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Law of Contracts
Law of Contracts
Malaysian contract law is governed by the Contract Act of 1950. Specific performance requires
that the parties have a valid contract in place. Contract conditions must be made clear. This is
crucial because equity cannot enforce a contract that is flawed or so vague that it leaves open
questions about what each side is required to perform. Because the court could order what the
parties never intended based on unclear wording, it would be unfair for the court to enforce
the terms of a contract. Contractual performance must be exact, precise, and in line with what
the parties pledged, according to contract law. According to Section 38(1) of the Contracts Act
of 1950, parties to a contract must carry out or offer to carry out their promises unless
prohibited by law. A contract is deemed legally binding when all six conditions are met.
a. Proposal or offer
b. Acceptance
c. Consideration
d. Intention to create legal relations
e. Capacity to contract
f. Free consent
Proposal or offer
If the law does not require that an offer be given in writing, it may be made either orally or in
writing. A clear declaration of intent or an overt action made by either party may serve as the
start of the contract. There is nothing more to it than what one person provides for another in
exchange for their pledge to carry out an action.. It cannot be vague or uncertain in any way. It
needs to be laid out in language that are clear and precise, such as the identification and nature
of the thing that is being offered, as well as the conditions and/or terms that it is being offered
under.
Acceptance
The contract is formed when one party accepts the other's offer. This acceptance cannot be
retracted, altered, or modified. Accepting makes a counteroffer. Though this varies by state,
there are no conditional legal acceptances. By accepting conditionally, the offeree rejects it. The
offerer can accept the offeree's conditions by act or word. Wang claimed in the newspaper that
Ngan was interested in collaborating on a development project she planned in Xi'an Quijiang,
China. Ngan offered Wang project collaboration. 26 February 2007: They inked a deal. Wang is
presumed to accept the offer after signing.
Consideration
Contract consideration can include money, a right, interest, profit, or an injury, loss, or duty.
Contracts demand consideration. Consideration must be agreed upon by the parties and the
terms of the contract. Any unintended benefits or downsides are meaningless. To support a
promise, consideration must be specific and sufficient. not pricey. Mutually binding agreements
are acceptable. Promises with conditions are valid. Contractual consideration is not enforceable
by law. Judges make decisions. Wang received RM13 million from Ngan in addition to a 25%
stake in CM Xi'an Qujiang Properties (M) Sdn Bhd. Director and VP will be Wang. Wang admires
Ngan's commitment.
All suggested terms and major components of any oral or written contract must be mutually
approved. Courts have found that all parties must intent to contract. This goal is based on the
parties' actions or comments, not their intentions. Simple negotiations to obtain a mutual
agreement or assent to a contract are not an offer and acceptance. Both parties must have
wanted to sign; neither can be misled. Contracts can be voided by fraud or error. Wang-Ngan is
commercial. Case law suggests Wang and Ngan are bound. No exclusion clause was included.
The contract binds both parties.
Capacity to contract
According to law, anyone can enter into a contract. To avoid a contract, one must present an
inability defense to the party responsible for upholding it. Every person who is of legal age, of
sound mind, and who is not forbidden from contracting by any legislation to which he is subject
is competent to contract, according to Section 11 of the Contracts Act of 1950. The contracting
partner must be fully grown and mentally capable. The legal age in Malaysia is 18. When they
signed, Wang and Ngan were older than 18. A person is of sound mind when entering into a
contract if they can comprehend it and make a reasoned decision about how it will affect their
interests, according to Section 12 (1) of the Contract Act of 1950. The agreement is lawful.
Free consent
Illegal or immoral contracts are unenforceable. Lotteries, dog races, horse races, and other
gambling-based contracts are banned in many areas. When contracting, parties must freely
consent. Section 10(1) states, "All agreements are contracts if concluded with the free assent of
competent parties." Section 14 requires free, uncoerced consent.
Damages are the main type of possible compensation for a contract breach. It is a common law
remedy that the unfortunate party is entitled to use. Damages are often meant to put the party
who suffered losses back in the same financial position they would have been in had the
contract been fully carried out. Equitable remedies (such specific performance and injunction)
may be awarded where monetary compensation alone is insufficient. Wang may pursue any
one of the following five remedies for contract breach:
I. Rescission of contract
II. Damages
III. Specific Performance
IV. Injunction
V. Quantum Meruit
Rescission of contract
According to contract law's Section 40, "the promise may put an end to the contract if a party
has refused to comply or rendered himself incapable of performing his promise in its entirety,
unless he has signified, by words or acts, his approval to its continuation." The opposite party
may terminate the agreement if either side fails to carry out their obligations.
Damages
According to Section 74 of the Contract Act of 1950, the party who didn't violate the contract
may be held liable for damages. The losses could be modest or substantial. If the innocent
person hasn't sustained any losses, nominal damages are granted. If an innocent party suffers a
loss due to another party's breach, substantial damages are given. An innocent party must
show distance and amount of financial damages to get a substantial sum of money
(measure).The party who violated the agreement is responsible for arguing that the other party
didn't go above and beyond to make up for his loss. The court may decide to impose this as a
just remedy.
Specific performance
A type of remedy that the court may award at its discretion is specific performance. It is a
section of the 1950 Specific Relief Act. It is a court order that directs a party to carry out the
terms of the agreement. It is typically only ordered when damages are insufficient. Generally
speaking, if a contract calls for continuous performance or supervision over a lengthy period of
time and the responsibilities are ambiguous, a court will not impose particular performance.
Because the contract is about results, not doing anything over time, and it typically specifies the
work that has to be done, specific performance is frequently necessary in building contracts.
Injunction
In Part III of the 1950 Specific Relief Act, injunction is called "Preventive Relief." The court
decides if the right thing to do is done or not. It is given when the claimant wants to stop the
defendant from breaking a negative contractual duty or wants to force the defendant to keep a
positive contractual promise and damages would not be enough to make up for the claimant's
loss (mandatory injunction). When deciding specific performance, the court will use the balance
of convenience test (weighing the benefit to the injured party and the detriment to the other
party). If a decree of particular performance couldn't order a party to do something, then an
injunction wouldn't be given.
Quasi-Meruit
It gives rise to obligations under common law, which are separate from obligations arising out
of a contract. It is a distinct subfield of the legal profession in its own right. It is possible to
pursue quasi-contractual remedies in certain circumstances, either as an alternative to a
remedy for breach of contract or in situations where there is no remedy for breach of contract.
HIRE PURCHASE
INTRODUCTION
All lease-to-own companies in Malaysia are subject to the Hire Purchase Act of 1967. The Hire
Purchase Act of 1967, which had already undergone a number of revisions, was based on the
Hire Purchase Act of 1960 in New South Wales, Australia. For each hire-purchase agreement,
the procedures for setting one up must be followed. In addition to limitations and warranties,
hire buy discusses the items' capacity to be sold and used. It also explains how the things can be
returned under a hire purchase arrangement as well as the renters' and landlord's legal rights.
Hire purchase agreement comprised products with an option to purchase and an agreement for
the purchase of goods by instalments (whether the agreement indicated instalments as rent or
otherwise), but not any agreement:
The Hire Purchase Act specifies that tenants don't own the goods until all instalments are paid.
The Act defines hirer as the person who takes goods from the owner under a hire purchase
agreement and to whom the tenant's rights or duties have been assigned or enforced. The
owner includes anyone to whom the owner's rights or responsibilities are transferred or
enforced by law. Samian Bin Sabin & Ors. The owner is a person who rents commodities (buses
in this case) under hire purchase agreements, including an assignor or by law.
If the instalment isn't paid, the owner can take back the goods. Tractor Malaysia v. Kumpulan
Pembinaan Malaysia Sdn.Bhd. Appealant and respondents rented a bulldozer. The appellant
was surprised when the respondent didn't pay the agreed-upon instalment. Respondents pay
overdue on the original instalment and get it back. Again, respondents didn't pay. Appellant
wants tray bulldozer tax, board, and compensation. Respondent denied because appellant and
respondents agreed to hire purchase. The court concluded that the appellant and respondent's
transaction is hire buy because ownership will only transfer upon full payment. If the
respondent doesn't pay in instalments, the appellant can repossess.
Section 9. (1)
Before the final payment is completed under a hire-purchase arrangement, the owner must
provide the hirer with a signed statement within 14 days of receiving a written request.
Once per quarter. The owner might decline similar requests more than once every three
months. The owner must comply within 14 days. If he doesn't comply "without reasonable
cause," the owner can't sue the hirer or recover the items, or any guaranteed contract tied to
the arrangement. If the default continues for a month, the owner is guilty of an infraction and
subject to an RM200 punishment.
Section 9. (2)
If subsection (1) isn't followed without good reason, the default persists.
Section 10
Regardless of any agreement to the contrary, a hirer who is required to pay the same owner
under two or more hire-purchase agreements has the right to demand that the owner
appropriate the amount so paid in or towards the satisfaction of the sum due under any one of
the agreements, as well as in or towards the sum due under the other agreements. When a
hirer signs multiple hire buys contracts with the same owner, this rule is applicable. when the
hirer's contribution to the total cost of the agreement is insufficient. The hirer's payment will be
used by the owner to finish any agreement, or if necessary, two or more agreements. The idea
is to give tenants who have multiple hire purchase agreements the option to split payments if
they are unable to pay the full amount due. This clause enables the hirer to ask the owner for
payment if they are able to.
Section 11
A Magistrate may, on the hirer's application, make an order approving the removal of the goods
to another place, which place shall be substituted for the place mentioned in the agreement,
where a hire-purchase agreement requires a hirer to keep the goods in his possession or
control at a particular place or not to remove them from a particular place.
Every hire purchase agreement specifies that the goods must be kept on site by the hirer. If the
hirer moves the items, it is a breach of contract, and the owner has the right to retrieve them. If
the tenant wishes to relocate the items to a different site than agreed upon, he must make an
application to the Court of Magistrates as stated in Section 10 of the Hire Purchase Act. The
renter may request that their belongings be transferred by a Magistrate. If the transfer is
approved by the Magistrate's Court, the new site will be the agreed-upon place.
Allows for the transfer of a tenant's rights, title, and interests under a hirer buy agreement with
the owner's consent or, in the event that consent is not given in a reasonable manner, without
consent.
In section 12(2),
A property owner is not permitted to demand anything other than what is expressly permitted
in this section in exchange for his consent as indicated in subsection (1). It is unreasonable
when a property owner demands payment or another favor in exchange for giving you
permission.
The hirer may apply to the High Court for a declaration that his consent to the assignment is
reasonably withheld and where the order made that consent must be classified as being
unreasonably withheld if the hirer requested in the hire purchase agreement that he not give
his consent to the tenant or his right, title, and interest. The owner may ask that any defaults be
remedied before giving the hirer's rights, title, and interest under a hire-buy contract.
1) 1) The assignee agrees with the owner to pay the outstanding payments and obey all
other terms and conditions of the regulated agreement for the balance of the term and
indemnifies the owner. The assignment must be signed and presented to the owner in a
way that doesn't influence the hirer's personal liability.
2) Pay reasonable stamping or registration costs for assignment agreement or
counterparts.
The hirer of a regulated arrangement has the right to ask the owner to assign his right, title, and
interest to a different party in writing. The assignment is subject to the assignee's agreement to
pay the owner the net balance due under the agreement and any reasonable expenses the
owner incurred. The owner may also request that all violations of the contract be corrected.
The owner should not demand payment or consideration for an assignment described in
paragraph A except as permitted in this section (1). If the owner fails or refuses to do so as
required by the agreement, the hirer may ask a court to issue an order compelling the owner to
assign his rights, titles, and interests under the regulated assignment.
5.0 His right, title, and interest passed through operation law
Section 13 described:
The right, title, and interest of a lessee under a hire-purchase agreement may pass to the
lessee's personal representative by operation of law. If the hirer is a corporation, the liquidator
has the same rights under the contract as the corporation. Nothing in this provision, however,
exempts a personal representative or liquidator from complying with the conditions of the
agreement. In the case of death or insolvency, the tenant's rights might be transferred to a
representative, trustee, or beneficiary by legal action. The hirer's right, title, and interest pass
to his heirs upon his death. If the hirer is a company, its right, title, and interest pass to the
liquidator. Personal representatives and liquidator must follow the agreement's conditions.
According to section 14(1), if the hirer has provided written notice to the owner of his intention
to do so on or before the designated day, he may finish the acquisition of the items by paying
or submitting the net balance owing under the agreement. In accordance with subsection (1),
the hirer buy agreement term fees are fixed rates when the original payable balance is less
than.
1) Any sum provided or paid for by the hirer or on their behalf pursuant to the Agreement.
2) The statutory term charge rebate.
3) The statutory insurance rebate will be paid if the hirer requests the cancellation of any
insurance contracts.
The outstanding amount financed, and term costs accrued up to the next due date of payment,
less any statutory insurance rebate, constitute the net balance payable when the term charges
are variable. The required insurance settlement if the hirer terminates an insurance agreement.
The hirer can use the rights given by this section at any time during the agreement or after the
owner has taken possession of the goods, as long as they pay the owner the net balance due
and reasonable costs (such as storage, repair, or maintenance costs) within 21 days of the
owner giving them a notice in the form shown in the Fifth Schedule (3).
The right to cancel at any time for the hirer. Returning the items to the owner at their place of
business or the location specified in the contract is how this is done during regular business
hours. The Act doesn't call for any kind of formal communication. The hirer must abide by any
protocol outlined in the contract. In Leong Weng Choon v. Consolidated Leasing (M) Sdn Bhd
[1998] 3 AMR 3133, the Court of Appeals decided that the sole way to terminate a lease early,
prior to the payment of all payments, is to return the items to the owner in accordance with
Section 15(1) of the Act. It allows the hirer to terminate the agreement.
References
Hire-Purchase Act 1967 (Revised 1978), Law of Malaysia Act 212 Hirer-purchased Act 1967
(January1,2006) :http://www.commonlii.org/my/legis/consol_act/ha19671978215/ (accessed
October 1, 2014).
Hirer Purchase Act. (n.d.). Retrieved November 9, 2014, from Hirer Purchase Act:
http://www.mti.gov.sg/MTIInsights/Documents/app.mti.gov.sg/data/article/23763/doc/Annex
%20D%20-%20Proposed%20Amendments%20to%20HPA.pdf
Lee, M .P, and Ivan , J . D , Business Law : Statutory Right of Hirer. New York : Oxford University
Press , 2009 .
Mumtaz Hassan, Khuzaimah Mat Salleh, Zuryati Mohamed Yusoff. (2003). Undang-Undang
Perniagaan Di Malaysia. Malaysia: UUM-COLGIS.
Pheng, L. M, and Ivan J. D. Business Law: Statutory right of hirer’s; To have his right, tittle and
interest passed on by operation law. New York: Oxford University Press, 2009
Salleh Buang , Malaysian Law on Hire Purchase : Termination of Hire Purchase Agreement.
Selangor : Sweet & Maxwell , 2001 .
Scribd. (n.d.). Hire Purchase -DBF. Retrieved November 9, 2014, from Scribc:
https://www.scribd.com/doc/87422129/Hire-Purchase-DBF
The Commissioner of Law Revision, M. (2013, March 1). Hire Purchase Act 1967. Retrieved
November 9, 2014, from Law of Malaysia: http://www.agc.gov.my/Akta/Vol.%205/Act
%20212.pdf
1. [2003] 5 MLJ 403 Arab-Malaysian Finance Bhd v Samian Bin Sabin & Anor.
2. [1979] 1 MLJ 129 Tractor Malaysia Bhd v Kumpulan Pembinaan Malaysia Sdn.Bhd
3. [1967] 1 MLJ 83 Credit Corp. (M) Bhd v Industrial Finance Corp & others
4. In Wong Ai Sung v Orix Credit Malaysia Sdn Bhd, [2007] 5 MLJ 39;.
5. Hire-purchased 1967(revised 1978) , Law of Malaysia reprint Act 212 Hire-purchase Act
1967, http://www.commonlii.org/my/legis/consol_act/ha19671978215/ (accessed
October 1,2014)
6. Hire-purchased Act 1967(Revised 1978) Law of Malaysia reprint Act 212 Hire-purchase
Act 1967, http://www.commonlii.org/my/legis/consol_act/ha19671978215/ (accessed
October 1, 2014)
7. Section 12(2) Hire Purchase Act
8. Section 12(3) Hire Purchase Act
9. (The Commissioner of Law Revision, 2013)
10. L. M. Pheng and Ivan J. D, Business Law: Statutory right of hirer’s; To have his right,
tittle and interest passed on by operation law(New York: Oxford University Press, 2009),
372.
11. (The Commissioner of Law Revision, 2013)
12. Salleh Buang , Malaysia Law on Hire Purchase : Termination of Hirer Agreement
( Petaling Jaya : Sweet & Maxwell Asia , 2001) , 30