Common Mistakes about Contracts

by | Oct 10, 2017 | Contracts

  1. (We Trust Each Other. We Don’t Need a Contract) – Drawing up a contract is not only a matter of trust. A contract contains the terms and obligations of the parties; including the agreed actions to be taken should certain matters arise during the contract period. Some people don’t remember what they had for lunch yesterday, much less to remember what was agreed years ago.


  1. (He is Family. I Trust Him) – Even if there are no disputes arising between the original parties of the contract, certain contracts still carry forward after death. What was agreed between the original parties may not be known to the other family members. I see this often when it comes to land / property and friendly loans to family members. Unnecessary disputes could have been avoided if a contract was drawn up between the original parties.


  1. (I Didn’t Read What I Signed. I’m Not Bound) – The general principle of law is that a party who signs a written contract is bound by the terms of the contract, except in in limited cases where fraud, undue influence or misrepresentation may be established. This rule is so strict that even if a party to a contract has not read the contents of a contract, he is bound by its terms. There is even a Malaysian High Court decision that goes further to hold that even if the party could not read nor understand the language in which the document was written, that person would still be bound by the contract.


  1. (We are Both Religious People. We will leave it to God) – If this sounds like something that would never happen, it does happen all too frequently. In fact, if both parties are Muslims, the need for a written contract was even mentioned in the Quran:-

“O you who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write. Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his lord, and diminish not anything of what he owes. But if the debtor is poor understanding, or weak, or is unable himself to dictate, then let his guardian dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man and two women, such as you agree for witnesses, so that if one of them (two women) errs, the other can remind her. And the witnesses should not refuse when they are called on (for evidence). You should not become weary to write it (your contract), whether it be small or big, for fixed term, that is more just with Allah; more solid as evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you carry out on the spot among yourselves, then there is no sin on you if you do not write it down. But take witnesses whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower of each and everything (al-Baqarah: 282).


  1. (I have the Best Lawyers if Anything Goes Wrong) – Your lawyer is only as good as the evidence and facts provided to him. No matter how influential, charming and senior your lawyer might be, if there is no evidence to support your claim, you will lose your case. Granted, there are other circumstantial and supporting documents which may be used to prove your claim, but why go through all that hassle to prove the existence of a contract when you could have just prepared a contract in the first place.


  1. (Lawyers Purposely Draw a Complicated and Lengthy Contract) – Depending on the drafting preference and skill of the lawyer, contracts are usually of a particular length as the contract will take into consideration the various possibilities that may arise during the period of the contract. This is the “what-if’s” that could arise and what do parties do when the “what-if” arises. This avoids parties from stalling their performance of the contract when a particular “what-if” arises. Once again, it is emphasized that the purpose of all these (drawing up a contract) is to avoid disputes as much as possible.

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