WEEK 1
Coercion (s.15)
Undue Influence (s.16)
Fraud (s.17)
Misrepresentation (s.18)
Mistake (ss.21–23)
- Conditional Rescission
What is innocent misrepresentation?
This type of misrepresentation occurs when a false statement is made with no intention to deceive.
Application of the doctrine is guided by two principles, what are they?
1) It is not contrary to public policy
2) It does not create a new contract
What is Section 28 of the Contracts Act 1950?
This section makes agreements restraining lawful trade void.
What are the types of duress ?
Duress to the person, Duress to goods, Economic duress
What are the further classifications of undue influence based on modern view?
Class 1 – Actual Undue Influence
Class 2 – Presumed Undue Influence
Class 2A: Presumption arises by law (fiduciary relationships)
Class 2B: Presumption arises by facts showing trust/confidence
Explain Fraudulent Silence
Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
What are the three types of common law mistake identified in the materials, and how do they relate to Malaysian contract law?
Common mistake (shared mistaken belief)
mutual mistake (misunderstanding between parties)
unilateral mistake (one-sided)
What are the exceptions of restraint of trade?
- Goodwill – ‘reasonable’ limit
- Partners prior to / anticipate dissolution – ‘reasonable’ limit
- Partners during partnership – no limit
What are the two categories of voidable contract?
Voidable contract as there is no free consent during the formation of the contract
Voidable contract due to a breach of contractual term i.e. either a breach of condition or an intermediate term that has serious consequences (see s.40 Contracts Act)
What are the two things needed to be proven for actual undue influence?
1. Dominate the will
2. Obtained an unfair advantage
In Chuah Tong Yeong v KLGCC [2003] 6 MLJ 577, misrepresentation must show what to succeed?
a) a representation
b) the plaintiff was induced by it
c) the representation is untrue
d) it is a suitable case for rescission
What is the test for non-est factum?
• Must be a radical difference between what he signed and what he thought he was signing
In MILLENIUM MEDICARE SERVICES V NAGADEVAN A/L MAHALINGAM [2013] 9 MLJ 873, what was the requirements needed for Exception 2?
I. Only between partners
II. The restrictive covenant must be made upon or in anticipation of a dissolution of the partnership
III. within such local limits as are referred to in Exception 1
In Teck Guan Trading Sdn Bhd (1996), what are the two elements of coercion?
Threat to do something forbidden by Penal Code.
Unlawful detention of property.
What is the facts of Polygram Records v The Search and what class does it fall under?
This Malaysian case involved a manager influencing a band to sign a contract, falling under Class 2B.
Name all 5 of acts that counts as Fraud
a) the suggestion, as to fact, of that which is not true by one who does not believe it to be true;
b) the active concealment of a fact by one having knowledge of belief of the fact;
c) a promise made without any intention of performing it;
d) any other act fitted to deceive;
e) any such act or omission as the law specially declares to be fraudulent.
Two issues to look at for mistake of fact are?
1. Made a mistake as to the identity of the person contracting with
2. Made a mistake as to the agreement that is signed (Non est factum)
What would Restraint of trade normally have? (factors)
1. Prohibiting one to practice/do/earn his livelihood,
2. Within a radius of a certain area,
3. For a certain limit of time
Based on Section 15, what does coercion mean?
Committing/threatening to commit an act forbidden by the Penal Code, or
Unlawful detention (or threat thereof) of property,
Done with the intention to cause a person to enter into a contract.
In s.16(2), a person is deemed to be in a position to dominate the will of another when ?
a. where he holds a real or apparent authority1 over the other, or where he stands in a fiduciary relation2 to the other; or
b. 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.
What are the 3 types of misrepresentation?
1) Fraudulent
2) Negligent
3) Innocent
What does S.7 SALE OF GOODS ACT 1957 explain about ?
Where there is a contract for the sale of specific goods, the contract is void if the goods without the knowledge of the seller have, at the time the contract was made, perished or become so damaged as no longer to answer to their description in the contract
What Section was emphasized in Polygram Records v The Search
This case emphasized that s.28 applies to post-contractual periods, not during the contract.