4 Contract IV - Commented
4 Contract IV - Commented
4 Contract IV - Commented
COERCION
What is Coercion?
(Section 15 of the Contracts Act 1950)
Coercion is:
- Committing or threatening to commit any act forbidden by
Penal Code for example A threatens to kill B if B does not
want to enter into a contract with him.
- Unlawful detaining or threatening to detain any property for
example A detained B's car until he is agreeable to enter into
a contract with him..
The person committed the act with the intention of causing any
person to enter into a contract.
It was held that the Appellant and the Respondent were in solicitor client
relationship. The transaction was unconscionable, and therefore the
burden was on the Appelant to rebut the presumption on undue influence .
Since the Appelant had not discharged the burden , the contract of
transferring the Respondents landto the Appelant was set aside.
FRAUD
What is Fraud ?
Refer to Section 17 of the Contracts act 1950
For example :
the suggestion, as to fact, which is not true and he himself knows
that it is not true. For example A knows the fact that the earring is
not made of gold but he told B that it is made of gold and sold it to
B according to the price of gold earring;
the active concealment of certain facts. Section 17 further explained
that mere silence likely to affect the willingness of a person to enter
into a contract is not fraud, unless the circumstances of case are
such that there is a duty of a person keeping silence to speak but he
does not speak (his silence amount to speech) then it is fraud.
For example if B says to A "If you do not deny it, I shall
assume that the horse is sound;" A says nothing. Here, A's
silence amount to speech. That means it an active concealment
of certain facts on part of A;
What is a Misrepresentation ?
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TYPES OF CONTRACT
Valid contract;
Void contract; and
Voidable contract.
1. VALID CONTRACT
When all elements of contract are fulfilled the parties can enforce the
contract in the court of law in the event of breach.
2. VOID CONTRACT
Court will not give its assistance for the enforcement of a void contract.
What is void contract? The contract is void when the consideration or
object of the agreement is unlawful or illegal.
Section 24 of the Contracts Act 1950
The circumstances where consideration or object of the agreement is
unlawful are that shall render the contract as void:
a.
it is forbidden by law;
b.
if permitted, it would defeat the law;
C.
it is fraudulent;
d.
involves or implies injury to the person or property of
another; or
e.
it is immoral or against the public policy.
Effects of Void Contract
The court will not enforce a void contract based on the maxim of ex turpi
non oritur action that is the court will not enforce an illegal contract .
Section 24 of the Act provides that an agreement which is unlawful is void
and Section 2 (g) provides that such an agreement is not enforceable by
law.
However , under Section 66 of the Contracts Act provides that when an
agreement is discovered to be void or when a contract becomes void , the
person who receives any advantage under such agreement any person
who has received any advantage under the contract is bound to restore or
make compensation for it to the person from the person whom he
received it.
In other words, Section 66 provides for the right of restitution.
3. VOIDABLE CONTRACT
Section 2(i) of the Contracts Act
Voidable is defined as an agreement which is enforceable by law at the
option of one party but not at the option of the other.
Therefore, one of the parties given a choice either to continue the contract
or to discontinue with the contract.
The agreement is valid and binding , until the party who is entitled to
rescind the contract chooses to rescind it.
hat party choose to rescind , then the contract is no longer valid and
binding upon the parties.
DISCHARGE OF CONTRACT
Once a contract had been formed both parties will be obliged to uphold
what they have promised to do under the contract. The contract shall
come to an end, which is known as discharge of contract. Upon
discharged of contract both parties will be released from further obligation
arising from the contract.
Thus, when a contract is discharged , it is actually terminated. Once a
contract is discharged the contracting parties are free from further
obligations under the contract.
There are four ways to discharge a contract:
1. by performance of the contract ;
2. by consent or mutual agreement between the parties to the
contract;
3. by impossibility of performance / frustration;
4. by breach of contract by one of the parties.
DISCHARGE BY PERFORMANCE
When the parties have performed their contracts, by carrying out their
promises under the contract , there is a complete discharge of the
contract.
If only one of the parties has performed his part under the contract, he
alone will be discharged from the contract. The other party is still bound to
the contract until he performs his promise under the contract.
a ) Time For Performance
What happens to the contract if it is not performed according to the time
and place that have been agreed ? The contract is voidable at the option
of the promisee.
Refer to
DISCHARGE BY FRUSTRATION
A contract is said to be frustrated, a special case to discharge a contract,
after the formation it is impossible or unlawful to perform the contract.
Thus , it may happen in 2 situations :
1.
2.
TAYLOR V CALDWELL
1.
(Destruction of the subject matter of the contract )
KRELL V HENRY
2.
(supervening events defeat the whole purpose of the contract )
LEE KIN V CHAN SUAN ENG
3.
(supervening illegality discharges a contract There is a change in
law which makes the contract becomes unlawful if it is performed )
4.
Effect :
When a contract is discharge by frustration , the contract is automatically
void.
(Refer to Section 66 of the Contracts Act 1950 )
When an agreement or contract is discovered to be void , any person
who has received any advantage under the agreement or contract is
bound to restore it , or to make compensation to it, to the person from
whom he received it.
DISCHARGE BY BREACH
Section 40 of the Contracts Act