law of contract-010216_094655.pptx
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LAW OF CONTRACT
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LECTURER: LIM ENG HOE
email. ehlimwee@hotmail.com
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FORMATION OF CONTRACT
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Contract
agreement- notenforceable by lawsocial/domesticcontract-enforceable bylawbusiness/commercial
oral
writingconduct
oer Oeree-s2(c)
oeror-s2(c)
Oer 2(a)
acceptan
ceconsideration-s2(d)
intention to treat
Capacity-
s11
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ContractContract! Act "#$%
Consent-s10
egality-s10
Certaint&!'%
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!"#$%$&$O%
' contract is an agreement
between two or more persons to door abstain from doing an act and itis intended to create a legally
binding relation 2(b) Contracts 'ct 1*+0
,wen te person to wom teproposal (oer) is made signi.esis assent tereto te proposal issaid to be accepted a proposalwen accepted becomes a
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(i!tinction: contract an) a*reement+ ,-* Contract! Act "#$%
/an a*reement not en0orcea1le 1& law i!
!ai) to 1e 2oi)3.
+ ,-h CA "#$%
/an a*reement en0orcea1le 1& law i! a
contract3.
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A contract ma& 1e ma)e:
in writin*orall&
1& con)4ct
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What con!tit4te a 2ali) contract5
A 2ali) contract m4!t ha2e 0ollowin* element!". o00er,. acce6tance
'. con!i)eration7. intention to create le*al relation$. ca6acit& o0 6er!on!8. le*al9. certain. con!ent
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What i0 )oe! not ha2e an& a1o2e
element!5
Contract i! either:
;oi)
;oi)a1le
4nen0orcea1le
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What i! an o00er< o00eror or o00eree5
+ ,-a CA "#$%
/when one 6er!on !i*ni0ie! to another hi!
willin*ne!! to )o or a1!tain 0rom )oin*
an&thin*< with a 2iew to o1tainin* the a!!ent o0
that other to the act or a1!tinence< he i! !ai) to
ma=e a 6ro6o!al -o00er3.
+ , -c CA "#$%
/the 6er!on ma=in* the 6ro6o!al i! calle) the
6romi!or -o00eror an) the 6er!on acce6tin* the
6ro6o!al i! calle) the 6romi!ee -o00eree
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O00er
M4!t 1e a1!ol4te
M4!t 1e 4n>4ali0ie)
M4!t 1e comm4nicate) to o00eree
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O00er
M4!t 1e a1!ol4te< cannot 1e 2a*4e
(e0inite 6romi!e to 1e 1o4n) 1& !6eci0ic term!
A00in Cre)it -Mala&!ia +)n ?h) 2 a6 4en F4i "#7B"ML "8#
Hel): term! o0 o00er m4!t 1e )i!clo!e) 1e0ore acce6tance can
1e *i2en to concl4)e a contract< 0ailin* which !4ch a*reement
i! 2oi).
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O00er m4!t 1e clear< )e0inite an) certainWhite 2 ?l4ett -"$' L ED '8
+on claime) 0ather a*ree) to )i!char*e him 0rom lia1ilit& in
con!i)eration o0 hi! 6romi!e to cea!e com6lainin*.
Hel): +on3! 6romi!e wa! no more than a 6romi!e not to 1orehi! 0ather an) wa! to 2a*4e to 0orm a con!i)eration
?4t in War) 2 ?&ham #$8B " WLR 7#8
Hel): 6romi!e to ma=e chil) ha66& wa! 6art o0 con!i)eration
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+ '% term! o0 a*reement m4!t 1e certain otherwi!e 2oi)
ar466an Chett& 2 +4ah Thian "#"8B
eld 'greement to grant a lease at 345+ per
mont for as long as e li6ed was 7oid foruncertainty
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M4!t 1e comm4nicate) to o00eree
Ta&lor 2 Lair) -"$8 "$8 ER ",%'
T wa! en*a*e) to wor= on L3! !hi6. He threw 46 hi! o1
14t contin4e) to hel6 on !hi6 witho4t L3! =nowle)*e.
+hi6 reache) 6ort an) he claime) rem4neration.
Hel): T co4l) not claim 1eca4!e he )i) not comm4nicatehi! o00er an) L ha) no o66ort4nit& to acce6t hi! o00er.
+ 7 -" /comm4nication o0 6ro6o!al i! com6lete when it
come! to =nowle)*e o0 6er!on to whom it i!
ma)e3.
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O00er: )i!tin*4i!h
In2itation to treat attem6t to in)4ce o00er!(i!6la& o0 *oo)!
Fi!her 2 ?ell "#8%B
harmace4tical+ociet& o0 Great ?ritain 2 ?oot! Ca!h
Chemi!t! "#$,B
A)2erti!ement
Attem6t to in)4ce o00er!
artri)*e 2 Critten)en "#8BA)2erti!ement can !ometime! 1e o00er
Carlill 2 Car1olic +mo=e ?all Co "#'B
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(i!6la& o0 *oo)!
Fi!her 2 ?ell "#8"B
( eDhi1ite) 0lic= =ni0e in hi! !ho6 win)ow. ro!ec4te)
4n)er Re!triction o0 O00en!i2e Wea6on! Act "#$#
Hel): (i!6la& o0 *oo)! in !ho6 win)ow e2en with 6rice
ta* not an o00er 0or !ale 14t an in2itation to treat.
harmace4tical +ociet& o0 G? 2 ?oot! "#$'B
La)& 6ic=e) 46 controlle) me)icine 0rom ?oot!< a !ell
!er2ice !tore. ?oot! wa! 6ro!ec4te) 4n)er harmac& an)
oi!on! Act "#''. Hel): Me)icine! on )i!6la& merel& in2itation to treat onl&
when la)& too= *oo)! to chec= o4t ca!hier !he ma)e
an o00er< which 6harmaci!t at chec= o4t co4l) re04!e.
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A)2erti!ement in2itation to treat
artri)*e 2 Critten)en "#8B
a)2erti!e) 1ram1le0iinch coc=! an) hen! 0or !ale an) wa!
char*e) 0or o00erin* 0or !ale 4n)er rotection o0 ?ir)! Act "#$7.
Hel): when a)2erti!e) he wa! ma=in* in2itation to treat an)
when C re!6on)e) he wa! ma=in* an o00er. I0 3! a)2erti!ementwa! treate) a! o00er then he wo4l) him!el0 contract4all& 1o4n)
to !466l& to all who re!6on)e).
A)2erti!ement o00er
Carlill 2 Car1olic +mo=e ?all Co "#'B
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ometimes in7itation to treat can be oer
ar7ela $n7estment td 7 3oyal &rust Co ofCanada 1*89: 'C 20;
Owner in7ited two bidders for teir sares
and stated tey would accept igest oer#irst bidder submitted .
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Oer distinguised from supply of information
ar7ey 7 #acey =18*5: 'c ++2
telegraped # , >ill you sell us ?umper all@&elegrap lowest cas price # telegraped ,owest price for ?A B*00 telegraped # ,>e
agree to buy ?A for B*00 as6ed by you
eld %o contract # merely supplying informationon lowest price acceptable $t was wo made teoer wic was ne7er accepted by #
te7enson 7 4cean (1880) + ?! 5D9eld oeree could still accept oer e7en toug e
ad telegraped to oeror reEuesting informationon credit terms because it did not destroy oer
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Ten)er
In2itation to ten)er i! *enerall& an in2itation to treatan) 1i))er3! ten)er i! an o00er
In2itation to treat attem6t to in)4ce o00er!
Harri! 2 Nic=er!on -"9'
A4ction
In2itation to treat attem6t to in)4ce o00er!
a&ne 2 Ca2e -"9#
?riti!h Car A4ction! 2 Wri*ht "#9,B
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Harri! 2 Nic=er!on -"9'
A4ctioneer a)2erti!e) to hol) a4ction. Harri! tra2elle) toa4ction !ite to 0in) item ha) 1een with)rawn. He !4e) 0or
lo!! o0 eD6en!e! 1eca4!e Nic=er!on wa! in 1reach o0
contract 0or not hol)in* !ale.
Hel): a)2erti!ement o0 a4ction an in2itation to treat toin2ite o00er!.
?riti!h Car A4ction! 2 Wri*ht "#9,B
Hel): 1i) i! an o00er an) 1ecome! a contract when
a4ctioneer acce6t! it.Now in ! 7, +ale o0 Goo)! Act "#$9
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Termination o0 o00er
+ $ -" o00er ma& 1e re2o=e) at an& time 1e0orecomm4nication o0 it! acce6tance i!
com6lete
+ 8-a 1& comm4nication o0 notice o0 re2ocation
+ 8-1 1& la6!e o0 time + 8-c 1& 0ail4re o0 o00eree to 04l0ill con)ition
6rece)ent
+ 8-) 1& )eath or mental )i!or)er o0 o00eror i0
0act o0 )eath or mental )i!or)er come! to o00eree3! =nowle)*e 1e0ore acce6tance
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Cross-oer
- two identical oers wic crossed eacoter will not
conclude a contract because eac oer ismade in
ignorant of te oter&inn 7 oman F Co (18;5) 2* & 2;1
On 28 %o7 18;1 wrote to & to sell im800 tons of
iron at 9*s per ton On same day & wrote to to buy
800 tons of iron at same price etters
crossed in
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Counter-oer
- is a purported acceptance wic does not accept all te terms and conditions of te oerG it introduces
new terms and is treated as a new oer
yde >renc (18D0) 5 ?ea7 55D
! oered to sell is land to A for B1000 but A replied to buy for B*+0 ! refused to accept A later oered
to buy for B1000 ! refused
Court eld no contract made because As counter-
oer is a reHection of ! oer wic could not later beaccepted
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'cceptance
; $n order to con7ert an oer into a contract teacceptance
; (a) must be absolute and unEuali.ed
; (b) be e
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owe7er oeror cannot prescribe silence asa manner in wic it is to be accepted
#eltouse 7 ?indley =1892: 1D2 "3 105;
# wrote to is nepew oering to buy isorse adding ,if $ ear no more about im $
sall assume orse mine at BD0 ?indleyauctioneer sold orse by mista6e tougnepew told auctioneer to e
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Con!i)eration
+ ,8 a*reement ma)e witho4t con!i)eration i! 2oi)+ ,-) /when< at )e!ire o0 o00eror< o00eree or an&
other 6er!on ha! )one or )oe! !omethin* J3
A !ort o0 1ar*ain < >4i) 6ro >4o< !omethin* )one in
ret4rn or in eDchan*e 0or !omethin*
+ ,-) a!t con!i)eration i! 2ali) con!i)eration
A)e>4ac& o0 con!i)eration
ED6lanation , o0 + ,8
Con!ent o0 o00eror i! 0reel& *i2en i! not 2oi) merel&
1eca4!e con!i)eration i! ina)e>4ate
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EDec4tor& con!i)eration
Where a contract i! ma)e in ret4rn 0or an o00er< i.e.
m4t4al eDchan*e o0 a m4t4al 6romi!e!
Ill4!tration -a ! ,7 A3! 6romi!e to !ell the ho4!e i! the
con!i)eration 0or ?3! 6romi!e to 6a& K"%
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Con!i)eration m4!t 1e law04l
+ ,7 an a*reement o0 which the o1ect or con!i)eration i! 4nlaw04l i! 2oi)
+ ,7-a it i! 0or1i))en 1& law
+ ,7-1 it wo4l) )e0eat an& law
+ ,7-c it i! 0ra4)4lent
+ ,7-) it in2ol2e! or im6lie) in4r& to the 6er!on
or 6ro6ert& o0 another
+ ,7-e co4rt re*ar)! it a! immoral or o66o!e) to
641lic 6olic&
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?ilateral contract
M4t4al eDchan*e o0 6romi!e! 1etween 6artie!
Unilateral contract
There i! onl& a 6romi!e 1& the o00eror. The o00eree
ma=e! no 6romi!e. He 6er0orm! the act to concl4)e
the contract. U!4all& an o00er 0or 6er0ormance o0 act
e.*. Carlill 2 Car1olic +mo=e ?all Co "#'B
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a!t con!i)eration
A 6romi!e i! ma)e !41!e>4ent to an) in ret4rn 0or anact that ha! alrea)& 1een 6er0orme)
+ ,8 Ill4!tration -c A 0in)! ?3! 64r!e an) *i2e! it to
her. ? 6romi!e! to 6a& A K"%%. It i! a contract
e.*.e6on* ro!6ectin* Lt) + a*athe!an Or! 2 A
E +chmi)t Maorie +chmi)t "#8$B
A*reement 1& com6an& to 6a& +chmi)t a0ter it!incor6oration i! le*all& 1in)in*
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A)e>4ac& o0 con!i)eration+ ,8 ED6lanation ,
A*reement to which con!ent o0 o00eror i! 0reel& *i2en
i! not 2oi) merel& 1eca4!e con!i)eration i! ina)e>4ate
Tho4*h ina)e>4ac& o0 con!i)eration ma& 1e ta=en
into 1& co4rt in )eterminin* whether con!ent i! 0reel&
*i2en
e.*. han* +wee im 2 ?eh I Hoc= "#87B ML ''
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EDce6tion to *eneral r4le o0 con!i)eration+ ,8 a*reement witho4t con!i)eration i! 2oi)
EDce6tion
+ ,8-a a*reement ma)e 0or nat4ral lo2e an)
a00ection with con)ition! m4!t 1e ma)e in writin*4ali0& 1& law
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Tho4*h minor< can< 6ro2i)e)0or !cholar!hi6 or !=ill trainin* -Contract!
-Amen)ment Act "#98 0ollowin* Go2t o0
Mala&!ia 2 G4rcharan +in*h Or! "#9"B0or nece!!arie! Na!h 2 Inman "#%B wai!t
coat
In!4rance In!4rance Act "#8' -Re2. "#9, can
enter into contract 0or in!4rance 1elow "8 &r! 14t
with con!ent o0 6arent!*4ar)ian
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CERTAINT
Term! o0 contract m4!t 1e certain+ '% a*reement< meanin* o0 which i! not
certain< or ca6a1le o0 1ein* certain i! 2oi)
e.*. ar466an Chett& 2 +4ah Thian "#"8B
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RI;IT OF CONTRACT
Onl& 6artie! to contract can !4e or 1e !4e)Onl& 6artie! to contract ha2e ri*ht! an)
o1li*ation! 4n)er contract.
(4nlo6 ne4matic T&re 2 +el0ri)*e "#"$BAC79
( !ol) t&re! to + with 6rice re!triction< i0 !ol)
1elow 6rice wo4l) 6a& ( $ each t&re. + !ol) to
c4!tomer 1elow re!tricte) 6rice. ( !4e) +.
Hel): ( )i) not 6ro2i)e con!i)eration to + an) (
not 6art& to contract 1etween + an) c4!tomer.
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ac=!on 2 Horion Holi)a&! Lt) B"#9$B ' All ER #,
1o4*ht holi)a& 0or 0amil&. Holi)a& 0ell !hort o0 what ha)
1een 6romi!e). claime) )ama*e! 0or all.
Hel): entitle) to claim 0or him!el0 an) 0amil&. Famil& a!
1ene0iciarie! were entitle) to the claim.
Woo)ar In2e!tment 2 Wim6e& Con!tr4ction "#%B " All ER
$9"
Woo)ar contracte) to !ell lan) to Wim6e& 0or "$%
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TERM+ OF CONTRACT
Contract contain! term! an) con)ition! a*ree) 1&
6artie! to contract
Can 1e eD6re!! or im6lie)
ED6re!! Term!The!e are term! an) con)ition! a*ree) to in
writin* or orall& 1& 6artie!
Im6lie) Term!
artie! ma& not ha2e eD6re!!l& a*ree) to the
term! an) con)ition! 14t !tat4te 6ro2i)e! 0or each
term! an) con)ition! to 1e im6lie) into contract
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e.*. +ale o0 Goo)! Act "#$9
!eller ha! ri*ht to !ell -con)ition Hire 4rcha!e Act "#89
*oo)! !hall 1e o0 merchanta1le >4alit&
C4!tom< U!a*e an) Co4rtTerm!< tho4*h not eD6re!! !ometime! im6lie)
into contract
a!t (ealin*o64lar In)4!trie! 2 Ea!tern Garment
Man40act4rin* +)n ?h) "##B
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Co4rt
Co4rt im6lie! term! into 6artie!3 contract to *i2e
04ll e00ect to 6artie!3 intention an) 14!ine!!
e00icac&
on* Un* ai 2 Entin* "#8$B
Co4rt im6lie! into contract that !ale o0 tim1er
re>4ire licence. E entitle) to re04n)
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Con)ition
maor term or e!!ence o0 contracti0 1reache)< innocent 6art& can re64)iate an)
terminate contract an) claim )ama*e!
Warrant&minor term which i! collateral to main 64r6o!e o0
contract.
i0 1reache)< innocent 6art& cannot re64)iate or
terminate contract 14t onl& !ee= )ama*e!
e.*. A!!ociate) Metal +melter! Lt) 2 Tham Cheow
Toh "#9"B
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EPEMTIONEPCLU+ION CLAU+E+
Contract ma& contain eDcl4!ion cla4!e eDem6tin*or limitin* one 6art& 0rom lia1ilit& 0or 0a4lt )one
to another 6art&
+IGNE( AGREEMENT
I0 6artie! !i*ne) contract containin* eDcl4!ion
cla4!e! then the& are 1o4n)
e.*. L3E!tran*ee 2 F3Gra4co1 Lt) "#'7B
UN+IGNE(
(e6en) whether contract4al or noncontract4al
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Contract4al
M4!t *i2e rea!ona1le notice< e.*. !i*n1oar) whichi! clear an) 4nam1i*4o4!
e.*. Thom6!on 2 Lon)on< Mi)lan) an) +cotti!h
Railwa& Co
I0 4nam1i*4o4! contra 6ro0eren)4m r4le a66lie!
Timin* o0 notice
M4!t 1e *i2en 1e0ore contract ma)e
e.*. Thornton 2 +hoe Lane ar=in* Lt) "#9"B
Olle& 2 Marl1oro4*h Co4rt Lt) "#7#B
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rior )ealin*e.*.?almain New Ferr& Co 2 Ro1ert!on "#%8B
M4!t not 1e&on) 7 corner!
e.*.Co4ncil o0 Cit& o0 +&)ne& 2 We!t "#8$BNoncontract4al
M4!t 1rin* act4al notice to other 6art&
e.*. Ca4!er 2 ?rowne "#$,B
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Le*al< 2oi) an) 2oi)a1le contract
Le*al: ! ,-h CA
;oi): ! ,-* CA
! "% 4nlaw04l o1ect or con!i)eration
! "" a*reement 1& minor< 6er!on o0 4n!o4n) min)
! ," a*reement entere) into 4n)er mi!ta=e
!,8 witho4t con!i)eration
! '% a*reement meanin* o0 which i! 4ncertain
;oi)a1le: ! ,-i
! "$ coercion ! "8 4n)4e in0l4ence
! "9 0ra4)
! " mi!re6re!entation
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;OI(A?LE CONTRACT
+ ,-i an a*reement which i! en0orcea1le 1& law
at o6tion o0 one 14t not at o6tion o0 the other i! a
2oi)a1le contract
+ "% all a*reement! are contract! i0 the& are ma)e
1& 0ree con!ent o0 6artie! com6etent to contract 0or alaw04l con!i)eration an) with a law04l 64r6o!e are
not 2oi)
+ "#-" when con!ent to a*reement i! ca4!e) 1&coercion< 0ra4)< or mi!re6re!entation< a*reement i! a
contract 2oi)a1le at o6tion o0 6art& who!e con!ent
wa! !o ca4!e)
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+ "#-, a 6art& to a contract who!e con!ent wa!ca4!e) 1& 0ra4) or mi!re6re!entation ma&< i0 he
thin=! 0it< in!i!t that contract !hall 1e 6er0orme)
an) he !hall 1e 64t in 6o!ition in which he wo4l)
ha2e 1een a! i0 re6re!entation wa! tr4ee.*. A inten)in* to )ecei2e ?< 0al!el& re6re!ent!
hi! com6an& wa! ma=in* RM$ M a &ear an)
here1& in)4ce! ? to 14& com6an&. Contract i!2oi)a1le at o6tion o0 ?
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EDce6tion
I0 con!ent i! ca4!e) 1& mi!re6re!entation or 1&!ilence or 1& 0ra4)4lent act within ! "9 contract i!
not 2oi)a1le i0 6art& who!e con!ent i! !o ca4!e)
ha! meanin* o0 )i!co2erin* tr4th with or)inar&
)ili*ence
e.*. A< 1& mi!re6re!entation o0 ?< lea)! ?
erroneo4!l& to 1elie2e hi! com6an& i! ma=in*
RM$ M a &ear. ? eDamine! acco4nt an) )i!co2er!com6an& i! onl& ma=in* RM7 M a &ear. ? 1o4*ht
com6an&. Contract i! not 2oi)a1le
-
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Where contract i! 2oi)a1le a**rie2e) 6art& ha!
ri*ht to either contin4e with contract or re64)iate it
+ "7 con!ent i! !ai) to 1e 0ree when not ca4!e)
1&:
+ "$ coercion commit or threaten to commit
an& act 0or1i))en 1& law or 4nlaw04l )etainin* orthreaten to )etain an& 6ro6ert& to 6re4)ice o0 an&
6er!on
+ "8 4n)4e in0l4ence 6er!on in 6o!ition to)ominate will o0 the other 4!e that 6o!ition to
o1tain 4n0air a)2anta*e
-
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+ "9 0ra4) inten) to )ecei2e another 6er!on or
to in)4ce another to enter into contract
+ " mi!re6re!entation
-a 6o!iti2e a!!ertion which i! not tr4e 1&
6er!on tho4*h he 1elie2e! to 1e tr4e
-1 an& 1reach o0 )4t&< witho4t intention to
)ecei2e *i2e! an a)2anta*e to 6er!on committin*
it
-c ca4!in* howe2er innocentl& 6art& toa*reement to ma=e mi!ta=e a! to !41!tance o0
thin*
-
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(I+CHARGE OF CONTRACT
". 1& 6er0ormance
artie! ha2e 6er0orme) their o1li*ation! 4n)er the
contract
+ 7% i0 a 6art& re04!e! to 6er0orm or )i!a1le)
him!el0 0rom 6er0ormin* the other 6art& can 64t en)to contract
,. 1& a*reement
artie! ma& con!ent to m4t4all& a*ree to en)contract
+ 8' ! 87 6ro2i)e 0or to en) contract 1& con!ent
-
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'. 1& 0r4!tration
+ $9 -, contract 1ecome! im6o!!i1le or ille*al to
6er0orm !41!e>4ent to the ma=in* 1ecome! 2oi)4ita1le reme)&
In4nction i! an or)er 1& co4rt to )e0a4ltin* 6art&to !to6 )oin* an act
+6eci0ic 6er0ormance i! an or)er 1& co4rt to
)e0a4ltin* 6art& to 6er0orm contract a! a*ree)
+ "-" +6eci0ic Relie0 Act "#$% !tate! when
co4rt ma& *rant !6eci0ic 6er0ormance
Miti*ation
art& not in 1reach m4!t miti*ate hi! lo!!
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