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2023 MarsdenLR 421
HIGH COURT MALAYA KUALA LUMPUR
SAIFUDDIN NASUTION ISMAIL – Appellant
Versus
ZURAIDA KAMARUDDIN – Respondent
[Civil Suit No: WA-22NCVC-621-09-2020]
A valid contract exists when mutual assent and consideration are present. A party's breach of loyalty permits enforcement of contractual obligations, including stipulated penalties.
Headnote:(A) Contracts Act 1950 - Validity of contract - Article 10 of the Federal Constitution - The Plaintiff, a political party, claimed RM10 million from the Defendant, an elected Member of Parliament, based on a Bond signed by the Defendant. The Court found the Bond valid, fulfilling all requirements of a contract as per the Contracts Act 1950. The Defendant's claims of invalidity due to lack of consent and unconscionability were dismissed. The Court ruled that the Defendant had consented to the Bond, and the amount was not excessive but served as a deterrent against disloyalty. The Plaintiff was entitled to the claimed amount due to the Defendant's breach of loyalty. (Paras 6-34)
(B) Consent - The Defendant failed to prove lack of consent to the Bond, and her evasive testimony was insufficient to challenge the validity of her signature. (Paras 17-24)
(C) Unconscionable Amount - The Defendant's admission of the value provided by the Plaintiff negated her claim of the amount being excessive. The RM10 million was deemed appropriate as a deterrent against disloyalty. (Paras 25-29)
(D) Breach of Agreement - The Defendant's actions constituted a breach of loyalty, justifying the Plaintiff’s claim for the RM10 million. (Paras 30-34)
| Table of Content |
|---|
| 1. plaintiff's claim based on a signed bond. (Para 1 , 2 , 3) |
| 2. defendant's contentions regarding the bond's validity. (Para 4 , 5) |
| 3. court's assessment of bond's validity. (Para 6 , 10 , 14 , 15) |
| 4. definition of enforceable contracts under law. (Para 7 , 12) |
| 5. mutual promises create a valid agreement. (Para 8 , 9) |
| 6. defendant's consent and burden of proof. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23) |
| 7. defendant's admission regarding the bond amount. (Para 25 , 26 , 28) |
| 8. breach of agreement and entitlement to payment. (Para 30 , 32 , 33) |
Introduction
[1] The Plaintiff which is a political party, filed this case through its Secretary General against the Defendant who at the material time was an elected Member of Parliament. The Plaintiff's claim against the Defendant is for a sum of RM10 million which the Defendant had promised to pay under a Bond signed with the Plaintiff on the occurrence of any of the events mentioned in the Bond.
[2] The Plaintiff's claim proceeded to a full trial whereby both the parties adduced oral evidence as well as documentary evidence. Oral evidence was adduced by the oral testimony amongst others of the Secretary General himself and the Defendant. The documentary evidence were all contained in a joint Bundle of Documents which were duly marked.
The Brief Facts
[3] The Defendant being chosen as a candidate to stand in the 14th General Election on behalf of the Plaintiff signed a bond promising to pay the Plaintiff RM10 million on the occurrence of any of the events mentioned in the Bond. The events were expressly provided in the Bond.
[4] The Plaintiff contends that a number of events as mentioned in the Bond had occurred after the Defendant was elected as a Member of Parliament on the Plaintiff's ticket. This occurrence of the events had triggered the need for the Defendant to keep her promise and pay the sum as agreed under the Bond.
[5] The Defendant in her defense amongst others alleged that the Bond is an invalid document and therefore not enforceable against her. Even if the Bond was valid, the Defendant contends her consent to the Bond was not voluntary and the sum mentioned in the Bond was unconscionable.
The Validity Of The Bond
[6] In determining the validity of the Bond the Court perused the Bond in its entirety. After perusing the Bond in its entirety, the Court found the Bond to be an agreement which fulfilled all the requirements of a valid contract as specified under the Contracts Act 1950 .
[7] Section 2 of the Contracts Act 1950 defines the criteria for an agreement being a contract enforceable under the law as follows:
In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context-
(a) when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal;
(b) when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise;
(c) the person making the proposal is called the "promisor" and the person accepting the proposal is called the "promisee";
(d) when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;
(e) every promise and every set of promises, forming the consideration for each other, is an agreement;
(f) promises which form the consideration or part of the consideration for each other are called reciprocal promises;
(g) an agreement not enforceable by law is said to be void;
(h) an agreement enforceable by law is a contract;
(i) an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or
