Law of Contract

1. Introduction

Contract does play an important role in our daily lives. This is because of a contract is a living area of law with which we engage on a daily basis. For instance, each time we buy a pair of jeans or a CD, go to a nightclub, get on a bus, rent a DVD or register for our latest course, we are entering into a contract. Moreover, they are regularly being entered into by individuals with other individuals, as well as businesses with other business, the sale of land or property, to provide and receive services and other obligations created. The hire of a property is based on a lease contract, the sale and purchase of goods is based on sale contracts, the hiring of employees is based on employment contracts, and so on. Business cannot erect without enforceable contracts.

1.1 Legal definition

A contract is an agreement enforceable by law. It means a contract is an agreement which is legally binding between the parties. All agreements are contracts if they are made by the free assent of parties competent to contract, for a lawful consideration as well as with a lawful object, and are not hereby clearly declared to be invalidated. However, all contracts are agreement but not all agreements are contract.

1.2 Sources of the law of contracts in Malaysia

The legislation in Malaysia governing contracts is the Contract Act 1950 (Act 136) (Revised 1974). The common law of contracts developed in England around the thirteenth century. Malaysian contract law evolved from the English common law. However, the Contracts Act 1950 is modelled on the Indian Contracts Act 1872. As the Contracts Act 1950 is in pari materia with the Indian Contract Act 1872 which is based on English common law, the positions under the common law and the Indian Contract Act are used as a starting point. Where a different position has been adopted in the Contracts Act 1950, this is highlighted and explained. The Contracts Act 1950 is analysed through the sections, explanations and...