, John, on the
purchase of the nephew’s horse amd wrote to him offering to buy the horse and added ‘If I
hear no more about him, I consider the horse is mine at $30.15s. However, John did not reply.
Six weeks later, whilst selling his farming stock, the nephew told the auctioneer to keep the
horse out of the sale. The auctioneer sold it by mistake and the plaintiff sued the auctioneer. It
was held that there was no acceptance of the plaintiff’s proposal by John. Therefore, the
plaintiff had no right to impose upon his nephew a sale of his horse by silence.
Under Section 6 of the Contracts Act 1950, a proposal is revoked when there is failure of the
acceptor to fulfil a condition precedent to acceptance.
In the case of PYM v Campbell, the parties negotiated for the sale of a certain invention on
condition that a third party approves the invention. It was held that since no third party had
approved the invention, there was no agreement.
Application:
In this case, despite the fact that both Adam and Datuk Amir had met a consensus on forming
a letter of offer, however there was no acceptance made by Datuk Amir. This is because, he
had never signed the letter of offer, indicating his assent to the offer which would render the
contract to be legally binding. That signature is a positive act which shows the intent of Datuk
Amir to form a binding contract. This positive act can be viewed in the case of Carlill v
Carbolic Smoke Ball, where it was held an executed promise as Carlill had performed the
offer made by the company and that reward for it is the $100 which shows the positive act of
acceptance.
Since Adam did not sign the contract and there was no positive act on his behalf, there cannot
be an acceptance due to his silence and inactivity as affirmed in the case of Felthouse v
Bindley where it was held that, there was no acceptance of the plaintiff’s proposal by John.
Therefore, the plaintiff had no right to impose upon his nephew a sale of his horse by silence.
Furthermore, the offer was terminated as the requirement precedent to the contract was not
made as Adam’s signature was also required by Datuk Amir in order for it to be enforceable.
In the case of PYM v Campbell, it was held that since no third party had approved the
invention, there was no agreement.
Conclusion: In conclusion, there was no legally binding contract between Adam and Datuk
Amir as both of the parties only made an offer, but never accepted it by both signing the
contract. The offer instead was terminated when Datuk Amir failed to get Adam’s signature as
well.
JUNE 2013
An offer is a proposal which, if accepted by another according to its terms, will create a
binding contract.
Briefly explain what is an offer and the requirement of a valid offer. (6 marks)
An offer is an intimation of willingness by an offeror to enter into a legally binding contract.
Among the requirement of a valid offer is that it must show the intent or willingness to enter
into a binding contract. It cannot be a ‘mere supply of information’ or ‘answer to a query’
The mere supply of information is as in the case of Ayer Hitam Dredging Malaysia Bhd v YC
Chin Enterprise Sdn Bhd, the facts were that YC Chin Enterprise where contractors and made
an agreement by offering to build low-cost houses and shophouses for the defendant
(appellant) AHTD with certain conditions which are ‘subject to contract’. The plaintiff
obliged themselves and continued with the construction of the project but the defendant had
contended that there was no written contract to be executed in order for both parties to be
legally bound. The plaintiff sued for breach of contract and was held that there was a binding
contract. Therefore, the defendant had appealed. It was held, that in the appeal the wordings
‘subject to contract’ was merely an expression to negotiate and determine the terms required
before a formal instigation of a legally binding contract could be performed. In regards, it was
the intent to pursue a future contract but not at the present moment of agreement where there
are still room for further exchange of information and negotiations.
Also, an answer to a query is not an offer as in the case of Harvey V Facey, the case was that
the plaintiff telegraphed the defendant ‘will you sell us Bumper Hall Pen? Telegraph lowest
cash price.’ Defendant telegraphed the reply, ‘Lowest price for Bumper Hall Pen $900.’
Plaintiff then telegraphed, ‘We agree to buy the Bumper Hall Pen to Plaintiff. Plaintiff
claimed that a contract had been made, the second telegraph being an offer. The court held
that there was no contract; the second telegram being merely an indication of what Defendant
would sell for, if and when, he decided to sell. Defendant was supplying information in
response to a question or query by Plaintiff.
An offer must be communicated as under Section 3, The communication of proposals, the
acceptance of proposals, and the revocation of proposals and acceptances, respectively, are
deemed to be made by any act or omission of the party proposing, accepting, or revoking, by
which he intends to communicate the proposal, acceptance, or revocation, or which has the
effect of communicating it.
That communication of offer must also be complete as per Section 4(1), The communication
of a proposal is complete when it comes to the knowledge of the person to whom it is made.
In R v Clarke, The Australian Government offered a reward for information leading to the
arrest and conviction of persons responsible for the murder of 2 police officers. X and Clarke
were arrested and charged with murders but shortly after, Clarke gave information, which led
to the arrest of another person, Y. X & Y were later convicted, and Clarke claimed the
reward. It was held, that his claim failed because it was not present to his mind about the
reward when he gave the information to the police. He gave information just to clear himself
from the murder charge & not in reliance on the offer of reward.
Hajah Erra Fauziah, a 45 year old lady works as a nurse at a private hospital. Last year
she decided to apply for an early retirement and pursue something that was close to her
heart, namely to provide a home for the elderly. Hajah Era Fauziah began searching for
appropriate premises. She saw a terrace house with a small compound, priced at
RM250,000 which she thought would be suitable. After viewing the house, Hajah Erra
Fauziah offered RM200,000. The owner, Encik Khalid, however firmly stated that he
will only accept RM230,000.
Subsequently Hajah Erra Fauziah went to view a second property, a double storey
house, belonging to Simon Wong priced at RM250,000. Since this was a larger property,
Hajah Erra Fauziah agreed to the price but the agreement was made “subject to
contract”.
Thre weeks later, Encik Khalid reconsidered his offer and was willing to accept
RM200,000.00.
Since then, Hajah Erra Fauziah had purchased a suitable property and is now ordering
the necessary items required to run the home for the elderly. She saw an advertisement
in the newspaper selling second-hand hospitals beds and wheelchars. Hajah Erra
Fauziah offered to purchase from the said company, Syarikat SecondHand Sdb Bhd, ten
secondhand beds and ten wheelchairs via a letter requesting a reply by 21 November
2012.
Syarikat SecondHand Sdn Bhd received Hajah Erra Fauziah’s offer and posted their
acceptance on 20th November 2012. However, Hajah Erra Fauziah only received the
letter on 1st December 2012.
Meanwhile on 30th November 2012, Hajah Erra Fauizah had assumed that Syarikat
SecondHand Sdn Bhd was unlikely to reply and therefore entered into a contract to
purchase beds and wheelchairs from Kumpulan Ikhtiar Holdings Sdn Bhd.
Both Encik Khalid and Simon Wong have been calling Hajah Erra Fauziah insisting
that she proceed with the respective sale and purchase agreement. The representative
from Syarikat Secondhand Sdn Bhd is also insisting on delivering the ten secondhand
beds and ten wheelchairs to her.
With reference to relevant authorities, advise Hajah Erra Fauziah as to her liability
towards Encik Khalid, Simon Wong and Syarikat SecondHand Sdn Bhd respectively.
(30 marks)
Issue: Whether counter-offer constitutes a legally binding contract between Hajjah Erra
Fauizah and Encik Khalid,
Law:
In Preston Corporation Sdn Bhd v Edward Leong the Definition of offer, per Abas FJ stated,
Additionally, that the acceptance of an offer must be absolute and unqualified. It cannot be
altered or amended as doing so would terminate the original offer and becomes void ab initio.
Under Section 7, In order to convert a proposal into a promise the acceptance must be
absolute and unqualified;
In Hyde v Wrench, the defendant wrote to plaintiff on June 6 offering to sell him his farm for
rejected the earlier offer
Application: In this case, there was clearly a counter-offer made by Hajjah Erra Fauziah
which she attempted to alter the offer by reducing it to RM200,000 and Encik Khalid the
same by increasing it to RM230,000 which is lower as compared to the original price of
RM250,000. Since both have made counter-offers, the original contract had been amended
and thus renders the contract to be void and null. In the case of Hyde v Wrench, the court
held that there was no contract as the plaintiff had rejected the earlier offer.
Conclusion: In this case, there was no acceptance as the original offer had been amended
rendering the contract to be null and void.
Issue: Whether the wording ‘subject to contract’ made the contract legally binding between
Hajjah Erra Fauziah and Simon Wong
Law:
In this case, ‘subject to contract’ is not to be intended to be an acceptance as there is still room
for negotiations and discussions for terms to be formulated.
In the case of Ayer Hitam Dredging Malaysia Bhd v YC Chin Enterprise Sdn Bhd, the facts
were that YC Chin Enterprise where contractors and made an agreement by offering to build
low-cost houses and shophouses for the defendant (appellant) AHTD with certain conditions
which are ‘subject to contract’. The plaintiff obliged themselves and continued with the
construction of the project but the defendant had contended that there was no written contract
to be executed in order for both parties to be legally bound. The plaintiff sued for breach of
contract and was held that there was a binding contract. Therefore, the defendant had
appealed. It was held, that in the appeal the wordings ‘subject to contract’ was merely an
expression to negotiate and determine the terms required before a formal instigation of a
legally binding contract could be performed. In regards, it was the intent to pursue a future
contract but not at the present moment of agreement where there are still room for further
exchange of information and negotiations.
Application: In this case, Hajjah Erra Fauziah offered to purchase the property from Simon
Wong amounting to RM250,00 and also being larger. However, the offer was still ‘subject to
contract’ as both of them still had to fulfil some terms and they were also still in the course of
negotiating. This is affirmed in the case of Ayer Hitam Dredging Malaysia Bhd v YC Chin
Enterprise Sdn Bhd, It was held, that in the appeal the wordings ‘subject to contract’ was
merely an expression to negotiate and determine the terms required before a formal
instigation of a legally binding contract could be performed. In regards, it was the intent to
pursue a future contract but not at the present moment of agreement where there are still room
for further exchange of information and negotiations.
Conclusion: There was no binding contract between Hajjah Erra Fauziah and Simon Wong as
the wordings of ‘subject to contract’ was still open to negotiations and there was still room to
discuss on the terms of the contract.
Issue: Whether the misdirection of the letter of offer to SecondHand Sdn Bhd and their
acceptance by postal rule, renders the contract to be legally binding
The offer when accepted must be communicated and complete. In this case, the acceptance
was made due to ‘Post’ as it is viewed under the principle of ‘Postal Rule’ where once the
letter is posted, it is indeed accepted.
Under Section 3, The communication of proposals, the acceptance of proposals, and the
revocation of proposals and acceptances, respectively, are deemed to be made by any act or
omission of the party proposing, accepting, or revoking, by which he intends to communicate
the proposal, acceptance, or revocation, or which has the effect of communicating it.
acceptance was effective upon posting. Under section 4(2)(a) posting the letter already
constituted an acceptance which affirmed this case for Postal Rule.
Application: In this case, even though Hajjah Erra Fauziah had entered into a different
contract with Kumpulan Ikhtiar Holdings Sdn Bhd for the wheelchair and beds, however she
is still bound to the first contract with SecondHand Sdn Bhd. This is because before 21st
November, SecondHand Sdn Bhd had already posted their letter which is a indication of
postal rule as under section 4(2)(a) of the Contracts Act 1950 as on 20th November when it is
put in course of transmission to SecondHand Sdn Bhd. Even though, Hajjah Erra Fauziah
assumed that there was no contract by the 30th and only received it on 1st December, the postal
rule had safeguarded SecondHand Sdn Bhd, enforcing the contract to be legally binding. This
is affirmed in the case of Adam v Lindsell where tt was held that since the acceptance was
made ‘in course of post’ and no time limit was imposed, acceptance was effective upon
posting. Under section 4(2)(a) posting the letter already constituted an acceptance which
affirmed this case for Postal Rule.
Conclusion: Hajah Erra Fauziah is not liable for Encik Khalid as there was counter-offer as it
altered the original offer, terminating it. Hajah Erra Fauziah is also not liable for Simon
Wong, as the contract was still subject to contract as there is still room for discussions and
negotiations which is not intended to be binding. However, Hajah Erra Fauziah is still liable
to SecondHand Sdn Bhd as there was already an acceptance by Postal Rule by the latter
DECEMBER 2013
Kenya Engineering Sdn Bhd advertised in the local newspaper that the company has a
vacancy for the post of a junior engineer, it wants to confirm if it is obliged to accept the
first application received.
With reference to relevant cases, discuss if the advertisement is an offer. (6 marks)
[INVITATION TO TREAT- SECTION 2(A),(B), DEFINITION OF ITT & TYPES-
PHARMACEUTICAL SOCIETY-FISHER V BELL]
QUESTION 4
In Re Selectmove Ltd [1995] 2 All ER 531, the Court of Appeal was of the view that
silence could be interpreted as acceptance in exceptional circumstances.
With reference to relevant cases, discuss these exceptional circumstances. (6 marks)
The general rule that silence does not amount to acceptance can be viewed in the case of
Felthouse v Bindley, the plaintiff had discussed with his nephew, John, on the purchase of the
nephew’s horse amd wrote to him offering to buy the horse and added ‘If I hear no more
about him, I consider the horse is mine at $30.15s. However, John did not reply. Six weeks
later, whilst selling his farming stock, the nephew told the auctioneer to keep the horse out of
the sale. The auctioneer sold it by mistake and the plaintiff sued the auctioneer. It was held
that there was no acceptance of the plaintiff’s proposal by John. Therefore, the plaintiff had
no right to impose upon his nephew a sale of his horse by silence.
However, the exception in In Re Selectmove Ltd, states that the unreasonable delay of
response could constitute to be an acceptance due their omission and silence towards the offer
made.
Under Section 3, it states that the communication of acceptance is deemed to be made by any
act or omission, by the party which he intends to communicate or have the effect of
communicating it. The word omission could also mean an acceptance through silence.
Additionally under section 9, an acceptance made other by words is also said to be an
acceptance which is implied.
The above case was also supported in Ganda Edible Oils v BV Transgrain, where the facts
were that the unreasonable delay of response to the shipping of 500 metric tons of palm oil
constituted an implied acceptance or through silence.
JUNE 2014
Discuss the significance of the case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256,
CA, in the formation of a valid contract. (6 marks)
[OFFER-MADE TO PUBLIC-CAME TO KNOWLEDGE-NOT ITT-NOT QUERY-NOT
SUPPLY OF INFORMATION-THERE WAS LEGAL INTENT]
QUESTION 2
With reference to relevant statutory provisions and cases, state the various modes to
revoke an offer. (6 marks)
Section 6, A proposal is revoked—
(a) by the communication of notice of revocation by the proposer to the other party;
In Dickinson v Dodds, Dodds offered to sell a house to Dickenson for $800, and the offer was
to be left open until 9am, Friday. On Thursday however, Dodds sold the house to one Mr.
Allan, and Mr. Berry told Dickenson of this sale. Dickinson nevertheless wrote a letter of
acceptance which he handed to Dodds before 9am Firday. It was held that there was no
contract, the offer having been withdrawn before acceptance and the communication by a
third party being valid.
(b) by the lapse of the time prescribed in the proposal for its acceptance, or, if no time is so
prescribed, by the lapse of a reasonable time, without communication of the acceptance;
In Ramsgate Victorian Hotel v Montefiore, the defendants offered to take shares in plaintiff’s
hotel in June 1864. Plaintiff did not reply to this offer, but in November he allocated shares to
defendant, which the defendant refused to take. It was held that the refusal was justified since
the plaintiff’s delay had caused defendant’s offer to lapse.
(c) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
In PYM v Campbell, the parties negotiated for the sale of a certain invention on condition
that a third party approves the invention. It was held that since no third party had approved
the invention, there was no agreement.
(d) by the death or mental disorder of the proposer, if the fact of his death or mental disorder
comes to the knowledge of the acceptor before acceptance.
In Bradbury v Morgan, Joseph Leigh wrote to the plaintiffs, requesting them to give credit to
his son and guaranteeing payment of the running balance of the account of $100. The
plaintiffs extended credit on that basis. Joseph Leigh then died but the plaintiffs, in ignorance
of that fact, continued giving the son credit. When the son defaulted in payment, the plaintiffs
sued Leigh’s executor Morgan on the guarantee. Morgan denied liability, arguing that the debt
arose out of transactions entered into after Leigh’s death. The court held that the estate was
liable. The guarantee could continue after death, at least until the plaintiff had notice of it,
because the continued existence of the offer was really only dependent upon the continuation
of the credit arrangement, not the continued life of the deceased.
PART C - QUESTION 1
Andrew Hooi is a famous vintage car collector. He has a fleet of vintage cars in his
garage. Sulaiman Solo, who lives nearby, occasionally visits Andrew Hooi just to have a
closer look at the vintage cars. Sulaiman Solo has his personal favourite, a red two door
Austin A40 classic. He has persistently asked Andrew Hooi to sell the Austin A40 classic
to him. Unfortunately, Andrew Hooi refused to sell the said car.
On 5th March 2014, Andrew Hooi telephoned Sulaiman Solo stating that he was willing
to sell the said car to him for RM75,000.00 and the latter’s acceptance should be made
in writing. He also informed Sulaiman Solo that the deposit would be 10 percent of the
purchase price and his offer will be valid until 27th March 2014.
Sulaiman Solo sent an email to Andrew Hooi which reads; “Please email whether you
would accept 5 percent as the deposit, or if not, the lowers deposit you would consider”.
Upon receiving the email, Andrew sold the car to his nephew. Failing to receive any
reply to his email, Sulaiman Solo decided to accept Andrew Hooi’s original offer and
agreed pay the 10 percent deposit. However, when Sulaiman Solo went to pay the 10
percent deposit, Andrew Hooi informed him that the car belonged to his nephew.
With reference to relevant authorities, advise Andrew Hooi as to his liabilities, if any
towards Sulaiman Solo and his daughter, Samantha Hooi. (15 marks)
[COUNTER OFFER-SECTION 2(A),(B),-7(B)-HYDE V WRENCH]
DECEMBER 2014
Briefly explain the differences between an offer and an invitation to treat. Support your
answer with decided cases and provisions in the Contracts Act 1950. (6 marks)
QUESTION 2
Section 7(a) of the Contracts Act 1950 provides that an acceptance must be absolute and
unqualified. With reference to decided cases, explain two situations, where an
acceptance is not absolute. (6 marks)
Joseph the owner of Joe & Joe Sdn Bhd entered into negotiations to construct low-cost
houses and shophouses for his workers. Joseph wrote a letter to Suria Contractors Sdn
Bhd on 19th November 2019 accepting their proposal in respect of the project subject to
certain terms and conditions in the letter that were to be instituted in an agreement
between Suria Contractors and Joe & Joe Sdn Bhd. After receiving the said letter, Suria
Contractors Sdn Bhd proceeded to construct the low-cost houses, although no formal
agreement in writing had been executed.
Subsequently, Joe & Joe Sdn Bhd instructed Suria Contractors Sdn Bhd to cease all
work and informed Suria Contractors their intention to discontinue negotiations and
that they will not be liable for any work already completed by Suria Contractors Sdn
Bhd.
Suria Contractors Sdn Bhd initiated legal proceedings against Joe & Joe Sdn Bhd for
sums due to them for work completed. Joe & Joe Sdn Bhd, however contends that there
is no contract between them.
a) With reference to decided cases, discuss the circumstances and conditions the
courts will take into consideration when deciding whether there is a binding
contract between the disputing parties (10 marks)
[OFFER & ACCEPTANCE]
b) Advise Joe & Joe Sdn Bhd as to its liability towards Suria Contractors Sdn Bhd
(10 marks)
[SUBJECT TO CONTRACT]
JUNE 2015
With reference to statutory provisions and relevant cases, explain the term ‘counter-
offer.’
Ramsy recently won the ‘Master Chef’ title in a cooking competition. With the prize
money and the recently proclaimed fame, he decided to start and operate his own
restaurant. Ramsy’s venture into the business began with a search for a suitable
premise. After a few weeks of searching, he found a shop lot located at Piaza Astana,
Johor Bahru. Ramsy loved the location and began negotiating with the owner of the
premise, Tia.
Finally both, both parties agreed to the terms of the tenancy agreement but subject to
the preparation and approval of a formal contract.
One day, Ramsy read an advertisement in a daily newspaper offering to sell used
cooking utensils and kitchen stoves. The advertisement required the offer to buy the
goods be mailed to the respective company on or before 4th April. Ramsy forgot to mail
his offer before the 4th April. He decided to send a text message via his handphone on 4th
April.
Last weekend, Ramsy visited the said premises and discovered that it is being occupied
by someone else.
With reference to statutory provisions and decided cases, advise Ramsy on the validity
of all the transactions.
i) The tenancy agreement between Ramsy and Tia (10 marks)
[SUBJECT TO CONTRACT-AYER HITAM]
ii) The purchase of used cooking utensils and kitchen stoves (10 marks)
[PRESCRIBED MANNER-SECTION 7(B)-YATES BUILDING]
JUNE 2016
With reference to relevant authorities, discuss the difference between an offer and an
invitation to treat. (6 marks)
b) Lily sent an email to Robin offering to sell her Prada Soffiano Lux Tote for RM3,000.
In the email, she asked robin to reply via email. Robin got very excited after reading
Lily’s email and called Lily immediately to say that she accepted Lily’s offer.
Unfortunately, Robin was directed to Lily’s voicemail. Robin left a message in Lily’s
voicemail saying that she accepted Lily’s offer.
Advise whether Robin’s acceptance is valid according to the provisions of the Contracts
Act 1950. (8 marks)
Issue: Whether Robin through her voicemail mode of acceptance forms a legally binding
contract, contrary the prescribed mode of acceptance.
Law:
Under the Contracts Act 1950, there must be a positive act for the acceptance of an offer
which can be explained under Section 7(b) of the Contracts Act 1950 where the acceptance of
offer must be made through usual and reasonable manner, to be in a prescribed manner for
that mode of acceptance and to be within the reasonable period of time.
Therefore, the positive act encompasses the expression through the vocalization, writing and
instantaneous modes through voice call, email and myriad more. An acceptor must also
comply with the prescribed manner in which the acceptance is to be made which a prescribed
manner is to be through post, then the acceptance must be in the form of a post.
There is an exception to that as although, the improper mode of acceptance is made, the
offeror must either insist the acceptor to revert to the original mode of acceptance or proceed
with the provided mode of acceptance. If the offeror ignores the fact, then a legally binding
contract would be enforceable onto both parties.
In the case of Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd, the respondent granted
the appellants options to purchase three portions of land. The option shall be exercisable by
notice in writing… such notice registered or recorded delivery. However, it was only sent by
ordinary post. Lord Denning held that where the offeror has prescribed a particular method of
acceptance, but not in terms insisting that only acceptance in that mode shall be binding,
acceptance communicated to the offeror by any other mode which is no less advantageous to
him will conclude the contract.
Application: In this case Lily had prescribed the mode or manner which the acceptance is to
be made that is through email. Robin did not comply but sent a voicemail which is contrary to
the prescribed manner. Clearly, that is against Section 7(b) of the Contracts Act 1950 which
states that the acceptance is made through usual and reasonable manner, given a prescribed
manner and within a period of time. However, if Lily did not respond to Robin within a lapse
of reasonable time, the acceptance is made and both parties are legally bound. Lily has to
either insist that Robin must communicate the acceptance through email or Lily will approve
the mode used by Robin before the expiry of the reasonable time where the court will
adjudicate. This is proven in the case of Yates Building Co Ltd v RJ Pulleyn & Sons (York)
Ltd, where it was held that despite the appellant accepting through ordinary post and not the
prescribed registered, recorded post, the respondent had to reply to the ordinary letter by
insisting on reverting to the prescribed mode of acceptance or just continue with the mode.
The respondent whom did not reply are legally bound by the contract due to their dormant
attitude of the lack of response.
Conclusion: In conclusion, there is a legally binding contract between Lily and Robin despite
the contrasting mode of acceptance by Robin that is through voicemail and email prescribed
by Lily, if Lily did not reply within a given reasonable time and did not further insist on
reverting to her prescribed mode of acceptance.
DECEMBER 2016
Briefly discuss the circumstances illustrated in the case of Ayer Hitam Dredging
Malaysia Bhd v YC Chin Enterprise Sdn Bhd [1991] 3 CLJ 133 specifically with regard
to the significance of ‘subject to contract’ clauses. (6 marks)
[SUBJECT TO CONTRACT-AYER HITAM-SECTION 2(A),(B)-PRESTON
CORPORATION]
Lady Galadriel (LG) saw a secondhand waterproof watch for sale in an advertisement
in www.memudah.com.my. The information given in the advertisement stated: ‘…
almost brand new watch made in Japan. I am willing to go as low as RM500. Contact
Hercules at 010-11111222.
LG contacted Hercules via Whatsapp and inquired as to the date when the watch was
bought and asked if the price could be reduced to RM450. Hercules replied that the
watch was bought as a present for his girlfriend three months ago but they broke up
and the watch was returned to him. As to the price, Hercules said ‘RM480 is my final
price’. LG said she agreed with the price and would get back to him as soon as possible.
Two days later, LG contacted Hercules to inquire about the payment details for the
watch. She was very disappointed when Hercules informed her that the watch was
already sold to another person who offered a better price. LG insisted that there was a
valid contract between them and that Hercules should not have it sold to another person
without her consent.
i) With reference to decided cases and statutory provisions, decide if there
exists a valid contract between LG and Hercules (15 marks)
ii) State the ways in which a proposal can be revoked (5 marks)
i) Issue: Whether there was a binding contract between LG and Hercules for only answering
an inquiry
Law:
In the case of Harvey V Facey, the case was that the plaintiff telegraphed the defendant ‘will
you sell us Bumper Hall Pen? Telegraph lowest cash price.’ Defendant telegraphed the reply,
‘Lowest price for Bumper Hall Pen $900.’ Plaintiff then telegraphed, ‘We agree to buy the
Bumper Hall Pen to Plaintiff. Plaintiff claimed that a contract had been made, the second
telegraph being an offer. The court held that there was no contract; the second telegram being
merely an indication of what Defendant would sell for, if and when, he decided to sell.
Defendant was supplying information in response to a question or query by Plaintiff.
Application: In this case, LG only asked a question to Hercules regarding the price of the
watch. Even though the question she asked on her side is said to be an offer, but there was
absolutely no acceptance made on behalf of Hercules. Hercules only answered that the lowest
price that he could offer was only RM480 which is only final price as compared to the early
question from LG whether the price could be reduced to RM450 through whatsapp.
Conclusion: Even though, Hercules sold the watch to another person, it was valid and that
Hercules was not bound to a contract with LG as LG only asked for the price reduction of the
watch and Hercules only answered. There never existed offer and acceptance rendering the
contract to be legally binding.
ii) [REVOCATION OF OFFER- REFER TO LIST OF AUTHORITIES]
JULY 2017
With reference to statutory provisions and two (2) relevant cases, explain the term
‘counter-offer’. (6 marks)
Don owns a classic Alfa Romeo Spider. The car is his prized possession. He is married to
Julie but they have no children. Three months ago, Don was diagnosed with cancer and
doctors indicated that his condition was critical. Upon hearing this, he decided too sell
his Alfa Romeo and some other properties. He refused to advertise the sale of his car to
the public since he only wished for an Alfa Romeo enthusiast to buy the car.
Datuk Hans, Don’s friend has always been interested in the car and had on many
occasions persuaded Don to sell his Alfa Romeo Spider to him.
On 1st June 2016, Don sent a text message to Datuk Hans, stating that he wanted to sell
the car to him. The asking price was RM80,000 and the offer was valid until 20 th June
2016. Datuk Hans did nothing until 20th June when he decided to call Don to discuss on
the matter. On that day, they discussed the payment terms and after the negotiations,
Datuk Hans said that his lawyer will draft a contract for them to execute, in order to
make it formal. The contract was sent to Don in July but he did not sign it.
On a particular morning, Datuk Hans paid a visit and informed Julie (Don’s wife) that
he had come to collect the Alfa Romeo Spider.
With reference to relevant authorities, advise Julie on the following matters:
iii) Whether Datuk Hans has any right to the car. (15 marks)
Issue: Whether Datuk Hans has the right to the car despite the absence of the signature and
not fulfilling the conditions precedent to contract.
Law:
In the case of Carlill v Carbolic Smoke Ball, the defendant company manufactured a patent
medicine, called ‘smoke ball’. In various advertisements they offered to pay $100 to any
person who caught influenza after having sniffed the smoke ball three times a day for two
weeks. This is an executed promise as Carlill had performed the offer made by the company
and that reward for it is the $100 which shows the positive act of acceptance.
Section 7(b) also expressed that an acceptance must be in some usual and reasonable manner,
In the case of Felthouse v Bindley, the plaintiff had discussed with his nephew, John, on the
purchase of the nephew’s horse amd wrote to him offering to buy the horse and added ‘If I hear
no more about him, I consider the horse is mine at $30.15s. However, John did not reply. Six
weeks later, whilst selling his farming stock, the nephew told the auctioneer to keep the horse
out of the sale. The auctioneer sold it by mistake and the plaintiff sued the auctioneer. It was
held that there was no acceptance of the plaintiff’s proposal by John. Therefore, the plaintiff
had no right to impose upon his nephew a sale of his horse by silence.
Under Section 6 of the Contracts Act 1950, a proposal is revoked when there is failure of the
acceptor to fulfil a condition precedent to acceptance.
In the case of PYM v Campbell, the parties negotiated for the sale of a certain invention on
condition that a third party approves the invention. It was held that since no third party had
approved the invention, there was no agreement.
Application:
In this case, on June 20 Datuk Hans met his lawyer to draft an offer where he required to
receive a signature of acceptance by Don. However by July, Don did not respond by signing
the contract to make it legally enforceable. Even though there was an offer, there was no
particular acceptance which existed between Don and Datuk Hans. This is because that
acceptance must be made in a positive act as in the case of Carlill v Carbolic Smoke Ball
where it is an executed
promise as Carlill had performed the offer made by the company and that reward for it is the
$100 which shows the positive act of acceptance.
Other than that, the acceptance must be usual and reasonable. The silence and inactivity of
Don who did not sign the contract and remained silent could not possibly a positive act, usual
and reasonable to constitute a legally enforceable contract. This is affirmed in the case of
Felthouse v Bindley, where it was held that there was no acceptance of the plaintiff’s proposal
by John. Therefore, the plaintiff had no right to impose upon his nephew a sale of his horse by
silence.
Finally, the offer itself had been terminated since Datuk Hans did not attain the signature of
Don which is a condition precedent to the offer to make it legally enforceable. In the case of
PYM v Campbell, it was held that since no third party had approved the invention, there was
no agreement.
Conclusion: There was no binding contract between Datuk Hans and Don since, there was no
acceptance of the offer made by Don due to his silence and inactivity of signing the offer
made by Datuk Han’s lawyer.
Also, since Datuk Hans failed to attain the condition precedent to the offer of attaining Don’s
signature, the offer itself had been terminated.
JANUARY 2018
Meanwhile, Din also wished to sell his father’s car. On Monday, he proposed to Zizan
that he would sell the car for RM15,000. Zizan was very pleased and assured Din that he
was interested but he needs to consult his mother first. Din told Zizan that he assumed
Zizan wants to purchase the car, unless he hears otherwise by Saturday.
On Thursday, Zizan put a letter in a post addressed to Din informing him that he
accepts Din’s proposal to sell the car for RM15,000. On Friday, Din changed his mind
and now wished to revoke his proposal to Zizan. He mailed a letter via express mail
informing Zizan that he wished to withdraw his proposal to Zizan as he has managed to
obtain a better offer for the car. Din received the letter from Zizan on Tuesday the
following week.
With reference to relevant authorities, advise Din:
iii) Whether he is liable to sell the car to Zizan (10 marks)
Issue: Whether Din is liable to sell the car to Zizan even he had revoked the offer even if
Zizan accepted it before the revocation?
Law:
acceptance was effective upon posting.
Application: In this case, Din could not possibly revoke the offer as it had already been
communicated (the acceptance) under section 3 and that acceptance is complete when it is put
in course of transmission to Din under section 4(2)(a). This is under section 5(1) of the
Contracts Act 1950 where he could not revoke after the communication of acceptance.
That acceptance is made by postal rule under section 4(2)(a) where it put in course of
transmission. This is affirmed in the case of Adam v Lindsell, where it was held that since the
acceptance was made ‘in course of post’ and no time limit was imposed, acceptance was
effective upon posting.
Conclusion: In conclusion, Din is bound by the contract to sell the car to Zizan as he had
failed to revoke the offer before the communication of acceptance by Zizan.
Lam is in the construction business. He owns his own construction company but his
company is not performing at its best. Recently, Lam went into negotiations with
College RMT to construct two blocks of student hostel for their new campus n Kuala
Terengganu. After reviewing Lam’s proposals, College RMT sent him a letter according
his proposal but subject to certain terms and conditions that will be incorporated in the
agreement. In reliance to the letter, Lam proceeded to perform some preliminary works
for the student hostel, although no formal agreement in writing had been executed.
Subsequently, College RMT instructed Lam to cease all works, stating their intention to
discontinue negotiations and any work done was entirely at Lam’s risk. Lam has
incurred cost for the preliminary works.
Based on the above facts, advise Lam on the following matters.
a) Whether there is a valid contract between Lam and College RMT (10 marks)
[SUBJECT TO CONTRACT- NOT AN OFFER-SECTION 2(A),(B), PRESTON
CORPORATION-AYER HITAM]
b) College RMT’s liability to compensate Lam for the cost incurred. (10 marks)
[NO NEED TO COMPENSATE AS NO ACCEPTANCE MADE]
JUNE 2018
In the case of Preston Corporation Sdn Bhd v Edward Leong & Ors [1982] 2 MLJ22,
the Federal Court had elaborated on the meaning of an offer and that it is “binding at
law”
Discuss the brief facts of the above mentioned case and with reference to relevant
authorities, explain the requirements to establish a valid offer. (20 marks)
Section 2(a) of the Contracts Act 1950, states offer is the willingness to do or to abstain from
doing with the view of obtaining the assent of the other to the act or abstinence, he is to make
a proposal
Section 3, offer must be communicated. The communication of offer is deemed to be made by
any party to the act or omission, which he intends to communicate it or has the effect of
communicating it.
Section 4 further states the communication of offer is complete when it comes to the
knowledge of to whom it is made.
In Preston Corporation Sdn Bhd v Edward Leong, the respondents were a firm of printers.
The parties entered into a business relationship regarding the printing of school textbooks.
There was an exchange of letters which commenced with the respondents submitting
quotations for the printing of the books. This was followed by the appellants issuing the
printing orders. The Court held that the quotations were never to be intended to be binding
offer, but was merely a supply of information. The offer in this case was actually constituted
by the printing offers issued by the appellants.
Definition of offer, per Abas FJ stated, An offer is an intimation of willingness by an offeror
to enter into a legally binding contract.
DECEMBER 2018
An offer which is met by a valid acceptance would have the consequence that there is no
longer any offer and it having emerged with acceptance will result in the formation of a
contract.
With reference to relevant authorities and cases, discuss the ways an offer may be
revoked or come to an end. (20 marks)
[REVOCATION OF OFFER-REFER TO LIST OF AUTHORITIES]
Meanwhile, before starting her business, Victoria advertised in a daily newspaper for
the position of a sales assistant. The successful applicant is to start work immediately at
her boutique.
Busy decorating and assembling all her designer dresses, Victoria decided to put her
most popular dress on a mannequin for display at the glass window, hoping to attract
customers into her boutique.
One day, Victoria’s boutique received a visitor, Shanti, she claimed that she had replied
to Victoria’s advertisement for a sales assistant and demanded Victoria to employ her
since she had accepted Victoria’s offer for employment. Victoria was confused and
wants to know if she has to employ Shanti.
After a rude encounter with Shanti, Victoria received another visitor, Datin Suzy who
demanded to purchase the dress on display at Victoria’s glass window. When Victoria
explained that the dress was not for sale, Datin Suzy became very upset and claimed
that Victoria was a dishonest person.
Based on the above facts and with reference to relevant authorities, advise Victoria on
the following matters.
ii) The appointment of Shanti as a Sales Assistant; and (10 marks)
iii) The refusal to sell the dress on display. (10 marks)

CONSIDERATION
FRAMEWORK FOR CONSIDERATION
FUNDAMENTALS OF THE LAWS NOTES
CONSIDERATION
Definition Provisions: Section 2(a), (b) and (d)
Cases: Currie v Misa

Contract without Provisions: Section 26,
consideration is void,
except Cases:
1) In Re Tan Soh Sim
2) Queck Poh Guan v Quick Awang (illustration (b)) /
(Natural Love and Affection)
1) Re McArdle
2) Kepong Prospects Ltd v Schmidt (Voluntary and Past
Consideration)
1) Halimah binti Abdullah v Tengku Mariah binti Sultan

Sulaiman (Statute Barred / Limitation Period)
Types of Consideration Cases:
1) Wong Hong Leong David v Noorazman bin Adnan,
Section 2(e) (Executory Consideration)
2) Carlill v Carbolic Smoke Ball (Executed Consideration)
3) Re McArdle, Section 26(b) (Past Consideration)
Consideration must not Provisions: Section 26, Explanation 2, Illustration f

be adequate but
sufficient Case: Phang Swee Kim v Beh I Hock
Pre-existing duties Cases:
1) Stilk Myrick
2) Ward v Biyham
3) Collins v Godefroy (Under existing duties)
1) Glasbrook Brothers Ltd. Glamorgan County Council

2) Williams v Roffey Bros & Nicholls (Over & Above)
Waiver of performance Provisions: Section 64
Case:
1) Pinnel’s case (UK Only)
2) Kerpa Singh v Bariam Singh (Only applicable in M’sia)
Equitable Estoppel Case: Central London Property Trust v High Trees House
LIST OF AUTHORITIES FOR CONSIDERATION
Consideration,
Section 2(d) when, at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or to abstain from
doing, something, such act or abstinence or promise is called a consideration for the promise;
In Currie v Misa, a valuable consideration, in the sense of law, may consist either in some
right, interest, profit or benefit accruing to the other party, or some forebearance, detriment,
loss, or responsibility given, suffered or undertaken by the other. A contract must be supported
with consideration because a contract is only legally binding if it is made in return for another
promise or an act.
Contract without consideration void, except…
Section 26, An agreement made without consideration is void, unless—
It is in writing and registered,
(a) it is expressed in writing and registered under the law (if any) for the time being in force
for the registration of such documents, and is made on account of natural love and affection
between parties standing in a near relation to each other; or
Illustration (b)- States, A, for natural love and affection, promises to give his son, B, RM1,
000. A puts his promise to B into writing and registers it under a law for the time being in
force for the registration of such documents. This is a contract.
In the case of In Re Tan Soh Sim, Deceased the facts were that A woman on her deathbed
expressed her intention to leave all her properties to her four adopted children. The court held
that the claims of the adopted children were not effective as it was contrary to Section 26(a)
i.e. it was not in writing and there was no natural love and affection between parties standing
in near relation to each other
In the case of Queck Poh Guan v Quick Awang, it is not disputed that the parties stand in a
near relation to each other; the deceased (the transferor) being the mother to the defendant
(the transferee), whether or not there exists any element of love and affection can be gathered
from the evidence adduced by both parties and the surrounding circumstances. It was held
that the transfer of the land was a gift from the deceased mother to the defendant on account
of natural love and affection.
Is a promise to compensate for something done

(b) it is a promise to compensate, wholly or in part, a person who has already voluntarily done
something for the promisor, or something which the promisor was legally compellable to do;
or
Re McArdle concerned a house which was joint property of several siblings in which they
lived together. The plaintiff, the wife of one of the brothers, paid for the repairs of the house.
After that, the siblings agreed with the plaintiff that, in consideration for the repairs, they
would pay her $488. Subsequently, the plaintiff sued for the payment of $488, the defendants
in the suit being the siblings other than her husband. The issue was whether there was
consideration for this agreement to pay her $488. The court of appeal held that, as the repairs
had been carried out before the agreement to pay had been made, it was past consideration.
In the case of Kepong Prospects Ltd & Ors v Schmidt, Mr Tan applied to the state
government for a prospecting permit for iron ore. He was assisted by the respondent,
Schimidt, who was a consulting engineer. The appellant was later incorporated with the
intention to take over the benefit of Tan’s prospecting permit, with Tan and Schmidt among
its first directors. There were two agreements involved. The first agreement in 1954 was
between the appellant and Tan whereby the appellant company should prospect work the land
in the mining permit and the company should take over Tan’s obligation to pay Schmidt 1%
of the selling price of all ore sold from such land. The second agreement in 1955 was between
appellant and Schmidt whereby the appellant company agreed to pay Schmidt 1% of the
selling price of all ore sold from the land comprised in the 1954 agreement. Schmidt was later
dismissed as a director and he commenced proceedings for al monies payable to him under
both agreements.
The Privy Council agreed with the Federal Court that in respect of the 1955 agreement,
Schmidt’s services to the appellant established “a legally sufficient consideration moving
from Schmidt” as to render the agreement valid. Schmidt’s services however can be
considered only after the time company was formed since no services can be given to a non-
existent company.
Or is a promise to pay a debt barred by limitation law

(c) it is a promise, made in writing and signed by the person to be charged therewith, or by his
agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which
the creditor might have enforced payment but for the law for the limitation of suits.
In the case of Halimah binti Abdullah v Tengku Mariah binti Sultan Sulaiman, In this case
the plaintiff alleged that by a "Jual Beli Sementera" dated June 28, 1951, the defendant
undertook to execute the transfer of the land when she obtained it from the estate of her
father, the late Sultan Sulaiman. The previous solicitors of the defendant had also written on
January 14, 1978 that the defendant was prepared to sign a transfer of the land into the name
of the plaintiff. The plaintiff claimed the land and the defence was limitation the letter of the
solicitors for the defendants was sufficient acknowledgment for all intents and purposes and
therefore the plaintiff's claim was not statute-barred. This affirms s 26(1) of the Limitation
Ordinance 1953.
Types of Consideration,
Executory consideration in Wong Hon Leong David v Noorazman bin Adnan, Gopal Sri Ram
JCA where he distinguishes between the two that now, it is well settled that consideration
may be executory or executed. If A agrees to mow B’s lawn for RM10 and B agrees to pay
him RM10 in exchange for this service, there is, in the eyes of law, a valid and binding
agreement between A and B. This is borne out by the words of 2(e) of the Contracts Act 1950
which
declares: ‘every promise and every set of promises, forming the consideration for each other,
is an agreement.’
The consideration in such case is said to be executory, namely the exchange of mutual
promises. When the lawn is mowed, the act promised has been done and the consideration is
said to have become executed.
Executed Consideration, as in Carlill v Carbolic Smoke Ball, the defendant company

manufactured a patent medicine, called ‘smoke ball’. In various advertisements they offered
to pay $100 to any person who caught influenza after having sniffed the smoke ball three
times a day for two weeks. This is an executed promise as Carlill had performed the offer
made by the company and that reward for it is the $100.
Past Consideration, as in Re McArdle concerned a house which was joint property of several
siblings in which they lived together. The plaintiff, the wife of one of the brothers, paid for
the repairs of the house. After that, the siblings agreed with the plaintiff that, in consideration
for the repairs, they would pay her $488. Subsequently, the plaintiff sued for the payment of
$488, the defendants in the suit being the siblings other than her husband. The issue was
whether there was consideration for this agreement to pay her $488. The court of appeal held
that, as the repairs had been carried out before the agreement to pay had been made, it was
past consideration.
Consideration must not be adequate but sufficient,
Under Section 26, Explanation 2 states- An An agreement to which the consent of the
promisor is freely given is not void merely because the consideration is inadequate; but the
inadequacy of the consideration may be taken into account by the court in determining the
question whether the consent of the promisor was freely given.
Illustration (f)- States that A agrees to sell a horse worth RM1,000 for RM10. A’s consent to
the agreement was freely given. The agreement is a contract notwithstanding the inadequacy
of the consideration
In the case of Phang Swee Kim v Beh I Hock, the respondent agreed to transfer the appellant
a parcel of land on payment of RM500 when the land was subdivided which was worth much
more. The respondent later refused to honor the promise which they argued is unenforceable.
The trial judge held that the ‘agreement was void due to inadequacy of consideration’. The
Federal Court reversed the decision and applied explanation 2 and illustration (f) of section
26.
Pre-existing duties,
In Stilk v Myrick where two members of the crew of a ship deserted in foreign port. The
master was unable to recruit substitute and promised the rest of the crew that they should
share the wages of deserters if they would complete the voyage home short-handed. The ship
owners however repudiated the promise. The court held in performing their existing duties the
crew gave no consideration for the promise of extra pay and the promise was not binding.
In Ward v Biyham,…
In Collins v Godefroy, Plaintiff was called by subpoena to give evidence in a case involving
the Defendant. He afterwards alleged that the defendant had promised to pay him six guiness
for his loss of time. Plaintiff failed in his action since he was bound by the law to attend the
trial. Therefore, plaintiff had not provided any consideration.
However, they are able to claim if it is over and above their existing duties…
In Glasbrook Brothers Limited v Glamorgan County Council and others. In that case, the
owners of a coal mine asked for and agreed to pay for a special police guard for the mine.
Later they repudiated liability saying that the police had done no more than perform their
public duty of maintaining order. The court held the police had done more than their general
duties because in normal circumstances the police would only provide a mobile force and not
a stationary guard. Therefore they were entitled to payment because their services were over
and above their pre-existing duties.
In Williams v Roffey Bros & Nicholls (more modern approach), the plaintiffs agreed to do
carpentry work for the defendants at a fixed price of $20,000. The work ran late. The
defendants were concerned that the plaintiffs will not finish the work on time and they
(defendants) would be bound to pay a penalty in the main contract, agreed to plaintiffs an
extra $10,300 to ensure the work was completed on time. They later refused to pay the extra
amount. The court expressed that a promise to pay an additional sum to secure performance
of an existing obligation is enforceable provided that it was not obtained by coercion or force,
ie voluntary and the promisor received benefit. Therefore, the plaintiffs were entitled to extra
payment.
Waiver of Performance,
Under Section 64- States that, 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
may accept instead of it any satisfaction which he thinks fit.
In Pinnel's Case (1602), Cole owed Pinnel £8-10s-0d (£8.50) which was due on 11 November.
At Pinnel's request, Cole payed £5-2s-2d (£5.11) on 1 October, which Pinnel accepted in full
settlement of the debt. Pinnel sued Cole for the amount owed. It was held that part-payment in
itself was not consideration. However, the agreement to accept part-payment would be
binding if the debtor, at the creditor's request, provided some fresh consideration.
In the case of Kerpa Singh v Bariam Singh, BS owed $8,869.94 under a judgment debt. BS’s
son wrote to KS offering $4000/- in full settlement of his father’s debt and endorsed a cheque
for the amount. He stipulated that should KS refuse to accept, he must return the cheque. KS’s
legal advisers, having cashed the cheque and retain the money proceeded to secure the
balance of the debt by issuing bankruptcy notice on the debtor. The Federal Court ruled that
the acceptance of the cheque from the debtor’s son in full satisfaction precluded them from
claiming the balance.
Equitable Estoppel,
It is a legal principle by which a person who makes a statement may be prevented from
retracting it. For example, if Ben, a party to a legal relationship, promises Rose, the other
party, that he will not insist on his full rights under a legal relationship, and this promise is
intended to be acted upon by Rose, and is in fact acted upon, then Ben is estopped from
bringing an action against Rose which is inconsistent with his promise, even if Rose gives no
consideration. Rose can use the principle of equitable estoppel as a defense against Ben
should attempt to enforce his original rights.
In Central London Property Trust v High Tree House, P leased block of flats to D. Due to the
war, D was unable to sublet the flats, and so P agreed to accept half rent. P later claimed the
full rent for the post war period. This claim succeeded.
JANUARY 2013
b) Cikgu Norita paid her neighbour, Auntie Sue, a monthly sum of RM500 to care for
Nur Chaya, her two year old daughter, while she was at work. Cikgu Norita was
selected from her school to attend a workshop concerning the recent blueprint on the
education policy in Bangkok for seven days. Cikgu Norita promised to pay Auntie Sue
an additional Sum of RM300 to look after Nur Chaya while she was in Bangkok. When
Cikgu Norita returned, she refused to pay the sum promised. (6 marks)
JUNE 2014 – PART A
QUESTION 3
Briefly discuss the doctrine of promissory estoppel and state the three (3) requirements
that must exist before the doctrine can apply
QUESTION 3
Unlike the position under common law, ‘natural love and affection’ is good consideration
under the Contracts Act 1950.
With Reference to decided cases and statutory provisions, briefly discuss the above
statement. (6 marks)
[Provide definition of offer and acceptance]
Consideration is defined under section 2 of the Contracts Act 1950 and in the case of Currie v
Misa, a valuable consideration, in the sense of law, may consist either in some right, interest,
profit or benefit accruing to the other party, or some forebearance, detriment, loss, or
responsibility given, suffered or undertaken by the other. A contract must be supported with
consideration because a contract is only legally binding if it is made in return for another
promise or an act. However, there are exceptions.
However, under section 26 of the Contracts Act 1950 there are exceptions. Section 26(a),
states that if an agreement is put in writing, registered if the law requires registration and
made on the account of natural love and affection arising from persons standing in near
relations. In the case of In Re Tan Soh Sim, Deceased the facts were that A woman on her
deathbed expressed her intention to leave all her properties to her four adopted children. The
court held that the claims of the adopted children were not effective as it was contrary to
Section 26(a) i.e. it was not in writing and there was no natural love and affection between
parties standing in near relation to each other
DECEMBER 2013 – PART A
QUESTION 2
Last Friday, Nur Jannah found Puan Kasih’s bag which contained some important
documents. On Monday morning, Nur Jannah returned the bag to Puan Kasih. Puan
Kasih was so happy that she promised to pay Nur Jannah RM500 by the end of the
week. Decide whether Nur Jannah have any right to sue Puan Kasih, should she fail to
pay her the promised sum of RM500. (6 marks)
Issue: Whether Nur Jannah have any right to sue Puan Kasih, should she fail to pay her the
promised sum of RM500 for past consideration
Law:
profit or benefit accruing to the other party, or some forbearance, detriment, loss, or
promise or an act.
However, there is an exception under section 26(b) of the Contracts Act 1950 states, A
promise to compensate for something voluntarily done or for something the promisor was
legally compellable to do. In another case, Re McArdle concerned a house which was joint
property of several siblings in which they lived together. The plaintiff, the wife of one of the
brothers, paid for the repairs of the house. After that, the siblings agreed with the plaintiff
that, in consideration for the repairs, they would pay her $488. Subsequently, the plaintiff
sued for the payment of $488, the defendants in the suit being the siblings other than her
husband. The issue was whether there was consideration for this agreement to pay her $488.
The court of appeal held that, as the repairs had been carried out before the agreement to pay
had been made, it was past consideration.
Hence, there are three types of consideration which are executory, executed and past. Past
Consideration is which anything has already been done before a promise in return is given is
past consideration. For example B looked after A’s Cat when A was on Holiday. Upon
returning, A promise to give B RM100 for looking after his cat. Therefore A’s promise to give
RM100 is for B’s past consideration, ie looking after the cat.
Application: In this case, there was past consideration as Nur Jannah had found Puan Kasih’s
bag and that Puan Kasih had promised to pay in response of her search of the bag as pursuant
to section 26(b) of the Contracts Act 1950. It is affirmed in the case of Re McArdle where it
was held that, as the repairs had been carried out before the agreement to pay had been made,
it was past consideration.
Conclusion: Nur Jannah has the right to sue Puan Kasih, should she fail to pay her the
promised sum of RM500 for past consideration.

QUESTION 2
Uncle Krishnan wants to give his land to his son, Prem for his graduation. Prem is not
required to pay Uncle Krishnan any money. But uncle Krishnan is not sure if it is a
valid transaction, since there is no consideration for the transfer of the land. (6 marks)
ISSUE: Whether there was consideration for the transfer of land from Krishnan to his son
Prem. LAW:
profit or benefit accruing to the other party, or some forbearance, detriment, loss, or
promise or an act. However, there are exceptions.
However, under section 26 of the Contracts Act 1950 there are exceptions. Section 26(a),
states that if an agreement is put in writing, registered if the law requires registration and
made on the account of natural love and affection arising from persons standing in near
relations. In the case of Queck Poh Guan v Quick Awang, it is not disputed that the parties
stand in a near relation to each other; the deceased (the transferor) being the mother to the
defendant (the transferee), whether or not there exists any element of love and affection can
be gathered from the evidence adduced by both parties and the surrounding circumstances. It
was held that the transfer of the land was a gift from the deceased mother to the defendant on
account of natural love and affection.
APPLICATION: In this case, even though there was no consideration for Uncle Krishnan
from Prem, however it is still a valid agreement as there is an exception as stated under
section 26(a) of the Contracts act which is writing and registered where both Uncle Krishnan
and Prem must sign some documents and that it is done on the account of natural love and
affection. This is proven in the case of Queck Poh Guan v Quick Awang where it was held,
the transfer of the land was a gift from the deceased mother to the defendant on account of
natural love and affection.
CONCLUSION: In this case, the transfer of land without consideration is valid as there is an
exception to agreement that requires consideration as it is based on natural love and affection.
QUESTION 3
Explain the distinction between executed consideration and past consideration (6 marks)
For executed consideration, here the consideration for the promise is a performed or executed
act. For example, A orders a cupboard from B and pays for it. If B does not deliver within the
specified time, A can sue B putting forward his executed act, i.e payment of money. Similarly
a person, who return’s a lost cat where there is an offer for reward, may claim the reward.
Because the act of returning the cat is executed consideration. In Carlill v Carbolic Smoke
Ball, the defendant company manufactured a patent medicine, called ‘smoke ball’. In various
advertisements they offered to pay $100 to any person who caught influenza after having
sniffed the smoke ball three times a day for two weeks. This is an executed promise as Carlill
had performed the offer made by the company and that reward for it is the $100.
Past consideration under section 26(b) of the Contracts Act 1950 states, A promise to
compensate for something voluntarily done or for something the promisor was legally
compellable to do. In another case, Re McArdle concerned a house which was joint property
of several siblings in which they lived together. The plaintiff, the wife of one of the brothers,
paid for the repairs of the house. After that, the siblings agreed with the plaintiff that, in
consideration for the repairs, they would pay her $488. Subsequently, the plaintiff sued for
the payment of $488, the defendants in the suit being the siblings other than her husband. The
issue was whether there was consideration for this agreement to pay her $488. The court of
appeal held that, as the repairs had been carried out before the agreement to pay had been
made, it was past consideration.
JUNE 2016 – PART C

QUESTION 1 [section 64] Consideration case = Nanyang, *Kerpa Singh page 90,
Associated Pan Malaysia
…. Bertha now seeks your advice on whether she is obliged to pay the RM4,000 as
demanded by Violet’s lawyers and also whether she can get back her land that has been
transferred to Shaman. She claimed that when she made the transfer, she was not
herself.
ISSUE: Whether Bertha is obliged to pay the consideration that she was obliged to pay the
RM4,000 as demanded by Violet’s lawyers.
LAW:
[Provide definition of offer, acceptance and consideration]
Consideration is defined under section 2(d) of the Contracts Act 1950 and in the case of
Currie v Misa, a valuable consideration, in the sense of law, may consist either in some right,
interest, profit or benefit accruing to the other party, or some forbearance, detriment, loss, or
promise or an act.
Under section 64 of the Contracts Act 1950, states that every promise 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 may accept instead of it any satisfaction which he thinks fit.
Illustration (b) A owes B RM5,000. A pays to B, and B accepts, in satisfaction of the whole
debt, RM2,000 paid at the time and place at which the RM5,000 were payable. The whole
debt is discharged.
APPLICATION: In this case, there was consideration where she received RM10,000 from
Violet and that she had to pay back the said debt under section 2(d). However, the facts of the
case stated that she returned the sum of RM6,000 only which violet considers sufficient from
Bertha. That is valid as pursuant to section 64 of the Contracts Act 1950, through illustration
(b), she does not have to pay the rest of the debt as the RM6,000 had already settled the debt
and that Violet could not claim a lawsuit against Bertha. In the case of Kerpa Singh v Bariam
Singh, the Federal Court ruled that the acceptance of the cheque from the debtor’s son in full
satisfaction precluded them from claiming the balance. From that case, we can correlate that
Bertha had paid RM6,000 which precluded them from the balance of debt.
CONCLUSION: Bertha is not obliged to pay the remainder of the debt of RM4,000 as paying
RM6,000 was enough to preclude her from that and that Violet had agreed to it.
QUESTION 3
An agreement made without consideration is void.
With reference to relevant cases and statutory provisions, briefly discuss the exceptions
to the above rule. (5 marks)

promise or an act.
However, under section 26 of the Contracts Act 1950 there are exceptions.
Section 26(a), states that if an agreement is put in writing, registered if the law requires
registration and made on the account of natural love and affection arising from persons
standing in near relations. In the case of In Re Tan Soh Sim, Deceased the facts were that A
woman on her deathbed expressed her intention to leave all her properties to her four adopted
children. The court held that the claims of the adopted children were not effective as it was
contrary to Section 26(a) i.e. it was not in writing and there was no natural love and affection
between parties standing in near relation to each other
Section 26(b) of the Contracts Act 1950 states, A promise to compensate for something
voluntarily done or for something the promisor was legally compellable to do. In another
case, Re McArdle concerned a house which was joint property of several siblings in which
they lived together. The plaintiff, the wife of one of the brothers, paid for the repairs of the
house. After that, the siblings agreed with the plaintiff that, in consideration for the repairs,
they would pay her $488. Subsequently, the plaintiff sued for the payment of $488, the
defendants in the suit being the siblings other than her husband. The issue was whether there
was consideration for this agreement to pay her $488. The court of appeal held that, as the
repairs had been carried out before the agreement to pay had been made, it was past
consideration.
Section 26(c) that is a promise to pay a debt barred by limitation law. It is the promise, made
in writing and signed by the person to be charged therewith, or by his agent generally or
specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might
have enforced payment but for the law for the limitation of suits. Under illustration (e) of
section 26, A owes B RM 1,000.00 but the debt is barred by limitation. A signs a written
promise to pay B RM500.00 on account of the debt. This is a contract. In the case of Halimah
binti Abdullah v Tengku Mariah binti Sultan Sulaiman, In this case the plaintiff alleged that
by a "Jual Beli Sementera" dated June 28, 1951, the defendant undertook to execute the
transfer of the land when she obtained it from the estate of her father, the late Sultan
Sulaiman. The previous solicitors of the defendant had also written on January 14, 1978 that
the defendant was prepared to sign a transfer of the land into the name of the plaintiff. The
plaintiff claimed the land and the defence was limitation the letter of the solicitors for the
defendants was sufficient acknowledgment for all intents and purposes and therefore the
plaintiff's claim was not statute-barred. This affirms s 26(1) of the Limitation Ordinance
1953.
*JULY 2017 – PART A
QUESTION 5 [Pinnel case, landmark, lesser amount of payment

With reference to two (2) decided cases, discuss the differences between Pinnel’s Rule and
Section 64 of the Contracts Act 1950.

Section 64 of the Contracts Act 1950 states “ Every promise 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 may accept instead of it any satisfaction which he thinks fit.”
Pinnel’s rule is an English law is that waiver of a right that is not supported by consideration
is void. A person who does no more than he is already legally obliged to perform under a
public duty to perform cannot hold the other party to his promise. Payment of a smaller sum is
not a satisfaction of a legal obligation to pay a larger sum. In Pinnel's Case (1602), Cole owed
Pinnel £8-10s-0d (£8.50) which was due on 11 November. At Pinnel's request, Cole payed
£5- 2s-2d (£5.11) on 1 October, which Pinnel accepted in full settlement of the debt. Pinnel
sued Cole for the amount owed. It was held that part-payment in itself was not consideration.
However, the agreement to accept part-payment would be binding if the debtor, at the
creditor's request, provided some fresh consideration.
The difference between Pinnel’s case is that there was no consideration if it was part or remit,
however in the case of Kerpa Singh v Bariam Singh, they took a different approach. BS owed
$8,869.94 under a judgment debt. BS’s son wrote to KS offering $4000/- in full settlement of
his father’s debt and endorsed a cheque for the amount. He stipulated that should KS refuse to
accept, he must return the cheque. KS’s legal advisers, having cashed the cheque and retain
the money proceeded to secure the balance of the debt by issuing bankruptcy notice on the
debtor. The Federal Court ruled that the acceptance of the cheque from the debtor’s son in full
satisfaction precluded them from claiming the balance.
PART B
*QUESTION 2
On Monday morning, Leela, a student returned the bag to Professor Susila. She was so
pleased and grateful that she promised to give Leela RM500.00 at the end of the week
but did not do so.
Later that evening, Leela was informed by her father that he wants to transfer his land
to her upon her graduation from IJL institute. Leela is not required to pay her father
any money for the land. Leela is not sure if the transfer is valid since she did not provide
any consideration for the transfer of the land.
Advise Leela of the validity of the said land transfer and whether she can legally enforce
Professor Susila’s promise.
Issue: Whether the said land transfer was valid
Law:
[Give definition of offer, acceptance and consideration with Currie v Misa case]
There is an exception that agreements must have consideration. An agreement does not need
to have consideration under section 26, specifically under s26(a) of the provision which states
that it can an agreement can be done without consideration if it is written and registered as
well as done on the account of natural love and affection. In the case of In Re Tan Soh Sim,
Deceased the facts were that A woman on her deathbed expressed her intention to leave all
her properties to her four adopted children. The court held that the claims of the adopted
children were not effective as it was contrary to Section 26(a) i.e. it was not in writing and
there was no natural love and affection between parties standing in near relation to each other.
Also, in the case of Queck Poh Guan v Quick Awang, it is not disputed that the parties stand
in a near relation to each other; the deceased (the transferor) being the mother to the
defendant (the transferee), whether or not there exists any element of love and affection can
be gathered from the evidence adduced by both parties and the surrounding circumstances. It
was held that the transfer of the land was a gift from the deceased mother to the defendant on
account of natural love and affection.
Application: In this case, the transfer of law without consideration was valid by virtue of
section 26(a) of the Contracts Act 1950 as long as it was written and registered as well as
done on the account of natural love and affection. We shall apply the case of Queck Poh
Guan v Quick
Awang as it was held that the transfer of the land was a gift from the deceased mother to the
defendant on account of natural love and affection. In this case, the transfer of land of Leela’s
father to her was valid as land transactions required signing of documents and that it was done
on the account of natural love and affection that because Leela was the daughter and she
graduated IJL institute, it showed that her father was proud to have a daughter like her.
Conclusion: The transfer of land was valid without consideration as it was done on account of
natural love and affection and that it was written and registered.
Issue: Whether Leela can legally enforce Dr. Susila’s promise for the consideration of RM500.
Law: [Define offer, acceptance and consideration under section 2(a),(b) and (d)]
Past consideration under section 26(b) of the Contracts Act 1950 states, A promise to
compellable to do. In another case, Re McArdle concerned a house which was joint property
of several siblings in which they lived together. The plaintiff, the wife of one of the brothers,
paid for the repairs of the house. After that, the siblings agreed with the plaintiff that, in
consideration for the repairs, they would pay her $488. Subsequently, the plaintiff sued for
the payment of $488, the defendants in the suit being the siblings other than her husband. The
issue was whether there was consideration for this agreement to pay her $488. The court of
appeal held that, as the repairs had been carried out before the agreement to pay had been
made, it was past consideration.
Application: In this case, there was past consideration as Leela had found the bag and that Dr.
Susila promised to pay RM500. In the case of Re McArdle, The court of appeal held that, as
the repairs had been carried out before the agreement to pay had been made, it was past
consideration.
*DECEMBER 2016 – PART A
QUESTION 3
Ahmad was saved from drowning by his jobless cousin, Malik. He promised Malik that
he would hire him as a training executive in his company, it has been a year since the
incident and Malik has not received any letter of offer from Ahmad.
Advise Malik whether he is entitled to claim the promise from Ahmad.
Issue: Whether Malik was entitled to claim the promise from Ahmad for past
consideration, Law: [Define offer, acceptance and consideration under section 2(d)]
Past Consideration Section 26(b) of the Contracts Act 1950 states, A promise to compensate
for something voluntarily done or for something the promisor was legally compellable to do.
In another case, Re McArdle concerned a house which was joint property of several siblings
in which they lived together. The plaintiff, the wife of one of the brothers, paid for the repairs
of the house. After that, the siblings agreed with the plaintiff that, in consideration for the
repairs,
they would pay her $488. Subsequently, the plaintiff sued for the payment of $488, the
defendants in the suit being the siblings other than her husband. The issue was whether there
was consideration for this agreement to pay her $488. The court of appeal held that, as the
repairs had been carried out before the agreement to pay had been made, it was past
consideration.
Application: In this case, there was past consideration as Malik had already saved Ahmad
from drowning and Ahmad himself had promised to hire him as a training executive in his
company as according to section 26(b) of the Contracts Act 1950 states, A promise to
compellable to do. In Re McArdle, it was held that, as the repairs had been carried out before
the agreement to pay had been made, it was past consideration.
Conclusion: Malik can claim against Ahmad as there was past consideration. 26(b) of the
Contracts Act 1950 states, A promise to compensate for something voluntarily done or for
something the promisor was legally compellable to do.
*JANUARY 2018 – PART A
QUESTION 2
(a) With reference to statutory provisions and decided cases, discuss whether Ayra is
obliged to pay the balance of the said loan of the remaining RM2,500 from RM10,000
from which she only paid RM7,500 that was already chequed by FFS. (10 marks)
Issue: Whether Ayra is obliged to pay the balance of the said load of RM2,5000.
Law: [Define offer, acceptance and consideration under section 2(a),(b) and (d)]
The case is related to waiver of performance. Under section 64 of the Contracts Act 1950,
states that every promise 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 may accept instead
of it any satisfaction which he thinks fit. Illustration (b) A owes B RM5,000. A pays to B, and
B accepts, in satisfaction of the whole debt, RM2,000 paid at the time and place at which the
RM5,000 were payable. The whole debt is discharged.
Application: In this case, Ayra is not obliged to pay the balance of the said loan. This is
because sice FFS had accepted RM7,500 that was already chequed, it excluded Ayra to pay
the rest of the loan. This is pursuant to section 64 and under illustration (b). In the case of
Kerpa Singh v
Bariam Singh, The Federal Court ruled that the acceptance of the cheque from the debtor’s son
in full satisfaction precluded them from claiming the balance.
Conclusion: In conclusion, Ayra is not obliged to pay the rest of the loan as she was
precluded from it when FFS had chequed it.
(b) Advise Bala whether he can enforce the promise of Simon who can claim RM500 for
increase of salary if he became extra alert and became Simon’s bodyguard as he was
only the security guard of Simon’s company. (10 marks) – Pre-existing duty Glasbrook
Brothers Limited v Glamorgan County Council & Ors
Issue: Whether Bala can enforce the promise of Simon for consideration of existing duties or
over and above it?
Law:
promise or an act.
The promise to pay additional reward for the performance of an existing contractual or legal
obligation is not enforceable because there is no consideration to make that promise binding
as in the case of Stilk v Myrick where two members of the crew of a ship deserted in foreign
port. The master was unable to recruit substitute and promised the rest of the crew that they
should share the wages of deserters if they would complete the voyage home short-handed.
The ship owners however repudiated the promise. The court held in performing their existing
duties the crew gave no consideration for the promise of extra pay and the promise was not
binding.
However, if the performance was over and above the pre-existing obligation that is sufficient
consideration. Additional promise of rewards of payments is legally enforceable as illustrated
in Glasbrook Brothers Limited v Glamorgan County Council and others. In that case, the
owners of a coal mine asked for and agreed to pay for a special police guard for the mine.
Later they repudiated liability saying that the police had done no more than perform their
public duty of maintaining order. The court held the police had done more than their general
duties because in normal circumstances the police would only provide a mobile force and not
a stationary guard. Therefore they were entitled to payment because their services were over
and above their pre-existing duties.
Application: In this case, Bala had exceeded his over and above pre-existing duties. This is
because, he was only a security guard at Simon’s company but however being a bodyguard
and keeping attentive of Simon if danger were to occur would substitute a new job or
consideration. The case of Stilk v Myrick is rejected and we shall rely on the case of
Glasbrook Brothers Limited v Glamorgan County Council where it was held that held the
police had done more
than their general duties because in normal circumstances the police would only provide a
mobile force and not a stationary guard. Therefore they were entitled to payment because
their services were over and above their pre-existing duties.
Conclusion: In conclusion, Bala was over and above his pre-existing duties and he was
entitled to RM500 for which is a new consideration and an additional promise or reward.
JUNE 2018
Felix entered into an agreement with Mr. Leong to purchase a factory complete with
machinery for production of bricks worth RM1.2 million for only RM450,000. Mr
Leong executed the agreement but Felix felt rather worried as to the validity of the
agreement since the purchase price was below the actual price value of the property.
With reference to relevant authorities, advise Felix as to his rights to claim from Tirai
Emas Sdn Bhd and the validity of the agreement to purchase the factory. (20 marks)
Additional Cases and notes

In JM Wotherspoon & Co Ltd v Henry Agency House, Suffian J stated:
…In this case the plaintiff had done what he did at the suggestions of the defendant firm
without any agreement by the defendant firm to pay any remuneration. What such act done
“voluntarily?”
…giving the word “voluntarily” its ordinary every day meaning, I am of the opinion that the
act done by the plaintiff for the defendant firm at the latter’s suggestion had not been done
voluntarily and therefore the promise made without consideration by the defendant firm to
compensate the plaintiff is not a contract.

In order to distinguish between executed consideration and executory consideration, we can
view this in the case of Wong Hon Leong David v Noorazman bin Adnan, Gopal Sri Ram
JCA where he distinguishes between the two that now, it is well settled that consideration may
be executory or executed. If A agrees to mow B’s lawn for RM10 and B agrees to pay him
RM10 in exchange for this service, there is, in the eyes of law, a valid and binding agreement
between A and B. This is borne out by the words of 2(e) of the Contracts Act 1950 which
declares: ‘every promise and every set of promises, forming the consideration for each other,
is an agreement.’
The consideration in such case is said to be executory, namely the exchange of mutual
promises. When the lawn is mowed, the act promised has been done and the consideration is
said to have become executed.
Consideration from promise or any other person

Under section 2(d) of the Contracts Act 1950, the consideration may flow from the promise or
third party.
In the case of Kepong Prospects Ltd & Ors v Schmidt, Mr Tan applied to the state
government for a prospecting permit for iron ore. He was assisted by the respondent,
Schimidt, who was a consulting engineer. The appellant was later incorporated with the
intention to take over the benefit of Tan’s prospecting permit, with Tan and Schmidt among
its first directors. There were two agreements involved. The first agreement in 1954 was
between the appellant and Tan whereby the appellant company should prospect work the land
in the mining permit and the company should take over Tan’s obligation to pay Schmidt 1%
of the selling price of all ore sold from such land. The second agreement in 1955 was between
appellant and Schmidt whereby the appellant company agreed to pay Schmidt 1% of the
selling price of all ore sold from the land comprised in the 1954 agreement. Schmidt was later
dismissed as a director and he commenced proceedings for al monies payable to him under
both agreements.
The Privy Council agreed with the Federal Court that in respect of the 1955 agreement,
Schmidt’s services to the appellant established “a legally sufficient consideration moving
from Schmidt” as to render the agreement valid. Schmidt’s services however can be
considered only after the time company was formed since no services can be given to a non-
existent company.
In relation to the 1954 agreement, it should be noted that although the agreement was between
Tan and the appellant, under section 2(d) of the Contracts Act 1950, consideration may only
be given by “promise or any other person.”
Consideration not be adequate but sufficient
Consideration must have some value. Court will not ask whether it is proportionate in value to
the thing given in return. In other words, there is no remedy for someone who makes a bad
bargain as stated in the explanation section 26 and illustration (f). However, courts may ask if
there was element of involuntariness such as coercion, undue influence or fraud under
illustration (g).
In the case of Phang Swee Kim v Beh I Hock, the respondent agreed to transfer the appellant
a parcel of land on payment of RM500 when the land was subdivided which was worth much
more. The respondent later refused to honor the promise which they argued is unenforceable.
The trial judge held that the ‘agreement was void due to inadequacy of consideration’. The
Federal Court reversed the decision and applied explanation 2 and illustration (f) of section
26.
LEGAL INTENT
FRAMEWORK FOR LEGAL INTENT
PRESUMPTIONS FOR THE LAWS NOTES
LEGAL INTENT
Family, domestic Provisions: *There are no provisions in the CA 1950 (Court However, this
relations refers to common law cases & precedents) presumption is
rebuttable
Cases:
1) Choo Tiong Hin v Choo Hock Swee (Definition and to
differentiate)
2) Balfour v Balfour (not legally binding)
3) Jones v. Padavatton (not legally binding)
4) Merrit v Merrit (legally binding/rebuttable)
Commercial relations Provisions: *There are no provisions in the CA 1950 (Court
refers to common law cases & precedents)
Cases:
1) Choo Tiong Hin v Choo Hock Swee (Definition and to
differentiate)
2) Carlill v Carbolic Smoke Ball (Legal Intent)
3) Daiman Development Sdn Bhd v Matthew Lui Chin Teck
LIST OF AUTHORITIES
Definition of Legal Intent & Types
The test applied by the courts is objective and not subjective. It is not what the parties had in
mind which is decisive but what inferences could be drawn from the words or conduct of the
parties…
Choo Tiong Hin v Choo Hock Swee, Whyatt CJ stated; it is, of course, elementary that an
agreement is not a contract in the strict sense of the word, unless it is common intention of the
parties that it shall be legally enforceable. Such an intention is normally inferred from the
nature of the agreement. For instance, in the case of agreements regulating commerce or
business, it is obvious that the parties intend legal consequences to follow; per contra… In the
case of agreements relating to social engagements, it is inferred as a matter of course that
there is no common intention to create legal obligations… If an agreement is made between
family members of a family in the course of a family life, as in the case of Balfour v Balfour,
the law will ordinarily imply, from the circumstances of the case, that the parties did not
intend their agreement to have legal consequences.
Afterwards, apply the above case with the related presumptions below to answer your question
Family intentions
In Balfour v Balfour, the defendant was employed in Ceylon. He and his wife returned to the
UK on leave but it was agreed that for health reasons she would not return to Ceylon with
him. He promised to pay her $30 a month as maintenance. Later the marriage ended in
divorce and the wife sued for the monthly allowance which the husband no longer paid. The
Court of Appeal held than an informal agreement of indefinite duration made between the
husband and wife whose marriage had not at the time broken up was not intended to be
legally binding.
In the case of Jones v. Padavatton, which in this case, a mother promised to pay her daughter
$200 per month if she gave up her job in the US and went to London to study for the bar. The
daughter was reluctant to do so at first as she had a well-paid job with the Indian embassy in
Washington and was quite happy and settled, however, the mother persuaded her that it would
be in her interest to do so. The mother's idea was that the daughter could then join her in
Trinidad as a lawyer. This initial agreement wasn't working out as the daughter believed the
$200 was US dollars whereas the mother meant Trinidad dollars which was about less than
half what she was expecting. This meant the daughter could only afford to rent one room for
her and her son to live in. The Mother then agreed to purchase a house for the daughter to live
in. She purchased a large house so that the daughter could rent out other rooms and use the
income as her maintenance. The daughter then married and did not complete her studies. The
mother sought possession of the house. The question for the court was whether there existed a
legally binding agreement between the mother and daughter or whether the agreement was
merely a family agreement not intended to be binding. The court held that, the agreement was
purely a domestic agreement which raises a presumption that the parties do not intend to be
legally bound by the agreement. There was no evidence to rebut this presumption.
In Merrit v Merrit, the husband had left the matrimonial home, which was owned in the joint
names of husband and wife, to live with another woman. The spouses met and held a
discussion in the husband’s car, in the course of which he agreed to pay her $40 a month out
which she
agreed to keep up the mortgage payments on the house. The wife refused to leave the car until
the husband signed a note of these agreed terms and an undertaking to transfer the house into
her sole name when the mortgage had been paid off. The wife paid off the mortgage but the
husband refused to transfer the house to her. The Court of Appeal held that in the
circumstances, an intention to create legal obligations was to be inferred and the wife could
sue for breach of contract.
Commercial relations
Carlill v Carbolic Smoke Ball, the facts were that the defendants issued an advertisement in
which they offered to pay $100 to any person who affected to influenza after having used one
of their smoke balls in a specific manner and for a specified period. The plaintiff, Mrs. Carlill
bought and used the smoke balls as prescribed and still caught influenza. The plaintiff who
suffered from influenza after using the product then sued the company for breach of contract.
It was held, that using the influenza balls and complying with the instructions of getting the
$100 conveyed legal intent in commercial settings. (There is intent)
Daiman Development Sdn Bhd v Matthew Lui Chin Teck, the facts were that the respondent
paid a booking fee of $700 and signed a booking pro forma for purchase of house from A, the
appellant who were housing developers. When the appellant tried to increase the price, the
respondent refused and subsequently applied for specific performance. The appellant
contended that pro forma was ‘subject to contract’ and until a further document was mutually
agreed on and signed, there was no contractual obligations between the parties. It was held
that pro forma does not make either the obligation to purchase or the obligation to sign
conditional on the making of some other agreement. The appellant was clearly bound by the
pro forma but argued that the pro forma did not create an obligation under a contract. (Intent
rebuttable)
JANUARY 2013
Ashraf, a 14 year old boy, agreed to purchase a bicycle from Encik Malik but failed to pay for
it.
With reference to relevant authorities, explain the consequences of Ali’s refusal to pay
(6 marks)
b) Mei Foong and Mei Ying are sisters but have not spoken to each other for ten years
because of a family dispute. Their mother is now seriously ill and requires to be
admitted into a nursing home. Mei Foong and Mei Ying finally decided to reconcile
their differences. They decided to share the cost of the nursing home and all other
medical expenses relating to their mother. Mei Foong and Mai Ying agreed to consult a
lawyer and have an agreement drawn up and finalized it.
Six months later, Mei Foong and Mei Ying had an argument, resulting in Mei Ying
refusing to continue paying the cost of the nursing home and the other medical
expenses.
Advise Mei Foong as to whether she can enforce the said agreement. (10 marks)
The issue in this case is whether Mei Foong can enforce the agreement with her sister
Mei Ying?
The law requires evidence of intention of the parties (express or implied) to become
legally bound in a contract. As a results, two presumptions have been developed to assist in
determining whether or not the parties intended to create legal relations which are the first
one is, it is presumed that parties to an agreement concerning commerce or business intend to
be legally bound and the second presumption is, it is presumed that parties to an agreement of
a family, domestic or social nature do not intend to be legally bound.
The test applied by the courts is objective and not subjective. It is not what the parties
had in mind which is decisive but what inferences could be drawn from the words or conduct
of the parties…
In the case of Choo Tiong Hin v Choo Hock Swee, Whyatt CJ stated; it is, of course,
elementary that an agreement is not a contract in the strict sense of the word, unless it is
common intention of the parties that it shall be legally enforceable. Such an intention is
normally inferred from the nature of the agreement. For instance, in the case of agreements
regulating commerce or business, it is obvious that the parties intend legal consequences to
follow; per contra… In the case of agreements relating to social engagements, it is inferred as
a matter of course that there is no common intention to create legal obligations… If an
agreement is made between family members of a family in the course of a family life, as in
the case of Balfour v Balfour, the law will ordinarily imply, from the circumstances of the
case, that the parties did not intend their agreement to have legal consequences
In Merrit v Merrit, the husband had left the matrimonial home, which was owned in
the joint names of husband and wife, to live with another woman. The spouses met and held a
which she agreed to keep up the mortgage payments on the house. The wife refused to leave
the car until the husband signed a note of these agreed terms and an undertaking to transfer
the house into her sole name when the mortgage had been paid off. The wife paid off the
mortgage but the husband refused to transfer the house to her. The Court of Appeal held that
in the circumstances, an intention to create legal obligations was to be inferred and the wife
could sue for breach of contract.
In this case, the relationship Mei Foong and Mai Ying is a family relationship as they
are sisters. Generally, there is no intention to create legal relation when the agreement was
made between family members. The presumption on the intention to create legal relation in
this case is that there is no intention to be legally bound when it falls under family, social and
domestic agreement. The law requires that there is an evidence that the parties’ intention was
expressly or impliedly stated to be legally bound. However, the presumption is rebuttable
though the traditional presumption is that parties to the agreement concerning domestic,
family and social matter do not intend to be legally bound but when if it is clearly commercial
then there is a valid contract between both parties. As in this case, As illustrated in the case of
Merrit
v. Merrit, where the agreement took place between husband and wife. In this case, the
spouses met and held a discussion in the husband’s car, in the course of which he agreed to
pay her $40 a month out which she agreed to keep up the mortgage payments on the house.
The wife refused to leave the car until the husband signed a note of these agreed terms and an
undertaking to transfer the house into her sole name when the mortgage had been paid off.
The wife paid off the mortgage but the husband refused to transfer the house to her.
Therefore, applying the case of Merrit v. Merrit in this situation where the Mei Foong and
Mai Ying agreed to consult a lawyer and have an agreement drawn up and finalized it. When
their mother is seriously ill and requires to be admitted into a nursing home. Mei Foong and
Mei Ying finally decided to reconcile their differences. Therefore, they decided to share the
cost of the nursing home and all other medical expenses relating to their mother. In this case,
there is intention to be legally bound by both parties as they take all the necessary measures to
make the agreement between them to be a valid contract despite the agreement was made
between family members. Therefore, the presumption is rebuttable as the agreement between
family members can be legally bound when it is clearly commercial.
In conclusion, the agreement between Mei Foong and Mai Ying is valid and she can
enforced the contract. Hence, Mei Foong can sue Mai Ying for breach of contract if Mai Ying
continue refusing to pay the cost for nursing home and other medical expenses.
DECEMBER 2013
a) Dorothy and David have been cohabiting for eight years. During their first year
together, Dorothy purchased an apartment and promised to transfer half share
of the apartment to David in consideration of the fact that he would contribute
equally to the monthly instalments. Sadly, David never made any contribution to
the monthly instalment.
Recently, David has become very abusive towards Dorothy. After weeks of
quarrelling, they decided to separate. David now claims his half share of the
apartment.
Advise Dorothy if she is obliged to do so. (10 marks)
The issue in this case is whether Dorothy is obliged to transfer half share of the
apartment as promised to David.
of the parties…
case, that the parties did not intend their agreement to have legal consequences.
In Balfour v Balfour, the defendant was employed in Ceylon. He and his wife returned
to the UK on leave but it was agreed that for health reasons she would not return to Ceylon
with him. He promised to pay her $30 a month as maintenance. Later the marriage ended in
legally binding.
In this case, Dorothy and David had been cohabiting together for almost 8 years and
she purchased the said apartment on their first year of their relationship which she promised
to give half of the shares of the apartment to David. Generally, there is no intention to create
legal relation when the agreement was made between family members. The presumption on
the intention to create legal relation in this case is that there is no intention to be legally bound
when it falls under family, social and domestic agreement. The law requires that there is an
evidence that the parties’ intention was expressly or impliedly stated to be legally bound. The
promise between Dorothy to David falls under the family, social and domestic agreements as
their relationship was based on natural love and affection as they have been cohabiting for 8
years. in the case of Balfour v. Balfour, where in this case the husband promised to pay her
$30 a month as maintenance. Later the marriage ended in divorce and the wife sued for the
monthly allowance which the husband no longer paid. The Court of Appeal held than an
informal agreement of indefinite duration made between the husband and wife whose
marriage had not at the time broken up was not intended to be legally binding. Applying the
case above in this situation, the promise made by Dorothy was made during they are in a
relationship that was based on love and affection and there is no intention to be legally
binding as in the legal presumption that parties to an agreement concerning domestic, family
or social matter will not intend to be legally bound. The agreement may be morally binding
but rarely is intended to have legal repercussion. Therefore, Dorothy has no intention to
create any legal relation with David as for the transfer of half of the share of the apartment to
him.
In conclusion, Dorothy has no obligation to transfer half of the share of the apartment
to David as there was no valid contract between them to make it an enforceable promise.
Meanwhile, Andrew Hooi’s daughter, Samantha Hooi has just received excellent results
in the recent STPM examination. The night before the release of the result, Andrew
Hooi promised Samantha a trip to Korea if she did well in her examination.
After hearing about the recent air crash of the Malaysian jetliner, Andrew Hooi decided
not to allow Samantha Hooi to go to Korea.
Samantha Hooi initiated a legal proceeding against Andrew Hooi.
With relevant authorities, advise Andrew Hooi as to his liabilities, if any towards his
daughter, Samantha Hooi (15 marks)
[FAMILY RELATIONS- NO PRESUMPTION OF LEGAL INTENT-CHOO TIONG HIN-
BALFOUR V BALFOUR]
JUNE 2015
Meanwhile, Ramsy offered an attractive employment contract to his siter Rosy who
resides in Sarawak to return to Johor bahru and work with him. Rosy refused. But after
constant persuasions from Ramsy, Rosy accepted his offer. Rosy had to resign from her
current position to sell her house and relocate to Johor Bahru. But when Rosy arrives in
Johor Bahru, Ramsy refused to acknowledge the said contract.
With refermce to statutory provisios and decided cases, advise Ramsy on the validity of
all the transactions.
iii) The employment contract between Ramsy and his sister (10 marks)
The issue in this case is whether there is a valid employment contract between Ramsy and his
sister?
one
is, it is presumed that parties to an agreement concerning commerce or business intend to be
legally bound and the second presumption is, it is presumed that parties to an agreement of a
family, domestic or social nature do not intend to be legally bound.
of the parties…
In the case of Jones v. Padavatton, which in this case, a mother promised to pay her
daughter $200 per month if she gave up her job in the US and went to London to study for the
bar. The daughter was reluctant to do so at first as she had a well-paid job with the Indian
embassy in Washington and was quite happy and settled, however, the mother persuaded her
that it would be in her interest to do so. The mother's idea was that the daughter could then
join her in Trinidad as a lawyer. This initial agreement wasn't working out as the daughter
believed the $200 was US dollars whereas the mother meant Trinidad dollars which was
about less than half what she was expecting. This meant the daughter could only afford to rent
one room for her and her son to live in. The Mother then agreed to purchase a house for the
daughter to live in. She purchased a large house so that the daughter could rent out other
rooms and use the income as her maintenance. The daughter then married and did not
complete her studies. The mother sought possession of the house. The question for the court
was whether there existed a legally binding agreement between the mother and daughter or
whether the agreement was merely a family agreement not intended to be binding. The court
held that, the agreement was purely a domestic agreement which raises a presumption that the
parties do not intend to be legally bound by the agreement. There was no evidence to rebut
this presumption.
In this case, it was only a family agreement between Rosy and Ramsy as despite the
fact that offering a job by Ramsy was of a commercial agreement, but it is rebuttable as there
was no formal signature of a contract or either of them intended to hire a lawyer or any other
person qualified to enable their venture to be legally enforceable by law.
In conclusion, Ramsy is not liable for Rosy as they were only in a family agreement
and if it is to be rebuttable, then there should be evidence that they have signed documents or
proceeded with other methods such as hiring a lawyer to fabricate relevant forms in order for
it to be legally enforceable.
DECEMBER 2015
Meanwhile, Dr Kay’s wife, Samantha had initiated legal proceedings against him for
failing to buy her a new BMW motor car. Dr Kay had promised to buy her the car for
her 50th birthday.
Based on the above facts, advise Dr Kay as to his liability for breach of contract with his
wife, Samantha. (10 marks)
The issue in this case is whether Dr Kay is liable for the breach of contract with his wife,
Samantha?
of the parties…
legally binding.
In this case, the promise has been executed between husband and wife which is
between Dr. Kay and his wife Samantha. The agreement between husband and wife falls
under the domestic, social and family agreement which generally it was presumed that the
parties has no intention to be legally bound. The law requires that there is an evidence that the
parties’ intention was expressly or impliedly stated to be legally bound. The agreement may
be a morally binding but rarely to be intended to have any legal repercussion. As illustrated in
the case of Balfour v. Balfour, where in this case the husband promised to pay her $30 a
month as maintenance. Later the marriage ended in divorce and the wife sued for the monthly
allowance which the husband no longer paid. The Court of Appeal held than an informal
agreement of indefinite duration made between the husband and wife whose marriage had not
at the time
broken up was not intended to be legally binding. In this case, the promise made by Dr. Kay
is to buy her a brand new BMW motor car for her 50th birthday but he failed to do so.
However, the promise is made between husband and wife and Dr. Kay has no intention to be
legally bound. Therefore, there is no valid and binding contract between them as the
presumptions for domestic, social and family agreement is no intention to create legal
relation.
In conclusion, Dr. Kay cannot be made liable for the breach of contract with Samantha
his wife as there is no valid and binding contract at the first place which the presumption to
crate legal relation for domestic, social and domestic agreement is no intention to create legal
relation.
JUNE 2016
Kamalia and Kammy are sisters. They recently agreed to purchase an apartment. Both
agreed to share the monthly instalments and other expenses pertaining to the
maintenance of the said apartment.
One year later, Kammy refused to continue paying the monthly instalments and other
expenses.
Advise Kamalia if she can initiate any legal proceedings against Kammy, (6 marks)
The issue in this case is whether Kammy had legal intent in familial ties to enter into a
contract with her sister, Kamalia.
In law, we are required to provide evidence of intention of the parties (expressed or
implied) to become legally bound. As a result, there is two presumptions which are there is a
presumption of a contract in commercial or business and no presumption of intention in a
family, domestic or social nature. However, the latter is rebuttable.
The test that can be used is the objective test in which it is not what the parties had in mind
that is decisive but what inferences could be drawn from the words or conduct of the parties.
In the case of Choo Tiong & Ors Choo Hock Swee, Whyatt CJ stated …such an intention is
follow; per contra, in the case of agreements relating to social engagements, it is inferred as a
matter of course that there is no common intention to create legal obligations.
If the agreement between family members was commercial, then there is a valid
contract. In the case of Merrit v Merrit, the husband had left the matrimonial home, which
was owned in the joint names of husband and wife, to live with another woman. The spouses
met and held a discussion in the husband’s car, in the course of which he agreed to pay her
40$ a month out which she agreed to keep up the mortgage payments on the house. The wife
refused to leave the car until the husband signed a note of these agreed terms and an
The wife paid off the mortgage but she refused to transfer the house to her.The Court of
Appeal held that in the circumstances, an intention to create legal relations was to be inferred
and the wife could sue for breach of contract.
In this case, Kammy despite having familial relations with Kamlina who is her sister
and it is contended that there is presumption to create legal relations which is not intended to
be binding, it was an agreement in commercial sense which involves transactions and
involves losses of one side. Both agreed to enter into an agreement to purchase an apartment
and also agreed to pay for monthly instalments and other expenses pertaining to the
maintenance of the apartment. Since it involves property and landlord-tenant issues, it is
obvious that there would be documents and formal contracts to be signed if there is a breach,
then either party may initiate a legal lawsuit. It is affirmed in the case of Merrit v Merrit that
an intention to create legal relations was to be inferred and the wife could sue for breach of
contract.
To conclude, there is presumption to create legal intent in family matters that is not
intended to be binding. However, it is rebuttable if it involves commercial and business
elements with supporting evidence to claim for an enforceable contract.
DECEMBER 2016
A mutual promise of two contracting parties does not itself create a contract. The law
requires evidence of the intention of both parties to become legally bound in a contract.
With reference to decided cases, discuss the two presumptions that have been developed
to determine whether or not both parties intend to create legal relations. (6 marks)
The law requires evidence of intention of the parties (express or implied) to become legally
bound in a contract. As a results, two presumptions have been developed to assist in
of the parties…
In commercial agreements, the presumption to create legal relation that the general
rule is that such intention exists. This is to facilitate trade and commerce and to promote
certainty in business transaction. In the case of Carlill v Carbolic Smoke Ball, the facts were
that the defendants issued an advertisement in which they offered to pay $100 to any person
who affected to influenza after having used one of their smoke balls in a specific manner and
for a
specified period. The plaintiff, Mrs. Carlill bought and used the smoke balls as prescribed and
still caught influenza. The plaintiff who suffered from influenza after using the product then
sued the company for breach of contract. It was held, that using the influenza balls and
complying with the instructions of getting the $100 conveyed legal intent in commercial
settings.
Intention to create legal relations in social and domestic agreement which in general
rule, the presumptions under this agreement are being presumed that there is no intention to
be legally bound. This is based on public policy considerations to encourage individuals to
take responsibility for their domestic and social affairs and to reduce be brought for the
courts’ determination. The agreement may be morally binding but rarely is intended to have
legal repercussion. In Balfour v Balfour, the defendant was employed in Ceylon. He and his
wife returned to the UK on leave but it was agreed that for health reasons she would not
return to Ceylon with him. He promised to pay her $30 a month as maintenance. Later the
marriage ended in divorce and the wife sued for the monthly allowance which the husband no
longer paid. The Court of Appeal held than an informal agreement of indefinite duration made
between the husband and wife whose marriage had not at the time broken up was not
intended to be legally binding.
However, the presumption can be rebutted if the intention is clearly commercial as in
the case of Merrit v. Merrit. In Merrit v Merrit, the husband had left the matrimonial home,
which was owned in the joint names of husband and wife, to live with another woman. The
spouses met and held a discussion in the husband’s car, in the course of which he agreed to
pay her $40 a month out which she agreed to keep up the mortgage payments on the house.
The wife refused to leave the car until the husband signed a note of these agreed terms and an
The wife paid off the mortgage but the husband refused to transfer the house to her. The
Court of Appeal held that in the circumstances, an intention to create legal obligations was to
be inferred and the wife could sue for breach of contract.
JULY 2017
PART B - QUESTION 1
Upon his retirement, Uncle Johnny decided to move back to his hometown in Ipoh. He
persuaded his son Chong Weei, who is a lecturer in a private institution to move and
live with him. Uncle Johnny promised to give Chong Weei 40% of his gratuity and to
assist Chong Weei in setting up his own business.
When in Ipoh, Uncle Johnny decided to purchase an expensive car with all his gratuity.
He retracted his offer to allocate 40% of his gratuity for Chong Weei to start his
business. Chong Weei is frustrated and wants to claim his right.
With reference to relevant authorities, advise Chong Weei if he can initiate any legal
action against Uncle Johnny. (10 marks)
The issue in this case is whether Chong Weei can initiate any legal action against Uncle
Johnny?
of the parties…
legally binding.
In this issue, the relationship between both parties are father and son which the
promise made is under the domestic, social and family agreement. Generally, there is no
intention to create legal relation when the agreement was made between family members.
The presumption on the intention to create legal relation in this case is that there is no
intention to be legally bound when it falls under family, social and domestic agreement. The
law requires that there is an evidence that the parties’ intention was expressly or impliedly
stated to be legally bound. The agreement may be a morally binding but rarely to be intended
to have any legal repercussion. The promise made by Uncle Johnny which he promised to
give Chong Weei 40% of his gratuity and to assist Chong Weei in setting up his own business.
However, he broke the promise when he decided to purchase an expensive car with all his
gratuity. Then, he retracted his offer to allocate 40% of his gratuity for Chong Weei to start
his business. As the agreement falls under the domestic, social and domestic agreements, the
presumptions is there is no intention for Uncle Johnny to be legally bound by the promise
made to Chong Weei. As illustrated in the case of Balfour v. Balfour where the agreements
made between husband and wife is being presumed that there is no intention to be legally
bound. Therefore, there is no contract were made between Uncle Johnny and Chong Weei on
the matter of allocation of 40% of his gratuity to Chong Weei.
In conclusion, Chong Weei cannot take legal action against Uncle Johnny as there is
no valid and binding contract between them as being presumed under the domestic, social and
family agreement that there is no intention to create legal intention.
JANUARY 2018
Lam and his wife, Audrey have mutually agreed to separate. They have been living
separately for 4 years. Before moving out from their home, Lam executed an agreement
in writing wherein he promised that during the separation period he would give Audrey
a monthly maintenance allowance of RM1000. Lam has not been able to give Audrey the
monthly allowance for the past two years. Being aware of his financial instability, Lam
is afraid that his will wife sue him for the money.
Based on the facts, advise Lam on the following matter.
c) Whether Audrey can enforce Lam’s promise (10 marks)
The issue in this case, whether Aubrey can enforce Lam’s promise?
of the parties…
In Merrit v Merrit, the husband had left the matrimonial home, which was owned in
the joint names of husband and wife, to live with another woman. The spouses met and held a
which she agreed to keep up the mortgage payments on the house. The wife refused to leave
the car until the husband signed a note of these agreed terms and an undertaking to transfer
the house into her sole name when the mortgage had been paid off. The wife paid off the
mortgage but the husband refused to transfer the house to her. The Court of Appeal held that
in the circumstances, an intention to create legal obligations was to be inferred and the wife
could sue for breach of contract.
In this case, the relationship between Lam and Aubrey is husband and wife during the
agreement was made. In this case, Generally, there is no intention to create legal relation
when
the agreement was made between family members. The presumption on the intention to
create legal relation in this case is that there is no intention to be legally bound when it falls
under family, social and domestic agreement. The law requires that there is an evidence that
the parties’ intention was expressly or impliedly stated to be legally bound. However, the
presumption is rebuttable though the traditional presumption is that parties to the agreement
concerning domestic, family and social matter do not intend to be legally bound but when if it
is clearly commercial then there is a valid contract between both parties. As in this case, As
illustrated in the case of Merrit v. Merrit, where the agreement took place between husband
and wife. In this case, the spouses met and held a discussion in the husband’s car, in the
course of which he agreed to pay her $40 a month out which she agreed to keep up the
mortgage payments on the house. The wife refused to leave the car until the husband signed a
note of these agreed terms and an undertaking to transfer the house into her sole name when
the mortgage had been paid off. The wife paid off the mortgage but the husband refused to
transfer the house to her. Therefore, applying the case of Merrit v. Merrit in this situation
where the husband, Lam executed an agreement in writing wherein he promised that during
the separation period he would give Audrey a monthly maintenance allowance of RM1000. In
this case, there is intention to be legally bound by both parties as they take all the necessary
measures to make the agreement between them to be a valid contract despite the agreement
was made between family members. Therefore, the presumption is rebuttable as the
agreement between family members can be legally bound when it is clearly commercial.
In conclusion, Audrey can enforce Lam’s promise as the promise is being proven to
be commercial agreement. In fact, Lam has not been able to give Audrey the monthly
allowance for the past two years and if he continue to do so, Audrey may claim for breach of
contract against Lam.
DECEMBER 2018
Recently, Krishnan started to be very abusive towards Shanti. Unable to tolerate the
verbal and physical abuse, Shanti ended their engagement. Krishnan was angry and
demanded half ownership of the condominium. He frequently harassed Shanti and
threatened to initiate legal proceedings against her since she had promised to transfer
half ownership to him.
With reference to relevant authorities and cases, advise Shanti on the following matters:
i) If Krishnan will be successful in his legal proceedings; (10 marks)
The issue in this case is whether Shanti has the obligation to transfer half the share of
ownership to Krishnan?
of the parties…
legally binding.
In this case, Krishnan and Shanti has been engaged and. Generally, there is no
intention to create legal relation when the agreement was made under the domestic, social
agreements. The presumption on the intention to create legal relation in this case is that there
is no intention to be legally bound when it falls under family, social and domestic agreement.
The law requires that there is an evidence that the parties’ intention was expressly or
impliedly stated to be legally bound. The promise between Krishnan and Shanti falls under
the family, social and domestic agreements as their relationship was based on natural love and
affection as they were engaged and was intended to get married too. In the case of Balfour v.
Balfour, where in this case the husband promised to pay her $30 a month as maintenance.
Later the marriage ended in divorce and the wife sued for the monthly allowance which the
husband no longer paid. The Court of Appeal held than an informal agreement of indefinite
duration made between the husband and wife whose marriage had not at the time broken up
was not intended to be legally binding. Applying the case above in this situation, the promise
made by Shanti for the transfer of half ownership of the condominium was made during they
are engaged to each other and the said agreement was based on account of love and affection.
There is no intention to be legally binding from Shanti as in the legal presumption that parties
to an agreement concerning domestic, family or social matter will not intend to be legally
bound. The agreement may be morally binding but rarely is intended to have legal
repercussion. Therefore, Shanti has no intention to create any legal relation with Krishnan as
for the transfer of half of ownership of the condominium to him. However, the presumption is
rebuttable if Krishnan cam prove to the court that there is an intention to create legal relation
in their agreement. Which in this case, Krishnan has to prove that Shanti’s promise to transfer
the half of ownership to him which is either in written or being orally recorded.
In conclusion, if Krishnan succeed to commence the legal proceeding, hence Shanti is
liable for the said promise as it is proven to be a commercial agreement rather than domestic,
social and family agreement.
CAPACITY
(MINOR & UNSOUND MIND)
FRAMEWORK FOR CAPACITY
WHO IS COMETENT? THE LAWS NOTES
Minors? Provisions: There are a few
1) Section 10, 11, 69 of the Contracts Act 1950 exceptions that
2) Section 4 of the Contracts (Amendment) Act 1976 minors can enter into
3) Section 13 of the Children and Young Persons a contract
(Employment) Act 1966
4) Section 12(1) of the Law Reform (Marriage
and Divorce) Act 1976
5) Employment Act 1955 (Revised 1981)
Cases:
1) Nash v Inman (necessaries/luxuries)
2) Government of Malaysia v Gurcharan
Singh (necessaries/education)
3) De Francesco v. Barnum (apprenticeship)
3) University of Malaya v Lee Ming Chong
(Scholarship agreement)
4) Rajeswary v Balakrishnan (marriage void by minor)
5) Mohori Bibee v Dharmodas Ghose (marriage not void)
Unsound of Mind? Provisions: Section 10, 11 & 12 of the Contracts Act

1950
Cases:
1) Imperial Loan Company Limited v Stone
LIST OF AUTHORITIES FOR CAPACITY

Intro
Section 10 of the Contracts Act 1950, provides that ‘all agreements are contracts if they are
made by the free consent of parties competent to contract, for a lawful consideration and with
a lawful object, and are not hereby expressly declared to be void’
Section 11 of the Contracts Act 1950, states that a person is competent to contract: “whoa re
the age of majority according to law which they are subject, and who is of sound mind, and is
not disqualified from contracting by any law to which he is subject.”
Minors
Section 2 of the Age of Majority Act 1971, provides that all persons attain the age of majority
at the age of 18 years. Those who have yet attained 18 years old are still considered to as
minors.
Effects, a minor is a person who is below age of 18 and is incompetent to make a contract.
Therefore, agreements entered into by a minor are generally void and he/she cannot be sued
under such void contracts. However, there are exceptions.
Necessaries,
Section 69, to claim for necessaries supplied to person incapable of contracting, or on his
account ‘If a person, incapable of entering into a contract, or anyone whom he is legally
bound to support, is supplied by another person with necessaries suited to his condition in
life, the person who has furnished such supplies is entitled to be reimbursed from the property
of such incapable person.
Nash v Inman, a Cambridge undergraduate, the son of an architect, was supplied with clothes,
including 11 ‘fancy waistcoats’, to the value of $122. It was held that the cloth could be
appropriate to the station in life of the undergraduate, but the contract was not enforceable
because the minor was already adequately supplied with clothes. Therefore, clothes supplied
by the tailor could not be classified as necessaries.
In the case of De Francesco v. Barnum, the defendant which is an infant, entered into a
contract of apprenticeship for seven years, to be taught stage dancing by the plaintiff. The
contract provided that the infant would not accept any professional engagement or marry
during the term of seven years without the consent of her master. There was no stipulation
that the master should provide dancing engagements for the infant to maintain her while she
was unemployed. The infant entered into a professional engagement to perform as stage
dancer with a third party. The plaintiff brought an action against the defendant to enforce the
contract and claim damage for its breach. The court held that the provisions of the contract
were unreasonable and could not be enforced against the defendant. Fry LJ stated that, …
whenever you find extraordinary or unusual stipulations contained in a contract, either of
apprenticeship or of service, there the Court at least must be on the watch lest the infant
should be held to be bound by a contract which is not reasonable and which is not good in law
and which is not maintainable.
Education, Scholarship Agreements,
Section 4 of the Contracts (Amendment) Act 1976 states a minor is bound by a scholarship
agreement if, it is a scholarship agreement, the scholarship is for studying and learning
purposes, the scholarship is awarded by persons in authority, ie Federal Government, State
Government, Educational Institution or Statutory Bodies
In Government of Malaysia v Gurcharan Singh, the facts were that the plaintiff sued the
defendant breach of contract. The claim was $11,500-alleged to be the sum spent by the
government in educating the first defendant. At the time of the contract, the defendant was a
minor. The defendant had served the government for 3 years and 10 months out of the
contractual period of 5 years. It was held that education or scholarship agreement was a
‘necessary’ thus the first defendant was liable for the repayment of a reasonable sum spent on
him. The plaintiff was however, awarded RM2683 as the amount of damages payable based
on the defendant’s completed months of service.
Employment,
Section 13 of the Children and Young Persons (Employment) Act 1966 provides,
‘Notwithstanding anything to the contrary contained in the Contracts Act 1950, or the
provisions of any other written law, any child or young person shall be competent to enter
into a contract of service under this Act otherwise than as an employer, and may sue as
plaintiff without his next friend or defend any action without a guardian ad litem…
Hence, a minor can enter into a contract of employment and is entitled to sue. The
Employment Act 955 (Revised 1981) however, disallows a minor from being sued for
damages or indemnity.
Marriage,
Under Section 12(1) of the Law Reform (Marriage and Divorce) Act 1976, summarily states
that regardless if they attain the age of majority and when they are under the age of 21, they
must require the consent in writing from his or her father, or if the person is illegitimate or his
father is dead, his or her mother, if the person is adopted, his or her adopted father, or if the
adopted father is dead, then the adopted mother, or if both parents (natural or adopted) are
dead, the then the person standing in loco parentis before she attains that age.
In the case of Mohori Bibee v Dharmodas, the general principle is stated that contracts with
minors are void. Brahmo Dutt, the defendant in the case, though his agent, Kedar Nath, lent a
sum of INR 20,000 to a minor at 12% interest. The loan was secured by way of a mortgage,
immovable property here, executed by the minor in the favour of Brahmo Dutt. Later the
mother of the minor commenced the action to get the mortgage declared as void under
Section 2, 10 and 11 of Indian Contract Act 1872 (9 of 1872), and repossession of property
thereunder conveyed to the defendant. Kedar Nath had received a letter from Bhupendra Nath
Bose, an attorney, on July 15, 1895, that the respondent was still a minor. The Privy Council
held that unless the parties involved are incompetent to contract is unenforceable by law and
is void. Since a minor is not competent to contract, any such agreement is void ab initio (void
from the beginning).
In the case of Rajeswary v Balakrishnan, the parties in this case were Hindus, the first
plaintiff and first defendant having completed a betrothal ceremony following the arranged
marriagae plans initiated by the second plaintiff and second defendant (parents of respective
parties). The
first defendant subsequently repudiated his promise to marry the first plaintiff who claimed,
inter alia, damages against the first defendant for breach of promise to marry. The first
defendant pleaded, inter alia, the incapacity of the first plaintiff to enter into the contract to
marry, as she had been a minor at the time. The Court of Appeal distinguished marriage
contracts entered into by minors from other classes of contracts and excluded from the
principle in Mohori Bibee as she had been a minor at the time. Mohori Bibee was a business
contract unlike the Rajeswary case. The judgement by Good J, also stated that it was a norm
for underaged marriage in the population of India. It was held, the action was maintainable by
the first plaintiff on the agreement entered into between her father, acting as her guardian and
on her behalf, and the first defendant whereby the latter promised to marry the first plaintiff.
Unsound Mind
Section 12(1) of the Contracts Act 1950, provides that a person is said to be sound mind for
the purpose of making contract if, at the time when he makes it, he is capable of
understanding it and forming a rational judgement as to the contract’s effects on his interest.
Section 12(2); a person who is usually of unsound mind, but occasionally of sound mind,
may make a contract when he is sound of mind.
Section 12(3); a person who is usually of unsound mind, but occcassionally of unsound mind,
may make a contract when he is of unsound mind.
In Imperial Loan Company Ltd v Stone, an action was brought on a promissory note which
the defendant had signed as surety. The jury found that the defendant was insane when he
signed the note, but could not agree on the question whether his incapacity was known to the
agent of the plaintiffs who was present when the note was signed. The matter went before the
Court of Appeal. Lord Esher MR, summarily stated that it is binding if executory or executed,
unless he can prove otherwise that the contract, he made with the other knew him to be so
insane as not be capable of understanding what he was about.
JANUARY 2013
Ashraf, a 14 year old boy, agreed to purchase a bicycle from Encik Malik but failed to
pay for it.
With reference to relevant authorities, explain the consequences of Ashraf’s refusal to
pay
(6 marks)
[BICYLCE IS A NECESSARY-SECTION 69-NASH V INMAN]
JUNE 2013
Sulaiman is recovering from a nervous breakdown, can Sulaiman enter into a valid
contract?
[UNSOUND MIND-SECTION 10,12-IMPERIAL LOAN]
Encik Ibrahim is the owner of a company which conducts training sessions for dancers
and organize performances for classical Indian dance internationally. He works closely
with the Ministry of Tourism and his dancers have represented Malaysia in many
international events. Recently, Jothi aged 16 a classical Indian dancer signed a contract
with Encik Ibrahim. The contract involves training sessions and travelling to various
parts of the world on tour. She will be paid a reasonable amount whilst on tour. The
contract also states that she will be supervised at all times and will not be allowed to
socialize outside the group.
Jothi’s father, Mr Prasad, wants to know whether the said contract is enforceable. With
reference to relevant authorities, advise Mr Prasda. (20 marks)
The issue in this case is whether the contract entered by Mr. Prasad’s daughter, Jothi with an
entertainment company is valid?
Section 10 of the Contracts Act 1950, provides that ‘all agreements are contracts if
they are made by the free consent of parties competent to contract, for a lawful consideration
and with a lawful object, and are not hereby expressly declared to be void’
Section 11 of the Contracts Act 1950, states that a person is competent to contract:
“who are the age of majority according to law which they are subject, and who is of sound
mind, and is not disqualified from contracting by any law to which he is subject.”
According to Section 2 of the Age of Majority Act 1971, provides that all persons
attain the age of majority at the age of 18 years. Those who have yet attained 18 years old are
still considered to as minors. A minor is a person who is below age of 18 and is incompetent
to make a contract. Therefore, the effect of an agreements entered into by a minor are
generally void which is void ab initio and he/she cannot be sued under such void contracts.
However, there are exceptions.
Section 13 of the Children and Young Persons (Employment) Act 1966 provides,
‘Notwithstanding anything to the contrary contained in the Contracts Act 1950, or the
provisions of any other written law, any child or young person shall be competent to enter
into a contract of service under this Act otherwise than as an employer, and may sue as
plaintiff without his next friend or defend any action without a guardian ad litem… Hence, a
minor can enter into a contract of employment and is entitled to sue. The Employment Act
955 (Revised 1981) however, disallows a minor from being sued for damages or indemnity.
In this case, Jothi is 16 year old an she is considered a minor as according to Section 2
of the Age of Majority Act 1971, provides that all persons attain the age of majority at the age
of 18 years. Those who have yet attained 18 years old are still considered to as minors and
contract entered by minor is void ab initio. However, there are exceptions which in the
contract entered by minor, the contract for employment. As stated in Section 13 of the
Children and Young Persons (Employment) Act 1966 provides, ‘Notwithstanding anything to
the contrary contained in the Contracts Act 1950, or the provisions of any other written law,
any child or young person shall be competent to enter into a contract of service under this Act
otherwise than as an employer, and may sue as plaintiff without his next friend or defend any
action without a guardian ad litem… Hence, a minor can enter into a contract of employment
and is entitled to sue. The Employment Act 1955 (Revised 1981) however, disallows a minor
from being sued for damages or indemnity. Therefore, Jothi has engaged herself into a
contract for employment and she was bound to it as she also has the privilege to sue as
according to The Employment Act 1955 ( Revised 1981).
In conclusion, the contract entered by Mr. Prasad daughter is valid as the contract for
employment is an exception for a contract entered by minor. Hence, the agreement is valid
and enforceable.
DECEMBER 2013
Generally all contracts entered into by minors are void. By virtue of section 69 of the
Contracts Act 1950, if a minor is supplied with necessaries by another, such person is
entitled to be reimbursed from the property of the infant.
With reference to relevant cases, define the term ‘necessaries’
[SECTION 69-NASH V INMAN-GURCHARAN SINGH]
b) Shortly before his death, Dato’ Samy had transferred to Mr Rajagopal, his
personal assistant, a major part of his property. Patma, Dato’ Samy’s only
daughter claims that Dato’ Samy suffered from Parkinson’s disease which
caused him to be physically and mentally disabled.
With reference to statutory provisions and relevant cases, advise Patma as to the
validity of the said transfer. (10 marks)
The issue in this case is whether the transfer of major part of property of Dato’ Samy towards
his personal assistant, Mr. Rajagopal is valid.
Lastly, parties to the contract must not be of unsound mind. According to Section
12(1) of the Contracts Act 1950, provides that a person is said to be sound mind for the
purpose of making contract if, at the time when he makes it, he is capable of understanding it
and forming a rational judgement as to the contract’s effects on his interest.
Section 12(2); a person who is usually of unsound mind, but occasionally of sound
mind, may make a contract when he is sound of mind.
Section 12(3); a person who is usually of unsound mind, but occasionally of unsound
mind, may make a contract when he is of unsound mind.
Unsound mind not only covers permanent disability of the mind but also
circumstances such as drunkenness or depression. Therefore, if a person of unsound mind
enters into a contract the consequences of a contract will depend on whether the person
asserting unsound mind is suffering from permanent or temporary. If it is permanent, the
consequences is void but if it is temporary, the consequences is voidable.
In Imperial Loan Company Ltd v Stone, an action was brought on a promissory note
which the defendant had signed as surety. The jury found that the defendant was insane when
he signed the note, but could not agree on the question whether his incapacity was known to
the agent of the plaintiffs who was present when the note was signed. The matter went before
the Court of Appeal. Lord Esher MR, summarily stated that it is binding if executory or
executed, unless he can prove otherwise that the contract, he made with the other knew him to
be so insane as not be capable of understanding what he was about.
In this case, Dato’ Samy has transferred his major part of his property to his personal
assistant shortly before he passed away. Patma, his daughter claims that Dato’ Samy suffered
from Parkinson’s disease which caused him to be physically and mentally disabled.
According to Section 11 of the Contracts Act 1950, states that a person is competent to
contract: “who are the age of majority according to law which they are subject, and who is of
sound mind, and is not disqualified from contracting by any law to which he is subject.”
According to Section 12(1) of the Contracts Act 1950, provides that a person is said to be
sound mind for the purpose of making contract if, at the time when he makes it, he is capable
of understanding it and forming a rational judgement as to the contract’s effects on his
interest. Therefore, it is not clearly stated the situation of Dato’ Samy during the transfer the
property to his assistant. Section 12(2); a person who is usually of unsound mind, but
occasionally of sound mind, may make a contract when he is sound of mind. By referring to
this provision, a person that is occasionally sound mind may enter into a contract. His
daughter claims that he has suffer mental disabilities due to the diseases he suffered, if the
agreement of transfer of the said property was made during he was sound mind then the
transfer of major part of the property is valid by virtue of Section 12(2) of Contracts Act
1950. If the agreement of transfer of was made during he is unsound mind then the agreement
is deemed to be void.
In conclusion, since it is not clearly stated the situation of the agreement of transfer of the
major parts of the property to his personal assistant, Mr. Rajagopal was done to undue
influence, then the transfer of the said property is deemed to be valid if the agreement was
made during he is of sound mind and not valid if during that time he had Parkinson’s disease,
it would become invalid.
JUNE 2014
Pursuant to section 10(1) of the Contracts Act 1950, the capacity of a party to enter into
a contract is an essential element for a valid contract. With reference to relevant
statutory provisions and cases, discuss this element. (6 marks)
Section 2 of the Age of Majority Act 1971, provides that all persons attain the age of
majority at the age of 18 years. Those who have yet attained 18 years old are still considered
to as minors. Effects, a minor is a person who is below age of 18 and is incompetent to make
a contract. Therefore, agreements entered into by a minor are generally void and he/she
cannot be sued under such void contracts. However, there are exceptions.
Contract entered by minor for necessaries, Section 69, to claim for necessaries
supplied to person incapable of contracting, or on his account ‘If a person, incapable of
entering into a contract, or anyone whom he is legally bound to support, is supplied by
another person with necessaries suited to his condition in life, the person who has furnished
such supplies is entitled to be reimbursed from the property of such incapable person.
Nash v Inman, a Cambridge undergraduate, the son of an architect, was supplied with
clothes, including 11 ‘fancy waistcoats’, to the value of $122. It was held that the cloth could
be appropriate to the station in life of the undergraduate, but the contract was not enforceable
For the purpose of education which is scholarship agreements, as according to Section
4 of the Contracts (Amendment) Act 1976 states a minor is bound by a scholarship agreement
if, it is a scholarship agreement, the scholarship is for studying and learning purposes, the
scholarship is awarded by persons in authority, ie Federal Government, State Government,
Educational Institution or Statutory Bodies
In Government of Malaysia v Gurcharan Singh, the facts were that the plaintiff sued
the defendant breach of contract. The claim was $11,500-alleged to be the sum spent by the
Lastly, parties to the contract must not be of unsound mind. According to Section
12(1) of the Contracts Act 1950, provides that a person is said to be sound mind for the
purpose of making contract if, at the time when he makes it, he is capable of understanding it
and forming a rational judgement as to the contract’s effects on his interest.
Section 12(2); a person who is usually of unsound mind, but occasionally of sound
mind, may make a contract when he is sound of mind.
Section 12(3); a person who is usually of unsound mind, but occasionally of unsound
mind, may make a contract when he is of unsound mind.
Unsound mind not only covers permanent disability of the mind but also
circumstances such as drunkenness or depression. Therefore, if a person of unsound mind
enters into a contract the consequences of a contract will depend on whether the person
asserting unsound mind is suffering from permanent or temporary. If it is permanent, the
consequences is void but if it is temporary, the consequences is voidable.
In Imperial Loan Company Ltd v Stone, an action was brought on a promissory note which
the defendant had signed as surety. The jury found that the defendant was insane when he
signed the note, but could not agree on the question whether his incapacity was known to the
agent of the plaintiffs who was present when the note was signed. The matter went before the
Court of Appeal. Lord Esher MR, summarily stated that it is binding if executory or executed,
unless he can prove otherwise that the contract, he made with the other knew him to be so
insane as not be capable of understanding what he was about.
DECEMBER 2014
Stefanie, a 14 year old, is a talented dancer. She persuaded her mother to allow her to
train under Madam Dora, a very popular dance instructor. Stefanie then entered into a
contract of apprenticeship to be taught stage dancing by Madam Dora for five years.
The contract provided that Stefanie would not accept any professional engagements or
marry during the term of five years without the consent of Madam Dora. There were
also other restrictions imposed by Madam Dora.
A year later, Stefanie entered into a professional engagement to perform as a stage
dancer with Free Lance Dancers Sdn Bhd. Disappointed with Stefanie’s action, Madam
Dora decided to sue Stefanie for breach of contract and claim for damages. (20 marks)
The issue in this case is whether Madam Nora can sue Stefanie for breach of contract and
claim for damages?
In the case of De Francesco v. Barnum, the defendant which is an infant, entered into
a contract of apprenticeship for seven years, to be taught stage dancing by the plaintiff. The
during the term of seven years without the consent of her master. There was no stipulation
that the master should provide dancing engagements for the infant to maintain her while she
was unemployed. The infant entered into a professional engagement to perform as stage
dancer with a third party. The plaintiff brought an action against the defendant to enforce the
contract and claim damage for its breach. The court held that the provisions of the contract
were unreasonable and could not be enforced against the defendant. Fry LJ stated that, …
In this case, contract entered by Stefanie who is a minor as according to Section 2 of
the Age of Majority Act 1971, provides that all persons attain the age of majority at the age of
18 years. Those who have yet attained 18 years old are still considered to as minors. Effects, a
minor is a person who is below age of 18 and is incompetent to make a contract. Therefore,
agreements entered into by a minor are generally void and he/she cannot be sued under such
void contracts. However, there are exceptions
The contract entered by Stefanie is a contract for necessaries. As according to Section
69, to claim for necessaries supplied to person incapable of contracting, or on his account ‘If
a person, incapable of entering into a contract, or anyone whom he is legally bound to
support, is supplied by another person with necessaries suited to his condition in life, the
person who has furnished such supplies is entitled to be reimbursed from the property of such
incapable person. Since, Stefanie is a talented dancer, it is a necessary for her to train herself
more on
stage dancing and be supplied with such training by her mother as she is incapable to support
herself. In the case of Nash v. Inman that illustrates the meaning of necessary, where the son
that has been supplied with 11 fancy waistcoat is not a necessary as he had been adequately
supply with clothes and compared to the situation of Stephanie that it is necessary for her to
train herself more. However, in contract for necessaries that contain harsh and burdensome
terms would not be enforceable against her as she has been forbid for entering any
professional engagement or married during the five years term without the consent of Madam
Dora and there were also other restriction imposed by Madam Dora on her too. In the case of
De Francesco v. Barnum where the infant entered into a contract of apprenticeship for seven
years by the plaintiff to be taught stage dancing which the contract provided that the infant
would not accept any professional engagement or marry during the terms of seven years
without the consent of her master. The court held that the provisions of the contract were
unreasonable and could not be enforced against the defendant.
In conclusion, Madam Nora cannot sue for breach of contract and claim for damages
as the provisions of the contract were unreasonable and could not be enforced against
Stefanie.
JUNE 2015
Zul, who is a 16 year old, rides his bicycle to work for a distance of 8 km every day. He
recently bought a new bicycle and traded in his old one as part payment. Zul failed to
settle the balance of the payment. With reference to relevant statutory provisions and
relevant cases, discuss Zul’s liability, if any. (6 marks)
The issue in this case is whether Zul can be made liable for his failure to settle the balance
of the payment of his new bicycle?
In this case, Zul is a minor as according to Section 2 of the Age of Majority
Act 1971, provides that all persons attain the age of majority at the age of 18 years. Those
who have yet attained 18 years old are still considered to as minors and contract entered by
minor is void ab initio. However, there are exceptions, as according to Section 69, to claim
for necessaries supplied to person incapable of contracting, or on his account ‘If a person,
incapable of entering into a contract, or anyone whom he is legally bound to support, is
supplied by another person with necessaries suited to his condition in life, the person who has
furnished such supplies is entitled to be reimbursed from the property of such incapable
person which in this case, contract enter by Zul is a contract of necessities which it is
necessary for him to have the bicycle for him to travel to work every day which the distance
he travels is 8km daily. Zul also needed the bicycle in order for him to fulfill his condition of
life which he uses it to work daily. This can be distinguished with the case of Nash v. Inman
which it illustrates that, where the son that has been supplied with 11 fancy waistcoat is not
necessary as he had been adequately supply with clothes which in Zul situation the used of
bicycle suited the condition of Zul’s life which being used daily as a transport for him to go to
work. He is liable to pay for the part payment if only he has the ability to do so. As he used
the bicycle to accommodate daily for works, this constitute that he has the property to pay for
the balance of part payment of the purchase of the bicycle.
In conclusion, Zul is liable for his failure to pay the balance of the part payment for
the purchased of the bicycle and he is needed to settle the payment as he has the property to
do so.
DECEMBER 2015
With reference to relevant authorities, state three (3) exceptions to the general rule that
contracts made by minors are void. (6 marks)
another person with
necessaries suited to his condition in life, the person who has furnished such supplies is
entitled to be reimbursed from the property of such incapable person.
Next, for the purpose of education which is scholarship agreements, as according to
Section 4 of the Contracts (Amendment) Act 1976 states a minor is bound by a scholarship
agreement if, it is a scholarship agreement, the scholarship is for studying and learning
purposes, the scholarship is awarded by persons in authority, ie Federal Government, State
Government, Educational Institution or Statutory Bodies
Lastly, contract of marriage which a minor can enter into a contract of marriage,
however there are requirements needed to be fulfilled. Under Section 12(1) of the Law
Reform (Marriage and Divorce) Act 1976, summarily states that regardless if they attain the
age of majority and when they are under the age of 21, they must require the consent in
writing from his or her father, or if the person is illegitimate or his father is dead, his or her
mother, if the person is adopted, his or her adopted father, or if the adopted father is dead,
then the adopted mother, or if both parents (natural or adopted) are dead, the then the person
standing in loco parentis before she attains that age.
In the case of Rajeswary v Balakrishnan, the parties in this case were Hindus, the first
plaintiff and first defendant having completed a betrothal ceremony following the arranged
marriagae plans initiated by the second plaintiff and second defendant (parents of respective
parties). The first defendant subsequently repudiated his promise to marry the first plaintiff
who claimed, inter alia, damages against the first defendant for breach of promise to marry.
The first defendant pleaded, inter alia, the incapacity of the first plaintiff to enter into the
contract to marry, as she had been a minor at the time. The Court of Appeal distinguished
marriage contracts entered into by minors from other classes of contracts and excluded from
the principle in Mohori Bibee as she had been a minor at the time. Mohori Bibee was a
business contract unlike the Rajeswary case. The judgement by Good J, also stated that it was
a norm for underaged marriage in the population of India. It was held, the action was
maintainable by the first plaintiff on the agreement entered into between her father, acting as
her guardian and on her behalf, and the first defendant whereby the latter promised to marry
the first plaintiff.
JUNE 2016
Tomtom aged 13, won the Gempak Ali Stars singing competition. He was offered a
recording contrct from Wicked Records to cut his first album. Tomtom agreed to all the
terms in the recording contract. One of the terms stated that Wicked Records would be
entitled to 30% of total sales generated from the sale of all his albums under Wicked
Records lable. Wicked Records also paid for a private tutor since Tomtom was not able
to attend a normal scjool as he is always on tour.
Tomtom’s album became a hit and generated a lot income for Tomtom and the
company. However, Tomtom decided to accepta a better offer from another recording
company and left Wicked Records.
Can Wicked Records sue Tomtom for breach of contract and recover the fees for the
private tutor that amounted to RM10,000? (20 marks)
The issue in this case is whether Wicked Records can sue TomTom for breach of
contract and recover the fees for the private tutor that amounted to RM10,000?
Contract for employment. According to Section 13 of the Children and Young Persons
(Employment) Act 1966 provides, ‘Notwithstanding anything to the contrary contained in the
Contracts Act 1950, or the provisions of any other written law, any child or young person
shall be competent to enter into a contract of service under this Act otherwise than as an
employer, and may sue as plaintiff without his next friend or defend any action without a
guardian ad litem…
Hence, a minor can enter into a contract of employment and is entitled to sue. The
Employment Act 955 (Revised 1981) however, disallows a minor from being sued for
damages or indemnity.
In this case, TomTom is a minor as she is 13 year old as according to Section 2 of the
Age of Majority Act 1971, provides that all persons attain the age of majority at the age of 18
years. Those who have yet attained 18 years old are still considered to as minors which
generally a contract entered by minor is void ab initio. However, the exception in this case is
the contract entered by TomTom is a contract for employment and he is said to have breach
the contract as he decided to accept a better offer from another recording company and left
Wicked Records. However, there is no clearly stated that the period of time that he was bound
to the contracts. If he left the Wicked Record during the period that he was still bound to the
agreement, he is said to have breach the contract. However, if he left the Wicked Records
after the period of time that she was bound to the agreement with the said company, he had
not breach any contract as he can either rescind or affirm the contract. As according to the
exception for a contract entered by minor is contract for employment. According to Section
13 of the Children and Young Persons (Employment) Act 1966 provides, ‘Notwithstanding
anything to the contrary contained in the Contracts Act 1950, or the provisions of any other
written law, any child or young person shall be competent to enter into a contract of service
under this Act otherwise than as an employer, and may sue as plaintiff without his next friend
or defend any action without a guardian ad litem… Hence, a minor can enter into a contract
of employment and is entitled to sue. The Employment Act 955 (Revised 1981) however,
disallows a minor from being sued for damages or indemnity. Therefore, TomTom can be
sued for breach of contract if only he left the company and accept the offer of another
company during the period of agreement between him and Wicked Record.
In this case, education is considered a necessaries. According to Section 69, to
claim for necessaries supplied to person incapable of contracting, or on his account ‘If a
person, incapable of entering into a contract, or anyone whom he is legally bound to support,
is supplied by another person with necessaries suited to his condition in life, the person who
has furnished such supplies is entitled to be reimbursed from the property of such incapable
person. TomTom was being supplied by Wicked Records a private tutor in order to fulfilled
his basic needs on education because she was not able to attend a normal school as he is
always on tour. As being illustrated in the case of Gucharan Singh, which he was being sued
for breach of contract, it was held that education is being stated to be a necessary, thus he is
liable for the repayment of reasonable sum of money spent on him. Wicked Records can
claim for reimbursement from TomTom as he is said to breach a contract with the company.
He is liable for reimbursement of the fees for the private tutor which is RM10,000 if he has
the property to do so. TomTom is liable for the reimbursement because he has 70% of the
total sales generated by the sale of the album.
In conclusion, Wicked Records cannot claim for breach of contract against TomTom
and he is also not liable to recover the fees for the private tutor amounted to RM10,000.
Wicked Records could not sue TomTom as he is safeguarded under the Employment Act
1995
DECEMBER 2016
Generally, a minor has no capacity to enter into a contract. With reference to decided
cases and statutory provisions, provide the circumstances where a minor can enter into
a contract. (6 marks)
[NECESSARIES-EMPLOYMENT-MARRIAGE-SCHOLARSHIP-SECTION 69-SECTION
4 OF THE CA 1950]
JULY 2017
With reference to two (2) decided cases. Discuss the enforceability of contracts for
necessaries which contain harsh and burdensome terms. (6 marks)
In the case of De Francesco v. Barnum, the defendant which is an infant, entered into
a contract of apprenticeship for seven years, to be taught stage dancing by the plaintiff. The
during
the term of seven years without the consent of her master. There was no stipulation that the
master should provide dancing engagements for the infant to maintain her while she was
unemployed. The infant entered into a professional engagement to perform as stage dancer
with a third party. The plaintiff brought an action against the defendant to enforce the contract
and claim damage for its breach. The court held that the provisions of the contract were
unreasonable and could not be enforced against the defendant. Fry LJ stated that, …
The necessities of minor varies as it is suited to the condition of life the infant itself. In
the case of Government of Malaysia v. Gucharan Singh, the case illustrates that education
amount to a necessary which the agreement consist of a reasonable deal that an amount of
payment needed to be paid if a breach of contract occurs. Also by referring to the Section 69
which stated that contract for necessary which is a basic essential suited to a minor lifestyle.
Education is a basic essential which as an infant the education needed to be supplied as it is
necessary for the minor usage. In education or training that will benefit a minor are
considered as necessaries This can be distinguish in the case of De Francesco v. Barnum
where a contract between the plaintiff and defendant is unreasonable as it is an extraordinary
or unusual stipulation contained in the contract. As the court held that the provisions of the
contract were unreasonable and could not be enforced against the defendant. Therefore, a
contract for necessaries which contain harsh and burdensome terms would not be enforceable
against infant.
FREE CONSENT
(COERCION, UNDUE INFLUENCE, FRAUD,
MISREPRESENTATION & MISTAKE)
FRAMEWORK FOR FREE CONSENT
FREE CONSENT & THE LAWS NOTES

TYPES
COERCION PROVISIONS: Section 10, 13, 14, 15, 19, 65
of CA 1950
CASES:
1) Chin Nam Bee Development Sdn Bhd v
Tai Kim Choo & 4 Ors
2) Kesarmal v Valiappa Chettiar
UNDUE INFLUENCE PROVISIONS: Section 10, 13, 14, 16, 20, 65 Can be rebutted if there is legal
of CA 1950 advice given
CASES:
1) Allcard v Skinner
2) Inche Noriah v Shaik Allie bin Omar
(Rebuttable also)
3) Khaw Cheng Bok & Ors v Khaw Cheng
Poon & Ors
FRAUD PROVISIONS: Section 10, 13, 14, 17, 19, 65 Used under Misrepresentation as
of CA 1950 ‘Fraudulent Misrepresentation’
CASES:
1) Kheng Chwee Lian v Wong Tak Thong
2) PJTV Denson (M) Sdn Bhd v Roxy
(Malaysia) Sdn Bhd
MISREPRESENTATION PROVISIONS: Section 10, 13, 14, 18, 19, 65
of CA 1950
CASES:
1) Bisset v Wilkinson or New Borneo
Merchant Co Ltd v Hajad bin Ibrahim
(Honest/Innocent Misrepresentation)
2) Hedley Byrne v Heller
(Negligent Misrepresentation)
3) Fraudulent Misrepresentation (Kheng
Chwee Lian, Derry v Peek, Tay Tho Bok &
Anor v Segar Oil Palm Estate Sdn Bhd,
Redgrave v Hurd)
MISTAKE PROVISIONS: Section 10, 13, 14, 21, Unilateral mistake is not applicable
Illustration C, 66 of CA 1950 in Malaysia and is not voidable and
not an operative mistake
CASES:
1) Tham Kong v Oh Hiam (Definition of
Mistake & Types)
2) Tamplin v James, Affin Bank Berhad v
Nupax Sdn Bhd (Unilateral Mistake)
3) Courtier v Hastie (Common Mistake)
4) Raffles v Wichelhaus (Mutual Mistake)
5) Sheikh Brothers Ltd v Oschner & Anor
(Mutual Mistake)
LIST OF AUTHORITIES FOR FREE CONSENT

When answering any questions on free consent, add these three provisions in the intro of your
answer
Intro
Section 10(1); all agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are not hereby
expressly declared to be void
Section 13, Consent is when ‘Two or more persons are said to consent when they agree upon
the same thing in the same sense’
Section 14, provides that “Consent is said to be free when it is not caused by- (a) coercion, as
defined in section 15, (b) undue influence as defined in section 16, (c) fraud, as defined under
section 17, (d) misrepresentation as defined in section 18; or (e) mistake, subject to sections
21, 22 & 23
Once you have done that, select one of the situations below which is not free consent that is
applicable to your question. (e.g. if your question is about mistake, then write down section
10, 13, 14 and then copy down the provisions below which is relevant to your question that is
section 21 & 66.)
Coercion
Section 15, Coercion is the committing, or threatening to commit any act forbidden by the
Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice
of any person whatever, with the intention to causing any person to enter into an agreement.
Explanation- It is immaterial whether the Penal Code is or not in force in the place where the
coercion is employed
Illustration- A, on board an English ship on the high seas, causes B to enter into an agreement
by an act amounting to criminal intimidation under the Penal Code
A afterwards sues B for breach of contract at Taiping
A has employed coercion, although his act is not an offence by the law of England, and
although section 506 of the Penal Code was not in force at the time when or place where the
act was done.
Section 19(1), the voidability of agreements without free consent is ‘when consent to an
agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract
voidable at the option of the party whose consent was so caused.
Section 65, the consequences of rescission of voidable contract is ‘when a person at whose
option a contract is voidable rescinds it, the other party thereto need not perform any promise
therein contained in which he is promisor. The party rescinding a voidable contract shall, if he
has received any benefit thereunder from another party to such contract, restore the benefit,
so far as may be, to the person from whom it was received.
Chin Name Bee Development Sdn Bhd v Tai Kim Choo, the respondents purchased homes
off the plan to be constructed by the appellants. Each of the respondents signed a sale and
purchase agreement to purchase the house at RM29,500. Subsequently, the respondent was
made to pay an additional RM4,000. The court was asked to determine if the additional
payment was voluntary or under threat by the appellant to cancel the respondent’s booking
for their houses. The appeal was dismissed by the High Court which ruled that there was
coercion as defined in section 15 of the Contracts Act 1950.
In Kesarmal v Valiappa Chettiar, a transfer of property which was made under the ‘orders of
the Sultan’ issued by the ominous presence of 2 Japanese officers during the Japanese
occupation of Malaysia. It was held that the agreement is not valid. This is because the
consent was given was not free and therefore the transfer became voidable at the will of the
party whose consent was so caused.
Undue Influence
Section 16(1), a contract is said to be induced by “undue influence” where the relations
subsisting between the parties are such that one of the parties is in a position to dominate the
will of the other and uses that position to obtain an unfair advantage over the other.
(2), In particular and without prejudice to the generality of the foregoing principle, a person
is deemed to be in a position to dominate the will of another—
(a) Where he holds a real or apparent authority over the other, or where he stands in a
fiduciary relation to the other; or (Illustration (c) A, being in debt to B, the moneylender of
his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to
prove that the contract was not induced by undue influence.)
(b) where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by the reason of age, illness, or mental or bodily distress (Illustraions
(a) A having advanced money to his son, B, during his minority, upon B’s coming of age,
obtains, misuse of parental influence, a bond from B for a greater amount than the sum due in
respect of the advance. A employs undue influence. Or the facts of question is Illustrations (b)
A, a man enfeebled by disease or age, is induced, by B’s influence over him as his medical
attendant, to agree to pay B an unreasonable sum for his professional services. B employs
undue influence.)
Section 20, Power to set aside contract induced by undue influence is ‘when consent to an
agreement is caused by undue influence, the agreement is a contract voidable at the option of
the party whose consent was so caused. Any such contract may be set aside either absolutely
or, if the party who was entitled to avoid it has received any benefit thereunder, upon such
terms and conditions as to the court may seem just.
Illustration (a) A’s son has forged B’s name to a promissory note. B, under threat of
prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on
this bond, the court may set the bond aside.
Illustration (b) A, a moneylender, advances RM100 to B, an agriculturist, and, by undue
influence, induces B to execute a bond for RM200 with interest at 6 percent per month. The
court may set the bond aside, ordering B to repay the RM100 with such interest as may seem
just.
Allcard v Skinner, Lindley J stated “… to protect people from being forced, tricked or misled
in any way by others into parting with their property is one of the most legitimate objects of
all laws; and the equitable doctrine of undue influence has grown out of and have been
developed by the necessity of grappling with insidious forms of spiritual tyranny and with the
infinite varieties of fraud…”
Inche Noriah v Shaik Allie bin Omar, the facts were an old and illiterate Malay woman
executed a deed of gift of a landed property to her nephew, respondent who had managing her
affairs. The court found that she was a feeble woman unable to leave the house, relying
entirely upon the respondent for everything. She had no knowledge of her own affairs nor the
value of the properties. It was held when the appellant executed a deed, her relationship with
the respondent was sufficient to raise presumption of the influence over the appellant. The
gift should be set aside as the presumption which arose was not rebutted. (Can be rebuttable)
One of the ways to prove that the other party has acted on his own free will is to show that the
legal advice had been obtained before the complaint signed the alleged document. However,
the fact that legal advice had been obtained will not itself, necessarily rebut any presumption
of undue influence. The Privy Council upheld the trial judge’s finding that the relations
between the appellant and respondent were such as to give rise to a presumption of undue
influence. The respondent brought evidence that the appellant had received independent legal
advice from a solicitor. However, this fact was not sufficient to rebut the presumption.
In the case of Khaw Cheng Bok & Ors v Khaw Cheng Poon & Ors, in this case, the deceased
was a man of great wealth and the plaintiffs and defendants were his children and
grandchildren, respectively. An issue arose whether the deceased had been unduly influenced
by his third son, Cheng Poon, into making certain gifts. Cheng Poon was the only son who
lived with the deceased and was the deceased’s favourite son. Jeffery Tan J held that a
presumption of undue influence was raised and that it has not been discharged:
Furthermore, and it was not the father and son relationship per se, undue influence could be
presumed. The deceased, at death’s donor, was totally dependent, and in that sense beholden,
to Cheng Poon and his family. From the evidence adduced, there existed that close
confidential relationship where Cheng Poon and his family were persons with great influence
and pull over
the life of the deceased and in a commanding person to exert undue influence or ‘dominion’
over the deceased; the deceased and Cheng Poon, with regard to the gifts, were not persons
dealing on a footing of equality.
Misrepresentation
Section 18, provides when misrepresentation happens and it includes
(a) The positive assertion, in a manner not warranted by the information of the person making
it, of that which is not true, though he believes it to be true;
(b) any breach of duty which, without an intent to deceive, gives an advantage to the person
committing it, or anyone claiming under him, by misleading another to his prejudice, or to the
prejudice of anyone claiming under him; and
(c) causing, however innocently, a party to an agreement to make a mistake as to the
substance of the thing which is the subject of the agreement
Types of Misrepresentation therefore, includes as can be extracted under section 18 are,
Negligent, Innocent and Fraudulent Misrepresentation. However, fraudulent
misrepresentation is not mentioned in section 18.
Under Section 17, there is an additional misrepresentation which is fraudulent
misrepresentation that “Fraud” includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agent, with intent to deceive another party thereto
or his agent, or to induce him to enter into the contract
(a) The suggestion, as to a fact, of that which is not true by one who does not believe it to
be true
(b) The active concealment of a fact by one having knowledge or belief of the fact;
(c) A promise made without any intention of performing it;
(d) Any other act fitted to deceive; and
(e) Any such act or omission as the law specifically declares to be fraudulent
The elements of misrepresentation would be;
Firstly, there is false statement of facts that cannot be statement of law, or cannot be a
statement of intention or future conduct, opinion or puffing advertisements.
Secondly, The false statement is made by representor to representee
Thridly, the false statement was made with the intention to induce the representee to enter into
a contract
Fourthly, Representee enters into the contract based on the false representation.
Apply the relevant cases to the facts of question only,…
(Innocent Misrepresentation) New Borneo Merchant Co Ltd v Hajad Bon Ibrahim, the
appellant company sold a diesel engine to the respondent under a written contract which
stated ‘delivery four to six months ex Works UK.’ The assistant manager told the respondent
this meant that the engine would arrive in Sandakan in four to six months from the date of the
contract. The engine did not arrive later and the respondent refused delivery and claimed to
be entitled to rescind the contract. The court held that the statement of the assistant manager
was an innocent misrepresentation on which the respondent was entitled to rely,
notwithstanding the terms of the contract. Hence, the respondent was entitled to rescind the
contract.
(Negligent Misrepresentation) Hedley Byrne v Heller, the ‘special’ relationship defined
negatives the pre-existing law with regard to innocent but negligent misrepresentations in the
law of tort. The law of negligent misrepresentation is now a major growth area in the law of
tort. It is a statement made without reasonable grounds for its truth.
(Fraudulent Misrepresentation) Kheng Chwee Lian v. Wong Tak Thong, the respondent
bought a half share in a piece of land from the appellant. Subsequently, the respondent had
been persuaded to enter into a second contract on the false representation that the are of the
land to be transferred, was of the same size as the land which the respondent had agreed to
buy under the first contract. (actually, the area is less than before). It was held the respondent
was induced by misrepresentation into signing the second agreement. Therefore, the
respondent has the right in repudiating the agreement claiming it was induced by fraudulent
misrepresentation.
Tay Tho Bok & Anor v Segar Oil Palm Estate Sdn Bhd, the plaintiffs entered into an
agreement to purchase 11 pieces of land from the defendant. After paying a deposit and
signing the agreement, the plaintiffs found that part of the land was being used by the Public
Utilities Board for water pipelines and by Tenaga Nasional Bhd for transmission cables. The
plaintiffs argued that the purchase price ought to be reduced to reflect the presence of these
encumbrances. The defendant refused, and argued that they had no knowledge of any land
acquisition by the Public Utilities Board, and that they did not make any representation that
the transmission lines did not run across the land. It was the plaintiff’s case that the defendant
had dishonestly concealed relevant material facts from them and had misled them into
believing, that the transmission lines and pipelines were not within the land concerned.
The High Court held that the acts of the defendant amounted to fraud within the meaning of
section 17 of the Contracts Act 1950. It was found as a fact that the defendant knew the
existence of the transmission lines and pipelines on the said land prior to the signing of the
sale and purchase agreement.
Silence can amount to misrepresentation if it distorts a representation made. It can have legal
consequences affecting a previous statement, that if
Firstly, if a statement is half true
Secondly, If a statement was true but became false before the contract was settled,
Thridly, if there is fiduciary relationship between the parties; and
Fourthly, if the contract is a contract of the utmost good faith (such as insurance contract, e.g.
Joel v Law Union and Crown Insurance Co)
In the case of Redgrave v Hurd, to have any consequences in contract law, a representation by
silence or otherwise must be one of the factors which actually induces the other party to enter
the contract. This means that a person pleading misrepresentation (ie injured party) must have
relied upon a material representation rather than upon his own judgement.
Mistake,
Section 21, Agreement void where both parties are under mistake as a matter of fact ‘where
both parties to an agreement are under a mistake as to a matter of fact essential to the
agreement, the agreement is void. Illustration (c) provides that A, being entitled to an estate
for life of B, agrees to sell it to C. B was dead at the time of the agreement, but both parties
were ignorant of the fact. The agreement is void.
Section 23, suggests that mistake made by one party is not an operative mistake: “A contract
is not voidable merely because it was caused by one of the parties to it being under a mistake
as to a matter of fact.”
Section 66, obligation of person who has received advantage under void agreement, or
contract that becomes void. When an agreement is discovered to be void, or when a contract
becomes void, any person who has received any advantage under the agreement or contract is
bound to restore it, or to make compensation for it, to the person from whom he received it.
In Tham Kong v Oh Hiam & Ors, Barabkah LP said; ‘…mistakes may be classified into
common mistake, mutual mistake and unilateral mistake. Mistake is common where both
parties make the same mistake. Each knows the intention of the other and accepts it, but each
is mistaken about some underlying and fundamental fact. The mistake is mutual where the
parties misunderstand each other and are at cross-purpose. In unilateral mistake, only one of
the parties suffers from some mistake. (Further definition and types of mistake)
In Tamplin v James, D purchasd at an auction a property known as the Ship Inn with all its
outbuildings and land. At the auction the plan was displayed, The dispute concerned two
pieces of garden which had originally belonged to the vendor but which he had sold and
continued to use under lease from the present owner. D believed he was also buying this land
and, after learning the true position, he refused to complete the sale. P was held entitled to a
writ of specific performance ordering D to complete the sale. D had made a mistake but the
mistake was of his own making. If a man will not take reasonable care to ascertain what he is
buying, he must take the consequences. (Unilateral Mistake) Refer to Section 23…
Courtier v Hastie, the plaintiff had entered into a written contract with the defendant whereby
the latter was to supply 50 bales of gunny sacks to be delivered to SS Mausang due in
Singapore on or before a specified date. The plaintiffs paid $1000 as deposit. When the SS
Mausang which in fact sailed from Calcutta the day after the contract was signed, arrived in
Singapore, the 50 bales of gunny sacks were not on board. Neither the plaintiffs nor the
defendant were aware of this fact when the contract was signed. The plaintiffs claimed the
refund of the deposit. It was held that the deposit must be refunded. The contract was for the
sale of specified goods on a specified ship arriving at Singapore on or about a specified date.
As the goods were not
on board the particular ship, the contract was incapable of performance. (Common Mistake)
refer to section 21
Raffles v Wichelhaus, the facts were that Raffles agreed to sell cotton to Wichelhaus. The
agreement provided that the cotton was “to arrive England from Bombay”. However, there
were two different ships regularly sailing from Bombay to England, one leaving in October
and the other in December. Raffles shipped the cotton on the December ship, and the
defendant Wichelhaus refused to accept the cotton. Raffles sued on the alleged contract.
Wichelhaus argued that it understood the shipment would be shipped on the October ship. It
was held that the court concluded that there was ‘no binding contract’ since the parties meant
different ships and there was a mistake by both Raffles and Wichelhaus. (Mutual Mistake)
In this case, of Sheikh Brothers Ltd v Oschner & Anor, the appellant granted the first
respondent a license (which was later assigned to the second respondent) to cut, process and
manufacture all sisal growing on certain lands of which the appellant was the lessee. The
agreement contained a clause whereby the licensee undertook to manufacture and deliver to
appellant or its agents for sale sisal fibre in average minimum quantities of 50 tons per month.
Disputes arose between the parties, an issue being, inter alia, whether the agreement was void
under section 20 of the Indian Contract Act by reason of mutual mistake of fact as both
parties believed erroneously that the leaf potential of the sisal area would be sufficient to
permit manufacture and delivery of the stipulated minimum quantities. The Privy Council
held that this was fundamental to a matter of fact essential to the agreement and thus, the
agreement was void.
This this includes the reasoning that the decision pursuant to section 21, was a case related to
the quality of the subject matter, in this case, the capacity of the leaf potential of the sisal
area. (Mutual Mistake)
JANUARY 2013
Explain whether silence could amount to misrepresentation (6 marks)
Silence can amount to misrepresentation if it distorts a representation made. It can have legal
consequences affecting a previous statement, that if
Firstly, if a statement is half true
Secondly, If a statement was true but became false before the contract was settled,
Thridly, if there is fiduciary relationship between the parties; and
Fourthly, if the contract is a contract of the utmost good faith (such as insurance contract, e.g.
Joel v Law Union and Crown Insurance Co)
In the case of Redgrave v Hurd, to have any consequences in contract law, a representation by
silence or otherwise must be one of the factors which actually induces the other party to enter
the contract. This means that a person pleading misrepresentation (ie injured party) must have
relied upon a material representation rather than upon his own judgement.
QUESTION 5
Distinguish between common, mutual and unilateral mistake (6 marks)
Firstly, we shall define what is mistake and the types of mistake
Under Section 21 of the Contracts Act 1950, Agreement void where both parties are under
mistake as a matter of fact ‘where both parties to an agreement are under a mistake as to a
matter of fact essential to the agreement, the agreement is void.
Illustration (c) provides that A, being entitled to an estate for life of B, agrees to sell it to C. B
was dead at the time of the agreement, but both parties were ignorant of the fact. The
agreement is void.
Further definition and types of mistake as in the case of Tham Kong v Oh Hiam & Ors,
Barabkah LP said; ‘…mistakes may be classified into common mistake, mutual mistake and
unilateral mistake. Mistake is common where both parties make the same mistake. Each
knows the intention of the other and accepts it, but each is mistaken about some underlying
and fundamental fact. The mistake is mutual where the parties misunderstand each other and
are at cross-purpose. In unilateral mistake, only one of the parties suffers from some mistake.
Common mistake as in the case of Raffles v Wichelhaus (The Peerless Case), the facts were
that Raffles agreed to sell cotton to Wichelhaus. The agreement provided that the cotton was
“to arrive England from Bombay”. However, there were two different ships regularly sailing
from Bombay to England, one leaving in October and the other in December. Raffles shipped
the cotton on the December ship, and the defendant Wichelhaus refused to accept the cotton.
Raffles sued on the alleged contract. Wichelhaus argued that it understood the shipment
would be shipped on the October ship. It was held that the court concluded that there was ‘no
binding contract’ since the parties meant different ships and there was a mistake by both
Raffles and Wichelhaus.
Mutual Mistake as in the case of Courtier v Hastie, the plaintiff had entered into a written
contract with the defendant whereby the latter was to supply 50 bales of gunny sacks to be
delivered to SS Mausang due in Singapore on or before a specified date. The plaintiffs paid
$1000 as deposit. When the SS Mausang which in fact sailed from Calcutta the day after the
contract was signed, arrived in Singapore, the 50 bales of gunny sacks were not on board.
Neither the plaintiffs nor the defendant were aware of this fact when the contract was signed.
The plaintiffs claimed the refund of the deposit. It was held that the deposit must be refunded.
The contract was for the sale of specified goods on a specified ship arriving at Singapore on
or about a specified date. As the goods were not on board the particular ship, the contract was
incapable of performance.
For Unilateral Mistake, as in the case of Tamplin v James, D purchasd at an auction a
property known as the Ship Inn with all its outbuildings and land. At the auction the plan was
displayed, The dispute concerned two pieces of garden which had originally belonged to the
vendor but which he had sold and continued to use under lease from the present owner. D
believed he was also buying this land and, after learning the true position, he refused to
complete the sale. P was held entitled to a writ of specific performance ordering D to
complete the sale. D had made a mistake but the mistake was of his own making. If a man
will not take reasonable care to ascertain what he is buying, he must take the consequences.
Thus a contract made by mistake is void as in section 66 where, obligation of person who has
received advantage under void agreement, or contract that becomes void. When an agreement
is discovered to be void, or when a contract becomes void, any person who has received any
advantage under the agreement or contract is bound to restore it, or to make compensation for
it, to the person from whom he received it.
However, Section 23, suggests that mistake made by one party is not an operative mistake: “A
contract is not voidable merely because it was caused by one of the parties to it being under a
mistake as to a matter of fact.” Meaning, a person who enters a contract by unilateral mistake
is not entitled to compensation.
Kamalah sold her house at RM385,000 and posted it on advertisement. She mentioned
that the air-conditioning was fitted in all rooms and was freshly painted. It was also
noted that the neighbourhood was decent and quiet.
After purchasing and moving in by Roslan and his wife, the neighbours were foreign
workers, noisy and that the air-conditioning were not functioning as well as the house
was painted cheap. When revalued, the house dropped because of many factories
nearby.
Advise Roslan and his wife if they can initiate legal action against Kamalah (10 marks)
[FRAUDULENT MISREPRESENTATION-SECTION 10,13,14,18-ELEMENTS-TYPES-
17-THAY THO BOK V SEGAR OIL PALM ESTATE SDN BHD-19(1)-65]
Hawa suffered from depression and could no longer take care of herself. Her niece Yaya,
took care of her. Hawa lost mobility of her legs. Hawa dependent entirely on Yaya. Yaya
took advantage of the situation and influenced Hawa to sell her bungalow located at the
seafront since she and her husband were interested to convert it into chalets. An
agreement was made and Hawa was asked to sign it. However, the next day Hawa
regretted signing the agreement and wished to cancel it.
With reference to the Contracts Act 1950, and decided cases, advise Hawa on the
following.
a) Whether she can challenge the agreement that she had signed (15 marks)
[UNDUE INFLUENCE-SECTION 10,13,14,16 – KHAW CHENG BOK V KHAW CHENG
POON-20,65]
JUNE 2013
Briefly discuss TWO (2) elements that must be present to establish fraud in order to
make a contract voidable under section 17 of the Contracts Act 1950. (6 marks)
QUESTION 5
With reference to statutory provisions and decided cases, discuss the effect when
consent is obtained by undue influence. (6 marks)
[UNDUE INFLUENCE-VOIDABLE AT OPTION OF THE PARTY WHO CONSENT
GIVEN-SECTION 20-SECTION 65]
Omar was accepted to study medicine at a private medical college in Malacca. His
retired parents decided to purchase a new house near the said college so that they can be
close to Omar. They met a broker, Ms Michelle, who recommended a house which she
described as being “near the medical college”. Omar’s parents met the owner and
offered to buy the said house for RM285,000.00. An agreement was duly executed by
Omar’s parents and the house owner. However, upon moving into their newly purchased
house, they discovered that the house was located 30 km away from the medical college.
Advise Omar’s parents whether they can set aside the agreement. (20 marks)
DECEMBER 2013
Define the word ‘coercion’
With reference to statutory provisions and one relevant case, explain the consequence of
a contract which contains the element of ‘coercion’ (6 marks)
Section 10(1); all agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and are not hereby
expressly declared to be void
Section 13, Consent is when ‘Two or more persons are said to consent when they agree upon
the same thing in the same sense’
Section 14, provides that “Consent is said to be free when it is not caused by (a) coercion, as
defined in section 15.
Section 15, states ‘Coercion is the committing, or threatening to commit any act forbidden by
the Penal Code, or the unlawful detaining or threatening to detain, any property, to the
prejudice of any person whatever, with the intention to causing any person to enter into an
agreement.
Explanation- It is immaterial whether the Penal Code is or not in force in the place where the
coercion is employed
Illustration- A, on board an English ship on the high seas, causes B to enter into an agreement
by an act amounting to criminal intimidation under the Penal Code
A afterwards sues B for breach of contract at Taiping
A has employed coercion, although his act is not an offence by the law of England, and
although section 506 of the Penal Code was not in force at the time when or place where the
act was done.
Chin Name Bee Development Sdn Bhd v Tai Kim Choo, the respondents purchased homes
off the plan to be constructed by the appellants. Each of the respondents signed a sale and
purchase agreement to purchase the house at RM29,500. Subsequently, the respondent was
made to pay an additional RM4,000. The court was asked to determine if the additional
payment was voluntary or under threat by the appellant to cancel the respondent’s booking
for their houses. The appeal was dismissed by the High Court which ruled that there was
coercion as defined in section 15 of the Contracts Act 1950.
In Kesarmal v Valiappa Chettiar, a transfer of property which was made under the ‘orders of
the Sultan’ issued by the ominous presence of 2 Japanese officers during the Japanese
occupation of Malaysia. It was held that the agreement is not valid. This is because the
consent was given was not free and therefore the transfer became voidable at the will of the
party whose consent was so caused.
JUNE 2014
With reference to relevant statutory provisions and cases, explain what is meant by
unilateral mistake. (6 marks)
[UNILATERAL MISTAKE]
After the sale, both Lena and Aziz discovered that the representations were untrue that
a house in Taman Indah contradicts the price, location, painting, built-in kitchen
cabinets, bathrooms with water-heaters.
With reference to relevant authorities, advise Lena and Aziz whether they can set aside
the Sale and Purchase Agreement. (20 marks)
QUESTION 2
Mahani, Tan Sri Halim Noh’s only sister had stayed and looked after Tan Sri’s family
for a long time. One day, she prepared and requested Puan Sri Rose and Danny to
execute three (3) Sale and Purchase agreements. Mahani warned Puan Sri Rose if she
refuses to do so, she would not take care of Puan Sri Rose anymore. Both Puan Sri Rose
and Danny executed all the agreements.
Noting that Danny had many medical problems and suffers from memory lapse while
Puan Sri Rose sat in her room alone and all her needs to be attended to after an
accident.
With relevant authorities, discuss the validity of the Sale and Purchase agreements. (20
marks)
[UNDUE INFLUENCE-SECTION 10,13,14,16 – KHAW CHENG BOK V KHAW CHENG
POON-20,65]
a) Professor Zul wanted to build a college at Kota Bharu, Kelantan in a tenancy
agreement with Tuan Muiz. Professor Zul discovered that there was no electricity and
they both tried to attain it.
Hence, the college cannot be proceeded. Professor Zul wants to terminate the agreement
since both he and the Tuan Muiz were mistaken as to a matter of fact, namely the
requirement of a substation. He claims the return of the deposit paid but Tuan Muiz
refuses to do so.
With reference to relevant statutory provisions and decided cases, determine the validity
of the tenancy agreement. (10 marks)
Issue: Whether there was a valid tenancy agreement between Professor Zul and Tuan Muiz
since they have both been mistaken to a matter of fact
Law:

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“LAW436 – CONTRACTS (2019)

LECTURER: DR SHEELA JAYABALAN

“Some questions were left intentionally as answering them were

I.T.T (Invitation to Case:

Acceptance Provisions: Section 2(b) of the Contracts Act 1950

Communication of Provisions: Section 3, 4(2)(a)&(b) / Postal Rule

Acceptance made Provisions: Section 7(b)

LIST OF AUTHORITIES FOR ACCEPTANCE

With reference to relevant authorities, advise Alina whether a valid contract is

ii) State the ways in which a proposal can be revoked (5 marks)

iii) The refusal to sell the dress on display. (10 marks)

Cases: Currie v Misa

1) Halimah binti Abdullah v Tengku Mariah binti Sultan

Consideration must not Provisions: Section 26, Explanation 2, Illustration f

1) Glasbrook Brothers Ltd. Glamorgan County Council

Is a promise to compensate for something done

Or is a promise to pay a debt barred by limitation law

Executed Consideration, as in Carlill v Carbolic Smoke Ball, the defendant company

Consideration must not be adequate but sufficient,

JUNE 2014 – PART A

JUNE 2013 – PART A

[Provide definition of offer and acceptance]

DECEMBER 2013 – PART A

JUNE 2015 – PART A

DECEMBER 2014 – PART A

JUNE 2016 – PART C

DECEMBER 2015 – PART A

[Provide definition of offer, acceptance and consideration]

*JULY 2017 – PART A

QUESTION 5 [Pinnel case, landmark, lesser amount of payment

[Provide definition of offer, acceptance and consideration]

Issue: Whether the said land transfer was valid

*DECEMBER 2016 – PART A

*JANUARY 2018 – PART A

Additional Cases and notes

[Provide definition of offer, acceptance and consideration]

Consideration from promise or any other person

Consideration not be adequate but sufficient

Advise Dorothy if she is obliged to do so. (10 marks)

Unsound of Mind? Provisions: Section 10, 11 & 12 of the Contracts Act

LIST OF AUTHORITIES FOR CAPACITY

FREE CONSENT & THE LAWS NOTES

LIST OF AUTHORITIES FOR FREE CONSENT

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