Here are the key points to consider in advising Goh Reng: - A valid contract requires offer, acceptance, consideration and intention to create legal relations. - Goh Reng must make an offer to sell the factory to Ling Kup at a certain agreed price. Ling Kup must accept the offer. - Consideration means something of value is exchanged by both parties. Ling Kup must pay an agreed price for the factory. - The intention must be to create legal obligations, not just a social arrangement. Selling a factory is clearly intended to be legally binding. - All terms must be clear and certain - e.g. price, what assets are included, completion date. Any vague terms

1. QUESTION 5
Sari contracted to sell a Picasso painting worth RM500,000 to Cheong Sam at the price of
RM3,000 only. When Cheong Sam delivered the payment to Sari, Sari claims that she is
entitled to be paid more for the painting as it should be sold according to its market value.
She further contended that since the price is not in accordance with the market value, the
contract is void. Cheong Sam insists that the contract between them is valid.
Advise the parties.

2. Answer :
I The issue in this case or question is whether there is a valid contract between Sari and Cheong Sam and
whether Cheong Sam is entitled for the painting.
L
The law applicable for this question is law of contract. Under the law of contract, consideration is the one
of the elements which is necessary to form a valid contract. This is provided by Section 26 of the
Contract Act 1950. According to Section 2(d) consideration means “When at the desire of the promise,
the promise or any other person has done or abstained from doing or does or abstained from doing or
promises to do or to abstain from doing, something, such act or abstinence or promise is called a
consideration of the promise.”
According to the law, it is clear that a valid contract requires both parties to provide consideration. The
Court of Appeal in Wong Hon Leong David V Noorazman Bin Adnan held that there was a valid
consideration between the appellant and the respondent when the latter promised to pay RM268,888 for
the service rendered by the appellant in the conversion and subdivision of certain land for a housing
project. The consideration on was a valid promise even though it was an executor one and he appellant
was entitled to claims for their fees from the respondent.
A
In the application stage, when Sari contracted to sell a Picasso painting worth RM500,000 to Cheong
Sam at the price of RM3,000 only, the law will not question the terms of contract agreed upon by the two
parties because if there are no elements of fraud then the consideration is valid. This particular principle
evolved from the court’s refusal to interfere with anything that has been agreed upon by the contracting
parties based on the laissoz faire doctrine.
Hence, the consideration given by Sari is sufficient under the law even though it may not be adequate
because the fact of the question do not mention that Cheong Sam forced Sari to sell the Picasso painting
at lower price or RM3,000. In the case of Phang Swee Kim V Beh I Hock (1964) M.L.J 383 the court
decide that the appellant was entitled to the land which was transferred to him by the respondent at the
price of $500 because there was no fraud involved in the transaction. However, if the issue of consent not
freely given is raised , perhaps due to fraud or misrepresentation, for the party to enter into contract, the
inadequacy of consideration would be taken by the court. On the other hand, if no such issue is raised,
the court will not bother of the inadequacy of the consideration as it is not important to form a valid
contract.
C In the conclusion, there is a valid contract between Sari and Cheong Sam. As such Cheong Sam is
entitled to the Picasso painting at RM3,000.

3. QUESTION 6
Zaki, a 15 years old college student, entered into a contract to buy some books from Bijak
Bookstore. He also contracted to buy a motorcycle from Rempitz Motors Co which costs
RM10,000 so that he could travel to his school easier. He agreed to pay for those goods in 2
weeks. After more than a month, he failed to pay for the goods. Bijak Bookstore and Rempitz
Motors Co want to bring an action against Zaki.
Capacity.

4. Answer :
I The issue in this case or question is whether Bijak Bookstore and Rempit Motor Co can take legal action
towards Zaki.
L
The law applicable for this question is law of contract. According to section 2(h) of the contract Act
1950 states that “An agreement enforceable by law is a contract.” There is seven element to form a valid
contract which is agreement, consideration, legal capacity, intention to create legal relation, certainty,
free consent and lawful object.
According to Section 10(i) states that “All agreement are contract if they are made by the free consent of
parties competent to contract for lawful consideration and with a lawful object and are not hereby
expressly declared to be void.
Section 11 explains that 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 sound mind and is not disqualified from contracting by any law
to which he is subject.
The general rule is age of majority act 1971 provides that a person attains the age of majority at 18.
Therefore, a person who is under the age of 18 is a minor and therefore not competent to enter into
contract.
Based on case Government of Malaysia V Gurcharan Singh, plaintiff sued the defendant for breach the
contract. The claim was for $11500 which was actually spent by the plaintiff in educating the defendant.
At the time of the contract, the defendant was a minor. It was held that the contract was void.
However, since education was necessaries, the defendant was liable for the repayment sum spent on him.
The contract becomes valid due to necessaries.
A
Applying to the current situation, it was had that the contract is void because Zaki is a 15 years old
student which is a minor. Bijak Bookstore and Rempitz Motor Co made a contract between them and
Zaki at first because Zaki agreed to pay some book and motorcycle which cost RM10,000 in two weeks.
But after a month, Zaki failed to pay for those goods. However, the contract became valid between
Zaki, Bijak Bookstore and Rempitz Motor Co because there is exception contract by minor under
‘necessaries’
C In the conclusion, Rempitz Motor Co and Bijak Bookstore can take legal action on Zaki because the
contract is valid under contract by minor which falls under necessaries.

5. QUESTION 7
Daud, a talented 16 years old student was selected by the All Blacks club to be trained as a
professional rugby player and signed a contract for 5 years. Under the contract, it is stated
that Daud is to be trained by a special coach 7 days a week and it required to play for the
team at all tournaments . Under the contract, he would only get an allowance of RM500 if the
teams wins, he cannot play for other clubs or work elsewhere to earn a living. After 2 years,
Daud left for another club which pays him RM2,000 monthly allowance. The All Blacks
intend to sue him for breach of contract.
Advise Daud.

6. Answer :
I The issue of this case is whether there is a valid contract between the all blacks club and daus – minor.
L
The law applicable for this case is the law of contract. The word contract is synonymous to agreement. It
is defines that contract is an agreement which is either enforce by the law or recognized by law as
affecting the legal rights or duties of the parties. Section 2(h)of the contracts act 1950 states that “an
agreement enforceable by law is a contract”.
The essential element to form a valid binding contract in this case is legal capacity. Every person
is free to enter into a contract as long as he is competent or have illegal of fully capacity to contract.
Section 10 states that “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.
Section 11 explain who are competent to contract. “Every person is competent to contract who is
of the age of majority according to the law of which he is subject and who is of sound mind and is not
disqualified from contracting by any law to which he is subject”. There are 3 categories of people who
do not have the capacity or are not competent to contract and they are not minors, infants, insane person
and a person disqualified by the law.
Age of majority act 1971 provides that a person attains the age of majority at 18. Therefore, a
person who under the age of 18. Therefore, a person who under the age of 18 is a minor and therefore not
competent to enter into contract. The general rule is by virtue of section 10(1), section 11 and the age of
majority act, a contract by minor is void because minors are not competent to contract. The main purpose
is to protect the minor’s interest from being abuse or manipulated by unscrupulous people.
The general rule is that all contract entered into by minors are void. However, there are some
exceptions to this general rule. Under this exception, the contract become valid and binding, even though
the contract are made by minors. The exception for this case is contract of apprenticeship. Contract of
apprenticeship is a contract under the minor obtain education or training for a trade or profession, or
beneficial experience in a trade or profession.
There are 3 cases that we can refer to. First, doyle v. white city stadium. D was a professional
boxer and still a minor. In order to get the license, D agreed to be bound by the rule which is if he
disqualified from a tournament, he would lose the prize money. D was disqualified then and he insisted
that the contract was not bind on him and wanted the prize money. The court agreed that the contract was
binded on D as the rule attached was practically essential to enable D become proficient in this
profession and for his own benefit.
Second, De Francesco v. Barnum. In this case, the plaintiff entered a contract with a minor which
is the minor become an apprentice dancer for the plaintiff for 7 years. The terms in the contract are she
could not marry, would not receive any payment and cannot dance professionally for other person
without the plaintiff’s consent. The minor made a contract to dance for defendant and this made the
plaintiff sued the defendant for damages. The court held that the terms of the contract was unreasonable
harsh and therefore the contract cannot be enforced against the minor.

7. Third, the case of Merchantile Union Guarantee Corporation LTD v. Ball (1937). D, a minor was
a haulage contractor, who obtains a lorry oh hire – purchase term from P. then, D fell in arrears with his
installment on the lorry. After that, P sued him contending that the contract was binding on him since it
was as whole for D’s benefits. The court held that D was not liable for installment due under the hire-
purchase agreement. Since the agreement being a trading contract, whether it is beneficial or not it was
not binding him.
A
Applying to the current situation, Daud was selected by the all blacks club to be train as a professional
rugby player for 5 years when he was 16 years old. The contract was unreasonable harsh that states that
daud will get special coach for 7 days a week and play for the team in all tournaments. He also get an
allowance of rm500 if the team wins and cannot play for another club or to work elsewhere to earn a
living. After 2 years, daud left for another club which pay him higher than before and all blacks club
intends to sue him for the breach of contract.
This case is similar to Defrancesco v. barnum which the terms in the contract that entered by the
minor was unreasonably harsh. It is because daud will be train for 7 days a week without rest. He will
also get an allowance of rm500 only if the team wins. It means that if the teams lose he would not
received any payment, plus he cannot play for another club or work elsewhere to earn a living. For
example, if the all blacks club lose the game and he as a player cannot play for other club, then how can
he survive to earn money for his living with such terms that was clearly forbid him to earn money for
himself. After 2 years, daud left for another club which pay him an allowance rm2000 monthly. His
decision to left tha all black club was a wise one because it give him a stable income for every month to
support his living. Therefore, as refer to the case of Defrancesco v. barnum, it was held that the contract
cannot be enforced against the minor which is daud because of the term was unreasonably harsh.
C In conclusion, the contract between all blacks club and daud are not valid because the terms in the
contract were unreasonably harsh. Therefore, all blacks club cannot sue him for breach of contract.

8. QUESTION 8
Chua, a businessman, always consults his lawyer Tee Poo before entering into any financial
transactions and for any legal problems he encounters. One day, Chua was charged with
committing assault on a business rival and Tee Poo represented Chua when he was charged
for the offence in Court. Tee Poo managed to convince Chua to sell 2 plots of land which
belongs to Chua an extremely low price as his fees. Chua reluctantly agreed as he feared that
Tee Poo will not defend him in the assault case if he refuses to sell the land to him. However,
after selling off the land to Tee Poo, Chua had a change of mind as he was advised by his
close friends that Tee Poo should not have charged so much for his legal fees. Chua wants to
set aside the sale of the lands as he did not willingly agree to the contract.
Advice Chua.

9. Answer :
I The issue in this case or question is whether Chua had given free consent when he made the transactions.
L
The law applicable for this question is free consent. In Section 16 of the Act provides : “A contract is
said to be induced by “undue influence” where the relation subsisting between the parties are such that
one of the parties is in a position to dominate the will of the other and uses that position to obtain an
unfair advantage over the other.”
The effect of “undue influence” in a contract is that the contract is voidable as stated in Section 20,
“When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the
option of the party whose consent was so caused. Any such contract may be set aside either absolutely
or, if the party who is entitled to avoid it has received any benefit thereunder, upon such terms and
conditions as the court may seem just.”
According Section 16 (2)(a) and (b), “In particular and without prejudice to the generality of the
foregoing principle, a person is deemed to be in a position to dominate the will of this two element. First,
where he holds a real or apparent authority over the over, or where he stands in a fiduciary relation to the
other. Secondly, where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness or mental or bodily distress.”
In Section 16 (3)(a) states that, “Where a person who is in a position to dominate the will of another,
enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced
to be unconscionable, the burden of the proving that the contract was not induced by undue influence
shall lie upon the person in a position to dominate the will of the other.”
In Chua and Tee Poo case, Tee Poo as the lawyer, he is the dominant party and he had dominated Chua
by sold off the land to him as his fees in order to represent Chua in a court. Chua had gained an unfair
advantage over Tee Poo who charge so much for the legal fees.
A
In the application stage, the burden of proving that undue influence did not exist would lay on Chua
based on Section 16 (3) Contract Act. This case are related with the Salwath Haneem v Hadjee Abdullah
case. According to Salwath Haneem v Hadjee Abdullah, Salwath want to set aside a contract between
she and her husband with her brother-in-laws after her husband died. She state that she was undue
influence by her husband when that contract was happen. In order to prove the contract was fully
understand and had agreed to the contract freely and without being subject to undue influence by
Salwath, the burden of proving was lay on brother in-laws.
The court held that a confidential relationship existed between the parties as both of them is husband and
wife. The law thus raises a presumption that undue influence has been exercised the burden of proof is
upon the done to show that the transaction is “righteous and proper”.
Based on above case, Chua and Tee Poo have confidential relationship which is as lawyer and client.
Chua was understand fully about the transaction but he been force by the Tee Poo in order to solve the
charged for the offence in court due to committing assault on business rival. Therefore, the burden of
proving in this case was lay on Tee Poo as a lawyer that has already sign the contract with the client,
Chua.

10. C In the conclusion, Tee Poo need to prove that when they agreed the contract there are no undue influence
on Chua. If Tee Poo unable to prove it, then Chua can set aside the transaction under Section 20.

11. QUESTION 9
Goh Reng wants to sell his factory which produces semiconductors used for various electrical
gadgets to his friend, Ling Kup. While persuading Ling Kup to purchase the factory, Goh
Reng informed Ling Kup that his factory can produce up to 1500 semiconductors daily and
that all the equipments in the factory are in good condition. In actual fact, Goh Reng has no
knowledge of what is going on in the factory as he hardly supervises the production of the
factory and everything was handled by his manager. Goh Reng, however, advised Ling Kup
that he can check the records of the factory as well as inspect the factory to verify what he
has said. Ling Kup trusted Goh Reng as they have been friends for a long time and agreed to
purchase the factory based on Goh Reng’s representation. It was only after the contract was
concluded that Ling Kup discovered that the factory did not produce as much and the
equipments were in bad condition. Ling Kup wants to set aside the contract as he claims that
Goh Reng did not tell him the true facts.
Advise Goh Reng.
Misrepresentation

12. Answer :
I The issue in this case or question is whether Ling Kup wants to set aside the contract as he claims that
Goh Reng did not tell him the true facts.
L
The law applicable for this question is free consent. In Section 10 provides : “All agreements are
contracts if they are made by the free consent of parties competent to contract, for lawful consideration
and with a lawful object and are not hereby expressly declared to be void.”
Consent in Section 13 states, “Two or more persons are said to consent when they agree upon the same
thing in the same sense.” Free consent in Section 14 states, “Consent is said to be free when it is not
caused by coercion, undue influence, fraud, misrepresentation and mistake.
A misrepresentation is a false or untrue statement or representation made by the representor and by such
statement the other party may be induced to enter into a contract. In Section 18, misrepresentation
includes the positive assertion in a manner not warranted by the information of the person making it, of
that which is not true, though he believes it to be true.
Elements of misrepresentation is there must be a false or untrue representation, either through a positive
statement or some conduct and the representation must induce the misled party to enter into the contract.
The party misled must prove that he was induced by the representation. He cannot be said to have been
induced, if the representation did not influence his mind at the time of entering into the contract or he
was aware that the statement was untrue.
A
Applying the above situation, when Goh Reng informed Ling Kup that his factory can produce up to
1500 semiconductors daily and all the equipments in the factory are in a good condition, he has no
intention to deceive Ling Kup but he negligently made the representation.
Hence, applying the decision in Tan Chye Chew & ANOR. V EASTERN MINING & METALS CO.
LTD, Ling Kup had entered into the conract without checking the true position at any time despite
having the facilities to do so, therefore the contract was not voidable.
C In the conclusion, Ling Kup cannot set aside the contract with Goh Reng because he did not check it
before purchasing the factory which he had the opportunity to check it before this. Thus, the contract is
invalid.

13. QUESTION 10
Mamat, an ardent fan of Peterpan was excited to hear the band would be coming to Malaysia
to perform in a concert at Bukit Jalil stadium and will be holding a press conference at the
Great Hotel in Kuala Lumpur where they will be staying in. As he wants to meet them
personally after press conference to present them with a gift, he decided to book a room one
floor below their suite in the hotel, 2 days before the scheduled arrival of Peterpan, it was
announced that the concert was cancelled as all the members of Peterpan fell ill after eating
Bakso Noodles in Jakarta. Mamat feeling disappointed, cancelled the booking of the hotel but
the hotel insisted that he pay for the room as there is a binding contract between them.
Advise Mamat.

14. Answer :
I The issue in this case or question is whether Mamat should pay for the booking that he made with The
Great Hotel.
L
The law applicable for this question is discharge of contract. Discharge of contracts is when two or more
parties entered into a contract, each of them has duties or obligations arising from the contract. When a
contract is ‘discharged’, it is actually terminated. Once a contract is ‘discharged’, the contracting parties
are free from further obligations under the contract.
The contract may be discharged by any one of the following modes which is by performance of the
contract, by consent or agreement between the parties of the contract, by impossibility or frustration and
by breach of contract by any one of the parties.
Regarding to the case of Mamat and The Great Hotel, the mode of discharged that can be implemented in
this case is discharged by impossibility or frustration. There are 2 situation under this mode which are the
contract is in itself impossible to be performed and the contract becomes impossible to be performed
after it has been made.
According Section 57(2) , under situation 2, there are several situation which are destruction of subject
matter of contract, supervening event which defeat the whole purpose of contract, death of personal
incapacity and change in law which makes the contract unlawful.
Above case related with the contract becomes impossible to performed after it has been made. Section
57(2), “A contract to do an act which, after the contract is made, becomes impossible, or by reason of
some event which the promisor could not prevent, unlawful, becomes void when the act becomes
impossible or unlawful.”
The case under situation, supervening event which defeats the whole purpose or object of the contract. If
the contract is entered into for a specific purpose known to the other party and something happens
beyond the control of either party which results in the purpose of the contract to be defeated, the contract
is frustrated.
A
In the application stage, it can refer to case Krell V Henry. According Krell V Henry case, Henry hired a
room for the sole purpose of watching the coronation procession of King Edward VII. However, owing
to the King’s illness, the procession was cancelled. It was held that Henry could be excused from paying
the rent for the room because the contract was frustrated.
Based on above case, Mamat should not pay to the hotel because the contract was frustrated. There is
supervening event which defeats the whole purpose or object of the contracts. This situation is similar to
the case of the Krell V Henry. So Mamat can be excused from paying for the booking room to the hotel.
C In the conclusion, Mamat did not paid any deposit or money to the hotel. So, the contract between
Mamat and The Great Hotel is void as the contract is frustrated.

15. QUESTION 11
Amy signed a 3 years contract with Bintang Malam Recording company as a recording artiste
where the company promised to release her album in 1 year’s time. During the said period,
she cannot, she cannot execute any contract with other recording company or sing in any
clubs. However, due to financial constrain, she quietly signed an agreement to perform in the
Hard Rock Café for 6 months where she was paid RM500 per night. Bintang Malam found
out about this and intends to sue Amy for breach of contract.
Advise Bintang Malam as to the available remedy against Amy. If any.

16. Answer :
I The issue in this case or question is whether Bintang Malam has the right to sue Amy for breach the
contract.
L
The law applicable for this question is law of contract under remedies for breach of contract. Remedies
for breach of contract is when there is a breach of contract, the party not in default may claim one or
more of the following remedies which is rescission of contract, damages, specific performance,
injunction and quantum meruit.
According to rescission of contract, if a party breaches his promise under a contract, the party not in
breach has the right to rescind or terminate the contract. Section 40 of the Contract Act provides, “When
a party to a contract has refused to perform, or disabled himself from performing his promise in his
entirety, the promise may put an end to the contract, unless he has signified, by word or conduct, his
acquiescence in its continuance.”
In Section 65, “If the party not in default chooses to rescind the contract, any benefit which he has
received from the defaulted party must be restored or returned.”
A
In the application stage, as stated in the decided case, if a party had refuse in performing his part of the
contract, he is to return all the benefits received from the other party under the contract due to breach of
contract.
This case are related with Muralidhar Chatterjee V International Film Co. Ltd. According to Muralidhar
Chatterjee V International Film Co. Ltd, it was held if a party had wrongfully refused to perform his part
of the contract, and the party not in default had rightly rescinded the contract under section 40, the party
in the default is bound under section 65 to restore to the party in default any benefit received from him
under the contract.
In Amy’s situation, she has breached the contract with Bintang Malam by signing a contract (6 months
where she was paid RM500 per night) with Hard Rock Café without the consent of Bintang Malam. In
conjunction to that, Bintang Malam has the right to sue Amy for breach for contract.
C In the conclusion, Bintang Malam is entitled to sue Amy and also to rescind the contract due to breach
the contract.

17. QUESTION 12
“Specific Performance is a remedy which is given at the discretion of the court”
Discuss the situations in which Specific Performance will and will not be granted.

18. Answer :
It is a decree of the court directing that the contract shall be performed specifically in
accordance with its terms. Thus, when a contracting party refuses to perform the contract, the
other party may claim in court so that the court may order the party in default to perform the
contract as agreed.
Section 11(1) of the Specific Relief Act 1950 provides the following circumstances where
specific performances may be granted by the court’s discretion such as when the act agreed to
be done is in the performance, wholly or partly, of a trust.
When there is no standard for ascertaining the actual damage caused by the non-performance
of the act agreed to be done. When the act agreed to be done is such that pecuniary
compensation for its non-performance would not afford adequate relief. This was decided in
the case of Gan Realty Sdn. Bhd. V Nicholas & Ors.(1969) 2 M.L.J. 110, which involved the
contract of sale and purchase of shares in a bank. The court held that as the shares of the bank
were not available in the open market the court therefore ordered specific performance.
Lastly, when it is probable that pecuniary compensation cannot be got for the non-
performance of the act agreed to be done.
Section 20 of the same Act lays down the following circumstances when contract cannot be
specifically enforced, a contract for the non-performance of which compensation in money is
an adequate relief. This was decided in case of Yeo Long Seng V Lucky Park (pte) Ltd.
(1971) 1 M.L.J. 20, where the court refused to grant specific performance as damages could
provide an adequate remedy.
Second, a contract which runs into such minute or numerous details or a contract which
requires continuous supervision by the court such as building contracts and which is
dependent on the personal qualifications of the parties such as contracts of employment. In
Lumley V Wagner (1852) 42 E.R. 687, the court refused to enforce a contract of personal
service i.e. a contract to sing at a theatre.
Next, a contract the term of which the court cannot find with reasonable certainty and in its
nature revocable such as contract of partnership with no fixed duration which can be
dissolved at any time by a party. A contract made by trustee either in excess of their powers
or in breach of their trust.
And a contract made by or on behalf of a corporation or public company which is in excess of
its powers. A contract the performance of which involves the performance of a continuous
duty extending over a longer period than three years from its date such as contracts of
construction. A contract which a material part of the subject-matter supposed by both parties
to exist has before it has been made, ceased to exist.

19. Section 21(2) spells out the circumstances when the court may properly exercise its discretion
not to grant specific performance. Where the circumstances under which the contract is made
are such as to give the plaintiff an unfair advantage over the defendant, though there may be
no fraud or misrepresentation on the part of the plaintiff. At last, where the performance of a
contract would involve some hardship on the defendant which he did not foresee, whereas its
non-performance would involve no such hardship on the plaintiff.