LAW OF CONTRACT PREPARED BY: NORAZLA ABDUL WAHAB

1. LAW OF CONTRACT PREPARED BY: NORAZLA ABDUL WAHAB

2. What is Contract?

3. Agreement between 2 or more parties that legally binding between them. • S.2 (h) of the Contracts Act 1950-…. “An agreement enforceable by law”

4. Essential Elements of the Contract: • Offer & Acceptance • Consideration • Intention to create legal relation • Certainty • Legal capacity • Free Consent • Legality of the Objects • Required Formalities.

5. OFFER

6. Offer Definition s2(a) CA Communication of offer s. 4 (1) of CA ITT Revocation of offer

7. An offer is a proposal • Once it is accepted, it creates a legally binding agreement • A person who makes an offer is called an offeror or promisor • A person to whom the offer is made is called an offeree or promisee

8. Definition of an offer • Section 2 (a) of CA 1950 S.2(a) – when one personsignifies to another his willingnessto do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal.

9. Types of Offer • An offer maybe: • express (verbally or in writing i.e. : agreement). • implied (one's act or behaviour).

10. Types of Offer • Section 9 of CA: • If an offer is made in word or writing it is said to express. If an offer is made by one act or behavoiur it is said to be implied.

11. To Whom Offer can be made ? 1) Specific 2) General/ Public

12. 1) Specific • Addressed to specific person • Only the addressee may accept the offer • Who is not addressee, cannot make the acceptance

13. Boulton v Jones • Jones (D) normally had some business deal with Brocklehurst. D offered to buy some goods from Brocklehurst, but on the day the order was sent, Brocklehurst had sold his company to P. • The P did not inform the D that the business had changed hands. When the D knew the goods had not come from Brocklehurst , he refused to pay for the goods.

14. Held: • D was not liable to pay for the goods. • No contract between the P and the D. Because the P had no right to accept the offer which is not addressed to him.

15. 1) Public/General • Addressed generally to any one who may satisfy all the terms or conditions stipulated by the offeror. • One who satisfies all the terms of the offer is considered as making acceptance. • Then, the offeror is bound to the contract.

16. Carlill v Carbolic Smoke Ball • the D issued an advertisement in which they offered to pay 100 pound to any person who suffered from influenza after having used one of their smoke balls. • The P bought and used the smoke ball and caught influenza. She sued the company for the promised reward. • The D refused to pay because he argued that one cannot make an offer with entire world.

17. The court held that the D has to pay the reward to P as an offer can be made to the entire world.

19. Condition of an offer • 1. certain • 2. communicated

20. 1. certain • Certain, clear, complete, final and detail to avoid any doubt

21. Guthing v Lynn (1831) • Lynn offered to buy a horse from Guthing on condition that if the horse brings luck to him. Then only he pay another 5 pound extra. Held: • The offer was not final & incomplete. Therefore, NOT VALID.

22. 2. communicated • S. 2 (a) “ when one person signifies to another

23. S. 4(1) – the communication of proposal is complete when it comes to the knowledge of the person to whom it is made Communication of an Proposal

24. R v Clarke Australian government offered a reward for information leading arrest of persons responsible for the murder of two policeman. X and Clarke were arrested and charged with murder. During investigation, Clarke gave information which lead to the arrest of Y. X and Y later convicted for murder and Clarke was discharged. Clarke then Claimed for the reward. Clarke claimed was rejected by the court because he has no knowledge with regard to the offer by Australian government. He gave the info not because he knows about the reward but to release himself.

25. DISTINCTION BETWEEN OFFER & INVITATION TO TREAT (ITT)

26. ITT • Can’t form a contract • Thus, NO BINDING • It merely invitation from 1 party to another party to make an offer. • No element of offer as S.2(a) ….with a view of obtaining the assents of act/ abstinent

28. a. Advertisement • An advertisement is only an invitation to applicants to make an offer.

29. Harris v Nickerson (1873) The D advertised a sale of certain goods including certain office accessories of a certain date at a particular place. The P then travelled to the said location and he discovered that the office accessories had been withdrawn from the sale.

30. Harris v Nickerson (1873) The P sought damages because the D had breached the contract based on the argument that the advertisement was an offer and his presence at the sale was an acceptance. Court : Rejected his claim Advertisement= ITT

31. Coelho v The Public Services Commission [ 1964] MLJ 12 The R advertised in the Malay Mail inviting applications for the post of an assistant Passport Officer. The applicant made an application and was subsequently accepted for permanent post and letter of appointment is given based on the unconditional condition. .

32. Coelho v The Public Services Commission [ 1964] MLJ 12 Subsequently, the R tried to terminate the A based on the reason that the A was appointed on probation. Then A sued R for breach of the contract.

33. The court held that: • the advertisement was an invitation to treat. • But • The application made by the applicant was considered as an offer. And the appointment of the applicant was considered as an acceptance • Thus, there was a valid contract of employment. • The termination of the applicant on probation is illegal.

34. B. Display of Goods • Self service shop/ shop window display • Do not constitute a proposal to sell=ITT • The proposal /OFFER: • when the customer selects the desired goods for payments at the counter.. • Offer comes from the customer, not from the shop/supermarket

35. B. Display of Goods When the offer is made by the customer • It is entirely up to the cashier at the counter to make acceptance (scan the goods) or to refuse the offer.

36. Fisher v Bell • The D displayed a flick knife in the window of his shop. • Under the Restrictive Weapon Act, it was illegal to manufacture, sell, hire or offer for sale or hire or lend to any other person any flick knife. • Because of that display act, the D then was charged for contravened the Act by offering the flick knife for sale. • The D submitted that this was not sufficient to constitute an offer.

37. Fisher v Bell • The court held that • displaying the knife was merely an ITT, not an offer • thus no liability arose.

38. Pharmaceutical Society of Great Britain v Boots Cash Chemist. • The D displayed a poison drugs on the shelves of self service system. Customers selected their purchases from the shelves, put them into basket and took them to the cashier desk. • However, the selling of poison drugs by using the above method is contravened the law. The D then was charged for offering to sell poison drug without pharmacist supervision. (S.18(1) of the Pharmacy & Poison Act 1933.

39. Pharmaceutical Society of Great Britain v Boots Cash Chemist. • Argument was made: Contract is complete at the moment customer took an article from the shelves and put in the basket. • COA laid down the principle: • Sale /contract complete at the cashier desk and not only by putting the things in the basket= offer. • The cashier has the right to accept/ reject. • The display of goods=ITT

40. C. Tender • A tender is only ITT. • X invites a supplier to tender a quotation for goods or services. An action taken by X is not an offer, therefore X is not bind to accept the bid.

41. C. Tender • An offer is actually made by the supplier to X. • A person who make a notice of tender/announcement all FREE to ACCEPT/REJECT.

42. Spencer v Harding • The D made announcement inviting tenders for sale of certain goods. • The offer made by the P is the highest but the D did not accepted that. • The P alleged that the D had breached the contract.

43. Spencer v Harding • The Court: • A circular offering stock for sale by tender was simply a proclamation that the D were already to negotiate for sale of goods and it merely ITT. • No obligation to sell to the highest bidder • It is different if stated that “ the highest bid/low quotation will be definitely be accepted.

44. D. Auction • An auction is only ITT. • The auctioneer is merely inviting the people present to make proposals which the auctioneer may accept or decline to accept. • Person who bids the price is the offerror.

45. D. Auction • Acceptance to the offer by the auctioneer is by knock of hammer (S.10 of the Auction Sale Act).

46. E. Price List/ Quotation • Not an offer= only ITT. • As early information to invite the prospective buyer to make an offer.

47. E. Price List/ Quotation • Given opportunity to the buyers to choose the best price. • Seller – entitled to reject/accept as well as to make counter offer with a new price.

48. Preston Corporation SdnBhd v Edward Leong & Others [1982] 2 MLJ 22 • The Publisher asked for quotation from the Printers • The (R ) gave quotation to the A. The A then made some printing orders based on the quotation given.

49. The Court laid down the principles: • The quotation were only supply of information which was an invitation to the A to make an offer /ITT in order to get the R’s service. • The printing orders made by the A=Offer which was subject to the acceptance by the R.