Chapter 1 Formation of Contract PDF

Chapter 1
Formation of Contract
Izura Masdina Zakri

LLB (Hons), LLM (Notts), Phd (Mal)
University of Malaya
Introduction
 A contract exists when the following elements are
present:
 Offer (Proposal)
 Acceptance
 Consideration
 Intention to create legal relation
 Capacity
2
Thus:
 When a written contract is entered into, the following
are generally deemed present:
 Offer
 Acceptance
 Intention
 However, it is not a contract if there is no:
 Consideration (note s.26 exception)
 Capacity (note the exceptions)
3
Offer (Proposal)
Introduction
 Two things must be aware of :
1. The definition of offer, and
2. The requirements of an offer
 S.2(a) Contracts Act 1950 provides the definition of an
offer ie what an offer means
but
if it does not fulfil the requirements of an offer, it is not a
valid offer
 In short, the definition guides you to identify it, but the
requirements will decide if it exists
s.2(a) Contracts Act 1950
6 Offer
When one person signifies to another his willingness to
do or to abstain from doing anything, with a view to
obtaining the assent of that other to the act or
abstinence
In other words:
 A says to B that I want – or not – to do something (and
hoping 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.
7 Offer
Preston Corp Sdn Bhd v Edward Leong
 Appellants: company which publishes books. Respondents:
firm of printers.
 Contract: printing of school textbooks
 Letters exchanged: R submitted quotations, A issued
printing orders.
 Quotation  orders  confirmation  printing
 At which point in time was an offer made?

 Quotation / order ?
8 Offer
 An offer is an intimation of willingness by an offeror to
enter into a legally binding contract.
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
9 Offer
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”
10 Offer
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

 A response by R, to A, as to the price of books to be printed
 Offer was constituted by the printing orders
11 Offer
Requirements
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
13 Requirements of an offer
1. Valid at Law
Offer itself must comply with the law
 otherwise, offer does not – cannot – exist
Note :
 It is usually stated as ‘needs to comply with the law’
 This means that the offer may have certain aspects that
needs to be fulfilled before it is considered as ‘valid’
 It is not referring to the fact that the offer is illegal
Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui
 The defendant denied the whole claim from plaintiff

seeking balance outstanding under the hire-purchase
agreement
 Defendant claimed that offer did not comply with s.4(1)

Hire Purchase Act 1967 (Revised 1978)
 Did not give him a written agreement consisting of a summary
of his financial obligations
s.4(1) Hire Purchase Act 1967
Before any hire-purchase agreement is entered into in
respect of any goods … shall serve on the intending hirer a
written statement duly completed and signed … in
accordance with … the Second Schedule;

Court ..
“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
 S.4(4) : A hire-purchase agreement entered into in
contravention of subsection (1) shall be void
2. Expressly/Impliedly
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.
Preston Corp Sdn Bhd v Edward Leong
“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.”
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”
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”
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”
Note:
 Once offer accepted, contract is formed (assuming other
factors valid)
 Offer must be distinguished from an Invitation to Treat
22 Offer
Invitation To Treat
Introduction
 It is to invite an offer
 Generally found in:
 Advertisements
 Pamphlets
 Display of goods
 Legal difference:
 Offer  Acceptance = contract

 ITT  Offer  Acceptance = contract
24 Invitation to Treat
 Thus:
 Offer – A is making the offer (to be accepted by B)
 ITT – A is ‘inviting’ B to make an offer
Fisher v Bell [1961] 1 QB 394

Displaying a flick knife for sale is an invitation to treat.
Not an offence – until a customer makes an offer (to the
cashier) which is accepted.
 General Rule … advertisements are ITT
but
it can be an offer:
1. Made by manufacturer
2. Can derive an intention to be bound

 The wordings of the advertisement is important
 Key issue: Was there an intimation of willingness to be
bound?
 Carlill v Carbolic Smoke Ball
Carlil v Carbolic Smoke Ball
Advertisement
“£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.”
 Advertisement
 Made to the whole world
 Unilateral contract
 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”
Revocation of Offer
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
31 Revocation of Offer
1. How to Revoke
s.6 Contracts Act 1950
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.
(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 (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.
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.”
“…communication of notice of revocation by
the proposer to the other party”
Is it ‘revocation by the proposer’ is communicated to the
other party, or …
“…communication of notice of revocation by

the proposer to the other party”
The notice of revocation is communicated by the proposer
to the other party?
 Second issue:
 When can the notice be effective/valid?
 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
(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
(c): Failure to fulfil condition
“By the failure of the acceptor to fulfil a condition
precedent to acceptance”
 Some offers may have a condition precedents to be

fulfilled prior to acceptance
 Thus, if these conditions are not fulfilled, then the offer is
revoked
 Aberfoyle Plantations Ltd v Khaw Bian Cheng

 Required renewal of several leases relating to the land being
bought
(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
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”
Concluding Remarks
Always remember:
 s.6 is with regards to revocation of an offer
 When you revoke an offer is equally important to ensure

whether it is binding
Acceptance
Introduction
 Once an offer is accepted, an agreement is formed
 Acceptance:
1. An act or omission (s.3)
2. Absolute and unqualified (s.7)
3. Communicated
Note:
If conditions to method for acceptance have been set,
then acceptance must be made according to those
conditions exactly
44 Acceptance
(1) Act or Omission (s.3)
 The acceptance are deemed to be made by any act or
omission of the party accepting
(i) An ‘Act’
 By words, or conduct
(i) Expressly stated: s.9
 Words
 Spoken i.e. phone or face-to-face, through letters
 Corresponding Issue: when is communication of acceptance
complete?
45 Acceptance
(ii) Via conduct: s.8
 S.7(b) i.e. in the manner prescribed by the proposer

 Holwell Securities Ltd v Hughes
 “it shall be exercisable by notice in writing to the
[defendant]…”
 Tinn v Hoffman
 Reply was to be ‘by post’ and Honeyman J: an equally
expeditious method will suffice, eg. telegram
 Fulfilling conditions in the offer

 Carlill v Carbolic Smoke Ball
 Brogden v Metropolitan Railway Co
46 Acceptance
(ii) An ‘omission’
 Not an ‘act’
 However, does not mean ‘silence’
 Felthouse v Bindley (1826) 142 ER 1037
unless
the offeree makes that stipulation:

 Re Selectmove Ltd, [The Times 13 January 1994]
 “where the offeree himself indicates that an offer is to be taken
as accepted if he does not indicate to the contrary by an
ascertainable time”
47 Acceptance
(2) Absolute and Unqualified
 S.7
 No changes made when acceptance is done
 Situations to note:
(i) Counter-offer
(ii) Terms of the offer changed during acceptance
(iii) ‘Subject to contract’ vs ‘Conditional contract’
48 Acceptance
i. Counter-offer
 A new offer is given
 Effect: original offer is destroyed, thus cannot be accepted
 Now up to the other party to accept
 Thus:
 A (offer), B (counter-offer) = A must accept (B is now the
offeror)
 Hyde v Wrench (1840) 3 Beav 334
49 Acceptance
 Counter offer is not to be confused with ‘request for
more information’
 Request for more information does NOT destroy the
original offer
 It is merely a question and the party is still free to
accept the offer
50 Acceptance
Stevenson v McLean [1880] 5 QBD 346
Stevenson wrote to McLean, asking for iron ore. McLean’s
offer:“40s nett cash per ton, open till Monday.”
Monday, 9.42am
Stevenson telegraphed “Please wire whether you would accept
forty for delivery over two months, or if not, longest limit you
could give.”
McLean did not answer.
Monday, 1.25pm
McLean sold iron ore to someone else.
Monday, 1.34pm
Not knowing this, Stevenson telegraphed to accept offer.
51 Acceptance
Held
Stevenson’s telegraph is merely a request for more

information and not a counter-offer: it was “a mere
inquiry, which should have been answered and not treated
as a rejection of the offer”.
The offer was accepted within time, and a contract exists.
52 Acceptance
ii. Terms of offer changed during acceptance
 No acceptance is made until the changes are accepted by
other party
 Until and unless both parties have agreed to the same
terms, no agreement can be formed
 There is no ‘meeting of the minds’
53 Acceptance
Brogden v Metropolitan Railway Co [1877] 2 App.
Cass 666
Brogden (B) supplies coal to Metropolitan Railway (M) for
several years without a written contract. On B’s
recommendation, M agreed to have one. An agreement
was drafted by M’s agent, with some parts left blank. This
was sent to B.
B filled in the empty blanks and made a few changes such

as “during the period of” to “while they shall fulfill”. B
approved it and returned it to M. M kept it without any
further action.
54 Acceptance
iii. Subject to contract vs Conditional Contracts
 Common to have acceptance stating, “subject to contract”,
“without prejudice”, “formal agreement would be prepared
and executed”
 Two meanings:
1. There is no contract until the formal document is signed, or
2. A binding contract is already entered into and the execution

of the document is a formality.
55 Acceptance
 Intention of the parties is important
 Not the words that was used
“ Court must determine whether the parties had already

entered into a legally binding contract where the
execution of the written contract is merely a formality
or whether the parties intended that their rights and
obligations under the contract should be suspended until
the formal and legally binding contract is finalised and
executed”
56 Acceptance
 Kam Mah Theatre Sdn Bhd v Tan lay Soon [1994] 1 MLJ 108
 Still in the process of negotiations
 No contract exists until a contract is signed
 Thus, no legal obligation until then
 Aberfoyle Plantations Ltd v Khaw Bian Cheng [1960] MLJ 47

(PC)
 Contract with conditions to be fulfilled
 Signing of the contract is a formality
 Thus, legal obligations exist
57 Acceptance
Aberfoyle Plantations Ltd
 Contract with conditions to be fulfilled
 “Subject to the condition in Clause 4, the vendor will sell and
the purchaser will buy”
 Purchase is conditional on the Vendor obtaining at the Vendor’s
expense a renewal of the seven (7) Leases … and if for any
cause whatsoever the vendor is unable to fulfil this condition
this agreement shall become null and void and the vendor shall
refund to the purchaser the deposit already made”
 Signing of the contract is a formality
 Thus, legal obligations exist
 ie the vendor has the legal obligation to renew the leases
58 Acceptance
(3) Communicated
 Acceptance must be communicated to offeror before it is
complete
 Three methods/ways:
i. Through acts
by fulfilling conditions in the offer, acceptance is complete.
Notice is not required.
59 Acceptance
ii. By Post or telegram
The communication of an acceptance is complete –
(a) as against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the
acceptor; and
 The offeror is bound – when the letter is sent
The communication of an acceptance is complete –
(a) as against the acceptor, when it comes to the

knowledge of the proposer
 The acceptor is bound – when the proposer receives the letter
iii. Instantaneous Communication
Entores Ltd [1955] 2 QB 327

Lord Denning:
It is not until the message is received that the contract is
complete. In all the instances I have taken so far, the man
who sends the message of acceptance knows that it has
not been received or he has reason to know it. So he
must repeat it.
62 Acceptance
But, suppose that he [acceptor] does not know that his
message did not get home. He thinks it has.
The offerror in such circumstances is clearly bound,

because he will be estopped from saying that he did not
receive it.
63 Acceptance
But if the offeror without any fault on his part does not
receive the message yet the sender of it reasonably
believes it has got home
– then I think there is no contract.
64 Acceptance
(4) Miscellaneous
(i) Knowledge of offer – is there acceptance when you did not
know there was an offer?
 No : Fitch v Snedaker 38 NY 248 (1868)

 Yes : Gibbons v Proctor (1891) 64 LT 594
 Malaysia?
Arguable, based on:

 S.2(b): When the person to whom the proposal is made
signifies his assent thereto, the proposal is said to be accepted:
 S.4(1): Communication of proposal is complete when it comes
to the knowledge of the person to whom it is made
65 Acceptance
(ii) Motive
Not relevant.
 As long as you know of the offer, acceptance valid
 Williams v Cawardine 5 C&P 566
 Reward for information leading to the discovery of the
murderer
 “ease her own conscience and in hopes of forgiveness
Relevant.
 R v Clarke (1927) 40 CLR 227
 Reward for information which lead to arrest and
conviction for the murders
 Gave information to clear himself from the false charge of murder
66 Acceptance
Revocation
Introduction
 How to revoke offer & acceptance (see outline)
 The important aspect here is when revocation can be

made – and whether it is valid
68 Revocation
Revocation of Offer
A proposal can be revoked at any time before the
communication of its acceptance is complete as against
the proposer, but not afterwards – s.5(1)
When it is put in a course of transmission to him –

s.4(2)(a)
In other words:
A can revoke his offer at any time before (or at the
moment) B posts his letter of acceptance (see illustration
s.5)
69 Revocation
Illustration s.5
70 Revocation
Revocation of Acceptance
An acceptance can be revoked at any time before the
communication of its acceptance is complete as against
the acceptor, but not afterwards – s.5(2)
When it comes to the knowledge of the proposer –

s.4(2)(b)
In other words:
B can revoke his acceptance at any time before (or at the
moment) when his letter of acceptance reaches A (see
illustration s.5)
71 Revocation
Illustration s.5
72 Revocation
s.4(3)
The communication of revocation is complete
(a) as against the person who makes it, when it is put into a
course of transmission to the person to whom it is
made, so as to be out of the power of the person who
makes it, and
(b) as against the person to whom it is made, when it

comes to his knowledge.
Once acceptor posts revocation of acceptance, he

cannot rescind it.
73 Revocation
Revocation of Acceptance
An acceptance can be revoked at any time before the
communication of its acceptance is complete as against the
acceptor, but not afterwards – s.5(2)
When it comes to the knowledge of the proposer – s.4(2)(b)
BUT
revocation is only binding as against the person to whom it is made,

when it comes to his knowledge – s.4(3)(b)
In other words:
B can send his revocation of acceptance at any time BEFORE (or at
the moment) when his letter of acceptance reaches A but his letter
of MUST ARRIVE before (or at the moment) his letter of
acceptance reaches A for it to be valid.
74 Revocation
Byrne & Co v Leon Van Tienhoven [1874-1880]
 Oct 1 : D posted a letter of offer
 Takes 10-11 days to arrive
 Oct 8: D posted letter of revocation
 Oct 11: P telegraphed acceptance
 Oct 20: P receives letter of revocation
Consider:
When was the revocation of offer valid?
When was the contract binding on D?
Can P revoke his acceptance? 75
Revocation
Consideration
introduction
 Definition
 Requirements, Types
 Exceptions to consideration:
 s.26
 S.64
 Promissory estoppel
 Certain Common law positions
 Pre-existing public duty
 Pre-existing contractual duty
 Pre-existing contractual duty to third party
 Misc:
 Privity of Contract
 Adequacy of Consideration
77 Consideration
Definition
 What is consideration?
 Currie v Misa (1875) LR 10Ex 153
 “A valuable consideration in the sense of the law may consist
either in some right, interest, profit or benefit accruing to one
party, or some forebearance, detriment, loss or responsibility
given, suffered or undertaken by the other.”
 In short?
 I get, you get
78 Consideration
s.2(d)
When, at the desire of the promisor, the promisee or any

other person has done or abstained from doing, or does
or abstain from doing, or promises to do or to abstain
from doing, something, such act or abstinence or promise
is called consideration for the promise.
79 Consideration
s.2(d)
When, at the desire of the promisor,1 the promisee or

any other person2 has done or abstained3 from doing, or
does or abstain from doing, or promises to do or to
abstain from doing, something, such act or abstinence or
promise is called consideration for the promise.
80 Consideration
1. Desire of the promisor
 The act / abstinence must be at the desire of the
promisor
 If it was never initiated / desire of promisor

 Then it is not consideration
81 Consideration
2. Promisee or any other person
 Thus, consideration need not be from the promisee only
 Kepong Prospecting Ltd v Schmidt
 Note: Privity of Contract
 Third party to the contract cannot sue

 Under common law, third party that receives benefit may have
the right to bring an action
 Contracts (Rights of Third Party Acts) 1999
82 Consideration
3. Done / Abstained
 It may be an act or an abstinence from doing something
 What about forbearance to sue?

 i.e. agreeing not to exercise a legal right
 The right to sue is something of value
 This is not the same as being forbidden to sue
83 Consideration
4. Has Done/does/going to do
 has done or abstained from doing
 past
 does or abstain from doing,
 present
 promises to do or to abstain from doing, something,
 Future
 ‘Past’ consideration, executed consideration, executory
consideration
84 Consideration
 Executory consideration
 One party makes a promise in return for a promise
 Eg: Seller promises to deliver goods in return for buyers

promise to pay
 Executed consideration
 One party makes a promise in return for the performance of
an act
 Eg: A promises to pay once B completes the act. Once B

completes the act, the consideration has been executed (Carlil)
85 Consideration
PAST CONSIDERATION
Meaning
 When a person makes a promise to pay after the act has
been completed
 Person A has completed the act
 THEN Person B says “Since you’ve done [__], I’ll pay you”
 Key: when was the promise made?
 before act or after?
 Be careful – position in Malaysia and under common law
is different.
87 Consideration
Common law
 Past consideration is not good consideration
ReMcArdle
Plaintiff paid for the repairs of the house. She was then
promised by the others to be paid £488.
Court of Appeal:
As the repairs had been carried out before the agreement
to pay had been made, it was past consideration and
therefore not good consideration
88 Consideration
 Exception:
Lampleigh v Braithwait
D committed murder. Asked P to obtain for him a royal

pardon, which P managed to do. D then promised to pay
him £100.
Held
Consideration was good as the act carried out at D’s
request.
89 Consideration
malaysia
S.2(d)
When, at the desire of the promisor, the promisee ... has
done … something … such act is called consideration for
the promise
 Reflects the common law position in Lampleigh v

Braithwait
90 Consideration
So, note:
 Never say that ‘past consideration is not good

consideration’
 This is NOT the position in Malaysia
 It doesn’t matter if it’s “past” or not – the point is, was it
at the desire of the promisor?
 If yes, then it IS valid consideration as per s.2(d)
 If it isn’t, then there is NO consideration
 But
 There can still be a contract
 S.26
91 Consideration
Exceptions
Introduction
 A contract requires offer, acceptance, consideration and
intention
 However, there are exceptions when consideration is not
required to form a contract
 As per:
 S.26 Contracts Act 1950
 S.64: part-payment
 Promissory estoppel: common law
 In addition, will also look at certain common law
positions regarding pre-existing obligations
93 Consideration
s.26
Introduction
An agreement made without consideration is void, unless
–
a. It is in writing and registered;
b. Or is a promise to compensate for something done;
c. Or is a promise to pay a debt barred by limitation law
In any of these cases, such an agreement is a contract
 In short, s.26(a) – (c) are exceptions to when

consideration is needed to form a contract
95 Consideration
s.26(a): it is in writing and registered
expressed in writing, and registered under the law (if any)

… and is made on account of natural love and affection
between parties standing in a near relation to each other
Thus, four requirements:

1. Expressed in writing
2. Registered under the law (if any)
3. Natural love and affection
4. Standing in near relation to each other
96 Consideration
 Natural love and affection between parties standing in
near relation to each other
 Re Tan Soh Sim
 The words “relationship” and “near” must be applied and
interpreted in each case according to the mores of the group
to which the parties belong and with regard to the
circumstances of the family concerned
 “natural love and affection” - Full effect must be given to the
word “natural”, and that it means not only “reasonable to be
expected” but “reasonably to be expected having regard to
the normal emotional feelings of human beings”
 If either the feelings or relation are lacking, this section does
not apply
97 Consideration
Re Tan Soh Sim
 Tan Soh Sim – married Chan (W2: Tan Boey Kee)
 Adopted 4 children (2 boys, 2 girls)
 Has 3 sisters , 2 ½brothers & 3 ½sisters (Khoo)
“We, the undersigned relatives of Tan Soh Sim do hereby renounce

all claims of whatsoever nature to the assets of Tan Soh Sim should
she die intestate. This renunciation of our claim is in favour of (the
four adopted Chans and Boey Kee, the other widow) in manner
following …”
 Signed by the Tan sisters and all seven Khoo ½ siblings
98 Consideration
Khoo Kim Huat
Tan Ah Thai Sng Gaik See
Tan Tan 3
Boey Chan Soh 2 5 Girls
Girls
Kee Sim Boys
2 Boys 2
Girls
99 Consideration
 The words “relationship” and “near” must be applied and
interpreted in each case according to the mores of the group
to which the parties belong and with regard to the
circumstances of the family concerned
 Chinese custom:
 Founded on patriarchal families and clan
 Dominant motive for adoption of a son is to ensure family
ancestor worship
 Whole system is based on the notion that the family, not the
individual, is the unit of consideration
 A person is either a member of the family or outside it – once
you marry into the family, not expected to leave it
100 Consideration
In short:
 Sons inherit, daughters do not
 Sisters-in-law: brother’s wife – wife’s sister: ‘outside’
So …
 Tan Soh Sim’s sisters and half-siblings: ‘outside’ the family
 Related to the children of Chan (whether natural or adopted)
only in a special and limited way which is not near
 Tan Boey Kee
 As a secondary wife: same as related to the principal wife’s
sister
101 Consideration
In conclusion
 Rejected as they are not nearly related
 Also, no evidence that there existed any natural love and

affection between the parties of the alleged agreement
 Signed by the Tan sisters and all seven Khoo ½ siblings
 Evidence showed all the signatories had affection for Tan but it
is not enough to show that an agreement was made in
deference to the wishes of a third person who was not a party
to it
102 Consideration
s.26(b): a promise to compensate for
something done
 A promise to compensate, wholly or in part, a person
who has already voluntarily done something for the
promisor, or something which the promisor was legally
compelled to do
 There are two situations in this i.e. did something which

was:
 voluntary
 something promisor was under a legal obligation to do
103 Consideration
 Ordinary everyday meaning of ‘voluntary’
 JM Wotherspoon & Co Ltd v Henry Agency House
 P had done something at the suggestion of the defendant firm.
Was this ‘voluntarily’?
 That which the promisor is legally compelled to do
104 Consideration
s.2(d) s.26(b)
When, at the desire of the An agreement made

promisor, the promisee without consideration is
or any other person has void, unless –
done or abstained from it is a promise to
doing, or does, or abstains compensate, wholly or in
from doing, or promises part, a person who has
to do or abstain from already voluntarily done
doing, something, such act something for the
or abstinence or promise promisor …
is called consideration for
the promise
s.2(d) s.26(b)
When, at the desire of An agreement made

the promisor, the without consideration
promisee or any other is void, unless –
person has done or it is a promise to
abstained from doing, or compensate, wholly or in
does, or abstains from part, a person who has
doing, or promises to do already voluntarily done
or abstain from doing, something for the
something, such act or promisor …
abstinence or promise is
called consideration for
the promise
s.2(d) vs s.26(b)
If A makes a promise (promisor) to pay after B has
completed an act, then ask –
 Did B do the act at A’s desire?

 If yes, then it is legal consideration as per s.2(d) and a contract
exist
 If no: not valid consideration
 Was it done voluntarily? OR Was it an act that the promisor is legally
obliged to do?
 If yes, then it is an exception under s.26(b) that allows a contract to be
formed even though there is no consideration
 If no, then it does not fall under the exception under s.26 and there is NO
contract
107 Consideration
Was promise made at desire of promisor?
Yes No
Was it:
(i) Done voluntarily?
(ii) An act the promisor is legally compelled to do?
s.2(d)
Valid consideration
Contract exists
Yes No
s.26(b) Exception
No consideration No consideration
Contract exists No contract
s.26(c): promise to pay a debt barred by
limitation
 It is a promise, made in writing and signed by the person
to be charged therewith … to pay wholly or in part a
debt of which the creditor might have enforced payment
but for the law for the limitation of suits
 This is not the same as s.64: part-payment
109 Consideration
Part-payment
s.64
 Every promisee may dispense with or remit, wholly or in
part, the performance of the promise made to him, or
may extend the time for such performance, or may accept
instead of it any satisfaction which he thinks fit
 Thus …
 Can dispense wholly or in part
 May extend time to perform
 May accept anything in exchange
111 Consideration
Kerpa Singh v Bariam Singh
Query: Had the judgement debt been satisfied by the
tender of a third party (the son) of a cheque for a smaller
amount than the sum due as payment in full. The cheque
had been accepted and cashed by the creditor.
“…you have agreed to receive $4000 from my father being

payment in full settlement of his share in the … civil suit
… amounting to $8,650 … I now enclose a receipt for
$4000 paid by cheque at your firm in Kota Bahru … I
pray you will accept the payment and agree to allow to
discharge my father ... from any further liability. If you
don’t agree … please return me my money”
112 Consideration
Held ..
 Very clear that a third party made an offer subject to

conditions i.e. that creditor could either
 Return the money, or
 Retain the cheque and discharge the debtor’s liabilities
 Conduct in cashing the cheque and retaining the money
can only be an agreement to discharge debtor from any
liability
 Has no consideration, but it falls under s.64
113 Consideration
Take note:
 Common law position of Pinnel’s case
 Payment of a lesser sum cannot satisfy a larger sum
 Even though the parties have agreed to it
 Not applicable in Malaysia due to s.64
114 Consideration
Promissory estoppel
Introduction
 A promise which has no consideration
 Note:
 It doesn’t create a contract, but it is a doctrine that allows the
promise to be upheld
 Common law concept that is accepted in Malaysia
 Began with:
 Hughes v Metropolitan Railway Co
 Central London Property Trust Ltd v High Trees House Ltd
116 Consideration
Hughes v Metropolitan Rly Co
P gave D (tenant) six month notice in October to carry
out repairs to the house. If not, the tenancy would be
terminated. In November, P carried out negotiations with
D with a view to sell the house to D. Negotiations ended
in December. Repairs had not been carried out so
landlord brought an action to evict tenant when the 6
months was up.
117 Consideration
Held …
If parties who have entered into definite and distinct terms

involving certain legal results … afterwards by their own act or
with their own consent enter upon a course of negotiations
which has the effect of leading one of the parties to suppose
that the strict rights arising under the contract will not be
enforced or will be kept in suspense, or held in abeyance, the
person who otherwise might have enforced those rights will
not be allowed to enforce them where it would be inequitable
having regard to the dealings which have thus taken place
between the parties.
118 Consideration
If parties who have entered into definite and distinct terms involving
certain legal results
 There is a contract between the parties
… afterwards by their own act or with their own consent enter

upon a course of negotiations
 Then, negotiations/statements made
which has the effect of leading one of the parties to suppose that
the strict rights arising under the contract will not be enforced or
will be kept in suspense, or held in abeyance,
 Which made one party to rely on the statement made, and
 Changed his position because of the statement made
the person who otherwise might have enforced those rights will not
be allowed to enforce them where it would be inequitable having
regard to the dealings which have thus taken place between the
parties.
 The other party cannot then deny the statement
119 Consideration
High Trees Case
In Sept 1939, P leased a block of flats to D for £2500 per
year. In January 1940, P agreed in writing to reduce it to
£1250 as the war conditions caused many vacancies in
the flats. No express time limit given and D paid reduced
rent. In 1945, flats full again and P claimed full rent – for
the future and restrospectively.
1. Was there an existing contract?

2. Was a statement made that is different from the
contract?
3. Was that statement relied on?
120 Consideration
Malaysian position
Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant
Bank Bhd [1995]
1. Estoppel is only as a shield, but not a sword

2. He who relied on the statement was influenced by it
 Only needs to prove influence, not that it was the sole factor which
influenced him
 Also, it does not need to be to his detriment
 “his conduct was so influenced by the encouragement or
representation … that it would be unconscionable for the
representor thereafter to enforce his strict legal rights.
121 Consideration
 In short:
 There is an existing contract between the two parties

 One makes a statement, the other relies on it
 Changes his position because of it
 Does not have to be to his detriment
 Thus, the statement cannot be denied
122 Consideration
Common law concepts
Introduction
 There are three situations:
 Pre-existing public duty
 Pre-existing contractual obligations
 Pre-existing contractual obligations to third parties
 Are there considerations in these situations so as to
create a contract?
124 Consideration
1. Pre-existing public duty
 There is no consideration (thus, no contract) when a
person who is merely performing his public duty
 Neither party received any benefit/suffered any detriment
for it
Collins v Godefroy
P received a subpoena to appear as a witness and to give

evidence for D. D had promised to pay him a sum of
money for appearing as a witness.
125 Consideration
 However,
 If the promisee does more than what is required to do as part
of his pre-existing public duty
 There is consideration
Glasbrook Bros Ltd v Glamorgan County Council

A national coal strike, lasting 3 months, made it unsafe for
the workers from working. Police were asked for help.
Police: patrol and send in police whenever needed.
Request: police garrison of 100 (later reduced to 70). They
were told that this is ‘special duty’ and a promise to pay
was signed.
126 Consideration
2. Pre-existing contractual duty
 No consideration
 Stilk v Myrick
 Ship voyage: London – Baltic – back. Two seamen deserted, and
it was agreed that their pay would be shared among the
remaining seamen to work the ship back to London.
 “There is no consideration for the ulterior pay promised to
the mariners who remained with the ship. Before they sailed …
had undertaken to do all that they could under the
emergencies of the voyage … voyage should be completed”
127 Consideration
Hartley v Posonby (1857)
 Similar situation to Stilk v Myrick
 However, here, the shortage of the labour was so great

that the further prosecution of the voyage exceptionally
hazardous
 Thus, there is consideration
128 Consideration
Williams v Roffey Bros & Nicholls (Contractors) Ltd
 Different view from Stilk v Myrick

 D, building contractors, subcontracted the refurbishment
of some flats to P. P unable to complete in time. D agreed
to pay P an additional £575 per flat on its timely
completion.
 There is consideration:
 Where one party obtained a benefit as D able to avoid paying
penalty fees to main employer
129 Consideration
3. Pre-existing contractual duty to third party
 There is good consideration
 Promisor obtains the benefit of a direct obligation
 Shadwell v Shadwell
 Uncle promised to pay his nephew a certain sum if he married
Ellen Nicholl – which the nephew, at that time, was already
engaged to.
 The marriage primarily affects the parties thereto; but in “a
secondary degree it may be an object of interest to a near
relative, and in that sense” a benefit to him
130 Consideration
“Sufficiency” of consideration
 All contracts require consideration
 As long as there is consideration, its adequacy is not
questioned
 Tan Chiw Thoo v Tee Kim Kuay [1997] 2 MLJ 221, FC
 In law, ‘sufficiency’ of consideration is different from ‘adequacy’
of consideration
 ‘sufficiency’ is synonymous with ‘validity’ in regard to
consideration
131 Consideration
 Just because consideration may be inadequate does not
mean it is insufficient
 S.26 illustration (f):
 A agrees to sell a horse worth $1,000 for $10. A’s consent to the
agreement was freely given. The agreement is a contract
notwithstanding the inadequacy of the consideration.
However
 An inadequate consideration may be taken into account
as the contract not being entered into with free will
 S.26 Explanation 2
 S.26 illustration (g):
 A agrees to sell a horse worth $1,000 for $10. A denies that consent
to the consent to the agreement was freely given. The inadequacy of
the consideration is a fact which the court should take into account
in considering whether or not A’s consent was freely given.
132 Consideration
Intention to Create Legal Relations
Introduction
 At the point when contract was made
 Eg when you made the offer, did you do so with the
intention to bind the other person if he accepts?
 ‘Intention’ is presumed, depending on whether it is:
i. Social and domestic agreement
ii. Commercial contracts
134 Intention
i. Social and domestic agreements
a. What is a social and domestic agreement?
 Generally, look at the relationship between the parties or
 The type of arrangement that it involves
b. General rule: no intention

 As it’s more on ‘sense of filial duty/paternal responsibility’ or
‘friendship’ or ‘good faith’
 Not guided by monetary gains
c. Exception to the rule

 Merritt v Merritt
135 Intention
Balfour v Balfour
Husband and wife.
Husband went to Sri Lanka to work. Wife unable to

follow, and stayed in UK. Husband agreed to pay
£30/month.
Held … no intention to create legal relations, thus no

contract.
136 Intention
Jones v Padavatton
Mother and daughter.
D (Washington) accepted an offer from Mum to go to

UK to do law, and was provided maintenance. Nothing in
writing, no terms recorded. House was then bought in
London, which daughter stayed. Other rooms rented to
provide maintenance. Mum paid for the house, and house
in mum’s name. Rent not taken by mum, no accounts of
rent.
137 Intention
Court of Appeal:
Only a family arrangement.
“depends on the good faith of the promises which are

made and are not intended to be rigid, binding
agreements”
138 Intention
Exception
 All presumptions can be rebutted
 If an intention to be bound can be shown, then there is a
contract
139 Intention
Merrit v Merrit
Husband and wife.
Separated. Husband agreed to transfer the house to the

wife, as long as wife paid the installments. This was put in
writing. Husband later refused to transfer.
Court of Appeal … there is intention.
140 Intention
ii. Commercial contracts
 General rule
 There is a presumption that an intention exists
 Presumption can be rebutted

 Where the agreement expressly states that it is not intended
to be legally binding
 Onus of proving falls on the one claiming it
 Rose and Frank Co v JR Crompton & Bros Ltd [1925]
 A contract of honour only
141 Intention
“This arrangement is not entered into, nor is this
memorandum written, as a formal or legal agreement, and shall
not be subjected to legal jurisdiction in the Law Courts either
of the United States or England, but is only a definite
expression and record of the purpose and intention of the
three parties concerned, to which they each honourably
pledge themselves, with the fullest confidence – based on past
business with each other – that it will be carried out through
each of the three parties with mutual loyalty and friendly co-
operation”
142 Intention
 What must be looked at is the surrounding circumstances
 Even if it deals with commercial relationships, must view:

 The wordings of the agreement
 Nature of the agreement
 Background an agreement was reached
143 Intention
Home Insurance Co Ltd & St Paul Fire and Marine
Insurance Co Administratia Asigurarilor De Stat
Insurance contract.
“This treaty shall be interpreted as an honourable

agreement rather than as a legal obligation”
Disputes “shall be referred to two arbitrators”
144 Intention
Letters of Comfort / Intent
145 Intention
Introduction
 Letter of Comfort a.k.a. LoC
 A document, usually from an affiliate (such as the holding /
parent company) of the borrower
 This document assures the financial soundness of the
borrower to repay its debts
 A LoC does not have a legal effect
 It is a moral obligation
 Does NOT create any payment/financial obligation on the
affiliate
 A letter of guarantee, however, does
 It is a legal obligation
 Thus, one must look at the intention of the parties
 Depends on the intention of the parties
146 Intention
Kleinwort Benson Ltd v MMC
D is MMC Bhd and D’s subsidiary is Malaysia Mining
Corporation Metals Ltd (MMC Metals). P’s bank, Kleinwort
Benson, gave a loan of ₤10 million to MMC Metals.
P asked D to be MMC Metals’ guarantor. They

refused. Instead, issued a letter stating, “It is our policy to
ensure that our subsidiary is in a solvent position”
147 Intention
In reliance of this letter of comfort, the bank advanced
money to MMC Metals. MMC Metals subsequently became
insolvent. Bank then took action against MMC Bhd for the
unpaid loan, based on the letter of comfort.
Held … There was intention to create legal relations

as it was a commercial agreement and there was nothing
to rebut the presumption.
148 Intention
However: Court of Appeal …
Held that there was no intention.
The letter was merely a statement of fact of the

defendant’s policy at that time, and did not give any future
commitment or assurance that the policy would continue.
D did not want to give a guarantee, and thus had only given
a letter of comfort. Court had considered the purpose of
the letter of comfort.
149 Intention
North South Properties Sdn Bhd v David Teh
Teik Lim & Anor [2005] 2 CLJ 510, CA
A letter of comfort is generally a statement of moral
responsibility. It is NOT intended to have any legally
binding effect. However, it is capable of giving rise to a
legally binding obligation if the intention of the parties and
the circumstances it is given shows it is so.
150 Intention
“We, the undersigned being the Directors of the Company
hereby give you our joint and several undertaking that the
sum of $217,002.50 referred to paragraph 2 (two) of the
said letter dated 7 May 1991 shall be paid to you on or
before the 29th day of October 1991.”
151 Intention
OSK Trustees Berhad v Kerajaan Malaysia
(Civil Appeal No. W-01-7-01/2012)
Malaysian International Tuna Port Sdn Bhd (MITP) is a
special purpose vehicle incorporated for the purpose of
carrying out upgrading works in Kompleks LKIM Batu
Maung, Penang. Entered into an Agreement on 16
December 2004 with Lembaga Kemajuan Ikan Malaysia
(LKIM).
152 Intention
To finance its work under the Agreement, MITP issued
RM240 million of Islamic bonds under a Bai Bithaman Ajil
Islamic Securities Facility (BAIS Facility) pursuant to a Trust
Deed dated 10 April 2007. OSK Trustees Berhad (Trustee)
was appointed as the trustee for the holders of these
bonds.
153 Intention
The Ministry of Agriculture and Agro-Based Industry (MOA),
on behalf of the Government, issued a letter of support dated
2 October 2006 (letter of comfort) to the Trustee in
connection with the Islamic bonds.
154 Intention
MITP defaulted on its repayment obligations under the
BAIS Facility and the Trustee obtained judgment against
MITP for a sum of approximately RM208 million.
The Trustee then filed an action against the Government on

the ground that the Government had breached its
undertaking, representation and assurance in the letter of
comfort.
155 Intention
"2. … we confirm the viability of MITP, including its ability to incur
borrowings and repay which is critical to ensure the successful
implementation and completion of the project … :
Ensures that MITP is (in) a position to meet (and do meet on a full

and timely basis) their liabilities in respect of all amounts borrowed for
so long as the amount in respect of the borrowings remain
outstanding; and
Provide all necessary support to MITP and also ensure that MITP
shall not take any detrimental action which cause MITP not being
able to perform its obligations in respect of its borrowings.
3. This letter is strictly limited to the points raised in paragraph 2(a)

and (b) above and there is no express or implied guarantee with
regards to the borrowings of MITP."
156 Intention
Held …
Court of Appeal unanimously dismissed the Trustee's appeal.
Upheld the High Court's decision that the letter of comfort issued
by the Government was not intended to create any binding effect
between the parties.
Mainly: Whether the letter of comfort amounted to an undertaking,

representation and assurance that the Government would ensure
that MITP would be in a position to fulfil its obligations under the
BAIS Facility or whether the letter of comfort was merely a letter
of comfort without any legal liabilities
157 Intention
The Court of Appeal agreed with the High Court that three
main questions had to be answered.
[One of] the main question :
Whether the letter of comfort amounted to an undertaking,

representation and assurance that the Government would
ensure that MITP would be in a position to fulfil its
obligations under the BAIS Facility or whether the letter of
comfort was merely a letter of comfort without any legal
liabilities;
158 Intention
"2. … we confirm the viability of MITP, including its ability to incur
borrowings and repay which is critical to ensure the successful
implementation and completion of the project … :
Ensures that MITP is (in) a position to meet (and do meet on a full

and timely basis) their liabilities in respect of all amounts borrowed for
so long as the amount in respect of the borrowings remain outstanding;
and
Provide all necessary support to MITP and also ensure that MITP shall
not take any detrimental action which cause MITP not being able to
perform its obligations in respect of its borrowings.
3. This letter is strictly limited to the points raised in paragraph 2(a)

and (b) above and there is no express or implied guarantee with
regards to the borrowings of MITP."
159 Intention
 The overriding test is that of the intention document as a
whole seen against the background of the practices of the
particular trade or industry
 Whether a letter of comfort is capable of giving rise to a

legally binding undertaking will depend on:
 the intention of the parties, and
 the circumstances under which the same is given
160 Intention
Thus …
 The wording in the support letter does not amount to

any guarantee from MOA
 It is but merely a strong support letter from MOA

reaffirming what is required in the Shareholders
Agreement dated 26.10.2004.
 Clear that the Government did not intend to be legally

bound by the terms of the letter of comfort.
161 Intention
Capacity
Introduction
 Only those who have the capacity to enter a contract can
create a legally binding contract (s.11):
 An adult (age of majority)
 Mentally competent (of sound mind)
 Not disqualified to do so by any law which he is subject
 S.2 Age of Majority Act 1971: 18 and above
 A minor who enters into a contract:
 Void ab initio – void from the beginning
 Mohori Bibee v Dharmodas Ghose [1903] 1 LR 30 Cal 539,
[1903] 30 LR IA 114
163 Capacity
Exceptions
There are situations when a minor can enter into a
contract:
1. Marriage i.e. ‘engagement’

 Rajeswary & Anor v Balakrishnan & Ors (1958)
 Law Reform (Marriage and Divorce) Act 1976
2. Scholarship
 S.4 Contracts (Amendment) Act 1976
3. Service contract under the Child and Young Persons
(Employment) Act 1966
164 Capacity
Remedies
 A contract that is void ab initio means that a contract
never existed in the first place
 No action can be brought on a contract that does not
exist
 However, one may still be able to claim based on
equitable / quasi-contractual reasons:
 S.41 Specific Relief Act (equity) ….. to be paid
 S.66 Contracts Act 1950 ……….. restitution
 S.69 Contracts Act 1950 ……. supplier of necessaries paid
165 Capacity
i. Equitable remedy
 Tan Hee Juan v Teh Boon Keat [1934] MLJ 96
 S.41 Specific Relief Act
 Courts discretion
 Only if:
 Fiduciary relationship
 Unfair to allow the minor to get all benefits (eg the property
and money)
166 Capacity
ii. s.66 Contracts Act 1950
“ When an agreement is discovered to be void, or when a
contract becomes void, any person who has received an
advantage under the agreement or contract is bound to
restore it, or to make compensation for it, to the person
from whom he received it.”
 Restitution
 ‘Returning of benefits’
167 Capacity
Leha bte Jusoh v Awang Johari bin Hashim [1978] 1 MLJ 202
… contract was void as the respondent was a minor when
contract made. Appellant was ordered to return the payment
under s.66.
However, contrast that with …
Mohori Bibee v Dharmodas Ghose [1903] 1 LR 30 Cal 539,

[1903] 30 LR IA 114
 s.65 (in pari materia with s.66 Contract Act)

 Cannot be used for a void ab initio contract
 S.65 is on the basis that there was an agreement and has no
application to a case in which there never was, and never
could have been, a contract
168 Capacity
“When an agreement is discovered
to be void,
or when a contract becomes void ..”
169 Capacity
iii. S.69 Contracts Act 1950
“ If a person, incapable of entering into a contract … is
supplied by another person with necessaries suited to his
condition in life, the person who has furnished such
supplies is entitled to be reimbursed from the property of
such incapable person.”
 In short: if you supplies necessaries to a minor, you can

claim payment
 Two aspects required:
(a) Necessaries
(b) Suited to his condition in life
170 Capacity
(a) ‘Necessaries’
Government of Malaysia v Gurcharan Singh & Ors [1971]
“necessaries” must be construed broadly … in any decision

involving whether what are supplied are or are not
necessaries, it is incumbent to have regard to the facts of
the case, the conditions and circumstances in which the
supply was made and the purpose which is served
Chapple v Cooper
“ … where it is necessary for him to have the things … or

… plainly and unequivocally for his benefit”
171 Capacity
(b) ‘Suitable for his condition in life’
Chapple v Cooper
“the subject-matter and extent of the contract may vary

according to the state and condition of the infant himself.
His clothes may be fine or coarse according to his rank;
his education may vary according to the station he is to
fill; and the medicines will depend on the illness with
which he is afflicted, and the extent of his probable means
when of age.”
172 Capacity
Miscellaneous
1. ‘On behalf of’
 Sri Kakulam Subramanyam v Rurra Subba Rao AIR [1948] PC
95, India
 A contract entered on behalf of a minor is valid only if:
 Guardian is legally capable of entering a contract on his behalf
 Contract is for the minor’s benefit
2. Minor who lied about his age

 S.115 Evidence Act – you are bound by the statement you
made
 Not applicable to minor who lied about age
 Natesan v Thanaletchumi & Anor [1953] MLJ 1
 Thus, contract still void ab initio
173 Capacity
The End
Note:
These are SHORT lecture notes
Explanations were given during lectures
Students are still required to read up cases and text books

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Chapter 1 Formation of Contract PDF

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Chapter 1

Izura Masdina Zakri

 At which point in time was an offer made?

S.2(a) Contracts Act 1950

When one person signifies to another his willingness to

“All prices quoted are at Nett, and subject to final

“We hope our quotation will meet with your kind

 It was merely a supply of information

 Offer was constituted by the printing orders

2. Offer can be made expressly, or impliedly

4. Must be clear in meaning

 The defendant denied the whole claim from plaintiff

 Defendant claimed that offer did not comply with s.4(1)

Before any hire-purchase agreement is entered into in

respect of any goods … shall serve on the intending hirer a

written statement duly completed and signed … in

accordance with … the Second Schedule;

“there could not be acceptance … of a non-existent offer”

 The written offer signed by the defendant without the

So far as the proposal … of any promise is made

“Its terms either expressly or impliedly must indicate that

S.3 Contracts Act 1950

Ahmad Meah & Anor v Nacodah Merican

D promised to build and give to P and his daughter, a

 Offer must be distinguished from an Invitation to Treat

 Offer  Acceptance = contract

Fisher v Bell [1961] 1 QB 394

2. Can derive an intention to be bound

 Was the advertisement an offer, or an ITT?

2. When can revoke

a) By the communication of notice of revocation by the

“notice of revocation by the proposer”

On Wed, June 10, the D gave P a written offer to sell a

Before 9am on June 12, P handed to D a formal letter of

“It is .. quite clear that before there was any attempt at

“…communication of notice of revocation by

 To be read together with s.5(1) Contracts Act

 What is reasonable time?

 Some offers may have a condition precedents to be

 Aberfoyle Plantations Ltd v Khaw Bian Cheng

 If known prior to acceptance, then one cannot accept

 “exceptional cases” = performance requires personal

 s.6 is with regards to revocation of an offer

 When you revoke an offer is equally important to ensure

 S.7(b) i.e. in the manner prescribed by the proposer

 Fulfilling conditions in the offer

the offeree makes that stipulation:

Stevenson’s telegraph is merely a request for more

The offer was accepted within time, and a contract exists.

B filled in the empty blanks and made a few changes such

1. There is no contract until the formal document is signed, or

2. A binding contract is already entered into and the execution

“ Court must determine whether the parties had already

 Aberfoyle Plantations Ltd v Khaw Bian Cheng [1960] MLJ 47

The communication of an acceptance is complete –

(a) as against the acceptor, when it comes to the

Entores Ltd [1955] 2 QB 327

The offerror in such circumstances is clearly bound,

– then I think there is no contract.

 No : Fitch v Snedaker 38 NY 248 (1868)

Arguable, based on:

 The important aspect here is when revocation can be

When it is put in a course of transmission to him –