CONSIDERATION

Introduction S 2 (d) promisee must give something in return for the promise of
the promisor. Be it an act to be done in the present or in the future
Section 2(d) of the CA or abstinence present or future.
Section 2(e) (executory
prom) Ex. A promises B, B pays for it = consideration
Section 2(g) (not enfor
by law=void) Curie v Misa: “valuable consideration in the sense of the law, may
Section 8 (perfrming consist either in some right, interest, profit or benefit accruing to
cndtions/unilateral one party, or some forbearance, detriment, loss or
cont) responsibility given, suffered or undertaken by the other”
Section 10 (what agr
=cont) South East Asia Insurance Bhd v Nasir Ibrahim: the essence of
Section 24 (wht lawful consideration is tht the promisee has taken upon himself some
consid) kind of burden or detriment.
Section 26 (agr w/o
consid = void except Dunlop Tyre Co v Selfridge: An act or forbearance of one party
with 3 situations) or the promise thereof, is the price for which the promise of the
other is bought and the promise thus given value is enforceable.
*important provisions Promisee must give something in return for the promise made by
the promisor.

Forbearance to Sue  A compromise of suit may constitute consideration forgoing

the exercise of a legal right
 Person has a right to sue, forgoes it in return for a promise
for the other party = consideration
 compromise of a suit

Tan Chiew Thoo v Tee Kim Kuay: Resp & Appl received title of
land in 1968 & 1972 respectively. Agreement signed eavh get ½
lot. Resp claimed land and succeeded. App appealed and
succeeded. R & A’s consideration for compromise is a promise to
forbear exercise of legal rights.

Hong Kong and Shanghai Banking Corp v Syarikat United

Leong Enterprise Sdn Bhd: P sued 2nd D on a guarantee of a
loan. P agreed to pospone legal action up to 3 mnths if D fulfilled
certain terms. Ct held, to succeed P must prove 2nd D req for
forbearance. No evidence D req.

Alliance Bank v Broom: D owed Bank. P (Bank) threatened to

sue him. D promised to provide P, securities for his debt and P
agreed not to sue. Held: P forbearance amounted to a
consideration and the agreement is a binding contract. D must
deliver the securities to P.

Agreements without General rule: S 26 with 3 exceptions

Consideration void
Macon Works & Trading Sdn Bhd v Phang Hon Chin: ct held
altho D acknowledged receipt, there was no consideration. D bagi
dated options to P, one dollar receipt.
Types of 1. Executed consideration
Consideration 2. Executory consideration
3. Past consideration

1. Executed  Party promises something in exchange, an act or

consideration abstinence is completed.
Carlill v Carbolic Smokeball Co Ltd: D offered 100 to whoever
caught influenza after using smoke ball in a specified manner &
period. P sued for claim cause she used the smoke ball in a
specified manner and period and succeeded. P executed
consideration required.

William v Cawardine: D offered a reward for information leading

to the conviction of certain murderer. P gave the information. Ct
held: D promise to give the reward and P’s act of giving
information is his consideration. D will be bound by his promise
only after the performance of the act by P.

2. Executory  An exchange of promises to perform or abstain act in the

Consideration future S (2)(e)
 Promise against a promise
K Murugesu v Nadarajah: R pestered A to buy house. Wrote on a
piece of paper, their promise but A changed his mind. Ct held
promise against a promise; executory promise.

 Illustration (a) of Sec 2 A agree to sell house to B for 10k.

B’s promise to pay is consideration. A’s promise to sell is
consideration.

Williams v Williams: Wife left her Hsbd. They entered into an

agreement whereby H promised to pay Wife 30s per week if the
wife promised not to incur debt under the H’s name. H failed to
make payment and W sued. H argued: Agreement unenforceable
– no consideration. Ct : There is a valid consideration from the
plaintiff. i.e her promise.

3. Past Consideration  Comm law: no consideration not valid

 It is subsequent to the act/independent of it
 something that has been done or completed by the
promisee before the promise is made by the promisor
S 26 illust (c) A finds Be’s purse and gives it to him. B promises to
pay 50. A cont.

English law: Past consideration is not a valid consideration It is

not a good consideration.

Roscorla v Thomas: P bought the D’s horse After the sale, the D
promised that the horse was tame. The truth: the horse proved to
be vicious Held: The express promise by the D was made after the
sale was over and unsupported by fresh consideration. P failed in
his claim.

In Re McArdle, Decd: wife of one of the kids decorated house,

after that kids promised to pay. Unenforceable. Held: gratuitous on
 the ground that the act had already passed and was carried out
not at the request of the promisor.

Exceptions: enforceable if promisor previously asked to

do/abstain.

Lampleigh v Braithwait: B killed someone, asked L to get pardon

in return promised to pay 100.

 Contracts Act 1950: past consideration recognized it

voluntarily done
 By desire of promisee w/o it not valid

At desire of promisor S 2(d)

a. Kepong Prospecting Ltd v Schmidt: ct. Held past
consideration done at desire of promisor is sufficient consideration.
Schmidt assisted negotiations & continued after company was set
up.

Voluntarily done S 26 (b)

a. JM Wotherspoon Co Ltd v Henry Agency House:

defined it as done at one’s own will without suggested by others.
S26(b) is not applicable if the promisee’s work is not done
voluntarily.

Adequacy of  Consideration must be sufficient, need not to be adequate

Consideration  Unless if no consent, adequacy will be taken into acc
 S 14 consent is free when no coercion, undue infl, fraud,
misrep, mistake.
 S 26 Explanation 2 agr which consent of promisor freely
given is not void merely bc consideration inadequate..
Inadequacy only taken into acc by ct in determine consent
free or not.
 “ Illustration (f) A agrees to sell horse worth 1k for RM10.
A’s consent freely given. Agr a cont notwithstanding
inadequacy.

a. Thomas v Thomas: consideration must have some value

in the eyes of law. motive to honour the wishes of a is not a good
consideration given by one party to enforce a promise of the other.
b. Tan Chiew Thoo v Tee Kim Kuay: where consideration
has economic value, then it is sufficient regardless of adequacy.

c. White v Bluett: sued father’s executors b/c father promised

to discharge if he stop complaining about prop distribution.
Ct held cession of complaints = no ecnmic value = no
consideration

Accord and  Agree to pay debt part of it in full settlement

Satisfaction
 English law: not good consideration to forgo balance

a. Pinnel’s case: Cole owe Pinnel money, he paid some at

Pinnel’s req. Pinnel sued for the rest. Ct held part payment not
good consideration
Consideration accepted if,
1. Paid earlier than date
2. Chattel
3. Different place

 Malaysia CA 1950: good consideration

 S 64 promisee boleh dispense/remit semua or part of
performance of janji or extend time for performance or
terima benda lain yg dia rasa ok
 s 64 illust (b) may accept smaller amnt in satisfaction of
whole debt

Associated Pan Malaysia Cement v Syarikat Teknikal &

Kejuruteraan Sdn Bhd: consideration nor agreement necessary

Kerpa Singh v Bariam Singh: App obtained a judgment debt of

$8650 against the Resp. The resp’s son agreed to pay $4000 to
satisfy wholly his father’s debt. He posted the cheque and
informed the app that if he does not accept the $4000 to satisfy the
whole debt, then he should send the cheque back to him. The
cheque was cashed and kept by the respondent lawyer. Ct held
cheque accepted, cash and kept by the resp, deemed resp
accepted the lesser amount to satisfy the app’s whole debt.

S 64 (a) may waive debt/promise

Performance of a S 26 illust (a) A promises, for no consideration, to give to B 1k.

Moral Obligation Void agr.

Eastwood v Kenyon: P guardian of a young woman. P used his

own money to improve the house for the woman. Woman got
married, the H promised to pay the debt incurred by the P. P sued
the husband for the promise wtf sedekah je la. Ct held moral
obligation for H to fulfill the promise and insufficient to be a good
consideration.

Performance of an 1. Performance of an existing duty

existing duty  Performance of an existing public duty insufficient
consideration
Collins v Godefroy: subpeona to P. D promised 6 guineas to P if
dtg. P cannot claim. Subpeona by ct wajib dtg.

Glassbrook Brothers v Glamorgan County Council: strike at

D’s mines, P thought mobile force sufficient. D insisted for
stationary guard. Ct held P did what’s above their duties = good
consideration
 2. Performance of contractual duties
 insufficient consideration
Stilk v Myrick: Captain promised crew extra wages if sail ship
home. Ct held crew bound in contract to meet normal emergencies

Hartley v Ponsonby: left w 36 crew mem, 19 left, 5 seamen. Ct

held ship so short handed, voyage became dangerous = good
consideration.

3. Performance of an existing duty by third party

 Good consid

Shadwell v Shadwell: Uncle promised to give the nephew £150

yearly during his life & until able to obtain annual income 600
guineas if P promised to marry a certain girl (tunang dia). P
kahwin and req money. Uncle mati executor refused any
outstanding. Ct held good consideration.

Exceptions For no considerations = valid

1. Natural love and affection
S26(a) it is in writing and registered
“ Illustration (b) A nak bagi anak duit, put in writing n registered..
A cont.

Queck Poh Guan v Quick Awang: parent and child

2. Promise to compensate for act voluntarily done

S26(b)
“ illust (c) A finds B’s purse. B promises to give A 50. A cont.
“ illust (d) A supports B’s infant son. B promise to pay expenses.
A cont

3. Promise to pay debt barred by law

S 26(c) promise in writing...creditor might have enforced payment
but for law…
“ Illust (e) A owes B 1k but debt barred by limitation. A signs prom
to pay B 500 on acc of debt. A cont.

*side note: eng law tak recognize

4. Scholarship
S4 (c) Contracts (Amendment) Act 1976, no sch agr shall be
invalidated on ground lacks consi

University Malaya v Lee Ming Chong: offered a scholarship to

do MBA in Canada. Breach the scholarship. Um sued LMC and
argued tht no consideration , thus scholarshp agt was void. There
was a consideration. Scholarship and bond (5yrs). Each has its
own bargain n price
PROMISSORY ESTOPPEL
Introduction 1. Derived from equity.
2. Negates necessity of consideration in an already
binding contract, where one of them promises to
waive/suspend their strict legal rights and the other
party relies on this promise. This doctrine estops
the party from going back on his promise.
3. If a party changes his position by acting or
forbearing in reliance upon a gratuitous promise,
then the party can enforce promise even if
elements not present.
4. A promised B he would not enforce legal rights, B
relied and acted on it w/o giving consideration, this
doctrine stops A from reneging his promise to B.

a. Central London Property Trust Ltd v High Tree

House Ltd - Landlord promised tenants can pay half of
ground rent due to war. After war, landlord sued tenants for
outstanding arrears during wartime but court held landlord
not entitled to it by using the doctrine. However, landlord
entitled to receive full payment after war.

b. Hughes v Metropolitan Railway - Lnadlord gave tenant

6 mnths to fix property or risk forfeiture. During 6 mths,
negotiation for sale of lease between tenant and landlord.
Court held: the negotiation impliedly promised to suspend
forfeiture.

Requirements/Features

1. Mere silence can give  Boustead Trading v Arab Malaysian

rise to a promise or Merchant Bank Bhd - Appellant remained
active encouragement. silent within the 14-days upon receiving the
14-day period of complaint.
 Teras Kimia Sdn Bhd v Kerajaan
Malaysia - P continued supply during
interim period and D did not object and was
silent.

2. Promise must be clear or  Hong Leong Leasing Snd Bhd v Tan Kim
unequivocal. Cheong - D bought machines from a dealer.
Dealer requested P to provide hire purchase
facilities to D. HP forwarded and D signed.
Machines did not exist. P claimed arrears.
Court held: no evidence on intention of D to
represent that he has received machines to
estop D even tho signed and paid some
installments.
3. May be applied even where  Curvet Transport SA V ShapaduTrans-
no pre-existing legal or System Sdn Bhd - court held: even tho not
contractual r/ship between concluded contract, court may still use
parties doctrine and precule parties from denying
valid contract.
 Cheng Hang Guan v Perumahan Farlim
(Penang) Sdn Bhd - principle applies
where there was pre-existing legal r/ship. P
has stayed on land for more than 100 yrs.
D, actual owners. P sued D for trespass &
nuisance. D countered posession of land. P
claimed PE against D, as D’s ancestors
promised to P >100 yrs ago. Court held:
Pre-existing contractual r/ship even tho no
legal cont can give rise to PE.

4. Must not be unfair for  MAA Holdings Sdn Bhd v Ng Siew Wah -
promisor to go back on  Teh Poh Wah v Seremban Securities Sdn
promise and insist on strict Bhd - A’s husband was imposed Mareva
legal rights order. A signed all cheques in her cheque
book and gave to husband to help him. R
brought action against P when R’s account
went bad. Court applied PE, as she led
reasonable man to believe she gave her
husband complete freedom to act on her
behalf.

5. The promisor’s act  Boustead Trading Sdn Bhd v Arab-

influenced the promisee. Malaysian merchant Bank Bhd - reliance
not essential in requiring proof for doctrine.
Sufficient to show his conduct was
influenced by representation.
 Murugappa Chettiar v Chinniah -

6. The representation made by  Boustead Trading Sdn Bhd v Arab-

the promisor may be of fact or Malaysian Merchant Bank Bhd - Gopal Sri
law Ram held that, docs suggest A and R,
proceeded upon assumption (of law) that
the factoring agreement was a good and
valid assignment.

Application of PE a. Combe v Combe - can be used only as a defence

and not used as a sword. PE does not create a course of
Sword or Shield? action.
b. Re Wyven Developments - court held PE can be a
cause of action.
PRIVITY OF CONTRACT
Introduction Privy: made participant in knowledge of something secret
Privity of contract: relation which subsist between 2 contracting
parties

Doctrine of Privity General rule/Principle: only those privy to contract can sue or be
sued. No third party can sue in personal capacity.

Whitman J, Tweddle v Atkinson: consideration must move from

promisee, so no stranger to the consideration can take advantage of
the contract eventho made for his benefit.

Crompton, J: only party yang moved consideration je entitled to sue.

a. Tweddle v Atkinson, Executor of Guy, Deceased: bapak2

husband & wife promised to pay hubby money, adding that hubby
can sue for the money tapi the hub’s claim for father’s estate was
dismissed.

Reasoning: only promisee may enforce promise.

a. Dunlop Pneumatic Tyre Co v Selfridge & Co Ltd: P sold

tyres to Dew & Co, w terms that they kena obtain undertaking that
retailers tak boleh sell below P’s price list. Dew & Co sold to D and
D sold below price list. P sought injunction and damages. Court held
cannot cause P not in contract with D. P in contract with Dew & Co.
Dew & Co in contract w D w/o P.

In Malaysia  S 2 (d) of Cont Act 1950 allows consideration to move from

3rd party to promisee, the law on privity remains the same as
in Comm L.

a. Kepong Prospecting Ltd v Schmidt: R, mining engineer,

assisted Mr. Tan (A) to obtain prospecting permit. A promised R
tribute 1% of selling price of all iron produced and sold. They
incorporated w App. App took over A’s obligation to pay R 1&.
However, R not party to agreement, cannot enfore.Privy Council
referred to S 2 (a), (b), (c) and (e), no different position to Eng ct.

b. Emar Sdn Bhd v Aidigi Sdn Bhd: the same rule applied as
the above case and further established the applic of the rule.

c. Badiaddin bin Mohd Mahidin v Arab Malaysian Finance

Bhd: the fed ct. Stated that Kepong Prospecting Ltd v
Schmidt is authority for the proposition for the words ‘or any
other person’ in S 2(d) tak wide enough to exclude doc of
priv to cont.

d. Lim Foo Yong & Sons Realty Sdn Bhd v Datuk Eric
Taylor: App bought shares from Resp’s estate. App also
agreed to discharge title deed of Resp’s estate’s land in
Cheras. App failed to do so. Resp’s wife, administratrix of
estate of deceased hub. She said App’s failure caused them
 financial hardships cause she had to sell matrimonial home
and paid rent for alt home. Court held, resp’s estate can
recover damages for loss bc app’s breach of cont but wife
cannot claim for any loss suffered in her personal capacity bc
not party to cont.

Current Position in  Law changed by statute allowing 3rd party the right to sue
England The English Contracts (Right sof Third Parties) Act 1999
 Provides for the circumstances where 3rd party may enforce
cont
S 1(a) contract expressly provides he may (b) term purports to
confer benefit on him (but not appl if did not intend to be
enforceable)
S 2(1) restricts ori parties to rescind the cont that confers benefit to
3rd party so far as it affects him unless obtained consent.
S 3 promisor given right to raise defence in proceedings brought by
3rd party yg available to him sama je macam if mamat tu promisee

Exceptions
1. 3rd party can sue a. Beswick v Beswick: nephew janji pay bini uncle aka aunty
as executor/executrix annuity kalau uncle transfer goodwill of the business to him. Aunty tu
tak dlm cont. Nephew bayar sekali je wtf then tak dah. Ct. held can
specifically enforced by Uncle’s representative aka aunty against
nephew lol padan muka

b. Lim Foo Yong & Sons Realty v Datuk Eric Taylor: Datin Peggy
Taylor (wife) as administratix of her late husband’s estate can obtain
compensation for any loss but not for loss in her own personal
capacity

2. Principle of Agency Cont. bween agent and other party. Agent or principal can enforce.
Agent can make cont on behalf principal w other person w/o bagitau
dia agent je. Undisclosed principal can sue and be sued even tho
identity undisclosed.

a. Datuk Jangindar Sing v Tara Rajaratnam: 3 lawyers

fraudulently obtained land belonging to Resp. HC found them guilty
of fraud, breach of agreement and undue influence. Damages
awarded to resp. Whether ada privity of cont between resp and app
bc cont is actually between resp and pakrisamy. App undisclosed
principal of Pakrisamy. FC held it was agent/principal r/ship so resp
can sue.
b. Said v Butt: Butt (D) own theatre, P nak masuk but Butt tak
bagi. P suruh kawan belikan ticket, pastu bila P masuk kena evicted.
P sue boc but ct cakap non-disclosure of P’s identity prevented it
from constituting a cont sebab identity P material element dlm
circumstances tu sebab D did not wish to cont with P.

Trust created for beneficiary (3rd party). Beneficiary can bring

action.
3. Trust
a. Gregory and Parker v Williams: Parker owed Greg and Will
 money. Parker agree to assign whole property to Will, but he kena
janji to bayar debt Greg. Will tak bayar. It was held that Parker must
be regarded as a trustee for Greg.
b. Takako Sakao V Ng Pek Yuen: “trusts are exception to the
comm law rule of privity”

Rc voluntarily accepted by purchaser of property, it’ll later bind the

4. Restrictive other person buying that property w notice.
Convenants
a. Tulk v Moxhay: P owned several houses in Leicester, sold
the garden in the centre to Elms, who convenanted to keep garden
and railings as it is and to let ppl visit. Land sold to D who knew
about the convenant. D nak build on land, P still owned houses
around it sought injunction. Ct. held covenant enforced againstall
purchasers w notice.
b. Tan Kam Cheong v Stephen Leong Kon Sang: vendors
sold first and ground floor to resp w cond resp shall have access to
rooftop. App knew of this restr when he bought remaining floors.

Bill of Exchange Act 1949 - allows 3rd party who receives

negotiable intrsument (cheque) to sue (drawer, drawee bank, payee
(3rd party) payee can sue drawer
5. Statutory
Exceptions Civil Law Act 1956 - legal assignment s 4(3)
S 23 life insurance for benefit of spouse and children

Road Transport Act 1987 - gives ebenfit of insurance policy to

authorised driver and 3rd party (injured party) who are not parties to
the insurance
CAPACITY TO CONTRACT
Introduction 1. Capacity: ability of persons to enter into a legally
binding agreement.
2. All persons of full age have contractual capacity.
3. No capacity = Contract void

Indian and Malaysian law S 10 - (1) ‘...made by the free consent of parties competent to
of contract (CA 1950) contract…’
S 11 - ‘...competent to contract who is of the age of
majority...of sound mind… not disqualified from
contracting…’
Age of Majority Act 1971 S 2 - all persons in Msia attain age of majority at 18.

1. Age of Majority S 2 Age of Majority Act 1971

a. Mohori Bibee v Dhurmodas Ghose - Infant mortgagor

Effects of Contract sued mortgagee on the grounds that he was under age. Privy
entered by a Minor Council held contracts entered into by minors were void.
(Msian Law) b. Tan Hee Juan by his Next Friend Tan See Bok v Teh
Boon Keat & Lai Soon - P (infant) transfered two land to D.
P’s next friend brought action to have transfers set aside as P
is a minor. Court held: Contract made by an infant is not only
voidable but void. No doubt the teansfers are void. P’s lands
restored.
c. Leha binte Jusoh v Awang Johari bin Hashim - R
claimed posession of land of A, pursuant to an agreement of
sale. A contended R was a minor = incompetent to contract =
null and void. Court allowed appeal and asked A to refund
money to R, pursuant to s 66 CA.

English Law General rule: Contract entered into by a minor is either valid
or voidable.
1. Subject matter necessaries: valid
2. Subject matter not necessaries: voidable at minor’s
options.

Necessaries 1. Minor bound to pay for necessaries under contract.

2. Necessaries: Things without which a person cannot
reasonable exist.
3. Depending on his condition of life (suitable to his actual
requirements).
a. Nash v Inman - Tailor sued minor an undergraduate at
Cambridge University, whom he supplied clothes (incl. 11
fancy waistcoats). Court held, they were not necessary, he
already had sufficient clothing.

Reimbursement of S 69 - allows person who supplied necessaries to minor to

Necessaries receive reimbursement from the minor’s property even though
contract is void.

a. Government of Malaysia v Gurcharan Singh - Govt.

entered into a contract w D (infant) and granted scholarship to
undergo training at the Msian Teacher’s Institution, in return
minor agreed to serve Govt. for 5 years after training. D only
 served part of it and left. Govt. claimed 11.5k. Court: The word
necessaries must be construed broadly. Valid contract for
necessaries. D liable for repayment.
S 4(a) ‘...a scholarship agreement entered into by a minor is
valid.’
Contracts (Amendment)
Act 1976

Marriage Contracts 1. Exception to the general rule.

2. Marriage contract entered by minor valid.
Age of Majority Act 1971 S 4(a) - Nothing in the Act shall effect…(a) capacity of any
person to act in the following matters namely, marriage…”
Contracts Act 1950 S 10(2) - Minor may sue or be sued for breach of promise to
marry.

a. Rajeswary & Anor v Balakrishnan & Ors - P can

maintain action on the agreement entered by father (as
guardian) with D, who promised to marry P. Court held:
Contracts to marry entered into by minors ae distinguishable
from other classes of contracts.

Minor’s Contracts for General rule: Minor eligible to enter into an employment
Employment and contract.
Apprenticeship

Children and Young S 13 - ‘...any child or young person shall be competent to enter
Persons (Employment) into a contract of service...and may sue as plaintiff without his
Act 1966 next friend or guardian ad litem.’

Employment Act 1955 S 13 - No damages and no indemnity shall be recoverable

from a child or young person for breach

England General rule: Contracts for education, serivces or

apprenticeship are valid, if the contract as a whole is beneficial
to the minor, unless terms are unduly onerous.

If contract beneficial to minor then it is binding.

a. De Francesco v Barnum - If service contract more

onerous than beneficial to the minor, he is not bound by it and
it is voidable at the minor’s option. The contract is not binding
on the minor but binding on the other part.
b. Clements v London and North Western Rly - Minor,
railway porter agreed to join insurance scheme, giving up claim
for personal injury under Employer’s Liability Act 1880. Court
held: Contract was on the whole beneficial and binds the
minor.
c. Doyle v White City Stadium Ltd - P (minor)
professional boxer, licensed by British Boxing Board of
Control, subject by their rules = boxer disqualified not entitled
to prize. P disqualified, sued D for prize. Court held: Contract
as a whole beneficial to P so binding. P not entitled to prize
money.
Recovery of Property General rule:S 65 & S 66 of CA 1950 not applicable to minor’s
Transferred to Minor contract.
a. Mohori Bibee v Dhurmodas Ghose - S 65 & 66 have
no application to a case where there never was and never
could’ve been a contract.
b. Leha binte Jusoh v Awang Johari bin Hashim - court
applied s 66 dunno whether per incuriam

Specific Relief Act S 40 - court may use discretion to require minor to refund

Misinterpretation of Age General rule: Minor not liable both in law and equity even if
By Minor fradulent misrepresentation established.
a. Mohamed Syedol Ariffin v Yeah Ooi Gark - R
(moneylender) sued A for a sum of money. A contended he
was a minor at time of loan. He wronglymisrepresented and
led R to believe he ws 21. Court held: Misrepresentation not
fraudelent even if it was, A was still a minor.
b. R Natesan v K Thanaletchumi - P sued 2 Ds. 1st D
contended she was still a minor at the time. P argued she
represented herself as full age. Court held: No such
representation, even if ada cannot stop from pleading minor to
avoid contract.

Recovery of Property 1. In equity, minor is bound to restore benefits received if

Transferred in Cases of he still posesses it.
Fraudulent a. R Leslie Ltd v Shields - Minor fraudulently
Misrepresentation misrepresented his age to get 400 euros which he wasted.
Court held: Minor not liable for deceit but in equity he is bound
to restore it if he still has it.
Introduction  To ascertain the extent of the obligations that the
parties have entered into. I.e Contents of the
contract.
 To know the contractual intentions & liabilities of the
contracting parties.
 No provision in the Malaysian Contracts Act
regarding this matter
 Need to refer to common law.

Term or Mere Statements during negotiations before the cont may either
Representation be terms or mere representation.

Terms Statements that form part of the contract. No law in Msia, ct

follow Comm Law.

Necessary to consider the term’s precise importance and

effect.

1. Conditions
2. Warranty
3. Innominate/Intermediate terms

1. Conditions  Regarded as essential/fundamental importance

 A statement of fact or promise that forms an
essential term of the cont.
 If breached, (a )the right to repudiate the contract/
discharge from performing the contract
(b) claim damages for any loss suffered.

a. Ching Yik Development Sdn Bhd v Setapak

Heights Development Sdn Bhd: App bought property from
resp RM4.99 mil. Agrtm required resp to deliver
memorandum of transfer to app’s solicitors. App issued a
cheque but the cheque was bounced. So, resp did not
transfer. App sued the Resp for speci performan for not
giving him the MOT. ct. Held The payment of the purchase
price was fundamental to the contract and the MOT was
subsidiary term. App caused the breach of ct, he was
estopped from suing the Resp.

b. Behn v Burness: agreed by charter-party that ship

‘now in port of Amsterdam…’ but in fact it was not.
The charterer discharged from further performance
as the statement was a cond.
c. Tham Cheow Toh v Associated Metal Smelters
Ltd: Resp bought metal furnace from App w specification
that it would have a temperature of not lower than 2,600
degree F. This specification was not satisfied. Failure to
fulfil specification is a breach of condition which entitles the
Resp to repudiate the contract and claim damages or they
can also treat it as breach of warranty and claim for
 damages only.

2. Warranty  Terms which are not as essential as condition

 Subsidiary term
 Can claim damages only
 Or may relate to a separate enforceable promise-
which is collateral to the contract

a. Bettini v Gye: B entered into a contact with G that

he will sing at G’s opera for 3 months – undertaking that he
would attend 6 days rehearsal but B only attended 2 days of
rehearsal. G repudiated the contract. Ct held rehearsal was
not the vital part of the contract. G can only claim damages.
By repudiating the ct, G actually committed BOC.
b. Ching Yik Development Sdn Bhd v Setapak
Heights Development Sdn Bhd

3.Innominate/Intermediate  For terms which are more complex, cannot be

terms categorised as condition or warranty.
 to look at the consequences of the breach of the
term in question.

a. Ching Yik Development Sdn Bhd v Setapak

Heights Development Sdn Bhd: ct looks at consequences
off breach. If the breach is of such a nature that it goes to
the root of the contract, then the term broken is fundamental
in nature. if the consequences of the breach are not serious
in the sense that they do not go to the root of the contract,
then the term is a subsidiary one entitling the innocent party
to recover damages only, not to end cont.
b. Hong Kong Fir Shipping Co Ltd v Kawasaki
Kisen Kaisha Ltd: Hong Kong Fir contracted with
Kawasaki to charter a vessel for a period of 24 months. A
provision in the terms warranted that the vessel was "fitted
in every way for ordinary cargo service". Discovered kena
buat byk fixing. Sept baru seaworthy. HFK(D) repudiated
cont in June. P sued. Ct held ada lagi 20 months despite
breach, tak deprive whole benefit. D cannot repudiate,
boleh claim damages je.
c. Tan Chong & Sons Motor Co Sdn Bhd v Alan
McKnight:

Mere Representation  mere inducement (induce party to enter into cont)

 not an integral part of the contract
 contract is not broken although statement altho
representation is untrue
 injured party cannot sue for breach of contract.
 May sue for misrep under S18 CA (to set aside the
cont and claim indemnity)
 Sue for fraud under S17 (to set aside the cont and
claim damages
 The court has devised 3 tests to distinguish term
and mere representation
 1. The time factor
2. The writing factor
3. The relative skill and knowledge

Mere representation = If there is long interval between time

1. The time factor when statement is made and the conclusion of an
agreement

a. Routledge v Mckay: P intended to buy D’s

motorcycle. On 23/10, D told P that it was 1942 model. On
30/10, they entered into a written contract of sale – nothing
is mentioned about the model. Later it was discovered that it
was 1930 model. P sued D Ct :There was a gap. The
statement was a mere representation.

2. The writing factor When contract is in writing, any statement made prior to that
will be construed as mere representation

a. Routledge v McKay: the statement of the age of

the motorbike was not incorporated into a written agt, only a
mere representation

3. The relative skill and Statement is made by a person who has special knowledge
knowledge test compared with the other party = A term of a contract

a. Schawel v Reade: P wanted to by a stallion from

the D D said that the horse was perfectly sound . If anything
wrong he will inform the P. Contract was concluded but later
the horse was found to be unfit. HOL : Statement of the D
was a term of contract. D made it as a person of special
knowledge and skill as to the horse’s capacity

Contractual Intentions CI refers to the facts showing that if the parties intended the
means Contractual statement to hav contractual liability as to the accuracy of it,
Liabilities the statement can be construed as term of a contract.

a. Low Kon Fatt v Port Klang Golf Resort: P paid

RM32,000 to be a member of a golf resort relying on the D’s
brochure that that there will be sea sports facilities. a
statement is represented in such a way as to represent a
fact that induces a representee to enter into a contract,
then such a statement intends to have contractual force.
b. Lim Sew Lan v Pembangunan Hysham Sdn Bhd:
P entered into sales purch agreem with D to purchase one
unit of shop office based on the brochure that D will be
developing 6 blocks of 5 to 7 storey of shop office with
service suites. D only constructed 6 blocks of 3 storey shop
office without service suites. P terminated the agt claiming
BOC. Ct : D was liable. D’s representation was a term of the
 agreement.

Collateral Contract A preliminary statement of assurance, collateral

(additional/side by side) to the principal agreement (written).

Parol Evidence Rule: S 91 Evidence Act 1950 When there

is a written agreement, oral evidence is not admissible for
the purpose of contradicting or varying the terms of written
agreement unless there are exceptions

Courts in Malaysia use the doctrine of collateral contract for

the purpose of accepting pre-contractual statement as a
separate contract and collateral to the main agreement. S
92 Evidence Act 1950.

a. Tan Swee Hoe v Ali Hussain Bros: Resp rented

premise from App. Oral agreement : Resp will be allowed to
stay as long as they wished upon payment of RM14,000.
App executed two tenancy agreements but did not include
the oral agt. Dispute arose as to payment of rent and the
Apps eventually sued. Resps claimed that under the oral
agreement, they were entitled to stay in the premises as
long as they wished and so long as they paid the rent
regularly. Court held: It is a trite law that parol evidence is
not admissible to add to, vary or contradict a written
agreement tapi invoke w collateral cont so it constitutes a
separate contract which exists side by side with the main
agt. Fc held the verbal promise was the one induced the
Resps to enter into the ct. As such, it created the
contractual obligation, so the App was in breach of the
contract.