QUESTION 1 (25 MARKS)

a.

Tom wanted to start his own business and decided to apply for a personal loan from

Kaya Bank. However, he was told that he needs a guarantor for the loan. He then

persuaded his uncle, Jerry, to sign the guarantor form. Jerry who stayed with Tom for

more than 10 years since his wife died had really depended on Tom, innocently signed

the form after listening to Toms deceitful explanation.

After getting the loan for his business, Tom failed to pay off his loan. Kaya Bank had

contacted Jerry and asked him to make payment. Further, Kaya Bank told him that a

letter of demand for payment will be sent to him. Jerry was so disappointed and

realized that he had been influenced to be Toms guarantor and wanted to invalidate the

agreement he signed as a guarantor.

Advise Jerry as to the status of the contract as he did not enter the contract in free

consent. In the course of your answer explain all situation that lead to the same

implication. Support your answer with the provisions in Contract Act 1950 and decided

cases (if any).

(15 marks)

b.

Zorro instructed his agent, Robin to sell his piece of land in Banting. Robin managed to

find a potential buyer and sold it at RM250,000. However, without Zorros knowledge,

Robin obtained secret profit of RM10,000 from the sales and credit it into his account.

When Zorro find out about it, he was unsatisfied with the matter and demanded the

amount of RM10,000 from Robin. Robin refused to tender the secret profit and claimed

that he gets the profit out of his own effort.

Discuss whether Zorro is entitled to claim the secret profit and suggest the most

suitable method to end their agency relationship. Support your answer with the

provisions in Contract Act 1950 and decided cases (if any).

(10 marks)