Contract Week 4: ITCLR

1. Sri Kajang Rock Products Sdn Bhd v Mayban Finance Bhd (1992):
High Court held that: “To constitute a valid contract there must be separate and definite
parties thereto; those parties must be in agreement, that is there must be consensus ad
idem; those parties must intend to create legal relations in the sense that the promises of
each side are to be enforceable simply because they are contractual promises.”

2.

3. Phiong Khon v Chonh Chai Fah (1970):

The appellant married a Chinese woman, who had a daughter and a son. The appellant
alleged that his step-son, the respondent, had executed a document in which the
respondent had transferred a piece of land to him. The respondent denied it. The former
 FC held that the appellant bore the onus of proving that the respondent intended by the
document to transfer the land to him. The appellant failed to do so.
The court observed that the terms of the alleged document seemed so vague and uncertain
that it muts be seriously doubted whether there was any intention to create a legal
relationship thereby. Without clear and express provisions making them amenable to legal
action, they remain in the realm of undertakings binding in honour only.
Bukti: In construing whether there is an intention to create legal relations, the courts will
look at the terms used by the parties. Where the terms of the document signed by the
parties are vague and uncertain, the court will construe that there was no such intention.

4. Perkayuan OKS No 2 Sdn Bhd v Kelantan State Economic Development Corp

(1995):
Lamin FCJ: “To gather the true intention of parties in a contract or an agreement, every
position of the agreement must be examined.”

5. Balfour v Balfour (1919): See notes

6. Merritt v Merritt (1970): husband left his wife and went off to live with another
woman.
The wife pressed the husband to make agreements for the future. They met and talked the
matter over and the husband made certain oral promises and then, on the wife’s
insistence, he wrote and signed and dated these notes: ‘In consideration of the fact that
you will pay all charges in connection with the house - until such time as the mortgage
repayment has been completed, I will agree to transfer the property to your sole
ownership.’.............. (see notes)

7. Pettitt v Pettitt (1970):

Facts: A woman purchased a matrimonial home for herself and her husband to live in out
of her own sums and conveyed the home into her name. The husband and wife cohabited
the home together, during which the husband made alterations and improvements to the
home. Following the couple’s divorce, the former husband claimed that he had a
beneficial interest in the home as his contributions to the property had increased its value.
Issues: The question arose as to whether a spouse could claim an equitable interest in a
matrimonial home in which s/he had no legal interest, by virtue of his/her decorations and
improvements to the home, so as to entitle him a share in the proceeds of sale of the
property.
Decision / Outcome: The House of Lords, overturning the Court of Appeal, held that the
improvements made to the home do not entitle the husband to an equitable interest in the
 property. The Court held that the voluntarily-undertaken improvements and decorations
of a family home served the purpose of making “the home pleasanter for their common
use and enjoyment” (826). In the context of a family home, the Court cannot impute an
implied common intention between spouses that regular and/or leisure undertakings to
decorate a home can alter existing proprietary rights in the home; the conduct of the
spouses does not give rise to such an intention and it was only claimed after matrimonial
difficulties occurred. The Court also dismissed an argument that there is a presumption to
treat payments made from a husband to a wife as advancements as out-dated and
motivated by policy concerns of a different social era. Thus, the Court held that the
husband had no equitable interest in the matrimonial home.

8. Jones v Padavatton (1968):

(see orange page 149)
The HC held that the mother was entitled to the possession of the house. The original
agreement was motivated by the mother’s desire for her daughter to succeed at the Bar.
They were originally on good terms and they have no intention to enter into a stiff
contractual arrangement.

9. Choo Tiong Hin v Choo Hock Swee (1959): See orange page 149-150

10. Simpkins v Pays (1955):

Orang page 150-151

11. Horrocks v Forray (1976):

Facts: The claimants in this judgment were the executors of an estate and the defendant
had been the owner of the estate’s mistress for seventeen years. The defendant was also
the mother of a child of the estate’s owner. During this period, the father bought a house
for the defendant to live in with his daughter and, whilst he considered at one point
transferring ownership of the house to the defendant, it remained in his sole name until
his death. The executors then sought and were granted possession of the house. The
defendant appealed on the basis that she had been granted a contractual licence to live in
the house for her lifetime or at least until her daughter had completed her education.
Issues: The issue in this circumstance was whether occupation of a property and the
intention of the property owner to allow a person to live in it infers a contractual licence
in favour of the occupier.
Decision/Outcome: It was held that there was no evidence to show that a contract had
been formed in these circumstances. The fact that the deceased had sought to provide
security for his mistress and daughter until his death was not sufficient to demonstrate a
 contractually binding promise on his part. Furthermore, even if the deceased intention
could be found to be sufficient, which it could not, the agreement lacked any kind of
consideration and it was therefore impossible for the licence to be contractual in nature.
The defendant’s appeal was dismissed and the order for possession upheld.

12. Kang Moi Lan v Kang Ah Lang (1993):

The defendant is the registered proprietor of land in Grisek (the Land) which was transferred to
her by her late father in 1969. The plaintiff, the defendant's sister, claimed that the Land was
transferred to the defendant as trustee for the plaintiff and sought an order that the Land be
transferred to her absolutely.

The plaintiff also put into evidence a deed of trust (the Deed) signed by the defendant in 1988 in
favour of the plaintiff. The defendant claimed that the Deed was signed under duress and
counterclaimed for a declaration that the Deed be set aside and for the removal of the caveat
lodged by the plaintiff against the title to the Land.

Held:

[1] There was no evidence that at the time the father transferred the Land to the defendant it was
being so transferred on trust for the plaintiff. The Land was transferred unconditionally and
absolutely at the behest of the father to the defendant.

[2] There was no evidence of agreement between the defendant on the one part and her father or
her mother or both of them on the other part, binding in law, whereby the defendant was required
by parental direction to transfer and part with the Land and title thereto.

[3] The Deed was signed late at night in surrondings oppresive to the defendant and not
conducive to the defendant's will being exercised freely. The defendant did not sign the Deed
voluntarily. The defendant signed the Deed under duress and the Deed was void and of no effect.

[Plaintiff's claim dismissed with costs.

Richard Talalla J: “Being the conservative family they were I believe the plaintiff when she
testified that it was the decision of her parents to transfer the Land to the defendant, that they did
things without having to tell the children that when the father was alive it was he who controlled
the Land and on his passing her mother did so and that it was the mother's idea to transfer the
Land to her. That seemed to me the expected state of affairs pertaining to a family such as this
one. It appeared to me perfectly natural that the children would have honoured and respected the
parents and acceded to their wishes; the father's wishes during his lifetime and thereafter the
wishes of the mother. Accordingly notwithstanding that the Land was transferred to the
defendant absolutely and unconditionally the defendant would have heeded and indeed did
comply with the wishes of her parents in regard to the working of the Land, the sharing of the
profits derived therefrom and later, on the father's demise, and when the plaintiff and her
husband returned from Brunei the defendant either of her own accord as a dutiful sister and
certainly at the bidding of the mother would have agreed to the plaintiff and her husband
working on the Land and sharing in the profits. The defendant would have done all these as a
dutiful daughter and a grateful one having been given the Land. However, the defendant's
willingness or even her feelings of obligation in this regard were not such as emanating from any
common intention of the parties concerned to be legally bound. It was only a matter of filial
respect and duty. There was no evidence of agreement between the defendant on the one part and
her father or her mother or both of them on the other part, binding in law, whereby the defendant
was required by parental direction to transfer and part with the Land and title thereto.”

13. Parker c Clarke (1960):

Mr Clarke and Mrs Clarke invited Commander and Mrs Parker (Mrs Clarke’s niece) to
sell their cottage and come to live with them… Orange page 151… see notes

14. Guthrie Waugh Bhd v Malaiappan Muthuchumaru (1972):

Ong CJ: “Any deed or agreement executed or made in the ordinary course of business
between merchants and traders must be presumed as intended to be legally binding.”
Bukti: Commercial agreements have a presumption that the parties do intend to make a
legally binding contract. Thus, it is not necessary for the plaintiff to prove that there was
such an intention.

15. Carlill v Carbolic Smoke Ball Co (1893):

See notes
Bank deposit was strong evidence that the defendant had contemplated legal liability
when they issued their advertisement.

16. Rose & Frank Co v JR Crompton & Bros Ltd (1925):

Orange book Page 153-154

17. Edwards v Skyways Ltd (1964):

The defendant declared the plaintiff, one of their pilots, as redundant. They ultimately
agreed with the pilots’ association to pay all redundant pilots an ex gratia sum
apporximating to the amount that the pilot had contributed to the pension fund. Later, the
defendant refused to make any such payment mainly because of the large number of
redundancies. The plaintiff brought an action for breach of contract. The defendant
argued that there was no contract between them as the use of the words ‘ex gratia’ meant
 that they promised to pay these sums only out of gratitude for the services rendered by
the pilots. Thus, the said words rebutted the presumption that there was an intention to
create legal relations.
However, the court held that there was intention to create legal relations, and gave
judgement for the plaintiff. The words ‘ex gratia’ did not negate contractual intention.
The use of the words ‘ex gratia’ is simply to indicate that the employers did not admit
any pre-existing liability on their part; but they are certainly not seeking to preclude the
legal enforceability of the settlement itself by describing the contemplated payment as ‘ex
gratia’. Therefore, the use of the words ex gratia in this case did not rebut the
presumption that there was ITCLR.
Orange page 155-156

18. Ford Motor Co Ltd v Amalgamated Union of Engineering & Foundry Workers
(1969):
Orange page 156-157

19. Esso Petroleum Ltd v Commissioner of Customs & Excise (1976):

Facts: Esso, a petrol company, by which customers would receive one free World Cup
coin for every four gallons of petrol purchased. The World Cup coins were manufactured
coins with the head of a 1970 World Cup English footballer on one side and the word
‘Esso’ on another for a sales promotion. Esso ran advertisements The Customs and
Excise Commissioners claimed that the coins were liable to purchase tax as goods
“produced in quantity for general sale,” under the Purchase Tax Act 1963, Sch 1, Group
25. Esso claimed that the coins were free gifts and, thus, there was no sale with the
intention to create legal relations and produce a legal effect.
Issues: The question arose as to whether, the distribution of the coins were goods “for
general sale,” and thus sold per a legal obligation by Esso to supply the coins under a
contractual relationship with customers.
Decision / Outcome: Firstly, the Court held that there was an intention to create a legal
obligation by Esso to supply the coins. The transaction took place in a business setting,
and was itself a legal offer beyond a mere ‘puff’ (p 5) that rendered Esso commercial
advantages, and was accepted by the customers. Secondly, the Court held that, for a
contract of sale, there must be a transfer of the goods for monetary consideration. The
Court held that, despite the intention to create a legal obligation, there was no
consideration for the transfer of the coins as the coins were transferred under the separate
contract for sale of the petrol. Accordingly, the Court held that there was no contract of
sale by Esso, there was a contract to produce the coins as goods “for general sale.”
 20. Lim Keng Siong & Anor v Yeo Ah tee (1983):
Summary: In this case, the appellants wrote to CH Williams, Talhar & Wong Sdn Bhd on 1
March 1976 as follows: ‘I confirm, subject to contract, that the lowest price I am willing to sell
the said property is [dollar]5.40 per square foot in Singapore currency, the sale and purchase to
be completed latest by March 24, 1976. Ten per cent deposit to be paid within the course of the
next few days if your buyer Mr Yeo Ah Tee agrees to the price and the terms.’ There were further
negotiations and eventually Messrs CH William, Talhar & Wong Sdn Bhd wrote on 3 March
1976 to confirm the sale: ‘We refer to our telephone conversation this afternoon in which you
have kindly accepted our client’s (Mr Yeo Ah Tee) further offer regarding the above, with vacant
possession at a price of [dollar]5.20 per square foot for [dollar]454,391.60 cents ringgit, four
hundred and fifty-four thousand three hundred and ninety-one dollars and cents sixty only. The
sale is to include all buildings, plant and machinery and all ancillary facilities etc. We have
received further instructions to inform you that our client has appointed Messrs Ting Poi Tak &
Co of 30 Jalan Laksamana as his solicitors to deal with all legal matters pertaining to the above
sale. Messrs Ting Poi Tek & Co will communicate direct with you regarding the sale.’ The
appellants in this case refused to complete the agreement and the respondent applied for specific
performance. In his statement of claim, the respondent averred that there was a concluded
contract and this was specifically admitted by the appellants in their statement of defence. The
appellants in their defence stated that the sale was subject to contract and that they had informed
the respondent’s solicitors that they did not wish to sell the property. Wan Yahya J ordered that
the agreement of sale be specifically performed and carried into execution. The appellants
appealed.
Held: on the evidence and the exhibits in this case it was the intention of the parties to come to a
definite and complete agreement on the subject of the sale and the mere fact that a written
agreement had to be drawn up and executed by them did not necessarily mean that there was no
legally binding and enforceable agreement. A legally binding and enforceable agreement was
concluded on 3 March 1976 and the learned judge had not erred either in law or fact in arriving
at the finding that he did.
21. Carlton Communications and Granada Media v The Football League (2002):
The applicants sought a declaration that they had not provided guarantees to support a
contract between a joint venture company owned by them, OnDigital, and the respondent
to screen football matches. The company had become insolvent.
Held: The applicants had indicated in the initial bid document that they would guarantee
the bid, but that guarantee had not been incorporated into the later documents. OnDigital
was not able to bind the claimants. The bid had been renegotiated and reformulated
before being signed. A guarantee had to be in writing, and the initial statement had been
superceded. Subject to contract negotiations remain in negotiation until a formal contract
is concluded. A company is not the agent of its shareholders. A declaration that the
claimants had not guaranteed the contract was granted.