Legal Implications under Contracts Act 1950 - Case Study

Scenario 1: Kai and Sid

Apple has just launched its new iPhone model in November 2020 of which Kai bought the iPhone 12 Pro Max model in pacific blue colour for RM5299.00. A week later, Kai wanted to sell the iPhone to buy the same model but in graphite colour. Kai offered his best friend, Sid the phone for RM5000.00. Knowing that Kai was craving for the graphite colour, Sid took advantage of the situation by offering RM4800.00 instead to be paid in cash on delivery. Sid also asked Kai to send the iPhone to his house the next day. Kai was a bit disappointed but did not say anything. As Kai did not object, Sid assumed he agreed and went to withdraw cash at the automated teller machine (ATM). However, the next day Kai sold the iPhone to his neighbour, Catalina whom Kai has long had a crush on for RM1000.00. Upon learning the matter, Sid intends to sue Kai for breach of contract.

On another occasion, Leo celebrated his 16th birthday in September 2020. His parents bought him a Galaxy S20 FE 5G smartphone so that Leo can fully utilise all online classes during the COVID-19 outbreak. In October 2020, Leo went to see Sid, who happened to be a licensed moneylender to borrow RM4000. Leo told Sid that he was a mature final year student at Universiti Malaysia Sabah and needed money to pay for internet data and other expenses during online distance learning. Based on the accusations he read on Facebook ‘UMS Confessions’, Leo portrayed the real character by complaining that he has many assignments this semester. Leo further exaggerated the situation by saying that he was a very disciplined student, particularly in terms of time management, but his lecturers purposely asked students to submit all assignments at about the same time. Leo also rants about the endless online classes, tutorials, and online assessments, thus justifying the need for extra cash. To convince Sid, Leo told him that he would pay the money before December as he also worked part-time. Sid felt sympathy for Leo as he also attended university decades ago. At that time, the internet was limited and expensive compared to nowadays with the absence of advanced devices like smartphones to facilitate learning and information retrieval over the internet. Truth be told, Leo used the money to play online games and to subscribe to movies online. He also used the money to show-off luxury on his Facebook to make his friends jealous and thinking that he was born into a wealthy family. December has arrived, and Leo has not paid the money as promised. Sid called him several times and not only did Leo avoid him, but he also blocked Sid’s number. Fortunately, Sid manages to track Leo and now wants to sue him.

Meanwhile, Sid is also a private contractor with five workers. Sid has contracted with Riku to renovate his kitchen as preparation for Riku’s engagement party in February 2021. Riku paid Sid RM5000.00 as a deposit, and they both agreed that the work must be done within two weeks and to be completed before Christmas 2020. Sid promised Riku that he would start the renovation on 1st December 2020. However, two days before December 2020, Sid and two of his workers tested positive for COVID-19 and were hospitalised for treatment. Sid informed Riku that he could not start the work within the time agreed. There will also be delays in completing the project as the other three workers were self-quarantined. Riku was so furious as he plans to organise a private Christmas party with his family and close friends to show them his newly renovated kitchen. Invitations have been sent, and Riku is embarrassed to cancel the event. Consequently, Riku terminated the contract and wanted to sue Sid.

With reference to the Contracts Act 1950 and relevant legal authorities, advise Sid on the legal implication(s) of the above situations against:

(a) Kai

(b) Leo

Riku