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Malayan Law Journal Articles/2000/Volume 4/Contracts for The benefit of third Parties -- Will our common
law SEE the demise of Privity of Contract?
[2000] 4 MLJ i
Malayan Law Journal Articles
2000

Contracts for The benefit of third Parties --Will our common law SEE the
demise of Privity of Contract?
Clarence Edwin
LLB (Hons)(London), CLP, Advocate & Solicitor, High Court of Malaya
Privity of contract is a concept that is fundamentally entrenched in the minds of legal practitioners throughout
the common law world. It has been a keystone of English contract law for the past 139 years --that is, until
the Contracts (Rights of Third Parties) Act 1999 came into force in England, Wales and Northern Ireland in
May this year. Though accepted thus far as an entrenched principle of contract law, the rule of privity of
contract has spawned condemnation among academic writers for many years now.1 The doctrine has been
under siege even from judicial quarters.2 Lord Diplock has described the doctrine of privity as 'an
anachronistic shortcoming that has for many years been regarded as a reproach to English private law'. 3
The doctrine of privity in its present form is considered to have been established by Tweddle v Atkinson.4
Although the principle that only a party to a contract can acquire rights under it and hence sue on it is
considered central to the law of contract, in the early days, common law allowed third parties to enforce
contracts made for their benefit.5 A paradigm shift in English common law began with the decision in Bourne
v Mason,6 where the court described a third party who sued on a contract as 'a mere stranger to the
consideration'.7 Conflicting judicial authority on the question of whether a person could sue on a contract to
which he was not a party was
4 MLJ i at ii
rife prior to 1861.8 As Windeyer J observed in Coulls v Bagot's Executor & Trustee Co Ltd,9 the law prior to
1861 did not conclusively establish that a third party was precluded from suing on a contract made for his
benefit. His Lordship remarked in that case:
The law was not in fact 'settled' either way during the 200 years before 1861. But it was, on the whole, moving towards
the doctrine that was to be then and thereafter taken as settled.10

Of those conflicting authorities, Dutton v Poole11 can be considered the leading decision in the third party's
favour. In that case, a son persuaded his father not to sell a wood to raise portions for his younger children.
He promised the father that he would pay each of his younger siblings 1000. One of the daughters brought
an action against the son on the promise he made to his father. Scroggs CJ, in allowing her claim, said:
'There was such apparent consideration of affection from the father to his children, for whom nature obliges
him to provide, that the consideration and promise to the father may well extend to the children.' 12
The decision was later approved by Lord Mansfield,13 though the court in Dutton v Pooleignored the fact that
no promise had been made to the daughters and there was no consideration that had moved from them. Be
that as it may, Dutton v Poole became obsolete when English law no longer recognized natural love and
affection as valuable consideration. This is evident from Tweddle v Atkinson, where a man failed in an action
against his father-in-law who had promised the man's father that he would pay the man a marriage portion
for marrying his daughter.14

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The law was eventually settled in 1861. The doctrine that no one could acquire rights or be subjected to
liabilities under a contract to which he was not a party emerged as the ratio of Tweddle v Atkinson. The
courts were, thereafter, loath to resurrect the old cases which would only serve to cast doubt on the rule 15 and
the doctrine was firmly ingrained as part of English common law by the House of Lords in Dunlop Pneumatic
Tyre Co Ltd v Selfridge & CoLtd.16 Viscount Haldane LC, in his speech, made the following oft-quoted
remarks:
4 MLJ i at iii
My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a
contract can sue on it. Our law knows nothing of a jus quaesitum tertio17 arising by way of contract. Such a right may be
conferred by way of property, as, for example, under a trust, but it cannot be conferred on a stranger to a contract as a
right to enforce the contract in personam. A second principle is that if a person with whom a contract not under seal has
been made is to be able to enforce it consideration must have been given by him to the promisor or to some other
person at the promisor's request. These two principles are not recognized in the same fashion by the jurisprudence of
certain Continental countries or of Scotland, but here they are well established.18

Although the Malaysian Contracts Act 1950 makes no mention of the doctrine, it is beyond doubt that the
doctrine is applicable in the Malaysian context. This is discernible from Kepong Prospecting Ltd & Ors v
Schmidt,19 a decision of the Privy Council on appeal from Malaysia. Responding to an argument by counsel
that the rule of privity of contract does not apply in Malaysia, Lord Wilberforce categorically said:
The real question which arises as to this agreement is whether it could be enforced by Schmidt who in his personal
capacity was not a party to it. In the first place there can, in their Lordships' view, be no doubt that if the agreement
were governed by English law, Schmidt would be unable to enforce it. ... But it was suggested that in this respect the
law of Malaysia differed from the law of England in admitting the principle of jus quaesitum tertio. Their Lordships are of
the opinion that the appellant company failed to make good this contention. Their Lordships were not referred to any
statutory provision by virtue of which it could be said that the Malaysian law as to contracts differs in so important a
respect from English law.20

4 MLJ i at iv
Similarly, in no uncertain terms Mohamed Dzaiddin J (as he then was) in Fima Palmbulk Services Sdn Bhd v
Suruhanjaya Pelabuhan Pulau Pinang,21 said: 'It is clear that the English doctrine of privity of contract applies
to our law of contract.'22
It is generally accepted that the doctrine of privity comprises two distinct rules. The two rules are firstly, that a
person who is not a party to a contract cannot sue on it and secondly, for a contract to be enforced by a
person, consideration must have been given by him to the promisor or to some other person at the
promisor's request.23 However, in Coulls v Bagot's Executor & Trustee Co Ltd,24 Windeyer J observed that
there is a differing analysis by some as to whether there are actually two rules. Many academics advance the
hypothesis that the two rules are actually one. The argument is that when one says that a person is not a
party to a contract, it actually means that that person has not provided any consideration for the promise
made by the promisor or has not given a promise in exchange for another.25 In other words, privity of contract
is regarded as a spin off from the requirement of consideration or a corollary to it. The argument is that a
person who is not a party to a contract could not possibly have given consideration for any promise made
therein by the promisor.26
The weakness in that argument is accentuated in tripartite agreements where one party may promise to pay
a sum of money to another in return for the third person performing some act. Although the second person
who is to receive the money was a party to the contract, he certainly was not a party to the consideration.
Hence, if the third person did in fact perform the act required of him, the second would still not be entitled to
sue the promisor as the consideration did not move from him. GH Treitel observes that if the rule was that
consideration must move from the party seeking to enforce the promise, it would undoubtedly be discrete
from the rule that
4 MLJ i at v
only a party to a contract can sue on it.27 Whether there are two rules or one in Malaysia is suspect. Section
2(d) of the Contracts Act 1950 provides that consideration for a promise may move from the promisee or any
other party. The scope of the section is certainly wider than the English rule that requires consideration to

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move from the promisee.28 Consequently, it is safe to conclude that in Malaysia, the doctrine of privity is
confined to the rule that only a party to a contract may sue on it. There appears to be no rule in Malaysia that
a person who is alien to the consideration cannot enforce a contract. Section 2(d) of the Indian Contracts Act
1950, which is in pari materia with our Malaysian provision, has caused the Indian courts to recognize that a
third party may provide the consideration for a contract.In this regard, reference could be made to Chinnaya
v Ramaya29 where a mother, through a deed of gift, gave a piece of property to her daughter with instructions
that the daughter should pay an annuity to her uncle. The mother, had in the past, been paying an annuity to
the girl's uncle. The daughter executed a document in favour of her uncle whereunder she agreed to pay the
annuity to the latter. When the daughter refused to fulfill her obligation under the agreement, the uncle sued
her for the amount due on the agreement. The High Court of Madras, applying Dutton v Poole,30 held that
consideration had moved indirectly from the uncle to the daughter and that he was, consequently, entitled to
sue her on the agreement.31 Chinnaya's case would not have been maintainable in England as modern
English law, which is based on Tweddle v Atkinson, does not recognize contracts where the consideration
was furnished by a third party. For any such contract to be enforceable in England, it must come within
established common law or statutory exceptions to the doctrine. Nonetheless, in India, as it should be in
Malaysia, the courts are partially free from the shackles of Tweddle v Atkinson. Jenkins CJ expressed this
view in Debnarayan Dutt v Chunilal Ghose32 when his Lordship said:
In India we are free from these trammels and are guided in matters of procedure by the rule of justice, equity and good
conscience.33

But just because s 2(d) of the Act provides that a third party can give consideration for a contract, it does not
follow that a third party can sue on the contract. As Rankin CJ pointed out in Krishna Lal Sadhu v Pramila
Bala Dasi34 , when dealing with s 2(d) of the Indian Contracts Act:
4 MLJ i at vi
Clause (d) of s 2 of the Contracts Act widens the definition of 'consideration' so as to enable a party to a contract to
enforce the same in India in certain cases in which the English law would regard the party as the recipient of a purely
voluntary promise and would refuse to him a right of action on the ground of nudum pactum. Not only, however, is there
nothing in s 2 to encourage the idea that contracts can be enforced by a person who is not a party to the contract, but
this notion is rigidly excluded by the definition of 'promisor' and 'promisee'.35

Consequently, although the definition of consideration under the Act is wider than in English law, the common
law doctrine applies in India, as in Malaysia, with the limited effect that only a party to the contract is at liberty
to enforce it.36
Exceptions to the rule
The doctrine of privity has come under heavy criticism because rigid application of the rule often results in
injustice. Certain exceptions have been developed over the years to mitigate the severity of the doctrine.
Among the notable exceptions are restrictive covenants concerning land. A restrictive covenant may be
enforced by injunction against any person who acquires or occupies the servient tenement with notice of the
covenant irrespective of the fact that the subsequent purchaser or occupier of the land was not a party to the
original agreement under which the benefit of the restrictive covenant was conferred on the owner of the
dominant tenement.37 The principles of agency constitute yet another exception to the doctrine of privity,
though it is sometimes believed that agency is not a true
4 MLJ i at vii
exception to the doctrine. The reason behind this belief lies in the fact that the principal is treated as the real
contracting party while the agent is looked upon as the means through which the principal contracts.
Nonetheless, the principles of agency are still widely accepted as a clear exception especially in cases where
the agent acts within the scope of his usual authority,38 where the principal is undisclosed39 or in certain cases
of agency of necessity.40
Equity has not remained idle while these common law exceptions were developed. Through the use of the
concept of trust, equity has developed its own exception to the doctrine of privity. Since a trust may be

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created not only over something physical but also over a chose in action, it presented itself as the ideal
implement to create an exception to the doctrine. Thus, if A owes B a sum of money under a contract, the
debt owed to B is a chose in action and that can well be the subject matter of a trust. It has even been held
that a person can be a trustee of a promise to pay money to a third party.41 A trust in favour of a third party
simply means that the third party can sue the promisor to enforce the contract. It also means that the third
party (and not the promisee) is beneficially entitled to any money paid or payable under the contract. 42 The
legislature has also had a hand in creating certain exceptions to the rule of privity of contract. Among the
more prominent statutory exceptions is the concept of absolute assignments that can be found in s 4(3) of
the Civil Law Act 1956. Any absolute assignment in writing by the assignor of any debt or other legal chose in
action transfers the legal right to the debt or chose in action to the assignee, provided express notice in
writing of the assignment is given to the debtor. The assignee, though not a party to the contract under which
the debt or chose in action
4 MLJ i at viii
is created, has all legal and other remedies in respect of the debt or chose in action from the date of the
notice to the debtor.43 Other statutory exceptions were created from time to time to extirpate the injustice
caused by the application of the doctrine. For instance, life insurance policies in favour of a spouse or child
could not be enforced against the insurer at common law due to the rigour of the doctrine. This pitiful state of
affair was reversed by s 23 of the Civil Law Act 1956. A life insurance policy in favour of a spouse or child
today creates a trust in favour of that spouse or child and the moneys payable under such policies do not
form part of the estate of the insured. Then we have marine insurance policies where legislation has carved
out situations in which a third party may sue on such a policy 44 and insurance policies required to be taken
under the Road Transport Act 1987. Under the Road Transport Act 1987, an insurer is liable to indemnify the
person or class of persons specified in the policy in respect of any liability which the policy seeks to give
protection against.45 These exceptions are evidently the result of having successfully drawn the legislature's
attention. Parliament's subsequent intervention can be said to be attributable to the commercial
repercussions that entail from holding on to a rule which many have come to regard as archaic. But while the
statutory exceptions that were made from time to time undoubtedly eradicated the injustice that resulted from
the application of the doctrine in those areas, they certainly did not
4 MLJ i at ix
revolutionise the common law as applied in Malaysia. The sporadic changes introduced by the legislature
were precipitated either by the weight of commercial or social pressure. Parliament has certainly not yet dealt
with the heart of the matter -- the inconvenience and injustice that continue to result from the application of
the doctrine in areas which have not seen the light of statutory intervention.
Proposals for reform
To entertain the belief that these intermittent legislative interventions or the ingenious juridically created
exceptions eliminate all traces of injustice caused by the rule is fanciful, to say the least, and self-deluding.
The exceptions that exist are themselves not free from difficulty. For example, the concept of a trust being
imposed to circumvent the application of the doctrine requires the intention to create the trust to be
affirmatively proved.46 Of no less importance is the fact that there is uncertainty in the methodology applied by
the courts to recognize a trust. For instance, before s 23(1) of the Civil Law Act 1956 was passed, the courts
held in some cases that a life insurance policy taken for the benefit of a third party created a trust in his
favour,47 while in other cases it was held that the policy conferred no rights on the third party.48 Other
criticisms that have been levelled against the trust concept are that a trust is not revocable by the promisor or
promisee once created49 and that the third party can be more likened to an assignee than a cestui qui trust.50
In 1937, the Law Revision Committee in the United Kingdom chaired by Lord Wright recommended in its
Sixth Interim Report that the doctrine be abolished and that statutory recognition be given to third party
rights, though with limitations. The report suggested that third party rights could only be acquired under the
express terms of a contract and that the
4 MLJ i at x
promisor should be entitled to put forward any defence against a third party which would have been
available to him against the promisee. Another suggested limitation was that the right of the promisor and
promisee to rescind the contract should be conserved with the exception of cases where the third party had
been given notice of the contract and had embraced it.

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Despite these recommendations, Parliamentary procrastination led the House of Lords to caution that further
delay might compel the Law Lords to 'reconsider Tweddle v Atkinson and the other cases which stand guard
over this unjust rule'.51 Lord Reid, in similar vein, said in Beswick v Beswick:52
It is true that a strong Law Revision Committee recommended so long ago as 1937 (Cmd 5449):
'That where a contract by its express terms purports to confer a benefit directly on a third party it shall be enforceable
by the third party in his own name ...'
And, if one had to contemplate a further long period of Parliamentary procrastination, this House might find it necessary
to deal with this matter.53

Steyn LJ in Darlington Borough Council v Wiltshier Northern Ltd 54 made a more recent attack on the doctrine
when the learned judge denigrated the doctrine in these scathing words:
The case for recognizing a contract for the benefit of a third party is simple and straightforward. The autonomy of the
will of the parties should be respected. The law of contract should give effect to the reasonable expectations of the
contracting parties ...there is no doctrinal, logical or policy reason why the law should deny effectiveness to a contract
for the benefit of a third party where that is the expressed intention of the parties.55

The Indian Law Commission followed in close pursuit the recommendations made by its English counterpart
in 1937. In its Thirteenth Report on the Indian Contracts Act 1872, the Commission recommended, inter alia,
where a contract expressly conferred rights on a third party, the contract should be enforceable by the third
party in his own name. The report, which was published in 1958, suggested that the following new s 37A be
inserted in the Indian Contracts Act 1872:
4 MLJ i at xi

1A

Benefits conferred on third parties

1.

Where a contract expressly confers a benefit directly on a third party, then, unless the
contract otherwise provides, it shall be enforceable by the third party in his own name, subject
to any defences that would have been valid between the contracting parties.

1.

Where a contract expressly conferring a benefit directly upon a third party has been adopted,
expressly or impliedly, by the third party, the parties to the contract cannot substitute a new
contract for it or rescind or alter it so as to affect the rights of the third party.

These recommendations, however, have yet to materialise as a legislative provision. Though the
recommendations made in England and in India were not adopted, this certainly did not diminish the
burgeoning need for reform. The nonchalance of the legislature did not inhibit the English Law Commission
in 1991 from deliberating on proposals for reform.56 The Commission proposed that if the parties to a contract
intend a third party to have the benefit of the promised performance, the third party should be entitled to
enforce the contract. The Commission further recommended that in such cases, a legally enforceable
obligation should be created in favour of the third party. The Commission also retained the 1937
recommendations that the defences available to the promisor against the promisee be also available against
the third party and that the promisor and promisee should have the right to expressly reserve the power to
vary or rescind the contract.
It took another five years before the Commission came up with the final report and a draft Bill. 57 During that
period, superior courts continued to express, in no uncertain terms, their abhorrence for the doctrine. 58 The
draft Bill was entitled the 'Contracts (Rights of Third Parties) Bill' and its passage through Parliament
witnessed the preservation of the main formulations of the Commission save for changes that were made to
the types of contract that are excluded from the scope of the Act in order to avoid inconsistency with existing
legislation or international transport conventions that already deal with third party rights. The Contracts
(Rights of Third Parties) Act, which had its genesis in the 1937 report, saw the culmination of more than 60
years of debate when it received Royal Assent on 11 November 1999.

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4 MLJ i at xii
The Contracts (Rights of Third Parties) Act 1999 -- The death of the doctrine of privity of contract in
England
The Contracts (Rights of Third Parties) Act 1999 ('the Act') opens in s 1 with the following provisions that
enable third parties to enforce contracts conferring benefits on them:

1 (1)

Subject to the provisions of this Act, a person who is not a party to a contract (a 'third party') may in his
own right enforce the contract if --

1.
1.

the contract expressly provides that he may; or

subject to subsection (2), the term purports to confer a benefit on him.

1)

Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties
did not intend the term to be enforceable by the third party.

1)

The third party must be expressly identified in the contract by name, as a member of a class or as
answering a particular description but need not be in existence when the contract is entered into.

1)

This section does not confer a right on a third party to enforce a term of a contract otherwise than
subject to and in accordance with any other relevant terms of the contract.

1)

For the purpose of exercising his right to enforce a term of the contract, there shall be available to the
third party any remedy that would have been available to him in an action for breach of contract if he
had been a party to the contract (and the rules relating to damages, injunctions, specific performance
and other relief shall apply accordingly).

1)

Where a term of a contract excludes or limits liability in relation to any matter references in this Act to
the third party enforcing the term shall be construed as references to his availing himself of the
exclusion or limitation.

1)

In this Act, in relation to a term of a contract which is enforceable by a third party --

'the promisor' means the party to the contract against whom the term is enforceable by the third party, and
'the promisee' means the party to the contract by whom the term is enforceable against the promisor.

The explanatory notes prepared by the Lord Chancellor's Department 59 state that the Act reforms the rule of
privity of contract and sets out, inter alia, the circumstances in which a third party is to have a right to enforce
a contractual term, the cases where such terms may be varied or rescinded and the defences available to
the promisor when an action is
4 MLJ i at xiii
brought by the third party to enforce the term. Although the Act is a welcome change that does away with a
primeval doctrine regarded by many as lacking any reason in logic or public policy,60 it may have attempted to
achieve too much too quickly. To abandon a legal principle that has been the cornerstone of English contract
law for 140 years is no doubt radical -- and radical changes are best made restrictively, and as far as
possible with clearly drafted legislative provisions to minimize the risk of ambiguity resulting from the
interpretation of those provisions. It is submitted that the Act fails in this regard to a certain extent.
For starters, while s 1(1)(a) of the Act is in line with the recommendations of the 1937 report that suggested
no third party rights should be acquired unless conferred by an express term, s 1(1)(b) may, in allowing a
third party to enforce a contract 'if the contract purports to confer a benefit on the third party', open up
Pandora's box. At first glance, s 1(2) of the Act -- which provides that s 1(1)(b) 'does not apply if on a proper
construction of the contract it appears that the parties did not intend the term to be enforceable by the third
party' -- appears to provide some boundary to the scope of s 1(1)(b). But reliance on principles of
construction to limit the rights of a third party, regarded by some as not too onerous a burden on the courts, 61
seems misplaced.
In its present form, s 1(1)(b) confers on a third party the right to enforce a contract if he is the recipient of
some benefit under it. The burden lies on the parties to the contract to prove that it was never intended for
the contract to be enforceable by the third party. Contractual intention is, in the final analysis, a question of
fact62 and the test of contractual intention has thus far been an objective one. 63

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The objective test, which was developed for commercial convenience, places emphasis on appearance -and rightly so, for to allow a person to escape liability by merely saying that he did not really intend a
particular result would be untenable. While this may serve as a useful purpose in determining whether a
contract had been made between two parties, it is doubtful that it would be ideal for determining whether or
not the parties to the contract intended for their contract to be enforceable by a
4 MLJ i at xiv
third party.64 The purpose of the Act is to allow third parties to sue on contracts that confer a benefit on
them. Could a judge, knowing this to be the legislative intent, conceivably decide that a contract that clearly
confers a benefit on a third party was never intended by the contracting parties to be enforceable by the third
party? If a contract clearly confers a benefit on a third party, could an objective 'construction of the contract'
possibly lead one to the conclusion that the parties who clearly conferred a benefit on someone else through
a contract did not intend for him to be able to enforce it? It is submitted that the parties' objective intention in
such a case would be, on a proper construction of the contract, travelling in the opposite direction.
In the last resort, careful and precise drafting of contracts will be the order of the day. If parties to a contract
do not wish for their contract to be enforceable by a third party, an express term to that effect should
sufficiently negate the presumption raised by s 1(1)(b) of the Act. The Indian Law Commission probably had
this in mind when it made the proposal that a third party be entitled to enforce, in his own name, a contract
that expressly confers a benefit on him 'unless the contract otherwise provides'. 65
Another undesirable feature is the requirement that the third party be 'expressly identified in the contract by
name, as a member of a class or as answering a particular description', for this is somewhat restrictive.
There are a plethora of retail transactions made for the benefit of third parties in which it is commonplace not
to provide details of the third party.
The Act seems to suggest that if A buys goods from B and asks B to deliver it to C, C being the named
beneficiary under the contract would be entitled to enforce the contract against B. Conversely, if A buys the
goods from B but delivers it personally to C, C being a person not named in the contract would not be entitled
to enforce the contract against B if, say, the goods are defective. The rationale behind this limitation is
elusive but the solution seems to be, yet again, careful drafting of contracts. In the light of these limitations,
parties to a contract who now intend to confer benefits on third parties must take care to satisfy the technical
requirements of the Act. An interesting feature, though, in s 1(3) of the Act, is that the third party 'need not be
in existence when the contract is entered into'. This enables contracting parties to confer benefits through a
4 MLJ i at xv
contract on an equally-deserving class of persons; for example, a future spouse or an unborn child or a
company that has yet to be incorporated.66
The death of the rule now restricts the parties' freedom to vary a contract
Since the Act now confers rights on a third party where none existed before, it has restricted the right of the
parties to vary or rescind the contract. Contract law has been loath to recognize unilateral variation of a
contract. To date, the alteration of contractual obligations can only be achieved through the mutual
agreement of both parties.67 Therefore, it is not surprising that s 2(1) of the Act restricts the right to vary or
rescind a contract that confers a benefit on a third party in so far as it affects the rights of the third party
unless the consent of the third party is first obtained. The section provides:

1 (1)

Subject to the provisions of this section, where a third party has a right under section 1 to enforce a
term of the contract, the parties to the contract may not, by agreement, rescind the contract, or vary it
in such a way as to extinguish or alter his entitlement under that right, without his consent if --

2.
2.
1.

the third party has communicated his assent to the term to the promisor,
the promisor is aware that the third party has relied on the term, or
the promisor can reasonably be expected to have foreseen that the third party would rely on
the term and the third party has in fact relied on it.

The situations enumerated in para (a), (b) and (c) above are not any different from the Indian Law

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Commission's proposal that the contract not be capable of variation once it has been 'adopted' by the third
party,68 for a contract can be 'adopted' either by expressly communicating assent thereto
4 MLJ i at xvi
or by relying on the representation made therein. They both place the burden on the third party to establish
that he has 'adopted' the contract. In the absence of express communication of acceptance of the term, the
third party would have to establish that he had altered his position in reliance of the term before he is able to
defeat a variation of the contract. Viewed from one standpoint, this requirement seems closely related to the
doctrine of estoppel. Irrespective of any such nexus, to state that consent of the third party need only be
obtained under certain conditions creates evidential problems that arise as a matter of course from having to
prove reliance. Be that as it may, the courts are familiar with the proverbial concept of reliance. 69 Though it
would be a burden to determine whether there is reliance from the facts of a case, it is submitted that it would
be a manageable one.
Section 2(1)(b) and (c) of the Act deserve particular mention. It is to be noted that the former provides that
the term cannot be varied without the consent of the third party if the promisor is aware that the third party
has relied on the term. The latter provides that consent is required if it was reasonably foreseeable that the
third party would rely on the term and he did in fact rely on it. The difference between the two lies in the fact
that the former requires the promisor to have actual knowledge of reliance whereas the latter imputes
knowledge to the promisor by applying the reasonable man test. The need for this distinction is unclear. It is
clear that in both cases, it must be established that the third party had relied on the term. If a reasonable man
could have foreseen that the third party would rely on the term, what does it matter whether the promisor had
actual knowledge of such reliance? In other words, the reasonable foresight test in sub-s (c) means that subs (b) could only apply to cases where a reasonable man would not foresee a third party relying on the term
but the promisor is nevertheless aware that the third party had in fact relied on it. Certainly, the proposition
that a third party would rely on a term that no reasonable man would expect him to is relatively implausible.
What is sought to be achieved by the distinction between the two subsections is vague.
The certainty of a third party's rights and its shield from unilateral variations are also somewhat diminished by
s 2(3)(a) of the Act. That section states:
Subsection (1) is subject to any express term of the contract under which --

1a)

the parties to the contract may by agreement rescind or vary the contract without the consent of the
third party.

This section allows parties to a contract to arrogate to themselves, through an express term in a contract, the
right to vary or rescind the contract without the consent of the third party. Thus, regardless of whether the
third party had in fact relied on the term in the contract that confers benefit on
4 MLJ i at xvii
him, parties to the contract will be at liberty to vary or rescind the contract so as to extinguish or alter the
third party's right if there is an express term in the contract that allows them to do so without his consent. The
rationale behind this section could be to preserve the parties' freedom to contract but it is submitted that
freedom to contract becomes secondary once the parties to a contract confer a benefit on an outsider who
subsequently acts in the belief that he will receive that benefit. The whole basis on which the concept of
reliance has been developed is that it would be inequitable for the person who made the promise to
peremptorily retract it.70 One wonders if an exception to such a long-standing rule could yield any useful
results.
Any difficulty in obtaining consent that arises from the whereabouts of the third party being unknown is dealt
with by empowering the court to dispense with the third party's consent. 71 The court can also dispense with
the third party's consent if he is mentally incapable of giving it. 72 The basis for conferring such power on the
court in those situations is understandable but the additional power granted in s 2(5) escapes reason. That
subsection reads:
The court or arbitral tribunal may, on the application of the parties to a contract, dispense with any consent that may be
required under subsection (1)(c) if satisfied that it cannot reasonably be ascertained whether or not the third party has

Page 10

in fact relied on the term.

Section 2(1)(c) of the Act requires evidence to be led to establish that the third party had relied on the term. It
calls for an evaluation of the conduct of the third party subsequent to the creation of the contract to ascertain
whether he had acted in reliance of a promise made therein to confer him a benefit. The upshot of it all is
whether there is evidence of reliance or not. If it 'cannot reasonably be ascertained whether or not the third
party has in fact relied on the term', it must mean that there is insufficient evidence to establish that the third
party had relied on the term. That would naturally entail the court ruling that the consent of the third party
need not be obtained under s 2(1)(c). Consider a case where A and B enter into a contract under which A
agrees to pay a certain sum to C in return for the performance of an act by B. C is a member of a computer
club that later offers him a computer at a discounted price. C purchases the computer at that price. He had
expected to pay for the computer with the money he was to receive from A. In such a case, can it be said
that it 'cannot reasonably be ascertained whether or not' C had acted in reliance of the promise made by A?
4 MLJ i at xviii
Reliance means that a representation must have in some manner influenced the conduct of the party to
whom the representation was made. In the example given, there are two separate inducements that made C
purchase the goods but that is unimportant. A's representation need not be the sole inducement that C relied
upon73 but it must have had some influence on his conduct. This requirement will not be satisfied if it can be
shown that the third party's conduct was not influenced in any way by the promise made by A74 since the third
party would not have been prejudiced by the representation. 75 Even assuming that what is required is proof
that C's conduct was motivated mainly by the promise made by A, the courts have, in the past, examined the
substantial purpose or moving cause for conduct which has been called into question and are familiar with
cases where there are competing purposes that motivated a particular kind of conduct. 76 The power to
dispense with the consent of the third party if it 'cannot reasonably be ascertained whether or not the third
party has in fact relied on the term' may therefore be regarded as superfluous. It is doubtful whether it can be
properly said that the court in such a case is 'dispensing' with the third party's consent when the better view
seems to be that consent need not be obtained because the third party has not in fact relied on the term.
This conclusion is reached because there is insufficient evidence to establish (either conclusively or on a
balance of probabilities) reliance on his part.
It is important to note that s 2 of the Act does not apply to variations to the scope of work in construction
contracts. These contracts normally contain a term that allows one of the parties (usually the employer) to
unilaterally alter or vary the details of work. The term 'variation' is used in s 2 in its legal sense to mean
variation to the terms of contract by further agreement between the original parties as opposed to changes to
the details of work in a construction contract, which in common parlance is also known as a variation. The
Explanatory Notes to the Act issued by the Lord Chancellor's Department state:
4 MLJ i at xix
It does not ... affect the terms of a construction contract which allow one of the parties to that contract unilaterally to
alter, or 'vary', the details of the work; such variation is not to the contract but only to the work. 77

Though it is accepted that a variation to the details of work in a construction contract is not per se a variation
of the terms of the contract, nevertheless, in certain circumstances, it could affect the rights of a third party.
Consider a construction contract where A engages B to construct a building. At B's request, A agrees to pay
part of the construction cost to C. The portion to be paid to C is due at the completion of the contract and
upon issuance of the final certificate by the architect. The contract further stipulates that the date of
completion is 30 months from the date of the contract and that time is of the essence. In such a case, the
third party does not only have a right to receive that portion of the construction cost but also a reasonable
expectation that payment would be made within the time stipulated in the contract. A now issues several
change orders, the cumulative effect of which make it impossible for the work to be completed within the time
stipulated. Consequently, A and B mutually agree to extend the time for completion of the contract. The
extension of time amounts to a variation in the legal sense but it is an offshoot of a change order.
Furthermore, the extension is not a variation of the actual term that confers a benefit on C. The effect of the
variation, without doubt, alters C's entitlement under the contract, but it is questionable whether the section

Page 11

will apply in such cases in the light of clear legislative intention to exclude variations of a technical nature
from the scope of the section. It will be interesting to see how English judges interpret s 2 of the Act under
such circumstances. For now, what can be said is that it would have been better had the section explicitly
provided that it does not apply to variations of a technical nature unless such a variation, directly or indirectly,
has the effect of altering the rights of the third party.
Other features of the Act
Section 3 of the Act lists the defences available to the promisor in proceedings brought by the third party to
enforce a term of the contract. In essence, the promisor can raise any defence or set-off that arises from or in
connection with the contract and is relevant to the term being enforced which would have been available to
him had the proceedings been brought by the promisee. 78 The promisor can rely on the defence that the
contract is void or that it has been discharged by frustration as these are defences that would be available to
him. He can also set up a defence, plead a set-off or make a counterclaim against the third party that does
not arise from the contract but which would have been available to him had the third party been a party to the
contract.79 Thus if A enters into a contract with B
4 MLJ i at xx
whereunder he agrees to pay C 1000 and C is already indebted to A in the sum of 300, A has a set-off
against C's claim and is only liable to pay him 700.
Section 4 of the Act preserves the right of the promisee to enforce the contract including the term that confers
a benefit on the third party. However, s 5 of the Act protects the promisor from double liability. If the promisee
has recovered from the promisor any damages or compensation for his failure to perform his obligation under
the term that confers the third party right, any damages awarded in an action subsequently brought by a third
party under s 1 of the Act shall be reduced by the amount recovered by the promisee.
The Act also provides in s 6(2) that it confers no rights on a third party in the case of the statutory contract
created between a company and its members by the articles of association under s 14 of the UK Companies
Act 1985. There is thus no change to the principles established in cases such as Hickman v Kent or Romney
Marsh Sheep-Breeders'Association80 or Melhado v Porto Alegre Rly Co81 that an outsider cannot enforce an
article that confers a benefit on him against a company. One other feature of the Act deserves particular
mention. It is embodied in s 8 of the Act. The section provides:

1)

Where --

3.

a right under section 1 to enforce a term ('the substantive term') is subject to a term providing
for the submission of disputes to arbitration ('the arbitration agreement'); and

3.

the arbitration agreement is an agreement in writing for the purposes of Part I of the
Arbitration Act 1996,

4
the third party shall be treated for the purposes of that Act as a party to the arbitration agreement as regards disputes
between himself and the promisor relating to the enforcement of the substantive term by the third party.

The section ensures that the provisions of the Arbitration Act 1996 apply in relation to a third party's rights
under the Act where appropriate. Had this section not been included in the Act, the Arbitration Act 1996 would
not apply to the third party, as he is not a party to the arbitration agreement within the meaning of that Act.
Subsection (1) not only ensures that the third party can effectively enforce his right through arbitration but
also compels him to enforce his right by arbitration. Any legal proceedings brought by the third party to
enforce his right in breach of an arbitration clause would, consequently, entitle the promisor to obtain a stay
of proceedings against the third party.
4 MLJ i at xxi
Does Malaysian jurisprudence change in the light of the reform of English common law?
The Contracts (Rights of Third Parties) Act 1999, no doubt, reforms the rule of privity of contract in England.
With this Act, the traditional rule that a third party cannot enforce a contract made for his benefit and the
ingenious judicial exceptions to it are now essentially relics that will only serve to give a historical perspective

Page 12

of what led to this new Act. The departure from the doctrine in England, however, does not mark the end of
the doctrine here. Although English common law and rules of equity are applied by Malaysian courts to the
extent that they are not inconsistent with the provisions of the Contracts Act 1950, the reception of English
statutes is displaced by the existence of our own statutory code. 82 That being the case, it is unlikely that the
courts here would depart from the rule established in Tweddle v Atkinson and vindicated in Dunlop v
Selfridge. Revolutionary changes to English common law, it is submitted, can only be rivalled here by local
legislative intervention. Perhaps changes in major common law jurisdictions such as the UK, Australia and
New Zealand coupled with the fact that the rule serves no identifiable purpose may lead to an early demise
of the doctrine here. Until such time, the doctrine will continue to cause injustice. Critics here will continue to
anticipate the day when a jus quaesitum tertio arises in Malaysia by way of contract.
1 F Reynolds, 'Privity of Contract, the Boundaries of Categories and the Limits of the Judicial Function' (1989) 105 LQR 1; J
Adams and R Brownsword, 'Privity of Contract -- that Pestilential Nuisance' (1993) 56 MLR 722; B Markesinis, 'An Expanding
Tort Law -- the Price of Rigid Contract Law' (1987) 103 LQR 354; J Beatson, 'Reforming the Law of Contracts for the Benefit of
Third Parties' (1992) CLP 1; Dorwick, 19 MLR 375.
2 Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500; Drive Yourself Hire Co (London) Ltd v
Strutt[1954] 2 QB 402; White v John Warwick & Co Ltd [1953] 1 WLR 1285 [1953] 2 All ER 1021; Pyrene Co Ltd v Scindia
Steam Navigation Co Ltd[1954] 2 QB 402; Rayfield v Hands [1960] Ch 1.
3 Swain v Law Society [1983] 1 AC 598 at p 611.
4 [1861] 1 B & S 393; 121 ER 762.
5 See Flannigan, 'Privity -- The End of an Era (Error)', (1987) 103 LQR 564 at pp 564-565.
6 [1669] 1 Vent 6.
7 Ibid at p 7.
8 In Crow v Rogers [1724] 1 Str 592 and Price v Easton [1833] 4 B & Ad 433, the third party each failed in his action; but the
third party was allowed to sue in Thomas v Thomas [1655] Sty 461; Green v Horn [1693] Comb 219; Marchington v Vernon
[1786] 1 B & P 101; Pigott v Thompson [1802] 3 Bos & Pul 147; 127 ER 80 and Carnegie v Waugh [1823] 1 LJ (KB) 89.
9 [1967] 119 CLR 460.
10 Ibid at p 498.
11 [1678] 2 Lev 210; affirmed by the Exchequer Chambers, T Ryam at p 302.
12 Ibid at pp 211-212.
13 Martyn v Hind [1776] 2 Cowp 437 at p 443.
14 Supra n 4.
15 Gandy v Gandy [1885] 30 Ch D 57 at p 69.
16 [1915] AC 847.
17 Jus quaesitum tertio: A right vested in, or acquired by, a third person ( Trayner's Latin Maxims (First Indian Reprint 1997,
Universal Law Publishing Co Pvt Ltd, 4th Ed)).
18 Ibid at p 853.
19 [1968] 1 MLJ 170.
20 Ibid at p 174.
21 [1988] 1 MLJ 269.

Page 13

22 Ibid at p 271. See also Yeng Hing Enterprise Sdn Bhd v Liow Su Fah[1979] 2 MLJ 240; Lee Tee & Anor v Seek Lai Neo &
Anor[2000] 2 CLJ 761; Perwira Habib Bank Malaysia Bhd v Pengkalan Enterprise Sdn Bhd [1992] 2 MLJ 35; Emar Sdn Bhd
(Under receivership) v Aidigi Sdn Bhd[1992] 2 MLJ 734; Royden (M) Sdn Bhd v Syarikat Pembinaan Yeoh Tiong Lay Sdn Bhd
[1992] 1 MLJ 33; Dato' Leong Pow Kue v Gan Kim Seng[1994] 1 CLJ 170; Punca Klasik Sdn Bhd v All Persons in Occupation
of the Wooden House Erected on a Portion of Land held under Grant No 26977 for Lot 4271 in the Township of Johor Bahru,
Johore (No 2) [1996] 5 MLJ 92.
23 See Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd[1915] AC 847 at p 853; Vandepitte v Preferred Accident Insurance
Corporation of New York [1933] AC 70 at p 79.
24 cf n 9 at p 494.
25 See Furmston, 'Return to Dunlop v Selfrigde?' (1960) 23 MLR 373 and Coote, 'Consideration and the Joint Promisee' (1978)
Cambridge Law Journal 301.
26 See the rule that consideration must move from the promisee: Thomas v Thomas [1842] 2 QB 851 at p 859; Pollway v
Abdullah [1974] 1 WLR 493 at p 497.
27 GH Treitel, The Law of Contract (9th Ed) at p 539.
28 See the speech of Lord Wilberforce in Kepong Prospecting Ltd & Ors v Schmidtsupra n 19 at p 174.
29 [1881] 4 Mad 137.
30 Supra n 11.
31 See also Samuel v Ananthanatha [1883] 6 Mad 351.
32 [1914] 41 Cal 137.
33 Ibid at p 145.
34 [1928] 55 Cal 1315.
35 See also Kepong Prospecting Ltd & Ors v Schmidt[1968] 1 MLJ 170, where the Privy Council held that though s 2(d) of the
Act provided a wider definition of 'consideration', there was nothing in the Act which supported the view that a third party could
sue on a contract. Lord Wilberforce in that case said: 'It is true that s 2(d) of the [Contracts Act] gives a wider definition of
'consideration' than that which applies in England particularly in that it enables consideration to move from another person than
the promisee, but the [defendant] was unable to show how this affected the law as to enforcement of contracts by third parties,
and it was not possible to point to any other provision having this effect. On the contrary paras (a), (b), (c) and (e) support the
English conception of a contract as an agreement on which only the parties to it can sue'.
36 Jnan Chandra Mukherjee v Monoranjan Mittra[1942] A Cal 251 at p 252; Narayani Devi v Tagore Commercial Corporation
Ltd[1973] A Cal 401 at p 405.
37 Tam Kam Cheong v Stephen Leong Kon Sang[1980] 1 MLJ 36; see also Tulk v Moxhay [1848] 2 Ph 774, where Lord
Cottenham said at p 777: 'It is said that, the covenant being one which does not run with the land, this court cannot enforce it,
but the question is not whether the covenant runs with the land, but whether a party shall be permitted to use the land in a
manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased.'
38 See Watteau v Fenwick [1893] 1 QB 346, where Wills J said at pp 348-349: 'The principal is liable for all the acts of the
agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the
principal and the agent, put upon that authority. It is said that this is only so where there has been a holding out. ... But I do not
think so.'
39 Keighley Maxsted & Co v Durant [1901] AC 240; Pople v Evans [1969] 2 Ch 255; The Havprins [1983] 2 Lloyd's Rep 356.
40 The Winson [1982] AC 939.
41 Tomlinson v Gill [1756] Amb 330; cf Gregory v Williams [1817] 3 Mer 582; see also Lloyd's v Harper [1880] 16 Ch D 290. The
exception received its stamp of approval from the House of Lords in Les Affrteurs Runis, SA v Leopold Walford (London) Ltd
[1919] AC 801; The Panaghia P [1983] 2 Lloyd's Rep 653.

Page 14

42 Re Flavell [1883] 25 Ch D 89 and Re Gordon [1940] Ch 851; cf Beswick v Beswick [1968] AC 58, where the House of Lords
held that a third party may retain any money paid to him even in the absence of a trust.
43 Cottage Club Estates Ltd v Woodside Estates (Amersham) Ltd [1928] 2 QB 463; Court Line v Aktiebologer Gotaverken (The
Halcyon the Great) [1984] 1 Lloyd's Rep 496; For the proposition that there is no requirement that the assignee should have
provided consideration for a statutory assignment before being able to sue alone at law, see Re Westerton [1919] 2 Ch 104.
Sargant J in that case said at p 111: ' Apart from the Judicature Act ... want of consideration would have been fatal to [the
assignee's] claim. Prior to the Judicature Act ... a legal chose in action such as this debt could not be transferred at law, and the
assignee of the debt could only have sued in the name of the assignor, and in the absence of consent ... or of a binding contract
by the assignor ... the use of the assignor's name could only have been enforced by filing a bill in equity ... and equity would not
have granted that relief unless the assignment had been for valuable consideration.' Since the Judicature Act 1873 [our Civil
Law Act 1956] allows the assignee to sue the debtor without the co-operation of the assignor, the learned judge remarked at p
114 of the report: '...there is no reason for continuing against the assignee those terms which were imposed by equity as a
condition of granting relief.' (Emphasis added.)
44 See the UK Marine Insurance Act 1906, which has been applied by our courts in Leong Bros Industries Sdn Bhd v Jerneh
Insurance Corporation Sdn Bhd [1991] 1 MLJ 102 and Malaysia British Assurance Bhd v Sejati Deepsea Fishing Sdn Bhd
[1996] 2 BLJ 557.
45 See s 91(3) of the Road Transport Act 1987 and the decision of the Court of Appeal in Union Insurance (M) Sdn Bhd v Chan
You Young[1999] 2 CLJ 517; [1999] 1 MLJ 593; [1999] 2 AMR 1473, where a passenger in a vehicle who was injured in a
collision successfully brought an action against the vehicle owner's [the insured] insurer to satisfy a judgment obtained against
the insured.
46 See the speech of Lord Wright in Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 at pp 7980; see also Colyear v Mulgrave [1836] 2 Keen 81; Page v Cox [1852] 10 Hare 163; Kekewich v Manning [1851] 1 DM & G 176;
Harmer v Armstrong [1934] Ch 65; Swain v Law Society [1983] 1 AC 598.
47 Royal Exchange Assurance v Hope [1928] Ch 179; Re Richardson [1882] 47 LT 514; Re Foster's Policy [1966] 1 WLR 222.
48 Re Sinclair's Life Policy [1938] Ch 799; Re Clay's Policy of Assurance [1937] 2 All ER 548. Re Engelbach's Estate [1924] 2
Ch 348; Re Burgess' Policy [1915] 113 LT 443; For cases involving insurance of other kinds, see Williams v Baltic Insurance Co
[1924] 2 KB 282; cf Waters v Monarch Assurance Co [1856] 5 E & B 870; Green v Russell [1959] 2 QB 226; Vandepitte v
Preferred Accident Insurance Corporation of New York, supra n 46.
49 See para 47 of the Sixth Interim Report of the UK Law Revision Committee 1937. The difficulty here lies in the fact that the
imposition of a trust sequesters the right of the promisor and promisee to vary and rescind the contract.
50 See para 46 of the Sixth Interim Report of the UK Law Revision Committee, 1937.
51 See the speech of Lord Scarman in Woodar Investments & Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR
277 at p 300.
52 [1968] AC 58.
53 Ibid at p 72.
54 [1995] 3 All ER 895.
55 Ibid at p 903.
56 Law Commission Consultation Paper No 121, 'Privity of Contract: Contracts for the Benefit of Third Parties' (1991).
57 Law Commission Report, 'Privity of Contract: Contracts for the Benefit of Third Parties' Report No 242 (1996).
58 See The Mahkutai [1996] 3 WLR 1; Darlington Borough Council v Wiltshier Northern Ltdsupra n 54; The Pioneer
Container[1994] 2 AC 324.
59 See Explanatory Notes to Contracts (Rights of Third Parties) Act 1999, Chapter 31. A copy of the notes can be accessed
through Her Majesty's Stationery Office's web site at <www.legislation.hmso.gov.uk/acts/en/1999en31.htm>
60 See para 37 of the Sixth Interim Report of the UK Law Revision Committee (1937); Darlington Borough Council v Wiltshier
Northern Ltdsupra n 54 at p 903.

Page 15

61 Meryll Dean, 'Removing a Blot on the Landscape --The Reform of the Doctrine of Privity' (2000) JBL 143 at p 147.
62 See Zakhem International Construction Ltd v Nippon Kohan KK [1987] 2 Lloyd's Rep 596.
63 See Smith v Hughes [1871] LR 6 QB 597 and Cambridge Nutrition Ltd v BBC [1990] 3 All ER 523. The objective test is,
however, qualified by a subjective element in that a person who actually has knowledge that the other party did not have the
requisite intention cannot rely on the objective appearance of an agreement. See Pateman v Pay [1974] 263 EG 467.
64 It must be borne in mind that s 1(2) of the Act states that the court has to discover the parties' intention as it 'appears' from 'a
proper construction of the contract'. Since the section refers to appearance, it can be quite safely concluded that the test to be
applied is an objective one.
65 See s 37A(1) which the Indian Law Commission proposed be inserted into the Indian Contracts Act 1872.
66 This will probably mean, with the coming into force of this Act, the reversal of the common law rule in Kelner v Baxter [1866]
LR 2 CP 174; Natal Land and Colonization Co Ltd v Pauline Colliery and Development Syndicate [1904] AC 120 and Re
National Motor Mail-Coach Co Ltd, Clinton's Claim [1908] 2 Ch 515. It is unclear whether the Act will have any effect on s 36C
of the UK Companies Act 1985, which provides that a promoter is personally liable on a pre-incorporation contract. The
Contracts (Rights of Third Parties) Act 1999 enables a third party to enforce a contract made for his benefit in his own name and
it appears not to impose any liability arising under that contract on the third party. Consequently, it is submitted that a promoter
will not be relieved from liability under s 36C of the Companies Act 1985 for pre-incorporation contracts.
67 See Besseler Waechter Glover & Co v South Derwent Coal Co [1938] 1 KB 408 at p 416; Plevins v Downing [1876] 1 CPD
220 at p 225and Morris v Baron & Co [1918] AC 1 at p 31.
68 See s 37A(2) which the Indian Law Commission proposed be inserted in the Indian Contracts Act, 1872: supra at p xi.
69 See, for example, Hughes v Metropolitan Ry [1877] 2 App Cas 439; Central London Property Trust Ltd v High Trees House
Ltd [1947] KB 130 and Dillwyn v Llewelyn [1862] 4 DF & G 517.
70 See Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130; Maharaj v Chand [1986] AC 898; Bremer
Handelsgesellschaft mbH v Bunge Corp[1983] 1 Lloyd's Rep 476; Bremer Handelsgesellschaft mbH v Deutsche-Conti
Handelsgesellschaft mbH [1983] 1 Lloyd's Rep 689; The Trado [1982] 1 Lloyd's Rep 157; Banner Industrial & Commercial
Properties Ltd v Clark Patterson [1990] 2 EGLR 139.
71 See s 2(4)(a) of the Act.
72 Ibid, s 2(4)(b).
73 See Edgington v Fitzmaurice [1885] 29 Ch D 459; The Siboen and The Sibotre [1976] Lloyd's Rep 293 and Horry v Tate &
Lyle Refineries Ltd[1982] 2 Lloyd's Rep 417.
74 See Fontana NV v Mautner [1979] 254 EG 199; Raiffeisen Hauptgenossenschaft v Louis Dreyfus & Co [1981] 1 Lloyd's Rep
345; The Scaptrade [1983] 1 All ER 301 and Bremer Handelsgesellschaft mbH v Deutsche-Conti Handelsgesellschaft mbH
[1983] 1 Lloyd's Rep 689.
75 See Ets Soules & Cie v International Trade Development Co Ltd [1980] 1 Lloyd's Rep 129.
76 See Howard Smith Ltd v Ampol Petroleum Ltd[1974] AC 821 at p 835.
77 See para 12 of the Explanatory Notes.
78 See s 3(2)(a) and (b) of the Act.
79 See s 3(4) of the Act.
80 [1915] 1 Ch 881.
81 [1874] LR 9 CP 503. See also Browne v La Trinidad [1887] 37 Ch D 1.
82 See Smith Kline & French Laboratories Ltd v Salim (Malaysia) Sdn Bhd [1989] 2 MLJ 380 and Pushpah a/p MSS Rajoo v
Malaysian Co-operative Insurance Society Ltd [1995] 2 MLJ 657. See also ss 3(1)(a), (b), (c) and 5 of the Civil Law Act 1956
and Cheshire, Fifoot and Furmston's Law of Contract(Singapore and Malaysian 2nd Ed) at pp 31-45.