Void and Illegal Contract -Final

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VOID AND ILLEGAL CONTRACT Section 24, Contract Act 1950 GROUP MEMBERS ALIF AZLAN BENJAMIN BIN IDRIS GM 05293 DOH SIEW FONG GM 05290 DZULPADZLI BIN SHA’ARIN GM05250 MOHD ZAHILE BIN ISMAIL GM 05234 NUR SYAZANA BINTI ZULKIFLI GM 05285

Transcript of Void and Illegal Contract -Final

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VOID AND ILLEGAL CONTRACTSection 24, Contract Act 1950

GROUP MEMBERS

ALIF AZLAN BENJAMIN BIN IDRIS GM 05293

DOH SIEW FONG GM 05290

DZULPADZLI BIN SHA’ARIN GM05250

MOHD ZAHILE BIN ISMAIL GM 05234

NUR SYAZANA BINTI ZULKIFLI GM 05285

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Introduction• Section 24 of Malaysian Contract Act 1950 deals with What considerations and object are lawful, and what not Void Agreements

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Section 24, Contracts Act 1950

The  consideration or object of  an agreement  is lawful, unless: 

( c )  it is fraudulent;( d )  involved or implied contract  injurious to person

or property of another; or ( e )  court regards it as immoral, or opposed to public

policy.

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S24 (c) fraudulent contract• An object and consideration of a contract is fraudulent.

• This is different with fraudulent misrepresentation where one is fraudulently induced by another party to enter into contract

• Illustration (e) Section 24:A, B and C enter into an agreement for the division among them of gains acquired, or to be acquired, by them by fraud. The agreement is void, as its object is unlawful.

• Example:Relationship between Principal & agent• if A (the agent) without knowledge of his Principal agrees to obtain

money from B’s lease of the land that belongs to his Principal.• The agent is unlawfully receiving a secret profit.

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S24 (d) involves or implies injuries to person or property of another

• Any contract which its consideration or objects causes injury to person or property of another is VOID under contract

CASE Syed Ahamed Alhabsyee v. Puteh bt Sabtu (1922)

ISSUE Defendant as a trustee of a piece of land which belonging to a minor. In this case, defendant agreed to sell the land to plaintiff. 

COURT’S DECISION The  transaction was VOID,  due  to  the defendant action would affect the interest of minor (minor would lost a piece of land)

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CASE Taylor v. Bowers(1876)

ISSUE The plaintiff was being pressed by his creditors, to prevent certin machinery  from  falling  into  their  hands,  he  trasferred  it  to  one Alcock.

He then called two meetings of creditors in an attempt to reach a settlement with them, but none was reach. 

The  plaintiff  successfully  claimed  back  the  machinery  from defendant, who was one of  the creditors  and had obtained  the machinery from Alcock with notice of the fraudulent scheme and in the hope of benefiting from it.

COURT’S DECISION The decision based on  the  fact  that  the  illegal  purpose had not been carried out. No creditor had been defraud.

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S24 (e) immoral or against public policy

• Any  contract  which  its  consideration  or  object  is  regarded  as  immoral or opposed to public policy is VOID under the law

Section 24 illlustration (j) Immoral Contract• A, who is B’s advocate, promises to exercise his influence, as such, with B  in 

favour  of C,  and C  promises  to  pay  RM1,000  to A.  The  agreement  is  void, because it is immoral.

Section 24 illustration (k) Immoral Contract• A  agrees  to  let  her  daughter  to  hire B for  concubinage.  The  agreement  is 

void, because it is immoral, though the letting may not be punishable under the Penal Code.

CASE Aroomogum Chitty v. Lim Ah Hang (1894)ISSUE The plaintiff initiated a claim for the refund of money he lent to a 

brothel business.

COURT’S DECISION The  money  lent  for  the  purpose  of  brothel  business  was  not recoverable for illegality. The object of the agreement was clearly immoral and against the public policy.

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CASE The Aspinall Curzon Ltd V. Khoo Teng Hock (1991)ISSUE The  plaintiff  had  taken  out  an  action  against  the  defendant  in 

the English High courts for unpaid gambling debts and obtained a judgment. The plaintiff then applied to proceed to registration of the judgment in Malaysia’s High Court, when was resisted by the  defendant  on  the  grounds  that  gambling  debts  are  not recoverable under Malaysian contract law.

COURT’S DECISION Dismissing the defendant’s appeal : (1) had the contract been entered in this country it had been so 

executed with lawful consideration, and section 24 of the Contracts Act 1950 cannot apply to make it void; 

(2) the chequeus were issued in exchange for cash and gaming chips for purposes of gaming at a licensed gaming casino. The enforcement of the UK judgment cannot be considered as against the public policy of Malaysia.

Section 24 illustration (f) Against Public PolicyA promises to obtain  for B an employment  in the public service, and B promises  to pay RM1,000 to A. The agreement is void, as the consideration for it is unlawful.

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CASE Malaysia Airline System Bhd v. Malini Nathan & Anor

ISSUE The respondents booked and had confirmed tickets to fly on the appellant's  airline  on  a  scheduled  date.  As  the  flight  was  fully booked,  the  appellant  was  unable  to  accommodate the respondents  on  the  said  flight.  The  respondents  sued the appellant for damages. The appellant relied on condition 9 of the conditions of contract printed on the airline ticket. 

COURT’S DECISION The appellant was entitled to rely on the said condition and was thus not in breach of contract for failing to fly the respondents on the  appellant's  airline.  In  arriving  at  the  decision,  the  court considered  that  'the  plaintiffs  ought  to  have  known  condition  9 and  they were presumed  to have known  it as  it was printed on the ticket. 

Exemption Clause!

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ConclusionContracts or agreements will be considered as VOID if:

( c )  it is fraudulent;( d )  involved or implied contract injurious to person or property of another; or

- Syed Ahamed Alhabsyee v. Puteh bt Sabtu (1922)- Taylor v. Bowers(1876)

 ( e )  court regards it as immoral, or opposed to public policy.

- Aroomogum Chitty v. Lim Ah Hang (1894)- The Aspinall Curzon Ltd V. Khoo Teng Hock (1991)- Malaysia Airline System Bhd v. Malini Nathan & Anor

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Condition 9