C1 : LAW OF CONTRACT

Carlill V Carbolic Smoke Ball Co

Principle of Contract Law originated from England
Defendants advertised that they will offer sum of money
Malaysia contact law closer to Indian Contract law because Original
100 to anyone who still succumb to influenza after using a
Ordinance 1950 reproduction of Indian Contract Act 1872 (Modified of
certain product according to instruction for a fixed period .
English law but varied in several aspects )
Plaintif using use the product & become ill . Plaintiff upon
.: Principle of Promise :.
refusal of the defendant to honour their promise, proceed to
Islam is officially religion of country so it must have Islamic tenents
sue them.
in law . ex: Islamic banking, Mahkamah Syariah
.:
Communication
of Proposal :.
.: What is Contract :.
Only an addressee may accept the proposal is the principle of
Agreement between two or more parties that is legally binding
communication of the proposal
between them
Section 2(a): When one person signifies to another his willingness
All contract must be built on agreement
to do or to abstain from doing anything, there can be no
Not all agreement are automatically contract
acceptance to form an agreement
Binding of contract : 6 elements
A party has done something which coincides with the proposal
1. Proposal
without aware about proposal does not bring an agreement
2. Acceptance
R. V Clarke
3. Consideration
4. Intention to create legal relation
Western Australian Government offer reward for information
5. Certainty
about the arrest & conviction of persons responsible for
6. Legal capacity
murder 2police officers. X & Clarke were arrested&charged
C2: PROPOSAL AND ACCEPTANCE
with the murders but after that a latter give info to arrest
Proposal is made when one person signifies to another his
another person,Y. X&Y convicted for the offence & Clarke
willingness to do or to abstain from doing anything with a view to
who did not commit the murders claimed reward but its failed
obtaining the assent of that other to such act abstinence
because the info was given to clear himself not because he
Section 2(b): when the person to whom the proposal is made
know about the reward
signifies his assent thereto, the proposal is said to be accepted
.: Counter-Proposal and Acceptance :.
.: Invitation to treat :.
Acceptance must be made on exactly the same terms as
Invitation to treat is not a proposal but a sort of preliminary
proposed without modification or variation
communication with passes between the parties
Section 7(a): Any modification or variation of the proposal does
Display of goods in a shop as in advertisements generally do not
not constitute an acceptance but amount to a counter-proposal by
constitute a proposal to sell
the party to whom the original proposal was made
Proposal made by customer when he selects the desire goods for
Counter proposal is rejection of original proposal
payment at the counter
Hyde V Wrench
Pharmaceutical Society of Great Britain V Boots Cash Chemist Ltd
Defendant offer to sell his estate to plaintiff on 6June
Defendant was charged under Pharmacy & Poisons Act 1933
1,000pounds. On 8June plaintiff made counter-proposal to
Case berlaku di self-service shop when customer ambil article yg
purchase at 950pounds. Defendant refuse to accept this
dia na beli dan masukkan dalam wire basket. Payment akn
proposal & 27June plaintiff wrote again to accept the original
dibuat dkt exit where a cashier was stationed & case involve drug
proposal . Court said no acceptance occurred because
pharmacist pantau transaksi utk elak sale
plaintiffs letter on 8June has reject original proposal .
Principle :advertisement is only an invitation to applicants to make
Even counter-proposal has effect of destroying the original
offer
proposal does not mean that further communication between the
Court rule : advertisement was an invitation to qualified person to
parties subsequent to the original proposal is not permissible
apply and the resulting application were offers
Stevenson Jaques & Co V McLean
Coelho V The Public Service Commision
Defendant wrote to plaintiff offer to sell iron at $40 cash & he
Applicant apply position selepas baca advertisement . selepas tu
open the offer until Monday.Monday morning 9.42 plaintiff
di diterima bekerja tapi ta lama lepas tu The Public Service
sent telegram to defendant said please wire whether you
Commission cuba tamatkan pekerja baru ats sebab dia dilantik
would accept forty for delivery over two months, or if not,
dlm percubaan . applicant pergi mahkamah minta keputusan tu
longest limit you would give . No respond from defendant,
dibatalkan .
but after receive it he sold iron to another purchaser . at
.: To Whom can a Proposal by Made ? :.
1.25pm sent a telegram to plaintiff advising them of the sale.
Proposal can be made to a particular person or the general public
1.34pm b4 defendants telegram was received, plaintiff sent
Section 2(b): When the person to whom the proposal is made..
the defendant a further telegram accepting the original offer.
lends support to his view
Plaintiff claimed that last telegram was an acceptance of
Principle : An advertisement is the offer to the whole world
defendants offer &court agreed with the claim.
Court Appeal : Plaintiff had accept the offer of the company made
Agreement requires a proposal & an 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 defendants 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 plaintiffs 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
Dickinson V Dobbs
delivery not in reasonable time to have sript in early April &
Dia revoke guna lawyer dia dan revoke tu jd sbb principal
offered to dependant on 15May
tahu dan other parties pun tahu
.: Acceptance Through Post :.
Silence is not acceptance
Acceptance is complete when it is communicated to the proposer
Fraser V Everett
Section 4(2): the exception to general rule where the parties have
contemplated the use of the post as mean of communication
Acceptance of the plaintiff was not made within reasonable
time . the document should be delivered much earlier, taking
Entores Ltd V Miles Far East Corporation
into consideration that the shares in question were mining
When a contract made by post it is clear law throughtout the
shares of a very fluctuating character
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

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 promise 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 which
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 Verikataramaya
.: 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 debtors

son wrote a letter to Kerpa , the appellant creditor, offering $4,000
in full satisfaction of his fathers debt and endorsed a cheque for
the amount, stipulating that should Kerpa refuse to accept his
proposal, he must return the cheque. Kerpas legal advisers,
having cashed the cheque & retained the money proceeded to
secure the balance of the debt by issuing a bankruptcy notice to
the debtor. Court said acceptance of the cheque from the debtors
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 presumption 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 for
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 agreement 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 of 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 As 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 minors 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 2nd 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 respondents 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 subsisting 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

A moneylender sued a borrower on a loan at 36% interest,
does not believe it to be true
an excessive rate, and in the light of the fact that the
The active concealment of a fact by one having knowledge of belief
defendant was an illiterate.
of the fact
A promise made without any intention of performing it
.: Mistake (Sec 21-23) :.
Any other act fittef to deceive
The effect of mistake on agreements is dealt with by section 21 to
Any such act or omission as the law specially declare to be
23 of Contract Act
fraudulent

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 1st 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 need
.: 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 (As) 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 Kings 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 firms 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, could 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
banks 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 payees 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 customers 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 can 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 :
.: Customers 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 customers 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 banks 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
partners 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 solicitors 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 solicitors 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
Yongs 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 Yongs 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 husbands 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 agents
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 husbands 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 husbands 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 under 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 principals
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 plaintiffs 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 defendants 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 Convent 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 case 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