Question Business Law

Topics: Contract, Contract law, Offer and acceptance Pages: 6 (2042 words) Published: April 16, 2013
( 23 ) Az oil Co. agrees to supply a quantity of oil to CRT Distributors Bhd at RM24.00 per barrel or RM26.00 per barrel Discuss the legal status of such agreement.
Az oil Co. agree to supply a quantity of oil to CRT Distributors Bhd at RM24.00 per barrel or RM26.00 per barrel. This is a contract and the contract is a legal, because Az oil Co agree to supply oil per barrel to CRT Distributors Bhd.

Consideration need not be adequate
Section 26 “ an agreement is not void merely because the consideration is inadequate. Section 26 illustration (f) “ A agree to supply a quantity of oil at RM24.00 or Rm26.00. the agreement is a contract notusthstanding the inadequacy of the consideration.

Case : Phang Swee Kim v. Beh I Hock (1964) MLJ 383.
The appellant agreed to buy a land for from the respondent for the price of $500, although the land was worth much more.

The respondent later refuse to honour the promise, arguing that the promise was unenforceable because of the inadequacy of consideration.

FC held : The consideration was adequate because the respondent has agreed to transfer the land to the appellant for $500. There was a valid contract.

( 24 ) Section 10 (1) of the Contracts Act 1950 Provides that: “all agreement are contract if they are made with the free consent of parties competent to contract.” Discuss when an agreement is said to be made free consent and what are the effect on the agreement if it is made without free consent. i. Free consent it means an act of assenting to an offer. According to section 13, "Tow or more persons are said to consent when they agree upon the same thing in the same thing in same sense." Thus, consent involves identity of minds in respect of the subject matter of the contract. In English Law, this is called 'consensus-ad-idem'. Contract act sec 14, is the which has been obtained by the free will of the parties. No pressure in the form of coercion fraud undue influence, mistake and misrepresentation in obtaining the consent.

* Effect of Absence of consent:
When there is no consent at all, the agreement is void ab-initio, i.e. it is not enforceable at the option of either party. Example X has one Maruti car and one fiat car. He wants to sell fiat car. Y does not know that X has two cars. Y offers to buy X's Maruti car Rs 50,000. X accepts the offer thinking it to be an offer for his Fiat car. Here, there is no identity of mind in respect of the subject of the subject matter. Hence there is no consent at all and the agreement is void ab-initio.

* Contract section define free consent in the following
“Consent is said to be free when it is not caused by (a) coercion, (b) undue influence, (c) fraud, (d) misrepresentation (e) mistakes.” a. Coercion [Section 15], It compelling a person to enter into contract, by use of physical force by Indian penal code, or threatens to do activities forbidden by I.P.C or threatens to damages the property. b. Under influence [section 16 (1)] the term ‘undue influence’ means dominating the will of the other person to obtain an unfair advantage over the other. According to section 16 (1), a contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of them is in a position to dominate the will of the other, and the dominant party uses that position to obtain an unfair advantage over the other, When two-partner are in relation, and one of them is dominant and other is in weaker position and dominant person takes undue-Advantage, then it is called under influence. c. Fraud essential elements of fraud [section 17], The term 'fraud' means a false representation of fact made willfully with a view to deceive the other party. d. Misrepresentation [section 18], a false representation of fact made innocently or non-disclosure of a material fact without any intention to deceive the other party. e. Mistake [section 20], a mistake is said to have occurred where the...
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