Business Law

Law of Contract - TutorialConsideration

Question 1

Analyse whether a contract exist in the following situations: -

Cindy sold her car worth RM60,000 to Minah for only RM10,000.

(5 marks)

Answer

Define consideration – s2(d) CA 1950 Explain the relevance of consideration – s26

CA 1950 Explain on consideration need not be

adequate – Explanation 2 to s26 CA 1950, Illustration (f) and (g), Phang Swee Kim v Beh I Hock (1964)

Apply the legal principles to the facts of the question

Question 2

If a person accepts part payment for a debt owed to him by another person and he opts to waive the rest of the debt owed to him, can he recover the balance later? Discuss

(7 marks)

Answer

S64 CA 1950 reads “promisee may dispense with or remit performance of promise”

The Illustration to s64 covers a number of areas S64 CA 1950 Illustration (b) S64 CA 1950 Illustration (c) S64 CA 1950 Illustration (d) S64 CA 1950 Illustration (e)

Question 3

Pak Mat wants to give his land to his daughter, Minah, for her 21st birthday. As Minah will not be paying any money to her father, her father is worried that since there is no consideration for the transfer of his land to Minah, the transfer may be void by virtue of s26 CA 1950. Advise Pak Mat

Question 4

C rented a house from D. The paint of the house was in bad condition. After C had finished painting the house, D was so pleased with the painting that he promised to pay C RM500 for the painting. Now D is refusing to pay. Advise C

(10 marks)

Question 5

In Dec 1999, Johny borrowed RM10,000 from Tony. Johny promised to repay the loan within a month. However, Johny did not repay the loan and Tony went overseas for further studies. He returned to Malaysia last month and demanded repayment from Johny. He refuses to pay. Advise Tony if he could sue Johny to recover the loan

Would it make any difference to your answer if, when Tony demanded repayment, Johny told him that he would repay the loan the very next day but never kept his word?

(10 marks)

Answer

Issue Whether Tony can claim the money?

Law A creditor cannot recover the loan back if he did not sue the

debtor within 6 years from the date of breach (s6 Limitation Act)

Application Based on the fact of the case, the debt is statute barred as Tony

did not sue Johny within 6 years

Conclusion Tony cannot claim the money

Answer

Issue Can Tony recover the money if Johny makes a new promise to pay?

Law S26 CA 1950 – general rule S26(c) CA 1950 – exception provided

Fresh promise to pay in whole or in part a statute barred debt Promise must be made in writing and Signed by the debtor

Application Though Johny made a fresh promise to pay but the conditions in s26(c)

CA 1950 were not fulled Conclusion

Tony cannot recover the money

Question 6

Advise A on the following: A owes B $100.00. He cannot pay and offers $50.00 and a pen worth

$3.00 in full settlement. B accepts but later sues for the balance.

( 3 marks) A owes B $250.00. He cannot pay. A’s father offers $100.00 and a watch

worth $50.00 in full settlement. B accepts but later sues for the balance.

(3 marks) A organized a faculty ball and approached the local police to keep out

“undesirables”. The station sergeant informed him that he would have a patrol car call in periodically during the night. A however, wanted an officer on duty in the hall. The sergeant informed A that it would cost him $200.00. A agreed to this. He now refuses to pay the police.

(3 marks)

Q & A