TUNKU ABDUL RAHMAN UNIVERSIYTY COLLEGE

BBBL2113 INVESTMENT INDUSTRY LAW

TUTORIAL 2:

ITCLR, CONSIDERATION, CAPACITY & PRIVITY OF CONTRACT

1. Kerrie promises to pay Ken, her husband RM500-00 if he completes her law assignment.
Ken has done so and claims the money and she refuses to pay. Will Ken succeed if he
sues Kerrie for the money? Discuss.
Issue: Will Ken succeed to sue Kerrie?

Law: Based on the case of Balfour v Balfour, the court held the agreement between husband
and wife was not legally enforceable because the parties did not intend that the agreement to
have legal consequences.

Application: In the case of Kerrie and Ken which is same with the case of Balfour v Balfour.
There is husband and wife [Link] domestic and family agreement the legal principle is
that parties to such agreements are presumed not to have intended to have legal
consequences.

Conclusion: Therefore, Ken will not succeed to sue Kerrie for the money.

2. Sufficient Berhad intends to sell its company’s car to Ben a high performing employee of
the company for a token sum RM1,000 in recognition of his contribution. The market
value of the car is more than RM100,000. The managing director of the company seeks
your advice whether the company can sell Ben for such a low amount. Limit your advice
to the principles of adequacy of consideration.
Issue: Can Sufficient Berhad sell the car for such a low amount to Ben?

Law: According to S.26 explanation 2, an agreement to which the consent of the promisor is
freely given is not void merely because the consideration is inadequate. In the case of
Phang Swee Kim v Beh I Hock, both parties were agreeded and accept which the
defendant transfer a parel of land to plaintiff of RM500. Although, the price of land is
lower than the market price. The court held that the agreement is valid despite the
inadequacy of the consideration as the consent of the parties were freely given.

Application: In the case of Sufficient Berhad and Ben, the company want to sell the car at
RM1000 for Ben which is the consent of company. It is not void merely due to the
consideration is inadequate.

Conclusion: Therefore, Sufficient Berhad can sell the car for Ben at low amount since both
parties are agreed.

3. Jane lost her pet cat. She places posters of her lost cat around the neighbourhood
asking them to help find her cat. Aileen who saw the poster, found the cat and returned it
to Jane. Jane then promised to give Aileen a reward of RM500 for having found the cat.
To date Jane has not paid Aileen. Advise Aileen if she could pursue the reward from
Jane.
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 TUNKU ABDUL RAHMAN UNIVERSIYTY COLLEGE

BBBL2113 INVESTMENT INDUSTRY LAW

Issue: Can Aileen claim the reward from Jane?

Application: In the case between Aileen and Jane, Jane promised to paid RM500 to the
person who helps her found the cat as reward but Jane didn’t pay to Aileen. When Jane
placed the poster which included RM500 as reward, there was an offer made by Jane.

Conclusion: Aileen can pursue the reward from Jane.

Would your answer be different if Jane had lost her cat, she had not place any posters
asking the neighbours to help. Aileen found the cat and returned it to her. Jane now
promises Aileen a reward of RM500.
Issue: Can Aileen claim the reward from Jane?

Law: According to S9 CA 1950, the proposal can be made in the form or oral or writing.
According to S2(a) Contracta Act 1950, a proposal made when one person signifies to
another his willingness to do or to abstain from doing anything, view to obtaining the
assent of that other to the act or abstinence.
S26(b) Contract Act 1950

Application: Even though Jane had not place the posters,the offer which promise to pay
RM500 as reward is made in oral form.

Conclusion: Therefore, Jane cannot revoked her offer and Aileen can claim the reward
from Jane.

4. Mary wrote and signed on a piece of paper promising to transfer all her jewellery to her
only and most precious daughter Tina. In return, Tina just thanked her mother. Appraise
the above as to whether the arrangement is legally enforceable.
Issue: Whether the arrangement is legally enforceable between Marry and Tina?
Whether without consideration between Marry and Tina the agreement is still legally
enforceable.

Law: According to S26 (a) CA 1950, a contract without consideration is void unless it is
in writing and registered, made on account of natural love and affection, between parties
standing in a near relation to each other. In the case of RE Tan Soh Sim, the principle
issues was whether an agreement made on account of natural love and affection for
three sisters and seven half-sister and brothers stood in near relationship to their
adopted nephews and nieces. The court held that adopted children did not fall under the
category of near relation to each other.
STRICTLY FOR TARUC STUDENTS ONLY
Any forms of circulation and/or republication are strictly prohibited.
 TUNKU ABDUL RAHMAN UNIVERSIYTY COLLEGE

BBBL2113 INVESTMENT INDUSTRY LAW

Application: In the case of Marry and her daughter, there was a contract between both of
them. Marry wrote and signed her promise and Tina is under the category of near
relation to Marry.

Conclusion: Therefore, the agreement has legally enforceable between Marry and Tina.

5. Ms. Doolittle, a 16 year old who lives far away from her school. She is always late to
school owing to the irregular bus service. She is an orphan and she sells flowers in her
neighbourhood to sustain her life. Ms. Doolittle is supplied with a bicycle worth RM400
so that she can continue to attend school and to selling flower for a living. She is given
six months to pay and after two payments, she runs out of money and unable to continue
payment. Adding to her woe, the bicycle is stolen. Advise the supplier.
Issue:

Law: S11 Contract Act 1950

Application:

Conclusion:

6. Eliza is unable to pay Ben, a licensed money lender, as she has lost all her money in a
business scam. Eliza has a rich and wealthy sister, Jane. Ben wants to sue Jane instead
of Eliza to get back his money. Advise Ben.
Issue: Can Ben sues Jane instead of Eliza to get back his money?

Law: According to the case of Kepong Prospecting Ltd v Schmidt, the question arises was
whether the agreement could be enforced by Schmidt who in his personal capacity was not a
party to it. The court held that a non-contracting party has no right to sue and be sued on a
contract.

Application: In the case between Jane and Ben, Jane is a third party who is not a party to the
contract. The contract is only between Eliza and Ben.

Conclusion: Therefore, Ben cannot impose obligation on Jane who is not a party to the contract.
Ben can only get back the money from Eliza, not Jane.

STRICTLY FOR TARUC STUDENTS ONLY