MBA Assignment -International Business Law
Assignment Question
Research the laws of contract regarding:
a) good faith and
b) unfairness in relation to a country other than one studied in this course.
Then compare them with the relevant Malaysian law. Critically evaluate the differences, by the use of case examples.
Possible Solution
Executive summary
This report was carried out to examine good faith and unfairness in law of contract for South Africa and Malaysia.
The report draws attention of the different types of law which include common law, civil law and religious law. Malaysia follows the common law this is as a result of colonization by Britain, while South Africa has a mixed legal system which include civil law inherited from Dutch, common law inherited from British and customary law which is inherited from African customary law.
The research shows that good faith plays a vital role in law of contracts in South Africa ,South Africa follows Roman Dutch Law for contracts and all contracts are referred to as Bona fides (Good faith) the courts also develops law to bring in line with constitutional values , and court based judgment on good faith clause which is usually included in contracts in South Africa ,the court prohibit the use of unfair term in contracts which is supported by the CPA Act where section 48 to 52 addresses unfairness terms allowing for court to be able to strike out unfair terms in contracts .
Malaysia follows common law in law of contract where the doctrine of good faith is not accepted ,Malaysia court of appeal also affirms that no free standing exists for contractual duty of good faith and based on the scenario discussed in this report the court of appeal emphasized that the Malaysia law follows the common law where good faith is not accepted as a reason not to comply with the contract terms .With regards to unfairness Malaysia parliament enacted consumer protection act 2010 which address the issues of unfair contract ,it allows the court to raise issues of unfairness and deal according to any situation where unfair terms are used in the contract.
The conclusion shows that good faith plays more active role in law of contract and there is duty upon courts to ensure the law bring in line with constitutional values ,it also draw attention that laws of contract must reflect in promoting the values and norms in the constitution and court should ensure they develop law which will be in line with constitutional values hence allowing for little or interference by the legislative .
The report draws attention of the different types of law which include common law, civil law and religious law. Malaysia follows the common law this is as a result of colonization by Britain, while South Africa has a mixed legal system which include civil law inherited from Dutch, common law inherited from British and customary law which is inherited from African customary law.
The research shows that good faith plays a vital role in law of contracts in South Africa ,South Africa follows Roman Dutch Law for contracts and all contracts are referred to as Bona fides (Good faith) the courts also develops law to bring in line with constitutional values , and court based judgment on good faith clause which is usually included in contracts in South Africa ,the court prohibit the use of unfair term in contracts which is supported by the CPA Act where section 48 to 52 addresses unfairness terms allowing for court to be able to strike out unfair terms in contracts .
Malaysia follows common law in law of contract where the doctrine of good faith is not accepted ,Malaysia court of appeal also affirms that no free standing exists for contractual duty of good faith and based on the scenario discussed in this report the court of appeal emphasized that the Malaysia law follows the common law where good faith is not accepted as a reason not to comply with the contract terms .With regards to unfairness Malaysia parliament enacted consumer protection act 2010 which address the issues of unfair contract ,it allows the court to raise issues of unfairness and deal according to any situation where unfair terms are used in the contract.
The conclusion shows that good faith plays more active role in law of contract and there is duty upon courts to ensure the law bring in line with constitutional values ,it also draw attention that laws of contract must reflect in promoting the values and norms in the constitution and court should ensure they develop law which will be in line with constitutional values hence allowing for little or interference by the legislative .
1.0 Introduction
Good faith and unfairness underwent several series of development throughout the twentieth century, they plays vital roles in law of contract and this will be understood better with references to historical development of law of contract.
The report focuses on determining the concept of good faith and unfairness in South Africa and Malaysia while investigating how the court dealt with scenarios which involves the concepts.
The report include information about the general concept of law , the types of law where discussed this includes civil law which spread throughout Europe and also has influence in other parts of the world such as Russia and China ,common law was also discussed which is widely used in England, United States and other countries colonized by England . And Religious law which is referred to path way to follow this type of law is often unalterable because words of God cannot be changed, Saudi Arabia adheres to sharia law and Quran is the constitution of the country.
The report discusses how good faith is interpreted in South African and Malaysia courts and how they courts respond to cases which involve good faith. The use of Unfair terms was also discussed in this report and South Africa and Malaysia Courts have right to look into unfair terms used in contract this is supported by the consumer protection Act. A conclusion and recommendation was also included in this report which suggests that courts should ensure good faith and unfairness conforms to public policy.
2.0 General concept of Law
2.1 Law
History of law connects to the development of civilization ,dating back to as far as 3000BC, Law is a system of guidelines and rules which are enforced on institutions in order to govern behavior.(Robertson 1990) In the legal system law can be split into civil law , common law or religious law.
2.1.1 Civil Law
Civil law is used in several countries around the world the authoritative sources in this law are usually the legislation most especially forming a legal code in the constitutions passed by government and customs .Modern civil law system is derived from the eastern Roman empire whose text were rediscovered by late medieval western Europe .Civil law codifications is closely based on the Roman law with some religious law influences .The law spread out throughout Europe and not only has influence on the law in continental Europe but also countries like Russia China central and Latin America have civil law system (CIA ,2014 ).
2.1.2 Common law
Common law is an ancient law which is based upon societal customs recognized and enacted by judgments of the courts. it is developed by judges through decisions of courts .The common law system is widely used in England ,United states and several other countries colonized by England. In common law system if a dispute has been resolved in the past the court follows the reasoning pattern used in the decision this is refer to as stare decisis but if the court finds the current dispute is completely different from all previous cases then judges have duty and power to make law by creating precedent. This precedent will be included in the law and will bind other courts.
The common law constitute basis of legal systems of several countries colonized by England it is distinct from civil law system which is widely available in Europe and other places colonized by France and Spain.
The common law constitute basis of legal systems of several countries colonized by England it is distinct from civil law system which is widely available in Europe and other places colonized by France and Spain.
2.1.3 Religious Law
Religious laws are based on religious perspective examples of this law include Islamic Sharia law, and Jewish Halakha law, they both refers to pathway to follow. Religious law is often not alterable because the words of God cannot be changed, amended or legislated by governments or judges. The legal system in Muslim countries may sometimes draw both civil and common law but most of the times is based on the Islamic Law (Sharia law). Countries like Afghanistan recognizes Islam as the religion of the state and the legislature adhere to Sharia law.
Religious law takes seriously the teaching of the holy books and base law following the book. for instance the Quran is the constitution of Saudi Arabia which contains mostly Muslims hence it oblige the legislature to adhere to Sharia law.
Religious law takes seriously the teaching of the holy books and base law following the book. for instance the Quran is the constitution of Saudi Arabia which contains mostly Muslims hence it oblige the legislature to adhere to Sharia law.
2.2 South Africa Law
South Africa has a mixed legal system which is formed by combining a number of legal traditions ,it include a civil law which is inherited from the Dutch ,a customary law inherited form African customary law and a common law system which is inherited from the British.
South Africa follows the Roman Dutch common law in the South Africa contract law, family law, law of dialect and law of persons while it follows the English law in constitutional law, criminal law of company, and law of evidence.(Du Bois 2007)
South Africa Law most especially the elements of civil and common law also forms basis of laws in other countries such as Lesotho, Botswana , Namibia and Zimbabwe the law was introduced to these countries during the process of colonization .The court system in South Africa consists of magistrates courts' high courts ,supreme court of appeal and the constitutional court which has final authority to decide if an issue is constitutional or not the court system in south Africa is organized hierarchically .
South Africa follows the Roman Dutch common law in the South Africa contract law, family law, law of dialect and law of persons while it follows the English law in constitutional law, criminal law of company, and law of evidence.(Du Bois 2007)
South Africa Law most especially the elements of civil and common law also forms basis of laws in other countries such as Lesotho, Botswana , Namibia and Zimbabwe the law was introduced to these countries during the process of colonization .The court system in South Africa consists of magistrates courts' high courts ,supreme court of appeal and the constitutional court which has final authority to decide if an issue is constitutional or not the court system in south Africa is organized hierarchically .
2.3 Malaysia Law
Malaysia law is mainly based on the common law legal system. Malaysia is colonized by Britain between the early 19th century and gain its independence in1957 before its independence most of the common laws were used in local legislation and sometime applied as case law.
Malaysia constitution includes the legal rights of all Malaysia citizens while federal law is enacted by parliament which applies throughout the country.
Malaysia constitution allows for unique dual system justice which is the (civil and criminal) secular law and sharia laws. Sharia law is also referred to Islamic law it applies to all Muslim in the country and plays little role in defining laws of the country.
The sharia law court is known as the Syariah Court in Malaysia it has jurisdiction in law matters which include marriage, and inheritance also some states such as Kelantan have sharia criminal laws which are based on sharia law to deals with criminal cases.
2.4 Law of Contract
Contracts and agreement plays vital role in several aspect of life. Contracts are most of the times written but in some case may be spoken. They are voluntarily binding agreement between two or more parties. Contract law is considered vital when an agreement is performed and each parties knows their rights and duties but where an event makes the agreement to be impossible to perform then a court will have to act to solve the problem should in case one party breach the contract terms, the innocent party will be entitled to cease performances and can sue for damages South Africa follows the Roman -Dutch Law of Contract while
Malaysia follows the English Common Law of contract.
The concept of Good faith and Unfairness will be discussed as they relate to South Africa and Malaysia below.
3.0 Concept of Good Faith
Good faith is derived from the Latin term bona fide it encompasses a truthful or sincere motive without any desire to defraud the other partner involved.
In contract law, Good faith implies that the parties to a contract will be honest and deal with each other fairly so as to avoid any problem which may lead to destroying the right of other parties from receiving the contract benefits .( Dubroff 2006)
A law suit by a partner may arise when the other partner did not perform its contractual obligations and not acting in good faith despite the understanding between the parties in contract.
3.1 Good Faith in South African Law of Contract
Freedom of contract in South Africa encompasses different notion which include that parties must be able to freely negotiate terms of agreement, decide to whom they wish to contract and free to decide not to contract (Hawthorne 1995).
South Africa follows the Roman-Dutch law for law of contract and all contract are regarded as (Bona fides) based on principles of good faith and more emphasis is placed on the agreement between the parties while negotiating on the contract this also allows for emphasis on the principle of the binding of all informal agreements if both parties agrees to the consensus
(Neels 1999) in his writing he explained that good faith serves as corrective function that is used in South Africa courts to bring about fair and impartial results among contracting parties.
In South Africa good faith is accepted to have a wider meaning than absence of bad faith or mere honesty but not strictly defined .Around 1903 as started by the court that law of contract do not permit the right of a court to allow a contracting party from an agreement just because the courts do not find the terms reasonable this clearly shows that the agreement between the two contracting parties is of utmost importance.
In South Africa law of contract, it's unlikely that a general definition of good faith or fair and impartial jurisdiction of courts will be accepted contract cases are dealt with based on the term and conditions which was agreed upon by the two contracting parties an example of how a court dealt with a case on good faith is explained below
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South Africa follows the Roman-Dutch law for law of contract and all contract are regarded as (Bona fides) based on principles of good faith and more emphasis is placed on the agreement between the parties while negotiating on the contract this also allows for emphasis on the principle of the binding of all informal agreements if both parties agrees to the consensus
(Neels 1999) in his writing he explained that good faith serves as corrective function that is used in South Africa courts to bring about fair and impartial results among contracting parties.
In South Africa good faith is accepted to have a wider meaning than absence of bad faith or mere honesty but not strictly defined .Around 1903 as started by the court that law of contract do not permit the right of a court to allow a contracting party from an agreement just because the courts do not find the terms reasonable this clearly shows that the agreement between the two contracting parties is of utmost importance.
In South Africa law of contract, it's unlikely that a general definition of good faith or fair and impartial jurisdiction of courts will be accepted contract cases are dealt with based on the term and conditions which was agreed upon by the two contracting parties an example of how a court dealt with a case on good faith is explained below
