Business Law
HUTECH & OUM
MBAOUM0512 INTAKE : MAY 2012 – OCTOBER SEMESTER 2012
STUDENT NAME: CHU THI HONG TUYEN ID No.: 2448481
BMLW5103 – BUSINESS LAW ASSIGNMENT
Question 1
Discuss the enforceability of an agreement which lacks consideration. Using legal authorities (relevant statutes and cases) to support your discussion. Answer: A valid contract is an agreement made between two or more parties that creates rights and obligations that are enforced by law. What does the consideration mean? And what does it effect to the agreement? Consideration is something of value exchanged for the promise. It is something given by a promisee in return for something given by the promisor. According section 2(d), Contract Act provides “when at the desire of the promisor, the promise or any other person has done or abstained from doing or to abstain from doing something such act or abstinence or promise is called a consideration of promises” Consideration is another important element of a contract and any agreement made without consideration is a void agreement. Section 26, contract act 1950 provides that “ an agreement made without consideration is avoid”. The Malaysian case which applied the principle of past consideration is the case of: Kepong Prospecting Ltd. & S.K. Jagatheesan & Ors v. A.E. Schmidt & Marjorie Schmidt [1968] 1 MLJ 170 Schmidt, a consulting engineer, had assisted another in obtaining a prospecting permit for mining iron ore in the State of Johore. He also helped in the formation of the company (Kepong Prospecting Ltd.) and was appointed as the Managing Director. Subsequently, Schmidt entered into an agreement with the company. In the agreement, the company agreed to pay him one per cent of the value of all ore sold from the mining land. This was “in Page 1 of 10
HUTECH & OUM
MBAOUM0512 INTAKE : MAY 2012 – OCTOBER SEMESTER 2012
STUDENT NAME: CHU THI HONG TUYEN ID No.: 2448481
consideration of the services rendered by Schmidt on behalf of the company before its
MBAOUM0512 INTAKE : MAY 2012 – OCTOBER SEMESTER 2012
STUDENT NAME: CHU THI HONG TUYEN ID No.: 2448481
BMLW5103 – BUSINESS LAW ASSIGNMENT
Question 1
Discuss the enforceability of an agreement which lacks consideration. Using legal authorities (relevant statutes and cases) to support your discussion. Answer: A valid contract is an agreement made between two or more parties that creates rights and obligations that are enforced by law. What does the consideration mean? And what does it effect to the agreement? Consideration is something of value exchanged for the promise. It is something given by a promisee in return for something given by the promisor. According section 2(d), Contract Act provides “when at the desire of the promisor, the promise or any other person has done or abstained from doing or to abstain from doing something such act or abstinence or promise is called a consideration of promises” Consideration is another important element of a contract and any agreement made without consideration is a void agreement. Section 26, contract act 1950 provides that “ an agreement made without consideration is avoid”. The Malaysian case which applied the principle of past consideration is the case of: Kepong Prospecting Ltd. & S.K. Jagatheesan & Ors v. A.E. Schmidt & Marjorie Schmidt [1968] 1 MLJ 170 Schmidt, a consulting engineer, had assisted another in obtaining a prospecting permit for mining iron ore in the State of Johore. He also helped in the formation of the company (Kepong Prospecting Ltd.) and was appointed as the Managing Director. Subsequently, Schmidt entered into an agreement with the company. In the agreement, the company agreed to pay him one per cent of the value of all ore sold from the mining land. This was “in Page 1 of 10
HUTECH & OUM
MBAOUM0512 INTAKE : MAY 2012 – OCTOBER SEMESTER 2012
STUDENT NAME: CHU THI HONG TUYEN ID No.: 2448481
consideration of the services rendered by Schmidt on behalf of the company before its