APPPENDIX

UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF BUSINESS AND FINANCE
FACULTY OF ACCOUNTANCY AND MANAGEMENT

ACADEMIC YEAR: 2021/2022

MAY 2021 TRIMESTER

UBML1013/UKML1013 CORPORATE AND BUSINESS LAW

GROUP ASSIGNMENT COVER SHEET

Course details

Programme Bachelor of Marketing (Honours)

: ____________________________________

Year and Trimester of study Year 1 Semester 1

: ____________________________________
T3
Tutorial Group (No.) : ____________________________________

Tutor’s Name Mr. Peramjit Singh a/l Balbir Singh

: ____________________________________

Assignment Details

Due Date : 6th August, 2021 before 4.00 pm via MT to the respective
tutor.

Important Note : Submission of assignment is the responsibility of the students.

No. Names Students ID

1 Kanta Lim 21ABB02863

2 Kee Pi Qi 20ABB03481
3 Ong Shi Wen 18ABB01963
4 Soo Wai Mun 20ABB03867
5 Tan Yan Yu 20ABB02660
6 Tay Zhi Yan 20ABB03451

Assignment Marks (upon 50 Marks): ____________ Marks

UMBL1013 Corporate & Business Law Assignment
Question 1
Issues
There are two issues between Rondure Development Sdn Bhd and MountGold Development
Sdn Bhd which are whether there is a total failure of consideration by MountGold Development
Sdn Bhd in the contract with Rondure Development Sdn Bhd and whether Rondure
Development Sdn Bhd able to rescind the contract and get the compensation from MountGold
Development Sdn Bhd.

Explanation of Law
Performance of a contract occurs when the parties have performed their obligations which
under the contract. Performance of a contract must be accurate and need to be consistent with
the promises which promised by the parties unless otherwise agreed upon by the parties. Based
on the Section 38, the parties to a contract must fulfil their promises in accordance with the
contract. According to Section 40, when a party to a contract has failed or rejected to fulfil the
obligations which have been promised, then the other party may terminate the contract unless
he agrees with words or actions to continue. For the illustration, assumed A is a actor who
entered into an agreement with B, a film director, to act at his film in everyday during the next
one month, therefore B refused to pay A RM500 for each day performance. On the tenth day,
A absence himself from the scene. B is entitled to put an end to the contract.

As a basic rule, a promisor needs to carry out his obligations within the time and place which
have been promised. According to S.47, the commitment must be acted within a rational period
and the rational period is hinge on each specific case when there is no duration is periodic for
performance. According to S.48, when a promise is to be fulfilled on a certain day, the promisor
can perform the promise that be made at any time during the usual time of business of the day
and at the location where promise should be fulfilled. According to S.51, the performance of
the promise can be completed in any way or at any time which regulated by the promise. For
the illustration, A desires B, who owes him RM100, to send him a note for RM100 by post.
The debt is discharged as soon as B puts into the post a letter containing the note duly addressed
to A.

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Time for performance is a key in a contract. The promisor must complete his obligations within
the time if time is known as the essence in a contract. According to Section 56(1), if the time
is essence of a contract, the contract will turn out to be voidable at the choice of the innocent
party when it fails to complete within the required time. Therefore, if one party fails to fulfil
the obligations within time, the other party has the right to act against whether repeal the
contract and claim for the money refund or regard the contract as still existing then claim for
the compensation.

In order to substantiate the rhetoric of time is of the essence, the case Sim Chio Huat v. Wong
Ted Fui [1983] 1 MLJ 151 which A has agreed with R that to build and deliver 2 units of
double storey detached houses within 6 months and 2 units of terrace houses within 12 months
from the date of acceptance of the treaty. Time is stated that be essence of the contract. There
was stated in the agreement that, A would take responsibility to pay R a sum of $1080 per
month as compensation for the double storey detached houses and a sun of $600 as
compensation for the terrace houses if A failed to deliver the houses to R within the specified
time. These responsibilities will be continuously effective until A delivers the houses to R. A
fail to deliver the houses to R within the specified time. In the process of building the houses,
A performed additional works due to R’s request which at a cost of $5,008 and incurred a cost
of $881. A sued R for the expenses and cost incurred but R denied. The trial judge agreed A to
claim and upheld R’s counterclaim for $28,176.

Another relevant case is Chye Fook & Anor v. Teh Teng Sseng Reality Sdn Bhd [1988] 3
MLRH 102. This case stated that the purchaser falls under a contract with the developer which
the house needs to be completed in a specified time. With included with a clause which stated
the vendor need to pay for the liquidated damages which is calculated 10% per annum of the
purchase price in daily if failed to deliver at the stipulated time and time was of the essence.
However, the vendor failed to deliver the project at the stipulated period;24 months and then
sued by the purchaser. The high court mentioned that, since time was of the essence and project
unable to complete within the time, therefore the plaintiff was entitled to rescind the contract
and sued for the liquidated damages agreed.

Moreover, the law case which Louinder v. Leis [1982] 149 CLR 509 can be referred to further
understand if the time is not essence of the contract. Louinder sold property to Leis, and there
is no date was fixed, thus time was not stated to be essence in the contract. Thus, in this case
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of ‘Louinder v. Leis’, the High Court held that the breach to contract occur, but it did not come
to the termination of contract as there is no specified date given in the agreement. Therefore,
the innocent party was not able to terminate the contract since the time is not essence of the
contract, but the innocent party was entitled to claim on the damages or losses that she or he
suffered.

In addition, refer to the law case which Yeow Kin Pong (Realty) LTD. v. Ng Kim Pong [1962]
MLJ 118, Section 56(3) stated that a person who agrees to accept the performance outside the
stipulated time is required to send a notice to the defaulting person as to claim damages for
losses suffered which due to delays. To further explain the statement, refer to law case; Berjaya
Times Squares Sdn Bhd v. M Concept Sdn Bhd [2010] 1 MLJ 597, Section 56(1) and 40 of
the acts has mentioned plainly that the innocent party is entitled to terminate the contract when
there is a total failure of consideration. In this case, it is not considered as total failure and
Berjaya Times Square is not entitled to rescind the contract as M Concept completed all the
project construction but haven’t delivery on time. Berjaya Times Squares had the right to
rescind the contract when M Concept was failed to deliver the buildings in a specified time
before, however, they are not only did not do that so, but subsequently R still opt to continue
the contract and making payments to the project with propose to terminate the agreement after
a longer of prescribed time to deliver the unit. It argued by court said that if Berjaya Times
Square is meant to rescind the contract, they will do so earlier, and it shown that their intention
does not treat time is an essence. Therefore, Berjaya Times Squares was only eligible to get the
compensation but no to terminate the contract as there was not a total failure did by the M
Concept and time was not of the essence.

There was a case Tan Yang Loong v. Newacres Sdn Bhd [1992] 1 CLJ 211; [1992] 3 CLJ
(Rep) 666.which considered as total failure. In this case, the purchaser and developer entered
into a contract which the developer need to build and deliver a vacant house within 36 months
started from the date of contract. The purchaser had paid some payments to the developer, but
he never starts to build the house. Unfortunately, the developers had failed and rejected to
deliver the house in the stipulated time in the agreement. Thus, the purchaser sued for the the
refund of sums that had paid. This case is considered as total failure as the developer did
nothing that he had agreed to do in the specified period in the contract. Therefore, the innocent
party has the right to rescind the contract which based under the S.56(1) stated that innocent
part entitled to terminate the contract once the party fail to perform within the stipulated period.
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Besides that, agreement, which is a contract that made by consent and able to be discharged by
consent, implied, or expressed. According to Section 63 in Contract Act 1950, agreement is
handled with the influence of novation, modification, and rescission. The consent of all the
people to the contract can rescind the contract which yet to be completed. Based on Section 64,
the agreement can be deals with the remission of performance. For an example, the promisee
can exempt from performance or accept it with any satisfaction that fit him.

Furthermore, damages conferring to the innocent party for the principal purpose of reimburse
the loss suffered due to the defendant’s breach of contract. They are not severe however it was
compensative qualitatively. It purposes to place the innocent party in the status he would have
occupied had the contract been acted adequately. The amount of indemnity or damages
reimbursable in the event of a breach of contract is articulate in s. 74 which is the legal declare
of the common law rule established in Hadley v. Baxendale (1854). According to Section 74,
when contract is broken, the innocent person has the right to obtain compensation for any
damage or loss caused by the breaching party. The compensation can successfully to be claimed
when the breach of contract that occurs naturally in the usual course of things or the person
knew they might breach the contract when sign the contract. However, some compensation
might not be approved for any remote or indirect damage suffered due to breach of contract.
For instance, the case of Hadley v. Baxendale (1854) stated that P uses D’s service as a carrier
to transmit his shaft to the manufacturer for repair. P had noticed D that the shaft needs to be
delivered immediately as the mill operation stopped. D failed to fulfil the performance and the
delivery took a few days instead of the promised day. P lost several days of operation and sued
D for the damages that he can gained.

Last but not least, liquidated damages are the total of damages that will be decided in advance
by both parties during the construction of agreement and will be compensated to the innocent
party. It is also the damages which might be specified in contract before breach occurs. These
liquidated damages are also the amount of damages that will be charged as a compensation of
loss to innocent party on account of late of delivery.

The law case which related to liquidated damages is Yap Yew Chong & Anor v. Dirga Niaga
(Selangor) Sdn Bhd [2005] CLJ 250. In this case, the defendant appealed a judicial case
against the decision made by the Senior Assistant Registrar in support the plaintiff’s summary
judgement. The people then go into a set-off agreement to settle debts. It is stated that the

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defendant should redeem the belongings and deliver a disclaimer letter to the plaintiff,
otherwise the defendant shall pay the plaintiff as buyer an interest of 12% of the remaining
daily purchase price. The Court then tried to prevent the impact of Selva Kumar. This can be
completed if both parties assent to avoid the rigours of Selva Kumar. The Court held that the
plaintiffs do not need to prove the losses that they suffered before they claim the monetary
damages. This is because the penalty clause was a term of an agreement which entered into
mutually between plaintiff and defendant. Therefore, according to the law, binding and
enforceable against both parties. So, the Court decided to dismiss the appeal.

Application of Law
To further applicate the law stated above into this case, the time was initially essence of the
agreement as stated in Clause 13 which the said land will only be transferred to MountGold
after RM25m has paid to Rondure. However, MountGold paid RM21m to Rondure on 2nd July
2017 and leave a balance of RM4m. Rondure should have the right to terminate the contract
initially as time was the essence, they are not only did not do so but entered into a
Supplementary Agreement with the balance of RM4m will be paid to Rondure in the form of
Mount Gold deliver 5 units of the condominium in the project which worth RM4m within
36months (by 31st August 2020). This status is similar with the facts of Sim Chio Huat v.
Wong Ted Fui [1983] 1 MLJ 151 mentioned above.

Next, there was no total failure of consideration due to MountGold has almost completed the
transaction which paid RM21m and leave a RM4m balance only. There is no justification or
proof regarding MountGold's denial to transfer the apartment units as agreed and there is no
declaration or prove that they will never complete the apartment unit or that the appellant has
renounced the development project.

Moreover, time was considered as not essence in this case which related to the case of Berjaya
Times Squares Sdn Bhd v. M Concept Sdn Bhd [2010] 1 MLJ 597. This is due to Rondure
has the right to rescind the contract when MountGold failed to complete the transaction of
RM4m at the first time. However, they are not only did not do that but then entered into a
Supplementary Agreement which MountGold will deliver 5 units of the condominium that
worth RM4m to Rondure by given 36months to complete the transaction. MountGold has failed
to deliver at the stipulated period and there have no right for Rondure to rescind the contract
for non-performance on part of MountGold as time was not essence anymore.

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Furthermore, liquidated damages are involved in this case. Even though Rondure is not entitled
to rescind the contract with MountGold due to not total failure considered, however they able
to claim for the compensation interest at the prescribed rate of 8% pa as mentioned at the
agreement in Clause 1.

Conclusion

There is not a total failure of consideration by MountGold Development Sdn Bhd in the
contract with Rondure Development Sdn Bhd as the balance is leave with only RM4M. Next,
Rondure Development Sdn Bhd is not able to rescind the contract however can get the
compensation from MountGold Development Sdn Bhd with the interest 8% pa which they
agreed in the agreement.

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Question 2
Issue
There are two issues occur between Tuai Rumah Embong and James Yong which are whether
Tuai Rumah Embong should return deposit to James Yong based on the situations and whether
there is a breach of implied term by Tuai Rumah Embong making him liable to James Yong.

Explanation Law
In the Contract Act 1950 stated, there is no clause is specifically addressed with the terms
agreed of a contract. The contents which are the terms of a contract that clarify the rights and
obligations of all the parties. The terms of a contract which can be express, implied or both are
the clauses, covenants, provisions, and stipulations in a contract. In express term, the terms are
to be specifically agreed by both persons and the terms can be either oral or written. In implied
term, the terms might not specifically state in the contract or even will not consulted in the
negotiation of the contract. However, the court will mention or propose the term into the
contract when there are some terms that are not present in the contract but are supposed to
present to ensure the completeness of the contract.

The court will imply the clause or term through some reasons. One of the reasons is the custom
and usage which related to a specific transaction or the normal business activity in a specific
industry or place. In order to further explain this custom and usage, the Pelly v Royal Exchange
Assurance [1757] 97 ER 342 can be referred. This case stated that if there is no explicit
stipulation to the contrary in a contract, and the trade custom or practices relied on are well
known, thus everyone who included in the business will be assumed to be involved in the
contract as a clause, then it might be implied by court. Besides that, the law case which Preston
Corporation Sdn Bhd v. Edward Leong & Ors. [1982] 2 MLJ 22 also can be referred. In this
case, the App., which a company publishing books and the R, a company of printers. R claimed
to own the film positives for a purpose to print books, but its ownership was argued. R need to
prove that there was a trade usage by which the film positives that be produced were belonged
to the person who represent the printers, even though the costs of reproduction are bear by the
consumers. The so-called trade usage was not fully proved. Thus, the court relied on the
meaning of trade usage in Halsbury’s Laws of England which stated that the features of usage
are infamy, rationality and affirmative, and these factors were not pleased.

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Next, the second methods of implied term are intention of the parties. There are
implementations where the parties clearly intend to imply a certain clause that should be
implied in their contract, but this is ignored because it is obvious. Therefore, the courts imply
the terms for the sake of deliver fully in force to the intention of both parties. For the Moorcock,
if the agreement is accomplished in the absence of it, the court will not imply a term. Similarly,
the court would also imply a term if a contract were inadequate by lack of implying a term.
In addition, the statutory provisions which in Section 17 Sales of Goods Act 1957 and Section
7 Hire Purchase Act 1967 are also one of the reasons that cause the court imply the term. This
would be implied by the previous actions of the parties. This can be explained through the case
which WN Hillas Co Ltd v. Acros Ltd [1932] 147 LT 503. In this case, under certain situations,
the court will imply the terms according to the previous conduction which made by the parties.
However, there must be a coherent and regular dealings.

Next, according to the “Officious bystander” test, it is the test that for court to apply in defining
if there was the intention of both parties that should be implied which is established by
Mackinnon LJ in the case of Shirlaw v. Southern Foundries (1926) Ltd. [1939] 2 KB. This
case stated that “The preliminary surface of any contract is implicit which does not require to
be explained are some obvious terms, which are applicable but not mentioned thus, an officious
bystander put forward in their agreement when both parties are in a transaction, they will
impatiently repress him with a general "Oh, of course!”. In order to further explain the
‘officious bystander’, the law case which Yong Ung Kai v. Enting [1965] 2 MLJ 98 can be
referred. D signed a written contract with P to buy a timber on certain land. As to cut the timber,
D needs to obtain a licence from the forests department. However, the necessity of acquiring
the licence was not stated in the written agreement. D tried his best to obtain the licence, but
he failed. D claimed the return of deposit. P need to refund the deposit to D since there was an
implied term which the sale of the timber was subject to acquire the licence.

Besides that, another relevant case is Reigate v Union Manufacturing Co. Ltd [1918] 1 KB
592, there were two tests must be fulfilled in order to successfully invoke the first type of
implied terms such as intention. First, the term should be something that evident that it goes
without stated. So that, while the persons were doing bargain, an officious bystander will be
able to suggest some express provision which in the agreement, and he will violently be
suppressed to agree. Next, the term should be an act as to provide business effectiveness to the
deal of the contract. For an example, the case which a ten-years employment of a managing
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director should lead an implied term so that the company would not transform the articles to
form a right to remove the managing director before the ten-year deadline.

Next, exclusion clause is a term of an agreement that intended either in used to modify the
principal responsibility occurring under the agreement or to restrict or preclude the liability of
a party which would or else the result from a breach by that party of his main duty to act the
contract in consistency with its terms. Clear words are necessity to be applied in the
construction of term to excuse a liability that would occur.

Furthermore, a breach of contract occurs when a promisor fails to fulfil his or her promises or
commitments under the contract. When there is a refusal to perform or an inability to perform
the contract, there may be a breach. The innocent person or the person who is not in default
will be able to seek breach remedies.

Subsequently, damages are not punitive, but they are compensatory in nature. Its goal is to put
the damaged party in the position that he or she would have been in if the contract had been
fulfilled properly. Awarding damages are important in order to compensate the innocent party
for the loss incurred which might cause by the defendant's breach of contract. In the event of a
breach of contract, the amount of claimant or damages recoverable is set out in Section 74,
which is the legal articulation of the common law rule handed out in Hadley v. Baxendale
(1854). According to Section 74, when contract is broken, the innocent person has the right to
obtain compensation for any damage or loss caused by the breaching party. The compensation
can successfully to be claimed when the breach of contract that occurs naturally in the usual
course of things or the person knew to be likely to end from breach. However, some
compensation might not be approved for any remote or indirect damage suffered due to breach
of contract. For instance, the case of Hadley v. Baxendale (1854) stated that P uses D’s service
as a carrier to transmit his shaft to the manufacturer for repair. P had noticed D that the shaft
needs to be delivered immediately as the mill operation stopped. D failed to fulfil the
performance and the delivery took a few days instead of the promised day. P lost several days
of operation and sued D for the damages that he can gained.

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Application
In this case, Tuai Rumah Embong and James Yong reached a written agreement to sell timber
on certain land. Due to the timber business, there is necessary to obtain a permit from the forests
department however this term was not stated in the agreement which associate to the case of
Yong Ung Kai v. Enting [1965] 2 MLJ 98, the court held in the example which was an implied
term stated that the sale of the timber required the license. Relate to the written agreement, Tuai
Rumah Embong and James Yong did not mention the requirement to acquire the license. In
this case, Tuai Rumah Embong and James Yong were fall under the intention of parties as Tuai
Rumah Embong implied the term which the necessity of obtaining the license in the contract
to James Yong, but this term is to be ignored since it was obvious. This is because both of them
are not strangers, and they are familiar with the business of the sale and extraction of timber.
Besides, it is obvious that the permit should be applied before work the timber which relate to
the case of Reigate v Union Manufacturing Co. Ltd [1918] 1 KB 592.
Next, according to the “Officious bystander” test, it is the test that for court to apply in defining
if there was the intention of both parties that should be implied which is established by
Mackinnon LJ in the case of Shirlaw v. Southern Foundries (1926) Ltd. [1939] 2 KB. Tuai
Rumah Embong and James Yong should enter into this test and determined by court whether
both of them have the intention to imply the term of obtaining the permit.
Furthermore, which stated in the agreement James Yong has full duty for the timber business
and Tuai Rumah Embong not entitled to interfere on it. Tuai Rumah Embong tried to exclude
his liability by saying that he was not breach the contract as the permit obtainment was not
mentioned in the agreement and will not refund the deposit and pay for the damages.

Conclusion
There is a breach of implied terms by Tuai Rumah Embong making him liable to James Yong,
thus Tuai Rumah Embong should return the deposit to James Yong.

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 REFERENCES

Krishnan, L., Rajoo, P. & Vergis, A. C. (2018). Principles of Business and Corporate Law,
Malaysia (3rd ed.). Kuala Lumpur,Malaysia:Wolter Kluwers.

National House Buyers Association of Malaysia. (1988). Chye fook & anor v. teh teng seng
reality sdn bhd high court [ipoh] civil suit no 22-38-87 abdul malek, j.
https://www.hba.org.my/laws/CourtCases/1988/chye_fook.htm

Suhaimi, A.B. (2019). Liquidated ascertained damages for late delivery of property.
https://www.thomasphilip.com.my/articles/liquidated-ascertained-damages-for-late-
delivery-of-property/

Law Teacher. (November 2013). Parties to a Contract Are Bound by an Obligation. Retrieved
from https://www.lawteacher.net/free-law-essays/contract-law/parties-to-a-contract-
are-bound-by-an-obligation-contract-law-essay.php?vref=1

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