Insurance

 Insurance - Uberrimae fidei

    We usually entered into an commercial contract which requires less detailed information to disclosed. However, insurance contracts require all information, such as age, family members, working environment, and salary and all kind of risk which might get compensation if any damages of the insured items happened. These information can help insurers to determine how much the premium should the person pay. Usually, the riskier the insured item is, the more insurance premium should be paid. 


   Insurance contracts are based on mutual trust and confidence between the insured and insurer. This is the legal in law, called Uberrimae fidei (Utmost Good Faith).

Review - Exceptions applied in SOGA

The operation of Estoppel - The owner by his conduct makes it appear to the buyer that the person who sells the goods has the authority of the owner to sell it. Based on the conduct of the owner, buyer has a better title than the owner, because the owner is precluded by his conduct from the seller' authority to sell the goods. (Section 27, Sale of Goods Act 1957)


Sale by mercantile agent - The owner of the property distributes the authority of selling his goods to an agent. Any sale made by this agent shall be valid due to whatever sales done by the agent is acted on the behalf of the real owner. (Section 27, Sale of Goods Act 1957)


Sale by One of Joint Owners - Sometimes, it may be more than one person to have the same good. One of the co-owner has the sole possession of the good. If one of the co-owner sell the good to a buyer on a good faith, and the buyer had no notice that the seller had the authority to sell it. Therefore, the course of transaction is valid. (Section 28, Sale of Goods Act 1957)


Sale under a Voidable Title -When the seller acquires the possession of a good under a voidable contract. The goods is sold to the buyer who is with a good faith and doesn't know the defect of the seller's title.(Section 29, Sale of Good Act 1957)


Sale by a Seller in Possession after Sale - When the Seller or the person acts on behalf of owner sells the same good to more than one buyer and still has the possession of good or the document of title of the good. Provided that a buyer receive the good in good faith, the buyer shall get a good title of the goods and the seller is liable to compensate the first buyer. (Section 30(1), Sale of Good Act 1957)


Sale by a Buyer in Possession -  If a buyer has brought a good from a seller with obtaining the possession or the document of title with the consent of seller. The buyer can resell the good and transfer a good title to the next buyer in good faith, although the first buyer has not obtained a good title in the first transaction. (Section 30(2), Sale of Good Act 1957)

Case study: LIM CHUI LAI v. ZENO LTD.[1964] 30M.L.J 314

     Nemo dat quod non habet, literally meaning that "no one can give what he/she doesn't have". In an easier way to explain it, any sale of possession from someone who doesn't have the ownership, unless there is a permission of the right owner to sale. "Sale by person not the owner"

    

     Let's look at the case study, LIM CHUI LAI v. ZENO LTD to see what was happened previously in "Sale by person not the owner" situation and what was the judgement based on the issue.

     Facts: 

      The chairman of the respondent company's board of directors entered into an agreement  with a contractor, named Ahmad.  Ahmad also declared to the Authority of Petaling Jaya that the respondent company were the company to supply the construction material, thereby he also entered in a secured contract with the authority that to carrying out financing of his company's project. Thereafter, the respondent company bought the material and sent it to the construction site.

   

     Not so far from the time after contract, the respondent company realised that the Ahmad had some troubles with the authority of Petaling Jaya, and it caused to stop the contract. The respondent company told the authority that the material on the construction site was belonging to them and they also would sell them. 

   

     Somehow, the respondent company found out that the material delivered to Ahmad was no longer in the construction site, and Ahmad was the person who sold the material to the appelant for RM14,000 of which Ahmad get half of it as the payment.

    The respondent company then require the costs of material from the appellant.

Appellant argued that:

1. the respondent had delivered the material to Ahmad. So, Ahmad had to be deserved the name for  the owner of the material. 

2. the material were the property of the partnership of the respondent and Ahmad. Therefore, Ahmad has the right to sell them.

    Held: 

      Ahmad was not the owner of the property, because the respondent was merely placing the material for the purpose of proceeding construction. Therefore, Ahmad was merely a bailee, but not the owner when the time he sold to the appellant.  Since, Ahmad was not the owner, he had neither the title nor the authority to sell the property. 

      unless According to Sale of Good Acts 1957, section 27, where goods are sold by a person who is not the owner thereof or who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the authority to sell.

Review to the historical case, Farquharson Brother & Co. v. C.King [1920] A.C.325

     Although, Ahmad insured the good, but it doesn't mean that he was the owner. So, There was nothing  a bailee could to do with the material. Therefore, appeal dismissed. 

Sale of Goods Acts Reviews

  

Formalities and elements of Contract:

   
   There is no formal requirement for the creation of contract. It can be made by oral, writing, or maybe implied by conduct, behaviour and customs. 


    Parties involved:seller and buyer. Their capacity is governed by contract Act 1950.


     Price:The Price of goods can be set by the contact, determined according to a course dealing with the parties (buyer and seller). When The price cannot be determined by either of these method, the buyer must pay a reasonable price. There must be Offer and Acceptance indeed before proceed to transaction.


   These Three Element is vital for a formation of contract.


Term of Contract:
      Two types of terms of contract are specified in SOGA which are Condition and Warranty. 


Condition: A stipulation Which is Essential to the main contract. Whatever rules written in the contract are the most important and close to to the purpose of the contract. It defines "What make the contract happened in between both parties". For example: The term of contract states that a computer in good condition is sold. In this case, we may want to know the most on how "good" is good of the condition.


Warranty: A stipulation which is collateral to the main contract. Rule written in the contract which is not as important as to be the main purpose of the contract in which the statement is supplementary. For example: posters on the road states that " to buy a computer will from us, you will get $100 voucher, and a little statement at the bottom of the poster states that LIMITED 100 vouchers". In this situation, the main purpose of both parties is to sell and buy the computer, but not because of the purpose of the $100 voucher.


      Mostly, what I mentioned above is just a expressed contract which is stated under the knowledge of both parties. Yet, there are some implied terms which can protect consumers.


Implied Terms:


       Title:Title of ownership of the good and the owner has right to sell goods.
       Quiet Possession of Good: buyer shall have ownership and enjoy quiet possession.
       Encumbrance or Charge: Goods shall be free from charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made. 
       Sale by description & sale by sample: It is not sufficient that the bulk of the goods do not correspond with the sample or description.
        Fitness for Purpose: buyer make known of the seller for the purpose which goods are required. So, seller is assumed to show their skill or judgement and the good are of description which is the business supplies.
        Merchantable Quality: The good shall be in merchantable quality.

Definition of GODDS

How do we classify goods?

Goods is any kind of movable property in which  it is agreed or agree to transfer from seller to buyer.















Good can be included, if:

1. Growing crops or grass - for instances, plants, vegetable, fruits of the land which is grown for selling purpose.

2. Stock & Shares - It is invisible, but it is exclusively counted as a good. It can be transferred

3. Items attached to land,yet severable to land - doors, plants, vegetables & etc.




Good can excluded, if:
1. Actionable claims-a claim to any debt or to any beneficial in movable property not in possession of a claimant.


2.Money - items which is used as generally accepted payment of goods and services and repayment of liabilities.


3. Land -  the part of earth which is not covered by water.

Caveat Emptor- Endless housing loan

Caveat Emptor, this is the word derived from Latin's word which has the meaning of "Let the Buyer Beware" . It defines all buyer must be very careful in consuming, because not all of the seller is going to  Let us look at the case which is happened in 2 years before in Malaysia. This news is extracted from a popular business newspaper, Utusan Konsumer, Jan-Feb, 2009.

Case :        
           This person, called Shanti (Not her real name), was borrowing a housing loan from a bank (no specified). The amount she borrowed from bank was RM40,500 and her maturity of repayment is 20 years., monthly instalment is not specified, maybe RM300++.
         
  After 16 years later from her first repayment, she found out that she still owes the an outstanding balance RM36,576 when the bank sent her a housing loan statement in December 2007. The Bank Revised her monthly instalment to RM456 which is higher than her past repayment, besides extend her maturity to become 26 years. 
           16 years to pay most of the interest rather than the principal RM3924. What about the rest? Can she finish repay the outstanding balance RM36,576 to the within 4 years? Undeniable, the answer is NO.


                  How can she do? Can she sue the Bank  for a fraudulent In this way? 
  
My Opinion:

In Fact, BNM (Central Bank Malaysia) notified that "in case of a floating rate loan, you should also note that your monthly increase substantially when interest rates("BLR, Base Lending Rate, announced by government, latest rate is 5.80%" quote from Banking info) go up."
      
            BLR  is a fixed rate set by government and all financial institution should follow the rate and offer a new interest rate to customer.Mostly, it is written in the housing loan contract, unless bank offer a fixed rate which is not following the central bank. Mostly, housing loan will be written in term of the interest rate offered.For example: BLR-2%,  the interest rate. When BLR increase therefore interest rate increase. BLR is independent.

            You should notice that when BLR  increases, Interest portion served in your repayment become more, therefore you should have to adjust your a higher monthly instalment. In a sense that, BLR will fluctuate and affect the interest and our tenure. Yet, why do we still pay the fixed monthly amount set by financial institution? whenever you do not settle the housing loan, the bank still has a right to confiscate for auction.

          By right, you have the right to ask the solicitor in charge of housing loan to explain the terms of contract one by one, if consumers do not understand the terms.
            
            You can refer to the web-site, URL as below: http://www.bankinginfo.com.my/02_know_your_products/0202_applying_for_loan/housing_loans.php?intPrefLangID=1&

Fact:
         She must read the contact of housing loan before the contract is  signed, approved and legally binding. 
Usually, BLR is listed in the contract, but most of the borrowers In fact, she should know the how is the calculation of interest going during their repayment period. By right, she should be carefully to select different housing loan products and go through details of the terms in order to protect themselves from overcharging of any bank. Bankers are always not responsible to tell every term to their customer. 

Sales of Goods Act

What is the definition of " Sales of Goods "?

The seller transfer or agree to transfer the property in good to the buyer for a price.

The Seller- It refers to the person who want to give up some items or something belongs to him/her to someone in the interest of getting some items or money in return.

transfer or agree to transfer - Give some items to someone with some money return within the agreement between seller and buyer. Usually , these group of buyers will get the items immediately or the other day in future which is agreed by seller.

the property in good - the seller is not only transfer their item physically to the buyer, but also the ownership of the items should be transfer to the other parties. It may be sell or rent.

the buyer- It refers to the person who want to give up money or ownership in items for exchanging the ownerships in items of the seller.

We can refer the Law to the Sale of goods contract 1957 Malaysia and merchantile law proposed in West Malaysia, Penang and Malacca.

Holding and Subsidiary company

Holding Company: A company acts like a parent company of the other company.

Subsidiary Company: A company which is registered under the holding company name.

For Example:

-MASB (Known as MAS Airline, Malaysia Airline System Berhad), the Holding Company.

-FlyFirefly Sdn Berhad( Known as Firefly Airline) the subsidiary company of MASB.

URL: http://www.fireflyz.com.my/about/company-profile

Same goes here, Firefly Sdn Bhd is counted to be a legal person separately from MASB. Yet, MASB has the power to control over Firefly Sdn Bhd. They just act like a totally different entity, but they have relationship to each other.

Therefore:

-the company's liability is limited.

-they can sue or maybe sued by others.

-they must be incorporated by two or more person.

-they may own land.

-Their members may come and go without changing the company's personality.

-they are separately different legal entities.

-A company will not end when its members leave and continue to exist until it is dissolved through certain legal processes.

Salomon case- Company is a separately legal person.

Fact:

Salomon was a shoemaker and he was running his business in a limited company form, A. Salomon & Co. It was a limited company in which it was not necessary for the company members to pay the debt if the company had no sufficient asset to liquidate into cash to pay creditors.

His wife and his 5 children had 6 shares for each of them, Salomon was holding another 20001 shares out of 20007 if the company. the company was under control by Salomon as he had most of the shares of the company. Some Parts of his shares are paid by using Debenture (A Secured loan Certificate, which has a seniority to get debt back from the company.)

The company went into bankruptcy where there is an incapability to pay off its debt to unsecured creditors by liquidating its assets. Besides, The Secured creditors had the priority to get the receivable payment. Salomon was also a Secured Creditor of A. Salomon & Co. Ltd, because he also held the debenture of the company which he was secured to get seniority of repayment of debt.

Since unsecured creditor could not get back their claims, Salomon was sued. He was sued because he was not deserved to get any money unless he paid off all the debt of the company before. He was the one who own the company, therefore the responsibility of paying debt should go to Salomon.

On the other side, Salomon was arguing that he was the one who only operating the company, and not necessary the company debt was his obligation to pay off. Therefore, he refused to pay all the debt to creditors who was getting back their claims.

Held:

The judgement held that even though Salomon's Co Ltd was owned by Salomon himself and he had almost the power to control the company to behave like what he did, but the company and Salomon were separately different entity in law.

This company could be counted as a legal entity which incorporated by 2 or more persons, yet It did not mean the company could be controlled by only a single person. Since, it was separated to be a legal person in law, it just acted like a normal person, therefore it has the right to sue and maybe sued by others.

Therefore, the decision was the company was legal separated person with Salomon. So, he could refuse to pay off the debt of the company.

Case Study- Contract law

Question 3:

One day, Jay saw a banner hanging in front of her favourite cassette outlet in Alamanda which reads "BIG SALE! LATEST TOO PHAT'S ALBUM is up for GRAB WITH 50% Discount! LIMITED STOCK! HURRY HURRY! After reading it, Jay immediately jumped in the outlet and said she wanted that album at the said discount price. But to her disappointment, the shop owner said that the cassette is now sold at normal price. Can Jay sue the company for breach of contract? Discuss according to contracts ACT 1950 and relevant decided cases.

Answer:

In this case, the banner which hang in the shop is merely an invitation to treat the people who

just pass by the shop. If any person who is interested then they will come in and ask the price again.

This is not a legally binding contract yet due to there is not yet an offer and acceptance at the

beginning.

This case is similar to a previous case, Fisher Vs Bell, occurred in court before. The defendant

displayed flip knives in his shop window. During that period, flip knives were counted as a prohibited

items to sell or buy because of the increasing number of robbery cases. So, this defendant, the shop

owner was sued for selling the prohibited item. The defendant said that he was only showing the flip

knives to the public, but not to sell them to any party. He only displayed them to attract people to

see them, but not to buy them. Therefore, He was not offer these item as products for selling, and

even not an acceptance to sell who was interested to buy them. Since there was no offer and acceptance, therefore, this was not a legally

binding contract.Finally, the defendant was not found any guilty and penalties were not given.

In the case, Jay would have an interest to buy the cassettes in lower price as what the banner

said. Yet, the shop owner said that it was a past price and they are selling at a normal price. In this case,

Thebanner was just showed to attract people to come to the shop and ask for the price. But there

is no acceptance from the shop owner's willingness for selling the cassettes in low price to customers.

Therefore, It is similar to the Fisher Vs Bell case, the owner is merely displaying the item to attract customer,

but not yet agree to sell them. Therefore, It is not a legally binding contract, and even not breach of contract.

To make a conclusion, Jay should not sue the company due to the contract between the company and him is

not legally binding.

Law of Contract

There are few Terminologies in this topic "Law of Contract", I have to specify them and make them clear before going to deeper understanding.

Agreement- Both party agree on something with a gentleman shake hand from written or non-written form. It must also be you agree something that is agreed by someone. So that, we could say these parties's perspectives are tally. It can be a legally binding or not a legally binding.

Contract-Contact is a subset of agreement and it can also be defined as an agreement enforceable by law. This is the legally binding agreement which accurred between two individuals or parties. e.g. An airline company must comply their agreement with customer that if there is a flight delayed exceed 1 and half hour, the airline company must pay the compensation amount as what is in the contract. If there is a breach, customers have the right to sue the airline company.

Mostly of the contract are in the form of written and spoken; whereas, unwritten form would be based the cultural, norm, conduct and habit of a society.

Offer- This is an important element to form an agreement. one individual or party have to be proposing something that must signify the other's party willingness to do or to abstain from doing anything.

offer can be delivered in two ways:

expressed- in a written, spoken way.

implied - other than written and spoken. base on conducts, norms, cultural, etc.

There are two types of offer:

Bilateral:two specified parties involved. (1 to 1)

Unilateral:one party give an offer to the world at large.(1 to many)

Invitation to treat - It seems like an offer, but it is not actually an offer. It is an expression of willingness to negotiate and to invite people to come and give an offer.

The example of Invitation to treat that we see from daily live is displayed price tag of certain good in a shop. It invites people to come and see whether the price is reasonable. If the customer would like to buy it, he or she can just make an implied offer at the cashier or even ask for a discounted price.

Source of Malaysian Law

There are two sources that make up Malaysian law which are Written and unwritten law.

Sources of Written laws refers to:

-Federal constitution, the supreme law of Malaysia.

The federal of Malaysia which is made up by 13 states with a written constitution, e.g. Johor, Malaka, Negeri Sembilan, etc.

This is the highest constitution of Malaysia which enshrines the basic rights of the individual.

It means that the constitution must go through some procedures from parliament assembly, approved by Yang di-pertuan Agong and it become a written law in final. If it is not approved, it goes back to the procedures of parliament again, at least 2/3 of the total number of the member of legislature must agree with that, thereafter it is amended to be the written law to follow in Malaysia.

-State Constitution, the law to be applied in 13 states in the federal of Malaysia. Every state has its own constitution. The state constitution contains provisions which include the matters concerning the ruler of the state, the Executive council, the legislature, the legislative assembly,etc.

-Legislation, law enacted by a body constituted in Malaysia.

• Laws are enacted by parliament after 1946 and before 1957, called Ordinances.
• Laws made after 1957 are called Acts.
• Laws made in state legislative assemblies, called Enactments (Exclude Sarawak)
• Laws made in Sarawak state are called Ordinances.

-Subsidiary Legislation, it is important as legislation by parliament and State legislatures which is insufficient to provide law required to govern everyday matters. Subsidiary deals with the details about which legislature has neither the time nor the technical knowledge to enacts law. It is delegated by persons or bodies under power conferred on them by Acts of Parliament or enactment of state legislatures, e.g. Yang di-pertuan Agong, Minister, etc.

Sources of Unwritten law refers to:

-Principles of English Law that are only suitable to local circumstances.

-Judicial decisions by the superior courts, e.g. The supreme court, subordinate courts, etc.

Besides, Muslim law (syariah) refers to:

-It is only applicable to Muslims and from Syariah Courts. This is an important law since the majority religious groups are Muslims in Malaysia.

Doctrine of Stare Decisis:

-It holds that judges are bound to follow the decision made by other judges before they dealing with the cases with similiar fact.

Any cases that is in law suit, It must refer and review to the similar cases in the past before any judgement made.

Advantages of Doctrine of Stare Decisis: Since the cases are referring to the old similar cases to make a judgement, therefore it doesn't need to do double effort to study the cases anymore. It leads to high efficiency to judge one case.

Disadvantages of Doctrine of Stare Decisis: It is a must to trace one by one to look for the similiar cases. Thus, it consumes most time in searching.

Business Law - 2nd Feb 2010

What is law?

Law is a set of general rules is shared and recognised by a certain community or society in a certain bounded geographical area.

There are some laws commonly practised almost in every nation. On the other hands, there are also some laws that are only applied for a nation, because the law applied is only suitable for a nation. For instance, Singaporean law may not be executed in Malaysia, because Malaysia has its own cuture and different perspective to look over some events, for example, prohibition of chewing gum in Singapore, yet, you can eat chewing gum in Malaysia.

In a conclusion,every country may practise different belief and custom. So, each country set the rules that are only applied in its country area.

Why do we need these rules to regulate our behaviour?

We always say that every game has its own rules to follow. Same goes to every country, law is an instrument needed in order to limit our behaviour and protect ourselves from in term of physical, reputation, right and etc.

Classification of law

Law has been classified into 2 types. One of them is Public law, the other one is Civil Law.

The differences between these two types of law are Public law concern about matters between government and individual. If a person violate the law which can make some others into damgages. he or she is charged a sentence in the the court of public law, the possible final outcome would only be punishment or free, e.g. fine, imprisonment, public service and etc.

Civil law or private law more concerns about matters which are related to the right and the duties of individuals amongst themselves. If a person make someone into losses. This person can be charged in the civil court, the final outcomes would be compensation to the victim.

More on edited... See you few days later!

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