CHAPTER 2 LAW OF CONTRACT What is a

CHAPTER 2: LAW OF CONTRACT

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

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

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 Pero 3 Maivi, to Wada for RM 35, 000. Offeror / Promisor / Offeree / Promisee Beni Wada

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

Specific Types of offer General

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

CASES CARLILL V CARBOLIC SMOKE BALL CO LTD BOULTON V JONES

An offer must be certain Conditions of an offer 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 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 An offer terminates when revoked before acceptance 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.

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

By non-acceptance within the time stipulated for acceptance or reasonable time Lapse of offer 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 VIDEO • Dickinson v Dodds • Hyde v Wrench

Let’s do some 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 An offer/proposal Invitation to Treat • 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 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