Academic journal article Journal of Management Research

"Domestic Contracts" the Effect of Family Contracts; the Malaysian Law Perspectives

Academic journal article Journal of Management Research

"Domestic Contracts" the Effect of Family Contracts; the Malaysian Law Perspectives

Article excerpt


A domestic contract refers to agreement between persons having family relationship and despite the general rule of contract, that parties in social, domestic and family agreements do not have intention to create legal relations, domestic contracts are legally binding. In the context of family law, domestic contracts normally involves marriage contracts and separation agreements which includes among others; pre-nuptial agreement, settlement agreement, division of matrimonial property agreement and custody of children agreement. Despite the common nature and structure of domestic contract as a typical agreement, there are concerns by the family law practitioners that domestic contracts should be interpreted differently from the commercial or other types of contract and judges should have special or additional factors of consideration in giving effect to the contracts.

In Malaysia, there is a proposal for the formation of a Family Court to improve procedures and providing a better service to families. The main objective of the Family Court is to empower the parties to resolve their disputes by mutual consent and in a manner that best serves the needs of the children involved. With the proposal for the establishment of family court, it is very important for the issues on interpretation and effect of domestic contract to be highlighted. This paper discusses and compares the approaches which the courts applied in dealing with domestic contracts and commercial contracts. Research methodology adopted in this paper are statutory and doctrinal analysis.

Keyword: Domestic contract; family law; contract law; family court


In Malaysia, the contract law is based on the English law which focuses on the principles decided by the courts. Although the laissez-faire principle is applied where parties are free to agree on terms of the contract but when dispute arise, the court retains the power in interpreting and giving effect to terms of the contract. Other than the rules of interpretation, the common law contract also applies the principle of intention to create legal relation whereby parties of agreements which fall under family, social and domestic agreement is deem not to have the intention to create legal relation.1 This means, in a general sense, agreements entered between husband and wife or between parent and child are not legally binding.

However, despite the general presumption that agreement between family members does not have any intention to create legal relations, it is common under the family law that spouses entered into agreements before the marriage, during the marriage, upon divorced and after divorced. Section 56 of the Law Reform (Marriage and Divorce) Act 1976 clearly provides for domestic agreement or arrangement to be referred to the court to express an opinion as to the reasonableness of the agreement or arrangement. It is interesting to see that there are different approaches applied by the courts in interprating domestic contracts compared to general / commercial contracts.

Administration of Family Law in Malaysia

Malaysia exercises the dual system of family law. Family Law of Muslim and another one is of non-Muslim. The basis of this system is originated from the diversity in the components of Malaysian citizens which comprises of people from various races, religions, customs and usage in family matters. Family law is the only area of law which divided the citizens based on religions. Due to the existence of the dual system of family law, different court has been established to administer family law for Muslims and non-Muslim separately.

The Non-Muslim

In Malaysia, the family constitutes the subject matter of a number of legislative enactments for the establishment of husband-wife and child relationships. As for the non-Muslims, all these are essentially found in the Law Reform (Marriage and Divorce) Act 1976. However, there are various other enactments which deal specifically in nature, for instance the Domestic Violence Act 1994 which regulates domestic violence cases. …

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