Contract Law Principles Quiz
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Questions and Answers

In the case of Minister of Health v Bellot, the court ruled that reasonable notice is required before unilaterally terminating a contract, unless the contract specifically states otherwise.

True (A)

What is the legal principle that allows an innocent party to terminate a contract and claim damages when the other party fails to perform their obligations?

  • Rescission
  • Breach of Contract (correct)
  • Discharge by Agreement
  • Discharge by Performance
  • In the case of Re Krishnan Rengasamay, the court ruled that a contract is not discharged if performance is not completed within the stipulated time, unless ______ is of the essence.

    time

    What legal principle allows a contract to be rescinded if vacant possession is delayed?

    <p>Discharge by Performance, specifically Section 56(1) of the Contracts Act 1950, which states that if time is of the essence, delay allows the contract to be rescinded.</p> Signup and view all the answers

    Match the legal principles with their corresponding cases:

    <p>Discharge by Agreement = Minister of Health v Bellot Breach of Contract = Yong Mok Hin v United Malay States Sugar Industries Ltd Discharge by Performance = Re Krishnan Rengasamay, Ex P. Arab Malaysian Credit Bhd Rescission due to Delay = Gan Hwa Kian v Shencourt Sdn Bhd</p> Signup and view all the answers

    In which case did the court rule that a contract was lawfully rescinded due to significant delays in vacant possession?

    <p>Gan Hwa Kian v Shencourt Sdn Bhd (A)</p> Signup and view all the answers

    In the case of Yong Mok Hin v United Malay States Sugar Industries Ltd, the defendant was found liable for breach of contract and was ordered to pay damages.

    <p>True (A)</p> Signup and view all the answers

    Briefly describe the significance of Section 56(1) of the Contracts Act 1950.

    <p>Section 56(1) of the Contracts Act 1950 outlines the legal principle that delay can be a valid ground for terminating a contract when time is of the essence.</p> Signup and view all the answers

    In the case of Grant v Australian Knitting Mills, what was the key issue concerning the sale of goods?

    <p>Whether defective goods violate implied terms under the Sale of Goods Act. (D)</p> Signup and view all the answers

    In Tarling v Baxter, the buyer was responsible for the loss of the haystack because the risk of loss transferred to the buyer when the contract was formed.

    <p>True (A)</p> Signup and view all the answers

    What is the significance of the decision in David Jones v Willis regarding defective goods?

    <p>The case established that goods with hidden defects, like defective shoes in this case, are considered unmerchantable, making the seller liable for injuries caused by such defects.</p> Signup and view all the answers

    In the case of Teh Khem On & Ors v Wu Development Sdn Bhd & Ors, the court established that contractors have a legal duty to ensure ______ and ______ in construction.

    <p>proper materials, workmanship</p> Signup and view all the answers

    Match the following cases with their respective legal principles:

    <p>Grant v Australian Knitting Mills = Implied terms of fitness for purpose and merchantable quality David Jones v Willis = Hidden defects render goods unmerchantable Tarling v Baxter = Risk transfers at contract formation for specific goods Newtons Wembley Ltd v Williams = Buyer in possession can pass good title to a third party Teh Khem On &amp; Ors v Wu Development Sdn Bhd &amp; Ors = Contractor's duty to ensure proper materials and workmanship</p> Signup and view all the answers

    Which of the following cases involved the buyer's right to transfer ownership to a third party despite not fully paying for the goods?

    <p>Newtons Wembley Ltd v Williams (A)</p> Signup and view all the answers

    The cases discussed highlight that sellers are always liable for any injuries caused by defective goods, regardless of the circumstances.

    <p>False (B)</p> Signup and view all the answers

    What is the primary legal foundation for the contractor's duty to ensure proper materials and workmanship in construction, as established in Teh Khem On & Ors v Wu Development Sdn Bhd & Ors?

    <p>Common law principles</p> Signup and view all the answers

    What must a manufacturer ensure regarding its products?

    <p>That they are safe for consumers (C)</p> Signup and view all the answers

    A manufacturer is only liable if there is a direct contract with the consumer.

    <p>False (B)</p> Signup and view all the answers

    What is the test for establishing a duty of care in negligence claims?

    <p>Three-Stage Test</p> Signup and view all the answers

    In Blyth v Birmingham Waterworks Co, it was found that the event causing damage was __________ by a reasonable person.

    <p>unforeseeable</p> Signup and view all the answers

    Match the following cases with their primary findings:

    <p>Caparo Industries Plc v Dickman = Duty of care does not arise in all financial misstatement cases Wagon Mound = Test for remoteness of damage Blyth v Birmingham Waterworks Co = No negligence found due to unforeseeable events Ginger Beer Case = Manufacturers owe a duty of care to consumers</p> Signup and view all the answers

    What does the remoteness of damage test in negligence claims determine?

    <p>Whether damages are recoverable based on foreseeability (C)</p> Signup and view all the answers

    A duty of care can be established if a reasonable person could foresee harm.

    <p>True (A)</p> Signup and view all the answers

    What was the primary reason the court ruled in favor of the defendant in Blyth v Birmingham Waterworks Co?

    <p>The event was unforeseeable.</p> Signup and view all the answers

    What is the primary legal principle regarding longstanding activities and nuisance claims?

    <p>Longstanding activities can still face nuisance claims if new harm arises. (C)</p> Signup and view all the answers

    Public nuisance only affects individuals, not communities.

    <p>False (B)</p> Signup and view all the answers

    What may allow a court to dismiss a nuisance claim despite a disturbance?

    <p>Public benefit outweighing individual inconvenience</p> Signup and view all the answers

    Residents sued the local council for excessive noise, constituting a public ______.

    <p>nuisance</p> Signup and view all the answers

    Match the cases to their respective conclusions:

    <p>Sturges v Bridgman = Longstanding use does not prevent a nuisance claim if new harm arises. Majlis Perbandaran Pulau Pinang v Boey Siew Than &amp; Ors = Actions disturbing a large section of the community are public nuisances. Perbadanan Pengurusan Taman Bukit Jambul v Kerajaan Malaysia = Public interest may override minor nuisance claims.</p> Signup and view all the answers

    In the case of the oil leak in Sydney Harbour, why was the defendant not held liable for the fire damage?

    <p>The fire was not a foreseeable consequence of the oil spill. (A)</p> Signup and view all the answers

    In Barnet v Chelsea & Kensington Hospital, the hospital was found liable for the patient's death.

    <p>False (B)</p> Signup and view all the answers

    What test is used in negligence cases to determine causation in fact?

    <p>but for test</p> Signup and view all the answers

    Secondary victims must prove __________ in order to claim for psychiatric harm.

    <p>proximity</p> Signup and view all the answers

    In the Hillsborough disaster case, how did the court rule regarding claims from relatives of the victims?

    <p>They were not able to claim due to insufficient proximity. (C)</p> Signup and view all the answers

    The government has a duty of care regarding the actions of third parties.

    <p>True (A)</p> Signup and view all the answers

    What did the court conclude in Home Office v Dorset Yacht Co Ltd regarding government negligence?

    <p>The government was liable for the damage caused by juvenile offenders.</p> Signup and view all the answers

    Match the following terms with their definitions:

    <p>Causation in Fact = Determining if harm would have occurred but for the defendant's actions Primary Victims = Individuals directly involved in an incident Secondary Victims = Witnesses who may claim psychiatric harm Duty of Care = Obligation to prevent harm to others under specific circumstances</p> Signup and view all the answers

    What was the main issue in the case of Bilung Han Enterprise Sdn Bhd v Mohd Nor Bin Abd Rahman?

    <p>No notice was provided for termination. (C)</p> Signup and view all the answers

    A principal can terminate a fixed-term agency contract at any time without any consequences.

    <p>False (B)</p> Signup and view all the answers

    What is required for the termination of an agency agreement for a fixed term?

    <p>reasonable notice</p> Signup and view all the answers

    In Sohrabji Dhunji Medora v Oriental Govt. Security Life Assurance Co. Ltd, ___ months' notice was deemed unreasonable for terminating a decades-long agency.

    <p>3.5</p> Signup and view all the answers

    Match the following cases with their outcomes:

    <p>Bilung Han Enterprise Sdn Bhd v Mohd Nor Bin Abd Rahman = Termination was invalid, principal liable for damages Merbok Hilir Berhad v Sheikh Khaled Jassem Mohammad = Agent entitled to damages for unjust termination Sohrabji Dhunji Medora v Oriental Govt. Security Life Assurance Co. Ltd = Termination with insufficient notice deemed wrongful</p> Signup and view all the answers

    Under what condition can a principal terminate an agency agreement for a fixed term without liability?

    <p>By providing reasonable notice (C)</p> Signup and view all the answers

    The court ruled that a termination notice of 2 years would be excessive for a long-term agency relationship.

    <p>False (B)</p> Signup and view all the answers

    What doctrine requires courts to consider the length of the agency relationship when deciding on reasonable notice?

    <p>Reasonable Notice Doctrine</p> Signup and view all the answers

    Flashcards

    Fitness for Purpose

    Goods must be fit for their intended use according to SOGA.

    Merchantable Quality

    Goods must be of merchantable quality and safe to use under SOGA.

    Liability for Defective Goods

    Sellers are liable for damages caused by defective goods.

    Risk Transfer

    Risk transfers at ownership transfer, regardless of delivery status.

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    Legal Title Transfer

    A buyer in possession with consent can transfer ownership.

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    Contractor's Duty

    Contractors must use proper materials and workmanship in construction.

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    SOGA Sections 16 and 20

    Sections outlining the requirements for goods and risk transfer.

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    Damages for Defects

    Buyers can recover damages for injuries from defective goods.

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    Duty of Care

    Manufacturers must ensure product safety for consumers, even without a contract.

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    Blyth v Birmingham Waterworks Co

    Case ruling that no negligence occurred as harm was unforeseeable.

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    Negligence Definition

    Failing to act as a reasonable person would, causing harm.

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    Three-Stage Test for Duty of Care

    1. Foreseeability 2. Proximity 3. Fairness, Justice, Reasonableness.
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    Caparo Industries Plc v Dickman

    Case where duty of care was not owed in financial misstatements.

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    Remoteness of Damage Test

    Liability is limited to reasonably foreseeable damages.

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    Foreseeability

    Was the damage something a reasonable person could predict?

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    Proximity

    The closeness of the relationship between parties in negligence claims.

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    Termination Notice

    A written notice required to terminate an agency contract.

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    Reasonable Notice Doctrine

    A legal principle requiring reasonable notice before termination.

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    Fixed-Term Contract

    An agency contract that has a specified end date.

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    Sufficient Cause

    A valid reason required to terminate a fixed-term contract.

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    Court Ruling

    Legal decisions made by a court related to contract disputes.

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    Compensation for Damages

    Payment required to rectify loss from premature contract termination.

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    Length of Relationship

    A factor influencing the reasonableness of termination notice.

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    Agency Agreement Duration

    The time period specified in an agency contract.

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    Causation in Negligence

    Requires proving that the breach caused the damage; includes 'but for' test.

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    Causation in Fact

    The 'but for' test determines actual causation.

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    Causation in Law

    A claim fails if the harm would have occurred anyway, regardless of negligence.

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    Primary vs. Secondary Victims

    Primary victims can claim, secondary victims need proximity proof.

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    Psychiatric Harm Claims

    Secondary victims must prove close proximity to establish claims for harm.

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    Liability for Third-Party Actions

    Government may owe duty of care for actions of third parties under their control.

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    Reasonable Notice

    A contractual requirement to inform a party before termination.

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    Discharge by Agreement

    A contract can be ended if both parties consent or reasonable notice is given by one.

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    Breach of Contract

    Failure of one party to fulfill a contractual obligation, allowing termination by the other party.

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    Claiming Damages

    The right of an innocent party to seek compensation after lawful termination due to breach.

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    Time of Performance

    The contractual requirement that obligations must be fulfilled on schedule, as stated in law.

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    Voidable Contract

    A contract that may be made void if time-critical performances are not completed on time.

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    Discharge by Performance

    A contract is fulfilled when all parties meet their obligations.

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    Rescinding a Contract

    Legally canceling a contract due to significant delays in performance or terms.

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    Sturges v Bridgman

    A case ruling that nuisance claims can arise from long-standing activities if harm affects new parties.

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    Public Nuisance

    A type of nuisance that impacts the comfort of a large group of people.

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    Public Benefit Defense

    A legal principle allowing dismissal of nuisance claims for greater public benefit.

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    Nuisance Claim Timeliness

    Long-term activities don’t automatically exempt from nuisance claims if new harm occurs.

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    Community Impact on Nuisance

    Actions causing disturbance to a large community can be classified as public nuisances.

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    Study Notes

    ILAC Method

    • Identifies the legal question
    • Specifies relevant legal principles/statutes
    • Applies the law to specific case facts
    • Determines final judgment/principle

    Carlill v Carbolic Smoke Ball Co [1893]

    • Issue: Was an advertisement promising a reward binding?
    • Law: Advertisements are usually invitations to treat, not offers. Unilateral contracts can be formed if performance is completed in accordance with the offer.
    • Application: The company advertised a reward. Carlill used the smoke ball and still got the flu.
    • Conclusion: The advertisement was a valid unilateral offer, accepted by performance.

    Young v Bristol Aeroplane Co Ltd [1944]

    • Issue: Is the Court of Appeal bound by its previous decisions?
    • Law: Courts must follow previous decisions (stare decisis) unless a previous case was decided wrongly (per incuriam), higher court overrules past judgments or previous decisions conflicted.
    • Application: The Court of Appeal had different past decisions on the matter.
    • Conclusion: The Court of Appeal is bound by its previous decisions, except for special situations.

    Hendry v De Cruz [1949]

    • Issue: Does stare decisis apply in Malaysia?
    • Law: Malaysian Courts follow English legal principles, based on Civil Law Act 1956, and consider Stare Decisis.
    • Application: The Malaysian courts followed the case of Young v Bristol Aeroplane Co Ltd on Stare Decisis.
    • Conclusion: Stare Decisis applies in Malaysia. Lower courts must follow higher court decisions.

    Gibson v Manchester City Council [1979]

    • Issue: Does a statement of "may be prepared to sell" constitute a valid offer?
    • Law: An offer is clear, definite and shows an intent to be legally bound. An invitation to treat is an invitation to negotiate.
    • Application: The council stated they "may be prepared to sell" the property. Gibson made an offer to buy based on this.
    • Conclusion: The statement was an invitation to treat, so no legally binding offer was made.

    Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953]

    • Issue: Does displaying goods on shelves in a self-service store constitute an offer?
    • Law: Goods displayed on shelves are generally invitations to treat, and the customer makes the offer when presenting items at the cashier.
    • Application: Boots displayed drugs on shelves, and a customer picked up the drug.
    • Conclusion: Goods on display are invitations to treat, not offers. Contract forms at cashier.

    Hyde v Wrench [1840]

    • Issue: Does a counteroffer cancel the original offer?
    • Law: A counteroffer cancels the original offer and cannot be revived.
    • Application: Wrench offered land for £1000. Hyde counteroffered £950, which was rejected. Hyde then tried to accept the original offer.
    • Conclusion: Hyde's counteroffer canceled Wrench's offer.

    Adams v Lindsell (1818)

    • Issue: When is acceptance of an offer effective?
    • Law: Acceptance is effective when posted, not when received (postal rule).
    • Application: Lindsell offered to sell wool to Adams. Adams posted acceptance, but Lindsell sold to someone else.
    • Conclusion: Acceptance was valid when Adams posted.

    Felthouse v Bindley (1862)

    • Issue: Can silence amount to acceptance?
    • Law: Silence does not constitute acceptance. Contracts require clear acceptance.
    • Application: Felthouse offered to buy a horse, stating "If I hear no more, I will assume it is mine." Bindley sold the horse.
    • Conclusion: Silence is not acceptance.

    Phiong Khon v Chonh Chai Fah [1970]

    • Issue: Is lacking certainty in an agreement a valid binding contract?
    • Law: Contracts must have clear and definite terms for a valid contract. Intention to create legal relations is essential.
    • Application: The agreement's vague terms about price and performance made it unclear.
    • Conclusion: The agreement could not be enforced due to lacking certainty.

    Balfour v Balfour [1919]

    • Issue: Can domestic agreements be legally enforceable?
    • Law: There is a presumption against the intention to create legal relations in domestic agreements.
    • Application: A husband promised to pay an allowance to his wife.
    • Conclusion: The agreement was not legally binding, as the parties didn't intend it to be legally enforceable.

    Merritt v Merritt [1970]

    • Issue: Can a written agreement between separated couples be legally binding?
    • Law: There is a presumption that separated couples have the intention to create legal relations if they enter into a written agreement.
    • Application: A couple created a written agreement regarding the division of a house.
    • Conclusion: The agreement was legally binding due to the written nature and intent of the separated parties.

    Jones v Padavatton [1969]

    • Issue: Are family agreements enforceable as contracts?
    • Law: Family agreements often lack the necessary legal intent to be binding.
    • Application: A mother promised to support her daughter if she studied law.
    • Conclusion: The agreement was not legally binding, as it was a family agreement lacking the intention to create legal relations.

    Kesarmal v Valiappa Chettiar [1954]

    • Issue: Does a contract signed under coercion make it voidable?
    • Law: Contracts entered into under coercion are voidable under Malaysian law.
    • Application: The plaintiff transferred land under pressure and threats.
    • Conclusion: The contract was voidable due to coercion.

    Chin Nam Bee Development Sdn Bhd v Tai Kim Choo [1988]

    • Issue: Can economic pressure be considered coercion?
    • Law: Coercion requires more than just economic duress; physical threats or harm are needed. However, it is not necessary to prove economic duress for pressure
    • Application: The claimant paid additional sum under pressure.
    • Conclusion: Economic pressure alone does not constitute coercion.

    Derry v Peek [1889]

    • Issue: Does fraudulent misrepresentation make a contract voidable?
    • Law: Fraud occurs when false statements are made knowingly or recklessly.
    • Application: A company misrepresented its ability to use steam-powered trams.
    • Conclusion: No fraud was found; the claim was dismissed.

    Raffles v Wichelhaus (1864)

    • Issue: Does mutual mistake void a contract?
    • Law: Mutual mistake about essential contract terms makes a contract void.
    • Application: Parties used the same ship name with different meanings.
    • Conclusion: Contract was void due to fundamental mutual mistake.

    Cundy v Lindsay (1878)

    • Issue: Does mistaken identity void a contract?
    • Law: A contract based on a fraudulent misrepresentation of identity is void.
    • Application: A fraudster impersonated a company and bought goods.
    • Conclusion: Contract was void due to a mistaken identity.

    Dunlop Pneumatic Tyre Co Ltd v Selfridge [1915]

    • Issue: Can a third party enforce a contract they were not a party to?
    • Law: The doctrine of privity of contract states a contract can only be enforced by the parties who entered into it.
    • Application: Dunlop sold tyres to a distributor who then sold them to Selfridges below the agreed price.
    • Conclusion: Dunlop could not enforce the price restriction against Selfridges because they were not party.

    Currie v Misa (1875)

    • Issue: Is consideration necessary for a contract to be legally binding?
    • Law: Consideration must be present to enforce a contract; either a benefit to the promisor or a detriment to the promisee.
    • Application: Misa failed to honour a bill of exchange.
    • Conclusion: Consideration is essential for enforcement of a contract.

    Carlill v Carbolic Smoke Ball Co [1893]

    • Issue: Can an advertisement be considered a legally binding unilateral contract?
    • Law: Unilateral contracts form through an offer to perform, rather than communication.
    • Application: Carlill used the product and claimed the reward.
    • Conclusion: The advertisement was a legally enforceable unilateral offer, valid upon performance.

    Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]

    Issue: Is displaying goods on shelves an offer? Law: Goods on display in a shop, or a self-service store, is an invitation to treat. Application: Boots displayed drugs on shelves, customer picked up a drug. Conclusion: Goods on display is an invitation to treat, and not an offer, the contract is made at the cashier.

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