Contract Law Acceptance and Cases Quiz

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Questions and Answers

In the case of Gibbons v Proctor, what was the court's ruling regarding knowledge of the offer?

The court ruled that knowledge of the offer was only necessary in certain jurisdictions.

The court ruled that knowledge of the offer was necessary for acceptance.

The court ruled that knowledge of the offer was not necessary for acceptance. (correct)

The court ruled that knowledge of the offer was only necessary in some cases.

What is the general rule regarding communication of acceptance?

Acceptance must be communicated in a timely manner.

Acceptance must be communicated in writing.

Acceptance can be communicated by any act or omission that effectively conveys acceptance. (correct)

Acceptance must be communicated through a formal letter.

When does acceptance become complete against the proposer, according to Section 4(2) (a) CA 1950?

When the proposer receives the acceptance.

When the acceptor sends the acceptance. (correct)

When the acceptor clarifies the acceptance.

When the proposer acknowledges the acceptance.

What is the significance of the case Williams v Carwardine regarding the acceptor's motive?

The acceptor's motive is irrelevant if the terms of the offer are fulfilled. (A) Signup and view all the answers

Under what circumstances is acceptance considered complete against the acceptor according to Section 4(2) (b) CA 1950?

When the proposer knows of the acceptance. (C) Signup and view all the answers

In the case of Ignatius v Bell, what was the mode of communication used by the parties?

Post (B) Signup and view all the answers

Which of the following is NOT a factor discussed in the text as impacting acceptance?

Duration of the Contract (A) Signup and view all the answers

What is the postal rule, as explained in the text?

Acceptance is binding from the moment it is sent, but only if it is sent via post or telegram. (A) Signup and view all the answers

What is required for an acceptance to convert a proposal into a promise?

The acceptance must be absolute and unconditional. (D) Signup and view all the answers

What constitutes a counteroffer in the context of acceptance?

Proposing new terms instead of accepting the original offer. (B) Signup and view all the answers

In the case of Hyde v Wrench, what key concept was established regarding counteroffers?

Introducing a new price constituted a counteroffer that destroyed the original offer. (D) Signup and view all the answers

Which of the following does NOT constitute a valid acceptance?

Agreeing with the offer but with additional conditions. (A) Signup and view all the answers

According to the Contracts Act 1950, acceptance must be characterized as which of the following?

Absolute and unqualified. (D) Signup and view all the answers

What was the primary conclusion from the case of The Ka Wah Bank Ltd v Nadinusa Sdn Bhd?

Acceptance must be final and unqualified. (C) Signup and view all the answers

In which scenario would acceptance be considered invalid according to the content provided?

A party expresses agreement with the terms after asking for modifications. (C), A party accepts an offer on the condition of receiving additional benefits. (D) Signup and view all the answers

Which of the following statements is true regarding acceptance and counteroffers?

A counteroffer destroys the original offer and removes options for acceptance. (B) Signup and view all the answers

Under the postal rule, when is acceptance considered complete for the proposer?

When the letter is posted (D) Signup and view all the answers

What must happen for a contract to be formed during instantaneous communication, such as a phone call?

The proposer must hear the acceptance (C) Signup and view all the answers

What happens if the proposer did not hear the acceptance due to their own fault?

The proposer is still bound by the acceptance (A) Signup and view all the answers

In a scenario where both parties are at fault during a phone call, what is the outcome regarding the contract?

The contract is considered valid (B) Signup and view all the answers

What is a key principle established in the case of Entores Ltd v Miles Far East Corporation?

Acceptance is effective when the proposer hears it (B) Signup and view all the answers

Which of the following scenarios would result in no contract being formed?

The phone line unexpectedly cuts off without both parties realizing (C) Signup and view all the answers

What can an acceptor do before their acceptance letter is received?

Withdraw their acceptance (C) Signup and view all the answers

According to the rules on acceptance, when does the acceptor become bound to the contract?

Once the proposer has received the acceptance (D) Signup and view all the answers

In the case of Brogden v Metropolitan Railway Co, what initially led to the court's ruling that no contract existed?

The amended agreement was not signed by both parties. (D) Signup and view all the answers

What is the main principle illustrated by the case of Jones v Daniel regarding acceptance of an offer?

Acceptance must be absolute and unconditional. (A) Signup and view all the answers

What does the phrase 'subject to contract' typically imply in an agreement?

The agreement is not legally binding until a formal contract is signed. (D) Signup and view all the answers

Which case explored the concept of acceptance by conduct, demonstrating that a formal contract is not always necessary?

Brogden v Metropolitan Railway Co (C) Signup and view all the answers

What distinguishes cross-offers from valid acceptances?

Cross-offers are made simultaneously and in ignorance of each other. (D) Signup and view all the answers

Which of the following scenarios would NOT be considered a counteroffer?

Clarifying a term in the offer during acceptance. (C) Signup and view all the answers

Which case exemplifies the principle that acceptance is conditional on signing a formal contract?

Kam Mah Theater Sdn Bhd v Tan Lay Soon (A) Signup and view all the answers

In the context of acceptance by conduct, what principle dictates that a contract is formed when parties behave as if they are bound by an agreement?

Mutual assent (D) Signup and view all the answers

Based on the case of Felthouse v Bindley, what can be concluded about acceptance by silence?

Silence never constitutes acceptance. (A) Signup and view all the answers

Which of the following is a valid exception to the rule that silence does not constitute acceptance?

When the offeror has clearly indicated that silence will be treated as acceptance. (D) Signup and view all the answers

According to Section 5(2) of the Contracts Act 1950, when can an acceptance be revoked?

Only before the acceptance is communicated to the offeror. (D) Signup and view all the answers

According to Section 4(2)(b) of the Contracts Act 1950, when is the communication of acceptance complete against the acceptor?

When the acceptance is received by the offeror. (D) Signup and view all the answers

According to Section 4(3)(a) of the Contracts Act 1950, when is the revocation of acceptance complete as against the proposer?

When the revocation is sent by the acceptor. (A) Signup and view all the answers

According to Section 4(3)(b) of the Contracts Act 1950, when is the revocation of acceptance complete as against the person to whom the revocation is made?

When the revocation is received by the proposer. (A) Signup and view all the answers

In the practical example provided, what is the legal outcome when A receives B's revocation letter on Wednesday before reading the acceptance letter?

There is no contract because B revoked their acceptance before A became aware of it. (C) Signup and view all the answers

Study Notes

Acceptance: A Comprehensive Note

Definition of Acceptance: Acceptance occurs when the person to whom a proposal is made signifies their agreement. This transforms the proposal into a promise.

Requirements of a Valid Acceptance

Absolute and Unqualified Acceptance (Section 7(a) CA 1950): Acceptance must be complete and unconditional, without altering the terms of the offer. Any changes constitute a counteroffer, invalidating the original offer.
Case Example (Ka Wah Bank Ltd v Nadinusa Sdn Bhd): The court ruled that acceptance must be final and unqualified. Any attempt to introduce new terms or conditions to the offer is not a valid acceptance.

When Acceptance is Not Absolute and Unqualified

Counteroffer: A counteroffer occurs when the offeree doesn't accept the offer but proposes new terms instead, effectively destroying the original offer.
Case Example (Malayan Flour Mills v Saw Eng Chee): This case illustrates the principle of a counteroffer invalidating the original offer.
Case Example (Hyde v Wrench): The plaintiff offered a lower price for a farm than the defendant's original offer, resulting in a counteroffer. The original offer was no longer valid.

Terms of Offer Amended at Time of Acceptance

Changing the Offer: Acceptance that introduces new terms, modifications, or alterations of the original offer constitutes a counteroffer, invalidating the initial agreement.
Case Example (Brogden v Metropolitan Railway Co): Continued business dealings and subsequent actions by both parties indicated the agreement's acceptance despite unsigned modifications.
Case Example (Jones v Daniel): Adding a new document with extra conditions to an offer indicated the acceptance was not unconditional.

Knowledge of the Offer Before Acceptance

Contradictory Decisions (Gibbons v Proctor, Fitch v Snedaker): These cases suggest different interpretations of whether knowledge of the existence of the offer is required for valid acceptance.

Motive of the Acceptor

Case Example (Williams v Carwardine): In this case, the court determined that the offeree's motive for accepting was immaterial; the terms were fulfilled correctly, allowing it to be a valid acceptance.

Modes of Communicating Acceptance

General Rule (Section 3 CA 1950): Acceptance can be made through any action or inaction effectively conveying agreement, contingent on it meeting all conditions specified originally within the offer.
When Communication is Complete (Section 4(2) CA 1950):
- Against the proposer (Section 4(2)(a)): Acceptance is complete when the offeree sends the acceptance, even if the offeror hasn't yet received or read it.
- Against the offeree (Section 4(2)(b)): Acceptance is complete when the offeror receives the acceptance.

Mode of Acceptance

Postal Rule: In cases of acceptance and revocation occurring via post, acceptance is complete when the letter containing the acceptance is posted (Ignatius v Bell)
Instantaneous Communication (e.g., phone, telex): Acceptance is complete only when the offeror receives it. There is no binding contract if the offeror (the party that sent the initial agreement) doesn't hear the offer

When is the Contract Complete?

The contract is completed only when the offeror receives the acceptance. This rule differs from the postal rule.

Revocation of Acceptance

Section 5(2) CA 1950: An acceptance can be revoked at any time before the communication of the acceptance is complete as against the acceptor. Acceptance cannot be revoked after that point.
Section 4(2)(b) CA 1950: Communication of acceptance is complete against the acceptor only when the acceptance comes to the knowledge of the proposer.
Revocation Completion: Revocation is complete when the other party receives the notice of revocation.

Practical Examples

Provide examples related to offer, acceptance, and revocation scenarios.

Summary

Result (Example): If the offeror has not yet received/been made aware of the acceptance, but the offeree decides to revoke the acceptance, the revocation will be successful.

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Description

Test your understanding of contract law concepts, focusing on the rules of acceptance, significant cases such as Gibbons v Proctor and Williams v Carwardine, and key principles like the postal rule. This quiz covers essential aspects like communication of acceptance and counteroffers as explained in various sections of the Contracts Act 1950.