NURUL SARIY ZAKIAH BINTI MOHD YUSOF

2012523517 | lecturer e! "#$%"l &%'"u((%$%!

TAKE HOME
TEST 1
BUSINESS LAW (LAW 416)
group NBMMBF1A
BUSINESS LAW
LAW416
TAKE HOME / Test 1
QUESTION 1
Sources of law may be divided into two; written and unwritten law. Explain the
unwritten sources of law.
(25 marks)
nwritten law! on refers to the law that has not been formally enacted. "he unwritten
law consists of case law (i.e. decisions of the superior courts which are bindin# on
the lower courts)! customary law (i.e. local customs which have been accepted as
law by the courts) and applicable principles of En#lish common law and e$uity.
nwritten law sources comprises the followin#%
En#lish common law and the rules of e$uity & "his is also a very important
source of 'alaysian law. Sections (()) and 5()) of the *ivil +aw ,ct )-5.
specifically permit the reception of En#lish common law and e$uity in 'alaysia
sub/ect to the limitations contained therein. 0owever! the reception of En#lish
law and e$uity are sub/ect to certain #eneral exceptions. 1n particular! En#lish
law may only be applied where ()) there is no local law #overnin# the matter
and (2) if it is suitable to the local circumstances.
2udicial precedents. & "his refers to the law as developed throu#h cases
decided in the superior courts. Sometimes referred to as 3/ud#e&made law4! it is
another very important source of law. nder the doctrine of bindin# /udicial
precedent! which is also observed in 'alaysia! the decisions of the hi#her
courts must be followed by the lower courts in similar cases. "his
#enerally ensures a fair and uniform application of the law.
1slamic law. "his is another important source of 'alaysian law! particularly in
matters relatin# to marria#e! divorce and inheritance amon# 'uslims. 1t is only
applicable to 'uslims. 1slamic law is administered at State levels by a
separate system of courts called the 3Syariah4 courts.
*ustoms. "his refers to the customs of the local inhabitants which have been
accepted as law. 1t mainly relates to family matters! e.#. marria#e! divorce and
inheritance. 5enerally! the customs of *hinese and 1ndians relatin# to
marria#e and divorce are no lon#er of much importance since the passin# of
the +aw 6eform ('arria#e and 7ivorce) ,ct )-8.! which abolished
poly#amous marria#es amon# them. 0owever the customary laws of the
'alays (also called 3adat4 law) and in East 'alaysia! native customary law!
continue to be important sources of law.
QUESTION 2
En#lish common law and the rules of e$uity form part of the laws of 'alaysia.
7iscuss the extent of the application of En#lish law as applied in 'alaysia.
(25 marks)
"he extent of the application of En#lish law is prescribed in the followin# three
sections which are Section (! Section 5 and Section ..
1n Section ( ())! it provides for the #eneral application of En#lish law. 1t states that%
Save so far as other provision has been made or may hereafter be made by any
written law in force in 'alaysia! the *ourt shall%
1n 9est 'alaysia or any part thereof! apply the common law of En#land and the rules
of e$uity as administered in En#land on the 8th day of ,pril! )-5.;
1n Sabah! apply the common law of En#land and the rules of e$uity! to#ether with
statutes of #eneral application! as administered or in force in En#land on the )st day
of 7ecember! )-5);
1n Sarawak! apply the common law of En#land and the rules of e$uity! to#ether with
statutes of #eneral application! as administered or in force in En#land on the )2th
day of 7ecember!)-:- ! sub/ect however to sub&section ((ii)%
;rovided always that the said common law! rules of e$uity and statutes of #eneral
application shall be applied so far only as the circumstances of the States of
'alaysia and their respective inhabitants permit and sub/ect to such $ualifications as
local circumstances render necessary.
1n short! section (()) provides that the courts in 'alaysia shall apply the common law
as well as rules of e$uity existin# in En#land in the absence of written law on 8th
,pril )-5. in 9est 'alaysia! )st 7ecember )-5) in Sabah and )2th 7ecember )-:-
in Sarawak.
1n sub&sections ())(b) and ())(c) of section ( states that En#lish statutes of #eneral
application Sabah and Sarawak shall be applied. "he difference in wordin# between
these subsections on the one hand and subsection ())(a) on the other hand
perpetuated a controversy which earlier arose from section (()) *+< )-5. which
was word for word the same as section (())(a) *+, )-5..
QUESTION 3
a) 9ith reference to the provisions of the *ontracts ,ct )-5= and decided cases!
explain the ways by which an offer (proposal) may be accepted.
()5 marks)
"he offer or proposal is one of the essential elements for a valid contract. , proposal
is said to be made when one party si#nifies to the other his willin#ness to do or
abstain from doin# anythin#! with a view to obtainin# the assent of that other to the
act or abstinence4.
See% s.2 (a) *ontracts ,ct )-5=. 9hen the offer is unconditionally accepted! a
bindin# a#reement arises. "he offer must be clear. 1f it is va#ue it is not a valid offer.
>or example! in 5unthin# v +ynn ()?())! an offer to pay an additional amount if the
horse proved 3lucky4 was held to be too va#ue.
1t is important to distin#uish an offer (proposal) from an invitation to treat. "he
invitation to treat in law only amounts to an invitation to others to make an offer. ,n
invitation to treat is not capable of bein# accepted so as to form a bindin# a#reement.
, common example of an invitation to treat is a display of #oods for sale in a shop.
"he case of ;harmaceutical Society of 5reat @ritain v @oots *ash *hemists ()-58)
serves as a #ood example. 1n this case there was a display of dru#s on the shelves
of a pharmacy. "he issue was whether this display amounted to an offer which was
accepted when the customer took it and placed it in a wire basket. "he court held
that the display did not amount to an offer. 1t was a mere invitation to treat. "herefore
it is very important to distin#uish between an offer and an invitation to treat. <nly an
offer is le#ally capable of bein# accepted thereby #ivin# rise to a bindin# a#reement.
b) Explain the revocation of a proposal with reference to the provisions of the
*ontracts ,ct )-5= (6evised )-8:) and decided cases.
()5 marks)
, proposer (offeror) is not le#ally bound to keep his proposal open indefinitely.
"herefore! a proposal (offer) will remain valid until it is revoked by the proposer. @y
s.5()) of the *ontracts ,ct )-5=! a proposal may be revoked at any time before the
communication of its acceptance is complete as a#ainst the proposer. >urther! s..
provides that a proposal may be revoked in the followin# ways%
(i) @y the communication of notice of revocation by the proposer to the other party.
nder this section the proposer is re$uired to communicate the revocation.
*ommunication by third parties not authorised by the proposer will probably not be
valid. "hus! the En#lish case of 7ickinson v 7odds ()?8.)! which held that revocation
would be effective so lon# as the offeree becomes aware of the revocation!
irrespective of who conveys the information to the offeree! may not apply in 'alaysia.
(ii) @y the lapse of time prescribed in the proposal for its acceptance! or if no time is
prescribed! by the lapse of a reasonable time! without communication of the
acceptance.
9hat amounts to a lapse of a reasonable time depends on the facts of each case. 1n
6ams#ate Aictoria 0otel *o v 'ontefiore ()?..) +6 ) Ex *h )=-! the defendant had
applied for shares in the plaintiff company in 2une and was informed by the plaintiff
company in Bovember that he was allotted the shares applied for. "he defendant
refused to accept the shares. "he court held that as the plaintiff had not accepted
within a reasonable time! the refusal was /ustified.
See also% 'acon 9orks and "radin# Sdn @hd v ;han# 0on *hin C ,nor D)-8.E 2
'.+.2. )88.
(iii) @y the failure of the acceptor to fulfil a condition precedent to acceptance.
>or example! if , offers to buy @4s car on condition that @ provides a roadworthiness
certificate issued by the 6oad "ransport 7epartment! the offer will be revoked if @
fails to provide such a certificate.
(iv) @y the death or mental disorder of the proposer! if the fact of his death or mental
disorder comes to the knowled#e of the acceptor before acceptance.
7eath or mental disorder of the proposer (offeror) does not automatically result in the
revocation of the offer. Fnowled#e of the acceptor is a crucial factor. "hus if the
acceptor! in i#norance of the death or mental disorder of the offeror! accepts the offer
such acceptance would be valid.
c) Explain whether the followin# transactions constitute a valid contract! and! what
are the ri#hts of the parties concerned! if any%
@aba! a ). year old student of *omputer "echnolo#y at Sita "echnolo#y *olle#e!
made the followin# transactions and failed to pay for;
i) a computer notebook worth 6'2!===.==! bou#ht from ,da"ech C *o;
ii) a hi#h&speed motorbike which cost 6')2.5==!==! bou#ht from *arat 'otors.
(2= marks)
,mon# the element of contract is +e#al *apacity. @aba! ). years old student! is not
of the a#e of ma/ority. ,ccordin# to ,#e of 'a/ority ,ct )-8)! those below )? years
old are known as minor.
"herefore in case ii. @aba is not competent into enterin# the contract to purchase
6')2!5== hi#h speed motorbike from *arat 'otors. @aba mi#ht be the end user of
the motorbike! thou#h it must be @aba4s parents or #randparent who enter the
contract with *arat 'otors.
*arat 'otors should claim the 6')25== from @aba4s close relative that enter the
contract for him.
0owever! in case i! where @aba purchased a computer notebook worth 6'2!===.==!
bou#ht from ,da"ech C *o! @aba are bound the contract that he made. "his is
because! it is considered as Becessaries. Becessaries incude food! shelter! clohin#!
medical services and education.
@aba! as a student *omputer "echnolo#y at Sita "echnolo#y *olle#e need to use
the computer he bou#ht from ,da "ech C *o as part of his educations. "hat entitle
him to be eli#ible to enter the contract and he is bound by it.
@aba must make payment to ,da "ech C *o either in full amount or by sta##ered
repayment dependin# to discussion or content of contract with ,da "ech C *<.
E',1+ G<6 ,BS9E6 "<% ismailbbHsalam.uitm.edu.my