LAW OF CONTRACT
LEGALITY
INTRODUCTION
• The court will not enforce an illegal contract
• The object or consideration of a contract must be that
which is permitted by the law. If the object is not
permitted, it is said to be unlawful
• If parties enter into an agreement where the
considerations or objects are unlawful, the contract
becomes void
GENERAL RULE
• The court will refuse its aid to a person who found his or her
cause of action upon an immoral or illegal act
• The legal maxim: ex dolo malo non oritur actio
• This is a Latin maxim which means ‘no right of action can
have its origin in fraud’.
• Section 2(g) Contracts Act 1950:
• “ An agreement not enforceable by law is said to be void.”
THE LAW
• Section 10 Contracts Act 1950:
‘All agreements are contracts if ….for a
lawful consideration and with lawful
object, and are not hereby expressly
declared to be void’
THE LAW
• Section 24 Contracts Act 1950:
• “The consideration or object of an agreement is lawful unless:
a) It is forbidden by a law
b) It is of such nature, that, if permitted, it would defeat any law
c) It is fraudulent
d) It involves or implies injury to the person or property of
another
e) The court regards it as immoral, or opposed to public policy.
EXAMPLES
• Unlawful consideration
• In Manang Lim Native Sdn Bhd v Manang Selaman [1986] 1 MLJ 379, the
court held that an agreement to transfer Native Area Land in Sarawak to a
non-native is deemed to be for an illegal consideration under section 8 of the
Sarawak Land Code.
• Unlawful object
• In Aroomoogum Chitty v Lim Ah Hang (1894) 2 SSLR 80, the plaintiff lent
money to the defendant for the purpose of running a brothel. The object was
immoral, thus, it became void for illegality. The plaintiff could not recover his
money back.
