ASSIGNMENT

BUSINESS LAW

Question 1. “ A consideration must be adequate”. Do you agree with the

statement? Discuss your answer by quoting the relevant decided cases to support
your answer.

I not agree with the statement. Providing consideration has some value, the court will
not investigate its adequacy. Where consideration is recognised by the law as having
some value, it is described as “real” or “sufficient” consideration. The court will not
investigate contracts to see if the parties have got equal value.

Consideration need not be adequate: Section 26, Explanation 2, Contracts Act, 1950:
an agreement is not void merely because the consideration is inadequate.
Illustration (f): application to the rule: ‘A agrees to sell a horse worth RM1,000 for RM10#
The agreement is a contract not with standing the inadequacy of the consideration.’

Case:
Phang Swee Kim v Beh I Hock (1964) MLJ, 383. In the case, the respondent alleged
that the appellant had trespassed on his land. He instituted an acting claiming for
possession and for an account of all income received by the appellant from the said
land. The appellant counter-claimed for a declaration that she was entitled to the said
land. At the hearing , the appellant argued that there was an oral agreement
made between her and the respondent in which the respondent agreed to
transfer the land to her on payment of RM500.

HELD: The learned trial judge held that the agreement was void due to the inadequacy
of consideration. There was adequate consideration in this case (there being no
evidence of fraud or duress) because the respondent agreed to transfer the land to the
Appellant for RM500 when the land was subdivided.
Question 2.

State whether the parties below are required by the law of contracts to fulfill
their legal obligation in the following situations and explain your answer:

a ) Alia placed the following advertisement in the notice board of Seven to Seven
Stores:

Missing a dark and grey colour Persian cat. The cat is wearing a silver necklace
with a heart shape pendent with a written name 'Kitty'. Anyone who finds the cat
may return the cat immediately. Do contact Miss Alia at telephone no .015 343900,
and reward will be given for those who returns the cat"

Rose writes to Mr. Alex, the manager of Hotel Mimpi Indah on

the15threquesting the information regarding the cost and availability of
accommodation for the weekend. Mr.Alex in answering her inquiry states that
accommodation is available for the week at the cost of RM100 per night. Mr. Alex
added that if Rose responds with the deposit of RM20 within 7days, the room will be
allocated to her. Rose responds to Mr. Alex letter by writing a letter accepting the terms
and enclosed a RM20 postal order. The letter was posted on18th March. However
there was a delay in the delivery of the letter to Mr. Alex. The letter only reached Mr.
Alex on the 28th March. Thus on the 24th March, Mr. Alex offered the said
accommodation to Mr. & Mrs Smith. They had accepted it. Decide as to whether
Rose can sue Hotel Mimpi Indah for breach the contract.

Topic : Acceptance by post

Issue / Problem
-Accommodation is available for the week at the cost RM100/night-Mr. Alex added
that if Rose responds with deposit of RM20 within 7days, the room allocated to
her-Rose responds to Mr. Alex letter by writing a letter accepting the terms and enclosed
aRM20 postal order-Rose was posted letter on 18thMarch-Delivery letter delay and Mr.
Alex accepted letter