QUESTION NO:2

In my point of view Adibah is to file the suit against CCTV Borneo as they agreed

(Donald) like to by and produce the consideration was stated too, RM3,000. Apart from

that when Adibah gave Donald the script, an agreement has been made between

Adibah and Donald that states “This is my only copy of the manuscript left and please

sign this note stating that you will pay me RM10,000 for it and if you fail to return it to

me in two weeks or it is lost or destroyed”. Donald agrees and signed to this contract.

Over here, it is a valid contract and not voidable contract as the 5 elements assist in the

case, therefore this case is enforceable. First of all Adibah makes as contract when she

passes her manuscript to Donald and Donald accepts the terms and conditions of this

offer, where an agreement has been reached. Together with this, comes an valid

consideration which is amounting RM10,000. A return acceptance comes from Donald

who agrees to publish it and agrees to pay Adibah RM30,000 for her piece. The two

key components that compose a legally binding contract are the agreement and

consideration. For the contract to be valid, this agreement must include some form of

consideration, meaning that the contracting parties must receive something of value

from the contract. Since this is a publishing contract, the publisher (Donald Diamond) of

CCTV Studio offers Adibah a royalty rate in exchange for publishing the author’s

manuscript. Since Adibah accepts the publisher’s offer there is an agreement and a

contract has been formed. Over here Adibah did not respond by rejecting to amount the

offer, then it becomes a “counter-offer”.

So, once an offer has been accepted and an agreement reached, then both parties

have made a formal contract.

Furthermore there is an agency relationship between Benard Olsen and Donald

Diamond. Benard Olsen the director of CCTV Borneo is the principal and Donald

Diamond is the agent. An agency relationship is a relationship in which a principal

engages an agent to perform some service on his or her behalf, this involves delegating

authority by the principal. Under Section 135 of Contract Act, the law of agency states

that there is no specific formality in order to form a contract of agency. Also

consideration is not necessary in order to form a contract of agency. In this case, it is

an express agency relationship as it was thru a verbal communication that Bernard

asked Donald to call up Adibah and get the manuscript. This is an example of a simple

principal –agent relationship do not operate formally but exist as through there is

agency.

For example : an employee and a manager in a corporation do not have a formal

agency relationship. This is because the managers do not themselves compensate the

employees for working on behalf of the managers. However at some point in their

relationship, the managers must rely on the employees without monitoring them all the

time. This relationship can still be defined and governed by theories of agency. From

section 140 of the Contract Act states Donald has acted on behalf of his principal

(Benard Olsen) as an agent to carry out the duties under the corporation. Here Donald

have implied from the circumstances of the case because Donald appears took
authority and made his own decision. As it states in Section 140, “It appears to third

parties that certain person is having authority to act on behalf of another person”.

Agency by ratification here is Donald has acted beyond his direction from Bernard

Olsen. Donald failed to inform his principal (Bernard) that there is another promise in

between that Adibah will claim RM10,000 if they fail to return the manuscript by 2

weeks.

Donald is now abide by rule of agency of ratification where it says : (i) When an agent

who was appointed by the principal, has exceeded his given authority or (ii) when a

person who has no authority to act for the principal, has acted as if he has the authority

to act on behalf of the principal.

A certificate or acceptance by the principal for an act done without authority or

exceeding the authority given.

In brief, Donald as acted on behalf of Bernard although in actual situation Donald is

suppose to obey to the principal is instruction. The CCTV of Borneo is liable to pay the

case filed by Adibah for RM40,000 plus damages and is suppose to be liable for the

agent’s misconduct. The fault of the agent here is suppose to be bearable by the

company as the agent did not obey the instruction of the principal and has over acted.

And Donald is liable for breach of duty, due to his failure to obey the principal’s

instruction and also not keeping the principal informal on all the things.

So, Donald is liable to pay compensation for the loss.