Undue Influence (Malaysia)

Topics: Contract, Contract law, Misrepresentation Pages: 11 (3500 words) Published: March 5, 2013



Coercion, as an element of duress, is grounds for seeking the cancellation of a contract or deed. When one party to an instrument is forced against his or her will to agree to its terms the document can be declared void by a court.

In order words, a contract only be binding if both of the parties voluntarily consent to it. The consent should be invalid of one party is forced to consent by threats or under persuasion by the other. As defined in section 15 of the Contracts Act, one form of such threats is ‘coercion’ and for the purposes of section 14 (as discussed in para 2.1) which, among others, require ‘free consent’ of contracting parties. The section goes on to provide that consent is free when it is not caused by ‘coercion’ as defined by section 15, or others such as ‘undue influence, fraud, misrepresentation and mistake’.

Section related to coercion
The relevant part of section 15 reads as follows: -
‘Coercion’ is the committing, or threatening to commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.

The illustration of coercion as per following:
A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Penal Code. A afterwards sues B for breach of contract at Taiping.

A has employed coercion, although his act is not an offence by the law of England, and although section 506 of the Penal Code was not in force at the time when or place where the act was done.

Sample Cases for coercion
Case 1
Lord Moulton in Kanhaya Lal v. National Bank of India Ltd, an appeal to the Privy Council from India on a provision in pari materia with the local Act, opined that the definition of ‘coercion’ was solely a definition which applied ‘to the consideration whether there has been ‘free consent’ to an agreement so as to render it a contract’. This means that the definition of ‘coercion’ under section 15 applies solely to the consideration whether there has been free consent to an agreement so as to render it a contract under section 10 of the Contracts Act.

The definition of ‘coercion’ covered duress at common law which has traditionally meant actual violence or threats of violence to the person of the contracting party or someone close to that person. The common law of duress relates to the unlawful threat to detain goods is a little unclear although it has been held that money paid to release goods unlawfully detained is recoverable. In any case, its importance is greatly diminished light of the wide definition of coercion under the Contracts Act which includes ‘the unlawful detaining or threatening to detain any property, to the prejudice of any person whatever. In Kanhaya Lal case, the Privy Council ruled that the plaintiff was entitled to recover money paid as a consequence of coercion caused by the wrongful interference of the defendant bank with property.

Case 2
“Duress” was applied in Kesarmal s/o Letchman Das v Valiappa Chettiar, where the court held invalid as it is a transfer executed under the orders of sultan, issued in ominous presence of two Japanese officers during the Japanese Occupation of Malaya was invalid. In this case, was not given freely and the agreement was voidable at the will or option of the party whose consent was so caused.

Case 3
In Chin Nam Bee Development Sdn. Bhd. v. Tai Kim Choo & 4 Ors, the respondents purchased homes off the plan to be constructed by the appellants. Each of the respondents had signed a...
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