KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES
INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA
SEMESTER 1, SESSION 2023/2024
BLAW 3301 MALAYSIAN BUSINESS LAW
GROUP ASSIGNMENT 2
QUESTION NO.
FOR EXAMINER’S USE ONLY
MARKS
QUESTION 1
QUESTION 2
QUESTION 3
QUESTION 4
QUESTION 5
QUESTION 6
TOTAL
GROUP NO. : 9
No.
Group Members Name
ID No.
Bibi Farheen Bucksun
2128136
Nur Aina Fariha Binti Idris
2111944
Johora Jannatuz
1828006
Nurul Aini Rasyiqah Binti Rosmadi
2014416
Salsabeelah Khalid
1826228
Nur Aina Shafika Binti Mohd Zulfikar
2119812
1
2
3
4
5
6
MARKS SCORED:
PEER EVALUATION FORM
Each member must state his/her contribution to this Assignment.
NO.
NAME & ID
1
Bibi Farheen Bucksun
2
CONTRIBUTION
(2128136)
Question 4
Nur Aina Fariha Binti Idris
Question 2
(2111944)
3
4
Johora Jannatuz
(1828006)
Question 5
Nurul Aini Rasyiqah Binti Rosmadi
Question 3
(2014416)
5
Salsabeelah Khalid
Question 1
(1826228)
6
Nur Aina Shafika Binti Mohd Zulfikar
(2119812)
Question 6
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QUESTION 1
Chef Reez and the Marimar Hotel entered into an agreement for Chef Reez to serve as
the chief judge for a series of cooking competitions. The hotel paid an RM 10,000
advance, with an agreement for an extra RM 15,000 payment following the competition.
However, Chef Reez met with a nasty accident and suffered severe injuries. This led to
the contract to be void and discharged by frustration. According to Section 57 (2) of
Contracts Act 1950, a contract to perform an act that, after the contract is made,
becomes impossible or unlawful due to some circumstance that the promisor could not
prevent, becomes void when the act becomes impossible or unlawful. To illustrate, in
the case of Herne Bay Steam Boat Co v Hutton [1903], a defendant and the claimant
entered into a contract to hire fleet ships to take passengers for a cruise to see the naval.
However, King Edward’s onset of illness caused the navel to be canceled and argued
that the contract was frustrated due to the non-occurrence of the naval. Similarly, in the
case of Marimar Hotel and Chef Reez, the contract was discharged by frustration and the
contract became void due to the unforeseen accident that Chef Reez faced one day
before the contest.
In addition, for the advance payment of RM 10,000 made by Marimar Hotel to Chef
Reez if there was an absence of specific contract provisions, Chef Reez may be
instructed to return the RM 10,000. Since the contract has been frustrated, the obligation
for Marimar Hotel to make the additional payment of RM 15,000 after the competition
will also be discharged. This is due to Section 57 (2) of the Contracts Act 1950, that
states that both parties are discharged from their obligations due to frustration.
In short, after Chef Reez met with a bad accident that was an unseen event, the status of
the contract become void as it was discharged by frustration.
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QUESTION 2
The issue in this case is whether Khairul will need to pay the remuneration to Muaz? And
whether Khairul can dismiss Muaz for his act or not? Agency is a relationship which
subsists between the principal and the agent who has been authorized to act for him or
represent him in dealings with others. In this situation, the contract in agency is between
the principal and the agent from which the agent derives his authority to act for and on his
behalf. It is provided under Section 135 whereby an “agent” is a person employed to do
any act for another or to represent another in dealings with third persons. The person for
whom such an act is done, or who is so represented, is called the “principal”. According
to Section 165, an agent is bound to conduct the business of the agency with as much skill
as is generally possessed by persons engaged in similar business, unless the principal has
notice of his want of skill. The agent is always bound to act with reasonable diligence,
and to use such skill as he possesses; and to make compensation to his principal in respect
of the direct consequences of his own neglect, want of skill, or misconduct, but not in
respect of loss or damage which are indirectly or remotely caused by such neglect, want
of skill, or misconduct. Besides that, Section 168 stated that the principal may reject a
transaction if the case indicates that the agent withheld any material information from him
dishonestly or that the agent's actions caused harm to him. This can happen if the agent
conducts agency business on his own account without first getting the principal's approval
and informing him of all relevant circumstances that have come to light. Thus, the
principal may terminate the agent’s authority. Furthermore, as mentioned in Section 169,
the principal may also be entitled to any profit that the agent receives as a result of the
agreement. To avoid any loss, the agent needs to be truthful, honest and uphold the
principle. Even in cases when a contract expressly permits either party to end it for any
reason, there is still an obligation to perform it properly. In order to prevent the principal
from harm, the agent is entitled to act in the best interests of the principal. The agent must
always be required to perform his duties with diligence, to use such skill as he possesses,
and to compensate his principal for any direct damages resulting from his negligence.
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In the case of Springer V Great Western Railway Company (1921), the defendant agreed
to carry the principal’s tomatoes from Jersey to Covent Garden Market. Due to the bad
weather, the tomatoes arrived late at Weymouth. Since the defendant's employees were
on strike, the tomatoes were unloaded by some casual laborers. 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 damages in
conversion based on the tomatoes market price in Covent Garden Market. The court held
that the plaintiff’s claim as no agency by necessity arose. Thus, the plaintiff was entitled
to the damages because the defendant was not an agent of necessity. This is because they
failed to communicate when they could actually have done so.
By applying Section 149, the acts are done by one person on behalf of another but without
his knowledge or authority, thus he may elect to ratify or to disown the acts. This is
because Muaz was told by Khairul to purchase a van. With the amount of only RM20,000,
Muaz was able to purchase a van, but Khairul was unaware that Muaz had retained the
remaining sum of RM5,000. It is very obvious that Muaz was dishonest in this case and
took advantage on behalf of Khairul. Moreover, Khairul has the right to act according to
Section 168 which terminates Muaz's authority in which if an agent deals on his own
account in the business of the agency, without first obtaining the consent of his principal
and acquainting him with all material circumstances which have come to his own
knowledge on the subject, the principal may repudiate the transaction, if the case shows
either that any material fact has been dishonestly concealed from him by the agent, or that
the dealings of the agent has been disadvantageous to him. In addition, Section 169 allows
Khairul the right to make claims for any benefits that the agent may have received. This
is due to the fact that this case clearly shows that Muaz has received a secret profit of
RM5,000. In conclusion, my advice to Khairul is, he has the right not to pay Muaz's
remuneration and he can dismiss Muaz for being dishonest to him as stated in Section
168.
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QUESTION 3
Firas had entered into a hire purchase agreement with Sukahati Finance Co. to purchase a
Honda accord however he failed to pay the monthly payments for three months. Due to
that, Sukahati Finance Co. sent notice of intention to repossess the car to Firas and two
weeks later its agent came to Firas’s house to take away the car. When Firas had enough
money to pay and wanted the car to be delivered he was told that the car had been sold to
another person.
The main issue that can be found in this case is whether Sukahati Finance Co is entitled
to repossess the car which has been purchased by Firas and Firas’s rights as the hirer in
the hire-purchase agreement with Sukahati Finance Co.
According to section 2 of Hire Purchase Act 1967 the definition of hire purchase
agreement is a hire purchase transaction is one in which the parties have the option to
purchase the said goods included in the transaction, regardless of whether the agreement
did not specify the installments as rent or hire or otherwise. In addition, the general rule
that relates with the case is section 16(1). Subject to this section, an owner shall not
exercise any power of taking possession of goods comprised in a hire-purchase agreement
arising out of any breach of the agreement relating to the payment of
installments.However, the aforementioned respect may be used if the installment
payments equal no more than 75% of the total cash price of the goods included by the hire
purchase agreement and there had been two successive defaults of payment by the hirer
and he has served on the hirer a notice, in writing, in the form set out in the Fourth
Schedule and the period fixed by the notice has expired, which shall not be less than
twenty-one days after the service of the notice.
In pertaining to section 16(1A) if the payment of instalments made amounts to more than
seventy-five percent of the total cash price of the goods comprised in a hire-purchase
agreement and there had been two successive defaults of payment by the hirer, an owner
shall not exercise any power of taking possession of the goods comprised in the hire-
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purchase agreement arising out of any breach of the agreement relating to the payment of
instalments unless he has obtained an order of the court to that effect.
In the case of Chong Seng Yong v Credit Corporation (M) Bhd, the appellant issued a
notice to repossess the goods only after one month of default payment. The court held that
the defendant did not comply with the procedures stipulated under section 16(1) of Hire
Purchase Act 1967, therefore the repossession by the owner was not invalid and this act
of repossession had breached the condition of quiet possession which was entitled by the
hirer.
Firas has defaulted payments for three months for the car. it did not mention the amount
Firas has paid by assuming that he paid no more than 75 percent so the first requirement
for the repossession in section 16(1) and section 16(1A) is valid and owner has the right
to repossess the car as the rule to repossess the car can be done when the hirer has paid
the installment less than 75% and has 2 successive defaults of payment. Nevertheless
Sukahati Finance Co can exercise the repossession if there is order obtained by the court,
however there is no mention in this case so we assume there is no court order.
Next, as stated in Fourth Schedule the requirement is the company needs to send you a
notice that informs you it intends to repossess the car before proceeding to take your car.
Sukahati Finance did send a notice to Firas in intention to repossess the car but two weeks
after that they already sent their agent to repossess the car. According to the law Sukahati
Finance Co needs to wait for 21 days before proceeding to repossess the car. Upon the
expiry of 21 days then only they can repossess the car. On the issue of Sukahati Finance
Co selling the car to another person, supposedly they need to inform Firas if they want to
sell it. Based on the Fifth Schedule notice upon the expiry of 21 days, the company again
needs to submit a notice 14 days that mention the company wants to sell the car to another
person. However Firas was not informed about his car being sold to another person and
only knew about it after he requested for his car to be redelivered. In this situation Sukahati
Finance Co has breached the Fourth and Fifth Schedule as they did not follow the time
stipulated.
In this situation Firas can make a complaint to the banking institution who repossesses the
car as well as complaint to Association of Hire Purchase Companies Malaysia to seek
support.
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QUESTION 4
The main issue in this case is; Whether Irene can take action to sue Janet and Cantikmuka?
Whether Irene can claim for damages from Janet and Cantikmuka? Whether the buyer
was made known to the seller or not?
According to Section 4(1) of the Sale of Goods Act 1957, a contract for the sale of goods
is one in which the seller gives the buyer ownership of the property of goods for a price.
Goods are defined as every kind of moveable property. A sale is a contract whereby
ownership or property of the items is passed from the seller to the buyer at the time of the
agreement. The lawsuit concerned the 1957 Sale of Goods Act (SOGA). All states were
covered by the contract, with the exception of Sarawak, Penang, Malacca, and Sabah. The
English Sale of Goods Act is in effect in these states; however, it was amended in 1990,
and the Sale of Goods Act 1957 became applicable in all of Malaysia's states. Section 3
of SOGA states that the terms of the Contracts Act of 1957 remain in effect unless they
conflict with SOGA.
Implied Condition as To Fitness for Particular Purpose S.16(1)(a) under Implies Term is
the applicable concept in this situation. According to the general rule, "The buyer is
expected to exercise care in making purchases, If he doesn't, he must bear all the
consequences” It means that when making a purchase, the customer needs to exercise
caution. The customer cannot sue the vendor if he is irresponsible in ensuring his own
satisfaction with the quality. However, there are two exceptions to the general rule, which
states that goods must be of merchantable quality (s.16(1)(b)) and must be reasonably fit
for a particular purpose (s.16(1)(a)). Stated differently, the buyer is free to reject the
products under these exclusions and can pursue damages from the seller if the goods are
defective. Nonetheless, there are four requirements that must be met. First, purpose
disclosure, expressly or impliedly. The specific reason the items are needed must be
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known by the customer or disclosed to the supplier. For example, the ruling in Priest v.
Last found that the plaintiff is exempt from disclosing the reason for purchasing a hot
water bottle because it serves just one purpose—that of storing hot water. The plaintiff's
suit ought to be successful. Another instance, in the case of Griffith v. Peter Conway, the
court determined that the seller was not in breach of implied condition regarding fitness
for particular purpose because the coat would not injure an average person, hence the
woman with exceptionally sensitive skin who failed to disclose it to the seller was not
successful in her claim. Next, in order to prove that he had relied on the seller's ability and
judgment—either explicitly or indirectly—the buyer must show that he did so. For
instance, Grant v. Australian Knitting Mill held that the seller should bear responsibility
since Grant depended on the seller's expertise and judgement. For the goods supplied are
of the description which the seller’s business to supply, the goods of a kind which it is of
course the seller’s business to supply. According to the ruling in Ashington Piggeries LTD
v. Christopher Hill LTD, the mink food did match the description. The mink food is still
exactly as described even after it was infected. Identity or description is the sole factor
taken into account in a sale by description; fitness quality is not. Finally, the products
cannot have been purchased using a trade name or patent. In the pertinent case of Baldry
v. Marshall, it is decided that even if the car was sold under a trade name, the dealer is
nonetheless accountable as the customer relied on the dealer's judgement to choose a
vehicle appropriate for the buyer's stated purpose.
In the case of Irene V Janet and Cantikmuka, based on section 16(1)(a), since the blusher
only has one use, Janet doesn't need to explain to Irene what it is. After Janet assured Irene
that the blusher wouldn't harm her complexion, Irene likewise trusted Janet's expertise
and judgement as she informed the vendor that she had dermatitis and other skin ailment
that caused her skin to be extremely sensitive. Cantikmuka is a cosmetic store that is a
good place to sell blushers, and Irene would have trusted the product that was sold there.
Irene applies the blusher to the appropriate areas of her face. Finally, because the blusher
lacks a marketable name. The buyer may file a claim for damages against Janet and
Cantikmuka because of the unpleasant rashes that initially formed on her face. Therefore,
Irene is able to sue Cantikmuka and Janet.
In conclusion, because all requirements outlined in section 16(1)(a) were met, Irene is
entitled to sue Cantikmuka and Janet.A legitimate goods contract exists between the
buyer and the seller because the buyer must demonstrate their reliance on the seller's
judgement and skill, and the seller must be transparent before the contract is signed.
Irene has the right to sue the vendor if the customer experiences problems after using
Cantikmuka's cosmetic product.
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QUESTION 5
Lim, Lee and Loh are directors and shareholders of Emerald Shine Co (ESC). The
business of ESC was greatly affected by the pandemic and to make matters worse, Loh,
the major shareholder of ESC, died due to a heart-attack. Bright Light Bhd (BLB) is suing
Lim and Lee for unpaid goods supplied to ESC. Lim and Lee are uncertain as to their
liabilities to BLB for the debt of ESC and the existence of the company since Loh has
died. Advise Lim and Lee by applying the Companies Act 2016 and relevant cases.
Regarding the unpaid items that were delivered to ESC by BLB, we need to consider
whether the directors and shareholders of ESC, Lim and Lee, bear personal responsibility
for them. This is particularly important given the adverse impact of the pandemic and the
unfortunate loss of Loh, who was ESC's primary shareholder.
According to Section 304 and the Companies Act 2016, directors such as Lim and Lee
may be held personally responsible for unpaid debts if they fail to fulfill their duties. By
evaluating whether they violated their director responsibilities, Lim and Lee's obligation
to Bright Light Bhd (BLB) for unpaid items delivered to ESC is established. Common
breaches of duty include breaching the duty of care, skill, and diligence. This duty requires
directors to act reasonably and diligently when managing the company's affairs.
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Moreover, if directors fail to fulfill their duty to act in the company's best interests and
instead prioritize their own interests, it could lead to unpaid debt. If Lim and Lee failed to
fulfill their responsibilities and played a role in ESC's inability to pay BLB's debt, they
could potentially be held personally responsible for the outstanding amount owed for the
goods.
Lee and Lim, who are the directors and shareholders of ESC, are currently dealing with
worries about the company's future after the passing of Loh, who was the main
shareholder. According to the Companies Act 2016, it is important to note that the death
of a shareholder or director does not have any impact on the existence of a company. Loh's
shares have the ability to be transferred to his legal heirs or beneficiaries. In order for Lim
and Lee to transfer Loh's shares and update the company's records, they must make sure
to follow the correct procedures. This is important to ensure that the company remains in
compliance with the Act of 2016.
In order to evaluate their unique circumstances in light of the Companies Act of 2016 and
pertinent instances, Lim and Lee should consult with a lawyer. If the directors breached
their duties, they might be personally responsible for the unpaid goods supplied to ESC.
Loh's passing does not, however, impact the company's ability to continue operating, and
the right channels should be used to transfer his shares.
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QUESTION 6
Elly and Sue are partners in Mybeauty Hair saloon Sdn. Bhd. Elly and Sue decided to
take Alice as their partner in 2019. Later on, the saloon was surrounded with debts due
since 2017. Discuss the liability of Alice.
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The issue in this case is whether Alice is liable for the debts by Mybeauty Hair saloon
Sdn. Bhd. that are due since 2017 even though she just joined as a partner in 2019.
According to Section 3(1) of the Partnership Act 1961, partnership can be defined as the
relationship that subsists between persons carrying on business in common with a view
of profit.In addition, the general rule that applicable to the case is Section 7 of the PA
1961 which indicate that every partner is an agent of the firm and his other partners for
the purpose of the partnership's business; and the conduct of every partner who does any
act for executing on in the standard manner business of the kind performed on by the
firm of which he is a member bind the firm and his partners, unless the partner so acting
has no authority to act for the firm in the specific matter, and the person with whom he
is dealing either knows that he has no authority or is unaware of it. It means that a
partner and the partnership (firm) are regarded as the same entity so partners are
generally liable for whatever happens in the course of the partnership’s business and
dealings. Besides that, Section 11 of the PA 1961 also stated that every partner in a firm
is liable jointly with the other partners for all debts and obligations of the firm incurred
while he is a partner. However, according to Section 19(1) of the PA 1961, a person who
is admitted as a partner into an existing firm does not thereby become liable to the
creditors of the firm for anything done before he became a partner unless he agrees to be
liable. It means that the new partner who just joined the partnership is not liable to the
transactions and debts incurred prior to his admission. However, the incoming partner
may agree to be liable for debts prior to his admission.
By applying section 19(1) of the PA 1961, Alice is not liable to the debts of Mybeauty
Hair saloon Sdn. Bhd. that are due from 2017. It is because Alice who has just joined the
partnership is not liable to the debts that are due since 2017 which prior to her admission
to the partnership in 2019 unless she agrees to be liable. She is liable to transactions and
obligations after her admission.
As a conclusion, Alice is not liable to the debts of the saloon that prior to her admission
in 2019 by virtue of section 19(1) of PA 1961 as she is an incoming partner.
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