Pak Samad and Wak Jamil resides in Seberang Perai, Penang. They were neighbours and had known each other for over 30 years. Pak Samad who runs a business in a nearby town suffered from a financial crisis where he required funds to settle an outstanding loan which was substantial.

He then turned to Wak Jamil who is known as a wealthy man owning huge acres of land. Wak Jamil agrees to assist Pak Samad by lending him money. For that, they entered into a jual janji contract where Pak Samad used his land located behind his house as security. The two agreed that Pak Samad will settle the loan within a period of five years. Wak Jamil drafted the agreement which was written using a black ball pen and with both parties signed the agreement.

Some three years later, the Penang Municipal Council issued a letter to Pak Samad stating that the said land will be acquired to build a townhouse project under the initiative of the state government. He was given compensation for the compulsory acquisition of the land but this arrangement was not known to Wak Jamil until after the actual project commenced. Upon hearing the explanation from the Municipal Council, Wak Jamil requested Pak Samad to settle his loan which the latter refused allegedly on the ground that the money he received as compensation to the compulsory acquisition of the land had been exhausted to pay his other outstanding loan. In addition, Pak Samad questioned the validity of the written agreement.

Wak Jamil is confused as to whether he can initiate a legal action against Pak Samad and/or the Municipal Council.

8 Based on the above facts, discuss the following issues:

(i) Whether the jual janji contract is a valid practice under the Malaysian legal system?

(ii) Presuming that the above scenario happened in 1830, what would be the decision of the court at that material time?

Answer rating: 100% (QA)

Analysis of Jual Janji Contract and Legal Action in Malaysia i Validity of Jual Janji Contract Yes jual janji contracts are generally considered valid ... View the full answer