week 4 ; subtopic 3 tppt.ppt

8/16/2019 WEEK 4 ; subtopic 3 tppt.ppt

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RANACO EDUCATION & TRAINING

INSTITUTE

LAW 243 COMMERCIAL LAW

SUBTOPIC 3:

FREE CONSENT


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INSTITUTE


1.3 Free consent

• The law requires that parties enter into contracts with

their full and free consent. The contract is vitiated

for lack of consent. The burden of proving lack of consent

normally lies on the person seeking to rescind the

contract.

• S 10 CA 1950 provides that all agreements are

contracts if they are made by free consent of parties.

Source: Lee Mei Pheng !van "eron #etta$ %ommercial law$ &'ford (a)ar$ *+,,.


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INSTITUTE


%&-T!-/

S 14 CA 1950: consent is said to be free when it is not caused

by one or more of the following:

,.%oercion

*.ndue influence

0. (raud

1. Misrepresentation

2. Mistake

Source: %ontract 3ct ,42+. 3


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INSTITUTE


Voidable contract is defined in

Section 2(i) of Contracts Act, 1950 as an agreement which is

enforceable by law at the option

of one or more parties but

not at the option of other or others.

%&-T!-/

Voidable Void

Lack of consent?

Section 2(g) of Contracts Act, 1950

Defines void contractas an agreement which

is not enforceable by law.

It gives rise to no

rights or obligations.

Source: %ontract 3ct ,42+.


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6/25


INSTITUTE


%&-T!-/

• The effect of coercion is that the agreement is a contract

voidable:5

S. 19$1% CA 1950 provides that when consent to an agreement

is caused by coercion$ fraud or misrepresentation$ the

agreement is a contract voidable at the option of the partywhose consent was so caused.

Source: %ontract 3ct ,42+. 6


7/25


INSTITUTE


%&-T!-/

Teck Guan Trading Sdn Bhd v. Hydrotek Engineering Sdn Bhd

[1996]

The defendant argued that the plaintiffM ,$,?+ amounted to an unlawful detention

of property in order to get the first defendant to agree to the

price of >M ,$*11. The )udge held that the plaintiff


8/25


INSTITUTE


&. UN'UE INF(UENCE

• S.1)$1% CA 1950:5 !nfluence by one of dominant position

5 to obtain unfair advantage

Malaysian rench Bank v !"dullah "in Mohd #usu$ [1991]

!t was held that in order to establish undue influence$ the

defendants had to prove that the plaintiff was in a position to

dominate their will and thus obtained an unfair advantage by

using that position. 3 plea of undue influence can only beraised by a party to the contract and not by a third party.

Sources: Lee Mei Pheng !van "eron #etta$ %ommercial law$ &'ford (a)ar$ *+,,= %ontract 3ct ,42+.

8


9/25


INSTITUTE


%&-T!-/

• S. 1)$&% CA 1950: 3 party deem to be in a position to

dominate the will of another where one party @

a. Aolds a real or apparent authority over the other

b. Stands in fiduciary relation over the other

c. Makes a contract with a person whose mental capacity


9


10/25


INSTITUTE


%&-T!-/

%nche &oriah v. Shaikh !llie "in '(ar [19)9]

3 Malay woman$ who was of great age and wholly illiterate$ e'ecuted a

contract in which she agreed to transfer her property in form of land as a

gift to her nephew BrespondentC. The court found that she was feeble old

woman$ unable to leave the house$ relying entirely upon the respondent for

everything$ even for her food and clothes and leaving the management

affairs to him. She had no knowledge of her own affairs or to the value of

her property. #ispute arose between the parties and the appellant wished to

set aside the contract. Aeld: the court set aside the gift made to him on the

basis of undue influence. The respondent was deemed in a position todominate the will of the appellant whose mental capacity was permanently

affected by reason of age and bodily distress.

Source: Syed 3hmad 3lsagoff$ Principles of the law of contract in Malaysia$ Le'is -e'is$ *++2.

10


11/25


INSTITUTE


%&-T!-/

• The effect of undue influence is that the agreement is acontract voidable:5

S. &0 CA 1950 provides that when consent to an agreement is

caused by undue influence the agreement is a contractvoidable at the option of the party whose consent was so

caused.

Source: Law of %ontract ,42+. 11


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INSTITUTE


3. FRAU'

• S. 1* CA 1950 %ertain acts which are committed with intent toinduce another party to enter into a contract.

• !n other words$ act done with the intention to deceive.

• (raud includes any of the following acts:

a. the suggestion$ as to a fact$ of that which is not true byone who does not believe it to be true.

b. the active concealment of a fact by one havingknowledge or belief of the fact.

c. a promise made without any intention of performing it.

d. any other act fitted to deceive and

e. any such act or omission as the law specially declares to befraudulent.


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13/25


INSTITUTE


%&-T!-/

• The effect of fraud is that the agreement is a contract voidable:5

S. 19$1% CA 1950 provides that when consent to an agreement

is caused by coercion$ fraud or misrepresentation$ the

agreement is a contract voidable at the option of the party

whose consent was so caused.

• Mere silence as to facts likely to affect the willingness of a

person to enter into a contract is not fraud$ unless the

circumstances of the case are such that$ regard being had tothem$ it is the duty of the person keeping silence to speak$ or

unless his silence is$ in itself$ equivalent to speech.


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14/25


INSTITUTE


%&-T!-/

*e"er v. Bro+n

The respondent sued the appellant for damages in respect of an

alleged false and fraudulent misrepresentation relating to the

number of rubber trees on an estate. Aeld: The appellant


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INSTITUTE


4. +ISREPRESENTATION

• 3 misrepresentation is a false statement of e'isting or past fact

made by one party$ before or at the time of making thecontract$ addressed to the other party to the contract$ and the

maker of the statement believes that what he said is true.

• S. 1, CA 1950 misrepresentation includes:

a. a person makes positive assertion$ of that which is not

true$ though he believes it to be true.

b. any breach of duty which is made without intention to

deceive

c. causing$ however innocently$ a party to an agreement to

make a mistake as to the substance of the thing which is

the sub)ect of the agreement.

Source: Syed 3hmad 3lsagoff$ Principles of the law of contract in Malaysia$ Le'is -e'is$ *++2= %ontract 3ct ,42+.

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INSTITUTE


%&-T!-/

• The basic different between misrepresentation and fraud is that

in fraud the person making the representation does not himself

believe in its truth whereas$ in cases of misrepresentation$ he

may believe the representation to be true.

Misrepresentation elieves what he said is true

!raud "nows what he said is lie


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17/25


INSTITUTE


%&-T!-/

• S. 19$1% CA 1950 provides that when consent to an agreement is caused by

coercion$ fraud or misrepresentation$ the agreement is a contract voidable at

the option of the party whose consent was so caused.

Bisset v. *ilkinson [19),]

The respondent agreed to buy from the appellant certain land for sheep

farming. The respondent relied on the appellant


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INSTITUTE


5. +ISTA-E

• S. &1 CA 1950 provides when both parties to an agreement are

under a mistake as to a matter of fact essential to the agreement$the agreement is void.

• /lements of mistake:

,. it must be mistake of both parties*. there must be a mistake as to a matter of fact essentialto the agreement.

• /'ample: 3 agrees to buy a certain cow. !t turns out that thecow was dead at the time of the transaction$ though neither partywas aware of the fact. The agreement is void.


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19/25


INSTITUTE


%&-T!-/

Gallo+ay v. Gallo+ay -191/

3 separation deed between a man and a woman was declared a

nullity because it was made on the mistaken assumption that

they were in fact married to each other.


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20/25


INSTITUTE


UI/

,. 8hen there is consent but it is not free Bi.e. when it is caused

by coercion or undue influence or fraud ormisrepresentationC$ the contract is usually void at the optionof the party whose consent was so caused BTrue6(alseC

*. 3 farmer agrees to supply ,++kg potato that will be produced by him out of his field$ after three month. Twomonths has been lapsed$ but the farmer neither implantseeds$ nor does cultivation. This is case of:

a. mistake

b. fraud

c. undue influence

d. coercion

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21/25


INSTITUTE


%&-T!-/

0. Silence amounts to fraud BTrue6(alseC

1. D threatens to kill E if he does not sell his house for >s.

,$++$+++ to D. E sells his house to D and receives the

payments. Aere$ EFs consent has been obtained byGGGG.

Aence$ this contract is GGGG at the option of G.a. fraud$ voidable$ y

b. coercion$ void$ '

c. coercion$ voidable$ y

d. mistake$ voidable$ y

2. !f the consent of either of the parties is not free the

agreement cannot become a contract BTrue6(alseC21



22/25


INSTITUTE


%&-T!-/

H. 3 compels to enter into a contract on the point of pistol. This is case

of:

a. mistake

b. coercion

c. undue influence

d. fraud

I. 8hich &-/ of the following statements regarding undue influence is

not true. 3 party deem to be in a position to dominate the will of another

where one party @

a. Aolds a real or apparent authority over the other

b. Stands in fiduciary relation over the other

c. %ontract makes in writing

d. Makes a contract with a person whose mental capacity

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23/25


INSTITUTE


%&-T!-/

?. ( having advanced money to his son during his minority$ upon Fs comingof age obtains by misuse of parental influence$ a bond from for a greateramount than the sum advanced. ( employsGGGGGGG.

a. undue influence

b. mistake

c. fraud

d. coercion

4. My land produces ,* tons of rice. 3 believes the statement to be trueMy land produces ,* tons of rice. 3 believes the statement to be truealthough he did not have sufficient grounds for the belief. Later on italthough he did not have sufficient grounds for the belief. Later on ittranspires that the land does not produce ,* tons of rice. This isGGGGGGGG.transpires that the land does not produce ,* tons of rice. This isGGGGGGGG.

a. misrepresentation

b. mistake

c. fraudd. coercion

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24/25


INSTITUTE


%&-T!-/

,+. M agrees to buy from - a certain horse. !t turns out that

the horse was dead at the time of the bargain

though neither party was aware of the fact. The agreement is

voidable BTrue6(alseC

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25/25

INSTITUTE


En o s2toc 3 2ner c!"ter &: l"# o

contr"ct.

Ans#er "ll t!e 2estons ro6e "o6e "n t!en

rocee #t! ne7t s2tocs 2ner c!"ter &.T!"n8 o2

week 4 ; subtopic 3 tppt.ppt

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