1. Jual janji is a traditional Malay practice where land is transferred to a lender as security for a loan, with the understanding that it will be returned to the borrower upon repayment. 2. Malaysian courts initially treated jual janji strictly as a sale, ignoring evidence it was intended as security. However, exceptions developed where time was not of the essence or the lender evaded repayment. 3. Recent cases and the National Land Code have recognized jual janji can operate as an equitable security transaction, balancing title rights with contractual obligations.

1. Jual janji
A sale of a promise
Conditional sale.
-The landusedas securitytosecure the loanwhichis small insize andvalue.
Originof jual janji
-Come intoexistence afterthe comingof Islamtothe Tanah Melayu-toavoidthe practice of usury
-In the early daysthe concept of ‘transfer’injual janji is onlyin form of oral understandingbetween
the creditorandborrowerandnoactual documentationorregistrationof anydocumentstakesplace.
TengkuZahara v Che Yusuf
Briggs J: “ The whole purpose of jual janji transaction is to provide a procedure for securing a
loan…Without infringing the prohibition of usury which is binding on the conscience of all good
Muslims.”
W.E Maxwell (The Lawand Customof the Malay withReference tothe Tenure of Land)
“the jual janji (conditional sale), the only form of hypothecation of land known to Malay law, is, in
principal incidents,quiteunlike ourmortgage of real property….."
 WhenNational LandCode 1965 wasintroducedand ownermustcomplywiththe mandatory
requirementforregistrationof landtitles,Jual Janji transactionwasalsoaffected.
 Dealingswere regulatedandJual Janji hastoconformto the proceduresof transferof land.
 The land will be transferred into the name of the lender and a collateral agreement will be
executed whereby the lender is obliged to transfer the property to the borrower upon full
repaymentof the loan.
Modus operandi
1. A contract enteredbetweentwoparties(aBorrower&Lender)
2. Transaction involves a transfer of land belonging to the Borrower to the Lender for the
considerationof loangrantedbyLender
3. With a condition or promise to retransfer to the Borrower upon full and final settlement of
the loanwithinanagreedduration
4. Failingtodo so,the transactionisdeclaredas an absolute sale i.e.Jual Putus.
Elementsofjual janji
1. Lender& Borrower;
2. Loan;
3. Land as a security;
4. Land transferredtothe Lender;
5. Lendertakesproceedsof the landduringthe loanperiod;
6. Upon full settlementof loan,Lenderretransferthe landto Borrower;
7. If Borrower defaultedthe repayment of the loan,land will be absolutely assigned to Lender
(Jual Putus)
Judicial Opinions/Views

2. 1. Strict interpretation
Purelycontractof sale where time isof essence
Purelycontractof sale where time isnotof essence (exceptions)
2. Liberal interpretation
Equitable principles
PurelyContract where time is of essence
Leadingcase:Hj Abdul Rahmanv Hassan(1917) AC 209
“it wasnot a securitytransactionormortgage as the onlyformof mortgage inMalaysiais charge
or lien.Since itwasa contract, the claimwas statute barred”
CasessupportedHj Abdul Rahman
A KanapathyPillayvJosephChong(1981) 2MLJ 117 (FC)
Facts:
Appellantwhowasinneedof moneytopreventforeclosure actionagainsthislandagreedtosell
it to Respondent. There was an option for the Appellant to repurchase the land at an enhanced
price. Option was not exercised within the time period. The land was transferred to the
Respondent who subsequently agreed to sell the land to the Developer.Appellant commenced
action for recoveryof the land. Held Trial Court: that the landhad in fact beensoldand had not
beentransferredontrust.(The claimwas dismissed).Federal Court:“The optiontopurchase was
onlycontractual andas the rightwasnot exercised,the Appellantcouldnotsucceedinhisclaim.”
-(SallehAbbasFJ)
Wong See Lengv SaraswathyAmmal [1954] MLJ 141 CA
Ibrahimv Abdullah(1964) MLJ 139
If the Borrower failed to comply with the terms of the contract, the court will not assist him to
invoke the termsof the agreementi.e.toobtainretransferof the land
PurelyContract where time is not of essence (Exceptions)

3. 1. Extensionof time
Abdul HamidBinSaad v AliyasakIsmail [1999] 1AMR 105
In pursuantto jual janji agreementdated27/4/66 (1st agreement) PtransferredhislandtoD for
a sum of RM2,770 on repayment within3 years. Under 2nd agreement dated 27/1/72 D agreed
to extend the time for repurchase for further 3 years in consideration of an increase sum of RM
3770. After2nd3 yearsperiodended,PrepeatedlyaskedDtotransferthe saidlandto himbut D
refused. Pbroughtanaction. Issue:Whetherthe agreementsconstitutejual janji oroutrightsale?
Held High Court: held that the conduct of parties in entering intoa second agreement after the
expiryof the firstagreementmeantthattime isnolongerof essence andthe transferof the land
to D was merely a conditional transfer and not an outright sale. Further, that D title to the said
landwas defeasible byvirtue of Sec340(4)(b) NLCand there was an obligationonDto retransfer
the landto P as agreedinthe twoagreements.
Ismail Hj Embongv Lau KongHan (1970) 2MLJ 213
2. Evade of payment
AhmadBinOmar v Hj SallehBinShaikhOsman[1987] 1MLJ 338
P agreedtosell apiece of landtoDfor a considerationof RM12,000. Pexecute the transferof the
landtoD. Pagreedtorepurchase the landwithin3years. Withinthe periodof 3yearsPattempted
to pay the sumbut D had beenavoidingP. HeldHigh Court: “thiswas a jual janji transactionand
the courtcouldgive effecttoequitable rightsexistingbetweentheparties.Eveniftimeisoriginally
of the essence of the contract, it had beenallowedtopassand the conduct of the partiesclearly
showedthatitwas no longerso.”
HatijahBte RejabvAbdullahSaad[2004] 2 AMR 665
The Borrowerwashavinga financial difficultiesandborrowedRM20,000 fromD witha condition
that she has to pay in full the loan amount within 5 years from the date the agreement and D
registeredasnewproprietorof the land(in1994). In 1996, D refusedtoaccept the repaymentof
the loanand claimedthatthe transferof title wasmade undera directsale transactionandnot a
promissory sale agreement i.e jual janji transaction. Held High Court: held that the agreement
reflectedthe intentionof the partiestouse the landas securityundera jual janji transactionnot
a direct sale agreement (jual janji is not considered as security transaction) However, the court
still followedHj AbdRahman’scase asa basisof evaluatingjual janji transaction.
Husaini binYaacob v Tan TeoSiang[2014] 5MLJ 606
Equitable principles

4. The collateral agreement for a retransfer in a jual janji transaction is in nature of an equitable
security transaction whereby the right to redeem remains irrespective whether the period for
repaymenthaslapsed.
HalijahvMorad [1972] 2 MLJ 166
Courttriedtofuse equityintostatutory&customaryrulesinordertoarrive atthe decision.Itwas
held that Respondent took possession of propertyas a creditor not as a purchase as such she is
not entitledtothe land.
Yaacob Bin Lebai JusohvHamisahBt Saad[1950] MLJ 255
NawabDinv MohamedSharif [1953] 19 MLJ 12
RecentdevelopmentinMY
The Malaysiancourts were reluctanttodeviate fromthe case of Haji Abdul Rahman.
Jual Janji can be recognisedasa customarysecuritytransactionpursuanttoSec 4(2) NLC.
In addition,section206(3) NLC providesthatcontractual operationof any transactionrelatingto
alienated land or interest will not be affected. It preserves the contractual obligations or an in
personamclaimtostrike a balance to the indefeasibilityof titleunderthe Torrenssystem.
Conclusion
3. Conceptof jual janji
4. Position of jual janji as security transaction (involve giving of loan) under the Code [section
206(3)]
5. General principle (time isof the essence)
6. Exceptions(time isnolongerthe essence)