REMEDIES FOR VOIDABLE CONTRACTS

1. Discuss the circumstances which give rise to voidable

contracts.
Basically as according to s.2(I) an agreement which is enforceable by law at the
option of one or more parties thereto, but not at the option of the other or others, is a
voidable contract which means that the innocent party has the option to enforce the
contract or not and either can choose to rescind the contract or continue the contract.
First circumstances that give rise to voidable contract is that there is a lack of free
consent in entering into an agreement. When an innocent party rescinds due to any
vitiating factor it is known as rescission ab initio. Second, the contract is voidable
when there is a serious breach of terms of the contract under s40, 54 and 56 of CA…
this is known as rescission for breach ..In both situations, the innocent party may
rescind the contract although there are some differences in the effects of rescission.

There are also provisions laid down which are the s.19(1) and s.20 in which a
contract may become voidable due to lack of free consent
-s.14
-give definition of what is voidable contract
-breach of contract - more govern by implied terms
-sales of good act
Discuss, with reference to cases, the remedies for voidable
contracts.
S.65 - When a person at whose option
a contract is voidable rescinds it, the
other party thereto need not perform
any promise therein contained in
which he is promisor. The party
rescinding a voidable contract shall,
if he has received any benefit
thereunder from another party to
such a contract, restore the benefit,
so far as may be, to the person from
whom it was received
s.66 - when…a contract becomes
void, any person who has received
any advantage under the…contract is
bound to restore it, or to make
 compensation for it, to the person
from whom he received it

CASE :
SATGURPRASAD V HAR NARAIN DAS
 If the matter could be regarded one as of contract, their Lordships think it would fall
within the terms of section 65 of the contracts act [s.66 malaysian contracts act]
which provides that ' when a contract becomes void' - and their Lordships would
have no difficulty in holding these words sufficient to cover the case of a voidable
contract which had been avoided - any person who has received any advantage
under such a contract is bound to restore it to the person from whom he received it,
or make compensation therefore"
CASE :
YONG MOK HIN V UNITED MALAY STATES SUGAR
INDUSTRIES
 Under the provisions of s.65, the obligation to restore any benefit received is
restricted to the party rescinding the contract but under s.66 the obligation is
extended to any party who has gained an advantage or benefit under the
contract.
 But this section [s.66] deals with contracts which are discovered to be void or
becomes void. It would include voidable contracts which become void by
rescission.

2. Explain the distinction between s.65 and s.66 of the

Contracts Act 1950.
As for s.65 means when a person at whose option a contract is voidable rescinds it,
the other party thereto need not perform any promise therein contained in
which he is promisor. The party rescinding a voidable contract shall, if he has
received any benefit thereunder from another party to such a contract, restore
the benefit so far as may be to the person from whom it was received
whereas as for the s.66 when a contract becomes void, any person who has
received any advantage under the contract is bound to restore it, or to make
compensation for it, to the person from whom he received it which summarise
that agreement discovered to be void or the contract becomes void. -if you
cannot restore, must pay compensation*
*any party means only refer to the person who is under contract

As for in the case of satgur prasad v har narain das where it tells when a contract
becomes void covers situation whereby a voidable contract that had been
rescinded
In the case of yong mok hin v united malay state sugar industries where the federal
court followed satgur prasad regarding breach of contract and thus voidable
contracts fall under s.66 if the option to rescind is exercised.
3. when must a voidable contract be revoked in order for the
revocation to be valid?
as stated in s2(I) of contracts act where an agreement which is enforceable by law at
the option of one or more of the parties thereto, but not at the option of the other or
others, is a voidable contract. Thus while a contract is valid and binding having
sstisfied the requirements on formation of contract, where a contract is voidable, one
of the parties to the contract has the option to avoid the contract. He has the choice
whether to carry on (affirm) the contract or to terminate (rescind ) the contract..

Once it is proven that the contract is voidable, the innocent party then has the right
either to avoid the contract by termianting or rescinding it, alternatively, if he so
wishes, to affirm or carry on with the contract

- the innocent party has the right to rescind or affirm the contract
-voidable contract- lack of free consent, serious….
1. Communicate the intention to rescind the contract
-s.67, chin kim v loh boon siew, sim chio huat v wong ted fui
2. Make an application to the court s34SRA
A VOIDABLE CONTRACT DOES NOT TERMIANTE AUTOMATICALLY,
THEREFORE THE INNOCENT PARTY
I. Exercise the option
Ii. Within a reasonable time - Consdier and think in adequate time whether that party
would like to proceed or rescind the contract but as soon as possible (1/2 weeks still
maybe reasonable time because time to think for rescind the contract cannot be too
long) -beware when the time you know there is a breach of contract
Does s.76 of the Contracts Act 1950 refer to all voidable
contracts or only some? Discuss.
S.76 tells that a person who rightly rescinds a contract is entitled to compensation for
any damage which he has sustained through the non-fulfillment of the contract
Only the contract that was rescind due to unfulfillment, not the contract that is rescind
void ab initio - mainly claim for damages-s.76
-suffer loses or damages, must be within the contract what can be claimed and
cannot be claimed refer to s.74, cannot be too remote
- a person who rightly rescinds a contract is entitled to compensation for …..
Case : haji ahmad yarkhan v abdul ghani & anor - only one can use s76 ti claim for
damafes which he has suffered because the term in the contract were not perofrmed
but innocent party cannot claim for an act prior to the decision.
A person entitled to compensation if he rightly rescinds the contract, he has
sustained damage through non fulfilment of the contract
- chye fook & anor v teh teng seng realty sdn bhd
-yong mok hin v united malay states sugar industries
*65-as far as you can but must pay compensation
5. Explain the distinction between a ‘voidable contract’,
‘void agreement’ and an agreement that is void ab initio.

Voidable contract can be distinct by looking at the s.2(I) where it

stipulates that an agreement which is enforceable by law at the option of
one or more of the parties thereto but not at the option of the other or
others, is a voidable contract. As for under s.65 when a person at whose
option a contract is voidable rescinds it, the other party thereto need not
perform any promise therein contained in which he is promisor. The party
rescinding the voidable contract shall, if he has received any benefit
thereunder from another party to such contract, restore the benefit,so far
as may be, to the person from whom it was received.
Whereas void ab initio means that when an innocent party rescinds due to
any vitiating factor- voidable contract where there is lack of free consent ,
it is known as void ab initio….
void agreement means when an agreement is discovered to be void, or
when a contract becomes void, any person who has received any
advantage under the agreement or contract is bound to restore it, or to
make compensation for it, to the person from whom he received it

Coercion question 3
Joan is a University student. She met Jack at the Perdanasiswa during lunch hour.
Jack fell in love with Joan at first sight and proposed to her. She refused. The next
day, Jack telephones her and informs her that if she does not agree to marry him, he
would get gangsters to harm her family. She is very afraid. She signs a contract to
marry Jack after she graduates.

However, after graduation, she realizes that she cannot go through with the marriage.
She seeks your advice. What will you advise her?
-whether joan’s consent to sing the contract with jack was of her free will

Definition - s.15CA - “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.
As for in the case of teck guan trading sdn bhd v hydrotek engineering sdn bhd -
there are 2 ways of committing ‘coercion’ as defined by s15 one of which is the
threatening of an act forbidden by the penal code, while the other is the unlawful
detention or the threatening of such to the prejudice of any person, with the intention
of causing any person to enter into an agreement. Mr Lim councel for the defendants
did not submit whether any or which of the acts of the plaintiff can be considered as a
threat to commit an act forbidden by the penal code and which section of the penal
code as forbidding the threatened act. Mr Lim must say what offence the plaintiff had
committed under the penal code before the court can decide whether such an
offence had been committed
If she does not agree to marry him, he would get gangsters to harm her family”
- this cosidered to be as against to the penal code

Coercion as provided s15 of the CA is NOT the same as duress under the common
law. S15 is wider in that it covers the unlawful detention of property. The common law
of duress only recognises actual or threatened violence to persons and threats to
property were held to be insufficent to amount to duress. for the english case which is
the Barton v Armstrong which is about the appellant alleged that the respondent had
coerced him into entering an agreement with the respondent by threatening to have
him murdered and by otherwise exerting unlawful pressure on him. The privy council
allowed the appeal and granted a declaration that the agreements were executed by
the appellant under duress and were void.
- coerced him to enter into an angreement or else he would be murdered

As for malaysian case, which is the asbir,hira singh and co v

supramaniam a/l pitchaimuthy & ors where the high court held that the
first defendant’s contention that he was coerced by the plaintiff into
signing an agreement to pay the plaintiff RM40000 fees remained a bare
allegation as the elements under s15 of the CA were not proved
- need to prove such allegation

When one is coerced into entering into a contract, he conract is

considered void ab initio because either party got into a contract with no
consent
-when void ab initio, can claim under s.65,s.66

Conclusion : can sue and the contract is void*

 COERCION
S14, s15, s19 are almost the same

S73 mesti ada contrak but didn’t look at new contract, because lebih pada batalkan
kontrak

Contrak ada mensti ada consideration, if new offering of contract, look back at new
consideration

1. Discuss the decision in the case of Chin Nam Bee Development v Tai Kim
Choo [1988] 2 MLJ 117, especially in relation to the meaning of ‘coercion’ in
sections 15 and 73 of the Contracts Act 1950.
- court held that respondent’s ..
Argument - pf’s councel stated that additiional sum of 4k was refundable under s.73
Appellant appeal on the ground that even though there was a threat to cancel the
booking of the houses..
Judgement - the word coercion under s15 is only related to s14 to further explain the
meaning of coercion, it does not stated that the meaning of coercion under s15
applies througout the entire
* tak boleh gabungkan meaning of coercion by combining s15 and s73
Basically, the law of coercion in Malaysia is provided in s15 of the CA where it
defines coercion as ‘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. Whereas as for
the s.73 of CA, it tells that a person to whom money has been paid, or
anything delivered, by mistake or under coercion, must repay or return it.

S.73 is a restitutionary provision allowing a person who has paid money or delivered
something, whether by mistake or coercion, the right to claim restoration of
the money paid or thing delivered. In this context, the court have held that the
meaning of ‘coercion’ in s15 dealth with above. In the case of chin nam bee
development sdn bhd v tai kim choo & ors. The defendant a housing
developer told the purchaser to pay an additional….

Jake and Caleb entered into a contract. Under the contract, Jake was to transport
timber from Caleb’s sawmill to the shipyard from 21 March 2016 to 20 April
2016. Caleb was to pay Jake RM10,000.

However, on 28 March 2016, Jake informed Caleb that he would only

continue transporting timber if Caleb would pay an extra RM2,000. Caleb had
no choice but to agree to this demand, as his clients expected the timber to
 be sent by 20 April 2016. Caleb, however, pays only RM12,000 on 20 April
2016. After the payment, Jake continued transporting the timber.

Caleb comes to you in May 2016 and asks whether he can reclaim the
RM2,00. Advise Caleb.

* north ocean shipping v hyundai construction

1. Threat to break contract - jake will only continue transporting timber if caleb
pays an extra 2k
2. Led to another contract - caleb agreed to pay the extra of 2k

* pau on v lau yiu - commercial pressure alone is insufficient , 4 questions to

determine true consent
Common law doctrine of economic duress. Economic duress is commercial pressure
that vitiates consent. For this part can quote the case of north ocean shipping
co ltd v hyundai construction co ltd for definition, the cases involved economic
duress as the defendant had threatened economic loss to the plaintiff.
In this case plaintiff paid extra because of the compulsion of delivering timbers to his
client. Economic duress was established. Contract was intially voidable.
Poo on v lau yiu long, commercial pressure along is insufficient there must be some
factor which could in law be regarded as a coercion of his will so as to vitiate
his consent. Four guidelines did he protest at the time of coercion, was there
an alternative at the time of contract, was he independently advised, after
entering the contract, did he take steps to avoid it
The fact is silent about whether plaintiff did or did not protest, but since there is no
choice for plaintiff, so I would presume no protest was made. Secondly, the
fact states that plaintiff had no choice so it would be reasonable to assume
that plaintiff tried but found no alternatives. Thirdly, the fact is silent so we can
conclude he didn’t get independent advice. Lastly, because plaintiff came to
me seek for advice which can be deemed as one mean of avoid paying it
Yes there is economic duress…although cannot claim under s19 common law does
provide that id there is economic duress, contract is voidable, according to
north ocean shipping. Since it is voidable s.65 and 66 may apply.
2. Joan is a University student. She met Jack at the Perdanasiswa during lunch
hour. Jack fell in love with Joan at first sight and proposed to her. She
refused. The next day, Jack telephones her and informs her that if she does
not agree to marry him, he would get gangsters to harm her family. She is
very afraid. She signs a contract to marry Jack after she graduates.

However, after graduation, she realizes that she cannot go through with the
marriage. She seeks your advice. What will you advise her?
-whether joan’s consent to sign the contract with jack was of her free will

Definition - s.15CA - “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.
As for in the case of teck guan trading sdn bhd v hydrotek engineering sdn
bhd - there are 2 ways of committing ‘coercion’ as defined by s15 one of
which is the threatening
Teck guan trading - there are 2 ways of committing of coercion as defined by
s15 one of which is the threatening of an act forbidden by the penal code,
while the other is the unlawful detention or the threatening of such to the
prejudice of any perosn, with the intention of causing any person to enter into
an agreement. Mr lim (councel for the defendants) did not submit whether any
 or which of the acts of the plaintiff can be considered as a threat to commit an
act forbidden by the penal code and which section of the penal act as
forbidding the threatened act. Mr lim must say what offence the plaintiff had
committed under the penal code before the court can decide whether such an
offence had been committed...
“If she does not agree to marry him, he would get gansters to harm her
family”

English case : barton v armstrong

- coerced him to enter into an agreement or else he would be murdered

Malaysian case : asbir, hira singh & co v supramaniam a/l pitchaimuthy & ors
- the High Court held that the first defendant’s contention that he was coerced
by the plaintiff into signing an agreement to pay the plaintiff RM40000 fees
remained a bare allegation as the elements under s15 of CA were not proved.
Coercion as provided in s15 of the CA is not the same as duress under the
common law. S.15 is wider in that it covers the unlawful dentention of
property. The common law of duress only recognises actual or threatened
violence to persons and threats to property were held to be insufficient to
amount to duress.
As for in Barton v armstrong the appellant alleged that the respondent by
threatening to have him murdered and by other wise exerting unlawful
pressure on him. The PC allowed the appeal and granted a declaration that
the agreements were executed by the appellant under duress and were void.
- need to prove such allegation

When one is coerced into entering into a contract , the contract is considered
void ab initio because either party got into a contract with no consent
* when void ab initio, can claim under s.65,s.66

Conclusion, can sue and the contract is void

4. Discuss whether there is room in Malaysian contract law to embody the

concept of economic duress.

Commercial pressure, universal tankship inc of monrovia v international transport workers

federation, north ocean shipping v hyundai construction the pressure exacerbated if the
innocent party already has existing obligations with third parties for which he may suffer
further losses if the original contract does not carry out as planned. Vitiated consent, pao on v
lau yiu long, there must be some factor which could in law be regarded as a coercion of his
will so as to vitiate his consent. 4 guidelines…did he protest at the time of coercion, was there
an alternative at the time of contract, was he independently adivsed, after entering the
contract, did he take steps to avoid it