LAW3201 Assignment

Q1:

In this particular problem, the major issue is whether there is an option between Lewis
and Benny. And the acceptance of Benny is effective or not. Next, the revocation of Lewis is
complete or not. Moreover, we need to examine whether there is a valid contract (offer and
acceptance), option contract between the Lewis and Benny, a valid contract between Lewis
and James and the revocation is effective or not.

A most basic element of legally binding contract is offer and acceptance. Offer and
acceptance is a traditional approach in law of contract used to determine whether an
agreement exists between two parties. So explanation of an offer and acceptance will be
needed. For offer, according to the section 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
obtaining the assent of that other to the act or abstinence, he is said to make a proposal’. In
simply word, an offer is a promise to be bound on particular terms. Section 2(c) of the Act
calls the person making the proposal/offer as offeror. The person to whom makes the offer is
‘an offeree’.

When a people make the offer, if it is accepted by an offeree, then will result in a legally
enforceable contract. Section 2(b) of said Act state that ‘when the person to whom the
proposal is made signifies his assent thereto, the proposal is said to have been accepted’.
Once the offeree has assented to the terms offered, a contract comes into effect and both
parties are bound to perform it. The offeror can’t longer to withdraw his or her offer. And the
offeree also can’t withdraw his or her acceptance.  For example, in a contract for the sale of a
piano, the seller may offer the piano to the buyer for $1,000.00. The buyer's acceptance of
that offer is a necessary part of creating a binding contract for the sale of the piano.

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In this case, Lewis made an offer to sell his fridge and washing machine to Benny for
Rm800. That means Lewis is making an offer to Benny for his fridge and washing machine,
and gets a consideration of rm800. At that point it was up to Benny to decide whether want to
accept this offer or not. But in fact, Benny replied: ‘I will buy it if I can raise the money’.
According to Section 7 of said Act, the acceptance must be absolute and unqualified. This
may be seen in LAU BROTHER & CO V CHINA PACIFIC NAVIGATION CO.LTD
[1965].In this case the fact is negotiations for the delivery of logs were conducted through a
series of telegrams and letters. Whilst still on the negotiating stage, the defendants withdrew.
The courts held that parties were still in a stage of negotiations and no agreement was
formed. Therefore defendants were justified in withdrawing. A conditional assent is not an
acceptance, so there is not acceptance. Although Benny did mentioned he will buy it but with
a conditional. So there is not an acceptance.

Promises are not contractually binding without consideration .A promise to keep an offer
open is only binding when there is an option contract. An option contract is defined as "a
promise which meets the requirements for the formation of a contract and limits the offeror's
power to revoke an offer." In term of option contract is the offeree must provide consideration
to the offeror to keep the offer open. If no such consideration is provided, then the offeror
may revoke his’s offer any time before the acceptance if he wants. When the offeror revoke
his offer, the offer is no longer open to offeree to accept it. In this case, Lewis promised that
he would not sell to anyone before Sunday. Although, he promised, but Benny didn’t
provided any consideration so there is not option contract between them. A similar case can
found is Routledge v Grant [1828]. In this case although the defendant had given the
plaintiff six weeks to accept an offer to buy house, he was entitled to withdraw the offer at
any time prior to plaintiff’s acceptance of the offer. So, Lewis had the right to revoke his’s
offer any time.

On Thursday, Benny phoned and left a message with answering machines, saying that he
had got the money and would come and collect the fridge and washing machine on Sunday

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morning. Section 7(b) of said Act stated acceptance must be made by same or reasonable
manner. Before Lewis making offer with Benny face to face. So there is common sense that
Benny should accept it by using the method which is oral. But Benny uses the method that
which is phoned and left a message with answering machines. Although that is not the same
manner, but there is a reasonable manner. Because we are usually use our phone. That is the
faster ways to let Lewis know also. So there is a proper acceptance.

However, the acceptance is effectively communicated only when the offeror has received
notice of it. Even through, Benny has made the proper acceptance but Lewis was very busy
and forgot to check his answering machine. A similar case can applied here is Powell v Lee
[1908]. In this case, the claimant was notified that his job application had been successful by
a member of an appointments board, which then decided to give the job to someone else. The
person who had told the claimant of his success had not been authorised to do so and
therefore acceptance had not been effectively communicated. In this circumstance,
acceptance by telephone is held to be effective only on being heard by the offeror. Since the
acceptance is not effective, so there is not valid contract between Lewis and Benny.

On Friday, Lewis was invited by James who said that he would pay RM900 for the fridge
and washing machine. In law, there is a proper offer. Lewis can decided want to accept it or
refused. Lewis accepts the offer. Because Benny did not provide any consideration for
Lewis’s promise to give his time to raise money; Lewis can sell his fridge and washing
machine anytime. And Lewis has accepted the James’s offer; there is a valid contract between
Lewis and James.

Later on, Lewis posted a letter to Benny and telling him that he could not have the fridge
and washing machine. As that action, Lewis is making a revocation of his offer. As a general
rule, when acceptance is complete, an agreement is formed so that there is no question of
revocation. But the acceptance is not complete yet so the revocation is possible. Due to
acceptance is not complete; Lewis was therefore at liberty to revoke the offer within that

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period of time.

But that is an important point to note that, the revocation is not effective until it is in fact
received by offeree – Section 4(3) of said Act. In the circumstances of the problem, Brian, the
postman, delivered it to the wrong address and Benny, who never received the letter. Which
mean the revocation is not effective. In Myrne v Tiehoven [1880], an offer was accepted by
post after a letter of revocation had been posted, but before it had reached the offeree, it was
held that a contract had been created by the acceptance of the offer. So in other word that, the
revocation is only effective when Benny received the letter which he is not.

In conclusion, there is not option contract between Lewis and Benny. Benny’s acceptance
is not complete, so there is not valid contract between them. Lewis can make contract with
James which he already did. There is a valid contract between James and Lewis. Although
revocation is not effective since Benny never received the letter and he appeared with a hired
van to collect the fridge and washing machine at 10 am on Sunday. But the Revocation can
take place up to the moment. Lewis can make the revocation when Benny appeared on
Sunday, since the acceptance of Benny is not complete. In law, Lewis is not wrong at all and
Benny can’t sue him for breach of contract.

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Q2:

In this question, we need to distinguish between an offer and an invitation to treat. First,
we need to define what is offer and some detail or rule of offer. And then the term of
’invitation to treat’, some similar case of offer and invitation to treat. Moreover, the different
between the offer and the invitation to treat

According to Section 2(a), Contract Acts 1950 offer is ‘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, he is said to make a proposal’. In other word offer
is a statement of the terms on which the offeror is willing to be bound. Or can say it is
promise to be bound on particular terms.

The communication of a proposal is complete when it comes to the knowledge of the

person to whom it is made – Section4 (1), of said Acts. This means that an offer or proposal is
only effective once the offeree know it. When the offer is made by offeror, offeree can
decided whether wanted to accept it or rejected. Once the acceptance is made by offeree
before the revocation, the offeror is bound to perform the contract.

An offer can be made through express or implied. The "expression" simply means it may
take different forms, such as writing, oral, letter, fax, email and even by conduct, as long as it
communicates the basis on which the offeror is prepared to make the contract.

There are 'bilateral' and 'unilateral' offers. A bilateral offer is one party make offer to
another party, both parties make a promise to the other. Bilateral contract normally is
comprised of an exchange of promise. For Unilateral contract, it means one party make offer
to the group of people or the world at large.

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The similar case of offer is Carlill v Carbolic Smoke Ball Co [1893] and it was of a
kind known as a unilateral contract.In this case the defendant manufactured smoke ball. They
claimed that if use the smoke ball properly that is impossible to catch flu. If still caught flu,
they will reward £100, they also bank in £1,000 into bank. Mrs.Carlill used it properly and
still caught flu. She claimed for that money. The defendant refused to pay, arguing that their
advertisement was not an offer. The court held that it was an offer of unilateral contract. The
claimant had accepted this offer by using the smoke ball properly and still caught flu. So, she
was therefore entitled to the reward.

An invitation to treat is not an offer, but it is only invitation to make an offer.The courts
have tended to take a consistent approach to the identification of invitations to treat, as
compared with offer and acceptance, in common transactions. The display of goods for sale,
advertisements, catalogues, price list, auctions, tenders are ordinarily treated as an invitation
to treat and not an offer. There are two case with the examples of invitation to treat can let u
get know more into invitation to treat.

First case is about advertisement; the majority of the advertisements are invitation to
treat. The case of advertisement is Partridge v Crittenden [1968] which is the defendant had
advertised bramblefinces in a magazine at 1.25 each. The defendant is charged with offering
for sale a wild live bird, contrary to the Protection of Birds act 1964. The court held that the
defendant was not guilty because his advertisement was an invitation to treat, not an offer.

Second case is about Goods display in shop, whether the goods with or without price tag
dose not amount to an offer t sell the goods displayed. It is invitation to treat. The case of
goods display in shop is Fisher v Bell [1961]. In this case the defendant was charged with
offering sale an offensive weapon, because he displayed a flick knife in his shop window. The

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court held that the defendant was not guilty also. The display of the knife amounted only to
an invitation to treat and not to an offer to sell.

Auctions are sometimes invitations to treat which allows the seller to accept bids and
choose which to accept. But, if the seller states that there is no reserve price or the reserve
price has been met, the auction will be considered an offer accepted by the highest bidder.
The rule is that when the bidder is making an offer to buy and the auctioneer accepts this in
whatever manner, usually the fall of the hammer. A bidder can withdraw his or her bid at any
time before the fall of the hammer.

An offer is made when a person shows a willingness to enter into a legally binding
contract with offeree. While an invitation to treat is merely a supply of information to invite a
person into making an offer. However the distinction between the two can often be
misleading and misinterpreted. When that is really misinterpret occur then it is depend to the
courts to decide and to distinguish between the two terms, so a person is not led into a
binding contract of which he does not want to be a part of, but is merely supplying
information to which an offer is to be made.

In conclusion, the difference of offer and invitation to treat can sometimes be difficult to
determine. In my opinion, the major different between offer and invitation is accepting an
offer creates a binding contract while "accepting" an invitation to treat is actually making an
offer.

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Q3:

In question 3 will need to explain term of a contract and the consequences of breach of
the terms in the contract. Next, examine types of the terms and apply some similar case.
Determine whether the term that Mary broke is condition terms or warranty term. Moreover,
she has the right to sue company or not.

Term in contract is a statement made in the negotiation stage. It is part of the contract and
creates obligation. If one party fail to perform the term in the contract, another party had the
right to sue him.

Term may be expressed or implied. The express term means the term that is mention in
contract. Implied term mean the things that not need to mention, it is common sense
knowledge. Implied terms can divided into 3 categories by statute, by court and custom. By
statute and by court is quite similar, it means by law for instance Sales of Goods Acts 1957
and the by court means it was said by court. For custom is trade custom which means that is
common sense things for example food, the food selling must be safety. When the express
terms conflict with implied terms, express terms will take over implied term, unless implied
terms is a statutory one and can’t be change.

There are two types of term, condition and warranty. Condition is most important
fundamental to the contract; it also is root of the contract. If one part fails to perform it,
another party can discharge the contract and sue for the damage. This may be seen in
Poussard v Spiers & Pond [1876] which an actress was employed for a season, but was
delayed by illness from taking up her role until a week after the opening night. The court held
that the employers were entitled to terminate the contract: her presence on the opening night
was crucial to the contract.

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For Warranty, warranty is less or minor important to the contract, so the contract will
survive. If one party breach that terms, the another party must still perform their part of the
contract but they have the right to sue for damages for any lose that might need to bear. This
might be seen in Bettini v Gye [1876]. In this case, a singer, engaged for a season failed to
turn up for the first three of the six prescribed rehearsal days. The court held that not
performances were missed this amounted only to minor breach; the employer was not entitled
to repudiate. Breach of either a condition terms or a warranty terms will give rise to damages.

In this circumstance of problem is Happy Holiday Co. engaged Mary, a modern

languages undergraduate, to act as its representative for its Sarawak Culture holidays. A term
of the contract requires Mary to attend a total of five training days before commencing the
job. There is very obvious the term is clearly state that Mary need to attend total of five
training days before commencing the job in other word Mary need to attend total of five day
training only can go for the job. That is a condition terms. A condition terms means breach of
that terms, will setting the contract aside.

In fact, some of the training days are held during Mary’s examinations and, as a result,
she only attends on three days. So which mean that, Mary fail to perform the condition terms
and that will lead to the contract to an end. So, the Happy Holiday Co. no longer bound to
perform the contract. This may be seen in Poussard v Spiers & Pond [1876] which actress
was employed for a season, but she was not taking up her role until a week after the opening
night. The court held that the employer was entitled to terminate the contract: her presence on
the opening night was crucial to the contract.

When the Happy Holiday Co. knews the Mary breach the terms, Happy Holiday informs
her that her services will not be required. That is a proper revocation, informs to Mary that

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the contract does not longer exist anymore. And Mary has learned from the revocation also.
So, there is not valid contract already.

And Mary knew it already and she still decides to go to Sarawak anyway. She spends the
entire summer holiday in Sarawak, living in the same three-star hotel she would have been
based at under the terms of her contract with Happy Holiday Co. Her total expenses are RM
4000. On her return to the hometown, she writes to Happy Holiday Co. demanding payment
of the RM3000 lump sum and reimbursement of her expenses of RM 4000. This Mary is
crazy; there is not valid contract between her and Happy Holiday Co. So, she spends the
entire summer holiday is her personal matter. She wants to do what also can because she got
the human right. But later on she writes to demanding of the RM3000 lump sum. That is
totally none of Happy Holiday Co’s business. Because there is not valid contract exist. Mary
can’t ask Happy Holiday Co. to pay her RM3000 lump sum.

In conclusion, Mary fails to perform the condition terms of the contract. Breach of
condition terms of contract can bring the contract to an end. So, there is not contract between
her and company, She spends the entire summer holiday in Sarawak is her personal matter. In
addition, she can’t sue the company of breach of contract or sue company for RM3000 lump
sum.

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