Appreciation post

Hi guys, it looks like my previous post about mistake was my last update for this subject. However, do pray for me to gain much strengths and desire to always update my blog regarding law matters. 

Furthermore, here is my acknowledgment and appreciation post to my lecturers. In preparation of my assignment, I had to take the help and guidance of some respected persons, who deserve my deepest gratitude. As the completion of this assignment gave me much pleasure, I would like to show my gratitude towards PROF. DR. ZUHAIRAH ARIFF BINTI ABD GHADAS, dean of the Faculty of Law and International Relations (FUHA) for giving me good guidelines for assignment throughout numerous consultations. I would also like to expand my gratitude to all those who have directly and indirectly guided me in writing and creating this blog.

In addition, a thank you to DR. FARHANIN BINTI ABDULLAH ASUHAIMI, who is also my lecturer for this Contract Law 2. I also thank the Universiti Sultan Zainal Abidin (UniSZA) for consent to introduce me a new normal types of learning during this pandemic covid-19 so i can have a chance to own and write my personal blog. Many people, especially my classmates have made valuable comment suggestions on my blogs which give me an inspiration to improve the quality of my blog in future. 

That is all from me. Thank Allah and thank you all for your supports 😘😇😄

Mistake

Hello everyone, welcome back to my blog. So, for today i will explain about the topic of mistake. Hope you guys enjoy 😙..

        Section 14(e) of Contract Act 1950 provides about mistake where it subjects to sections 21, 22 and 23 of the same Act. First of all, what is mistake under contract law?

      Mistake can be defined as where a party try to set aside a contract which he had misunderstood the contract entered by him. If he know the truth, he will not enter such contract. Mistake can be claimed by both party and it also in operative through English law and Malaysian law. Under common law, mistake is considered as void ab initio which means a contract is void in the beginning if mistake arises. However, under Malaysia law, contract will become void as effect in the later consequence. There are 2 types of mistake which are unilateral mistake which means as one (1) party commit mistake and mutual or bilateral mistake which means as two (2) or more parties commit mistake.
In regard with Section 21, mistake is committed by both or more parties in a contract and the mistake must be in matter of mistake of fact which essential to an agreement. Section 21 stated that where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. The effect under this section make an agreement shall be void pursuant to section 2(g) of the Act. Basically, there are only 3 circumstances pertaining to the substance of mistake of fact which are mistake as to the existence, identity and possibility of performing contract. However, in the case of Sheikh Brothers, another two circumstances were introduced which are mistake as to quality and quantity of subject matter of a contract. These two circumstances was clearly explained in the case of Smith v Hughes which stated P agrees to buy from D a certain parcel of oats which both believes to be old oats. They are in fact new oats, and unsuitable for the purpose for which P wants them. There is a valid contract despite the mistake, as the subject matter only differs in some quality, not substance. This means the oats sold by defendant in fact was new old which does not suffice the agreement as plaintiff ask for old oats. Therefore, contract was void.
Moreover, section 23 means as where mistake is committed only by one 1 party or unilateral mistake. This section stated that a contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact. The difference between section 23 and 21 is only the number of party who committed the mistake as the circumstances is same which consistent with the 3 fundamental substance to mistake of fact. While the effect under this section caused a contract to be either valid, void, but not voidable. Next, in regard with section 22, this provision provides about mistake of law. This section stated a contract is not voidable because it was caused by a mistakeas to any law in force in Malaysia, but a mistake as to a law not inforce in Malaysia has the same effect as a mistake of fact. This section gives effect same like section 23. For example, mistake as to the law in Malaysia, contract become not voidable while mistake as to foreign law, an agreement will become void due to it will be treated as a matter of fact is essential to the agreement. As consequence, it applies section 21 of Contract Act.
Alhamdulillah, finally i am able to explain this topic as fast as i can. I hope you guys can understand and enjoy it.

Misrepresentation

        Hello guys.. for this week, we learned for both topic in a same day which are fraud and misrepresentation because both of this topic is quite similar and related to each other. However, I am still have to explain them separately otherwise you will not be able to understand the differentiate between them. Misrepresentation is a false statement of fact made by one party to another which, whilst not being a term of the contract induces the other party to enter the contract. Similar to fraud, we must bear into mind that section 14 of free consent must exist to enter a contract which does not caused by misrepresentation, which is defined under section 18 (a) of Contract Act 1950. This section stated that misrepresentation includes the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true.

The effect also same with fraud which make a contract voidable pursuant to section 19 of CA. This section said 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. Thus, the exception of this section make a contract become not voidable when party whose consent was so caused had the means of discovering the truth with ordinary diligence. In other words, a fraud or misrepresentation which did not cause the consent to a contract of the party on whom the fraud was practiced, or to whom the representation was made, does not render a contract voidable. Furthermore, there are distinction between fraud and misrepresentation. In fraud, the person making the representation does not himself, believe in its truth. Burden of proof in fraud cases is very high. However, in misrepresentation the person may believe the representation to be true. In order to apply misrepresentation or to make it actionable in a contract, there are some conditions need to be fulfilled.
        Firstly, false statement of fact. An actionable misrepresentation must be a false statement of fact, not opinion or future intention or law. This is because a false statement of opinion, a false statement by a person as to what he will do in the future and false statement as to the law are not misrepresentation of fact. Second one is inducement. The false statement must have induced the representee to enter into the contract. The requirements are the misrepresentation must be material and it must have been relied on.
        Other than that, the misrepresentation must be material, in the sense that it would have induced a reasonable person to enter into the contract. The representee also must have relied on the misrepresentation and there will be no reliance if the misrepresentee was unaware of the misrepresentation. This can be seen in the case of Horsfall v Thomas. The fact is Thomas bought a cannon which had been manufactured for him by Horsfall. The cannon had a defect which made it worthless, and Horsfall had endeavored to conceal this defect by the insertion of a metal plug into the weak spot in the gun. Thomas never inspected the gun and he accepted it. Upon using it for the purpose for which he bought the gun, the gun burst. The court held that as he never examine the gun, the concealment of defect did not influence him.
In regard with the types of misrepresentation, there are 3 types that can be discussed which are fraudulent, negligent and wholly innocent. Firstly, fraudulent misrepresentation was defined by Lord Herschell in Derry v Peek as a false statement that is made, knowingly, without belief in its truth, recklessly and careless as to whether it be true or false. Secondly, negligent misrepresentation is a false statement made by a person who had no reasonable grounds for believing it to be true. Under Common Law, refer to Hedley Byrne v Heller stated there are two possible ways to claim either under common law which are by negligent misstatement recoverable in tort or statute by section 2(1) of the Misrepresentation Act 1967.
Lastly, wholly innocent misrepresentation is a false statement which the person makes honestly believing it to be true and the usual remedy is rescission with an indemnity. This can be referred to the case of Sim Thong Realty Sdn Bhd v Teh Kim Dar which stated that the defendant is a limited company. It was keen on acquiring land to build a factory. It saw an advertisement in a newspaper placed by an estate agent which is Mr TK Wong, carrying on business as Wong Tai Kong Realty . The advertisement referred to certain land at the Jalan Kelang Lama area as being available for purchase. The land in question was owned by the defendant. By pre-arrangement, the defendant's representatives visited the land. Wong accompanied them. There was some discussion about the availability of access to the land in question. Wong represented to the defendant's representatives that the land had access to the main road. This was an important fact because, absent access, the land was worthless to the defendant. Following negotiations, the parties entered into a written sale and purchase agreement pursuant to which the defendant paid a deposit of RM254,204. It later transpired that the land in question had no access.
Moreover, in misrepresentation there are several remedies available. Firstly it is rescission. it means as to put the parties back in their original position, as though the contract had not been made. The injured party may rescind the contract by giving notice to the representor of his intention to rescind the contract. This can be referred to the section 67 of CA or he may apply to the court under section 34 (1) (a) of the Specific Relief Act 1950. This remedy also have limitations which are affirmation of the contract, restitution in integrum (impossible /ability to restore) and third party acquires rights or bona fide purchaser for value without notice.
Secondly, indemnity is an order of rescission may be accompanied by the court ordering an indemnity. This is a money paid by the misrepresentor in respect of expenses necessarily created in complying with the terms of the contract and is different from damages. For example, in any contract for the sale & purchase of a house, the purchaser not only pays the purchase price of the property but must also incur expenses that include legal fees, stamp fees and the others. Thirdly is damages. Damages generally granted in cases of fraudulent misrepresentation. The injured party may claim damages for fraudulent misrepresentation in the tort of deceit. Damages are available in addition to rescission because an action for fraud is grounded upon the tort of deceit.
Fuuhh, quite long right for this topic?🙀... But it is okay, we can do this💃So, it think that is all for today. Please wait for my update on next week for our last topic which is mistake.

Fraud

Hi guys, for today i will share about the topic of fraud. Section 14(c) of Contract Act 1950 (CA) mentioned that free consent in a contract does not affected by any fraud, which is defined under section 17 of CA. This section stated that fraud includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract. In other words, whenever a person causes another to act on a false representation which the maker himself does not believe to be true, he is said to have committed a fraud.

Under this section, there are 5 acts that have been laid down that may constitutes fraud. There are:-1. The suggestion, as to a fact, of that which is not true by one who does not believe it to be true.2. The active concealment of a fact by one having knowledge of belief of the facts.3. A promise made without any intention of performing it.4. Any other act fitted to deceive.5. Any such act or omission as the law especially declares to be fraudulent.
Therefore, we cam explore to each of the acts respectively. Firstly, the suggestion, as to a fact, of that which is not true by one who does not believe it to be true. Section 17(a) has similar requirements as in Section 18 (a) in that there must be a false representation of fact addressed to the party misled. The only difference is the state of mind of the maker of the statement. Under section17 (a) state the maker of statement does not believe it to be true. We can refer to the case of KhengChweeLian v Wong Tak Thong where it was held that the second agreement was void due to the respondent was induced into signing the second agreement by the misrepresentation regarding the area granted to him, which misrepresentation was fraudulent within the meaning of section17(a) and (d) of Contracts Act 1950. This circumstances give the meaning where one party induces the other to contract on the faith of representations made to him, anyone of which is untrue, the whole contract is considered as having been obtained fraudulently.
Secondly, the active concealment of a fact by one having knowledge of belief of the facts. Where a party to a contract actively conceals or prevents certain material information from reaching the other party to the contract, this active concealment amount to fraud . It is illustrated in the case of Horsfall v Thomas where the plaintiff ordered a gun from the def. The def inserted a metal plug to conceal the defect in the weak spot in the gun. The Court held, this act amount to active concealment with intention to deceive or to induce the other party to enter into the contract .
Under section 17(b) of CA active concealment is mentioned and rise the question of the difference between caveat emptor. The situation under section 17(b) together with Illustration (c) and (d) must not be confused with the general rule of caveat emptor that silence does not amount to misrepresentation or fraud, which is a party to contract is not bound to disclose material facts to the other party. Under the general rule, the alleged party does not do anything active to hide the information. Based on the illustrations , there was only passive concealment of material facts by A. Thus, A did not do anything active to conceal from B the horse’s unsoundness and the change in prices .This is not amount to fraud . According to Keates v Cardogan, silence as to the ruinous state of the property is an act of passive concealment
Thirdly, a promise made without any intention of performing it. Where a promise is made without any intention of performing it , it is an act of fraud under section 17(c) of the CA. It is either the promisor knows that when he makes the promise he cannot perform it or he makes a promise that he intends to break. Referring to the case of MUI Plaza SdnBhd v Hong Leong Bank Bhd, the plaintiff claimed fraud against the defendant under section 17( c) for making a promise without any intention of performing it. It was held, the plaintiff has a cause of action to recover damages for fraudulent misrepresentation and for the tort of deceit.
Next, any other act fitted to deceive. This circumstances falls under section 17(d) where it is a catch-all clause to prevent any fraud escaping the net of the law. According to the case of Loi Hieng Chiong v Kon Tek Shin, the court found that the appellant was not honest as to the true value of his land at Sibu when he persuaded the Respondent to exchange the lands and that it was not fair ,just and reasonable having regard to the accepted value of the Appellant’s land . The Appellant had perpetrated fraud in the exchange of the land titles.
Lastly, any such act or omission as the law especially declares to be fraudulent. Where any law specially declares certain acts or omissions to be fraudulent, such act or omission amounts to fraud under section 17 (e) of CA. For example, silence or non disclosure. The general rule is mere silence or non-disclosure would not constitute fraud. However, there are certain circumstances whereby silence or non-disclosure may constitute fraud as provided under the explanation to section 17 of CA. From the explanation, the main points that can be sorted out is the law puts a duty upon a person in a position of trust and confidence a duty to speak and disclose all relevant information to the person reposing trust and confidence in him in any transaction between them. In some circumstances, the silence is in itself equivalent to speech.
Regarding to the standard of proof of fraud, we can refer to the case of Ang Hiok Seng v Yim Yut Kiu which stated that all cases on agreement and contracts are dealt with in civil courts. An allegation of fraud in any civil proceedings could be an allegation based on a civil offence or criminal offence. If it is based on a criminal offence which is on offence of criminal breach of trust or misappropriation of money, the court must apply the criminal burden of proof of beyond reasonable doubt. Moreover, under Section 19 of CA stated about the contract become voidable as to the effect of fraud. However, there are exceptions that make contract is not voidable within circumstances which are where the misrepresentation or fraud did not affect the misled party’s consent to enter into the contract and where the misrepresentation or fraud by silence could have been discovered by the misled party had he exercised ordinary diligence before entering into the contract.Therefore, we need to be more careful when entering a contract in order to prevent ourselves from involving a contract with fraud.
Finally it is the end of my explanation for this topic. I am a bit exhausted today since there were so many tests within this week..huhu😰

Undue Influence Part 2

        Last week, we already had covered for the topic Undue Influence Part 1. So for today i would like to share for the Part 2. It is essential for you guys to remember the two elements need to be proved in order to raise undue influence in a contract pursuant to section 16(1) of Contract Act 1950. In this part 2, I will share about the second element where the wrongdoer use the dominant position to get an unfair advantage in a transaction.

        According to the common law, they use the concept of unconscionable bargain but in our Contract Law we used the term of unfair advantage. This term brings the meaning of there was an unfair outcome for a party which he has right to obtain the benefits under such contract. In other words, even certain conditions in a contract can be said to be unfair for a party, as long as he get what he wants from the contract, it cannot falls under unfair advantage.

For the elements of unfair advantage, we can start to refer with section 16(1) of CA as a provision to prove the element. Section 16(3) of CA provides a rebuttable presumption for defendant. When a plaintiff claim for undue influence after fulfill certain conditions, a defendant also has right to deny it. In this matter , the defendant gain the burden to prove that plaintiff already had an independent legal advice before entered the contract or the contract was entered with free will by plaintiff. However, if defendant fail to rebut, the plaintiff has right to rescind or to affirm a contract pursuant to section 65 of the same Act. This makes a contract become voidable under undue influence which the continuation of such contract falls on the right of the plaintiff .
Besides that, on part of a gift in a transaction, there is no need to prove the elements of unfair advantage because a gift means only one parties give consideration while another is not. It is inherent that it would be an unfair advantage to a side party which is the plaintiff. In shorts, proving unfair advantage is essential to claim under undue influence. When undue influence occurred, a contract become voidable plus a defendant also has their on right to deny that he had fulfill the elements of Undue Influence.
So, that is all for today. I hope you guys can understand my explanation very well since this topic is quite long😄. Stay tuned for my further updates ok😎

Undue Influence Part 1

            Undue influence can be simply described as about a person who take advantage in his special position to deceive another party in a contract. According to the section 10 (1) of the Contract Act (CA) it stated that all parties must enter into an agreement by free consent. However, section 14 (b) said that consent is said to be free when it is not caused by undue influence as stated under section 16 of the same act. This section stated that undue influence is a relation of a party who is in his special position to dominate another party to obtain an unfair advantage in a contract.

According to common law, there are two types of undue influence which are actual and presumed undue influence. Basically, both types have a big similarity in their meaning which when the wrongdoer in his dominant position, and the transaction done was unfair, then it can be said that undue influence to be occurred. The different is a plaintiff does not need to prove the wrongdoer is in his dominant position regards to actual undue influence, but plaintiff need to prove the element of trust to raise undue influence.
For your better understanding, we may refer to section 16(1) of CA which said undue influence can be raised in a contract by proving two (2) elements which are the wrongdoer must be in a dominant position and he uses his position to have an unfair transaction. We can see that this provision is keen to the presumed undue influence. Then, look at section 16(2)(a) provides on how to prove the dominant position. We then can cross refer this section with class 2A and Class 2B.But, what is class 2A and class 2B?
Firstly, class 2A is a category of person who is in a special relationship with certain authority which are apparent and real authority. Apparent means the authority is implied. For example, a mother can ask her son to buy her some groceries. Her son can refuse his mother request but as the relationship of parents and child, the child automatically did what his mother asked. While real authority is we can look at doctors and lawyers. Due to their position are qualified, we, as a normal client or patient always follow the advice given by them when we are in an appointment with them. In other words, their position establish an express or direct authority which make us to follow their order no matter what.
Secondly, class 2B includes the category of person who is in fiduciary relationship. For instance relationship between, husband and wife, siblings and friends. In this level of class, the only thing that need to prove is the element of trust. Therefore, if the wrongdoer stands in either both classes, by proving the required elements, then undue influence can be claimed.
While in section 16(2)(b), this is a shortcut to prove the dominant position. When a contract come with an unfair outcomes, and the plaintiff whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress, then the contract can be said to be claimed under undue influence.

That is all for today. I am a bit tired, hahaha.. I need some rest maybe.😴Do wait for my updates on part 2!!!