This is part 2, Click here for Part 1
Prop Legacy had the opportunity to be invited to the Executive Guest Lecture Series 2019 Seminar at UCSI College (Damansara Utama). The seminar featured two guests to speak and share their insight and expertise into matters targeted at Real Estate Negotiators. The first speaker Ms Sophia Ling gives us some insight into ‘Common Legal Issues faced by Real Estate Practitioners & how to secure your Contractual Rights’.
Consideration is the action of exchanging one thing of value for another, an example would be when you offer to sell your house, you expect to get back money. Every promise and every set of promise forms the consideration of each other, and it is an agreement. Consideration must be legally enough and bargained-for by the receiving party.
How to make a Valid Oral Contract?
Oral Contracts are difficult to enforce in court due to the nature of proof, but there are ways to enforce it, by incorporating the following elements:
- Mutual consent and understanding, both parties must know what they are agreeing to.
- Offer and acceptance, which means that one party is proposing something that the other party may accept under certain conditions, both must have mutual understanding of what is being exchanged.
- Mutual consideration must include all the important elements that show an exchange of valuable goods, rights or services.
- Performance, the contractual parties have certain duties to perform in addition to the mutual consideration.
- Good Faith, the parties should not enter into a verbal agreement to cheat each other or to break the law.
Oral contracts work in the way that goes back to consideration, every promise and every set of promises forming the consideration for each other is an agreement. For cases such as booking forms, and sale and purchase agreement, not everything can be included into these two documents.
In the context of common law, an offer and its acceptance constitute an agreement. Thus, an agreement comes into existence the moment two or more parties agree with each other as to what they will do or will not do.
Do note however, not all agreements in writing are automatically enforced in law.
While the law does not favour oral contracts, but in many situations, they can be enforced in court. The difficult part is that the burden of providing evidence falls on The Plaintiff. Miss Sophia advices that you can use any form of informal writing such as Whatsapp, text, informal emails and even audio recordings to provide some kind of evidence or documentation to support your arguments.
The widespread perception is that just because there is no written document, therefore a contract, a person cannot enforce rights, but a successful claim can still be made if there is sufficient evidence.
How oral agreements bind on your clients.
Collateral contract is in the form of oral agreement, it is a device which impose liability for oral statements made at the time of negotiations, precedent to the making of a contract.
Miss Sophia uses a few cases to demonstrate cases that can be used to help in your claim. Collateral contract may exist independently and as a separate contract as an assurance to induce the party to enter into a contract with another party such as in the case of J EVANS & SONS (PORTSMOUTH) LTD V ANDRE MERZARIO LTDV.
As an agent, this is one of the few concerns when dealing with clients such as in the case of HEILBUT SYMONS and CO v BUCKLETON, “If you will make such and such a contract, I will give you one hundred pounds is in every sense of the word a complete legal contract”.
There is still oral agreement that is silent* in the written agreement, example is that one party submits to court that the written contract document did not form the entire agreement between the parties. The alleged oral statement that is silent in the document also constitutes an express term of the contract, it is separate and collateral to the principal document. The case of TAN SWEE HOE CO LTD V ALI HUSSAIN BROS is one of the leading authorities that strengthens the doctrines of collateral contract.
*Not written down in the principal document
However, these cases cannot be always used all the time as it is still based on case-by-case-basis.
TAN SWEE HOE CO LTD V ALI HUSSAIN BROS
The occupants had been given the option to pay “Tea-money” orally, so that they could occupy the land for so long as they wished. The federal court had viewed that after looking at all the evidence as a whole that the parties intended or must be taken to have intended that the oral promise was to form part of the basis of the contractual relations between them. The payment of “tea money” was part of the Consideration, when the payments been accepted. the So, when the appellant tried to take back what was promised, it was considered a breach of the agreement.
Chief Justice Raza Azlan Shah stated that; “In our view those cases are strong authority for the proposition that an oral promise, given at the time of contracting which induces a party to enter into the contract, overrides any inconsistent written agreement.”
Two cases that may interest agents are CHEW TENG CHEONG & ANOR V PANG CHOON KONG (1981) 1 MLJ 298 and MILLAR V. RADFORD.
For CHEW TENG CHEONG & ANOR V PANG CHOON KONG (1981) 1 MLJ 298, CJ Raja Azlan Shah (MALAYA) has ruled that “Where the agency contract provides that the agent earns his remuneration upon bringing about a certain transaction, he will be entitled to such remuneration if he is the effective, not necessarily the immediate cause of the transaction being brought about. Whether there is a sufficient connection between his act and the ultimate transaction must be ascertained from the facts of the case.”
This means if an agent can prove that the they had contributed to a certain degree the transaction would have made because of them, they are entitled to their agreed remunerated. However, it is again based on after all the facts have been analysed, following a case-by-case-basis.
Similarly, in the case of MILLAR V. RADFORD, if the agent can show that some act of his was the CAUSA CAUSANS of the transaction or was an efficient cause of the sale, he is entitled to his agreed remuneration.
by Bob Tan with permission and edits from Miss Sophia Ling from Leong & Co
12th February 2019 11:42