Easy Law

e-Cases in Business Law DPB 30073

CONTENTS

1 TABLE OF CASES
2 LAW OF CONTRACTS
3 LAW OF AGENCY

2

4 SALES OF GOOD ACT

2

5 PAST YEAR QUESTIONS

2

e-Cases in Business Law DPB 30073

TABLE OF CASES

Law of Anton Piller K.G v Manufacturing Processes Ltd PAGE
Contract Balfour v Balfour 1-12
Ban Hong Joo Mines v. Chen & Yap Ltd
Agency Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd 13-17
Bisset v Wilkinson 18-21
Sale of Bolton v Mahadeva
Goods Bradbury v Morgan
Byrne v Vien Tianhoven
Carlill v Carbolic Smoke Balls
De Bernady v Harding
Felthouse v Bindley
Government of Malaysia v. Gurcharan Singh
Hadley v Baxendale
Harrison v Nickerson
Hyde v Wrench
Ignatius v Bell
Inche Noriah v Shaik Allie b Omar
Karuppan Chetty V. Suah Thian
Kepong Prospecting Ltd v Schmidt
Kerpa Singh v Barian Singh
Kersamal s/o Letchman Das v Valiappa Chettiar
Lee Sau Kong v Leow Chang Chiang
Letchemy Arumugam v Annamalay
Merritt v Merritt
Neoh Siew Eng v Too Chee Kwang
Phang Swee Kim v. Beh I Hock
Pharmaceutical Society of Great Britain v Boots Cash Chemist
Raffles v Wichelhaus
Ramsgate Victoria Hotel v Montefiore
Rose & Frank Co v Crompton Bros
Tan Hee Juan v The Boon Keat
Tan Soh Sim, Chan Law Keong v Tan Saw Keow
Taylor v. Caldwell
Venkata Chinnaya V Verikatara’ma’ya

Andrews v. Ramsay and Co
Bumiputra Malaysia Bhd v Henry Ginai Anak Langgie
Chan Yin Tee v William Jacks & Co Ltd
Foley v Hill
Great Nothern Railway Company v Swaffield
John McCann & Co v Pow
Keepel v. Wheeler
Keighley Maxsted & Co v Durant
L.S Trustees Ltd v Power packing Services
Mahesan v. Malaysian Govt.
Merchantile Credit v Garrod
Miss Gray Vs. Cathcart.
Springer v. Great Nothern Railway
Turpin v Bilton

Ahmad Ismail v Malayan Motors
Beale v Taylor
Car & Universal Finance Co Ltd v Caldwell
Folkes v King
Godley v Perry
Lim Chui Lai v Zeno Ltd
Microbeads AG v. Vinhurst Road Markings Ltd
Nagurdas Pushomtumdas v Mitsui Bussan Kaisha Ltd
Newtons of Wembley Ltd v Williams
Pacific Motor Auctions Pty Ltd v Motor Credit
Rowland v Divall
Steinke v. Edwards
Syarikat Batu Sinar Bhd v UMBC Finance Bhd
Wilson v Ricket, Cockerelle & Co Ltd

e-Cases in Business Law DPB 30073

LAW OF
CONTRACTS

This section covers the cases in law of contracts include elements of contracts, voidable contracts,
discharge of contracts and remedies.

2.1 ELEMENTS OF CONTRACT

2.1.1 OFFER
 Definition - according to section 2(a) Contracts Act 1950 :

when a person signifies to another his wilingness to do or to abstain
from doing anything, with a view to obtaining the assent of that other
to the act or abstinence, he said to make a proposal

Carlill v Carbolic Smoke Balls (Advertisement/ Offer to public)

Carbolic Smoke Ball Co.Ltd advertised that they would offer £100 to anyone who
still succumbed to influenza after using a certain remedy for a fixed period. The
plaintiff duly used it but nevertheless contracted influenza. The plaintiff then
sued for money.

Held: The plaintiff was entitled £100 as she accepted the offer made to the world
at large.

*Invitatation to treat (ITT) ITT is not an offer but is an offer to consider offers

Pharmaceutical Society of Great Britain v Boots Cash Chemist
(Goods displayed in shop windows and shelves)

The defendant ran a self-service shop in which non-prescription drugs and
medicines, many of which were listed in the Poisons List provided in
the Pharmacy and Poisons Act 1933, were sold. These items were displayed in
open shelves from which they could be selected by the customer, placed in a
shopping basket, and taken to the till where they would be paid for. The till was
operated by a registered pharmacist. However, the claimant brought proceedings
against the defendant for breach of section 18(1) of the Pharmacy and Poisons
Act 1933, which requires the supervision of a registered pharmacist for the sale
of any item in the Poisons List.

Issue : The question was whether the contract of sale was concluded when the
customer selected the product from the shelves (in which case the defendant was
in breach of the Act due to the lack of supervision at this point) or when the
items were paid for (in which case there was no breach due to the presence of
the pharmacist at the till).

Held : The Court of Appeal held that the defendant was not in breach of the Act,
as the contract was completed on payment under the supervision of the
pharmacist. The display of the goods on the shelves were not an offer which was
accepted when the customer selected the item; rather, the proper construction
was that the customer made an offer to the cashier upon arriving at the till,
which was accepted when payment was taken. This analysis was supported by
the fact that the customer would have been free to return any of the items to the
shelves before a payment had been made.

1

*Invitation to treat

Harrison v Nickerson (Auction)

The defendant advertised that an auction of certain goods would take place at a
stated time and place. The plaintiff travelled to the auction only to find that items
that he was interested in had been withdrawn. He claimed compensation for
breach of contract, arguing that the advertisement constituted an offer, and his
travelling to the auction, an acceptance by conduct.

Held : The advertisement was not an offer, merely a declaration of intention.

Termination of offer

Byrne v Vien Tianhoven (Revocation must be communicated)
The defendants wrote a letter, on October 1, to the plaintiffs offering the sale of
1000 boxes of tin plates. The defendant was based in Cardiff and the plaintiff was
based in New York, and letters took around 10-11 days to be delivered. The
plaintiffs received this letter on October 11 and accepted it on the same day by
telegram, as well as by letter on October 15. However, on October 8, the
defendant sent a letter to the plaintiffs which withdrew their offer and this
arrived with the plaintiff on October 20. The plaintiffs claimed for damages for
the non-delivery of the tin plates.

Issue
The court was required to establish whether the withdrawal of the offer for the
sale of goods was acceptable. The court would have to consider whether the
contract had been agreed by the acceptance by the plaintiffs of the letter of
October 1, or whether the defendants had successfully withdrawn their offer by
issuing the withdrawal by letter on October 8.

Held: The court held that the withdrawal of the offer was ineffective as a contract
had been constructed between the parties on October 11 when the plaintiffs
accepted the offer in the letter dated October 1. On this basis, it was held that an
offer for the sale of goods cannot be withdrawn by simply posting a secondary
letter which does not arrive until after the first letter had been responded to and
accepted. The court gave judgment for the plaintiff and awarded that the
defendant paid their costs.

Hyde v Wrench [1840] - ( Counter offer)
The defendant offered to sell a farm to the claimant for £1,000. The claimant in
reply offered £950 which the defendant refused. The claimant then sought to
accept the original offer of £1,000. The defendant refused to sell to the claimant
and the claimant brought an action for specific performance.
Held: There was no contract. Where a counter offer is made this destroys the
original offer so that it is no longer open to the offeree to accept.

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Ramsgate Victoria Hotel v Montefiore (Lapse of time)
The defendant offered to purchase shares in the claimant company at a certain
price. Six months later the claimant accepted this offer by which time the value of
the shares had fallen. The defendant had not withdrawn the offer but refused to
go through with the sale. The claimant brought an action for specific
performance of the contract.
Held: The offer was no longer open as due to the nature of the subject matter of
the contract the offer lapsed after a reasonable period of time. Therefore there
was no contract and the claimant's action for specific performance was
unsuccessful.

2.1.2 ACCEPTANCE
 Definition – section 2(b) Contract Act 1950
when the person to whom the proposal is made signifies his assent
thereto, the proposal has been accepted.

Ignatius v Bell
The defendant, Bell gave an option to the plaintiff to purchase a piece of land on
the condition that the option must be exercised on or before 20 August 1912.
Both parties contemplated the use of the posts as means of communication. The
plaintiff sent a registered letter on 16 August 1912. Because he was not at home,
the defendant only received it on the evening of 25 August.
Held : The court held the contract bound the defendant on 16 August 1912, that
is when the plaintiff posted the letter of acceptance. The said option was
executed within the specified time.
Felthouse v Bindley
A nephew discussed buying a horse from his uncle. He offered to purchase the
horse and said if I don't hear from you by the weekend I will consider him mine.
The horse was then sold by mistake at auction. The auctioneer had been asked
not to sell the horse but had forgotten. The uncle commenced proceedings
against the auctioneer for conversion. The action depended upon whether a valid
contract existed between the nephew and the uncle.
Held: There was no contract. You cannot have silence as acceptance.

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2.1.3 INTENTION
 Definition- section 2(a) Contract Act 1950
according to the definition of offer, ‘willingness’ can be referred to
the existence of intention.
 Two presumptions, have developed in the determination of
intention :
a. in business agreements, there is a presumption that the parties
intend legal consequences.
b. in social, domestic or family agreements, it is implied as a
matter of course that no legal realtions are contemplated.

Balfour v Balfour [1919]

A husband worked overseas and agreed to send maintenance payments to his
wife. At the time of the agreement the couple were happily married. The
relationship later soured and the husband stopped making the payments. The
wife sought to enforce the agreement.

Held: The agreement was a purely social and domestic agreement and therefore
it was presumed that the parties did not intend to be legally bound.
Merritt v Merritt [1970]

A husband left his wife and went to live with another woman. There was £180
left owing on the house which was jointly owned by the couple. The husband
signed an agreement whereby he would pay the wife £40 per month to enable
her to meet the mortgage payments and if she paid all the charges in connection
with the mortgage until it was paid off he would transfer his share of the house
to her. When the mortgage was fully paid she brought an action for a declaration
that the house belonged to her.

Held: The agreement was binding. The Court of Appeal distinguished the case
of Balfour v Balfour on the grounds that the parties were separated. Where
spouses have separated it is generally considered that they do intend to be
bound by their agreements. The written agreement signed was further evidence
of an intention to be bound.
Rose & Frank Co v Crompton Bros

The claimants and defendants entered an agreement for the supply of some
carbonised tissue paper. Under the agreement the claimants were to be the
defendant's sole agents in the US until March 1920. The contract contained an
honourable pledge clause which stated the agreement was not a formal or legal
agreement and shall not be subject to the jurisdiction of the courts in neither
England nor the US. The defendants terminated the agreement early and the
claimants brought an action for breach.

Held: The honourable pledge clause rebutted the presumption which normally
exists in commercial agreements that the parties intend to be legally bound by
their agreements. The agreement therefore had no legal affect and was not
enforceable by the courts.

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2.1.4 CONSIDERATION
 section 2(d) Contract Act 1950
when, at the desire of the promisor, the promise or any other
person has done or abstained from doing, or does or abstains from
doing or promises to do or to abstain from doing, something such
act or abstinence or promise is called a consideration of the
promise.

Phang Swee Kim v. Beh I Hock (Consideration Not be adequate)

Sale of a land for $500/- when it was worth more than that. Seller refused to
honour promise citing that the price was inadequate for a consideration.

Held: The trail court judge held that the agreement was void due to inadequacy
of consideration. However upon appeal to the Federal Court, the decision of the
Trail judge was reversed and applied explanation 2 and illustration (f) of Section
26.

Tan Soh Sim, Chan Law Keong v Tan Saw Keow ( Natural love)
In the case of Tan Soh Sim, deceased; Chan Lam Keong & Ors v Tan Saw Keow &
Ors (1951), the court held that the validity of consideration depended on natural
love and affection between near relations, relationship and nearness depended
on the mores of the group to which the parties belong and the circumstances of
the particular family.

Kepong Prospecting Ltd v Schmidt (Past consideration)
Schmidt claimed payment as promised from a company to reward his service as
an advised engineer before and after the company was registered when his
service is terminates. In defense, the company claims that no consideration is
given for the promise.

Held: Court rejected the defense. The service gave by Schmidt before the
agreement but after the company registered is a valid consideration under sec
2(d).

Venkata Chinnaya V Verikatara’ma’ya (Consideration from third parties)

A sister agreed to pay an annuity of Rs 653 to her brothers who provided no
consideration for the promise. But on the same day, their mother had given the
sister some land stipulating that she must pay the annuity to her brothers. When
the sister subsequently failed to pay to fulfill her promise to pay the annuity, her
brothers sued her on the promise.

Held - The court ruled that she was liable on the promise on ground that there
was a valid consideration for the promise even though it did not move from the
brothers.
Past consideration is good consideration

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2.1.5 CERTAINTY
 Section 30 Contracts Act
Agreements, the meaning of which is not certain or capable of being
made certian, are void.

Karuppan Chetty V. Suah Thian (1916)
The court held that the requirement of certainty was not met when the parties
agreed upon the granting of a lease ‘at $35.00 per month as long as he likes’.

2.1.6 CAPACITY
 Section 11 Contract Act 1950
every person is competent to contract who is of the age of
majority, and who is of sound mind and is not disqualified from
contracting by any law to which he is a subject.

Tan Hee Juan v The Boon Keat
(Infant cannot make a valid contract)
When a minor executed a transfer of land. The plaintiff applied for the court
order to revoke the said transfer.
Held: The contract made by infant not only void but voidable.
Government of Malaysia v. Gurcharan Singh
(Contract of necessaries)
The government sued the first defendant (the minor) and the second and the
third defendants (the sureties) for breach of contract. The amount of claim was
RM 11500 being the sum spent by the Government for the minor’s education. At
the time when the contract was made, the first defendant was a minor.
Held: the contract was void but since education was necessaries the minor was
liable for the repayment of a reasonable sum spent on him. The amount ordered
as payment to the Government was RM 2683 because the minor has served the
Government for three years and 10 months out of contractual period of five
years.

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2.2 VOIDABLE CONTRACTS

2.2.1 COERCION
 Section 15 Contract Act 1950
Committing or threatening to commit any act forbidden by the
Penal Code or the unlawful detaining or threatening to detain any
property, to the prejudice of any person whatever, with the
intention of causing any person to enter into an agreement.

Kersamal s/o Letchman Das v Valiappa Chettiar
A transfer of property which was made under ‘the orders of the Sultan, issued in
the ominous presence of 2 Japanese officers during the Japanese ocupation of
Malaysia was held to be not valid. This is because the consent given was not free
and therefore the transfer became voidable at the will of the party whose
consent was so caused.

2.2.2 UNDUE INFLUENCE
 Section 16 (1 )Contracts Act 1950
Where the relations subsisting between the parties are such that
one of the parties is in a position to dominate the will of the other
and uses that position to obtain an unfair advantge over the other.

Inche Noriah v Shaik Allie b Omar
An old and illiterate Malay woman executed a deed of gift of a landed property in
Singapore in favour of her nephew who had been managing her affairs. Before
the execution of the deed, the donor had an independent advice from a lawyer
who acted in good faith. However, he was not aware that the gift constituted
practically the whole of her property and did not impress upon her that could
she could prudently, and equally effectively have benefited the donee by
bestowing the property upon him by a will.
Held : The gift should be set aside as the presumption of undue influence, which
is raised by the relationship proved to have been in existence between the
parties, was not rebutted.
Chait Singh v Budin B. Abdullah
A moneylender, advances $100 to B an agriculturist and by undue influence,
induces B to execute a bond for $200 with interest at 6% per month. The court
may set the bond aside, ordering B to repay the $100 with such interest as may
seem just.
* Salwath Haneem v Hadjee Abdullah

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2.2.3 FRAUD
 Section 17 Contracts Act 1950
to include various acts committed by a party to a contract with
intent to deceive the other contracting party :
a. the suggestion as to fact of that which is not true by ine who
does not believe it to be true
b. the active concealment of a fact by one having knowledge of
belief of the fact
c. a promise made without any intention of performing it
d. any other act to deceive
e. any such act or omission as the law specially declares to be
fraudulent

Letchemy Arumugam v Annamalay
The defendant had made a fraudulent misrepresentation to the plaintiff, an
illiterate Indian women rubber tapper and induced her to enter into a sale
purchase agreement. The defendant had fraudulently represented to the plaintiff
that the document she was a required to sign was for a loan she took and to free
the land from charge. In fact the documents she signed included a sale agreement
relating to the land, a transfer of the land.
Held: The court found the agreement was voidable at the option of the plaintiff
and must be rescinded.

2.2.4 Misrepresentation
 Section 18 Contracts Act 1950
it refers to certain false statements made by a representator and
which induces the other party to enter into a contract.
 the basic difference between misrepresentation and fraud is that in
fraud the person making the representation does not himself
believe in its truth whereas in case of misrepresentation, he may
believe the representation to be true.

Bisset v Wilkinson
The claimant purchased a piece of farm land to use as a sheep farm. He asked the
seller how many sheep the land would hold. The seller had not used it as a sheep
farm but estimated that it would carry 2,000 sheep. In reliance of this statement
the claimant purchased the land. The estimate turned out to be wrong and the
claimant brought an action for misrepresentation.
The Privy Council held that the statement was only a statement of opinion and
not a statement of fact and therefore not an actionable misrepresentation. The
claimant's action was therefore unsuccessful.

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2.2.5 Mistake
 Section 21 Contracts Act 1950
Where both the parties to an agreement are under a mistake as
to a matter of fact essential to the agreement, the agreement is void.

Raffles v Wichelhaus
The parties entered a contract for the sale of some cotton to be shipped by 'The
Peerless' from Bombay. The Peerless had a sailing from Bombay in October and
in December. The defendant thought that it was the October sailing and the
claimant believed it was the December sailing which had been agreed.

The court applied an objective test and stated that a reasonable person would
not have been able to state with certainty which sailing had been agreed.
Therefore the contract was void as there was no consensus ad idem

2.3 DISCHARGE OF CONTRACT
2.3.1 By performance

Bolton v Mahadeva [1972]
The claimant installed central heating in the defendant's home. The agreed
contract price was £560. The defendant was not happy with the work and
refused to pay. Defects in the work amounted to £174. The action by the claimant
to enforce the payment failed since the court held there was no substantial
performance.

2.3.2 Agreement
Kerpa Singh v Barian Singh
Bariam Singh (Debtor) owed Kerpa Singh (Creditor) $8869.64. The debtor’s son
wrote a letter to Kerpa that Kerpa Singh’s offering $4000 in full satisfaction of his
father’s debt and endorsed a cheque for the amount and stipulating that should
Kerpa Singh refuse to accept his proposal, he must return the cheque. Kerpa
Singh having cashed the cheque and retained the money and secure the balance
of the debt by issuing a bankruptcy notice on the Bariam Singh. Kerpa Singh
having cashed the cheque and retained the money and secure the balance of the
debt by issuing a bankruptcy notice on the Bariam Singh.
Court held: The acceptance of the cheque in full satisfaction precluded them from
claiming the balance. The act of promisee/creditor by acceting the smaller sum
of cheque will waive the performance of promise that made to him.

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2.3.3 Frustration
Taylor v. Caldwell
he claimant hired out a music hall in Surrey for the purpose of holding four grand
concerts. The claimant went to great expense and effort in organising the
concerts. However, a week before the first concert was due to take place the
music hall was destroyed by an accidental fire. The claimant sought to bring an
action for breach of contract for failing to provide the hall and claiming damages
for the expenses incurred.
Held: The claimant's action for breach of contract failed. The contract had been
frustrated as the fire meant the contract was impossible to perform.

2.3.4 Breach
Ban Hong Joo Mines v. Chen & Yap Ltd
The Federal Court ruled that the deliberate refusal of the appellant to make
fortnightly payments for work already done and their order to the respondents
to stop work left the latter with no option but to treat the contract as having been
repudiated, and to sue for payment of work that have been done.

2.4 REMEDIES
2.4.1 Damages

Hadley v Baxendale
The crankshaft broke in the Claimant’s mill. He engaged the services of the
Defendant to deliver the crankshaft to the place where it was to be repaired and
to subsequently return it after it had been repaired. Due to neglect of the
Defendant, the crankshaft was returned 7 days late. The Claimant was unable to
use the mill during this time and claimed for loss of profit. The Defendant argued
that he was unaware that the mill would have to be closed during the delay and
therefore the loss of profit was too remote.
Held: The damages available for breach of contract include:
1. Those which may fairly and reasonably be considered arising naturally from
the breach of contract or
2. Such damages as may reasonably be supposed to have been in the
contemplation of both the parties at the time the contract was made. If any
special circumstances exists which were actually communicated to the
Defendant, the Claimant may recover any damages which would ordinarily
follow from a breach of contract under the special circumstances communicated.
* Tham Cheoh Toh v Associated Metal Smelters

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2.4.2 Rescission of Contract
Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd
The appellant, Berjaya Times Square Sdn bhd is a seller who sells the commercial
shop lot in the project known as Berjaya Times Square. The respondent, M
Concept is a purchaser made a contract to buy one of the shop lot. The agreement
in this case can be classified as a sale and purchase agreement between a
purchaser and a vendor. The agreed condition of the contract was that the
delivery of the shop lot must be made before or on 23rd November 1998. There
are several conditions laid down in the contract which were clause 22 where
appellant is required to pay liquidated damages calculated from a day to day at
the rate of 12% per year of the purchase price and clause 32 where time was the
essence. The appellant had breach the condition where they has to make a
delivery on the agreed time, but the appellant still keep in touch with the
respondent on the progress of the development. The respondent had made a full
payment before they rescind the agreement. Nevertheless, the appellant had
failed to make delivery by the end 2002. So the respondent asks for the payment
which they have paid to be return back to them. The appellant then claimed that
they only liable to pay for the liquidated damages. The respondent use section 56
of the Contracts Act 1950 which allowed them to terminate the contract, as they
claimed that the appellant had breach the condition where the time is essence of
the contract. As conclusion, the issue was whether the respondent is allowed to
rescind the agreement and whether time was the essence of the contract.

2.4.3 Specific Performance
Lee Sau Kong v Leow Chang Chiang
The parties entered into an agreement in writing whereby the respondent
agreed to purchase all the scrap iron lying within the Bundi Concession,
Terengganu. Respondent paid deposit and advances which is totaling to
RM22,600.00 and proceeded to remove metal. Later on, the appellant alleged that
the Respondent had removed from the Concession’ machinery and metal other
than scrap. Eventually, they had a meeting for that and the Appellant then
agreed that the respondent can continue with the said agreement but
Respondent should pay RM 4,000.00 for that. The Respondent then paid via
postdated cheque. Upon presented for payment, the said payment of the cheque
had been stopped. The appellant then terminated the contract and claimed for
damages.
Held: The trial court found as a fact that the respondent was not in breach of
contract. The Appellant had no justification for forbidding the respondent to
remove further quantities of scrap iron and the act of Respondent to put the said
agreement as at end is justified.Then , the respondent was entitled to such
damages as he could prove.

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2.4.4 Injunction
Neoh Siew Eng v Too Chee Kwang
where an injunction granted requiring the landlord to water supply open
for his tenants.

2.4.5 Quantum Meruit
De Bernady v Harding
where the plaintiff agreed to advertise and sell ticket for the defendant, who was
erecting stands for spectators to view the funeral of the Duke of Wellington

2.4.6 Anton Piller Order
Anton Piller K.G v Manufacturing Processes Ltd
The appellant, Anton Piller was a German manufacturer of motors and electric
generators used in the computing industry. The respondent was the appellant’s
agent in the UK. As agents the respondents had received confidential information
surrounding the appellant’s business. The appellants found out that the
respondents been in secret communication with other German companies called
Ferrostaal and Lechmotoren with a view to giving those companies detailed
plans and drawings of the appellant’s products so that they could be copied.
The appellants were about to launch a new product and feared that details of it
might get into the hands of competitors if the respondents were forewarned that
the appellants were aware of the respondents’ breaches of confidence. Anton
Piller commenced ex parte proceedings seeking an injunction to restrain
copyright infringement as well as a court order to permit entry to the
respondent’s premises to search and remove all confidential information owned
by the appellants. The injuction was granted but the order for inspection and
removal was refused. The appellants appealed the denial of the latter order. In
the Court of Appeal the order was granted. From this initial order has grown the
jurisprudence on Anton Piller orders, commonly known as civil search warrants.

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LAW OF
AGENCY

3.1 CREATION OF AGENCY

3.1.1 Direct Appoinment (Express )
Bumiputra Malaysia Bhd v Henry Ginai Anak Langgie
Facts : The defendant, the owner of a certain piece of land granted power of
attorney to his brother, John A Langgie in respect of the land. The attorney, in
purported exercise of his powers, charged the land to the plaintiff to obtain
overdraft facilities of RM50,000 and letter of credit/trust receipts for the use of
Tanah Sheema Enterprise. The plaintiff applied for an order for sale of the
charged land.

Held : A power of attorney is construed strictly by the courts according to well
recognized rules. The powers of attorney are interpreted as giving only such
authority as they confer expressly or by necessary implication.
An attorney in purported exercise of his authority acted in excess of and outside
the reasonable scope of his special powers by charging the land for his own
personal benefit or for the use of the company and not for the benefit of the
defendant. Unless the defendant expressly authorized it or adopted it by taking
the benefit of it or otherwise, the plaintiff, as the third party, will be unable to
make the defendant, as principal, liable.
3.1.2 Implied appointment

Chan Yin Tee v William Jacks & Co Ltd
On In the case of Chan Yin Tee v William Jacks& Co, the appellant and
Yong were registered as partners and during the meeting with
respondent company, the appellant held himself out to be Young’s partner.
The Federal Court held that since the appellant had held Yong out as his agent who
had the authority to do things on his behalf, the appellant was liable for Young’s
acts.

Miss Gray Vs. Cathcart.
A wife was supplied with clothes of 215 dollars, the husband refused to pay. On
being sued, the husband proved that he paid his wife 960 dollars a year
allowance. Held: It was held that the man is not held liable.

Merchantile Credit v Garrod
A, one of the partners sold a car to a finance company and credited the sales
money into the partnership account without the consent of his partner, B. The
finance company took action when they found out that there was fraud in the
sales.
Held : The court held B was entitled to recover money from A.

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3.1.3 Ratification

Keighley Maxsted & Co v Durant
An agent, Roberts was authorised by the appellants to buy wheat at a certain
price. The agent exceeded his authority and bought at a higher price in his own
name but intending it for Keighley. Keighley agreed to take the wheat at the price
but failed to take delivery.

Held: Keighley was not liable to Durant since Roberts at that time of contract did
not profess to act as an agent.

3.1.4 Necessity

Great Nothern Railway Company v Swaffield

Facts: Defendant owner sent his horse by rail from Kings Cross to Sandy station.
When the horse arrived at Sandy station there was no one to collect it and no on
at the station knew the name or address of the owner. The claimant railway
company arranged for the horse to be fed and stabled. When the defendant
collected his horse, he refused to reimburse the railway company for their
expenses in having the horse stabled.

Decision: The claimant had acted in the best interests of the defendant in
arranging to have the horse stabled. An agency of necessity had arisen and the
defendant was bound to pay for the cost of stabling the horse.
Springer v. Great Nothern Railway

A cargo of tomatoes arrived at Weymouth station. The defendant railway
company was contracted by the claimants to deliver the tomatoes to Covent
Garden. There was a railway strike, and the railway company, noticing that the
cargo of were in poor condition, sold them locally.

It would have been possible for the railway company to seek the instructions of
the owners of the tomatoes by sending a telegram. They had been contracted to
carry, not sell, the tomatoes. To give them the right or sell, circumstances must
exist which out them in the position of agents of necessity for the owners. As the
railway company could have communicated with the owners, there was no
agency of necessity.
Freeman & Lockyer v Buckhurst Park Properties

Freeman and Lockyer were engaged by Buckhurst properties to work • When
they sought their payment they were informed that the person from Buckhurst
did not have the authority to make the contract on behalf of the company and
was therefore not liable to pay the fees. The court held that although the person
from Buckhurst park did not have actual authority to act on behalf of the
company he did have apparent authority .The court ruled in favour of Freeman
and Lockyer

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3.2 DUTIES OF AGENT TO HIS PRINCIPAL
3.2.1 To obey the principal’s instruction – sec 164 CA 1950

Turpin v Bilton
The principal instructed his agent to take out an insurance on his ship but he
failed to do so. The court held that the agent was liable for damages when the
ship was lost.

3.2.2 To exercise duty with care
Keepel v. Wheeler
In this case, the defendant was an agent for the plaintiff. The agent was asked by
the Plaintiff to sell a house. One offer was made by A through the agent and it was
accepted by the Principal subject to a condition. Later, another offer was made by B,
but this time the offer is higher than the first offer made by A. The agent did not
inform the Principal about B’s offer. Principal signed the contract with A. Principal
took an action against agent
Held that: The agent was liable because he must use his skill and care for the
benefit of the Principal. Since the agent did not do so, he was liable to pay the
principal the difference between the two offers.

3.2.3 To render proper accounts
Foley v Hill
The agent is under a general duty to account to principal. The agent is under duty
to keep accounts of all transactions and to produce them to the principal on
demand.

3.2.4 To pay his principal all sums received
Mahesan v. Malaysian Govt.
Officers Co-operative Housing Society Ltd [1978] 1 MLJ 149, the appellant was a
director and secretary of the respondent co-operative society. He brought land at
a price of $944,000 from the vendor who had earlier paid $456,000 for it. The
appellant knew of this fact however he failed to inform the society. The society
discovered the fact only after the sale was done and discovered the appellant had
received $122,000 as secret commission from the vendor. As a result, the Privy
Council held that the respondent could recover either bribe or the amount of the
actual loss suffered by it as a consequence of entering into the contract.

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3.2.5 To communicate with principal
Springer v Great Western Railway
A cargo of tomatoes arrived at Weymouth station. The defendant railway
company was contracted by the claimants to deliver the tomatoes to Covent
Garden. There was a railway strike, and the railway company, noticing that the
cargo of were in poor condition, sold them locally.
DECISION: It would have been possible for the railway company to seek the
instructions of the owners of the tomatoes by sending a telegram. They had
been contracted to carry, not sell, the tomatoes. To give them the right on
sell, circumstances must exist which out them in the position of agents
of necessity for the owners. As the railway company could have communicated
with the owners, there was no agency of necessity.

3.2.6 Not to let his own interest conflict with his duty
John McCann & Co v Pow
A principal appointed a firm of real estate agents to sell his flat. Without the
principal’s approval, the real estate agents gave details of the flat to a sub agent
who found a buyer. Then the agents asked for their commission for the sale of
the flat.
The court held that since they had delegated the sale to a sub-agent without the
principal’s permission, the principal was not liable to pay the commission to the
agent although the flat had been sold for the price requested

3.2.7 Not to make any secret profits
Andrews v. Ramsay and Co
Where the principal successfully recovered both the commission paid to the
agent plus the secret commission received by his agent from a third party. In that
case, the plaintiff directed the defendant to sell property and agreed to pay him
commission of 50 pounds. The defendant received 100 pounds from a purchaser
as deposit for the property. The defendant paid 50 pounds to the plaintiff and
kept the other 50 pounds in payment of his commission with the plaintiff’s
knowledge. However the plaintiff learnt that the defendant had also received
another 20 pounds as commission from the purchaser. He sued his agent to
recover these 20 pounds and also the 50 pounds he had paid the defendant
initially. The court held that he could recover both of them.
Not to disclose confidential information
Not to delegate his authority to others.

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3.2.8 Not to disclose any confidential information
L.S Trustees Ltd v Power packing Services
The principal instructed his agent to prepare an insurance claim when his
warehouse was burnt down. He reminded his agent not to disclose some
information enclosed in the insurance documents. The agent went against the
reminder. The court held that the principal was entitled to terminate his contract
with the agent for breach of confidence

3.2.9 Not to delegate his authority
John McCann & Co v Pow
Here, estate agent brought in another agent to find a purchaser for a property -
this other agent wasn't a sub-agent, just someone else involved in transaction.
Held: this other agent not entitled to claim commission on this transaction
because he had not been authorised by the principal, and agent had no authority
to appoint him.

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SALES OF
GOOD ACT

4.1 Implied condition
4.1.1 As to title

Rowland v Divall
The claimant, a car dealer, bought a car from the defendant for £334. He painted
the car and put it in his showroom and sold it to a customer for £400. Two
months later the car was impounded by the police as it had been stolen. It was
then returned to the original owner. Both the claimant and defendant were
unaware that the car had been stolen. The claimant returned the £400 to the
customer and brought a claim against the defendant under the Sale of Goods Act.
Held: The defendant did not have the right to sell the goods as he did not obtain
good title from the thief. Ownership remained with the original owner. The
defendant had 2 months use of the car which he did not have to pay for and the
claimant was not entitled to any compensation for the work carried out on the
car.
Ahmad Ismail v Malayan Motors
A car on hire purchase was detained by the police on suspicion that it was stolen.
However, the car was released because there was no evidence that it was a stolen
goods.
Held: The court held that because the car was not a stolen goods, the owner there
of has the right to sell it

4.1.2 Sales by description
Beale v Taylor
A car salesman advertised a car “Herald Convertible, white”… for sale. The buyer
inspected the car before buying it. After buying it, he discovered that the car
consisted of parts of two cars welded together, one being earlier than 1961.
Held: The court decide the buyer entitled to sue for damages because there was a
breach of contract.
Nagurdas Pushomtumdas v Mitsui Bussan Kaisha Ltd
Under previous contracts between the parties of sale of flour had been sold in
bags bearing a well known trade mark. Further flour was ordered described as
the same as our previous contract. Flour identical quality was delivered but it did
not bear the same well known trade mark.
Held : It was held that goods did not comply with the description.

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4.1.3 Fitness
Griffith v Peter Conway
The plaintiff bought a Harris Tweed, tailor-made coat from the defendants. Due
to her abnormally sensitive skin, she contracted dermatitis from wearing the
coat. Only someone who had a similar skin type would have suffered from this
problem.
Held : Plaintiff failed. The defendants did not know of the plaintiff’s sensitive skin
and could not be expected to assume its existence. The coat was fit for most
people. s14 (3) of the Sale of Goods Act did not apply
Wilson v Ricket, Cockerelle & Co Ltd
A women ordered fuel by its trade name “Coalite” from a fuel merchant. During
delivery a detonator was embedded in a apiece of coal, causing an explosion.
Held: The court held that the consignment of the goods as a whole were not of
merchantable quality.

4.1.4 Sale by sample
Godley v Perry
A young boy bought a catapult from a corner shop. As he pulled back the elastic
to let fly a missile, the elastic snapped removing his eye. He sued the retailer for
damages. The retailer in turn was able to sue the manufacturer to recoup his
losses. However, this produces problems if the contract chain is broken, either as
the recipient was given the item or one party no longer exists. A partial solution
to the problem was reached as a result of:

4.2 IMPLIED WARRANTY
4.2.1 Quiet possession
Microbeads AG v. Vinhurst Road Markings Ltd
The claimant purchased some road marking machines from the defendant. After
the purchase a third party was granted a patent right in the machines. This
meant the claimant could not use the machines unless they were granted a
licence to do so. There was no breach of s.12(1) as at the time of the sale the
seller had the right to sell the goods. However, there was a breach of s.12(2) in
that the buyer could not enjoy quiet possession of the goods.

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4.2.2 Goods are unencumbered
Steinke v. Edwards
The Plaintiff who had bought the car paid off the tax owing and sought to recover
it from the Defendant (seller).
Held: the right of the govt. to levy a tax on vehicle coupled with a right to seize
the car to enforce collection was a `charge or encumbrance’. Therefore the claim
was allowed for breach of the implied warranty
4.3 TRANSFER TO TITLE
Lim Chui Lai v Zeno Ltd
Zeno made agreement with a contractor, Ahmad. Ahmad had a contract with
Petaling Jaya Authority for construction of culvert. Agreed that Zeno to provide
all construction materials. Zeno bought materials and delivered to construction
site. Contract between Ahmad and Petaling Jaya Authority terminated. Zeno then
informed PJA that materials belong to them, and wanted to sell them. Found
materials already sold by Ahmad.
Held: Ahmad was just a bailee and not owner of the goods. Because he has no
title to the goods and has no authority to sell the goods, title to the goods did not
pass to him.

Syarikat Batu Sinar Bhd v UMBC Finance Bhd
The second plaintiff Supreme Leasing purchased a tractor from a seller and
leased it to the first plaintiff (Syarikat Batu Sinar). The first defendant UMBC had
previously bought the same tractor from the seller and leased it to second
defendant. However at the time UMBC purchased it, the registration card to the
tractor was in the seller’s possession and no certification was made in the card to
show the tractor then belonged to UMBC. The issue, was on who is entitled to the
tractor.
Held: The court decide that the failure by UMBC to take steps to make the
certification in the registration card precluded it from denying Supreme Leasing
of its title to the tractor.

Folkes v King ( Sale by Merchantile Agent)
Fact: Folkes owned a car and he hand it to A ( a merchantile agent ) for sale and
the price must be not less then 575 pound sterling. A later sold this car to King
for the price of 340 pound sterling, which buy in good faith and without notice of
any restriction . A later absconded with the money. Folkes claimed King
Held: Since all the requirements are satisfied, king get good title.

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Car & Universal Finance Co Ltd v Caldwell
Caldwell the owner of a Jaguar car was persuaded to sell and deliver a car to
rogue, who gave Caldwell a car of a much lower value and cheque which Caldwell
later found to be worthless. Caldwell reported to the police and asked
Automobile Association to recover his car. They found that the car had passed
through several hands and eventually was acquired by the Car and Universal
Finance Co Ltd.
Held: The court held that even though the Car and Universal Finance Co Ltd
purchased the car in good faith without notice of the real situation since Caldwell
had acted speedily in rescinding the contract with A, the rogue, Caldwell was
entitled to the car.

Pacific Motor Auctions Pty Ltd v Motor Credit (Sale by a seller in Possession
after Sale)
Plaintiff put several of his cars at a car dealer’s shop and made an agreement for
the sale of the cars. Problem arose between them and the plaintiff rescinded his
agreement with the car dealer but he left them there. The car dealer then sold the
said cars to the defendants without his consent.
Held: The Privy Council held that the defendant was entitled to the car bought.

Newtons of Wembley Ltd v Williams (Sale by a Buyer in Posession)
A bought a car from the plaintiff and paid by cheque. The cheque was found to be
worthless. The plaintiff found out that A sold the same car to B. B then sold it to
defendant.
Held: The court held that since the car was in A’s possession with the plaintiff’s
consent even though the cheque was worthless and the car was already
transferred to the defendant, the defendant therefore had a valid right over the
car.

Griffiths v Peter Conway
Consumer is a lady who goes into a lady’s shop and asks for a tweed jacket. She is
recommended a Harris Tweed jacket. This is very rough tweed. She buys it and
gets a case of dermatitis. There is nothing wrong with the jacket. It’s the
customer’s skin that is very delicate. The rough material on her skin gave her
dermatitis. The defence was that if she had told the seller she had delicate skin,
they would not have recommended that particular tweed.
Held: The court said there was no liability unless the shop was aware of her
delicate skin

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PAST YEAR QUESTIONS

JUN 2019

QUESTION 1

a) Describe THREE (3) examples of an invitation to treat and support your

answer with relevant cases. [15 marks]

b) Soo Sah’s parent passed away while he was in Form Two. He was very
shocked and concerned about his school financial. As a consequences, he
sold his father’s motorcycle to See Nang.

After a week, he was advised by his uncle about his action. Soo Sah had
changed his mind and intends to rescind the sale. Soo Sah wanted to give
back the money he received to See Nang but See Nang refused to give back
the motorcycle to Soo Sah.

i) Interpret an issue arises on the situation. [1 mark]

ii) Illustrate the relevant provision under Contract Act 1950.
[4 marks]

iii) Apply ONE (1) relevant case to support your answer.
[3 marks

iv) Interpret your conclusion of the above issue. [2 marks]

QUESTION 2

a) Kaa Yaa and Miss Keen are two talented and brilliant inventors of robotic

surgery. They have developed a product and they wish to market it. They

were advised to form a partnership. Kaa Yaa and Miss Keen seek your

advise on the definition of a partnership and describes TWO (2)

advantages of the business. [4 marks]

b) Explain THREE (3) important duties of a principal to an agent under the
Contracts Act 1950. Support your answer with relevant provisions.

c) Illustrate THREE (3) important condition for the creation of agency by
way of ratification supported with the relevant cases.

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QUESTION 3

a) Define caveat emptor. [2 marks]

b) According to the general rule, when a person takesgood, he or she gets

only the same rights to the goods as the person from who he or she took

them. This rule is expressed in the Latin maxim Nemo Dat Quad Non Habit

as set out in Sale of Good Act 1957. Identify the FOUR (4) exceptions to

this general rule. [8 marks]

c) Pak Nik ordered watches from a popular watch manufacturer, Jam Chan
Teek Sdn Bhd. Contract of sale has been done through sample. When he
received the watches, Pak Nik found all the watches were as same as the
sample. After the inspection, Pak Nik satisfied with the condition of the
watches. However, he then found out that there were a few damages that
cannot be seen with a normal inspection that he has done.

i) Interpret an issue arises on the situation [2 marks]

ii) Illustrate the relevant provision under Contract Act 1950

[4 marks]

iii) Apply ONE (1) relevant case to support your answer.

[6 marks]

iv) Interpret your conclusion of the above issue. [3 marks]

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