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LAW486 - CONTRACT LAW II, What is implied terms? - Coggle Diagram

- - - - Proviso (a) vitiating factors Any fact may be proved which would invalidate any document or entitle any person to any decree of order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party or failure of consideration or mistake in fact or law
        
        Case: Tan Siew Hee & Ors v Hii Sii Ung [1964] 1 MLJ 385 Oral evidence of failure of consideration in contract is admissible
      - Proviso (b) collateral warranty The existence of any separate oral agreements as to any matter on which a document is silent and inconsistent with its term, may be proved (Collateral Contract)
        
        Cases
        
        Tan Swee Hoe v Ali Hussain Bros [1980] 2 MLJ 16 oral promise by landlord to tenant that upon payment of tea money, he could stay as long as he wanted provided he paid the rentals due, was held to be admissible as a collateral contract to the written tenancy agreement
        
        Tan Chong & Sons Motor v Alan McKnight [1983] 1 MLJ 220 Oral evidence was also allowed to be given despite the fact the agreement was in writing
        
        Ng Lay Choo Marion v Lok Lai Oi [1995] 3 SLR 221 The court disallowed some oral term to be adduced in evidence because did not fall under (b) collateral contract and indeed has high degree of formality
        
        Collateral Contract used to overcome the parol evidence rule to admit pre-contractual statements which had not been incorporated into the written agreement
        
        Conditions to be fulfilled: 1. Must exist side by side (separately) 2. Must be promissory in nature and has induced parties to enter contract 3. Must override any inconsistent written term 4. Cannot destroy the main contract
      - Proviso (c) condition precedent The existence of any separate oral agreement constituting a condition precedent to the attaching of any obligation under any such contract
        
        Case: Ganesan & Anor v Baskeran [1986] 2 MLJ 26 the respondent orally promise that he would obtain the consent of the ruler in council necessary for the transfer constituted separate oral agreement is admissible under proviso (c) of s. 92 and the appellants should have been permitted to adduce evidence to prove the existence of such a promise
  - - - Case: Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 it was stated that s. 92 specifically excludes evidence to contradict, vary, add to or subtract from any of the terms of a contract in writing, except in any of the situations spelled out in the provisos thereto
      - Case: Tan Chong Motor v Alan McKnight where it was held that "some terms are given orally and some in writing, oral evidence could be given to prove the terms agreed to orally"
      - Case: Ibrahim Jiin Director General of Inland Revenue v Ee Sim Sai stated s.92 applies only to parties to instrument and not to strangers
    - - Historical background & surrounding circumstances Case: Keng Huat Film Co Sdn Bhd v Makhanlal [1984] 1 MLJ 243
      - Recital of contract Case: Ganam Rajamany v Somoo Sinniah [1984] 2 CLJ 268
- - - - Seller's obligation
        
        S.14(a) - implied condition as to title
        
        Case :pen: Rowland v Divall
        
        S.14(b) - implied warranty enjoyment of quiet possession of goods
        
        Case :pen: Microbeads v Vinhurst Road Markings
        
        S.14(c) - implied warranty that the goods are free from any charge of encumbrance
        
        Case :pen: Steinke v Edwards, Lloyds & Scottish Finance Ltd v Modern Cars & Caravans Ltd
        
        S.15 - an implied condition that goods correspond with the description
        
        Case :pen: Nagurdas Purshotumdas v Mitsui Bussan Kaisha Ltd
        
        S.16(1)(a) - implied condition that goods are reasonably fit for a particular purpose.
        
        S.16(1)(b) - Implied condition that goods must have merchantable quality.
        
        S.17 - Sale by sample.
        
        Case :pen: Lorymer v Smith
      - Statutes
        
        The most evident in the contracts for the sale of goods.
        
        SOGA 1957 (Revised 1989)
      - Common law
        
        Eg ; employment contract, landlord & tenants, bankers & customers
        Binding precedent - implied terms to arise from previous decided cases on certain specific facts.
  - - - Officious bystander test
        
        If while the parties were makin their contract, an officious bystander were to suggest some express provision, they would both reply, "oh, of course"
        
        Case :pen: Shirlaw v Southern Foundries [1940
      - Combined test
        
        :silhouettes: Used for interpreting legal instruments especially contracts and statutes.
        :silhouettes: Most states treat this as mere customs not having the force of law.
        
        Case :pen: Photo Production Ltd v Securicor Transport Ltd
      - Business efficacy test
        
        :silhouettes: The implied term should be of a kind that will give business efficacy to the transaction of the contract of both parties.
        :silhouettes: Business efficacy - desired result of the business (transaction to be efficient or produce the intended effect)
        
        Case :pen:
        i. The Moorcock [1889]
        ii. Datin Peggy Taylor v Udachin
        iii. Development [1984]
        iv. Kong Wah Housing Development
        vi. V Desplan Construction Trading [1991]
  - - - What to establish :!?:
        
        Certain
        
        Case :pen: i) Les Affreteurs Reunis SA v Leopotd Walford (London) Ltd [1919] ii) Cheng Keng Hong v Government of the Federation of Malaya [1966]
        
        Custom or trade usage is implied on the rationale that it is well known, identifiable and reasonable, thus, the parties have not deemed it necessary to express it in their contract and are willing to be bound by it.
        
        Reasonable practice
        
        Before a practice can be implied as a custom or trade usage, it must be established that it is a reasonable practice.
        
        Case :pen: Preston Corporation Sdn Bhd v Edward Leong & Ors
        
        Knowledge of custom or trade usage
        
        :!: If the practice is reasonable as well as certain and notorious, then a party will be bound even if he is not aware of it.
        :!: If the practice is unreasonable, but certain and notorious, it cannot constitute usage, but if a party knows of it and agrees to it, it will bind him.
        
        Case :pen: Cunlife-Owen v Teather & Greenwood
- - - - Thornton v Shoe Land Parking Co Ltd
        Olley v Malborough Court Ltd
      - Chapelton v Barry Urban District Council
        Grogan v Robin Meredith Plant Hire
      - 3.Parker v South Eastern Railway Co
        Thompson v London
        Malaysian Airline System v Malini Nathan & Anor
    - - An exclusion clause can be incorporated into a contract where the other person is a regular customer and there is a consistent course of dealing between the parties.
        
        J Spurling Ltd v Bradshaw, The court of Appeal held that; the conditions were part of the contract after look at the course of business and conduct of the parties.
        
        The contracting party must have sufficient notice of the conditions sought to be incorporated. Although constructive notice is sufficient.
        -Hendy Kendall & Sons v William Lillico & Sons Ltd & Ors
        
        Must be consistency in the dealings.
        -Messrs Young and Co v We Hood Teck Development Corp Ltd
    - - The issues of notice of exclusion clause of a previous course of dealing is not relevant if one had signed a document or contract which contains an exclusion clause.
        
        A party is bound by the contract even though he has not read the contract.
        
        The classic authority for this rule is L’Estrange v F Graucob Ltd
        
        Subramanian v Retnam
- - - - :fountain_pen:Estoppel
        where a third party has relied on an assumption induced by another that a benefit would be conferred upon him or her.
        Case: Tropical Profile Sdn Bhd v Kerajaan Malaysia Jabatan Kerja Raya Malaysia & Ors [2007] 8 MLJ 419.
        
        the third party must prove that the promisor had engaged in unconscionable conduct inducing the third party to believe that a benefit will be conferred upon the third party.
      - :fountain_pen: Agency
        • Relationship that exists when one person (the agent) is appointed by another person (the principal) to act as their representative
        • An agent – Third Party (TP) in the contract between P and D.
        • An agent will not be liable nor has rights in the contract between principal and other party.
        Case: Beswick v Beswick. [1966] Ch. 538.
        
        i) Where the contract is made by an agent for the sale/purchase of goods from a merchant resident abroad;
        
        ii) Where the agent does not disclose the name of his principal;
        
        iii) Where the principal, though, disclosed cannot be sued.
      - :fountain_pen: Trust
        When A and B enter into a contract, and A promises B that A will do something for a third party, e.g. pay money, the courts have occasionally treated B (promisee) as a trustee of the rights of the third party beneficiary.
        
        If the promisor fails to carry out the promise, the trustee and the TP beneficiary are allowed to join together as co-claimants to sue the promisor for breaking the promise.
        Case: i) Les Affreteurs reunis SA v. Walford
        (London) Ltd. [1919] AC 801,
        ii) Trident General Insurance Co Ltd v
        McNiece Bros Pty Ltd (1988) 165 CLR
        107.
        
        BUT must first prove the trust relationship exists
      - :fountain_pen:Collateral contract
        A separate (collateral) contract between the promisor and the third party.
        Case: Shanklin Pier v Detel Products (1951)2 All ER 471
      - :fountain_pen:Restitution/Unjust enrichment
        Unjust enrichment may apply when a promisor receives consideration for a promise but fails to fulfil it because the third party was not a party to the contract.
        allow a person to get back a benefit they gave to someone else when it would be unfair for that person to keep the benefit.
        S. 71 of the Contracts Act 1950
      - :fountain_pen:Restrictive Covenants
        (for right for easement: right attached to the land) –(Burden Rule).
        Case: i) Tulk v Moxhay (1848)
        ii) Tan Kam Cheong v Stephen Leong Kon Sang [1980] 1 MLJ 36.
      - :fountain_pen:Contract of Guarantee
        S 79 CA 1950 - a contract to perform the promise, or discharge the liability, of a third person in case of his default
        A guarantee may be either oral or written.
        
        Loan agreements, scholarship agreements
        
        A surety/guarantor is the person giving the guarantee.
        
        A debtor is the person for whose default the guarantee is given.
        
        A creditor is the person to whom the guarantee is given.
        
        :pen:Essentials of a Guarantee
        a) Capacity of Parties
        Case: Government of Malaysia v. Gurcharan Singh & Ors [1971]
        b) S 80 CA 1950 Consideration
        Case: Low Chin Meng v Cimb Islamic Bank Bhd [2014]
      - :fountain_pen:Assignment
        a party to a contract (the assignor) is able to transfer the benefit he or she is to receive under that contract to another person (the assignee). The assignee can enforce performance even though he or she is not a party to the original contract.
        Case: Darlington Borough Council v. Wiltshire Northern Ltd [1995] 3 All ER 895.
- - - - (b) it is of such a nature that if permitted, it would defeat any law
        
        (c) it is fraudulent
        
        (d) it involves / implies injury to the person / property of another
        
        (e) the contract regards it is as immoral, or opposed to public policy
        
        Aroomoogum Chitty v Lim Ah Hang
        
        Pearce v Brooks
        
        immoral
        
        At common law, immorality is confined to sexual immorality only, but illust (j) seems to indicate a wider interpretation of the meaning of immorality in Malaysia
        
        opposed to public policy
        
        Chung Kiaw Bank Ltd v Hotel Rasa Sayang
        
        1 more item...
        
        The general head of public policy covers, in English law, a wide range of topics. Agreements may offend against public policy by tending to the prejudice of the State in time of war (trading with enemies, etc.),…
        
        Syed Ahamed b Mohamed Alhabshee v Puteh bte Satu
        
        Datuk Jaginder Singh v Tara Rajaratnam
        
        Hee Cheng v Krishnan
        
        Lim Kar Bee v Duofortis Properties (m) Sdn Bhd
        
        covers those situation where even if there is no express provision of law against making a contract but such contract would not be allowed if it would defeat the purpose / spirit of law
      - Jurutera Consultant (SEA) Sdn Bhd v Eddie Lee Kim Tak
      - Manang Lim Native Sdn Bhd v Manang
      - deals with cases of express / direct prohibition
  - - - 2 condition :
        
        agreement is discovered to be void
        
        the other party has received the advantages
      - Ahmad bin Udoh v Ng Aik Chong
        
        Thong Foo Ching & Ors v Shigenori Ono
        
        Murugesan v Krishnasamy