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.
Tuesday, April 13, 2010
Friday, April 9, 2010
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
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
Wednesday, March 31, 2010
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..................
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..................
Tuesday, March 30, 2010
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.
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.
Thursday, March 4, 2010
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.
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.
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.
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.
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