Question 1

The issue of the case given in Question 1 is whether Nelson can set aside the contract
and succeed in his claim.

Under Section 17 of the Contracts Act 1950 (CA 1950), fraud includes any of the
following acts committed by a party to a contract, or with his connivance, or by agent, with
intent to deceive another party thereto or his agent, or to induce him to enter into the contract.
(LLB, 2018)

In other words, there must be intention to deceive or to induce the other party to enter
into the contract, and there must be reliance on the false statement by the other party.
However, the false statement does not give rise to fraud. The person must have relied on the
statement made by the representor and then entered into the contract (Sin, 2019).

To illustrate this, the case of Letchemy Arumugam v N. Annamalay (LLB, 2018). In

this case, the plaintiff is an illiterate Indian woman rubber taper, she wanted to take a loan to
discharge her property but she was induced to enter a sale and purchase agreement. The
defendant fraudulently represented to her that the document she was signing was for a loan to
be used to discharge her land. However, the documents were actually an agreement to sell her
land. After that, the defendant sold her land, the plaintiff sought to bring an action to rescind
the agreement. The court held that there was fraud and the contract had to be rescinded and
she was also awarded damages for the fraud.

Furthermore, under Section 17 of the CA 1950, the section gives 5 different kinds of
fraudulent acts (Malaysia, 2006), which are (a) suggestion of fact which is not true, (b) the
active concealment of a fact by one having knowledge or belief of the fact, (c) a promise
made without any intention to perform it, (d) any other act fitted to deceive and (e) any act or
omission as the law specially declares to be fraudulent.

Based on the case given, Uncle Don has the intention to deceive or to induce Nelson
to enter into the contract as Uncle Don persuaded Nelson to sell his land to him at RM 10
000, which was inherited from Mrs Tan (Nelson’s father). Moreover, under Section 17,
Nelson was reliance on the false statement by Uncle Don, which the land was only worth for
RM 10 000. Due to Nelson was relied on the false statement that given by the Uncle Don;
therefore, he didn’t seek any advice from lawyer and as a result he sold the land to Uncle
Don.

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 Moreover, based on the case above, the type of fraud which under Section 17 is
Section 17 (b) the active concealment of a fact by one having knowledge or belief of the fact,
to illustrate this, the operation of Section 17(b) govern by Section 19 illustrations (c)
(Malaysia, n.d.) is as B, having discovered a vein of ore on the estate of A, adopts means to
conceal and does conceal the existence of the ore from A. Through A’s ignorance B is
enabled to buy the estate at an undervalue. The contract is voidable at the option of A.

On the case above, it showed that Uncle Don has discovered that the land was worth
at least 30 times more than RM 10 000 because of mineral under the land. Uncle Don means
to conceal and does conceal the existence of the mineral under the land. Through Nelson’s
ignorance Uncle Don is enabled to buy the land at only RM 10 000. However, later Nelson
discovered the truth and the contract is voidable at the option of Nelson.

As a conclusion, Nelson can set aside the contract and succeed in his claim.