An oral agreement lacking consideration is unenforceable under the law.

[1] As pointed out by the trial judge, this case involves the unfortunate situation where the 1st plaintiff is suing the defendant, his own nephew. The 2nd plaintiff is the wife of the 1st plaintiff. After a full trial, the plaintiffs' claim was allowed; judgment was entered, and the defendant's counterclaim was dismissed. For ease, we shall refer to them by reference to that familial relationship.

[2] In a nutshell, the defendant's nephew took out a loan for the benefit of the uncle. The aunt's property, a shop house, was used as collateral for the loan. The full sum of the loan was paid into the nephew's account. The nephew only released part of the loan to his uncle.

[3] The uncle serviced the monthly loan repayments but that soon stopped when he and his nephew fell into dispute over the non-release of the full loan. The bank has threatened to obtain a statutory sale of the charged property.

[4] The uncle's case is this. He claims that the loan was intended for the opening of a pharmacy business with some of his friends, one of whom is located in India and who would be supplying him the medication and equipment from India. A "Proposal to set up a pharmacy business" was prepared for that purpose. He needed RM960,000.00.

[5] However, the bank told him that he was "too old"; and this is where the nephew came in. The loan would be in the nephew's name. This entire arrangement was oral and never reduced to a written formal agreement because it was made between close relatives.

[6] The bank approved the loan on 1 October 2013 and the full sum was released to the nephew. The nephew sent three cheques totaling RM300,000.00 but refused to release the balance sum of RM660,000.00. The uncle sued for breach of oral contract, seeking to recover that balance sum.

[7] In defending the claim, the nephew explained that the loan was actually to enable his uncle to settle his debts. The pharmacy business proposal was merely a camouflage that was thought up after his uncle failed to get any of their relatives to help him.

[8] The nephew agreed to help. According to the nephew, the first RM300,000.00 was to settle the uncle's debts to others, the second RM300,000.00 was to settle a loan taken from his family, and the balance was for the nephew himself because of the "huge liability attached to the defendant and this constitutes the consideration to the defendant". As for the aunt's shophouse, the rentals collected were expected to cover the monthly instalments due on the loan. When the shophouse was sold, the proceeds would be divided in the ratio of 60% to the uncle and 40% to the nephew.

[9] The nephew claimed that the loan went into default immediately with the uncle never servicing the repayments. That left the nephew in a "precarious and prejudicial position". Upon the uncle's plea, the nephew released RM250,000.00 from the RM360,000.00 which he had received. This was all done at a hotel in Taiping on 4 December 2014.

[10] When he realised that his uncle was not keeping up with his end of the bargain, the nephew instructed lawyers to draw up an agreement containing all the terms that he asserted. The agreement was emailed to his uncle but there was no response from his uncle. The nephew counterclaimed for the return of the RM250,000.00 that he subsequently loaned to his uncle, and damages for the embarrassment and loss of reputation suffered as his name has sinc