TUTORIAL 3

CONTRACT
BBL 2014

1. (i)What is past consideration?

Where a promise is made subsequent to and in return

for an act that has already been performed, the promise is
made on account of a past consideration.

Example

If K finds and returns M’s pen and in gratitude, M promise to

pay K RM200/- the promise is made in return for a prior act.

Section 2(d) of the Contracts Act 1950

(ii)Discuss the maxim that past consideration is good

consideration.
Section 26 Contract Act 1950:
An agreement made without consideration is void unless:-
a. it is in writing and registered – Section 26 (a) (love and
affection)it must be expressed in writing and registered under
the law (if any) for the time being in force for the registration
of such documents and is made on account of natural love
and affection between parties standing in near relation to
each other.
b. or is a promise to compensate for something done Section
26 (b)
It is a promise to compensate wholly or in part a person who
has already voluntarily done something for the promised or
something which the provision was legally compellable to do.

There are three limbs to the exception

i. it is a promise to compensate either wholly or in part the
other person
ii. the promisee has voluntarily done something for the
promisor. The act must be performed voluntarily. Voluntarily
was defined in the case of J.M. Wotherspoon & Co Ltd v Henry
Agency House [1962] MLJ
iii. An agreement to compensate for an act the promisor was
legally compellable to do.

The necessary ingredients are :-

a. promisee has voluntarily done an act
b. the act is one which the promisor was legally compellable
to do
c. an agreement to compensate, wholly or in part, the
promisee for the act

Example.

A supports B’s infant son. B promises to pay A’s expenses in

so doing. This is a contract.

** if X pays a fine imposed by the court on Y who promises to

compensate him, that promise is binding under this provision

c. or is a promise to pay debt barred by limitation law. Section

26 (c)

A statute barred debt refers to a debt, which cannot be

recovered through legal action because of a lapse of time
fixed by the law.
Section 26(c) creates an exception to this rule but subject to
several conditions:-

1. The debtor made a fresh promise to pay the statute barred

debt.
 2. The promise is in writing and signed by the person to be
charged or his authorized agent in his/her behalf

Example

A owes B RM1000/-, but the debt is barred by limitation. A

signs a written promise to pay B 500 on account of the debt.
This is a contract
Case:
Kepong Prospecting v Schmidt

2. Will advertised in the Star newspaper that anyone who found his
lost son, Finn and delivered him to him would be paid RM 10
000.00. Sue accepts this offer and finds Finn. Sue hands Finn
over to Will. Will refuses to pay the RM 10 000. Advise Sue as to
her legal rights.

In this case, Sue can use her legal rights for suing Will.
According to Section 26 (b): It is a promise to compensate
wholly or in part a person who has already voluntarily done
something for the promised or something which the provision
was legally compellable to do. This shows that the earlier
contract was valid and also called as a past consideration
because there is an offer, acceptance and consideration.

3. Malfoy promises Crabbe and Goyle that he would pay them RM 1

000.00 if they would steal the Gryffindor Sword from
Dumbledore’s room. Crabbe and Goyle manage to do so but
Malfoy now refuses to pay them the money. Advise Crabbe and
Goyle.

In this situation, Crabbe and Goyle cannot sue

Malfoy for any consideration because the purpose of the
 contract was illegal and not enforceable by law. So, in this
case, the contract was invalid and automatically void. Refer to
section 24:

Consideration or object of agreement is lawful unless

a.It is forbidden by law

b.it is such a nature, that if permitted, would defeat any

law.

c. it involves or implies injury to the person or property of

another

d.the court regards it immoral or opposed to public policy.

4. Sasha offered to sell her necklace to Diana for RM 100.00. Diana

accepts Sasha’s offer by paying her the said sum of money. Sasha
later discovers that the necklace is an antique piece of jewellery
worth RM 100 000.00 and insists that Diana return the necklace
to her. Is Diana bound to do so?

No. It is because the sale agreement was valid although the

consideration was not adequate. (explanation 2 of section 26)

Similar to the case : CHAPPELL & CO LTD V NESTLE CO LTD

&PHANG SWEE KIMV. BEH I HOCK

5. Puck is an English lawyer. Syed, a Malaysian real estate agent,

requests Puck’s advice on acquisition of certain property. Puck
prepares his advice. Syed promises to pay Puck 20% from the
profit he makes from sale of the profit. Syed acquires the
property and sells it for a 200% profit. He now refuses to pay
Puck. Puck thinks he cannot enforce Syed’s promise in the
Malaysian court and seeks your advice as a Malaysian legal
expert. What would your advice be?
 My advice to Puck is that he can sue Syed for breach
the contract. ...............unsure

6. Patrick wants to give his land to his daughter Mary on the

occasion of her marriage to John. Mary accepts the land. Patrick
wants to transfer the land to her name but is not expecting any
consideration from Mary. Patrick seeks your advice whether the
transfer is a valid contract.

According to me, the transfer is a valid contract. In

this situation, Patrick may refer to section 26 of the Contract
Act 1950 stated that: “An agreement without consideration is void”
unless based on Section 26(a): it must be expressed in writing
and registered under the law (if any) for the time being in
force for the registration of such documents and is made on
account of natural love and affection between parties
standing in near relation to each other. So, in a conclusion,
the contract is valid because it was made on count of natural
love and affection