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Law 240

On July 1
2009, Fahmi offered to sell his antique piano to Hisyam for RM10,000. Fahmi requested
Hisham to give his answer within 7 days. On the 4
July 2009, in reply, Hisham agreed to buy a piano
for RM8,000. When Fahmi refused to accept the offer, Hisham then agreed to accept the original price.
Unfortunately, Fahmi has changed his mind and refused to sell. Advise Hisham whether he would
successfully sue Fahmi for breach of contract.

Issue :
1) Whether there is a valid acceptance when Hisyam made a counter offer to buy Fahmis antique
piano for RM8,000 from its original price of RM10,000 ?
2) Whether Hisham can sue Fahmi for the breach of contract he has made ?
3) Whether there is a binding contract between Fahmi and Hisham ?

Law :
Acceptance according to section 2(b) of the contracts Act 1950 provides that when the person
to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted; a
proposal, when accepted, become a promise. Which mean when offeree agrees or accepts the offer
made by the offeror, there is an acceptance to such offer. Once there is an agreement between the
parties is created, a contract is exists and it is binding upon the parties.
The acceptance made by the offeree, must satisfy certain conditions. If the conditions are not
fulfilled, such acceptance would not be valid, and thus the contract is void. According to the case, the
acceptance must be Absolute and Unqualified. The term of Absolute and Unqualified means that,
the acceptance must be made without any additional conditions or qualifications to the original offer.
The acceptance must be made exactly on the same term of ther offer, without any modification. Any
modification on the term of offer amounts to a Counter Offer is treated as rejection of original offer.
Due to that, the contract is not binding.
As for the case HYDE v WRENCH, on June 6, the defendant offered to sell his farm to the
plaintiff for 1000. June 8, in reply, the Plaintiff made a counter offer to purchase at 950. Defendant
refused to accept the counter offer. On June 27, Plaintiff accepting the original offer of the defendant.
However, the defendant refused to adhere to his original offer. Plaintiff sued the defendant alleging that
there is already a contract between them. As the answer for this case, there is no acceptance occurred
because the Plaintiffs letter of June 8 had rejected the original offer. Once the plaintiff agreed to buy at
950 in response to the defendants offer to sell at 1000, it was a counter offer and no contract binding
between them.

Application :
As we refer to the case Fahmi and Hisyam, we may say that Hisham has do the counter offer on
July 2009 to buy Fahmis antique piano from RM10,000 to RM8,000. According to the acceptance
conditions, the acceptance must be Absolute and Unqualified, which mean if there a modification on
the offer or counter offer, it will be treated as a rejection and the acceptance is not valid.
According to the case Hyde v Wrench (1840), Hisyam cannot sue Fahmi because Hisyam does
not accept the original offer made by Fahmi for his antique piano. Later Hisyam accepting the original
offer but he already made a counter offer which mean no valid acceptance exists.
There is no binding contract between Fahmi and Hisyam because no acceptance occurred and
it was a counter offer, which mean the acceptance will be rejected.

Conclusion :
As to conclude in this case, we may say that any modification on the term of the offer amounts
to a counter offer is treated as a rejection to the original offer, which means there is no valid acceptance
exists and no contract is binding although the plaintiff has changed their mind to accept the original