Free Consent In Law Of Contract PDF

LAW OF CONTRACT FREE CONSENT  Introduction Free consent is the basis of a contractual relationship There must be a consensus between the parties as to the nature and scope of the contract a consensus ad idem (meeting of the mind) The parties must have the same thing in mi...

LAW OF CONTRACT FREE CONSENT  Introduction Free consent is the basis of a contractual relationship There must be a consensus between the parties as to the nature and scope of the contract a consensus ad idem (meeting of the mind) The parties must have the same thing in mind  Statutory Provisions Section 10 Contracts Act 1950 “ all agreements are contracts if they are made by the free consent of parties competent to contract...”. Section 13 Contracts Act 1950 “ two or more persons are said to consent when they agree upon the same thing in the same sense.” Section 14 of Contracts Act 1950 Consent is said to be free when it is not caused by one or more of the following: 1)Coercion 2)Undue influence 3)Fraud 4)Misrepresentation 5)Mistake  Effect On Contract If a contract is made without the free consent of the parties, the contract may be void OR voidable It is unfair to make a person liable for a contract that she had not consented to perform  Void Contract Section 2(g) of the Contracts Act 1950 provides that, “an agreement not enforceable by law is said to be void.” This means that the contract does not exist When the contract becomes void, there is no option to proceed with the contract It will be terminated or cancelled  Voidable Contract Section 2(i) of the Contracts Act 1950 provides that, “an agreement which is enforceable by law at the option of one or more of parties, but not at the option of the other or others, is a voidable contract.” Voidable contracts are valid until it has been repudiated [terminated] The contract can be repudiated at the option of the party who claimed that he has been forced to enter into the contract without free consent That option can only be given to the innocent party  Effect of the Contract Section 19(1) of the Contracts Act: “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 so caused.” FREE CONSENT COERCION  Introduction Section 15 Contracts Act 1950 “Coercion is the committing, threatening to commit any act forbidden by the Penal Code, or the lawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.” Example: causing grievous hurt, kidnapping, criminal force and assault, murder, extortion.  What is coercion? In Teck Guan Trading Sdn Bhd v Hydrotek Engineering (S) Sdn Bhd 4 MLJ 331, it was stated that there are two ways of committing coercion under section 15: 1.The threatening of an act forbidden by the Penal Code 2.The unlawful detention of any property or the threat thereof to the prejudice of any person  Scope of coercion The act or threat may apply to the following situations: i. The life or person of the plaintiff ii. The life or person of the plaintiff’s family members iii. The property of the plaintiff Kesarmal s/o Letchumanan Das v Valiappa Chettiar 20 MLJ 119 The transfer of property executed under the orders of the Sultan, issued in the ominous presence of two Japanese officers during the Japanese Occupation of Malaya was held to be invalid The court held that the consent was not freely given Thus, the transfer became voidable at the option of the innocent party Chin Nam Bee Development Sdn Bhd v Tan Kim Choo & 4 Ors (1988) 2 MLJ 117 The respondents had signed an agreement to purchase a house at RM29,500 to be constructed by the appellants. Subsequently, they were asked to pay an additional RM4,000, if not, their bookings on the house would be cancelled. The court held that the respondents could recover the money as it was paid under coercion.  Remedies for coercion 1) Rescission of contract ▪ Request the court for an order to set aside the contract (section 19) 2) Restitution ▪ If the contract is rescinded, any benefits received in the contract must be restored to the owner (section 65) 3) Compensation ▪ The innocent party may ask compensation for any damage suffered through non-fulfilment of the contract (section 76)