CIB2002 BUSINESS LAW

SEMESTER 2, 2020/2021

TUTORIAL 2 AND TUTORIAL 3

GROUP 2

NAMES MATRIC NO.

NUR SHAMIRA BINTI MUHAMMAD KHAIRULHADI U2003037

RENUKADEVI A/P SHARAN 17186785

TASNIMUL ISLAM 17062360

NURUL ATHIRAH BINTI ZULKIFLI U2003244

ZHAO HAOTIAN 17215512

FIZREEN QISTINA BINTI MOD FAIZAL U2003078

THALLITA AMARILLYS ARGUBIE 17122631

Tutorial 2

Charlie was offered by his employer to further study abroad. He decided to sell his house to
his friend, Chaplin. Charlie called Chaplin’s handphone but no answer. Luckily, Charlie kept
Chaplin’s home address. He then wrote a letter of offer to sell the house to Chaplin and posted it
on 2nd February. Chaplin received this letter on 4th February and was interested to accept the
offer. Chaplin wrote an acceptance letter to Charlie and asked his brother to post the letter on the
same day since he was very busy with his work.

On 3rd February, Charlie met his new officemate, Mr Bean, who was looking for a house.
Charlie then offered his house to Mr Bean. This offer has been made instantaneously but Mr
Bean did not give an answer at the meantime. Charlie later gave Mr Bean four (4) days to accept
his offer. (Not including the date of the offer). On the 5 th February, Mr Bean called Charlie and
informed that he agreed to buy the house. Charlie then sold his house to Mr Bean. On the 8 th
February Charlie received Chaplin’s letter of acceptance.

The day after, Chaplin came to Charlie’s house with his brother to view the house. However,
Chaplin was very frustrated to know that the house was sold. Chaplin claimed that he was
entitled to the house as his letter of acceptance was posted on 4th February. However, Chaplin’s
brother told that actually he did not post the letter on 4th February as he suffered stomachache
and was not able to go to the post office. He only posted the letter on 6th February.

With reference to the Contract 1950, who is entitled to buy the house? Support your answer with
relevant sections and decided cases.
Answer:

Issue:

Whether Chaplin or Mr Bean is entitled to buy the house?

Solution:

According to the general rule S4(1), communication of acceptance is effective only when it is
communicated. Other than that, the postal rule is where it is agreed that the parties will use the
post as a means of communication the postal rule will apply. The postal rule states that where a
letter is properly addressed and stamped the acceptance takes place when the letter is placed in
the post box. Based on S4(2)(a) against the offeror, communication of acceptance is complete
when it is transmitted to him. Based on S4(2)(b) against the offeree, communication of
acceptance is complete when it comes to the knowledge of the offeror. When an offer is made
and accepted by letter through post, the contract is completely concluded once the letter of
acceptance has been posted, even though the letter has not reached its destination yet.

Case (i): Adams v Lindsell (1818) 106 ER 250

The defendant wrote to the plaintiff offering to sell them some wool and asking for a reply ‘in
the course of post’. The letter was delayed in the post. On receiving the letter, the plaintiff posted
a letter of acceptance the same day. However, due to the delay, the defendant had assumed that
the plaintiff was not interested in the wool and sold it to a third party. The plaintiff sued the
defendant for breach of contract. The court held that there was a valid contract which came into
existence the moment the letter of acceptance was placed in the post box. This case established
the postal rule. This applies where post is the agreed form of communication between the parties
and the letter of acceptance is correctly addressed and carries the right postage stamp. The
acceptance then becomes effective when the letter is posted.

Case (ii) : Entores Ltd v Miles Far East Corp (1955) 2 QB 327

The claimant sent a telex message from England offering to purchase 100 tons of Cathodes from
the defendant in Holland. The defendant sent back a telex from Holland to the London office
accepting that offer. The question for the court was at what point did the contract come into
existence. If the acceptance was effective from the time the telex was sent, the contract was made
in Holland and Dutch law would be applied. If the acceptance took place when the telex was
received in London, then the contract would be governed by English law. The court held that to
amount to an effective acceptance, the acceptance needed to be communicated. Contract created
when acceptance received (come to the knowledge of offeror). Therefore, the contract was made
in England.

Application:

Based on the sections and cases mentioned above, Chaplin received the letter of offer on 4 th
February but his brother posted the letter on 6th February because he suffered from a stomach
ache. The acceptance of agreement is valid on 6th February. However, Charlie offered his house
to Mr Bean on 3rd February. Mr Bean agreed to buy the house from Charlie on 5 th February. The
acceptance of agreement is valid on 5th February, a day earlier than Chaplin.

Conclusion:

Mr Bean is entitled to buy the house.

Tutorial 3

Samsung wanted to sell his car to his best friend, Nokia for only RM20, 000 though the price
offered was below market price. When Samsung’s mother, Blackberry, knew about this, she felt
disappointed as the price was not reasonable. Blackberry approached Nokia and asked Nokia to
return the car. Blackberry claimed that the sale was not valid for the inadequacy of the price.
Nokia refused as she had already paid for the car.

Blackberry decided to take legal action to invalidate the contract between Samsung and
Nokia. She asked his son, iPhone to accompany her to see a lawyer. Unfortunately, while she
was driving to the lawyer’s firm, she failed to overtake one car and suddenly hit a lorry from the
opposite direction. Blackberry died on the spot while iPhone who was also in the car only
sustained a minor injury. He was called by the Magistrate Court as a witness during the trial of
the case. The lorry driver had promised iPhone to give the reward to iPhone if he could attend
the trial and provide true evidence about the accident. iPhone attended and claimed the reward as
promised by the lorry driver.

Meanwhile, HTC, Iphone’s brother who was a security guard at CIMC Bank was determined
to become a better worker. He performed his job dutifully and then claimed extra payment from
his employer as he always came earlier and went back late, but his claim was rejected. A few
days later, the bank was robbed and HTC was instructed to report for duty within 24 hours. HTC
again claimed extra payment for his additional working hours but this was also rejected by his
employer.

Settle the above problems.

Issues:

(i) Can Blackberry take legal actions on Nokia?

(ii) Can Iphone claim the reward from the lorry driver?

(iii) Can HTC claim extra payment for his additional working hours?

Solution (i):

Based on the explanation 2 S26, an agreement to which the consent of the promisor is freely
given is not void merely because the consideration is inadequate, but the inadequacy of the
consideration may be taken into account by the court in determining the question whether the
consent of the promisor was freely given.

Case (i) : Phang Swee Kim v Beh I Hock (1964) MLJ 383

Respondent agreed to transfer to the appellant a parcel of land on payment of RM500, although
the land was worth much more. The respondent later refused to honor the promise, contending
that the promise was unenforceable. The court held that as long as there was consideration,
inadequacy of consideration was immaterial.

Application (i):

Based on the section and case mentioned above, Blackberry cannot take any legal action towards
Nokia. This is because Samsung has agreed to sell the car at RM 20,000. Nokia’s consent to the
agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the
consideration.

Solution (ii):

It is a public duty imposed on the offeree as legally compelled to fulfill the duty.

Case (ii) : Collins v Godefroy (1831) 1 B & Ad 950; 109 ER 1040

Plaintiff was served with a subpoena to attend court as a witness to the defendant's trial. The
defendant promised to pay a certain amount to the plaintiff if he attends. The court held that the
defendant’s undertaking to pay the plaintiff to appear in court after he was served with a
subpoena is no consideration, as the plaintiff is legally compelled to attend court.

Application (ii):

Based on the section and case mentioned above, iPhone cannot claim the reward from the lorry
driver. This is because iPhone was under a public duty to attend court and provide true evidence
about the accident. Therefore, iPhone was legally compelled to attend court.

Solution (iii):

There is an exception unless the promisor goes beyond their duty.

Case (iii) : Glasbrook Bros Ltd v Glamorgan County Council (1925) AC 270

Police officers claimed payment of 2200 sterling promised by the appellant colliery for their
extra services during a strike. The court held that the police officers were entitled to their claims
as they had gone beyond their public duty to render extra services than required by law.

Application (iii):

Based on the case mentioned above, HTC is unable to claim extra payment for coming to work
earlier and going back home late. However, he can claim extra payment for his additional
working hours when he was instructed to report for duty within 24 hours. This is because it is
beyond his duty to work during other shifts. Therefore, CIMC Bank has no rights to reject HTC’s
claims.

Conclusion:

(i) BlackBerry cannot take legal action on Nokia because there is a valid contract between
Samsung and Nokia.

(ii) iPhone cannot claim rewards from the lorry driver.

(iii) HTC can claim extra payment for the additional working hours, except for coming to work
earlier and going back home late.