Our exam is 2 weeks away from now, so wish you all the best in exam and remember, there is nothing to worry about. If you have not revised your studies, do them now and start practising past year questions to gain the confidence. If you have been revising consistently, good, now you can have some time to relax and continue doing some questions when you feel like doing them.
Finally, remember one thing, always study smart and not study hard, good luck, may god bless us to score good marks :D
Monday, May 23, 2011
Thursday, May 19, 2011
F4 MYS - Remedies for breach of contract
You will be expected to be able to suggest the most suitable remedies in the given scenario and explain why you choose it. Contract Act 1950 provides two types of remedies: damages and rescission while Specific Relief Act 1950 provides two equitable remedies: specific performance and injunction.
Damages
This means the compensation for losses suffered. It will normally be given by the court if the innocent party can prove that he suffered natural loss (loss which is connected to the breach of contract) or if the loss is foreseeable by the wrong party. Substantial damages will be given to compensate most of the loss suffered by innocent party, but if the innocent party suffered little or no loss, then nominal damages (small amount of money) will be given to innocent party. In certain circumstances, exemplary damages may be given in addition to substantial/nominal damages by the court to penalise the wrong party even if no loss has been suffered by innocent party.
In summary, use damages only if the innocent party suffered actual losses or losses which are foreseeable by the wrong party.
Rescission
This means to end the contract and both party returns to original position before contract. In this case, whatever benefit that the innocent party received must be returned to the wrong party and wrong party must do so as well.
Rescission is suitable if the contract is not so important for the innocent party.
Specific performance
This is a discretionary order by the court to request the wrong party to continue performing the contract. Since it is discretionary, court will not always order it as court will have to supervise the performance by the wrong party if order is made. Normal situations that court will order specific performance include:
1. Money is not enough to compensate the innocent party.
2. The amount of actual damage is difficult to ascertain.
3. Court will presume that breach of contract to transfer immovable property cannot be adequately compensated by money.
However court will not grant specific performance if money is enough to compensate the innocent party or it requires a lot of time from the court to follow-up the performance by the wrong party.
In summary, apply for specific performance if the innocent party wishes the performance of the contract to be completed and that money will not be sufficient to compensate the innocent party for non-performance of the contract. A good example will be when the contract is about some rare items or good prices.
Injunction
This is a preventive relief granted again at the court's discretion, this will prevent the wrong party from continuing the performance which will breach the contract. There are two types of injunctions:
1. Temporary injunction - court will grant this when there is no sufficient evidence to confirm that the wrong party's action will breach the contract.
2. Perpetual injunction - court will grant this when it is confirmed that if the wrong party continues the action, he will breach the contract.
In summary, injunction is suitable when the innocent party finds out that the wrong party is going to breach the contract which is important for the innocent party.
Example: Chicken enters into a contract with Duck to sell 100 chickens at RM250 and deliver to Duck in one week time. Duck paid RM50 to Chicken as initial payment and will pay the rest upon receiving the chickens. However as the inflation rate rose, Chicken refuses to perform the contract (RM50 is not returned to Duck) on the ground that RM250 is too less and should be RM400, then requiring Duck to pay RM350. Duck believes that Chicken has breached that contract and he knew there is something wrong with the conduct of Chicken, so he seeks your advice of which remedy is best in this case.
Tips: Damages is not suitable as Duck has not suffered any loss so far, Duck wants the price to be RM250 so rescission is again not suitable. Injunction is only useful if the contract is not yet breached.
Solution:
The issue here is whether Duck can compel Chicken to sell the chickens at RM250 by obtaining the order of specific performance.
According to Specific Relief Act 1950, specific performance is a discretionary court order requiring the party who breached the contract to perform his obligation under the contract. However, court will not grant the specific performance if money is enough to compensate the plaintiff's loss or if it can create great burden to the court, probably requiring long supervision period of following up the performance by the defendant. Court may grant the order if money is not enough to compensate the loss suffered.
In this case, since Duck has not suffered any losses (the RM50 is not considered as loss), damages is not a good remedy to go for. Compelling Chicken to sell 100 chickens at RM250 to Duck is not a complex issue, so it is quite probable that it does not create burden to the court.
In conclusion, Duck is advised that he has a good chance of obtaining the order of specific performance and so he may be able to get the price of RM250 from Chicken, then he will only need to pay another RM200.
The above is a very easy question, so you can easily identify the suitable remedy, however when you face some more difficult scenarios, always think what remedy will benefit the innocent party the most.
Damages
This means the compensation for losses suffered. It will normally be given by the court if the innocent party can prove that he suffered natural loss (loss which is connected to the breach of contract) or if the loss is foreseeable by the wrong party. Substantial damages will be given to compensate most of the loss suffered by innocent party, but if the innocent party suffered little or no loss, then nominal damages (small amount of money) will be given to innocent party. In certain circumstances, exemplary damages may be given in addition to substantial/nominal damages by the court to penalise the wrong party even if no loss has been suffered by innocent party.
In summary, use damages only if the innocent party suffered actual losses or losses which are foreseeable by the wrong party.
Rescission
This means to end the contract and both party returns to original position before contract. In this case, whatever benefit that the innocent party received must be returned to the wrong party and wrong party must do so as well.
Rescission is suitable if the contract is not so important for the innocent party.
Specific performance
This is a discretionary order by the court to request the wrong party to continue performing the contract. Since it is discretionary, court will not always order it as court will have to supervise the performance by the wrong party if order is made. Normal situations that court will order specific performance include:
1. Money is not enough to compensate the innocent party.
2. The amount of actual damage is difficult to ascertain.
3. Court will presume that breach of contract to transfer immovable property cannot be adequately compensated by money.
However court will not grant specific performance if money is enough to compensate the innocent party or it requires a lot of time from the court to follow-up the performance by the wrong party.
In summary, apply for specific performance if the innocent party wishes the performance of the contract to be completed and that money will not be sufficient to compensate the innocent party for non-performance of the contract. A good example will be when the contract is about some rare items or good prices.
Injunction
This is a preventive relief granted again at the court's discretion, this will prevent the wrong party from continuing the performance which will breach the contract. There are two types of injunctions:
1. Temporary injunction - court will grant this when there is no sufficient evidence to confirm that the wrong party's action will breach the contract.
2. Perpetual injunction - court will grant this when it is confirmed that if the wrong party continues the action, he will breach the contract.
In summary, injunction is suitable when the innocent party finds out that the wrong party is going to breach the contract which is important for the innocent party.
Example: Chicken enters into a contract with Duck to sell 100 chickens at RM250 and deliver to Duck in one week time. Duck paid RM50 to Chicken as initial payment and will pay the rest upon receiving the chickens. However as the inflation rate rose, Chicken refuses to perform the contract (RM50 is not returned to Duck) on the ground that RM250 is too less and should be RM400, then requiring Duck to pay RM350. Duck believes that Chicken has breached that contract and he knew there is something wrong with the conduct of Chicken, so he seeks your advice of which remedy is best in this case.
Tips: Damages is not suitable as Duck has not suffered any loss so far, Duck wants the price to be RM250 so rescission is again not suitable. Injunction is only useful if the contract is not yet breached.
Solution:
The issue here is whether Duck can compel Chicken to sell the chickens at RM250 by obtaining the order of specific performance.
According to Specific Relief Act 1950, specific performance is a discretionary court order requiring the party who breached the contract to perform his obligation under the contract. However, court will not grant the specific performance if money is enough to compensate the plaintiff's loss or if it can create great burden to the court, probably requiring long supervision period of following up the performance by the defendant. Court may grant the order if money is not enough to compensate the loss suffered.
In this case, since Duck has not suffered any losses (the RM50 is not considered as loss), damages is not a good remedy to go for. Compelling Chicken to sell 100 chickens at RM250 to Duck is not a complex issue, so it is quite probable that it does not create burden to the court.
In conclusion, Duck is advised that he has a good chance of obtaining the order of specific performance and so he may be able to get the price of RM250 from Chicken, then he will only need to pay another RM200.
The above is a very easy question, so you can easily identify the suitable remedy, however when you face some more difficult scenarios, always think what remedy will benefit the innocent party the most.
Monday, May 16, 2011
Guidance for T9 MYS - Taxable gratuity
Gratuity is simply a lump-sum cash received by the tax payer due to retirement. Gratuity is exempted under certain circumstances, but here we will look at what if the gratuity is taxable, how much it will be taxed in a YA. Gratuity is assessed under S13(1)(a).
To determine the taxable gratuity amount for a YA, you must first look at period of first day working to first day of last basis period.
1. If the period is more than 5 years - gratuity received will be spread back 6 YA.
2. If the period is not more than 5 years - gratuity received will be spread even throughout the employment period (first day working to last day working).
Example: On 31.10.10, Ali who is 49 years old, received gratuity of RM88500 on his retirement, calculate the gratuity to be taxed in YA 2010 if:
(i) Ali worked with his employer since 30.11.03
(ii) Ali worked with his employer since 1.12.05
Solution:
(i) First day working to first day of last basis period = 30.11.03 - 1.1.10 = more than 5 years.
Gratuity is spread back 6 YA, so RM88500/6 = RM14750.
Gratuity taxable in YA 2010 = RM14750.
(ii) First day working to first day of last basis period = 1.12.05 - 1.1.10 = less than 5 years.
Gratuity is spread evenly throughout employment period, employment period = 1.12.05 - 31.10.10 = 59 months. Therefore, RM88500/59 = RM1500 per month.
Gratuity taxable in YA 2010 = RM1500 x 10 = RM15000 (gratuity taxable in YA 2009 = RM1500 x 12 = RM18000).
Gratuity is quite straightforward topic and it is highly examinable in June 2011 as part of question 1 in section B, understand the rule and learn to apply it by looking at this example.
To determine the taxable gratuity amount for a YA, you must first look at period of first day working to first day of last basis period.
1. If the period is more than 5 years - gratuity received will be spread back 6 YA.
2. If the period is not more than 5 years - gratuity received will be spread even throughout the employment period (first day working to last day working).
Example: On 31.10.10, Ali who is 49 years old, received gratuity of RM88500 on his retirement, calculate the gratuity to be taxed in YA 2010 if:
(i) Ali worked with his employer since 30.11.03
(ii) Ali worked with his employer since 1.12.05
Solution:
(i) First day working to first day of last basis period = 30.11.03 - 1.1.10 = more than 5 years.
Gratuity is spread back 6 YA, so RM88500/6 = RM14750.
Gratuity taxable in YA 2010 = RM14750.
(ii) First day working to first day of last basis period = 1.12.05 - 1.1.10 = less than 5 years.
Gratuity is spread evenly throughout employment period, employment period = 1.12.05 - 31.10.10 = 59 months. Therefore, RM88500/59 = RM1500 per month.
Gratuity taxable in YA 2010 = RM1500 x 10 = RM15000 (gratuity taxable in YA 2009 = RM1500 x 12 = RM18000).
Gratuity is quite straightforward topic and it is highly examinable in June 2011 as part of question 1 in section B, understand the rule and learn to apply it by looking at this example.
Monday, May 2, 2011
Guidance to law of contract for F4 MYS
The purpose of this article is not to cover the whole contract law, obviously, but to give a guidance on how to apply the contract knowledge to the application-based question since that is one of the problem areas.
Studying law of contract
This should not have any problem because the things listed in Contract Act 1950 are quite straightforward and there are many cases to illustrate the points. However it is a big topic and it requires a time of at least 2 days to cover the whole contract law relevant to F4 syllabus. What you have to focus is to understand everything, for example in consideration, you know that it is a price that one party (A) paid to another party (B) in order to secure the promise, this promise is made by B and A wants that promise to be legally recognised, therefore he will have to give consideration. You have to strengthen your understanding on the concepts before you are able to tackle the application-based question.
Law of contract covered in F4 MYS
Basically your contract knowledge must cover:
(a) Essential elements of contract.
(b) Terms of the contract including exclusion clause.
(c) Breach of contract and the remedies available including the one provided under Specific Relief Act 1950.
What to write
In the application-based question, you have to write the relevant laws based on the scenario. An example is as follow:
Ali sends a letter to Bali on 30.4.2011 to make offer to buy a car, the letter reached Bali on 1.4.2011. Bali immediately send a letter of acceptance on that day but then Bali received a letter from Ali on 2.4.2011 saying that Bali is an April fool and that the offer is just to trick. Bali wishes to know whether there is a valid contract.
Tips: In this question, immediately you should know that acceptance is being tested (knowing what is being tested is essential, by looking at the story of some cases, you may be familiar). This is an easy question but when you faced a harder question, you should put yourself in the scenario and think what rules apply.
Answer:
The issue here is whether the revocation by Ali is valid.
According to Contract Act 1950, acceptance is when one party who is being offered by another party signifies his assent to the offer. The communication of the acceptance must be complete before the offer is regarded as accepted. Generally there are two ways to complete the communication, either instant (by telephone, orally agree) or by postal.
For the instant method, the communication of acceptance is complete when the promisor hears about the acceptance from the promisee. In postal rule, the acceptance is complete at the moment when promisee posts the letter, revocation received after that time is void, the communication of the acceptance will be completed when the promisor received the letter, then both party is binding to the contract.
In this case, Ali's revocation is received by Bali on 2.4.2011 but the letter of acceptance is sent on 1.4.2011, ie. the date the acceptance is complete. Therefore, Ali's revocation is not valid as he is bound by the agreement at 1.4.2011.
In conclusion, Bali is advised that the agreement will complete when the letter of acceptance reached Ali and both party is bound to the contract thereafter.
The length of answer depends on how much marks the examiner will give, this answer should worth around 6-8 marks, you should always think that at least 1 point is needed for 1 mark. The important points and explanations must be there in order to get good marks in exam.
Cases
There are a number of cases in contract law, it is quite useful to remember some of them because quoting case in the answer of the question can really help you to gain about 1 mark. You only need to remember the case name, not the story, so try to remember some easy names such as Fisher v Bell, Felthouse v Bindley, Hyde v Wrench and so on, although the more you remember, the more you are in an advantage.
Conclusion
Law of contract is actually an interesting topic, I will suggest you not to remember the section numbers if you have tried because there will be no mark given for section numbers. Understand the rules, the deepest the understanding, the more question you can answer.
Studying law of contract
This should not have any problem because the things listed in Contract Act 1950 are quite straightforward and there are many cases to illustrate the points. However it is a big topic and it requires a time of at least 2 days to cover the whole contract law relevant to F4 syllabus. What you have to focus is to understand everything, for example in consideration, you know that it is a price that one party (A) paid to another party (B) in order to secure the promise, this promise is made by B and A wants that promise to be legally recognised, therefore he will have to give consideration. You have to strengthen your understanding on the concepts before you are able to tackle the application-based question.
Law of contract covered in F4 MYS
Basically your contract knowledge must cover:
(a) Essential elements of contract.
(b) Terms of the contract including exclusion clause.
(c) Breach of contract and the remedies available including the one provided under Specific Relief Act 1950.
What to write
In the application-based question, you have to write the relevant laws based on the scenario. An example is as follow:
Ali sends a letter to Bali on 30.4.2011 to make offer to buy a car, the letter reached Bali on 1.4.2011. Bali immediately send a letter of acceptance on that day but then Bali received a letter from Ali on 2.4.2011 saying that Bali is an April fool and that the offer is just to trick. Bali wishes to know whether there is a valid contract.
Tips: In this question, immediately you should know that acceptance is being tested (knowing what is being tested is essential, by looking at the story of some cases, you may be familiar). This is an easy question but when you faced a harder question, you should put yourself in the scenario and think what rules apply.
Answer:
The issue here is whether the revocation by Ali is valid.
According to Contract Act 1950, acceptance is when one party who is being offered by another party signifies his assent to the offer. The communication of the acceptance must be complete before the offer is regarded as accepted. Generally there are two ways to complete the communication, either instant (by telephone, orally agree) or by postal.
For the instant method, the communication of acceptance is complete when the promisor hears about the acceptance from the promisee. In postal rule, the acceptance is complete at the moment when promisee posts the letter, revocation received after that time is void, the communication of the acceptance will be completed when the promisor received the letter, then both party is binding to the contract.
In this case, Ali's revocation is received by Bali on 2.4.2011 but the letter of acceptance is sent on 1.4.2011, ie. the date the acceptance is complete. Therefore, Ali's revocation is not valid as he is bound by the agreement at 1.4.2011.
In conclusion, Bali is advised that the agreement will complete when the letter of acceptance reached Ali and both party is bound to the contract thereafter.
The length of answer depends on how much marks the examiner will give, this answer should worth around 6-8 marks, you should always think that at least 1 point is needed for 1 mark. The important points and explanations must be there in order to get good marks in exam.
Cases
There are a number of cases in contract law, it is quite useful to remember some of them because quoting case in the answer of the question can really help you to gain about 1 mark. You only need to remember the case name, not the story, so try to remember some easy names such as Fisher v Bell, Felthouse v Bindley, Hyde v Wrench and so on, although the more you remember, the more you are in an advantage.
Conclusion
Law of contract is actually an interesting topic, I will suggest you not to remember the section numbers if you have tried because there will be no mark given for section numbers. Understand the rules, the deepest the understanding, the more question you can answer.
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