FREE CONSENT (MISTAKE)
No mutual
S.10 (1) - Free consent is the basis of a
contractual relationship.
S.13 - Consent = agree upon the same
thing in the same sense.
There must be a meeting of the minds
(consensus ad idem) as to the nature
and scope of the contract.
Mere consent is not enough, it must be
freely given.
S.14 (e) - Consent is said to be free
when it is not caused by mistake,
subject to S.21-23.
Mistake of fact by both parties
S.21 agreement under mistake of fact
is void.
Mistake of fact is by both parties
It must be a matter of fact which is
essential to agreement.
Agreement is void.
Essential/Fundamental Facts
a) Existence of subject matter (RES
EXTINCTA)
M Pakiam v YP Devathanjam
Facts: A who had rubber tapping contract
with owner of estate assigned the said
contract to R for
3 months. Provided in contract that at end
of 3 months, A had option to terminate
assignment or to assign contract to R
absolutely. Subsequently, owner of estate
terminated contract with A and sold it to
3rd party. R claimed against A for the
return of consideration given for the
assignment.
Held: COA- no mistake. Mistake must be
more fundamental for court to say that no
agreement was in fact reach. Parties knew
what they were dealing with and both
intended to deal with same thing. Even R
honestly believed that tapping contract
could x be determined for a specific
period, that mistake not sufficient to
render the contract nullity.
mistake which could render contract void.
United Asian Bank v Chun Chai Chai
Facts: P entered into tenancy agreement
with D, intending to use the premise to
carry out banking business. P had problem
in obtaining electricity and Lembaga
Letrik Negara said sub-station need to be
constructed. P wrote to D terminating
tenancy and claiming all monies paid on
the ground common mistake as to matter
essential to agreement.
Held: from evidence, parties were under
common mistake as to matter of fact
(requirement of sub-station). This fact was
essential to the tenancy agreement and
thus void and applied to grant relief to P
under S.66. (P entitled to refund)
b) Ownership of the subject matter
(RES SUA)
- Person makes a contract to
purchase things that already
belongs to him, the contract is
void.
Cooper v Phibbs
Facts: Cooper not realizing that a
fishery already belonged to him,
agreed to lease it from Phibbs.
Held: Contract was void.
c) Capacity of the subject matter to
perform
Sheikh Brothers v Ochsner
(considered as mutual mistake)
Facts: A granted 1st R a licence to cut
process and manufacture all sisal
growing on certain lands on which A
was the lessee. Agreement contained
clause whereby licensee undertook to
manufacture and deliver to A/its agents
for sale sisal fibre in average min
quantities of 50 tons per month.
Dispute arose.
 Issue: whether agreement was void by
reason of mutual mistake of fact as
both parties believed erroneously that
the leaf potential of sisal area would be
sufficient to permit manufacture and
delivery of stipulated min quantity
Held: PC- this was mistake
fundamental to matter of fact essential
to agreement, so agreement void.
S.21 includes cases of mistakes as to
the quality of the subject matter
(capacity of leaf potential of sisal area)
Mistake provided in S.21 nullifies
consent, and thus agreement is void.
Mistake of law
S.22 distinction made between
mistake of law in force in msia, and
mistake of law not in force in msia.
If mistake of law in force in msia,
contract is not voidable, agreement is
valid.
- Because of the phrase ignorance
of law is no excuse and that a
person is expected to know or
find out applicable law in msia
that affects his contractual
dealings.
If mistake as to foreign law, same
effect as mistake of fact. Not voidable.
Agreement void
- Accord with converse rationale that
Person is not highly expected to
know foreign laws that x in force in
Malaysia.
Effect of mistake is contract is not
voidable
Not clear whether valid or void.
Sinnadurai opined that such an
agreement is valid bearing in mind that
in s.21, it has been clearly provided
that where both parties are under
mistake of fact, agreement is void.
Unlike s.21, mistake in s.23 is not one
that is a matter of fact essential to the
agreement.
Only covers mistake of fact not
essential to agreement, in cases of
mistake of identity, follow English
cases that hold no agreement between
parties based on principles of offer and
acceptance.
However, even though mistake as to
identity is valid under s.23. It can be
argued that it will be void under the
rule of proposal i.e. a proposal to
specific person can only be accepted
by that particular person.

Mistake of fact by one party

S.23 a contract not voidable merely
cause it caused by one of the parties to
it being under a mistake as to a matter
of fat.
Applies to unilateral mistake (mistake
of fact by one party only).
Unilateral mistake commonly involves
mistake as to the identity of persons.