BUSINESS LAW

BUS 2033
EN. SAIFUNNIZAN SAM
SEMESTER 6 (2010)
 CHAPTER 1 – INTRODUCTION TO LAW
• 1.1 – Nature of Law
• What is law?
– General rule of conduct.
– Define as a `body of rules which are enforced by the state.
– Consist of rules recognised & acted on by courts of justic e.
– John Austin `The Province of Jurisprudence Determined’ –
``law as a command set by a superior being to an inferior
being and enforced by sanctions (punishments)’’
– Superior-state, Inferior-individual & Sanctions-fine,
imprisonment etc
– Defined in the Federal Constitution – Art 60(2) & Sec2(1)
Item 43(c) to include :- a) Written Law b) Common Law c)
Any custom or usage having the force of law.

– Written law in Malaysia – Federal Constitution being

supreme law [Art 4(1) states that the Federal Constitution
is the supreme law of the Federation and any law passed
after Merdeka Day which is inconsistent with the
Constitution shall be void].
– Even laws enacted by the Parliament which is
inconsistent with the Federal Constitution is
declared void.
• R. Rethana v. The Government of Malaysia & Anor.
– Plaintiff sought a declaration that an Act of
Parliament namely S31 & S42 of Employees’ Social
Security Act 1969 (SOCSO) were ultravires the
Federal Constitution Art d8(1) that provided equal
protection of the law for all. He alleged that the act
precluded employees from suing the employer.
– Held : Court dismissed plaintiff claim as
classification by SOCSO was fair & reasonable.
• Repco Holding Bhd v. Public Prosecutor

– Applicant 申请人 was charged by Security

Commission for infringing Security Indusctry Act
1983 & Security Commission Act 1993. Applicant
claimed that the 2 Sections infringe Art 145 (3) of
the Federal Constitution.
– Held : Court held that both Sections to be
unconstitutional, null & void.
• Art 74 of the Federal Constitution provides that the
Parliament may make laws with respect to any of the matters
enumerated in the :-

– 1) Federal List (1st list of the 9th Schedule)

• External affairs
• National defence
• Internal security
• Etc.
– 2) Concurrent List (3rd list of the 9th Schedule)
• Social Welfare
• Scholarships
• Protection of wild animals
• Town planning
• Drainage & irrigations
• Etc.
• State legislature 立法团体 may make laws with respect
to any of the matters enumerated in the State List.

– 1) State List
• Islamic law, Malay custom, Syariah court,
• Land
• Agriculture & forestry
• Etc
Mamat Bin Daud & Others v. Government
of Malaysia
Fact : Petitioner 请求者 charged to have acted as
unauthorised Bilal,Khatib & Imam in Kuala
Terengganu without being appointed. Respondent
离婚案被告 claimed law passed by Parliament 国会
on the basis of public order, internal security &
criminal law according to Art II of the Federal
Constitution.
Held : Substance of law on the subject of religion
where only States have legislative power under Art
74 & 77 of the Federal Constitution.
Ketua Pengarah Jabatan Alam Sekitar &
Anor v. Kajing Tubek & Others
Fact : 3 of the natives (respondents) applied through
High Court the Environmental Impact Assessment 确定
Order 1995 was invalid and before Ekran Bhd, that was
awarded the Bakun Hydroelectric Project 水电站项目
should comply with 服从 the Environmental Quality
Act 1974.
Held : Court held that since environment in question by
reasons of List II & IIIA of Schedule 9 of the Federal
Constitution lay wholly 完全的 within the legislature
of Sarawak, hence the state has exclusive rights to
regulate 控制 .
 Classification of law

Individual & the State Law between states Individual inter se

Rights of individual in the states

Rights arise from agreements

Offences against states

Offences against individuals

Relationship between trustee & beneficiary

• Public Law – relationship between individuals and states
– Constitutional Law 宪法– rights of individual in the states
– Criminal Law 刑法 – actus reus (wrongful act) eg. To strangle.
- mens rea (a guilty mind) eg. Intention to kill.

• International Law – body of law which state bound to

observed in relation to one another.
– Public International Law – law prevails between states
– Private International Law 国际私法– rules that guide a judge when
rules of more than one country affect a case.

• Private Law – concerned matter that affect rights & duties of

individual among themselves.
• Contracts – based on agreement.
– Elements : -
1) Offer
2) Acceptance of offer
3) Capacity to contract
4) No mistake, misrepresentation or undue influence
5) Object is lawful
6) Intent for legal relation
7) There must be a considerations.

• Torts – based on obligation imposed by law – a civil law 民法

– Elements :-
- must be an act or omission 省略 done and damaged caused.

• Trust – obligation between a trustee and beneficiary 受惠者

in relation to trust properties.
1.2 – Sources of Malaysian Law
Meaning of sources
1. Historical sources – include religious beliefs, customs
and opinion of jurists.
2. Legal sources – legal rules that make up sources
3. Places where the law can be found – statutes, law
reports, textbooks.

– Malaysian law
• Written
• Unwritten
• Written Law
– Most important source. Include the followings :-
1. Federal & State Constitution
2. Legislation enacted by Parliament and State Assemblies
(eg Acts of Parliament, Ordinances, etc)
3. Subsidiary legislation 附属法例 made by persons or
bodies under powers conferred on them by Acts of
Parliament or State Assemblies ( eg By-laws, Guidelines
etc)
• Unwritten Law
– Simply a portion of Malaysia law which is not written
– Found in cases decided by courts, local customs, etc
– Comprises the followings :-
• 1. Principles of English law applicable to local circumstances
• 2. Judicial decisions of the superior courts, High Courts, Court of
Appeal and the Federal Court.
• 3. Custom of local inhabitants which has been accepted as law by
the courts.
• 4. Other sources – Muslim law, Islamic banking, estate matters.
Sources of Law
Written Law 成文法
1. Federal Constitution 联邦宪法
• Malaysia – a federation of 13 states with written constitution.
• Federal Constitution being the supreme law.
• Lay down powers of Federal & State Governments.
• Enshrines basic fundamental rights of individual.
• Rights can be changed by a 2/3 majority of the total number of
members of the legislature.
• Normal laws – can be changed with simple majority.
• Comprises:-
– The name, States and territories of the Federation.
– Religion of the Federation
– Fundamental liberties
– Citizenship
2. State Constitutions 指定法规
– State also possesses its own constitution regulating the
government of the state.
– Contains provisions which are enumerated in the 8th Schedule of
the Federal Constitution.
– Include matters concerning the Ruler, Executive Council, the
Legislative Assembly, financial provisions, State employees and
amendments of the Constitution.

3. Legislation 法律
– Refers to law enacted by a body constituted for this purpose.
– Parliament – Federal level
– State Legislative Assemblies – State level
– Ordinances – law enacted between 1946-1957
– Acts – 1957 & beyond
– Enactments – law made by State Legislative Assemblies (except
Sarawak are called Ordinance)
 – Parliament enact laws pertaining to List I – 9th Schedule
– State enact laws pertaining to List II – 9th Schedule
– Concurrent list – List III – both authorities
– Other law not in these lists – under state authority.

4. Subsidiary Legislation
– `any proclamation, rule, regulation, order, notification, by-
law or other instrument made under any Ordinance 法令 ,
Enactment or other lawful authority and having legislative
effect’ (The Interpretation Act 1967)
– Deals with 应付 the details about the laws not covered by
legislature where basic and main laws are legislated.
– The details are delegated to 委托 other bodies or authories
such as YDA, ministers and local authorities.
– Subsidiary legislation in contravention to the parent Act is void.
– An exception however, is the proclamation of emergency under Art
150 of the Federal Constitution.

Eng Keock Cheng v. Public Prosecutor

Facts : The appellant has been convicted for 2 offences under ISA 1960 and
sentenced to death. He appeal on 2 grounds :-
1. High court has no authority absence of prelim inquiry nor jury both required
under Criminal Procedure Code.
2. Procedure was ultra vires and invalid and infringe Art. 8 that declares all
person equal before the law.
Held :
1. Art 150 of the Federal Constitution – Parliament has during emergency,
power to legislate even inconsistent with the constitution.
2. Emergency Powers Act 1964, not under Parliament to enact and cannot be
challenged
3. Appeal dismissed as appellant was rightly convicted.
 cont..25/2/09
Unwritten law 不成文法 / 习惯法
• Comprised of :-
– 1. English law
– 2. Judicial decisions 公正的决定
– 3. Customs 进口税

1. English law
– form part of the laws in Malaysia.
– Can be found in English common law & rule of equity.
– Civil Law Act 1956 states that :-
i) Peninsula Malaysia – S3(1)a, court shall apply common law of
England & rules of equity as administered in England on 7/4/1956
– ii) Sabah & Sarawak – S3(1)c
• common law 习惯法 - court shall apply common law of England
as administered in England on 1/12/1951
• Rules of equity 平衡规则 - court shall apply Rules of equity of
England as administered in England on 12/12/1949

– Application of law of England in Malaysia only applies under 2

circumstances :-
• i) absence of local statutes on particular subject
• Ii) local law take precedence over English law

– Extent of application of common law of England in Malaysia was

decided in :-
• SYKT BATU SINAR SDN BHD v. UMBC FINANCE BHD

– Fact : Ownership claim by UMBC over 2nd tractors

whereby ownership was not endorsed on
registration card & wanted to repossess tractors
but plaintiff sued on the ground that defendant not
entitle due to unendorsed name.

– Held : 1. All 2nd hand cars buyer in P. Malaysia are

without ownership in registration card. 2. It has
been in practice and English cases cannot be
followed.
English Commercial Law
• Difference with regard to 关于 to the application of English
Commercial Law

• Civil Law Act 1956, S5(1), application of English Commercial Law in

P. Malaysia as it stood on 7/4/1956 in the absence of local
legislation.

• For Penang, Malacca, Sabah & Sarawak, S5(2) states that English
Commercial Law shall apply in the corresponding period as it had
been decided in England. Hence a continuous reception of English
Commercial Law.

• However, due to incursion of new local statutes such as Company

Act 1965, Partnership Act 1961, hence reliance towards English
Commercial Law is lessen.
English Land Law

• Sec 6, Civil Law Act 1956,

``(6) Nothing in this part shall be taken to introduce into Malaysia or any
of the States comprising therein any part of the law of England
relating to the tenure or conveyance or assurance of or succession to
any estate, right or interest therein’’

UNITED MALAYAN BANKING CORP BHD & ANOR. V PEMUNGUT

HASIL TANAH, KOTA TINGGI
Fact : Johor State Authority alienated land to certain proprietor in
consideration for certain conditions and annual rent. Rent was not
paid and land was forfeited. UMBC appeal through Privy Council the
decision made.

Held : The National Land Code is a complete and comprehensive code

of law and the English Law cannot be applied in this circumstances.
• In the event whereby there is conflict between Common Law
and Equity, the Rules of Equity shall apply.

2. Judicial Decisions

• Malaysian law can be found in the judicial decisions of High

Court, Court of Appeal 地区法院 and Federal Court.

• Also decisions from Supreme Court (1/1/87-23/6/94) and

Federal Court and Judicial Committee 司法的委员会 of the
Privy Council (form part of the judicial system until 31/12/86
but decisions still binding in present court)
• Judges make decisions based on precedents cases of similar
situations.

• If a judge applies existing rule without extending it, his

decisions is called a declaratory precedent. 宣言范例

• If the case is without precedent, his decisions is known as

original precedent.

• These are called ``doctrine 教条 of binding judicial

precedent’’ (stare decisis) 照章办事
 Hierarchy of Precedents
• The general rule of hierarchy of precedents is based on the principle that
decisions of higher court bind lower courts and some court are bound by their
own decisions.
THE JUDICIAL SYSTEM
FEDERAL COURT

COURT OF APPEAL

HIGH COURT IN MALAYA HIGH COURT IN SABAH & SWAK

SYARIAH COURT NATIVE COURT & SYARIAH COURT

SESSIONS COURT SESSIONS COURT

MAGISTRATES COURT MAGISTRATES COURT

SMALL CLAIM COURT SMALL CLAIM COURT

PENGHULU’S COURT
• Prior to 1/1/87, the Privy council which sits in England was
the final court of appeal of Malaysia.
• The decision was in the form of advice to the YDA who will to
effect of it.
• Appeals on criminal and constitutional matters 宪法的内容
were abolished on 1/1/78.
• Between 1/1/78 – 1/1/87, appeal are limited to civil cases
only.
• After 1/1/87, appeal cases was handled by Supreme Court
until 23/6/94 where it was abolished on the 24/6/94.
• After that date, the Federal Court was set up as the highest
court and the appeals from the High Court can be made
through Court Of Appeal.
• Distinguishing precedents

– A judge may apply precedents in the following

circumstances :-
1. Judges may ignore or overrule 拒绝 precedent laid
down by lower court on appeal cases.

2.They may refuse precedent if the decision made in

ignorance 无知 of statute 法令 or binding precedents

3. If the case is of material difference from precedent

cases.
3. Customs

– Customs of local inhabitants in Malaysia are also source of

law such as relating to marriage 结婚 , divorce 离婚
and inheritance 遗产 have legal force in Malaysia.

– Adat applies to Malay, Hindu & Chinese customary law

applies to both races.

– In Sabah & Sarawak – native customary laws.

– In Peninsula Malaysia, 2 main varieties of Malay customary
law :

1. The adat perpatih – prevalent in Negeri Sembilan and

Malacca and covered matters such as land tenure, election
of lembaga,, undang and the Yang di Pertuan Besar.

2. The adat temenggong – from Palembang Sumatra and

adopta more patrilineal system . (In a patrilineal descent
system (= agnatic descent), an individual is considered to
belong to the same descent group as his or her father.)
4. Muslim Law

– The Federal Constitution provide that state have power to

administer Muslim Law.

– The courts which enforce Muslim Law are the Syariah

Court and applies only to Muslims.
 Questions :-
1. Describe the various sources of Malaysian law?

2. Explain briefly what are the :-

2.1 Written
2.2 Unwritten law of Malaysia.
 1.3 The legal System in Malaysia...26/2/09(11.00am)
• The Federal Constitution provides power to be exercised by
the legislative, the executive and the judiciary.

• The judiciary has power to determine civil and criminal 犯人

matters, interpret the Federal Constitution and even
pronounce the legality of legislative 立法的 and executive
acts.

• The head of the judiciary is the Chief Justice 法院院长 .

• The current Chief Justice Of The Federal Court, Malaysia The

Right Honourable Tan Sri Dato' Seri Zaki bin Tun Azmi
 FEDERAL COURT

SUPERIOR
COURTS COURT OF APPEAL

HIGH COURT IN MALAYA HIGH COURT IN SABAH & SWAK

SYARIAH COURT NATIVE COURT & SYARIAH COURT

SESSIONS COURT SESSIONS COURT

SUBORDINATE
COURTS
MAGISTRATES COURT MAGISTRATES COURT

SMALL CLAIM COURT SMALL CLAIM COURT

PENGHULU’S COURT
Subordinate Courts in Peninsula Malaysia
– Consist of Penghulu’s Courts, Magistrates’ Courts and
Sessions Courts.
– Established under Sec2(2) of Subordinate Courts Act 1948.

Penghulu’s Court
• Lowest level of subordinate courts in P. Malaysia.
• Presided by a penghulu or headman appointed by the State
Government for a mukim.(district)
• Normally settle 安排 disputes informally.
• Empowered in minor civil cases involving debt settlement of
not more than RM50 involving Asian races in Malay language.

• In criminal cases, minor cases involving fines not more than

RM25.

• Appeal or re-tried can be made at Magistrate Court.

Magistrates’ Courts 治安法院
• deals with minor civil and criminal cases.
• Presided over by a Magistrate.
• 1st class Magistrate - Jurisdiction to try cases for which max
term of punishment not exceeding 10 years imprisonment or
with fines only.
• In civil cases, sum disputes not exceeding RM25,000.
• 2nd class Magistrate - Jurisdiction to try cases for which max
term of punishment not exceeding 12 months imprisonment
or with fines only.
• In civil cases, sum disputes not exceeding RM3,000.
Juvenile Courts 少年法庭
• Deals with criminal cases for offenders below age of 18.

• Presided over by a 1st class Magistrate assisted by 2 advisors.

• function of advisors to advise with respect to any

consideration affecting punishment or young offenders.

• If found guilty, the young offenders may be sent to approved

institution for corrective education.
Sessions Courts 开庭法院
• The highest of the subordinate courts.

• Under the charge of Sessions Court Judge.

• Criminal jurisdiction other than punishable by death.

• In civil cases, sum disputes not exceeding RM100,000

• Does not include jurisdictions on land matters, divorce,

bankruptcy and trusts and have to apply through High Court
to try cases of these nature.
 Subordinate Courts 下级法院 in East Malaysia

• Consist of Native Courts, Sessions Court and Magistrates’ Courts.

Native Courts
• Only in Sabah & Sarawak.
• Affecting native custom involving indigenous races in Sabah & Sarawak.
• Hear cases of civil and criminal matters including breach of native customs
and law, land issues.
• In Sabah, Native Court is exercised under District Officer jurisdiction.
• In Sarawak, consist of District Native Court, Headman’s Court and Chief’s
Court.
 Superior Courts 高等法院 In Malaysia

• Consist of High Court of Malaya, High Court of Sabah & Sarawak, Court
of Appeal and Federal Court.

High Court
• 2 Chief Judges, one in P. Malaysia and one in Sabah & Sarawak.
• Any civil matters cannot be decided in subordinate courts are brought to
High Court including cases, defendants, facts and land ownership is
within Malaysia.
• It has power to remove cases from subordinate courts and request
records of all proceedings in subordinate court.
The Industrial Court
• Established to relieve the ordinary courts of some of their work and cater
for specialized or technical matters.
• Falls under Industrial Relations Act 1967 deals in trade disputes
concerning employees, employers and trade unions.
• Consist of a President appointed by the YDA and 2 panel members
representing employees and employer.

CHEEK HONG LEONG v. KYM INDUSTRIES SDN BHD

Fact : The plaintiff was dismissed under constructive dismissal and was
awarded reduced compensation. He appeal to High Court.
Held : The matter cannot simply referred to High Court by agreement by
both parties without weighing the merit or importance of the case.
The Court of Appeal
• Consist o f a President of Court of Appeal and up to 10 Court of Appeal
Judges.
• For any case, at least 3 judges or greater uneven number to reside.
• Has jurisdiction to hear appeal cases involving criminal and civil cases
subject to at least RM 250,000.
• Where the cases have been heard and decided upon, it has no power to
re-open, re-hear and re-decide.

The Federal Court

• Highest court in Malaysia and consist of Chief Justice, President of Court
of Appeal, the Chief Judge of Sabah & Sarawak.
• Has jurisdiction over criminal and civil appeal cases from Court of
Appeal, hear disputes between Federal Government and States
determine constitutional cases and give opinion on matters given by
YDA.