Explanation – An erroneous opinion on the value of the thing that is the subject of the agreement should not be considered a factual error. The effects of misrepresentation or fraud by agents of an oral contract are an oral agreement that can be legally binding. Like a written contract, the parties enter into an agreement to take or not an obligation. The general business practice is that most commercial contracts are concluded in writing to keep a correct record of the agreement. 21. In the event of an error in a fact essential to the agreement for both parties to an agreement, the agreement is void. 2. This section shall not be considered illegal with respect to any subscription, contribution or subscription or contribution agreement, made or received for or for any plate, prize or sum of money of a value or amount equal to or greater than five hundred ringgit awarded to the winner or winners of a horse race. As with all contracts, the parties to an oral contract must have the full competence and legal capacity to form a valid contract.
As a general rule, a court will not impose an oral agreement when either party does not have jurisdiction or is unable to make the contract. This is a valid contract for the supply of rice and an invalid agreement on opium.