TUTORIAL NOTES
Week 1 : Chapter 1 & 2 4th March 2014 Week 2 : Chapter 3 & 4 11th March 2014 Week 3 : Chapter 5 18th March 2014 Week 4 : Chapter 6 25th March 2014 Week 5 : Chapter 6 1st April 2014 Week 6 : Chapter 7 8th April 2014 Week 7 : Chapter 8 & 9 29th April 2014 Week 8 : Chapter 10 & 11 6th May 2014 Week 9 : Chapter 12 13th May 2014 Week 10 : Chapter 13 & 14 20th May 2014 Week 11 : Chapter 15 & 16 27th May 2014 Week 12 : Chapter 17, 18 & 19 3rd June 2014 Business Law
TUTORIAL NOTES
Business Law
CHAPTER 1 – AN INTRODUCTION TO
THE CONCEPT OF LAW IN MALAYSIA
WHAT IS 'LAW'?
L
aw can generally be described as a set
of rules, developed over a long period
of time that regulates interactions that
people have with each other, and which sets
standards of conduct between individuals
and
between
individuals
and
the
government and which are enforceable
through sanction.
The term 'law' is defined both by Article
160(2) of the Federal Constitution 1957 and
Item (43C) of section 2(1) of the Interpretation
and General Clauses Ordinance 1948 to
include:



The written law; Common law in so far as it is in
operation in the Federation or any
part thereof; and
Any custom or usage having the force
of law in the Federation or in any part
thereof.
business law. Although businesses often use
legal standards in carrying out their activities
and in decision-making, businesses also
adopt codes of ethics or conduct to guide
employers and employees when considering
ethical issues during the decision-making
process. For example, bankers are guided by
the BNM/GP 7, the Code of Ethics issued by
Bank Negara Malaysia, which sets the
minimum standards required in the
respective bank's Code of Conduct.
RULE OF LAW
The rule of law was formulated in its modern
form in the late nineteenth century by an
eminent Oxford academic lawyer, Professor
Dicey. It is at the heart of our present legal
system and is based on the idea that laws
should conform to a minimum standard of
fairness in both content and procedure. Dicey
suggested that the rule of law involves the
following three propositions:

LAW IN RELATION TO JUSTICE
Law aims to maintain justice in society.
Justice is an abstract idea of right and wrong,
fairness and equality. Therefore, the aim of a
given law is to encourage the doing of what
is right or just in a particular set of
circumstances.
LAW AND ETHICS
Ethics is about what is right and what ought
to be, not simply accepting what is. The
purpose of law is to govern the conduct of all
members of society, both natural and
artificial (such as businesses and companies)
whilst ethics guides individuals in
ascertaining the soundness of rules, and their
impact upon relationships.
Law and ethics, though of different concepts,
are often related; particularly in the area of


No person must be punished except
for a breach of the law. This means
that a person should be able to know
whether what they may want to do is
lawful or unlawful. It also recognizes
the law as the highest authority in
society;
All persons are equal before the law
irrespective of status or position; and
The rights or freedoms of citizens are
enforceable in the courts.
LAW, THE STATE AND THE
CONSTITUTION
Law in Malaysia
Malaysia, which consists of Peninsular
Malaysia, Sabah and Sarawak, is one political
unit but it is not governed by the same set of
laws. There are, however, two important
links which unite the two parts of Malaysiathe Parliament and the Federal Court. The
Malaysian Parliament can and does legislate
for the whole country while the Federal
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Court acts as a final court of appeal for the
whole country.
What is a 'State'?
For international purposes, Malaysia is one
state. Within Malaysia, however there are
thirteen states altogether.
Each state has a government and has rules
which lay down who shall govern and how.
Unlike the United Kingdom where there is an
unwritten constitution derived generally
from the common law, statutes, and
conventions, Malaysia has a written
constitution. The written constitution is
called the Federal Constitution. The Federal
Constitution declares itself to be the supreme
law of the Federation. Article 4(1) of the
Federal constitution states:
4.Supreme Law of Federation.
(1) This Constitution is the supreme
law of the Federation and any law
passed after Merdeka Day which is
inconsistent with this Constitution
shall, to the extent of the inconsistency
be void.
CLASSIFICATION OF LAW
The major legal systems existing in the world
today include:



Civil law
Civil law is derived from Roman law.
It is a complete code of written laws
whose primary source of law is
legislation. Common law
Common law is derived from case law
(or precedent) and statute.
Sino-Soviet
This system is based on the
philosophy of Karl Marx (that is, the
eradication of capitalism and the
elimination of private ownership). Its
emphasis on codes makes it more like



a mere variant of civil law albeit with
an emphasis on public law.
Islamic
The Islamic legal system is derived
from the Koran. It co-exists with other
laws.
Hindu
The Hindu legal system is based on
the doctrine of proper behaviour.
Hindu law is followed by Hindus.
Talmudic
The Talmudic legal system is derived
from the Old Testament of the Holy
Bible. It is the law of the Jews states
altogether.
Public Law
Public law is basically the law which governs
the relationship between individuals and the
state. Public law may be further subdivided
into two categories- constitutional law and
criminal law.
Constitutional law lays down the rights of
individuals in the state. It deals with
questions such as supremacy of Parliament
and rights of citizens. It also covers areas
dealing with state and federal powers.
Criminal law codifies the various offences
committed by individuals against the state,
such as murder, cheating, criminal breach of
trust, forgery, causing grievous hurt, theft,
robbery and counterfeiting.
International Law
International law may be defined as that
body of law which is composed for its greater
part of the principles and rules of conduct
which states feel themselves bound to
observe, and consequently commonly do
observe, in their relations with each other.
Private Law
The third broad division of law is private
law. Private law is concerned with matters
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that affect the rights and duties of individuals
amongst themselves. Basically, private or
civil law is intended to give compensation to
persons injured, to enable property to be
recovered from wrongdoers, and to enforce
obligations (contracts and trusts).
Contracts are based on agreement. The law of
contract is the branch of private law which
determines when a promise or a set of
promises is legally enforceable. The promises
which are to be enforced form the contract.
The essential elements in a contract are as
follows:

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



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there must be an offer
acceptance of that offer
both parties making the contract must
have the capacity to contract
there
must
be
no
mistake,
misrepresentation or undue influence
the object must be lawful
both parties must intend to enter into
legal relations
there must also be consideration
Tort is based on an obligation imposed by
law. A tort is a civil wrong. It is the breach of
a general duty which is imposed by the law
(and not agreed between the parties). It is
remediable by a civil action for unliquidated
damages.
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CHAPTER 2 – SOURCES OF
MALAYSIAN LAW
MEANING OF 'SOURCES'
T
he word 'sources' has several
meanings which may include the
following:
1) Historical sources
These are factors that have influenced
the development of the law although
they are not recognized as law. These factors may include religious beliefs,
local customs and opinion of jurists.
2) Legal sources
These are the legal rules that make up
the law.
3) Places where the law can be found
For example, statutes, law reports and
text books.
MAIN SOURCES OF MALAYSIAN LAW
Written Law
Written law is also referred to as statute law.
As seen earlier, this is law made by
Parliament and any subordinate bodies to
whom Parliament has delegated power to
legislate.
Statutes assume the existence of common
law, and in many cases they reaffirm
common law principles; for example, the Sale
of Goods Act 1957 and the Bills of Exchange
Act 1949. Where statute law and common
law conflict, statute law will prevail to the
extent of the conflict.
Once an Act of Parliament comes into
existence, it remains law until it is repealed
by a later Act of Parliament. Most Acts of
Parliament set out the law on a particular
matter in broad terms. They also contain a
provision stating that detailed rules
necessary to give effect to the legislation can
be found in the relevant regulations or
guidelines.
The Federal Constitution
Malaysia is a Federation of thirteen states
with a written constitution, the Federal
Constitution, which is the supreme law of the
country. Besides laying down the powers of
the Federal and State Governments, the
Federal Constitution enshrines the basic or
fundamental rights of the individual. These
rights written into the Constitution can only
be changed by a two-thirds majority of the
total number of members of the legislature.
This is in contrast to normal laws which can
be amended by a simple majority.
State Constitutions
Besides the Federal Constitution, which
applies to all States in the Federation, each
State also possesses its own constitution
regulating the government of that State. The
State Constitution contains provisions which
are enumerated in the Eighth Schedule to the
Federal Constitution. Some of these
provisions include matters concerning the
Ruler, the Executive Council, the Legislature,
the
Legislative
Assembly,
financial
provisions,
State
employees,
and
amendment to the Constitution.
Legislation
Legislation refers to law enacted by a body
constituted for this purpose. In Malaysia,
laws are legislated by Parliament at federal
level and by the various State Legislative
Assemblies at state level. Laws that are
enacted by Parliament after 1946 but before
Malaysia's Independence in 1957 are called
Ordinances, but those made after 1957 are
called Acts. On the other hand, laws made by
the State Legislative Assemblies (except in
Sarawak) are called Enactments. The laws in
Sarawak are called Ordinances.
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Subsidiary Legislation
The Interpretation Act 1967 defines
subsidiary legislation as 'any proclamation,
rule, regulation, order, notification, by-law or
other instrument made under any
Ordinance, Enactment or other lawful
authority and having legislative effect'.
Subsidiary legislation is very important as
legislation by Parliament and the State
legislatures is insufficient to provide the laws
required to govern everyday matters.
Subsidiary legislation deals with the details
about which the legislature has neither the
time nor the technical knowledge to enact.
Legislature merely lays down the basic and
main laws, leaving the details to persons or
bodies to whom they delegate their
legislative powers. Such persons or bodies
include the Yang di-Pertuan Agong,
Ministers and local authorities, among
others.
Unwritten Law
Unwritten law is mainly comprised of:



English law
Judicial decisions
Customs
English Law
English law forms part of the laws of
Malaysia. English law can be found inter alia
in the English common law and rules of
equity. However, not all of England's
common law and rules of equity form part of
Malaysian law. Section 3(1) of the Civil Law
Act 1956 (Revised 1972) provides that, in
Peninsular Malaysia, the courts shall apply
the common law of England and the rules of
equity as administered in England on 7 April
1956. In Sabah and Sarawak, the courts shall
apply the common law of England and the
rules of equity, together with statutes of
general application, as administered or in
force in England on 1 December 1951 and 12
December 1949 respectively.
Judicial Decisions
Malaysian law can also be found in the
judicial decisions of the High Court, Court of
Appeal and the Federal Court, the then
Supreme Court and the Judicial Committee
of the Privy Council. Decisions of these
courts were made and still are being made by
what is called the 'doctrine of binding
precedent'.
Customs
Customs of the local inhabitants in Malaysia
are also a source of law. Generally, customs
relating to family law, i.e. marriage, divorce
and inheritance, are given legal force by the
courts in Malaysia. 'Adat' applies to Malays;
prior to the enforcement of the Law Reform
(Marriage and Divorce) Act 1976, Hindu and
Chinese customary law applied to the
Hindus and Chinese respectively. In Sabah
and Sarawak, native customary laws apply in
land dealings over native customary lands
and family matters where natives subject
themselves to native customary laws.
Islamic Law
As seen earlier, the Federal Constitution
provides that States have the power to
administer Islamic Law. The head of the
Muslim religion in a state (except for Penang,
Malacca, Sabah, Sarawak and the Federal
Territories) is the Sultan. In Penang, Malacca,
Sabah, Sarawak and the Federal Territories,
the Yang di-Pertua Negeri is the head.
The courts which enforce Islamic law in the
country are the Syariah Courts. Islamic law
applies to Muslims only and does not apply
to non-Muslims. In business, in particularly
the areas of banking and finance, Islamic
principles are increasingly relevant in
lending and investments.
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CHAPTER 3: THE JUDICIAL SYSTEM IN
MALAYSIA
SUBORDINATE COURTS IN
PENINSULAR MALAYSIA
INTRODUCTION
The subordinate courts in Peninsular
Malaysia consist of the Penghulu's Courts,
Magistrates' Courts and Sessions Courts.
The role of the courts is more concerned with
the administration of the law. The courts
have both criminal and civil jurisdiction.
Jurisdiction refers to the cases or matters that
a court can hear, and is established by statute.
The Federal Constitution provides that
power is exercised by the legislative, the
executive and the judiciary. The judiciary has
the power to hear and determine civil and
criminal matters. It can even pronounce on
the legality of legislative or executive acts. It
can also interpret the Federal and State
Constitutions.
The judicial power of Malaysia is vested in
the Federal Court, the Court of Appeal, the
High Courts and the Subordinate Courts.
The head of the judiciary is the Chief Justice.
The jurisdiction and powers of the courts, as
well as the doctrine of separation of powers
that exists between the legislative, the
executive and the judiciary were well
pronounced by the Federal Court in PP v Kok
Wah Kuan.
The court system may be illustrated as
follows:
A subordinate court is any one of those
courts established under section 3(2) of the
Subordinate Courts Act 1948 for the
administration of civil and criminal law:
a) Sessions Courts;
b) Magistrates' Courts; and
c) In West Malaysia only, Penghulu
Courts.
Penghulu's Courts
The Penghulu's Court is the lowest level of
subordinate courts in Peninsular Malaysia. It
is presided over by a penghulu or headman
appointed by the State Government for a
Mukim. The penghulu is empowered to hear
and determine original proceedings of a civil
nature in which the plaintiff seeks to recover
a debt or liquidated demand in money not
exceeding RM50 and in which all the parties
to the proceedings are persons of an Asian
race speaking and understanding the Malay
language.
The criminal jurisdiction of a Penghulu's
Court is restricted to the trial of offences of a
minor nature which are specifically
enumerated in his kuasa and which can be
adequately punished by a fine not exceeding
RM25.
The Penghulu's Court can only try criminal
charges against persons of an Asian race.
Any person charged with an offence before a
Penghulu's Court may elect to be tried by a
Magistrates' Court.
Magistrates' Courts
The Magistrates' Court deals with minor civil
and criminal cases. The court is presided over
by a magistrate. Under section 85 of the
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Subordinate Courts Act 1948 Revised 1972)
amended by the Subordinate Courts
(Amendment) Act 1978, a first class
magistrate possesses jurisdiction to try all
offences for which the maximum term of
punishment provided by law does not
exceed ten years' imprisonment, or all
offences punishable with a fine only, as well
as offences under sections 392 and 457 of the
Penal Code.
Where a person is found guilty, the
magistrate may pass any sentence allowed by
law not exceeding:
1) Five years' imprisonment;
2) A fine of RM10,000;
3) Whipping of up to twelve strokes;
or
4) A combination of any of the above
mentioned.
Juvenile Courts
Juvenile Courts have been set up to deal with
criminal offenders below the age of eighteen.
A Juvenile Court consists of a first class
magistrate who is assisted by two lay
advisers, one of whom shall, if practicable, be
a woman. The functions of the advisers are to
inform and advise the court with respect to
any consideration affecting the punishment
or other treatment of any child or young
person brought before it. Under section 4(4)
of the Juvenile Courts Act 1947 (Revised
1972), the court is conferred jurisdiction to try
all offences except those punishable by death.
Sessions Courts
The Sessions Court is the highest of the
subordinate or inferior courts. Its criminal
jurisdiction extends to all offences other than
offences punishable with death. A Sessions
Court may pass any sentence allowed by law
other than the death sentence.
In civil matters, it has jurisdiction to try all
actions and suits of a civil nature where the
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amount in dispute or value of the subjectmatter does not exceed RM100,000.
However, in general, matters relating to land,
specific performance or recession of
contracts,
injunction,
probate
and
administration
of
estates,
divorce,
bankruptcy, trusts and accounts are excluded
from its jurisdiction.
SUBORDINATE COURTS IN EAST
MALAYSIA
Prior to 1 June 1981, the subordinate courts in
East Malaysia consisted of the Native Courts
and the Magistrates' Courts. With effect from
1 June 1981 when the Subordinate Courts Act
{Extension) Order 1980 came into force, the
Subordinate Courts Act 1948, with some
modifications, was extended to Sabah and
Sarawak.
With
this
extension,
the
subordinate courts now consist of Native
Courts, Sessions Courts, and Magistrates'
Courts.
Native Courts
The Native Court is peculiar only to Sabah
and Sarawak. It exercises jurisdiction over
matters affecting 'native customs' where the
parties are natives. In relation to Sarawak, a
native is a person who is a citizen and is of a
race indigenous to Sarawak (such as the
Ibans, Bidayuhs, Kelabits, Kayans, Kenyahs,
Muruts, Penans, Melanaus, etc.). In relation to
Sabah, a native is a person who is a citizen, is
the child or grandchild of a person of a race
indigenous to Sabah (such as the Kadazans
and the Dusuns), and was born either in
Sabah or to a father domiciled in Sabah at the
time of birth. Previously, the Native Court
also possessed jurisdiction over matters
concerning Muslim law. Muslim law in
Sabah and Sarawak is now administered by a
separate system of Muslim courts, the
Syariah Courts.
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Native Courts are empowered to try civil and
criminal matters including the following:
1) Cases arising from breach of native
law or custom, e.g. those relating to
religious or matrimonial matters;
2) Cases involving land where there is no
title issued by the Land Office and in
which all the parties are subject to the
same native system of personal law,
and
3) Civil cases (excluding land) where the
value of the subject-matter does not
exceed RM50 and all parties are
subject to the same native system of
personal law.
In Sarawak, there are three Native Courts
exercising original jurisdiction. These are the:
1) District Native Court;
2) Native Officer's Court or Chief's
Court; and
3) Headman's Court.
SUPERIOR COURTS OF MALAYSIA
The Superior Courts of Malaysia consist of
two High Courts i.e. the High Court of
Malaya and the High Court in Sabah and
Sarawak, the Court of Appeal and the
Federal Court.
The High Court
The jurisdiction of the High Court is original,
appellate and supervisory. In the exercise of
its original jurisdiction, it has unlimited
criminal and civil powers. Any civil matter
which cannot be determined in the
subordinate courts is heard before the High
Court. The High Court has the jurisdiction to
try all civil proceedings where:
1) The cause of action arose within
Malaysia; or
2) The defendant(s) resides or has his
place of business within Malaysia; or
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3) The facts on which the proceedings
are based, exist or are alleged to have
occurred within Malaysia; or
4) Any land the ownership of which is
disputed is situated within Malaysia.
The High Court's civil jurisdiction also
includes, among others, bankruptcy or
winding-up
matters,
probates
and
administration of the estates of deceased
persons. In criminal cases, no case may be
brought to the High Court unless an offender
has been properly committed for trial after a
preliminary hearing in a Magistrates' Court.
In the exercise of its appellate jurisdiction, the
High Court hears civil and criminal appeals
from the Magistrates' and Sessions Courts.
The High Court also possesses the power to
refer any points of law arising in the appeal
for the decision of the Court of Appeal if it
feels that it is in the public interest and is of
paramount importance.
Other tribunals
In addition to the ordinary law courts, there
are also other tribunals such as the Special
Commissioners of Income Tax and the
Industrial Court which exercise judicial or
quasi-judicial functions.
The Industrial Court
The Industrial Court, constituted under the
Industrial Relations Act 1967, deals primarily
with trade disputes and therefore has
jurisdiction
over
matters
concerning
employers, employees and trade unions.
The Court of Appeal
The Court of Appeal has jurisdiction to hear
and determine any appeal against any High
Court decision on criminal matters. The
Court of Appeal also has jurisdiction to hear
and determine civil appeals generally for
cases where the amount or value of the
subject-matter of the claim is at least
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RM250,000. Where an appeal has been heard
and disposed of by the Court of Appeal, the
Court of Appeal has no power to review the
case. That is, the said Court has no power to
re-open, re-hear nor to re-examine its
decision for whatever purpose – Lye Thai
Sang & Anor v Faber Merlin (M) Sdn Bhd & Ors
[1986] 1 MLJ 166.
have turned to alternative methods of
dispute resolution via channels such as
tribunals and alternative dispute resolution
(including mediation and arbitration).
Indeed, in these modern times, mediation,
conciliation and arbitration procedures are
being introduced into court and tribunal
procedures.
The Federal Court
SUMMARY
The Federal Court is the highest court in
Malaysia.

The Federal Court has jurisdiction in matters
including the following:

1) To hear civil and criminal appeals
from the Court of Appeal.
2) To
exercise
exclusive
original
jurisdiction
on
those
matters
conferred on it under Article 128(1)
and (2) of the Federal Constitution. It
can hear disputes on any matter
between any state and the Federal
Government. It can also pronounce on
the validity of any federal or state
legislation as being in excess of
powers.
3) To determine constitutional questions
which have arisen in the proceedings
of the High Court but referred to the
Federal Court for a decision.
4) To give its opinion on any question
referred to it by the Yang di-Pertuan
Agong concerning the effect of any
provision of the Constitution which
has already arisen or appears likely to
arise – Government of Malaysia v
Government of the State of Kelantan.
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

ALTERNATIVE METHODS OF DISPUTE
RESOLUTION

In an attempt to overcome some of the
traditional problems associated with the
court system, such as lack of accessibility,
delays, costs, ignorance and intimidation,
government, businesses and the community


The Federal Constitution provides that
power is exercised by the legislative, the
executive and the judiciary.
The judicial power of Malaysia is vested
in the Federal Court, the Court of Appeal,
the High Courts and the Subordinate
Courts.
The head of the judiciary is the Chief
Justice.
The jurisdiction and powers of the courts,
as well as the doctrine of separation of
powers that exists between the legislative,
the executive and the judiciary – PP v Kok
Wah Kuan.
The jurisdiction of the civil courts and the
Syariah courts sometimes becomes an
issue for the Malaysian courts, cases:
Wan Khairani Wan Mahmood v Ismail
Mohamad & A nor, Majlis Ugama Islam
Pulau Pinang dan Seberang Perai v Shaik
Zolkaffi ly Shaik Natar & Ors, Mohamed
Habibullah bin Mahmood v Faridah bt. Dato
Talib and Dalip Kaur Gurbux Singh v
Pegawai Polis Daerah (OCPD), Bukit
Mertajam & Anor.
The subordinate courts in Peninsular
Malaysia consist of the Penghulu's
Courts, Magistrates' Courts and Sessions
Courts.
The Penghulu's Court is the lowest level
of subordinate courts in Peninsular
Malaysia.
The Magistrates' Court deals with minor
civil and criminal cases.
Juvenile Courts have been set up to deal
with criminal offenders below the age of
eighteen.
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
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The Sessions Court is the highest of the
subordinate or inferior courts.
The Native Court is peculiar only to
Sabah and Sarawak. It exercises
jurisdiction over matters affecting 'native
customs' where the parties are natives.
The Superior Courts of Malaysia
comprises two High Courts – the High
Court of Malaya and the High Court in
Sabah and Sarawak, the Court of Appeal
and the Federal Court.
The jurisdiction of the High Court is
original, appellate and supervisory.
The High Court also possesses the power
to refer any points of law arising in the
appeal for the decision of the Court of
Appeal if it feels that it is in the public
interest and of paramount importance.
The Industrial Court, constituted under
the Industrial Relations Act 1967, deals
primarily with trade disputes and
therefore has jurisdiction over matters
concerning employers, employees and
trade unions.
The Court of Appeal has jurisdiction to
hear and determine any appeal against
any High Court decision on criminal
matters.
The Federal Court is the highest court in
Malaysia.
Alternative
methods
of
dispute
resolution are made via channels such as
tribunals
and
alternative
dispute
resolution (including mediation and
arbitration).
The Small Claims Court settles industrial
disputes through conciliation and
arbitration.
The Consumer Claims Tribunals which
by working on the principle of mediation
and arbitration, mediate disputes
between consumers and traders.
The Financial Mediation Bureau mediates
disputes between banks and other
financial institutions and their customers.
Mediation is a facilitative process for
resolving disputes quickly and cheaply.


The role of the mediator is a
determinative one.
Conciliation is where the conciliator may
exercise an advisory or directive role in
assisting the parties to identify the
dispute in question, develop options,
determine what alternatives are available,
and try to reach an agreement.
Arbitration is a means of settling
commercial disputes. It is a formal
dispute resolution process which
involves the hearing of a dispute by an
independent third party (an arbitrator).
At the end of the hearing the arbitrator
will make an award. Arbitration is a
determinative process.
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CHAPTER 4: THE LAW OF CONTRACT
INTRODUCTION
T
he word 'contract' may be defined as
'an agreement enforceable by law'.
Thus, a contract is an agreement which
is legally binding between the parties. The
legislation that governs contracts in Malaysia
is the Contracts Act 1950 (Act 136) (Revised
1974). In instances where the provisions of
the Contracts Act differ from English law, the
former must prevail – Song Bok Yoong v Ho
Kim Poui [1968] 1 MLJ 56.
ELEMENTS OF A CONTRACT
The basic elements of a contract are:
1.
2.
3.
4.
5.
6.
Offer
Acceptance of the offer
Intention to create legal relations
Consideration
Certainty
Capacity
Offer
An offer or proposal is necessary for the
formation of an agreement. Section 2(a) of the
Contracts Act 1950 provides that 'when one
person signifies to another his willingness to
do or to abstain from doing anything, with a
view to obtaining the assent of that other to
the act or abstinence, he is said to make a
proposal'.
A proposal must be a definite promise to be
bound provided certain specified terms are
accepted. The promisor (also known as the
'offeror') must have declared his readiness to
undertake an obligation upon certain terms,
leaving the option of its acceptance or refusal
to the offeree, the person to whom the offer is
made.
The communication of a proposal is complete
when it comes to the knowledge of the
person to whom it is made – section 4(1)of the
Contracts Act 1950.
The communication of an offer or a proposal
is deemed to have been made by any act or
omission of the party proposing by which he
intends to communicate the proposal or
which has the effect of such communicationsection 3 of the Contracts Act 1950.
An offer should be contrasted with an option
and an advertisement. An option is merely
an undertaking to keep the offer open for a
certain period of time. The purpose of an
option is usually to give the offeree time to
consider whether he in fact wishes to buy the
item under consideration, or to give him time
to raise the necessary finance. An option
arises when the offeror promises to keep the
offer open for a specified period.
Thus, an offer must be distinguished from an
invitation to treat. An invitation to treat is not
an offer, but rather is an offer to consider
offers. Instances which are generally
regarded as invitations to treat include:
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Auctions;
Advertisement of tenders;
Catalogues;
Price lists; and
Goods displayed in shop windows
and shelves.
Acceptance
Section 2(b)of the Contracts Act 1950
provides that when the person to whom the
proposal is made signifies his assent thereto,
the proposal has been accepted. A proposal,
when accepted, becomes a promise.
Section 2(c) of the Contracts Act 1950 refers
to the person accepting the proposal as the
'promisee'.
Section 9 of the said Act provides that there
is an expressed acceptance if the acceptance
of any promise is made in words and an
implied acceptance if the acceptance is made
other than in words. For a proposal to be
converted into a promise, the acceptance of
11
TUTORIAL NOTES
that proposal must be absolute and
unqualified – section 7 of the Contracts Act
1950
Acceptance
must
be
absolute
and
unqualified so that there is complete
consensus. If the parties are still negotiating,
an agreement is not yet formed – Lau Brothers
& Co v China Pacific Navigation Co. Ltd [1965]
1 MLJ 1.
If
acceptance is
not absolute or
unconditional, that is, it does not comply
with the conditions–if any–stated by the
offeror, it will amount to a counter-offer. A
conditional assent is not an acceptance.
Revocation of Offer and Acceptance
A proposal may be withdrawn in any of the
following ways:
1. Communication of the notice of
revocation by the proposer to the
party to whom the proposal was
made.
2. The time prescribed in the proposal
for its acceptance elapses, or if no time
is prescribed for acceptance by the
lapse of a reasonable time – Ramsgate
Victoria Hotel Co. Ltd v Montefiare
[1866] LR and Macon Works and Trading
Sdn Bhd v Phang Hon Chin & Anor
[1976] 2 MLJ 177.
3. The failure of the acceptor to fulfil a
condition precedent to an acceptance.
4. The death or mental disorder of the
proposer if the fact of the proposer's
death or mental disorder comes to the
knowledge of the acceptor before
acceptance.
As a general rule, when acceptance is
complete, an agreement is formed so that
there is no question of revocation. Revocation
is possible, however, if the acceptance s not
complete. A revocation of an offer must be
communicated in order to be effectivesection 6(a) of the Contracts Act 1950.
Business Law
TERMS OF A CONTRACT
The Malaysian Contracts Act 1950 does not
contain any provision which deals
specifically with the contents of a contract.
One may say that the contents of a contract
are made up of terms which may be
expressed and/or implied. A term is
basically a statement which creates
contractual obligations between the parties,
breach of which will result in the injured
party being able to sue.
Once the court decides that a statement is a
term of a contract, it is then necessary to
consider the statement's significance because
the remedies available to the injured party
differ. Not all of the obligations created by a
contract are of equal importance and this is
recognized by the law. Thus it is necessary to
make a distinction between a condition and a
warranty.
Terms may be classified as either conditions
or warranties. A condition is a term that is
vital to the contract. The parties consider it so
important that its non-performance may be
considered by the injured party as
amounting to a substantial failure to honour
the contract at all and thus may be regarded
as grounds for setting the contract aside,
and/or suing for damages.
On the other hand, a warranty is a type of
term considered by the parties to be of lesser
importance to the main purpose of the
contract. If it is breached, the injured party
must still perform their part of the contract
but they have the right to sue for damages for
any loss that they may suffer as a result of the
breach. In addition to its express terms, a
contract may contain a number of terms that
the parties or the courts may 'read' into the
contract. These are called 'implied terms'.
Conditions and Warranties
Terms of a contract have been traditionally
classified into conditions and warranties.
12
TUTORIAL NOTES
Whether a particular term in a contract is a
condition or a warranty depends on the
intention of the parties. The mere labelling of
a term as a condition or a warranty is not
conclusive. The courts will still have to
determine the exact intention of the parties.
VOIDABLE CONTRACTS
Section 10 of the Contracts Act 1950 provides
inter alia that all agreements are contracts if
they are made by the free consent of parties.
By virtue of section 14, consent is said to be
free when it is not caused by one or more of
the following:
1.
2.
3.
4.
5.
Coercion
Undue influence
Fraud
Misrepresentation
Mistake
Section 19(1) of the said Act provides that
when consent to an agreement is caused by
coercion, fraud or misrepresentation, the
agreement is a contract voidable at the option
of the party whose consent was so caused.
Section 19(2) goes on to say that a party to a
contract, whose consent was caused by fraud
or misrepresentation, may, if he thinks fit,
insist that the contract shall be performed,
and that he shall be put in the position in
which he would have been if the
representation made had been true.
VOID AND ILLEGAL CONTRACTS
Business Law
2. it is of such a nature that, if permitted,
it would defeat any law;
3. it is fraudulent;
4. it involves or implies injury to the
person or property of another; or
5. the court regards it as immoral, or
opposed to public policy.
In each of the above cases, the consideration
or object of an agreement is said to be
unlawful. Every agreement of which the
object or consideration is unlawful void.
RESTRAINT OF TRADE AND LEGAL
PROCEEDINGS
Restraint of Trade
Section 28 of the Contracts Act 1950 applies
here. As a general rule, all contracts
restraining a person from carrying on a
lawful profession, trade or business of any
kind is to that extent prima facie void –
Wrigglesworth v Wilson Anthony.
There are three exceptions to the general rule
as stated above (section 28):
1. Restrictions on the sale of the goodwill
of a business;
2. Agreements between partners made
upon or in anticipation of a
dissolution, and
3. Agreements between partners not to
carry on business during the
continuance of the partnership.
Restraint of Legal Proceedings
According to section 2(g) of the Contracts Act
1950 a void contract is an agreement that is
not enforceable by law. Section 24 of the said
Act provides that the consideration or object
of an agreement is unlawful if it falls within
any of the subsections of the section.
Section 29 provides that every agreement by
which any party to an agreement is restricted
absolutely from enforcing his rights under
the contract, or any agreement which limits
the time to enforce a party's rights, is void.
According to section 24, the consideration or
object of an agreement is lawful unless:
The Contracts Act 1950 provides three
exceptions to this general rule:
1. it is forbidden by a law
1. Contracts to refer disputes which may
arise to arbitration;
13
TUTORIAL NOTES
Business Law
2. Contracts to refer any question which
may have already arisen to
arbitration; and
3. Contracts in respect of an award of a
Government scholarship wherein it is
provided that the discretion exercised
by the Government under that
contract shall be final and conclusive
and shall not be questioned by any
court.
DISCHARGE BY FRUSTRATION,
PERFORMANCE AND BREACH
Discharge by Frustration
If a party promises to carry out a particular
act, the law will hold them to their promise.
This principle is commonly known as the
doctrine of absolute liability. The harshness
of this doctrine was demonstrated in Cutter v
Powell.
REMEDIES
‘Remedy' is the method by which an injured
party enforces a right or corrects a loss. The
remedies available to the injured party will
depend on the nature of the breach and the
results will differ between the parties. The
usual remedy for a breach of contract is an
award of damages, which is a common law
remedy. However, if a monetary remedy is
not satisfactory, the court may exercise its
discretion and order any one of several
equitable remedies.
The remedies available for breach of contract
are:
1.
2.
3.
4.
5.
6.
7.
Rescission
Restitution
Damages
Specific Performance
Injunction
Anton Piller Order
Quantum meruit
Rescission
Rescission is an equitable remedy, which
allows an innocent party to cancel the
contract by rescinding it or, if there has been
misrepresentation by the other party, raising
that misrepresentation as a defence if sued
for damages or specific performance by the
other party.
Restitution
Restitution (or restoration) is sometimes
referred to as quasi-contract. It is not
contractual and does not rely on the plaintiff
suffering loss or damage. Its basis is unjust
enrichment; that is, those situations where it
would be very unfair if the defendant was to
be allowed to retain the money, or the goods
or services, without payment.
Damages
The main purpose of damages is to enable the
innocent party to receive monetary
compensation from the party responsible for
the breach of contract. Damages are not
awarded to punish a wrongdoer, but rather
to put the injured party back in the position
that they would have occupied if the contract
had been performed as originally intended.
Therefore, damages are calculated on the
basis of looking at what the position should
have been if the contract had been properly
performed.
Specific Performance
Specific performance is a discretionary order
granted by the courts directing a person to
carry out their obligations under the contract.
It is not generally used in breach of contract
actions unless damages prove to be
inadequate.
In cases where common law damages are not
an adequate remedy, particularly contracts
involving land or where the subject matter is
unique, like a rare artwork, specific
14
TUTORIAL NOTES
performance may be granted by the court
where it finds that damages would be
inadequate compensation. Where the court
cannot supervise the implementation of a
contract, it will not generally grant specific
performance. Thus, contracts involving
personal services create problems of
supervision because the courts cannot
determine whether the agreed promise is
being properly performed. The courts will
also refuse to grant specific performance
where the contract would require constant
supervision by the court.
Business Law
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Quantum Meruit
Quantum meruit means 'as much as he has
earned' and only arises in cases of part
performance. The contract may be
discharged by breach, but where the contract
is for goods or services, there is a new
implied contract imposed by law on the party
taking the benefit that it will pay a reasonable
amount for the quantum or portion given. It
is not available to the party in breach.
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Quantum meruit can arise where:
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a defendant has prevented a plaintiff
from carrying out the remainder of the
contractual duties;
the parties cannot agree on payment;
and
the parties agree on payment for the
part-performance but not the actual
amount.
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SUMMARY
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The word 'contract' may be defined as 'an
agreement enforceable by law'.
The legislation in Malaysia governing
contracts is the Contracts Act 1950.
The basic elements of a contract are:
1. Offer (which under the Contracts Act
1950 is referred to as a proposal)
2. Acceptance of the offer or proposal
3. Intention to create legal relations
4. Consideration

5. Certainty
6. Capacity
Section 2(a), Contracts Act 1950 provides
that 'when one person signifies to another
his willingness to do or to abstain from
doing anything, with a view to obtaining
the assent of that other to the act or
abstinence, he is said to make a proposal’.
The communication of a proposal is
complete when it comes to the knowledge
of the person to whom it is made - section
4(1)of the Contracts Act 1950.
The communication of an offer or a
proposal is deemed to have been made by
any act or omission of the party
proposing by which he intends to
communicate the proposal or which has
the effect of communicating it - section 3
of the Contracts Act 1950.
An offer or proposal made in words (oral
or written) is said to be expressed. If a
proposal is made other than in words (e.g.
by conduct), it is said to be implied
(section 9, Contracts Act 1950).
An option is merely an undertaking to
keep the offer open for a certain period of
time.
Advertisements of bilateral contracts are
not offers whereas advertisements of
unilateral contracts are construed to be
offers.
An invitation to treat is not an offer, but
rather is an offer to consider offers.
Instances which are generally regarded as
invitations to treat include:
1. Auctions;
2. Advertisement of tenders;
3. Catalogues;
4. Price lists; and
5. Goods displayed in shop windows
and shelves.
Section 2(b), Contracts Act 1 950 provides
that when the person to whom the
proposal is made signifies his assent
thereto, the proposal is said to have been
accepted.
15
TUTORIAL NOTES
Business Law
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A proposal, when accepted, becomes a
promise.
For a proposal to be converted into a
promise, the acceptance of that proposal
must be absolute and unqualified section 7, Contracts Act 1 950
If acceptance is not absolute or
unconditional, that is, it does not follow
the conditions-if any-stated by the
offeror, it will amount to a counteroffer.
Silence may also amount to acceptance if
other facts such as the conduct of the
offeree indicate acceptance.
An offer or proposal may be withdrawn
in any of the following ways:
1. Communicating
the
notice
of
revocation by the proposer/offeror to
the party to whom the proposal was
made.
2. The time prescribed in the proposal
for its acceptance elapses, or if no time
is prescribed for acceptance by the
lapse of a reasonable time
3. The failure of the offeree/acceptor to
fulfil a condition precedent to a
acceptance.
4. The death or mental disorder of the
offeror/proposer if the f act of the
offeror's death or mental disorder
comes to the knowledge of the offeree
before acceptance.
A revocation of an offer must be
communicated in order to be effective
section 6(a) of the Contracts Act 1 950.
In domestic arrangements there is a
presumption against the existence of an
intention to create legal relations whilst in
commercial arrangements the rebuttable
presumption is that legal relationships
are intended an agreement without
consideration is void.
Consideration need not be adequate.
Past consideration is good consideration
Natural love and affection is a valid
consideration if certain pre-requisites are
complied with.
1. it is expressed in writing;
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2. it is registered (if applicable); and
3. the parties stand in a near relation to
each other.
Part payment may discharge an
obligation.
Consideration need not move from the
promisee.
The parties entering into a contract
should also be competent to contract, i.e.
they must have the legal capacity to do so.
The age of majority is eighteen years (Age
of Majority Act 1971)
The general rule is that contracts made by
infants are void.
Exceptions to this rule:
1. Contracts for necessaries
2. Contracts of scholarship
3. Contracts of insurance
Besides being of the age of majority, a
person is competent to contract if he is
mentally sound and there must be no
legal disqualification against him such as
in the case of an enemy alien.
Apart from special circumstances a
person who is not a party to a contract has
no right to sue on the contract.
The contents of a contract are made up of
terms which may be expressed and/or
implied.
A term is basically a statement which
creates contractual obligations between
the parties, a breach of which will result
in the injured party being able to sue.
Terms may be classified as either
conditions or warranties.
A condition is a term that is vital to the
contract. Its non-performance may be
considered by the injured party as
amounting to substantial failure to
honour the contract at all and thus may be
regarded as grounds for setting the
contract aside, and/or suing for damages.
A warranty is a type of term considered
by the parties to be of lesser importance to
the main purpose of the contract. If it is
breached, the injured party must still
perform their part of the contract but they
16
TUTORIAL NOTES
Business Law
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have the right to sue for damages for any
loss that they may suffer as a result of the
breach.
5 conditions that had to be satisfied for a
term to be implied into a contract. It must
be:
1. reasonable and equitable;
2. necessary to give business efficacy to
the contract, so that no term will be
implied if the contract is effective
without it;
3. so obvious that 'it goes without
saying';
4. capable of clear expression; and
5. not in contradiction of any express
term of the contract.
Terms may be implied by:
1. Custom and usage pertaining to a
particular type of transaction;
2. Statutory provisions; and
3. The courts, based on the intention of
the parties.
Normally, the courts will imply terms
into a contract:
1. To give business efficacy to the
transaction - The Moorcock.
2. By applying the 'officious bystander'
test or what is commonly known as
the 'Oh, of course!' test–Reigate v Union
Manufacturing Co Ltd and Shirlaw v
Southern Foundries (1926) Ltd.
Terms may also be imported from a
previous course of dealing between the
parties to the contract–Popular Industries
Limited v Eastern Garment Manufacturing
Sdn Bhd.
Terms of a contract have been
traditionally classified into conditions
and warranties.
Whether a particular term in a contract is
a condition or a warranty depends on the
intention of the parties.
All agreements are contracts if they are
made by the free consent of parties.
Consent is said to be free when it is not
caused by:
1. Coercion
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2. Undue influence
3. Fraud
4. Misrepresentation
5. Mistake
When consent to an agreement is caused
by coercion, fraud or misrepresentation,
the agreement is a contract voidable at the
option of the party whose consent was so
caused.
A party to a contract, whose consent was
caused by fraud or misrepresentation,
may, if he thinks fit, insist that the
contract shall be performed, and that he
shall be put in the position in which he
would have been if the representation
made had been true.
The definition of 'coercion' in section 15
above is limited to an unlawful act done
'with the intention of causing the person
to enter into an agreement’.
The doctrine of 'undue influence' is a
development of equity to cover cases of
particular relations and is sometimes
used as a comprehensive phrase to
include cases of coercion, domination or
pressure within or without those special
relations-section 16, Contracts Act 1950.
The effect of undue influence is to render
the contract voidable at the option of the
innocent party.
Fraud is defined in section 17, Contracts
Act 1950, to include certain acts which are
committed with intent to induce another
party to enter into a contract.
The general rule is that mere silence or
non-disclosure would not constitute
fraud.
However, there may be certain
circumstances under which silence or
nondisclosure may constitute fraudExplanation to section 1 7.
Section 18 of the Contracts Act 1950
defines the word 'misrepresentation'.
Silence in certain situations where there is
a duty imposed to disclose, may amount
to a misrepresentation (section 18(b).
17
TUTORIAL NOTES
Business Law
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Section 21, Contracts Act 1950 provides
for cases where there is a mistake of fact.
For a mistake to be operative under
section 21, it must be a mistake 'essential
to the agreement'.
A void contract is an agreement not
enforceable by law-section 2(g), Contracts
Act.
Section 24 of the said Act provides that
the consideration or object of an
agreement is unlawful if it falls within
any of the subsections of the section.
According to section 24, the consideration
or object of an agreement is lawful unless:
a) it is forbidden by a law
b) it is of such a nature that, if permitted,
it would defeat any law;
c) it is fraudulent;
d) it involves or implies injury to the
person or property of another; or
e) the court regards it as immoral, or
opposed to public policy.
In each of the above cases, the
consideration or object of an
agreement is said to be unlawful.
Every agreement of which the object
or consideration is unlawful is void.
Agreements are void if any part of their
considerations and objects are unlawful section 25, Contracts Act 1950.
The following agreements are also
declared void by the Contracts Act 1950:
1. An
agreement
made
without
consideration unless it is in writing
and registered, or is a promise to
compensate for something done, or is
a promise to pay a debt barred by
limitation law-section 26;
2. An agreement in restraint of marriagesection 27;
3. An agreement in restraint of trade
except for an agreement not to carry
on business of which goodwill is sold;
or an agreement made prior to a
dissolution of a partnership or an
agreement
made
during
the
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
continuance of a partnership-section
28;
4. An agreement in restraint of legal
proceedings except for a contract
agreeing to refer disputes to
arbitration or a contract relating to
scholarships–section 29;
5. An agreement, the meaning of which
is not certain, or capable of being
made certain–section 30;
6. An agreement by way of wagersection 31.
Courts will not enforce an illegal contract:
ex turpi causa non oritur actio.
Section 24, Contracts Act 1950 provides
that an agreement which is unlawful is
void, and section 2(g) provides that such
an agreement is not enforceable by law.
Section 66 of the Contracts Act 1 950 lays
down that when an agreement is
discovered to be void or when a contract
becomes void, the person who received
any advantage under such agreement or
contract is bound to restore the other
party to the position he was in before he
entered into the contract or to pay
adequate compensation for the sameright of restitution.
Section 28, Contracts Act 1950-all
contracts restraining a person from
carrying on a lawful profession, trade or
business of any kind are to that extent
prima facie void.
3 exceptions to the general rule as stated
in section 28:
1. Restrictions on the sale of the goodwill
of a business;
2. Agreements between partners made
upon or in anticipation of a
dissolution, and
3. Agreements between partners not to
carry on business during the
continuance of the partnership.
Section 29 provides that every agreement
by which any party to an agreement is
restricted absolutely from enforcing his
rights under the contract, or any
18
TUTORIAL NOTES
Business Law
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agreement which limits the time to
enforce a party's rights, is void.
3 exceptions to the general rule in section
29:
1. Contracts to refer disputes which may
arise to arbitration;
2. Contracts to refer any question which
may have already arisen to
arbitration; and
3. Contract in respect of an award of a
Government scholarship wherein it is
provided that the discretion exercised
by the Government under that
contract shall be final and conclusive
and shall not be questioned by any
court.
Contracts in restraint of trade or legal
proceedings are not entirely void; such a
contract is void to the extent of the
restraint only
If a party promises to carry out a
particular act, the law will hold them to
their promise- doctrine of absolute
liability.
The doctrine of frustration applies where:
1. physical impossibility because of
destruction of subject matter;
2. physical impossibility under contract
of personal service;
3. change in the law rendering
performance impossible;
4. impossibility due to non-occurrence
of event basic to contract; and
5. where the particular state of affairs
ceases to exist.
A contract is frustrated when there is a
change in the circumstances which
renders a contract legally or physically
impossible of performance-section 57(2),
Contracts Act 1950.
There are two instances of frustration when a contract to do an act becomes
impossible or unlawful.
Frustration should be supervening and
subsequent to the formation of the
contract.
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A 'self-induced frustration' does not
discharge a party of his contractual
obligations.
Frustration can only arise where:
1. an unforeseen event outside the
control of the contracting parties (a
supervening event) has significantly
or radically changed the obligations of
the parties from their original
intentions;
2. neither party caused the supervening
event ;
3. neither contemplated the supervening
event, so there was no provision in the
contract for it, and
4. the new circumstances would make it
unjust to hold the parties to their
original contract.
The effect of a frustrating event is to
discharge a contract immediately, but
only as to the future. The contract is not
void ab initio, but only void from the time
of the frustrating event.
When a contract is discharged by
frustration, the contract does not become
merely voidable but is brought to an end
forthwith and automatically-section
57(2), Contracts Act 1950 states that such
a contract 'becomes void'.
Sections 57(3) and 66, Contracts Act 1950
provide restitutionary remedies.
Performance of a contract must be exact
and precise and should be in accordance
with what the parties had promisedsection 38( 1), Contracts Act.
The effect of both sections 51 and 56 is that
a promise must be performed at the time
agreed by the parties.
Where a party fails to perform their
obligations as agreed, they are in breach
of contract.
A breach can occur in some ways
including:
1. failure to comply with a term of the
contract;
2. by a party announcing to the other
party that they are no longer
19
TUTORIAL NOTES
Business Law
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interested in carrying out their
obligations prior to the time for
performance (anticipatory breach);
and
3. delay in the performance where time
is of the essence in the contract.
Where one of the parties indicates to the
other either by conduct or in clear terms
an intention not to go on with the
contract, the party is said to have
repudiated or renounced the contract.
A refusal to perform a contract may occur
before the time for performance is due
(anticipatory breach), or during the time
of performance itself.
A refusal to perform a contract when
performance is due would amount to a
discharge.
If one party fails to perform their
obligations under the contract or breaches
a condition, the innocent party is entitled
to treat the contract as ended from the
time of the terminating event and may be
able to recover damages. The contract is
not treated as void ab initio.
If a party breaches a less important term
(a warranty), then there is a partial breach
and while the innocent party is still going
to have to carry out their obligations
under the contract, they may sue for
damages.
If one party indicates that they will not be
performing their part of the contract prior
to the time for performance, the innocent
party can immediately treat the contract
as at an end and sue for breach. There is
no need to wait until actual breach occurs.
The party in default cannot terminate the
contract which he himself had broken.
'Remedy' is the method by which an
injured party enforces a right or corrects a
loss.
The usual remedy for a breach of contract
is an award of damages
The remedies available for breach of
contract are:
1. Rescission
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2. Restitution
3. Damages
4. Specific Performance
5. Injunction
6. Anton Piller Order
7. Quantum meruit
Rescission allows an innocent party to
cancel the contract by rescinding or, if
there has been misrepresentation by the
other
party,
raising
that
misrepresentation as a defence if sued for
damages or specific performance by the
other party.
Restitution (or restoration) is where it
would be very unfair if the defendant was
to be allowed to retain the money, or the
goods or services, without payment.
The main purpose of damages is to enable
the innocent party to receive monetary
compensation from the party responsible
for the breach of contract.
Damages are granted to a party as
compensation for the damage, loss or
injury he has suffered through a breach of
contract-section 74, Contracts Act 1950.
The effect of section 74 is that the plaintiff
is only allowed to recover a reasonable
sum for breach of contract.
Section 75 prevents the plaintiff from
recovering simpliciter the sum fixed in
the contract whether as penalty or
liquidated damages unless he can prove
that the damages suffered by him is a
genuine pre-estimate of the sum named
in the contract.
The requirement of the plaintiff seeking
substantial damages to prove both the
fact and amount of damages before he can
recover the damages.
The law imposes a duty upon the person
claiming damages (the injured party) to
take all reasonable steps to reduce or
minimize or mitigate their loss.
Specific performance is a discretionary
order granted by the courts directing a
person to carry out their obligations
under the contract.
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TUTORIAL NOTES
Business Law
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The Specific Relief Act 1950 provides for
the remedy of specific performance.
An injunction is a court order restraining
a party from breaking their contract or
from committing a wrongful act (an order
prohibiting performance) and will not be
awarded if damages are an adequate
remedy.
An injunction may be prohibitory,
mandatory or interlocutory,
A mareva injunction prevents the
defendant removing or disposing of any
assets in the jurisdiction until the court
makes a decision.
An anton piller order may be made
available in exceptional circumstances
where it can be shown that the defendant
has incriminating evidence in their
possession, which is necessary to the
plaintiff's case and which may well be
destroyed before a court order for
discovery can be made.
Quantum meruit means 'as much as he
has earned' and only arises in cases of part
performance.
Quantum meruit can arise where:
1. a defendant has prevented a plaintiff
from carrying out the remainder of his
contractual duties;
2. the parties cannot agree on payment,
and the parties agree on payment for
the part-performance but not the
actual amount.
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