Elements Of Contract Law In Malaysia

Introduction A contract law is one of an important thing as it is the legal foundation whereby business transaction can be conducted. A contract can be defined as an agreement whereby it can be legally forced between two or more competent parties for a certain action. A contract is a form that is resulting from the combination of two ideas, which are agreement and obligation . The Law of Contract in Malaysia is basically regulated under the Contract Act 1950. According to the section 2(h) of the Act 1950, it states that an agreement that is enforceable by law is named a contract. Based on the section mentioned above, it can be interpreted that when two parties made a mutual agreement, then their agreement has already fulfilled requirements

Intention to create legal relationship is a concept whereby it aims to ensure that two parties have made an agreement with showing an intention to enter a legal relationship based on the nature and context of negotiations, so it will be enforceable by law. If there is no intention to be legally bound contained in their agreement, then it will not be considered by the courts as a contract. There are (2) two types of agreements that mostly often use in the law, which are Social and Domestic Agreements, and Commercial and Business

It differs from the social and domestic agreements. It can be defined as an agreement made in the context of business and are presumed to intend to be legally binding. The presumption can be rebutted, but only strong evidence that can be shown to the courts, such as a clear statement in a written contract . Business agreement also involves two or more business parties, such as companies, suppliers, consumers. In the case of “Esso Petroleum v Commissioners of Customs and Excise , facts that when Esso, a petrol firm, ran a promotion in giving away World Cup free coins collection with every purchasing of (4) four petrol gallons. However, Customs and Excise Commissioners stated that those coins were subject to tax items as those coins had been produced in quantity for general sale. On the other hand, Esso would be responsible to pay for purchasing tax. Esso implied that those coins were regarded as the free gifts only. Moreover, it also argued that there was no intention to create legal relations on its promotion. The Courts held that there had an intention to create legally binding contained in their agreement. Lastly, there had also no contract of sale and instead had a contract to produce the coins