Contract Law Principles Quiz

ILAC Method

• Identifies the legal question
• Specifies relevant legal principles/statutes
• Applies the law to specific case facts
• Determines final judgment/principle

Carlill v Carbolic Smoke Ball Co [1893]

• Issue: Was an advertisement promising a reward binding?
• Law: Advertisements are usually invitations to treat, not offers. Unilateral contracts can be formed if performance is completed in accordance with the offer.
• Application: The company advertised a reward. Carlill used the smoke ball and still got the flu.
• Conclusion: The advertisement was a valid unilateral offer, accepted by performance.

Young v Bristol Aeroplane Co Ltd [1944]

• Issue: Is the Court of Appeal bound by its previous decisions?
• Law: Courts must follow previous decisions (stare decisis) unless a previous case was decided wrongly (per incuriam), higher court overrules past judgments or previous decisions conflicted.
• Application: The Court of Appeal had different past decisions on the matter.
• Conclusion: The Court of Appeal is bound by its previous decisions, except for special situations.

Hendry v De Cruz [1949]

• Issue: Does stare decisis apply in Malaysia?
• Law: Malaysian Courts follow English legal principles, based on Civil Law Act 1956, and consider Stare Decisis.
• Application: The Malaysian courts followed the case of Young v Bristol Aeroplane Co Ltd on Stare Decisis.
• Conclusion: Stare Decisis applies in Malaysia. Lower courts must follow higher court decisions.

Gibson v Manchester City Council [1979]

• Issue: Does a statement of "may be prepared to sell" constitute a valid offer?
• Law: An offer is clear, definite and shows an intent to be legally bound. An invitation to treat is an invitation to negotiate.
• Application: The council stated they "may be prepared to sell" the property. Gibson made an offer to buy based on this.
• Conclusion: The statement was an invitation to treat, so no legally binding offer was made.

Pharmaceutical Society of Great Britain v Boots Cash Chemists Ltd [1953]

• Issue: Does displaying goods on shelves in a self-service store constitute an offer?
• Law: Goods displayed on shelves are generally invitations to treat, and the customer makes the offer when presenting items at the cashier.
• Application: Boots displayed drugs on shelves, and a customer picked up the drug.
• Conclusion: Goods on display are invitations to treat, not offers. Contract forms at cashier.

Hyde v Wrench [1840]

• Issue: Does a counteroffer cancel the original offer?
• Law: A counteroffer cancels the original offer and cannot be revived.
• Application: Wrench offered land for £1000. Hyde counteroffered £950, which was rejected. Hyde then tried to accept the original offer.
• Conclusion: Hyde's counteroffer canceled Wrench's offer.

Adams v Lindsell (1818)

• Issue: When is acceptance of an offer effective?
• Law: Acceptance is effective when posted, not when received (postal rule).
• Application: Lindsell offered to sell wool to Adams. Adams posted acceptance, but Lindsell sold to someone else.
• Conclusion: Acceptance was valid when Adams posted.

Felthouse v Bindley (1862)

• Issue: Can silence amount to acceptance?
• Law: Silence does not constitute acceptance. Contracts require clear acceptance.
• Application: Felthouse offered to buy a horse, stating "If I hear no more, I will assume it is mine." Bindley sold the horse.
• Conclusion: Silence is not acceptance.

Phiong Khon v Chonh Chai Fah [1970]

• Issue: Is lacking certainty in an agreement a valid binding contract?
• Law: Contracts must have clear and definite terms for a valid contract. Intention to create legal relations is essential.
• Application: The agreement's vague terms about price and performance made it unclear.
• Conclusion: The agreement could not be enforced due to lacking certainty.

Balfour v Balfour [1919]

• Issue: Can domestic agreements be legally enforceable?
• Law: There is a presumption against the intention to create legal relations in domestic agreements.
• Application: A husband promised to pay an allowance to his wife.
• Conclusion: The agreement was not legally binding, as the parties didn't intend it to be legally enforceable.

Merritt v Merritt [1970]

• Issue: Can a written agreement between separated couples be legally binding?
• Law: There is a presumption that separated couples have the intention to create legal relations if they enter into a written agreement.
• Application: A couple created a written agreement regarding the division of a house.
• Conclusion: The agreement was legally binding due to the written nature and intent of the separated parties.

Jones v Padavatton [1969]

• Issue: Are family agreements enforceable as contracts?
• Law: Family agreements often lack the necessary legal intent to be binding.
• Application: A mother promised to support her daughter if she studied law.
• Conclusion: The agreement was not legally binding, as it was a family agreement lacking the intention to create legal relations.

Kesarmal v Valiappa Chettiar [1954]

• Issue: Does a contract signed under coercion make it voidable?
• Law: Contracts entered into under coercion are voidable under Malaysian law.
• Application: The plaintiff transferred land under pressure and threats.
• Conclusion: The contract was voidable due to coercion.

Chin Nam Bee Development Sdn Bhd v Tai Kim Choo [1988]

• Issue: Can economic pressure be considered coercion?
• Law: Coercion requires more than just economic duress; physical threats or harm are needed. However, it is not necessary to prove economic duress for pressure
• Application: The claimant paid additional sum under pressure.
• Conclusion: Economic pressure alone does not constitute coercion.

Derry v Peek [1889]

• Issue: Does fraudulent misrepresentation make a contract voidable?
• Law: Fraud occurs when false statements are made knowingly or recklessly.
• Application: A company misrepresented its ability to use steam-powered trams.
• Conclusion: No fraud was found; the claim was dismissed.

Raffles v Wichelhaus (1864)

• Issue: Does mutual mistake void a contract?
• Law: Mutual mistake about essential contract terms makes a contract void.
• Application: Parties used the same ship name with different meanings.
• Conclusion: Contract was void due to fundamental mutual mistake.

Cundy v Lindsay (1878)

• Issue: Does mistaken identity void a contract?
• Law: A contract based on a fraudulent misrepresentation of identity is void.
• Application: A fraudster impersonated a company and bought goods.
• Conclusion: Contract was void due to a mistaken identity.

Dunlop Pneumatic Tyre Co Ltd v Selfridge [1915]

• Issue: Can a third party enforce a contract they were not a party to?
• Law: The doctrine of privity of contract states a contract can only be enforced by the parties who entered into it.
• Application: Dunlop sold tyres to a distributor who then sold them to Selfridges below the agreed price.
• Conclusion: Dunlop could not enforce the price restriction against Selfridges because they were not party.

Currie v Misa (1875)

• Issue: Is consideration necessary for a contract to be legally binding?
• Law: Consideration must be present to enforce a contract; either a benefit to the promisor or a detriment to the promisee.
• Application: Misa failed to honour a bill of exchange.
• Conclusion: Consideration is essential for enforcement of a contract.

Carlill v Carbolic Smoke Ball Co [1893]

• Issue: Can an advertisement be considered a legally binding unilateral contract?
• Law: Unilateral contracts form through an offer to perform, rather than communication.
• Application: Carlill used the product and claimed the reward.
• Conclusion: The advertisement was a legally enforceable unilateral offer, valid upon performance.

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]

Issue: Is displaying goods on shelves an offer? Law: Goods on display in a shop, or a self-service store, is an invitation to treat. Application: Boots displayed drugs on shelves, customer picked up a drug. Conclusion: Goods on display is an invitation to treat, and not an offer, the contract is made at the cashier.