Is there a contract?

The very basis step to resolve arguments between two parties over a certain aspect of business activities, is determining whether there is a valid contract between those two parties.

In Sri Kajang Rock Products Sdn Bhd vs Mayban Finance Bhd (1992), Justice VC George stated that:

"To constitute a valid contract,
there must be a separate and definite parties thereto,
those parties must be in agreement,
that is, there must be consensus ad idem,
those parties must intend to create legal relations
in the sense that the promises of each sides are to be enforceable
simply because they are contractual promises
and the promises of each party must be supported by consideration."

Under the Malaysia Contracts Act 1950, Section 10(1) stated 'all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void'. The term 'free consent' is later defined in Section 13, which stated that 'two or more persons are said to consent when they agree upon the same thing in the same sense'. The intentions to create legal relations point to the intention of getting into legal enforceability after an offer or proposal is to be accepted, hence creating a situation where the parties involved can either sue or be sued. The effect of this is stated in Section 2(h), where 'an agreement enforceable by law is a contract'. In the last line of Justice VC George verdict, the term consideration is defined in Section 2(d), where 'when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise'.