Law Paper

Question 2

Identification of law

• Whether the contract can be vitiated.
• Whether Helley has use his position to obtain advantage from Carl.
• Whether Helley has reveal complete truth to Carl.

Explanation of law

According section 10(1) of Contract act 1950, all agreements are contracts if they are made by the free consents of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Consent has been mentioned in section 13.”Two or more persons are said to consent when they agree upon the same thing in the same sense.”  Every law must have exception. Therefore, there are no free consent as mention in section 14, if there are coercion in section 15, undue influence in section 16, fraud in section 17, misrepresentation in section 18 and mistake in section.

There are two different contract which are voidable contract and void contract. Voidable contract are contracts where one or more parties thereto and not the other have the option to either rescind the contract or affirm the contract. For those innocent party which elects the contract, the other party need not perform any promise or obligation under the contract. The party rescinding the voidable contracts shall restore any benefit he has received under the contact from whom it was received, under section 65. On the other hand, the general rule of void contract is mention in section 2(g), an agreement not enforceable by law is void. Section 66 applies in the case of void contracts, any person who has received any benefit or advantage under the contract is bound to restore it, or to make compensation for it, to the person from whom he received it.

When consent to an agreement is caused by coercion, fraud and misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused in section 19(1).Undue influense also falls under voidable contract as mention in section 20.For operative mistake, it is void where both parties were under a mistake as to a matter of fact essential to the agreement.

Fraud is an act committed by a party to a contract with the intension to deceive the other contracting party or to induce his to act on a false representation to enter into the contact under section 17. The definition of misrepresentation is mention in section 18, an unambiguous false statement of fact which is addressed to the party misled and which materially induces the contract. Misrepresentation includes three prescribed situation. First is any positive assertion, of that which is not true, though he believes it to be true. Second, ant breach of duty which, without an intent to deceive, gives an advantage to the person committing it by misleading another to his prejudice, and the third one is an innocent party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement. Misrepresentation has supported by Sim Thong Realty Sdn Bhd v. Teh Kim Dar and Tee Kim [2003] 3 MLJ 460, A representation may sue been induced by an innocent representation may sue for rescission but he may not recover damages. The definition of coercion under section 15 are the committing or threatening to commit any act forbidden by the Penal Code ,and the unlawful detaining or threatening to detain, any property, from any person with the intention of causing the person to enter into an agreement. Common law Duress is actual violence or threats of violence to the person of the contracting party or someone close to that person. It is applied in Kesarmal s/o Letchman Das v. Valiappa Chettiar [1954]. Another supporting case law is Chin Nam Bee Development Sdn Bhd v. Tai Kim Choo & 4 Ors. [1988] 2 MLJ 117. This case is all about The respondents/plaintiffs (R) were purchasers of certain houses to be constructed by the appellants/defendants (A). Each of them signed a sale and purchase agreement to purchase a house at $29,500. The dispute related to the payment of an additional sum of $ 4,000 by each respondent to the appellants. The magistrate found that the payment of $4,000 was not voluntary but made under threat by A to cancel R’s bookings for their houses. R claimed a refund of the additional sums paid. A appealed. The main ground of A’s appeal was that the $ 4,000 was paid voluntarily and not under any coercion. The High Court dismissed A’s appeal and ordered that the amount paid by R must be refunded.  It held that the definition of the word "coercion" in section 15 does not apply to section 73. The word "coercion" in the context of section 73 should be given its ordinary and general meaning.