Cases for Contract II PDF

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TOPIC: MISREPRESENTATIONCASE FACTS JUDGEMENT PRINCIPLESim Thong Realty Sdn Bhd v Teh Kim Dar @ Tee Kim [2003] 3 MLJ 460Define misrepresentation as an unambiguous false statement of fact which is addressed to the misled party and materially induces the contract. Low Kon Fatt v Port Klang Golf Resort ...

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TOPIC: MISREPRESENTATION CASE

FACTS

JUDGEMENT

Sim Thong Realty Sdn Bhd v Teh Kim Dar @ Tee Kim [2003] 3 MLJ 460

Low Kon Fatt v Port Klang Golf Resort (M) Sdn. Bhd [1998] 6 MLJ 448

Ravichanthiran v Percetakan Wawasan Maju [2008] 8 MLJ 450

Lau Hee Teah v Hargill Engineering Sdn. Bhd [1980] 1 MLJ 145

Keates v Lord Cardogan (1851) 10 CB 591 Bisset v Wilkinson [1927] AC 177

Defendant published brochure that promised various facilities at their resort and plaintiff was lured by the brochure, he signed up to be a member but later the facilities were unsatisfactory to him as the sea sports facilities were absent due to the refusal of authority to grant permission. Plaintiff sued the first and second defendant because they misrepresented to him the actual amount of EPF leading to EPF suing him for amounts due.

The court held that the exaggeration in the brochure amounts to misrepresentation.

The court held that second defendant was merely relaying information as he stated that his representation was based on representation made by the first defendant company. Appellant wanted to rescind the hire purchase The court held that the representation contract of a loader from respondents was not false because respondent because they represented to him that the never represented that it was loader was a 1968 model when in fact it was manufactured in 1968 and since manufactured in 1964 and it was second1964 there was no new model, it was hand. not second-hand when used only for demonstration once. Defendant let plaintiff a house which he The court held that mere silence is knew was in a ruinous condition but he kept not a misrepresentation. Caveat silent on it. emptor applies. Respondent agreed to buy land for sheep The court held that it was a statement farming and relied on his statement that he of opinion not of fact, so no estimated the land would carry 2000 sheep misrepresentation. when in fact it couldn’t.

PRINCIPLE Define misrepresentation as an unambiguous false statement of fact which is addressed to the misled party and materially induces the contract. Mere exaggeration is generally not a misrepresentation but exception is if it has the object and result of inducing buyers to enter into contract, it amounts to misrepresentation. Merely relaying information does not amount to misrepresentation.

Only false representation amounts to misrepresentation.

Mere silence is passive concealments and thus not amount to misrepresentation. One of requirement under S. 18 (a) CA 1950 is it must be representation of fact not of opinion, law or intention.

Smith v Land & House Property Corp (1884) 28 Ch D 7 Edgington v Fitzmaurice (1885) 29 Ch D 459

Vendor described his hotel for sale being led to a most desirable tenant when in fact he knows that the tenant went bankrupt. Plaintiff claimed repayment of money due to misstatement of fact.

Peek v Gurney (1873) LR 6 HL 377

Appellant purchased share of respondent’s company in an open market but later the company wounded up and later sued them on the ground of misrepresentation.

The court held that it was not a representation of opinion not of fact.

Exception to representation of opinion.

The court held that it was a representation of fact not of intention because he had no intention to keep his promise of intent. The court held that the representation was not meant for appellant because the appellant bought the shares from original allotees in the open market.

Exception to representation of intention.

Requirement in S. 18 CA 1850 requires the misrepresentation is addressed to the misled party.

TOPIC: FRAUD CASE

FACTS

Kheng Chwee Lian v Wong Respondent bought half share of land from Tak Thong appellant to build biscuit factory from appellant with appellant’s consent and later [1983] 2 MLJ 320 appellant induced respondent to sign another agreement that gave respondent smaller share of land. MUI Plaza S/B v Hong Second defendant promised the plaintiff that Leong Bank Bhd he will be responsible for any loss suffered [1998] 7 MLJ 122 by plaintiff in allowing the bank to remain in occupation of the plaintiff’s premises, plaintiff suffered losses. Loi Hieng Chiong v Kon Appellant exchanged his land at Sibu worth Tek Shin only 55,000$ for respondent’s land and [1983] 1 MLJ 31 respondent wanted to sell the land at 115,000$. Appellant had falsely told the respondent that there was an offer for Sibu land at 175,000$.

JUDGEMENT

PRINCIPLE

The court held that there was a fraud committed by appellant.

S. 17(a) CA 1950 of representation as to a fact applies.

The court held that there was fraudulent promise by the second defendant because the second defendant had no actual intention of fulfilling his representation. The court held that this misrepresentation by appellant constituted fraud because he lied to the respondent about the true value of the Sibu land.

S. 17(c) CA 1950 of fraudulent promises apply.

S. 17(d) of other act fitted to deceive applies.

Datuk Jagindar Singh v Tara Rajaratnam [1983] 2 MLJ 196

First and second appellants are advocates and solicitors and colluded to obtain possession of land in Kulai by fraud.

Lau Hee Teah v Hargill Engineering Sdn. Bhd [1980] 1 MLJ 145

The respondent did not disclose the fact that the loader had met with an accident.

Lim Kim Hua v Ho Chui Lan [1996] 2 CLJ 299

Plaintiff was old, illiterate and had memory problem and lived with granddaughter who took care of her. The plaintiff transfer her will of property to defendant’s son.

The court held that their acts are fraud because they never intended to fulfil conditions of agreement and all they wanted was to get respondent to sign the transfer form so they could lay hands on the property. The court held that there was no fraud because there was no active duty of respondent to disclose the fact. The court held that the defendant had a duty to disclose because they were in position of trust and confidence.

Ang Yok Seng v Yim Yut Kiu [1997] 2 MLJ 45 Horsfall v Thomas (1862) 158 ER 183

Wei Tah Construction Co Sdn Bhd v Law Wun Ing [1981] 2 MLJ 157

Tan Chye Chew v Eastern Mining Metals Co Ltd [1965] 1 MLJ 201

Plaintiff inserted a metal plug in the gun to conceal the defect before selling to defendant. Defendant never inspected it so he didn’t know the active concealment and the gun burst. Plaintiff bought a piece of land from defendant and defendant false represented that the land was near Sibu airport but later plaintiff instructed solicitor to investigate and was advised that the land is good. First appellant assigned respondent rights to prospect certain mining land included in an approved application for prospecting permit. Respondent alleged that the second appellant had shown to the respondent’s geologist some land that was later discovered not to be included in the approved application.

The court held that although there was active concealment, it did not induce the defendant to buy the gun. The fraud did not affect his judgement as he didn’t know. The court held that although there’s false representation but it did not induce plaintiff to contract because he relied on the solicitor’s judgement rather than the misrepresentation The court held that the respondent company had the means to discover the truth with ordinary diligence. They entered the contract without checking the true position of the land despite having the facilities to do so.

S. 17(d) of other act fitted to deceive applies.

A duty to speak in fraud by silence only arises when the party is in a position of trust and confidence as in Illustration (b) S. 17 CA 1950. A duty to speak in fraud by silence only arises when the party is in a position of trust and confidence as in Illustration (b) S. 17 CA 1950. Fraud for criminal offence bears the burden of proof beyond reasonable doubt but if civil, burden of proof on the balance of probabilities apply. If party didn’t know the existence of fraud, or misrepresentation, the misrepresentation and fraud did not affect his consent and contract is not voidable. If party makes own investigation and rely on it, the misrepresentation and fraud did not affect his consent and contract is not voidable. If party had the means to discover truth by exercising ordinary diligence, the contract is not voidable.

Wei Tah Construction Co Sdn Bhd v Law Wun Ing [1981] 2 MLJ 157

Tay Tho Bok v Segar Oil Palm Estate Sdn Bhd [1996] 3 MLJ 181

Plaintiff intended to buy the land from defendant to immediately sell to third party but when the sale did not materialize, plaintiff wanted to rescind by alleging that defendant false represented the land to be 500 yards from Sibu airport when it was eight or nine miles away. Plaintiff couldn’t discovered the existence of transmission of lines and pipelines which are encumbrances of the said land.

Weber v Brown (1908) 1 FMSLR 12 Ong Chat Pang v Valliappa Chettiar [1971] 1 MLJ 224

Plaintiff claimed specific performance for sale of land from defendant who alleged himself as a bona fide purchaser.

Chuah Tong Yeong v Kuala Lumpur Golf & Country Club [2003] 6 MLJ 577 Whittington v Seale-Hayne (1900) 82 LT 49

Plaintiff paid to become a member in defendant’s club but later found that the facilities featured in the brochure was nonexistent. Plaintiff, a poultry farmer, was induced by defendant’s misrepresentation to take a lease of a farm when in fact the water in the farm was contaminated. Plaintiff claimed rescission of lease and indemnity (expenses incurred regarding the lease of the farm i.e. loss of profits and medical cost). Plaintiff was an old illiterate rubber tapper woman was fraudulently induced by defendant to sign a loan agreement. Plaintiff claimed for rescission and damages.

Letchemy Arumugam v N Annamalay [1982] 2 MLJ 198

The court held that the plaintiff could discover the land distance by ordinary diligence when making the contract but he didn’t do so, he only complained about that after contract was concluded, contract was not voidable. The court held that plaintiff didn’t have means to discover the truth because when he went to search in Land Office, it did not reveal the existence of any encumbrances. The court held defence of ordinary diligence in active fraud can’t be raised by the representor. Defendant must prove himself as bona fide purchaser.

The court held that payment of damages is adequate because plaintiff didn’t suffer any losses so he cannot rescind the contract. The court held that the plaintiff can recover the rescission and indemnity for the misrepresentation.

The court awarded rescission and special damages i.e. damage to plaintiff’s property for the fraud.

If party had the means to discover truth by exercising ordinary diligence when making contract, he cannot after that complain about the truth, the contract is not voidable.

Exception to S. 19 was inapplicable if party didn’t have means to discover the truth by exercise of ordinary diligence. Principle of ordinary diligence is only applicable in misrepresentation and fraud by silence not active fraud. Bona fide purchaser for value without notice will make the misled party loses his right to rescind a contract and claim his property. If payment of damages is an adequate remedy for misrepresentation or fraud, misled party cannot rescind a contract. In misrepresentation, awards claimable are rescission and indemnity not award of damages.

In fraud, awards claimable are rescission and award of damages. Apart from that, claim for specific performance is non-claimable.

TOPIC: MISTAKE CASE

FACTS

JUDGEMENT

PRINCIPLE

Ho Weng On v Bindev Sdn Bhd [2007] 7 MJL 607

Plaintiffs purchased from defendant developer one unit of a double-storey semidetached house but unknown to the defendant, its agents had sold the said unit to another party a year earlier.

The court held that the mistake was only made by defendant alone not both of them because a year is a long period to be rendered as mistake. Contract was valid.

S. 21 CA 1950 requires both parties to make mistake in order to render an agreement as void.

Sheikh Bros Ltd v Ochsner [1957] AC 136

Galloway v Galloway (1914) 30 TLR 531

Parties are mistaken that they were legally married and wanted to separate, they entered into a separation deed.

Falck v Williams [1900] AC 176

Defendant and plaintiff were negotiating about two charter parties (one to carry shale from Sydney to Barcelona and the other to carry copra from Fiji to Barcelona). Plaintiff’s agent sent a coded telegram intending to confirm copra charter but ambiguous. About parties mistaken on the quality of compensation contract. Appellant company granted license to A and later assigned respondent to cut and manufacture all sisal growing on 5000 acres of land in Kenya. Under the agreement, respondent was to deliver to the appellant 50 tons of sisal for sale per month but respondent was unable to do so because the leaf potential for sisal was insufficient to produce so much monthly.

Bell v Lever Bros Ltd [1932] AC 161 Sheikh Bros Ltd v Ochsner [1957] AC 136

The court held that the agreement of the separation deed was null because the subject matter of the agreement which is the marriage did not exist. The court held that there was no contract.

The court held that the contract was valid. The court held that the contract was void.

This case extends the four scope of mistake made by both parties essential to agreement under S. 21 CA 1950. Mistake as to the existence of subject matter is void.

Mutual mistake as to the identity of the subject matter of agreement is void because both parties are so much at cross-purpose.

Mistake as to the quality of subject matter is valid. Mistake as to the possibility of performing an agreement is void.

Ho Weng On v Bindev Sdn Bhd [2007] 7 MJL 607

Cundy v Lindsay [1878] 3 App Cas 459

King’s Norton Metal Co Ltdv Edridge, Merret & Co Ltd (1897) 14 TLR 98 Oh Hiam v Tham Kong [1980] 2 MLJ 159

Plaintiffs purchased from defendant developer one unit of a double-storey semidetached house but unknown to the defendant, its agents had sold the said unit to another party a year earlier. Plaintiff received handkerchief order from one Blenkarn who cheated his identity as a reputable firm of Blenkarn & Co. Plaintiff then sent it to Blenkarn & Co but the dishonest Blenkarn took possession of it and sold to defendant. Plaintiff claimed for return of handkerchief from defendant. Plaintiff mistakenly sent the order of wire to one Wallis instead of Hallam and Co but both of them are the same person. Wallis took possession, failed to pay and sold to defendants. Parties entered into oral contract for a sale of certain pieces of land in Gombak only but when transferred to written contract, it includes Gombak and Setapak.

The court held that the mistake was only made by defendant alone.

Unilateral mistake of subject matter under S. 22 CA 1950 is valid.

This is an English case where the position of bona fide purchaser for value without notice is unprotected. Defendant is liable for conversion.

Unilateral mistake as to the identity of other contracting party in English law is void, contrary to Malaysian law which hold it as valid because we protect bona fide purchaser.

Defendants are not liable for conversion because mistake as to attribute of person under English law is valid since Wallis and Hallam and Co are the same person. The contract is valid but rectification must be made by cancelling the Setapak.

Mistake as to attribute of person under English law is valid

Remedy for rectification is available for written contract or oral contract put into written contract.

TOPIC: ILLEGALITY CASE Manang Lim Native Sdn Bhd v Manang Selaman [1986] 1 MLJ 379

FACTS About an agreement to transfer Native Area Land in Sarawak by the respondent to nonnative corporate body appellant.

Arumugam v Somasundram (1934) FMSLR 322

Defendant employed plaintiff to drive his motorcar for him for hire contrary to Motor Vehicles Enactment when the car is licenced for private use only, when defendant fails to pay wages, plaintiff sues.

JUDGEMENT The court held that the agreement contains unlawful consideration as it is against S. 8 of Sarawak Land Code. The object of the agreement which is to drive unlicensed car for hire is unlawful. Plaintiff cannot claim for wages.

PRINCIPLE Agreement with unlawful consideration is void under S. 24 CA 1950. Agreement with unlawful object is void under S. 24 CA 1950.

Aroomoogum Chitty v Lim Ah Hang (1894) 2 SSLR 80 Pearce v Brooks (1866) LR 1 Ex 213 Sababumi Sandakan Sdn Bhd v Datuk Yap Pak Leong [1998] 3 MLJ 151 Haji Hamid bin Arifin v Ahmad bin Mahmud [1976] 2 MLJ 79

Foo Say Lee v Ooi Heng Wai

Plaintiff lent money to defendant for the purpose of running a brothel and when defendant fails to repay, plaintiff sues. A agrees to hire a coach to B, a prostitute knowing that she shall use it for her trade.

A Malay person sold his Malay Reservation Land to one Siamese lady. She then took possession of it and sold to Malay appellant. When she and original vendor died, the appellant acted as her administrator and sued the administrator of original vendor. About transfer of a right or interest of any Malay in Reservation land to any person not being a Malay.

Hee Cheng v Krishnan [1955] MJL 103

Defendant was a TOL holder and entered into agreement with plaintiff to transfer his TOL right to plaintiff.

Lim Kar Bee v Duofortis Properties (M) Sdn Bhd [1990] 1 MLJ 356

The purpose of the scheme was to avoid paying the estate tax, as the said land would remain with members of the immediate family of the landowner in the sense that the children and wife of the landowner would control exclusively the holding company without their having paid one cent towards the purchase price of the said land.

The court held that object of agreement which is running a brothel is immoral. Plaintiff cannot sue. The court held that object of agreement is immoral The court held that agreement in contrary to Pool Betting Act was void under S. 24(a) not 24(b) because agreement is clearly forbidden by statute. The court held that the transfer of land to Siamese lady is contrary to S. 6(1) of Kedah Malay Reservation Enactment because the transfer was to non-Malay. She couldn’t take possession of the land. The court held that the agreement was not null because it is not contrary to Section 13A(i) of the Malay Reservation Enactment The court held that the contract was illegal because rule 41 of Land Rules Occupation Licence said no TOL rights is transferrable and agreement is void under S. 24 Contracts Ordinance that if permitted, would defeat the law. The court held that the agreement was illegal because it would defeat the tax law in question.

Agreement with unlawful object is void under S. 24 CA 1950. Agreement with unlawful object is void under S. 24 CA 1950. Discuss the distinction between S. 24(a) and (b) of CA 1950.

S. 24(a) of CA 1950 applies of clear prohibition.

S. 24(a) of CA 1950 applies of clear prohibition.

S. 24 (b) CA 1950 of implied prohibition applied.

S. 24 (b) CA 1950 of implied prohibition applied.
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