DIPLOMA IN BUSINESS MANAGEMENT

MODULE LEARNING GUIDE

INTRODUCTION TO LAW
SUBJECT CODE: BM602(09)

VERSION: August 2010

1) INTRODUCTION

This module will introduce students to the operation of Malaysian Legal System, the principles
governing entering into contracts, terms of contracts, discharge of contract and remedies and principles
governing employment, terms of employments contract and termination.

2) AIMS

This subject aims to develop students’ understanding of laws which govern businesses. It is also to
develop students’ ability to apply the laws to business situations which he/she likely to be concerned with.
The law which is covered in this subject are Malaysian Legal System, Law of Contract and Employment
Law.

3) LEARNING OUTCOMES

On completing this module, students should be able to understand the Malaysian Legal system and its
modus operandi, entering into contracts and its principles, terms of contracts, discharge of contracts and
remedies, employment principles, terms of employment contract and termination

4) LEARNING MATERIALS

A) Main Reference
• Business Law - Lee Mei Pheng & Ivan Jeron Detta, 2009 Edition, Oxford University Press

B) Other References
• The Malaysian Legal System – Ahmad Ibrahim & Ahlemah Joned
• General Principles of Malaysian Law – Lee Mei Pheng
• Principles of the Law of Contract in Malaysia – Syed Ahmad Alsagoff.
• Partnership Law in Malaysia – Samsar Kamar Latif
• Understanding Company Law in Malaysia – K. Arjunan & C.K. Low
• The Industrial Relations Law of Malaysia – Wu Min Aun
• Law of Negotiable Instruments – Poh Chu Chai.
• Islamic Banking – Concepts and Applications – Sudin Haron & Bala Shanmugam

RELEVANT STATUTES

▪ CONTRACTS ACT 1950

▪ REGISTRATION OF BUSINESS ACT 1956
▪ EMPLOYMENT ACT 1955
▪ INDUSTRIAL RELATIONS ACT 1967
▪ PARTNERSHIP ACT 1961
▪ COMPANIES ACT 1965
▪ COMPANIES COMMISSION ACT 2001.
5) ASSESSMENT

Assessment Final exam 60%

Assignment 40%

6) Class Intructional Schedule

Topics Hours

• Introduction to the Concept & Sources of Law 6

• Offer & Acceptance 10

• Consideration 6

• Other Essentials of a Contract 6

• Terms of a Contract 6

• Void, Voidable & Unlawful Contracts 6

• Discharge of Contracts 6

• Sale of Goods 10

Learning Suggestions and Guidelines encompassing lecture attendance, tutorials and independent
study and research.
Week 1

Over this week of lecture/ tutorial and independent study, the focus will be to undertake the
following:

• To ensure you are aware of the overall module requirements in terms of the Teaching-Learning
and Assessment strategies and expectations.
• To emphasize the need for you as students to adopt the right approach to University education
and the critical skills and attributes necessary to succeed on the Diploma in Business
Management program.

Learning outcomes to be attained:

• Introduce the concept of law, its definition, its relation to the state and constitution, its sources and
the structure of the judicial system.

Readings and preparation to be undertaken by the student:

a. Read module material, Chap 1& 2

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. Define “law” and explain what the definition means through illustrations.
2. What is the purpose of law?
3. Is Malaysia a federation or a monarchy state? Does Malaysia have a written constitution?
4. How many states are there within Malaysia?
5. How is law classified?
6. What are the main sources of law? Provide a brief explanation of each source of law.
7. Explain the structure of the legal system.
8. What is the doctrine of binding precedent? What are its advantages and disadvantages?
9. What is delegated legislation?

Week 2

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• Distinguishing factors of an offer and an invitation to treat.

Readings and preparation to be undertaken by the student:

a. Read module material, Chap 6

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.
Questions for discussion during tutorials:
1. What are the essential elements of a binding contract?
2. What is the effect on a contract that lacks one or more essential elements of a contract?
3. What is an offer? Provide illustrations.
4. What is an “Invitation to Treat?” Provide illustrations.
5. What is a counter-offer?
6. Is a ‘tender’ an offer?
7. To whom can an ‘offer’ be made?
8. Is it true that a person can accept an offer without having the offer being communicated to him?
Case Studies:

1. On Saturday, Adam saw a car in his local garage with a price ticket of
RM3,000.00.When he went into the garage to buy it, the garage owner, Bill, laughed and
said that the ticket must have been wrongly marked as the actual price of the car was
RM8,000.00. However, in the circumstances, he said he would split the difference and let
Adam have it for RM5,500.00. Discuss.
2. Discuss the case of “Pharmaceutical Society of Great Britain V Boots Cash
Chemist Ltd. [ (page 136 of the textbook). Would the Judge decide differently had there
been a notice on the self-service shelf which read “all items removed from the self-service
shelf would be considered sold”.
3. Kindly provide a brief narration of the facts and decision of Coelho V the Public
Services Communication [1946] (page 134 of your textbook).

Week 3

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• Various form of acceptance and communication of acceptance.

Readings and preparation to be undertaken by the student:

a. Read module material, Chap 6

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. What is acceptance?
2. Is a counter-proposal considered acceptance?
3. Communication of acceptance is not necessary. Discuss.
4. Acceptance cannot be accepted through post. Discuss.
5. How is an offer terminated?
6. At which point does revocation of an offer become effective.
7. Can an offer be accepted :
a) by merely doing what is requested.
 b) by doing nothing if the offer provides so.
8. What is the effect of acceptance to contract with the words “Subject to Contract”?
9. How is revocation of acceptance affected?
10. What is an option and is it different from a proposal?

Case Studies:

1. On 1st August, Peter wrote to Malik offering his durian plantation to Malik for the price of
RM10,000.00. On 2nd August, Malik wrote back to Peter offering to buy the durian plantation for
RM8,000.00, When Peter refused to accept Malik’s proposal, Malik, on 5th August, wrote to Peter
to accept to buy the durian plantation for RM10,000.00. Now, Peter refuses to sell the durian
plantation to Malik. Discuss.
2. On 3rd September, Chin Chai wrote to Ah Pak offering to sell his used umbrella for the price of
RM10.00, subject to a formal contract being drawn up between the parties. On researching, Ah
Pak finds out that the actual value of the used umbrella is more than RM50,000.00 and therefore,
on 5th September quickly forwards a cheque for the sum of RM10.00. Chin Chai refuses to accept
the cheques and Ah Pak seeks your advice on whether there is a valid contract. Discuss.
3. Mr Careless has lost his pet named “Fido” and advertised in the newspaper that a reward of
RM100.00 will be given to anyone who finds and returns his dog. Ms Wong finds “Fido” and
hands over the dog to Mr. Careless who now refuses to give Ms. Wong the RM100.00. Advise
Ms. Wong.
4. By an Agreement dated 19/10/1971, between Thomas Hilarie Hughes (THH) and Holwell
Securities Ltd (HSL), THH granted an option to purchase a property known as 571 High Road,
Wembley a freehold property, at a price of RM45,000.00. The property was the residence of THH
and also the place where he carried out his medical practice.

Clause 2 states :
“The said option shall be exercisable by notice in writing to THH of any time within 6 months
from the date hereof…”

Clause 3 states :
“At the exercise of the option, HSL shall pay to THH’s solicitors as stakeholders by way of
deposit the sum of … RM4,500.00.

By a letter dated 14/4/1972 HSL’s solicitors wrote to THH’s solicitors, which read as follows:

“Re: Dr. T. H. Hughes & Holwell Securities Ltd.

571, High Road Wembley

We refer to our earlier correspondence regarding our clients option to purchase the above
property. Our clients wish to exercise the option and we should be obliged if you should accept
this letter as a notice of the option. Kindly acknowledge receipt. We enclose herewith our clients
cheque for the sum of RM4,500.00 being the 10% deposit payable on the exercise of the option to
be held by you as stakeholders … We are sending a copy of this letter to your client.”
 Letter was delivered by hand to THH’s solicitors on 14/4/1972.

On the same day, HSL’s solicitors prepared another letter to THH which read “Dear Sir, re: High
Road, Wembley : Holwell Securitees Ltd. We enclose for your information a copy of a letter sent
to your solicitors today.”

On 21/4/1972, THH’s solicitors wrote to HSL’s solicitors stating that they would not accept the
letter of 14/4/1972 as a notice of exercise of the option and that they were therefore, returning the
cheque.

Discuss.

Week 4

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• Types of Consideration, Rules relating to Consideration.

Readings and preparation to be undertaken by the student:

a. Read module materials, Chap 6

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. What is consideration?
2. If a promise:
a) Does something
b) Promise to do something, what kind of consideration has he given in each case.
3. Is past consideration good consideration? Discuss.
4. If someone does what he is already bound to do, would that amount to providing consideration?
5. Is acceptance of part payment of an existing debt binding on a person who accepts it or may he
still claim for the unpaid balance.
6. What are the exceptions to the general rule that an agreement without consideration is void?
7. Is it true that consideration must be adequate?
8. Consideration must move from promisee. Discuss.
9. Under local law, no reply can waive the requirement of performance.

Case Studies:

1. Mr. Tan agrees to sell his racing horse worth $20,000 to Mr. Wee for a sum of $200. After the
agreement was concluded and the $200 paid. Mr. Tan refuses to hand over the horse to Mr. Wee.
Advice Mr. Wee.
2. Kerpa Singh was awarded a decree of RM8,869.94 including interest. A letter dated 30/7/1963
was forwarded to Kerpa’s solicitors and it read as follows:
 “Dear Mr. Wrigglesworth,
I am the son of Mr. T. Barian Singh. I came to know through my father and Mr. Bhan Singh, the
court interpreter of Raub that you have agreed to receive RM4,000.00 (Dollars for Thousand
only) from my father being payment in full settlement of his share in the above civil suit towards
the decretal amount and costs amounting to RM8,650.00. Upon payment of this sum you have
agreed that you would take no action whatsoever against my father and that the balance thereof,
to sue against the other defendant, Mr. Bachan Singh.
Due to delay in getting the required amount, I could not get in touch with you in time as you have
left UAE.
I now enclose a receipt for RM4,000.00 paid by cheque at your firm in Kota Bahru.
I pray you will accept the payment and agree to allow to discharge my father Mr. Barian Singh
from any further liability.
If you don’t agree with the above settlement, please return me my money.

I am sir
Yours faithfully,
Sqd : Surbakhash Singh

This cheque was cashed and money retained by the solicitor. Thereafter, Kerpa’s solicitors
proceeded with the Bankruptcy petition against Barian Singh. Discuss
3. a) Distinguish the following terms:
i) Past Consideration
ii) Executed Consideration
iii) Executory Consideration
b) Monsieur has dug Elizabeth’s garden for her. At the time of doing the work no mention of
payment was made, but after Monsieur had completed the job Elizabeth promised to pay him
RM30 for the work. State with reasons and reference to decided cases where appropriate,
whether Monsieur will be able to enforce this promise against Elizabeth if:
i) Monsieur is a jobbing gardener or
ii) Monsieur is Elizabeth’s neighbour and she is extremely attractive.

Week 5

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• Intentions to create Legal Relations.

• Uncertainty of Terms and Formalities.
• Capacity to contract.

Readings and preparation to be undertaken by the student:

a. Read module materials, Chap 6

b. Attempt all activities as outlined under tutorial activities.
 c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. What is the effect of a statement in a business agreement that is not intended to create legal
relations?
2. How do the courts deduce the intentions of the parties (to create legal relations or not to do so)
from the terms of a domestic or family agreement?
3. What sorts of Domestic Agreements are the courts willing to interpret as legally binding?
4. When is a commercial agreement never intended to create legal relations?
5. Which section of the Contracts Act 1950 provides that contracts that are not certain or capable of
being made certain are void?
6. Only contracts that are in writing are valid. True or False?
7. The Age of Majority Act 1971 provides that the age of majority is ___ years.
8. Which section and Act refers to ‘Necessaries’?
9. What are the requirements of ‘Necessaries’?
10. Are scholarship agreements entered into by a minor valid?
11. Minors can ratify void Agreement. True or False?
12. Is every person is competent to contract regardless of their state of mind?
13. Are corporations able to contract on any matter regardless of what their memorandum and articles
of association specify?

Case Studies:

1. a) ‘Where an agreement between two parties is of a business nature the courts will presume an
intention of enter into legal relations’
How far would you agree that this is a true statement of the law?
b) Philip made an offer to Susan, his cousin, to provide maintenance for her at the rate of RM350
a month if she would give up her job as a typist in the civil service and study to be an accountant.
Susan agreed to accept Philip’s offer and in September 1994 she gave up her job and enrolled as a
student of an accountancy course. In August 1999 Susan had still not passed her final
examinations and so Philip advised her that he was no longer prepared to support her while she
continued her studies.
Advise Susan who wants to claim the RM350 a month.
2. a) State and explain the kind of contracts which minor can enter into.
b) Bloom, a money lender, makes a loan to Ade on Ade’s representation that he is nineteen years
old. Ade is in fact seventeen years old. Ade refused to pay the loan. Advise Bloom on his legal
rights, if any.

Week 6 & 7

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• To distinguish between Express and Implied terms.

• The difference between Conditions and Warranties.
• Understanding of standard and exemption clauses.
Readings and preparation to be undertaken by the student:

a. Read module materials, Chap 10

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. What is the “officious bystander” test?

2. Can extrinsic evidence be admitted to prove an implied term?
3. What is collateral contract?
4. Distinguish a condition and a warranty.
5. What is an innominate term?
6. Explain the meaning of a ‘contingent contract’.

Week 8

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• How contracts can be voidable through coercion, undue influence, and fraud.
• Misrepresentation, mistake and consequences of void or illegal contracts.

Readings and preparation to be undertaken by the student:

a. Read module materials, Chap 6

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. When is consent to a contract said to be not free?

2. What is a void contract?
3. What is a voidable contract?
4. State on whom the burden lies and the standard of proof for an allegation of fraud.
5. How is undue influence established?

Week 9

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the following
learning outcomes:

• How contracts are discharged, its effect and remedies available.

Readings and preparation to be undertaken by the student:

a. Read module materials, Chap 6

b. Attempt all activities as outlined under tutorial activities.
c. Undertake further readings and activities based on the main topics covered in both the lecture and
tutorial.

Questions for discussion during tutorials:

1. What is the effect of a breach of a term where time is said to be “of the essence” of the contract?
2. When is a contract said to be frustrated?
3. What is specific performance?
4. What is an injunction?
5. What damages can be recovered for a breach of contract?

Week 10 Presentation Week

Week 11

Over this week of lecture/ tutorial and independent study, the focus will be to ensure the attainment
of the following learning outcomes:

• To understand the application of the Sale of Goods Act 1957 and its implications on
contracts for the sale of Goods.
• Conditions, Warranties and Implied Terms.

Readings and preparation to be undertaken by the student:

a) Read module material, Chap 9

b) Attempt all activities as outlined under tutorial activities.
c) Undertake further readings and activities based on the main topics covered in both the lecture
and tutorial.

Questions for discussion during tutorials:

1. What are the remedies available to a buyer of goods when a seller is in breach of a sale of goods
contract?
2. Explain the following terms in the context of sale of goods – i) condition, ii) warranty iii) privity
of contract
3. Ali IT Ideas Sdn Bhd entered into a contract of sale to sell 5000 units of robots to Hassan
Holdings Bhd. State two remedies available to Ali IT Ideas in the event Hassan Holdings
breaches the contract.

Week 12
Over this week of lecture/ tutorial and independent study, the focus will be to ensure the attainment
of the following learning outcomes:

• Transfer of property as between seller and buyer.

• Performance of the Contract.
• Right of unpaid seller against the goods.
• Remedies.

Readings and preparation to be undertaken by the student:

a) Read module materials, Chap 9

b) Attempt all activities as outlined under tutorial activities.
c) Undertake further readings and activities based on the main topics covered in both the lecture
and tutorial.

Questions for discussion during tutorials:

1. Explain the following terms:

i) existing goods
ii) specific goods
iii) unascertained goods
iv) future goods
2. Distinguish a breach of a condition from a breach of a warranty.
3. What is the meaning of “Caveat Emptor”?
4. When are goods said to be of ‘merchantable quality’?
5. What is S62 C.A.?
6. What remedy does a 3rd party have when there’s a breach of a sale of goods contract?
7. Distinguish possession from property in goods.
8. When does risk pass?
9. Explain the phrase "Nemo dat quod non habet".

Week 13 Revision week