Chapter 8 - Discharge by Performance

Question 1

DISCHARGE BY PERFORMANCE

Overview

Answer 1

1) Time for performance

2) Manner of performance

Question 2

TIME FOR PERFORMANCE

Overview

Answer 2

1) General rule
2) Time is of the essence
3) Time is not of the essence
4) Time in conditional contracts

Question 3

TIME FOR PERFORMANCE

General rule

Answer 3

1) S.47:
- within reasonable time.
2) Damansara Realty Bhd v Bungsar Hill Holdings Sdn Bhd:

• when the time is at large, duty is to commence work within reasonable time;
• failure to take necessary steps to commence work may amount to breach, i.e. anticipatory breach.

Question 4

TIME IS OF THE ESSENCE

Overview

Answer 4

1) The law & scope
2) When is time of the essence - general rule
3) Existence of LAD clause
4) Waiver
5) Acceptance of performance other than time specified
6) Failure to perform

Question 5

TIME IS OF THE ESSENCE

The law & scope

Answer 5

1) The law:
- S.56
2) Scope - Sim Chio Huat v Wong Ted Fui:

• failure to perform at specified time = party may terminate;
• no termination = contract subsisting, time ceases to be of the essence.
• cannot claim damages for late performance unless there is specific clause allowing it.
• can make time of the essence again, but need to send notice of new date of completion.

Question 6

TIME IS OF THE ESSENCE

When is time of the essence - general rule

Answer 6

Tan Ah Kian v Haji Hasnan:

• EXPRESSLY stipulated in the contract; or
• REASONABLE NOTICE to make time of the essence; or
• NATURE of the contract making it time of the essence.

Question 7

TIME IS OF THE ESSENCE

When is time of the essence - existence of LAD clause

Answer 7

1) BTS Sdn Bhd v M-Concept Sdn Bhd (FC):
- when there is LAD clause, it points to time not being of the essence.
2) cf. Chye Fook v Teh Teng Seng Realty Sdn Bhd:

• entitlement to LAD does not take away the right to rescind for failure to complete within stipulated time;
• time is still of the essence if it is provided as such.

Question 8

TIME IS OF THE ESSENCE

Waiver - overview

Answer 8

1) Effect of waiver
2) Silence
3) Continued negotiations
4) Extension of time
5) Extension of time + continued negotiations

Question 9

WAIVER

Effect of waiver

Answer 9

Sim Chio Fuat v Wong Ted Fui:

• innocent party is deemed to treat the contract as subsisting;
• ctt exists but time is at large;
• cannot claim for liquidated damages unless there is provision for it;
• must give notice if wants to make time of the essence again.

Question 10

WAIVER

Silence

Answer 10

Araprop Development Sdn Bhd v Leong Chee Kong & Anor:

• mere silence per se cannot amount to waiver;
• there must be additional factor which can be interpreted or inferred as waiver.

Question 11

WAIVER

Continued negotiations

Answer 11

Wong Kup Sing v Jeram Rubber Estate Ltd:

• Continued negotiations & allowing time to pass amounts to waiver.

Question 12

WAIVER

Extension of time

Answer 12

Siah Kwee Mow v Kulim Rubber Plantation:

• Mere extension of time stipulated would not amount to waiver.
• extension of time is a waiver for substituting the original time, not waiver for time of the essence.

Question 13

WAIVER

Extension of time & continued negotiations

Answer 13

Wong Kup Sing v Jeram Rubber Estate Ltd:

• multiple extensions & continued negotiations amount to waiver.

Question 14

ACCEPTANCE OF PERFORMANCE OTHER THAN TIME SPECIFIED

Overview

Answer 14

1) the law & scope

2) housing development

Question 15

ACCEPTANCE OF PERFORMANCE OTHER THAN TIME SPECIFIED

the law & scope

Answer 15

1) The law:
- S.56(3)
2) Scope - Yeo Kim Pong Realty Ltd v Ng Kim Pong:

• a party who grants eot to the defaulting party has accepted the performance at other time than the time agreed;
• if he intends to sue for damages for late performance, he must give notice to the defaulting party.
• if no notice is given, he may not be able to recover such compensation.

Question 16

ACCEPTANCE OF PERFORMANCE OTHER THAN TIME SPECIFIED

housing development

Answer 16

Sentul Raya Sdn Bhd v Hariram Jayaram:

• S.56(3) does not apply to housing development contract;
• Under HDA, purchaser is able to claim for LAD for late delivery once completion dates have passed.

Question 17

FAILURE TO PERFORM

Overview

Answer 17

1) Effect of failure to perform
2) Options to rescind
3) Rights to damages

Question 18

FAILURE TO PERFORM

Effect of failure to perform

Answer 18

Linggi Plantations Ltd v Jagatheesan:

• amounts to breach;
• terminate the contract + sue for breach + restitution S.65; OR
• affirm the contract + sue for breach.

Question 19

FAILURE TO PERFORM

Options to rescind

Answer 19

Loke Yuen Cheng & Anor v Vintex Sdn Bhd:

1) Option 1:

• rescind under S.56(1);
• rescission ab initio;
• remedies: restitution S.65 + 66 ONLY
• cf. with Muralidhar below.

2) Option:

• action for breach under S.40;
• remedies: damages S.76, restitution S.65 +66

Question 20

FAILURE TO PERFORM

Rights to damages

Answer 20

Muralidhar Chatterjee v International Film Company Ltd:

• damages are claimable despite termination taken under S.56(1) or S.40.
• S.56(1) is also voidable ctt, so S.65 + 66 apply.

Question 21

TIME IS NOT OF THE ESSENCE

Overview

Answer 21

1) The law
2) When
2) Right to rescind
3) Notice to make time is of the essence
4) Relief for SP

Question 22

TIME IS NOT OF THE ESSENCE

The law

Answer 22

S.56(2)

Question 23

TIME IS NOT OF THE ESSENCE

When

Answer 23

KL Landmark Sdn Bhd v Standard Chartered Bank:

• NO EXPRESSION that time is of the essence;
• NO NOTICE is given to make time of the essence;
• NATURE OF THE CONTRACT does not make time is of the essence.

Question 24

TIME IS NOT OF THE ESSENCE

Right to rescind

Answer 24

Ganam Rajamany v Somoo Sinniah:

• There is no right to rescind if the time is not of the essence.

Question 25

TIME IS NOT OF THE ESSENCE Notice to make time of the essence

Answer 25

Yeo Liong Ho v Loh Choon Hooi: - No breach of on part of notice giver; - Notice giver is ready, willing & able to perform & complete; - Notice receiver must be guilty of unreasonable delay well before notice to complete is served; - Notice must limit a reasonable period for completion.

Question 26

TIME IS NOT OF THE ESSENCE Relief for SP

Answer 26

Ganam Rajamany v Somoo Sinnniah: - Innocent party must show that he has performed or at all times ready, willing & able to perform; - If innocent party is not ready, SP will not be granted.

Question 27

TIME IN CONDITIONAL CONTRACTS How to interpret

Answer 27

Aberfoyle Plantations Ltd v Khaw Bian Cheng: - fixes a date for completion: condition must be fulfilled by that date; - fixes no date of completion: condition must be fulfilled within reasonable time; - fixes date for fulling condition: condition must be fulfilled strictly, time cannot be extended. - when condition is not fulfilled, the agreement will be held unenforceable.

Question 28

MANNER OF PERFORMANCE Overview

Answer 28

1) Manner of performance where time is stipulated 2) Refusal to accept performance 3) Performance by 3rd party 4) Partial performance 5) Performance of reciprocal promise

Question 29

MANNER OF PERFORMANCE Who to perform

Answer 29

1) The law: S.41 2) Refusal to accept performance - MM Ally & Co v Chellamah: - a promisor cannot be held in breach if promisee refuse to accept his performance; - A man cannot by his own deliberate fault, create a artificial fault in another.

Question 30

MANNER OF PERFORMANCE When to perform

Answer 30

1) The law: - S.48 2) When vendor does not have office hours - Lim Yoh v Astana Strategi (M) Sdn Bhd: - When the vendor has no office hours or office does not open, S.48 does not apply.

Question 31

MANNER OF PERFORMANCE Performance by third party - the law

Answer 31

S.42

Question 32

MANNER OF PERFORMANCE Performance by third party -part-performance by 3rd party

Answer 32

1) Hj. Nik Ishak v Nik Zainab Nik Jaafar: - partial-performance is sufficient for S.42 to apply; - upon acceptance of the performance albeit partly done, promisee cannot enforce the promise against the promisor. 2) cf. Scott & English (Malaysia) v Foo Thor Lombong Bijih Sdn Bhd: - there must be actual & full performance by 3rd party before S.42 can apply & promisor can be released from his obligation. 3) cf. Wasco Lindung Sdn Bhd v Lustre Minerals Sdn Bhd (2014) - there must be actual performance by 3rd party for S.42 to apply; - if there is a breach by 3rd party, S.42 will not apply; - promisee is able to hold promisor liable & enforce the promise against him. - this is so unless the promisee will be unjustly enriched.

Question 33

PARTIAL PERFORMANCE Overview

Answer 33

1) General rule & exceptions 2) Factors for substantial performance 3) Relief - quantum meruit claim at common law 4) Relief - quantum meruit claim under S.71

Question 34

PARTIAL PERFORMANCE General rule & exceptions

Answer 34

1) General rule - Bolton v Mahadeva: - partial-performance is non-performance. 2) Exception 1 - divisible contract - Ming & Co v Leong Ping Ching: - Divisible contract = Contract where payments are made from time to time. - Entire contract = failure to complete work will disentitle him from making any claims. 3) Exception 2 - substantial performance - KP Kunchi Raman v Goh Brothers Sdn Bhd: - A promisor who has substantially performed his side of contract may sue for the agreed sum; - He however remains liable for his partial failure to fulfil his contractual obligations.

Question 35

PARTIAL PERFORMANCE Factors for substantial performance

Answer 35

Sapiahtoon v Lim Siew Hui: - nature of defects / non-performance & costs of remedying defects; - proportion between the costs of rectifying such defects & contract price; - Extent to which the work has been completed.

Question 36

PARTIAL PERFORMANCE Relief - quantum meruit claim under Contract Act

Answer 36

1) The law: S.71 2) Conditions - Siow Wong Fatt v Susur Rotan Mining Ltd & Anor: - The work done must be lawful; - The work done must be for another person; - The work must not be intended to be done gratuitously; - The work done must be such that the other person enjoys the benefit of the act.

Question 37

PARTIAL PERFORMANCE Relief - quantum meruit claim at common law

Answer 37

1) Option - Sumpter v Hedges: - D as recipient of benefit whom to pay the claim must be given the option to accept or reject the benefit, in order for P to claim the benefit he has given. 2) Not at fault - Lau Kee Ko v Paw Ngi Siu: - P must not be at fault or breach. 3) Contract provision - Sykt Binaan Utara Jaya v Koperasi Sungai Glugor Bhd: - if the ctt provide of quantum meruit claim, P can claim for it even though he is at breach. 4) Reasonable price - Haji Hasnan v Tan Ah Kian: - the claim is only for reasonable price for work done.

Question 38

PERFORMANCE OF RECIPROCAL PROMISE The law & scope

Answer 38

1) The law: - S.52, 53, 54, 55 2) Code Focus Sdn Bhd v Tan Chee Hoe & Sons Sdn Bhd: - S.52: promisor need not to perform unless the promise is ready & willing to perform his promise; - S.53: order to perform; - S.54: where one party prevents the other party to perform.