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(008974-T) 2010

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CHAPTER

The Law of Contract

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OBJECTIVES
This chapter: describes the basic principles of the law governing contracts

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PREVIEW

Introduction Elements of a Contract Privity of Contract Terms of a Contract Voidable Contracts Void and Illegal Contracts Restraint of Trade and Legal Proceedings Discharge by Frustration, Performance and Breach Remedies
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INTRODUCTION

compare contract with agreement:

contract involves an element of agreement but not every agreement will result in a contract recognizable by law contract is an agreement enforceable by law contract is an agreement which is legally binding between them parties

Malaysian legislation Contracts Act 1950

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INTRODUCTION (cont.)

where there are no provisions in Contracts Act 1950 English law applies by virtue of the Civil Law Act 1956 where the Contracts Act makes certain provisions which differ from English law, the provisions of the Contracts Act 1950 must prevail see Song Bok Yoong v Ho Kim Poui

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ELEMENTS OF A CONTRACT
1. Offer (Proposal) section 2(a), Contracts Act 1950 when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal the promisor (offeror) must have declared his readiness to undertake an obligation upon certain terms, leaving the option of its acceptance or refusal to the offeree. See Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui
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ELEMENTS OF A CONTRACT (cont.)

the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made section 4(1)of the Contracts Act 1950 compare offer with option and advertisement is complete when it comes to the knowledge of the person to whom it is made section 4(1)of the Contracts Act 1950 compare offer with option and advertisement

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ELEMENTS OF A CONTRACT (cont.)

option undertaking to keep the offer open for a certain period of time
option arises when the offeror promises to keep the offer open for a specified period. See Goldsborough Mort & Co Ltd v Quinn, Coelho v The Public Services Commission, M N Guha Majumder v Re Donough whether an advertisement is an offer or an invitation to treat depends on the intention of the parties in each case
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ELEMENTS OF A CONTRACT (cont.)

advertisements of bilateral contracts are not offers whereas advertisements of unilateral contracts are construed to be offers. See Majumder v Attorney-General of Sarawak, Pharmaceutical Society Of Great Britain v Boots Cash Chemist Ltd, Partridge v Crittenden, Rooke v Dawson, Grainger & Sons v Gough if a party intends their words or conduct to constitute and offer, the court will construe as such. See Carlill v Carbolic Smoke Ball Co. Ltd
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ELEMENTS OF A CONTRACT (cont.)

offer must be distinguished from invitations to treat, e.g.:

auctions advertisement of tenders catalogues price lists goods displayed in shop windows and shelves

the advertisement of an auction is not an offer to hold it but an invitation to treat. See Harrison v Nickerson
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ELEMENTS OF A CONTRACT (cont.)

2. Acceptance

when the person to whom the proposal is made signifies his assent thereto, the proposal is said to have been accepted section 2(b)of the Contracts Act 1950 when a proposal is accepted, it becomes a promise the person accepting the proposal the promisee if the acceptance is made in words expressed acceptance
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ELEMENTS OF A CONTRACT (cont.)

if the acceptance is made other than in words implied acceptance for a proposal to be converted into a promise, the acceptance of that proposal must be absolute and unqualified section 7 of said Act acceptance must be absolute and unqualified so that there is complete consensus. If the parties are still negotiating, an agreement is not yet formed. a conditional assent is not an acceptance
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ELEMENTS OF A CONTRACT (cont.)

if acceptance is qualified by words such as subject to contract or subject to a formal contract being drawn up by our solicitors, the courts would be inclined to regard it as a mere conditional contract the mere use of the words subject to contract does not necessarily mean that the contract is not yet binding. Whether the parties contemplated a binding contract to take immediate effect or whether they were postponing their rights and obligations under the proposed contract until formalization is a question of fact and depends on the circumstances of each case
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ELEMENTS OF A CONTRACT (cont.)

in Ayer Hitam Tin Dredging Malaysia Bhd v YC Chin Enterprises Sdn Bhd:
1. The existence of an agreement depends upon the intention of the parties who must be ad idem. It may be inferred from the language used, the parties conduct having regard to the surrounding circumstances and the object of the contract. The court will generally apply an objective or reasonable man test. 2. Merely because the parties contemplate the preparation of a formal contract, that would not prevent a binding contract from coming into existence before the formal contract is signed.

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ELEMENTS OF A CONTRACT (cont.)

although the formula subject to contract gives rise to a strong presumption of the necessity of a further formal contract, it does not detract from the well-established principles that:
1. An informal contract without any express details may be binding 2. A bargain with essential terms, though a formal document is to be drawn up with further terms, is still a bargain 3. Where there is a definite and complete agreement, the reservation in respect of a formal document only means that it should be put into proper shape and in legal phraseology with any subsidiary terms necessary for insertion in a formal document

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ELEMENTS OF A CONTRACT (cont.)

acceptance which is qualified by the introduction of a new term may be considered as a counter-offer destroying the original offer. See Hyde v Wrench acceptance must be made within a reasonable time. See Fraser v Everett reasonable time depends on the circumstances of each case, e.g. the nature of the subject-matter or the method by which the offer is communicated
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ELEMENTS OF A CONTRACT (cont.)

an offer is normally short-lived in the case of perishable goods, whereas in the case of land, provided that there is nothing in the offer to indicate a degree of urgency, the offer remains open for a longer time. See Ramsgate Victoria Hotel Co Ltd v Montefiore
the rationale for this rule is given by Hashim Yeop A Sani J in the case of Macon Works & Trading Sdn Bhd v Phang Hon Chin & Anor

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ELEMENTS OF A CONTRACT (cont.)

acceptance must be expressed in some usual and reasonable manner, unless the proposer prescribes the manner in which it is to be accepted. The proposer cannot prescribe silence as a manner of acceptance section 7(b) of the Contracts Act 1950 however, silence may also amount to acceptance if there are other facts like the conduct of the offeror to indicate acceptance. See Weatherby v Banham
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ELEMENTS OF A CONTRACT (cont.)

thus, acceptance must be made in the manner prescribed by the offeror. When the acceptor deviates from the prescribed manner, the offeror must not keep silent. If he does so and fails to insist upon the prescribed manner, he is considered as having accepted the acceptance in the modified manner section 7(b) the acceptance of proposals is deemed to be made by any act or omission of the party accepting by which he intends to communicate the acceptance or which has the effect of communicating it section 3
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ELEMENTS OF A CONTRACT (cont.)

the communication of an acceptance is complete as against the proposer when it is put in a course of transmission to him so as to be out of the power of the acceptor with respect to the acceptor, the communication of an acceptance is complete as against the acceptor when it comes to the knowledge of the proposer when the acceptance does not reach the proposer, there can still be an agreement because the offeror, though having no knowledge of the acceptance, is bound whilst the acceptor, because his acceptance had not come to the knowledge of the proposer, is not bound. See Ignatius v Bell
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ELEMENTS OF A CONTRACT (cont.)

in cases of acceptance through post, acceptance is complete upon posting however, this rule that acceptance is complete upon posting may be excluded by the express terms of the offer Holiwell Securities Ltd v Hughes the mere posting of the letter of acceptance was not sufficient exception to the aforesaid rule as regards acceptance through the post lies in cases of instantaneous circumstances, e.g. telephone, telex and telefax see Entores Ltd v Miles Far East Corporation, Tenax Steamship Ltd v The Brimmes
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ELEMENTS OF A CONTRACT (cont.)

Revocation of Offer and Acceptance a proposal may be withdrawn in any of the following ways:
1.Communicating the notice of revocation by the proposer to the party to whom the proposal was made 2.The time prescribed in the proposal for its acceptance elapses, or if no time is prescribed for acceptance by the lapse of a reasonable time 3.The failure of the acceptor to fulfil a condition precedent to a acceptance
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ELEMENTS OF A CONTRACT (cont.)

4. The death or mental disorder of the proposer if the fact of the proposers death or mental disorder comes to the knowledge of the acceptor before acceptance

when acceptance is complete, an agreement is formed so that there is no question of revocation revocation is possible if the acceptance is not complete revocation of an offer must be communicated to be effective section 6(a)

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ELEMENTS OF A CONTRACT (cont.)

the communication of revocation section 4(3) section 4(2) the communication of an acceptance is complete:

1. As against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor 2. As against the acceptor, when it comes to the knowledge of the proposer

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ELEMENTS OF A CONTRACT (cont.)

the communication of a revocation is also complete at 2 different times:

1. As against the person who makes the revocation, when it is put in the course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it section 4(3)(a) 2. As against the person to whom it is made, only when it comes to his knowledge section 4(3)(b)

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ELEMENTS OF A CONTRACT (cont.)

a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards section 5(1) an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards section 5(2)

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ELEMENTS OF A CONTRACT (cont.)

3. Intention to Create Legal Relations

there are cases where there were no intention to enter into legal relations
where the agreements merely represent family arrangements where concessions were made in the course of business negotiations

circumstances and conduct of parties may also indicate lack of intention in domestic arrangements presumption against the existence of an intention to create legal relations
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ELEMENTS OF A CONTRACT (cont.)

in commercial arrangements presumption is that legal relationships are intended it is up to the courts to ascertain the intentions of the parties from the language used and the context in which they are used
as a general rule, an agreement without consideration is void section 26, Contracts Act definition of consideration see section 2(d), Contracts Act
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4. Consideration

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ELEMENTS OF A CONTRACT (cont.)

Consideration Need Not be Adequate

an agreement is not void merely because the consideration is inadequate Explanation 2, section 26 for the application of the rule see Illustration (f) section 26 adequacy of consideration see Chappell & Co Ltd v Nestl Co. Ltd, Phang Swee Kim v Beh I Hock
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ELEMENTS OF A CONTRACT (cont.)

Provision of Consideration consideration may move from a person who is not the promisee. It may move from the promisee or any other person section 2(d)
Past Consideration is Good Consideration English law does not recognize past consideration

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ELEMENTS OF A CONTRACT (cont.)

exceptions to this rule an act originally done at the request of the promisor, a promise made subsequent to the doing of that act, was deemed binding since the act constituted consideration. See Lampleigh v Brathwait definition of the word consideration in section 2(d) appears extensive enough to cover the aforementioned rule an agreement made without consideration is void unless it is a promise to compensate a person who has already voluntarily done something for the promisor section 26(b)
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ELEMENTS OF A CONTRACT (cont.)

Natural Love and Affection is Valid Consideration English law does not recognize natural love and affection as valid consideration natural love and affection are valid consideration if certain prerequisites are complied with Contracts Act 1950 in Malaysia

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ELEMENTS OF A CONTRACT (cont.)

an agreement made on account of natural love and affection would be held to be binding in Malaysia if the requirements of section 26(a) are present:
1. It is expressed in writing 2. It is registered (if applicable) 3. The parties stand in a near relation to each other

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ELEMENTS OF A CONTRACT (cont.)

Accord and Satisfaction Part Payment may Discharge an Obligation English law (Pinnels Case) general rule that payment of a smaller sum is not a satisfaction of an obligation to pay a large sum this does not apply in Malaysia exceptions to the rule [T]he gift of a horse, hawk, or robe ... in satisfaction is good. For it shall be intended that a horse, hawk, or robe ... might be more beneficial ... than the money ... .
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ELEMENTS OF A CONTRACT (cont.)

section 64 is wide enough to cover all the exceptions to the general rule under English law. Indeed, it goes further to provide that the promisee may do away with the promise completely see Illustration (b) of section 64

Consideration Need Not Move from the Promisee a party to an agreement can enforce the promise even if he himself has no given no consideration as long as somebody else has done so section 2(d) see Venkata Chinnaya v Verikatara Maya
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ELEMENTS OF A CONTRACT (cont.)

5. Certainty

an agreement which is uncertain or is not capable of being made certain is void. See Karuppan Chetty v Suah Thian

6. Capacity

refers to the ability of the parties to a contract to fully understand its terms and obligations every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject section 11
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ELEMENTS OF A CONTRACT (cont.)

the age of majority is eighteen years Age of Majority Act 1971 exceptions to the rule that contracts by minors are void:
1. Contracts for necessaries 2. Contracts of scholarship 3. Contracts of insurance

necessaries are things which are essential to the existence and reasonable comfort of the infant, e.g. food and clothing, shelter, and education
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ELEMENTS OF A CONTRACT (cont.)

a scholarship agreement is valid if granted by the Federal or State Government anyone between the age of ten and sixteen may enter into a contract of insurance with written consent of his parents/guardian

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PRIVITY OF CONTRACT

only the persons who are parties to the contract can acquire rights and incur liabilities under it. See Andrew Christopher Chuah Choong Eng Chuan case obligations under a contract generally cannot be transferred unless all the parties consent equity, and in limited cases, the law permits an assignment of rights contract requiring performance of personal service is not assignable
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TERMS OF A CONTRACT

terms may be expressed or implied terms may be classified as:

1. Condition vital to the contract. The parties consider it so important that its non-performance may be considered by the injured party as amounting to substantial failure to honour the contract at all and thus may be regarded as grounds for setting the contract aside, and or suing for damages 2. Warranty considered to be of lesser importance to the main purpose of the contract. If it is breached, the injured party must still perform their part of the contract but they have the right to sue for damages for any loss that they may suffer as a result of the breach
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TERMS OF A CONTRACT (cont.)

the 5 conditions for a term to be implied into a contract it must be:

1. Reasonable and equitable 2. Necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it 3. So obvious that it does without saying 4. Capable of clear expression 5. Not in contradiction of any express term of the contract

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TERMS OF A CONTRACT (cont.)

terms may be implied by:

1. Custom and usage pertaining to a particular type of transaction 2. Statutory provisions 3. The courts, based on the intention of the parties

where there is no express provision to the contrary in a contract, and the trade custom or usage relied on is so well-known that everyone in that business making a contract would be assumed to have included it as a term into the contract, then it may be implied by the courts
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TERMS OF A CONTRACT (cont.)

statutes that imply terms into a contract Sale of Goods Act 1957, Hire-Purchase Act 1967, National Land Code 1965
normally, the courts will imply terms into a contract:
1. To give efficacy to the transaction see The Moorcock 2. By applying the officious bystander test or what is commonly known as the Oh, of course! test see Reigate v Union Manufacturing Co Ltd, Shirlaw v Southern Foundries (1926) Ltd

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TERMS OF A CONTRACT (cont.)

terms may also be imported from a previous course of dealing between the parties to the contract see Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd
whether a particular term in a contract is a condition or a warranty depends on the intention of the parties the courts will have to determine the exact intention of parties. See Associated Metal Smelters Ltd v Tham Cheow Toh
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Conditions and Warranties

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TERMS OF A CONTRACT (cont.)

Standard Contracts and Exemption Clauses

provisions limiting (as distinguished from exempting) liability have been held to be valid. See Chartered Bank of India, Australia and China v British India Steam Navigation Co Ltd, Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd the effectiveness of an exclusion clause is a matter of construction

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TERMS OF A CONTRACT (cont.)

if the exclusion clause is properly incorporated, there are 3 possibilities for ones approach to interpretation:
1. The contra proferentum rule see White v John Warwick & Co Ltd 2. The four corners rule see The Council of the City of Sydney v West 3. Interpretation according to the express agreement see Photo Production Ltd v Securicor Transport Ltd

however, the presumption of equality of bargaining positions in commercial contracts is a rule of construction based on the presumed intention of the contracting parties in each case
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VOIDABLE CONTRACTS

all agreements are contracts if they are made by the free consent of parties section 10, Contracts Act according to section 14, consent is said to be free when it is not caused by:
1. Coercion 2. Undue influence 3. Fraud

4. Misrepresentation 5. Mistake

a party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representation made had been true section 19
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VOIDABLE CONTRACTS (cont.)

1. Coercion

is defined in section 15, Contracts Act 1950 see Kanhaya Lal v National Bank of India, Ltd, Kesarmal s/o Letchman Das v Valiappa Chettiar, Allied Granite Marble Industries Sdn Bhd v Chin Foong Holdings Sdn Bhd & Ors

2. Undue Influence

is defined in section 16, Contracts Act 1950 3 matters to be dealt with under section 16(3) are:
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VOIDABLE CONTRACTS (cont.)

The relations between the parties to each other must be such that one is in a position to dominate the will of the other The issue whether the contract has been induced by undue influence The burden of proving that the contract was not induced by undue influence lies upon the person who was in a position to dominate the will of the other

3. Fraud

is defined in section 17, Contracts Act 1950 wherever a person causes another to act on a false representation which the maker himself does not believe to be true, he is said to have committed a fraud
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VOIDABLE CONTRACTS (cont.)

4. Misrepresentation

is defined in section 18, Contracts Act 1950 see Tan Chye Chew & Anor v Eastern Mining & Metal Co., Malayan Miners Co (M) Ltd v Lian Hock & Co, Maria Chia Sook Lan v Bank of China cases where there is a mistake of fact see section 21, Contracts Act 1950 section 22 provides for cases where there is a mistake as to law a contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact section 23
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5. Mistake

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VOID AND ILLEGAL CONTRACTS

a void contract is an agreement not enforceable by law section 2(g) according to section 24, the consideration or object of an agreement is lawful unless:
a) it is forbidden by a law b) it is of such a nature that, if permitted, it would defeat any law c) it is fraudulent d) it involves or implies injury to the person or property of another e) the court regards it as immoral, or opposed to public policy

agreements are void if any part of their considerations and objects are unlawful section 25
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VOID AND ILLEGAL CONTRACTS (cont.)

agreements declared void by the Contracts Act 1950: 1. An agreement made without consideration unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law section 26 2. An agreement in restraint of marriage section 27 3. An agreement in restraint of trade except for an agreement not to carry on business of which goodwill is sold; or an agreement made prior to a dissolution of a partnership or an agreement made during the continuance of a partnership section 28
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VOID AND ILLEGAL CONTRACTS (cont.)

4. An agreement in restraint of legal proceedings except for a contract agreeing to refer disputes to arbitration or a contract relating to scholarships section 29 5. An agreement, the meaning of which is not certain, or capable of being made certain section 30 6. An agreement by way of wager section 31

Consequences of Void or Illegal Agreements the courts will not enforce an illegal contract ex turpi causa non oritur right of restitution section 66 see Menaka v Lum Kum Chum, Wong Lee Sing v Mansor
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RESTRAINT OF TRADE AND LEGAL PROCEEDINGS

1. Restraint of Trade all contracts restraining a person from carrying on a lawful profession, trade or business is to that extent prima facie void section 28 3 exceptions to the general rule:
1. Restrictions on the sale of the goodwill of a business 2. Agreements between partners made upon or in anticipation of a dissolution 3. Agreements between partners not to carry on business during the continuance of the partnership
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RESTRAINT OF TRADE AND LEGAL PROCEEDINGS (cont.)

2. Restraint of Legal Proceedings

every agreement by which any party to an agreement is restricted absolutely from enforcing his rights under the contract, or any agreement which limits the time to enforce a partys rights, is void section 29 exceptions to this general rule:
1. Contracts to refer disputes which may arise to arbitration 2. Contracts to refer any question which may have already arisen to arbitration 3. Contract in respect of an award of a Government scholarship wherein it is provided that the discretion exercised by the Government under that contract shall be final and conclusive and shall not be questioned by any court

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RESTRAINT OF TRADE AND LEGAL PROCEEDINGS (cont.)

3. Effects of Contracts in Restraint of Trade and Legal Proceedings

contracts in restraint of trade or legal proceedings are not entirely void. Such a contract is void to the extent of the restraint only it is possible to sever that part which is invalid and to enforce the rest of the agreement provided it does not substantially alter the nature of the agreement
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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH

1. Discharge by Frustration

if a party promises to carry out a particular act, the law will hold them to their promise doctrine of absolute liability for exceptions to this rule of frustration see Cutter v Powell doctrine of frustration applies where the following situations occur:
1. 2. 3. 4. 5. Physical impossibility because of destruction of subject matter Physical impossibility under contract of personal service Change in the law rendering performance impossible Impossibility due to non-occurrence of event basic to contract Where the particular state of affairs ceases to exist
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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH (cont.)

a contract is frustrated when there is a change in the circumstances which renders a contract legally or physically impossible of performance section 57(2) frustration should be supervening and subsequent to the formation of the contract see Maritime National Fish, Ltd v Ocean Trawlers Ltd frustration only arises where there is an unforeseen and radical change in surrounding circumstances see Yee Seng Plantations Sdn Bhd v Kerajaan Negeri Terengganu & Ors), H A Berney v Tronoh Mines Ltd, Standard Chartered Bank v Kuala Lumpur Landmark Sdn Bhd, Eastacres Development Sdn Bhd v Fatimah Mutallip & Anor, Dato Yap Peng & Ors v Public Bank Bhd & Ors
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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH (cont.)

Effects of Frustration to discharge a contract immediately, but only as to the future. The contract is not void ab initio, but only void from the time of the frustrating event. a total failure of consideration would need to be established in order that the money be recovered see Fibrosa Spolka Akcyjna v Fairburn Lawson Combe Barbour Ltd
2. Discharge by Performance performance of a contract must be exact and precise and should be in accordance with what the parties had promised section 38(1)
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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH (cont.)

performance may be from a third party and not necessarily from the promisor section 42
section 56 regulates the position when time is of the essence of a contract

the performance of any promise may be made in any manner, or at any time, which the promisee prescribes or sanctions section 51
the effect of both sections 51 and 56 a promise must be performed at the time agreed by the parties
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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH (cont.)

when a promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee, the promisor may perform it at any time during the usual hours of business on the day and at the place at which the promise ought to be performed section 48
when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance section 40
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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH (cont.)

3. Discharge by Breach when a party fails to perform their obligations as agreed can occur due to:
Failure to comply with a term of the contract Anticipatory breach Delay in the performance where time is of the essence

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DISCHARGE BY FRUSTRATION, PERFORMANCE AND BREACH (cont.)

Effects of Breach the innocent party is entitled to treat the contract as ended and may be able to recover damages partial breach the innocent party still has to carry out his obligations but may sue for damages if the innocent party ends the contract, he must restore any benefits received from the other party section 65
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REMEDIES
1. Rescission

an equitable remedy, which allows an innocent party to cancel the contract by rescinding or, if there has been misrepresentation by the other party, raising that misrepresentation as a defence if sued for damages or specific performance by the other party

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REMEDIES (cont.)
2. Restitution

is sometimes referred to as quasi-contract. It is not contractual and does not rely on the plaintiff suffering loss or damage. Its basis is unjust enrichment; that is, those situations where it would be very unfair if the defendant was to be allowed to retain the money, or the goods or services, without payment

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REMEDIES (cont.)
3. Damages main purpose is to enable the innocent party to receive monetary compensation from the party responsible for the breach of contract. Damages are granted to a party as compensation for the damage, loss or injury he has suffered through a breach of contract the general principle for the assessment of damages is compensatory section 74
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REMEDIES (cont.)

the requirement of the plaintiff seeking substantial damages to prove both the fact and amount of damages before he can recover the damages is seen in Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd the court must determine what is the reasonable compensation and whether or not actual damage or loss is proved to have been caused thereby section 75

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REMEDIES (cont.)
Mitigation of Loss duty upon the person claiming damages to take all reasonable steps to reduce, minimize or mitigate their loss if he fails in doing so, the amount of damages to recover will be reduced if the plaintiff is able to avoid loss, damages will not be recoverable for the potential loss
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REMEDIES (cont.)
4. Specific Performance

is a discretionary order granted by the courts directing a person to carry out their obligations under the contract. It is not generally used in breach of contract actions unless damages prove to be inadequate. the court has a discretion to refuse specific performance where the granting of it would cause undue hardship to the defendant section 21,Specific Relief Act 1950
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REMEDIES (cont.)

specific performance may be granted in respect of agreement relating to land transactions where there is a presumption that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money section 11(2) of the Specific Relief Act 1950 specific performance may also be granted in respect of executory contracts and in cases where actual damage cannot be ascertained
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REMEDIES (cont.)

the court will exercise its discretion not to decree specific performance:
1. Where damages will provide an adequate remedy section 20(1)(a),Specific Relief Act 1950. SeeYeo Long Seng v Lucky Park (Pte) Ltd 2. Where the terms of the contract are uncertain section 20(1)(c), Specific Relief Act 1950. See Lim Nyuk Chan v Wong Sz Tsin

3. Where there has been delay in bringing the action

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REMEDIES (cont.)
4. Where there is evidence of fraud 5. Where to do so would require the constant supervision of the court see Lee Sau Kong v Leow Chang Chiang 6. Contracts for personal services see Dato Abdullah bin Ahmad v Syarikat Permodalan Kebangsaan Bhd & Ors

the court has the power to award damages in addition to or in lieu of specific performance section 18, Specific Relief Act 1950
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REMEDIES (cont.)
5. Injunction

is a discretionary court order may be:

a) prohibitory preventing the breach of a contract b) mandatory requiring a person to perform some contractual obligation c) interlocutory where it freezes the status quo between the parties until the dispute can be heard by the court

is an equitable remedy can be varied or dissolved if the court discovers later that the application was made on suppressed facts or facts upon which the order was granted no longer exist
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REMEDIES (cont.)
6. Mareva Injunction prevents the defendant removing or disposing of any assets in the jurisdiction until the court makes a decision a plaintiff must be able to establish all the following:
a) the defendant has assets that are in the courts jurisdiction b) there is a real risk that the defendant will remove or get rid of any assets before judgement c) the plaintiff can establish a substantive cause of action such as a claim for damages
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Remedies (cont.)
7. Anton Piller Order

may be made available in exceptional circumstances where it can be shown that the defendant has incriminating evidence in their possession, which is necessary to the plaintiffs case and which may well be destroyed before a court order for discovery can be made

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REMEDIES (cont.)
8. Quantum Meruit means as much as he has earned and only arises in cases of part performance can arise where:
a) a defendant has prevented a plaintiff from carrying out the remainder of their contractual duties b) the parties cannot agree on payment c) the parties agree on payment for the partperformance but not the actual amount
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REVIEW

Introduction Elements of a Contract Privity of Contract Terms of a Contract Voidable Contracts Void and Illegal Contracts Restraint of Trade and Legal Proceedings Discharge by Frustration, Performance and Breach Remedies
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