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
: Preston Corporation Sdn. Bhd. : Edward Leong & ORS.  Suffian L.P,  Salleh Abas and  Abdul Hamid F.JJ.

Appellants

Respondents

Judges

:

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)

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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)

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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)

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