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  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) 7 In other words: DEFINITION OF OFFER IN SIMPLER 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) 8 Preston Corp Sdn Bhd v Edward Leong Appellants: company which publishes books. Respondents: firm of printers. Contract: printing of school textbooks Letters exchanged A asked, R submitted quotations, A issued printing orders. THE MOMENT WHEN AN OFFER IS MADE ◦ Question  Quotation  orders  confirmation  printing NOT AN OFFER, MERELY A SUPPLY OF INFORMATION ©DR IZURA MASDINA (UM) 9  A enquired, R submitted quotations, A issued printing orders. ◦ Query (A)  Quotation (R)  Orders (A)  Confirmed Order (R)  Printing QUESTION: At which point in time was an offer made? ©DR IZURA MASDINA (UM) 10 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) 11  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) 12 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 ◦ R replied A, as to the price of books to be printed Offer was constituted by the printing orders ©DR IZURA MASDINA (UM) 13 Requirements 4 MAIN REQUIREMENTS 1. MUST BE VALID AT LAW 2. MUST BE EXPRESSLY OR IMPLIED STATED 3.MUST BE COMMUNICATED 4.MUST BE CLEAR IN MEANING ©DR IZURA MASDINA (UM) 14 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) 15  1. Valid at Law NEED TO FULFILL THE REQUIREMENT OF MAKING A VALID OFFER - Offer itself must comply with the law DOES NOT MEAN THT SUCH OFFER MUST BE ENTIRELY LEGAL/ILLEGAL IN 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) 16  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) 17  MADE OTHER THAN MADE IN WORDS 2. Expressly/Impliedly IN WORDS 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) 18  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) 19  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” OFFER IS COMPLETE WHEN IT COMES TO THE KNOWLEDGE OF THE OFFEREE 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) 20  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” THE WORD “SUITABLE BUILDING” IS VAGUE AND UNCLEAR BECAUSE IT IS DIFFERENT FOR EACH PEOPLE ACCORDING TO THEIR PREFERENCES ©DR IZURA MASDINA (UM) 21  ONCE AN OFFER IS BEING ACCEPTED , A PROMISE IS FORMED 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) 22 Invitation to Treat ©DR IZURA MASDINA (UM) 23 Introduction OFFER : An offer is an intimation of willingness by an offeror to enter into a legally binding contract INVITATION TO TREAT : Indication of a willigness for an offer to be made 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) 24 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? DISPLAY OF GOODS IS AN ITT AND NOT AN OFFER , SO THIS DOES NOT APPLIES “ 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) 25 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) 26  2. Advertisements Usually an ITT SUBJECT TO CONDITIONS AND WORDING OF THE ADVERTISMENT 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) 27 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) 28 ©DR IZURA MASDINA (UM) 29 “£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.” THIS WORDING INDICATES THE COMPANY WILLINGNESS TO BE BOUND BY HIS OWN ADS SUBJECT TO THOSE WHO COME FORWARD TO HIS CONDITIONS Mrs. Carlill used the item as advertised ©DR IZURA MASDINA (UM) 30  Advertisement ◦ made to the whole world ◦ Unilateral contract A unilateral contract is a legally binding agreement where one party makes an offer to another party, REQUIRES SPECIFIC PERFOMACE OF THE and the second party can only accept the offer by performing a specific action: ACT FOR A CONTRACT TO BE FORMED 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) 31 What about Preston’s Case? ©DR IZURA MASDINA (UM) 32 Preston Corp Sdn Bhd v Edward Leong Appellants: company which publishes books. Respondents: firm of printers. Contract: printing of school textbooks Letters exchanged A asked, R submitted quotations, A issued printing orders. ◦ Question  Quotation  Orders  Confirmation  Printing ©DR IZURA MASDINA (UM) 33  A enquired, R submitted quotations, A issued printing orders. ◦ Query (A)  Quotation (R)  Orders (A)  Confirmed Order (R)  Printing QUESTION: Is the Quotation an Invitation to Treat? ©DR IZURA MASDINA (UM) 34  THIS TENDER IS AN ITT AS IT DOES NOT SHOW ANY WILLINGNESS TO BE BOUND / SERIOUSNESS OF THE OFFEROR, AND IT FUNCTIONS TO JUST SUPPLY INFORMATION Tender: Is this an Offer / ITT? ©DR IZURA MASDINA (UM) 35 BEFORE A REVOCATION IS DEEMED COMPLETE 2 REQUIREMENTS NEED TO BE FULFILLED 1. METHOD OF REVOCATION - SECTION 6 CA 1950 2.WHEN/TIMING OF REVOCATION - SECTION 5(1) CA 1950 Revocation ©DR IZURA MASDINA (UM) 36  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) 37 1. How to Revoke: s.6 HOW TO REVOKE AN OFFER ? REFER 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) 38 (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” Dickinson v Dodds : Communication of revocation can be done by other than the proposer ©DR IZURA MASDINA (UM) 39  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) 40 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.” BOTH PARTIES ARE NOT ON THE SAME MIND/ PAGE ,THEREFORE A CONTRACT IS NOT MADE ©DR IZURA MASDINA (UM) 41 “… communication of notice of revocation by the proposer to the other party” ©DR IZURA MASDINA (UM) 42  For Arguments Sake: “…communication, of notice of revocation by the proposer, to the other party” OR “…communication of notice of revocation, by the proposer, to the other party” 43 “…communication, of notice of revocation by the proposer, to the other party” ◦ that the proposer’s revocation is communicated to the other party (can be anyone) OR “…communication of notice of revocation, by the proposer, to the other party” ◦ The proposer himself needs to communicate his revocation to the other party 44 “… communication of notice of revocation by the proposer to the other party” Dengan mengkomunikasikan notis pembatalan oleh pencadang kepada pihak yang lain itu ©DR IZURA MASDINA (UM) 45  Second issue: ◦ When can the notice be effective/valid? When can notice be effective? S5(1) : Proposal may be revoked before communication of acceptance is complete against the proposer S4(2)a : When acceptor send his letter of acceptance, it binds the proposer 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) 46 (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 DEPENDS ON THE SUBJECT MATTER OF THE OFFER GENERAL RULE COOLING OFF PERIOD IS 10-14 DAYS ©DR IZURA MASDINA (UM) 47 (c): Failure to fulfil condition “By the failure of the acceptor to fulfil a condition precedent to acceptance” SUCH CONDITION MUST LINK TO OFFER ITSELF 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) 48  failed to fulfill a condition precedent is also a revocation of offer. The vendor failed to renew several lases relating to land which was the subject matter of the contract 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) 49 “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) (same meaning as fulfillment of condition) In Financings Ltd v Stimson : There was no concluded contract as the offer made by defendant 'the car must be the same condition until acceptance' was a conditional offer. The car was stolen and recovered in a badly damaged condition. ©DR IZURA MASDINA (UM) 50  MUST BE DEATH / MENTAL DISORDER OF THE OFFEROR - COMES TO THE KNOWLEDGE OF THE ACCEPTOR BEFORE ACCEPTANCE (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 “MEETING OF THE MIND” IS ALSO AN ESSENTIAL POINT TO A FORMATION OF A CONTRACT ©DR IZURA MASDINA (UM) 51  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) 52 Concluding Remarks Always remember: HOW TO REVOKE AN OFFER s.6 is with regards to revocation of an offer When you revoke an offer is equally important to ensure whether it is binding S.5(1) OF CONTRACTS ACT ©DR IZURA MASDINA (UM) 53 End