Question

Explain and evaluate the factors which will cause a contract to be void under Malaysian law.

Answer 1

According to the Contract Act 1950, the section 2(g), provides that an agreement not enforceable by law is said to be void.

A contract will be considered void if fulfills any of the following criteria under Section 24 of the Act :-

(a) - It is Forbidden by the law :-

Main object of an agreement order consideration in lieu of that agreement is provided by law then the contract becomes Forbidden by law and thus becomes void.

(b)- It is of such nature that would defeat the provision of any law :-

If terms of the agreement are such that the real intention of the parties are to defeat the provisions of law then the said contract is considered void.

(c) - It is a fraudulent contract :-

Agreements which contains unlawful objects and unlawful consideration and are made with the intention of doing fraud to one party or both the parties of the contract are said to be void.

(d) - It involves injury to a person or property of another :-

When a contract possesses such terms which involve criminal acts and harmful intention towards another person or property then these contracts are said to be void.

(e) -It is immoral or opposed to public policy :-

Contracts which involve trading with the enemy country, stiffening prosecution, maintenance and champerty, agreement to traffic in public offices, agreement to create monopolies, agreement to brokeage marriage for rewards, interfering with the ccourt's proceedings ,all come under the category of contracts which are opposed to public policy and are considered void by nature.

In addition to this following points also make a contract void :-

(f) - It has no consideration :-

A contract is an agreement to do something in lieu of consideration for doing such thing. Thus a contract without consideration is Null and void .However agreement without consideration can be considered valid if it is in writing and registered, is a promise to compensate for something or is a promise to pay a debt but by limitation law.

(g)- Consideration of subject matter is unlawful :-

If any part of consideration or the complete consideration for completing the contract is unlawful, then it renders the agreement void.

(h)- The contract is uncertain :-

The agreements for which the meaning is not certain or is not capable of being made certain are null and void .For example wagering contract are null and void.