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Week 1 - Introduction To The Law of Contract 1

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28 views

Week 1 - Introduction To The Law of Contract 1

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wb9bf6fgks
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© © All Rights Reserved
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INTRODUCTION TO THE LAW

OF CONTRACT I
INTRODUCTION

Some warming up questions:

• Q1: What are the aims of


the Law of Contract?

• Q2: Whether the Contracts


Act (CA)1950 is a complete
code?
Q1: What are the aims of the
Law of Contract?
→to ensure the contracting
parties honour their promises
& obligations.
• so……if they do not?
→the law will enforce it upon
them.
Q2: Whether the CA 1950 is a
complete code?

→ NO!
→ The Act is not the only legislation regulating
contractual relationship.

• Extensive provisions can be found in:

• Specific Relief Act 1950 (SRA)


• Civil Law Act 1956 (CLA)
• Government Contracts Act 1949
• Other relevant statutes
For certain specific contracts, other
legislation is applicable
E.g :
• Partnership Act 1961,
• Hire Purchase Act 1967,
• Sale of Goods Act 1957,
• Housing Developer (Control & Licensing) Act,
• Companies Act 1965,
• Consumer Protection Act 1999,
etc
Sources of contract laws

When the CA 1950


The CA 1950 draws The ICA 1872, was enacted, it
During the colonial
its origins and which was in force was largely based
era, Malaysia was
inspiration from in British India, on the provisions
under British rule;
English common provided the of the ICA, with
the legal system
law principles, foundation for certain
was heavily
particularly the contract law in modifications and
influenced by
Indian Contract Act Malaysia at that adaptations to suit
English law.
1872 (ICA). time. the local legal
context.
→ S.3 & S.5 Civil Law Act
1956 :

Scope of application • provides for the


of English Law application of English
Law unless ‘other
provision’ has been or
shall be made by any
written law.
Where the CA 1950
contains specific
provisions
What is the effect of Where the CA 1950 is
CLA on the law of silent on the meaning of a
contract in these legal term
situations?
Where there is no express
provision in the CA 1950,
ie there is lacuna
What is a ‘contract’?
→an agreement enforceable by
law
→a promise (or set of promises) of
one person to do a certain thing in
exchange for a promise from
another person to do another thing

• Q : Are all agreements contracts?


• Q : other than contract &
agreement, does covenant carry
the similar meaning?
Q : Are all
agreements
contracts?
• Some agreements like:
• non-business,
• religious, or
• charitable agreements
→ are not always
contracts.
• Agreements which are not
certain, or incapable of
being made certain are
void.
• A contract the terms of
which the court cannot
find with reasonable
certainty is not
enforceable
• Agreement not finalized
by the agreed date would
not be an enforceable
contract.
Statutory Definition –
CA 1950

• ss. 2(a), (b), (e), (h)

• S. 10

• Case-law
Case : Sri Kajang Rock Products Sdn
Bhd v Mayban Finance [1992] 3 CLJ
611, HC
• “.. to constitute a valid contract there must be
separate & definite parties thereto; those
parties must be in agreement, that is there
must be a ‘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 & the promises of each
party must be supported by consideration.”
-VC George J-
Can agreement be made orally?

Case : Syed Jaafar bin


oral agreement is
Syed Ibrahim v Maju
equally recognised by
Maher Singh Travel &
law like written
Tours Sdn Bhd [1999]4
agreement.
MLJ 413, HC
Contract by conduct – S. 3 & S. 9 CA 1950
Syed Jaafar b. Syed Ibrahim v Maju Mehar Singh Travel & Tours Sdn Bhd (1999)

Facts:
1. Plaintiff and Defendant had an oral agreement, that in consideration of Plaintiff
providing passengers to Defendant and collecting RM5,500 per person, Defendant
would issue return air tickets for hajj, apply and obtain visas for the passengers, and
pay a commission of RM200 per passenger to Plaintiff.
2. Plaintiff did all these, but Defendant could not obtain the visas, and Plaintiff had to
arrange for food and accommodation for the passengers while they were stranded in
KL. All had to return to KB without performing the hajj.
3. Plaintiff claimed from Defendant the cost of air tickets, bringing passengers from
KB to KL, and the costs for food and accommodation while stranded.

Held:
There was an oral agreement between Plaintiff and Defendant, so they intended to
create a binding contract.
Case : Brogden v Metropolitan Railway Co (1877) 2 App. Cas. 666

→classic example of acceptance of an offer by


conduct
→there may be a contract where, without
formal recognition, a course of dealing and
conduct leads to the inference that those with
whom a party was dealing were made aware, by
conduct, that the proposed contract had been
accepted.

Brogden, were suppliers of coal to the defendant, Metropolitan Railway. They completed business dealings regarding the
coal frequently for a number of years, on an informal basis. There was no written contract between the complainant and
the defendant.
Unilateral vs Bilateral Contracts

Bilateral:

→A reciprocal contract in which the parties involved give mutual


promises.

→a contract involving mutual promises, both parties are equally


bound to the performance of their promises
• E.g : contracts of sale
→ one-sided agreement
whereby a person promises
to do (or refrain from doing)
something in return for a
performance (not a
promise)
Unilateral?
S. 8 of CA 1950
Unilateral Contracts
• an agreement to pay in exchange for
performance, if the potential performer
chooses to act.
• A "unilateral" contract is distinguished from
a "bilateral" contract, which is an exchange
of one promise for another.
• E.g., : "I will pay you RM5,000 if you bring
my car from Johor Bahru to Perlis." Bringing
the car is an acceptance.
Case : Carlill v Carbolic Smoke Ball Co [1893] 1 QB
256
Carbolic Smoke Ball Co. (D) manufactured and
sold the Carbolic Smoke Ball.

The company placed ads in various


newspapers offering a reward of 100 pounds
to any person who used the smoke ball three
times per day as directed and contracted
influenza, colds, or any other disease.
Carlill v Carbolic Smoke Ball Co

01 02 03 04
After seeing the ad, Carlill contracted Carbolic Smoke Ball Judgment for 100
Carlill (P) influenza and made refused to pay; pounds was
purchased a ball a claim for the Carlill sued for entered for Carlill
and used it as reward. damages for and Carbolic Smoke
directed. breach of contract. Ball appealed.
Judgment & Rule:

Appeal was dismissed.

To accept an offer, a person need only follow the indicated method of acceptance. If
the offeror either expressly or impliedly intimates in his offer that it will be sufficient to
act without giving notice of acceptance, performance is sufficient acceptance without
notification.
Carlill v Carbolic Smoke Ball Co
• The court addressed the issue of whether the ad was intended to be a
promise or whether it was merely “puffing”.

• The court pointed to Carbolic Smoke Ball’s claim in the advertisement that it
had deposited 1000 pounds with Alliance Bank, which the court decided was
intended to demonstrate the company’s sincerity in paying the reward.

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