Section 18

the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

any breach of duty which, without an intent to deceive, gives an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him;

causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

Voidability of agreements without free consent 19.

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.

A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.

Exception — If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Explanation — A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.

Contracts 26

Illustrations

A, intending to deceive B, falsely represents that 500 gantangs of indigo are made annually at A’s factory and thereby induces B to buy the factory. The contract is voidable at the option of B.

A, by a misrepresentation, leads B erroneously to believe that 500 gantangs of indigo are made annually at A’s factory. B examines the account of the factory, which show that only 400 gantangs of indigo have been made. After this B buys the factory. The contract is not voidable on account of A’s misrepresentation.

B, having discovered a vein of ore on the estate of A, adopts means to conceal, and does conceal, the existence of the ore from A. Through A’s ignorance B is enabled to buy the estate at an undervalue. The contract is voidable at the option of A.

A is entitled to succeed to an estate at the death of B; B dies; C, having received intelligence of B’s death, prevents the intelligence reaching A, thus induces A to sell him his interest in the estate. The sale is voidable at the opinion of A.

Power to set aside contract induced by undue influence 20.

When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.

Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the court may seem just.

Illustrations

A’s son has forged B’s name to a promissory note. B, under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the court may set the bond aside.

A, a moneylender, advances $100 to B, an agriculturist and, by undue influence, induces B to execute a bond for $200 with interest at 6 per cent per month. The court may set the bond aside, ordering B to repay the $100 with such interest as may seem just.

Agreement void where both parties are under mistake as to matter of fact 21.

Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.

Explanation — An erroneous opinion as to the value of the thing which forms the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.

Contracts

B.L.R.O. 3/2023 27

Illustrations

A agrees to sell B a specific cargo of goods supposed to be on its way from England to Brunei Darussalam. It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of the facts. The agreement is void.

A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact. The agreement is void.

A, being entitled to an estate for the life of B, agrees to sell it to C. B was dead at the time of the agreement, but both parties were ignorant of the fact. The agreement is void.

Effect of mistake as to law 22.

A contract is not voidable because it was caused by a mistake as to any law in force in Brunei Darussalam; but a mistake as to a law not in force in Brunei Darussalam has the same effect as a mistake of fact.

Illustration

A and B make a contract grounded on the erroneous belief that a particular debt is barred by limitation: the contract is not voidable.

Contract caused by mistake of one party as to matter of fact 23.

A contract is not voidable merely because is was caused by one of the parties to it being under a mistake as to a matter of fact.

What considerations and objects are lawful, and what not 24.

The consideration or object of an agreement is lawful unless —

it is forbidden by law;

it is of such a nature that, if permitted, it would defeat the provisions of any law;

it is fraudulent;

it involves or implies injury to the person or property of another; or

the court regards it as immoral or opposed to public policy.

Contracts 28

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

Illustrations

A agrees to sell his house to B for $10,000. Here, B’s promise to pay the sum of $10,000 is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay the $10,000. These are lawful considerations.

A promises to pay B $1,000 at the end of 6 months if C who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here the promise of each party is the consideration for the promise of the other party and they are lawful considerations.

A promises, for a certain sum paid to him by B to make good to B the value of his ship if it is wrecked on a certain voyage. Here A’s promise is the consideration for B’s payment, and B’s payment is the consideration for A’s promise and these are lawful considerations.

A promises to maintain B’s child and B promises to pay A $1,000 yearly for the purpose. Here the promise of each party is the consideration for the promise of the other party. They are lawful considerations.

A, B and C enter into an agreement for the division among them of gains acquired, or to be acquired, by them by fraud. The agreement is void as its object is unlawful.

A promises to obtain for B an employment in the public service and B promises to pay $1,000 to A. The agreements is void as the consideration for it is unlawful.

A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal. The agreement between A and B is void, as it implies a fraud by concealment, by A, on his principal.

A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void as its object is unlawful.

A’s estate is sold for arrears of revenue under the provisions of an Act by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser and agrees to convey the estate to A upon receiving from him the price which B has paid. The agreement is void as it renders the transaction, in effect, a purchase by the defaulter and would so defeat the object of the law.

A, who is B’s solicitor, promises to exercise his influence as such with B in favour of C and C promises to pay $1,000 to A. The agreement is void because it is immoral.

A agrees to let her daughter to hire to B for concubinage. The agreement is void because it is immoral, though the letting may not be punishable under the Penal Code

(Chapter 22).

Contracts

B.L.R.O. 3/2023 29

Void agreements

Agreements void if considerations and objects unlawful in part 25.

If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.

Illustration

A promises to superintend, on behalf of B, a legal manufacture of indigo and an illegal traffic in other articles. B promises to pay to A a salary of $10,000 a year. The agreement is void, the object of A’s promise and the consideration for B’s promise, being in part unlawful.

Agreements without consideration void 26.

An agreement made without consideration is void unless —

it is expressed in writing and registered under the law

(if any) for the time being in force for the registration of such documents, and is made on account of natural love and affection between parties standing in a near relation to each other;

it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor or something which the promisor was legally compellable to do;

it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

Explanation 1 — Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2 — An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the court in determining the question whether the consent of the promisor was freely given.

Contracts 30

Illustrations

A promises, for no consideration, to give to B $1,000. This is a void agreement.

A, for natural love and affection, promises to give his son, B, $1,000. A puts his promise to B into writing and registers it under a law for the time being in force for the registration of such documents. This is a contract.

A finds B’s purse and gives it to him. B promises to give A $50. This is a contract.

A supports B’s infant son. B promises to pay A’s expenses in so doing. This is a contract.

A owes B $1,000 but the debt is barred by limitation. A signs a written promise to pay B $500 on account of the debt. This is a contract.

A agrees to sell a horse worth $1,000 for $10. A’s consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration.

A agrees to sell a horse worth $1,000 for $10. A denies that his consent to the agreement was freely given.

The inadequacy of the consideration is a fact which the court should take into account in considering whether or not A’s consent was freely given.

Agreement in restraint of marriage void 27.

Every agreement in restraint of the marriage of any person, other than a minor during his or her minority, is void.

Agreement in restraint of trade void 28.

Every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, is to that extend void.

Saving of agreement not to carry on business of which goodwill is sold

Exception 1 — One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein:

Provided that such limits appear to the court reasonable, regard being had to the nature of the business.

Contracts

B.L.R.O. 3/2023 31

Of agreement between partners prior to dissolution

Exception 2 — Partners may, upon or in anticipation of a dissolution of the partnership, agree that some or all of them will not carry on a business similar to that of the partnership within such local limits as are referred to in the last preceding exception.

Or during continuance of partnership

Exception 3 — Partners may agree that someone or all of them will not carry on any business, other than that of the partnership, during the continuance of the partnership.

Agreements in restraint of legal proceedings void 29.

Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.

Saving of contract to refer to arbitration dispute that may arise

Exception 1 — This section shall not render illegal a contract by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.

Saving of contract to refer questions that have already arisen

Exception 2 — Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.

Agreements void for uncertainty 30.

Agreements, the meaning of which is not certain, or capable of being made certain, are void.

Illustrations

A agrees to sell to B “100 tons of oil”. There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.

Contracts 32

A agrees to sell to B 100 tons of oil of a specified description, known as an article of commerce. There is no uncertainty here to make the agreement void.

A, who is a dealer in coconut oil only agrees to sell to B “100 tons of oil”. The nature of A’s trade affords an indication of the meaning of the words and A has entered into a contract for the sale of 100 tons of coconut oil.

A agrees to sell to B “all the grain in my granary at Tutong”. There is no uncertainty here to make the agreement void.

A agrees to sell to B “1,000 gantangs of rice at a price to be fixed by C”. As the price is capable of being made certain, there is no uncertainty here to make the agreement void.

A agrees to sell to B “my white horse for $500 or $1,000”. There is nothing to show which of the two prices was to be given. The agreement is void.

Agreements by way of wager void; exception in favour of certain prizes for horse racing 31.

Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.

This section is not deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of $500 or upwards, to be awarded to the winner or winners of any horse race.

Nothing in this section is deemed to legalise any transaction connected with horse racing forbidden by any written law in force for the time being.