CONTRACTING OUT OF A STATUTE

OOI BOON LEONG & ORS V CITIBANK NA [1984] MLJ 222; (1984) 4 PCC 253 (PRIVY COUNCIL MALAYSIA)

The respondent Bank sued the appellants on a contract of guarantee for banking accomodation given to a Company.The appellants were the directors of a company and in the contract of guarantee they had agreed to waive their rights in respect of any variation or alteration of the contract between the bank and the Company.(Usually when there is an Offer and Acceptance there is a Contract, and one party cannot alter or vary the contract after the contract comes into existence.)

The money lent by the bank was not repaid by the company.The bank sued the company and the Assistant Registrar gave the order for the bank but this decision was reversed by the High Court.The Company appealed.

Held: if freedeom of contract was to be curtailed in relation to a particular subject , the Contract Act 1950 should state it in clear terms.If the Contracts Act 1950 intends to render an agreement void, it should say so in clear terms.Therefore there was a clear and binding agreement because the company had agreed that the contract can be altered or varied.