CONSENT
Consent of the Parties to the
Contract
The objectives:
 To determine a valid consent according to
Contract Act 1950 as one of the essential
elements of contract.
 What are the circumstances that would impair
or affect the validity of the consent given?
What constitutes consent?
 Section 10(1) of the Contracts Act
‘all agreement are contracts if they are made by free
consent of parties competent to contract…’
 Section 13 of CA, elaborates it as 'two or more
person are said to consent when they agree upon
the same thing in the same sense‘
 Hence, consent must be free.
Circumstances that would affect
the Validity of the Agreement
 S 14 of the Contract Act has listed 5 circumstances
where consent given is to be said not be given
freely:
(a) Coercion (S 15)
(b) undue influence (S16)
(c) Fraud (S 17)
(d) Misrepresentation (S 18) ; and
(e) Mistake (S 21,22 & 23) .
Circumstances that would affect
the Validity of the Agreement
 In such cases the contract may be set aside by the
court and declared the said contract either void or
voidable.
Void & voidable Contract
 Void contract - section2(g)
means an agreement in which no rights or
obligations are created at all.
Void & voidable Contract
 Voidable contract - section 2(i)
means an agreement which gives the rights to the
parties whether to affirm or reject the contract.
1. Coercion (Voidable)
 S. 14(a) of CA:
The consent is not freely given when the making of
the consent is caused by coercion.
1. Coercion (Voidable)
What is coercion?
 The practice of compelling a person or
manipulating him to behave in an involuntary way
by use of threats some other form of force.
What constitute Coercion?
S. 15 of CA,
The coercion include;
the committing or threatening to commit any act
forbidden by penal code,
i.e. “Putting a gun to Abu's head" or putting a "knife under
Abu’s throat" to compel Abu to transfer his land to
Minah.
What constitute Coercion?
The unlawful detaining or threatening to detain any
property to the prejudice of any person,
i.e. threat to close down his market stall and to seize his
goods if he refuse to enter into agreement (i.e . Pay
toll).
What constitute Coercion?
with intention of causing any person to enter into an
agreement.
Kesarmal a/l Letchumanan Das v
Valiappa Chettiar [1954] MLJ 119
 Facts: The sultan transfer of property on the basis
of coercion of two Japanese officer during Japanese
occupation in Malaya.
 Held: Consent was not given freely and the
transfer of the property is not a valid transfer
because the consent given is caused by coercion.
Chin Nam Bee Development Sdn Bhd v Tai
Kim Choo & 4 Ors. [ 1988] 2 MLJ 117
 Respondent purchased houses off to be constructed
by the appellant.
 Each of the respondents had signed a sale and
purchase agreement to purchase house at RM
29,500.
 Subsequently, the Respondent were forced to pay
additional RM 4,000 under a threat by the
appellant to cancel the respondent’s booking of their
house.
Chin Nam Bee Development Sdn Bhd v Tai
Kim Choo & 4 Ors. [ 1988] 2 MLJ 117
Court held:
respondent’s promise to pay extra money
for house-booking is voidable since the
promise made under coercion
EFFECT
i) Rescission (Section 19)- VIODABLE
ii) Restitution (Section 65)
Iii) Compensation (Section 66)
Maskell v Horner [1915] 3 KB
106
Lord Reading CJ stated that:
“ if a person pays money, which he is not bound to
pay, under a compulsion of urgent and pressing
necessity or of seizure, he can recover it as
money had and received.
2. Undue Influence
 S. 14(b) of CA:
The consent is not freely given when the
making of the consent is caused by undue
influence.
2. Undue Influence
It means that influence alone is not sufficient. It
is necessary to establish such influence is
undue.
 Example:
 Ali constantly visits his aunt B while she is ill. She
is alone and her son does not visited her. Ali always
urges her to leave her property to him instead of
her son. Failing to do so, he will stop from
visiting her. It finally brings over a lawyer to write
a new will in favor of B.
 Isn’t it Undue Influence?
What is undue influence?
One person taking advantage of a position of
power or influence over another person.
He uses his power to persuade someone into
signing (or not to sign) a contract.
Party to the contract had lost the ability to exercise
his/her judgment.
What constitute Undue Influence?
 S.16(1) of CA/ Ingredients:i) Domination of the will by one party over other
party; (the other party was in position to
dominate the will of the first party),; and
What constitute Undue Influence?
 S.16(1) of CA/ Ingredients:-
ii) The use of that position to obtain an unfair
advantage in the contract .
(The person who in the position of domination had
used that position to obtain unfair advantages
for himself and causing loss or injury to other
party)
What constitute Dominant
Position
 S16(2) of CA:
 (a): when party holds a real and apparent
authority over the other
i.e. father authority over a child, senior officer over
junior officer
OR
where he stands in a fiduciary relationship
(amanah)
e.g.: lawyer-client, doctor-patient.
What constitute Dominant
Position
 S16(2) of CA:
 (b) Where party makes a contract with a person
whose mental capacity is affected by reason of
age
e.g. illness or mental or bodily distress.
Salwath Haneem v Hadjee Abdullah
(1894) SSLR 57
 The Plaintiff's husband made a conveyance of
property belonging to himself and the plaintiff to
his brother; B and C.
 The Plaintiff initially agreed to the conveyance
the said property but after her husband’s death,
she brought an action seeking to set aside the
agreement on the ground of Undue Influence.
Salwath Haneem v Hadjee Abdullah
(1894) SSLR 57
 Held:
 There was a confidential relationship existed
between plaintiff and the B and C.
 Therefore, the burden of proof was on B & C to
show the plaintiff was fully understood to the
agreement that made and the consent was freely
be given.
 Since both B &C failed to discharge the burden,
the said contract was set aside.
Datuk Jaginder Singh v Tara
Rajaratnam [1985] MLJ 105
Facts:
T was the owner of one piece of land. J as a lawyer to
T had used his position to influence T, to transfer
his land to the 3rd party.
Held:
The consent given is not freely given and the transfer
become voidable as it was caused by undue
influence.
Inche Noriah v Shaik Allie Bin
Omar [1929] AC 127
 A Malay woman who was great age and wholly
illiterate, depends wholly on R (her nephew) to get
supply of food and cloths. All matters are settled by
R, until she has no idea of how much her own
property worth.
 It leads to the execution of the deed of gift of landed
property in Singapore in favour of Respondent.
Inche Noriah v Shaik Allie Bin
Omar [1929] AC 127
 Held:
A’s action that gave to R an estate under a writing
agreement = UI.
Chait Singh v Budin Bin Abdullah
(1918) 1 FMSLR 348
 Facts:
P is a Sikh moneylender sued the Defendant who
was an illiterate Malay agriculturist upon a pronote.
The note provided for interest at the rate of 36%.
Defendant has charge his land as security and
the interest charged exceeded 18%.
Chait Singh v Budin Bin Abdullah
(1918) 1 FMSLR 348
 This circumstance raise in the opinion of the
court that the said transaction was
unconscionable.
 The interest rate is too high for a loan with
security. It shows that the contract is
advantageous to one party only.
 Thus, UI.
Effects of Undue Influence
 S. 20 of CA, 1950:
 A party to the contract may rescind a contract on
the ground that he has entered into that agreement
by influence of the other party
(Voidable /Rescission + Restitution).
Effect of Undue Influence
 However, where the complainant has received any
benefit there under, the court may set aside the
contract and ordering the complainant to restore
benefits he has obtained under the contract.
3. Fraud
 Section 14(c) of the Contract Act provides that the
consent given caused by fraud is not a valid
consent (not freely given).
 Fraud is : a deception (penipuan) made for personal
gain or to damage another individual.
 Certain acts which are committed with
intent to deceive another party or to induce
him to enter into a contract.
 Examples:

The seller (Kassim) found the necklace on the
street, he then told the buyer (Sofea) that it
was new and special edition.
Ah Keong sell a radio for RM500 telling
Aminah that it is fully functional, when he
knows that it is actually totally broken

What constitute Fraud?
 Sec 17 of CA; fraud includes:
 a) fraud includes the suggestion as to fact which is
not true by one who does not believe it to be true.
(the maker knows the facts are not true/ false).
Kheng Chwee Lian v Wong Tak
Thong [1983]2 MLJ 320
the respondent had been persuaded by the appellant to
enter into second contract on the false
representation that the area of land to be
transferred was the same size as the land which the
respondent had agreed to buy under a first
agreement. In fact, the area even less than that.
Kheng Chwee Lian v Wong Tak
Thong [1983]2 MLJ 320
Court held:
The respondent had been induced by
fraudulent misrepresentation into signing
the second agreement and that
misrepresentation was fraudulent meaning of
Section 17 (a) and (d).
What constitute Fraud?
 b) the active concealment of a fact by one
having knowledge of belief of the fact.
Letchemy Arumugan v Annamalay
[1982] 2 MLJ 198
the defendant had induced the plaintiff an illiterate
Indian woman to enter into sale and purchase
agreement.
The defendant had fraudulently represented to the
plaintiff that the document that she was signed was
for loan she took and it was to free the land from a
charge .
Letchemy Arumugan v Annamalay
[1982] 2 MLJ 198
In fact the document that she signed was included a
sale agreement relating to land, a transfer of the land
and further agreement to purchase three unapproved
sub-lots in her own land.
 Held:
The agreement was voidable.
What constitute Fraud?
 c) a promise made without any intention of
performing it
What constitute Fraud?
For example;
 Skim Cepat Kaya and Kad Gores & Menang
 The owner of the house (A) promised to the tenant
(B) that he will repair the defects of the house and
he will disburse the said repairs done by the tenant.
However, after the said repairs are completed, the
owner of the house refused to pay that. He actually
from the very beginning does not intend to pay for
that. A = a promise made without an intention
to perform it'
Does Silence Constitute Fraud?
(Explanation of S.17)
 Mere silence as to facts likely to affect the
willingness of a person to enter into contract is
not fraud
 unless the person has the duty to speak or
his silence is equivalent to speech.
 Gen. Rule: silence does not constitute a
fraud .
 See Illustration (a) of section 17
 See Illustration (d) of section 17
 See Illustration (a) of section 17
 A sell by auction to B a horse which A knows to be
unsound. A says nothing to B about the horse’s
unsoundness. This is not fraud in A.
 See Illustration (d) of section 17
 A and B , being traders enter upon a contract. A has
private information of a change in prices which
would affect B’s willingness to proceed with the
contract. A is not bound to inform B.
 However, in certain circumstances, SILENCE
MAY CONSTITUTE A FRAUD.
 The law puts a duty upon a person in position of
trust a duty to speak and disclose all relevant
information to the person putting trust in him in
any transaction between them.
 See Illustration (b) of section 17
 See Illustration (c) of section 17
 See Illustration (b) of section 17
 B is the daughter and has just come of age. Here,
the relation between parties would make it A’s duty
to tell B if the horse is unsound. (if A not tellfraud).
 See Illustration (c) of section 17
 B says to A, “If you don not deny it, I shall assume
that the horse is sound”. A says nothing. Here, A’s
silence is equivalent to speech. (If A did not speak
the truth- his silence=fraud).
4. Misrepresentation
 According to Section 14(d) of the Contract Act, the
consent is not freely given when it caused by
misrepresentation.
 False statement of fact made by one party
before or at the time of making the contract
;
 which is addressed to other party ;
 and induces the other party to enter into
the contract.
 Furthermore, the maker believe in the
truth of the statement
 ( the maker honestly believed that facts of
such statement is True, in fact the said
statement is False ).
 example
 A (seller) is telling the buyer (B) that a
radio is "practically new" so that B buy it, it is
in fact 5 years old and heavily been used. So
in the above example, if the seller didn't know
the radio was actually old, he would only be
liable for an innocent misrepresentation
What constitute misrepresentation?
 S.18 (a) of CA:
 Representation of one of the fact which is
not true but he believes it to be true
(Innocent misrepresentation)
What constitute misrepresentation?
S. 18(b) of CA:
There is a duty imposed to a party to disclose
information to each other but the parties failed
to do it or breach of it – Negligent
Misrepresentation.
Basically, it means that you did not directly lie
(without intention to deceive), but you made a
representation about something while having no
reasonable reasons for believing it to be true.
 For example:
 A broker tries to sell a house to a buyer, who
stresses his need for peace and quiet. The broker
promises that the house is very quiet. In reality, the
house next door is undergoing a very noisy
reconstruction. Although the broker did not know
this, his promise of that house was quiet was made
without he having any reason to believe that was the
case. he simply assumed that the house is quiet.
The broker in this case is making negligent
misrepresentation.
Duty of Misled Party to
Exercise Diligence
 The misrepresentation does not make
the contract voidable if the misled party
had the opportunity to investigate and
ascertain the truth of the
representation.
Caparo Industries v Dickman,
- an auditor (Dickman) who had negligently approved an
overstated account of a company's profitability.
- A takeover bidder (Caparo) relied on these statements
and pursued its takeover on the basis that the company's
finances were sound.
- Once it had spent its money acquiring the company's
shares and a company control, it found that the finances
were in poorer shape than it had been led to believe.
Caparo sued the auditor for negligence
misrepresentation.
Caparo Industries v Dickman,
The House of Lords however held:
there was no duty of care between an auditor and a third
party pursuing a takeover bid.
The auditor had done the audit for the company.
The bidder could have paid for and done its own audit.
Conditions for Misrepresentation
(Summary)
 There must be false representation
 The Misrepresentation must be one fact (mere
expression of opinion is not a representation of fact).
 The Misrepresentation must be made by a party to
the contract
 The party was acted or induce the contract by
relying on that misrepresentation
 The P must have suffered damage as a result of
misrepresentation
Opinion is not Misrepresentation
Bisset v Wilkinson,
 contract of sale a poultry farm is valid even though the
seller made a statement that the farm can breed 2000
sheep is not true.
 It is because it is an opinion. He never breeds a sheep
at the farm before.
 Thus, the contract is valid.
Silence is not a misrepresentation
 Generally, a party to a contract is
not bound to disclose materials
facts to the other party.
Silence is not a misrepresentation
Keats v Lord Cardogan,
 D lets a house that was in bad condition to P.
 P however, never ask any information from D
with regard to the house.
 The act of D is not misrepresentation P should
caution and investigate.
Effect or Remedies of Misrep.
& fraud
Section 19 (1) of Contract Act 1950.voidable/ Rescission (S. 34 of the Specific
Relief Act 1950.
 Section 65- Restitution / restore the
benefit
 Section 66-compensation/ recover any
benefit

5. Mistake
 When one party to a contract enters into it under
some misunderstanding.
 The contract entered into is invalid/ void as if
they know the true facts they would never have
entered into the contract.
1) Common Mistake - Mistake of facts by both
parties = VOID
 Section 21 of CA-
Elements:
i) both parties to an agreement under mistake (mutual).
ii) mistake relating to a “matter of fact essential to the
agreement”.
 Explanation of S.21
“An erroneous opinion as to the subject matter of
the agreement is not amount to mistake as to a
matter of fact”.
Illustrations:
A) Mistake as to existence (kewujudan) of subject
matter or where both parties were unaware
that the subject matter of the contract of the
contract had already perished at the time of
contract was entered into
 Illustration
(a) of Section 21
 A agrees to sell B a specific cargo of goods supposed to
be on its way from England to Kelang. Before the day
of bargain, the ship that carry the same had been cast
away and the goods lost. Neither party aware of the
facts. The agreement is VOID.
B) Mistake as to identity of subject matter
Raffles v Wichelhaus
 Facts:
 Raffles agreed to sell cotton to Wichelhaus. The agreement
provided that the cotton was “to arrive England from Bombay.”
However, there were two different ships regularly sailing from
Bombay to England, one leaving in October and the other in
December.
 Raffles shipped the cotton on the December ship, and defendant
Wichelhaus refused to accept the cotton. Raffles sued on the
alleged contract. Wichelhaus argued that it understood the
shipment would be shipped on the October ship.
B) Mistake as to identity of subject matter
Raffles v Wichelhaus
Held:
The court concluded there was “no binding contract.”
Since the parties meant different ships and there was a
mistake as to identity of the subject matter by both
Raffles and Wichelhaus.
C) Mistake as the possibility of performing the
contract
Illustration (c) of Section 21
C)
Mistake as the possibility of performing the
contract
Sheikh Brothers v Ochsner
The appellant granted to the respondent, license and
authority to cut and manufacture all sisal growing on
5,000 acres of land in Kenya, and to deliver to the
appellant 50 tons per month of sisal fiber for sale.
Respondent then was unable to do so as the leaf
potential of the sisal was not sufficient to produce
that much.
Held: it was mistake as to the possibility of performing
the contract. The said agreement was void.
2) Mistake of Facts by 1 party
(UNILATERAL MISTAKE)
 Section 23 of CA:
 The contract is not voidable or still valid. But the
party making the mistake would be entitled to an
order of rescission.
 1) Mistake as to identity of party to the contract

E.g: A wants to contract with B but instead contracted
with C.
CUNDY V LINDSAY
 Blenkarn offered to buy goods from the Plaintiff by
pretending to be “ Belkiron & Co.” a reputable business
on the same street. He signed the letter in such a way that
it could be read as “Belkiron”. Then, the Pliantiff
dispatched the goods and sold to the defendant who took
the property in good faith. The plaintiff sued defendant
because of that mistake.
Held: the offer by the plaintiff was only to “Belkiron & Co,
so it could not be accepted by Blenkern. Hence, there is
no contract between the plaintiff and Blenkern.


 2) Mistake as to quality of subject matter

E.g: A agrees to buy from B a picture that A believe
to be genuine Lat’s drawing but which in fact was
painted by Leman. B in this case intends to sell a
picture by Leman but A believes that the sale is of
a picture painted by Lat.
 What is the effect of the said contract?
 A = mistake as to quality of subject matter= not
voidable = right to rescission.
3. Mistake by Law
 Section 22 of CA:
 A contract is valid in the event of mistake by law.
 See ILLUSTRATION of section 22 of CA.
“ A and B make a contract grounded on the erroneous
belief that a particular debt is barred by limitation ;
the contract is not voidable”
i.E . Debt is already barred by Limitation Law, but still
you claim for that.
Note: This Notes and Copyright therein is the property of Madam
Norazla Abdul Wahab and is prepared for the benefit of her students
enrolled in the MGM 3351 course for their individual study. Any other
use or reproduction by any person WITHOUT CONSENT IS PROHIBITED.
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