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Question 1

The common law rule of nemo dat quod non nabet, literally means one cannot give what he
has not.It means that a seller of goods cannot give the buyer thereof a better title than he
himself has in the goods.This rule was developed by the common law to protect the interests
of the true owners of goods The rule is now embodies in section 23 (1) of the Sale of Goods
Act Cap 31, which provide "inter alia.where goods are sold by a person who is not the owner
thereof and who does not sell them under the authority or with consent of the owner, the
buyer acquires no better title than the seller had.

nemo dat quod non habet rule as explained previously, simply means that the buyer of the
goods does not acquire the title of the goods if they are bought from a person who is not the
owner of the goods or does not have authority from the owner to sell the goods. This rule
seeks to protect the right of ownership, and therefore the sellers’ interest. The rule is
illustrated in Ng Ngat Siang v. Arab-Malaysian Finance Bhd. @ Anor.

Ng Ngat Siang v. Arab-Malaysian Finance Bhd. @ Anor. (1988) 3 M.L.J.319

Facts: The plaintiff bought a car from the second defendant. To affect the transfer of
ownership of the car into the plaintiff’s name, the second defendant had to pay off MUI
Finance from whom he had earlier obtained a hire-purchase facility. For this purpose, the
second defendant retained the registration card. After obtaining the cancellation of
endorsement of MUI’s ownership, the second defendant sold the car to B whose purchase
was financed by the first defendant. The first defendant endorsed its ownership claim on the
registration card. The plaintiff applied to the court to determine whether or not the first
defendant had a better title to the car.

Held: allowing the application :

After a full payment was made by the second defendant to MUI Finance and MUI Finance
had relinquished all rights to ownership over the car, the plaintiff had acquired ownership to
the car and the second defendant’s further dealings on the car with the first defendant are
therefore illegal. To that end, the first defendant acquired no title or interest over the car
when they purchased it and their only remedy, if any, is against the second defendant
personally for the return of the purchase price but as against the plaintiff they cannot claim
any right ownership over the car.

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Analysis of the sale of goods law Formation of the contract

The Subject matter of the contract involves the following areas. It may involve goods or
service that are presently available or goods that may be available in the future. There may be
a contract that depends upon a condition set be the seller which may or may not occur.
Whenever the seller attempts to create a contract on the present sale of future goods this
contract operates as an agreement to sell the goods this contract then lawfully becomes an
agreement between the two parties to sell the goods becomes null.

It should also be noted that under the sale of goods law Section 7 if the goods before a set
contract deteriorated or come under so much harm the good no longer becomes fit for its
intended purpose without the knowledge of the seller. Noted in Section 8 an agreement will
be voided if the goods are marred after an agreement but before the sale the agreement. This
will still be the case even if the is done so without the knowledge of the seller and the buyer.

Under the subject matter of price is section 9.1 the price may be set accordingly by the
contract, may be set under agreed conditions or may be set pertaining to the dealings between
both the buyer and the seller. As state in section 9.2 if there is if no price is decided upon a
reasonable price might be charged but this will set not to any standard but according to every
single particular individual case.

When dealing with an agreement to sell under valuation according to section 10 (1) if the
value which had been agreed to be determined by a third party, if that third party fails to
commit such an act the contract is becomes voided. If however the goods manage to be
delivered the buyer is subjected to pay a reasonable price. According to section to section 10
(2) if one if the parties is at fault for the inability for the third party to decide on the price the
party not in fault may maintain a suit to claim damages.

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Question 2
An agreement can only result in a binding contract if the parties consent freely and genuinely
to its terms. As the court explained in Adeola v. Henry Stephens & Sons Ltd., a contract is
essentially an expression of the free-will of the parties, not an imposition or, something
obtained through trickery or fraud. The parties' negotiations must result in a genuine
consensus ad idem (a meeting of the minds), or no binding contract can arise.

VITIATING FACTORS:
These are factors Which operate to nullify or negate the consent which parties appear to have
bestowed on a contract. The four factors which vitiate a contract are as follows:
1. Duress,
2. Undue influence,
3. Misrepresentation, and
4. Mistake.

Each of these vitiating factors affect a contract differently. Some may render an agreement
totally void, while others only make it voidable, unenforceable, or just illegal

DURESS
Duress arises when a party is induced to enter into a contract by force or the threat of force.
In this event, consent is not freely given and hence such contracts are voidable at the option
of the party under coercion.

In Cummings v. Ince, an eighty-year old lady was threatened that she would be confined
unlawfully to a mental asylum if she refused to sign a document transferring some of her
property to a relative. Held: her consent to the transfer was vitiated by duress.

Legal Effect of Duress:


It is generally agreed that the effect of duress is to make the agreement voidable. The party
concerned can have it set aside if he wishes. If he does not do that but acts on it voluntarily,
he will be bound by the agreement.

UNDUE INFLUENCE (unwritten)


Undue influence arises if excessive authority or pressure brought to bear on a party to such

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extent that his free will is completely overcome by the other party's. Undue influence vitiates
consent because it renders a party incapable of acting as a free agent. Almost all cases of
undue influence arise because a party who has authority or power over another, uses this
power wrongfully to exert his consent to agreement.

Proof of Undue Influence


The following approaches or methods are possible:

(a) Agreements between specially related parties:


If a special (fiduciary relationship exists between the parties so that one can unduly control
the mind of the other, their agreement shall be presumed to be vitiated by undue influence
once the allegation is made. The following parties are linked by special/fiduciary relationship
at law:

(i) Solicitor and client,


(ii) Priest or spiritual adviser and disciple,
(iii) Parent and child.
(iv) Trustee and beneficiary,
(v) Doctor and patient,
(vi) Guardian and ward,
(vii) Husband and wife.
The list however is not exhaustive. The test is whether opportunity for unconscientious use of
one's authority over another exists or not Whenever undue influence is alleged and presumed
in cases like these the other party can refute or rebut the presumption by proving that the
complainant obtained independent (legal) advice before he entered into the disputed
agreement.
It is necessary too to prove that the adviser had all relevant information about the agreement
to enable him give independent advice. In Taylor v. Brewer (1813) 1 M & S. 290, a woman
challenged an agreement under which she had transferred some of her property to her father.
It was held that her consent was vitiated by undue influence since her father also acted as her
solicitor in the transaction and he had not proved that the lady obtained independent advice
before she consented to the transfer.

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(b) Agreements where parties are not specially related:
In such cases, no presumption of undue influence arises. Rather the party making the
allegation has to provide evidence to show that undue influence exists in fact. This can be
done, for example, by showing that the other party had obtained some authority over the
plaintiff which he had used unconscientiously to obtain his consent to the agreement. In
Hodgson v. Mark, an elderly lady transferred her house to her lodger and allowed him to
manage her affairs. He later sold the house. Held: undue influence was to be presumed from
the relationship and the benefits obtained by the lodger.

Legal Effect of Undue Influence:


Undue influence makes an agreement voidable. The person unduly influenced can have the
agreement set aside if he acts in good time, and does nothing to show that he has
subsequently affirmed the agreement. Again, the agreement should be avoided before
innocent third parties become affected or involved.

MISREPRESENTATION
Misrepresentation is another important factor whose presence vitiates consent and prevents
an agreement from becoming a binding contract.
Definition: Misrepresentation consists of untrue statements, relating to some existing facts, or
past events, made by a party to induce the other party to enter into an agreement. From the
definition, the features of misrepresentation are as follows:-

(a) Misrepresentation takes the form of an untrue statement:


There must be evidence that an untrue statement was made (either in writing, verbally, or by
conduct). For the general rule is that silence does not constitute misrepresentation. The
exceptions to this rule or the situations in which silence may amount to misrepresentation are
as follows:

(i) Contracts uberrima fidei - These are contracts like insurance and
Partnership which are based on utmost good faith. Parties are obliged
to volunteer all material information to each other. Non-disclosure
may therefore amount to misrepresentation and make the agreement
voidable.

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(ii) If a true statement made in the course of the negotiations subsequently becomes false,
failure to inform the other party before the agreement is finalized may amount to
misrepresentation.
(iii) When silence distorts and makes a representation untrue, i.e. half-truths.
In R. v. Kylsant (1932) 1 K.B. 442, for example, a company issued a prospectus offering
shares for subscription and stated that it had paid dividends throughout the preceding five
years. It omitted to disclose that dividend was rather paid from extra-ordinary items. The
court held that this omission amounted to misrepresentation since it gave the wrong
impression that the company had made profits throughout the period.
(b) The untrue statement must be made before or at the' time of. Making the contract: The
purpose of making representations is to persuade a reluctant party to contract. These
representations may be incorporated into the agreement itself if the parties want. If that
happens, the representations become terms of the contract. If incorporated as a part of the
terms of the agreement, it affords a party extra protection since the other party thereby
contracts or warrants that the representations are true, and may be sued for breach of contract
if they turn out to be untrue.
(c) A statement of opinion, intention or about the law does not amount to misrepresentation:
If a party gives an opinion, i.e. he states beliefs which are based on grounds that cannot be
subjected to any proof, he cannot be liable for misrepresentation. To advertise a product as
"the best of its kind in the world" is regarded as mere puffery. Since every salesman is
entitled to "puff-up" h is products to attract customers, he is entitled to state his opinion and
commend the virtues of his wares. This right is expressed in the Latin maxim simplex
commendation non obligate (mere commendation creates no obligations). On the basis of this
maxim, it was held in Scott v. Hanson that it is not misrepresentation to describe one's land as
"uncommonly rich"

Types and Consequences of Misrepresentation


Misrepresentation may be described as either innocent, negligent or fraudulent. Each attracts
different legal consequences.

1. Innocent Misrepresentation:
This arises if a party makes untrue representations without being aware that the statements
are false. At common law, no remedy for damages existed unless the untrue statement had

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been incorporated into the terms of the contract. The injured party can only apply for
rescission of the contract, i.e. for the contract to be set aside, and all benefits obtained under
the agreement restored to their owners.

2. Negligent Misrepresentation:
These are untrue statements made because the maker failed to exercise reasonable care. The
position that such untrue statements are actionable was adopted by the House of Lords in the
important case of Hedley Byrne & Co. Ltd. v. Heller. & Partners Ltd (1964) A.C. 465. The
effect of this rule is that one is liable to pay for losses arising from his failure to exercise
reasonable care in making statements that he knows that other parties will rely on to decide
whether to contract or not. A party can only sue for damages for negligent misrepresentation
if he can prove that he has relied on the statements and suffered damage as a result.

3. Fraudulent Misrepresentation: As defined in Derry v. Peek (1889) 14 App. Cas. 337,


fraudulent misrepresentation consists of untrue statements that are made
(a) Knowing that they are untrue, or
(b) Believing that they are untrue, or
(c) Made recklessly, without caring whether they are true or not.
Fraudulent misrepresentation is the worst case of securing consent to agreements falsely.
Consequently, the party who is misled into an agreement by fraudulent misrepresentation has
the right either:
(i) To rescind the contract if it is possible to restore the parties to their pre-contractual
positions, or
(ii) To affirm the contract but still sue for damages for the tort of deceit.

All agreements obtained by fraudulent misrepresentation are voidable. The deceived party
may therefore repudiate the agreement, and, if sued, plead the other's fraud as his defence.

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MISTAKE (written)
The term mistake is used in contract law to describe the situation in which one or both parties
to an agreement acted under an untrue belief about the existence or non-existence of a
material fact. In at least four situations, mistake as a vitiating factor, may make an agreement
void and incapable of being enforced as a valid contract. These are cases of res extincta, res
sua, non est factum and a unilateral mistake about the identity of a party. Apart from these
four cases, the general rule is that the mistake of a party does not affect the validity of a
contract.

TYPES OF MISTAKE
Mistake may be one of these three types, namely, common mistake, mutual mistake and
unilateral mistake.

Common Mistake
A common mistake occurs where both parties are suffering from the same handicap. For
example, contracts to sell corn to B and unknown to both parties, the corn have perished
before the contract was made. The above example is a mistake concerning the existence of
the subject matter of the contract.

Mutual Mistake
Mutual mistake occurs where the parties have negotiated at cross-purposes. For example, A
agrees to sell his horse to B, A is thinking of his white horse and B is thinking of A’s black
horse. This is a mistake concerning the identity of the subject matter of the contract.

Unilateral Mistake
Unilateral mistake occurs where one party only is mistaken, and the other party knows or is
deemed to know about the mistake. For example, A makes an offer to B only; C accepts the
offer, knowing full well that the offer was made to B only. A thinks mistakenly that the
acceptance was made by B. This is a mistake as to the identity of the other contracting party.

Legal Effect of Mistake


Though "to err is human", the law does not accept that once a party makes a mistake, he
should be forgiven and released from his obligations. The following kinds of mistake do not

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generally an agreement:

(a) Where a party makes a mistake about his legal rights and powers. For the general rule
affirmed in Agbaje v. Bankole "ignorance of the law is no excuse" (ignoratio juri excusat).
Everybody is presumed to know his or her legal rights.

(b) A mistake as to the true value, quality or characteristic of something contracted for will
usually not affect the agreement. Parties are normally held bound by the contract because rule
that parties must protect their own interest, i.e. caveat emptor (buyer must beware).

Laymen are prone to believe as a result, that the law is harsh on parties who made genuine
mistakes. However, the common law and equity have accepted some situations in which
some genuine errors on the part of one or both parties may render the contract, if any, void
and of no effect.

The four situations in which mistake may make an agreement void are as follows:
1. RES EXTINCTA:
Where both parties make a common mistake about the existence of the subject matter of the
agreement, the agreement is void. For example, in Couturier v. Hastie (1856) 5 H.L.C. 673,
the parties who were in Britain were not aware that the cargo of maize they had contracted
for had been sold already in Spain by the shipmaster because it was going bad before the
contract was signed. Held: no contract.

An insurer may also mistakenly agree to insure the life of somebody without
the customer/proposer or the insurer knowing that the person to be insured had already died
as in Srickland v. Turner (1852) 7 Exch. 208. These examples are cases where the goods or
subject matter of the agreement had ceased to exist before the agreement was entered into.

2. RES SUA:
If a party mistakenly buys what belongs to him, there is no contract. In Abraham v. Oluwa
(1944) 7 NLR 123, for example, neither the seller nor the buyer knew at the time of the sale
of piece of land that the land already belonged to the buyer. The court consequently held that
their common mistake rendered the agreement void. This situation is known as res sua.

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3. NON EST FACTUM (IT IS NO MY DEED):
If a party mistakenly signs a document, the doctrine of non est factum may permit the
agreement signed to be set aside if all the following conditions are satisfied:
(a) The party signing must have been led to sign a document which is fundamentally different
in nature from the one he intended to sign.
(b) The other party was aware of his mistake; he normally tricks the other party to sing, and
(c) The party who singed must act without negligence i.e it must be shown that he took
reasonable care.
In Lewis v. Clay (1987) 67 LJQB 224, the defendant was presented with a document covered
with blotting paper by a fraudulent lord. He was informed by the Lord that the document
related to some secrete family matters, and the defendant was expected to sign as a mere
witness. It turned out to be a note in which the defendant promised to pay certain debts owed
by the lord to the plaintiff. The court held that the defence of non est factum will avail the
party who signed. However, it is better to read and understand documents before one signs
them. The general rule, to which the above may be regarded as an exception is that once a
person signs a document he is bound by its contents, his mistake as to its meaning or terms
notwithstanding.

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Question 3

Minors are permitted to enter into contracts for limited purposes however, and the test as to
whether or not they can, focuses on the nature of the transaction, and whether the minor is of
an age such that they are capable of understanding it.

The general law states that contracts entered into by children that are for necessaries are
binding on children, as are those for apprenticeship, employment, education and service
where they are rightly said to be for the benefit of the child.

Contracts for necessaries are for such things as the supply of food, medicines,
accommodation and clothing, but generally speaking conveniences and products and services
for comfort or pleasure are excluded, as are commercial or 'trading' contracts. These latter
contracts are therefore voidable at the option of the minor. Consequently, whether the minor
may avoid a contract they have entered into depends on the nature of that contract.

Contracts where the minor may avoid the effect of the contract are for the acquisition of a
legal or equitable interest in property of a permanent nature - so shares, land, marriage and
partnerships would all be included here. Other contracts, however, require positive
ratification in order to be enforceable, which includes contracts for debts and the sale of
goods that are not for necessaries. The ratification must take the form of an acknowledgement
that the debt is binding after attaining the age of 18.

On the other hand, restraints of trade may be unenforceable against a minor, even if they
would be enforceable against an adult.

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Voidable Contract

The general rule regarding contracting with minors or infants is that such a contract is
voidable by the minor. This rule has been established to protect younger individuals who may
not fully grasp the consequences of certain contracts. Minors are believed to lack the capacity
to contract. Therefore, courts and statutes provide minors with the ability to exit the contract
at the minor’s discretion. This right does not belong to the other contracting party; it is only at
the discretion of the minor. So while the contract is still valid, the minor can basically leave it
as he or she sees fit. Due to the fact that such a rule can be abused or otherwise lead to harsh
results, a variety of exceptions have been carved out of the general voidability of a minor’s
contract.

Necessaries

If every single contract with a minor could be voided, other parties would refuse to enter into
a contract with them. The law provides that contracts for certain goods and services are not
voidable. Necessaries include items and services that are necessary to the minor’s health and
safety, such as food, lodging, shelter and clothing. In some instances, automobiles are
considered necessaries. The minor’s and his or her parents economic status can be considered
in determining whether an item is considered a necessary. Some courts will enforce the
contract as originally written while others may require the minor to pay the fair market value
for the goods or services provided. For example, if the minor exited the interstate during a
torrential downpour and the hotel was rm150 for the night although the fair market value was
rm100, some courts would impose the rm150 price while others would impose the rm100
price.

Bank Accounts

Most courts require minors to comply with the terms of their banking agreement. They are
subject to the same fees and penalties as other consumers.

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Employment Contracts

Many people who are under the age of 18 have some type of employment. Additionally, there
are many children in the entertainment industry. Both California and New York have passed
legislation that limits such a minor’s right to disaffirm the contract. Some laws allow courts
to first approve the contract so that the infant cannot later attempt to void it. Additionally,
contracting with the infant’s parent rather than directly with the infant can bind the child in
some cases. Some states allow infants to work so long as they acquire a work permit.

Other Contracts

State laws and case law may list other types of contracts that minors cannot void. For
example, many states require minors to be held to sports or entertainment contracts. New
York allows minors to purchase or be the recipient of a life insurance policy with such policy
not being voidable.

Ratification

To avoid a long period of limbo, most states impose rules regarding ratification. The infant
can only void the contract while he or she is still a minor. Some states allow for minors to
void contracts within a short period of time after the infant’s 18th birthday, such as six
months. If the former minor does not do anything to disaffirm the contract by this point,
courts may refuse to void the contract. The minor is found to have “ratified” the contract.

Voiding the Contract

A minor can void the contract in one of two ways. The first way is for him or her to file a
lawsuit asking the court to void the contract. The second way is to raise the affirmative
defense of lack of capacity if he or she has been sued. If a minor voids the contract, he or she
must disaffirm the entire contract. The minor cannot pick and choose the provisions of the
contract that he or she likes or finds favorable. Additionally, the minor may be required to
pay restitution for the benefit of the goods received. Additionally, the minor may be required
to return the subject matter of the contract. Courts are split as to whether the minor needs to
pay for any repairs or the decrease in value of a good that benefited the minor.

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Question 6

The 7 essential elements of a contract are the offer, acceptance, meeting of the minds,
consideration, capacity, legality, and sometimes a written document.3 min read
The 7 essential elements of a contract are the offer, acceptance, meeting of the minds,
consideration, capacity, legality, and sometimes a written document.

Contract Basics

Contracts are legal agreements between two parties or more. Legally binding contracts must
have essential elements in order to be enforced in court. Some contracts that are missing one
or two of these essentials will still hold up in a court, but it's best to have them all covered.

A contract is made basically any time one entity offers something to another and the offer is
accepted. Think of the last time you accepted a job offer. The company offered you a job and
you accepted, therefore a contract was formed. Employment contracts are one of the most
common types of legal agreements.

Contract Classification

Usually, the types of contracts you'll come across in the business world are classified as
simple contracts. These can be made:

 In writing
 Verbally
 With action

Bilateral contracts are one of the basics where both parties act to uphold the agreement. If one
person promises something to someone else and that person agrees to give something in
return, they've entered into a bilateral contract. When a product or service is sold and the
customer provides payment, the company selling the item and the customer entered into a
bilateral contract.

Unilateral contracts are agreements where one party promises something in return for the
action of the other. If you've even returned a lost dog for a reward, you've entered into a
unilateral contract. The dog owner paid you a reward for the action of finding their pet.

Deeds are required to be handwritten and sealed with the signatures of both involved parties
under the witness of a third party. These include agreements like:

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 Transferring land
 Mortgages
 Conveyances

Offer

First, an offer must be extended in order to begin a contract. This should include details of the
agreement and its terms and conditions. Simply put, the offer is the offeror's attempt at
entering into a contract with another.

Sometimes businesses will look for contractors through an invitation to treat by letting people
know that they are interested in entering into a contract.

Acceptance

Once the offer is extended, it's in the hands of the offeree to either accept or reject the
proposal and its terms and conditions. Offerees can accept offers via mail, email, or verbally.

Most states use the mailbox rule meaning that, if an offer is accepted via mail or email, the
moment the acceptance is placed in a mailbox to be mailed or sent via email, it has officially
been accepted. This holds true even if the offerer never receives the acceptance. Within this
acceptance, there needs to be a clear statement that the terms of the agreement are all
accepted.

Meeting of the Minds

The meeting of the minds in contract law refers to the moment when both parties have
recognized the contract and both agreed to enter into its obligations. This is also called:

 Genuine agreement
 Mutual agreement
 Mutual assent
 Consensus ad idem

Even after the parties have entered into the contract, it can be voided a few different ways
including duress, undue influence, fraud, or misrepresentation.

Consideration

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Something of value must be exchanged in order to have a valid legal agreement. Usually,
things like products, property, protection, or services are offered for the exchange of money.

If not trading in money at all, the parties should be sure that the court would view whatever
they are trading, also called their consideration, as valuable.

Capacity

Each party must be fully able or have the legal capacity to enter into the contract in order for
it to be considered valid. For instance, you cannot enter into a legal contract with a three-
year-old. Both parties must be of their right mind in order to form a contract, so a valid
agreement could not take place if one of the parties is under the influence of any mind-
altering substance.

This also includes the desire of both parties to enter into the agreement free from coercion.

Legality

Contracts cannot be created to govern the trade of illegal products or services. A drug dealer
cannot enforce a contract with their buyer if their buyer doesn't pay them.

Each party must show legal intent, meaning that they intend for the results of their agreement
to be completely legal.

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References

1.Teacher, Law. (November 2013). Elements of a contract. Retrieved from


https://www.lawteacher.net/free-law-essays/contract-law/elements-of-a-contract-contract-
law-essay.php?vref=1

2. https://www.lawhandbook.org.au/2018_07_01_03_elements_of_a_contract/

3.'Sale Of Goods Law In Malaysia' (Lawteacher.net, February 2019)


<https://www.lawteacher.net/free-law-essays/commercial-law/sale-of-goods-law-in-
malaysia-commercial-law-essay.php?vref=1> accessed 8 February 2019

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