FREE CONSENT

CONTRACTS ACT 1950

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◦ Section 10 : ‘all agreements are contract if they are made by the free consent of
competent parties to contract’.
◦ Means: The consent of the parties must be given freely and voluntarily.
◦ What is consent?
◦ Section 13 : 2 or more persons are said to consent when they agreed upon the
same thing in the same sense (consensus ad idem).
◦ Means : If parties enter into a contract with free will, no pressure – it is known as
free consent- contract valid.
◦ Section 14: consent is said to be free when it is not caused by:
1.Coercion – s.15
2.Undue influence- s.16
3.Fraud –s.17
4.Misrepresentation – s.18
5.Mistake – s.21, 22, 23
◦ If the parties enter into a contract because of C, Ui, F, M – means no willingness
and the contract is voidable.

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SECTION 2(i) VOIDABLE
CONTRACT
◦ Definition :
◦ Section 2(i) CA 1950 : an agreement which is enforceable by law at the option of
the one but not the other. The innocent party is given the choice of either
rescind/terminate the contract or continue with it.

◦ Voidable contract means an agreement which is valid at the option of the

one but not the other.
◦ The innocent party is given the choice of either terminate the contract or
continue with it.

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 2. UNDUE
1. COERCION
INFLUENCE

VOIDABLE CONTRACT
-to terminate or continue with contract

3. FRAUD 4.
MISREPRESENTATIO
N

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1) COERCION
◦Section 15: coercion is the committing or threatening to commit any act forbidden by Penal
Code, or the unlawful detaining or threatening to detain any property to the prejudice of any
person, with intention of causing any person enter into an agreement.
◦Coercion means duress / pressure - involve physical force or threat.
◦to force the victim to act in a way contrary to their own interests.
◦One party is committing a crime or threatening to commit a crime in order to force other
party to enter a contract
◦What are act constitute as coercion?
◦Act forbidden by Penal Code (criminal act) – a person cannot do anything which is
prohibited by the Penal Code for making contract. EG: B threatens to shoot/kill/ A if A does
not agree to sell his property at the stated price (lower price) – here, A’s consent is obtained
by coercion and A can terminate the contract because the contract is voidable contract.
◦Unlawful detention of property. EG: B threatens to burn A’s house if A refuse to sign the
sale and purchase agreement.
◦Effect : section 19 – the contract becomes voidable at the option of injured party ( who
suffered loss).

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Case : Kesarmal s/o Lethuman Das V Valiappa Chettier
◦Facts : the transfer of property issued in the presence of two Japanese Officers during the
Japanese Occupation of Malaysia. Held : the transfer was not made with free consent and
voidable.
Case : Chin Nam Bee Development Sdn Bhd V Tai Kim Choo
◦Respondents purchased houses to be constructed by appellant. They signed a sale and
purchase agreement valued at RM29,500. Later the respondents were forced to pay an
additional RM4000 under a threat by the appellant to cancel the respondents’ booking for
their houses.
◦Held (COA): the payment was not voluntary but had been made under threat / coercion
and thus was recoverable.
◦Example : B was forced to enter into a contract to sell his 2 nd hand car to A for RM2000.
The original price of the car was RM10,000. During the execution of the contract A carried
parangs and threatened to harm him.
◦Can B terminate the contract?
◦According to section 20, the contract is voidable and B has a right to terminate the
contract.

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2) UNDUE INFLUENCE
Section 16 : a contract is said to be induced by undue influence when there is
subsisting relationship between the parties where one party is in the position to
dominate the will of the other and he used that position to obtain unfair advantage
over the other.
Relationship between the promisor and promisee. 2 types of relationships:
1.One party relies on another for advice /fiduciary relationship between trustee and
beneficiary, lawyer and client, a doctor and his patient etc.
2.A person holds real authority over the other. Eg- between parents and child.
He misuses the position -
He obtain unfair advantages – undervalue sale.
◦Effect : section 20 - contract voidable

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◦ Datuk Jaginder Singh and Ors V Tara Rajaratnam
◦ The 1st appellant, a lawyer had influenced his client, the respondent to transfer her
property to the second appellant.
◦ Held: the respondent could set aside the contract. The transfer was voidable.

◦ Example :
◦ Madam Wong met with an accident and was bedridden for 5 years. She employed Ning, a
trained nurse to take care of her. During her employment, Ning managed to convince
Madam Wong to sell her house for RM50,000 despite the fact that the market price of
the house was RM200,000. Upon recovery from her illness, Madam Wong wanted to
invalidate the sale.
◦ According section 19- Madam Wong can rescind the contract

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3) FRAUD
Section 17: fraud includes any of the following acts committed by a party to a
contract, with intent to deceive another party, or to induce him to enter into a
contract.
1. Suggestion as to fact which is not true – it is a false statement of facts knowing them to
be false.
Senanayake v Annie Yeo
Facts: P bought shares from the D’s firm because she relied on the D’s statement that the
firm was good and potential firm.
An untrue statement was made about the good potential of a firm
Held: the statement was not true. It was fraud to deceive others into buying the shares.
2. Active concealment/ not disclose of fact by one having knowledge of the fact
Eg : if Ali knows that Boy’s land contains gold and he conceal this fact from Boy, hoping
that he can buy the land at a lower price - fraud
3. Promise made without any intention to perform it.
4. Any other deceiving activities.
5. Any act or omission which the law specifically declares to be fraudulent

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4) Misrepresentation
Definition of misrepresentation according section 18 : false statement
( incorrect / wrong /untrue ) made by a someone and which induces or
convince the other party to enter into contract.
It includes:
◦ Positive assertion that is not true, through he believes it to be true. ( he believe the
statement is true)
◦ Any breach of duty, without intention to deceive, give an advantage to the person
committing it by misleading the other to his prejudice. (there should be no intention
to deceive)
◦ Causing, however innocently a party to an agreement to make a mistake ( induced or
inspired the other to enter into a contract)

◦ Eg: B believe that the antique mirror she sell is from Dynasty Ming and she tell that
to the buyer which in fact it is not. When the buyer know about the truth, the buyer
has a right to terminate the contract for ‘misrepresentation’ or continue with the
contract but claim for money compensation.

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Conditions to be fulfilled in order to prove misrepresentation:
1.There must be a positive false statement. Silent will not be considered a
misrepresentation. : Keates V Lord Cardogan
Defendant let (rent) the plaintiff a house that the
defendant knew was in ruinous condition. The defendant kept silence.
Held : no misrepresentation because there is no positive statement.

2. The misrepresentation must be one of fact, not opinion. : Bisset V Wilkinson

W agreed to buy certain land for sheep farming. W relied on B
statement that the land would carry 2000 sheep. The land in fact
could carry less than the said amount.
Held : No misrepresentation. It was Bisset's opinion because:
i. Bisset was never a sheep farmer
ii.No person had ever carried on sheep on the land.
3. The statement was addressed to the party mislead
4. The representation must induce the contract
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5. Mistake
** mistaken regarding a word, definition, term, quantity, or other measurement in a contract

i. Mistake of fact
a. Mutual mistake - Section 21 - the agreement is void.
A mutual mistake occurs when the parties to a contract are both mistaken about the same material fact within their
contract.
Mistake as to identity of subject matter
Raffles V Wilchelhaus
◦ Facts: There was a contract to buy a cargo of cotton from a ship called ‘Peerless’ sailing from Bombay. Unknown to
both parties, there were two ships called Peerless leaving Bombay at two different times. Both were mistaken as to
which ship.
◦ Held: the contract was void for mutual mistake.
Mistake as to existence of subject matter
Coutier V Hastie
◦ A contract of sale of corn was void because unknown to both parties the subject matter (corn) was no longer in
existence. The captain of the ship in the middle of the journey sold it.

b. unilateral mistake - Section 23 – valid

A unilateral mistake is a mistaken belief held by only one of the parties 
Tamplin v James
◦ Facts: A bidder made a bid to an auction, believing that certain land was included in the lot, in which, it was not.
Held: The contract was valid as the mistake was done by the bidder alone.

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But, exceptions – contract voidable :
1) Mistake one party as to terms
Taylor v Johnson
◦ Facts: Mrs Johnson mistakenly stating a lower price for a land that she was selling to Taylor.
Instead of stating 15000 pounds per acre, sha stated 15000 pounds for the whole land. Taylor
knew about this and did not correct it.
◦ Held: The contract is voidable
2) Mistake as to document
Awang Bin Omar v Haji Omar & Anor
◦ Facts: Haji Omar was induced to sign a document by his brother. The document was in English
in which he did not understand. He was told that he signed as a witness. Instead he found out
that he had mistakenly signed as a guarantor.
◦ Held: The contract is voidable. He can defense himself use plea non-est factum (this is not my
document)
3) Mistake of identity
Ingram v Little
◦ Facts: Seller sold a car to a person named Hutchinson from Stanstead Rd. He was paid by
cheque but later it turned out to be a bounce cheque.
◦ Held: The contract was voidable because of mistaken identity and fraud element.

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 5. Mistake
ii.Mistake of law
Section 22 : mistake as to any law in force in Malaysia – a contract is not Voidable.
Means contract is valid.
Generally, a mistaken belief about a law is no defense to a violation of that law.
When a party enters into a contract, without the knowledge of the law in the
country, the contract is affected by such mistakes but it is not void. The reason
here is that ignorance of law is not an excuse.
Mistake as to law not in force in Malaysia – same mistake as fact. Means, for
foreign law – contract is void.

**Mistake of law also known as Ignorance of law and pointing to a mistake of law
almost never works as a criminal defense

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