tAW OF CONTMCT

Genera[rule of Generalrule:
lCLR
Agreement itself does not create a binding contract - it must be intended to be
legally enforceable.
. Expressed intention or implied intention

Types of Presumptions:
presumptions
1. Business agreements
Agreement is intended to be legally enforceabre unless specify otherwise.

:'
\__
2. Social, domestic, and family'agreements''
Agreement is not intended to be legalty enforceable.

Balfour v. Balfour (1919) Z K.B. 571

Facts: The defendant was a civil servant stationed in ceylon and while on
leave in England, he' has promised to pay his wife a monthly
allowance as maintenance. The wife could not accompany hirir
abroad because of her poor health. The defendant defaulted the
promise, i.e. payment, and so the wife;sued him.

Held: There was no legally binding agreement because parties did not
intend they should be atlended by legal consequences.

Rebuttable Rebuttable presurnptions:

L presumptions
sirrce this topic is based on presumptions, thus it can be rebutted, i.e, disprove.

1. Business agreements
. "Subject to contract" agreements

Winn v. Bull(1877)7 Ch. D 29

Facts: There was a written agreement between the plaintiff and the
defendant for the lease of a house subject to the ciause, "subject to
the preparation and approval of a formal contract," but there was n0
- further formal contract entered into.
Held: There was no enforceable contract.
 LAW Or CONTRACT

. Masters v. Cameron {1954} $1 C.L.R, 3S3

!t wap freld by the High court of Austratia that "subject to contract, is

intended to be the basis for the future contract and noi as to constitute a
contract.

Low Kar Yit & Ors. v. Mohd lsa & Anor. (1968) M.L.J.165

Facts: The defendant gave an option to the plaintiff's agent to buy a parcel
of land subject, inter alia, to a formal contract io be drawn uil and
:
agreed upon by the parties. The plaintiffs agent duly exercised the
option but defendant subsequenfly failed to sign the agreement for
sale, whereupon the plaintiff instituted proCeedings for specific
, pedormance or alternative damages for breach of coniract.

Held: The option was condltionar upon and subject to a formal contract to
, be.drawn up and agreed upon between ihe parties. Therefore, the
exercised of the option amounted to nothing more than an agreement

However, the above cases should be distinguished from the two following cases
whereby an agreemqnt "subject to contract" was held valid and enforceabLe.

Lim Keng Seong & Anor. v. yeo Ah Tee (1gS3) Z M.L.J. 39

Facts: lt was,claimed by the respondent that there was a completed contract

. arising from a number of letters exchanged between them. tn their
defence, the appellant stated that the sare was subject to contract
and that they had informed the respondent's solicitois that they did
not wish to proceed with the sale.

Held: The court ordered that the agreement of sale be. "speciflcally
performed.

"lt was the intention of the parties to. come to a deflnite and complete
'agreement
on the subject of the sale and the mere fact that a written
contract had to be drawn up and executed by them did not
necessarily mean that there was no legally binding and enforceable
agreement,"

Daiman Development sdn Bhd v. Mathew Lui chin Teck & Anor. (19g1)
1 M.L.J. 56

Facts: The Respondent (purchaser) signed a booking pro forma according to

which the parties had agreed to the purchase price of a house to be
built by the appellant (a housing developer). subsequent to the
payment of a deposit and signing of the pro forma, the appellant
informed the respondent that the price of the house was to be
increased. The respondent did not agree to the increased price and
applied to the court for specific performance, The appeilant
contended that upon its proper construction, the pro forma was
 LAW OF CONTRACT

"subject'to contract" in the sense that until further document was

mutually agreed and signed, no contractual obligation arose from the
pro forma itself.

Held: The 'sgbiect to co_ntract" argument itras rejected. The appeilant was
bound by the pro forma and could not argue that it did not create an
obtigation to purchase and sell the property.

1. Social,.domestic, and family agreements

Menit v, Menit (19I0)2 A[ E.R. 260

Facts: The husband left the mahimoniar home which was in the joint name
of husband and wife and subject to a mortgage. The husbaird and the
wife then discussed and agreed to pay nG wire 840 a month out of
which she should pay the oubtanding mortgage payments. when
payments completed, the husband would transferihe property
L , luch to
her sole ownership. The.agreement was recorded in a pieie dr paper
and the husband signed. But upon completion of the payment, ihe
husband refused to transfer the house.

Held: Based on the sunounding circumstances, 6oth parties intended to be

legally binding. Thus the court ordered that the house be transferred
to the wife,

. N.B. Lord Diplock in Pettitt v. Peftitt (1920) AC77T:

lf not under Law of contract, the rcLR between the parties can exist
under other areas of law, e.g. Law of property