LAW OF CONTRACT

Executive Summary

This study focuses on the law of contract based on the Malaysian Legal System. The
formation and implementation of the essential features of a valid contract have been
discussed in this study. The remedies based on the discharge of contracts have also been
explained in this study for the benefit of the partners or legal entities of a company. The legal
aspects based on the sales of agencies and goods have been demonstrated. These are
discussed on the basis of The Contract Act of 1950. The case studies on the basis of the
discharging contracts in the country through legal proceedings have been mentioned in this
study. The outcomes of the cases on the basis of appropriate sections of the legal system of
the country have also been stated in this study.
 Table of Contents
Introduction ................................................................................................................................ 4

Content ....................................................................................................................................... 4

Discharge by performance ..................................................................................................... 4

Discharge by agreement ......................................................................................................... 5

Discharge by the breach ......................................................................................................... 6

Discharge by frustration ......................................................................................................... 7

Conclusion ................................................................................................................................. 8

Bibliography ............................................................................................................................ 10
Introduction

Discharge is a legal proceeding of the court of law that imposes a decision of no legal
punishment to be processed for the defence or the prosecutor. In other words, in any legal
case if the judge determines that inflicting any charges on the defender or the prosecutor will
be inappropriate then the defendants are released from the claims of the prosecutors. This is
called the process of being discharged. This decision is also formally addressed by the judge
on the basis of any breaches occurring in the legal terms of The Contract Act (CA) 1950
Section 37-74 in Malaysia. These proceedings on the discharge cases by frustration, breach,
agreement and performance based on the contract law will be further discussed to determine
the legal activities of the country.

Content

Discharge by performance

There are multiple situations where one or both parties fail to attain their obligations based on
a contract. In this situation, the discharge of contract by performance can occur. There are
mainly three essentials that are required to be considered by both parties while developing a
contract. As mentioned in Section 38 subsection 1, the actual performance is based on the
promises imposed by the parties in a contract based on the acceptance of their optimum
clause fulfilment ([Link], 2019). The parties should consider collateral damages that
might occur during the fulfilment of a contract. The basic timeline required to achieve the
clauses imposed by the parties to fulfil the contract must also be determined by the parties
before imposing it. Failing to attain the clauses of the actual performance can provoke the
court of law to withdraw the discharge process of the defendants. Thus, the clauses of actual
performances should be considered by both parties before imposing a contract (Andenas,
2017). The essential features of a valid contract are to gaining consent from both parties and
comprehension of the lawful objects and considerations of the country.

There is also a chance of the defendant in gaining discharge through the offer of tender or
perform. In a contract, tender is a legal term that is utilized as an offer of performance. As
stated in Section 40 and 41 of CA 1950, the receiving party can accept or reject a tender
offered by delivering the party in the market of Malaysia ([Link], 2019). Achieving the
clauses of a tender is also essential for the delivering party. If not achieved successfully, the
renewal of tender can be claimed by the receiving party with the acquisition of financial
values provided by them. This can be stated as a valid contract. Section 47 of the law
determines the claims of the receiving party for the execution of a valid contract (Bigoni,
2017). However, the delivering party can claim for a discharge process on the basis of
provided services to the receiving party to be optimum for the termination of the valid
contract.

The delivering party can claim for discharge based on the standard of performance
obligations present in Section 68 of the CA 1950. The delivering party can provide
performance evidence to the court of law to exhibit the clause of a valid contract attained by
them. The delivering parties can also provide the reasons for the clauses of a valid contract
that they were not being able to attain (Giancaspro, 2017). This can enforce the court of law
to impose a discharge process on the delivering party. These are the basic remedies available
to the delivering party in the market of Malaysia. In the case of KRISHNAN RENGASAMY,
EX P ARAB MALAYSIAN CREDIT BHD (2001) 4 CL J 797, the delivering agency or party
Krishnan Rengasamy was not able to deliver the goods and services to the receiving party in
the provided timeline ([Link], 2019). This was a significant breach of Section 42 of CA
1950. The agreement was discharged by the implementation of a third-party service provider
by the delivering party to attain the time provided by the receiving agency. In this case, the
conjectures of Section 42 have been addressed.

Discharge by agreement

In the market of Malaysia, it is essential for the parties to sustain through mutual agreement.
The competitive market of the region inflicts arrangements among the parties by the court of
law. Section 63 of CA 1950 states that there are six methods of processing a discharge
through mutual agreement ([Link], 2019). These methods involve the merger, waiver,
rescission, remission, alteration of contract and novation. The merger agreement disavows the
rights of an inferior party and incorporates the claims of the superior party in the market of
Malaysia. Waiver process involves one of the agencies to release their rights based on a valid
contract based on the goods and agency. In this situation, the agencies are no longer obligated
by the terms of the valid contract (Golden, 2016). This is a major facility provided by the
Malaysian Legal System in the market of the region.
In the rescission process, the agencies terminate the terms of the contracts due to various
reasons. These reasons involve a voidable contract, performance obligations and mutual
consent. This can impose discharge by agreement among the agencies or parties. The CA
1950 of Malaysia also states the remission of the contracts is also possible if one agency
gains the minimum amount of goods from other agency and decides to obliterate the terms of
the contract. In Section 63, it has also been stated that if both agencies feel satisfied with the
services and goods they have provided and gained an alteration of contract can also impose
the discharge process in the court of law ([Link], 2019). This generally occurs when the
receiving party is satisfied with the quality goods received in the market of Malaysia.
Novation is the process of implementing an entirely contemporary contract in the place of the
previous contract. Section 64 of CA 1950 deals with the novation process at the court of law.
In this situation, an agreement that can be achieved by both the parties and agencies is
implicated. This disposes of the previous contract and the delivering party is discharged from
its terms.

In the case of JATIDIRI SDN BHD V BAN THONG REALTY SDN BHD CIVIL APPEAL NO
J-02-2406 [2010], the receiving party was Jatidiri Sdn Bhd. The receiving party claimed a
10% deposit amount from the delivering party in the market of Malaysia ([Link],
2010). The agreement attained by both the parties involved the extension of the contract
timeline by two months. The delivering party received the extension and the receiving party
also collected 10% deposit amount. This is based on the notions presented in Section 64 of
the CA 1950. The formation of a novice contract was executed in this situation to achieve a
discharge by agreement. This case justifies the notions of Section 64 of the CA 1950.

Discharge by the breach

There are generally two kinds of breach attained by the delivering agencies in the market of
Malaysia. Section 74 of the CA 1950 has stated the clause of an actual breach and an
anticipatory breach ([Link], 2019). An actual breach occurs when delivering agencies
completely fail to achieve the term set by the receiving agency in the market of the region.
This situation can be treated as a penalty for the delivering agencies. The receiving parties
can potentially sue the delivering agencies claiming for damages for the breach of a valid
contract (Hoffman, 2017). This can emerge due to the delivering party transpiring bad debts
for economic or market conditions. An actual breach can be terminated by treating the
contract as discharged in the court of law of Malaysia (Wickelgren, 2017). The remedies
available for this situation are to discuss the terms of an agreement with the implementation
of the provision for bad debt by the delivering agency.

An anticipatory breach of contract is the verbal notions of both agencies that violate the terms
of a valid contract before the provision of performance. These violations can generate due to
any written, spoken or display of misconduct by the delivering party of the country. The
receiving party can discharge the valid contracts on the basis of the undelivered goods or
performances of the delivering party in the market of Malaysia (Klass, 2019). Hence, the
breach can occur among the partners or the management leaders with the legal entities of a
company. The partners are the collaborating management leaders of a company. The legal
entities involve the employees, suppliers and distributors or retailers of the company (Lipson,
2018). Any breach of the contracts imposed by the partners or legal entities of a company can
also proceed in the court of law. The prosecutors or receiving party can release the contract
by proving the violation charges of the delivering party. The remedies regarding this involve
achieving a mutual agreement among the partners or the management leaders with the legal
entities of the company in the market of Malaysia.

In the case of MALAYAN CEMENT INDUSTRIES SDN BHD V GOLDEN ISLAND

SHIPPING (L) BHD [2012], 1 CLJ 228 (CA) the Golden Island Shipping bhd was the
plaintiff or the receiving party. The receiving party claimed collateral damages caused in the
process of obtaining goods from the delivering party ([Link], 2012). The judgement
was in favour of the receiving party based on the breach of contract attained by the delivering
agencies. Based on the regulations provided in Section 74 and 75 the breach of contract in
this situation was imposed to be an actual breach. The terms of the contract were also based
on the provisions of the collateral damages of the receiving party. Thus, in this situation, it
can be stated that the discharge of the contract occurred due to an actual breach. In this
case, the conjectures of Section 74 and 75 have been addressed.

Discharge by frustration

Section 57 of CA 1950, states the three notions of the frustrations occurring in a valid
contract. These notions involve the obligations of the contract fulfilment based on its terms,
rendering illegal performances and prevention of achieving the objectives of a contract
([Link], 2019). These terms can impose a discharge process on the delivering agencies
for relieving them from the terms of a contract. The obligations based on the fulfilment of the
terms in a contract include environmental hazards, accidents, third-party interference and
sickness of one of the agencies. Submitting appropriate shreds of evidence in the court of law
regarding the issues of the delivering agencies to attain the terms of a valid contract can
release them from the terms of the contract due to frustration (Pargendler, 2017). The
frustrations in these situations occur for the receiving and the delivering parties for being
unable to attain the objectives of a contract.

The incorporation of illegal performance on the basis of a contract involves multiple

violations in the court of law of Malaysia. These violations involve insurance fraud, non-
reliable sources of income and delivering subordinate level goods to the receiving party. The
receiving party can discharge a contract based on the element of frustration due to harassment
caused by the delivering party (Savelyev, 2017). The delivering agencies in these cases can
also be the partners of a firm or legal entities of a company. Both parties can be charged in
this case if found to be guilty. Based, on the legal regulations of Section 57, the illegal
activities of the parties can discharge the contracts in the market of Malaysia ([Link],
2019). In this situation, the basic remedy is to avoid conducting any violation of the legal
notions of the country. The parties should attain the appropriate tasks and terms to achieve
them within the legal boundaries of the region.

The case of GAN JIN SIM @ GAN GIM SIM v SWI CHUAN @ NAN SWU CHUAN & 1 lagi.
3, W-02(C)(A)-1165-0 is a perfect example of the situation based on the case of frustration.
Gan Soon Cheow was appointed by the court of law as the administrator of the properties of
Gan Lai Kim due to an absence of a valid will ([Link], 2010). Guaman Sivil claimed
surcharge from the company while Gan Lai Kim also enforced legal actions to obligate the
sale of the property. This is a classic case of frustration based on Section 57 mentioning the
preventions for attaining the terms of a valid contract. Thus, the case was discharged in
favour of Gan Soon Cheow to invoke the rights of administration in the company of
Malaysia. In this case, the conjectures of Section 57 have been addressed.

Conclusion

The discharge of a valid contract in the market of Malaysia occurs due to multiple reasons.
Malaysian Legal System entitles multiple facilities for the partners and legal entities of a
company. The essential features of a valid contract are to be addressed by both receiving and
delivering agencies. The case of JATIDIRI SDN BHD V BAN THONG REALTY SDN BHD
CIVIL APPEAL NO J-02-2406 [2010] the formation of a novice contract was executed in this
situation to achieve a discharge by agreement. In the case of GAN JIN SIM @ GAN GIM SIM
v SWI CHUAN @ NAN SWU CHUAN & 1 lagi. 3, W-02(C)(A)-1165-0 the case was
discharged based on Section 57 of the legal notion of Malaysia. The following cases have
proved the benefits of both the partners and the legal entities of the country through the CA
1950.
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