Law of Contract I (LAW 1210)

Tutorial 3-4pm – Miss Khadijah

Semester 1, 2010/2011

CASE REVIEW on
PRESTON CORPORATION SDN. BHD.
v. EDWARD LEONG & ORS
[1982] 2 MLJ 22
Appellants : Preston Corporation Sdn. Bhd.

Respondents : Edward Leong & ORS.

Judges :  Suffian L.P,

 Salleh Abas and
 Abdul Hamid F.JJ.

Court : Federal Court Civil Appeal (Kuala Lumpur)

In this case the appellants were a company carrying on the business of publishing books
and the respondents were a firm of printers. There was a relationship between the appellants
and the respondents. The appellants paid all the printing charges except the disputed sum of
$500 which they claimed was an overcharged by the respondents. They also withheld
payment of the extra charges claimed by the respondents for reproducing the film positives
used in the printing of the books because the respondents claimed ownership of the films. The
respondents sued the appellants for the sum of $500 which they alleged was the balance of
printing charges and a further sum of $28,052 as extra charges for reproducing the films
positive whose ownership was disputed. The respondents pleaded that they were entitled to
the ownership of the film positives because of the express terms of the contract between them
to that effect and also because of a trade usage prevalent in the printing industry. The
appellants on the other hand denied that the contract contained such terms and alleged trade
usage.

MAGNIFICIENT & CO.

‘Adilah binti Sabri (1019536)
Farrah Nadia binti Mazlan (1012990)
Nadra Fatima binti Mannan (1016122) Page 1
Law of Contract I (LAW 1210)
Tutorial 3-4pm – Miss Khadijah
Semester 1, 2010/2011

The Issues:
 Whether or not the appellants were bound to pay the disputed sum of $500 to the
respondents.
 Whether the respondents were entitled to the payment for the extra charges.
 Whether the respondents can claim ownership of the film positives on the basis of
trade usage.
 Whether the evidence was sufficient to establish the fact intended to be proved.

The Principles:
 No contract between the parties could come into existence at the moment when the
appellants’ printing orders were issued, but did so only at the time when these orders
were confirmed or accepted by the respondents.
 The quotation was merely a supply of information or an invitation to enter into a
contract.
 The characteristics of usage are notoriety, certainty and reasonableness. Thus, a usage
which outrages the sense of justice and common sense is not reasonable.
 The alleged usage is completely unilateral as it does not take into consideration the
mutual interest of printers’ customers.

Ratio Decidendi – (Judgement):

The judgment of learned judge must be reversed and that the appeal should be allowed with a
cost. Therefore, the respondent’s claim was dismissed and the deposit should be refunded to
the appellant. The judgement was on the basis ground of:

1) The learned judge’s finding and order as regards the sum $500 were clearly erroneous
and could not be supported by the evidence as he took no account at all of the
admissions made by the respondents that the disputed item was an overcharge.
2) The contracts was formed and existed with offers of printing orders from the appellant
and the acceptance by respondent’s confirmation. Consequently, the film ownership

MAGNIFICIENT & CO.

‘Adilah binti Sabri (1019536)
Farrah Nadia binti Mazlan (1012990)
Nadra Fatima binti Mannan (1016122) Page 2
Law of Contract I (LAW 1210)
Tutorial 3-4pm – Miss Khadijah
Semester 1, 2010/2011

clause contained in the quotations was completely irrelevant which not part of
contract at all.
3) The alleged trade usage was not sufficiently proved by the respondents which is
reproduced film positives belonged to printers who reproduce them, although their
reproduction costs are borne by the customer.
4) The basis of the alleged trade usage seemed unreasonable because it conflicted with
the ordinary sense of justice commonly understood by reasonable men in that a person
who pays for an article or for making it should be entitled to it and not be deprived of
its ownership for which he has paid or required to pay.

Conclusion:
This case signifies one of the principles in contract law which is to distinguish offer from
invitation to treat (ITT) in order to identify existence of a contract between two parties. As
the quotations stated by the respondents are merely a supply of information for appellants in
the inquiries of the price of printed books and their delivery dates. Thus, there was no
contract formed at the time but only was concluded with an effective communication through
offer of printing orders by the appellants and acceptance of confirmation by respondents.
Plus, the ownership of the reproduced film positives should not be claimed by respondents as
terms in the quotations submitted by them because it was neither a binding offer nor a part of
contract at all.

MAGNIFICIENT & CO.

‘Adilah binti Sabri (1019536)
Farrah Nadia binti Mazlan (1012990)
Nadra Fatima binti Mannan (1016122) Page 3