1. VOIDABLE CONTRACT Section 2(i) a voidable contract :-
An agreement enforceable by law
At the option of one or more of the parties to it
But not others
It is initially valid but one or more of the parties to it have the right to rescind it to render it void. Until and unless this right of election is exercised, a voidable contract remains valid

2. What contracts are voidable?
Sec. 19(1) :
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was caused.

3. A contract is voidable:
When consent to an agreement is caused by coercion, fraud or misrepresentation
b) When consent to an agreement is caused by undue influence at the OPTION of the party whose consent was so caused

4. Why it is voidable?
Sec. 14: Consent is said to be free when it is not caused by -
Coercion – Sec. 15
Undue influence – Sec. 16
Fraud – Sec. 17
Misrepresentation – Sec. 18
Mistake – subject to Sec. 21,22 & 23

5. FREE
CONSENT T

6. Section 10
“All agreements are contracts if they are made by the Free consent…..”
Is the basis of a contractual relationship
The consent of the parties must be given freely and voluntarily

7. What is consent?
Section 13
“two or more persons are said to consent when they agree upon
the same thing in the same sense”

8. to be free when it is not caused by
What is free consent?
Coercion
MISTAKE
Section 14
FRAUD
Consent is said
to be free when it is not caused by
MISREPRESENTATION
UNDUE
INFLUENCE

9. (a) COERCION – SECTION 15
Committing or threatening to commit act forbidden by Penal Code.
Unlawful detaining or threatening to detain property, to the prejudice of any person.
With intention to cause the person enter into agreement.
Threaten to do something forbidden by the Penal Code so that Offeree enters into an agreement

10. Illustration to Sec.15
Kanhaya Lal v. National Bank Of India the court held that the definition of coercion in s.15 is limited to an unlawful act done ‘with the intention of causing the person to enter into an agreement

11. Effect of a contract entered into by coercion:
Section 19 When consent to an agreement is caused by coercion…… the agreement is a contract voidable at the option of the party whose consent was so caused

12. Kesarmal s/o Lethcman Das v Valiappa Chettiar
A transfer executed the orders of Sultan, issued in the ominous presence of 2 Japanese officers during the japanese occupation of Malaya, was invalid. The court held that consent was not freely given & the agreement was voidable at the option of the party whose consent was so caused.

13. Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & 4 Ors.
Barton v. Armstrong
Held: A deed executed under threat to kill was held to be void for duress.
Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & 4 Ors.

14. Remedies or effect of Coercion?
Can either proceed with the contract or rescind the contract. If choose to rescind the contract, must restore benefits obtained.

15. (b) UNDUE INFLUENCE – SECTION 16
It happens where one of the parties to a contract,
Entered into such contract
By influence
Of the other party who was able to influence

16. Section 16(1) Where the relations subsisting between the parties
One of the parties is in a position to dominate the will of the other
Uses that position to obtain an unfair advantage over the other.

17. S.16 – 2 ingredients to form undue influence :
relations subsisting between the parties
Domination of will by one party
Unfair advantage obtained due to domination of will

18. 1) Where a person holds a real or apparent authority over the other or
Sec. 16(2)(a)&(b):THREE (3) circumstances whereby a party is deemed to be in a position to dominate the will of another:-
1) Where a person holds a real or apparent authority over the other or
eg. A parent’s authority over a child.
illustration (a) to section 16

19. 2) Where one party stands in a fiduciary relation to the other
illustration (c) to section 16
eg. In the case of the confidential relationship between a solicitor & client, trustee & beneficiary, religious advisor & follower/diciple, doctor & patient

20. 3) Where a party makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental/bodily distress illustration (b) section 16

21. Cases : Salwath Haneem v Hadjee Abdullah
Datuk Jaginder Singh v Tara Rajaratnam
S.16(3) – agreement is unconscionable
Chait Singh v Budin b Abdullah
If there is domination of will but advice obtained from others, no undue influence. But advice must be independent & person giving advice must know all facts
Inche Noriah v Shaik Allie b Omar

22. EFFECT OF UNDUE INFLUENCE
Contract is voidable – s. 20
s. 65 – Can either proceed with the contract or rescind the contract. If choose to rescind the contract, must restore benefits obtained.

23. FRAUD

24. (c) FRAUD – SECTION 17
Includes certain acts which are committed with intent to induce another party to enter into a contract – with intent to deceive another party

25. S.17(a): when A suggests as to a fact which he knows not true.
(S. 17) - 5 acts which may constitute fraud:
S.17(a): when A suggests as to a fact which he knows not true.
S.17(b): when A made active concealment of fact he believes to be true.
S.17(c): when A made a promise w/o intention of performing it.
S.17(d): any other act fitted to deceive
S.17(e): any act/omission as the law specially declares to be fraudulent

26. DERRY v PEEK Court held that:
Fraud is proven when it is shown that false representation has been made either.
i) knowingly,
Ii) without belief in its truth, or
Iii)recklessly, careless whether it be true or false

27. Element s of fraud
False representation/statement made with the intention to deceive;
2) The representee must have relied on the representation in making decision to make a contract.

28. Cases Derry v Peek Weber v Brown Kheng Chwee Lian v Wong Tak Thong
Letchemy Arumugam v Annamalay
Effect of fraud : contract is voidable – s.19(1)
S.65

29. Does silence amount to fraud?
Gen. Rule: mere silence/non-disclosure would not constitute fraud.
Auth: Explanation to Sec. 17
Exceptions (mere silence constitute fraud):
The act of silence equivalent to speech that later found out to be untrue.
The contract is of uberrimae fide.

30. EFFECT of FRAUD
SECTION 19- VOIDABLE CONTRACT

31. (d) MISREPRESENTATION – SECTION 18
Is a false or untrue statement or representation made by the representor and by such statement the other party may be induced to enter into a contract.

32. Elements a) false or untrue representation
b) the representation must induce the misled party to enter into a contract
A person is said to to be induced if:-
a) the representation is material fact
b)the party to whom the statement was addressed believes that the misrepresentation to be true

33. DUTY OF MISLED PARTY TO EXERCISE DILEGENCE
The misrepresentation does not make
the contract voidable if the misled
party had the opportunity to investigate &
as the certain the truth of
representation
Exception to s.19
Case: Tan Chye Chew v Eastern Mining
Metals Co

34. Effect of the contract being entered due to misrepresentation
Voidable
However if the misled party chooses to
affirm the contract – he entitled to damages
S 19(2)

35. MISTAKE

36. MISTAKE Wrongful belief about certain matter while making a contract.
2 kinds of mistake:
Mutual mistake (both parties)
Unilateral mistake (one party )

37. MUTUAL MISTAKE (s.21)
Both parties made mistake i.e. Common/Mutual mistake
Mistake is of Fact Essential to Agreement
EFFECT: Contract is Void!

38. Mistake of fact essential to the agreement
a)Mistake as to the existence of subject matter of contract
both parties are unaware that the subject matter has ceased to exist. Illustartion (a) and (b) section 21
b) Mistake as to identity of the subject matter
Raffles v Wichelhaus
c) Mistake as to the possibility of performing the contract
Sheikh Brothers Ltd v Ochsner

39. EFFECT of MUTUAL MISTAKE
Agreement is VOID
Remedies under section 66

40. UNILATERAL MISTAKE (s.23)
Mistake of Fact
Made by One Party only or Unilateral mistake
Effect: Contract is Valid!
Tamplin v Janes

41. Case: L’Estrange v F Graucob (1934)
MISTAKE AS TO DOCUMENT
GENERAL RULE: Person is BOUND by the terms of the contract that he SIGNS
Case: L’Estrange v F Graucob (1934)
M’sian Case: Subramaniam v Retnam (1966)
EXCEPTIONS: plea of ‘non est factum’
because of mistaken belief as to: character & class of document

42. PLEA OF NON EST FACTUM Mistake caused by any one of the following:
Illiteracy
Blindness
Sensibility of the signor
Fraudulent conduct of the other party
Foster v Mackinnon (1869)
Awang b. Omar v Hj. Omar & Anor. [1949]

43. MISTAKE OF LAW
Mistake as to any law in force in M’sia – NOT VOIDABLE/VALID