Section 66 CA 1950 - Tuto work PDF

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Intro The question concerns whether the agreement between Das and Lea was illegal and if Das may claim for refund under Section 66 of the Contracts Act 1950.

Law Section 2(g) of the Contracts Act 1950 (CA 1950) provides for an agreement not enforceable by law is said to be void. Thus, there cannot be any relief based on contractual rights and any relief obtainable is restitutionary in nature, that is, the restoration of the advantages received by a party under the agreement under section 66 of the CA 1950. Section 10(1) of the CA 1950 provided that for an agreement to be a contract, it must be the free consent of the parties to be competent to contract and that the consideration and object of the agreement must be lawful and are not expressly declared to be void. Section 24 of the CA 1950 stated that the consideration or object of an agreement is unlawful if it comes within any of the five which are if it is forbidden by a law, if it is of such a nature that, if permitted, it would defeat any law, it if fraudulent, it involves or implied injury to the person or property of another or the court regards it as immoral, or opposed to public policy. Section 24(a) and (b) states that if a contract is signed and its application violates certain statutes or laws then the contracts become illegal. The execution of these statutes can be seen in the case of Hee Cheng v Krishnan [1953] MLJ 103. The plaintiff sold his house built upon a piece of land in respect of which he was the holder of a TOL to the defendant. The High Court held that the Plaintiff’s claim must fail, as the alleged contract was an attempt to buy and sell the rights under the TOL which is contrary to Rule 41 of Land Rule 1930 which provides that no TOL of state land shall be transferrable. Section 66 of CA 1950 applies to void agreement and contract becomes void. Any person who has received an advantage in these two situations is bound to restore or compensate for it to the person from whom it has been received. Nevertheless, in this context, the person seeking the relief under section 66 must not be a party to the illegality. Also, the party must not aware

of the illegality at the time the contract was entered into and the illegality was only discovered subsequently. The application for relief under section 66 of CA 1950 is illustrated in the case of Ng Siew San v Menaka [1973] 2 MLJ 154, FC. In this case, the court held that since the respondent was not aware of the illegality of the agreement at the time they executed it, hence, section 66 was applicable and the court was right to order the return of a specified money to the respondent. Section 68 of the National Land Code 1965 stated that the holder of the Temporary Occupation Land (TOL) has no right to transfer, sell or transmit upon death or anything that amounts to an assignment of the TOL holder’s rights and interest. It also stated that the TOL is personal to the holder may enjoy other rights which do not amount to a transfer. They also have the right to possession of the land, therefore the right to sue for trespass and the right to grant tenancy. The right conferred to TOL holders under this statute is well illustrated in the case of Govindaraju v Krishnan [1962] 1 MLJ 334. The TOL holder rented out two rooms in which he later terminated the tenancy. The tenants refused to leave the premises and argued that the tenancy was void because he was a mere licensee. The court held that the tenancy did not amount to a transfer of his rights under the TOL. Application In applying to the question, based on section 2(g), before Das can claim any of his rights and remedies, he needs to make sure the considerations made between him and Lea was lawful. Section 68 of National Land Code 1965 has stated that TOL holders, which is Lea in this question, has no rights to sell or transfer ownership of TOL to others whom in this matter, she is trying to sell to Das. This means that the consideration which is for Das to purchase the TOL from Lea was unlawful to begin with as it contradicts the law under section 68 of the National Land Code 1965. Since the consideration is unlawful, this automatically makes the agreement between Lea and Das to be illegal as stated under section 24 of CA 1950. Moving on to what whether Das may claim for relief under section 66, in applying the judgement from the case of Ng Siew San v Menaka, Das may

claim back his deposit of RM10,000 although section 66 stated parties to a void agreement may not claim for compensation there are exception to that matter however Das was not aware of the illegality of the agreement at the time they executed it and only found out after Lea told him about the rejection of the letter of approval. Hence, section 66 is applicable and Das has the right to order the return of the deposit money worth RM10,000 from Lea. Unfortunately, Das may not claim back the RM500 that he has transferred monthly to Lea. In accordance to section 2(g) of CA 1950, However, the contract between Das and Lea is null and void, and the separate circumstance in which Lea gave Das permission to cultivate the land at RM500 per month is lawful and legal on the basis of the above case of Govindaraju v Krishnan where the rental of the premises was held not to amount to a transfer of the licence. Similarly, the land license was not trasnferred with Das and Lea, but merely rented out to Das by Lea. In conclusion, the agreement between Das and Lea was null and void due to the unlawful consideration. However, Das may still claim back his deposit of RM10,000 from Lea because he was aware of the illegality of the contract only after he was informed by Lea and not while the transaction was happening. Unfortunately, Das may not be able to claim back the RM500 that he paid monthly to Lea because it is considered as him renting Lea’s land which is legal and does not constitute as transferring which is unlawful....