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But, bearing in mind the familiar saying that a persons beliefs or his state of mind are just as
much facts as the state of his digestion or the existence of a tangible object, from what
factors may the existence of an agreement be inferred? The authorities show that such
inference must be drawn from the language the parties have used, their conduct, regard
being had to the surrounding circumstances, and the object of the contract. In other words,
in its task of ascertaining the intention of the parties, the court will, generally speaking, apply
an objective test; more particularly, it will ask itself, what would the intention of
reasonable men be, if they were in the shoes of the parties to the alleged contract.
iv.
Consideration
Section 2. Interpretation CA
(d) when, at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or to abstain from
doing, something, such act or abstinence or promise is called a consideration for the
promise;
Consideration refers to the price paid in exchange for the promises both parties made. For
an agreement to be regarded as a contract, it must either be supported by consideration or
be a formal contract. The promisor is the person undertaking to perform the consideration;
the promisee is the recipient of the consideration. In contracts where both parties provide
consideration each party will be both a promisor and a promisee. Consideration that is still to
be performed is termed executory. Consideraton that has already been performed is said to
be executed. The element of consideration is essential in any valid contract. It is this
element that turns a mere promise into a contract that the law will enforce.
v.
Capacity to contract
Section 11. Who are competent to contract
Every person is competent to contract who is of the age of majority according to the law to
which he is subject, and who is of sound mind, and is not disqualified from contracting by
any law to which he is subject.
Section 12. What is a sound mind for the purposes of contracting
(1) A person is said to be of sound mind for the purpose of making a contract if, at the time
when he makes it, he is capable of understanding it and of forming a rational judgment as to
its effect upon his interests.
It means that the person who enters into the contract must have the full capacity in terms of
age and mind. The age of majority in Malaysia is 18 years old as per Age of Majority Act.
vi.
Free consent
Section 13. Consent
Two or more persons are said to consent when they agree upon the same thing in the same
sense.
Section 14. Free consent
Consent is said to be free when it is not caused by
(a) coercion, as defined in section 15;
(b) undue influence, as defined in section 16;
(c) fraud, as defined in section 17;
(d) misrepresentation, as defined in section 18; or
takes an objective approach to assess an agreement. The law is not concerned with what is
in the minds of the parties. The law is concerned with what can be inferred from their
conduct. Lord Denning in stoner v. Manchester City Council [1974] 3 All ER 824 at p. 828
remarked that:
In contracts you do not look into the actual intent in a mans mind. You look at what he said
and did. A contract is formed when there is, to all outward appearances a contract.
In Serangoon Garden Estate Ltd v. Marian Chye [1959] MLJ 113 it was held that:
I think it is quite clear that when a party signs a contract knowing it to be a contract which
governs the relations between them, than to use the words of Denning J in the case of
Curtis v. Chemical Cleaning and Dyeing Co. (supra) his signature is irrefragable evidence of
his assent to the whole contract including the exempting clauses unless the signature is
shown to be obtained by fraud or misrepresentation. In LEstrange v. F Graucob Ltd [1934] 2
KB 394 Scrutton LJ said:
When a document containing contractual term is signed then, in the absence of fraud, or I
will add misrepresentation, the party signing it is bound and it is wholly immaterial whether
he has read the document or not.
Teja Singh Mohinder Singh lwn. Saifulnizam Ilias & Yang Lain [2015] 1 LNS 698
(34) Dalam menentukan sama ada wujudnya satu kontrak antara pihak pihak yang terlibat,
penelitian perlu dibuat terhadap dokumen dokumen yang ada yang melibatkan pihak
berkenaan serta tindakan pihak-pihak berkaitan. Pertimbangan bagi menentukan isu ini
hendaklah dibuat secara objektif.
In Teja Singh case, the court observed the testimonies of the witnesses. D5 whom is a party
to the Memorandum Jualan (MJ) agreed that those who signed the MJ did intend to sell the
land to plaintiff. He also agreed that on certain date he and the other defendants went to
plaintiff's office to discuss on the sale and purchase of that land. He did not deny that he can
read and understand the MJ and that the MJ was read to D1 by his son because he was
blind. SD2 whom is wife of one of the purchasers (deceased) agreed that it was his late
husband's signature on the MJ. The Court then came to the decision that all the parties to
the MJ signed the contract on their own volition based on the testimonies.
Applying to the case at hand, there is an offer made by Ariffin to Ghazali where he offered to
purchase Ghazali's share on the land for RM 30K. In return, Ghazali made an acceptance
which he agreed to sell his share on the land for RM 30K and transfer the land to Ariffin's
mother, Selamah. He made an absolute and unqualified acceptance when he accepted the
offer by accepting the purchase money given by Arrifin as evidenced by the Surat
Pengakuan.
There is a valid and executed consideration in monetary form RM 30K paid to Ghazali for
him to transfer the land as promised earlier. This can be seen in the Surat Pengakuan
signed by Ariffin and Razali where it was stated Ariffin paid RM 3 250 to Razali on 16th July
of 1995 being the balance of purchase price for the land. The Surat Pengakuan shows that
the amount agreed had been paid successfully by Ariffin and he completed his obligation
under their agreement. This declaration was then signed by both parties.
Furthermore, there is mutual assent on both Ariffin's and Ghazali's mind to enter into the
agreement and completed it. This can be seen where Ariffin made payment to Ghazali, both
Ariffin and Ghazali signed the Surat Pengakuan, Form 14A which had been filled in and
witnessed by the Pendaftar, the Duty Stamp paid and that Ghazali had received the money
from Ariffin being balance purchase price of the land. The conducts from both parties shows
there is clear intention from both parties in creating legal relations and completing their part
of obligations under the agreement.
Both parties, Ariffin and Ghazali have the capacity to contract where both were of majority
age and sound mind on the relevant time. Both are capable of understanding and signing
the Surat Pengakuan, filling in the F14A and paying the duty stamps. Both also consented
where they agreed on the same thing, which Ariffin to pay RM30K to Ghazali and Ghazali in
return to transfer his portion of land to Ariffin's mother. There is free consent since there is no
indication of coercion, undue influence, fraud, misrepresentation or mistake in the case at
hand.
As per the cases and provisions of law, it is nowhere to be found that a contract has to be
reduced into writing so as to make it valid and enforceable under Malaysian law. Therefore,
an oral agreement is a valid and enforceable contract in Malaysia and bind on the parties to
the contract. Since all the elements of valid contract are established, there is a valid and
enforceable contract between Ariffin and Ghazali.