CHARLES GRENIER SDN BHD v LAU WING HO.

Held, dismissing the appeal:

1 (1)
An agreement to make an agreement does not result in a contract. It is for the court
in each case to construe the correspondence exchanged between the parties and to
say whether that is the result intended by the parties. If the court reaches an opposite
conclusion, then there is an enforceable contract (see p 335C).
2

(2)
The law leans in favour of upholding bargains and not in striking them down (see p
335E-F); Hillas & Co v Arcos Ltd [1932] All ER Rep 494 followed.

(3)
The court had examined the two letters that passed between the parties, and was
unable to find that the parties intended that there should be no concluded contract
until a formal sale and purchase agreement had been executed by them. On the
contrary, the court found their objective intention to be travelling in quite the
opposite direction. They had identified the parties to the transaction, the property, the
price and the terms they considered essential with sufficient clarity. Such an
agreement was termed an 'open contract'. It was enforceable as if it was embodied in
a document with all the attendant solemnity. In order to give it effect, the law will,
acting out of necessity, imply terms into the contract for sale in order to make it work
(see pp 335I and 336A-C); Liverpool City Council v Irwin [1977] AC 239 and
Rojasara Ramjibhai Dahyabhai v Jani Narottamdas Lallubhai [1986] 3 SCC 300
followed.

(4)
The phrase 'subject to the sale and purchase agreement' relied on by the vendor did
not point to an intention that no contract was to come into existence until a formal
sale and purchase agreement had been prepared and executed. Rather, it was, when
read in the context of the correspondence and the objective aim of the transaction,
indicative of an intention to merely formalize the agreement already concluded
between the parties (see p 336E).
1996 3 MLJ 327 at 329

(5)
Since the injunction came after the contract between the vendor and the purchaser
had been made, it had no effect upon the transaction that had already been
concluded. Further, there was material in the record provided that reasonably
supported the inference that the purchaser was really an innocent party who had
entered into a contract with the vendor without any notice whatsoever of the alleged
transaction on the basis of which the injunction was obtained. In these
circumstances, there was no impediment to an application by the vendor to have the
injunction dissolved so that the sale to the purchaser may be proceeded without any
further delay (see p 336G).

KAM MAH THEATRE SDN BHD v TAN LAY SOO.

Held, allowing the appeal:
6 (1)
There was no contract at all, because the said document was dependent on the
signing of a formal contract to be further negotiated and approved by both parties.
The proviso in the said document was very similar to the phrase or formula of
'subject to contract'. There need not be the very words of the said formula in order to
have the usual effect arising from the use of such formula.
1994 1 MLJ 108 at 109
7

(2)
The words 'usual terms and conditions' failed to reveal certainty and were too
ambiguous. What would be the usual terms and conditions remained largely a matter
of conjecture, thus the words would create uncertainty unless a contract containing
these agreed 'usual terms and conditions' had been signed by the parties.

(3)
It is settled that the formula of 'subject to contract' gives rise to a strong presumption
of the necessity of a further formal contract and it requires cogent evidence to
displace this strong presumption. On the facts of this case, there was
compelling/cogent evidence to show that negotiations were still ongoing between the
parties, including: (i) the provision of the return of the deposit on the failure of the
parties signing the contract by 18 March 1989; (ii) the agreement which was signed
by the plaintiff only, containing two more conditions; (iii) there could have been a
further amended draft of the ultimate agreement to take account of withdrawal of the
compulsory acquisition over part of the land; and (iv) the correspondence after the
date of the said document.

(4)
Evidence of surrounding circumstances, background and negotiations between
parties is admissible and relevant to show that there was no contract or concluded
and binding agreement at all, for ss 91 and 92 of the Evidence Act 1950 merely
strike at evidence to contradict, vary, etc, the terms of an established contract, for in
that event, such evidence would be unacceptable. Correspondence that passed after
the date of the said document was relevant also, for in finding whether there was any
contract at all, the court must look at the correspondence as a whole.

10 (5)
The sum of RM2.48m, paid by the respondent to the chargee, was to be refunded by
the appellant to the respondent, with interest at 6.5%pa thereon from the date of the
respondent's payment of the same to the date of repayment to the respondent, and
costs of the appeal and in the court below were awarded to the appellant.