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LAND LAW II

(JUAL JANJI)

Definition

A sale of a promise
Conditional sale.

Origin of Jual Janji

Come into existence after the


coming of Islam to the Tanah
Melayu-to avoid the practice of
usury
In the early days the concept of
transfer in jual janji is only in
form of oral understanding
between
the
creditor
and
borrower
and
no
actual
documentation or registration of
any documents takes place.
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Tengku Zahara v Che Yusuf


[1951] 17MLJ

Briggs J: The
whole purpose of
jual janji
transaction is to
provide a
procedure for
securing a loan
Without infringing
the prohibition of
usury which is
binding on the
conscience of all
good Muslims.
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W.E Maxwell (The Law and Custom


of the Malay with Reference to the
Tenure of Land)
the

jual janji (conditional


sale), the only form of
hypothecation of land
known to Malay law, is, in
principal incidents, quite
unlike our mortgage of
real property... "
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Effect of NLC 1965 on JJ

No more oral agreement.

Mutual understanding on
of land during loan period
practised anymore.

owner
must
comply
with
mandatory
requirement
registration of land titles.

Dealings were regulated and Jual Janji


has to conform to the procedures
of transfer of land.

ownership
cannot be
the
for

HOW?

The land will be transferred


into the name of the lender
and a eventually a collateral
agreement will be executed
whereby it is stated that the
lender is obliged to transfer
the property to the borrower
upon full repayment of the
loan.
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WHAT IS

COLLATERAL
AGREEMENT?
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A collateral agreement is an
agreement
where
the
consideration is the entry into
another agreement,
So this agreement co-exists
side by side with the main
agreement.

Elements of Jual Janji

Lender
Borrower;
Loan;
Land as a security;

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HOW IT WORKS?

1.A

loan
granted by
Lender to
the
Borrower
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2. As a consideration
to the loan,
Borrower transfer
land belonging to
the Borrower to the
Lender
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3. With a condition or

promise by the Lender to


retransfer to the Borrower
(collateral agreement)
upon full and final
settlement of the loan by
the Borrower within an
agreed duration
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4. If Borrower fail to
make payment within
the agreed time, the
transaction is declared
as an absolute sale i.e.
Jual Putus.
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5. Lender takes
proceeds
of
the
land
during
the
loan period
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JJ

is not
govern by the
NLC 1965
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So when JJ case brought to


court, the court can interprete JJ
by referring to one of the
interpretations below:

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Judicial Opinions/Views
A.

Strict interpretation

B.

Purely contract of sale


where time is of essence
exceptions

Liberal interpretation

Equitable principles

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A. STRICT INTERPRTATION
Purely Contract - time is of
essence

Leading
case:
Hj Abdul Rahman v Hassan
(1917) AC 209
it

was
not
a
security
transaction or mortgage as
the only form of mortgage in
Malaysia is charge or lien.
Since it was a contract, the
claim was statute barred
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Cont

Cases supported Hj Abdul


Rahman
A Kanapathy Pillay v Joseph
Chong (1981) 2MLJ 117 (FC)
-prac of JJ by non Malay comun
Wong See Leng v Saraswathy
Ammal [1954] MLJ 141 CA
Ibrahim v Abdullah (1964)
MLJ 139
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Cont

If the Borrower failed to


comply with the terms of
the contract, the court will
not assist him to invoke the
terms of the agreement i.e.
to obtain retransfer of the
land

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Exceptions to strict interp:


1.

Extension of time
Ismail Hj Embong v Lau
Kong Han (1970) 2MLJ 213
Abdul Hamid Bin Saad v
Aliyasak Ismail [1999]
1AMR 105

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Cont
2.

Evading payment of loan


Ahmad Bin Omar v Hj
Salleh Bin Shaikh Osman
[1987] 1MLJ 338
Hatijah Bte Rejab v
Abdullah Saad [2004] 2
AMR 665
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B. LIBERAL INTERPRETATION
Equitable Principles

The collateral agreement for


a retransfer in a jual janji
transaction is in the nature
of an equitable security
transaction whereby the
right to redeem remains
irrespective whether the
period for repayment has
lapsed
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Cont
Yaacob

Bin Lebai Jusoh v


Hamisah Bt Saad [1950]
MLJ 255
Nawab Din v Mohamed
Sharif [1953] 19 MLJ 12
Halijah v Morad [1972] 2
MLJ 166
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Recent Development in
Malaysia

The
Malaysian
courts
reluctant to deviate from
the case of Haji Abdul
Rahman.
Hatijah bte Rejab v
Abdullah Saad (2004) 2
AMR 665

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