Advanced Business Law LAW503

ADVANCED BUSINESS LAW
LAW503
PREPARED BY:
NURULHUDA ADABIAH BINTI MUSTAFA
LECTURER
FACULTY OF LAW
UNIVERSITI TEKNOLOGI MARA
12/10/16
Nurulhuda Adabiah Mustafa
LECTURERS CONTACT DETAILSNURULHUDA ADABIAH MUSTAFA

0355211097/0123899650
CEMPAKA 1-103
adabiah@salam.uitm.edu.my
nurulhuda.adabih@gmail.com
12/10/16
Statutes:
Bills of Exchange Act 1949
Consumer Protection Act 1999
Contracts Act 1950
Hire-Purchase Act 1967
Islamic Banking Act 1983
Sale of Goods Act 1957
Takaful Act 1984
Employment Act 1955
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Books:
Abdullah Alwi Hassan (1992), Sales and Contracts in
Early Islamic Commercial Law, Islamic Research
Institute, International Islamic University, Islamabad.
Ahmad Hidayat Buang (2000), Studies in Islamic Law
of Contracts: The Prohibition of Gharar, International
Law Book Services, Kuala Lumpur.
Ala Eddin Kharofa (1997), Transaction in Islamic
Law, AS Nordeen.
Beatrix Vohrah, Wu Min Aun (2000), The Commercial
Law of Malaysia, Longman, Kuala Lumpur.
Islamic Banking Practice from the Practitioners
Perspective (1994), Bank Islam Malaysia Berhad,
Kuala Lumpur.
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Lee Mei Pheng (2005), General Principles of Malaysian

Law. 5th Edition, Penerbit Fajar Bakti Sdn. Bhd. Kuala
Lumpur.
Syed Ahmad S A Alsagoff (1996), Principles of the Law of
Contract in Malaysia, Malayan Law Journal, Kuala Lumpur.
Takaful (Islamic Insurance): Concept and Operational
System from the Practitioners Perspective (1996), BIMB
Institute of Research and Training, Kuala Lumpur.
Wan Arfah Hamzah, Ramy Bulan (2003), An Introduction to
The Malaysian Legal System, Fajar Bakti, Kuala Lumpur.
Ahmad Mohamed Ibrahim (2000), The Administration of
Islamic Law in Malaysia, Institute of Islamic Understanding
Malaysia, Kuala Lumpur.
Lam Sinn Hui (1996), Commercial Law (Students
Companion Law Series), International Law Book Services,
Kuala Lumpur.
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Lee Mei Pheng, Detta Samen (1997), Commercial

Law in Malaysia, Malayan Law Journal, Kuala
Lumpur.
Liaquat Ali Khan Niazi (1991), Islamic Law of
Contract, Research Cell, Dyal Sing Trust Library,
Lahore.
Shaik Mohd. Noor Alam (2000), Undang-Undang
Komersil Malaysia, Dewan Bahasa dan Pustaka,
Kuala Lumpur.
Prof Altaf Ahmad Mir, Dr. Nik Ahmad Kamal,
Employment Law in Malaysia, International Law
Book Services.
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Articles:
1. Mohd. Daud Bakar (1996), Contract of Exchange in
Islamic Law of Transactions as Applied in InterestFree Banking System, paper presented at Seminar
on Shariah and Legal Aspect of Islamic Banking
Practice, Kuala Lumpur, 29-30th May 1996, pp. 1-34.
2. Affifuddin Omar (1995), Development of Islamic
Banking in Malaysia, New Horizon, February 1995,
p.12-13.
3. Mohd. Daud Bakar (2000), The Problem of Risk and
Insurable
Interest
in
Islamic
Takaful:
A
Jurispridential Analysis, paper presented at the 4th
International Conference on Islamic Economics and
Banking, Loughborough University, United Kingdom,
13-15 August 2000, pp. 179-192.
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4. Mohd. Masum Billah (1997), A Model of Life

Insurance in the Contemporary Islamic Economy,
Arab Law Quarterly Volume 12, Number 3, March
1997, Pages: 287 306 Brill.
5. Rustam Idris (1994), Towards Islamic Banking: The
Malaysian Experience-III, New Horizon, September
1994, p.9.
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LAW OF CONTRACT
ELEMENTS AND FORMATION OF
CONTRACT
TYPES OF CONTRACT VALID,
VOID AND VOIDABLE CONTRACT
DISCHARGE OF CONTRACT
TYPES OF REMEDIES AVAILABLE
COMPARISON WITH SHARIAH
PERSPECTIVES
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SALES OF GOODS
FORMATION OF SALES OF GOODS
TRANSFER OF TITLE
REMEDIES OF BUYER AND SELLER
UNDER SOGA AND CPA
CONSUMER PROTECTION LAW
CONSUMER PROTECTION ACT
1999
PERSPECTIVES
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10
HIRE-PURCHASE
FORMATION AND ELEMENTS OF
HIRE-PURCHASE
DUTIES AND RIGHTS UNDER HIREPURCHASE
PERSPECTIVES
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LAW OF AGENCY
CREATION OF AGENCY
RIGHTS AND DUTIES OF AGENT
AND PRINCIPAL
TERMINATION OF AGENCY
PERSPECTIVES
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EMPLOYMENT LAW
CONTRACT OF SERVICE AND
CONTRACT FOR SERVICE
DUTY OF CARE
DISMISSAL AND PRINCIPLES OF
NATURAL JUSTICE
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13
MONETARY INSTRUMENTS
BILLS OF EXCHANGE
TYPES OF ENDORSEMENTS
HOLDER
CHEQUES
TYPES AND CROSSING ON
CHEQUES
PROTECTION OF PAYING AND
COLLECTING BANK
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ISLAMIC BANKING AND FINANCE

- ELEMENTS AND PRINCIPLES OF
ISLAMIC BANKING
- ISLAMIC BANKING PRODUCTS
- DIFFERENCES BETWEEN ISLAMIC
BANKING AND CONVENTIONAL
BANKING SYSTEM
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ISLAMIC INSURANCE (TAKAFUL)

PRINCIPLES OF TAKAFUL
TYPES OF TAKAFUL BUSINESS
DIFFERENCES
BETWEEN
TAKAFUL AND CONVENTIONAL
INSURANCE
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LAW OF CONTRACT
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17
INTRODUCTION
The law applicable: Contracts Act 1950
and case law.
Definition of contract Consensus ad idem.
Is an agreement between 2 or more
persons that is legally binding between
them.
Sec
2(h)
CA:
An
agreement
enforceable by law is a contract.
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ELEMENTS OF CONTRACT
Proposal and Acceptance
Consideration
Intention
to
Create
Relations
Certainty
Legal Capacity
Free Consent
Legality of the Objects
Required Formalities
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Legal
19
PROPOSAL AND ACCEPTANCE

Proposal + Acceptance = Agreement
Proposal
Also known as promise or offer.
A proposal made by one party to another party, with the
intention that, that other party would accept his
proposal.
Made by a person called as offeror or promisor who
offers of promises something to another person.
Sec 2(a) CA- A proposal is made when one person
signifies to another his willingness to do or to abstain
from doing anything, with a view to obtaining the assent
of that other to such act or abstinence.
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Proposal can be made toIndividual

Public in general
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21
Case:
Carlill V Carbolic Smoke Ball Co.

[1983] 1 QB 256.
The defendants had made an advertisement about a
medicine, smoke ball that was used to cure influenza. They
also mentioned they would pay 100 to anyone who still
suffer influenza after taking the medicine according to its
prescription. To show their true intention, defendants had
deposited 1000 into a bank account for this particular
purpose. Mrs Carlill, who had bought and used the smoke
ball but still suffer influenza, claimed the 100 from the
defendants but was denied by them.
Held:
The advertisement was made to the whole world
at large and anyone who is willing to consume the
medicine as prescribed was said to have accepted the
offer. Furthermore, by depositing 1000 the defendants had
shown their earnest intention to make a valid contract with
their prospective buyers or consumers. Thus, Mrs Carlill
claimed was successful.
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An offer must be communicated to the

promisee/offeree. Otherwise the offer is not valid.
Refer to Sec 2(a) CA: When one person signifies
to another
The word signifies in this section indicates that
the offer must be communicated, which means
that the offer must reach the knowledge of the
promisee/offeree.
Sec 3 CA: The communication of proposals
, respectively, are deemed to be made
by any act or omission of the party proposing
.., by which he intends to communicate
the proposal ., or which has the effect
of communicating it.
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Sec 4(1) CA: The communication of a

proposal is complete when it comes to
the knowledge of the person to whom it
is made.
Sec 4 Illustration (a) CA: A proposes,
by letter, to sell a house to B at a
certain price. The communication of
the proposal is complete when B
receives the letter.
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Case: R v. Clarke (1927) 40 CLR 227.

Clarke, was an accomplice to the murder of two
policeman. Following a notice by the Australian
government to grant a free pardon and a reward of $1000
for information leading to the arrest of the murderers,
Clarke supplied the information. He admitted at the
hearing that he had supplied the information to save his
skin and at the material time the thought of the reward
had completely passed out of his mind.
Held: Ignorance of the offer is the same as never hearing
it or forgetting it after hearing of it. Therefore, Clarke
failed to get the reward.
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The position would be different if the proposal was

present in the promisees mind when he acted upon it
although he may have been motivated by some other
considerations.
Case: Williams v. Carwardine
The defendant offered a reward of 20 for information
leading to the conviction of a certain murderer. The
plaintiff gave the information not for the reward but to
ease her own conscience although she knew of the
reward.
Held: The plaintiffs motive in giving the information was
irrelevant. The act was done by the plaintiff with
knowledge of the reward.
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EXCEPTIONS TO THE GENERAL RULE

An offer must be distinguished from invitation to
treat (ITT)
Offer must be distinguished from ITT in order to
ascertain when will the actual offer takes place.
If a person does something with the intention to
make an offer, then such act may bind the
promisor/offeror if there is an acceptance by
another person to such an offer.
However, if a person does something with the
intention to make an ITT, then anything done by
another person in response to such ITT is only
an offer.
There is no binding contract yet until there is an
acceptance to such offer.
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It is merely an invitation from one party to another

party to make an offer.
It is an early stage before an offer could be made.
ITT Is a sort of preliminary communication, which
passes between the parties at the stage of
negotiation that might lead to an offer.
Examples of ITT
Advertisement
Display of goods with price tags in a self service
shop
Tender
Price list/Quotation
An auctioneer inviting bids in an auction sale
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DISPLAY OF GOODS IN A SELF-SERVICE

SHOP
The act of the seller displaying the goods with the price tags,
in a self service shop is an ITT.
The customer would make the offer when they selected what
they want and bring them to the counter for payment.
The cashier will make the acceptance.
Case :
Pharmaceutical Society of Great Britain v.
Boots Cash Chemist Ltd. (1953)
Whether the display of goods with the price tags in a selfservice shop is an offer or an ITT.
Held: The display of goods was only an ITT. An offer is made
when the customer placed the articles into the basket and
brings them to the counter for payment. Acceptance would
only be made when the cashier or the shop owner accepted
the payment made by the customer. So long as the cashier
did not accept the payment, there is no contract yet.
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Case: Fisher v. Bell

Display of several kinds of flickknives in a glass shop window is
not an offer but only an invitation
to the customers to make an offer
to buy. Whether the offer is
accepted or not, it depends on the
discretion of the shop owner.
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Proposal v. Counter Offer

Case: Hyde v. Wrench (1840) 3 BEAV 334
D offered to sell a piece of land to the P for
1000 on 6th of June. P then made a counteroffer to purchase at 950 on 8TH of June.
However, D refused to accept the new price. P
then immediately wrote to D accepting the
original offer of 1000 on 27th of June.
Held: There was no acceptance because the
plaintiffs letter on 8th of June had rejected the
original offer and not to be revived. Therefore,
there was no valid contract.
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Acceptance
Sec 2(b) of CA- When the person to whom the
proposal is made signifies his assent thereto, the
proposal is said to be accepted: A proposal, when
accepted, becomes a promise.
Acceptance must be absolute and unqualified.
Sec 7(a) of CA- In order to convert a proposal into
a promise the acceptance must be
(a)
absolute and unqualified
Case: Hyde v. Wrench
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32
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Sec 7(b) CA: ..The acceptance

must be expressed in some usual
and reasonable manner, unless the
proposal prescribes the manner in
which it is to be accepted.
If there is a mode of acceptance
prescribed by the offeror it must be
followed by the offeree in order to
make a valid acceptance.
33
Case: Felthouse v. Bindley

Felthouse offered by letter to buy his nephews
horse and said If I hear no more about him, I
shall consider the horse is mine. His nephew
did not give any answer, but the nephew told
Bindley (the auctioneer) to keep the horse out
of the auction sale, as he intended to reserve it
for his uncle, Felthouse. However, Bindley had
sold the horse by mistake. Felthouse sued
Bindley claiming that Bindley should not sell
the horse to other person because there was
already a contract between him and his
nephew.
Held: There was no contract between
Felthouse and his nephew because the
nephew had never signified to Felthouse his
acceptance of the offer before the auction sale
took place. Silence does not constitute
acceptance.
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POSTAL RULE
A rule governing acceptance through post. It is provided
in Sec 4(2) CA. It is important to determine the
communication of acceptance because it will affect the
validity of revocation either by the proposer or by the
acceptor.
Acceptance through post is complete when the letter of
acceptance is posted, even though it has not come to the
actual knowledge/received by the proposer; the proposer
is bound to the contract when the acceptor posts the
letter of acceptance, even though the proposer has no
knowledge of the acceptance.
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The contract is binding on the acceptor,

irrespective of any delay or disappearance
of the letter of acceptance.
Communication of
complete as against-
an
acceptance
is
a) Proposer-Once posted [Sec 4(2)(a) CA].

b) Acceptor-Comes to the knowledge of
the proposer [Sec 4(2)(b) CA]; Illustration
(b) of Sec 4 CA].
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36
Case: Ignatius v. Bell (1913) 2 FMSLR

115
The D offered to sell his land to the P on
condition that if the P would like to
accept the offer, he must make the
acceptance on or before 20th August
1912. The P sent an acceptance by
registered post on 16th August but the
letter did not reach the D until 25th
August, because the D was away.
Held: The acceptance was exercised by
the P when he letter was posted on 16th
of August. Therefore the D was bound to
the contract.
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REVOCATION OF PROPOSAL AND

ACCEPTANCE
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Revocation refers to withdrawal of proposal by

the proposer or withdrawal of acceptance by the
acceptor.
Requirements of a valid revocationIt must be communicated.
The communication of a revocation is complete
as against thea) Person who makes it- when it is
communicated to the other person (Sec 4(3)(a)
CA).
b) Person who receives it-when comes to his
knowledge
(Sec 4(2)(b) CA).
Refer to Illustration (d) of Sec 4 CA.
38
Time of revocation.
Proposal (Sec 5(1) CA)- At any time
before the communication of its
acceptance is complete as against the
proposer, but not afterwards.
Acceptance (Sec 5(2) CA)- At any time
before the communication of its
acceptance is complete as against the
acceptor, but not afterwards.
Refer to Illustration of Sec 5 CA.
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MODES OF REVOCATION OF PROPOSAL
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Communication of notice of revocation by the

proposer to the other party (Sec 6(a) CA).
By the lapse of time prescribed in the proposal for
its acceptance or if there is no such prescription, by
the lapse of reasonable time, without the
communication of its acceptance (Sec 6(b) CA).
When the acceptor fails to fulfill a condition
precedent to acceptance (Sec 6(c) CA).
Death or mental disorder of the proposer (Sec 6(d)
CA). However, if the acceptor has no knowledge
about the death or mental disorder of the proposer,
his acceptance is valid and binding. Such a contract
can
be
enforced
against
the
personal
representatives of the proposer unless where the
proposal is personal to the proposer.
40
CONSIDERATION
Sec 2(d) CA: Consideration is an act
or abstinence or promise by the
promisee or any other person as
required by the promisor in return
for his promise.
Literally, it means something that is
given in return for something else.
Sec 26 CA: Agreement made
without consideration is void.
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TYPES OF CONSIDERATION
Executory consideration i.e a promise for a

promise.
Refer to Illustration (a) of Sec 24 CA.
Executed Consideration, i.e a promise for an
act.
Contract arises upon executed consideration.
is
Past Consideration
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A consideration is executed when an act

performed in return to a promise.
Refer to Carlill v. Carbolic Smoke Ball Co. (1893).
Is the consideration which has been done or

completed before the promise is made.
One promise is made subsequent to an in return for
an act that has already been performed before the
promise is made.
Refer to Illustration (c) of Section 26 CA.
42
EXCEPTIONS UNDER SEC 26 CA

Agreement without consideration is void, unless Sec 26(a) CA- Contract made on account of natural
love and affection.
Refer to Illustration (b) of Sec 26 CA.
Requirements Expressed in writing (any reasonable form);
Must be registered if required by law;
Made on account of natural love and affection and
between parties standing in near relation to each
other.
(Near relation = Immediate family members
(Depends on social group).
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43
Case: Re Tan Soh Sim (1951) MLJ 21

TAN AH THAI (1) X SNG GAIK SEE X KHOO KIM HUAT (2)
(d 1894)
(d 1932)
(d 1926)
TAN X CHAN X TAN

BOEY
SOH
KEE
SIM
3
2
5
DAUGHTERS SONS DAUGHTERS
ADOPTED
2
2
SONS DAUGHTERS
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44
The deceased, Tan Soh Sim, had three sisters.

Their mother was firstly married to one Tan Ah Thai
and had four children. When Tan Ah Thai died, she
married one Khoo Kim Huat and had seven
children. The Tan and Khoo children maintained
social and friendly relations with one another. Tan
Soh Sim married, but having no issue, adopted
four children. The husband, one Chan, married a
second wife, Tan Boey Kee. When Tan Soh Sim
was on her death bed, too ill to make a will, all the
Khoo and Tan children signed a document drawn
up by a solicitor renouncing all claims to Tans
estate in favour of the four adopted children and
Tan Boey Kee. They were told by Tan Boey Kee that
this was the intentions of Tan Soh Sim. Tan Soh
Sim died without having recovered consciousness.
The question arose in the distribution of Tans
estate whether the instrument signed was valid.
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Held: Chinese adopted children are

related to the adoptive parents and
brothers, however they are not nearly
related to the family of their adoptive
mother. Hence, uncles and aunties do not
stand in near relation to their nephews
and nieces. In this case, there was no
natural love and affection between the
signatories and donees.
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Sec 26(b) CA- An agreement to compensate

for a past voluntary act.
Requirements
Sec 26(b) CA- An agreement to compensate

a person who did an act which the promisor
was legally compellable to do.
Requirements
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A promise to compensate either wholly or partly to

promisee;
Promisee did the act voluntarily.
Refer to Illustration (c) of Sec 26 CA.
Promisee has done the act voluntarily;

The act is one which the promisor was legally
compellable to do;
An agreement to compensate, wholly or partly, the
promisee for the act.
Refer to Illustration (d) of Sec 26 CA.
47
Sec 26(c) CA: An agreement to pay a statute barred debt.

Statute barred debt cannot be recovered through legal
action because lapse of time fixed by law.
Limitation Act provides that the time is 6 years from the
cause of action.
Requirements:
The debtor made a fresh promise to pay the statute
barred debt;
The promise is in writing and signed by the promisor
(debtor) or his authorized agent.
Refer to Illustration (e) of Sec 26 CA.
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48
RULES ON CONSIDERATION
Consideration must have some value in the eyes of the
law. An act or promise to do something which one is
bound to do will not be a valid consideration.
Case: Collins V. Godefroy (1831) 109 ER 1040
A promise had been made to pay a witness, who was
under an order to attend the court as subpoena, 6
guineas for his trouble.
Held: The promise was unenforceable because there
was no consideration for it. The duty to attend was a
duty imposed by law.
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Consideration need not be adequate but sufficient.

Case: Thomas v. Thomas (1842) 114 ER 330
Rent payment of 1 made by the plaintiff to defendant
was a valuable consideration even though it was not
adequate.
By virtue of Explanation 2 to Sec 26 of CA, the
inadequacy of consideration is not important.
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Explanation 2, Sec 26 CA: An agreement to which the consent of the

promisor is freely given is not void merely because the consideration is
inadequate
Illustration (f) Sec 26 CA.
Consideration can move from the promisee or other person.
Refer to Sec 2(d) CA.
Case: Venkata Chinnaya v. Verikataramaya (1881) 1 LR 4

A sister agreed to pay an annuity of Rs 653 to her brothers who provided no
consideration for the promise. On the same day, their mother had given the
sister some land stipulating that she must pay the annuity to her brothers.
When the sister subsequently failed to fulfill the promise, her brothers sued her.
Held: She was liable on the promise on the ground that there was a valid
consideration for the promise even though it did not move from the brothers.
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Consideration must not be illegal.

Consideration must not be vague.
Consideration must be possible of performance.
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INTENTION TO CREATE LEGAL RELATIONS

Two
presumptions,
though
rebuttable, have developed in the
determination of intention with
respect to agreements, viz
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In business agreements, there is a

presumption that the parties intend legal
consequences to follow unless the parties
specify otherwise.
In social, domestic or family agreements, it is
implied as a matter of course that no legal
relations are contemplated, but such
presumption may be rebuttable.
53
BUSINESS AGREEMENTS
Subject to contract
Case: Winn v. Bull (1877) 7 Ch.d 29
The defendant agreed in writing with the plaintiff to
take a lease for certain terms at a certain rent
subject to the preparation and approval of a formal
contract. No formal contract was ever entered into
between the parties and the plaintiff brought an
action for specific performance.
Held: There was no binding contract.
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SOCIAL, DOMESTIC AND FAMILY

AGREEMENTS
Between husband and wife.
Case: Balfour v. Balfour (1919) 2 KB 571
The defendant, who was a civil servant stationed in Ceylon,
came to England with his wife. Later he returned back to
Ceylon but his wife stayed back in England on doctors
advice. The husband, before sailing, promised her 30 a
month until he returned. Later he wrote to her saying that it
would be better if they remained apart and the wife obtained
a decree nisi. The wife sued him on the promise to pay her
30 per month. She succeeded in the first instance but the
Court of Appeal allowed the husbands appeal. Held: There
was no contract as the parties did not intend that the
agreement should be attended by legal consequences.
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Case: Merritt v. Merritt (1970) 2 ALL ER 760

The husband left the wife and went to live with another
woman. The wife pressed the husband to make
arrangements for the future. They met and talked the
matter over and he wrote and signed and dated these
notes: In consideration of the fact that you will pay all
charges in connection with the houseuntil such time as
the mortgage repayment has been completed, I will agree
to transfer the property to your sole ownership. The wife
paid the mortgage but the husband refused to transfer
the house to her. The wife sued for a declaration.
Held: The court made a declaration that the wife was now
the sole beneficial owner of the matrimonial home.
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Between parent and child.

Case: Jones v. Padavatton (1969) 1 WLR 328
Mrs Padavatton was working as a secretary in the
USA. Her mother, Mrs Jones offered to provide her
daughters expenses if she would return to Englang
to study for the Bar. Mrs Padavatton accepted. A little
later, Mrs Jones offered in addition to provide a
house for her daughter, some of the rooms to be let
to tenants. Later Mrs Padavatton became so uncooperative that, two years later, Mrs Jones claimed
possession of the house. Mrs Padavatton resisted
on the ground that her mother was contractually
bound to the arrangement. Held: Mrs Jones was
entitled to possession. The original agreement was
motivated by the mothers desire for her daughter to
succeed at the Bar. They were originally on good
terms and they had no intention to enter into a stiff
contractual arrangement.
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CERTAINTY
Sec 30 CA: Agreement, the meaning of

which is not certain, or capable of being
made certain, are void.
Issues of certainty
Language used too vague.

Fail for incompleteness.
Case:
Karuppan Chetty v. Suah
Thian (1916) 1 FMSLR 300
The contract that allowed one of the
parties to rent a premise for $35 a month
as long as he likes was held
void.
Held: There was no certainty.
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58
LEGAL CAPACITY
MINOR
LEGAL CAPACITY
UNSOUNDMIND
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59
MINOR
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Age of Majority Act 1971 provides that a person

attains the age of majority at 18. A person under
this age is considered to be a minor.
Sec 10(1) CA- All agreements are contracts if
they are made by the free consent of parties
competent to contract, for a lawful consideration
and with a lawful object, and are not hereby
expressly declared to be void.
Sec 11 CA- 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
soundmind, and is not disqualified from
contracting by any law to which he is subject.
Contract entered into by incompetent parties is
void.
60
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All contracts entered into by minor are void.

Void ab initio.
This is because to protect the minor against
consequences of his own actions and
presumed lack of judgment.
Therefore, a minor cannot be made liable
upon the contract. The contract cannot be
enforced against the minor. The other party
of the contract cannot sue the minor for
breach of contract.
Similarly, the minor also cannot enforce the
contract and cannot sue the other party for
breach for contract, if he himself was still a
minor at the time the contract was made.
61
Case: Mohori Bibee v. Dhurmodas Ghose

(1903)
The appellant lent the respondent (a minor) the sum
of Rs 20000. The loan was secured by was of
mortgage on some houses belonging to the
respondent. The appellant knew that the respondent
was a minor. Later, the respondent brought an action
for a declaration that the agreement was void
because he is still a minor and lack of capacity.
Held: The agreement is void and therefore it is not
binding on the respondent.
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62
EXCEPTIONS TO THE GENERAL RULE
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The capacity of any person to act in matters relating to

marriage. A promise of marriage entered into by minors
or their parents on their behalf is valid.
Case:
Rajeswary & Anor v. Balakrishnan & Ors
(1958)
3 MC 178
Both parties were Ceylonese Hindus. According to the
customary practice, a marriage agreement was made
on behalf of the plaintiff and the defendant by their
fathers. Under the agreement, it was agreed that the
dowry is $3000. If there is any breach of the agreement
by either party, the penalty is $5000. Subsequently the
defendant refused to perform the contract. Plaintiff
then brought an action for damages against the
defendant for the breach of promise of marriage. The
defendant pleaded that the contract is not binding
because at the time of the contract, the plaintiff was a
minor.
63
The contract was binding, as the contracts of

promise of marriage entered into by minors are
valid.
12/10/16
The minor is liable in contracts for necessities.

Case: Nash v. Inman (1908) 2 KB 1
Plaintiff had supplied to the defendant clothing to the
value of 145 at a time when the defendant was a
Cambridge student. The clothes supplied included 11
fancy waistcoats. Plaintiff claimed for the payment from
the defendant. The defendant contended that at the time
the clothes were supplied to him, he was still a minor
and that the clothes were not necessaries. Furthermore,
it was provided that the defendants father had amply
supplied the defendant with proper clothes according to
his condition in life.
Held: The clothes supplied to the defendant were not
necessary to the defendants actual requirement
because the defendant was sufficiently supplied with
suitable and necessary clothes by his father. Therefore,
the defendant was not bound to the contract.
64
12/10/16
Sec 69 CA entitles a person to be reimbursed

if he enters into contract with a minor for
necessaries. However, this rights is subject to
some conditions
The necessaries must have been actually supplied

to the minor;
The minors liability includes necessaries to anyone

whom he is legally bound to support such as his
wife or children-Illustration (b) to Sec 69 CA.
65
The supplier may claim only a reasonable

price, which may not be the same as the
contractual price. If the supplier wants to
claim the reasonable price, he must prove
thati) The goods are suitable to the minors
condition of life, and
ii) The goods are suitable to the actual
needs of the minor during the sale or
delivery.
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66
Case:
Government of Malaysia v.
Gurcharan
Singh & Ors (1971) 1
MLJ 211
The plaintiff sued the defendant for breach of
contract. The claim was $11500-alleged to be the
sum actually spent by the government in educating
the first defendant. At the time of the contract, the
defendant was a minor. The first defendant now had
served the government for three years and ten
months out of the contractual period of five years.
Thus, it was pleaded by the defendants that the
claim for $11500 was excessive and not a
reasonable compensation.
Held: Education was necessaries, thus the first
defendant was liable for the repayment of a
reasonable sum spent on him. The plaintiff was
awarded, however, $2683 as the amount of damages
payable based on the defendants completed
months of service.
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67
Scholarship
Sec 4(a) Contracts (Amendment) Act 1976-A
scholarship entered into by a minor is a valid
contract.
Insurance
Insurance Act 1963 (Revised 1972)-A minor
over 10 years may enter into a contract of
insurance but if under the age of 16 years
must
have
written
consent
of
the
parents/guardian.
Apprenticeship
Children and Young Persons (Employment)
Act 1966-Contract of apprenticeship of
service is a necessaries.
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68
CAPACITY OF PERSON OF SOUNDMIND

Basis of contract-Meetings of mind + Free consent
Sec 10 CA.
Sec 11 CA-Person of soundmind is competent to
contract.
Sec 12(1) CA-Soundmind at the time when a person
makes a contract, he is capable of understanding it and
forming a rational judgment as to the contracts effects
on his interest.
Sec 12 CA-Persons of mentally disorder and person
incapacitated through sickness, alcohol or drugs.
Illustration (a) and (b) Sec 12 CA.
Sec 12(2) CA and Sec 12(3) CA.
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69
Effect-Contract is voidable at the option

of the person of unsoundmind if
The fact of mental disorder or intoxication can
be proved;
The other party knows of his condition.
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70
FREE CONSENT
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Free consent is the basis of a

contractual relationship.
Sec 10(1) CA- All agreements are
contracts if they are made by the free
consent of parties competent to
contract
Sec 13 CA- Two or more persons are
said to consent when they agree upon
the same thing in the same sense.
71

(1)
(2)
(3)
(4)
(5)
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Sec 14 CA-Consent must be free. It is said not to

be free if caused byCoercion (Sec 15 CA);
Undue Influence (Sec 16 CA);
Fraud (Sec 17 CA);
Misrepresentation (Sec 18 CA);
Mistake (Sec 21-23 CA).
If one of the factors which are mentioned under
Sec 14 CA, exists in the agreement, the consent
is said to have been given not freely and
voluntarily. Therefore, the contract may become
void or voidable.
72
VOID OR VOIDABLE CONTRACTS?
Void-Not valid (Sec 2(j) CA).
No rights given to the parties and no obligations imposed on

them.
The contract cannot be enforced at all, even by the court.
Voidable-Valid until rescinded (Sec 2(i) CA).
One of the parties is given a choice either to continue the

contract or to discontinue with the contract.
The agreement is valid and binding, until the party who is
entitled to rescind the contract chooses to rescind it.
If that party chooses to rescind, then the contract is no longer
valid and binding upon the parties.
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73
ELEMENTS THAT MAY AFFECT THE

FREE CONSENT
(1) Coercion (Sec 15CA)
The effect of the contract is voidable-Sec 19(1) CA.
Case:
Chin Nam Bee Development Sdn Bhd v.
Tai
Kim Choo & 4 Ors
Respondents purchased houses to be constructed
by the appellant. Each of the respondents had
signed a contract to purchase a house at $29500.
However, the respondents were forced later to pay
an additional $4000 under a threat by the appellant
to cancel the respondents booking for their
houses.
Held: The payment was not voluntary but had been
made under threat. Thus, there was coercion in the
agreement of paying the additional $4000 to the
appellant.
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74
(2) Undue Influence (Sec 16 CA)
The effect of Undue Influence is

voidable-Sec 20 CA.
Two elements of Undue Influence(i) The domination of the will by one party
over the other;
(ii) Obtaining an unfair advantage.
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75
Case: Allcard v. Skinner (1887) 57 LT 61

(CA)
When Miss Allcard was about 35 years of age she
felt a desire to devote her life to good works. She
became associated with the sisters of poor and
after a few years became a professed member of
that sisterhood and bound herself to observe the
rules of poverty, chastity and obedience. The rule
as to poverty required a member to surrender all
her property either to her relatives, the poor or to
the sisterhood itself. The rules also provided that
no sister should seek advice from anyone
outside the order without the consent of the Lady
Superior. Within a few days of becoming a
member Miss Allcard made a will bequeathing all
her property to Miss Skinner, the Lady Superior,
and in succeeding years made gifts to the value
of about 7000 to the same person. When Miss
Allcard left the sisterhood about eight years later
she immediately revoked the will and claimed all
her properties back.
Held: Contract is voidable.
12/10/16

Nurnazida Nazri-Faculty of Law
76
Sec 20 of CA-Power to set aside

contract induced by undue influence.
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77
(3) Fraud (Sec 17 CA)

Case: Derry v. Peek
Fraud is proved when it is shown that false representation has
been made eitheri) Knowingly, or
ii) Without belief in its truth, or
iii) Recklessly, careless whether it is true or false.
Elements of fraudi) There must be a false representation/statement;
ii) The representee must have relied on the
representation;
- Otherwise the misrepresentation is irrelevant.
Refer Explanation to Sec 19 CA and Illustration (b).
12/10/16
78
Case: Kheng Chwee Lian v. Wong Tak Thong

The respondent had been persuaded to enter into a
second contract on the false representation that the
area of the land to be transferred, was of the same size
as the land which the respondent had agreed to buy
under the first contract.
Held:
The
respondent
was
induced
by
misrepresentation into signing the second agreement.
Therefore the respondent has the right in repudiating
the agreement on the ground that it was induced by
fraudulent misrepresentation.
12/10/16
79
Case: Letchemy Arumugan v. Annamalay

Defendant had made a fraudulent misrepresentation to the
plaintiff, an illiterate Indian woman rubber tapper and induced
her to enter into a Sale and Purchase Agreement. The
defendant had fraudulently represented to the plaintiff that the
document she was required to sign was for a loan that she
had taken and to free the land from the charge. In fact, the
documents she signed included a sale agreement of the land.
Held: The agreement was voidable at the option of the
plaintiff.
Burden of proof-It is on the party who claims that there is
fraudulent misrepresentation, to prove all the elements of
fraud. Otherwise the contract cannot be rescinded.
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80
Effect of fraud in a contract-Voidable (Sec

19(1) CA)
Does silence constitute fraud?
Refer Explanation to Sec 17 CA.
The general rule is silence does not
constitute fraud. Refer to Illustration (a)
and (d).
However, in certain circumstances,
silence may constitute fraud. Refer to
Illustration (b) and (c).
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81
(4) Misrepresentation-Sec 18 CA.
False statements made by the

representor and which induce the
other party to enter into the contract.
However, such false representation
was not made with the intention to
deceive.
Elements of misrepresentation
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There must be a false representation,

either through a positive statement or
some conduct.
The representation must be one of fact,
not a more expression of opinion.
The statement was addressed to the party
misled.
The representation must induce the
misled party to enter into the contract.
82
Refer to Explanation to Sec 19 of CA.

Refer to Illustration (b) to Sec 19 of CA.
Three limbs of misrepresentation
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Negligent misrepresentation arising out of a breach

of duty- Sec 18(b) of CA.
An honest belief in the truth of a statement made is
no defence to misrepresentation where the statement
is made in a manner not warranted by the information
available to the representor-Sec 18(a) of CA.
Mistaken belief of a fact by the person himself (not
the presentor) is not a voidable contract-Sec 23 of
CA.
But if the mistake had been induced by the other
party, it is a voidable contract-Sec 18, Paragraph C.
83
Remedies as to Misrepresentation Sec 19(1) of CA.

Sec 19(2) of CA-Right to affirm the
contract and put it in the position on
which he would have been if the
representations made had been true.
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84
5. Mistake-Sec 21 of CA.
Elements of Mistake:
The mistake must be made by both
parties (mutual mistake);
The mistake is relating to a matter of
fact essential to the agreement.
Mistake of fact may occur in the
following circumstance
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Mistake as to the existence of the subject

matter of the contract-Refer to Illustration
(a), (b) and (c) to Sec 21 of CA.
Mistake as to the identity of the subject
matter-Both parties are at cross purposes.
85
Case: Raffles v. Wichelhaus

Two parties contracted for a sale of a
cargo of cotton arriving in London by a
ship called The Peerless, sailing from
Bombay. But unknown to both parties,
there were two ships of the same name
leaving from Bombay at different times.
They were both negotiating under a
mistake and had in mind different ships.
Held: The contract was void for mutual
mistake.
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86
12/10/16
Mistake as to the possibility of performing

the contract.
Case: Sheikh Brothers v. Ochsner
The appellant granted to the respondent
licence and authority to cut and
manufacture all sisal growing on 5000
acres of land in Kenya and to deliver to the
appellant 50 tons per month of sisal fiber
for sale. Respondent was then unable to
do so as the leaf potential of the sisal was
not sufficient to produce that much.
Held: It was a mistake as to the possibility
of performing the contract. The agreement
was void.
87
Effect of mutual mistake in a contract,

the contract cannot be enforce at all and
void-Sec 21 of CA.
Effect of unilateral mistake, it does not
affect the validity of a contract because a
person is expected to take reasonable
care to ascertain what he is contracting
about. The contract is valid.
12/10/16
88
Sec 65 of CA-Consequences of rescission of

voidable contract.
Sec 66 of CA-Obligation of person who has received
advantage under void agreement, or contract that
becomes void.
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89
LEGALITY OF THE OBJECTS

Sec 24 of CA-Considerations and objects
which are lawful and not.
REQUIRED FORMALITIES
Sec 10(2) of CA-Nothing herein
contained shall affect any law by which
any contract is required to be made in
writing or in the presence of witnesses,
or any law relating to the registration of
documents.
12/10/16
90
DISCHARGE OF CONTRACTS
When a contract is discharged, it means the

contract is terminated.
Once discharged, the contracting parties are
free from further obligations under the
contract.
Contract may be discharged by
12/10/16
By performance of the contract; or

By consent or agreement between the parties of
the contract; or
By impossibility of performance (Doctrine of
Frustration); or
By breach of contract by anyone of the parties.
91
DISCHARGE BY PERFORMANCE
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Usual method to discharge a contract.

Parties need to perform.
If both have carried out their obligations-Complete
discharge.
If only one party carried out his obligations-He alone
is discharged.
Sec 40 of CA-It must be strictly performed in
accordance with the terms of the contract unless the
parties have agreed otherwise.
Parties must be prepared to perform their obligations
at the time and place at which he is undertaken to do.
Sec 56(1) of CA-Effect of failure to perform at fixed
time, in contract in which time is essential.
However, if the time is not essential, the contract
does not become voidable but the promisee is
entitled to compensation for any loss he suffered-Sec
56(2) CA.
92
DISCHARGE BY AGREEMENT
A contract
can
be
discharged
by
the
consent/agreement of all the parties in the form of
substitution/alteration/rescission of the original
contract-Refer Sec 63 and Illustration (a) to Sec 63
of CA.
However, the consent must be secured from all
parties. If any of the parties does not agree with the
substitution/alteration/rescission of the original
contract, then the contract is not discharged-Refer
Illustration (c) to Sec 63.
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93
DISCHARGE BY IMPOSSIBILITY/
FRUSTRATION
A contract may be discharged if there is impossibility of
performance of the contract.
It may happen in two situations

The contract in itself impossible to be performed- Refer to Sec
57(1) of CA and Illustration (a).
(i) The contract is discharged if either one or both parties are
aware of the impossibility.
(ii) If only one party knew of the impossibility, he must make
compensation to the other party-Refer to Sec 57(3) of CA.
(i)
If the contract becomes impossible to be performed after it has

been made-Refer to Sec 57(2) of CA.
This is also known as Doctrine of Frustration.
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94
(ii) It happens because of a supervening impossibility which

caused the contract becomes impossible to be performed
or radically difficult.
Case: Taylor v. Caldwell
The defendant agreed to let to the plaintiff the use of his
music hall and garden for the purpose of entertainment.
Before the day of performance arrived, the music hall was
destroyed by fire. The plaintiff sued the defendant for
damages for breach of the contract which the defendant,
through no fault of his own, was unable to perform.
Held: Defendant was not liable. The performance of the
contract becomes impossible.
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95
Case: Krell v. Henry

The plaintiff placed advertisements outside his flat to the
effect that windows to view the coronation procession were
to be let. The defendant was told by the plaintiff that the flat
gives a good view of the procession. The defendant hired the
flat for 75 from the plaintiff for 26-27 June. The defendant
paid 25 when the contract was made and promised to pay
the balance 50 on 24 June. The procession was cancelled
due to the serious illness of the King. The plaintiff claimed the
balance of 50.
Held: The contract was void.
* Refer to Sec 66 of CA.
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96
DISCHARGE BY BREACH OF CONTRACT

When a promisor fails to perform his obligations, there is
a breach of the contract.
This entitles the other party who are not in breach, to
take
appropriate
action
which
includes
repudiation/rescission of the contract-Sec 40 of CA.
The party not in breach has the option either to continue
with the contract or to repudiate it.
Refer to Illustration (a) to Sec 40 of CA.
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97
REMEDIES
If there is a breach of contract, the party not in default
may claim one or more of the following remedies Rescission of contract
If a party breaches his promise under a contract, the party not in
breach has the right to rescind/terminate the contract-Sec 40
CA.
If the party not in default chose to rescind the contract, any
benefit which he has received from the defaulted party must be
restored-Sec 65 and Illustration (c) to Sec 66 of CA.
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98
Damages
Is granted to a party as compensation for the damage, loss

or injury suffered due to a breach of contract-Sec 76 and
Illustration.
Specific Performance
Is an order of the court to the party at fault to carry out the

contract according to its terms.
This remedy is given at the discretion of the court.
Injunction
Is a courts order to restrain the doing, continuance or

repetition of some wrongful conduct, which is against the
contract. Granted at the discretion of the court.
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99
Quantum Meruit
Is a claim for reasonable remuneration for work done or
services supplied under the contract, in the event of
breach of contract.
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100
LAW OF CONTRACT IN SHARIAH
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101
DEFINITION
The Arabic word for contract aqd means
tying or tightening.
In the Shariah terminology, a contract is the
legal bond between the speech of one party
to the others, in a manner showing the
place, which is the object of the contract.
Islamic jurisprudence defines the contract
as a commitment by one party to accept an
offer made by another party in a manner
showing its impact on the object of
contract.
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102
Acceptance denotes confirmation and the

speech of one party is called so because
it confirms to the other party the choice
of acceptance.
The commitment to the offer and the
acceptance thereof constitute a contract.
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103
ELEMENTS FOR A VALID CONTRACT

Offeror and Offeree
Offer and Acceptance
Subject matter
Consideration
Parties to the contract must be competent (Puberty,
prudence and soundmind).
Islamic Law is distinct from other legal systems that it
insists on the session of contract (majlis al-aqd) in the
sense that both the offer and acceptance are to be jointly
connected in one single session without any gap in time
or place.
The session therefore creates the essential unity of time
and place.
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104
THE LAW ON SALE OF GOODS
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105
INTRODUCTION
Statute applicable in Peninsular Malaysia SALE OF
GOODS ACT 1957.
In Sabah, Sarawak governed by Sec 5(2) Civil Law
Act 1956 English Law.
Our SOGA is almost identical to English SOGA.
Sec 3 SOGA provides that provisions of CA 1950
continue to apply unless they are inconsistent with
SOGA.
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106
SCOPE OF SOGA
Applies to all types of goods, including second hand
goods in commercial and private dealings.
Sec 2 SOGA defines the word GOODS as
meaning every kind of movable property includes
stock and shares, growing crops, grass and any
detachable things from land. This would mean land is
excluded from the definition of goods therefore it is
not governed by SOGA.
Goods which become the subject matter of the
contract of sale may be existing goods or future
goods.
Existing goods already owned or possessed by the seller.
Future goods goods to be manufactured or produced by the
seller.
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107
THE CONTRACT OF SALE

Sec 4(1) SOGA provides that a contract of sale is a
contract whereby the seller transfers or agree to
transfer the property in goods to the buyer for a
price.
In Sec 2 SOGA price is defined as the money in
consideration for a sale of goods.
Object of contract of sale is the transfer of ownership
of goods to the buyer for money as the consideration
on the part of the buyer.
Contract of sale is not the same as the agreement of
sale.
A contract of sale property is transferred to the buyer by the
seller.
Agreement to sell is a contract under which the transfer of
property will take place in the future.
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108
Case:
Harper Gilfillan Sdn Bhd (1980) v. Kean

Toh Amang Factory SB & Lee Kwee Hong
(Claimant) (1986) 1 MLJ 249
When the bailiff seized the goods in the factory, the
claimant claimed that the goods seized belong to
him, relying on a Sale and Purchase Agreement.
Held: The goods seized still belong to the defendant.
Courts finding that property did not pass to the
claimant in an agreement to sell, only a jus in
personam (right to sue the person) is created.
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109
FORMATION OF THE CONTRACT
No special form under SOGA.

A contract of sale can be created orally or written or
be implied from conduct of parties [Sec 5(2) SOGA].
Formation:
Sec 5(1) SOGA - Contract of sale is made by an offer
to buy or sell goods at a price and by the acceptance
of such an offer.
The contract may be the immediate delivery of the
goods or the immediate payment of the price or
both.
If no specific payment on delivery of goods and
payment, then Sec 32 provides that both payment
and delivery be made concurrently.
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110
Price:
Price is the money consideration.
It may be fixed in the following manner:
Fixed by the contract,
Be left to be fixed in a manner agreed in the contract
e.g fixed by third party,
Be determined by the course of dealing between the
parties,
Where it is not determine in any of the above ways,
then the buyer shall pay a reasonable price. Sec 9
provides that what is reasonable depending on the
circumstances of each particular case.
Capacity:
Capacity is governed by Contracts Act 1950.
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111
Terms of the Contract:

Condition and warranties.
Condition: Sec 12(2) SOGA a condition is an essential terms
of the contract, the breach of which gives rise to the right to
treat the contract as repudiated.
- As a general rule the innocent party can terminate the contract.
- Exceptions: Where the innocent party cannot terminate the
contract of sale but can only claims damages where:
(i) Buyer waives the condition;
(ii) Buyer treats the breach as breach of warranty and
claim for damages only;
(iii) Buyer had accepted part of the goods which is
possible to be severed; and
not
(iv) Where the goods had been passed to

the buyer and
breach of any condition
must be accepted as
breach of
warranty.
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112
Warranty:
- Sec 12(3) SOGA terms collateral to
the object of the contract, the breach
of which gives rise to claim for
damages but not to a right to reject the
goods and terminate the contract.
- Whether the term is condition or
warranty depends on the facts of each
case.
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113
Implied Terms:
Time:
Sec 11 SOGA provides that unless the parties intend to
make time as important to the contract, it will not be the
essence of the contract.
For example, if the buyer did not stipulate any time period
for the payment of the goods supplied then the buyer
may pay within a reasonable time period. But if the seller
wanted the buyer to pay the price of the goods on the
date of delivery and failing which the buyer is said to
have breached the contract. Then time is regarded as
important to the contract.
Title:
Sec 14(a) SOGA implied condition on part of the seller
that , in the case of sale, he has a right to sell the goods.
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114
Quiet possession:
Sec 14(b) SOGA the buyer shall enjoy quiet
possession of the goods.
This right covers against wrongful interference by
stranger claiming a lawful right by stating that his
title is better then the seller himself.
But the seller who has not been paid or partly been
paid can interfere with quiet possession e.g by
repossessing the goods.
Interference of quiet possession can be by
physical interference or other means.
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115
Goods free from any encumbrances:

Sec 14(3) SOGA goods shall be free from any
charge or encumbrance in favour of any third party
not known to the buyer before or at the time when
the contract is made.
For example in the case of Steinke V Edwards, it
was held that the vehicle is not free from
encumbrance was held that the seller has breach
implied warranty.
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116
When sale of goods by description, the goods must

correspond with the description.
Sec 15 SOGA provides that when the goods
were described, it should correspond with the
description. Failure to correspond with
description because of:
Goods vary from the contract.
Case: Moore & Co V Laundauer & Co
Contract for 3100 cases of Australian canned fruit
packed 30 tins per case.
Held: Buyer was entitled to reject the goods when half
of the cases contained only 24 tins per case. Goods
do not correspond with the contractual description.
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117
Goods described in more general sense in the

absence of detailed commercial description.
Considerable discrepancy must occurs before
constitute a breach.
Case: Varley v. Whipp
Contract for a second hand reaping machine
described as new the previous year and used to cut
50 acres, was not performed when the goods
delivered was a very old machine which has been
repaired.
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118
Sale of goods by description covers two situations:

(i) Where buyer has not seen the goods;
(ii) Where buyer has seen the goods.
Where buyer has not seen the goods.
In such a situation buyer will only rely on the
description alone.
Case: Nagurdas Purshotumdas v. Mitsui
Bushan Kaisha (1911) 12 SSLR 67
Flour sold bearing a well known trade mark in
previous dealing. Flour was then ordered the
same as our previous contract. Flour sent was
same quality but not the same trade mark.
HELD:Goods did not comply with the description.
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119
Where the buyer has seen the goods.

Seller will be liable if defect was concealed
from the buyer.
Case: Beale V Taylor (1967)2 All ER 253
Seller advertised Herald convertible, white,
1961.. The buyer viewed the car before agreeing
to buy it. Later buyer discovered that the front
part of the car was earlier model.
Held: Seller breached the condition of sale. He
failed to comply with description because the
goods were not the same as description.
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120
Implied conditions as to fitness for particular

purpose.
General rule: Section 16 SOGA provides the
common law principle of caveat emptor. This
principle is applicable to buyer.
Caveat emptor means Let the buyer beware. The
law imposed duty on the buyer to exercise due care
and diligent before making any decision to buy any
goods. If he himself is careless in making decision
then he has to face the consequence.
Exceptions: However this principle has two
exceptions:
S.16(1)(a) - Goods must be reasonably fit for
purposes which the buyer wants;
S.16(1)(b) - Goods must be of merchantable
quality.
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121
Four requirements must be fulfilled before the buyer

can use this section:
The buyer must inform the seller, expressly or
impliedly before or at the time of contract was made
the particular purpose for which the goods are
required;
Case: Griffith v. Peter Conway Ltd
Where a woman who has sensitive skin did not tell
the seller about it when she purchased the coat. She
failed to claim under Sec 16(1)(a) SOGA because the
coat will not harm ordinary person.
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122
The buyer is relying on the sellers skill or judgment;

Case:
Grant v. Australian Knitting Mills This case
decided that when the buyer goes to the sellers
shop with confidence indirectly shows that he relies
on the sellers skill in selected his stock.
The goods described is in the course of the sellers
business to supply;
Case:
Ashington Piggeries Ltd v.
Christophern Hill Ltd
Where it was decided by the court that even though it
was the first time the seller prepare the feeding
compound for minks, but it was of the kind of the
sellers business to supply. (The seller was the
manufacturer and dealer in animal feed).
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If goods are specific, and bought under their

patent or trade name.
If the buyer purchased the goods under
patent or trade name, and it is not fit for
purpose then he may sue the seller.
Case: Wilson v. Rickett, Cockerell Co Ltd.
Where the seller, a firm of coal merchant,
was liable for the explosion occurred while
using the household fuel under trade name
coalite which was contaminated with
detonator that may cause an explosion.
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Implied condition as to merchantable quality

Sec 16(1)(b) provides that the goods must be of
merchantable quality.
Quality means the state of condition of the goods.
Case: Wilson v. Rickett, Cockerell Co Ltd.
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Implied conditions in a sale by sample:

Sec 17(1) provides that a contract of sale where the
seller shows a sample, the goods sold must correspond
(exactly the same) as the sample.
The following conditions are implied in a sale by
sample:
Sec 17(2)(a) the quality of the bulk correspond with
the sample; and
Sec 17(2)(b) buyer shall have opportunity to compare
with the sample; and
Sec 17(2)(c) free from defect which would not be
apparent on reasonable examination of the sample.
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TRANSFER OF PROPERTY IN GOODS

Property in goods, that is, title or ownership, must
be distinguished with possession.
Although title of goods sold may have passed to
buyer, the seller may continue to possess the goods.
Or the buyer may have in possession the goods but
the title is still with the seller.
In a contract of sale, it is important to determine the
time when the title or ownership of the goods passes
to buyer.
This is very important because from the legal
perspective goods remain at sellers risk until it is
transferred to buyer. When the title or ownership is
transferred to buyer, the goods are at buyers risk
irrespective of whether delivery has been made. (Sec
26 SOGA).
As a general rule, title passes from seller to buyer
when the parties intend it to pass.
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SOGA specifies the condition before seller and

buyer can apply the general rule:
Sale of unascertained goods.
Sec 18 SOGA - where there is a contract for the
sale of unascertained goods. No title is
transferred until the goods are ascertained.
Sale of specific or ascertained goods
Sec 19 - where there is a contract for the sale of
specific or ascertained goods, the title is
transferred at such time as the parties to the
contract intend it to be transferred.
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Sale of Specific Goods in a Deliverable State

Sec 20 - where there is a contract of specific goods
in a deliverable state, the title passes when the
contract was made.
Sec 21 - where the contract for the sale of specific
goods but not in deliverable state, title will not pass
until the goods is put in a deliverable state and the
buyer has notice of it.
Sale of Goods in a deliverable state but subject to
weigh
Sec 22 - where the contract of sale of specific goods
and in deliverable state but seller weigh, measure,
test or any other to ascertain the price, the title does
not pass until such act or thing is done and the buyer
has notice thereof.
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Sec 21 - where the contract for the sale of specific

goods but not in deliverable state, title will not
pass until the goods is put in a deliverable state
and the buyer has notice of it.
Sale of Goods in a deliverable state but subject to
weigh
Sec 22 - where the contract of sale of specific
goods and in deliverable state but seller weigh,
measure, test or any other to ascertain the price,
the title does not pass until such act or thing is
done and the buyer has notice thereof.
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Sale of unascertained future goods

Sec 23 contract of unascertained or future
goods by description and the goods of that
description and in a deliverable state are
unconditionally appropriated to the contract,
either by the seller or the buyer, property in good
passes to the buyer.
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Goods delivered but on sale or return

Sec 24 unless different intention appears, when
goods are delivered to the buyer on approval or on
sale or return or other similar terms, the property in
goods passes to the buyer;
When the buyer agreed to accept the goods i.e by
paying it;
When the buyer did not say anything but retain the
goods and did not give any rejection notice.
This section covers goods sent on trial, giving the
buyer option to purchase on terms specified.
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RISK
General rule risk passes when the
property in the goods passes
irrespective of whether delivery has
been made.
Refer to Sec 26.
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TRANSFER OF TITLE
General rule nemo dat quod non habet. It means
the seller cannot give a better title to the buyer than
what he has at the time of selling the goods.
Same as provided in Sec 27.
Sec 27 provides that where goods are sold by a
person who is not the owner, and who does not sell
them under the authority or with the consent of the
owner, the buyer will not get a better title to the
goods than the seller had
The buyer will not get a better title even if he had
purchased the goods for value and good faith.
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Case:
Lim Chui Lai V Zeno Ltd (1964)3 MLJ 314
Zeno Ltd contracted with Ahmad for the construction of
culverts with Petaling Jaya Local Authority. Zeno
supplied all the materials at the site but later the
contract was cancelled. Zeno Ltd informed PJ Authority
that the materials at the site belonged to them. When
Zeno tried to sell the materials, they discovered that the
materials had been sold by Ahmad to Lim Chui Lai.
Held:
Ahmad was not the owner of the materials at
the time he sold them to Lim Chui Lai. Therefore Ahmad
has no title to the goods and he cannot pass the title to
Lim Chui Lai. Thus Lim Chui Lai does not have the title
upon the materials bought from Ahmad.
Rationale this rule is to protect the right of ownership
because without this rule the right of owner when his
goods were stolen will be jeopardized.
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Exceptions to Nemo Dat quod non habet:

Estoppel;
Sale by merchantile agent;
Sale by one of joint owners;
Sale under a voidable title;
Sale by a seller in possession after sale; and
Sale by a buyer in possession.
Estoppel:
Where the owner by his conduct makes it appear
to the buyer that the seller is authorized to sell the
goods, the buyer will get a good title because the
owner is precluded from denying the sellers
authority to sell (Sec 27).
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Sale by mercantile agent:

Mercantile agent with the consent of the owner shall be
valid (Sec 27).
However the buyer must buy the goods in good faith and
had not received any notice that the seller has no authority
to sell.
Sale by one of joint owners:
Sec 28 provides that if one of the joint owners of goods has
the sole possession of the goods by permission of the coowners, then the property in goods will be transferred to the
buyer provided he acted in good faith.
Sale under a voidable title:
Sec 29 provides that when seller obtained goods through a
voidable contract, buyer acquires good title to the goods
provided he buys in good faith and without notice of the
sellers defect in title.
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Sale by a seller in possession after sale:

Sec 30(1) provides that if a seller continues to be
in possession of the goods, can transfer a good
title provided the buyer acted in good faith and
without knowledge.
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Sale by a buyer in possession:

Sec 30(2) provides that when a buyer had in possession
goods with the consent of the seller, can pass a good title
to the subsequent buyer, even if under the first transaction
he has not obtained a good title.
Case: Newtons of Wembley Ltd v. Williams (1965) 1 QB
560
Plaintiff sold car to A who paid in cheque. Although he was
given possession, it was agreed that the property would
pass until the cheque was honoured but A sold the car to
B who bought the car without the knowledge of the
position. B resold to defendant. Plaintiff tried to recover
the car from defendant.
Held: A, was given permission to keep the car. Therefore he
could pass a good title to B, who in
turn transferred to
defendant. Therefore defendant was entitled to keep the car.
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DUTY OF SELLER AND BUYER (Sec 31)

Duty of seller willing to deliver the goods.
Duty of buyer willing to accept and pay for them in
accordance with the terms of the contract of sale.
Sec 32 provides that delivery and payment should be
concurrent unless agreed otherwise.
Place of delivery Sec 36(1) whether the seller is required
to send the goods or the buyer takes possession depend
on what is agreed upon between them.
General rule goods sold are to be delivered at the place
at which they are at the time of the sale.
Sec 36(5) provides that unless the parties agree
otherwise, the expenses and any expenditure in relation
to the delivery of the goods shall be borne by the seller.
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REMEDIES FOR BREACH
12/10/16
Chapter V and VI of SOGA deal with:

rights of unpaid seller against the goods;
right to sue for breach of contract;
right of buyer to sue for damages for non
delivery;
right of buyer to bring an action for
specific performance;
remedies available to the buyer for
breach of warranty; and
buyers action in torts.
141
BREACH BY BUYER
Breach by buyer because:
Refuse to take the delivery of the goods;
Sec 44 when the seller ready to deliver but buyer
refuse to take delivery of the goods.
Liable to any loss arising from his refusal.
Liable for the custody and care of the goods.
Did not accept delivery of the goods; or
Sec 56 where the buyer wrongfully neglects or
refuses to accept and pay for the goods seller may
sue for damages for non acceptance.
Illustration Sec 74 provide example for non
acceptance.
Did not make payment for the goods delivered.
Sec 55 seller may sue for the price.
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RIGHTS OF UNPAID SELLER AGAINST

THE GOODS
Sec 45 SOGA seller is considered as unpaid seller
in the following situations:
When the whole price has not been paid or
tendered;
Cheque was dishonoured by the sellers bank.
Unpaid has two types of remedies:
Rights in personam;
Rights in rem.
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Rights in personam:
means the seller who has not been paid by
the buyer is entitled to sue the buyer
personally in court.
The method is provided in Sec 55 and 56
SOGA.
The seller has the right to sue the buyer for:
Sec 55 - for the unpaid price.
Sec 56 - for damages for non acceptance
such as the transportation fees etc.
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Rights in Rem:
Unpaid seller have three rights under the law in Sec 46(1)
SOGA:
Lien on goods.- Sec 46(1)(a)
Right in lien is right to retain the goods until
payment is made . This is only possible if the goods
is still in his possession.
Right to lien can only be exercised by seller under
situations provided by Sec 47:
Where the goods have been sold without any
agreement that it is to be paid by credit - Sec
47(1)(a)
Where goods sold on credit but term for credit
has expired - S.47(1)(b)
Where the buyer becomes insolvent - S.47(1)(c)
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Stopping the goods in transit Sec 50

Stopping the goods in transit means the seller stops
the goods that is still with the carrier and resume
possession.
Sec 50 provides right of stopping only applicable:
if the buyer is insolvent;
The goods are in the custody of carrier.
Sec 51 provides that transit starts from the time
the goods are delivered to for the purpose of
transmission to the buyer.
The purpose of stopping is to resume possession of
the goods.
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A right to resell.
Sec 54(3) provides that unpaid who resells can
give a good title to second buyer as against the
first buyer.
The seller can resell when:
The property in goods has not passed to the
first buyer.
Seller in possession of the goods;
When the seller resells after exercised his
right in lien or stoppage in transit.
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Sec 54 provides that seller has a right to

resell:
Sec 54(2) goods are perishable in
nature;
The seller has exercised his right of lien
and stoppage in transit gives notice to
the buyer of his intention to resell, the
buyer fails to make payment within
reasonable time.
There is an express provision in the
contract of sale for the right to resell in
the event buyer defaults in the payment.
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THE LAW OF AGENCY
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LAW OF AGENCY
Agency is a legal r/ship under which one person (the
agent) acts on behalf of another (the principal). The
existence of the r/ship is a matter of law, in that there is
no need for the parties to intend to create a r/ship of
agency for one to exist, nor is the fact that they have
labeled their r/ship as one of agency conclusive.
Agency is the r/ship that exists between two persons
when one, called the agent, is considered in law to
represent the other, called the principal, in such a way as
to be able to affect the principals legal position in respect
of strangers to the r/ship by the making of contracts or
the disposition of property. (GHL Fridman, The Law of
Agency [6TH Ed, 1980]).
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Sec 135 of CA- An agent is a person employed to do any

act for another or to represent another in dealing with
third persons. The person for whom such act is done, or
who is so represented, is called the principal.
In agency there are in effect two contractsBetween the principal and the agent from which the agent
derives his authority to act for and on his behalf;
Between the principal and the third party through the
medium of the agent.
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Who may be the agent and principal?

Agent- Sec 137 of CA: As between the principal and third
persons, any person may become an agent; but no
person who is not of the age of majority and of sound
mind can become an agent,so as to be responsible to his
principal according to the provisions in that behalf
herein contained.
Principal- Sec 136 of CA: Any person who is of the age of
majority according to the law to which he is subject, and
who is of sound mind, may employ an agent.
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CREATION OF AGENCY
A contract of agency can be expressed or implied from the
circumstances and the conduct of the parties.
The r/ship of principal and agent may be created in 1 of 5
ways:
By express appointment by the principal.
Sec 140 of CA-An authority is said to be express when it is
given by words spoken or written.
By implied appointment by the principal.
Sec 140 Of CA-An authority is said to be implied when it is to
be inferred from the circumstances of the case; and things
spoken or written, or the ordinary course of dealing, may be
accounted circumstances of the case. (See Illustration).
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The r/ship of principal and agent may exist between a husband

and wife.
Sec 7 of Partnership Act-Partners are each others agents when
contracting in the course of the partnership business. By virtue
of Sec 7 PA, every partner is each others agent when
contracting during the course of the partnership business.
By ratification by the principal.
The concept of ratification allows a principal to adopt the
actions of an agent who has acted without authority. It can be
applied(i) Where a person who is in fact an agent acts outside his
authority;
(ii) Where a person who is not an agent at all.
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Sec 149 of CA-If the principal ratifies them, the same effects
will follow as if they had been performed by his authority.
Sec 150 of CA-Ratification may be expressed (oral or in
writing) or be implied from principals conduct.
Requirements:
The act done by agent must be unauthorized.
The unauthorized act must be one which is recognized by
law.
Case: Brook v. Hook (1871)
Court held that principal cannot ratify his forged signature.
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The principal can only ratify if at the time of the contract the
agent expressly acted as an agent.
Principal must be in existence at the time of agents act.
The principal must be a competent principal at the time when
contract was made.
Principal must have full knowledge of transaction and of all
material facts.
Sec 151 of CA- No valid ratification can be made by a person
whose knowledge of the facts of the case is materially
defective.
Ratification must be of the entire contract.
Sec 152 of CA- A person ratifying any unauthorized act done
on his behalf ratifies the whole of the transaction of which the
act formed a part.
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Ratification must take place within a reasonable time of

making the contract with third party.
Case: Grover & Grover v. Matthews (1910)
The principal attempted to ratify a contract of fire insurance
after a fire had destroyed the property concerned. It was held
that the contract could not be ratified, because at the time of
the purported ratification the principal would not have been
able to make the contract himself.
Ratification must not injure a third party.
Sec 153 of CA-An act done by one person on behalf of another,
without that other persons authority, which, if done with
authority, would have the effect of subjecting a third person to
damages, or of terminating any right or interest of a third
person, cannot, by ratification, be made to have that effect.
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By necessity
An agency may arise by necessity regardless of any intent
or contractual r/ship between the parties.
Bowstead on Agency-Agency of necessity arises by
operation of law in certain cases where a person is faced
with an emergency in which the property or interests of
another are in imminent jeopardy and it becomes
necessary, in order to preserve the property or interest, to
act for that person without authority.
Sec 142 of CA- An agent has authority, in an emergency, to
do all such acts for the purpose of protecting his principal
from loss as would be done by a person of ordinary
prudence, in his own case, under similar circumstances.
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Conditions:
Generally, it is recognized that there must already be some
contractual r/ship between the two parties.
Case: Great Northern Railway Co v. Swaffield
The railway company carried the defendants horse to its
contracting destination. When it arrives there is no one to
meet the horse. The station master did not know the
defendants address and the agents address. He ordered
the horse to be put in the stable. Later, the station master
claim for the stable charges. The defendant refused to pay.
Held: There is an agency by necessities.
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It is impracticable for the agent to communicate with principal

and to get instructions from principal.
Case:
Springer v. Great Western Railway Company The
defendant agreed to carried the principals tomatoes from
Jersey to Covent Garden Market. Owing to the bad weather, the
tomatoes arrived late at Weymouth. Since defendants
employees were on strike, the tomatoes were unloaded by
some casual labourers. Some of the tomatoes were found bad.
The defendant decided to sell the tomatoes locally since he was
afraid that it could not arrive at Covent Garden Market in a
saleable condition. The defendant did not contact or even try to
communicate with the plaintiff. The plaintiff claimed for
damages in conversion based on the tomatoes market price in
Covent Garden Market, the court allowed the plaintiffs claim as
no agency by necessities arise.
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The action is necessary to prevent the principal from any loss.

There must be a real emergency.
Case: Sachs v. Miklos
Sachs stored furniture in a room belonging to Miklos without
charge. He then did not visit Miklos nor inform him of his change
of address. Miklos wishing to let the premises try to get in touch
with Sachs by telephone and letter, but failed, as his
whereabouts were unknown and there was nothing to show that
he received the letters. Miklos then sent the furniture for sale by
auction, he wanted for other purpose the space which was
occupied by the furniture and fail to get further instructions from
Sachs.
Held: Miklos was not an agent of necessity and therefore he was
guilty.
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Case: Munro v. Wilmott and Co.

The defendant, without asking for payment, allowed the
plaintiff to park her car in the defendants garage. It was
left there for some years, after which time the defendant
found it was too inconvenient to keep it and was unable to
locate to ask her to take the car. The defendant sold the
car.
Held: The defendant was liable. No real emergency arose
permitting the owner of the garage to send the car to an
auction after he had been unable to get in touch with the
owner.
*The relevant time to consider whether there is an
emergency is the time when the existence of the
supposed emergency became apparent.
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Agent had acted in good faith.

The agent has acted in the interest of the principal, not of
the third party.
The action taken by the agent is reasonable and prudent.
By estoppel
Sec 190 of CA- When an agent has, without authority,
done acts or incurred obligations to third persons on
behalf of his principal, the principal is bound by those
acts or obligations if he has by his words or conduct
induced such third persons to believe that those acts and
obligations were within the scope of the agents authority.
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In certain circumstances, the court will prohibit the

parties from denying that an agency exists, by
invoking the doctrine estoppel. If a person behaves
in such a way that another person appears to be his
agent and then he stands by while a third party
contracts with the agent then he is estopped from
denying his liabilities as a principal.
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DUTIES OF AGENT TO PRINCIPAL

To obey the principals instructions.
Sec 164 of CA.
Case: Turpin v. Bilton
The agent did not act sufficiently quick to insure a ship,
with the result that when it was lost the owner was
uninsured. The agent was liable for the failure to act.
In the absence of instructions from principal, to act
according to the custom which prevail.
To exercise care and diligence in carrying out of his work
and to use such skill as he possesses.
Sec 165 of CA.
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Case: Keppel v. Wheeler

The defendant was employed by the principal to sell a
house. The principal got an offer and accepted by the
principal subject to contract. A few days later, a higher
price was offered by X but this was not disclosed to the
principal. The principal signed a contract of sale with the
first offeree. The court held that the defendant is liable for
the difference between the two offers. The defendant should
possesses his skills and get the best price for the plaintiff.
To render proper accounts when required.
Sec 166 of CA.
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To pay to his principal all sums received on his behalf.

Sec 171 of CA.
To communicate with the principal.
Sec 167 of CA and Sec 142 of CA.
Not to let his own interest conflict with his duty.
Case:
Wong Mun Wai v. Wong Tham Fatt and Anor
(1987)
The court found that the first defendant failed in his duty as agent
of the plaintiff on two counts; First, he sold the plaintiffs half share
of land well below the market value and second, he failed to inform
the plaintiff that he had sold it to the second defendant who was
his wife. The court expressed the view that the first defendant had
a duty to act in good faith in protecting the interests of the plaintiff
and could not use his position as agent to profit at the plaintiffs
expense.
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Not to make any secret profit out of the performance of his

duty.
Case:
Armstrong v Jackson
If the agent is instructed to buy shares, he can not sell his own
shares to the principal. Only if the principal consented to it he
can sell the shares to the principal. If not, the principal had the
right to repudiate it.
Not to disclose confidential information or documents
entrusted to him by his principal.
Not to delegate his authority.
Delegatus Non Potest Delegare-A delegate cannot delegate.
Sec 143 of CA.
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168
Case:
De Bussche v. Alt (1878)
The principal appointed an agent to sell his ship in
China. The agent was unable to do so and sought the
principals consent to appoint a sub-agent to sell the
ship in Japan.
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DUTIES OF PRINCIPAL TO AGENT

To pay the agent the commission or other agreed remuneration
unless the agency r/ship is gratutious. When to pay the
amount? Refer to contract. Example: In advance, etc.
Case:
Luxor (Eastbourne) Ltd v. Cooper (1941)
A company wished to sell some cinemas and Cooper agreed to
try to provide a purchaser. The agreement stated that he was to
be paid a fee of 10,000 on completion of the sale. Cooper
provided a willing purchaser, but the company decided not to
go through with the sale. Cooper sued for his commission. The
House of Lords held that everything turned on the express
terms of the contract between Cooper and the company. Since
the express terms referred to completion of the sale and this
had not taken place, Cooper was not entitled to any
commission.
* Sec 172 of CA.
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Not to wilfully prevent or hinder the agent from earning his commission.
To indemnify and reimburse the agent for acts done in exercise of his
duties.
Sec 175 of CA.
For losses or liabilities incurred in the performance of his duty.
The principal will indemnify the agent as long as the agent act within his
authority and as long as the agent did not act in a negligent manner.
Where the agent causes injury to the third party in the course of his
employment.
When the agent himself is injured, he is entitled to indemnify.
Where the agency is for a fixed period of time but the principal
terminates before the expiry date then the principal is to compensate
the agent.
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TERMINATION OF AGENCY
Sec 154 of CA-An agency is terminated by the principal
revoking his authority; or the agent renouncing the
business of the agency, or by the business of the agency
being completed; or by either the principal or agent dying
or becoming of unsoundmind; or by the principal being
adjudicated or declared a bankrupt or an insolvent.
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AGENCY FROM SHARIAH

PERSPECTIVES CONCEPT OF ALWAKALAH
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Literally wakalah means protection or delegation.

Legally wakalah refers to a contract where a person
authorizes another to do a certain well-defined legal
action on his behalf.
The contract of Wakalah is about the provision of
service.
The main features of agency are service,
representation and power to affect the legal position
of the principal. An agent performs a service for his
principal.
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CONDITIONS OF AL WAKALAH
The principal should have the power and
competence to deal and own the property. If the
principal is not competent to perform a certain
action, he cannot delegate the doing of that action
to another person. For example, an insane or a
minor cannot appoint agents to act on their behalf.
The agent should also be a competent person.
The thing or act should be known. This is to avoid
uncertainty or gharar.
That the action is a lawful action.
That the action is such on which the agency is
accepted. Agency, for e.g. is not accepted with
regard to salat, fasting, taking ablution or with
regard to public (mubah) property.
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TYPES OF AL WAKALAH
Particular Wakalah or Special Agency
Particular wakalah is made only for a certain known
transaction.
General Wakalah
It is a general delegation of power.
Restricted Agency
Where the agent has to act within certain conditions.
Absolute agency
Where no condition is put for the transaction. For
example if the principal assigns an agent to buy a house
and he does not specify the price, the method of payment
or other conditions. However an agent is still bound to
act within the prevailing practices and customs.
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LAW ON HIRE PURCHASE
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INTRODUCTION
The relevant law is HIRE PURCHASE ACT 1967.
The transaction - sale of goods between seller and
buyer but payment for the goods is done by another
third party.
The third party will then enter into a hire purchase
agreement with the buyer, where the buyer will pay
the third party by way of installment the price of the
goods.
In law, the third party is known as OWNER and the
buyer is known as HIRER.
The law on hire purchase will only govern the
relationship between owner and hirer.
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The list of goods are also limited because only goods

under First Schedule of HPA is covered:
Goods under First Schedule are:
All consumer goods;
Motor vehicles namely:
Invalid carriages,
Motorcycles,
Motorcars, including taxi and hire cars,
Goods vehicles (maximum permissible laden is
2540 kg)
Buses including stage bus.
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INTERPRETATION
Hire Purchase Agreement a letting of goods with an
option to purchase and an agreement to purchase the
goods by way of installment.
Hirer who has taken goods from owner under a hire
purchase agreement.
Owner let goods to hirer under a hire purchase
agreement.
Consumer goods goods purchased for personal,
family and household purposes.
Goods only those listed in First Schedule of HPA
1967. It could be new or second hand goods.
Case:
MBF Finance Bhd v. Ting Kah Kuong (1993) 3
MLJ 73
Whether forklift was a motor vehicle listed in the First
Schedule?
Held:
Forklift was NOT a motor vehicle listed in
the First Schedule.
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FORMATION AND CONTENTS OF HP

AGREEMENT
There are three stages that need to be complied with by
owner:
Before signing of HP Agreement:
Section 4(1) negotiation stage leading to the making of
HP Agreement, prospect owner shall serve on the
intending hirer a written statement duly completed Form
1 of the Second Schedule.
Section 4(1)(b) if negotiation handled by dealer (seller),
dealer must serve a duly completed Form 1 of Second
Schedule.
Section 4(3) prospect is NOT obliged to :
enter into HP Agreement; and
pay any consideration.
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Effect for non compliance with this provision:

Section 4(4) HP Agreement is void.
Section 4(5) owner/dealer shall be guilty of an
offence under HPA.
Section 4(6) if owner charge payment for serving
the written statement, he is guilty of an offence
under HPA.
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Signing of HP Agreement:
Section 4A (1) HP Agreement must be in writing.
Section 45(1) (a) if handwriting is not legible; or (b) the
printed form is not in 10 Font then it is considered as
not in writing.
Alteration Section 39 provides that it must be initialled
in the margin opposite the alteration.
Section 4A(2)(3) effect for non compliance: HP
Agreement is void and the owner is guilty of an offence.
Contents of HP Agreement:
Commencement of HP;
Number of installments;
Amount of installment;
Time for each installment to be paid;
Description of goods;
Address where the goods will be kept.
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Section 4B(1) HP Agreement must be

signed by all parties.
Section 4B(3) effect for non
compliance, agreement is void.
Section 4D(1) separate HP Agreement
in respect of every item. Exception to this
provision in Section 4D(4) when the
items are essentially similar. Example a
CPU and monitor of a computer.
If the goods is a second hand good,
Section 40 provides that it must be
specified that as second hand good.
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After signing of HP Agreement:

Section 5(1) within 14 days from signing of HP
Agreement, owner shall serve on hirer/guarantor a
copy of the HP Agreement.
Section 5(2) if did not serve, HP Agreement is not
enforceable.
Section 41 provides that owner can apply to court
for an extension of time for service.
Service of HP Agreement Section 43 provides that
service is done by way of delivering it personally to
the hirer or posting by registered post to the last
known address.
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CONDITIONS AND WARRANTIES

In every HP Agreement, there are:
Terms; and
Conditions.
Terms and conditions are included expressly in the
Hire Purchase Agreement.
In addition to these express terms and conditions,
the Hire Purchase Act also protect the hirer by
stating the implied conditions. These implied
conditions are:
Section 7(1):
Hirer shall enjoy quiet possession;
Owner has right to sell the goods;
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Case:
Kaflex Ltd v. Poole (1933) 2 KB 251
Owner should have title at the time of delivery because
option to purchase maybe exercised after delivery.
Case:
Public Finance Bhd v. Ehwan Saring (1996) 1
MLJ 331
Seller sold the vehicle to buyer but before the vehicle can
be delivered it was seized by the relevant authority. As
the vehicle was seized soon after HP Agreement was
executed and had not been returned to either party, no
title was passed to hirer.
Case:
Ahmad Ismail v. Malayan Motor & Co (1973) 1
MLJ 117
Motor seized on suspicion of stolen vehicle and
subsequently released to the buyer. It was decided by the
court the seller could pass a good title.
Goods free from any encumbrances.
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It is also an implied condition in Section 7(2) that goods

under HP must be of merchantable quality.
The exception to merchantable quality in Section 7(2):
When the hirer had examined the goods and the defect
would have been revealed.
In other words, the hirer has exercised due care and
diligent before making any decision to sign the HP
Agreement.
Case:
Lau Hee Tiah v. Hargill Engineering Sdn
Bhd
(1980) 1 MLJ 145
The court decided that in order to prove it is not of
merchantable quality, the hirer must show that the goods
is of no use for any purpose for which it would normally
be used and therefore not saleable under that
description.
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If the goods are second hand goods.

Implied condition as to merchantable quality may be
waived if it specifically that all conditions and
warranties as to quality are negative.
The fact that no conditions and warranties to the
second hand good must be brought to the attention of
the hirer.
Case: Trader Finance Corp Ltd v. Rourke & Anor
(1967) 85 WN (NSW) 739
It was decided by the court that although parties are
aware that the goods are second hand goods, the
implied condition as to merchantable quality and
fitness for purpose could not be excluded unless the
agreement contained a statement that the goods are
second hand.
Case: Lau Hee Tiah V Hargill Eng S/B
Loader was used a product demonstration once and
the court decided that the loader is new.
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LIABILITY OF OWNER AND DEALER FOR

MISREPRESENTATION.
Section 8(1) provides that if owner/dealer
misrepresented to hirer, the hirer may:
Section 8(1)(a)-hirer can rescind the HP
Agreement;
Section 8(2)(b)-action in damages.
Section 8(2) provides that any clause that intends
to modify sub sec (1) is void.
If misrepresentation is done by third party or dealer,
owner is entitled under Section 8(3) to be
indemnified.
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STATUTORY RIGHTS OF HIRER

1.
Rights to obtain written statements under HP

Agreement (Section 9).
Hirer is entitled to obtain:
Amount paid by owner;
Overdue amount;
Amount that need to be paid;
Interest.
The statement has to be given to hirer within 14
days.
But this rights can only be exercised once in every
three months.
Non compliance Section 9(3) owner is guilty and
max fine RM200.00.
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2.
3.
4.
Right to appropriate payment (Section 10).

Hirer who is liable to make payments in respect
of two or more HP Agreements to the same
owner, is entitled to appropriate the sum so paid
towards the satisfaction of the sum due under
all the agreements in such proportions as he
thinks fit.
Right to remove goods (Section 11).
Hirer may apply to court for the removal of the
goods.
Right to assign her rights under HP Agreement
(Section 12).
Hirer may assign to third party provided that owner
is agreeable to such assignment but this right
usually is subject to the hirer bear all the cost
incurred in the assignment.
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5.
6.
Right to pass rights, title and interest through

operation of law (Section 13).
The right to pass on to the personal representative
upon death but he must comply with the terms of
the HP Agreement.
Right to make early settlement (Section 14).
If hirer intends to make early settlement, he must
first give a written notice to pay the net balance and
net balance would be the balance originally payable
under the agreement less the amount already paid
and a statutory rebate.
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7. Right to terminate hiring (Section 15).

Hirer can terminate the HP Agreement by
returning the goods to the owner during
the normal business hours at the place
where the owner ordinarily carries on
business.
Under Section 15(5) hirer can require the
owner to sell the goods to any person
suggested by hirer.
If the value of goods is more than the net
balance, hirer has the right to get the
difference.
If value is less, hirer is obliged to pay the
difference.
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STATUTORY RIGHT OF OWNER

If hirer breached the HP Agreement, owner is entitled
under the HPA to recover possession of the goods.
But this power must be exercised in accordance with
HPA.
Before owner can repossess the goods, he must
serve a notice of intention to repossess the goods.
The notice is specified in Section 16(1), known as
Form Fourth Schedule.
This notice is valid if:
Hirer has defaulted two successive installments;
In default of last payment.
In Section 16(1A)- if hirer is deceased, there must
be four successive defaults of payments.
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The notice must give at least 21 days for the hirer to pay
the arrears. Only at the expiry of 21 days, the owner can
take possession of the goods.
Section 16(3) provides that owner must serve on the hirer
and guarantor a written notice set out in Fifth Schedule
asking the hirer to return the goods or pay the arrears
within 21 days from the date of the notice.
Section 16(4) provides that owner must acknowledge
receipt of the goods. Acknowledgement shall set out a
short description of the goods and a date time and place
the owner takes possession of the goods.
Case:
Phang Brothers Motors Sdn Bhd v. Lee Aik
Seng (1978) 1 MLJ 179
Two days before 21 days is considered as the possession
was not valid.
Section 17(1) provides that an owner who has taken
possession of goods shall not sell or dispose the goods
without written consent of hirer until after the expiration
of 21 days after the service of Form in Fifth Schedule.
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Case:
Hong Leong Finance Bhd v.
Lee Cheng
(1987) 2 MLJ 266
It was decided by the court that hirer may
recover damages if the goods sold below
market price.
Section 19 allows the hirer to regain
possession if he tenders payment and
other incidental cost incurred in the
repossession of the goods.
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HIRE PURCHASE UNDER

THE SHARIAH LAW
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198
There are two contracts involved in this concept.

The first contract, an Ijarah contract (leasing/renting),
The second contract, a Bai contract (purchase) are undertaken
one after the other.
For example, in a car financing facility, a customer enters into
the first contract and leases the car from the owner (bank) at
an agreed rental over a specific period. When the lease period
expires, the second contract comes into effect, which enables
the customer to purchase the car at an agreed price.
In effect, the bank sells the product to the debtor, at an above
market-price profit margin, in return for agreeing to receive the
payment over a period of time; the profit margin on the lease is
equivalent to interest earned at a fixed rate of return.
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199
ADVANTAGES OF IJARAH
1) Ijarah conserves capital as it may provide 100%
financing.
2) Ijarah enables the Lessee to have the use of the
equipment on payment of the first rental. This is
important since it is the use (and not ownership) of the
equipment that generates income.
3) Ijarah arrangements are flexible because the terms and
rental provision may be tailored to suit the needs of the
Lessee. Therefore, it aids corporate planning and
budgeting
4) Ijarah is not borrowing and is therefore not required to
be disclosed as a liability in the Balance Sheet of the
Lessee.
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200
5) All payments of rentals are treated as payment of

operating expenses and are therefore, fully taxdeductible.
6) There are many types of equipment, which becomes
obsolete before the end of its actual economic life.
This is particularly true in high technology equipment
like computers. Thus the risk is passed onto the
Lessor who will undoubtedly charge a premium into
the lease rate to compensate for the risk. A Lessee
may be willing to pay the said premium as an
insurance against obsolescence.
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201
NEGOTIABLE INSTRUMENT
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i)
ii)
iii)
NI are instruments or documents, which the law

recognizes as having the quality of transferability.
These documents are used in commerce to secure
the payment of money.
Main examples of NI are:
Bills of Exchange;
Cheques; and
Promissory Notes.
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BILLS OF EXCHANGE
A BOE constitutes a legally binding written promise by
the drawer, that the person who took it in payment will
be paid in cash when he presents the bill for payment
at the proper time and place.
A BOE enables a seller of goods or services to receive
his money as soon as possible while enabling his
buyer to defer payment for a period.
Sec 3(1) BOEA.
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CHARACTERISTICS OF BOE
There are three parties to a bill.
Drawer- The person who gives the order to pay.
Drawee- The person to whom the order is addressed
and who becomes the acceptor when he incurs
liability on the bill by signing (accepting) it. The drawee
is the party primarily liable on the bill. The drawer and
any other person who has signed (indorsed) the bill are
sureties for his payment.
Payee- The person to whom the payment is to be made.
If the bill is negotiated (transferred) to another person,
the transferee (the holder of the bill) becomes the
payee.
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The bill must be an unconditional order (Sec 3(1)

BOEA).
The bill must contain an order to pay not a mere request.
For example: Pay
A conditional order is not enforceable.
The order must be unconditional between the drawer and
the drawee. It must not order any act to be done in
addition to the payment of the money. Sec 3(2) BOEA.
The bill must be in writing Sec 3(1) BOEA.
The bill must be addressed by one person to
another Sec 3(1) BOEA.
The bill must be an order from a drawer to a drawee to pay.
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206
The drawee must be named or otherwise identified

with reasonable certainty (Sec 6(1) BOEA).
The bill may be addressed to two or moew drawees
jointly (Sec 6(2) BOEA).
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The bill must be signed by the person giving it (Sec

3(1) BOEA).
The signature must be that of the drawer or his authorized
agent (Sec 96(1) BOEA).
It may also be in a trade name or a corporate seal (Sec
96(2) BOEA).
A signature is required for liability to be incurred on a BOE.
The bill must order payment of a sum certain money
(Sec 3(1) BOEA).
The payment must be in the form of money, not in the form
of goods or services.
If there is any discrepancy between the amounts of the bill
as it appears in figures and as written in words, the words
take priority (Sec 9(2) BOEA).
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The bill must be payable on demand or at a fixed

or determinable future time (Sec 3(1) BOEA).
Payable on demand means the holder is entitled to
payment immediately upon demand.
Must be payable to the order of a specified person
or to bearer (Sec 3(1) BOEA).
All
BOE
must
satisfy
characteristics/requirements.
instrument/document
fails
requirements, it is not a BOE.
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all
to
the
If
meet
above
any
those
209
HOLDER
i)
ii)
Sec 2 BOEA- A holder of a bill is the person who is in

possession of the bill.
Two types of holder:
Holder in due course- A person who is in possession of the
bill after he himself had given value for it.
A sold a computer to B. B drew a bill in favour of A as the
payment of the computer. A is the holder in due course, as
he obtained the bill from B after giving value for it by
selling the computer to B.
Holder for value- A person who obtained a bill from a
person who had given value for it.
A who is the holder in due course of the bill, now transfer
the bill to C (his son)as his birthday present. C is the holder
for value, because C obtained the bill from A (who had
earlier given value for it). In this situation, C obtained the
bill from his father (A). He got the bill as a birthday gift.
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CHEQUES
i)
ii)
iii)
iv)
v)
vi)
Definition- It is a BOE drawn on a banker payable on

demand (Sec 73(1) BOEA).
CharacteristicsIt is an unconditional order in writing;
It is issued and signed by the drawer;
It is drawn on a banker (drawee bank/paying bank).
It orders the drawee/paying bank to pay a sum certain
in money on demand.
It is drawn in favour of a specified person (payee) or
to his order or in favour of a bearer.
May be crossed.
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ALTERATIONS ON CHEQUES
If a cheque has been materially altered without the
consent of the drawer or subsequent parties liable on
the cheque, such drawer and the subsequent parties
liable on the cheque are discharged from liablity upon
the cheque.
The drawee bank (paying bank) cannot debit the
account of such drawer or any subsequent parties
liable on the cheque.
Sec 64(1) BOEA- Where a bill is materially altered
without the assent of all parties liable on the bill, the
bill is avoided
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PROTECTION OF THE PAYING BANK

Who is the paying bank?
Is the bank, which issue cheques to its customers.
When the customer draws a cheque, the PB (also known
as the drawee bank) is under a duty to pay the amount of
the cheque to the right person according to its
customers (drawers) mandate.
RISKS
If the PB pays the amount of the cheque to the wrong
person, the bank must bear the loss for its breach of
duty towards its customers because of:
Non-compliance with the mandate of its customer;
Conversion to the true owner of the cheque.
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PROTECTION OF THE PAYING BANK

UNDER THE ACT
BOEA provides some protection for the PB against the
loss of the right to debit its customers account if the
bank paid the cheque to the wrong person. This is
because the bank can not be presumed to know the
payee or other holders who are not their customers.
There are certain conditions to be fulfilled before the
PB entitled to be protected under the provisions in the
BOEA.
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CONDITIONS
Payment in due course - Sec 59 BOEA: A bill is
discharged by payment in due course by or on behalf of
the drawee
o Payment in due course means the payment is made at
or after the maturity of the bill to the holder thereof in
good faith and without notice that the holders title to
the bill is defective.
o This section also protects the PB that pays the bearer
of a bearer cheque
Forged or unauthorized indorsement - Sec 60 BOEA.
o A PB is expected to know his customers signature.
Therefore, the PB will not be protected if he pays a
cheque in which the drawers signature is forged.
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o H/ever, a PB is not expected to know the signatures of

other persons who are not its customers.
o T/fore, Sec 60 BOEA protects the PB if he pays a cheque,
which bears a forged or unauthorized indorsement in
good faith and in the ordinary course of business.
No indorsement or irregular indorsement Sec 82(1)
BOEA
o Sec 82 BOEA protects the PB if the banker pays a cheque
which is irregularly indorsed so long as the PB pays it in
good faith and in the ordinary course of business.
Crossed cheques
o Proviso to Sec 79(2) BOEA protects the PB if the cheque
is paid in good faith and without negligence on which the
crossing is not apparent or the crossing has been
obliterated, added or altered and this is not apparent.
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PROTECTION OF THE COLLECTING

BANK
CB is the bank, which collects the amount of the cheque

from the paying bank (Drawee bank) on behalf of its
customers (I.E the payee or the holder of the cheque).
The CB is under a duty to collect the amount and credit
its customers account with such amount.
RISKS
A CB may be liable on two grounds:
To its customers for breach of contract due to the failure
of the CB to collect the amount when it was instructed
to do so.
To the true owner for wrongful conversion when the CB
improperly collects on behalf of its customers who was
not entitled to the money.
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PROTECTION OF THE COLLECTING BANK

UNDER THE ACT
The collecting banker must acted for its customers.
o The CB is protected by Sec 85 from any liability towards the
true owner so long as he collected the amount on behalf of
its customer.
The CB must acted in good faith.
o Sec 95 BOEA The banker must acted honestly in
collecting the amount on behalf of his customer.
The CB must acted without negligence.
o Sec 85 BOEA If the bank acted in good faith but
negligently, the banker will not be protected under Sec 85.
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A CB is negligent if he is not making proper

enquiries
in
the
following
suspicious
circumstances:
Where a customer presents a cheque drawn in
favour of his company, but the amount is to be
credited into a private account not into the
companys account.
favour of himself in his official capacity, but to be
credited into his private account.
favour of his principal, but the sum is to be
credited into his own account or where a cheque
is drawn by the customer on behalf of his
principal, but in favour of himself.
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Where a customer presents a cheque crossed

account payee and he is not the payee named on
the cheque.
Where a customer pays in a cheque for an unusually
large amount which is out of character with his
normal circumstances.
Opening an account without enquiry into the identity
and circumstances of the customer.
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220
Types of indorsements
a)Blank indorsement Sec 34(1)
- The indorsement simply signs his name
without adding the name of the transferee /
indorsee.
- If the indorser indorses in the blank the bill
becomes payable to the bearer of the bill.
- The bill may later be negotiated by mere
delivery.
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b) Special indorsement Sec 34(2)

- the indorser signs his name and adds the
name of the transferee / indorsee or to
whose order the bill payable
- if there is special indorsement , only the
indorsee named in the indorsement
becomes the holder of the bill and have
the title to the bill.
- if the indorsee wants to negotiate the bill,
he must in turn indorse the bill and
transfer it to the transferee.
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C) Restrictive indorsement Sec 35(3)

-
This kind of indorsement prohibits the

futher negotiate of the bill or merely gives
authority to deal with the bill in the manner
directed but not transfer of the ownership
For the example: Pay D for the account of X.
It gives the indorsee only the right to

receive
payment, and not to negotiate
it.-sec35(2)
d) Conditional indorsement
-
The indorsement contains a condition to be

fulfilled before making the payment
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The payment to be made is dependent on a
THE LAW OF EMPLOYMENT
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224
What is employment?
E means work or service performed by an individual to the
task at hand for another person or entity in exchange for
wages or other remuneration.
What is employment law?
EL is the law which regulates the operation of the labour
market in general and the employment r/ship between
employers and employees in particular. Eg: hiring process,
suspension from work, maternity rights and wages. The
obligations and rights of an employment contract are
covered by the EL. When an offer for employment is made
by an employer to an employee, the law governing the
r/ship between an employee and an employer begins.
The principal legislation governing the labour market and
employment r/ship in Msia is the Employment Act 1955.
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Who is an employer?
An employer in relation to an employee or
a workman, means a person by whom the
employee or workman is employed. An
employer obtains the services of another
to perform work and has direct control of
the way in which the work is to be done.
An employer shall provide the means
through which the services will performed
such as providing a place where the work
is to be performed and tools required to
get the job done.
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Who is an employee?
In general, an employee means a person who has
entered into or works under a contract of employment,
there are different interpretations for the term,
employee, in different Acts governing the labour market
in Malaysia. Those interpretations will determine
whether you are an employee protected under the scope
of an Act.
Where an employee begins employment with an
employer and for a period of more than one month, such
employee must be given a written contract of
employment with particulars of the terms and conditions
of employment including the notice period required to
terminate the contract of employment.
Refer to First Schedule Employment Act 1955.
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Contract of service VS. Contract

for service
Contract of service means any agreement,
whether express or implied, and if express,
whether oral or in writing where the employer
agrees to employ and the employee agrees to
be employed and includes an apprenticeship
contract.
A person who is in a contract of service is a
servant or employee whereas one who is in a
contract for service r/ship is an independent
contractor and the general rule, subject to
the exceptions discussed further below is
that an employer is not liable for the torts of
his independent contractor.
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TEST TO BE APPLIED TO
DETERMINE A CONTRACT OF
Degree of control.
SERVICE
Case:
Ready Mixed Concrete (South East) Ltd v
Minister of Pension & National Insurance
Appellant (Company) made a written contract with
Latimer. The written contract declared Latimer as an
independent contractor i.e an owner driver asked to carry
companys concrete being paid on mileage basis. The
company provide an exclusive use of vehicle for company
deliveries. The vehicle is only to be driven by Latimer or
by any other person if consented by the company. In this
case the company wanted to determine whether Latimer
was by virtue of the contract is an employee or an
independent contractor.
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It was held he was an employee by virtue of Section 1(2) of the

National Insurance Act 1965. Company appeal.
Issue : Whether Latimer a servant or independent contractor?
Held :
Appeal allowed i.e Latimer is an independent contractor.
The Court of Appeal held that in a contract of service exist three
conditions should be fulfilled :
the servant agrees in consideration of a wage or other remuneration
to provide his own work and skill in the performance of service for
his master.
the servant agreed expressly or implied that in performance of that
service he'll be subject to the other's control in a sufficient degree to
make that other master.
the other provisions of the contract were consistent with it being a
contract of service.
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Whether the person perform the service on his own account.

Case:
Market Investigation Ltd v. Minister of
Social
Security
A market research company employed a number of people to
act as interviewers for short period of time. The company
could specify the person to be interviewed and the question
to be asked. The interviewer however was free to work when
she wish and could take other jobs with similar
organisations. She could not be dismissed in the middle of
the survey, but no provision was made for time off, sick pay
and holidays.
HELD:
The fundamental test to be applied was whether
the person engage to perform the services, perform them for
his business on his own account. If he did then the contract
was one for service, if not it was a contract of service.
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Whether work done is an integral part of the company's business.

Case:
Mat Jusuh b Daud v. Sykt Seberang Takir Sdn Bhd
(1982) 2 MLJ 71
The Plaintiff who work as a sawyer at the Defendant's sawmill
sustained injuries while carrying a log with another co-worker
and was consequently refused further employment at the
Defendant's sawmill. In an action for damages against the
Defendant, liability was denied by the latter who contended that
Plaintiff was not their employee but an employee of X, who was
the contractor of the Defendant.
HELD:
Since wages and the number of logs to be sewn
determinable by the Defendants, the Plaintiff's work was an
integral part of the Defendant's business and he was therefore
their employee.
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Case:
Stevenson Jordan & Harrison Ltd

v. Macdonalds & Evan Ltd
(1952) 1 TLR 101 A.C
Denning L.J:
Under a contract of service a man is employed as
part of the business and his work is done as an
integral part of the business, whereas under a
contract for service his work although done for
business, is not integrated into it but is only
accessory to it.
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Is the contract of service a must

in writing?
A contract of service can either be in oral
or in writing.
Where an employee begins employment
with an employer for a period exceeding 1
month, the employer shall give to the
employee
a
written
statement
of
particulars of employment.
You can provide better terms and
conditions to your employee in a contract
of service but not less favourable than the
minimum requirements provided in the
Employment Act 1955.
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234
A contract of service shall contain particulars of:

The names of employer and employee
The date when the employment began
The place of work or an indication of that and of the
address of the employer
The title of the job which the employee is employed to do
or a brief description of the work for which a person is
employed
The commencement salary and where applicable other
allowances and bonus
Any terms and conditions relating to
Probation period
Hours of work
Entitlement to holidays, including public holidays
12/10/16
235
Overtime pay and leave

Incapacity for work done due to sickness or injury,
including any provision for sick pay and medical
bills
EPF and SOCSO
The length of notice which the employee is obliged
to give and entitled to receive to terminate the
contract of service or a clause on the manner in
which the contract of service may be terminated.
In any circumstances, a wage period shall not
exceed 1 month.
Where the period of notice of termination is not
specified in the contract of service, the notice shall
be as follows:
12/10/16
236
4 weeks notice has been employed for

less than 2 years
2 years or more but less than 5 years
5 years or more.
A written contract of service with
particulars of the terms and conditions
must be given to all employees on or
before the commencement of an
employment.
12/10/16
237
What are the minimum conditions set out

for employment?
A written contract of employment must be given to
every employee where the employment period exceed 1
month. The contract must includes particulars of the
terms and conditions of employment and notice period
required to terminate it.
Wages earned must be paid not later than the 7th day
after the last day of any wage period.
Unless prior written approval of the Director General of
the Department of Labour is obtained, female
employees are not permitted to work in any industrial or
agricultural undertakings between the hours of 10
oclock in the evening and 5 oclock in the morning.
12/10/16
238
Female employees are entitled to 60 days paid maternity

leave for up to five surviving children.
The normal work hours of an employee shall not exceed 8
hours in one day or 48 hours in one week.
An employee with less than 2 years of service is eligible
for 8 days of paid annual leave, 12 days of paid annual
leave for an employee with 2 years or more but less than 5
years of service, and 16 days of paid annual leave for an
employee with over 5 years of service.
An employee with less than 2 years of service is eligible
for 14 days of paid sick leave, 18 days of paid sick leave
for an employee with 2 years or more but less than 5 years
of service and 22 days paid sick leave for an employee
with over 5 years of service per calendar year and where
hospitalization is necessary, up to a maximum of 60 days
paid sick leave per calendar year.
12/10/16
239
The minimum payment for overtime work is 1 times the

hourly rate of pay on normal working days, 2 times the
hourly rate on rest days and 3 times the hourly rate on
public holidays.
An employee shall be entitled to at least 1 whole day of
rest day in a week.
An employee shall not work on normal hours exceeding
8 hours a day excluding a period of rest, 5 consecutive
hours of work without a period of rest of not less than 30
minutes and 48 hours in a week.
12/10/16
240
What is the minimum age of a person I

can employ?
Under the Children and Young Persons (Employment)

Act 1966 (Act 350), children under the age of 14 years
are
Only allow to work between 7 AM until 8 PM.
Not allow to work for 3 consecutive hours without a
period of rest. Period of rest shall be at least 30
minutes.
Not allow to work more than 6 hours a day. If attending
school, total working and schooling hours shall not be
more than 7 hours a day.
Not allow to commence work with less than 12 rest
hours a day.
12/10/16
241
12/10/16
And can only be designated by employer

to
Carry out light activities which are
reasonably believed to be in accordance
to their liabilities.
To be a domestic servant or maid.
Work in an appropriate industry.
Engaged in any capacity in any vessel
under the guardians of their parents.
242
Under what circumstances can a

contract of service be terminated by
either the employer or employee?
Where a contract of service is considered broken, an

employer can dismiss an employee. A contract of service is
considered to have been broken when an employee has been
absent from work for more than 2 consecutive working days
without prior leave from the employer or without informing
or attempting to inform the employer at the earliest
opportunity during such absence with reasonable excuse.
An employer may terminate the contract of service where the
employee is found guilty of misconduct or negligence.
An employee has the right to terminate the contract of
service, where an employer fails to pay wages within 7 days
after the wages period.
12/10/16
243
A contract of service can also be

terminated without notice:
By paying to the other party indemnity.
If there is a wilfull breach by the other
party of a term or condition of the
contract of service.
Where the contract of service has
expired or work being completed, the
contract may also be terminated. Written
notice being given by either party may
also terminates a contract of service.
12/10/16
244
What is the notice period

required to terminate a contract
service?
An employee of
may
resign by giving notice of resignation
or termination to the employer to terminate the contract
of service. An employer may also dismiss an employee
by giving notice of termination to such employee. In
both situation, the length of notice shall be the same
pursuant to the contract of service.
Less than 2 years of service minimum 4 weeks.
2 years or more but less than 5 years of service
minimum 6 weeks
5 years of service or more minimum 8 weeks
12/10/16
245
What shall I do if I have been

terminated without cause or
excuse by my employer?
Where you have been terminated without cause or
excuse by your employer, you can enforce your civil
right and remedies for any breach or nonperformance of the contract of service by any suit in
court or you can file in a written representation
within 60 days of the dismissal to the Director
general of Industrial Relations Department to be
reinstated pursuant to Section 20 of the Industrial
Relations Act, 1967.
12/10/16
246

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ADVANCED BUSINESS LAW

Nurulhuda Adabiah Mustafa

LECTURERS CONTACT DETAILSNURULHUDA ADABIAH MUSTAFA

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Lee Mei Pheng (2005), General Principles of Malaysian

Nurulhuda Adabiah Mustafa

Lee Mei Pheng, Detta Samen (1997), Commercial

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

4. Mohd. Masum Billah (1997), A Model of Life

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

ISLAMIC BANKING AND FINANCE

Nurulhuda Adabiah Mustafa

ISLAMIC INSURANCE (TAKAFUL)

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

Nurulhuda Adabiah Mustafa

PROPOSAL AND ACCEPTANCE

Nurulhuda Adabiah Mustafa

Proposal can be made toIndividual

Nurulhuda Adabiah Mustafa

Carlill V Carbolic Smoke Ball Co.

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An offer must be communicated to the

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Sec 4(1) CA: The communication of a

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Case: R v. Clarke (1927) 40 CLR 227.

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The position would be different if the proposal was

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EXCEPTIONS TO THE GENERAL RULE

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It is merely an invitation from one party to another

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DISPLAY OF GOODS IN A SELF-SERVICE

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Case: Fisher v. Bell

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Proposal v. Counter Offer

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Nurulhuda Adabiah Mustafa

Sec 7(b) CA: ..The acceptance

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Case: Felthouse v. Bindley

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Nurulhuda Adabiah Mustafa

The contract is binding on the acceptor,

a) Proposer-Once posted [Sec 4(2)(a) CA].