OFFER LEGAL CAPACITY
Proposal is revoked (SECTION C)
 By the communication of notice of revocation
by the proposer to other party.
 By the lapse of time prescribed in the proposal
for its acceptance.
 By the failure of the acceptor to fulfil a
condition precedent to acceptance.
CONSIDERATION
Types of consideration
1) Past Consideration
 A promise made subsequent to and in return
for an act that has already been performed.
2) Executed Consideration
 A promise is made in return for
performance of an act done by other.
3) Executory Consideration
 The parties exchange promises to perform acts
in the future.
Rules governing consideration
1) Consideration for all simple contracts
 An essential element in every simple contract
such as contracts not under seal.
2) Consideration must be legal
 An illegal consideration makes the whole
contracts invalid such as a promises to pay B
RM50 000 for kidnapping C’s daughter.
3) Consideration need not move from the promisee
 Such as the person who received the promise
must give himself something in return.
Types of contract
1) Contract of necessaries
 Necessaries including goods and services that
is reasonable necessary
 Such as food, shelter and clothing.
2) Scholarship contract
 The scholar entering into such agreement is
not of the age of majority.
3) Insurance
 Over the age of ten may enter into a contract
of insurance but if under 16, need written
consent from parents.
Characteristics of competent person
the 1) Reach age of majority
 The person below 18 years old will be known
as minor.
2) Sound Mind
 A patient in a mental hospital who is at
intervals of sound mind, may contract during
those intervals..
3) Not disqualified from contracting by any law
 A contract to appoint a person at the age of 70
and above to become a public companies
director is invalid.
 AGENCY
Types of agent
1) Brokers
 A commercial agent who is employed to make
contract between his principal and third parties.
2) Auctioneers
 An agent who is employed to sell goods by
auction.
3) Factors
 A commercial agent who in the ordinary
course of his business is entrusted with goods.
CREATION OF AGENCY
Requirements to be fulfil by agency of necessity
1) It’s impossible for the agent to get principal’s
instruction
1) The agent’s action is necessary in
circumstances to prevent loss
2) The agent acted in good faith
 A commercial agent who in the ordinary
course of his business is entrusted with goods.
DUTIES OF PRINCIPAL TO AGENT
1) To pay the agent the commission or other
remuneration agreed
 Payment for the performance of any act is not
due to the agent until the completion of the act.
2) Not willfully prevent or hinder the agent from
earning the commission
 An agent is entitled to retain goods, papers
and other property whether moveable or
immovable.
3) To identify the agent for acts done in the
exercise of his authority
 The right to be indemnified entitles the agent to
recover not only his commission but also
money.
SALES OF GOODS
Type of goods
1) Existing goods
 Those already owned or possessed by the
seller
2) Future goods
 Goods to be manufactured or producer by the
seller
Implied Terms under Sale of goods
1) Implied terms as to time
 If the buyer fails to pay by an agreed date, it
the does not automatically entitle the seller to
repudiate the contract.
2) Implied terms as to title
 The seller must have title to the goods that he
sells at the time of the contract
 Such as owner of the goods
3) Implied condition that the goods correspond with
description
 The obligation of the seller under this section is
absolute and it is no defence
 NEMO DAT RULE
Exceptions for Nemo dat rule
1) Estoppel
 The owner by his conduct makes it appear to
the buyer that the person who sells the good
has his authority to do so
2) Sale under a voidable title
 The seller of goods has obtained possession
thereof under a contract voidable under sec 19
3) Sale by a buyer in possession
 A person, having sold goods continues or is in
possession of the goods or of the documents
of title to the goods
ESSAY
DUTIES OF AGENT TO HIS PRINCIPAL
1) To obey principal’s instruction and in the
absence of instructions from the principal,
to act according to the custom.
 Sec 164, an agent is bound to conduct the
business of his principal according to the
directions given by the principal or in the
absence of any such directions.
 When the agent acts otherwise, if any loss
sustained, he must makes it good to principal.
 Illustration, agent engaged in carrying on for B
a business, in which it is the custom to invest
from time to time, at interest, the money which
may be in hand, omits to make the investment.
2) To exercise care and diligence in carrying out his
work and to use such skill as he possesses
 Sec 165, an agent is bound to conduct the
business of agency with as much skill as is
generally possessed by people engaged in a
similar profession.
 Illustration, a merchant in KL has an agent, B,
in London, to whom a sum of money is paid on
A’s account with orders to remit. B retains the
money for a consideration time. A, in
consequence of not receiving the money,
becomes insolvent. B is liable for the money
and interest from the day on which it ought to
have been paid.
3) To not let his own interest conflict with his duty
 Sec 169, if an agent without the knowledge of
his principal, deals in the business of the
agency of his own account instead of on
account or his principal, the principal entitled to
claim from the agents any benefit.
 Illustration, A directs B, his agent, to buy a
certain house for him, B tells A it cannot be
bought and buys the house for himself. A may,
on discovering that B has bought the house,
compel him to sell it to A at the price he gave
for it.
4) Not to make any secret profit out of the
performance of his duty
 Sec 168, if an agent of his own account in the
business of the agency, without first obtaining
the consent of his principal and acquainting
him with all material circumstances which have
come to his own knowledge in the subject.
 Illustration, A directs B to sell A’s estate. B buys
the estate for himself in the name of C. A, on
discovering that B has bought the estate for
himself, may repudiate the sale if he can show
that B has dishonesty concealed any material
fact.
IMPLIED TERMS (HIRE PURCHASE)
I. IMPLIED CONDITION
1) Right to sell
 Sec 7 (1), owner have their right to sell at any
time when the property is to passed.
 When the owner made an early payment.
3) Fitness
 Section 7 (3), goods shall be fit for its purpose
except the goods in concern is second-handed
goods and…
 All conditions and warranties of fitness and
suitability are expressly negative and the
owner proves that the hirer has acknowledge
in writing that the statement was bought to his
notice.
 Illustration, A directs B, his agent, to buy a
certain house for him, B tells A it cannot be
bought and buys the house for himself. A may,
on discovering that B has bought the house,
compel him to sell it to A at the price he gave
for it.
II. IMPLIED WARRANTY
4) Quite possession
 Sec 7 (1) (a), hirer enjoy quite possession free
from any interference.
 Hirer free from any charge or encumbrance in
favour any 3rd party.

2) Merchantable quality
 Section 7 (2), goods shall be merchantable
quality except the hirer examined the goods or
sample in which the defects ought to have
revealed with such examination
 If the goods are second handed and all
conditions and warranties as to the quality are
expressly negative, and the owner proves that
the hirer has acknowledge in writing that the
statement was bought to his notice.
 ESSAY OFFER

EXAMPLE INVITATION TO TREAT TERMINATION OF PROPOSAL

1) Shop window displays 1) Revocation of offer

 LAW  The communication of notice of revocation by
 Fisher v Bell the proposer to other party which need to be
 The defendant had displayed a flick knife in his made by offeror. It is sufficient that the offeree
shop window and was convicted of the criminal learns of the revocation from a reliable source.
offence of offering such knives for sale. On  LAW
appeal, Lord Parker CJ stated that display of  Dickinson v Dobbs
an article with a price on it in a shop window  X agreed to sell Y by a document, which stated
was only an invitation to treat and not an offer. this offer to be left over until Friday, 9 am. On
Thursday X contracted to sell the property to Z.
2) Price list Y heard of this from B and on Friday at 7 am
 LAW he delivered to X an acceptance of his offer.
 Partridge v Crittendent
 An advertisement in a magazine stated 2) Counter of offer
Bramble finch cocks and hens, 25s each. As  Offer operates as a rejection of the original
the bramble finch was a protected species, the offer because the acceptance must be
person who placed the advertisement was absolute and unqualified.
charged with unlawfully for sale a wild bird  LAW
contrary to the Protection of Birds Act.  Hyde v Wrench
 The defendant had made a proposal to the
3) Goods on the shelves of a self service store plaintiff to sell his estate at the price of 1000 on
 LAW 6th June. After that on 8th June, the plaintiff
 Pharmaceutical Society of Great Britain v replied the defendant’s proposal by creating a
Boots Cash Chemist Ltd counter offer to buy at the price of 950. Since
 Boots were charged with an offence the defendant refuse to accept it, the plaintiff
concerning with the sale of certain medicines wrote again to the defendant on 27 th June,
which can only be sold by or under the where the plaintiff indicated to accept for the
supervision of the qualified pharmacist. price of 1000 and it was turn down by the
defendant.
 CONSIDERATION  A owes B 1000, but the debt is barred by
limitation. A signs written promises to pay B
EXCEPTIONS TO THE GENERAL RULE 500 on account of debt.

1) An agreement made on account of natural LEGAL RELATION

love and affection between parties standing
in near relation to each other PRESUMPTIONS IN DETERMINING THE
 It is valid when it is expressed in writing which INTENTION OF THE PARTIES TO THE
may be in any reasonable form. AGREEMENT
 It must be registered where a law exists
requiring such registration. 1) Business Agreement
 LAW  The parties intend legal consequences to be
 Re Tan Soh Sim followed unless the parties specify otherwise.
 A woman on her deathbed expressed  LAW
her intention to leave all her properties to  Winn v Bull
her four adopted children and the court held  There was a written agreement between
that the claims of the adopted children were plaintiff and the defendant for the lease of a
not effective because it was not in writing, and house subject to the clause mentioned above
there was no natural love since the four but no further formal contract was entered into.
children were adopted and did not have
blood ties to that woman. 2) Domestic Agreement
 The presumption against the establishment of
2) An agreement to compensate for the past to create legal relation unless proven
voluntary act otherwise.
 It is a promise to compensate either wholly or  LAW
in part the other person  Bafour v Balfour
 LAW  Husband was a government servant that being
 J.M Wotherspoon v Henry Agency House stationed at Ceylon. The husband has made a
 A supports B’s infant son. B promises to pay promise to pay $30 for monthly allowances a
A’s expenses in so doing. This is a contract. If maintenance. The wife was unable to
X pays a fine imposed by the court on Y who accompany the defendant abroad due ti her
promises to compensate him, that promise is poor health. The husband failed to keep the
binding under this provision promise and the wife sued for the breach of
contract.
3) An agreement to pay a Statute Barred Debt  It was not a legally enforceable agreement
 Refers to a debt, which cannot be recovered because the parties did not intent that they
through legal action because of a lapse of time should be attended by legal consequences.
fixed by the law.
 LAW
 Illustration
 LAW
 Merrit v Merrit
 Both husband and wife joint name for the
matrimonial house I which subjected to
mortgage. Since both parties not in good
terms, the husband left the house. After that
both parties made a discussion and
agreement, husband agreed to give wife 40 out
of which the wife would top up the balance.
Then, the wife had settled the whole payments
and the husband failed to keep his promise in
which he refuses to transfer the ownership of
the house.
 The agreement should be a legally binding
contract because the plaintiff had managed to
the court that both parties having the intention
to create legal relation by putting the
agreement in writing and signed it.