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INTRODUCTION TO

MALAYSIAN
CONTRACT LAW
Mdm. EMEDYA MURNIWATY BINTI SAMSUDIN
Dept. of Building and Construction,
Faculty of Civil and Environmental Engineering
office room location:
Room No 15, MB, Level 1, FKAAS
Email: emedya@uthm.edu.my
emedya.samsudin@gmail.com

1.0 INTRODUCTION TO
MALAYSIAN CONTRACT LAW
Chapter content:
1.1 Definition of Contract/Law
1.2 Elements and Classifications of
Contract
1.3 Motive of Contract
1.4 Sources of Contract Law

What is Contract ?

1.1 Definition of Contract/Law


What is Contract?
The Contract is normally a massive and complex
document.
A contract is any promise or set of promises made
by one party to another for the breach of which
the law provides a remedy.
A contract represent a legally binding
agreement between two or more persons ...

(Adam Epstein, 2008)

1.1 Definition of Contract/Law


Other definitions
..A legally binding agreement made between two or more
parties, by which right are acquired by one or more to acts or
forbearances on the part of the other or others .
(Sir William Anson)
.An agreement giving rise to obligation which are enforce
or recognize by law. The factor which distinguishes
contractual from other legal obligations is that they are based
on the agreement of the contracting parties.
(Treitel, 2003)

A promise or set of promises which the law is enforce


(Sir Frederick Pollock)

1.1 Definition of Contract/Law


An Engineering Contract Dictionary defines a
contract as..
.A binding agreement between two or more
persons which creates mutual rights and duties
and which is enforceable at law
Section 2(h) Contract Act 1950 (Act 136),
hereinafter called the Contract as.
.Contract is an agreement enforceable by law

1.1 Definition of Contract/Law


General Principles (Contract):
All contract must be build upon an agreement,
not all agreements are automatically a
contracts.
2. A contract consisting of an offer and
acceptance. (Therefore, at least two parties are
required; the offeror-makes an offer; and
offeree-accepting the offer.)
3. The promise or promises made (the contract)
may be express (either written or oral) or may
be implied from circumstances.
1.

1.1 Definition of Contract/Law


What is Law?
In the Dictionary of Law (2nd Edition), Curzon defines law
as..
the written and unwritten body of rules largely derived
from custom and formal enactments which are
recognized as binding among those person who
constitute a community or state, so that they will be
imposed upon and enforced among those persons by
appropriate sanctions
John Austin in The Province of Independence
Determined
a command set by superior being to an inferior being
and enforced by sanctions (punishments).

1.1 Definition of Contract/Law


Five (5) Characteristics of law :1. It is a body of rules or commands set by a
superior being (i.e. the state) to govern an inferior
being (i.e. an individual)
2. The rules of commands can be in written or
unwritten form;
3. The source of these rules or commands are
essentially custom and legislation;
4. The rules or commands are binding on the
members of the community or state;
5. Enforcement is through appropriate
sanctions, ie fines, imprisonment, etc.

1.1 Definition of Contract/Law

Article 106(2) of the Federal Constitution


holds the word Law to include.
1. Any Written law,
2. Any common law in so far as it is in
operation in the Federation or any part
thereof, and
3. Any custom or usage having the force of
law in the Federal or any path thereof.

1.1 Definition of Contract/Law


Law is not a Fact
1. Fact is an event. On the contrary, law is a
principle;
2. Though law is conceived, fact is actual;
3. Practically, law is a rule of duty. Fact is
that which has been according to and in
contravention of the rule.

1.2 Elements & Classifications of


Contract
Basic Elements Of A Contract
FIRM OFFER/ PROPOSAL

UNQUALIFIED ACCEPTANCE

CONSIDERATION
FREE CONSENT

INTENTION TO CREATE
LEGAL RELATIONS

CERTAINTY OF TERMS

LAWFUL OBJECT AND


CONSIDERATION

LEGAL CAPACITY TO
CONTRACT

PHYSICAL/ LEGAL
POSSIBILITY

VALID/ ENFORCEABLE
AGREEMENT/ CONTRACT

1.2 Elements & Classifications of


Contract

Nine (9) Basic Elements of a Contract


1. A clear or firm offer or proposal;
2. An unqualified acceptance of the offer/proposal;
3. Intention to create legal relations: both parties must show an
intention to enter into legally binding agreement;
4. Consideration: each party must contribute something in
reciprocation of the others promise;
5. Certainty: the terms of an agreement must be certain or capable
of being certain;
6. Capacity: the party must have legal capacity to contract;
7. Consent: the parties must contract with free consent, ie consent
must not be obtained by fraud, misrepresentation, undue
influences, etc;
8. Legality: the contract must be formed within the boundaries of
the law, eg its object or consideration must not be unlawful;
9. Possibility: the contract must be capable of performance both
physically and legally.

1.2 Elements & Classifications of


Contract
Two (2) broad classes of Contract:
1. Contract by Deed
Formal legal document signed, witnessed and
delivered to effect a conveyance or transfer of
property or to create a legal obligation of a
contract.

2. Simple Contract
Informal contract and may be made in any waywriting, orally or implied from conduct.

1.2 Elements & Classifications of


Contract
Other Contract classifications:

Bilateral Contract (2 way contracting)


Unilateral Contract (one way contracting)
Void Contract
Voidable Contract
Unenforceable Contract
Express Contract
Implied Contract (hidden contract)

1.3 Motive of contract


Motive is an idea, belief, or emotion that impels
a person to act in accordance with that state of
mind.
Contract documentation consisting certain
allocations with signatures and witnesses.
Contractual parties- right and responsibilities
All contract are build upon the basic premise of
the meeting of minds, the idea of assent and
agreement as to do the same thing.

1.3 Motive of contract


Protecting the contracting parties- putting
the terms of agreement in a writing that clearly
and expressly states exactly what intend to do,
the obligations of all parties, any terms of
compensation, and what happens in the event of
a dispute.
Objective/theory of contract:

When determining the existence of a contract or its


interpretations, courts used a legal principle referred
to as the objective theory of a contract.
Courts consider what the reasonable person would
have thought under the same or similar
circumstances.
The general rules: special meaning to a terms, should
have defined somewhere in that agreement.

1.4 Sources of Contract law


Modes of Categorizing Law:
1. Content basis (i.e. substantive law and
procedural law)
2. Its Sources (e.g. written law and unwritten
law)
3. Specific branches per its enforceability (i.e.
public law, private law and international
law).

1.4 Sources of Contract law


Categories of Law

Per
Content

Substantive
Law
Defines rights and
duty
Stipulate sanctions

Per
Sources

Procedural
Law
Lays down rules to
set process of law
in motion
E.g. Arbitration

Per
Enforcement

Public Law

Written
Law
Constitution
Legislation

Unwritten
Law
Customary Law
Case Law/Judicial
Decision
Common Law/Equitable
Principles

Private Law

International
Law

1.4 Sources of Contract law


Legal sources of Malaysian Law
Written
Law

Constitutional
Law

Federal
Constitution
State
Constitution

Legislation

Acts of
Parliament
State Laws
(Ordinances/
Enactments

Unwritten Law

Known as Muslim
Law
Applicable to those
practising Islamic
Faith

Subsidiary/
delegated
Legislation

Delegated by
Acts of
Parliament.
E.g. UBBL,
etc.

Syariah Law

Judicial
Decisions

Case Law
Doctrine of
State Decisis/
Judicial
Precedent

Applicable
English Law

Common
Law
Equitable
Principles
Statues of
General
application

Customary
Law

Native
Customs
Trade
Customs/
Usage

1.4 Sources of Contract law


Federal Court

Superior
Courts

Court of Appeal
High Court of Sabah &
Sarawak

High Court of Malaya

Sessions
Court

Subordinate
Courts

Magistrates
Court
Penghulus Court

Syariah Court

Sessions Court

Native
Courts

Juvenile Court

Juvenile
Court
Magistrates Court

HIERARCHY OF MALAYSIAN COURTS

1.4 Sources of Contract Law

What is Construction Law?


Construction Law is neither a legal term of art nor a
technical one.
It is used to cover the whole field of law which,
in one way or another, affects the construction
industry
Appears all encompassing, subsuming Building Law
and Engineering Law.

Sources
Broadly categorized into:
Written law; and
Unwritten law.

1.4 Sources of Contract Law


Construction Law

TYPES OF LAW ON
ENGINEERING/CONSTRUCTION
WORKS

Engineering Law

Building Law

ATTENTION!
Collection for Contract and
Estimation Teaching Module.
Each student must pay RM14/person
to the Class Representative
Module is Compulsory for
EVERYONE. PHOTOCOPY IS
STRICTLY NOT ALLOWED

End of Chapter 1
Thank You