English & Malaysian Contract Law Case Study

“The High Court in the case of Perlis Plantations Bhd v Mohammad Abdullah Ang [[1988] 1 CLJ 670] had clearly stated that our Contracts Act 1950 does not provide for any form of coercion other than as defined by section 15. Under section 15, commercial pressure and the presence of the above factors are insufficient to constitute coercion. The alleged act by the defendant must be forbidden by the Penal Code.”

Syed Ahmad Alsagoff, Principles of the Law of Contract in Malaysia (5th edn, Lexis Nexis 2023) 383.

With reference to English legal authorities, discuss the concept of ‘economic duress’ in

English contract law, and whether such a concept has been officially recognised in Malaysia. If it has not, analyse if Malaysian contract law should be reformed to adopt the English concept of ‘economic duress’, and if so, what form it should take under Malaysian contract law.

Course Learning Outcome 1: Analyse complex legal principles, concepts and doctrines pertaining to the law of contract.

General Expectation:

Students are expected to conduct extensive research by employing both traditional and modern research methodologies. In producing a good assignment, students are advised to pay particular attention to the content of the essay, originality and creative thought, style, and presentation of the essay, referencing and acknowledgement of sources. Students should not feel restricted to the mentioned books and articles and are encouraged to seek articles from the internet and the law journals, provided due acknowledgment is given.

Specific Expectation:

This assignment is designed to test the students’ understanding of ‘economic duress’ in English contract law and whether it has potential as a vitiating factor in Malaysia. In attempting this question, students are expected to:

• Discuss the concept of ‘economic duress’ in English contract law, with reference to cases, and whether such a concept has been granted official recognition in Malaysia, also with reference to cases;
• Analyse if Malaysian contract law should follow English legal principles on economic duress, considering the realities of commercial legal relations in modern day Malaysia; and
• Suggest/propose reforms (if any), to the doctrine if adopted officially in Malaysia.

Compulsory Reading:

1. Syed Ahmad Alsagoff, Principles of the Law of Contract in Malaysia (5th edn, Lexis Nexis 2023)

2. Richard Stone and James Deveney, The Modern Law of Contract (14th edn, Routledge 2022)

3. The Contracts Act 1950

4. Relevant cases under these chapters

Recommended Reading:

1. Cheong May Fong, Contract Law in Malaysia (Sweet & Maxwell 2010)

2. Visu Sinnadurai and Low Weng Tchung, Sinnadurai Law of Contract (5th edn, LexisNexis 2023)

3. Ewan McKendrick, Contract Law Text, Cases and Materials (10th edn, OUP 2022

Experts Answer on Above Contract Law Questions

Introduction

Economic Duress is an important concept that implies a kind of pressure utilised by one party over another with the objective of forcing the other party to enter into a contract without genuine consent. In English contract law, duress is recognised as a ground for setting aside a contract, whereas in case of Malaysian law, it only recognises this form of coercion as provided under Section 15 of the Contract Act 1950.

Economic duress in English contract law

The application of illegitimate economic pressure by one party over the another, and thereby leaving no other alternatives except to agree to a contract is termed as economic duress. The essential elements of economic duress are unlawful pressure, the victim does not have any alternative, the pressure forces the victim to enter into a contract, and that is no free consent by the victim. It can be analysed from the cases including the Siboen and the Sibotre (1976) whereby it is recognised that the economic pressure resulted in duress if the consent is not genuine. Another case on Universe Tankships Inc v ITWF 1983, it was held that the contract becomes voidable from illegitimate economic pressure.

Is economic duress officially recognised in Malaysia?

The answer is no, the Malaysian court has not recognised economic duress as an independent ground for avoiding contracts. According to Section 15 of the contracts act 1950, the existence of coercion is where a person commits an act forbidden by the Penal Code or unlawfully detains property. In a case on Perlis Plantations Bhd v Mohammad Abdullah Ang [1988], it was held by the High Court that the commercial pressure does not result in coercion under section 15.

Should Malaysia adopt economic duress?

Yes, Malaysia should recognise economic duress because the modern transaction involves economic pressure rather than criminal threats. It is essential because it helps in protecting weaker parties from unfair bargaining power, aligns Malaysian contract law with English common law, promotes fairness in commercial contracts and improves confidence level among International investors.

Suggested reforms

Malaysia should perform the reformation of law by amending Section 15 of the contracts act 1950 and make provision for including economic duress. It should also define clearly about the illegitimate economic pressure, and give the court with sufficient authority to declare contracts voidable where consent was obtained through economic duress.

Want Detailed Answers with References?

The analysis of the contract law above on economic duress including English contract law, Malaysian contracts act 1950, legal reforms and landmark case analysis revealed important findings about the need to include economic duress in Malaysian law. If you need a similar kind of assistance with your law assignment, get a professional law assignment helper in Malaysia, or visit our Malaysian assignment help page to get help with assignments from any subjects. You can review the assignments solved for students from Help University before making a decision with your assignment.