MASTER OF BUSINESS ADMINISTRATION

SEMESTER SEPT 2020

BMLW 5103

BUSINESS LAW
Table of Contents
PART A

1. Issues: How a contract has discharged?.............................................................................2

1.1 Discharge by performance...........................................................................................2
1.2 Discharge by agreement..............................................................................................2
1.3 Discharge by frustration..............................................................................................3
1.4 Discharge by breach....................................................................................................3
2. Principles of Contract Act on the above issues:.................................................................4
2.1 Discharge by performance...........................................................................................4
2.2 Discharge by agreement: Novation.............................................................................4
2.3 Discharge by frustration..............................................................................................5
2.4 Discharge by breach....................................................................................................5
3. Application on the Contracts Law......................................................................................6
3.1 Discharges by performance.........................................................................................6
3.2 Discharge by agreement..............................................................................................6
3.3 Discharge by frustration..............................................................................................7
3.4 Discharge by breach....................................................................................................7
4. Cases of Contract Discharge...............................................................................................8
4.1 Discharge by performance...........................................................................................8
4.2 Discharge by agreement............................................................................................10
4.3 Discharge by frustration............................................................................................11
4.4 Discharge by breach contract....................................................................................12

PART B

1. Issues: What are the hirer’s statutory rights? Hire Purchase Act 1967............................13
2. Principles of Hire Purchase Act on the above issues:......................................................15
3. Application on the Hire-Purchase Act..............................................................................16
4. Cases of Hire-Purchase Act 1967.....................................................................................17
5. Recommendation..............................................................................................................18

6. References........................................................................................................................20

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PART A

1. Issues: How a contract has discharged?

Discharge of the contract shall take effect after the primary obligations of the contract.
The termination of this contract means the termination of the contractual relationship.
However, the parties could terminate the contract even if they do not fulfil the primary
obligations imposed by the contract. The key distinction between discharge and
termination of the contract is, therefore, the terms under which the contractual
arrangement ends. There are few methods for the discharge of a contract. (Dr Rozanah
Abdul Rahman, 2020) (76)

1.1 Discharge by performance

Contract discharged by performance is when the parties to the contract have
carried out what they have agreed to do in the contract. (Business Law, n.d.) (23)

1.2 Discharge by agreement

When a contract has completed, it could be discharged or terminated by
agreement. The agreement would be completed according to the terms of the
contract as well. An agreement to cancel or terminate the contract itself becomes a
binding contract, given that it is backed by consideration or rendered under seal.
(Discharge of a Contract by Agreement, n.d.) (51)

I. Discharge by Novation.
Novation is an act of substituting a legitimate existing contract for a
substitute contract, where all the parties involved agree to make a move. In
most novel cases, one of the two initial contracting parties has replaced by an
entirely new party, where the original party voluntarily decides to forgo any
privileges given initially. Novations has commonly seen in corporate
takeovers and company transactions. (Novation, n.d.) (64)

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 II. Discharge by Rescission.
Rescission is a mechanism of the parties terminated the contract, and return
to their positions led to the creation of the contract. In order for the mutual
termination to take place, the parties must make another arrangement which
also meets the legal provisions of the contract, which must include an offer,
acceptance and consideration. If the parties agree to rescind the initial
contract, the second contact would be subject to legal consideration. Mutual
termination could occur in this manner when the original contract is
enforceable on both sides. (Rescission, n.d.) (88)

1.3 Discharge by frustration

A contract may be frustrated if there is a change of circumstances following the
termination of the contract, which is not the responsibility of either party, which
makes the contract either challenging to execute or deprives the contract of its
commercial intent. Where a contract has found to be frustrated, each party has
released from potential obligations under the contract, and neither party could sue
for infringement. (Discharging From a Contract, 2018) (67)

1.4 Discharge by breach

Discharge by the breach has referred to one of the parties to the contract violates
the obligation imposed by the contract; that party violates the contract. The
violation may include failure to perform the related duty or to perform it in a
manner. It also could be failure performed because of time that does not comply
with the requirements of the contract. (Dr Rozanah Abdul Rahman, 2020) (76)

When the party breach a contract, the party not in default may claim one or more
of the following remedies;
I. Damages
II. Specific performance
III. An injunction (27)

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2. Principles of Contract Act on the above issues:

2.1 Discharge by performance

In Section 38(1) of the Contracts Act, 1950 (Contract Act, 2020) states that the
parties to the contract must either make their respective commitments or agree to
make them unless they have been exempted from any regulation.

An offer could be made verbally or in writing as long as it has not mandated by

law. It is a definite word or an open action that the contract begins. It is what has
offered to another for the return of that person’s promise to act. It cannot be
ambiguous or unclear. It must spell out of the specific details, such as the identity
and the object which have offered. Also, under what conditions and/ or terms it
has offered.

Section 40 of the Contracts Act 1950 provides that if a party to a contract refuses
to fulfil its promise or disables itself from doing in its entirety. The promisee may
terminate the contract until it has shown its acquiescence by word or actions in the
continuation of the contract. It means that with the consent of the promisee, a
contract would continue to exist. Although if the promisee’s behaviour has already
amounted to a violation of the contract.

Section 47 of the Contract Act 1950 provides that a promisor shall fulfil his
promise without the promise have been rendered, and no time for delivery shall
have stated. The committee shall have made within a reasonable time.

Based on Section 50 of the Contracts Act 1950, which specifies that if no place
has specified for performance and the commitment is have been made without the
promise made by the promisee, the promisor must ask the promisee where he
would like the contract to be executed. (283)

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2.2 Discharge by agreement: Novation
The contract could be discharged either by agreement or infringement. Novation is
one way of fulfilling the contract by negotiation, and Section 63 of the Contracts
Act 1950 gives expression to the theory of novation. The replacement of an old
contract with a new contract has referred to as a novelty. It takes place with the
consent and agreement of all the parties to the contract, thus creating new
contractual obligations which have been fulfilled by the old parties. The doctrine
of innovation exists to give expression to the idea that the parties to the contract
should be competent to add, subtract or modify the terms of the contract before
the breach of the contract using a new contract. (119)

2.3 Discharge by frustration

According to Section 57(2) of the Contracts Act 1950, specifies that a contract to
conduct an act which, after the contract has been completed, becomes unnecessary
or on the grounds of an occurrence which the contractor may not avert, unlawful,
becomes void when the Act becomes impossible or unlawful. (49)

2.4 Discharge by breach

Breach contract by damages. In cases of breach of contract, claims for damages
shall have made according to Sections 74 to 76 of the Contracts Act 1950. Base on
Section 74, the compensation for damage, loss or injury suffered as a result of a
breach of contract but not applied to remote or indirect loss. Meanwhile, base on
Section 75, only the complainant is entitled to recover a fair amount for breach of
contract. If the amount stipulated in the contract, the amount of damages
recoverable by the claimant does not match the amount stipulated in the contract.
As for breach contract by specific performance, is where the party did not perform
according to the contract. Specific performance is a discretionary remedy
provided by the court of law. The court order decrees that the contract have
explicitly executed in compliance with the terms of the contract. The remedy has
provided in compliance with the Specific Relief Act of 1950. Besides, Section
20(1)(a) of the Specific Relief Act 1950 explicitly states that precise output would
not have given where monetary compensation is sufficient.

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 Similar to specific performance, an injunction is an equal remedy. It is thus issued
only at the discretion of the judge. It has granted in cases where damages would
not be an appropriate remedy to compensate the claimant because the claimant has
to prevent the defendant from the beginning or to continue the violation of a
negative contractual undertaking (prohibitory injunction) or has to force the
claimant to do so.

In the practice of its discretion, the court would consider the same factors as those
listed above for individual performance. It would use the convenience test
(weighting the gain to the injured party and the detriment of the other party). An
injunction shall not have given if it has the effect of pressuring a party to do
something that could not have required to do by an explicit performance decree.
(322)

3. Application on the Contracts Law

3.1 Discharges by performance

Scenario 1:
Badrul has contracted to build two houses and stables for Akmal for RM100,000.
Akmal already paid him RM50,000. Badrul carried out the work accordingly based
on the specifications given by Akmal. Therefore, Badrul has now discharged by his
performance, and Akmal has to pay him the remaining RM50,000. (48)

Scenario 2:
Aisy has promised to deliver goods to Fatin’s store on 17 October 2020. On that
day, Aisy brought the goods to Fatin store. Since Fatin was not present, the goods
had handed over to her retail manager. Here Aisy is discharged by her
performance, and Fatin cannot allege that the delivery is not valid, since it is
sufficient for the delivery of goods to be done to her agent. Furthermore, nothing
has stated in their earlier agreement about the mode of delivery. (82)

3.2 Discharge by agreement

Scenario 1:

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 Syafiq owes RM5000 to Liana and promises to pay it within one year. They are
documenting the debt under the contract. Subsequently, he lost his job and begged
Liana to consider RM2000 as a final loan settlement. Liana agrees, and they are
entering into a contract to that effect. In this case, the contract has discharged by
consent. (58)

Scenario 2:
Under the deal, A owed the money to B. It has decided between them that B would
now recognise C as its debtor, instead of A. A’s old debt to B was at the end, and
the current debt of C to B has contracted. Base on the situation above, the contract
has been discharged by novation. (57)

3.3 Discharge by frustration

Scenario 1:
Liana has signed a contract to host a program with TVA amounting to RM1500
and was paid in advance. Liana becomes too ill to host the program. Liana is not
bound to compensate TVA for the loss of the profits which TVA would have made
if Liana had been able to host the program. However, Liana must refund the
RM150 advance payment to B. According to the situation above, the contract has
discharged by frustration. (75)

3.4 Discharge by breach

Scenario 1: Discharge by damages.

Safiah approached Ally Kitchen Equipment Pte Ltd (AKE) to purchase five
additional ovens to expand its business. SHALE has been its supplier for the last
three years and is familiar with the company of Safiah. AKE’s agreement with
Safiah specifies that all orders are to have issued within seven days. Mary also told
AKE that she would expect new sales during the festive season of Raya.”

In the next few days, Safiah obtained orders of up to RM4000. As Safiah thought
that the AKE ovens would arrive soon, she tendered and won a tender for a
commercial project (The Cookie Monster Company) involving the selling of her
cookies in the sum of RM12,000.

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 Three days before Raya, AKE called Safiah to tell him that the ovens would only
be available 30 days after the date of purchase. As a result of the delayed delivery,
Safiah was unable to comply with its existing orders or to take further orders.
Cookie Monster sought compensation for the failure to produce. Safiah could sue
AKE for breach of contract, and claim damages for loss of profit. (182)

Scenario 2: Discharge by specific performance

Jim signs a deal with Rob to purchase an RM14,000 of Honda Civic. Rob knows
that he cannot give up his Honda because the car has much sentimental value.
Since finding an RM14,000 of Honda Civic is comparatively easy, Jim would have
to buy a similar car and sue Rob for the price difference. The above case is the
example of discharge by specific performance. (65)

4. Cases of Contract Discharge

4.1 Discharge by performance

Case 4.1.1: AZFAWANI MOHD AZAMI V. KUWAIT FINANCE HOUSE

(MALAYSIA) BERHAD [2016] 2 MELR 623 (Case in Malaysia, 2020)
The claimant was the Relationship Manager of the company. Following an alleged
fraud, an investigation has carried out, and the claimant received a letter from the
company’s Head of Human Capital, informing her that she has suspended from
work due to a pending domestic inquiry. For the charge pertaining to withholding
of information, the company contended that if the claimant had disclosed the
existence of a crucial letter and/or its contents to her superiors, the company would
have refused to release some financing facility of RM5,000,000.00 to one PASB.
Dissatisfied with the explanation given, the company issued a notice to the
claimant informing her that a DI would be held.

Held: The court was satisfied that natural justice had been complied with during
the DI. The DI panel, especially the Chairman, was not biased as the claimant has
given every opportunity to be heard and to bring her witnesses who could assist her
in her defence. There was also no evidence from the notes that she has prevented

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from cross-examining the witnesses called. However, the evidence showed that the
claimant’s submission has an afterthought as the claimant never pleaded in her
statement. Therefore, she has disregarded.

Furthermore, the claimant failed to call this officer to testify the same, and neither
was there any explanation given against the officer’s absence. Such failure had put
a massive dent on the claimant’s case. The claimant, who held the position of a
Bank Manager, occupied a position of trust. Therefore, she should not only be
honest but be seen, to be honest. Although her action did not benefit her personally,
the punishment meted out to the claimant was appropriate in the circumstances of
the case. She was supposed to have a high level of treatment and behaviour as an
employee of the banking industry. (300)

Case 4.1.2: MURALI THARAN NAIR G NARAYANA NAIR V. HLMG

MANAGEMENT CO SDN BHD [2020] 2 MELR 316 (Case in Malaysia, 2020)
The claimant contended that he has forced and/or coerced and/or put under duress
to accept or to sign a Mutual Separation Scheme and there was no valid reason for
his dismissal. The company averred that it did not dismiss the claimant from his
employment. Since the claimant’s services had ceased by mutual agreement which
the claimant had voluntarily accepted, there was no dismissal of the claimant
within the context of s 20 of the Industrial Relations Act 1967 as alleged by the
claimant. At all material times, the claimant was given the opportunity and was at
liberty to accept or reject the offer of the mutual separation. The claimant, as a
Senior Manager of Industrial Relations, was fully aware of his legal rights and had
signed the MSA voluntarily.

Held: The claimant had succeeded in proving, on a balance of probabilities, that the
company had dismissed him in the guise of a mutual separation scheme. The MSA
was not entered into by the claimant on his own free volition. The company had
indeed dismissed the claimant, and such dismissal has made without just cause and
excuse. The company does not wish to keep the claimant in its employment.

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 The court thus awards and directs that the company pay the claimant a total sum of
RM184,000.00. (215)

4.2 Discharge by agreement

Case 4.2.1: NORAINI MOHAMED HADI V. PEMBANGUNAN TANAH

DAN PERUMAHAN SENDIRIAN BERHAD & ANOTHER APPEAL [2020]
4 MLRA 158 (Case in Malaysia, 2020)
These appeals by the plaintiff concerned her claim as a purchaser of a piece of
land, namely Lot 536, which she had purchased from the first purchaser, for which
she had paid the full purchase price. The defendant claim that did not sell the land
to the first purchaser as the first purchaser had bought it from four vendors before
the defendant purchased the land which included the Lot from its original owner,
one Kheng Hup Co Ltd. The trial judge in the High Court held that the plaintiff had
not explained the connection or relationship between the four vendors who
collectively had sold the Lot to the first purchaser and from whom the plaintiff had
purchased that land vis-a-vis the defendant. There was no privilege of a contract
between the plaintiff and the defendant.

The defendant did not hold the land as a constructive trustee or as a bare trustee,
and there was also no legal obligation to transfer the subdivided title to the Lot to
the plaintiff.

Held: Although there were some dotted lines initially between the four vendors and
their attorney, one Syed Ali and the defendant, eventually looking at the overall
circumstances of the case and the documents provided, as well as the actions of the
parties, those dotted lines could be comfortably joined together to connect the
defendant to the Lot in question as being significantly the actual vendor having the
Lot. The defendant had otherwise ratified the selling of the Lot as being made by
the defendant. Besides, the actions of the defendant had prevented him from
claiming that he did not sell the Lot to the first purchaser. The facts provided is that
the defendant had merely claimed that it had no knowledge or record of it. The
plaintiff had denied the right of the plaintiff to land. (305)

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 Case 4.2.2: TAKAKO SAKAO v. NG PEK YUEN & ANOR [2009] 3 MLRA
74 (Case in Malaysia, 2020)
The appellant, a Japanese citizen, and the 1st respondent were business partners.
The 1st respondent had then sold the property to the 2nd respondent company,
owned by her husband, for a sum of RM1,930,000. The appellant lodged a caveat
to protect her interest in the property and commenced the present action against the
1st respondent to establish that she was the beneficial owner of the property. In
contrast, the 2nd respondent was the registered proprietor. The 1st respondent also
commenced a proceeding against the appellant to remove the said caveat.

The appellant’s claim that trust had arisen in her favour has dismissed. She has
directed to remove the caveat entered while the 1st respondent has directed to
refund the sum of RM65,450, with interest. It has also held that s 433B of the
National Land Code barred the appellant from enforcing any trust that might have
arisen in her favour because of her contribution towards the purchase price. The
appellant appealed to the Court of Appeal, which upheld the orders of the High
Court. (174)

4.3 Discharge by frustration

Case 4.3.1: AB RAZAK OMAR v. QSR BRANDS (M) HOLDINGS SDN BHD
[2017] 2 MELR 640
From the evidence, it was evident that the claimant was fully aware of the decision
of the company to terminate his services even before the letter of termination has
issued to him. Furthermore, on the issue of redeployment, the claimant himself had
admitted that there were some discussions between him and the Managing
Director. However, the company was unable to find any suitable redeployment in
other departments within the company. In our present case, the employment
contract between the company and the claimant had categorically provided for a
termination clause which allowed either party to terminate the contract. The early
termination of the claimant’s contract of employment has contemplated at the time
the parties entered into the contract. Besides, the claimant had admitted that he has
well aware of the existence of this clause when he took the cross-examination. He

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 had accepted the same as part of his terms and conditions of employment as well.
(155)

Case 4.3.2: TAYLOR V. CALDWELL (1863) B&S 826 (Dr Rozanah Abdul
Rahman, 2020)
The defendant decided to allow the plaintiff to use the Music Hall to conduct four
concerts. Before the first concert has scheduled to take place, the hall was
demolished by fire without neglect by either group. The complainant had sued the
reduction of promotional costs for damages.

Held: The contract was difficult to fulfil, and the claimant was not responsible. (60)

4.4 Discharge by breach contract

Case 4.3.1: MACKT LOGISTICS (M) SDN BHD v. MALAYSIAN AIRLINE

SYSTEM BERHAD [2014] 3 MLRA 38 (Case in Malaysia, 2020)
The plaintiff carried on the business of air cargo transportation and the handling of
consignments and used the defendant to transport its cargo. The bank guarantee
also covered debts and liabilities under the sales agency agreement. Just before the
expiry of the bank guarantee, the defendant issued a letter of demand alleging that
the plaintiff had not honoured its obligations to the defendant and made a call on
the bank guarantee. The call has also made because of electricity charges due from
the third party Mackt HWT Freight Sdn Bhd. The High Court dismissed with costs
a claim brought by the plaintiff.

Held: In the instant case, the plaintiff did not breach the sales agency agreement.
Neither did the call on the guarantee as reflected in exh P5 disclose any breach on
the part of the plaintiff. The defendant’s failure to plead the requirement to pierce
the veil had to be construed against the defendant. Such a failure would render the
defendant’s letter of demand in exh P5 bad and invalid in law. The High Court,
having found that the bank guarantee was conditional, failed to consider whether
the defendant’s claim and demand under the bank guarantee were proper and valid
in law. The plaintiff and Mackt HWT Freight Sdn Bhd were different companies
and separate legal entities. (218)

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 Case 4.3.2: EMINENCE PROPERTY DEVELOPMENTS LTD V HEANEY
[2010] EWCA CIV 1168 (Eminence Property Developments v Heaney, 2018)
On 5 December, the seller’s lawyers received a notice of termination within
working days according to contractual clause 6.8, in which they would have the
right to withdraw from the deal according to contractual clause 7.5. Treating the
final date of execution as 15 December, the seller’s lawyers published a notice of
violation and of repudiation of the contract on 17 December. The real date of
conclusion of the contract, the measurement of the definition of working days, was
19 December.

Held: The Court held the test for repudiatory breach of contract requires an
assessment of all circumstances of the contract objectively. In so interpreting, the
intent of the offending party is a relevant condition, in so far as it represents how
the supposed repudiation may have treated by an innocent party or a rational party
in its place. Thus the incorrect notices of recession made by the seller did not
constitute a repudiatory violation that gave the purchaser the right to terminate the
contract. (165)

PART B

1. Issues: What are the hirer’s statutory rights? Hire Purchase Act 1967

A hire - purchase contract is an arrangement under which the owner agrees to hire goods
from the hirer with an option for the hirer to purchase the goods.

Section 2(1) of the HPA 1967 defines :

A hirer is a person who takes or has taken goods from the owner of the hire-purchase. It
involves a person to whom the hirer‘s rights or liabilities have been given by assignment
or by statute.

An owner is a person who lets or has lets goods to a hirer under a hire-purchase
agreement to buy goods and involves a person to whom the rights of the owner or

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liabilities under the arrangement have been given by assignment or by law enforcement.
(Hire-Purchase Act 1967, 2006)

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1. Rights and obligations of the hirer.
Section 9 of the Hire Purchase Agreement gives contractual rights to the hirer
(customer). It includes the right to a copy of the statement relating to the financial
status of the hirer. It also includes the right to the early conclusion of the agreement
and the right to cancel the agreement. Lastly is the right to repossession by the owner
and several others. The hirer also owes the primary obligations, including to place
the goods in the place stated in the contract of purchase, to pay daily instalments and
not to sell or dispose of the goods to any other party. This right could only use not
more than three months. If the hirer makes the request more than once in three
months, the owner could refuse to comply with the request.

2. Right to payment appropriations when hirer has more than one deal with the
same owner.
Based on this clause, Section 10, this distribution right of payment occurs when a
hirer enters into more than one hirer of purchase under the same owner. If the hirer
makes payment in respect of the agreement, it is not necessary to release the entire
amount payable under the agreement. The owner shall use the money paid by the
hirer with a settlement amount payable under either the agreement or a settlement
amount payable under two or more agreements, as the section deems necessary.

The aim is to provide services to tenants who have entered into more than a hire
purchase agreement to allocate payments under either agreement if they are unable to
pay all the amounts that have set. Under this clause, the hirer would apply from the
owner to distribute the payments that he believed he could afford to pay.

3. Right to ask for an order to remove products.

Through the contract of hire-purchase, the hirer shall hold in his possession or
control at a specific place the goods included in the arrangement. The hirer could not
remove the goods from a particular place, the Court of the Magistrate may at the
request of the hirer, make an order authorising the removal of the goods from another
place for the agreement.

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 Each hire purchase agreement specifies that the hirer shall retain the products
purchased on the spot agreed in the agreement. If the hirer transfers the goods to
another location, they shall have treated as a violation of the agreement. Therefore
the owner of the right to return the goods. In this case, if the tenant desires to transfer
the goods to another location other than the agreed place. They should request the
Court of Justice, as defined in section 11 of the Hire Purchase Act.

The hirer shall have the right to make an application to the Magistrate’s Court to
move his belongings to another spot. Therefore, if the Magistrate’s Court approves a
move, the new place would be replaced by the place agreed in the agreement.

4. Right to early completion of the agreement.

The hirer has the right to make early settlement of the full purchase price under the
Hire Purchase Agreement, provided that the hirer: (Dr Rozanah Abdul Rahman,
2020)
(a) give written notice of its intention to the bank;
(b) The owner shall pay the net amount due under the agreement. The net balance
due applies less to the balance owed under the agreement:

i. the total amount that has already have paid;

ii. the statutory rebate for fixed-term charges; and
iii. statutory insurance rebate (if any).

5. Passing of right by operation of law.

Upon the death of the hirer, all rights, titles and interests of the hire-purchase
agreement shall have transferred to their representative who shall comply with the
agreement.
(748)

2. Principles of Hire Purchase Act on the above issues:

Sections 9 to 15 of the Hire-Purchase Act 1967 lay down statutory rights of a hirer
under the hire-purchase agreement. (Dr Rozanah Abdul Rahman, 2020)
 Section 9: Right to a copy of the statement of financial position

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  Section 10: Right to the appropriation of payment when there is more than one
agreement
 Section 11: Right to apply for an order to remove the goods
 Section 14: Right to early completion of the agreement
 Section 13: Passing of the right by operation of law (83)

3. Application on the Hire-Purchase Act

1. Section 9 Hire-Purchase Act 1967

Jasmine did not recall if she got a copy of the Hire Purchase Agreement when it has
made. Suppose the Hire Purchase Agreement has personally sent to Jasmine for
signature. In this case, Jasmine should get a copy of the agreement under section
9(1), and Jasmine should have it within seven days after the agreement has made
under section 9(2). Suppose the bank has sent the Hire Purchase Agreement to
Jasmine for signature. In that case, a copy of the Hire Purchase Agreement shall have
sent to Jasmine at the same time as referred to in paragraph 9(2), but no further copy
has needed under paragraph 9(2)(b). On the other hand, if the Hire Purchase
Agreement had executed at the time the Jasmine signed it, a copy of the Hire
Purchase Agreement must be given and then forwarded to the Hire Purchase
Agreement according to section 9(1). (147)

2. Section 10 Hire-Purchase Act 1967

Jasmine had paid the bank more than one-third of the overall price of the vehicle,
provided that she had managed to hold monthly payments for the first two years of
the three-year Hire Purchase Agreement. Besides, the fact that the property of the car
remains in the bank. It would have satisfied the conditions set out in section 10,
which the bank is not entitled to recover possession of the vehicle except by the court
order. Therefore, if the bank retrieved the car from Jasmine for some reason, it would
be in contravention of section 10. The Hire Purchase Agreement shall terminate, and
Jasmine shall be relieved of all liability under the agreement and entitled to recover
from the bank all sums paid by Jasmine under the Hire Purchase Agreement. (130)

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 3. Section 11 Hire-Purchase Act 1967
According to Section 11, if Jasmine did not pay the instalment for more than six
months, the bank has their right to get the Court order for goods to be removed to the
bank store for furthers actions. Jasmine needs to pay full outstanding of the
instalment with the storage fees within 21 days after the goods have removed. If
Jasmine failed to pay the full outstanding balance, the goods would put under
auctions. (74)

4. Section 14 Hire-Purchase Act 1967

Base on Section 14 of the Hire Purchase Agreement, if Jasmine wants to make full
settlement of the goods, she could do that by giving the notice to the bank and inform
her intention to do that. Jasmine needs to request for the amount that she needs to
pay for the full settlement. She needs to submit the receipts after made the payment
and bank would prepare the full settlement letter and the grants. (74)

4. Cases of Hire-Purchase Act 1967

Case 4.1: TRACTORS MALAYSIA BHD V. KUMPULAN PEMBINAAN

MALAYSIA SDNBHD (1979) 1 M.L.J 129 (Case in Malaysia, 2020)
The issue before the court is if there has been a contract of hire-purchase. The court
held that concerning the creation of an arrangement between the parties. It had
claimed that the property of the vehicles has not to be transferred to the respondent
before full payment made. The arrangement was also a contract of hire-purchase.
Accordingly, the appellant has the right of a violation of its term by the respondent,
to reset the car. (75)

Case 4.2: UNITED MANUFACTURERS SDN BHD V. SULAIMAN BIN

AHMAD & ANOR [1989] 1 MLJ 482 (Dr Rozanah Abdul Rahman, 2020)
The hirer argued that the Fourth Schedule Notice according to Section 16(1) had
ceased to affect. Its was due to the re-establishment that took place two years after
the contractor had informed.

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 Held: The Hire-Purchase Act 1967 did not define any period during which the owner
could return the goods after the notification has made. (55)

5. Recommendation

After review the Hire-Purchase Act 1967 and its contents, the laws regulating the rights
and obligations of the parties involved in the contract, the compliance and other general
matters. However, it appears that the Hire Purchase Agreement is not adequate to lay
down substantive guidelines for the basic concept of the Islamic contract-purchase
contract. This loophole could open up the application of English law to Islamic hiring-
purchase transactions. The Hire-Purchase Bill has initiated to address the inadequacy of
the Hire-Purchase Act 1967. The bill has modelled after Hire Purchase Agreement with
some changes that would make it compliant with the provisions of the Shariah.

However, the existing factual situation does not favour the introduction of the Muamalah
Bill in the light of certain inherent drawbacks, such as the bureaucratic nature of passing
new laws and having an insufficient compliance authority. On the other hand, there have
been powerful legal and compliance institutions in favour of the Hire Purchase
Agreement, which could be used jointly through Shariah legislation such as the
Muamalah Bill. At this point, efforts have required to address these contradictions in the
Hire Purchase Agreement by integrating the principles of Shariah found in the
Muamalah Bill.

According to the law, the bank has the right to get the court order for the good to be
removed if the hirer could not pay the full outstanding balance within 21 days. The law
needs to be amended, this particular repossession on this particular right of the hirer
should be amended because at the moment is quite unfair to the hirer. For example,
prolong the period from 21days to 45 days for the settlement out of the outstanding
balance before auctions.

Another recommendation is to amend the law under section 10. The hirer could have the
flexibility to re-schedule their payment according to the hirer current financial
conditions. For example, due to COVID-19 pandemic, most of the people affected

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financially and under some circumstance that the hirer would not be able to pay back the
loan amount accordingly to the agreed agreement.

Lastly, under section 13, passing of the right by operation of law. This law could be
amended as well because it is quite unfair to the hirer representative. As per the housing
loan, there is two scheme that being implement to protect the purchaser. It also could be
implemented to protect the hirer or the representative as well. One of the schemes that
could use is that the insurance of the car could cover the loan if anything happens to the
hirer, and the different amount should return to the hirer or their representative. (435) (5147)

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6. References

Business Law. (n.d). Retrieve from toppr:

https://www.toppr.com/guides/business-laws/indian-contract-act-1872-part-ii/
discharge-of-a-contract/

Case in Malaysia. (November 2020). Retrieve from eLaw.my: https://www.elaw.my/

Contract Act. (November 2020). Retrieve from Law Teacher:

https://www.lawteacher.net/free-law-essays/contract-law/malaysian-contract-law-
essay.php

Discharge of a Contract by Agreement. (n.d). Retrieve from Upcounsel:

https://www.upcounsel.com/discharge-of-a-contract-by-agreement

Discharging From a Contract. (November 2018). Retrieve from LawTeacher:

https://www.lawteacher.net/free-law-essays/contract-law/methods-of-discharging-
from-a-contract-contract-law-essay.php?vref=1

Dr Rozanah Abdul Rahman, A. P. (2020). Business Law - BMLW 5103. Open University
Malaysia.

Eminence Property Developments v Heaney. (November 2018). Retrieve from All Answers
Ltd.: https://www.lawteacher.net/cases/eminence-property-v-heaney.php?vref=1

Hire-Purchase Act 1967. (January 2006). Retrieve from Law of Malaysia Act 212 Hirer-
purchased Act 1967: http://www.commonlii.org/my/legis/consol_act/ha19671978215/

Novation. (n.d). Retrieve from Investopedia:

https://www.investopedia.com/terms/n/novation.asp

Rescission. (n.d). Retrieve from LawTeacher.net: https://www.lawteacher.net/free-law-

essays/contract-law/discharge-or-end-of-a-contract-contract-law-essay.php

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