Commercial Agreements Opposed to Public Policy: The Malaysian Interpretation

Public policy as a ground for holding a contract illegal and thus void, in Malaysia, is a topic that not to be broached lightly. Although a contract is complete, in the sense that it contains the necessary elements of a valid contract, the contract may still be held void on grounds of illegality. However the knotty state of affairs which caused much debate among the judges in Malaysia is that the Contracts Act 1950 has failed to lay down a proper legal framework to regulate public policy matters since the enforcement of this Act. With the present laws being in limbo, judges have then acted at their discretions when adjudicating case laws, either by embracing the common law classification on public policy, or by adopting the approach of extending the scope beyond the common law classification. Hence this gives rise to inconsistencies in the law. Using the content analysis methodology of research, this paper seeks to propound that Malaysia should establish a proper legal framework on contracts against public policy so as to avoid any inconsistencies and uncertainties in the law of contract. Transposing principles of public policy from foreign jurisdictions may not be the ideal solution.