Terms of a Contract in Malaysia

Chapter 2 (Part 2 ) : Terms of a Contract

Introduction of terms

• Terms are the essential elements or contents of a contract.
• It known as terms or clause.
• The main terms generally being the price paid and the subject matter of the contract.
• Terms of a contract may be either wholly oral, wholly written or partly oral and partly written.
• There are two types of terms; such as express terms and implied terms.

Express terms

• Oral statement – made during negotiations prior to conclusion of a contract becomes a term of the contract.
• Court look at wide range of factors of a term, such as importance of the statement and the timing of statement is made.
• Other than that, court also look into the strength of the statement, the special skills and knowledge of the parties.

Oral  statement

• Written contract -  If contract is put down in writing, any statement appearing in that written agreement will usually be regarded as a term, and any prior oral statement that is not repeated in the written agreement will usually be regarded as a representation, due to the assumption that if a statement is left out of a written agreement, the parties did not view the statement as important.
• Signature -  will usually make it difficult for the signatory to successfully argue that the written terms of the agreement do not represent what they have agreed.

Implied terms

• Where the contract is silent on a matter on which a term is normally implied by law, parol evidence may be given to support, or to rebut, the usual implication.
• There are four categories of implied terms, such as implied by fact, implied by law, implied by custom and implied by trade usage.

Categories of implied terms

• Implied by fact - terms that courts assume both parties would have intended to include in the contract had they thought about the issue. They are implied on a “one-off” basis.
• Implied by law - terms which the law requires present in certain types of contracts (i.e. not just on “one-off” basis and sometimes irrespective of the wishes of the parties).