Topic Explanation

Void contract Sec 2(g) of ca - an agreement not enforceable by law is said to be void

When a contract becomes void ;

- The parties to the contract are, thus, under no obligation to perform the
contract
- No right or duty flows from the contract
- Such contracts are a complete nullity in law right from the very beginning
- the contracting parties will not get any benefits under a void contract

Five categories of agreements contravene the law via OBJECT or CONSIDERATION of an

CONTRAVENE THE LAW S24 agreement

1) forbidden by law – sec 24(a)

- Agreement agreed by the contracting parties clearly contravene with provisions
of law
- Eg, Unlicensed purchaser signed a contract to buy copra( dead coconut) in
contravention of rules made under the Federal Agricultural Marketing Authority
Act 1965

2) If permitted, would defeat any law - S24(b)

- Contract which was signed but not expressly contrary to any provisions of the
law
- Laws which allow a contract to be signed between parties but at the same time
forbids any contract be made by those without a license or a permit

3) Fraud – sec24(c)
- Consideration or object of agreement is fraudulent in nature contravenes the
law
- An agreement to divide a share of money obtained by deceit (tipu org) is void

4) Implies or involves injury to the person or property of another - S24(d)

- If two parties agreed to destroy a third party’s house for a sum of money which
will be paid by another person, this agreement is VOID in accordance with (d)

5) Court presume as immoral or against public policy -S24(e)

- Immoral agreements ; Lent money for running the brothel (rumah pelacuran)
- Against public policy ; Injuries to Public Services
FORBIDDEN BY
LAW
S24 (a)
 S29 - Every agreement, by which any party thereto is restricted absolutely from
enforcing his rights under or in respect of any contract, by the usual legal proceedings
in the ordinary tribunals, or which limits the time within which he may thus enforce his
rights, is void to that extent

- time limit to enforce rights under a contract under Limitation Act 1953 is six
years from the date of the breach

- if the contract had a condition limiting the time for legal action to less than six
years (e.g., only one year), that specific condition would be considered void

eg; Imagine you sign a contract to purchase a product, and the contract
includes a clause stating that you can only file a lawsuit for any issues arising
from the contract within one year from the date of purchase. So this consider
as void contract
RESTRAINT OF LEGAL PROCEEDING S29
- If a contract says that any decision made through arbitration is final and cannot
be challenged or taken to court, that part of the contract is void. If a contract
tries to do that, it is considered void to the extent of this restriction. In simpler
terms, everyone should have the right to challenge an arbitration decision in
court if they believe it's necessary (arbitration – sttle mslah tnpa prgi ct)

3 exception ( contract is still valid despite restraint)

- Sec 29, exception 1,2,3

S29, Exception 1,2

- It is valid for the parties to agree to insert a condition in the contract to refer to
arbitration for any disputes which may arise in respect of the contract
 S29, exception 3
Any scholarship agreement between a person and government, which state that the
government’s discretion is final and conclusiveand not to be questioned by any court, is
valid. Government also include state government

In summary, Section 29 means that any clause which limits the time a person can bring
legal action in enforcing his rights, by shortening it from the time allowed under the
Limitation Act (six years for contract), is void to the extent of the restriction

A clause which requires a party to first submit to arbitration is valid but it is not so for
any clause which restricts any decision made by arbitration to be appealed to the
courts. Such a clause is void to the extent of the restraint

Effect of void contract Contracts in restraint of legal proceedings

- These contract are not wholly void but only void to the extent of the restriction.
Once the restriction is severed from the other whole part of the agreement w/o
changing the nature of the contract, the valid part of the contract is
enforceable (In simpler terms, if there's a part of a contract that is not valid,
you can cut it out as long as it doesn't change the whole point of the contract.
After removing the problematic part, the remaining valid parts can still be
enforced)

Example: Ali bought a provision shop situated in Klang from Faizal. Faizal agreed not to
carry out the same trade in Klang and Ipoh. The two covenants can be severed and only
Faizal's promise not to carry out the same trade in Klang is binding but not the one in
Ipoh.

Section 66 of the CA 1950 can be used to sue for return of benefits or compensation for
void contracts except contracts void due to illegality ( sec ni blh apply if contract void
but bukan utk contract yg illegal)