Lecture Note Introduction To Commercial Law LAW240 PDF

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LECTURE NOTES ON INTRODUCTIONTO COMMERCIAL LAW(LAW 240)(For Internal Circulation only) INTRODUCTION TO COMMERCIAL LAWTable of Contents Chapter Topic Pages Chapter 1 Introduction to Malaysian Legal System 3- Chapter 2 Law of Contract 13- Chapter 3 Sale of Goods 36- Chapter 4 Hire Purchase 43- Chapter...

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LECTURE NOTES ON INTRODUCTION TO COMMERCIAL LAW (LAW 240)

(For Internal Circulation only) INTRODUCTION TO COMMERCIAL LAW Table of Contents Chapter

Topic

Pages

Chapter 1

Introduction to Malaysian Legal System

3-12

Chapter 2

Law of Contract

13-35

Chapter 3

Sale of Goods

36-42

Chapter 4

Hire Purchase

43-52

Chapter 5

Law of Agency

5 3 59

Chapter 6

Employment Law

60-66

Chapter 7

Cheque

67-72

Chapter 8

Introduction to Shari'ah Principles Governing Commercial Transaction

73-77

2

INTRODUCTION TO MALAYSIAN LEGAL SYSTEM

DEFINITION OF LAW Rule of conduct Oxford Dictionary " Body of enacted or customary rules recognized by a community as binding" Salmond "Body of principles recognized and applied by the state in the administration ofjustice" Austin "A command set by a superior being to an inferior being and enforced by sanction" On the whole, law is a system of rules designed to ensure that people live in peace and harmony. It includes rights, duties and obligations.

CLASSIFICATION OF LAW Public law regulates the relationships between the citizen and the state examples: constitutional law, criminal law and administrative law. Private law deals with the relationship between a citizen and another citizen in the state examples: contracts, torts, trust, family law, company law and property law. International law laws that govern one particular independent country. subdivided into international public law and international private law

v

/

International public law is the law that governs the relationship between provinces and international entities examples are law of seas and treaties. v

/ International private law is the law that deals with conflict of laws. The issues are on which law to use and which court of a country the case to be heard.

4

SOURCES OF LAW

Writ en law

Unwritten law

English law Constitution

Legislation Subsidiary legislation Judicial Precedent

Federal constitutionFederal law Customary law State constitutionState law Islamic law

Written Law

law enacted by Parliament and the States Assemblies. The sources

of written law are: 1, Federal Constitution Art 4 FC: Constitution is the supreme law of the land Any law passed which is inconsistent with the constitution shall to the extent of the inconsistency, be void Article 32(1) "A constitutional monarchy and the supreme head of the federation is called YDPA Federal Constitution lays down powers of the federal government and the state government. These powers are stated in the federal list, state list or concurrent list. v/ The federal list:- relating to external affairs, defense, internal security, civil and criminal law procedures, the administration ofjustice, federal citizenship, naturalization and aliens, the machinery of government, finance, trade, commerce and industry, shipping, navigation and fishery, communications and transport, education, medicine, health, labor and social

security,

federal

holidays,

professions

and

occupations,

newspapers, publications, theatres, cinemas, films etc. v

/ The state list:- relating to Islamic personal and family law, land, agriculture and forestry and local government, state works and water, state holidays etc.

v

/ The concurrent list:- relating to the social welfare, protection of women, children and young persons, social services, scholarship, protection of wild animals and wild birds, national parks, town and country planning, sanitation and prevention of diseases etc.

It also lay down fundamental rights of every citizen: Chapter 2 of the Federal Constitution. Any clause of the Federal Constitution can be changed by two third (2/3) majority votes of total number of members of parliament. 2. States Constitutions 6

Each state has its own constitution. This constitution is applicable to that particular state only. The provisions in the State Constitution are relating to state matters, for example relating to ruler, financial, state employees etc. 3. Legislation o Legislation refers to the law enacted by Parliament and the State Legislative Assemblies. For the law enacted after 1946 until 1956, they are known as Ordinance. For those that are enacted from 1957 they are known as Act. For the laws legislated by the State Legislative Assemblies, they are known as Enactment except in Sarawak, known as Ordinance. 4, Subsidiary Legislation Also referred as to delegated legislation Made by specific bodies or persons in authority under powers given to it by legislation. These laws basically concern with everyday matters, which are not covered by Parliament or State Assemblies. Normally they relate to policies. Subsidiary legislation also known as rules, regulations, order and by-law. Procedure of the law making process before any law is passed by Parliament How a Bill becomes a law? Parliament exercises its power to make laws by passing of Bill in both Houses i.e. House of Representative (Dewan Rakyat) and Senate (Dewan Negara). In Each House, a Bill is required to undergo 4 stages: v

/ First Reading — reading of long title, i.e. the title of the Bill will be read. If it is accepted, the bill will be printed and distributed to the members of Parliament.

v

/ Second Reading — the members will discuss and debate on the Bill. Voting by simple majority (by voices) or 2/3 majority through divisions. If it is accepted, it will be sent to the next stage for the consideration of the Committee of the House. 7

'/ Committee Stage — Specific Debate on all clauses, schedule and preambles will take place. The committee will consider the Bill and may amend any part of it. If the committee approved, the bill will be sent to the next stage. v

/ Third Reading — voting for second time. Long title will be read and passed by the house.

v

/ Royal Assent - Once passed by the Houses in which the Bill is originated, it will be sent to the other House. Once the House (second House) passes the Bill, it must be presented to the YDPA for His assent thereto. The YDPA must within 30 days assent to the Bill by causing Public Seal to be affixed thereto. If He fails to do so, the Constitution provides that the Bill should become law at the expiration of 30 days as if He had assented thereto.

Gazetted and Printed - The Bill shall become law on being assented to by the YDPA, but no law shall become into force until it had been gazette. Law Similar procedures apply in both House of Representative and Senate. Unwritten Law law which is not enacted by Parliament nor the State Assemblies. In Malaysia the sources of unwritten law are: 1, Principles of English law The guidelines in application of English law throughout Malaysia is based on the Civil Law Act 1956. Our legal system normally would adopt English Common Law and Equity and English Commercial Law depends on:

8

v/ the local circumstances where the Malaysian written law permits; and when there is no statute of particular law in Malaysia that deals with that kind of situations English Land Law is not applicable in Malaysia because Malaysia has adopted the National Land Code. 2, Judicial Precedents Under the common law, judicial decisions means the non-statutory law evolved through judicial decisions, In deciding cases before the courts, the judges are bound to follow the previous decisions made by the previous judges. The effect of not following the judicial precedent: The decision will be legally wrong. There is a likely that the decision will be subject to appeal and overruled on appeal. v

/ Where there is no appeal, it might be overruled in later cases.

Content ofjudicial precedent: i. Ratio decidendi: the legal reasoning (it is binding) ii. Obiter dicta: "things said by the way" i.e. the judge's opinion (it is persuasive) How it works? i. Vertically: higher courts will bind the lower courts ii. Horizontally: Courts are bound by: v/ Its own previous decisions v/ The decisions of its predecessors v/ The decision of courts of equal rank 3.Customary law Customary law is the law that based on customs of each race and they are legally binding. v

/ Adat perpatih v'/

Adat temenggung The differences between adat pepatih and adat temenggung: i. Adat Pepatih is the democratic matrimonial adat law while Adat Temenggung is an autocratic patriarchal adat law. 9

ii. Adat Pepatih is brought to Negeri Sembilan while Adat Temenggung prevailed in other parts of the Malay Peninsula iii. Adat Perpatih is matrilineal form of organization which one belongs to mother's lineage while Adat Temengung is patrilineal form of organization which one belongs to father's lineage. iv. Adat Pepatih generally involves the inheritance of property, names or titles from mother to daughters, while Adat Temengung generally involves the inheritance of property, names or titles from father to son. v. Adat Temenggong is not favourable to women compared with Adat Pepatih. v/ Chinese Customary law originated from the Ching dynasty but has been modified and influenced by the English law Indian Customary law adapted from India, however it is not necessarily the same as in India provided that it is not contradict with the general public policy and justice 4.1slamic Law Its application is limited to Muslim only. Covers the aspect of family law e.g. inheritance, matrimonial and ta'zir offences Islamic law falls under the state list Art 3 of the Federal Constitution: Islam is the religion of the federation but other religions may be practiced in peace and harmony. Art 1 1 provides that every citizen has a right to profess and practice his religion The administration of Islamic law Enactments were given to three principal authorities i.e. the Majlis Agama Islam Negeri, the Mufti and the Syari'ah Courts. The sources of Islamic law are Al-Quran, Sunnah, Ijma' and Qiyas.

10

THE JUDICIAL SYSTEM IN MALAYSIA

Superior Courts

Subordinate Courts

Hierarchy Of Courts Composition And Jurisdiction Of Courts In Malaysia 11

Magistrates Court Composition Presided over by a magistrate Two types of courts: v

/ First Class Magistrate : appointed by the State Authority with the

recommendation of the Chief Judge. Must befit andproper (the member of Judicial and Legal Service of the Federation) v/ Second Class Magistrate: appointed by the State Authority and could be any fit and proper person Jurisdiction Jurisdiction of the First Class Magistrate (civil cases) Can try all actions and suits where the amount in disputes or value of the subject matter does not exceed RMI 00,000 Jurisdiction of the First Class Magistrate (criminal cases) Can try all offences for which the maximum term of punishment provided by law does not exceed 10 years imprisonment, or o Can try all offences punishable with fine only Where a person is found guilty, the magistrate may pass any sentence allowed by law not exceeding: 0 5 years' imprisonment 0 fine ofRMIO,OOO o whipping up to 12 strokes o a combination of any of the abovementioned sentences Jurisdiction of the Second Class Magistrate (civil cases) For the recovery of debt or liquidated demand on money not exceeding RMI 0,000 Jurisdiction of the Second Class Magistrate (criminal cases) Can try offences for which the maximum term of imprisonment provided by law does not exceed 12 months imprisonment, or Can try all offences punishable with fine only. A second class magistrate may pass any sentence allowed by law: o Not exceeding 6 months imprisonment o Fine of not more than RMI,OOO o Any sentence combining either the abovementioned 12

Sessions Court Composition Will be headed by Sessions Court Judge Appointed by YDPA on the recommendation of the Chief Justice Must be the member of Judicial and Legal Service of the Federation Jurisdiction Jurisdiction (civil cases) o Can try cases where the amount in disputes or value of the subject matter does not exceed RMI million Unlimited civil jurisdiction for motor-vehicle accidents, landlord and tenant issues and distress Has the jurisdiction to grant injunction Subject matters which are excluded from the jurisdictions: matters related to land; issue of grant of representation legitimacy of any person; guardianship or custody of infant; and validity or dissolution of marriage. Jurisdiction (criminal cases) May try all offences other than offences punishable with death May pass any sentence allowed by law other than death sentence High Court Composition Consists of a Chief Judge and not less than four other judges. However, the number of judges appointed shall not exceed sixty in Peninsula Malaysia and thirteen in Sabah/Sarawak unless the Yang di-Pertuan Agong order otherwise. The appointment of judges in the High Court is made by the Yang di-Pertuan Agong acting on the advice of the Prime Minister, after consulting the Conference of Rulers.

To be qualified as the High Court judge, he must be a Malaysian

citizen and has been in the legal service for at least ten years Jurisdiction A. Original jurisdiction The court has unlimited jurisdiction in civil and criminal cases B. Supervisory jurisdiction 13

Has a jurisdiction to revise and review the decision of the subordinate courts C. Appellate jurisdiction Can hear criminal and civil appeals from subordinate courts The Court of Appeal Composition Consists the President of Court of Appeal and 10 other judges. Appointment of judges in this Court shall be appointed by the Yang di-Pertuan Agong acting on the advice of the Prime Minister after consulting the Conference of Rulers To be qualified as the Court of Appeal judge, he must be a Malaysian citizen and has been in the legal service for at least ten years Jurisdiction A. Civil Appeal Can hear any appeal in civil matter No appeal can be made to the Court of Appeal where: v

/ The amount or value of the subject matter of the claim is less than RM250,OOO v/ The judgment or order is made with the

consent of the parties v/ The judgment or order related to costs only By any written law, the judgment or order of the High Court is expressly declared to be final B. Criminal Appeals Can hear any appeal against the decision of the High Court. The Federal Court Composition Headed by the Chief Justice. The members of the Federal Court include the President of Court of Appeal, the Chief Judges of the High Court and seven other judges and any additional judges as may be appointed. Appointed by Yang di-Pertuan Agong acting on the advice of the Prime Minister after consulting the Conference of Rulers 14

To be qualified as the Federal Court judge, he must be a Malaysian citizen and has been in the legal service for at least ten years Jurisdiction A. Original jurisdiction To exercise exclusive jurisdictions including: v

/ To determine the validity of the laws made by the Parliament or state

legislature, where it is alleged that the respective legislature has no power to make it v/ To determine disputes on any question between the states or between the Federal Government and the state As an advisor to the YDPA on any question on Constitution

B. Appellate jurisdiction To hear civil and criminal appeals from decisions of the Court ofAppeal and High Court Tribunal for Consumer Claims The Tribunal for Consumer Claims is established under section 85 of the Consumer Protection Act 1999 (hereinafter CPA 1999). It is an independent body that caters consumer claims. Section 86 of the CPA 1999 provides the composition of this Tribunal. It consists a Chairman and a Deputy Chairman who both among members of the Judicial and Legal Service and not less than five members who are qualified individual within the meaning of the Legal Profession Act 1976 or Advocates Ordinance Sabah or Advocates Ordinance Sarawak or have held the posts specified in the Fourth Schedule to the Subordinate Courts Act 1948. The appointment ofeach member is made by the Minister. Based on section 98(1) of the CPA 1999, the Tribunal has jurisdiction to look into consumer claims which the value of subject matter does not exceed RM25, 000. However, section 100(1) of the CPA 1999 allows the Tribunal to hear consumer claims which exceeding RM25,000 if the parties involved in the claim have make a written agreement that the Tribunal shall hear and determine the claim. 15

The following matters are excluded from the jurisdiction of this Tribunal: v/ Disputes involving land except fixtures example land recovery as stated in section

and section of the CPA 1999;

Disputes involving will and intestacy example entitlement of person on will as stated in section 99(l)(c)(i) of the CPA 1999; v/ Disputes on trade secret or intellectual property as in section 99(l)(c)(iv) of the CPA 1999; and v/ Claims arising from personal injury and death as in section 99(3) of CPA 1999. The limitation period of consumer claims under this Tribunal is three years as prescribed in section 99(2) of the CPA 1999. It means that any consumer claims must be made within three years otherwise the legal action would be expired and could not be catered by this Tribunal.

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