Law of Contract (Case Studies)

Due to a rampant robbery in which the robbers used ski masks to cover their faces. The Cyberjaya Authority issued a regulation that makes it illegal to sell ski masks as a safety measure, the rule also makes it illegal for anyone to offer for sale the ski masks. In spite of this, Messy has not cleard the ski masks from the shelves of his sport equipment shop in Cyberia. The authority officials came to know about thsi and later on charged Messy under the new regulation. Advise Messy according to Contract Act 1950 and relevant decided cases.

Opinion:

In this case, Messy have been charged sue to the display of item which is ski mask in his shop. By the way, the authority cannot charged messy under the new regulation because it may consider as "invitation to treat" act. This is because in the first place which is under the Contract Act 1950, it requires offer and acceptance and consideration for a contract exist. In this case, by selling the ski mask only amount to an offer due to lack of the trade, there are no acceptance and consideration for the buyer part. The case of Pharmaceutical Society of Great britain v Boots Cash Chemists and Fisher v. Bell may be a reference. In the case of Fisher v Bell, display of any goods with a price tag on it in a shop was not as offer but rather was an invitation to treat, the Contract might not applicable ti this case since it just an invitation to treat.

Nemo dat quod non habet

Nemo dat quod non havet meaning that "no one can give what he not have" is a legal rule, sometimes called the nemo dat rule, that states that the purchses of a pressession from someone who has no ownership right to is also denies the purchaser any ownership title. This rule usually stays valid even of the purchaser does not know that seller has no right to claim ownership of the object of the transaction. However, it is often difficult for courts to make judgement as in may cases there is more than one innocent party. On top of that, this term also can be defined that if you are not the legitimate owner of an item you are not justified to despatch it to anybody else as you cannot give something that does not belong to you. This is designed to protect the true owners. If anybody is trying to sell an item without that legitimate owner's permission.
This principle is clarified in Section 27 of the Sale of Goods Act which explains that anybody purchasing something without the consent of the legitimate owner only attains the same rights to an item as the dishonest seller. An unauthorized vendor only obtains the capacity to sell this item if the rightful owner is disallowed, by some behavior from giving permission to this unauthorized sale.

Sections 26(1) of Sale of Goods Act states that a buyer from non-owner obtains no better title than the seller had, epitomizing the meaning under the nemo dat no habet. The Mercantile Law Amendment Act specified that 'document of title' includes a Bill of Lading or a Warehouse Receipt or any delivery docket for goods as proof. The Sale of Goods Act 1994 also specifies that a seller has certain responsibilities which must be fulfilled before goods may be sold legally.

Following rule can be varied by a number of exceptions, all of which will be discussed in this essay and are listed below for ease of reference:

1. Mercantile Agent
2. Joint Owner
3. Voidable Contract
4. Possession of Goods after Sale
5. Buyer in Possession
6. Unpaid Seller
7. Permission by Partner
8. termination of Offer
9. Valid, quasi contracts
10. Condition: warranty

Hire-Purchase

Hire Purchase is a system of acquiring goods on credit whereby the seller of the goods re regarded as the dealer, the purchaser is regarded as the hirer and the finance company as the owner. The ownership of the goods bought on hire purchase does not pass to hirer at the time purchase agreement or upon delivery of the goods. The ownership of the goods remains in the finance company until the hirer has fully settle the price agreed upon in the hire purchase agreement. A hire purchase agreement, commonly known as H.P agreement, in respect of the goods must be in writting and printed in type of a size not smaller than the type known as 10-point Times. Any oral agreeemnet is not a valid hire purchase agreement. The main legislation governing the hire purchases transaction in Malaysia is the hire Purchase Act 1967, which came into force on 11 April 1986 after hire purchase became an increasingly popular method of acquisition. Only the following goods can be bought on hire purchase in Malaysia:

1. all consumer goods

2. motor vehicles namely

- invalid carriages

- motor cycles

- motor cars including taxi cabs and hire cars

- goods vehicles where the maximum permissible laden does not exceed 2540 kilograms

- buses, including stage buses

What are the details that must be stated in a hire purchase agreement?

Under the Hire Purchase Act 1967, a hire purchase agreement must:

i. specify a date on which the hiring shall be deemed to have commenced

ii. specify the number of installments to be paid under the agreement by the hirer

iii. specify the amount of each of installments are the person whom and the place at which the payment of these installment are to be made

iv. specify the time for the payment of each of those installments

v. contain a description of the goods sufficient to identity them

vi. specify the address where the goods under th hire purchase agreement are.

Income tax

When tax is levied on the income of a person, it is called income tax. If there is no income, there is no income tax. There are different types of income types of income upon which tax is imposed such as business income, employment income, rental income, dividends, interest, royalties. In Malaysia, income tax is imposed, assessed and collected under the Income Tax Act (ITA) 1967. Under section 3 of ITA 1967, a tax known as income tax shall be charged foe each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia. What does it mean "income"? In the Webster Dictionary, income has been defined as "a gain or recurrent benefit that is measured in money and for a given period of time derived from capital, labour, or combination of both. Furthermore, in the absence of statutory definition meaning. In the oxford advanced Learer's Dictionary, income means " money which comes in as the periodical produce of one;s work, business, land or investments" Next, the characteristic of "income", going to repetitive from sources of income and received in the ordinary course of business. Periodical return "coming in" with some sort of regularity or expected regularity from defined sources. Nature of gains or profis has to fall into any of the sub-paragraphs under section 4 and 4A of ITA 1967.

Different Classes of Income Subjected to Income Tax

Sec 4 of ITA 1967:

- Profits or gains of a trade, business, profession or vocation

-Profits or gains from personal services - employment

- Dividends, interest and discounts

- Rents, royalties or premiums

- Pension, charges or annuity or other periodical payment

- Gains or profits not falling under any of the foregoing paragraphs

Workplace Productivity - Inland Revenue

Inland Revenue recognised that many owners of small and medium sized enterprises (SMEs), were not meeting their tax responsibilities. Often unintentionally, some customers would be incorrectly registered or producing incorrect returns.

Malaysian Tax Information

1.) Any income derived from Malaysia is subject to Malaysia income tax each year.

2.) Income from source outside Malaysia is exempted from tax, e.g. pension & dividend.

3.) Types if income subject to tax:

a. Business, trade or profession

b. Employment

c. Dividend , interest or discounts

d. Rents , royalties or premiums

e. Pensions , annuities or periodical payments

f. Gains or profits not falling under any of the foregoing paragraph

g. Income of a non resident in respect of technical advice , assistance or service rendered in connection with any technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme.

4.) Tax rate:

a. The tax rate for an individual will depend on his/her residence status. Generally, a non resident individual is taxed at a flat of 27% without any personal deductions. Income under (g) above is taxed at 10% on gross income.

b. A resident is taxed at a scale rate of tax from 0%-27& on chargeable income after personal deductions.

5.) Residence status of an individual for tax purposes is determined not by nationality but by the length of stay in Malaysia. The status is determined for each calendar year. Foe example, the individual will be considered as a resident if he or she stay:

a. in a year amounting to 182 days or more in Malaysia; OR

b. if less than 182 days in a year but that period is linked to another period of more than 182 consecutive days:

e.g. from 01/03/2003 to 31/12/2003 = more than 182 days

from 01/01/2004 to 31/01/2004 = 31 days

therefore he is tax resident for 2003 and 2004 ; OR

c. if 90 days or more in a year and stayed 90 days or more / resident for three out of four preceding years of assessment.

e.g. 2000 , 2001 , 2002 – stayed 90 days or resident 2003 – stayed 90 days or more, Therefore he is tax resident for year of assessment 2003, OR

d. is stayed less than 90 days or did not stay in Malaysia at all in a year but stayed as resident for three year preceding years and the following year

e.g. 2000 , 2001 , 2002 - resident

Therefore he is tax resident in the year 2003

6. The individual who does not carry on a business will need to submit the tax return by 30 April of the following year.

The individual who carries on a business such as a sole proprietor or a partnership will need to submit the tax return form by 30 June of the following year.

Functions and Powers of the Board (IRB)

Functions of IRB:

1.) Act as an of the Malaysian Government and to provide services in administering, assessing, collecting and enforcing payment of taxes under the IRB.

2.) Advice the Malaysian Government on matters relating to taxation and to liaise with the appropriate Ministries and statutory bodies on such matters.

3.) Participate such other functions as are conferred on the Board by any other written law.

4.) Act as a collection agent for and on behalf of any body fir the recovery of loans due for repayment to that body under any written law.

5.) To participate in outside Malaysian in respect of matters relating to taxation.

Powers of the Board:

1.) To enter into contracts

2.) To utilize all property of the Board, movable and immovable, in such manner as the Board may think expedient including the raising of loans by mortgaging such property.

3.) To engage in any activity, either alone or in conjunction with other organisations or international agencies to promote better understanding of taxation.

4.) To provide technical advise or assistance, including training facilities to tax authorities of other countries.

5.) To impose fees or charges for services rendered by the Board.

6.) To grant loans to employees of the Board for any purpose specifically approved by the Board.

7.) To provide recreational facilities and promote recreational activities for and activities conductive to the welfare of employees of the Board.

8.) To provides training for employees of the Board and to award scholarships or otehrwise pay for such training.

9.) To do anything incidental to any of its powers.