Law Assignment Final.docx

UNIVERSITY OF MALAYA

ASSIGNMENT COVER PAGE _____________________________________________________________________________ FACULTY:

Engineering

PROGRAMME:

Bachelor of Engineering (Hons)

MODULE TITLE:

Law and Engineers

CODE: KXEX2166

SEMESTER:

1

YEAR: 2016-2017

We, the undersigned students, confirm that this group assignment work is our own work and in our own words. We authorize the Faculty to verify our work for plagiarism and we are aware that in the event plagiarism is detected our assignment will not be given any mark and that the Faculty is at liberty to take appropriate action against us.

No. Name of Student 1 MUHAMMAD AMIR HAKIM BIN MOHD YUSOF 2 MUHAMMAD AMIR SAFWAN BIN MOHAMED SHAFIE 3 MUHAMMAD SYUKRI BIN ABD RAHMAN 4 MOHAMED IMTIYAZ BIN MOHAMED RAFFI

Date: ………………………

Student No. KEK140020 KEK140021 KEK140024 KEK140056

Signature

An Agreement is Not a Contract but a Contract is an Agreement

Introduction A contract normally occurs in our life. It usually occurs between persons or organisations. As an example, a contract between a person with the dealer occur when he goes to a shop to buy goods. Another examples when a passenger boards a bus, a contract occurs between him with the bus driver to take him to the place that he wants based on the agreed fare. A contract may happens with or without they realised that they already make a contract. Definition and Comparison of an Agreement and a Contract Term one, an agreement. An agreement is when any type of proposal that is made between parties under mutual understanding and complete elaboration is accepted and ready to be fulfilled upon the honour of the involving parties. A proposal, which can either be in the form of written or oral, occurred when a party (promisor) offers something to another party (promisee) and once the promisee accepts the offers and ready to give full commitment, it is then called an agreement. Term two, a contract. A contract is when an existing agreement or relationship between two or more parties to accomplish certain goals or ambitions is enforced by law. A contract also can be defined as an enforcement of law towards the exchange of promises between parties and only can be form when the offer made is supported with acceptance after undergoes full consideration between the parties. Both parties which are the promisor and the promisee must then form a legal relationship on this agreement focusing on the matters of law where they entered with free-will and be able to accomplish the goals by any means necessary. Based on the definition above, the statement, “an agreement is not a contract but a contract is an agreement” highlights that an agreement is a part of the element that makes a contract. This further emphasizes that all contract is an agreement but not all agreement is a contract unless few factors are met to complete the definition of the contract of which the most important one, the agreement is bounded with the enforcement of the law. Further elaboration on the subject, focusing on the main elements of both terms. The main element for agreement is offer and acceptance whereas the main element for contract is agreement and

enforceability. From inclusion-exclusion principle’s point of perspective, a contract must contain an agreement and intervention of the law of which to reach an agreement an offer or proposal must be made and accepted by both parties. Simply put, contract includes all the elements of an agreement making “all contract is an agreement” with addition of enforceability of which agreement is lacking of, hence “not all agreement is a contract”. To illustrate this process, an analogy is described based a common buyer-seller situation: Consider person A who wanted to buy a product at a mall with the best offer A can get. Person A would meet the seller, in this case person B to negotiate and bargain until A gets the best deal that A wanted. It is very common that person B would already put what is considered the right price with the right duration of monthly instalment. This is considered as an “offer”. The usual case would be that A would bargain for the lowest price and negotiate the duration of the monthly instalments to be the longest A could get, hence, “proposal”. B would adjust between the price and the monthly instalments duration to fit what is also the best for B’s party. This is where “consideration” occurred. After A agrees with the adjustment made by B of which is assumed to be also favourable by B, hence, “acceptance” occurred and “agreement” is achieved. B would provide A with a written agreement which states that A must pay a specific amount of money each month for specific duration of time of which any violation will cause A to be penalize. This is where “enforceability” takes place hence a “contract” was made between A and B. Furthermore, citing example from a real law case that happened around 30 years ago which is between Utah International, Inc. v. Colorado-Ute Electric Ass'n., Inc., (1976). Let us consider Utah International, Inc, coal mining company as P meanwhile Colorado-Ute Electric Ass'n., Inc as D. So, P, is a coal mining company have signed a requirement contract with D. to supply coal at a specific cost for electrical generators more than 35 years in sums as would be required by two 350,000 kW generator. The agreement had both a maximum purchase obligation and minimum purchase obligation. The D’s minimum purchase of the coal was arranged assume that the D guaranteed that they would buy the coal each year regardless of whether they utilized it. Eventually preceding the marking of the agreement, the D. utilized bigger generators requiring more coal, yet they intentionally neglected to inform the P. of the change, since they would not like to give bad influence on the negotiations. At some point after the agreement was marked, the cost of coal went up strongly because of the oil ban, and the P. sued to be discharged from the agreement totally,

alleging breach by D. in utilizing bigger generators than the agreement indicated. D. countersued for execution. So, the risk that could rise naturally from this situation is both the D. also, the P. took a risk that they could improve (standard offer of merchandise dangers). Also, both sides took a risk that the future would be uncertain. This transaction attempted to redistribute the risk such that the P.'s (seller's) risk would be limited somewhat by the D.'s guarantee to buy a minimum amount, and the D.'s risk would be limited somewhat by the P.'s guarantee to provide as much as required up to a certain amount. The issue in this problem is whether the adjustment in the size of the generators was a break that entitled P. to void of the whole contract. For this contract, it cannot be hold anymore because the minimum purchase limit in a requirements contract is a right of purchase of the buyer, and any deliveries above that could be demanded only to the maximum purchase limit that have been agreed during the development of the contract by the both parties. In terms of reasoning, the court contemplated that the contract had two sections. The minimum purchase of coal that have negotiated was separate from the genuine necessities of the D., in that it was ensured regardless to how much fuel the generators would require. In this way, the commitment to buy implied the right to buy a minimum limit amount of coal, thus the P must provide the amount of coal that have been paid. Furthermore, the court also clarified that the total amount above the minimum purchase and below the maximum purchase should be enough to supply the actual fuel needed by the generator. Thus, any adjustment in size of generator with a bad intention, would affect the total amount that required P to supply. P relied on the size of generator to determine the price of coal and in designing its mine, and so was only contractually obligated to supply the actual requirements of the smaller generators. In addition, enforce means to compel observance of or obedience to. Enforceable means capable of being enforced. A right or obligation is enforceable if a party obligated to an act can be forced or ordered to comply with the legal process. In other words, enforceable is an action which can be made effective. For example, an agreement or contract between persons in which either of the parties can legally compel the performance of other is called an enforceable contract.

An employee sued his employer for racial discrimination under the relevant statute governing this area (the Racial Discrimination Code). The employer sought to compel arbitration pursuant to an arbitration clause in the employment agreement, which was subject to the code. However, the arbitration clause excluded an award of punitive damages, which are available under the code, and was therefore unenforceable as written. The employee therefore argued that the employer could not compel arbitration since the entire arbitration clause was void. The court, however, in this case found it inapposite to strike down the entire clause. Under certain circumstances, the courts will not declare an entire clause or agreement null and void, but may sever the inoperative part, thereby allowing the remaining provisions of the clause or contract to survive. The court may also have regard to public policy concerns regarding the use of arbitration to resolve disputes. Here, the employment agreement contained an express severability clause, which read as follows: “Should any part of this agreement, or the application thereof to any person or circumstance, for any reason, be declared invalid or unenforceable, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in force and effect as if this agreement had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of this agreement without including therein any such part, parts, or portion which may for any reason be hereafter declared invalid.” The existence of this severability clause, along with the fact that the agreement was otherwise valid and enforceable and the fact that federal policy favoured arbitration, led the court to rule that the ban on punitive damages should be severed from the arbitration clause and that the parties should be compelled to arbitration. The employee also argued that the employer had not fully implemented the provisions of the code, and that the employer was therefore in breach of the code. However, this was deemed to be a moot point in respect of the matter at hand since the failure to implement did not affect the validity or otherwise of the pertinent clause of the agreement.

Enforcement of contracts contingent on an event happening. -Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. Example: A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been offered, refuses to buy him. The contract cannot be enforced by law unless and until C refuses to buy the horse. Enforcement of contracts contingent on an event not happening. -Contingent contracts to do or not to do anything if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible, and not happening. Example: A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks. Furthermore, the fact which an agreement is a proposal and its acceptance when two or more person or also known as parties promises to do abstain from doing act but regarding from section 2(h) of the Indian Contract Act, an agreement enforceable by law is a contract. It is support with these two elements of a contract: (a) Agreement Contractual Obligation (b) Enforceability by Law Example: A invites B for dinner and the latter accepts the invitation. From this situation, it is a social agreement not a contract because it does not imply any legal obligation. For a Contract to be there an agreement is essential; without an agreement, there can be no contract. As the saying goes, "there is fire when there is smoke while when there is no fire there can be no smoke”. It is the same as “there is agreement when there is contract while when there is no agreement there can be no contract”. On the other meaning, an agreement gives birth to a contract just the meaning a fire gives birth to smoke.

The legal obligation is the second essential element of a contract for the parties to the contract. The agreements which not entail any legal obligations cannot be called contracts. Example: A gives his car to B for repair. Then, B asks A for RM 500 to repair his car. The agreement imposes an obligation on both after A agrees to pay the price and B agrees to repair the car. The third element of a contract is that the agreement must be enforceable by law. The other has the right to go the court and force the defaulter to keep his promises if one party fails to keep his promise. The other elements are offer, acceptance, legal obligation, lawful consideration, valid object, agreement not being declared void by law, free consent, agreement being written and registered, capacity to contract, possibility of performance etc. Conclusion Both arguments and contracts entered the people life every day. On the other hand, an arguments is not enforceable by law meanwhile a contract is enforceable by law. Furthermore, a contract is enforceable by law since the parties have intention to create the legal relation. Besides that, generally a party to an agreement do not have the intention to be bound by their promises legally. In a nutshell, it can be said that an agreement is not a contract but a contract is an agreement. Last but not least, a contract must have all the essential elements to be enforceable by law. The elements are offer, acceptance, intention to create legal relation, consideration etc. In any event of the essential element is absent the contract made will not be enforceable by law.

Bibliography ("Elements of A Contract - The Law Handbook") 2015. Elements of A Contract. The Law Handbook, [online] 29 October, Available at: [Accessed 29 October 2016] (Laws of Malaysia) Laws of Malaysia, Act 136: Contracts act, 1950 (Revised-1974) (Surbhi) Surbhi, S. 2015. Difference Between Agreement and Contract (with Comparison Chart). Key Differences, [online] 23 March, Available at: [Accessed 29 October 2016] (UTAH INTERN., INC. V. COLORADO-UTE ELEC. ASS'n, INC.) UTAH INTERN., INC. v. COLORADO-UTE ELEC. ASS'N, INC. (United States District Court, D. Colorado. December 14, 1976). Lawnotes.in,(2016)[online] Available at:http://www.lawnotes.in/Section_2_of_Malaysian_Contracts_Act,_1950