# Contracts Act 1950 (Act 136): Malaysia's General Law of Contract

> Statute entity page for Act 136 — where Malaysia's contract law comes from, the ten Parts it is organised into, and the four requirements section 10 sets for an agreement to be an enforceable contract.

- Category: law
- Language: en
- Status: published
- Updated: 2026-07-24
- Canonical: https://negaraku.md/en/law/contracts-act-1950

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A lease, an employment letter, a hire-purchase agreement, a WhatsApp-confirmed sale
of a used car — all of them stand or fall on the same seventy-year-old statute:
the Contracts Act 1950.

This page is the statute record for Act 136 — its identity, its structure, where
it came from, and the conditions section 10 sets for an agreement to count as a
contract at all. It does not walk through remedies, specific contract types, or
case law on any single doctrine.

## At a glance

| | |
| --- | --- |
| Short title | Contracts Act 1950 |
| Act number | Act 136 |
| Royal Assent | 12 May 1950 |
| Gazetted | 23 May 1950 |
| Commencement | 23 May 1950 in Kuala Lumpur, Johore, Kedah, Kelantan, Negeri Sembilan, Pahang, Perak, Perlis, Selangor and Terengganu; 1 July 1974 in Malacca, Penang, Sabah and Sarawak |
| Structure | 10 Parts, sections 1 to 191 |
| Latest reprint | As at 1 January 2006 |

## Where it came from

The Act is not a Malaysian original. Its ancestor is the **Indian Contract Act
1872**, which the Federated Malay States adopted, with local modification, as the
**Contract Enactment 1899**. That Enactment then spread to the Unfederated Malay
States one by one — Johore was the first to accept it, as early as 1914.

The Federation of Malaya's own Federal Legislative Council did not formally pass
the Contracts Ordinance until 1950, which is why the Act carries that year in its
name even though its underlying rules are older still.

Penang and Malacca, as former Straits Settlements, ran on English common law
rather than the Ordinance for another generation, and Sabah and Sarawak joined
Malaysia later still. All four territories were brought under the Act together,
on **1 July 1974** — the same date recorded in the AGC's own commencement note.

## What the Act covers

Act 136 is organised into ten Parts:

| Part | Covers | Sections |
| --- | --- | --- |
| I | Preliminary — short title, interpretation | 1-2 |
| II | Communication, acceptance and revocation of proposals | 3-9 |
| III | Contracts, voidable contracts and void agreements | 10-31 |
| IV | Contingent contracts | 32-37 |
| V | Performance of contracts | 38-68 |
| VI | Relations resembling those created by contract (quasi-contract) | 69-73 |
| VII | Consequences of breach of contract | 74-76 |
| VIII | Indemnity and guarantee | 77-100 |
| IX | Bailment | 101-134 |
| X | Agency | 135-191 |

Two whole categories of agreement are deliberately **not** in here. The **Sale of
Goods Act 1957 (Act 382)** and the **Partnership Act 1961 (Act 135)** carry the
specific rules for those contract types; Act 136 supplies the general law of
contract that sits underneath them.

## The four conditions for a valid contract

Section 10 is the Act's hinge provision. It says an agreement is a contract only
if it satisfies all four of these at once:

| Requirement | What it means | Where |
| --- | --- | --- |
| Free consent | Consent not procured by coercion, undue influence, fraud, misrepresentation or mistake | s.14 (definition); ss.15-20 |
| Competent parties | Of the age of majority, of sound mind, and not disqualified from contracting by any other law | s.11-13 |
| Lawful consideration | Something of value given in return for the promise; without it, an agreement is void, subject to three narrow exceptions | s.2(d) (definition); s.26 |
| Lawful object | Not forbidden by law, not fraudulent, not injurious to a person or property, and not one the courts regard as immoral or against public policy | s.24-25 |

Behind section 10 sit the definitions in **section 2** — "proposal" (an offer),
"promise" (an accepted proposal), and "consideration" among them — which is why
practitioners still describe Malaysian contract analysis in terms of offer,
acceptance and consideration even though the Act itself never uses the word
"offer".

Section 26's three exceptions to the consideration requirement are narrow: a
written and registered promise made out of natural love and affection between
parties in a near relation, a promise to compensate someone for something they
already did voluntarily, and a promise to pay a debt that limitation law would
otherwise bar.

## Reading the right text

The AGC's record for Act 136 lists a string of amendments running from 1967
through 1980, with the current reprint dated **1 January 2006**. There has been
no wholesale restructuring since — unlike, say, the Companies Act, which was
entirely re-legislated in 2016 — so the 2006 reprint remains the text to check
against for the sections above.

## What's next

This page fixes Act 136's identity, structure and formation requirements. How a
contract dispute is actually litigated is a question for the
[court hierarchy](/en/law/court-hierarchy) and, where Islamic finance or family
contracts are involved, the line between the
[civil courts and the Syariah courts](/en/law/civil-and-syariah-courts). How the
Act underpins one specific contract — the employment relationship — is set out
in the [Employment Act 1955](/en/law/employment-act-1955); how it underpins a
company's own contracts is a question for the
[Companies Act 2016](/en/law/companies-act-2016).

## Sources

- Act 136 — Contracts Act 1950, principal Act timeline — https://lom.agc.gov.my/act-detail.php?type=principal&lang=BI&act=136 (Attorney General's Chambers of Malaysia)
- Contracts Act 1950, Act 136 (reprint) — https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/Act%20136.pdf (Commissioner of Law Revision, Malaysia)
- Act 136 - Contracts Act 1950 - Laws of Malaysia - Legislation — https://www.lawyerment.com/library/legislation/acts/1950/136/part/III/ (Lawyerment)
- Contracts Act 1950 — https://www.easylaw.com.my/statutes/general-litigation/contracts-act-1950 (Easylaw.com.my)
- The Malaysian Contracts Act 1950: Some Legislative and Judicial Developments Towards a Modern Law of Contract — https://ejournal.um.edu.my/index.php/JMCL/article/view/16301 (Journal of Malaysian and Comparative Law, Vol. 36)
- Act 382 - Sale of Goods Act 1957 — https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/Act%20382.pdf (Attorney General's Chambers of Malaysia)

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