Contract II

Expectation loss

look at the diminution in value, cost of cure and also loss of amenities as compare to the position if the contract had been performed

Operative mistake

mistake of fact fundamental to a contract

Reliance losses

put the PNIB back into the position he was in before the breach

Hobbs and Wife v The London and South Western Railway Company

recovery of damages for physical discomfort and inconvenience consequent on a breach of contract allowed - English case cited in Subramaniam

Addis v Gramophone Co Ltd [1909] AC 488

- English case cited in Subramaniam - Damages for C's mental distress and injured feelings NOT ALLOWED

Jarvis v Swans Tours Ltd

- English case cited in Subramaniam where the object of the contract is to provide pleasure and that is prevented by breach of contract, damages can be awarded for mental distress - (the skiing facilities and accommodation did not live up to what was advertised in the brochure, C awarded half of what he paid.), in the words of Lord Denning, a contract for a holiday is to provide entertainment and enjoyment

Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 (HL)

- English case cited in Subramaniam, loss of amenities awarded for non-monetary loss - •On the facts, there was no monetary diminution in the value of the works actually performed by D (a 6.5 feet deep swimming pool) and the works contracted to be performed (a 7 feet deep swimming pool) •Further, damages on the cost of cure basis (i.e. awarding C money to build a new 7 feet deep pool) would be unreasonable in the circumstances as it did not reflect the actual loss suffered by C. •The actual loss of C was his loss of enjoyment in swimming a pool that was shallower than what he had expected. •C was awarded £ 2,500 as loss of amenities.

UNILATERAL MISTAKE

- One party makes a mistake as to (a) the terms of the contract or (b) identity of the other party AND the other party knows or ought to have known of this mistake. - no consensus ad idem - one party is taking advantage of the mistaken party

Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy [1995] 1 MLJ 817 (FC)

1.Hence, despite 'the words in question', a plaintiff who is claiming for actual damages in an action for breach of contract must still prove the actual damages or the reasonable compensation in accordance with the settled principles in Hadley v Baxendale.

Contracts inter praesentes

A and B are dealing face-to-face from the time the misrepresentation as to identity is made until the contract is concluded with A thinking that he is contracting with C - voidable for misrepresentation - a rebuttable presumption that a person (A) intends to contract with whoever he is dealing with face-to-face (B)

Contracts inter absentes

A and B are not in each other's physical presence from the time the misrepresentation as to identity is made until the contract is concluded, with A thinking that he is contracting with C. - void for unilateral mistake

Choy Ching Wan v Land Development Specialist Sdn Bhd [2008] 7 MLJ 96, HC

Abdul Malik Ishak J recognized the possibility of gain-based damages being awarded to the PNIB in exceptional cases

COMMON (MUTUAL) MISTAKE

Both parties are mistaken as to the same matter that is fundamental to the performance of the agreement. - but the common mistake renders performance either impossible or fundamentally different from what was mistakenly agreed.

CROSS-PURPOSE (MUTUAL) MISTAKE

Both parties are mistaken but on different matters relevant to the formation of a contract - no consensus ad idem

Tan Sri Khoo Teck Phuat v Plentitude Holding Sdn Bhd [1994] 3 MLJ 777 (FC

Expectation losses - refer to words of Parke B in Robinson v Harman

duty to mitigate the loss

If the PNIB fails to mitigate, he will not be entitled to that portion of his loss which he could have avoided or reduced had he mitigated his losses. If expenses incurred during the mitigation, the expenses is also recoverable. At the same time, if during the mitigation, PNIB gains economic advantage from it, this will be offset against PNIB's claim. application - Kabatasan Timber Extraction v Chong Foh Shing [1969] 2 MLJ 6 (FC)

Bee Chuan Rubber Factory Sdn Bhd v Loo Sam Moi [1976] 2 MLJ 14 (FC),

It is foreseeable for the PIB to expect that if he breaks the contract, the PNIB may have to take other steps to remedy the breach and in the process may suffer some losses for which the contract-breaker is liable. The expenses that PNIB spent to rent another premises while waiting for the completion of the house was claimable if there was a delay of the building process, such expenses is not too remote to be recovered

Anglia Television v Reed

Lord Denning MR stated that the plaintiff canonly claim for one of the damage (expectation losses or reliance losses). Further, the plaintiff couldn't recover expectation losses as he had failed to mitigate his losses.

Hartog v Collin & Shield [1939] 3 All ER 566

Mistake by offeror in the terms of his offer known to the offeree. Offeree "snapped up" the offer. No contract formed - the plaintiff couldn't reasonably have supposed that that offer contained the offerers' real intention, the mistaken offer could not be snapped up by the plaintiff

Watkin v Watson-Smith (1986) Times 3, July 1986 (HC)

Mistake by offeror in the terms of his offer. Offeree ought to have known of the mistake. No contract formed - If one party knew or ought to have known of a unilateral mistake as to the terms of the offer by the other party, there is no contract.

Nirwana Construction Sdn Bhd v Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus [2008] 4 MLJ 157, CA

Nominal damages are awarded when there is no actual loss, in Gopal Seri Ram JCA words, "breach of contract is actionable per se" as long as there is a breach, damages should be awarded

Subramaniam a/l Paramasivam v Malaysian Airlines System Bhd [2002] 1 MLJ 45 (HC)

Not all Non-pecuniary losses are recoverable - damage for mental distress not allowed on the basis that the contract is not of the kind that affect his personal interest referring what stated in Jarvis, no damages for mental distress could be awarded; but refer to Hobbs and Wife, physical discomfort & inconvennience allowed (not nominal damages)

SS Maniam v The State of Perak [1957] MLJ 75 (HC)

P paid D $5,000 as security for properly performing a services contract. Upon P's breach, D terminated the contract and the deposit was forfeited. P brought an action to recover the forfeited deposit. It was held that D had not wrongfully terminated P's services as P could not rely on S. 75. D was entitled to forfeit the deposit since the forfeited sum was a reasonable amount.

Ban Chuan Trading Co Sdn Bhd v Ng Bak Guan [2004] 1 MLJ 411 (CA)

Reliance loss - Malaysian law allows the injured party to elect to recover his reliance losses while referring to the English case of Anglia Television v Reed

What has Hadley v Baxendale stated?

The first rule is to look at what loss is a natural (ie objectively speaking) consequence of the breach objectively The 2nd rule is based on the specific knowledge of types of potential losses that is in the minds of both parties when the contract is made. subjectively In other words, if the damages that the PNIB claiming is unforeseeable to the defendant, the amount couldn't be claimed. other than these 3 rules, Contract Act 1950 also imposed a duty for the PNIB to mitigate his own losses

Lewis v Averay [1972] 1 QB 198 (CA)

a)Since this was a face-to-face transaction there was a presumption that L was dealing with the person in front of him (R), even though, because of R's fraud, L thought that he was dealing with another person (Greene) whom he believed to be the person physically present. The contract between L and R was voidable. Lord Denning MR stated why it was not void - the fact that one party is mistaken as to the identity of the other does not mean that there is no contract, or that the contract is a nullity and void from the beginning. It only means that the contract is voidable

gain-based damages

assessed based on what PIB gained from this breach

Toeh Kee Keong v Tambun Mining Co. Ltd [1968] 1 MLJ 39 (FC

clarified that S.74(1) is a statutory enunciation of the common law rule as stated in Hadley v Baxendale - loss that is too remote is not recoverable

Phillips v Brooks [1919] 2 KB 243 (HC)

contract dealing face-to-face, the court deemed that P intended to deal with the person in front of him, only voidable for misrep

Cubic Electronics Sdn Bhd (in liquidation) v Mars Telecommunications Sdn [2019] 6 MLJ 15, FC

decided that S. 75 applied to forfeiture clauses as well. if there is a breach of contract any money paid as part-payment of the contract price is generally recoverable by the payer, but deposit paid which is not merely part payment but also as a guarantee of performance is generally not recoverable - s 75 of the Act allows reasonable compensation to be awarded by the court irrespective of whether actual loss or damage is proven. Thus, proof of actual loss is not the sole conclusive determinant of reasonable compensation although evidence of that may be a useful starting point;

King's Norton Metal Co v Edridge Merrett & Co Ltd (1897) 14 TLR 98 (CA)

distinguished from Cundy v Lindsay, the decision might have been different if Hallam & Co had in fact existed. - if the misrepresented identity did not exist, the contract is voidable but not void

Bliss v South East Thames RHA [1987] ICR 700 (CA)

employment contract - Such contracts are NOT for enjoyment or peace of mind; the exception does NOT apply; the general rule applies and damages for mental distress and injury were NOT ALLOWED.

Shogun's

even though the contract was made face-to-face and inter praesentes could apply, there was an agreement clearly stated that it was Mr. Patel, but not F that stated in the contract, according to the parol evidence rule, no evidence could show that F was a party.

Maula Bux v Union of India (1970) 2 MLJ 61 (SC)

first brought out the concept that the forfeiture clauses were a species of penalty clauses

Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441,FC

gain-based damage - recognized that it could be a basis for assessment of damages for breach of contract. However, the gain-based damages were not awarded yet in MLS

Section 74

highlights the (1)compensatory nature of damages (but not punishment) (2)need for causal link between the breach of contract and the loss suffered by the PNIB (causation) (3)rules on remoteness of damages (4)privity of contract rule (only party to a contract can claim damages under S.74)

Parke B in Robinson v Harman

if a party suffers a loss due to a contract violation, they should be compensated financially in a way that puts them in the same position as if the contract had been fulfilled.

Cundy v Lindsay (1878) 3 App Cas 459 (HL)

if the contract is only made inter absentes, which means that the parties are not in each other's physical presence, and the contract clearly stated that the innocent party is contracting with a third party (who he thought the person contracting with him is), such contract is void - •Contract between Lindsay and Blenkarn was void for mistake because Lindsay's offer was to Blenkiron & Co and could not be accepted by Blenkarn. •Blenkarn, therefore, did not obtain title to the goods; so, he could NOT pass any title to Cundy. •Lindsay could therefore recover the goods from Cundy.

Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd [2007] 2 MLJ 229 (CA)

in a situation where there is an infringement of a legal right such as this but where there is no basis for ascertainment of the amount of loss suffered, nominal damages may be awarded

Ingram v Little [1961] 1 QB 31 (CA)

it was a inter praesentes case but the contract had been deemed as void. On the basis of fact, it is assumed that Ingram refused to accept the cheque in the beginning but accepted it after R provided a false identity and checked the directory after it. It can be deemed as Ingram only want to contract with the false identity but not R himself.

Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777 (SC

since B had completed the purchase and had done so without having to rely on the loan, the breach did not cause any loss to B, nominal damages were awarded

Bank Bumiputra Malaysia Bhd v MAE Perkayuan Sdn Bhd [1993] 2 MLJ 76 (SC)

since only the loss of profit on the Dungun project was the natural and probable result of the breach, loss of profits other that this were not allowed. - It is public and common knowledge that where a financial institution withdraws its financial facility it becomes virtually impossible for the developer to obtain facilities from alternative sources. However, with regard to the Alor Gajah project the loss of profits claimed was dependent upon M applying the profits expected from the Dungun project to the Alor Gajah project and would be too remote and should not therefore be allowed.

Tham Cheow Toh v Associated Metal Smelters Ltd [1972] 1 MLJ 171 (FC)

the contract-breaker would be liable for payment of damages for loss of profits only if the special purpose of the object had been drawn to their attention and they had contracted on the basis that delay in delivery of the particular object would make them liable to payment of loss of profits.

Sun Properties Sdn Bhd v Happy Shopping Plaza Sdn Bhd [1987] 2 MLJ 711

the purpose of the deposit is "to bind the bargain entered into" to let both parties adhere to the agreement. Therefore, if there is a party in breach, it is reasonable for the deposit to be forfeited.

S. 74(1)

when a contract has been broken, the PNIB is entitled to receive from PIB compensation for any loss or damage caused to him

London Joint Stock Bank v MacMillan [1918] AC 777

while the losses suffered was not caused by the bank's breach of contract, the causal link between the loss and the breach is not sufficient.

Scriven Bros v Hindley [1913] 3 KB 564

•Mistake by offeree as to terms induced by offeror, mistake is operative, No contract formed

Denny v Hancock (1870) 6 Ch App 1 (CA)

•Mistake by offeree as to terms induced by offeror. No contract formed - Specific performance would be refused since D's mistake was caused by P's misleading plan.

Smith v Hughes (1871) LR 6 QB 597

•Mistake by offeree as to terms. Offeror not at fault. Contract formed, - per Blackburn J: " there is no legal obligation on the seller to inform the buyer that he is under a mistake which has not been induced by the act of the seller"