VOID CONTRACTS

The Contracts Act does not make any distinction between illegal and void contracts. The CA merely states in Section 2(g) that" an agreement not enforceable by law is said to be void."

The law in this area is one of the most complex and difficult in the area of Contract law.So students are advised to do some reading on their own in reference to this topic.A void contract may have repercussions in other areas of the contract itself. In the case of Yango Pastoral Co. Ltd& Ors v First Chicago Aust. Ltd & Ors, Gibbs ACJ stated concisely that the manner in which the contract may be deemed to be void.

There are four main ways in which the enforceability of a contract may be affected by a statutory provision which renders a particular contract unlawful.

(1) the contract may have something to do which the statute forbids.
(2) the contract may be one which the statute expressly or impliedly prohibits.
(3) the contract,although unlawful on its face, may be made in order to effect a purpose which the statute renders unlawful;
(4) the contract, although lawful on its own terms , may be performed in a manner which the statute prohibits.

One particular example in this area in reference to the Malay Reservation Enactments where it is expressly stated where the transfer of any Malay Reservation land to a non- Malay is forbidden by law. Therefore any transfer by a person or body of Malay Reserve Land to a non-Malay is prohibited- void in law.

In Haji Hamid bin Ariffin 7 Anor v Ahmad bin Mahmud [1976] 2 MLJ 79 FC , the Court held that such a transaction was void on the ground that it was in conflict with the Kedah Malay reservation Enactment.

However the Statute may contain a provision known as a saving provision which has the effect that even though the contract may be in conflict with sertain provisions of the statute, the contravention may not affect the legality on the contract entered into.

The old Section 67(6) of the CA 1965 provided as follows:-

Nothing in this section shall operate to prevent the Company from recovering the amount af any loan due made in contravention of this section or any amount for which it becomes liable on account of any financial assistance given in contravention of this section.