QUESTION:
Datuk Ally agreed to sell his bungalow in Batu Feringgi to Datuk Kamal. Subsequently, Datuk Kamal
paid RM300,000 as a deposit for the said bungalow. One week after the payment of the deposit, the
bungalow was swept away by a tsunami.
Advise the parties as to their rights according to the law of contract.
Issue:
Whether the contract between Datuk Kamal and Datuk Ally is discharged by frustration
Law:
Section 57(2) of the CA 1950 state that a contract to do an act which, after the contract is made,
becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, or
becomes void when the act becomes impossible or unlawful.
There are 4 types of situations that lead a contract to discharge by frustration:
1) Destruction of the subject matter of the contract.
2) When the supervening event defeat the purpose of the Contract / Unforeseeable
circumstances that prevent someone from fulfilling a contract.
