7.

0 Law and Acts governing engineer

(6 hours)
7.0 Law and Acts governing engineer (6 hours)
7.1 Environmental Quality Act 1974
7.2 Law of contract
7.3 Akta Suruhanjaya Pencegahan Rasuah Malaysia
(SPRM)
7.4 Employment Act and Regulation
7.5 Insolvency & Bankruptcy Act
7.6 Cyber Law

EDIT BY BA 23 MAC 2018

 LAW OF
CONTRACT
Contract Act 1950
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 INTRODUCTION
► Contract defined by Sec. 2(h) - ‘an agreement
enforceable by law is a contract’
► Specific Legislation - Contract Act 1950 - but English
law still applicable by virtue of Civil Law Act.
► Function of contract:
 to secure the expectation created by a promise of future
performance or expectation will be paid for its breach.
 facilitate forward planning of the transaction in terms of cost
and value, responsibilities of parties and preparation for
contingencies.
► Contract therefore - the instrument by which separate
and conflicting interests of the parties can be
reconciled and brought to common goal.
 ELEMENTS OF A CONTRACT:
1. Offer, 2. Acceptance
3. Consideration
What is a Contract?
 https://www.youtube.com/watch?v=slfN6eJLl8k

What is Offer and Acceptance? (Contracts)

► https://www.youtube.com/watch?v=6MRj-88m4bM&t=234s

What is Consideration? (Contracts)

► https://www.youtube.com/watch?v=hmdW_95r2jI
 ELEMENTS OF A CONTRACT:
4.0 Capacity
► legalcapacity in contract law
► https://youtu.be/VlBy6dUovuk?t=77
 ELEMENTS OF A CONTRACT:
5.0 Intention
► What are the Intentional Torts
► https://youtu.be/_hBaSpRgYCc?t=39
 ELEMENTS OF A CONTRACT:
6.0 Free Consent

► Sec 10 of Contract Act - agreements are contracts if they

are made by the free consent of the parties.
► Sec 14 - consent is free when not caused by one or more
of the following:
1. Coercion - Sec 15
2. Undue influence - Sec 16
3. Fraud - Sec 17
4. Misrepresentation - Sec 18
5. Mistake - Sec 21, 22 and 23

► Void - agreement that lacks any legal effect from the

beginning - void ab initio.
► Voidable contract - Sec 2 (i) ‘an agreement which is
enforceable by law at the option of one or more parties, but not
the others….’
 ELEMENTS OF A CONTRACT:
6.0 Free Consent
► Coercion Under Free Consent
► https://youtu.be/yaV_PfMq7fc?t=96

► what is informed consent.adult

► https://youtu.be/OrAA9Lq9xKU?t=54
 ELEMENTS OF A CONTRACT:
7.0 Certainty
► Certainty of Contract
► https://youtu.be/qxa-bF_-5IY?t=1
 VOID AND ILLEGAL
CONTRACT
► Void, Valid and Voidable. Know the difference for your real estate
exam!
► https://youtu.be/qkprB53iAnk?t=44

► Contract Enforcement, Breach, and Remedies

► https://youtu.be/NDXdHEqeOZk?t=80

► Breach, Damages, and Remedies in Contract

► https://youtu.be/VtHtHPWOlQM?t=59

► What is VOID CONTRACT? What does VOID CONTRACT mean? VOID

CONTRACT meaning, definition & explanation
► https://youtu.be/uj7rv9XM9eo?t=52
 DISCHARGE OF CONTRACT
► Contract is discharged when it is terminated in one of these ways:
1. By performance.
2. By consent or agreement between the parties
3. By impossibility (frustration)
4. By breach.

► Discharge of Contract
► https://youtu.be/bzQG6h-6u84?t=80

► What is a Breach of Contract

► https://youtu.be/uCG-RqHDGEo?t=117
 REMEDIES
► There are several remedies provided by the law to give relief to the
party not in default in a breach of contract.
1. Rescission of Contract. - Sec 40
2. Damages. - Sec 74 to 76
3. Specific Performance. - The Specific Relief Act 1950
4. Injunction. - Specific Relief Act.

► Remedies for Breach of Contract

► https://youtu.be/oH_ruOJxU5Q?t=5

Rescission of a Contract

https://youtu.be/7IvdNT7yzig?t=33
Student Reading
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
1. OFFER
1. Offer

► Sec.2 (a) - offer or proposal - when a person signify his willingness to

do or abstain from doing anything.
► Proposal or offer - something which is capable of being converted into
an agreement by its acceptance.
► Must be a definite promise to be bound - provided that certain
specific terms are accepted.
► Lack of offer and acceptance - contract void ab initio

► Sec. 4 (1) -offer must be communicated - effective when it comes to

the knowledge of the offeree.
 R v. Clarke - communication of proposal regarding capture of
convict

► Offer can be made to a particular person or to the general public

 Carlill v. Carbolic Smoke Ball - offer made to the rest of the world
but the contract is made with that limited portion of the public
who come forward and perform the condition
 ELEMENTS OF CONTRACT-
1. OFFER
► To be an offer, the offeror must not merely feeling his way
towards an agreement – if that is the case, then it is not offer
but is an invitation to treat
► Examples of ITT:
 Advertisements in the paper for the post of a doctor - ITT
 Auctioneer inviting a bid – ITT (but a bidder making a bid is an
offer)
 Catalogue advertising goods for sale
 Goods on display in a shop
► Cases:
 Boots Cash Chemist Ltd – sale of poison under pharmacist
supervision
 Majumder V. Attorney General of Sarawak – advertisement for the
post of a medical officer
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
2. Acceptance
2. Acceptance
► Sec.2 (b) - when the person to whom the proposal is made signify his assent
thereto.
► Acceptance can be expressed or implied (inferred from conduct)
► Acceptance must be accepted on exactly the same terms as the proposal
without any variation or modification – it must be absolute and unqualified
► Any modification / variation to the offer is a counter - proposal and is
equivalent to rejection
 Hyde v.Wrench - offer £1000, accept £950
 Stevenson v. McLean - request for additional information is not counter
proposal
► Acceptance must be communicated with some positive action – silence
cannot be imposed as acceptance – Felthouse v. Bindley
► Exception : - proposer dispense with it
- acceptance in form of performance
► Acceptance must be within reasonable time - Sec.6(b)
► Acceptance may also be revoked at any time before the communication of
the acceptance is complete against the acceptor
 ELEMENTS OF CONTRACT-
2. Acceptance
► Sec.4 - Acceptance through post - an exception to the general
rule that acceptance must be communicated – a.k.a. The Postal
Rule
► Sec.4 - communication of acceptance is complete-
a. As against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the acceptor
b. As against the acceptor, when it comes to the knowledge of
the proposer
► Illustration to the section:
B accept A’s proposal by a letter sent by post
The communication of the communication is complete:
as against A, when the letter is posted
as against B, when the letter is received by A
 ELEMENTS OF CONTRACT-
2. Acceptance
Termination of offer
► Revocation must also be communicated – Fitch v.Snedaker
► Revocation of proposal possible if acceptance is not complete.
► Sec. 6 - A proposal may be withdrawn under four
circumstances
 By communication of notice of revocation by the proposer to the
other party – Bryne V. Tienhoven
 By lapse of time (prescribed or reasonable) – Ramsgate Victoria
Hotel v. Montefiore
 By failure of acceptor to fulfill a condition precedent to
acceptance – Hyde V. Wrench
 By death or mental disorder of the proposer if such fact comes to
the knowledge of the acceptor before acceptance – Bradbury V.
Morgan
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
3. Consideration
4. Consideration

► Sec.26 - as a general rule - agreement without consideration is void

► Sec. 2 (d) defined what is consideration.
► Types of consideration
i) Executory consideration
ii) Executed consideration
iii) Past consideration
► Consideration need not be adequate - Phang Swee Kim v. Beh Hock
► Consideration need not move from the promisee - Venkata Chinnaya v.
Verikataramaya - consideration provided by mother
► Past consideration is good consideration - Kepong Prospecting Ltd..
► Part payment from the full amount is valid consideration

► Exception to the rule that agreement without compensation is void - Section

26:
a. agreement made on account of natural love and affection
b.agreement to compensate for past voluntary act
c. agreement to compensate act the promisor legally compelled to do
d.agreement to pay a statute barred debt.
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
4. Capacity
6. Capacity
► Parties to a contract should be competent to contract, i.e have the legal
capacity to do so.
► Where one or more of the parties to a contract lack the capacity - contract
invalid / void. - Tan Hee Juan
► Sec. 11 - ‘Every person is competent to contract who is of the age of majority
according to the law to which he is subject, and who is of sound mind, and is
not disqualified from contracting by any law to which he is subject’.
► Age of majority- 18 years - Age of Majority Act 1971
► Exception:
 contract for necessaries Nash V.Inman
 scholarship Govt. of Malaysia v. Gurcharan Singh
 Marriage contracts
 insurance
 Apprenticeship
► Sound mind - Sec 12(1) - ..capable of understanding it and forming rational
judgement as to its effect upon his interest.’
► Includes incapacity due to sickness, alcohol or drugs
 PRIVITY OF CONTRACT
► After a valid contract has been formed - to whom does the
obligation extend? What are the limits of the contractual
agreement.
► The general rule under common law - no one but the parties to a
contract can be entitled to it, or bound by it.
► Contract cannot confer rights on third party
 Price v. Easton - payment of debt on behalf of another
 Dunlop Pneumatic Tyre v. Selfridge.
► Contract cannot impose liability on third party
 e.g. relationship between building owner - contractor - sub
contractor
► However, a claim can still lie in tort.
 CONTENTS OF A CONTRACT
1. EXPRESS AND IMPLIED TERMS

► Contents made up of terms - expressed or implied

1. Express terms - has been specifically agreed upon by the parties -orally, in
writing or both.
 Express terms are straightforward and can be identified just by looking at
the contract document.
2. Implied terms - term that is read into the contract by the court.
 Form an integral part of the contract though not expressly provided -
necessary to give business efficacy to the contract

► Terms may be implied by :

1. Custom and usage pertaining to a particular transaction.
 Preston Corporation - implied a term based on trade usage regarding
ownership of film positives used to print books
► Must satisfy - notoriety, certainty and reasonableness

2. Statutory Provision
 Statutes that imply terms into a contract:
1. Sales of Goods Act 1957
2. Hire - Purchase Act 1967
3. National Land Code 1965
 CONTENTS OF A CONTRACT
3. The courts , based by the intention of the parties
► Cases:
 Yong Ung Kai v. Enting - implied a term that must have been in the
mind of the parties – to get license to cut the timber
 the officious bystander test i.e. “ oh, of course!”.

2. Conditions and Warranties

► Another classification of terms
► Definition of both terms - given by Sales of Goods Act 1957
► Sec 12 (2) SOGA - condition - ‘a stipulation essential to the main
purpose of the contract, the breach of which gives rise to a right to
treat the contract as repudiated’.
► Sec 12 (3) SOGA - warranty - ‘ a stipulation collateral to the main
purpose of the contract, the breach of which gives rise to claim for
damages but not a right to reject the goods or repudiate the contract.’
► Whether a term is a condition or warranty - depends on the intention
of the parties - the court will help to determine.
 CONTENTS OF A CONTRACT
3. Exemption Clause
► Defined as ‘ a term of a contract that attempts either to modify the principal
obligation(s) arising out of the contract or to limit / exclude the liability of a
party which would otherwise arise as a result of a breach by that party…’.
► Common in standard contract - the operation of which depends on the
construction of the contract.
► In case of disputes- court will interpret - contra proferentum.
► If the clause is ambiguous - will be interpreted to the disadvantage of the party
who will benefit from clause.
► In case of negligence - need clear and unambiguous words to exclude liability.
► In case of serious / fundamental breach - exemption clause will not cover the
parties who made the clause.
- Port Swettenham v. T.W.Wu and Company

► There are also some statutes which modify the effect of the exemption clause
to provide more protection to consumers.
► Also - exemption clause cannot give benefit to third party nor make another
party liable
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
5. Intention To Create Legal
Relation
3. Intention To Create Legal Relation

► Not provided by Contract Act but by case laws

► Mere agreement is not enough to contemplate the existence of a legal contract.
► Sometimes can be imputed from the nature of the agreement, for e.g :
 acceptance to a dinner
 acceptance to an offer to play a game of soccer
 acceptance of an offer to pay for half of the petrol cost
► Thus parties to a transaction may state that they do not intend to enter into
any binding obligation.
► Intention is particularly relevant when it comes to cases where legal contracts
are not normally made like in domestic arrangements – Balfour v. Balfour
► However in a commercial agreements, the presumption is that there is
intention to create legal relations- Winn V.Bull
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
6.0 Free Consent
► Sec 10 of Contract Act - agreements are contracts if they are made by
the free consent of the parties.
► Sec 14 - consent is free when not caused by one or more of the
following:
1. Coercion - Sec 15
2. Undue influence - Sec 16
3. Fraud - Sec 17
4. Misrepresentation - Sec 18
5. Mistake - Sec 21, 22 and 23

► Void - agreement that lacks any legal effect from the beginning - void
ab initio.
► Voidable contract - Sec 2 (i) ‘an agreement which is enforceable by law at
the option of one or more parties, but not the others….’
 Free Consent :1. Coercion.

1. Coercion.
► Coercion defined as ‘ committing or threatening to commit any act
forbidden by the Penal Code, or the unlawful detaining of any person /
property with the intention of causing any person to enter into an
agreement’.
► Kesarmal v. Valiappa Chettiar - transfer made under Sultan’s
order in the presence of Japanese officers during the
occupation considered voidable.
► Chin Nam Bee Development – payment of extra $4000 under
threats to cancel booking of houses
 Free Consent :2. Undue Influence

2. Undue Influence
► Exist when ‘ the relations subsisting between the parties are such that one of
the parties is in the position to dominate the will of the other and uses that
position to obtain an unfair advantage over the other’.
► Therefore the elements of undue influence:
 Position to dominate
 Use that position to obtain unfair advantage
► Position to dominate exist when:
 Has real or apparent authority over the other – e.g.: parent-child
► Morley v. Loughnan
 Stand in fiduciary relation to the other –e.g.: religious leader –
follower, solicitor-client
► Allcard v. Skinner
► Tate v. Williamson
 Made contract with a mentally incapacitated person by reason of
age, illness or distress.
► Inche Noriah v. Shaikh Allie

► Burden of proving no undue influence - on the person in position to dominate

 Free Consent :3. Fraud

3. Fraud
► Sec 17 – Five acts that would constitute fraud:
 Suggestion of fact that is not true
 Active concealment of fact - Horsfall v. Thomas - inserting metal plug in a
cannon is active concealment
 Promise made without intent to perform it
 Other act fitted to deceive
 Any acts the law declares to be fraudulent
► There must be an intention to deceive - that is made knowingly, without belief
in its truth or reckless whether it true or false
► Generally – silence does not constitute fraud - the misled party has the duty to
exercise ordinary diligence
► However, under certain circumstances silence or non -disclosure may
constitute fraud –
 Takes into account the relationship btw parties and where silence is
equivalent to speech
► Duty to exercise ordinary diligence applies to fraud by silence only – not other
cases of fraud
 Weber v. Brown - number of rubber trees
 Free Consent :4. Misrepresentation.

4. Misrepresentation.

► Misrepresentation refer to certain false statement of existing or past fact made

by a person before or at the time of making the contract which induces a party
to enter into a contract.
► Basic difference between misrepresentation and fraud is that in fraud the
person making the representation does not himself believe in its truth - but for
misrepresentation - may himself believe it true.
► Like fraud - when there is a duty to disclose - silence may amount to
misrepresentation.
► However under the Contract Act - Sec 19 - misled party has duty to exercise
due diligence
 Tan Chye Chew v. Eastern Mining Metals – contract not voidable despite the
misrepresentation as the party has means of discovering the truth with ordinary
diligence.
► To be actionable:
1. There must be false representation - Keates v. Lord Cardogan
2. The representation is one of fact , not opinion - Bisset v. Wilkinson.
3. The statement was addressed to the party misled - Peek v. Gurney.
4. The statement must induce the contract - Attwood v. Small
 Free Consent :5. Mistake.

5. Mistake
► Sec. 21 of the Contract Act - ‘where both the parties under the agreement
are under a mistake as to a matter of fact essential to the agreement, the
agreement is void’ - for lack of free consent.
► Sec 22 - mistake as to the law - contract not voidable due to mistake
of law in force in Malaysia, but if the law not in force in Malaysia - like
mistake of fact.
► Sec 23 - mistake as to one party (unilateral) - contract is valid
► Mistake of fact made by both parties can be as to :-
 Existence of the subject matter
► Strickland v. Turner. - annuity for a dead person

 Identity of the subject matter

► Falck v. Williams - identity of charter parties

 Quality of the subject matter

► Kennedy v. Panama Royal Mail. - shares in a mail company

 Possibility of performing the contract.

► Sheikh Brothers v. Ochsner. - manufacture sisal
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 ELEMENTS OF CONTRACT-
7. Certainty
5. Certainty
► The terms of an agreement cannot be vague but must be certain.
► If uncertain or incapable of being made certain - void.
► Intentions of the parties will be frustrated because of uncertainty and
the court will usually not interfere
► At common law - two aspects of uncertainty:
 due to language used
 failure to reach agreement on fundamental term of the agreement
► In Contract Act - uncertainty provided by Sec. 30 - ‘agreements,the
meaning of which is not certain, or capable of being made certain, are
void.
► Case:
► - Karuppan Chetty v. Suah Thian - ‘lease at $35.00 per month as long
as he likes’
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 VOID AND ILLEGAL CONTRACT
► Sec 2 (g) - Contract which is not enforceable
by law.
► Sec 24 –Contract with unlawful consideration
/ object is void i.e.:
a- forbidden by law - Hee Cheng V. Krishnan –
attempts to transfer TOL land
b- of such nature as to defeat the law -Tan Bing Hock –
attempts to assign logging rights
c- fraudulent -Palaniappa Chettiar
d-involves / implies injury to person / property. - Syed
Ahamed Alhabshee V. Puteh
e- immoral / against public policy - Pearce V. Brooks –
hire of vehicles for prostitution
 VOID AND ILLEGAL CONTRACT

► There are also Sec 25 to Sec 31 which provides for other instances
that renders a contract void in law.

► Sec 25 - any part of a single consideration / any part of several

consideration unlawful
► Chung Khiaw Bank Ltd.
► Sec 26 - agreement made without consideration.
► Sec 27 - agreement in restraint of marriage.
► Sec 28 - agreement in restraint of trade
► Wrigglesworth v. Anthony Wilson – restrained from practicing
as lawyer within five miles from KB for two years
► Sec 29 - agreement to restraint legal proceeding
► Corporation Royal Exchange v. Teck Guan
► Sec 30 - agreement void for uncertainty.
► Sec 31 - agreement by way of wager.
 VOID AND ILLEGAL CONTRACT

Consequence Of Void And Illegal Contract.

► General rule under CA - ex turpi causa non oritur
actio - no action will arise from a wrong done.
► Contracts under sec 27, 28 and 29 - not void in toto
- severable.
► Sec 66 - Right of restitution - doctrine of unjust
enrichment
 Ahmad b. Udoh – paid $1500 as deposit for lease of padi
land which was illegal
 Yeep Mooi v. Chu Chin Chua – money deposited with a
company carrying unlicensed business is recoverable
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 DISCHARGE OF CONTRACT
► Contract is discharged when it is terminated in one of these ways:
1. By performance.
2. By consent or agreement between the parties
3. By impossibility (frustration)
4. By breach.

DISCHARGE OF CONTRACT
2. By Consent or Agreement.
1.By Performance.
►Performance must be strictly in accordance with terms of the
contract.
►Sec 38 (1) - parties to a contract must either perform or offer to
perform their respective promises unless such performance has
been dispensed with by any law.
►When time is of the essence - Sec 56
►Performance by third party - Sec 41
► Letchumi Ammal – terms of contract that requires personal
performance must be done by promissor
►Haji Nik Ishak v. Nik Zainab – if a promisee accepts performance
from a third party, cannot afterwards enforce it against promisor
 DISCHARGE OF CONTRACT
2. By Consent or Agreement.

2. By Consent or Agreement.
► Contract created by consent can be extinguished by consent
either express or implied.
► Express consent may be given at time of contract or
subsequent to that.
 E.g. discharged at the occurrence of an event.
Waiver, release, novation or rescission.
► Sec 63 - if the parties to a contract agree to substitute a new
contract for it, or to rescind or alter it, the original contract
need not be performed.
► Sec 64 - every promisee may dispense with or remit, wholly or
in part, the performance of the promise made to him, or may
extend the time for such performance, or may accept instead of
it any satisfaction which he thinks fit.
 DISCHARGE OF CONTRACT
3. By Impossibility / Frustration.
3. By Impossibility / Frustration.
► Two categories of impossibility of contract
► When impossibility is at the time of making the contract - an agreement to do
an act impossible in itself is void.
► A contract is frustrated when there is a change in the circumstances which
renders a contract legally or physically impossible of performance – not merely
difficult or more onerous
► Sec 57(2) - a contract to do an act which after the contract is made becomes
impossible, or by reason of some event which the promisor could not prevent,
becomes void when the act becomes impossible or unlawful.
► In applying the rule - court will examine the circumstances surrounding the
frustration , including whether it is self induced or not.
► A contract may be discharged in any of the following circumstances:
1. Destruction of the subject matter - Taylor v. Caldwell
► there must be total destruction - not partial due to Sec 12 of SRA
2. Supervening event defeat the whole purpose / object of the contract.
► Henry v. Krell.
3. Death or personal incapacity especially in regards of personal obligation.
4. Supervening illegality - Lee Kin v. Chan Suan Eng.

► Effect of frustration - automatically end the contract

► Sec 66 CA provides for restitutionary remedy.
 DISCHARGE OF CONTRACT
4. By Breach

4. By Breach
► Sec 40 - ‘When a party to a contract has refused to perform, or
disabled himself from performing, his promise in its entirety, the
promisee to the contract, unless he has signified, by words or conduct,
his acquiescence in its continuance.’
► Party not in breach has the option of continuing with the
contract and claim damages or repudiate the contract.
► Sec 65 - ‘when a person at whose option a contract is voidable
rescinds it, the other thereto need not perform any promise therein
contained in which he is promisor. The party rescinding a voidable
contract shall, if he has received any benefit thereunder from another
party to such contract, restore the benefit, so far as may be, to the
person from whom it was received.’

► Cases :
 Choo Yin Loo v. Visuvalingam
 Ban Hong Joo Mine Ltd. V. Chen & Yap
 LESSON OUTLINE
► INTRODUCTION
► ELEMENTS OF A CONTRACT:
1. Offer
2. Acceptance
3. Consideration
4. Capacity
5. Intention
6. Free Consent
7. Certainty
8. Valid Object

► VOID AND ILLEGAL CONTRACT

► DISCHARGE OF CONTRACT
► REMEDIES
 REMEDIES
► There are several remedies provided by the law to give
relief to the party not in default in a breach of contract.

1. Rescission of Contract. - Sec 40

2. Damages. - Sec 74 to 76

3. Specific Performance. - The Specific Relief Act 1950

4. Injunction. - Specific Relief Act.

 REMEDIES
► There are several remedies provided by the law to give
relief to the party not in default in a breach of contract.

1. Rescission of Contract. - Sec 40

2. Damages. - Sec 74 to 76

3. Specific Performance. - The Specific Relief Act 1950

4. Injunction. - Specific Relief Act.

 REMEDIES 1.Rescission
1.Rescission
► as dealt with in the previous part under sec. 40
 REMEDIES 2.Damages
2.Damages
► Damages are granted to a party as compensation for the damage, loss or
injury done / suffered through breach of contract - but damage can’t be too
remote or indirect.
► Damages can be classified as substantial, nominal or exemplary.
► Sec 74 - ‘when a contract has been broken, the party who suffers is entitled to
receive…..compensation for any loss or damage….which naturally arose in the
usual course of things..or which the parties knew, when they made the
contract, to be likely to result from the breach’.

► Illustrations to sec74 also indicate that the aggrieved party may recover
damages -
 for other expenses incurred as a result of the breach,
 for loss of profits arising out of the breach,
 for the difference btw the price of goods as contracted for and the actual
price the goods were sold for as result of the breach.

► Sec 75 - ‘When a contract has been broken, if a sum is named in the contract
as the amount to be paid in case of such breach…or any other stipulation by
way of penalty…the party complaining of the breach is entitled to
receive…reasonable compensation not exceeding the sum named or the
penalty stipulated for.’
► The effect of fixing the sum - to determine the upper limit of compensation.
► Nevertheless, party seeking damages is also under the duty to mitigate the
loss - Kabatasan Timber Extraction Co.
 REMEDIES 3. Specific Relief.
3. Specific Relief.
► The Specific Relief Act provides for the remedy of specific performance - which is
discretionary by nature.
► It a decree of the courts directing the contract to be performed according to its terms.
► Sec 11 in trust cases and where no adequate relief.
► Sec 12 - presumption in cases of transfer of land
► Sec 18 - court has power to award damages in lieu of SP
► Sec 21 - court has discretion to refuse specific performance if cause undue hardship to
the defendant.
► Sec 20 - circumstances where no SP can be enforced:
 where money is adequate relief.
 contract with minute details.
 contract dependant on personal qualification.
 contract that will need supervision of the court.
 contract with uncertain terms.
 contract revocable by nature.
 contract made by trustee in excess / breach of their power
 contract made on behalf of public or private corporation in excess of its power.
 contract the involves performance of continuous duty extending over a period longer
than three years from its date.
 contract which a material part of the subject matter has ceased to exist even before
the contract is made
 REMEDIES 4. Injunction.
4. Injunction.
► An equitable remedy that can be varied or dissolved
► Sec 50 of SRA provides for two types of injunctions:
1. Interim Injunction.
 Used by a party to maintain the status quo of a subject matter pending
full trail of the case.
 To continue until a specified time / full order of the court.
 May be granted at any period during a suit.
 Must consider that there are serious question to be tried, that
compensation would be adequate and it is proper on the balance of
convenience.
 Can be mandatory injunction or a restraining order.

2. Perpetual Injunction.
 Granted by decree made after a full trial based on the merits of the case
- defendant will be permanently prohibited.
 No injunction where the contract cannot specifically enforced.
► LAWS11061_2 Capacity to Contract
► https://www.youtube.com/watch?v=d1TZeV
fXc5s
That’s All
Folks!