Business Law Assignment: Hire-Purchase and Contract Law Analysis

This Business Law assignment solution addresses key concepts within contract law, sales of goods, and agency, as applicable in the Malaysian legal context. It begins by defining insurance contracts and contracts of sale, differentiating between general and life insurance, and exploring the Sale of Goods Act 1957. The solution then classifies agents based on authority and work performed, detailing the roles of universal, general, special, del credere, factors, brokers, auctioneers, and bankers. Furthermore, the assignment analyzes a scenario involving the 'nemo dat' rule, determining the validity of a car sale. Lastly, it outlines implied warranties, conditions, and the rights of hirers in hire-purchase agreements, referencing the Hire-Purchase Act 1967. The assignment provides a comprehensive overview of these areas of business law, using case analysis and statutory references to support the arguments.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

BUSINESS LAW
Question 1
(a) An insurance contract is one where a company
(insurer) agrees to indemnify a person (insured)
against loss or damage arising out of a pre-
determined event in exchange for a premium
(periodic payments by the insured) as
consideration. An insurance contract is in written
form and is referred to as the insurance policy.
Insurance is based on risk and is of two kinds-
general insurance and life insurance. Insurance
contracts are contracts of indemnity by nature.
Contracts of indemnity are those where the one
party agrees to compensate or indemnify another
party for loss or damage suffered by virtue of the
occurrence of a predetermined event (Llewellyn
2016). In such a case only loss or damage that
happens as a result of the predetermined event is
relevant. For example if a person’s car is insured
for RM 50,000 against accidents and the car meets
with an accident the insurance company would
have to compensate that person for the market
value of that car or the insured amount whichever is
lower. Not all insurance contracts are contracts of
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indemnity like life insurance, marine insurance and
accident insurance are not contracts of indemnity.
(b) A sale refers to the transfer of title and possession
of a particular piece of property. Property can be
either moveable or immovable. The term goods
refer to tangible movable property that can be sold
in exchange for money. Thus, these are ideally
articles of trade or merchandise. The sale of such
articles can be executed between two entities by
virtue of a contract of sale. Sale of goods in
Malaysia are governed and regulated by the Sale
of Goods Act 1957 and the act defines goods under
Section 2. Contracts of sale are defined in the act
at section 4 (1). The section states that a contract
of sale is one where a seller (the person who owns
the goods to be sold) transfers or agrees to transfer
that the title of the goods to the buyer in exchange
for the price of the goods in monetary terms. When
such a transfer is contingently associated to an
event or is agreed upon to occur at a future time
then such an agreement is called an “agreement to
sell”. This is different from a contract of sale and is
defined under Section 4 (3) of the act.
Question 2
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(a) Agents can be classified based on two parameters-
the authority held by them and the work performed
by them. In terms of authority the different kinds of
agents are (Hunter 2017):
Universal agent: These agents have a wide scope
of powers which can be exercised by them. These
agents are empowered to exercise any power that
is conferred on the principle. An example of this
would be an agent appointed through power of
attorney.
General agent: General agents are agents who
are appointed for a particular trade or business and
are empowered to undertake any act related to
such a trade or business. An example of this is
when a person is appointed to manage a retail
outlet.
Special agents: These are agents who are
appointed for a particular purpose. Their authority
extends only to acts related to that particular
purpose. The difference between general agents
and special agents is that general agents retain
their authority till they are terminated and special
agents lose their authority as soon as the purpose
they are appointed for is accomplished.
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When classified based on the nature of the work
performed the various kinds of agents are:
Del credere agent: These agents act as sureties.
They undertake to indemnify the principal in case a
third person fails to perform a contractual term. If
the third person fails in the performance of the duty
the agent will be liable.
Factors: Factors are agents who are employed by
the principal to sell various goods owned by them.
They hold and dispose the properties and pay the
sale amount to the principle. The principal pays the
factor a commission for the sale.
Brokers: These agents are middlemen who are
employed to buy and sell commodities on behalf of
the principal. In this case too the principal pays the
broker a commission known as brokerage.
Auctioneers: These agents employed to sell
goods by hosting a public auction. They are paid
fees for the services rendered.
Banker: A banker acts as an agent of its customers
especially in terms of holding properties on behalf
of the bankers.
(b) Section 154 of the Contracts Act, 1950 states that
the death of the principal or agent terminates the
Agency. Thus in the given case Martin’s death
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would mean the Aaron is no longer entitled to act
on behalf of the principal and thus the seller can
sell the goods to George.
Question 3
In the facts and circumstances given above we see
that Donald made a purchase of a car from Robert
which was stolen. Thus, the true owner of the title
repossessed the car. The issue here is to determine if
the Donald can make a claim for the entire amount
paid by him.
As stated by Section 2 of the Sale of Goods Act 1957
for a sale to be valid there must be a transfer of
ownership. Ownership here refers to the transfer of
title. Only the true owner of the good holds a title.
Section 27 of the Sale of Goods Act 1957 lays down
the nemo dat rule which states that a person who
doesn’t own a good cannot sell it (Milsom 2014). This
means that is the title of a good is not held by a person
the good cannot be sold by them unless authorized by
the true owner. Thus, if there is no transfer of title from
the true owner to the seller the seller cannot transfer
the title to another buyer and such a sale would not be
valid. Applying the requirements of Section 2 and the
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nemo dat rule embodied in Section 27 of the Sale of
Goods Act 1957 we see that since Robert did not have
the title to the car he was not entitled to sell the car to
Donald. Donald in acquiring the car entered into an
invalid transaction since the seller did not have the title
to the car. Thus, when Donald purchased the car the
true owner who the car was stolen from retained the
right to repossess the car.
Question 4
(a) In contracts of hire-purchase the warranties and
conditions implied are (McKendrick 2014):
The hirer in case of a hire-purchase contract has an
implied warranty to enjoy peaceful possession of
the property. This has been stated in Section 7(1)
(a) of the Hire-Purchase Act 1967.
As provided for in 7(1) (c) of the Hire-Purchase Act
1967 the goods given on hire-purchase must be
free from all charges and encumbrances from third
parties at the time of the execution of the
agreement.
The implied conditions in such a case are:
Section 7(1) (b) of the Act provides that in cases
where there is a hire-purchase agreement the seller
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must have the title to the goods at the time of
execution of the contract.
Section 7(2) of the Act lays down a condition
relating to the quality of the goods in a hire-
purchase agreement and mandates that at the time
of execution of such a contract the goods in
question must be of merchantable quality. This is
subject to certain exceptions defined in the act.
Section 7(3) of the Hire-Purchase Act 1967
imposes an implied condition on the hire-purchase
of good relating to their fitness. This section
mandates that the goods in question must be fit for
the purpose of the agreement the time of execution
of the contract.
(b) In case of a hire-purchase agreement the hirer has
the following rights:
Section 9 of the Hire-Purchase Act 1967 gives the
hirer a right to all material information and
documents relating to the goods.
Section 10 of the Hire-Purchase Act 1967 gives the
buyer the right to demand an appropriation of the
payments made in the hire-purchase agreement
from the owner of the goods.
Section 11 of the Hire-Purchase Act 1967 gives the
buyer the right to apply to the magistrate for an
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order for removing the goods from their designated
place to a different one.
The buyer has the right to assign his rights in the
agreement to a different person under Section 12 of
the act.
The hirer can pass his rights in the contract to a
legal representative through operation of law as per
Section 13 of the act.
The buyer has a right to acquire the goods early
after service of notice and payment of balance
amount as provided for in Section 14 of the act.
The hirer has a right to determine the contract by
returning the goods as provided in Section 15 of the
act.
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Reference list:
Hunter, Howard. "Modern Law of Contracts."
(2017).
Llewellyn, Karl N. The common law tradition:
Deciding appeals. Vol. 16. Quid Pro Books, 2016.
McKendrick, Ewan. Contract law: text, cases, and
materials. Oxford University Press (UK), 2014.
Milsom, Stroud Francis Charles. Historical
foundations of the common law. Butterworth-
Heinemann, 2014.
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