LAW OF CONTRACT

DIL1232

GROUP ASSIGNMENT:
PRESENTATION & REPORT

PREPARED BY:

AMNA NAFISYA BINTI MOHD NIZAM DIL221022

SUMAIYAH SOFIYAH BINTI MOHD AZEMI AZMAN DIL221027

NUHA ALESSANDRIA BINTI MOHAMMAD FULIM DIL221029

SOFEA HANI BINTI ZAIDI DIL221048

AMIRUL FARID DIL203003

PREPARED FOR: MADAM ASNALISA ARMA BINTI ASNAN

QUESTION 2 (20m)

Mak Jah, who is 80 years old and in a poor health condition , is a wealthy widow who owns
three bungalows in Cheras. Until recently she suffered from hallucinations that she was being
pursued by demons. About two months ago she enrolled herself for the treatment offered by a
spiritual advisor, Pak Dollah, who operated from his link house in Cheras. Whilst she was
receiving treatment as a resident at Pak Dollah’s house, he told her that he needed a bungalow
to house the persons seeking his treatment and impressed upon her that her assistance is
required in this matter.

This prompted Mak Jah to state that she would help Pak Dollah as soon as she recovers from
her illness. Two months after commencing the treatment offered by Pak Dollah, Mak Jah no
longer had the hallucinations mentioned above. She returned home last week. A day after she
returned home, she signed a contract prepared by Pak Dollah’s solicitor agreeing to sell one
of her bungalows for RM200,000. The market value of the bungalow is RM2 million.

Mak Jah comes to see you today. She says that she regrets having signed the contract and
seeks your advice on whether she could avoid the contract on any grounds.

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1) Issue(s)
- Whether the contract between Mak Jah and Pak Dollah has been induced by
undue influence.
- Whether the contract between Mak Jah and Pak Dollah is voidable.

2) Laws / Cases
Statutes
- Contract Act 1957 Section 16(1) states that a contract is considered to be persuaded
into by undue influence when one of the parties in the contract has relations to the
other of which causes them to be in a position to dominate their will, and uses the
relation to achieve an unfair advantage.

- Contract Act 1957 Section 16(2)(a) details that that a person is deemed to be in a
position to dominate the will of the other when he holds power or authority over the
other, or is entrusted with the duty of care of the other.

- Contract Act 1957 Section 16(2)(b) also details that if a person makes a contract with
another person whose mental capacity is temporarily or permanently unstable due to
old age, illness, or mental or bodily distress, then the person making the contract is
deemed to be in a position where he is dominating the will of the other.

Cases
Rosli bin Darus v Mansor Harun bin Hj Saad [2001]
Facts: The plaintiff was the registered proprietor of 1/3 undivided share in a piece of
land Held under Pegangan No 338, Mukim 9, Daerah Seberang Perai Utara, Pulau
Pinang (‘the land’).The plaintiff inherited the land from his adoptive mother after her
death. Thereafter, the plaintiff transferred his share in the land to his uncles (‘the
defendants’) in equal share.This was the plaintiff’s application for a declaration that
the transfer was null and void as the transfer was without consideration and was
induced by the undue influence of the defendants. According to the plaintiff, he was
instructed to go to the land office by the defendants. The officers at the land office
asked the plaintiff whether he had agreed to transfer. The plaintiff did not reply but
wanted to discuss the matter with the defendant first. The first defendant then

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 informed the plaintiff being an adopted child, could not inherit the land, as the same
was the property of the defendants’ father. Due to the first defendant’s remarks, the
plaintiff executed the transfer. The consideration stated in the memorandum of
transfer was return of 1/3 share to the lawful transferees. The defendants’ version was
that as soon as the plaintiff found out that his adoptive mother had transferred her
share in the land to him, the plaintiff voluntarily transferred his share to the
defendants as he felt morally obligated to the first defendant who had helped raise him
after the death of his adoptive father. According to the first defendant, he provided the
plaintiff with food, clothing and expenses and carried out his role as the plaintiff’s
guardian and during that time, the plaintiff always obeyed the first defendant.

Judgement: The court would act in relieving against transactions on the ground of
inequality of footing between the parties is not confined to cases where a fiduciary
relation can be shown to exist, but extended to all the varieties of relations in which
dominion may be exercised by one man over another, and applied to every case where
influence was acquired and abused or where confidence was reposed and betrayed.
That being the case, the onus was on the defendants to prove the absence of undue
influence, it is show that the transfer was perfectly fair and reasonable and that they
had not taken advantage of the first defendant’s position and to rebut the presumption
that the transfer was procured by the exertion of undue influence. So, the application
was approved by the court.

3) Application
Pak Dollah made an offer to treat Mak Jah who has suffered from mental illness
(hallucinations). Mak Jah accepted the offer as she already enrolled herself about two
months ago.

As referred to Section 16(1) of Contract Act 1950, the relations subsisting between
the parties are such that one one of the parties is in a position to dominate the will of
the other and uses that position to obtain an unfair advantage over the other.
According to this section, this indicates that Pak Dollah tries to dominate the will
where he uses his position as a spiritual advisor (one who helps in discovering the
spiritual process) to gain an advantage (Mak Jah's bungalow) over Mak Jah where he

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impresses her that her assistance is required in this matter (Pak Dollah needed a
bungalow a house the persons seeking his treatment) while Mak Jah is still in
treatment for cure his mental illness (hallucinations).

Section 16(2)(a) of Contract Act 1950, where a person is deemed to be in a position to

dominate the will of another— where he holds a real or apparent authority over the
other, or where he stands in a fiduciary relation to the other. This shows that Pak
Dollah and Mak Jah have already established a fiduciary relationship when Pak
Dollah was entrusted by Mak Jah's to treat her hallucinations (mental illness) until she
recovers.

Under Section 16(2)(b) of Contract Act 1950, where he makes a contract with a
person whose mental capacity is temporarily or permanently affected by reason of
age, illness, or mental or body distress. Pak Dollah entered into a contract with Mak
Jah who was subject as an elderly person (80 years old) who also experienced
temporary mental disability (hallucinations).

In the case of Rosli bin Darus v Mansor Harun bin Hj Saad [2001], the plaintiff
willingly transferred the land as he felt morally obligated to the defendant since he
was the one who helped raising him after the death of his adoptive father and mother.
It is presumed that the defendant had influence and authority over the plaintiff. It also
would have appeared that the defendant implied more than mere moral authority since
the plaintiff was jobless, without parents and was totally dependent on the first
defendant.

The defendants with the knowledge that he was in a state of mental anguish by reason
of the death of his mother, induced him to transfer the land without any execute,
without legal counsel and without being told by the defendants of the purport and
effect of his act, with knowledge that plaintiff was naive, immature in thinking and
character and was without other family members, induced him to execute the said
transfer. As referred to this, Pak Dollah made use of his dominant position because
according to section 2(b) of Contract Act 1950, a person is deemed to be in a position
to dominate the will of another— where he makes a contract with a person whose
mental capacity is temporarily or permanently affected by reason of age, illness, or

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 mental bodily distress. Pak Dollah had made a contract with Mak Jah who is 80 years
old and he had used that to his advantage.

4) Conclusion
Pak Dollah had undue influence over Mak Jah, taking advantage of her old age, thus
making the contract between them voidable.