1. ) TIEW CHERN WEE 2. ) LIM MEI LING v CHEN ENG KEONG

Case Significance

Illustrates the requirement of certainty of terms in an oral contract, and an appellate court's willingness to overturn a finding that enforced an arrangement whose essential terms were left vague and inconsistent by the parties.

This High Court decision at Shah Alam, delivered by Noor Hayati binti Haji Mat J, is an appeal from the Sessions Court in a dispute founded on an alleged oral agreement. In the Sessions Court the respondent had sued the two appellants claiming payment of RM101,332, said to be his share of the proceeds of an investment under an oral agreement between the parties. After a full trial the Sessions Court judge found that the respondent had proved the existence of a binding oral agreement and allowed the claim; the appellants appealed.

The appeal required the High Court to examine whether the oral agreement relied on had terms certain enough to be enforced. A contract — including an oral one — is only enforceable if its essential terms are sufficiently clear; where the basis of the parties' agreement and their respective obligations are vague, a court should not be asked to enforce, or to make orders based on, an arrangement that the parties themselves never defined with clarity. Reviewing the evidence and submissions, the Court found the fundamental terms of the dealing to be vague, inconsistent and shifting — in particular the formation of the agreement, the money contributed, the ratio in which any proceeds were to be divided, and the true purpose for which the money had been placed into the appellants' account.

The Court held that the Sessions Court judge had erred in finding a binding oral agreement and in allowing the claim, having failed to focus on and answer the issues that had been framed, and that the decision below was not consistent with the evidence. Finding the appeal meritorious, the Court allowed the appeal, set aside the Sessions Court's decision, and dismissed the respondent's claim, with costs of the appeal fixed at RM5,000 subject to allocatur. The judgment is a useful illustration of the requirement of certainty of terms in an oral contract, and of an appellate court's willingness to overturn a finding that enforced an arrangement whose essential terms were left vague and inconsistent by the parties.