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Assignment 1 [LAW 436]

Name: Muhammad Shairazi Bin Saidin


Student ID: 2018817108
Class:NLWIK1AX
Lecturer: Mr. Mu’iz Razak

1- Summary Of Case Analysis:


PRESTON CORPORATION SDN BHD v EDWARD LEONG & ORS [1982] 2 MLJ 22

2- The Substantial Fact of The Case:

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.
3- The Issues:
a) Whether or not the appellants were bound to pay the disputed sum of $500 to the
respondents.
b) Whether the respondents were entitled to the payment for the extra charges.
c) Whether the respondents can claim ownership of the film positives on the basis of trade
usage.
d) Whether the evidence was sufficient to establish the fact intended to be proved.
4- 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. Referring to the interpretation of
section 2(a) and (b), Contract Act 1950 – an ‘offer’ happens when the appellants order
the respondents to print. The respondents ‘accept’ the offer by their confirmation on
the order and subsequently, performing the printing job. As none of the printing orders
(from the appellants) which were confirmed by the respondents contained any film
ownership clause, such clause therefore could not form as part of the contract between
the parties. Therefore, the offeror and offeree must arrive to a consensus ad idem, to
ensure the clarity and certainty of any contract.
 The quotation was merely a supply of information or an invitation to enter into a
contract. The quotations provided by the respondents do not amount to ‘offer’, they
are merely ‘supply of information’ or ‘invitation to treat’. It is for the appellants to
initiate an offer by placing an order to the respondents.Therefore, the film ownership
clause stated in the footnote of the quotations from the respondents was completely
irrelevant and does not form any part of the contract. For instance, in ‘Harvey v Facey’,
the defendant’s action by replying to Harvey’s enquiry via telegram on the lowest price
for Bumper Hall Pen as £900, (the answer) is just to respond to the request for
information by the plaintiff, which in this question is equivalent to the quotations
provided by the respondents (Edward Leong & Ors) and they are not and do not
amount to ‘offer’.
 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
respondents failed to prove the existence of such custom or trade usage of the printing
industry. Referring to this matter, the respondents failed to prove that it’s the custom
or a norm of the industry that the printers are entitled to the ownership of the film
positives, and the production costs is the responsible of the publishers.
 The alleged usage is completely unilateral as it does not take into consideration the
mutual interest of printers’ customers. In this case, the trade usage was claimed for the
protection of the respondents’ interest fearing that the release of these film positives to
their customers would prejudice the printers’ business. This is against the ordinary
sense of justice commonly understood that a person who pays for an article or for
making it should be entitled to it and not be deprived of its ownership which he has
paid or required to pay.

5- Decision of The Court:


a) 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:
b) The learned judge’s finding and order as regards the sum $500 were clearly
erroneous(incorrect) 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.
c) 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 clause
contained in the quotations was completely irrelevant which not part of contract at all.
d) 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.
e) 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.

6- Requirements to establish a valid offer are as follow:

 It may be made to a specific person or to the world

i. Offer made to specific person or persons. As in Boulton v Jones, the defendant


requested specific order to Brocklehurst. Without defendant’s knowledge,
Brocklehurst has sold his business to Boulton. Jones refused to pay when an
invoice was issued to him by Boulton. The defendant was not liable to the price
as his intention was to create contract to Brocklehurst and not with Boulton. In
this case, Jones specifically made the offer to Brocklehurst (a specific person)
and not to others.

ii. Offer made to public at large. As in Carlill v Carbolic Smokeball, the defendant
advertisement has amounted to an offer to the public at large. In the general
offer by the defendant through the advertisement, £1,000 will be awarded to
anyone who still succumbed to influenza after using a certain remedy for a fixed
period.

 It may be made expressly or impliedly

Referring to Section 9 CA, and in the case of Preston 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. Yet an examination of all the quotations
in this case did not seem to express such intention.”

Furthermore, the quotations by the respondents are not offers, but just information.

 Its meaning must be clear

Offer which is not clear may be held to be invalid for uncertainty. In Gunthing v
Lynn, the defendant promised to pay extra $5 if the horse he bought from the
plaintiff is ‘lucky’. The term ‘to pay extra $5 if the horse is lucky’ is too vague. The
words contain in an agreement must be certain and ‘clear’.
 It must be valid at law

An offer must not contravene any provisions of the law otherwise it would amount
to a non-existent offer not capable of acceptance by the offeree.

 There are several rules to be observed pertaining to an offer in the formation


of a contract.

i. An offer must be communicated to the offeree


ii. An offer and acceptance must correspond
iii. An offer must be distinguished from an option
iv. An offer may be revoked before acceptance
v. An offer must be distinguished from preliminary negotiations
vi. An offer must be distinguished from an invitation to treat

6- 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.