Rescission

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The decision in the case of Yong Mok Hin that allows section 75 to be applicable to rescission under section 40 has been criticised in Visu Sinnadurai, Law of contract which goes: it is submitted that the application of section 66 and 75 in the cases of rescission under section 40 of the Contracts Act is not correct. The appropriate section of the Contracts Act giving the party rescinding the contract the right to claim for damages is section 76 and not 75. In my opinion, the comment from Dato’Visu is a very true statement. This is because, the damages for rescission under section 40 have to be looked at section 65, 66 and 76 and this has been said in the previous cases such as the case of Muralithar. Thus not applying this in the decision of the case is not appropriate. Along with that, section 75 has clearly stated that the compensation for breach of contract where penalty stipulated. Hence this section would not apply in this case. This commentary was followed by several cases in their decision. In the case of Hims Enterprise (M) Sdn Bhd & Anor v Ishak bin Subari & Ors, the court referred to this view to decide the damages to be given. Also in the case of Travelsight (M) Sdn Bhd &Anor v Atlas Corporation Sdn Bhd, Abdul Malik Ishak J said that ‘I would certainly subscribe to the cogent views of the learned author in the person of Dato Seri Dr. Visu Sinnadurai. That would certainly reflect the correct interpretation of the law’ He also added that the illustration to section 76 is substantially the same as illustration (b) in the section 40 and that the word rescind in section 76 refers to the exercise of the option to treat the contract as broken.

In conclusion, I do not agree with his Lordship MacIntyre J in his decision of using section 75 of the Contracts Act for damages in the case of Yong Mok Hin. In my opinion section 75 was not the suitable section to be used in this situation and there is much more suitable section to be used. Dato’ visu’s commentary about the application of section 75 in cases of rescission under section 40 is right on point as he claimed that 76 is the proper section to be used for rescission. This commentary was also referred by several cases when deciding the damages.

BIBLIOGRAPHY

CASES

Yong Mok Hin v United Malay States Sugar Industry Ltd [1967] 2 MLJ 9

Muralidhar Chatterjee v International Film Co Ltd AIR 1943 PC 34, PC (APPEAL FROM INDIA)

Hims Enterprise (M) Sdn Bhd & Anor v Ishak bin Subari & Ors [1992] 1CLJ 132

Travelsight (M) Sdn Bhd &Anor v Atlas Corporation Sdn Bhd [2003] 6 CLJ 34

ACT

Contracts Act 1950

BOOKS

Visu Sinnadurai, Law of Contract: volume 1, 3rd ed (Kuala Lumpur: Lexis Nexis Butterworth, 2003)

Cheong May Fong Contracts Law in Malaysia 2010 by Sweet & Maxwell Asia