C1 : LAW OF CONTRACT CONTRACT
Principle of Contract Law originated from England Malaysia contact law closer to Indian Contract law because Original Ordinance 1950 reproduction of Indian Contract Act 1872 (Modified of English law but varied in several aspects ) .: Principle of Promise :. Islam is officially religion of country so it must have Islamic tenents in law . ex: Islamic banking, Mahkamah Syariah .: What is Contract :. Agreement between two or more more parties that is legally binding binding between them All contract must be built on agreement Not all agreement are automatically contract Binding of contract : 6 elements 1. Proposal 2. Acceptance 3. Consideration 4. Intention to create legal relation 5. Certainty 6. Legal capacity C2: PROPOSAL AND ACCEPTANCE Proposal is made 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 such act abstinence Section 2(b): when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted .: Invitation to treat :. Invitation to treat is not a proposal but a sort of preliminary communication with passes between the parties Display of goods in a shop as in advertisements generally do not constitute a proposal to sell Proposal made by customer when he selects the desire goods for payment at the counter Pharmaceutical Society of Great Britain V Boots Cash Chemist Ltd Defendant was charged under Pharmacy & Poisons Act 1933 Case berlaku di self-service shop when customer ambil article yg dia na beli dan masukkan dalam wire basket. Payment akn dibuat dkt exit where a cashier was stationed & case involve drug pharmacist pantau transaksi utk elak sale Principle :advertisement is only an invitation to applicants to make offer Court rule : advertisement was an invitation to qualified person to apply and the resulting application were offers Coelho V The Public Service Commision Applicant apply position selepas baca advertisement advertisement . selepas tu di diterima bekerja tapi ta lama lepas tu The Public Service Commission cuba tamatkan pekerja baru ats s ebab dia dilantik dlm percubaan . applicant pergi mahkamah minta keputusan tu dibatalkan . .: To Whom can a Proposal by Made ? :. Proposal can be made to a particular person or the general public Section 2(b): „When the person to whom the proposal is made..‟ lends support to his view Principle : An advertisement is the offer to the whole world Court Appeal : Plaintiff had accept the offer of the company made
Carlill V Carbolic Smoke Ball Co Defendants advertised that they will offer sum of money 100£ to anyone who still succumb to influenza after using a certain product according to instruction for a fixed period . Plaintif using use the product & become ill . Plaintiff upon refusal of the defendant to honour their promise, proceed to sue them. .: Communication of Proposal :. Only an addressee may accept the proposal is the principle of communication of the proposal Section 2(a): When one person signifies to another his willingness to do or to abstain from doing anything, there can be no acceptance to form an agreement A party has done something which coincides coincides with the proposal without aware about proposal does not bring an agreement R. V Clarke Western Australian Government offer reward for information about the arrest & conviction of persons responsible for murder 2police officers. X & Clarke were arrested&charged with the murders but after that a latter give info to arrest another person,Y. X&Y convicted for the offence & Clarke who did not commit the murders claimed c laimed reward but its failed because the info was given to clear himself not because he know about the reward .: Counter-Proposal and Acceptance :. Acceptance must be made on exactly the same same terms as proposed without modification or variation Section 7(a): Any modification or variation of the proposal does not constitute an acceptance but amount to a counter-proposal by the party to whom the original proposal was made Counter proposal is rejection of original proposal Hyde V Wrench Defendant offer to sell his estate to plaintiff on 6June 1,000pounds. On 8June plaintiff made counter-proposal to purchase at 950pounds. Defendant refuse to accept this proposal & 27June plaintiff wrote again to accept the original proposal . Court said no acceptance occurred because plaintiff‟s letter on 8June has reject original proposal . Even counter-proposal has effect of destroying the original proposal does not mean that further communication between the parties subsequent to the original proposal is not permissible Stevenson Jaques & Co V McLean Defendant wrote to plaintiff offer to sell iron at $40 cash & he open the offer until Monday.Monday morning 9.42 p laintiff sent telegram telegram to defendant said “please wire whether you would accept forty for delivery over two months, or if not, longest limit you would give” . No respond from defendant, but after receive it he sold iron to another purchaser . at 1.25pm sent a telegram to plaintiff advising them of the sale. 1.34pm b4 defendant‟s telegram was received, p laintiff sent the defendant a further telegram accepting the original offer. Plaintiff claimed that last telegram was an acceptance o f defendant‟s offer &court agreed with the th e claim. Agreement requires a proposal & an absolute absolute & unqualified acceptance of it If parties still in process of negotiation, there is no question of an agreement
Lau Brothers & Co. V. China Pacific Navigation Co Ltd. Ignatius V Bell Negotiation for the delivery of logs were conducted in a Plaintiff sued for specific performance of an option series of telegrams&letters.Defendants withdrew & the issue agreement which purported to give him option of purchasing is whether there is a binding contract in that stage. Court the defendant‟s right over a piece of land.the option wa said they still in negotiation&defendant could rightly withdraw exercise before or on 20/8/1912. They use post to from it . communicate. Plaintiff sent notice of acceptance by .: Communication of Acceptance :. registered post in Klang on16/8/1912 but not delivered till Acceptance of proposal must be communicated to the proposer evening 25/8 because plaintiff away. The letter remained at for there to be a binding contract between parties post Kuala Selangor until pick up by defendant Acceptance can be expressed in reasonable manner & within .: Revocation of Proposal :. reasonable time Section 5(1): A proposal may be revoked at any time before the Exception that acceptance must be communicate : communication of its acceptance is complete as against the Proposer has dispensed with need for it proposer, but not afterwards Proposer allows the party to whom the proposal is made to Section 6 state proposal is revoked of : perform „the condition of proposal‟ (a) By the communication of notice of revocation by the proposer Proposer allows „the acceptance of any consideration for a to other party reciprocal promise which may be offered with a proposal‟ (b) By the lapse of the time prescribed in the proposal for its .: Positive Act of Acceptance :. acceptance or if no time is so prescribed, by lapse of a Communication of acceptance may be waived, it will be necessary reasonable time without communication of the acceptance for addressee to do something positive to accept such as actual (c) By the failure of the acceptor to fulfill a condition precedent to performanceof condition of proposal or express it acceptable acceptance manner (d) By death or mental disorder of proposer, if the fact of his Sectin 2(b): the person to whom the proposal is made to signify death or mental disorder comes to the knowledge of acceptor his assent thereto to proposal b4 acceptance Fraser V Everett Byrne V Tienhoven No rule of law said „silence gives consent‟ Issue : whether there is a binding contarct ? Defendant had contravted for the purchase of „transfer and Defendant offered to sell 1000 boxes of timplates to the scrip‟ shares but were tendered bearer -warrants shares . his plaintiff . lordship said that defendant could not be compelled to 1 Oct :defendant post letter of offer in Cardiff to plaintiff in accept bearer-warrant & his failure to reply to plaintiff‟s letter New York inform him that certificate had been exchanged could not be 8 Oct: Defendant post letter revoking offer on 1 Oct treated as waiver of objection 11 Oct:Plaintiff terima surat 1okt dan buat penerimaan by Section 6(b): proposal is revoked if „ by lapse of time prescribed in telegram pd hari yg sama dan followed dgn surat penerimaan the proposal for its acceptance or if no time is so prescribed, by 15okt the lapse of a reasonable time, without communication of the 20 Oct:surat revocation defendant dtrima plaintiff acceptance‟ Ada contract sbb revocation offer post on 8okt ta effective till 20okt Fraser V Everett Section 6(a) : Communication of revocation should be done „by Acceptance of proposal must be made in reasonable time the proposer‟ or his agent acting on his behalf Contract expected to be mailed at end of march & which if
mailed would have arrived on 23 April . court said the delivery not in reasonable time to have sript in early April & offered to dependant on 15May .: Acceptance Through Post :. Acceptance is complete when it is communicated to the proposer Section 4(2): the exception to general rule where the parties have contemplated the use of the post a s mean of communication
Entores Ltd V Miles Far East Corporation When a contract made by post it is clear law throughtout the common law countries that acceptance is complete as soon as the letter is put in post box & that is the place contract where is made
Dickinson V Dobbs Dia revoke guna lawyer dia dan revoke tu jd sbb principal tahu dan other parties pun tahu Silence is not acceptance
Fraser V Everett Acceptance of the plaintiff was not made within reasonable time . the document should be delivered much earlier, taking into consideration that „the shares in question were mining shares of a very fluctuating character‟
i) Promise to compensate either wholly or in part the other person Ramsagate Victoria Hotel Co V Montefiore ii) The promisee has voluntary done something for the promisor Defendant apply share in June and paid deposit into the Issue : whether the plaintiff was a person who had already voluntarily company bank. It was not till November that the company done something for the defendant informed the defendant that share has been allotted to him The exception : and that the balance of the purchase price should be paid. 1. The promise has voluntary done an act Defendant refuse to accept the shares& the court held the 2. The act is one which the promisor was legally compellable to refusal justified because such a proposal should have been do accepted within reasonable time 3. An agreement to compensate wholly or in part the promise for Subsection 9(d): The happening of that two does not automatically the act result the demise of proposal . the fact of death or mental disorder Section 26(c) must be known to the acceptor b4 acceptance. It is only upon Statute barred debt: a debt which cannot be recovered through such knowledge that the proposal is no longer available for legal action because of a lapse of time fixed by law acceptance. Limit of action in contract according Limitation ordinance in C3: CONSIDERATION Peninsular Malaysia is 6years from the time the action Section 26: an agreement made without consideration is void Exception : unless they belong to one of those categories of agreements listed 1. The debtor made a fresh promise to pay statuted-barred debt in the same section as being exempted from the rule. 2. The promise is writing and signed by the person to be .: Executory , Executed and Past Consideration :. charged or his authorized agent in that behalf Executory when one promise is made in return for another ( X janji .:Adequacy of Consideration :. nak jual moto kat Y . Y janji nak bayar $2000 kat X ) Phang Swee Kim V Beh I Hock Executed when a promise is made in return for the performance of Respondent agreed to transfer the appellant a parcel of land act on payment $500 when the land was subdivided although Past consideration where promise is made subsequent to and in the land worth much more. The respondent later refused to return for an act that has already been performed honour the promise, contending that the pr omise was Kepong Prospecting Ltd & S.K. Jagatheesan & Ors. V A.E. Schidt unenforceable. Judge kata the agreement was void due to & Marjorie Schmidt inadequacy of consideration Schmidt a consulting engineer had assist another in obtaining .: Consideration Need Not Move From Promisee :. a prospecting permit for mining iron ore in Johore. He also Consideration must move from the promise helped in the subsequent formation of the company, Kepong A party to an agreement can enforce a promise even though he Prospecting and was appointed managing Director. After has given no consideration company formed, agreement was enter between them wh ich Section 2 (d): which provides that consideration can move from company undertook to pay him 1% of the value of all old sold the promise or „any other person‟ from the mining land Venkata Chinnaya V Verikatara’ma’ya .: Exceptions to General rule :. Sister agreed to pay an annuity of Rs653 to her brothers The exception are : who provided no consideration for the promise. On the same (a) An agreement made on account of natural love and affection day, their mother had given the sister some land stipulating between parties standing in near relation to each other that she must pay the annuity to her brothers. When the (b) An agreement to compensate for past voluntary act sister failed to fulfill her promise , her brother sued her on (c) An agreement to pay a a statute-barred debt the promise. The court ruled that she was liable on the Section 26(a) promise on the ground that there was a valid consideration The validity of agreement depend on this condition : for the promise even though it did not move from the brother. 1. It is expressed in writing which may be in any reasonable .: Waiver Of Performance :. form A waiver of a right that is not supported by consideration is void 2. It must be registered where a law exists requiring such Section 64: Every promise may dispense with or remit, wholly or in registration part, the promise made to him, or may extend the time for such 3. It is made on account of natural love and affection between performance, or may accept instead of it any satisfaction . parties standing in near relation to each other
Re Tan Soh Sim In her last illness Tan Soh Sim had espressed a wish that her estate should be divided among her 2 adopted song & 2 adopted daughters. The legal next-of-kin of Tan Soh Sim respect the wish that made and an agreement renouncing on their right in favour of the adopted children who were their nephew and niece. It was held that Chinese adopted children are related to the adoptive parents and brothers but there is no nearly related to the family of their adoptive mom Section 26(b) : There are two libms to this exception :
IllustrationC:A owes B $5000.C pays to B $1000&B accept them in satisfaction of his claim on A.This payment is discharged the whole claim
Kerpa Singh V Bariam Singh
Bariam owed Kerpa $8,869.94 under judgement debt. The debtor‟s son wrote a letter to Kerpa , the appellant creditor, offering $4,000 in full satisfaction of his father‟s debt and endorsed a cheque for the amount, stipulating that should Kerpa refuse to accept his proposal, he must return the cheque. Kerpa‟s legal advisers, having cashed the cheque & retained the m oney proceeded to secure the balance of the debt by issuing a bankruptcy notice to the debtor. Court said acceptance of the cheque from the debtor‟s son is in full satisfaction precluded from claiming the balance
CHAPTER 4 : Other Essentials of a Contract
Karuppan Chetty V Suah Thian .: Intention to create Legal Relation :. The contarct was declared void for uncertainty because the The two presumption on this agreement are : parties agreed to lease of 35$ per month „for as long as he 1. In business agreement, there is pres umption that the parties likes‟ intend legal consequence to follow unless the parties specify .: Capacity of Contract :. otherwise According to law a person who enters into a contract has the full In social, domestic or family agreements, it is implied as a matter of capacity to do so but where one or more parties lack such course that no legal relations are contemplated, but capacity in certain instance, the contract may be invalid 2. such presumption may be rebuttable Section 10(1) :All agreements are contracts if they are made by Agreement are made everyday in social & family life. The parties the free consent of parties competent to contract, for a lawful are horrible that they are may be taken to the court for such consideration and with a lawful object, and are not hereby agreement expressly declared to be void. Balfour V Balfour Section 10(2): Nothing herein contained shall affect any law by The defendant in Sri Lanka . He promised to his wife to paid which any contract is required to be made in writing or in the maintenance for allowance. But his wife in England & could presence of witnesses, or any law relating to the registration of not follow him due to poor illness, The husband did not fulfill documents. the promise to the wife and she take the case to the court. In Section12(1): sound mind is a person who can made a reasonable held, court said there is no intention to create a legal judgement agreement because it just a domestic and family agreement Section 12(2): A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of Jones V Padavvatton sound mind. Which the agreement between mother&daughter. The mother Section 12(3): A person who is usually of sound mind, but ask the daughter to give up her job in US and go to England fo occasionally of unsound mind, may not make a contract when he study& the mother will give maintenance. Her daughter go to is of unsound mind. England for study&her mother varied the agr eement to give a (a)A patient in a mental hospital, who is at intervals of sound mind, house to her daughter. In held, the agreement is not a legal may contract during those intervals. agreement because it is a domestic and family agreement. (b) A sane man, who is delirious from fever, or who is so drunk But not all family and domestic agreement is not binding, it that he cannot understand the terms of a contract, or form a depend on whether they have intention or not and the way they rational judgment as to its effect on his interests, cannot contract expressed it. whilst such delirium or drunkenness lasts. Merrit V Merrit Minors Is different from two case above. In this case a husband and A minor is a person who has not reached the age of majority wife want to divorce. The husband left a home with their joint The age of majority is 18 years. name. the house is the subject of mortgage. The husband All the contract enter by a minor are void they lack of judgement in also promise to pay a month of £40 and the outstanding of such matter mortgage. After everything is solve he want to give the Section 11: every person is competent to contract who is of the house to his wife. The husband made agreement on paper age of majority, according to the law to which he is subject, and and he signed it. But after everything are solved the who is of sound mind,and is not qualified from contracting by any husband did not want to give the house to his wife. The wife law to which he is subject bring this to court. The court said that there is a binding Tan Hee Juan V The Boon Keat contract because the husband has intention to made a legal Plaintiff infant executed transfers of land in favour of the agreement because he signed the agreement on the paper. defendant, and the transfers were witnessed & subsequently .: Uncertainty of terms :. registered. The plaintiff by his next o f friend, applied to the Two aspect to the issue of uncertainty : court for an order setting aside the transfers and for 1. Language used may be too vague in which case, the court is incidental relief. The court said the transaction is void & likely to hold that there is no concluded agreement ordered the restoration of the property to the minor. 2. Failure to reach agreement on a vital or fundamental term of a minor cannot employ agent & although he may act as one in an agreement bringing his principal into contractual relation with the other party. Section 30: agreement, the meaning of which is not certain, or Not all void, the exception are : capable of being made certain, are void. Insurance / scholarships / necessaries / apprenticeship (a) A agrees to sell to B “a hundred tons of oil”. There is nothing Necessaries whatever to show what kind of oil was intended. The agreement is Minor is liable on contracts for necessaries void for uncertainty Section 69: If a person, incapable of entering into a contract, or (c) A, who is a dealer in coconut oil only, agrees to sell to B “one anyone whom he is legally bound to support, is supplied by hundred tons of oil”. The nature of A‟s trade affords an indication another person with necessaries suited to his condition in life, the of the meaning of the words, and A has entered into a contract for person who has furnished such supplies is entitled to be the sale of one hundred tons of coconut oil. reimbursed from the property of such incapable person. The following point are from section 69 :
1. The necessaries must have been actually supplied to minor. An agreement to supply is void like any other agreement entered by minor 2. The minor‟s liability includes necessaries supplied to anyone whom is legally bound to support such as wife or child. 3. Supplier necessary may claim only a reasonable price which may not be the same as the contract price . the word use is reimbursed 4. the minor not personally liable. He is obliged to pay only if he has the property to do so. Scholarships
.: Fraud under the National Land Code :. Datuk Jaginder Singh & Ors V Tara Rajaratnam Respondent claimed that she was induced by the fraud of appellants to transfer her land to 2 nd appellant. Appellant and respondent were in a solicitor client relationship and the transaction was unconscionable. Court had found that the appellant had no intention of performing the contract with the respondent and this absence of intention to perform constituted fraud in section 17(c) .: Misrepresentation :. Certain false statement made by a representor and which induces the other party to enter into a contract. Section 66: When an agreement is discovered to be void, or when a contract become 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 .: Coercion (paksaan) :. 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 be prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
Government of Malaysia V Gurcharan Singh Government sue the first defendant as the promisor & the second & third defendants as sureties for breach of contract. The claim was $11,500 alleged to be the sum actually spent by the government in educating the first defendant, at that time the first defendant is a minor. The court said the contract was void but ruled that since education was necessaries, the first defendant was liable for the repayment of a reasonable sum of spent $2,683 Insurance Under insurance act a minor over the age ten may enter into a contract of insurance but if he or she is under sixteen years, the written consent of the parents or guardian is essential Kesarmal s/o Letchman Das V Viliappa Chettiar Apprenticeship The court held invalid a transfer executed under the orders A child is defined as any person below the age of 14 and young of the Sultan, issued in the ominous presence of two person as one between the ages of 14 and 16. Though the child Japanese officer during the Japanese Occupation of or young person may sue or defend under such contracts of Malaysia.In the instant case, consent was not free and, service, no damages or indemnity can be recovered from him for therefore, the transfer became voidable at the will of the breach party whose consent was so caused CHAPTER 6: Consent of Parties Section 14 provides : consent is said to be free when it is not Chin Nam Bee Development Sdn Bhd V Tai Kim Choo & 4 Ors caused by The respondent purchased homes off the plan to be (a) Coercion ( section 15 ) constructed by the appellants. Each of respondent had (b) Undue influence ( section 16) signed a sale and purchase agreement to purchase house (c) Fraud ( section 17) at $29,500. Subsequently, the respondent was made to pay (d) Misrepresentation ( section 18) an additional $4,000. The court was asked to determine if (e) Mistake (section 21, 22, 23 ) the additional payment was made voluntarily or under threat .: Void, Voidable and illegal contracts :. by the appellant to cancel the respondent‟s booking for their „ab initio‟ no legal rights and obligation exist and yet the term is houses. Lower court had found that payment was not commonly used voluntarily but has been made under threat. Appeal was Section 2(g): an agreement not enforceable by law is said to be dismissed by High Court which ruled that there was coercion void Section 2(i): an agreement which enforceable by law at the option .: Undue Influence (Pengaruh tidak wajar ):. Section 16: where the relation subs isting between the parties are of one or more of the parties thereto, but not at the option of the such that one of the parties is in a position to dominate the will of other or others, is a voidable contract. the other and uses that position to obtain an unfair advantage over „nemo dat‟ rule : no one can give what he does not have the other .: Fraud ( Ada niat nak tipu ) :. A plaintiff may rescind a transaction on the grounds that he was Section 17: Fraud include any of the following acts committed by a pressured to enter into it by the influence the other was able to party to a contract, or with his connivance, or by his agent, with exercise over him. intent to deceive another party thereto or his agent, or to induce him to enter into the contract: Chait Singh V Budin bin Abdullah
a) b) c) d) e)
The suggestion, as to a fact, of that which is not true by one who does not believe it to be true The active concealment of a fact by one having knowledge of belief of the fact A promise made without any intention of performing it Any other act fittef to deceive Any such act or omission as the law specially declare to be fraudulent
A moneylender sued a borrower on a loan at 36% interest, an excessive rate, and in the light of the fact that the defendant was an illiterate. .: Mistake (Sec 21-23) :. The effect of mistake on agreements is dealt with by section 21 to 23 of Contract Act
Section 23: A contract is not void merely because one of the parties being under a mistake ad to a matter of fact Section 21: Where both parties to an agreement are under a mistake as a matter of fact essential to the agreement, the agreement is void
2- Damages 3- Specific performance 4- Injunction 5- Quantum meruit CHAPTER 10: Hire Purchase Agreements .: Goods :. A limited range of goods is covered by hire purchase act. They are listed in 1 st schedule and may be varied by minister from time to CHAPTER 8: Discharge of Contract time. The list are : A contract may be discharge by any of this : 1- All consumer goods 1- By performance 2- Motor vehicles 2- By consent or agreement between the parties Section 2(1): goods purchased for personal, family and household 3- By impossibility purpose 4- By breach .: Formation and Content :. (kalau ta ikut agreement akan batal) .: Discharge by Performance ( telah dilaksanakan ) :. Section 4(1)(a): imposes an obligation on an owner or its agent to When the parties have carried out exactly what they have serve on the prospective hirer part 1 documents undertaken to do, there is a complete discharge but if only one Section 4(1)(b): imposes the same on dealer party performs his part of the bargain, he alone will be discharged .: Written agreement :. Section 40: When a party to a contract has refused to perform, or Section 4A : a hire-purchase agreement to be in writing. disabled himself from performing, his promise in its entirety, the An agreement is deemed not to be in writing and thus void if a promise may put an end to the contract, unless he has signified, hand-writing „is not clear and legible‟ by word or conduct, his acquiescence in its continuance .: Signature of parties :. .: Discharge by agreement :. Section 4B(1): hire-purchase agreement to be signed by or on Section 63 : If the parties to a contract agree to substitute a new behalf of all parties to the agreement contract for it, or to rescind or alter it, the original contract n eed .: Contents :. not be performed Section 4C(1): require hire purchase to contain following Illustration (b): A owes B $10,000 and enters into an agreement information : with B whereby he gives B a mortgage of his (A‟s) estate for 1- A date of hiring start $5,000 in place of the debt of $10,000. This new contract 2- Number of instalments to be paid extinguishes the original contract 3- Amount of each instalments & the person to whom & the .: Discharge by Impossibility :. place at which payment to be made Section 57(2): a contract becomes impossible, or by reason of 4- Time for the payment of each instalment some event the promisor could not prevent, unlawful 5- Description of goods sufficient to identify them 6- Address where the goods are kept Taylor V Caldwell .: Separate agreement :. A music hall is hired by the defendant to the plaintiff for a Section 4D: when more than one item of goods is purchased, series of concerts was accidentally burnt down before the there must be a separate hire-purchase agreement in respect of date of the concert. every item Berney V Tronoh Mines Ltd .: alternations :. A contract of employment was discharged by frustration on No addition or alteration can be made to a hire-purchase the outbreak of war when Japan invaded Malaysia . A agreement or written documents containing the terms and contract may also be frustrated if supervening events defeat conditions of the agreement in relation to any of matters set out in the whole purpose or object of the contract the pre-contractual statement required to be served on the Section 66: any person who has received any advantage under prospective hirer pursuant to section 4(1)(a) and (b) the agreement or contract is bound to restore it, or to make Kalau dah buat agreement tak boleh buat pindaan sebab dah compensation for it, to the person from whom he received it sign. Hire purchase lindungi pengguna .: Statutory right of hirer :. (hak untuk penyewa ) Krell V Henry 1. Right to copy of statement relating to his financial A room was hired for sole purpose of watching the position(s9) coronation procession of KE VII but owing the King‟s illness, 2. Right to appropriation of payment (s10) the procession was cancelled. It held that Henry could be 3. Right to apply for an order for goods to be removed (s11) excused from paying rent for the room as the contract was 4. Right to assign (s12) frustrated 5. Right by operation of law (s13) .: discharge by breach :. 6. Right to early completion of agreement (s14) Section 40: When a party to a contract has refused to perform, or 7. Right to terminate agreement (s15) disabled himself from performing, his promise in its entirety, the 8. Right to repossession by owner (s16) promise may put an end to the contract, unless he has signified, CHAPTER 13: Cheques by words or conduct, his acquiescence in its continuance Section 73: bill of exchange drawn on a banker and payable on .: Remedies for breach :. demand. Party not in default may claimed : Characteristic of cheques : 1- Rescission of contract
1. 2. 3. 4.
London Joint Stock V Macmillan and Arthur It is an unconditional order in writing It is signed by the drawer A partner in a firm drew a cheque for 2 pounds payable to It is drawn on a banker (drawee) bearer. The sum was stated in figures but not in words. A It is orders the banker to pay sum certain in money on clerk of the firm misappropriated the cheque and altered the demand figures to read 120 pounds and wrote in appropriate word 5. It is drawn in favour of a specified person (payee) or to his before cashing the cheque at the bank. The house of lord order or in favour of a bearer held that the bank could debit the firm‟s account with 120 .: Crossing of cheque :. pounds. The partner had neglected to take all precautions. Drawer cross cheque to make it difficult, though not impossible, By leaving blank the space where the amount should have for an authorized person such as theif to obtain payment across been stated in words and also by leaving blank space on the counter either side of figure 2, there was a clear breach of duty Open cheque one is not crossed, can be exchanged for cash which the customer owed to the banker across the counter even before the loss is discovered by the owner Barbour Ltd. V Ho Hong Bank Ltd Crossed cheque can only he paid through bank, and therefore the The manager of Barbour Ltd drew a cheque $2520 but the person presenting the cheque would have a bank account word „two‟ was written in such a way that it could be Kalau tak cross anyone boleh tunaikan cek. Kalau cross kena changed to „twelve‟. Moreover, in filling in the figure he left a tunaikan kat bank account space between the $ sign and the figure 2 so that an Madam CIMB dia bayar kat Leha . leha maybank . maybank is the additional figure, in this case 1, co uld be inserted, thereby collecting banker, so dia akan mintak duit dekat CIMB changing the sum of $2520 to $12520. Thus the bank paid .: Type of Crossing :. out the sum of $12520. Barbour Ltd sued the bank and the Section 76: divides crossing into 2 types . general crossing and bank‟s defence was that since the cheque was negligently special crossing drawn by the manager of Barbour Ltd. .: General crossing :. Section 76(1) : General crossing have two parallel transverse lines Slingsby V District Bank drawn across the face of the cheque The plaintiff ask their solicitor, Cumberbirch, a partner in The words „and company‟ ( „and co.‟ ) or „not negotiable‟ may be Cumberbirch & Potts to draw a cheque on their account on written between the parallel transverse lines. the defendant bank payable to John Prust & Co. The cheque The words „account payee‟ or „A/C Payee‟ also accepted was drawn with a space between the payee‟s name and the Effect of general crossing is the paying banker can only pay the words „or order‟. After it was signed by the plaintiff, amount of the cheque to a collecting banker. He cannot pay cash Cumberbirch fraudulently inserted in the space the words, for the cheque across the counter, as in the case of an open „per Cumberbirch & Potts‟ so that the cheque read „Pay John cheque Prust & Co per Cumberbirch & Potts‟ and he obtained .: Special crossing :. payment for it. The court said that the form of word „Pay AB Section 76(2): a crossing is special when name of a banker is per CD‟ as used in the instant case which was unknown to written between the parallel transverse lines or it is written across the plaintiff was not in sufficient common use to make it the face of the cheque without the lines. unreasonable or negligent conduct in leaving a space after Word „not negotiable‟ may also be added to the crossing line the name of payee The effect of special crossing is the paying banker must pay the .: Protection of The Paying Banker :. amount of the cheque only to the collecting banker named in the The bills of Exchange Act provide the paying banker some crossing. protection against loss of the right to debit his customer‟s account The negotiable in cheque is to a large extent, restricted in that when he pays a cheque to the wrong person. such a cheque can only be negotiated to some person who is a The protection are : customer of the bank to whom it is crossed 1. Payment in Due Course ..: Not negotiable Crossing :. - A payment made at or after maturity of the bill to the holder in Section 76: permits a person crossing a cheque to add the words good faith and without notice that his title to the cheque is „Not Negotiable‟. defective Section 81: the cheque loses the full character of negotiability but 2. Forged or Unauthorised Indorsement remains transferable. In other word, it c an be transferred but the 3. No indorsement or irregular indorsement person taking it (transferee),however honestly ad for value,cannot 4. Crossed cheque obtain a better title than that of the person from whom he receive it .: Protection of The Collecting Banker :. (transferor) *Effect of NNC* A collecting banker may be liable : If a cheque NNC is stolen, the personj taking it from the theif a) To his customer for breach of contract, for example, where he cannot retain it against the true owner of the cheque because his fails to collect when instructed to do so title to the cheque depends on the transferor. b) To the true owner for wrongful conversion where he collects .: Account payee only crossing :. improperly on behalf of a customer who was not entitled to To minimize the chances of fraud because these words operate the money as notice to the collecting banker that only the account of the To minimize the risk run by the collecting banker , section 85(1) of payee is to be credited. act state that where a banker : .: Customer‟s Duty of care against Fraudulent alterations :. i) In good faith and
ii) iii)
Without negligence Receive payment of a cheque for a customer or having credited the customer‟s account receive payment for himself and the customer has no title or a defective title to the cheque, he is not liable to the true owner To enjoy the benefit of this provision, the collecting banker must be able to prove, the onus being on him, : i) That he acted for a customer
The national City Bank of New York V Ho Hong Bank Limited
Oriental Bank of Malaya V Rubber Industry (Replanting) Board A person becomes a customer of a bank as soon as he opens an account with the bank. The duration of the account is immaterial. But, although a banker may show that a e) Where a customer pays in cheque for an unusually large person for whim he collected cheques was a customer, the amoun which is out of character with normal circumstances banker may be negligent in opening the account for the Lloyds Bank Ltd V Chartered Bank of India, Australia and China customer by not obtaining reference or making inquiries as An employee of the plaintiff bank who had authority to sign on to his standing, including the name of his employer or behalf of his employers, drew a total of 19 cheques which were checking on the authenticity or a reference given by the sent to the defendant bank for collection with a request to credit customer the proceeds into his private account. The court said that the ii) That he acted in good faith defendant bank had failed to prove absence of negligence in not iii) That he acted without negligence making inquiries because the amount credited were such that Court has held a collecting banker negligent in not making proper they could not be payments of salary enquiries in the following : CHAPTER 14: Law of Agency a) Where a customer present a cheque drawn in favour of his Section 135: Agent is a person employed to do any act or to company for the credit of a private account represent a person to deal with third party A L Underwood V Bank of Liverpool and Martines Principle is a person where the act has been made Tan Ah Sam V Chartered Bank .: creation of Agency :. The federal court upheld a bank‟s action in returning a Agency may arise in the following ways : cheque drawn payable to a partnership but for payment into 1. By express appointment by the principal partner‟s private account 2. By implied appointment by the principal b) Where a customer present a cheque drawn in favour of 3. By ratification by the principal himself in his official capacity for the credit of his private 4. By necessity ie by operation of law in certain circumstances account 5. By the doctorine of estoppel or „holding out‟ c) Where a customer present a cheque drawn in favour of his By express appointment principal for the credit of his own account or a cheque is Section 140: An authority is said when it expressed straight drawn by the customer on behalf of his principal but in favour when the word spoken of his himself No special form required, authorization can be made by writing Midland Bank Ltd V Reckitt and Others or oral A solicitor(peguam) fraudulently drew cheque on the account By implied appointment of his client for whom he acted as attorney. These cheque Section 140: An authority is said to be express when it is given were paid into the solicitor‟s account with the defendant by words spoken or written. An authority is said to be implied bank who had previously advised him to reduce his when it is to be inferred from the circumstances of the case; and overdraft. The house of Lord held the bank negligent in not things spoken or written, or the ordinary course of dealing, may questioning the crediting of the cheque, the form which put be accounted circumstances of the case. them on notice that it was not the solicitor‟s money i) A person by his words or conduct holds out another person as having authority to act for him d) Where a customer present a cheque crossed „account payee‟ and he is not the payee named Chan Yin Tee V William Jacks and Co. (Malaya) Ltd. The appellant, Chan and one, Yong a minor, were registered The Rubber Industry (Replanting Board) V The Hong Kong and as partners in business. At a meeting with representative of Shanghai Banking Corporation the respondent company, Chan held himself out to be Plaintiff Yong‟s partner. Business then commenced between the parties and goods were supplied to Yong but the price was not paid. The respondent company obtained judgment against Chan and Yong. The court said whether Chan was a partner or not, Chan had authority to do things on his behalf as such, Chan was liable for Yong‟s acts. ii) The relationship of principal and agent may exist between a husband and wife
When a husband and wife live together, there is a presumption Agency by Estoppel that the wife has authority to pledge her husband‟s credit for Section 190: When an agent has, without authority, done acts or necessaries suited to their style of living incurred obligations to third persons on behalf of his principal, the The presumption can be rebutted by husband proving that : principal is bound by those acts or obligations if he has by his i) He expressly forbade his wife to pledge his credit words or conduct induced such third persons to believe that ii) He expressly warned the tradesman not to supply his those acts and obligations were within the scope of the agent‟s wife with goods or credits authority. iii) His wife was sufficiently provided for with goods of the .: Duties of Principal and Agent :. kind in question .: Duties of an agent to his principal :. iv) His wife was given a sufficient allowance for buying the Contract of agency is silent on the terms, the rights and duties of goods without having to pledge her husband‟s credit an agent to his principal and vice versa are governed by section v) The order, through necessaries was unreasonable, 164 to 178 taking into consideration her husband‟s income at that The main duties of agent are : time 1. To obey the principal instructions iii) Partner is liable to each other Section 164: An agent is bound to conduct the business of his Agency by ratification principal according to the directions given by the principal, or, in Section 149: Where an agent, holding an express or implied the absence of any such directions, according to the custom authority to name another person to act for the principal in the which prevails in doing business of the same kind at the place business of the agency, has named another person accordingly, where the agent conducts the business. When the agent acts that person is not a sub-agent, but an agent of the principal for otherwise, if any loss be sustained, he must make it good to his such part of the business of the agency as is entrusted to him. principal, and, if any profit accrues, he must account for it. Before agency by ratification arise, one of two must exist : Failure to obey may be treated s a breach of contract and agent - Either an agent who was duly appointed has exceeded his liable for any loss sustained by the principal on account of the authority breach - A person who has no authority to act for the principal has 2. In the absence of instructions from the principal, to act acted as if he has the authority according to the customs Principal can either reject the contract since he has not Section 164 authorized it, or accept the contract so made 3. To exercise care and diligence in carrying out his work and Ratification of contract can be done un der the following to use such skill as he possesses condition: Section 165: An agent is bound to conduct the business of the - The act or contract must be unauthorized agency with as much skill as is generally possessed by persons - The unauthorized act must be one which is recognized by law engaged in similar business, unless the principal has notice of his want of skill. The agent is always bound to act with Agency by necessity reasonable diligence, and to use such skill as he possesses; Section 142: An agent has authority, in an emergency, to do all and to make compensation to his principal in respect of the such acts for the purpose of protecting his principal from loss as direct consequences of his own neglect, want of skill, or would be done by a person of ordinary prudence, in his own misconduct, but not in respect of loss or damage which are case, under similar circumstances. indirectly or remotely caused by such neglect, want of skill, or Before agency by necessity can arise, three condition must be misconduct. satisfied: Chef ta boleh hire tukang masak tanpa pengetahuan boss i) It is impossible for the agent to get the principal‟s 4. To render proper accounts when required instructions. Section 166: An agent is bound to render proper accounts to his Springer V great Western Railway Company principal on demand. Defendant agreed to carry the plain tiff‟s tomatoes from Tak boleh tipu jersey to Convent garden market. Owing to bad whether, the 5. To pay to his principal all sums received on his behalf ship arrived late at Weymouth. The defendant‟s employees Section 171: Subject to the deductions specified in section 170, were on strike so the tomatoes were unloaded by casual the agent is bound to pay to his principal all sums received on labourers. Some of the tomatoes locally as they felt that the his account. tomatoes could not arrive in Conven t Garden Market in Aimi jual rumah madam dekat anis tapi aimi amek komisen & saleable condition. They did not communicate with the tunjuk statement dekat madam plaintiff. The plaintiff claimed for damages in conversion 6. To communicate with the principal based on the market price of tomatoes in Convent Garden. Section 167: It is the duty of an agent, in cases of difficulty, to The court held that the plaintiff was entitled to damage use all reasonable diligence in communicating with his principal, because the defendants were not agents of necessity and in seeking to obtain his instructions. because they have failed to communicate with plaintiff when Must communicate kalau tak boleh baru guna reasonable they could have done so 7. Not to let his own interest conflict with his duty ii) The agent action is necessary, in the circumstances to Madam beli tanah dari alaw lepastu letak nama suami dia. prevent loss to the principal with respect to the goods Lepastu markup harga jual dekat aimi sedangkan aimi dah committed to his charge bagitahu suruh beli iii) The agent of necessity has acted in the good faith
8.
Not to make any secret profit out of performance of his duty
Section 168: If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the ca se shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him. Madam agent aimi lepastu beli tanah dekat alaw RM100K tapi kat aimi jual RM150K so, madam dapat RM50K 9. Not to disclose confidential information or documents entrusted to him by his principal Ta boleh expose rahsia ayam KFC 10. Not to delegate his authority Delegatus non potest delagare : a delegate cannot delegate .: Termination of Agency :. An agency may terminated by : a) The act of parties b) Operation of law Act of parties Section 154: An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; PAGE DEPAN-DEPAN .: Sources of Law :. Written law 1. Federal Constitution 2. States Comprising the Federation 3. Federal law by Parliament 4. State law by the State Assemblies 5. Federal & State subsidiary legislation 6. Judicial law Unwritten law 1. English law 2. Islamic law Common law in England 7/4/1956
