Prepared by

PN. NORAZLINA ABDUL AZIZ

Introduction
SECTION 2(h): CONTRACT ACT 1950
Agreement Enforceable By Law
Sri Kajang Rock products sdn. Bhd v Maybank

finance berhad{ 1992} 1 CLJ 204

Projection Pte Ltd v The Tai Ping Insurance Co
Ltd{2001} 1 SLR 399

ESSENTIAL ELEMENTS OF A VALID

CONTRACT
1.OFFER
2.ACCEPTANCE
3.CONSIDERATION
4.CAPACITY
5.CERTAINTY
6.INTENTION
7.FREE CONSENT/ VOID@VOIDABLE

CONTRACT

DISCHARGE OF
CONTRACT
1. Discharge by Performance
2. Discharge by Agreement
3. Discharge by Frustration/Impossibility
4. Discharge by Breach of Contract

REMEDIES
(Discharge by Breach of Contract)
1. Rescission of Contract
2. Damages
3. Specific Performance
4. Injunction
5. Quantum Meruit

Law Of Contract
(Summary)
CONTRACT

7
ESSENTIAL
ELEMENTS

DISCHARGE
OF
CONTRACT

REMEDIES

OFFER
(1st element)
DEFINITION
SEC. 2(a)

Contract Act 1950

TYPES:
Specific
General

Boulton v. Jones

Carlill v. Carbolic Smoke Ball

CONDITIONS :
Clear, certain & final
Must be communicate

Guthing v Lynn

R v Clarke ;Taylor v Laird

Harris v Nickerson
Harvey v facey

INVITATION TO TREAT v. OFFER

Advertisement
Display of Goods
Tender
Price List
Auction

s. 10 Auction Sales Act

Fisher v Bell
Spencer v. Harding

REVOCATION OF OFFER
OFFER
Section 5 (1)

An Offer remains open until it is revoked by

the offeror
Payne v Caves( 1789)
Routledge v Grant(1828)

Revocation of offer
cases
Sec 6(a):NOTICE
Sec 6(b):Timur Permai Holdings Sdn Bhd v Soon seng

Plywood & Timber Sdn. Bhd92)[1998] 3 CLJ 408; National

Land finance Co-operative Society Ltd v sharidal Sdn.
Bhd[1983] 2 MLJ 211.LAPSE OF TIME
Sec 6(c): Trans Trust S.P.R.L v Dnubian Trading Co.

Ltd{1952} 1 All ER 970; Aberfoyle Plantations Ltd. Khaw

Bian Cheng[1960] MLJ 47
FAILURE TO FULFILL STIPULATED ONDITIONS
Sec 6(d):DEATH OR MENTAL DISORDER

ACCEPTANCE
(2nd element)summary

Definition: sec. 2(b):

when the person to whom the proposal is made.accepts the offer

Hyde v Wrench

SEC. 7(a) v.
Conditions:
COUNTER OFFER
1.Absolute & Unqualified sec. 7(a)
Modification of original offer
Stevenson Jaques v. McLean
municated in Usual & Reasonable Manner sec. 7(b)

Effect: rejection of original offer

Acceptance

Conditions no 1

Case of counter offer

Malayan Flour Millsbhd v Saw Eng Chee[1997]

1 MLJ 763

Condition of Acceptance
no.
2Rule
General
Acceptance Must be Communicated: sec. 2(b)

( Powell v Lee)

Provision under section 2(b)

signifies his assent
Silence is not an acceptance( Felthouse v Bindley/

Fraser v Everett)

Exceptions
1.Unilateral Contract

Carlill v Carbolic Smoke Ball; Eringgton v

Eringgton; New Zealand Shipping v A. m
Satterwhaite
2.Offer to the public( Carlills case)
3.Reciprocal promises

( sec 2(f)/ sec. 8)

4.Acceptance through post

Postal rule
Sections applicable.
S. 4(1):offer must comes to the knowledge of offeror
S.4(2)(a):when the acceptance binds the offeror
S.
S.
S.
S.

4(2)(b):when the acceptance binds the offeree

5(1):revocation of offer
5(2):revocation of acceptance
6(a): method of revocation(notice)

Postal rule
SECTION 4( 2 )( a)

Entores Ltd v Miles Far East Corp. (1955)

When the contract is made by post, the acceptance is
complete as soon as the letter is put into the post box

Ignatius v Bell
Household Fire Insurance Co. Ltd v

Grant(1879)

SECTION 4( 2 ) ( b)
To avoid disadvantaged on the part of the

offeror( exemption clause)

Holwell Securities Ltd v Hughes(1974)

CONSIDERATION
rd
3Definition:
elementsection 2(d)

which have value in the eyes of the

law
Currie v Misa(1875)

categories

Executory
{Promise v promise}

Executed
{Promise v Act}

Past
{Promise v Past Act}

Exceptions:
1.Contract Made on Account of
Natural Love & Affection,
{ section 26(a)} RE Tan Soh Sim

2nd exceptions
2.Contract To Compensate A Past
Voluntary Act, {section 26(b), 1st
limb}

J.M Wotherspoon & co Ltd v Henry

Agency House

Illustration c

3rd exceptions
3.Contract to compensate for an act,
which the promisor legally
compellable to do
{ section 26(b), 2nd limb}

Illustration d

4th exceptions
4.Contract to pay a statute- barred
debt
{section 26(c)}

Illustration e

Rules Governing
Consideration
1.Adequacy of consideration

Phang Swee Kim v Beh I Hock

Adequacy is not important to

form a valid contract

2.Consideration Need Not Come

From The Promisee

Definition sec. 2(d) promisee or

any other person

Venkata Chinnaya v
Verikataramaya

3. Waiver of
Performance
English Law v. Malaysian Law
English
Pinnels Case
payment of a smaller sum is not a

satisfaction of an obligation to pay a

larger sum

Malaysia
section 64
Pan Ah Ba & Anor v Nanyang
Construction Sdn. Bhd.
Kerpa Singh v Bariam Singh
Hirachand Punamchand v Temple

CAPACITY
4th element

Section 10(1); parties competent to

contract..
Section 11: who are competent parties?
1.Age of majority
2.Soundmind
3.Not disqualified from contracting
{ bankruptcy}

MINOR
AGE OF MAJORITY ACT 1971

THE AGE OF 18 YEARS OLD and above

Effect of contract entered into

by incompetent person?
VOID: section 2(g) an agreement not
enforceable by law

EXCEPTIONS FOR MINOR

1.Necessaries
Government of Malaysia v Gurcharan Singh
Nash v Inman
2.Beneficial contract
Doyle v White City Stadium
Children and Young Persons(Employment )
Act 1966
.

3.Scholarships
Contracts( Amendment) Act 1976 section
4(a)
4.Insurance
Insurance Act 1963
5.Made under Age of Majority Act 1971
Section 4(a) marriage, divorce, dower and
adoption

Rajeswary & Anor v Balakrishnan & ors

UNSOUNDMIND
SECTION 12 (1), (2),(3)
Contract Act 1950

CONTRACTS BY
CORPORATIONS
1. STATUTORY CORPORATIONS
Established by act of Parliaments, Enactments of

State assemblies
Have the same contractual capacity and may act
in the same manner as an individual of full
capacity
However their contractual capacity is limited
expressly or impliedly by the Statute under which
the corporation was created
Any contract made, which is beyond the powers
conferred by the statute is ultra vires and void

Registered
corporations(companies)
Incorporated and registered under the Companies

Act 1965
Artificial legal person, has some rights and
capacities like an individual person
A company has the capacity to enter into a
contract
Its contractual capacity is within the limits of the
object Clause set out under the article of
Association & Memorandum of Association.
If contracting outside the object clause, the
transaction may be declared ultra vires.

What happen to the property or

payment?
If declared to be void, means failed to

fulfill one of the exceptions: section 66

(right of restitution)
If falls under one of the exceptions

section 69
entitles a person to be reimbursed

INTENTION
5th element

General rule:

1.Commercial Agreement
There is Intention to create Legal Relation

Low Kar Yit v Mohd Isa

Lim Keng Seong v Yeo Ah Tee

Daiman Development Sdn. Bhd. v Matthew Lui Chin Teck

2.Social, Domestic & Family Agreement

There is NO Intention to create Legal
Relation

Balfour v Balfour
Merrit v Merrit

HOWEVER
EXCEPTIONS TO THE GENERAL RULE:
1. COMMERCIAL AGREEMENT MIGHT NOT

HAVE INTENTION TO CREATE LEGAL RELATION

IF
facts of the case shows that parties are not
serious to be bound by a contract

On the other hand

2. Parties in a social domestic & family

agreement might have the intention to be

bound by a valid contract
If
there is seriousness showed in their act or
word

The seriousness
Differ from one case to another
Depending on the facts of the case

subject to formal
contract
Bukit Lenangs caseOakfield does not shows
any intention to enter into the contract.
Lee Chin Kok v Jasmin Arunthuthu
Esso Standard Malaya bhd v Southern Cross
Airways

Courts interpretation
Strict interpretation: meaning that the

interpretation of the correspondences between

parties, the intentions of the parties were that
legally binding contracts only came into existence
upon the execution of a formal contract
Cases:
Quek Choon Huat v R.M seow & Anor[1981] 2 MLJ 3
Ong Chong Soo v Tan Eng Tai & Anor[1982] 1 MLJ
307
Yap Eng Thong & Anor v Faber Union Ltd[1973] 1
MLJ 191

Moderate interpretation
Court will look into facts of the case, conduct

of parties etc, to determine the existence of a

valid binding contract
A contact may exist even though there is no
execution of a formal contract
Esso Std Malaya Bhd v Southern Cross
Airways
Air Hitam Tin Dredging Malaysia bhd v YC Chin
Enterprises Sdn Bhd[1994] 2 MLJ 754

CERTAINTY OF CONTRACT
6th element
Section 30: Agreements, the meaning of
which is not certain, or capable of being
made certain, are void.
Illustration (a) (f) of section 30

Karuppan Chetty v Suah Thian

Held: The contract was void for

uncertainty because the parties

agreed to a lease of $35 per
month for as long as he likes

Privity of Contract