Law of Contract: Free Consent

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Questions and Answers

Which of the following is NOT an example of coercion as stated in the provided content?

Unlawfully detaining property

Offering an incentive for a contract (correct)

Threatening an individual’s property

Threatening to harm the plaintiff's family member

In the case of Kesarmal s/o Letchumanan Das v Valiappa Chettiar, why was the property transfer considered invalid?

The consent was not freely given. (correct)

The sale price was inadequate.

The transfer occurred outside legal hours.

The documents were not properly executed.

What legal remedy allows the innocent party to set aside a contract due to coercion?

Specific performance

Reformation of contract

Compensation for losses

Rescission of contract (correct)

According to the scope of coercion, which of the following is a permissible application of coercion?

Threatening the plaintiff’s life Signup and view all the answers

What was the consequence of the respondents being coerced to pay an additional RM4,000 in Chin Nam Bee Development Sdn Bhd v Tan Kim Choo?

They could recover the coerced payment. Signup and view all the answers

What is necessary for an agreement to be considered a binding contract?

Free consent from parties Signup and view all the answers

Which of the following indicates that consent is not free?

Threat of harm if not complied Signup and view all the answers

Which of the following describes a void contract?

Not enforceable by law Signup and view all the answers

What is a characteristic of a voidable contract?

Valid until it is repudiated by one party Signup and view all the answers

Under which circumstances can a contract become voidable?

When consent is caused by misrepresentation Signup and view all the answers

Which of the following actions constitutes coercion?

Threatening to expose personal secrets Signup and view all the answers

According to Section 19(1) of the Contracts Act, when can an agreement be considered voidable?

If consent was caused by coercion, fraud, or misrepresentation Signup and view all the answers

What is defined as coercion under Section 15 of the Contracts Act?

Committing an act forbidden by the Penal Code Signup and view all the answers

Which of the following scenarios exemplifies coercion as defined in the content?

Threatening a person with harm to force them into a contract. Signup and view all the answers

What remedy allows the injured party to regain their original position after a contract is rescinded due to coercion?

Restitution Signup and view all the answers

In the case of Chin Nam Bee Development Sdn Bhd v Tan Kim Choo, which action was taken by the court regarding the additional payment?

The court ruled that the payment was made under coercion, allowing recovery. Signup and view all the answers

Which of the following is NOT a situation that coercion applies to, as outlined in the content?

The financial state of the plaintiff. Signup and view all the answers

What was determined regarding the consent in the case of Kesarmal s/o Letchumanan Das v Valiappa Chettiar?

Consent was not freely given, making the transfer voidable. Signup and view all the answers

What is a necessary condition for free consent in a contract?

The parties must have the same understanding of the contract. Signup and view all the answers

When is consent considered not free according to the Contracts Act?

When coercion is involved. Signup and view all the answers

What distinguishes a void contract from a voidable contract?

A void contract is never enforceable, while a voidable contract can be enforced at the option of one party. Signup and view all the answers

What is the effect of coercion on a contract?

The contract becomes voidable at the option of the coerced party. Signup and view all the answers

Which section of the Contracts Act addresses void contracts?

Section 2(g) Signup and view all the answers

What is the definition of undue influence in the context of free consent?

Exploiting a position of power to influence someone's decision. Signup and view all the answers

Which of the following can make a contract voidable?

Consent obtained through misrepresentation. Signup and view all the answers

Which of the following statements is true about free consent?

It is essential for a contract to be valid and enforceable. Signup and view all the answers

Study Notes

Free consent is the foundation of a contractual relationship.
Consensus ad idem (meeting of the minds) is essential; both parties must agree on the same thing in the same sense.
Parties must be competent (legally able) to enter a contract.

Statutory Provisions

Section 10 of the Contracts Act 1950: All agreements are contracts if made with the free consent of competent parties.
Section 13 of the Contracts Act 1950: Two or more persons consent when they agree on the same thing in the same sense.

Section 14 of the Contracts Act 1950

Consent is free when it's not induced by coercion, undue influence, fraud, misrepresentation, or mistake.

Effect on Contract

A contract lacking free consent can be void or voidable.
It is unfair to hold someone liable for a contract they didn't freely consent to.

Void Contract

Section 2(g) of the Contracts Act 1950 defines a void contract as one not enforceable by law.
A void contract is essentially nonexistent.
If a contract becomes void, further action is not possible.

Voidable Contract

Section 2(i) of the Contracts Act 1950 defines a voidable contract; it's enforceable at the option of one or more parties, but not at the option of others.
Voidable contracts remain valid until one party chooses to repudiate (cancel) it.

Effect of Coercion, Fraud, or Misrepresentation

Section 19(1) of the Contracts Act 1950: Agreements caused by coercion, fraud, or misrepresentation are voidable at the option of the affected party.

Coercion

Section 15 of the Contracts Act 1950: Coercion involves committing, threatening, or detaining (legally or otherwise) someone to enter an agreement.
Example acts include causing grievous hurt, kidnapping, criminal force, assault, murder, or extortion.

What is Coercion?

In legal case Teck Guan Trading Sdn Bhd v Hydrotek Engineering, coercion involves threatening to do an act forbidden by law or threatening to detain an asset.
Coercion is also unlawful detention of a party's property, threatening to detain such property.

Scope of Coercion

The coercion can apply to the life or person of the party, family members, or the party's property.

Cases on Coercion

Kesarmal s/o Letchumanan Das v Valiappa Chettiar: A property transfer made under threat during the Japanese Occupation of Malaya was deemed invalid, as consent was not freely given.
Chin Nam Bee Development Sdn Bhd v Tan Kim Choo: Forced payment for a house constitutes coercion, permitting the party to recover money.

Remedies for Coercion

Rescission: The court can set aside the contract (Section 19).
Restitution: If a contract is voided, any gains from it must be returned.
Compensation: The injured party can seek compensation for losses.

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Description

This quiz explores the concept of free consent in contractual relationships as defined by the Contracts Act 1950. It examines the importance of mutual agreement, legal competency, and the implications of induced consent. Test your understanding of statutory provisions and the effect of void contracts.