Contract Law: Offer and Acceptance

Questions and Answers

Which of the following accurately describes express appointment in agency relationships?

An agency relationship that arises through implied actions of the principal.

A scenario where the agent acts without prior consent from the principal.

An authorization given through written or spoken words by the principal. (correct)

A form of ratification of unauthorized actions by the agent.

What characterizes implied appointment in an agency relationship?

It arises from actions or dealings that suggest authority. (correct)

It allows an agent to exceed their authority without consequences.

It requires signed documents to be valid.

It is established only through court orders.

In the context of agency by ratification, what is the role of the principal?

The principal’s acceptance retroactively legitimizes the unauthorized act. (correct)

The principal can choose to ignore acts completed by the agent.

The principal must always approve unauthorized actions before they are binding.

The principal has no involvement in the ratification of agent actions.

Which of the following is NOT a way to create an agency relationship?

Agency arising from mutual consent only. Signup and view all the answers

Which statement is a misconception regarding ratification in agency?

All acts by an agent require prior authorization to be valid. Signup and view all the answers

What would constitute an example of an implied appointment as an agent?

A person publicly representing themselves as an agent for a business. Signup and view all the answers

Which of the following is a critical effect of ratification according to Section 149?

It renders the contract legally binding as if initially authorized. Signup and view all the answers

What aspect can lead to a misunderstanding of implied appointment?

Assuming only written contracts create agency relationships. Signup and view all the answers

Which principle governs the validity of a contract when an agent exceeds their authority?

The contract may become binding if the principal ratifies the agent's actions. Signup and view all the answers

Study Notes

Offer and Acceptance Dynamics

Alfred's initial offer: 1000 boxes of tinplates at RM10 per box, valid for 72 hours starting Monday at 12:00 p.m.
Bruno counters with RM9 per box, leading to rejection of Alfred's original offer.
Bruno attempts to accept Alfred’s original offer after the counter, deemed invalid due to previous rejection.

Legal Principles of Contract Formation

Section 2(b) of the Contract Act 1950 states acceptance must be unequivocal; a counter offer constitutes rejection of the original.
Hyde vs Wrench (1849): A counter offer nullifies the original offer.
Acceptance post-counter offer is ineffective; original offer cannot be revived once rejected.

Communication of Acceptance and the Postal Rule

Acceptance is considered complete upon posting according to the Postal Rule; however, the timing is critical.
Alfred’s offer expires on Thursday at 12:00 p.m. after 72 hours, invalidating any acceptance sent after that time.
Bruno communicated acceptance on Wednesday at 2:00 p.m., but Alfred received it after the offer’s expiry.

Conclusion on Contract Validity

No valid contract exists between Alfred and Bruno due to the timing of communication and rejection of the original offer.
The acceptance lapses as it does not align with the defined timeframe, leading to termination of the offer.

Key Aspects of Enforceable Contracts

Acceptance must be clear and unequivocal, demonstrating genuine intent.
Acceptance can be expressed in writing, verbally, or through conduct if it shows intent to accept.
Any interactions without clear acceptance lead to non-enforceable agreements, as exemplified by Sarah and Hafiza's case involving an invitation to treat.

Agency in Contractual Relationships

Agency defined under the Contracts Act 1950 allows contracts to be bound by agents other than the original parties.
Five creation methods of agency in Malaysian law:
- Express Appointment: Clear articulation of authority through spoken or written means (e.g., Power of Attorney).
- Implied Appointment: Authority inferred through actions or representations, such as business partnership roles.
- Ratification: Agency established retroactively when a principal accepts actions taken beyond an agent's authority.
  - Section 149 states that ratified acts bind the principal as if authorized initially.

Description

Explore the nuances of contract law through a scenario involving an initial offer, a counter offer, and an acceptance attempt. This quiz will test your understanding of key concepts such as offer validity and timing in contract formation. Ideal for students studying commercial law.