Offer PDF

Introduction Formation of a contract Not an ‘agreement’ (perjanjian) A contract is legally binding Requires: ◦ Offer (Tawaran) ◦ Acceptance (Penerimaan) ◦ Consideration (Balasan) ◦ Intention to create legal relations (Niat untuk mewujudkan perhubungan undang-undang) ◦ Capacity (Keupayaan)...

Introduction Formation of a contract Not an ‘agreement’ (perjanjian) A contract is legally binding Requires: ◦ Offer (Tawaran) ◦ Acceptance (Penerimaan) ◦ Consideration (Balasan) ◦ Intention to create legal relations (Niat untuk mewujudkan perhubungan undang-undang) ◦ Capacity (Keupayaan) ©DR IZURA MASDINA (UM) 2 Dealing with a normal business contract It is the basic foundation of any contract Does not require: ◦ Witnesses ◦ In writing ◦ Signature ◦ Guarantor ◦ Stamp duty ©DR IZURA MASDINA (UM) 3  When a written contract is entered into, the following are generally deemed present: o Offer o Acceptance o Intention It is NOT a contract if there is no: o Consideration (except in s.26 situations) o Capacity (except when the exceptions apply) ©DR IZURA MASDINA (UM) 4 Offer Introduction S.2(a) Contracts Act 1950 When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtain the assent of that other to the act or abstinence, he is said to make a proposal ©DR IZURA MASDINA (UM) 6 In other words: A says to B that I want – or not – to do something (and hoping fervently that you’ll agree) Preston Corp Sdn Bhd v Edward Leong: ◦ “An offer is an intimation of willingness by an offeror to enter into a legally binding contract ©DR IZURA MASDINA (UM) 7 Preston Corp Sdn Bhd v Edward Leong Appellants: company which publishes books. Respondents: firm of printers. Contract: printing of school textbooks Letters exchanged: R submitted quotations, A issued printing orders. ◦ Quotation  orders  confirmation  printing At which point in time was an offer made? ◦ Quotation / order ? ©DR IZURA MASDINA (UM) 8 An offer must indicate a willingness on the part of the offeror to become bound as soon as it has been accepted by the offeree: S.2(a) Contracts Act 1950 ◦ When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtain the assent of that other to the act or abstinence, he is said to make a proposal ©DR IZURA MASDINA (UM) 9  Quotations “We thank you for your enquiry and have the pleasure in submitting our quotation for the printing and supply of …” “All prices quoted are at Nett, and subject to final confirmation upon receipt of your order.” “We hope our quotation will meet with your kind approval” ©DR IZURA MASDINA (UM) 10 Court held: Quotations never intended to be a binding offer ◦ Nothing in the quotations showed “an intimation of willingness … to enter into a legally binding contract” ◦ It was merely a supply of information ◦ A response by R, to A, as to the price of books to be printed Offer was constituted by the printing orders ©DR IZURA MASDINA (UM) 11 Requirements ©DR IZURA MASDINA (UM) 12 Introduction 1. Offer must be valid at law 2. Offer can be made expressly, or impliedly 3. Must be communicated 4. Must be clear in meaning ©DR IZURA MASDINA (UM) 13  1. Valid at Law Offer itself must comply with the law otherwise, offer does not – cannot – exist This does not mean that the offer itself must be ‘legal’ It means that it needs to fulfill the requirements of creating a legal offer ©DR IZURA MASDINA (UM) 14  Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui Offer did not comply with s.4(1) Hire Purchase Act 1967 (Revised 1978) ◦ ie owner of goods required to give prospective hirer a written agreement consisting of a summary of the hirer’s financial obligations under the proposed hire-purchase agreement “there could not be acceptance … of a non-existent offer” ◦ The written offer signed by the defendant without the condition precedent being fulfilled was not an offer recognised by the Hire-Purchase Act ©DR IZURA MASDINA (UM) 15  2. Expressly/Impliedly S.9 Contracts Act So far as the proposal … of any promise is made in words, the promise is said to be express. So far as the proposal … is made otherwise than in words, the promise is said to be implied. ©DR IZURA MASDINA (UM) 16  Preston Corp Sdn Bhd v Edward Leong “An offer is an intimation of willingness by an offeror to enter into a legally binding contract. Its terms either expressly or impliedly must indicate that it is to become binding on the offeror as soon as it has been accepted by the offeree.” ©DR IZURA MASDINA (UM) 17  3. Must be communicated S.4(1) Contracts Act 1950 “The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made” S.3 Contracts Act 1950 “The communication of proposals … are deemed to be made by any act or omission of the party proposing … by which he intends to communicate the proposal … or which has the effect of communicating it” ©DR IZURA MASDINA (UM) 18  4. Clear Meaning An offer that is not clear would be invalid for uncertainty Ahmad Meah & Anor v Nacodah Merican D promised to build and give to P and his daughter, a “house which must be a suitable building” ©DR IZURA MASDINA (UM) 19 Once an offer is accepted, a promise is formed. Eventually, if all the other factors are satisfied, a contract is formed An offer must be distinguished from an Invitation to treat ©DR IZURA MASDINA (UM) 20 Invitation to Treat ©DR IZURA MASDINA (UM) 21 Introduction An indication of a willingness for an offer to be made It is not a statement that is binding at law Offer  Acceptance  Promise Invitation to treat  Offer  Acceptance Promise Examples of ITT: 1. Display of goods 2. Pamphlets 3. Advertisements 4. Tender ©DR IZURA MASDINA (UM) 22 1. Display of Goods Fisher v Bell Display of a ‘flick-knife’ in shop window. Was it an offence against s.1(1) Restriction of Offensive Weapons Act 1959? “ Any person who … sells or … offers for sale …any knife which has a blade which opens automatically by hand pressure applied to a button, spring or other device in or attached to the handle of the knife, sometimes known as a “flick knife” or “flick gun” … shall be guilty of an offence …” ©DR IZURA MASDINA (UM) 23 Pharmaceutical Society of Great Britain v Boots There were medication on shelves that were controlled items. Customer enters pharmacy; chooses goods on shelf; places in wire basket; goes to cashier : places it on the receptacle. When is an offer made? ©DR IZURA MASDINA (UM) 24  2. Advertisements Usually an ITT Partridge v Crittenden “Quality British A.B.C.R … bramblefinch cocks, bramblefinch hens, 25s each” under “Classified Advertisements”. S.6(1) Protection of Birds Act 1954 “any person sells, offers for sale or has in his possession for sale …” ©DR IZURA MASDINA (UM) 25 HOWEVER Advertisements can be an offer The wordings of the advertisement is important Key issue: Was there an intimation of willingness to be bound? Carlill v Carbolic Smoke Ball ©DR IZURA MASDINA (UM) 26 ©DR IZURA MASDINA (UM) 27 “£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.” Mrs. Carlill used the item as advertised ©DR IZURA MASDINA (UM) 28 Advertisement ◦ made to the whole world ◦ Unilateral contract Was the advertisement an offer, or an ITT? Intention to be bound can be determined in this case: ◦ £1000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter.” ◦ Shows “intimation of being bound once accepted” ©DR IZURA MASDINA (UM) 29 Tender ©DR IZURA MASDINA (UM) 30 Revocation ©DR IZURA MASDINA (UM) 31  Introduction In order for an offer to be revoked, two things must be adhered to: 1. How to revoke ◦ i.e. the method of revocation ◦ S.6 Contracts Act 1950 2. When can revoke ◦ s.5(1) Contracts Act 1950 ©DR IZURA MASDINA (UM) 32 1. How to Revoke: s.6 A proposal is revoked – a) By the communication of notice of revocation by the proposer to the other party; b) By the lapse of time prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of acceptance; c) By the failure of the acceptor to fulfil a condition precedent to acceptance; or d) By the death or mental disorder of proposer, if the fact of his death or mental disorder comes to the knowledge of the acceptor before acceptance. ©DR IZURA MASDINA (UM) 33 (a) Notice of Revocation “…communication of notice of revocation by the proposer to the other party” First issue: ◦ Can the communication of revocation be done by someone other than the proposer? “notice of revocation by the proposer” ©DR IZURA MASDINA (UM) 34  Dickinson v Dodds (1876) On Wed, June 10, the D gave P a written offer to sell a house for £800 “to be left over until Friday, June 12, 9.00am”. On June 11, D sold the house to a third party, Allan, for £800. P was informed of this that evening by a fourth man, Berry. Before 9am on June 12, P handed to D a formal letter of acceptance. ©DR IZURA MASDINA (UM) 35 James LJ: “It is.. quite clear that before there was any attempt at acceptance by the Plaintiff, he was perfectly well aware that Dodds had changed his mind … It is impossible, therefore, to say there was ever that existence of the same mind between the two parties which is essential in point of law to the making of an agreement.” ©DR IZURA MASDINA (UM) 36 “… communication of notice of revocation by the proposer to the other party” ©DR IZURA MASDINA (UM) 37 Second issue: ◦ When can the notice be effective/valid? To be read together with s.5(1) Contracts Act ◦ A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards ©DR IZURA MASDINA (UM) 38 (b): Lapse of time “By the lapse of time prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of acceptance” What is reasonable time? ◦ Question of fact in each case ©DR IZURA MASDINA (UM) 39 (c): Failure to fulfil condition “By the failure of the acceptor to fulfil a condition precedent to acceptance” Some offers may have a condition precedent to be fulfilled prior to acceptance ◦ Thus, if these conditions are not fulfilled, then the offer is revoked ©DR IZURA MASDINA (UM) 40 Aberfoyle Plantations Ltd v Khaw Bian Cheng A agreed to sell an estate to R. However, the sale was conditional upon A obtaining renewal of several leases. R paid the deposit. A did not manage to obtain the renewal of leases. PC … R’s obligation to pay the balance of the purchase price did not arise if the appellant did not obtain the renewal of the leases. ©DR IZURA MASDINA (UM) 41 “It is a principle of general application that if an obligation in a contract is conditional on an occurrence of an event then the occurrence or non-occurrence of the event will have the effect of either necessitating or excusing the performance of the promise” Chase Perdana Bhd v Md Afendi bin Hamdam (2015) ©DR IZURA MASDINA (UM) 42 (d): death or mental disorder “By the death or mental disorder of proposer, if the fact of his death or mental disorder comes to the knowledge of the acceptor before acceptance” If known prior to acceptance, then one cannot accept ◦ Dickinson v Dodds – “offer cannot be accepted after his death” ◦ No meeting of the minds ©DR IZURA MASDINA (UM) 43  Bradbury v Morgan “Death does not in general operate as a revocation, but only in exceptional cases and this is not within them” “exceptional cases” = performance requires personal service Note as well s.38(2) Contracts Act 1950 ◦ “Promises bind the representatives of the promisors in case of the death of the promisors before performance, unless a contrary intention appears from the contract” ©DR IZURA MASDINA (UM) 44 Concluding Remarks Always remember: s.6 is with regards to revocation of an offer When you revoke an offer is equally important to ensure whether it is binding ©DR IZURA MASDINA (UM) 45 End