CHAPTER 2: LAW OF CONTRACT

What is a contract? An agreement which can be enforced by law (S.2(h) CA 1950).

Elements of contract Formalities Free consent Legality of object Offer Consideration Certainty Capacity Acceptance Intention

Offer Definition How an offer could be made Types Of offer Condition of an offer Offer distinguished from invitation to treat Termination of Offer

Definition of offer When a person (offeror) promises something to another party (offeree) with the intention that his promise would be accepted by the offeree, the person (offeror) is said to make an offer (S.2(a) CA 1950).

The comunication of a proposal is complete when It comes to the knowledge of the person to whom it is made

Example: Beni wrote a letter offering to sell his car, a Pero3 Maivi, to Wada for RM35,000. BeniWada Offeror / Promisor / Offeree / Promisee

How an offer could be made Express A proposal made in words (oral or written) Implied A proposal made other than in words (by conduct)

Types of offerSpecificGeneral

Types of offer An offer made to a definate person or group of person Only that person/group can accept the proposal Specific An offer is made to the whole world, anyone may accept by complying with the terms of the offer. General

CASES CARLILL V CARBOLIC SMOKE BALL CO LTD BOULTON V JONES

Conditions of an offer An offer must be certain An offer must be communicated

An offer must be certain Case: Guthing v Lynn

An offer must be communicated Section 3, 9, 4(1) Contract Act Case: Taylor v Laid R v Clarke

Offer distinguished from invitation to treat Offer (S.2(a) CA 1950 Invitation to treat = An invitation from one party to another party to make an offer. Examples: Advertisement Display of goods with tags in a self-service shop Tender Price-list An auctioneer inviting bids in an auction sale

Advertisement/ Price-list The reasoning behind the rule that advertisement are not to be treated as offers is that further bargaining between the parties is still possible or even necessary. If a person sees a price-list and places an order, the seller is not normally bound to supply the goods.

Display of goods with tags in a self-service shop It was decided that the contract was concluded at the cash-desk. The customer made the offer and this could be accepted or accepted or rejected by the defendants.

An auctioneer inviting bids in an auction sale Where an auctioneer asks for bids, he is not making an offer to sell the goods to the highest bidder. A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer and until the announcement is made any bidder may retract his bid.

CASES PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMIST LTD FISHER V BELL HARRISON V NICKERSON

A statement of price is not necessarily an offer Harvey v Facey Facts: The following telegraph messages were exchanged between the parties. H: “Will you sell Bumper Hall Pen? Telegraph lowest price. F: “ Lowest price for Bumper Hall Pen #900. H:” We agree to buy Bumper Hall Pen for #900 asked by you. To this last telegram F made no reply. H claimed that there was a contract between himself and F, Held: There was no contract. The second telegram was not an offer but in the nature of an invitation to treat. The final message could not be looked upon as an acceptance/

Revocation of Offer Must be communicated to the offeree before acceptance The revocation may be directly by the offeror himself or indirectly The important point to note is that revocation is of no effect until is actually brought to the notice of the offeree. An offer terminates when revoked before acceptance

Rejection of offer When the offeree communicates his rejection to the offeror Where the offeree makes a counter- offer

Lapse of offer By non-acceptance within the time stipulated for acceptance or reasonable time The death or mental disorder of the proposer if the fact of the proposer’s death or mental disorder comes to the knowledge of the acceptor before acceptance

CASES Ramsgate Victoria Hotel Co. Ltd v Montifiore Byrne v Van Tienhoven Dickinson v Dodds Hyde v Wrench VIDEO

Let’s do some exercises! exercises

QUESTION 1 Define a contract and describe the basic elements of a valid contract.

ANSWER 1 Contract: An agreement which can be enforced by law (S.2(h) CA 1950). Basic elements of a contract law: Offer,acceptance,intention to create legal relations, consideration, certainty, capacity.

QUESTION 2 Distinguish between an offer and an invitation to treat.

ANSWER 2 When a person (offeror) promises something to another party (offeree) with the intention that his promise would be accepted by the offeree, the person (offeror) is said to make an offer. An offer/proposal An invitation to make offers.eg: Advertisement Display of goods with tags in a self-service shop Tender Price-list An auctioneer inviting bids in an auction sale Invitation to Treat