PUAN YUHANZA BINTI OTHMAN LAW OF CONTRACT OFFER BY : PUAN YUHANZA BINTI OTHMAN yuhanza/2014

CONTENTS Elements Discharge Remedies Offer Acceptance Consideration Capacity Intention Certainty Free consent Lawful object PERFORMANCE AGREEMENT FRUSTRATION BREACH RESCISSION DAMAGES SPECIFIC PERFORMANCE INJUNCTION QUANTUM MERUIT yuhanza/2014

CONTRACT = AGREEMENT WHAT IS CONTRACT? GH Treital An agreement which is either enforced by the law or recognized by law as affecting the legal rights or duties of the parties SECTION 2(H) of the Contract Act 1950 an agreement enforceable by law is a contract Not all agreements are contract but all contracts are agreement yuhanza/2014

ELEMENT OF CONTRACT PROPOSAL (OFFER) ACCEPTANCE CONSIDERATION LEGAL CAPACITY INTENTION TO CREATE LEGAL RELATION CERTAINTY FREE CONSENT LAWFUL OBJECT yuhanza/2014

INTENTION TO CREATE LEGAL RELATION CONTRACT OFFER + ACCEPTANCE = CONSIDERATION LEGAL CAPACITY INTENTION TO CREATE LEGAL RELATION CERTAINTY FREE CONSENT LAWFUL OBJECT yuhanza/2014

Condiiton Definition OFFER Revocation yuhanza/2014

PROPOSAL/OFFER Auth: Sec. 2(a) CA 1950 one person signifies willingness to do or abstain from doing with a view to obtaining assent of that other An offer is a promise by a person to another person with the INTENTION to create a LEGALLY BINDING RELATIONSHIP yuhanza/2014

HOW A PROPOSAL CAN BE MADE? SECTION 9 CA 1950 So far as the proposal or acceptance of any promise is made in words, the promise is said to be express. So far as the proposal or acceptance is made otherwise than in words, the promise is said to be implied. yuhanza/2014

To whom a proposal can be made? One person (specific offer) To the world at large (general offer) BOULTON v JONES CARLILL v CARBOLIC SMOKE BALL CO. yuhanza/2014

Boulton had taken over the business of one Broklehurst. BOULTON v JONES Boulton had taken over the business of one Broklehurst. Jones sent an order for goods to Broklehurst. Jones had no knowledge that the business had changed hands. Boulton supplied the good to Jones. Jones refused to pay because the good was not from Brocklehurst. Boulton sued Jones for the price. Court held that: Jones is not liable to pay for the good because he intends to make a contract only with Brocklehurst not Boulton. yuhanza/2014

CARLILL v CARBOLIC SMOKE BALL CO The Defendant (Df) manufactured a smoke ball and published advertisement at the time of influenza epidemic that their smoke ball could cure all kinds of ailments. And stated that, anyone who bought one of their smoke ball, used it as directed and still suffer from influenza would be paid l100. Plaintiff(pf) bought the smoke ball but still had influenza. She claimed l100 from df. The df argued that, there was no contract because the advertisement was an invitation to treat not an offer. The court held that: it was an offer addressed to public at large which could be accepted by anyone who fulfills the conditions attached o the offer. From this case: An advertisement to give reward for the return of lost goods would be considered as an offer to public at large. it was an offer addressed to public at large which could be accepted by anyone who fulfills the conditions attached o the offer yuhanza/2014

CONDITION OF AN OFFER Clear communicated Acceptor must aware yuhanza/2014

CLEAR clear = final, definite GUTHING v LYNN Lynn offered to buy a horse from Guthing on condition that if the horse brings luck to him, he will pay another L50 A dispute arose and the issue is whether there was a valid offer. The court held that, the offer was not final and complete and hence, it was not valid. yuhanza/2014

An proposal must come to the knowledge of the acceptor. COMMUNICATED S.2(a), when one person signifies to another his willingness S.4. (1) The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made An proposal must come to the knowledge of the acceptor. TAYLOR v LAIRD yuhanza/2014

T quit but helped to work at the vessel home without L’s knowledge TAYLOR v LAIRD T was engaged to command L’s Ship and to conduct certain explorers on an expedition up to River Niger. T quit but helped to work at the vessel home without L’s knowledge T claimed to be paid for the service rendered. The court held that, he cannot recover as his offer to work at the vessel home was not communicated to L, thus it would not amount to a contract between T and L. yuhanza/2014

ACCEPTOR MUST AWARE R v CLARKE The Australian Government made an offer to pay a reward for any information leading to the arrest and conviction of persons responsible for the murder of 2 police officers. Mr.A and Mr. Clerk were arrested for the crime. Clerk without knowledge of the reward, gave an information which led to the arrest of Mr.B. Clerk was released as he was not guilty for the offence. Clerk then found that, there was a reward from Australian Government and claimed the reward. The court held that, Clerk failed to claim because at the time he gave the information, the reward was not present in his mind, he gave the information only to release himself not because of the reward. He was not aware of the reawrd. yuhanza/2014

INVITATION TO TREAT RULE FOR ITT COURT GUIDELINE DEFINITION yuhanza/2014

INVITATION TO TREAT DEFINITION Preliminary communications, negotiations, invitation to make an offer. Must differentiate offer from invitation to treat because response to invitation to treat would not form a binding contract yuhanza/2014

RULEs FOR ITT The offeree merely invites the readers to respond with an offer When a person respond to ITT, that person make an offer It is entirely up to the offeree whether to accept or to reject the offer made by the public. If the offeree accept there will be a contract between the offeree and the offeror. If not, there will be no contract between them. yuhanza/2014

DISPLAY OF GOODS IN A SELF SERVICE SHOP ADVERTISEMENT DISPLAY OF GOODS IN A SELF SERVICE SHOP EXAMPLE OF INVITATION TO TREAT QUOTATION TENDER AUCTION SALE yuhanza/2014

ADVERTISEMENT RULE The advertiser merely invites the readers to respond with an offer When a person respond to ITT, that person make an offer It is entirely up to the advertiser whether to accept or to reject the offer made by the public. If the advertiser accept the offer the contract is concluded yuhanza/2014

ADVERTISEMENT PLACES AN ADVERTISER ADVERTISEMENT ADVERTISER IS NOT MAKING AN OFFER PERSON WHO RESPONDS TO ADVERTISEMENT IS MAKING AN OFFER yuhanza/2014

RELEVANT CASES HARRIS v NICKERSON PARTRIDGE v CRITTENDEN EXCEPTION READER RESPONSE TO ADVERTISEMENT AND WAS ACCEPTED = CONTRACT COELHO v PUBLIC SERVICES COMMISSION yuhanza/2014

The Pf sued the Df to claim damages. HARRIS v NICKERSON Df made an advertisement for a sale of certain goods at a particular place. The Pf. Traveled to the location specified and discovered that the goods had been withdrawn from the sale. The Pf sued the Df to claim damages. The court held that, the advertisement was not an offer but it was only ITT. yuhanza/2014

CONTINUE…. EXCEPTION:- Anyone who fulfils the conditions in the advertisement = contract CARLILL v CARBOLIC SMOKE BALL CO yuhanza/2014

DISPLAY OF GOODS IN A SELF-SERVICE SHOP WITH PRICE TAGS ON Legal aspect: not amount to an offer The shop owner is making an ITT The shop owner invites customers to make an offer for him The offer comes from the customer If the shop owner/cashier accept the aoffer made by the customer= contract Pharmaceutical Society of Great Britain v Boots Cash Chemist (1953) yuhanza/2014

NOTICE OF TENDER INVITATION TO TREAT Co or organization = & NOT OFFER put work out to tender = CASE : SPENCER v HARDING yuhanza/2014

PRICE LIST / QUOTATION EARLY INFORMATION WHICH INVITES PROSPECTIVE BUYERS TO MAKE AN OFFER HARVEY v FACEY PRESTON CORPORATION SDN BHD v EDWARD LEONG yuhanza/2014

AUCTION AUCTIONEER (HE IS NOT MAKING AN OFFER BUT AN INVITATION TO TREAT) OFFER IS MADE BY THE BIDDER(S) AUCTIONEER IS FREE TO ACCEPT OR REJECT THE OFFER MADE BY THE BIDDER The auctioneer is deemed to make an acceptance at the fall of the hammer yuhanza/2014

Specific offer and general offer Acceptor aware Clear Condition Sect. 2(a) Introduction Communicated s.4(1) Specific offer and general offer Acceptor aware Sect. 5(1) Revocation Rule of ITT ITT Effective revocation sect.4(3)(a) &(b) Types of revocation Guideline Advertisement Display of goods Tender Quotation auction Notice Lapse of time Not fulfill condition Unsound mind/death yuhanza/2014

Acceptance yuhanza/2014

Exceptions to communication Condition Definition Acceptance Exceptions to communication Revocation yuhanza/2014

ACCEPTANCE Key words in section 2(b) : when the person to whom the offer was made signifies his assent thereto yuhanza/2014

Conditions for acceptance to be valid Section 7 (a) Acceptance must be absolute & unqualified Absolute = acceptance in totality, accept the whole offer Unqualified = no restrictions, no conditions attached to the acceptance No counter-offer yuhanza/2014

COUNTER-OFFER When the offeree responds with another offer or when the offeree changes the nature of the offer E.g. ask for reduction of price, introduce new terms which change the offer or which are not included in the offer Effect : original offer is destroyed & no contract is created yuhanza/2014

NO ACCEPTANCE BY OFFEREE Hyde v Wrench A FARM £1,000 OFFEREE OFFEROR OFFER £950 Lah.. SOLD TO ANOTHER NOT ACCEPTANCE - COUNTER OFFER NO ACCEPTANCE BY OFFEREE NO CONTRACT CREATED yuhanza/2014

DISTINGUISH THESE CASES : STEVENSON JACQUES & CO v MCLEAN Mere inquiry / request for further information is not a counter-offer JONES v DANIEL Introducing terms which are not in the contract = counter-offer yuhanza/2014

X contract. Counter offer Sell :RM15 Buy :RM 10 with a condition ACCEPTANCE REMARKS Sell: RM15 Buy :RM15 contract Buy : RM10 X contract. Counter offer Sell :RM15 Buy :RM 10 with a condition Buy:RM10 The seller agreed with RM10. yuhanza/2014

HOW AND WHEN AN ACCEPTANCE CAN BE MADE S. 7(b) CA 1950 Acceptance must be expressed in some usual and reasonable manner unless the proposal prescribes the manner in which it is be accepted… Concern with: mode of acceptance & time of acceptance If a particular mode of acceptance is prescribed + the Offeree must follow If not prescribed + use a usual and reasonable manner depending on the case ELIASON v HENSHAW yuhanza/2014

CONTINUE…. Offer + prescribed mode of acceptance and Offeree not follow the mode but the Offeror accept the acceptance = contract WESTERN ELECTRIC v WELSH DEVELOPMENT A If there is prescribed time = Offeror must accept within the time limit If no time prescribed = must be reasonable time FRASER v EVERETT yuhanza/2014

COMMUNICATION OF ACCEPTANCE: GENERAL RULE: Acceptance must be communicated Section 2(b) = “signifies” The Offeror must known of the acceptance receives information of the acceptance Mere intention to accept = not contract Silence does not amount to an acceptance FRASER v EVERETT POWEL v LEE yuhanza/2014

Pf applied for post of headmaster of a school. POWEL v LEE Pf applied for post of headmaster of a school. The board of managers passed a resolution selecting the pf for the post. The resolution was not communicated to the pf . The manager acting under his individual capacity informed the pf regarding the appointment. but the pf did not receive any appointment letter. Court held that: no contract in the absence of authorized communication of acceptance yuhanza/2014

EXCEPTIONS RECIPROCAL PROMISES ACCEPTANCE BY POST OFFEROR SAYS NO NEED ALLOWS OFFEREE TO FULFILL CONDITIONS yuhanza/2014

EXCEPTIONS OFFEROR SAYS NO NEED OFFEROR ALLOWS OFFEREE TO FULFILL CONDITIONS ACCEPTANCE BY POST RECIPROCAL PROMISES yuhanza/2014

Postal Rule Section Offer Sect.2(a) When one person signifies his willingness Communication of offer (offer is effective/complete…) Sect.4(1) When offer come to the knowledge of an acceptor Acceptance Sect.2(b) When one person accept the offer Communication of acceptance (effective./complete.) Sect.4(20(a)(b) When the acceptor post letter of acceptance yuhanza/2014

ENTORES v MILES FAR EAST CORPORATION The court held that: when the contract is made by post, the acceptance is complete as soon as the letter is put into the post box. yuhanza/2014

pf sent an acceptance by registered post Pf must accept the offer IGNATIUS v BELL The df offered to sell his land to the pf on the condition that the acceptance must be made on or before 20/8/1912 16/8/1912 20/8/1912 25/8/1912 pf sent an acceptance by registered post Pf must accept the offer Df received letter of acceptance from pf The court held that: the acceptance was complete when the pf post on 16/8/1912. there was a contract between pf and df. yuhanza/2014

Revocation of acceptance Postal Rule Offer Sect.2(a) Sect.5(2) Sect.4(1) Revocation of acceptance Revocation of offer Sect.4(3)(a)(b) Sect.5(1) Sect.4(3)(a)(b) acceptance Sect.2(b) Sect.4(2)(a)(b) yuhanza/2014

REPRESENTATIVE ACTING ON HIS BEHALF REVOCATION OF OFFER WHO CAN REVOKE REPRESENTATIVE ACTING ON HIS BEHALF OFFEROR yuhanza/2014

WHEN CAN OFFER BE REVOKED? S. 5(1) a proposal may be revoked at any time Before the communication of its acceptance is complete as against the proposer but not afterwards… PAYNE v CAVE Df made the highest bid for the pf’s good at an aution sale but revoked his bid before the fall of the hammer. The court held that: the offer could be revoked at any time before the fall of hammer. The revocation was effective. yuhanza/2014

HOW AN OFER CAN BE REVOKED? BY NOTICE WHICH MUST BE COMMUNICATED s. 6(a) LAPSE OF TIME S. 6(b) OFFEREE DOES NOT FULFILL CONDITIONS S. 6(c) FRASER v EVERETT PYM v CAMPBELL BYRNE v VAN TIENHOVEN OFFEROR DIES OR BECOMES INSANE S. 6(d) BRADBURY v MORGAN yuhanza/2014

BY NOTICE 6. A proposal is revoked— (a) by the communication of notice of revocation by the proposer to the other party; 5. (1) A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards (3) The communication of a revocation is complete— (a) as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; and (b) as against the person to whom it is made, when it comes to his knowledge BYRNE CO v VAN TIENHOVEN & CO yuhanza/2014

BYRNE CO.v VAN TIENHOVEN 1/10 8/10 11/10 20/10 Df post letter of offer to pf in New York Df post a letter revoking the offer Pf received the letter of offer and sent letter of acceptance Pf received the df’s letter of revoaction of offer The court held that: there was a contract between df and pf. The revocation of offer was not effective since the contract was created on 11/10 because the pf had already accepted the offer on 11/10 yuhanza/2014

LAPSE OF TIME S. 6(b) An offer may expire by lapse of time in 2 situation : by the lapse of the time prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance; FRASER v EVERETT yuhanza/2014

OFFEREE DOES NOT FULFILL CONDITIONS S. 6(c) (c) by the failure of the acceptor to fulfill a condition precedent to acceptance; PYM v CAMPBELL yuhanza/2014

OFFEROR DIES OR BECOMES INSANE S. 6(d) (d) by the death or mental disorder of the proposer, if the fact of his death or mental disorder comes to the knowledge of the acceptor before acceptance. yuhanza/2014

REVOCATION OF ACCEPTANCE Section 5(2) : “…at any time before the communication of the acceptance is complete as against the acceptor…” Section 4(3) (a) & (b) – revocation of acceptance must be communicated & it is effective when offeror gets knowledge of acceptance DUNMORE v ALEXANDER yuhanza/2014