week 5 subtopic 4.ppt

8/16/2019 WEEK 5 subtopic 4.ppt

1/14

RANACO EDUCATION & TRAINING

INSTITUTE

LAW 243 COMMERCIAL LAW

SUBTOPIC 4:

ILLEGAL AGREEMENT


2/14


INSTITUTE


2.4 ILLEGAL CONTRACTS

•S. 24 CA 1950 CA 1950 spells out the situations wherein theconsideration or object of an agreement is unlawful. Theconsideration or object of an agreement is unlawful if:

a. it is forbidden by law

b. it is of such a nature that, if permitted, it would defeat any law

c. it is fraudulent

d. it involves or implies injury to the person or property of anotheror

e. the court regards it as immoral, or apposed to public policy

• If either the consideration or the object of the agreement comeswithin any of the above situation, the whole agreement is “VOI!.

"ource: #ee $ei %heng & Ivan 'eron etta, (ommercial law, O)ford *ajar, +-- (ontract /ct -01.


3/14


INSTITUTE


CONTINUE

2nlawful consideration:

Manang Lim Native Sdn Bhd v. Manang Selaman [1986]

*acts: In this case a non native sought to deal in native

#and and "arawa3 #and (ode unless the dealing wasauthori4ed by the 5ang di6%ertua 7egeri, "arawa3.

8eld: /n agreement made in contravention of a statute 9that isthe "arawa3 #and (ode was entered into for an illegal

consideration and was therefore a void agreement within themeaning of section +9g of the (ontract /ct -01.

"ource: #ee $ei this was against the %heng & Ivan 'eron etta, (ommercial law, O)ford *ajar, +--


4/14


INSTITUTE


CONTINUE

2nlawful object:

Aroomoogam Chitty v. Lim Ah Hang (189!

*acts: The plaintiff lent money to the defendant for the purpose of running a brothel. The object of the contract was

therefore immoral. ;hen the plaintiff sued for payment.

8eld: %laintiff could not recover his money as no action will

arise from a wrong done.

"ource: "yed /hmad /lsagoff, %rinciples of the law of contract in $alaysia, #e)is 7e)is, +1.


5/14


INSTITUTE


AGREEMENTS FORBIDDEN BY LAW

Ha"i Hamid #in Ari$$in v. Ahmad #in Mahm%d [19&6]

*acts: / $alay person sold his $alay sestate, for specific performance.



6/14


INSTITUTE


(O7TI72?

8eld: The sale to the "iamese lady was void from the very

beginning because s. @9- of the Aedah $alay


7/14


INSTITUTE


ATTEMPTS TO DEFEAT LAW

Hee Cheng v. 'rihnan [19))]

*acts: Cy a sale and purchase agreement, the plaintiff sold his house built

upon a piece of land in respect of which he was the holder of a Temporary

Occupation #icense to the defendant. The defendant refused to perform the

agreement and the plaintiff claimed specific performance of the agreement

or alternatively, damages for the defendant>s breach of contract.

8eld: The agreement entered into was an attempt to sell and to purchase

the plaintiff>s rights under the Temporary Occupation #icense. This is

contrary to rule D- of the #and The

agreement was unlawful and void under ".+D of the (ontracts Ordinance

as being of such a nature that, if permitted, would defeat the provisions of

any law.



8/14


INSTITUTE


CONTRACTS INVOLVING FRAUD AND CAUSING

INJURY TO PERSON OR PROPERTY OF ANOTHER

*at%+ ,agindar Singh v. -ara a"aratnam [198/]

*acts: The -st and +nd appellants, advocates and solicitors in 'ohore and the

Brd appellant, an advocate and solicitor in "ingapore, colluded to obtain

possession of the respondent>s property, some 1 acres of land in Aulai,

'ohore by fraud. The respondent>s brother in law owed the 8ong3ong and

"hanghai Can3 F-+-,G-0.G in overdraft facilities, with 'agindar and

"uppiah, the +nd appellant obtained the respondent>s land, paid the (hung

Ahiaw Can3 F 0+,.. The land was then transferred to "uppiah and -G

days later, "uppiah transferred it to /rul, the B rd appellant, in "ingapore on

0th /ugust -0H1. #ater, on instructions from 'agindar, /rul transferred it toa land development company almost wholly owned by 'agindar. The land

was eventually subdivided into H lots and sold to the public.

8eld: The appellants were guilty of fraud, breach of agreement and undue

influence and awarded damages to the respondent.



9/14


INSTITUTE


AGREEMENTS THAT ARE IMMORAL

0h -hevea v. Sia Ho+ Chai [199]

The plaintiff sued the defendant summarily for damages for

breach of promise to marry the plaintiff. The defendant denied

that he had promised to marry the plaintiff and even if he had,she 3new that he was a married man and thus the agreement is

immoral and against public policy.



10/14


INSTITUTE


CONSEUENCES OF ILLEGAL AGREEMENT

•eneral rule under contracts /ct -01 is that the courts willnot enforce an illegal contract.

• 8owever, !"#$%&' (( &) $*" C&'$+,#$! A#$ 1950 lays down

that when an agreement is discovered to be void or when acontract becomes void, the person who received any

advantage under such an agreement or contract is bound to

restore it to the other party or to pay ade=uate compensation

for the same 9


11/14


INSTITUTE


UI-

-. (ourt will not enforce an illegal contract 9True J *alse

+. /greements are voidable if any part of their considerations

and objects are unlawful 9True J *alse

B. ;hen an agreement is discovered to be void or when a

contract becomes void, the person who received any

advantage under such an agreement or contract has right of

restitution 9True J *alse

D. "ection +D of the (ontract /ct -01 provides that an

agreement which is unlawful is void 9True J *alse


12/14


INSTITUTE


(O7TI72?

1. The object or consideration of an agreement is lawfulunless if it falls within any subsection of section +D of

(ontract /ct -01 9True J *alse

@. "ection @@ of the (ontract /ct -01 provides for right ofrestitution 9True J *alse

H. (ourt will enforce an immoral agreement 9True J *alse



13/14


INSTITUTE


(O7TI72?

G. Celow are grounds that ma3e the consideration or object

of an agreement is unlawful "#"/$:

a. it is forbidden by law

b. it is of such a nature that, if permitted, it would defeat

any law

c. it is fraudulentd. the court regards it as moral

0. ?very valid agreement must has lawful object or lawful

consideration 9True J *alse

-. /ny agreement is voidable if is forbidden by law 9True J

*alse



14/14


INSTITUTE


E' &) !$&/%# 4 '"+ #*,/$"+ 2: 3, &)#&'$+,#$.

A'!"+ ,33 $*" "!$%&'! /+&6%" ,&6" ,' $*"'

/+"" %$* '"$ !$&/%# '"+ #*,/$"+ 2.T*,'7 8&

week 5 subtopic 4.ppt

Documents