Coerced to Sign an Agreement? Here’s What You Should Know.- Malaysia

Ali and Fatimah are married for 3 years now. One day, Ali forces Fatimah to sign a document. Fatimah insists on reading the document before signing but Ali violently protested and threatened to kill her if she refuses. Afraid of what Ali could do, Fatimah signed the documents. Soon later, Fatimah finds out that the document signed was for the transfer of a particular land belonging to Fatimah inherited from her late Father.

What can Fatimah then do?

The Law on Coercion

Coercion is defined under Section 15 of the Contracts At 1950 as follows:

‘Coercion’ is the committing, or threatening to commit any act forbidden by the Penal Code, or the unlawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. Explanation – It is immaterial whether the Penal Code is or is not in force in the place where the coercion is employed.

ILLUSTRATION A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Penal Code. A afterwards sues B for breach of contract at Taiping.

By this definition, it can be deduced that there are two types of coercion namely act which is prohibited by the penal code and secondly, the detention of property.

In Bergamo Development (M) Sdn Bhd v ECK Development Sdn Bhd & Anor [2018] MLJU 555 (HC), the court held that consent is said to be free when it is not caused by-

(a) coercion, as defined in section 15; (b) undue influence, as defined in section 16; (c) fraud, as defined in section 17; (d) misrepresentation, as defined in section 18; or (e) mistake, subject to sections 21, 22 and 23.

In Allied Granite Marble Industries Sdn Bhd v Chin Foong Holdings Sdn Bhd [2000] 5 CLJ 71 (HC), J Abdul Malik Ishak held as follows:

“Mere allegation of duress without proof, and without particulars must be ignored outright. At common law and also at equity it has been said that a party cannot be held to a contract unless he is a free agent. Legal duress means actual violence or threats of violence to the person. Put differently, it means threats calculated to produce fear of loss of life or bodily harm (Friedeberg-Seely v. Klass [1957] Times 19 February, 101 Sol Jo 275). It is very difficult to conceive a situation where a contract is procured by actual violence or a threat of violence. Cf Ware and De Freville Ltd v. Motor Trade Association [1921] 3 KB 40 laid down the principle of law to the effect that the threat must be illegal; it must be a threat to commit a crime or a tort.”

In Barton v Armstrong [1976] AC 104 (PC), the appellant alleged that the respondent had coerced him into entering an agreement by threatening to have him murdered. It was held that the agreement was void and is to be set aside. Where there is duress to the person there was no obligation to show that he would not have entered the agreement but for the threat, it simply being sufficient that the death threats were a cause.

Similarly, here, Fatimah was threatened to being killed which is an offence under the Penal Code, hence she can be said to be coerced into signing the documents.

Effect of Coercion on the Agreement

When there is coercion, parties seeking legal relief can seek to nullify the agreement. This shown under Section 19(1) of the Contract Act which provides that where consent to an agreement is caused by among others, coercion, the agreement is voidable at the option of the party whose consent has been so caused. The innocent party can then choose to either go on with the effect of the contract or to choose to treat the agreement as a void agreement.

In Messrs Albert Ding, Lee & Partners v Cho Chooi Mei [2020] 5 CLJ 778 (HC), in dealing with a similar situation on coercion of signing a contract, JC Evrol Mariette Peters held as follows:

[69] Since it is my finding that the second agreement was obtained by coercion pursuant to s. 15 of the Contracts Act, s. 19 of the same Act is triggered. Section 19(1) reads: Section 19 – Voidability of agreements without free consent (1) When consent to an agreement is caused by coercion, fraud, or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. (emphasis added) [70] ‘By virtue of s. 19(1) of the Contracts Act, a contract entered into by a party either through innocent or fraudulent misrepresentation is voidable at the option of the party whose consent was so obtained. Thus, the innocent party who had been induced to enter into the contract through an innocent misrepresentation, may choose to set aside the contract on his own accord or by seeking the assistance of the court under the Specific Relief Act 1950’ as per Abdul Malik Ishak JCA in Balakrishnan Devaraj & Anor v. Admiral Cove Development Sdn Bhd [2010] 7 CLJ 152. [71] As a result of the coercion, the defendant is at liberty to set aside the contract on her own accord, and in this case, she had done so.

If the party exercise the option to rescind, the effects of recession will apply.

Conclusion

As a conclusion, a person seeking to nullify the contract on the ground of coercion must first establish that the act of coercing is of that which is prohibited under the penal code.

Fatimah can therefore seek to nullify the agreement signed as she was coerced to do so or she will be killed. As killing is an offense under the penal code, the agreement signed by Fatimah is therefore void and cannot be enforced.

She should as promptly as possible make a police report detailing the incident that took place and seek legal advise on her rights and remedies.