The principal statute dealing with contracts is the Contracts Act 1950 (Revised 1974) – a re-enactment of the Contracts (Malay States) Ordinance 1950 previously applicable to the nine Malay States. The revised Act is now applicable throughout Malaysia. Prior to its enactment, the four former colonies of Penang, Malacca, Sabah and Sarawak were governed by English contract law so far as it was suited to local conditions.
Although principles of contract law originated from England, Malaysian Contract Act is, in fact , closer to the Indian Contract Law simply because the original Ordinance 0f 1950 was a reproduction of Indian Contract Act of 1872 which was itself modeled on English law but varied in  several aspects. The Indian Act also borrowed several provisions from the Draft Code for the State of New York (field Code).
English Law may be used to fill in gaps in the Act subject to the restrictions imposed by section 3 and 5 of Civil Law Act. In the interpretation of provisions of contract act, English cases may also be relied upon where the law is similar or the Act embodies common law principles without defining them.
Contract - refers to an agreement between two or more parties that is legally binding between them. S. 2(h) : ‘an agreement enforceable by law’. The nucleus of the contract is an agreement. All contracts must be built upon an agreement but not all agreements are automatically contract.
Essential elements of contracts:
  1. Proposal and acceptance
  2. Consideration
  3. Intention to create legal relations
  4. Certainty
  5. Legal capacity
  6. Free consent
  7. Legality of the objects
  8. Required formalities


  1. To secure the expectation created by a promise of future   performance or expectation will be paid for its breach.
  2. To facilitate forward planning of the transaction in terms of cost and value, responsibilities of parties and preparation for contingencies.

LAW OF CONTRACT - INTRODUCTION  LAW OF CONTRACT - INTRODUCTION Reviewed by Kamaruddin Mahmood on 6:57:00 PTG Rating: 5

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