1. Voidable contract

2. intro
By virtue of S 2(h) of the CA 1950, contracts are defined as agreements enforceable by law, however with the presence of vitiating factor, it will have an impact on the enforceability of the said agreement

3. Vitiating factor Duress Undue influence Misrepresentation Mistake
Fraud
Mistake
Misrepresentation

4. Definition
S. 2(i)- voidable contract as an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others.
It is an enforceable contract until it is set aside by one party of the contract.

5. Section 10 (1)
All agreements are contract if they are made by the free consent of parties….
Section 13
Consent means freedom to contract, mutual assent as well as consensus ad idem in relation to terms agreed upon by parties in a contract.

6. Section 14 - consent is free if it is not caused by:
1.Coercian – sect Undue influence – sect Fraud – sect Misrepresentation – sect Mistake – sect. 21, 22, 23

7. 1.coercion Definition- S. 15 Committing any act 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

8. Consequence of a contract entered by coercion
voidable at the option of the party whose consent was so caused
(S. 19)
a person to whom money has been paid or anything delivered under coercion must repay or return it
(S. 73)

9. Kesarmal a/l Letchumanan Das lwn. Valiappa Chettiar (1954)20 MLJ 119
Cases
Kesarmal a/l Letchumanan Das lwn. Valiappa Chettiar
(1954)20 MLJ 119
Chin Nam Bee Development Sdn. Bhd lwn. Tai Kim Chook & 4 YL
(1988)2 MLJ 117

10. 2. Undue influence
Definition
S. 16(1)
One of the parties is in a position to dominate the will of the other
2) Uses that position to obtain an unfair advantage over the other

11. Who is deemed to be in a position to dominate the will another
Holds a real or apparent authority over the other
Stands in a fiduciary relation to the other
Contract with a person whose mental capacity is affected

12. Egs.
Employer and employee
Parents and children
Doctor and patient
Lawyers and client
Religious adviser and follower

13. Salwath Haneem v Hadjee Abdullah (1894)2 SSLR 57
Malaysian French Bank Bhd v Abdullah bin Mohd Yusof & Ors (1991)2 MLJ 475
Che Som bte Yip & Ors v Maha Pte Ltd & Ors (1989) 3 MLJ 468

14. Sect. 16(3) – Burden of proof
The burden of proving shall lie upon the person in a position to dominate the will of the other
Inche Noriah v Shaik Allie B. Omar (1929)AC 127

15. Consequence of a contract entered by undue influence
Section 20
Section 66 – the person who received any advantage under such agreement or contract is bound to restore it to other party or to pay adequate compensation for it, to the person from whom he receives it

16. 3. Fraud
When one party commits certain acts with intent to deceive or induce another party to enter into a contract.
S. 17- lays down 5 different acts which may constitute fraud.

17. Fraudulent action
1. Suggest a fact which is not true by one who does not believe it to be true. Case: Weber v Brown 2. The active concealment (hiding) of a fact by one having knowledge or belief of the fact 3. A promise made without any intention of performing it 4. Any other act fitted to deceive; and 5. Any such act or omission as the law specially declares to be fraudulent

18. Is silence a fraud? Sect. 17 Explanation
General rule- mere silence does not constitute fraud
Exception- silence is fraud if
it is the duty of the person keeping silence to speak ; or
His silence is in itself equivalent to speech
See illustrations

19. Effect for an agreement when consent is caused by fraud
S. 19- voidable at the option of the party whose consent was so caused
Exception to s Fraud by silence- the duty of the misled party to exercise ordinary diligence.
Tan Chye Chew & SL lwn. Eastern Mining & Metal Co. Ltd

20. 4. Misrepresentation S.18- misrepresentation includes
1)The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true
2)Any breach of duty which, without an intent to deceive, gives an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him

21. 3) causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement

22. What is the difference between fraud and misrepresentation
Fraud – there is intention to deceive Misrepresentation – there is no intention to deceive

23. Misrepresentation The representation must be one of fact
Mere expression of opinion or a statement of law is not a representation of fact

24. Misrepresentation
The statement was addressed to the party which acted upon it
The representation must induce the contract
See explanation sect. 19 & illustration (b)

25. Misrepresentation Duty of misled party to exercise ordinary diligence
Exception to S. 19

26. 5. MISTAKE By both parties By one party only (s.23)
Mistake as to law (s. 22)

27. MISTAKE MADE BY BOTH PARTIES (s.21)
both parties are under a mistake as to a matter of fact essential to the agreement.
an erroneous opinion as to the value of a thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.
effect- void agreement

28. Example:
Raffles v. Wichelhause
Couturier v. Hastie

29. MISTAKE MADE BY ONE PARTY (s. 23)
contract is not voidable
Tamplin v. James

30. mistake as to any law in force in Malaysia- not voidable
MISTAKE AS TO LAW (S.22)
mistake as to any law in force in Malaysia- not voidable
mistake as to any law not in force in Malaysia- same effect as a mistake of fact - voidable

31. Effect of voidable contract caused by mistake