Separation of Powers

                  The separation of powers in its simplest sense is the division of state into branches, each with separate and independent powers and areas of responsibility. The normal division of branches is into an executive, a legislature and a judiciary.

Definition by jurists:

Montesquieu:
"When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty...Again, there is no liberty if the power of judging is not separated from the legislative and executive. If it were joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control; for the judge would then be the legislator. If it were joined to the executive power, the judge might behave with violence and oppression. There would be an end to everything; if the same man, or the same body, whether of the nobles or the people, were to exercise those powers, that of enacting laws, that of executing public affairs, and that of trying crimes or individual causes."

Aristotle:
"There are three elements in each constitution in respect of which every serious lawgiver must look for what is advantageous to it; if these are well arranged, the constitution is bound to be well arranged, and the differences in constitutions are bound to correspond to the differences between each of these elements. The three are, first, the deliberative, which discusses everything of common importance; second, the officials; and third, the judicial element."

John Locke:
"The three organs of the state must not get into one hand...It may be too great a temptation to human frailty..."

Strict sense: There should be a clear demarcation of functions between the legislature, the executive and the judiciary. None should have excessive power and there should be in place a system of checks and balances between the institutions

Liberal sense: It would mean that let there be overlaps in function and membership between the legislature, the executive and the judiciary but on condition that there should be checks and balances between the institutions.

Whether Separation of Powers is followed

Legislature and Executive

Membership

-YDPA is the ceremonial executive and a part of the Parliament (Art. 44)

- PM and his Cabinet are required by the FC to be members of either Houses of Parliament.

Functions

- Executive has the power to make delegated legislation

-Executive controls Parliament. Party Whip – Executive will make sure all MPs do not oppose the Bill that needs to be passed.

Checks and Balances

- Legislature scrutinizes the executive through parliamentary procedures like question time, debates and select committees.

- YDPA acts on the advice of the Cabinet. The YDPA is guided by the FC dealing with the requirement of a Royal Assent to the Bill.

-Parliament may oust a government through a vote of no-confidence.

However,

- The Government usually has a two-thirds majority in Parliament and tends to dictate the Legislative branch

- Weaknesses of Parliamentary procedures such as question time, debates and select committees.

-Opposition lack of equal information in the Parliament

Legislature and Judiciary

Membership

-The highest court in UK was also the highest house of Parliament, House of Lords. Now the highest court in UK is Supreme Court.

Functions

- Legislature regulates its own composition and procedures like enforcement of breach of parliamentary privilege or contempt of Parliament. E.g. Stockdale v Hansard.

-Judicial organ makes law through the doctrine of judicial precedent.

-Judges are not supposed to make law. When judges make the law, they may not have made proper studies on the issue yet. Laws made by the judges are up to the personal preferences of the judge. Law made by Parliament will be balanced out because there are over 100 or 200 people in Parliament. Judge made law is automatically retrospective, can never be prospective. A judge can only make the law when the case comes to court. When the case comes to court, the event already happened.

-Judicial organ interpret statutes through differently, altering the literal meaning of the statutes. Purposive approach and mischief rule, judges may end up making law under the term of statutory interpretation.

- Parliament can pass laws that apply retrospectively in civil cases (Art.7)

-YDPA is from the Parliament, and appoints judges

Checks and Balances

-No MP can hold judicial office and vice versa to maintain independence of the judiciary

- Judiciary can declare an Act of Parliament as unconstitutional.

-Conduct of judges cannot be discussed in State Legislative Assemblies. Conduct can only be discussed in Parliament on a substantive motion of which notice has been given by not less than one quarter of the total number of members of that House

- Judiciary can control delegated legislation by declaring any subsidiary legislation inconsistent with any Act of Parliament or State Enactment void to the extent of the inconsistency.

- Parliament can pass laws to overwrite judge-made law

-Parliament can remove judges, by forming a tribunal and deciding.

Whether checks and balances are effective

- Not really, because the Executive dominates the Parliament, and the Parliament is forced to carry out its functions on behalf of the Executive. For example, passing a Bill containing policies of the Executive

Executive and Judiciary

Membership

-Indirect. Executive appoints the judges of the superior courts.

Functions

-AG who is part of the Executive, performs a judicial function,i.e. power to prosecute or not to prosecute

-Judges of Session and Magistrate courts are members of the judicial and legal service. They are transferable from the Bench to the AG’s Chambers and the government departments

- Chairpersons of administrative tribunals are not judges, but they perform the role of a judge.

- Statutory Interpretation. Judges will end up questioning policies even though they are not supposed to do so. Policies are done by the Executive. Purpose of the act can be equated to the policies.

-Under the Executive, the Home Minister can detain anyone without trial under the ISA. It prevents the courts from performing their functions.

Checks and Balances

-No Member of Executive can hold judicial office and vice versa

-Judges can only be removed from their office for misbehavior or inability to properly discharge the functions of their office

- Art.123 provides safeguards for the appointment of judges by the Executive by prescribing qualifications

- FC contains express provisions to secure independence of the judiciary from interference either from the Executive or Legislature.

Whether check and balances are effective

- Judicial powers of the Courts have been removed by the Executive

-Latent threats, the financial and other resources necessary for the judiciary to function properly is under the Executive

-PM can insist on appointment of a judge even if the Conference of Rulers disagree
-PM can pass laws inconsistent with the Constitution under Art.149 and Art.150

Whether there are overchecking and overbalancing

-Judiciary seldom performs judicial review, especially after the 1988 Judicial Crisis.

-Executive dominates the Parliament. Majority of the MPs comes from the Executive.

Promissory Estoppel (Consideration)

Promissory Estoppel

                There may be promises where there is no consideration but which may be given effect by the doctrine of promissory estoppels.  The doctrine may apply in a situation where both parties are in an existing legal or contractual relationship and one party (A) promises to relieve another (B) of some previous obligations.  In this situation, the doctrine of promissory estoppel seeks to prevent A from reneging on his promise to fully enforce A's previous rights against B. Thus, the doctrine is said to act as a defence and not as a cause of action ("as a shield but not as a sword").

For the doctrine to apply, these elements must exist:

(a) One party makes a promise with the intention that the other party should act in reliance on the promise;

(b) The promisee has acted in reliance on the promise;

(c) It is inequitable to allow the promisor to go back on his promise.

The doctrine only suspends the promisor's (A) rights but does not take it away (suspensory and not extinctive). The party who had relied on it (B) is granted temporary relief until A gives further notice provided B can be put back to his original position. Otherwise, A's right may be denied to avoid the detriment that B may suffer.

Common Law position

Hughes v Metropolitan Rly Co. (1877) 2 App Cas 439

In this case, the plaintiff, the owner of a house gave the defendant, the tenant, six months notice in October to carry out repairs to the house failing which the tenancy would be terminated. In November, the landlord carried out negotiations with the tenant with a view to selling the house to the tenant. The negotiations ended in December and the tenant had not carried out repairs to the house. After the six months, the landlord brought an action to evict the tenant from the house.

The House of Lords held that the negotiations commenced by the landlord constituted a promise that as long as the negotiations continued, he would not enforce the notice for repairs to the house. The tenant had acted in reliance on the promise as he had done nothing to make repairs to the house while the negotiations were ongoing. Thus, the period of the notice should be calculated from the date the negotiations ended, and not six months from the date the notice was given. In this case, the doctrine suspended the landlord's original rights.

Lord Cairns: “ It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results - certain penalties or legal forfeiture - afterwards by their own act or with their own consent enter upon a course of negotiations which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.”

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130

In this case, the defendant rented flats from the plaintiff for 99 years for a certain rate. When World War II broke out, the plaintiff agreed to reduce the rent. The defendant paid rent according to this new rate from 1941 to 1945. At the end of 1945, the plaintiff claimed for rentals as well as arrears based on the old rate.

Lord Denning: “when one party gives a promise with the intention that the other party should act in reliance on that promise and the other party does so act, the promise must be fulfilled although no new consideration is given for the promise. The reason promissory estoppel can only be used as a defence is because no consideration has been given for that promise. The other party cannot be said to enforce a new contract because there is no new contract (for want of consideration). But the party who has suffered a detriment as a result of relying on the promise may, when the party who has given the promise brings an action against him, raise the promise as a defence to estop him.”

Malaysian position

Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331

http://www.ipsofactoj.com/archive/1995/Part04/arc1995(04)-014.htm

In this case, the appellant bought goods from Chemitrade Sdn Bhd (Chemitrade). Chemitrade entered into a factoring agreement with the respondent whereby the debts owed by the appellant to Chemitrade were assigned to the respondent. Chemitrade gave to the respondent copies of the invoices in respect of the sale and delivery of goods to the appellant. The respondent then stamped the invoices with the endorsement that any objection must be made within 14 days of receipt and sent the invoices to the appellant. The appellant did not complain within the said period nor challenge the respondent's imposition of the endorsement. After several payments on the invoices, the appellant refused to make payment on 20 invoices. The respondent argued that since the appellant did not protest about the validity of the endorsement, it was entitled to assume that the appellant had accepted it.

The Federal Court applied estoppel and held that as the appellant, Chemitrade and the respondent had proceeded upon the assumption that the factoring agreement was a valid assignment, it would be unjust and unconscionable to allow the appellant to challenge the document now. The Court further held that a reasonable person in the respondent's position would be entitled to assume that the appellant had agreed to the endorsement by remaining silent and making payment on the invoices.

This case is significant as the Federal Court clarified and restated two elements of the doctrine of estoppel, the first as to the effect which the representation had upon the mind of the person relying on the estoppel and the second, whether the person must have acted to his detriment.

Gopal Sri Ram JCA: “The traditional view ... is that a litigant who invokes the doctrine must prove that he was induced by the conduct of his opponent to act in a particular way ... we are of the opinion that this requirement is not an integral part of the doctrine. All that the representee ... need to do is to place sufficient material before a court from which an inference may fairly be drawn that he was influenced by his opponent's actings. Further, it is not necessary that the conduct relied upon was the sole factor which influenced the representee. It is sufficient that "his conduct was so influenced by the encouragement or representation ... that it would be unconscionable for the representor thereafter to enforce his strict legal rights"…We take this opportunity to declare that the detriment element does not form part of the doctrine of estoppel. In other words, it is not an essential ingredient requiring proof before the doctrine may be invoked. All that need be shown is that in the particular circumstances of a case, it would be unjust to permit the representor or encourager to insist upon his strict legal rights.”

Sim Siok Eng v Government of Malaysia [1978] 1 MLJ 15,FC

In this case, the appellant was assigned to construct a building but he failed to complete it on time. The respondent had promised to supply the appellant with construction materials which were difficult to obtain. The respondent had stopped supplying these materials without notice to the appellant.

The Federal Court held that the respondent's promise to supply the construction materials was a variation of the original contract. The appellant had relied on the promise and had changed his position in reliance of it. Therefore, the original contract was suspended and if the respondent wanted the original contractual position to resume, he should give notice to the appellant.

Consideration (Contract)

Past Consideration


- Section 2(d) of Contracts Act 1950

          Anson in his book ‘Anson’s Law of Contract’ has explained the issue on past consideration. Anson stated that “Executed consideration must be distinguished from past consideration which is a mere sentiment of gratitude or honour prompting a return for benefits received and is no consideration at all. In the case of executed consideration, both the promise and the act which constitutes the consideration are integral and co-related parts of the same transaction. In the case of past consideration, however, the promise is subsequent to the act and independent of it; they are not in substance part of the same transaction. Thus if A saves B from drowning and B later promises A a reward, A's action cannot be relied on as consideration for B's promise for it is past in point    of time." In Malaysia, both executed consideration and past consideration are good consideration. 

 In Common law, past consideration is not good consideration.

 Re McArdle [1951] Ch 669. 

In this case, a house was the joint property of a few siblings living together. The plaintiff, the wife of one of the brothers paid for repairs to the house. Then, the siblings agreed to pay her 488 pounds as the consideration for the repairs. Later, the plaintiff sued for such payment, the defendants in the suit other than her husband. The issue was whether such consideration exists. 

The Court held that, as the repairs had been carried out before the agreement to pay had been made, it was past consideration and therefore not good consideration.

The rule of past consideration is not good consideration has an exception. If an act is done at the promisor’s request, although the promisor’s promise was given only after the act has been carried out, the act is good consideration.

Lampleigh v Braithwait (1615) Hob 105

the defendant committed murder and requested the plaintiff to obtain a royal pardon for him, the latter successfully doing so. Later, the defendant promised the plaintiff payment of 100 pounds.

The court held that the consideration was good because the act had been carried out at the defendant’s request.

Guthrie Waugh Bhd v Malaiappan Muthucumaru [1972] 1 MLJ 35

Sharma J: “The words 'has done or abstained from doing or does or abstains from doing or promises to do or to abstain from doing' in clause (d) of section 2 of the Contracts (Malay States) Ordinance 1950 indicate the wide ambit of the definition of 'consideration.' Past consideration, unlike in England, is quite valid in that part of our country where the Contracts Ordinance is applicable.”  

Hongkong and Shanghai Banking Corporation v Syarikat United Leong Enterprise Sdn Bhd & Anor [1993] 2 MLJ 449

In this case, the second defendant argued that since no further money was advanced to the first defendant by the plaintiff at the date or after the signing of the guarantee, the guarantee was actually to secure past advances and thus was past consideration and not enforceable. The second defendant’s contention was rejected.

Ian HC Chin JC: “… past consideration can still be good consideration even if the benefit was not given at the time of the execution of the guarantee in a one-off transaction provided the benefit that was given before the execution of the guarantee was given 'at the desire' of the guarantor…”

SEA Insurance Bhd v Nasir Ibrahim [1992] 2 MLJ 355; [1993] 1 SCR 89

Gunn Chit Tuan SCJ: “The detriment undertaken by the promisee ... is a past performance and should be sufficient consideration where there is a promise in consideration of some act previously done by the promisee at the request of the promisor. In deciding whether consideration is past, the court should not take a strictly chronological view. If the consideration and the promise are substantially one transaction, as in this case, it should not matter in what order they are given. In other words, consideration itself accommodates past consideration so long as the 'desire' requirement is specified, that is the guarantee was given at the request of the indemnifier.”

GBH Ceramic Sdn Bhd v How It @ Low Aik & Ors [1989] 2 CLJ 427

In this case, the defendant guaranteed the payment of all monies and obligations of one Heng Lee Enterprise due and owing to the plaintiff under a contract for goods sold and delivered. The defendant’s contention was that consideration given by the plaintiff was void for past consideration because the goods supplied by the plaintiff were sold and delivered over a period of time before the execution of the guarantee.

The Court held that, from the letter of guarantee, it was clear that the plaintiff’s act was done at the defendant’s request.

Lau Ngiik Ping & Anor v Bank Pertanian Malaysia [1992] 3 CLJ 1437

the borrowers applied for loan from the defendants, to be secured by a charge over land owned by plaintiffs. The loan money was released by the defendants a day after the signing of the agreement. However, the memorandum of charge was executed only one month after. The plaintiffs contended that the release of monies was without security, and thus consideration was past consideration.

 

The Court of Appeal held that the issue could not be looked at in isolation only because the execution of the loan agreement, the release of the loan and the execution of the charge instrument took place on different dates. This letter of authorisation indicated that it was at the desire of the plaintiffs that the defendants agreed to grant the loan to the borrowers. This constituted good consideration under s 2(d) of the Contracts Act.

Aseambankers Malaysia Berhad & Ors v. Gula Perak Berhad & Anor [2010] 1 LNS 1409

In this case, the plaintiffs are lenders and provided facilities to the 1st defendant and the 2^nd defendant is the guarantor. The defendants argued that there is no consideration for the supplementary agreement.

The court held that “...it is well settled in Malaysian context even past consideration is good consideration though the position may not be the same at common law.”

Zainal Abidin Ahmad v Kenari Air (M) Sdn Bhd & Ors [2011] 1 LNS 144

In this case, the 3^rd defendant alleged that the Letter of Guarantee was void due to past consideration. The court cited the case of Hongkong and Shanghai Banking CorporationHONGKONG AND SHANGHAI BANKING CORPORATION v. Syarikat United Leong Enterprise Sdn Bhd & Anor [1993] 3 CLJ 419 where the headnote reads: “...Past consideration could still be good consideration...provided the benefit that was given before the execution of the guarantee was given 'at the desire' of the guarantor.”         

 

Constitutional Supremacy (Continuation)

Constitutional Supremacy means that the constitution is the supreme and highest law of the land. The Parliament or Legislature may pass laws provided that they are in line with the constitution. Any laws in conflict with the constitution will be deemed as unconstitutional and invalid by the courts. The Federal Constitution is the written constitution in Malaysia. Article 4(1) states that “This Constitution is the supreme law of the Federation and any law passed after Merdeka Day which is inconsistent with the Constitution shall, to the extent of the inconsistency, be void.” A written constitution represents a higher law, not merely because it is written, but because these rules are far more difficult to amend. The Constitution is usually amendable by special majorities as opposed to ordinary or simple majorities. In Malaysia, amendments to the Constitution usually require two-thirds of the total number of members of each House of Parliament. Requirements for amendments can be found in Article 159 of the FC.

Cases on Constitutional Supremacy

Marbury v Madison

President John Adams, before his term ended, had made many federal appointments, including William Marbury as justice of the peace in the District of Columbia. Thomas Jefferson, the new president, refused to recognize the appointment of Marbury. The normal practice of making such appointments was to deliver a "commission," or notice, of appointment. This was normally done by the Secretary of State whom at the time was James Madison. At the direction of Jefferson, Madison refused to deliver Marbury's commission. Marbury sued Madison, and the Supreme Court took the case. Chief Justice John Marshall wrote that the Judiciary Act of 1789, which spelled out the practice of delivering such commissions for judges and justices of the peace, was unconstitutional because it the gave the Supreme Court authority that was denied it by Article III of the Constitution. Thus, the Supreme Court said, the Judiciary Act of 1789 was illegal and not to be followed.

This was the first time the Supreme Court struck down a law because it was unconstitutional. It was the beginning of the practice of "judicial review."

Chief Justice Marshall explained the power of the constitution:

" It is a proposition too plain to be contested that the constitution controls any legislative act repugnant to it; or, that the legislature may alter the constitution by an ordinary act. Between these alternatives there is no middle ground. The constitution is either a superior, paramount law, unchangeable by ordinary means, or it is on a level with ordinary legislative acts, and, like other acts, is alterable when the legislature shall please to alter it. If the former part of the alternative be true, then a legislative act contrary to the constitution is not law: if the latter part be true, then written constitutions are absurd attempts, on the part of the people, to limit a power in its own nature illimitable. "

Ah Thian v Government of Malaysia

Suffian L.P observed : " The doctrine of supremacy of Parliament does not apply in Malaysia. Here we have a written constitution. The power of Parliament and State legislatures in Malaysia is limited by the Constitution, and they cannot pass any law as they please. Under our Constitution written law may be invalid on one of these grounds: (1) Art 74; (2) in the case of both Federal and State written law, because it is inconsistent with the Constitution; (3) Art 75".

Mamat bin Daud & Ors v Government of Malaysia

In this case, the application for leave under Article 4(4) arose as to whether Sec 298A of the Penal Code and Criminal Procedure Code were ultra vires the Constitution being in excess of the legislative power of the Parliament.

Mohamed Azmi SCJ : For the applicants to succeed, they must satisfy the court (a) leave is necessary under Art 4(4) & (b) they have an arguable case in that the application is not frivolous. Since the present application was not considered frivolous by the court, it allowed the applicants to canvass their case before the full court on the constitutionality and validity of the new section.

PP v Dato' Yap Peng

Section 418A of the Criminal Procedure Code which allowed the Attorney General to transfer cases from one court to another, was held to encroach on the judicial power of the courts, vested exclusively in the judiciary under the then Article 121(1) of the Constitution. The decision was rendered ineffective by the Constitution Amendment Act 1988 (Act A704) which amended Article 121(1) to define judicial powers narrowly and amended Article 145 to enlarge the powers of the Attorney General

Cases involving inconsistency with the Constitution

Phang Chin Hock v Public Prosecutor

Federal Court held that "The rule of harmonious construction in construing Article 4 and Article 159 enables them to hold that Acts of Parliament made in accordance with the conditions set out in Article 159 are valid even if inconsistent with the constitution".

Loh Kooi Choon v Government of Malaysia

Federal Court rejected the argument that the Constitution as the Supreme law cannot be inconsistent with itself. In this case, Parliament amended Article 5(4), denying persons detained under restrictive residence law, right to production before a Magistrate. The amendment was given retrospective effect to independence day.

Parliamentary Sovereignty v Constitutional Supremacy

1. Parliamentary Sovereignty

The definition of parliamentary sovereignty in its basic form simply means that the Parliament is supreme and has unlimited law-making power. The Parliament may enact, amend or repeal any law as it wishes. This concept is practised in countries without a written constitution. For example, United Kingdom.

The concept of Parliamentary Sovereignty is best explained under AV Dicey's 3 postulates

i) Parliament is legally competent to legislate upon any subject matter

ii) No Parliament can bind its successors nor be bound by its predecessors

iii)Once Parliament has legislated, no one can question the validity of the legislation

Application of Dicey's 3 postulates

1st Postulate

- Resignation of King Edward VIII in UK. King Edward wanted to marry an American divorcee, Wallis Simpson but the marriage would be deemed morally unacceptable because remarriage after divorce was opposed by the Church of England. However, King Edward chose to marry Simpson, thus he would be abdicated. The Parliament then had to enact such law as there were no law regarding the abdication. Therefore, His Majesty's Declaration of Abdication Act 1936 was passed. Under the Act, King Edward may no longer be king and the generations after his may no longer be king.

- Burmah Oil Company v Lord Advocate 1965

During the World War, Japan conquered Burmah and the British ran away but they burnt all of the oil rigs to prevent the Japanese from obtaining the oil. After the war, Burmah Oil Co. sued the British government for compensation. The House of Lords decided that the British government has to pay compensation to Burmah Oil Co. because the oil was not destroyed during the war. The government immediately introduced into Parliament the War Damage Bill to nullify the decision. War Damage Act 1965 states that in future, any damage done during the war whether during the actual battle or not during battle, compensation will not be paid. The House of Lords' decision was overturned by the passing of the Act by Parliament.

- In 1991, the British government tried to pass an act known was War Crimes Bill to punish whoever committed crimes during the 2nd World War. Any of the British soldiers who had committed crimes such as rape,molest,etc are to be punished. However, the people opposed and the government couldn't pass the law.

- Septennial Act 1715.

Parliament can also extend or shorten their own 'life' in the Parliament. In the past, the Parliament has done so, extending from 5 years to 7 years, but it is back to 5 years.

- Mortensen v Peters 1906

Those in the United Kingdom who wishes to do fishing must apply for a license from the Fisheries Department. There was also can international law which says that countries can only regulate their own territories up to 10 miles outside their shore. Up to 10 miles from the beach, and after that it is considered as international waters regulated by international laws even though it is under UK territory. In this case, the person was fishing in the sea and he was outside 10 miles without a licence. UK government charged him for fishing without a licence. The UK law did not apply to him because he was not in UK territory and international law didn't ask for any licence. However, the Court held that an Act of Parliament is the highest and will overwrite international law if they want to.

2nd Postulate

- Vauxhall Estates Ltd v Liverpool Corporation

In this case, the government wanted to purchase a piece of land from Vauxhall Estates. The Government needs to pay compensation to purchase the land. At the time, there were two different schemes of compensation from The Housing Act 1925 and the Acquisition of Land (Assessment of Compensation) Act 1919. The 1925 Act did not mention anything about the earlier Act. Section 7(1) of the 1919 Act provides that compensation cannot be amended by future Parliaments. The Court decided that the later Act will always prevail over the previous Act. The earlier Act can never bind the future Act. Thus, the Parliament is always supreme.

- Ellen Street Estates v Minister of Health

The facts of this case are similar to Vauxhall Estates'. However, the lawyer in this case tried to circumvent the previous case. It was argued that under normal circumstances, the later Act will always prevail over the earlier Act. However, the circumstance in this case is not normal because the earlier act says that this act will be applicable forever. If that is the situation, then the only way for the later act to repeal the earlier act is by mentioning expressly to repeal the earlier act. The Court held that the lawyer's argument is wrong because the Parliament can always expressly or impliedly repeal an act. There are 2 ways for the Parliament to repeal the earlier laws; by the doctrine of express and implied repeal.

3rd Postulate

- Pickin v British Railways Board

In this case, there was an Act of Parliament that says that for every carriage of train that goes through a person's land, the person will be compensated. The British Railways Board proposed a Private Members Bill into the Parliament to remove such compensation. The Bill went through Parliament and became an Act. Pickin was an owner of a land where carriages of train would go through. After the passing of the Act, he would not receive any more compensation. He brought an action in court saying that certain procedures were not followed. After the 1st and 2nd reading, the Parliament was supposed to inform those who would be affected by the Bill so that they could defend their own rights. Court held that once a Bill becomes an Act, we cannot enquire into the validity of the Act. Even if a Bill did not go through the 2nd or 3rd reading, the Act still cannot be questioned.

Acceptance and the Requirement of Acceptance(popular topics)

Section 7(a) of the Contracts Act that “in order to convert a proposal into a promise the acceptance must be absolute and unqualified”

In section 7(b) of the same Act, the acceptance must “be expressed in some usual and reasonable manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in that manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance”

This principle of acceptance was stated in The Ka Wah Bank Ltd v Nadinusa Sdn Bhd & Anor [1998] 2 MLJ 350, FC.

According to Chitty on Contracts, 26th Ed (1989) Vol 1, para 54, p 44, 'an acceptance is a final and unqualified expression of assent to the terms of the offer'. But, where the reply is qualified or attempts to vary the terms of the offer or attempts to accept an offer on new terms (not contained in the offer), then such a reply is not a communication of an acceptance but may be a rejection accompanied by a counter-offer which the original offeror can accept or reject.

1. Counter offer by the offeree

Hyde v Wrench [1840] 3 Beav 334

Facts: the defendant on June 6 wrote to the plaintiff offering to sell his farm for 1,000 pounds. The plaintiff immediately called and offered the defendant 950 pounds for the purchase of the farm. On June 27, the defendant replied to the plaintiff, unable to accept the plaintiff’s offer. Upon receipt of the letter on June 29, the plaintiff immediately wrote to the defendant accepting the defendant's earlier offer of 1,000 pounds. The issue was whether a contract has been concluded between the parties.

The court held that there was no binding contract. The plaintiff did not absolutely and unconditionally accept the defendant's offer price of £1000. By proposing a different figure of £950, the plaintiff had rejected the defendant's offer and now makes a new offer (a counter-offer). This counter-offer destroys the original offer

Lord Langdale MR: “… there exists no valid binding contract between the parties for the purchase of the property. The defendant offered to sell it for £1000, and if that had been at once unconditionally accepted, there would undoubtedly have been a perfect binding contract; instead of that, the plaintiff made an offer of his own, to purchase the property for £950, and he thereby rejected the offer previously made by the defendant.”

Malayan Flour Mills Bhd v Saw Eng Chee (Administrator of the estate of Saw Cheng Chor, deceased) & Anor [1997] 1 MLJ 763.

Facts: In the instant case, by proposing to purchase all the four lots, the plaintiff's managing director Teh Liang Teik had in fact taken upon himself not only to vary the term but also subject matter of the original offer.

The court held that the offeree's intention to accept must be conclusive and he must not treat the negotiation between the parties as still open to the process of bargaining. He must unreservedly assent to the exact terms of the offerer. If while purporting to accept the offer as a whole, he introduces a new term which the offeror has not the chance of examining, he is in fact making a counter-offer. The effect of this in the eyes of the law is to destroy the original offer.

Stevenson, Jaques & Co v McLean (1879-1880) 5 QBD 346

Facts: the parties were negotiating for the sale of iron and ultimately the defendant wrote to the plaintiff fixing 40s, per ton, net cash, as the lowest price, and stating that he would hold the offer open till the following Monday. The plaintiffs on Monday morning telegraphed to the defendant: "Please wire whether you would accept forty for delivery over two months, or if not, longest limit you could give". The defendant didn’t reply and on the same day he sold the iron to someone else and telegraphed the plaintiffs at 1.25 p.m. that he had done so. Before the telegram arrived, the plaintiffs found a purchaser for the iron at 1p.m. and sent a telegram at 1.34 p.m. to the defendant saying that they had secured his price.

Lush J: “...Here there is no counter proposal. The words are, 'Please wire whether you would accept forty for delivery over two months, or, if not, the longest limit you would give.' There is nothing specific by way of offer or rejection, but a mere inquiry, which should have been answered and not treated as a rejection of the offer.”

3. Acceptance made “subject to contract” or to fulfil condition precedent

In commercial documents, phrases such as ‘subject to contract’, ‘without prejudice’ or ‘a formal agreement would be prepared and executed’ are commonly found. The issue is whether those statements constitute a valid acceptance bringing forth legal obligation to the parties. There are two main approaches to this issue. Firstly, that there is no contract and the court will construe such words as to postpone liability until the formal document is signed. The second approach is that the parties have already entered into a legally binding contract and the execution and signing of the document is a mere formality.

Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor Appeal, 1978] 2 MLJ 239, FC; [1981] 1 MLJ 56, PC

It was held that “the express terms of the purchase contained in the booking pro forma were not made "subject to contract". The clauses pointed strongly towards obligations presently accepted rather than to a suspension of obligations until some further event or agreement had occurred or been made”.

Art-Is At Work Sdn Bhd v Sony Music Entertainment (M) Sdn Bhd [2000] 5 CLJ 559

Abdul Malik Ishak J: "...The court must determine whether the parties had already entered into a legally binding contract where the execution of the written contract is merely a formality or whether the parties intended that their rights and obligations under the contract should be suspended until the formal and legally binding contract is finalised and executed".

Kam Mah Theatre Sdn Bhd v Tan Lay Soon, [1994] 1 MLJ 108, SC

Facts: the alleged contract contained a proviso that the agreement shall incorporate ‘other usual terms and conditions’.

The Court held that the formula "subject to contract" gives rise to a strong presumption of the necessity of a further formal contract. Cogent evidence is required to displace this strong presumption. On the facts, the Court held that there was no contract at all and that the document was dependent on the signing of a formal contract to be further negotiated and approved by both parties.

Lim Chia Min v Cheah Sang Ngeow & Anor [1997] 2 CLJ 337, FC

Federal Court held that when the parties "proposed that a formal agreement would be prepared and executed", they must have meant what they said.

Pengurusan Projek Daya Sdn Bhd & Anor v. Konsortium Lapangan Terjaya Sdn Bhd [2011] 1 LNS 210

The issue of this case is whether for the purpose of submitting a proposal to the Government on the Privatisation Project there was an oral agreement between the plaintiffs and the defendant that the work done by the plaintiffs would be carried out on a 'success bid' basis in the terms as pleaded.

The court held that “…the parties were still negotiating the terms of the appointments of the Plaintiffs. The appointments of the plaintiffs were subjected to a final and formal agreement between the parties…”

Prism Leisure Sdn Bhd v Lumut Marine Resort Bhd 16 [2002]5 CLJ 391

Abdul Malik Ishak J: “Even in the absence of a "formal agreement", ... the courts have on numerous occasions found that the parties were at consensus ad idem even though the formal agreements have yet to be executed … In the context of the present case, it was my judgment that the requirement of a 'formal agreement' was merely intended as a solemn record of an already complete, valid, legal and binding contract...”

The Court held that there was a valid, legal and binding contract between the parties and that the defendant had breached that concluded contract.

Charles Grenier Sdn Bhd v Lao Wing Hong [1996] 3 MLJ 327, FC

The Federal Court held that the phrase "subject to the sale and purchase agreement" relating to two shophouses did not point to an intention that no contract was to come into existence until a formal sale and purchase agreement had been prepared and executed.

Diamond Peak Sdn Bhd & Anor v Dr Tweedie [1982] 1 MLJ 97

The court held that “I found on the evidence, both oral and documentary, that there was an offer by the defendant and a definite acceptance by the plaintiffs constituting a binding agreement.”…and the use of the words "the technical details I leave to my lawyers" were in my judgment and I so found, to use the oft-quoted words of Parker J…"a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through".

Contract Law - Invitation to treat (popular topics)

Offer and Invitation to treat

An offer should be distinguished from an invitation to treat. Unlike an offer, an invitation to treat is a statement which is not intended to be binding at law. An invitation to treat merely invites interested parties to make an offer. Invitations to treat often appear in the form of advertisements, display of goods and tenders. Other aspects considered are auctions and applications for club membership.

1. Advertisements

Whether an advertisement is an offer or an invitation to treat is a question of the intention of the party placing the advertisement. In most cases, advertisements are treated as attempts to induce offers unless on exceptional facts situations as in Carlill’s case (example of advertisements of unilateral contracts which will usually be held as offers).

Carlill v Carbolic Smoke Ball Co [1892] 2 QB 484,QB; [1893] 1 QB 256, CA

Facts : The defendant issued an advertisement offering to pay £100 to any person who contracted influenza after using the smoke ball in a specified manner for a specified period. The advertisement stated that the defendants had deposited £1,000 with bankers to show their sincerity. The plaintiff, after seeing the advertisement, bought and used the ball in the manner prescribed caught influenza. The plaintiff sued the defendants for £100.

The Court of Appeal held that an offer can be made to the world. In this case, there was an acceptance of the offer by the plaintiff's conduct.

Partridge v Crittenden [1968] 1 WLR 1204

Facts : In this case, the appellant inserted in a magazine an advertisement containing the sale of cocks and hens and was inserted under the general heading of "Classified Advertisements" and nowhere was any direct use of the words "offers for sale". The respondent answered the advertisement and enclosed a cheque. The issue was whether the advertisement he inserted was an offer for sale or an invitation to treat.

The court held that it was an invitation to treat.

Ashworth J : “…in my judgment the law of the country is equally plain as it was in regard to articles in a shop window, namely that the insertion of an advertisement in the form adopted here under the title "Classified Advertisements" is simply an invitation to treat.”

Coelho v The Public Services Commission [1964] MLJ 12

Facts : the appellant applied for the post of Assistant Passport Officer advertised in the newspaper. Subsequently, he was informed that he was accepted and after being posted to the Immigration Office, he was informed that his appointment was terminated forthwith by payment of one month’s salary in lieu of notice. He applied for a certiorari to quash the decision.

The Court held that the resulting applications were an invitation to qualified persons. The resulting applications were offers. The information conveyed to the appellant was an unqualified acceptance. Therefore, the respondent had acted ultra vires in purporting to terminate his appointment.

MN Guha Majumder v RE Donough [1974] 2 MLJ 114

Facts : An advertisement appeared in the Sarawak Tribune for the sale of the defendant’s house. The plaintiff inspected the house twice and a number of telephone conversations took place between the plaintiff and the defendant's agent. The plaintiff alleged that the defendant had accepted his offer to purchase the house, but the defendant denied it.

The Court held that there was no contract in existence between the parties at the material time as there was no clear intention of the parties to enter into a formal legal relationship from the evidence adduced.

2. Display of Goods

The reason behind this rule is that to hold otherwise would require a seller to sell whatever quantity of the item displayed even if he has insufficient supplies; while the buyer cannot also change his mind once an item is chosen and is taken off the display shelf.

Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401, CA,

Facts : the defendants carried business in the retail sale of drugs. On entering the shop, the customer was provided with a wire basket; and having selected the items which he wished to buy, would put them in the basket and take them to the cashier's desk at the exit, where the cashier would state total price and receive payment.

The Court of Appeal held that the display of goods on the shelves was only an invitation to treat. It was for the customer to offer to buy the goods. The contract of sale was completed when the customer's offer to buy was accepted by the seller in receiving the payment at the cashier's desk.

Fisher v Bell [1961] 1 QB 394

Facts: The issue in this case is whether the shopkeeper's display in his shop window of a "flick knife amounted to an offer of the knife for sale contrary to s 1(1) of the Restriction of Offensive Weapons Act 1959.

The Court held that it is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract.

3. Tenders

Invitations to tender are not normally considered to be offers unless accompanied by words that the highest tender will be accepted.

Spencer & Ors v Harding & Ors (1869-1870) LR 5 CP 561

Facts: the defendants issued to the plaintiffs and other persons in the wholesale trade a circular regarding the wholesale trade for sale by tender. The plaintiffs sent in a tender which turned out to be the highest tender; but it was not accepted.

The Court held that the circular was only an attempt to ascertain whether an offer could be obtained. Further, there was a total absence of any words to the effect that the highest bidder would be the purchaser.

Willes J: “...Here there is a total absence of any words intimate that the highest bidder is to be the purchaser. It is a mere attempt to ascertain whether an offer can be obtained within such a margin as the sellers are willing to adopt.”

Blackpool and Fylde Aero Club v Blackpool BC [1990] 3 All ER 25, CA

Facts: In this case the defendant council owned an airport. It granted concessions to operate flights. It sent an invitation to tender to the plaintiff and six other parties all of whom were connected to the airport. The invitation to tender stated that the tenders were to be submitted in the envelope provided and before the deadline and that late tender would not be considered. The plaintiff sent the tender in time to the post box but the post box was not cleared. The tender was marked late when it reached the defendant was not considered. The issue was whether there was a contract between the parties.

The Court of Appeal held that in the circumstances, an invitation to tender can give rise to a binding obligation to consider tenders which conform with the conditions of the tender. It was only right that the tenderer who submitted a tender conforming to the deadline should have it considered.

Bingham LJ: “...if he submits a conforming tender before the deadline he is entitled, not as a matter of mere expectation but of contractual right, to be sure that his tender will after the deadline be opened and considered in conjunction with all other conforming tenders or at least that his tender will be considered if others are.”

Cheng Keng Hong v Government of the Federation of Malaya [1966] 2 MLJ 33

Facts: In this case, the respondent issued a notice inviting tenders to build a school. The appellant tendered for the work and his tender was accepted and a contract was entered into.

High Court held that the unconditional acceptance of the tender by the respondent bound both parties and a contract was formed.

Azlan J: “The law with regard to acceptance of a tender is perfectly clear. The unconditional acceptance of a tender by the employer binds the parties, and a contract is thereby formed, the terms of which ascertainable from the invitation to tender, the tender, the acceptance, and any other relevant documents...”

See also:

Harvela Investments v Royal Trust Co of Canada (CI) Ltd & Ors, All ER 65, CA; [1985] 2 All ER 966, HL.

4. Auction

i) Auctioneer's request for bids

The first principle is that an auctioneer's request for bids is considered to be an invitation to treat. The bid itself is an offer which the vendor is free to accept or reject.

Payne v Cave (1789) 3 Term Rep 148

Lord Kenyon CJ: “The auctioneer is the agent of the vendor and the assent of both parties is necessary to make the contract binding. That is signified on the part of the seller by knocking down the hammer which was not done here till the defendant had retracted ... Every bidding is nothing more than an offer on one side which is not binding on either side till it is assented to”

M & J Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd & Anor[1994] 1 MLJ 294, SC

Supreme Court held that at the fall of the hammer, an agreement is concluded between the vendor and the highest bidder. Thereafter, the vendor cannot offer the goods to other prospective buyers and the bidder cannot retract his acceptance.

Wan Yahya SCJ: “So a reference to a sale being concluded at the fall of the auctioneer's hammer could only refer to that stage of the transaction of sale when there is concluded an agreement between the vendor and the highest bidder, the former to sell and the latter to purchase the goods.”

ii) Notice of Auction

Harris v Nickerson (1873) LR 8 QB 286

Facts: the defendant advertised in the London papers that certain items would be sold by him on a certain day and the following two days. The plaintiff attended the sale but on the third day, on which the furniture was advertised for sale, all the furniture were withdrawn.

Court held that an advertisement that goods will be sold on auction on a certain day does not constitute a promise to potential bidders that the sale will be actually held. To hold otherwise or to require an auctioneer to give notice of withdrawal of the sale would be excessively inconvenient and costly.

iii) Auction without reserve

Warlow v Harrison (1859) 1 E & E 309

Facts: the defendant and a Mr Bretherton were auctioneers in a partnership who advertised a sale by auction without reserve. The plaintiff attended the sale and made a bid of 60 guineas for one of the horses. The owner of the horse, immediately made bid of 61 guineas. The defendant entered the owner’s name as the purchaser.

The Court held that the sale should be without reserve: the auctioneer in his advertisement had made a definite offer to this effect, and the plaintiff, by making his bid in reliance upon it had accepted the offer.

Martin B: “...neither the vendor nor any person in his behalf shall bid at the auction, and that the property shall be sold to the highest bidder, whether the sum bid be equivalent to the real value or not...