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Tutorial 1 Miss Perahsan decided to join a modelling competition organized by Lupehal Modelling Company (LMC). She, however, was not confident as her face complexion was riddled with pimples. She had used several kinds of skin repair products, all without success. One day, she saw an advertisement from the Daily Moon advertising a skin repair product called Wakenabeb manufactured by Watipulu Company (WC). The company claimed that Wakanebeb was the best skin repair product in the market. It could remove pimples within three(3) days. The advertisement promised that the company would pay RM500 as reimbursement to any customer who used this product but still suffered pimples problem. It also stated that WC had deposited RM5000 in Bank Wacayalu to show their sincerity to honour their promise. Miss Perahsan bought the product and applied to her face according to the steps printed on the instruction. However, after three(3) days, she was very shocked to find that her pimples worsened and spread to her whole body. When she went to submit her application to join the modelling competition, the organizer rejected her application due to her bad skin condition. She was very frustrated and would like to sue WC and get RM500 as promised in the advertisement. At the same time, Miss Perahsan’s brother, Wassup wanted to sell his car. He offered to Miss Perahsan at RM50000. Miss Perahsan agreed to buy but asked for RM45000 only. Wassup then offered to his friend, Watatau and Watatau agreed to buy at RM50000. Wassup then sold his car to Watatau. When Miss Perahsan knew about this, she was very angry and claimed that Wassup had breached his promise and the car should be sold to her since she had accepted the offer earlier. Advice Miss Perahsan and Wassup in the above case based on the law of contract. Support your answer with relevant sections and case.
Answer Issues : i. If Miss Perahsan sue Watipulu Company (WC), is it possible for Watipulu Company (WC) to win against Miss Perahsan? ii. Can Miss Perahsan sue his brother Wassup based on law of contract? Solution & Application : Solution ( i ) : Section 2( c ) Contract Act 1950 stated that offer can be made to general public who meets all the term of the offer can accept. Exception to the general rule where court have construed advertisement to be offers because the advertisement contained definite terms that invite acceptance. Case : Carlill V Carbolic Smoke Ball (1893) 1 QB 256 In this case to accept the offer the offeree would have to purchase and use smoke ball in the prescribed manner for the specified time and then still contracted either cold or influenza as Mrs. Carlill had. No one who did not satisfy there requirement could claim the 100 pound. Futher the terms of the advertisement went beyond a puff, they were intended to be part of the binding offer. This was clear from the statement that company had deposited 1000 pound with the Bank. So, a statement of intention to reward anyone who had contracted influenza after using the smoke balls pursuant to the requirements in the advertorial was valid and accepted as a legally binding intention or promise to contract notwithstanding that in general, the law for bilateral contracts involving advertisement are not offers but more invitation per se. According to the case, court allowed Mrs. Carlill’s claim. Application ( i ) : Based on the section and cases discussed above, it is impossible for Watipulu Company (WC) to win against Miss Perahsan because Watipulu Company (WC) already made an offer in the advertisement where Watipulu Company (WC) offer to pay RM500 to anyone who used this product but still suffered pimples problem. It also stated that WC had deposited RM5000 in Bank Wacayalu to show her sincerity to honour their promise. Acceptance apply when Miss Perahsan used WC product according to the steps printed on the instruction. But after three days it become worse. So, a statement of intention to reward anyone who using their product but still have pimples problems after using the Wakanebeb pursuant to the requirements in the advertorial was valid contract and accepted. Solution ( ii ) : Section 7 Contract Act 1950 stated that acceptance must be absolute and not qualified. Case : Hyde V Wrench (1840) The defendant offered to sell a farm to the claimant for £ 1,000. The claimant in the reply offered £ 950 which the defendant refused. The claimant then sought to accept the original offer of £ 1,000. The defendant refused to sell to the claimant and the claimant brought an action for specific performances. The court held that there was no contract where a counter offer is made and this destroys the original offer so that it is no longer open to the offeree to accept. Application ( ii ) : Based on the section and case discussed above, there was no valid contract between Miss Perahsan and Wassup, when Miss Perahsan did accept to buy his brother’s car at RM45,000 where she already make a
counter offer where it is trated as rejection of the original offer which is at RM50,000. As the result, there was no contract between Miss Perahsan and Wassup because Miss Perahsan destroying the original offer so that the car was no longer open for Miss Perahsan to accept. It is possible for Wassup to sell his car to Watatau and Miss Perahsan cannot sue hie brother, Wassup because Miss Perahsan already breached her promise. Conclusion : i. Is is possible for Watipulu Company (WC) to win against Miss Perahsan. ii. Miss Perahsan cannot sue his brother, Wassup.
Tutorial 2 Charlie was offered by his employer to further study abroad. He decided to sell his house to his friend, Chaplin. Charlie called Chaplin’s handphone but no answer. Luckily, Charlie kept Chaplin’s home address. He then wrote a letter of offer to sell the house to Chaplin and posted it on 2nd February. Chaplin received this letter on 4th February and was interested to accept the offer. Chaplin wrote an acceptance letter to Charlie and asked his brother to post the letter on the same day since he was very busy with his work. On 3rd February, Charlie met his new officemate, Mr Bean, who was looking for a house. Charlie then offered his house to Mr Bean. This offer has been made instantaneously but Mr Bean did not give an answer at the meantime. Charlie later gave Mr Bean four (4) days to accept his offer. (Not including the date of the offer). On the 5th February, Mr Bean called Charlie and informed that he agreed to buy the house. Charlie then sold his house to Mr Bean. On the 8th February Charlie received Chaplin’s letter of acceptance. The day after, Chaplin came to Charlie’s house with his brother to view the house. However, Chaplin was very frustrated to know that the house was sold. Chaplin claimed that he was entitled to the house as his letter of acceptance was posted on 4th February. However, Chaplin’s brother told that actually he did not post the letter on 4th February as he suffered stomachache and was not able to go to the post office. He only posted the letter on 6th February. With reference to the Contract 1950, who is entitled to buy the house? Support your answer with relevant sections and decided cases.
Answer Issues : i. Are Chaplin entitled to buy the house? ii. Are Mr Bean entitled to buy the house? Solution & Application : Solution ( i ) Based on general rule S4(1), communication of acceptance is effective only when it is communicated. The postal rule is where it is agree that the parties will use the post as a means of communication the postal rule will apply. The postal rules states that where a letter is properly addressed and stamped the acceptance takes places when the letter id placed in the post box. Based on S4(2)(a) VS offeror, communication of acceptance is complete when it is transmitted to him. Based on S4(2)(b) VS offeree, communication of acceptance is complete when offeror know it. When an offer is made and accepted by letter through post, contract was completely concluded once the letter of acceptance had been posted, even though the letter do not reach it’s destination. Case : Adams V Lindsell (1818) The defendant wrote to the claimant offering to sell them some wool and asking for a reply 'in the course of post'. The letter was delayed in the post. On receiving the letter the claimant posted a letter of acceptance the same day. However, due to the delay the defendant's had assumed the claimant was not interested in the wool and sold it on to a third party. The claimant sued for breach of contract. The court held that there was a valid contract which came in to existence the moment the letter of acceptance was placed in the post box. This case established the postal rule. This applies where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp. The acceptance then becomes effective when the letter is posted. Application ( i ) Based on the sections and case mentioned above, Chaplin received the letter on 4th Feb but his brother posted the letter on 6th Feb because his brother suffered from stomachache. The acceptance or agreement is valid on 6th Feb. Solution ( ii ) Based on general rule S4(1), communication of acceptance is effective only when it is communicated. The general rule is that the offeror must receive the acceptance before it is effective. Cases : Entores Ltd V Miles Far East Corp (1955) The claimant sent a telex message from England offering to purchase 100 tons of Cathodes from the defendant on Holland. The defendant sent back a telex from Holland to the London office accepting that offer. The question for the court was at what point the contract came into existence. If the acceptance was effective from the time the telex was sent, the contract was made in Holland and Dutch law would apply. If the acceptance took place when the telex was received in London then the contract would be governed by English law. The court held that to amount to an effective acceptance, the acceptance needed to be communicated. Contract created when acceptance received (come to the knowledge of offeror). Therefore, the contract was made in England.
Application : Based on the section and case mentioned above, Chaplin received the letter on 4th Feb but his brother posted the letter of acceptance on 6th Feb. However, on 3rd Feb, Charlie offered his house to Mr Bean and Mr Bean agreed on 5th Feb to buy the house from Charlie where the agreement is valid. Conclusion : i. Chaplin is not entitled to but the house. ii. Mr Bean is entitled to buy the house.
Tutorial 3 Samsung wanted to sell his car to his best friend, Nokia for only RM20, 000 though the price offered was below market price. When Samsung’s mother, Blackberry, knew about this, she felt disappointed as the price was not reasonable. Blackberry approached Nokia and asked Nokia to return the car. Blackberry claimed that the sale was not valid for the inadequacy of the price. Nokia refused as she had already paid for the car. Blackberry decided to take legal action to invalidate the contract between Samsung and Nokia. She asked his son, iPhone to accompany her to see a lawyer. Unfortunately, while she was driving to the lawyer’s firm, she failed to overtake one car and suddenly hit a lorry from the opposite direction. Blackberry died on the spot while iPhone who was also in the car only sustained a minor injury. He was called by the Magistrate Court as a witness during the trial of the case. The lorry driver had promised iPhone to give the reward to iPhone if he could attend the trial and provide true evidence about the accident. iPhone attended and claimed the reward as promised by the lorry driver. Meanwhile, HTC, Iphone’s brother who was a security guard at CIMC Bank was determined to become a better worker. He performed his job dutifully and then claimed extra payment from his employer as he always came earlier and went back late, but his claim was rejected. A few days later, the bank was robbed and HTC was instructed to report for duty within 24 hours. HTC again claimed extra payment for his additional working hours but this was also rejected by his employer. Settle the above problems.
Answer Issues : i. Can Blackberry take legal action to invalidate the contract between Samsung and Nokia? ii. Can iPhone claimed the reward as promised by the lorry driver? iii. Should HTC get extra payment for additional working hours? Solution & Application : Solution ( i ) Based on the explanation 2 S26, it mentioned that 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. Case : Phang Swee Kim V Beh I Hock 1964 Respondent agreed to transfer to app a parcel of land on payment of RM500 although the land was worth much more. Respondent later refused to honor the promise, contending that the promise was unenforceable. Court held that as long as there was consideration, inadequacy of consideration was immaterial. Application ( i ) Based on the section and case mentioned above, Blackberry could not take legal action on Nokia. Blackberry’s son, which is Samsung agree to sell the car to Nokia by costing RM20,000. Nokia consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration. Solution ( ii ) It is a public duty imposed on offeree as legally compelled to fulfill the duty. Case : Collins V Godefroy 1831 Plaintiff was served with subpoena to attend court as a witness to defendant’s trial. Defendant promised to pay certain amount to plaintiff if he attend. The court held that defendant’s undertaking to pay plaintiff to appear in court after he was served with subpoena is no consideration as plaintiff is legally compelled to attend court. Application ( ii ) Based on the section and case mentioned above, iPhone cannot claimed the reward from lorry driver because iPhone was under a public duty to attend court and provide true evidence about the accident. iPhone was legally compelled to attend court. Solution ( iii ) There is an exception unless the promisor goes beyond their duty. Case : Glassbrook Bros Ltd V Glarmorgan Country Council 1925 Police officer claimed payment of 2200 sterling during strike, The court held that police officer were entitled to their claim as they had rendered extra services than required by law.
Application ( iii ) Based on the case mentioned above, HTC is unable to claim for going to work early and going home late. However, HTC can claim extra payment for his additional working hours as he was instructed to report for duty within 24 hours. It is the duty for HTC to work on time. The employer cannot reject the claimed. Conclusion : i. Blackberry could not take legal action on Nokia because there is a valid contract between Nokia and Samsung. ii. iPhone cannot claimed the reward from lorry driver. iii. HTC can claim extra payment for the additional working hours, but not for going to work early and going home late.
Tutorial 4 Miss Naughty and Miss Spoil were a twin. Their parents had died a few years ago and they were adopted by their uncle, Mr Rich who had no children. Miss Naughty received an offer to further studies at the University of XYZ. At that time, she was 17 years 5 months old. Three (3) months later, she was offered a scholarship from Jabatan Pekhidmatan Awam (JPA) and the contract was signed. According to the term of the contract, Miss Naughty was required by the JPA to serve the government department for four (4) years upon completing her studies in the year 2012. In the middle of the year 2012, Miss Naughty had successfully finished her studies and she was instructed to work with Kementerian Kebudayaan, Kesenian dan Pelancongan cawangan Bandar Hilir, Melaka. After servicing for 2 ½ years, Miss Naughty tendered her resignation and worked with another company, which offered a higher salary. JPA, through their lawyer, had served a claim to Miss Naughty demanding for payment of RM40 000 on the basis of breached of contract. Miss Naughty’s sister, Miss Spoil was not as lucky as her sister. She was not qualified to obtain any scholarship due to her unsatisfactory grade in her exam. Her uncle, Mr Rich, agreed to sponsor her education at college on the basis that Miss Spoil must reimburse all her educational expenses when she earned her own financial income. After finishing her study, Miss Spoil had worked as a lecturer at the College ABC. Mr Rich claimed that Miss Spoil must pay all the total expenses spent on her costing about RM150,000.00. Apart from that, Mr Rich claimed for the payment of the sports car, which he bought for Miss Spoil when she was 17 years old. Miss Spoil denied her liability to pay his uncle on the basis that she had no capacity to enter into the contract since she was still a minor. At the same time, Miss Naughty would like to set up a tourist centre. She had signed a sales and purchase agreement to buy a land from Mr Mereng. After the transaction was completed, Mr Mereng tried to invalidate the contract on the ground that at the time when the contract was made, she was not in the state of sound mind. Advise all the parties in the above case. Support your answer with sections and case-law.
Answer : Issues: i. Can JPA sue Miss Naughty and claim RM40000? ii. Can Mr Rich claim back the educational expenses and the sport car from Miss Spoil? iii. Is the contract valid between Miss Naughty and Mr Mereng? Solution & Application : Solution ( i ) Based on general rule, all contract entered into by a minor are void. S11 states that contract by minor is valid because he does not have capacity. Exception of scholarship. From S4(a) contracts (Amendment) Act 1976, no scholarships agreement shall be invalidated on the ground that the scholar entering into such agreement is not of the age of majority. S5(a) states that the scholar and sureties are liable in breach of the agreement. Case : Mohari Bibee v Dharmodas Ghose (1903) The appellant loan a sum of money to the respondent, a minor, secured on a house which was leased to the appellant. The minor, through the mother ,applied for the court declaration that the lease was void because the minor had no capacity to contract. The Privy Council held that an infant can not make any valid contracts, The combined effect of S 10 & 11 of the Indian Contract Act, which similar to the same section of the local Act, rendered such contract void. Therefore the contract was void and he could not sue or be sued. Case : Tan Hee Juan v Teh Boon Keat (1934) The plaintiff,a minor ,executed transfers of land in favour of the defendants. The plaintiff by his next friend applied to the court for an order setting aside the transfers. The court held the transfers of land executed by a minor were void. Application ( i ) Based on the sections and cases mentioned above, Miss Naughty needs to pay RM40000 on the basis of breached of contract because the scholarship agreement is valid although Miss Naughty was a minor. Miss Naughty us liable in breach of the scholarship contract and JPA can sue her and claim RM40000. Solution ( ii ) Based on general rule, all contract entered into by a minor are void. S11 states that contract by minor is valid because he does not have capacity. Exception of necessaries. Based on S69 Contract Act, is a person, incapable of entering a contract is supplied by another person with necessaries suited to his condition in life, the person supplying the necessaries is allowed to claim reimbursement from minor.
Case : Kerajaan Malaysia V Gucharan Singh & Ors 1971 Govern sued Gucharan,claimed RM11500, the sum actually spent in educating Gucharan. Gucharan argued that the contract void as he was still a minor at the time of the contract. The court held that the contract was void, but since the education was necessaries, Gucharan was liable for the repayment of a reasonable sum spent on him. Case : Nash V Inman The court held if a minor has been supplied with luxury, the supplier could not claim repayment. Application ( ii ) Based on the section and cases mentioned above, Mr Rich can only claim back the education expenses of RM150000 from Miss Spoil because education is a necessaries for her. Mr Rich cannot claim back the sport car because it is a luxury. Mr Rich cannot claim repayment because sport car is not necessaries . Miss Spoil only needs to pay the educational expenses to Mr Rich. Solution ( iii ) Based on general rule, contract entered into by an unsound mind is voidable on his option provided the fact of mental disorder can be proved and the other party knows of his condition. Case : Imperial Loan Co. v Stone Defendant when unsound mind signed a promissory note as surety upon which plaintiff brought an action and defendant took the defence of insanity. The court held that in order to success to take the defence of insanity of breach of contract def must show that not only that he was so insane of the time of executing the deed that he was incapable of understanding the implications of the agreement, but also that at the time of the contract his insanity was known to the plaintiff. The burden of proof must lie on the defendant. Application ( iii ) Based on the section and case mentioned above, the contract between Miss Naughty and Mr Mereng can be avoided but only when it can be proven that Miss Naughty was unsound mind when she signed the contract and Mr Mereng knew about her insanity only where these can be proven that the contract be a voidable contract, on Miss Naughty option. Conclusion : i. JPA can sue Miss Naughty can claim RM40000. ii. Mr Rich can claim the educational expenses from Miss Spoil. iii. The contract between Miss Naughty and Mr Mereng can be avoided if Miss Naughty can prove she is unsound mind and Mr Mereng Knew about her insanity.
Tutorial 5 Alex, 24, a business man loved her girlfriend, Sari, 10, very much. He had proposed to marry her but Mr Sam, Sari’s father did not agree since Sari was still a minor. However, Mr Sam allowed Alex to marry Sari once she attained her age of majority. Alex agreed and put his proposal in writing and signed by him and Sari. One of the terms of the agreement was, Mr Sam presented a sports car for Alex so that he can send Sari to school and fetched her every day. It was also stated in the agreement that the car should be returned to Sari if Alex breached his promise to marry her. Unfortunately, when Sari attained her age of majority, Alex had fallen in love with another girl, Serina. Sari urged Alex to return his father’s car but Alex had given the car to her new girlfriend, Serina. Sari was very frustrated and decided to sue Alex but Alex claimed that Sari was not able to sue him as the contract was void. Alex later married to Serina. They were a very happy married couple but after few months staying together, Alex was transferred to England by his employer. Serina was very sad and Alex comforted her that he would come back to Malaysia once a month and would provide an allowance of 1000 pound sterling to Serina. Serina was very happy but after six months, Alex failed to fulfil his promise to come back and was not able to provide such allowance. Serina was thinking to sue Alex in court. Settle the above problem and support your answer with relevant sections and cases.
Answer Issues : i. Can Sari sue Alex? ii. Can Serina sue Alex? Solution & Application : Solution ( i ) Based on Section 11 of Contract Act 1950, contracts by minors are void because there is no legal capacity. The age to enter into a contract in Malaysia is 18 years old. Case : Mohari Bibee & Anor V Dharmodas Ghouse (1903) The court held that the combined effect of S10 & S11 of the Indian Contract Act, which similar to the same section of the local Act, rendered such contract void. Exceptions : Promise of Marriage Case : Rajeswary & Anor V Balakrishnan & Ors (1958) Parties Rajes & Bala were Ceylonese Hindus. Following customary practice, a marriage settlement was entered into Rajes gave Bala a dowry & a penalty on Bala if he breaks his promise to marry. Later, Bala repudiated the promise of marriage. Rajes claimed damages for breach of contract, Bala refused as Rajes was still a minor and the contract was void. The court held that Rajes entitled to claim because marriage contracts entered into by minors were distinguishable from other classes of contracts and did not come within the principles laid down in Mohori Bibee case. Application ( i ) Based on the sections and cases mentioned above, in general contract by minor is void contract. However, there is an exception for promise/contract of marriage as decided by the court in Rajeswari’s case. Therefore, the contract of marriage is valid though Sari was still a minor when the contract is signed. Sari can sue Alex to return the car to her father. Solution ( ii ) There is no definition in Contract Act 1950. It comes from heart, difficult to ascertain. Refer to the common law principle, 2 presumptions in determination of intention with respect to agreement : (1) In business agreement, the presumption that parties to the contract intend to create legal relation unless specify otherwise. (2) In social/domestic agreement, the presumption that parties to the contract, no intention to create legal relations. Case : Balfour V Balfour Defendant was a civil servant stationed in Ceylon and while on leave in England, he had promised to pay his wife a monthly allowance of 30 pounds sterling as maintenance. Husband defaulted and his wife sued
for breach of contract. The court held that it was not a legally enforceable agreement, because the parties did not intend that they should be attended by legal consequences. The wife could not claim feom the husband. Application ( ii ) Based on presumption in determination of intention in domestic agreement there is no intention to create legal relations. Therefore, since Serina and Alex is husband and wife, there is no contract between them. Serina cannot sue Alex when Alex breached the promise to pay 1000 pounds sterling to her. Conslusion : i. Sari can sue Alex. ii. Serina cannot sue Alex.
Tutorial 6 Auta was an officer in Company X, a very prestigious company dealing in transportation. He dutifully performed his job and was eventually promoted as manager. After being promoted, Auta started to change in his attitude. He started cheating and deceiving people who made dealings with the company, and used their funds for his own gambling activities. The Board of Director of Company X then discovered his devious activities and fired him. He was in deep financial trouble as he had used all of his savings to gamble, and in addition, made huge losses. Auta decided to make a personal loan from Bank Y. He approached his friend Smarty to be his guarantor for the loan. Smarty who was a graduate from College X had agreed to be the guarantor and signed the form withoiut reading the content. Auta failed to pay the monthly payment. Bank Y had sent a letter of demand for payment to Smarty. Smarty was so disappointed and claimed the guarantor form he signed with Bank Y did not bind him. One day, Auta met his old friend Innocent, who was in the furniture business. He told Innocent that he was the owner of Company X and wanted to buy a sofa set. Auta also used the letterhead of Company X in dealing with Innocent. He then paid the deposit by cheque under the name of Company X and promised Innocent that the balance of the price would be settled one day after delivery. Innocent put his trust in Auta and based on the belief that Company X was an established company, he would not face any problem in getting payment. After the furniture was delivered, Innocent went to Company X to claim for a payment, and was shocked to find out that Auta did not work there anymore. Innocent suspected that Auta had fraudulently disclosed this fact and his identity. Innocent then decided to take a legal action against Auta. Advise, Smarty and Innocent.
Answer Issues : i. Can Smarty sue Auta in court? ii. Can Innocent take legal action against Auta? Solution & Application : Solution ( i ) Based on general principle, a unilateral mistake does not avoid contract. Refer to Section 23 Contract Act 1950, unilateral mistake is one party entered into a contract under a mistake as to a matter of fact, contract valid. It has the exception on kistake as to document which meant one party made mistake as to the nature of document he has sign. Case : Tamplin V James 1898 James made a successful bid at an auction for the slae of a public house under a mistaken belief that a certain field was included, in fact, it was not. The court held that the contract was valid. Case : L’estrange V Graucob 1934 2KB 394 The claimant purchased a cigarette vendinf machine for use un her cafe. She signed an order from which stated in small print ‘Any express or implied, condition, statement of warranty, statutory or otherwise is expressly excluded.’ The vending machine does not work and the claimant sought to reject it under the Sale of Goods Act for not being of machantablecourt held that a person is bound by the agreement he signed even though he has not read it, as there was no fraud or misrepresentation. Application ( i ) Based on the sections and cases mentioned above, the contract is valid because Smarty understand the content of the document but he was nor reading the content, there will not be undue influence occur. Solution ( ii ) This case has to refer to Section 21 to Section 23, Contract Act 1950. Refer to Section 23, unilateral mistake as to a matter of fact, the contract is valid. Based on the general rule, a unilateral mistake does not avoid contract. Case : Tamplin V James 1898 James made a successful bid at an auction for the slae of a public house under a mistaken belief that a certain field was included, in fact, it was not. The court held that the contract was valid. Case : Cundy V Lindsey 1878 A rogue hired a room which same street with a high reputable firm. The rogue ordered a quantity of handkerchiefs from claimant disguishing the signature to appear as the high reputable frim and sell to the defendants although no payment made by rogue. Later the claimant found out they sold the goods of
rogue, not to the high reputable firm. The court held that the contract was void for unilateral mistake in mistake as to identity because the claimant was bale to demonstrate an identifiable existing business whom they intended to contract with. Application ( ii ) Based on the sections and case mentioned above, Innocent can take legal action against Auta because Auta lied about the letterhead of the Company X in the agreement contract. Moreover, Innocent had took a reasonable step in identifying Auta’s qualification because Innocent believe that Company X is an establishes company. Conclusion : i. Smarty cannot sue Auta in court. ii. Innocent can take legal action against Auta.
Tutorial 7 Mak Lurus was a very rich old woman. Her husband had died and she was staying with her niece, Jelek and her adopted daughter, Baik. Mak Lurus loved Jelek and Baik very much as she had no children. Jelek was graduated from college but has no job. She was very lazy and always depends her life on Mak Lurus. Mak Lurus had advised Jelek to find a job but Jelek ignored. She always asked Mak Lurus for money. Mak Lurus who was not comfortable with Jelek’s attitude had warned Jelek that she would not give her money to Jelek anymore. One day, Jelek and his boyfriend, Hodoh had asked Mak Lurus to sign a form and informed Mak Lurus that her signature was only as a witness and the agreement was an application for a scholarship to further her studies. The form was printed in English. Mak Lurus who did not understand English language had relied on Jelek’s statement and put her signature on the form. Actually, Mak Lurus’s signature was as a guarantor for the personal loan applied by Jelek at the amount of RM50 000. Unlike Jelek, Baik was a good girl. Even though she was 16 years old, she always help Mak Lurus. Baik was adopted by Mak Lurus when she was still a baby. Her parents were Mak Lurus’s best friend. Baik’s father who was a pilot had died in the tragic air crash while her mother who was a teacher had died after suffering from cancer last year. Baik’s mother had asked Mak Lurus to look after Baik after she died, as they had no other relatives. She also left a will which stated that Mak Lurus was a trustee to the land left in favour of Baik and the land should be transferred to Baik’s name once she had attain her age majority. When Jelek had known about the land, she tried to sell it to his friend. Advise Mak Lurus and Baik.
Answer Issues : i. Can Mak Lurus invalidate the contract? ii. Can the deal between Jelek and his friend invalidated? Solution & Application : Solution ( i ) Based on Section 23, unilateral mistake is one party entered into a contract under a mistake as to a matter of fact, the contract is valid. Based on the general principle, a unilateral mistake does not avoid contract. There is exception for mistake as to document where one party made mistake as to the nature of document he had signed. Case : L’estrange V Graucob 1934 The court held that a person is bound by the agreement he signed even though he has not read. Case: Subramaniam V Retnam 1966 The court held that the defendant bound by the agreement he had signed regardless of his ignorant of the language, as there was no fraud or misrepresentation. However, there is an exception of common law, which is not est factu, no my deed. It applied where person signs the agreement under a mistaken belief as to character or class of document and mistake was caused by illiteracy, blindness, senility of the person fraudulent conduct of other party. Case : Foster V Mackinnon 1869 The court held where a signatory to a document signs it under a genuine mistake as to its nature, he is not bound because hid mind had not gone with his action. Application ( i ) Based on the section and cases mentioned above, Mak Lurus has signed the agreement under a mistaken belief as to class of document and mistake was caused by illiteracy of the person fraudulent conduct of other party. Thus, the contract signed by Mak Lurus is voidable. Solution ( ii ) Based on section 24 of Contract Act, the consideration or object of an agreement is unlawful unless based on Section 24 (d), contract injurious to the person or property of another. Consideration or object involves injury to the person or property of another. Case : Syed Ahmad Alhabsy V Puteh binti Sabtu The defendant agreed to sell a property of an infant had an interest. The court held that the dealing is cancel.
Application ( ii ) Based on the section and case mentioned above, Baik was still and infant and the land will belong to her once she had attain her age majority. The deal between Jelek and his friend will affect infant’s ( Baik ) interest. Therefore, the deal between Jelek and his friend is invalidated. Conclusion : i. The contract signed by Mak Lurus is invalidated. ii. The deal between Jelek and his friend is invalidated.
Tutorial 8 Papan was a shareholder in Syarikat Batu Api Sdn Bhd (SBA). Based on the SBA’s constitution, if any conflict arises between the company and the shareholders, the matter must be referred to the arbitration. Due to dissatisfaction with the company, Papan brought the matter before the court. SBA questioned Papan’s action but Papan argued that he had a right in so doing and SBA could not restrict his right to sue. One day, SBA had entered into a contract with Pranom Company (PC) from Thailand to sell cooking oil. This sale is against the law which prohibited the export of cooking oil to over sea considering the insufficient supply of cooking oil for domestic use. The lorry who was supposed to deliver the oil had been arrested by the Local Custom. Due to the failure of SBA to deliver the cooking oil, Pranom decided to claim compensation from SBA in court. Settle the above case. Support your answer with sections and case-law.
Answer Issues : i. Can Papan sue Syarikat Batu Api Sdn Bhd in court? Can Syarikat Batu Api Sdn Bhd restrain Papan’s right to sue? ii. Can Pranom claim compensation from Syarikat Batu Api Sdn Bhd? Solution & Application : Solution ( i ) Based on Section 29 Contract Act 1950, agreement whereby a person is restrained from enforcing his rights is void that extent. Case : Corporation Royal Exchange V Teck Guan 1912 A clause in insurance policy : if claim be made and rejected, all benefits under this policy shall be forfeited. The court held that it is void. The clause reduced the period within which an assured might bring a suit for compensation to a period less than that sanctioned by the limitation statue. However, there is an exception where agreement to refer any dispute to arbitration any dispute which may arise. Application ( i ) Based on the section and case mentioned above, Papan cannot bring the case to the court because it is cover under exception under Section 29 stated in the agreeement between him and Syarikat Batu Api Sdn Bhd that any issues to be refered to the arbitration. This is despite the general rule under Section 29 that forbids or refrain anyone from taking the case to the court. Solution ( ii ) Based on Section 24 (e), the consideration of an agreement is lawful unless the contracts regard it as immoral or opposed to public policy. In this case, the contract is against public policy which is against the interest of the state. It is detrimental to state where agreement to trade with an enemy alien. Case : Foster V Priscoll 1929 Agreement to smuggle whisky to US in contravention of its law, it is illegal. When come to consequence of illegality, the general rule is neither party can enforce, court refuse to assit, parties may not rev=cover money or any property transferred. Based on maxim, ‘ex turpi causa non oritur actio’, no action can be taken and enforced on illegal contract. Application ( ii ) Based on the section and case mentioned above, the agreement between Pranom and Syarikat Batu Api Sdn Bhd is illegal contract because it is against public policy whereby detrimental to the stae. Therfore, no compensation is allowed under such illegal agreement.
Conclusion : i. Papan cannot sue Syarikat Batu Api Sdn Bhd in court. ii. Pranom cannot claim the compensation from Syarikat Batu Api Sdn Bhd.
Tutorial 9 Softball was a good girl. She was adopted by Pinball, when she was still a baby. Her parents were Pinball’s best friend. Softball’s father who was a pilot had died in the tragic air crash while her mother who was a teacher had died after suffering from cancer last year. Prior to her death, Softball’s late mother had asked Pinball to look after Softball after she died, as they had no other relatives. She also left a will which stated that Pinball was a trustee to the land left in favour of Softball and the land should be transferred to Softball’s name once she had attained her age majority. One day, Pinball decided to sell this land to her brother, Football. During their negotiation, Softball heard about this and questioned Pinball’s action. However, Pinball ignored and asked Softball not to interfere with her transaction with Football. Pinball and Football agreed to sign the agreement of sale and purchase of the land later. Meanwhile, the management of Softball’s office was reshuffled and Softball was placed under the new department. Softball did not like her manager, Miss Volleyball as she was a perfectionist and wanted everything on time. Miss Volleyball always gave Softball a lot of works and was never satisfied with Softball’s performance. Softball was very frustrated and wanted to quit. She decided to tender her notice of resignation. However, she felt very disappointed when she realized that the agreement between her and the company included the following clause: ‘Upon the resignation of any accountant, he or she is thereafter not allowed to work as an accountant at any other organization within KL…’ Advise the parties involved in the above case.
Answer Issue: i. Can the agreement of sales and purchase of the land between Pinball and Football be void? ii. Can the agreement between Softball and her company be discharged? Solution & Application : Solution ( i ) Based on Section 24 Contract Act 1950, the consideration or object of an agreement is lawful unless it involves or implies injury to the person or property of another. Refer to Section 24 (d), contract injurious to the person or property of another. Consideration or object invloves injury to the person or property of another. Case : Syed Ahmad Alhabsyi V Puteh Binti Sabtu The defendant agreed to sell a property of an infant. The dealing was detrimental to the infant’s interest must be struck down. The court held that the dwaling is cancel. Application ( i ) Based on the sections and case mentioned above, the land is belongs to Softball although Pinball did not transfer the land to her when she reached the age of majority. The agreement between Pinball and Football will affect Softball’s interest. Therefore, the deal between Pinball and Football is valid. Solution ( ii ) Based on Section 28 Contract Act 1950, agreement whereby a person is restrainedfrom exercising a lawful profession, trade, or business of any land is void to that extent. However, there were expectations which restriction on selling the goodwill of business, prior to dissolutionof partnership, partner agreed not to carry on a business similar to partnership within specified local limits and during the continuance of partnership, partners agreed not to carry on business apart from partnership business. Case : Wrigglesworth V Wilson Anthony Defendant was restrained from practising as an advocate and solicitor within 5 miles from Kota Bharu town for a period of 2 years in the event that he left the plaintiff’s firma and set up a firm in Kota Bharu town. Plaintiff sought an injunction to uplield such as restriction. The court held that restriction void, defendant was not a partner on the legal firm, merely an employee and partnership exception irrelevant. Application ( ii ) Based on the section and case mentioned above, the restriction stated in the agreement of Softball and the company should not be exist and restrained Softball from working at other organization within KL as an accountant. Conclusion : i. Agreement between Pinball and Softball are void. ii. Agreement between Softball and her company are discharged.
Tutorial 10 Ipin an owner of a restaurant had arranged for three (3) days family holiday in Cameron Highland. Ipin had rented out an English style bungalow owned by Dollah. Dollah had guaranteed that the bungalow was in good condition including the hot water and house heater. Unfortunately, on the first night of their stay the house heater was not functioning. Ipin had made a few calls to Dollah to come and fix the heating system but to no avail. Ipin and his family were hardly slept because the house was so cold without the heater. Ipin who had acute asthma fell sick that night. Ipin’s wife had sent him to the hospital and he was admitted for one (1) day treatment at the hospital. The whole family was very disappointed, left Cameron Highland and went home. Only after two (2) weeks Ipin is fully recovered from his illness and he was unable to run his business for that duration. Ipin wanted to sue Dollah for the losses he had suffered which consist of bungalow rental, the cost of medical treatment and his illness, which had affected his business financial income. Recently, Ipin had imported furniture from Indonesian jati wood for his restaurant. He had signed a contract with his supplier, Miss Minah. Unfortunately, last week, the government has banned jati wood to be imported from Indonesia. Ipin was very upset and would like to know the consequence of the government’s prohibition on his contract with Miss Minah.
Advise Ipin about the available remedies, which he can claim, and the consequence of the government prohibition on his contract with Miss Minah.
Answer Issues : i. Can Ipin sue Dollah for the losses he had suffered which consist of bungalow rental, the cost of medical treatment and his illness, which had affected his business financial income? ii. Can contract between Ipin and Miss Minah be continued? Solutions & Applications : Solution ( i ) Remedies is the method by which an injured party enforces a right or corrects a loss. The remedies available to the injured party will depend on the nature of the breach and the results will offer between the parties. The usual remedy for a breach of contract is an award of damages which is a common law remedy. A defendant who had breached his conract would not be compelled to perfomr, but was liable to compensate the plaintiff for any loss he suffered as a consequence of the breach. Remedies available for breach of contract such as damages, injuction and Specific Performance. Damage is available as of right to the innocent party compensate innocent party for losses suffered as a result of breach of contract. The normal remedy for breach of contract is an award of damages i.e monetary compensation to the innocent party. The purpose is to compensate the victim for the loss caused him by the breach of contract and not to punish the party in default. There are 3 types of pecuniary losses : i) Physical loss ii) Pain, suffering, loss of amenities & expectation of life iii) Injury to feeling and mental distress In this case, it is physical loss. Case : Hobbs & Wife V The London & South Western Railway Co. 1875 Train company breached contract and caused Mr and Mrs Hobbs to alight at a different place. They had no place to stay and fell sick due to a drizzle that night. Mrs Hobbs was also very tired since she had to walk 5 milles a long way to back to their home. Due to the sickness, Mrs Hobbs cannot assists Mr Hobbs in his business. They were incurred medical expenses. The court held that physical inconvenience is a non pecuniary loss that is recoverable as damages. Application ( i ) Based on the case mentioned above, Ipin can only sue Dollah for the physical loss but not the medical expenses which is the bungalow rental because of no heating system, they suffered a sleepness night since it is very cold without the heater. This is because, Ipin had acute asthma before the tragedy happen. Its consequence were to remote from the breach of contract. Solution ( ii ) Based on Section 57-2 in situations where in a contract may be frustrated : (1) where the contract become physically impossible of performance and (2) where the contract unlawful to perform. Instances of frustration which is Government interference. Performance of a contract becomes illegal through change of law or government interference. The contract is legal when formed, later due to change in law, its performance becomes unlawful.
Case : Avery V Browden 1856 Defendant chartered a ship and was contracted to collect cargo from odessa. On arrival the cargo wasn’t ready. By the time it was, the Crimean war had happened and it became illegal to load in enemy port. The court held that the plaintiff cannot suee the defendant since the contract frustrated by government’s interference. Case : Esposito V Bowden 1857 Bowden signed a charter party with Esposito to load wheat at Odessa. Before the time for loading arrived, was broke out between Russia and England. For Bowden to perform his part of the contract would have involved trading with the enemy, an illegal act. The court held that the contract was discharged by frustration because the wae affected a change of law; the trading would previously have been lawful was now unlawful. Application ( ii ) Based on section and cases mentioned above, Ipin has lost his right to sue Miss Minah due to the government prohibition because it was discharged by frustration. As the contract signed between Ipin and Miss Minah ( Supplier ) is unlawful due to the banning of importing Jati wood from Indonesia. Initially, importing Jati wood form Indonesia is lawful, however, due to the government prohibition, it become unlawful. Therefore, the contract is discontinued. Conclusion : i. Ipin can sue Dollah for the losses of bungalow rental but not for medical expenses. ii. The contract between Ipin and Miss Minah discontinued due to frustration by illegality.
Tutorial 11 Dr. White was a cosmetics specialist in the Red City. Black was one of Dr. White’s customers. Since Black had moved far to the Pink City, he instructed his staff, Grey, who happened to be visiting the City Red to take 20 packs of face whitening cream produced by Dr. White and the strawberries ordered by Black during Dr White’s holiday in London. On the way home from City Red, Grey had to stop due to the worst haze. He was told that Highway to Pink City had been closed to all traffic for two (2) weeks. Gray had tried to contact Black to inform about the situation and also to get Black’s instructions. Unfortunately, Black had switched off his mobile phone. Grey had tried to contact the Black’s office but had been told that Black was attending a meeting in Paris for three (3) days. Grey later left a message to Black’s mobile phone but Black was too busy to read it. During the suspension, Grey had been living in a motel and met Brown. Brown who also suffered from skin problems asked to buy whitening cream that Grey had and Grey sold all of them to Brown. After two (2) days, the strawberries started to rot. To avoid losses, Grey sold them at a local market and saved the profits for Black. After returning from Paris, Black read the news about the incidents at Highway at a Pink City. He was very angry when informed that all his belongings had been sold. Black blamed Grey for failure to comply with his instructions and he wanted to take a legal action against Grey. Solve the above problem based on the principle of agency law. Support your answer with relevant sections and case-law/relevant example
Answer Issue: i. Does Grey has the authority to sell the whitening cream? ii. Can Black sue Grey by selling the strawberries at the local market which considered as failure to comply with his instructions? Solution & Application : Solution ( i ) By ratification by the principal. a person, who has no authority to act for the principal & has acted as if he had the authority. When either one of the above happens, the principal can either reject or accept the contract so made. Case : Keighley Maxted & Co. V Durant 1901 Roberts, was authorized by the Keighley to buy wheat at a certain price. Robert exceeded his authority & bought at higher price from Durant & used his own name but intending it for Keighley. Keighley agreed to take the wheat at that price but failed to take delivery. The court held that Keighley was not liable to Durant, as he could not ratified Robert’s contract, since Robert did not profess to act as agent. Application ( i ) Based on the section and case mentioned above, Grey have no the authority to sell the whitening cream as grey had exceed his authothority by selling the whitening cream to Brown without the permission from Black. Solution ( ii ) Section 142, by necessity in an emergency. A person is entrusted with another’s property & it becomes necessary to do something to preserve that property although he has no express authority to do so. There must be already some existing contractual relationship between the principal & the person who acts on his behalf. Case : Springer V Geat Western Railway Company 1921 Defendant agreed to carry plaintif’s tomatoes from Jersey to Covent Garden market. Owing to bad weather, the ship arrived late at Weymouth. Defendant’s employees were on strike, tomatoes were unloaded by casual labourers some of tomatoes were found to be bad. Def decided to sell tomatoes as they felt that tomatoes could not arrive in Covent Garden market in a saleable condition. Plaintif claimed damages. The court held that the plaintif was entitled to damages because defs were not agent s of necessity because they have failed to communicate with the plaintif when they could have done so. Application ( ii ) Based on the section and case mentioned above, Black cannot sue Grey because it is necessary to sell the strawberries that started to rot to avoid any losses. it becomes necessary to sell the strawberries that started to rot to avoid any losses for Black although Grey has no express authority to do so.
Conclusion: i. Grey has no authority to sell the whitening cream to Brown ii. Black cannot sue Grey by selling the strawberries at the local market which considered as failure to comply with his instructions.
Tutorial 12 JLO Associates was a legal firm, which consists of tiga (3) partners, Jazz, Lamborgini and Opel. One of their clerical staffs named Beatle was the most senior among other staffs. Jazz, Lamborgini and Opel always treated Beatle like he was also their partner. One day, Jazz’s client, Miss Alfa came to JLO Associates to discuss her case. Jazz had introduced Beatle as one of his partners and told Miss Alfa that Beatle was an experienced legal expert and could also gave his legal advice to Miss Alfa’s case. The next appointment, Miss Alfa came to see Jazz but he was not available since he got to attend one urgent court matter. Miss Alfa sought a legal opinion from Beatle. Beatle gave his advice and submitted his bill to Miss Alfa. After paying the bill, Miss Alfa discovered that Beatle had wrongly advised her and he had no legal qualification so as to act as a legal adviser. She decided to sue Beatle and claimed back her money. Beatle refused to be liable against Miss Alfa’s loss. He claimed that he was not the one who should be responsible since he was only a staff and not a legal practitioner. When Miss Alfa submitted her claim to Jazz, he denied being liable too. In the meantime, Lamborgini instructed his clerk, Cooper, to buy two copies of the latest Contract Act 1950 from the Merc Bookshop. Lamborgini gave Cooper RM20.00 to pay for the two statutes, which cost RM10.00 each. Cooper went to Merc Bookshop and found that the price for the Contract Act 1950 had been increased to RM15.00 each. Knowing that Lamborgini was really in need with the statute, Cooper therefore bought the two statutes by advancing his money of RM10.00. When Cooper gave those two statutes to Lamborgini and explained about the additional payment, which he had advanced, Lamborgini took both of the statutes without saying anything. Cooper did not satisfy since Lamborgini failed to pay his money. In another incident, Opel was appointed by Datson to handle his accident case. Datson, who was the defendant in that case, had instructed Opel to convince the plaintiff to drop the case by offering RM1K to the plaintiff. Opel refused to follow Datson’s instruction as it is against his ethical code as a lawyer. Datson insisted Opel to compromise since he had paid his legal fee to Opel. Furthermore, Datson claimed Opel must follow his instruction as he was the principal and Opel was his agent. Advise all the parties involved in the above case based on the law of agency. Support your answer with relevant sections and case-law.
Answer Issue: i. Is Jazz being liable against Miss Alfa’s loss? ii. Can Cooper’s act be ratified? iii. Should Opel follow his agent ( Datson ) instruction to drop the accident case? Solution & Application : Solution ( i ) Based on Section 140 Contract Act 1950, authority of an agent can be expressed in written or oral form. Meanwhile, implied appointment held that certain circumstances of the case will infer the creation of an agency. It may arise by implication when a person holds out another person as the person is having authority to act for him by his words or conduct. Case : Chan Yin Tee V William Jacks and Co. (Malaya) 1964 Chan, the appellant held himself out as Yong’s partner in a meeting with respondent company. Yong was a minor and they were registered as business partner in a business. Business was conducted between Yong and respondent company, but the price for the goods was not being paid. Because of this, the respondent company sued Chan and Yong. The court held that since Chan had held Yong as his agent, who has authority to do things on his behalf, so Chan was liable for Yong’s acts. Application ( i ) Based on the section and case mentioned above, Jazz had held Beatle ( which is only a senior in the company and not a partner of the company ) out of the agents who had the authority to give legal advice to Miss Alfa on Jazz’s behalf. Therefore, Jazz is being liable against Miss Alfa’s loss. Solution ( ii ) Agency of ratification may arise followed by one of two situations; it can be either an agent who was properly appointed has exceeded his authority or a person who has no authority to act for the principal has acted as if he had the authority. Based on Section 149 Contract Act 1950, when situation above happens, principal can elect either to accept or reject the contract, ratification will arise when principal accepts and confirm the contract. Based on Section 150 Contract Act 1950, ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done. Ratification is retrospective, which means the date when the original contract was made will be taken into account of the contract, not the time of ratification. Case : Keighley Maxted & Co V Durant 1901 Roberts, was authorized by the Keighley to buy wheat at a certain price. Robert exceeded his authority and bought at higher price from Durant and used his own name but intending it for Keighley. Keighley agreed to take the wheat at that price but failed to take delivery. The court held that Keighley was not liable to Durant, as he could not ratified Robert’s contract, since Robert did not profess to act as agent.
Application ( ii ) Based on the sections and case mentioned above, Lamborghini was liable to pay additional payment since there is ratification as there is no disclosure of agency made by Cooper during the time of contract. A contract on behalf of an undisclosed principal cannot be ratified, it is complete upon singing. The principal must exist at the time of contract. Solution ( iii ) Based on the Section 164 to 178 Contract Act 1950, duties of principal and agent. Agent’s duties is (1) to obey the principal’s instructions (S164). If failed to do so, it is breach of contract and liable for any loss suffered by the principal. Case : Turpin V Bilton 1843 The court held that the agent was liable when he failed to insure a ship when instructed to do so and the ship was lost. However, agent is under NO duty to obey instructions of his principal if the instructions are unlawful. An agent is not required to do anything that is illegal, or which is void. Case : Cohen V Kittel 1889 The court held that the agent was not liable for failing to place bets. Application ( iii ) Based on the sections and cases mentioned above, Opel don’t need to follow the instruction given by Datson even though Opel was his agent. This is because it is against the ethical code as a lawyer for opel. Therefore, it is unlawful to accept the offer RM 1K from Datson to drop the accident case. Conclusion : i. Jazz is being liable against Miss Alfa’s loss. ii. Cooper’s act should be ratified. iii. Opel should not follow Datson instruction to accept RM 1K to drop the case.