Just Follow Law [1/13]

Trade Marks

Is there a duty on the public to check with the Registrar of Trade Marks to ascertain whether a trade mark has been registered?
What happens if say I start a business using a business name that happens to coincide with a registered trade mark, say "ABC" and "ABC" has been registered as a trade mark?

Cyber Law

Currently i'm working in a software house. I would like to take additional projects (web design project) as my part time job. Is it legal to use my company software and computer to develop the project? If my company know, can they sue me? Please advise.

buisness visa

AS Indian citizen. I want to start or buy a running buisness in Malaysia. How can I do it? what is the minimum investment required? suppose i want to buy running a petrol pump then by obtaining a buisness visa can I do it?what support the financial institutes in Malaysia provide to me? will govt help me in making proper investment?
i shall be grateful for an early reply.

Witdrawing from private limited company

Two friends and I invested some money and incorporated a Sendirian Berhad. A fourth person who is a relative of the other two was appointed as an employee and the relationship between the two directors and myself has deteriorated. I wish to withdraw from the company but the two of them wish to pay me only what I paid as initial capital. The business has grown and I feel I should be able to enjoy part of the growth. How do I go about getting my dues from the company if I resign as a director and from the business?

Sole Proprietor - Sabah

i want to register my business in Sabah as a sole proprietor, can I do it at any branch in other states? Or do I have to register it in Sabah?

Shareholder benefits & dividens

I'm an employee of a company and recently as a shareholder also of the private limited company. I'm holding the 10% share of the company but also the smallest share among all the shareholders. May I know what kind of benefits I should have as a shareholder of the company but not a director.

Need clarification

I need some clarifications on this matter. I was a Director in a Sdn Bhd but resign in May 2006. As the company couldn't find a director to rpelace me during that time, I am only being released in August. The problem now is the Company has not been paying salaries and EPF of the staff in June until August.

I would like to know whether I am liable for this if EPF or the staff were to take action against the company as I was still the director during that period.

Hope to get some advice from experts out there.

Skin Care Product Complaint II

My sister found the quality of her cleansing milk changed after using for few months and refer it to the beauty house. The beauty house rejected the complaint with reason they wont responsible for any quality claim after 30days frm purchase date. She also claimed that there is nothing wrong with the product, just minor change due to product is not kept in fridge. She finally agreed to pass the defective product to the sales rep during the visit for further test.

The product is with her now til the sales rep visit her after cny. I am not sure if it is right thing to do to let her keep the product now, and also worry if she rejected again without returning the product to my sis. By that time, my sis will not hv any evidence with her if not satisfied with the reply. wld like to hear some professional advice in this case.

unreasonable customer

a guy came to buy used item, tested it fully at shop. receipt written clearly sold as is , no warranty and customer informed clearly. next day he take back and wants money back, items is working no problem. I remind him that it was agreed sold as is, yet he still insists.I had to say no, later got claim from consumer tribunal, some more want compensation. Do i have a strong case here.

Breach of contract

Hi,

I am 4th year, currently studying medicine. I am receiving sponsorship and the contract stipulate 10 years of my service to the government once I have graduated. I am very grateful for the oppurtunity of learning that I have received. However, I am facing a difficult situation deciding for my future career and 'family issues'. I might have to breach the contract and work in the UK once I complete my studies ( this for many reasons, mainly future family matters ) . In regards to this, I have a few questions that perhaps could be answered by you.

I have enquired my sponsor and they informed me that there's no means of negotiation apart from 60 days of " repayment claim " ( this include everything that I have received for the whole 5 years ) if a contract is breach. Could this be renogiated further because the sum that I might have to end up paying is approximately RM 1M.? I asked about monthly repayment but they did not give this option...
Also does it make any difference if I come back to serve for about 2 years and then breach the contract after? ... Will I then be able to repay my sponsor monthly ? The only confusion is that I have heard of similar case in regards to my situation, but this person was allowed to repay in monthly installments. Lastly, can i negotiate with my sponsor to not file a sue to my guarantors, but to me if they have to? Is there any possibilities of negotiating the repayment matter before I breach the contract as to avoid being sued etc. ? So far they have not stated any penalty clause but I am sure it is about RM 160 000.

Hope to receive some advice.

Salesman run away company's cloollection

this happen 8 months ago, my salesman quit the job and we found that he has runaway with Rm3500++( Company's collection ).
my company doesn't have any temporary receipt for our sales person, all we have is just a payment request slip.
after checking with our customer site, now i already have a copy of payment request slip of RM3500++ with CASH PAID written and sign by salesman.
Can i sue or make a police report against this fellar by using this as an evidence?

How to get collection unreasonable client

I am an freelance interior designer with a registered company. I have a client introduced by my brother. In the 1st meeting, me and my brother went to the client house to measure the house so that I can plan and design accurately. I told him the design and drawings will takes 7 days and I will call him for the next meeting. Then, the 2nd meeting, I submitted my design and drawings to him so that he can consider and imagine his house with his family. On that day, after I had presented my ideas and advice to him, I ask him to acknowledge the drawings and design given to him. He likes my design and ask me for the quotation fast. After giving him my quotation, he was not happy with the price and ask me to knock down the cost and I did twice and faxed to him. Another week, when I ask for him whether he confirm the job, he says our price not favourable to him and I just tell him to get another contractor to do for him BUT I will charge him the interior design fees to him. He ask me to fax the bill to him and ask me to give him a discount. I was not agree with him and wait for his reply. After another week, I ask him to collect my fees, he said I was unfair to charge him the fees and will discuss with his wife.

I think this client is running away and expects FREE consultation. Moreover, his wife also a lawyer. And before its happens, he told me that he takes my plan and lets other contractors for a quote. In the interior design industry, I have many, many experiences with these people and intend to run away with our valued drawings and NO return.

What shall I do?
Are we protected by the Malaysian Law?

Claim From Shopping mall

It was happened in last year ,13/11/2006. My right side eye was injured caused by hot oil splashed into eye. I was paying for a cheese cake during the incident, after injury, i was send to clinic immediately and my eyes cannot be opened at that time. The next day after that, i was send to medical check under the clinic which recommend by that shopping center. At there, the doctor advised me not to open the eyes at least 2 weeks, and hus i am unable to go working along 2 weeks. My salary was paid based on working day, RM70 per day, and i unable to earn my salary for 2 weeks since my eye cannot open caused by that incident. I have the original copy of medication certificate, medication approvement letter, salary receipt, company letter, and the shopping receipt. I have try to claim the insurance (RM 1000) from their company by sending all the copy of the above documents, but they rejected my claim last month due to my eye was not "permanent" injury case. I started this claiming from last year, and only get the respond from last month after i calling and keep asking for that. Do i have the right to claim from that shopping mall? I really need that money to pay for my study in university

Law question

hi there! ok let me come to the point now! im workin in a company for about 8month and they never give me a confirmation letter or appointment letter! and suddenly my boss came to me and said im not happy with u so u can go back home! he said i'll pay u one month payment only! so now; what am i suppose to do? where am i suppose to go? Who im i suppose to see? can anyone help me in this case? (actually i created all the format's in this company! i runed this company till now but the gift is priceless & speechless now)....... Better luck next time for my self!...... Hehe...... )
And the worse part is as everyone know! the economy is in bad condition! My boss brought in an india guy, pay him RM1200.00. and what u know!!!!!!!!!!! my office Account administrator also getting the same pay as the india guy getting now! The Accountant girl is actually a DIPLOMA HOLDER in E-bussiness.......

.....................What a company....................

contract law.....

Sergeant Jamal is a police officer who has been called to the court to give evidence in a case. CAN HE DEMAND EXTRA PAY FOR THAT WORK? Give reasons.

SUMMARY OF TAXES LAW

WHAT IS TAX LAW ?

Tax law is found in many places - tax law is generated by the federal government, state government as well as counties, cities, and other municipalities. The variety of taxes that everyone faces is staggering - tax law affects almost every aspect of your life.

COMPANY TAX ?

A company, whether resident or not, is assessable on income accrued in or derived from Malaysia. Income derived from sources outside Malaysia and remitted by a resident company is not subject to tax, except in the case of banking and insurance business and sea and air transport undertakings. A company is considered a resident in Malaysia if the control and management of its affairs are exercised in Malaysia. Places of control and management are considered on the basis of where meetings of the Board of Directors are held.

Best of Muthu (from Just Follow Law)

Law approaches Justice, but can never reach it

URL ADDRESS

http://www.youtube.com/watch?v=jbkjAXlLPkE

....... Types ................... OF ............. Insurance ........

1. Accident insurance
2. Auto Insurance
3. Boat Insurance
4. Car Insurance
5. Commercial Insurance
6. Contents Insurance
7. Claim Settlements
8. Credit Insurance
9. Dental Insurance
10. Disability Insurance
11. Fire Insurance
12. Flood Insurance
13. Health Insurance
14. Home Insurance
15. Indemnity Insurance
16. Insurance Broker
17. Insurance Claims
18. Insurance Premium
19. Insurance Policy
20. Insurance Marketing
21. Insurance Rates
22. Liability Insurance
23. Life Insurance
24. Medical Insurance
25. Mortgage Insurance
26. Motorcycle Insurance
27. Online Insurance
28. Personal Insurance
29. Pet Insurance
30. Property Insurance
31. Quotes & Estimates
32.Reinsurance
33. Short Term Insurance
34. Student Insurance
35. Tenants Insurance
36. Term Insurance
37. Travel Insurance
38. Vehicle Insurance
39. Wedding Insurance

Official Web

Malaysian court official Web....whereby all information judges will decides the case....
in high court....federal court.....appeal court....in Malaysia....

This this the url....address....


http://www.kehakiman.gov.my/courts/maljudiciary.shtml

Judge rejects policy exclusions in Chinese drywall case

NEW ORLEANS—A Louisiana court has ruled that an insurer may not use several exclusions to deny homeowner claims resulting from tainted Chinese drywall.

The New Orleans Parish Civil District Court ruled recently that Audubon Insurance Co.’s pollution exclusion in its homeowners policy could not be used as an “affirmative defense” to deny coverage of a Chinese drywall claim.

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In his ruling, Judge Lloyd J. Medley wrote that Audubon’s gradual or sudden loss exclusion and its faulty, inadequate or defective planning exclusion also could not be used as defenses to deny coverage.

The case, Simon Finger and Rebecca Finger vs. Audubon Insurance Co., arose when the Fingers filed a July 2009 claim with Baton Rouge, La.-based Audubon, a subsidiary of American International Group Inc., under an all-risks policy. Audubon denied the claim last July, citing its pollution and contamination; gradual or sudden loss; and faulty, inadequate or defective exclusions as reasons for denial, according to court documents.

In his ruling, Judge Medley said a policyholder with all-risk coverage “has a ‘very light’ burden and must show only damage” occurred. He added that the burden of proof is on the insurer to define what claims are denied, adding that “exclusions must be interpreted as narrowly as possible to provide maximum coverage for the insured.”

The court said as a general rule, insurance policies should be interpreted to effect, not deny, coverage. During depositions, Audubon argued that the policy “speaks for itself.”

In addition, the pollution exclusion “was never intended to apply to residential homeowners claims for damages caused by substandard building materials,” the judge ruled. Faulty drywall that emitted various gases into the home “is not sufficient enough to qualify as a ‘pollutant’ under the pollution exclusion,” he said.

As for the gradual or sudden loss exclusion, the judge said he followed previous Louisiana court rulings that found “the purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen,” thus affording coverage to the policyholder.

Audubon argued that the exclusion applied to corrosion, as it’s been reported that sulfuric gases the drywall emits corrodes wiring and metals within the homes. Judge Medley said that the corrosion is a result of the drywall and not due to corrosion over time.

Judge Medley also ruled that the Chinese drywall is not defective as Audubon’s exclusion interprets it, meaning that the policy’s exclusion for faulty, inadequate or defective planning also does not apply.

Under the “plain language of the Audubon policy, the Chinese drywall ‘defect’ is not one that renders the drywall unable to perform the purpose of drywall,” Judge Medley wrote in his opinion.

Audubon is expected to appeal the ruling.

About 500 million pounds of tainted drywall was imported into the United States between 2004 and 2007. The drywall was traced to Chinese subsidiaries of German manufacturer Knauf Plasterboard Tianjin Co. Ltd.

Currently, there are more than 2,000 complaints filed nationwide regarding the faulty drywall, including a multidistrict litigation trial taking place in New Orleans.

Macaura v Northern Assurance Co Ltd {Facts}

Macaura own land on which stood timber. He sold the land and timber to a company he formed and received as consideration all the fully paid shares. The company carried the business of felling and milling timber. A fire destroyed all timber which had been felled. Macaura had earlier insured the timber against loss of by fire in his own name. He had not transferred the insurance policy to the company.

Macaura owned a tree plantation. The plantation was covered by an insurance policy. He subsequently sold the plantation to a company of which he was the only shareholder, through the purchase money remained owing to him. After the sale, Macaura continued to insure the plantation in his own name. A fire broke out and destroyed the plantation. When Macaura attempted to claim on the policy, the company refused to pay. The issue was whether Macaura had an insurable interest at the time of the loss

Case Fact @ Held

SALOMON v SALOMON & CO

Fact

Salomon had incorporated his boot and shoe repair business. He transferred the business to a company own by him. He took all the shares of the company except six which were held by his wife, daughter and four sons. Part of the payment for the transfer of the business was made in the form of debentures ( a secured loan) issued by the company to Salomon. Salomon transferred the debentures to Broderib in exchange for a loan. Salomon defaulted on payment of interest on the loan and Broderib sought to enforce the security against the company. Unsecured creditors try to put the company into liquidation.

Issue

Is Broderib or the unsecured creditors (Salomon himself) had priority in relation to payment of the debts?It was argued for the unsecured creditors that Salomon’s security was void as the company was a sham an was in reality the agent of Salomon.

Held By House Of Lords

The company had been properly incorporated and therefore the security was valid and could be enforced. A company and its members are separate persons. This principle is known as the veil of incorporation.

ABDUL AZIZ BIN ATAN & 87 ORS V LADANG RENGO MALAY ESTATE SDN BHD (1985) 2 MLJ 165.

Facts

all the shareholders of the company sold and transferred their entire share holdings to a certain buyer

Issue

the court had to determine whether a change of employer took place

Held

An incorporated company is a legal person separate and distinct from its shareholders. The company, from the date of incorporation, has perpetual succession and did not change its identity or personality even though the entire share holding of the company changed hands.

LEE V LEE’S AIR FARMING LTD (1961) AC 12

Fact

Lee who was a pilot who conducted an aerial top-dressing business, formed a company to conduct the business. Lee hold 2999 shares of the 3000 shares in the company. The remaining one share was taken by his solicitor as nominee for Lee. Under the articles of association, Lee was governing director with very wide powers. Workers’ compensation insurance was taken out, naming Lee as an employee. Lee was killed when his aeroplane crashed while engaged in aerial top-dressing.

Issue

His widow made a claim for payment under the Workers’ Compensation Act 1922. Her claim was initially rejected on the ground that as Lee had full control of his company he could not be a "worker" within the meaning of the Act. "Worker’ was defined under the Act as a person "who has entered onto or works under a contract of service ... with an employer."

Held By Privy Council

* the company was a separate legal entity distinct from its founder, Lee
* Lee could enter into a contract of employment with him

MACAURA v NORTHERN ASSURANCE CO LTD (1925) AC 619

Fact

Macaura own land on which stood timber. He sold the land and timber to a company he formed and received as consideration all the fully paid shares. The company carried the business of felling and milling timber. A fire destroyed all timber which had been felled. Macaura had earlier insured the timber against loss of by fire in his own name. He had not transferred the insurance policy to the company.

Issue

When Macaura made a claim his insurers refused to pay arguing that he had no insurable interest in the timber. Only persons with a legal or equitable interest in property are regarded as having interest in it.

Held By House Of Lords

The insurers were not liable. Only Macaura’s company, as owner of the timber, which had the requisite insurable interest in it. Only the company, and not Macaura, could insure its property against loss or damage. Shareholders have no legal or equitable interest in their company’s property.

LIFTING THE VEIL OF INCORPORATION

The Veil

The law recognise that a company is a separate legal entity distinct from its shareholders. Therefore the courts usually do not look behind "the veil" to inquire why the company was formed or who really controls it

Exceptions (Lifting The Veil)

The company is treated as in some degree identified with its members or directors or managers. These exceptions are described as "lifting the veil of incorporation".

Lifting the Veil by Statute

1. If a company breaches the prohibition against providing financial assistance for the purchase of its own shares, s67(3) makes its officers in default, and not the company, guilty of a criminal offence.
2. Under s304(2) which should be read in conjunction with s303(3) an officer who knowingly contracts a debt with no reasonable or probable ground of expectation of the company being able to pay the debt is guilty of an offence, and a conviction may be the basis for a court to declare that the officer concerned shall be personally liable to pay that debt.
3. Under s169 the directors of a holding company is required to prepare consolidated accounts consolidating the financial position of the holding company and its subsidiaries. In this respect the Act does not treat each company in the group as a separate legal entity but recognises the reality that a group of related companies functions as a single entity.
4. Under s36 if the number of members of a company (other than a company whose issued shares are wholly held by a holding company) is reduced below two and it carries on business for more than six months while the number is so reduced, a person who is a member of the company during the time that it so carries on business after those six months, and is aware of it, is personally liable for all the debts of the company contracted after those six months and may be sued therefor, and shall also be guilty of an offence against the Act.
5. Persons who were knowingly party to fraudulent trading may be personally liable to make such contribution to the assets of the company as the court may think proper under s304(1) of the Act.
6. Under s121, an officer of a company who signs or authorises to be signed on the company’s behalf any bill of exchange, cheque or promissory note where the company’s name is not properly or legibly written thereon, will be personally liable for the amount if unpaid by the company.
7. s140(1) of the Income Tax Act 1967 allows the Director-General of Inland Revenue to ignore transactions which have the effect of avoiding or evading tax: SBP Sdn Bhd v Director General of Inland Revenue (1988) MSTC 243.

Lifting the Veil at Common Law

1. Combating fraud

In Jones v Lipman (1962)1 WLR 832, a vendor had agreed to sell a piece of land. Subsequently, he changed his mind. In an effort to defeat a move to obtain specific performance the vendor transferred the land to a company which he controlled. The court refused to countenance this. The veil was lifted and specific performance was ordered against the vendor and the company.

In Gilford Motor Co v Horne (1933) Ch 935, an employee had entered into an agreement not to compete with his former employer after ceasing employment. In order to try to avoid this restriction the employee set up a company an acted through that. The court held that this manoeuvre would not be tolerated, the veil would be lifted and an injunction would be issued against the company too.

In Aspatra Sdn Bhd v Bank Bumiputra Malaysia Bhd (1988) 1 MLJ 97 the Supreme Court of Malaysia lifted the veil of incorporation to ascertain the actual ownership of assets in granting a Mareva injunction.

2. Agency

In Smith, Stone and Knight Ltd v Birmingham Corporation (1939) All ER 116, Atkinson J lifted the veil to enable a subsidiary company operating business on land owned by the holding company to claim compensation on the ground of agency.

In Hotel Jaya Puri Bhd v National Union of Hotel, Bar & Restaurant Workers (1950-1985) MSCLC 282, the Jaya Puri Chinese Garden Restaurant was closed down and the workers’ contracts were terminated. The industrial court found, on the facts, that the hotel was in fact the employer of the workers and ordered it to pay compensation. The hotel sought to quash the award. The High Court dismissed the application, holding that a court is willing to lift the veil of incorporation "when the justice of the case so demands" and that on the facts of the instant case there was the essential unity of a group enterprise and the restaurant and the hotel ought to be treated as a single unit.

In Firestone Tyre and Rubber Co Ltd v Lewellin (1957) 1 WLR 352, agency was once again the trigger for lifting the veil where a British company manufacturing tyres for an American holding company was held to be its agent. In Re FG (Films) Ltd (1953) 1 WLR 483, where fraud or sharp practice was also a factor the American holding company set up a British subsidiary to produce the film "monsoon’. It was held that there was an agency and that the film was an American one.

3. Groups

In Harold Holdsworth & Co (Wakefield) Ltd v Caddies (1955) 1 WLR 352, the respondent held an employment contract with the appellant company to serve it as Managing Director. The House of Lords held that the appellant company could require he respondent to serve a subsidiary company.

In DHN Food Distributors ltd v Tower Hamlets London Borough Council (1976) 1 WLR 852, the company operating the business was the holding company and the premises were owned by the company’s wholly owned subsidiary. Compensation was only payable for disturbance of the business if the business was operated on land owned by the company. It was held that the ownership of a lease and of the business which used the premises divided between two companies of the same group were treated as if owned by the same person.

4. Trust

In Trebanog Working Men’s Club and Institute Ltd v MacDonald (1940) 1 KB 576, the club was charged with selling liquor without a license. It was held that by the divisional court that the club in fact held the liquor on trust for its members so there was no offence.

In The Abbey, Malvern Wells Ltd v Ministry of Local Government and Planning (1951)Ch 728, it was held that shares in a company were held on trusts and that directing the affairs of the company were trustees so that the court could lift the veil and impose the terms of the trust on the company’s property.

PUBLIC PROSECUTOR V KASIHKU SDN. BHD.

(1991) 1 MSCLC 90, 653

KASIHKU had pleaded guilty to charges of failure to remit to the EPF contributions as required by the EPF Act 1951. The Magistrate imposed a fine and ordered that the defendant company pay the arrears of EPF contributions in seven monthly instalments. However, at the end of the seven month period, a portion of the arrears was still unpaid and KASIHKU was again brought to court. During the proceedings, the PP requested that a term of imprisonment be imposed on the manager of KASIHKU. Counsel for KASIHKU opposed, arguing that as the defendant company was a limited company it could not be sent to jail. The Magistrate refused to send the manager of the KASIHKU to prison for the default of KASIHKU and ordered that the balance of the arrears be recovered as a civil debt. PP appealed.

Issue

Whether an officer of KASIHKU could be imposed with a term of imprisonment for the default of the KASIHKU

Held

An officer of KASIHKU could not be sent to prison for offences committed by KASIHKU if there was no prosecution instituted against him as an officer of the defendant company.

There was no issue of process against any officer of the defendant company and none of the officers of the defendant company had been charged for offences relating to the Act.

JUDGEMENT

Abdul Aziz Atan vs Rengo Malay Estate Sdn Bhd

1.

This Appeal turns upon the proper application of reg 8 of the Employment (Termination and Lay-Off Benefits) Regulations 1980 (hereafter referred to as reg 8 and the Regulations).

2.

Ladang Rengo Malay Estate Sdn Bhd (the Company) as on 10 March 1981 had an issued capital of 5,000,020 fully paid ordinary shares of $1 each (the said shares) which were registered in the names of 25 owners (the registered owners). On that date their authorised agents entered into a written Agreement (the said Agreement) to sell the said shares to Gemas Bahru Estate Sdn Bhd (the Purchaser) for Ringgit Fifteen Million and sixty only. The main asset of the Company consisted of 1948 acres of land (hereafter referred to as the said land) on which the Company appears to have carried on the business of a rubber estate and oil palm.

3.

Clause 11 of the said Agreement provided as follows:

The Vendors hereby undertake FIRST to carry out the affairs and management of the Company in a manner more or less similar to the manner in which the same have been carried out in the past SECONDLY not to damage or cause to be done any damage to the rubber trees or oil palms on the said land by unreasonable or excessive tapping THIRDLY on or as soon as possible after the Completion date to produce to the Purchaser a complete list of trade liabilities incurred since the date of this Agreement AND the Vendors hereby declare that the balance of the Trade Creditors Accounts on the Completion Date shall not exceed the sum of $50,000 and that the Vendors shall personally be liable and pay for any sum in excess thereof and that no contingent liability has arisen by reason of any guarantee given by the Company.

4.

Clause 16 of the said Agreement provided as follows:

The Purchaser hereby agrees with the Vendors that subject to the Vendors fulfilling their undertaking contained in the Second Limb of cl 11 hereof the Purchaser shall have no claim whatsoever against the Vendors in respect of the said land and the Purchaser shall be deemed to have been completely satisfied with everything done by the Directors on or as regards the said land.

5.

The said Agreement was subject to the approval of the Foreign Investment Committee and it would appear that this was subsequently obtained and that the said shares were thereafter transferred to the Purchaser.
6.

On 3 November 1982 a claim was initiated under s 69 of the Employment Act 1955 for termination benefits under reg 8. The claim is for $168,670.40, representing the sum alleged to be payable to Abdul Aziz Atan and 87 other employees of the Estate. The claim is said to be as for April 1982. It alleges that the sale took place without notice to the employees although there had been a change in the Manager and staff at the Estate office. The personal particulars of the employees concerned were attached to the complaint as exh C1.

7.

The matter eventually came up for disposal on 2 April 1983. The complainants were represented by Mr. B Lobo of Counsel. The Company appeared by its director Mr. Teh Wan Boon. In the preliminary discussion the parties agreed that the point in dispute was whether the Estate was sold and if so whether a change of employer took place. After amending the claim to include wages in lieu of notice Abdul Aziz Atan gave evidence as follows:—

I made this claim as the estate had been sold. In the agreement of sale dated 10 March 1981 they were 25 registered owners of the estate. (Agreement marked on Ex (2). The said 25 owners sold the estate to Gemas Baru Estate Sdn Bhd. I have made a claim for termination benefits and wages in lieu of notice against the new owners of the estate at Pejabat Perhubungan Perusahaan Kluang. I also made the same claim against the new owners of the estate at the same office.

I wish to correct my previous statement that there was no change on the staff of the estate when the transaction took place in April 1982.

8.

In answer to the Enquiry Officer he said:—

When I learnt of the sale of the estate, I did make a claim for termination benefits against both the new and former owners, but was not paid as they claimed that it was only the sale of the shares of the estate.

Most of the complaints in this case are still working for the estate. Some however, have left after the sale was made.

We are all also working under the same terms and conditions of service as prior to the sale of the estate.
9.

Teh Wah Boon declined to give evidence and the parties then made their respective submissions.
10.

Mr. Lobo’s submission before the Enquiry Officer was substantially the same as that which he made before me. Mr. Teh submitted that there had been no change of ownership and that the Estate is still owned by the Company. He referred to a Collective Agreement between NUPW and the Estate made on 14 February 1980 which was still in force on the date of the transfer of the shares. An amended list of complainants was submitted on 25 April 1983 and the Enquiry Officer gave his decision on 16 May 1983. He expressed his findings as follows:—

I am satisfied that all the 88 complainants were employees of the Rengo Malay Estate Sdn Bhd and that they were working for the defendant at its rubber estate before and after the sale of the defendant’s shares on the same terms and conditions of services.

I am also satisfied that the shares of the Rengo Malay Estate Sdn Bhd did change hands, with the legal entity of the company remaining the same even after the transfer of shares took place.

Further, I am satisfied that all the complainants were still working for defendant without loss in seniority or break of service after the sale of the shares took place. The services of the complainants were never terminated.
11.

The claimants then appealed. As the matter was presented to me, it seems that the sole issue with which I am concerned may be expressed thus:

Where all the employees of a corporate organisation continue in employment without any break on the same terms and conditions of service, does reg 8 require it to be legally presumed that their contracts of service have been terminated merely because there has been a change in the ownership of the share capital of that organisation, notwithstanding that there has been no change in the business being carried on by the corporation?
12.

Kumpulan Kamuning Sdn Bhd v Rajoo [1983] 2 MLJ 400 is a decision of the Federal Court but clearly distinguishable on the facts. The employees affected by that decision were employed in the Bukit Lembu Div of the appellant Company. That Division was sold to the National Land Finance Co-operative Society Ltd. Thus the case did not deal with the sale of shares in a limited company but a sale by the company of a part of its operations which thereby passed into new hands. The appellant Company then terminated the contracts of service of their employees affected by the sale with effect from the date of the hand-over. The decision turned on whether the employees had a choice whether to accept an offer of re-employment or insist on termination benefits being paid in accordance with reg 8.
13.

The only other local decision cited to me was the unreported decision of Association Motor Industries (M) Sdn Bhd v Thangaraju Poomie Judgment dated 28 October 1983 in Kuala Lumpur High Court Originating Motion No A44 of 1982 (unreported). Mr. Lobo has strenuously submitted that on the principle of stare decisis I should follow this decision, and further states that it is on all fours with the facts before me.
14.

In that case, the Appellant limited Company, in the business of assembling motor vehicles at Shah Alam, had all its shares owned initially by Wearne Brothers. Wearnes sold out to the Ford Motor Co. Thangaraju contended that the take-over amounted to a change in the ownership of the business and Abdul Razak J agreed. I must confess that I have had some difficulty in applying the judicial reasoning in that case to the facts before me. Even though the said shares had changed hands here, the fact remains that the Company is still the owner of the Estate i.e. there is no change in the ownership of the business. In asking Mr. Lobo to address me on the mischief aimed at by reg 8 I had in mind the example of a small family Company owned say by a husband and wife who are unfortunately killed in a crash. The business of the company continues as before and the employees continue in service without a break, under their contracts of employment with the Company. Does reg 8 require us to presume that a change has occurred in the ownership of the business because the shares pass into the hands of their Administrator of the deceased, and again when it passes into the hands of the beneficiaries under a will or an intestacy? Does it matter in such case that there have been changes in the interim in the constitution of the Board, or of senior management in the Company?
15.

Mr. Lobo submits that reg 8 must be given a beneficient construction in favour of the employee and that the words “whether by virtue of a sale, or other disposition or by operation of law” are very wide. He stresses that the Regulation uses the word “deemed to have been terminated” and he says that it thereby follows that even if no termination of employment has in fact taken place, it must be presumed in the case before me and in the example I have just cited. If he is right, the proposition he has advanced will have far reaching consequences for the economic life of this country.
16.

With respect, the focal point of reg 8 is the word “change”. That is where the emphasis must be placed. The Regulation requires a metamorphosis not only in the ownership of a business but also in the business for the purposes of which an employee is employed.
17.

It is trite law that an incorporated company is a legal person separate and distinct from the shareholders of the company. The company from the date of incorporation has perpetual succession and the Companies Act provides that the liability on the part of the shareholders to contribute to the assets of the company will be limited in the manner provided by law and its memorandum and articles of association. The whole point of forming a limited company is that the shareholders can have in their hands the management of the business without incurring the risk of being under unlimited liability for the debts of the company. Authority for this proposition should be found in any textbook on law relating to companies (but see Halsbury’s Laws of England 4th ed vol 7 paras 1, 82 and 100.)
18.

In the present case there was no change whatsoever in the constitution of Ladang Rengo Malay Estate Sdn Bhd. The company did not change its identity or personality and it continued to own all the assets of the estate which were an integral part of the business for the purposes of which the Applicants were employed.
19.

But it is submitted for the Applicants that for the purposes of reg 8 one should not look to the company but have regard to the change in the identity of the shareholders. In other words, it is being submitted that the business of Ladang Rengo Malay Estate Sdn Bhd was not owned by the company but by the shareholders. This proposition violates the most elementary concept of company law. A single shareholder of a company only owns the shares in his name. He has no right to lay his hands on the assets of the company. In certain circumstances it is of course within the power of the shareholders to wind up a company and have the nett assets thereof, after satisfaction of all its liabilities, distributed to themselves. But until that happens property standing in the name of the company belongs to the company.
20.

The stand taken by the Applicants that the shareholders are the owners of the company and that the previous shareholders and the new shareholders are jointly and severally liable for the payment of the termination benefit which they claim, is wholly inconsistent with the format in which this claim has been cast. For the Applicants have not sued these shareholders. They have sued the company. Their claim is a contradiction in terms.
21.

For myself, I would say, with respect, that a plain reading of reg 8 does not support the construction Mr. Lobo sought to place upon it. I would require far clearer words in a statute if the intention was, as is now being argued to stand the provisions of the Companies Act on its head. At the risk of repetition I would say that this is the consequence which would follow, because the liabilities of the company would then be transferred directly to its shareholders regardless either of the absence of any privity of the contract between them and the company’s employees, or the legal limitation of the shareholders’ liability.
22.

Thus far I have not referred to the English authorities and in particular to s 13(1) of the English Redundancy Act 1965. Admittedly the wording of that section is different from reg 8 in that not only does it require that there should be the kind of change which reg 8 requires (and as to this the wording is identical), but also it requires that there has to be a physical termination of employees’ contract of employment by the previous owner in connection with that change.
23.

In other words whereas the English section requires that there should be a change in ownership and also a physical termination of the contract of employment by the previous owner, the Malaysian regulation assumes that such a termination has occurred if the necessary change has taken place.
24.

Bearing this in mind, I would with respect, say that some assistance can be derived from the English authorities which are persuasive to that extent. Of the many cases cited to me I found two helpful namely Dallow Industrial Properties Ltd v Else [1967] 2 All ER 30, 33 (especially Diplock LJ at page 33) and Woodhouse v Peter Brotherhood Ltd [1972] 3 All ER 91 (especially Buckley LJ at page 98). One should be slow to apply tax cases in other areas but the distinction between the shareholders of a company and the company itself has been clearly brought out in Cameron v Hector Finlayson & Co Ltd [1967] ITR 110 and Wright v Charlton Concrete Co Ltd [1967] ITR 72. This last case has very close parallels to ours in that the entire shareholding of the company changed hands but the tribunal held that there was no change of ownership of business within the meaning of s 13(1) of the English Act.
25.

I am indebted to both Mr. Lobo and Mr. Ajit Singh for providing me with meaningful assistance in coming to a decision in this matter. The appeal is dismissed with costs.[1]

Lee -v- Lee’s Air Farming Limited [1960] 3 All ER 420

Mr Lee had formed a company, Lee's Air Farming Limited and held nearly all its shares. He was the managing director, but by profession a pilot. The company was formed to conduct an aerial top-dressing business. He appointed himself the chief pilot for the company. In the Court of Appeal of New Zealand, North J said: "These powers were moreover delegated to him for life and there remained with the company no power of management whatsoever. One of his first acts was to appoint himself the only pilot of the company, for, although article 33 foreshadowed this appointment, yet a contract could only spring into existence after the company had been incorporated. Therefore, he became in effect both employer and worker. True, the contract of employment was between himself and the company: see Booth v Helliwell, but on him lay the duty both of giving orders and obeying them. In our view, the two offices are clearly incompatible. There could exist no power of control and therefore the relationship of master-servant was not created." Held: Appeal allowed. "one person may function in dual capacities. " and "Ex facie there was a contract of service. . . . the real issue is whether the position of the deceased as sole governing director made it impossible for him to be the servant of the company in the capacity of chief pilot of the company. . . there was no such impossibility. There appears to be no greater difficulty in holding that a man acting in one capacity can give orders to himself in another capacity than there is in holding that a man acting in one capacity can make a contract with himself in another capacity. The company and the deceased were separate legal entities. The company had the right to decide what contracts for aerial top-dressing it would enter into. The deceased was the agent of the company in making the necessary decisions."

Facts Salomon v A Salomon

Mr Aron Salomon was not a leather boot and shoe manufacturer. His firm was in Whitechapel High Street, with warehouses and a large establishment. He had had it for 30 years and "he might fairly have counted upon retiring with at least £10,000 in his pocket." He had a wife, a daughter and five sons. Four of the sons worked with him. The sons wanted to be partners, so he turned the business into a limited company. The wife and five eldest children became subscribers and two eldest sons also directors. Mr Salomon took 20,001 of the company's 20,007 shares.

The price fixed by the contract was £39,000, which was "extravagent" and not "anything that can be called a business like or reasonable estimate of value." Transfer of the business happened on June 1, 1892. Purchase money for the business was paid, totalling £20,000, to Mr Salomon. £10,000 was paid in debentures to Mr Salomon as well (ie, Salomon gave the company a loan, secured by a charge over the assets of the company). The balance paid went to extinguish the business’ debts (£1000 of which was cash to Salomon).

But soon after Mr Salomon incorporated his business, there was economic trouble. A series of strikes in the shoe industry led the government, Salomon's main customer, to split its contracts between more firms (the Government wanted to diversify its supply base to avoid the risk of its few suppliers being crippled by strikes). His warehouse was full of unsold stock. He and his wife lent the company money. He cancelled his debentures. But the company needed more money, and they sought £5000 from a Mr Edmund Broderip. They gave him a debenture, the loan with 10% interest and secured by a floating charge. But the business still failed, and they could not keep up with the interest payments. In October 1893 Mr Broderip sued to enforce his security. That was the end. The company was put into liquidation. Mr Broderip was paid but other unsecured creditors were not.

The liquidator met Broderip’s claim with a counter claim, joining Salomon as a defendant, that the debentures were invalid for being issued as fraud. The liquidator claimed all the money back that was transferred when the company was started: rescission of the agreement for the business transfer itself, cancellation of the debentures and repayment of the balance of the purchase money.

Q & A ..........

Should the horizontal instrument regulate commercial
guarantees limited to a specific part?

Option 1: Status quo: the possibility to provide commercial guarantee limited to
specific part would not be regulated by the horizontal instrument.
Option 2: The horizontal instrument would only provide for the information
obligation.
Option 3: The horizontal instrument would include an information obligation and
would provide that, by default, a guarantee covers the entire contract goods.


Should the consumer be free to choose any of the available
remedies?

Option 1: Status quo: consumers would be obliged to request repair/replacement
first, and ask for a price reduction or termination of contract only if the other
remedies are unavailable.
Option 2: Consumers would be able to choose any of the available remedies from
the start. However, termination of the contract would only be possible under
specific conditions.

How should the notions of consumer and professional be defined?

Option 1: An alignment would be made of the existing definitions in the acquis,
without changing their scope. Consumers would be defined as natural persons
acting for purposes which are outside their trade, business or professions.
Professionals would be defined as persons (legal or natural) acting for purposes
relating to their trade, business and profession.
Option 2: The notions of consumer and professional would be widened to include
natural persons acting for purposes falling primarily outside (consumer) or
primarily within (professional) their trade, business and profession.
Option 3: Consumers would be obliged to request repair, replacement or reduction
of price first, and would be able to ask for termination of contract only if these
remedies are unavailable.


In your opinion, which is the best approach to the review of the consumer legislation?

Option 1: A vertical approach consisting of the revision of the individual directives.
Option 2: A mixed approach combining the adoption of a framework instrument
addressing horizontal issues that are of relevance for all consumer contracts with
revisions of existing sectoral directives whenever necessary.

A consistent approach for EU consumers?

The review covers the 8 main directives aimed at protecting consumers, including the familiar roll-call of the Unfair Terms in Consumer Contracts Directive, the Consumer Sales and Guarantees Directive, the Distance Selling Directive, the Doorstep Selling Directive and the Package Travel Directive. It pulls on a number of surveys which show that despite attempts at harmonisation, trade between member states in consumer goods is not what it could be - many businesses would like to sell to consumers in other member states but are fearful of doing so because of varying regulatory requirements, and many consumers who purchase goods from another member state are running into difficulties when their rights vary state to state.

The main objective of the review is to remove this stumbling block, allowing consumers and businesses within the European Union to trade without concern as to where the other party is based, primarily to benefit consumers by allowing for consistency, but also to reduce the burden of SMEs by creating a more predictable regulatory environment within the European Union.

The green paper is consulting on a number of issues including the proposed approach (either a vertical approach requiring the revision of individual directives, or a horizontal approach requiring the implementation of a framework addressing issues for all consumer contracts), the definitions of consumer and professional (recognising that there is not currently a consistent approach to this), the potential introduction of a general duty to act in good faith, and detailed questions regarding unfair terms, withdrawal, delivery, remedies and other issues.

Custodial sentence for obtaining data illegally?

The Department for Constitutional Affairs has announced that it intends to take forward the ICO’s suggestion that custodial sentences be available for breach of s55 of the Data Protection Act 1998. This will be introduced when parliamentary time allows.

Entries Tagged 'Case Law' ↓ Is decision-making “processing” under the Data Protection Act? April 5th, 2007 — Data Protection, Case Law The case of

The courts have once again had reason to consider a contractual obligation to act reasonably and in good faith in the case of Tramtrack Croydon Ltd v London Bus Services Ltd [2007] EWHC 107 (Comm). In the contract the parties had agreed to agree (acting reasonably) some particular financial arrangments and to refer any failure to agree to expert determination. Considering the authorities including Walford v Miles [1992] 1 All ER 453, the parties did not contest that the clause was unenforceable for lack of certainty, and the court went on to confirm this stating: “In those circumstances the Court can, in my judgment, decide, in the case of dispute, at least what they, and the expert, acting reasonably, are bound to take into account or ignore. An agreement such as this should not be construed to mean that the parties (or the expert) may legitimately take into account anything (however unreasonable or irrelevant) they choose, or that their contractual fate is to be determined by whatever the appointed expert happens (on whatever basis) to decide. Reasonableness is a criterion on which the Court (and the expert) can make a judgment; and, if the parties cannot agree whether it would be unreasonable to take into account, or to exclude, a particular consideration, the Court may determine the question.”

Meta data, e-discovery and Vista

There are a number of blogs in the US currently commenting on the impact of Vista to electronic discovery. Recent changes in the US to the Federal Rules of Civil Procedure around discovery of electronic documents have brought this subject close to the hearts of US attorneys, but the comment is no less significant in the UK.

Metadata is already an issue for businesses, as even outside the scope of litigation, documents which are let loose into the world electronically can contain information not immediately apparent to the naked eye - details of who had edited the document, changes from previous versions, even the originating document that this one is based on.

Microsoft’s new operating system Vista does not change the need for caution in this sphere, but its new security features may cause additional data to be disclosed during a disclosure process. These features will no doubt be a welcome relief for those lawyers busily drafting late at night who suddenly “lose” hours of carefully crafted work when their computer crashes (or they close it without saving!). But by saving numerous versions of the document as “shadow” documents, comments which may not be intended to see the light of day could find themselves basking in the sunlight.

I have yet to see any case where the existence of metadata has made or broken the case (although I’m willing to be proven wrong), and whether this does become an issue remains to be seen. In the meantime, businesses should at least be aware of the information their computer systems are collecting about the work their employees are doing, and consider their information management strategies accordingly.

Entries Tagged 'Professional Conduct' ↓ What duty does a solicitor owe?

The recent case of Marplace (No. 512) Limited v Chaffe Street [2006] revisits some of the issues raised in Football League Ltd v Edge Ellison (a Firm) [2006] EWHC 1462 regarding the scope of a solicitor’s duty to advise on the commercial aspects of a transaction, and caps on solicitor’s liability for negligence. The firm of solicitors advised a company on a corporate acquisition. For various reasons the acquisition went wrong and the solicitors were accused of negligence.

Ultimately the solicitors were found not to be negligent. The scope of a solicitor’s duty depended on the context of his instructions from his client.

A solicitor may be duty bound to proffer unsolicited advice or seek further instructions for example, if they were not involved in the negotiation of a transaction but were simply instructed to implement that transaction, the solicitor must still point out any legal obscurities of which the client may be unaware, or point out any hidden pitfalls.

However, a solicitor is not under a duty to review the whole range of commercial considerations underlying a particular deal to which the client may have given insufficient thought. In this instance, the solicitors in question had been entitled to take the view that their clients were intelligent, sophisticated and experienced businessmen who were perfectly able to seek advice if they desired it.

The case went on to comment on the cap on liability. The solicitors letter of engagement said “You agree that … our maximum aggregate liability to you in the event of professional negligence on any matter in relation to which we are instructed shall be £20 million… should you want to vary these limitations we shall be pleased to discuss it with you but we reserve the right to vary our fees accordingly”.

As context:

* Chaffe Street’s turnover was low - about £4 million.
* The amount of the limitation set by Chaffe Street with its various clients did vary from one transaction to another.
* Chaffe Street’s insurance at the time of the alleged breach was £25 million.
* Chaffe Street accepted that the Unfair Contract Terms Act applied to the cap on liability and therefore they were obliged to demonstrate it was reasonable.

The court did find that limitation was reasonable for the following reasons:

* The claimant was a sophisticated and wealthy consumer, and therefore the bargaining positions of the parties were equal. In particular the claimant was used to contracting with professionals and the basis of limitations of liability.
* The claimant was aware of the cap on liability and had in fact discussed it with Chaffe Street. It had not been imposed as a non-negotiable term (albeit the court recognises that it would have probably been difficult to switch solicitors at the time).
* The engagement letter made it clear that if the claimant wanted different limitations of liability then Chaffe Street was prepared to discuss that.
* Chaffe Street determined the £20 million limit on reasonable commercial principles taking into account insurance cover, expenses and circumstances of the transaction.

We don’t frequently get suggestions from the court as to what levels of limitation of liability will be reasonable under UCTA. It’s always nice when one comes along!

Copyright and Related Rights for the Knowledge Economy

Copyright and Related


The European Commission’s Internal Market Directorate-General commissioned a report, now published, into Copyright and Related Rights for the Knowledge Economy. With the full report running to over 300 pages, I’d recommend taking a look only at the executive summary. They have grappled with a whole range of issues relating to the changing ways in which we use information, and the international nature of that use. However, 15 years of harmonisation in the EU has, according to the report, brought both benefits and drawbacks.

Do you have to accept repaired goods?

No.

The House of Lords have recently looked at the operation of s 35 (6)(a) of the Sale of Goods Act 1979 where a customer and a seller had agreed to the repair of defective goods.

s35 can be a confusing provision which sets out when a customer may be “deemed” to have accepted goods purchased under a contract for the sale of goods.

In this case, the customer had used the goods (a power harrow) for a few days before it was clear they were defective. The supplier took them away to investigate. On investigation, the defect was identified and fixed. So no problem?

Well, not quite. The customer asked what the problem had been and what had been done to fix it - but the supplier would only tell him that the problem had been resolved. When the customer found out what the problem had been, he was concerned that the use before the repair could have caused long term damage - and he wouldn’t find that out until next spring when next cultivating the soil.

s 35 (6)(a) says that the buyer is not obligated to accept goods just because he has agreed to their repair. But it goes no further regarding what the effect of agreeing to repair has on the contract of sale.

The House of Lords have tried to fill this gap. They held that there was a separate contract for the repair of the goods, which did not in itself affect the customer’s right to rescind the contract of sale, but which must contain an implied term that if it was performed correctly, the customer would not exercise this right. This was required for business efficacy.

There was also an implied term in the repair contract that the customer would be informed of the defect and the actions taken to cure it - this was required to enable the customer to make an informed decision about whether to accept the repaired goods.

Failure to comply with this implied term was a material breach. The customer was entitled to rescind the repair contract, and then the contract of sale.

Phew. All in all, a complex analysis, but one which was required by the absence of detail in the statute.

Tip: If you are negotiating a sale of goods contract which includes an option for the supplier to repair any defective goods, consider including provisions which explain what this means rather than relying on the statutory provisions. What information does each party need to provide? How long will the repairs take? Can the customer reject the repaired products?

This applies whether you are acting for the customer or the supplier - the certainty that can be obtained through a clearly drafted clause has to be preferable to costly court action to determine the outcome.

Contract: express and implied terms

Express terms are terms that have been specifically mentioned and agreed by both parties at the time the contract is made. They can either be oral or in writing.

However, sometimes a term which has not been mentioned by either party will nonetheless be ‘included’ in the contract, often because the contract doesn’t make commercial sense without that term. Terms like this are called implied terms, and there are two main types:

* Terms implied by statute: the Sale of Goods Act 1979. The key provisions are:

o Section 12: the person selling the goods has to have the legal right to sell them.

o Section 13: if you’re selling goods by description, e.g. from a catalogue or newspaper advert, then the actual goods have to correspond to that description.

o Section 14: the goods must be of “satisfactory quality” – that is, they should meet the standard that a reasonable person would regard as “satisfactory”. Also, if the buyer says they’re buying the goods for a particular purpose, there’s an implied term that the goods are fit for that purpose.

o Section 15: if you’re selling the goods by sample – you show the customer one bag of flour and they order 50 bags – then the bulk order has to be of the same quality as the sample.

* Terms implied by the courts…

o As a matter of fact. Something that’s so obviously included that it didn’t need to be mentioned in the contract. If I agree to pay you £50 for a lawnmower, it probably wouldn’t occur to us to write down that we mean fifty pounds sterling, as opposed to any other sort of pound. That’s obvious to both of us. (Beware of this point – it has to have been obvious to both parties – it’s not enough to show that one party thought it was included, or that the contract would have been more reasonable with the added term.)

o As a matter of law. This is about general considerations of public policy – the courts are laying down, as a matter of law, how the parties to certain types of contract ought to behave. For example, in one case, the courts held that landlords of blocks of flats ought to keep the communal areas (lifts, stairs etc) in a reasonable state of repair – so that term was implied into the rental contract.

o Customary terms. Some terms are generally known to be included in contracts in a particular trade or locality. Amongst bakers, “one dozen” means thirteen – they don’t have to include terms in every contract specifying that.

Sales of good

Exercise

1. What is ‘sale of goods’ contract?

ANSWER
 A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in good to the buyer for a price (s.4(1)).
 In other words, a sale occurs when the ownership or property in goods passes to the buyer.


2. Discuss the elements necessary to exist in a sale of goods contract.

ANSWER
Goods which form the subject of a contract of sale may either be existing goods or future goods under section 6, Sale of goods Act 1957. Existing goods are goods are goods already owned or possessed by the seller and may be either specified or agreed upon at the time a contract of sale is made.
Elements necessary to exist in a sale of goods contract are specific goods and unascertained goods. Specific goods means goods identified and agreed upon at the time a contract of sale is made. For example, if Ali agree to buy Mahmud’s car bearing registering number WPP 888 this is contract for the sale of specific goods. On other hand, unascertained goods are those identified by description only. An example is Ah Ling buys from Muthu two Rolex gold watches, the goods would be ascertained goods only when they have been appropriate to the contract, as when two Rolex gold watches have been sat aside for Ah Ling in accordance with the contract.


3. What is ‘goods’ under the SOGA?

ANSWER
Every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale


4. Explain and illustrate the difference between movable and immovable property?

ANSWER


5. Price in an important feature in a sale of goods contract. How is price being fixed?

ANSWER
A contract of sale is made by an offer to buy and sell goods at a price and by the acceptance of such an offer: section 5(1), sales of goods Act 1957.The contract may provide for the immediate delivery of the goods or the immediate payments of the price or both. Delivery or payments may even be by installments: Section 5(1), sale of goods Act 1957. Price means the money consideration for the sale of goods. Price may be fixed in the following manner:
1) It may be fixed by the contract.
2) It may be left to be fixed in a manner agreed in the contract.
3) It may determined by the course of dealing between the parties.
4) Where the price is not determined in any one of the aforesaid ways, the
Buyer must pay a reasonable price.


6. What is ‘term of contract’? Who determines it?

ANSWER
Terms of contract are either express or implied. There are some implied terms under the SOGA 1957 for the purpose of protecting the consumers. Terms of contract can be in the form of ‘CONDITION’ or ‘WARRANTY’ – s12 (1)


7. What is ‘warranty’? What rights may arise if warranty is breached?

ANSWER
A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated : section 12(3),sale of goods act 1957.


8. What is ‘condition’? What rights may arise if warranty is breached?

ANSWER
A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated: Section 12(2), Sale of goods act 1957.As a general rule, a breach of condition entitles the innocents party to repudiate the contract. However, in the following circumstances, the innocents’ party cannot repudiate the contract but can merely claim damages:


a. where the buyer waives the condition;
b. where the buyer elects to treat the breach of condition as a breach of warranty and claim damages only;
c. where the contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition must be accepted as a breach of warranty unless otherwise provided in the contract;
d. Where the contract is for specific goods the property in which has passed to the buyer, the breach of any condition must be accepted as a breach of warranty unless otherwise provided in the contract.



9. Who determine whether a term of contract is warranty or condition?

ANSWER
The parties involved are Seller and Buyer. However, the contract is made by an offer to buy or sell goods at a price + acceptance of such an offer (s.5(1)). Meanwhile, the offer & acceptance may be made in writing or/and by word of mouth, or implied from conduct (s.5 (2))

10. What is meant by ‘time is of essence in the contract’?

ANSWER
Stipulations as to time of payments are not deemed to be of the essence with respect to the contract of sale: Section 11, Sale of goods Act 1957. This means that unless the contract specifically states that the time of payments shall be the essence of the contract, if a buyer fails to pay by an agreed date, it does not entitles the seller to repudiate the contract.


11. Terms of contract can be either express or implied, explain.

ANSWER
An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent there with.









12. SOGA imposes certain implied terms in a sale of goods contract, what is the purpose of this? Can parties to contract modify those implied terms?

ANSWER

These implied terms will only apply in so long the parties have not excluded or modified them.




13. It is an implied term that a seller must have had a title over the goods sold. Explain and illustrate.

ANSWER
In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the part of the seller, that, in the case of a sale, he has a right to sell the goods, and that in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.
As a illustrate, Marry sold to jean a piano and jean paid Mary the purchase price. After one year, Jean discovered that the piano actually belonged to john and that Mary was actually looking after john possession and house while john was overseas. Jean can recover the price in full even though she had used the piano for one year.




14. It is an implied term that a seller must have released the goods from any charges or encumbrances. Explain and illustrate.

ANSWER

In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied warranty that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time when the contract is made.











15. What can buyer do if he/she finds the goods do not match with the description or sample earlier shown?

ANSWER
Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description. However, where the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description.



16. It is an implied term that a seller must provide a good that is fit for the purpose wanted by the buyers. What are the requirements to have this implied term applicable?

ANSWER
In short, as general rule is no implied rule warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. There two exceptions to this rule are goods must be reasonably fit for purpose for which the buyer wants them; Goods must be of merchantability quality. Where the buyer, express or implied, makes known to the seller the particular purpose for which the goods are required so as to show that he relies on the seller’s skill or judgment, and, the goods are of a description which is in the course of the seller’s business to supply, there is an implied condition that the goods shall reasonably fit for such purpose.



17. What is meant by ‘merchantable quality’?

ANSWER

Merchantable quality which means subject to the provisions of this Act and of any other law for the time being in force, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except. Besides that, where goods are bought by description from a seller who deals in goods of that description… there is an implied condition that the goods shall be of merchantable quality.










18. What can buyer do if he/she finds the goods must be correspond with the sample shown?

ANSWER

The bulk of the goods must correspond with the sample. If the bulk is totally inferior to the sample, the buyer may effect to reject all the goods. However, if the bulk is only party inferior to the sample, the buyer may either elect to accept all the goods and claim damages for those which are inferior or reject all the goods and sue for damages. The buyer does not have the alternative to accept part of the bulk and reject the rest if the contract of sale is not severable.


19. Distinguish ‘property’ from ‘possession’.

ANSWER
In a sale of goods contract, the two must pass from the seller to the buyer. The passing of property determines who to bear the risks of such property. Only when the property passes to the buyer, the risk will also pass to him. Irrespective whether or not the good has been physically delivered to the buyer.
(sec. 26) Risk prima facie passes with property where by unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer. But when the property therein is transferred to the buyer, the goods are the buyer’s risk whether delivery has been made or not. Provided that where delivery has been delayed through the fault of either the buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault.
Unless the unascertained goods which the property passes to the buyer only after the goods are ascertained (s.18).E.g. when A buys from B the latest Honda car to be consigned from Japan. Only when B has set aside the car for A, the property passes to A. Besides that ascertained/specific goods where the property in goods passes to the buyer at such time as the parties to the contract intend it to be transferred (s.19) mean while this intention can be identified by looking at: TERM of contract and/or the CONDUCT of parties & CIRCUMSTANCES of the case.


20. What is meant by the rule of ‘nemo dat quod non habet’?

ANSWER
Section 27 of the sale of goods Act 1957 codifies the ‘nemo dat quod non habet’ which means ‘no one can give a better title than he has himself’. This means that if goods are bought from a person who is not owner’s authority, the buyer does not acquire any title Lim chui lai v. Zeno Ltd and Ng Ngat Siang v. Arab Malaysian Finance bhd& Anor





21. In which section under SOGA is the above rule provided?

ANSWER
Under section 2 of the SOGA


22. Is there any exception(s) to the above rule?

ANSWER

YES…
a. estoppel
b. Sale by a mercantile agents
c. Sale by one of joint owners
d. Sale under a voidable title
e. Sale by a smaller in possession after sale
f. Sale by a buyer in possession

COMPANY LAW --> EXERCISE

EXERCISE ON COMPANY LAW (BBL2014)
Ben and Gary are the subscribers of Sporty Sdn. Bhd., a company that imports sport equipments from China to Malaysia. After two years of successful business, the company decides to buy 70% of shares at Promo Sdn. Bhd. another local company that does the promotion and distribution works for Sporty Sdn. Bhd. in Malaysia. The other 30% shares were retained by Lim and Leong, both the original subscribers of Promo Sdn Bhd. On this outset, please discuss the legal issues and their solution according to the Malaysian company laws that you have learned:

Question 1:
Memorandum and Articles of Association are vital documents for every company. Explain the nature and function of each of Memorandum of Association and Articles of Association.

ANSWER OF QUESTION 1:
The memorandum of association of a company, often simply called the memorandum, is the document that governs the relationship between the company and the outside. While the articles of association of a company, often simply referred to as the articles, are the regulations governing the relationships between the shareholders and directors of the company, and are a requirement for the establishment of a company.
Together with the memorandum of association, they form the constitution of a company. A similar term, "articles of agreement", is often used for non-profit organizations. The memorandum of association records the agreement of the first subscribers to form a company and to become members and, in the case of a company that is to have a share capital, to take at least one share each. Articles of association typically cover the issuing of shares, the different voting and dividend rights attached to different classes of share, restrictions on the transfer of shares, the rules of board meetings and shareholder meetings, and other similar issues.

Question 2:
Sporty Sdn. Bhd. made a contract with ChinaSport Corp (a Chinese company) to supply gymnastic equipments to Kuala Lumpur. Unknown to Gary, Ben had made a prior back agreement with ChinaSport Corp to allocate some shares of ChinaSport Corp to Ben personally as a gift for his role in concluding the contract with Sporty Sdn. Bhd. Gary only knew this later and he asked if there is anything he could do against Ben. Please advise him and support your answer with relevant decided case law.


ANSWER OF QUESTION 2:
In this case, Gary can sue Ben for using company power for his own personal benefits without notifying the shareholders (Gary in this case). This type of offenses falls under the principal of “Lifting of Corporate Veil” which states that “in certain circumstances the directors and members of the company might be personally liable for their business transactions”. These cases include:
1. Business carried on when there are fewer than two members.
2. Defrauding the creditors.
3. Signing in documents without the name of the company.
What Ben has done is signing documents without the name of the company (prior back agreement with China Corp) to get personal gift as shares. He is only eligible for the gift due to what he has done for China Corp to get the deal with Sporty Sdn Bhd.


Question 3:
In undertaking the promotion activities, Promo Sdn. Bhd. had received loan amounting to RM 1million, that is currently outstanding (overdue) and exceeds the assets of Promo Sdn. Bhd. Bank Putri Berhad (the creditor) seeks to claim for the repayment from all the company’s owners, i.e. Sporty Sdn. Bhd., Lim and Leong. Please explain to them the law on this and who should be liable to pay the debt in this situation. Please support your answer with relevant decided case law.



ANSWER OF QUESTION 3:
According to this this, reference can be made to the case that discusses “Salomon v. Salomon Co.LTD(1987)”. The individual that is supposed to reimburse back the balance due is the possessor company, which is know as Sporty Sdn.Bhd, this is because, the law of Separate Legal Entities claims that the mentioned company is obviously separate from it’s members/ this means that Leong and Lim are only the members of the company after the taking over of the company by Sporty Sdn.Bhd. Sporty Sdn.Bhd is accountable if a fine is in consideration to be passed.


Question 4:
Knowing that Promo has an outstanding debt amounting to RM 1million, Lim and Leong, who also acted as directors of Promo Sdn. Bhd. secured another business with a third party in which Promo has to finance the project with their money first, and therefore they applied for another loan at another bank. The loan of RM 500K was approved, but not long after that the loan was due and it was obvious that Promo Sdn. Bhd. could not pay as it already became insolvent in the first place. In the view of doctrine of separate legal entity, please discuss the liabilities of the directors (Lim and Leong) in this case. Please support your answer with relevant decided case law.


ANSWER OF QUESTION 4:
The case that suits this matter will be is Lee v. Lee’s Air Farming Ltd [1960]..
The incidents of the events of this case are very much similar to the example case given. In this case, lee acted as the pilot, governing director and the controlling shareholder of the company. After the murder, his wife claimed compensation from the company and it was the court’s decision to the wife’s entitlement of compensation as the situation declares that the company and Lee were separate legal persons. So, when we analyse the case further, it is understood that in the case of Promo Sdn.Bhd, the directors, namely Leong and Lim will not be liable to to pay their liabilities but in order to clear the debt the comoany will be liquidated. Despite the high ranking in the company, the debt stands under the company’s name due to the reasons being that the members in the company are separate legal entities.



Question 5:
Gary and Ben wanted to sell all their shares to Jojo and Cool respectively. What is the effect of these transactions to the status of the company Sporty Sdn. Bhd.? Please justify your answer with a case law.


ANSWER OF QUESTION 5:

ANSWER (1)

(a) The acquisition of an undertaking or property of a substantial value; or
(b) The disposal of a substantial portion of the company’s undertaking or property, unless the arrangement or transaction has been approved by the company in a general meeting.


ANSWER (2)
The creation of secured transactions begins with the consent of the parties to the transaction. The agreement would have to be registered under the relevant law or laws in order to give priority to the secured transaction. Once the security is placed on the register it will be deemed to be within the constructive knowledge of any subsequent creditor. This ensures priority to the registered charge over all subsequent registered and unregistered charges. Submitting a transaction for registration is a matter of procedure. Upon registration, the register would show the registration date to be the date on which the transaction was submitted for registration.
The following securities are available under Malaysian law: -
(i) a registered charge over National Land Code land;
(ii) debentures which form fixed and floating charges over real and personal property;
(iii) legal and equitable mortgages of personal and intangible property;
(iv) pledges of personal property;
(v) liens over land; and
(vi) the assignment of proceeds of contracts or choses in action.



....................THE END OF ANSWER THE QUESTION..................

HOME WORK (CASE 1 ) GROUP WORK........

GRUOP MEMBERS..
1.ILANGOVAN 1091103033
2.NURUL SYAZMIN HAMDAN 1081104673
3.MAEEN NAJEEB SHABAN 1061104398
4.LAKSHMIPRIYA MAHESWARAN 1061109030
5.RACHEL JEYA KUMAR 1061101963

QUESTION 3

One day, Jay saw a banner hanging in front of her favorite cassette outlet in Alamanda which reads: “BIG SALE! LATEST TOO PHAT’S ALBUM IS UP FOR GRAB WITH 50% DISCOUNT! LIMITED STOCK! HURRY, HURRY, HURRY!”.After reading it, Jaw immediately jumped in the outlet and said she wanted that album at the said discounted price. But to her disappointment, the shop owner said that the cassette is now sold at the normal price. Can Jay sue the shop owner for breach of contract? Discuss according to contract Act 1950 and relevant decided cases.

ANSWER FOR CASE STUDIES......

To begin with, the banner hanging in front of the outlet is not a contract but a mere invitation to treat. How do we know that the banner is just an invitation to treat and not a contract? In addition to the general rule that states that all types of advertisements (banner in this case) are just invitations to treat and not contracts, many of the contract elements are not found in this case. Elements such as consideration, certainty and some others don’t exist in this case, which supports the conclusion of invitation to treat and not a contract.

From this point, we can conclude that Jay cannot sue the shop owner for breach of contract as there is no contract in the first place.

In point form:

 Identify the legal issue:
Legal issue here is the fact that the shop owner is not following what he mentioned in the banner. So, Jay wants to sue him.

 Cite the relevant law:
This case falls under two relevant rules: Display of goods in the shop (with / without price tags)
- Advertisement (Banner).
Both cases are invitations to treat.

 Apply the law:
By applying the law here, the banner is just an invitation to treat, so Jay can’t sue the shop owner.

 Legal advice:
Jay can’t don anything and the shop owner has all the right to reject her offer to buy at the discounted price.

contract law.......notes.......own notes.....

meaning of contract.....

an agreement between two or more parties that is legally binding between them. It is an agreement enforceable by law. (section 2(h) of Contracts Act)

Element of contract....

1. offer and acceptance
2. intentation
3. consideration
4. certainty
5. legality
6. legal capacity
7. free consent

Offer @ acceptance

1.Offer

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal

two type of offer
a) bilateral offer.....specific person or group of persons
b) unilateral offer.....any specific person rather it is made to the world at large.

Acceptance

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise

2.intentation

....to create legal relations
....from the language and context of the agreement and conduct of the parties.


3.consideratiom

....“When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstain from doing, or promises to do or to abstain from doing something, such act or abstinence or promise called a consideration for the promise.”

without consideratiom
“An agreement without consideration is void.”
[Section 26,Contract Act 1950]

4. certainty

“Agreements, the meaning of which is not certain, or capable of being made certain, are void.” [Section 30, Contracts Act]

5 @ 6 legality
Requirement of Legality

The purpose or consideration of the contract should be lawful

.....If the purpose of the contract is unlawful,
.....then the contract would be invalid and would not be enforceable by law.
(Section 24)

constitutes illegality/unlawful
....is forbidden by law
....If allowed may defeat any law
....fraudulent
....Implies injury to other’s body or property
....Immoral or opposed to public policy

Status of Contract

..valid
..void contract
..voidaable contract

7. Free consent

... (sec. 10)

a. Fraud – s.17
b. Misrepresentation – s.18
c. Coercion – s.15
d. Undue influence – s.16
e. Mistake – s.21

a....
whenever a person causes another to act on a false

b....
false statement made by one party which induces the other to enter into a contract

types of misrepresentations
....Innocent Misrepresentation
....Negligent Misrepresentation
....Fraudulent Misrepresentation

c....
....“Coercion is the committing, or threatening to commit
....any act forbidden by the Penal Code,
....to the prejudice of any person whatever,
....with the intention of causing any person to enter into an agreement.”

d....
“A contract induced by “undue influence” where the relations subsisting between the parties are such that 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.”

Elements of Undue Influence: A party who relies upon the plea of undue influence must prove that:
.....the other party was in a position to influence him;
.....the influence was exercised;
.....the influence exercised was undue;
.....the exercise of undue influence had brought about the transaction; and
.....by exercising undue influence the other party had obtained an unfair advantage over him.

e....
Where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.


Discharge of contracts
a) Discharge by performance...respective promises in accordance ...
b) Discharge by frustration...if the contract legally or physically becomes impossible to perform for subsequent change of circumstances.
c) Discharge by Breach of contract...If one of the parties in a contract refuses to perform his promise it is said that the contract has been discharged by breach.

Remedies for Breach of Contracts

a) Damages
b) Specific Performance
c) Injunction
d) Quantum Meruit

a...
If one of the parties breaks the contract made between them, then the party affected by the breach may claim damages from the party who has breached the contract.

b...
which breaks the contract to perform his promise.

c...
If one of the parties breaches the contract then the other party may apply for interlocutory injunction to maintain status quo of the subject-matter in a pending suit.

d...
In the event of a breach of contract, the injured party may have a claim other than that for damages. In particular he may claim payment for what he has done under the contract.

the sources of law

the sources of law divided into 6 categories.....


1. Relion
2. Custom
3. convention
4. constitution
5. Statutes
6. common law

s
Sources of malaysian legal system....

divided into 2 parts as..

unwritten sources are....

1. customary law
2. islamic law
3. English common law
4. judicial decision

written law are....

1. constitution
2. legislation
3. subsidiary ligeslation



Islamic law

Shariah ....... Courts [Art. 121(1A)]


English common law


rules of equity are applicable to Malaysia through the operation of......... section 3(1) of the Civil Law Act 1956

suited to the local circumstances will be applied to Malaysia.


Constitution – Federal & States

Federal Constitution .....supreme source.....extent of the inconsistency be void.” (Article 4).


Doctrine of Stare Decisis

known as doctrine of binding judicial precedent.
other judges before them in dealing with cases with similar facts.

Horizontally: a judge is bound by decisions of earlier judges of similar/coordinate level.
Vertically: a judge is bound by decisions of judges made at superior courts.

Bommalattam ( The law ) tamil movie preview

Among a deluge of movies portraying rowdies who make a living out of taking the law into their own hands, it is a relief to see Thamizhan, that does not advocate that route and instead, propagates a valid message about the people knowing the law of the land and their rights. But director Majeed needs to take a few pointers from directors like Shankar on how to convey a socially relevant message in an entertaining manner. A lacklustre romance and crude comedy all but negate the effectiveness of the core message in this movie.

The movie details the circumstances that lead to the President himself releasing a postage stamp of Surya(Vijay), a lawyer in TamilNadu. Surya is a law school graduate, taking life lightly with his lover Priya(Priyanka Chopra) and his group of friends. When he realises the ignorance of the common man when it comes to the law of the land, he begins a crusade to educate him on the tenets of Indian law. His efforts lead to a virtual revolution where every man learns the ins and outs of the law and fights injustice based on his knowledge. When a wealthy plantation owner GK(Ashish Vidyarthi) arranges the death of Surya's brother-in-law Sakthivel(Nasser) after losing a case, Surya vows to bring GK to the streets through legal means.

Taking a cue from Shankar's Mudhalvan , Director Majeed cleverly picks a message that is close to the heart of the common man. So he is able to tackle everyday issues that resonate with the viewer. Viewers will definitely cheer when characters they probably meet everyday, like the rude conductor or the traffic policeman expecting some extra income, get their comeuppance from individuals who are now well versed in the law. But like most directors, he too goes to the extreme in depicting the changed situation, resulting in some scenes turning comedic.

But barring the scenes portraying Vijay's attempts to popularise basic law, there is little left to admire, or even enjoy, in the movie. Both the romance and comedy, which together occupy a hefty portion of the running time, are difficult to endure. Though the romance starts off promising to be cute, with both Vijay and Priyanka being in love but not conveying it to the other, it doesn't deliver on this promise. The sequences with the balloon are more silly than romantic and Vivek's intrusions don't help either. Its funny how Priyanka all but disappears once Vijay begins his social crusade but reappears at regular intervals to pave the way for a duet!

Director Majeed earns come points by not stopping with highlighting a key social issue but actually suggesting some concrete solutions to remedy the situation. Vijay's monologue in the court in the climax does have some intelligent(though Utopian) suggestions about increasing the quality of justice in the country.

Vijay does a neat job though his youth does work against him when he starts delivering advice while looking at the screen. Priyanka Chopra is likely to join the long line of single-movie heroines in Tamil cinema recently. Nasser and Revathi have little to do while Ashish Vidyarthi doesn't add much to another routine villain role. New music director Imaan composes some peppy and youthful tunes that help Vijay show off some impressive steps in the song sequences.