Tuesday, May 5, 2020

The Commercial Law Of Malaysia For Business - Myassignmenthelp.Com

Questions: 1. It is common for vendors to put up disclaimers on the goods on sale. Whenever there is any defect found on such goods that we have recently purchased, the main issue that needs to be considered is whether it is still possible to claim any refund against such vendors. Discuss this issue. The discussion should refer to relevant provisions of the Act and decided cases. 2. While it is highly recommended for any business entity to officially appoint their agents, there are situations where such an entity bears liability for actions done by a person as an agent despite the absence of any formal appointment. Discuss. The discussion should refer to relevant provisions and decided cases. Answers: Answer 1 Introduction Business involves the exchange of goods and services between the buyer and the seller. This exchange of goods and services are governed by certain rules of law. In the Malaysian context, the sale of goods is governed by the provisions of the Sale of Goods Act, 1957 (SOGA), the Contract Act, 1950 and the Consumer Protection Act, 1999 (CPA) (Yusoff et al., 2015). The sale of goods and services is done by way of sale contracts, which are similar to the other contracts and hence, the provisions of the Contract Act, 1950 shall be applicable in the sale of goods, as long as it is not inconsistent with the Contract Act, 1950 (Halim, 2014). The consumers, who buy goods from the sellers, have certain rights and obligations as the sale of goods is basically a contract between the seller and the buyer and these rights and obligations of the consumers are protected by the Consumer protection Act, 1999 (Nayak, 2015). Therefore, during the sale of goods, provisions of all the three acts shall appl y in relation to the rights, obligations, breach and remedies of the seller and the buyer in case of sale of goods. One of the issues that may arise in case of sale of goods is whether a refund will be available to a buyer in case of any damage found after purchase, where the seller in such case has provided a disclaimer. The collaborating paragraphs will discuss this issue under the various provisions of the three Acts, relating to the sale of goods, in the Malaysian context. Discussion In the sale of goods, a common problem arises regarding the right of the buyers to claim refund in case of disclaimers for the sale of goods by vendors. A disclaimer in law generally means statements that specifies or restricts the scope of the rights, and obligations that is otherwise enforced and exercised by the parties within a legally recognized relationship (Whaley McJohn, 2016). However, in the legal context, unlike the other terms, the term disclaimer usually relates to situations that involve a level of risk, waiver or uncertainty. A disclaimer can specifically mention the terms and conditions of a contract agreed mutually or it can also specify exceptions or warnings in order to qualify a duty of care, owed to prevent the unreasonable risk of injury or harm. On the other hand, some disclaimers are proposed for limiting the causation of damages, after any harm has been sustained. In addition, some disclaimers are used as a voluntary waiver of right or obligation that is owed by the disclaimant (Armstrong et al., 2015). Disclaimers are not uniform and may differ depending on the parties and the particular context, while other sort of disclaimers may stick to a consistent and established set of formalities, which are subjected to rare or negligent modification, except under authorized authority. The presence of a disclaimer does not essentially mean or assure that the terms of disclaimer will be enforceable and recognizable in any statutory dispute. Other legal considerations may be there for rendering a disclaim er to be void either in whole or in part. A disclaimer in a contract for sale usually states that a the seller will not be responsible for any defect in the goods, after purchase and the buyer shall have no right to refund of the purchase amount (Green, 2014). Whether such refund is possible or not can be defined by interpreting the various provisions relating to disclaimer, under the three abovementioned Acts. Laws related to disclaimer In case of the sale contracts, as stated above, one of the main issues is when a seller or vendor puts up a disclaimer on the goods of sale. Disclaimer on the sale of goods means that in case of any defects found in the goods after purchase, the buyer shall not be entitled to claim a refund from the seller or vendor. The issue is whether it is still possible for the buyer to claim the refund from the vendor. In Malaysia, disclaimer and limitation of warranties clauses are more commonly referred to as exemption or exclusion clauses (Karim, 2016). The Malaysian law does not a draw a difference between the two clauses. Until the CPA, 1999 came into force, there were a very few statutory provisions for limitation of liabilities clauses. Section-29 of the Contract Act, 1950 and section-62 of the SOGA 1957 also deal with the provisions relating to the disclaimers and limitation of liability clauses in case of a contract for sale of goods (Nayak, 2015). Disclaimer and limited liability clause under the Sale of Goods Act, 1957 (SOGA) According to section- 62 of the SOGA 1957, any right, duty or liability, arising under a contract of sale, which may be implied by law, can be waived adversely or varied by an express agreement. However, such waiver must be made during the course of dealing between the parties or by usage, in the case where such usage is to bind the parties to the contract (Tehrani Manap, 2014). Therefore, according to this section, when a vendor puts up a disclaimer in the contract of sale, the buyer cannot claim any refund for any damage found in the goods after purchase, as such disclaimer is an expressed agreement according to section 62 of the SOGA. Section- 62 of the SOGA clearly recognizes the rights of the parties to change or vary the ordinary incidence of a contract by way of expressed terms for measuring the damages in case of breach of contract and also for excluding any conditions and terms that the law attaches to the contract of sale of goods (Razman, 2014). However, the SOGA also states that such expressed agreement in a contract of sale must also be signed by both the parties. If an expressed agreement term for the condition of breach is not signed, then it shall not be enforceable and will not apply. The law of disclaimer limited liability clause under the Contract Act, 1950 In Contract Act, 1950, under section- 29, a party to an agreement is restricted absolutely to exercise or enforce his rights under or in respect if any contract. The party is subjected to normal legal proceedings in the ordinary tribunals. The party must enforce such rights within the stipulated time; otherwise, such rights shall be rendered as void or invalid to that extent. This law under the Contract Act, 1950, again, clearly empowers the parties to contractually limit or exclude the liability by stating it expressly in the contract. However, as stated earlier, such express agreement shall not be enforceable if it has not been signed. However, it is still possible to limit and or exclude liability if the liability exclusion terms were incorporated in the agreement between the parties, for protection of the party, who seeks to rely on the clause (Zawawi Alias, 2016). Moreover, the person against whom the exclusion clause had been incorporated must have the knowledge of such clause. As the law provides for expressly limiting the liability under a contract, the scope of applicability of such exclusion shall is very wide and it is so wide that, if correctly worded, it can even waive the liability for negligence. In Malaysian Airlines System Bhd. V Malini Nathan and Anor.[1986] 1 MLJ 330 the passengers were confirmed and booked on a flight. The airline ticket contained a printed contract which stated that the carrier would make best efforts to carry the passengers and assured that the luggage will be dispatched accordingly. It was expressly mentioned in the contract that the time and other places shown on the timetable was not guaranteed and did not form a part of the contract. In addition, it stated that the carrier might substitute alternate carriers or aircraft and might cancel or alter the places of stopping, mentioned in the ticket. It also mentioned that the schedules were subjected to change without notice. Later, the flight was overbooked and it became impossible for the respondents to accommodate on the flight. In this case, the Supreme Court held that the respondents were not entitled to claim damages from the airlines, as the airline was not in breach of contract, as they could rely on the exclusion clause. However, the contract that involve consumers, are given statutory protection and the extent of the limitation of liability has been severely restricted by the Consumer Protection Act, 1999. Disclaimer and limited liability clause under Consumer Protection Act, 1999 In Malaysia, the Consumer Protection Act, 1999 is the most important and the main legislation that protects the consumers in Malaysia. The CPA has been influenced by legal developments in Australia, UK, Canada and New Zealand. In Malaysia, this Act safeguards the consumers from the sellers by eliminating unfair contract terms regarding exclusion clauses. Part-III of the CPA, which is a new addition to the CPA 1999 by amendment in 2010, specifically deals with the unfair terms in a consumer contract by dividing unfairness into procedural and substantive unfair. Section 24C of the Act, procedural unfairness means unfairness in the making of a contract like the failure of a party to notice a contract term during small printing at the time of signing (Latimer, 2016). On the other hand, according to section-24D (1) states that a contract is substantively unfair, if the contract terms excludes or restricts liability for negligence or liability for breach of implied or express terms of the contract without proper justification in case it involves oppressive, harsh and unconscionable terms. This new law has covered liability exclusion for both the tort of negligence and contractual obligation. According to section-24(G) of the Act, the court or Tribunal can declare a contract term to be unfair under section- 24C and 24D of the CPA to be void or unenforceable (Jackson, 2014). Moreover, the CPA 1999 faced criticism on the ground that it was not applicable for commercial contracts. But the amended Act of 2010 made it applicable to all contracts as well. In the case of Saad Marwi v Chan Hwan Hua Anor [2001] 3 CLJ 98 the judge was of the view that it was time for the courts to recognize the wider doctrine of inequality of bargaining power for doing justice. In this case, stress was given by the court on the provisions in Part-III of the CPA. In this case, it was recognized that in the presence of an expressed exclusion of liability clause in a consumer contract, it could be made void and unenforceable by the court under Section- 24(G) of the Act, by raising questions regarding the fairness of the contract terms stipulated under sections- section- 24C and 24D of the CPA. Furthermore, the Act also provides that if a contract includes expressed terms, which are unfair according to the law, it shall not be enforceable as was also determined in the given case. Conclusion Therefore, it can be stated that concerning the issue regarding the possibility to obtain refund from a vendor, in case of a sale contract, which includes a disclaimer regarding the liabilities of the contract, the Contract Act, 1950 is silent on the matter and does not provide anything specifically on this regard. The Sale of goods Act, 1957, although states a little about the exclusion clause in a contract under section-62 of the Act, it does not clearly provide any solution as to the remedy to the buyers. However, it is the Consumer Act, 1999 and its Amendment in 2010, that, by the provisions in its part III, clearly provides remedies in case of unfair disclaimer terms in a sale contract. Therefore, refund will be available to the buyer despite of the vendor putting up disclaimer, under the CPA, when the terms of such exclusion clauses are unfair. Answer 2 Introduction The assignment intends to provide an explanation to the fact that a business entity is required to appoint agents based on the formalities of official appointment. However, in certain cases it can be observed that entities are sometimes liable for the actions of any other person acting as an agent in the absence of any formal appointment. In this report the duties of various agents to its principal has been emphasized. It is noteworthy to mention here that different agents have distinct duties towards their entities however it is important that agents should be appointed formally in order to get relief under the provisions of Section 135 to 191 of the Contracts Act 1950 (Bakar, 2013). The principal is bound by the acts of an agent if the acts are performed within the authority of the principal. The acts done by the agent beyond such authority do not bind the principal unless the principal approves the unauthorized act. In this report, emphasis has been laid on the relationship betwee n agent and his principle and the acts performed by the agents in the boundary of such relationship. Discussion Creation of Agency An agency can be defined as the relation between an agent and a principal in whom the function of the agent is the creation of contracts between the principal and the third parties according to the provisions of Section 135 of the Contracts Act 1950 (Balasingam, 2017). The Part X of the Contracts Act 195 governs the provisions of the law of agency. There had been a confusion regarding the concept of agency that it is a relationship between the principal and the agent since time immemorial (Ishan Abdullah, 2015). However, agency is in fact a tri parte relationship between the agent and his principal and third party. According to the provisions of Section 136 of the Contracts Act 1950, a person under 18 years and of unsound mind can be considered as an agent however they are not liable for their acts done on behalf of their principal (Alibeigi Munir, 2016). In this regard the provisions of Section 138 of the Contract Act 1950 set out the conditions for the creation of agency. In KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd it was held that the contract of agency should not necessarily be in writing, it can be expressed or implied. An agency can be created by the express appointment by the principal and in such cases the principal shall not be liable if the agent exceeds its authority. The agent shall be liable personally to the third parties for the breach of his authority. According to Section 140 of the Contracts Act 1950, an agency can be created by both express and implied appointment (Tehrani Manap, 2014). An agency can be created by implied appointment when the principal in his own words or conduct has given the authority to a third party to act for him. In Chan Yin Tee v William Jacks and Co, it was observed that the plaintiff agreed to supply goods to the defendants believing him to be the partner of another person. The defendant in this case did not pay the payment of the goods delivered, as he did not know the commerce of business. The plaintiff sued the defendants for not providing the payment of the goods. The court in this case held the defendants to be liable as they were a part of the contract and cannot in any way repudiate from such contract. In this regard it can be stated that agency can also arise as a result of necessity when the agent has acted in good faith, when it became impossible on the part of the agent to follow the instructions of the principle and when the action of the agent was necessary to prevent the loss of the principal. In SRM Meyappa Chettiar v Lim Lian Koo it has been observed that Palaniappa Chettiar the attorney of Somasundaram Chettiar entered into an agreement with the defendant where Palaniappa Chettiar handed over a piece of land to defendant which belonged to his principal for a sum of RM 7000. However, it was seen that such sum was to be returned to the de fendant who was ratified by Somasundaram Chettiar. The Court of Appeal held that Palaniappa Chettiar was acting in his personal capacity as per the terms of the agreement. The Court held that the principle of ratification would not apply in case of this agreement held it. The extent to which entities or principal are liable for the activities of the agent According to modern jurists the acts of the agents are binding upon the principal and thereby the acts are done in such authority. However, it is important to have a knowledge regarding the nature of the authority of the agent. The extent of the authority of the agent authority has been defined in the provisions of Section 141 of the Contracts Act 1950 (Mahmood, 2013).An agents authority can be categorized into apparent authority and actual authority as depicted in the provisions of Section 141 of the Contracts Act 1950. The authority given by the principal to its agents either in writing or orally is termed as actual authority. The concept of actual authority can be explained with the help of a Malaysian case Firm of T.AR. CT. V. SV. KR where it was held by the Privy Council that an agent is authorized to be aloof from the money matters of the firm and has the implied authority to receive repayment for the benefit of the firm. In a recent case Tunku Ismail, bin Tunku Md. Jewa Anor. V. Tetuan Hisham, Sobri and Kadir the plaintiff was the authorities of an estate and was involved in the selling of a piece of land for more than one million. The respondents were the solicitors acting on behalf of the bank and the purchaser. The Court held that the burden of proof of apparent or ostensible authority lies with the plaintiffs. In this regard, the Court held that there could be only apparent authority in order to give such an undertaking and the solicitor had such authority in the ordinary course of business. It was a necessary part of the undertaking to pay the balance of the purchase price to the plaintiffs in order to complete the registration process undertaken by the defendants as solicitors representing the bank, successfully. According to section 141 of the Contract Act 1950, the concept of apparent authority can be explained. As per section 141 of the Contract Act 1950, an apparent authority may arise when the principal either expressly or impliedly permits a third party to act as an agent (Apandi Bolhil, 2016). According to the provisions of section 141 of the Contracts Act 1950 an apparent authority can also arise in cases where an agent previously had the authority to conduct on behalf of the principal without acknowledging the third party (Bakar, 2013) terminated such authority. In Graphic Lines Pte Ltd v. Chai Chee Mein Ors it was held by the Court that the respondents who were partners of the night club were bound by the acts of the assistant manager who participated in the advertisement for the nightclub along with the partners. The general manager had acknowledged the plaintiffs that such advertisements shall take place through the assistant manager. In this case, the general manger had actual authority to decide whether the assistant manager shall place the advertisements on behalf of the club; hence, the defendants were bound by such act. The Court concluded that in this case, the assistant manager had the apparent authority. Duties of the agents to counterbalance the principals liability caused by their actions For the purpose of counter-balance to the potential exposure and liability of the principal caused as a result of the actions of his agent, the agent in this regard owes certain duties to the principal in common law and equity. In this regard, it can be stated that an aged owes certain duties to the principal that could be contractual, commercial and fiduciary in nature. According to the provisions of Section 164 of the Contracts Act 1950 the agent is obligated to conduct business of the principal. However the agent is obligated not to misuse his position (Lambak Tahir, 2013). The agent has a duty to disclose the material facts to his principal in order to avoid conflict of interests in future. According to the provisions of Section 168 of the Contracts Act 1950 an agent is prohibited from making any secret profit from any third party (Alibeigi Munir, 2016). On receiving secret profit from any third party the law of land presumes it to be secret commission or an act of bribery. In such cases the principal has the opportunity to repudiate the contract if it occurs to him that such secret profit made by the principal will be disadvantageous to him. However in this regard, if the agent deals with the business n his own account then the principal do not have the authority to repudiate the contract in case of any secret commission made by the agent. The burden of proof lies on the principal and he needs to prove that relevant facts and materials had been hidden by the agent in order to gain secret profit from the principals business. The principal is entitled to recover secret profit made by the agent in the business transaction in which the agent sold the materials at a higher price, which was previously set by the principal. In case the agent passes the secret profit to a third party, the principal has the right to recover the same. In Tan Kiong Hwa v. Andrew S.H. Chongit was held by the Court that the principal is entitled to recover a sum of $ 9,000 from the agent as the agent has breached his duty. In Mahesan v. Malaysian Govt. Officers Co-operative Housing Society Ltd it was held by the Privy Council that the defendant is entitled to recover the bribe and the actual amount of loss suffered by him. Conclusion To conclude, it can be stated that an agency can be created with the help of express and implied appointment by the principal. However, in certain cases without prior appointment, an agent causes breach of his duties to the principal for which the principal becomes liable. In certain cases, the principal cannot be held liable for the activities of the agent if the agent acts in good faith and due diligence. In some cases, it can be observed that if the breach of the agents duties exceeded overtime then the principal is at the authority to repudiate the contract. Lastly, it can be stated that formal appointment is necessary in order to establish principal-agent relationship in a contractual framework and without it the principal would not be able to recover his losses. References: Alibeigi, A., Munir, A. B. (2016, April). Electronic contracts, the Malaysian perspective. Ine-Commerce in Developing Countries: with focus on e-Tourism (ECDC), 2016 10th International Conference on(pp. 1-7). IEEE. Apandi, A. A. B. A., Bolhil, A. I. B. A. (2016). Standardizing the Legal Framework on Duty of Care for Road Haulage in Malaysia: A Conceptual Paper.GSTF Journal of Law and Social Sciences (JLSS),5(2), 8. Armstrong, G., Kotler, P., Harker, M., Brennan, R. (2015).Marketing: an introduction. Pearson Education. Bakar, B. A. (2013). " The Commercial Law Of Malaysia"*-Revisited Section 5 (2) Of The Civil Law Act 1956; Constitutionality, The Eu And Islamisation.Iium Law Journal,21(1), 1. Balasingam, U., Dhanapal, S., Sabaruddin, J. S., Nazeri, N. B. M. (2017). A Need for Enduring Power of Attorney in Malaysia.Advanced Science Letters,23(9), 9060-9064. Chan Yin Tee v William Jacks Co (Malaya) Ltd [1964] MLJ 290 Graphic Lines Pte Ltd v. Chai Chee Mein Ors. (1987) Nov. Butterworths Digest Green, S. D. (2014). Contesting Disclaimer-of-Reliance Clauses of Efficiency, Free Will, and Conscience: Staving off Caveat Emptor.Tex. AM L. Rev.,2, 1. Halim, M. A. B. A., binti Mohd, K. W., Salleh, M. M. M., Yalawae, A., Omar, T. S. M. N. S., Ahmad, A., ... bin Mohd Kashim, M. I. A. (2014). Consumer Protection of Halal Products In Malaysia: A Literature Highlight.Procedia-Social and Behavioral Sciences,121, 68-78. Ishan, Z. M., Abdullah, F. (2015). Revisiting Agency Theory in Franchising Law in Malaysia. Jackson, S. (2014). Practice and procedure: Statute bar remains firm: Hall v Don Faulkner Motors Pty Ltd [2013] QSC 331.Proctor, The,34(1), 46. Karim, S. M. T. (2016). Protection of Rights of Consumers in Business Transaction: A Comparative Approach with Special Reference to Islamic Law.IIUC Studies,10, 183-200. Kgn Jaya Sdn. Bhd V Pan Reliance Sdn Bhd [1996] 2 CLJ 611, [1996] 1 MLJ 233 Lambak, S., Tahir, I. M. (2013). Juristic Analysis on the Applications of Common Law in Malaysia Takaful Act 1984 Based on Doctrine al-Urf.Asian Social Science,9(9), 262. Latimer, P. (2016). Protecting Consumers from Unfair Contract Terms: Australian Comparisons. Mahesan v. Malaysian Govt. Officers Co-operative Housing Society Ltd [1978] 1 MLJ 149 Mahmood, A. (2013).The need for legislative reform of the privity doctrine in commercial contracts in Malaysia: a comparative analysis(Doctoral dissertation, Queensland University of Technology). Malaysian Airlines System Bhd. V Malini Nathan and Anor.[1986] 1 MLJ 330 Nayak, R. K. (2015).Consumer protection law in India: an eco-legal treatise on consumer justice. Indian Law Institute, New Delhi. Nayak, R. K. (2015).Consumer protection law in India: an eco-legal treatise on consumer justice. Indian Law Institute, New Delhi. Razman, M. R. (2014). Sale of Goods Act, 1957: The role of statutory implied terms towards food and environmental sustainability.Research Journal of Applied Sciences,9(9), 624-628. Saad Marwi v Chan Hwan Hua Anor [2001] 3 CLJ 98 SRM Meyappa Chettiar v Lim Lian Koo [1954] 20 MLJ 246 T.AR. CT. V. SV. KR (1955) MLJ 2 Tan Kiong Hwa v. Andrew S.H. Chong [1974] 2 MLJ 188 Tehrani, P. M., Manap, N. A. (2014). Contractual issues of transformation technology in SME industry in Malaysia.International Business Management,8(1), 39-48. Tehrani, P. M., Manap, N. A. (2014). Contractual issues of transformation technology in SME industry in Malaysia.International Business Management,8(1), 39-48. Tunku Ismail bin Tunku Md. Jewa Anor. V. Tetuan Hisham, Sobri and Kadir (1989) 2 MLJ 488 Whaley, D. J., McJohn, S. M. (2016).Problems and Materials on the Sale and Lease of Goods. Wolters Kluwer Law Business. Yusoff, S. S. A., Ismail, R., Markom, R., Zakuan, Z. Z. M. (2015). Consumer protection and the Malaysian Sale of Goods Act 1957.International Business Management,9(4), 452-459. Zawawi, M., Alias, S. A. (2016). International Cross-Border Surrogacy: An Analysis of the Malaysian Legal Position.IIUM Law Journal,24(2), 283.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.