Question 1

First of all, it is to be determined that whether there is a valid and enforceable contract between
Jeremy and Jack. For a valid contract to establish the element needed would be offer, acceptance,
consideration, intention to create legal relation. On the fact, it is to be determined that whether
there is offer and acceptance between the parties. It is to be noted that a valid contract can either
be in oral or written form pursuant to Section 10 of the Contracts Act 1950.

By virtue of Section 2(a) of the contracts Act 1950, it stipulates that an offer is willingness to do
or to abstain from doing anything with a view to obtaining the assent of the other. In the case of
Preston Corporation Sdn Bhd v Edward Leong, the Federal Court held that a proposal is an
intimidation of willingness by the offeror to enter into a legally binding agreement.

However, it is noteworthy that an offer is to be distinguished from the principle of invitation to

treat. An invitation to treat carries the meaning of displaying someone’s good in whatever
manner (normally advertisement or display of good on the shelf of a shop) to invite the public to
make and offer for the owner of his agent to make the acceptance. The principle was enunciated
in the case of Fisher v Bell.

Invitation to treat is to be further distinguished from the doctrine of unilateral offer. In the case of
Carlill v Carbolic Smoke Ball, the court held that the women who caught flu was entitled to
claim the amount stated inside the advertisement by the Carbolic smoke Ball co. as the they are
posing out a unilateral offer to the whole world where if they caught flu after consuming the
smoke ball, they will be granted an amount of money as compensation.

it is submitted that on the fact, the advertisement posted by Jack in the local newspaper amounts
to an invitation to treat and the fact the Jeremy who came across such advertisement was making
an offer to buy such car at the price of RM20,000.00. it is not a unilateral offer as it only offers
the public to negotiate but not to claim the car after performing certain act(s).

it is the general rule that an offer must be communicated to the other side to be deemed as
complete pursuant to Section 4(1) of the Contracts Act 1950. On the fact, it is silent on Jack’s
part who was supposed to express his acceptance to Jeremy’s offer. Therefore, from the surface
of the case, it seems like there is no contract established between the parties due to lack of
communication. However, according to the principle of Felthouse v Bindley, silence does not
amount to an acceptance in general, except in the circumstances that one has the duty to speak.

On the fact, it seems like a normal sale and purchase contract, and Jack is supposed to respond to
such offer by Jeremy and his failure to do so would amount to non-acceptance of such an offer
due to lack of communication.

Therefore, it is submitted that now since there is no contractual relationship between the parties
at the moment, what Jeremy can do is to revoke his offer made to Jack before any
communication achieve from Jack’s side. According to Section 5(1) of the Contracts Act 1950, a
revocation of contract can be done at any time before the acceptance is complete against the
offeree. First of all a notice to revoke such offer must be give to Jack by Jeremy by virtue of
Section 6(a) of the Contracts Act 1950. On the fact, Jeremy wrote Jack to indicate his interest in
buying the car, therefore, it is humbly submitted that the same method shall be used by him in
revocation of his offer made.

Pursuant to Section 4(3) of the Contracts Act 1950, communication of revocation of offer will
only deemed to have been done if the offeror put it into a course of transmission to the offeree;
and for the offeree, the communication will only be effective when it comes to his knowledge.

Now, the present candidate will proceed to discuss based on the fact that there is an acceptance
from Jack towards Jeremy’s offer. The question arises as to whether the fact that Jeremy who is
intending to pull himself out of the deal will be a breach of contract.

Under Section 40 of the Contracts Act 1950, if the party refused to perform or has disabled
himself from performing the contract, such a breach of contract allows the other party to put an
end to the contract and the one who terminates the contract is entitled to compensation for any
damage suffered as per Section 76 of the Contracts Act 1950. It is to be noted that despite the
wording in Section 40 of the Contracts Act 1950 suggested that the plaintiff can put an end to the
contract, the court of appeal case of Ching Yik Development Sdn Bhd v Setapak Heights
Development Sdn Bhd held that the Plaintiff can only terminate such contract if a fundamental
term is breached, also known as the condition. In such circumstances, the innocent party can also
choose to affirm the contract and claim for damages suffered. However, if a less important term
is breached, the innocent party cannot discharge himself and can only sue for damages.
On the facts, the fact that there is a valid and enforceable contract between Jack and Jeremy, it is
submitted that a will to pull himself out of the contract would have cause damage to Jack who
has the opportunity to sell his car to other, maybe at a higher price, instead of tie to Jeremy who
eventually caused him to have nothing in the end. Therefore, it is definitely a breach of a term to
the root of the contract, ie. The condition of the contract. According to the case of Ching Yik
Development, Jack would be able to terminate the current contract and sue for damages.

Under the claim of damages, the plaintiff (Jack) would want to claim for damages to put himself
so far as money can do, in the same situation as if the contract had been properly performed as
per the case of Robinson v Harman. First of all, pecuniary losses are to be looked into. On the
facts, Jack would like Jeremy to compensate his pecuniary losses. As a general rule the plaintiff
can only claim for expectation losses, ie the loss of profit or reliance loss but not both as per the
court held in the case of Cullianane v British “Rema” Manufacturing Co. Ltd. however in the
case of Hydraulic Engineering, the court held that the Plaintiff may claim both expectation loss
and reliance losses if there is no overlap, namely the net profits and wasted expenses.

On the facts, it is humbly submitted that Jack can likely claim for expectation loss (due to his
loss of potential client) and the depreciation in value of his car as the time passed. Furthermore,
for reliance losses, Jack can also claim if he had incurred any cost in performing his obligation
towards the contract, e.g. to spend money in transferring the ownership of the car to Jeremy and
etc.

The assessment of damages is subjected to Section 74 of the Contracts Act 1950 where the
following factors will be taken into account, i.e. the causation, remoteness of damages, party’s
effort to mitigate such losses and etc.

With regards to the deposit paid by Jeremy to Jack, it is submitted that Jack might rely on
Section 75 of the Contracts Act 1950, to claim a reasonable compensation up to the amount
stated in the contract to forfeit the deposit. It is to be noted that in the case of Cubic Electronics v
Mars Telecommunications, the bench held that forfeiture of deposit is allowed subject to the
right of Defendant’s right to challenge the unreasonableness of the forfeiture. It is humbly opined
that there is no argument that Jeremy can raise to defend himself as regard to the forfeiture of
such deposit as he has the intention to pull out from the deal just because of the deal is no longer
good in his view.
Question 2

The question requires us to discuss on whether there is a valid consideration from the parties and
whether there is an existence of contractual relationship between the parties. The present
candidate will discuss the topic accordingly pursuant the issue concerned as follows.

Intention to create legal relation

This is an important element to establish a valid and enforceable contract. This is because the
parties can tell each other that both of them are ready to enter into a contractual relationship and
to face any legal repercussion due to their breach or non-performance of such contract. First of
all the involved parties’ mind must be clear on which type of contracts that they are intended to
enter into and what kind of consequences that they will be facing according to the contractual
terms. Therefore, it can safely concluded that if there is no existence of such an intention to
create legal relation, the contract will not be valid and enforceable. In other words, the said
“contract” will only be tantamount to a mere promise instead of a binding agreement where the
parties may not be performing it and there will be no legal consequences against the parties.

On the facts, Kevin's uncle had promised him that he would get him the latest play station if he
were do well in his exams which Kevin went ahead and did well in his studies. Eventually his
uncle said he was just joking about the promise.

Therefore, it can be clearly seen that on the fact, the promise or potential contract was made
upon the family or domestic relations. It is to be noted that for domestic relations, there is no
presumption of legally binding relationship between the parties. The principle had well
enunciated in the case of Balfour v Balfour. In that case, the husband had brought his wife from
Sri Lanka to UK but he had to stay over due to health issue. Then, he promised to pay his wife
an amount of money from the time being until he comes back to the UK as compensation for the
wife. Eventually, he had failed to make such payment and his wife brought the case to the court
where the court held that there was no consideration from his wife and therefore there is no
intention to form a valid and enforceable contract for the parties. The judiciary also held that it is
on the claimant’s burden to proof that there is such an intention exist to enter into contractual
relationships.
It is to be noted that the presumption of no legal binding intention between the family is
rebuttable. On the fact, Kevin who is likely to bring the claim against his uncle bears the burden
of proving there is an intention from both parties to be bound by the contract.

It is humbly opined that there is no intention from Kevin’s uncle to enter into a contractual
relationship with Kevin as the adult tends to make promise to the youngsters, but it is not
necessary for them to fulfill each and every one of such promises.

What actually amounts to consideration.

In Malaysia, pursuant to Section 2(d) of the Contracts Act 1950, the court accepts present, past
and future consideration from the parties. As per Section 26 of the Act, a contract without
consideration is a void contract unless it falls within the exception of scholarship agreement.

On the fact, Kevin may rely on the decision in the case of Re Tan Soh Sim where the court held
that natural love and affection is sufficient consideration provided the parties stand in a near
relation to each other, this includes any emotional relationship and not only subjected to family
relationship. But it is humbly submitted that there is no act of love and affection had been shown
from Kevin towards his uncle by merely study hard to get a better result in his academic. On the
other hand, his uncle may rely on Section 27(a) of the Specific Relief Act 1950 to rebut Kevin’s
claim due to the reason that the consideration provided by Kevin is grossly inadequate to not
grant the remedy of specific performance to him.

Subsequently, Kevin’s uncle may rely on the ground that there is an inadequacy of consideration
moving from Kevin to him. According to the case of Phang Swee Kim v Beh I Hock, in 1944 by
a memorandum of transfer and in consideration of $20,000 in Japanese currency, the respondent
transferred his half share of the land in question to the appellant’s husband, now deceased. The
transfer was not registered but the deceased obtained possession of the land, and in 1946 died
intestate. The appellant, the widow of the deceased extracted grant of letters of administration in
1951 and she continued to be in possession. Sometime in 1963 the land was sub-divided into two
lots and the respondent become the sole proprietor of the lot occupied by the appellant. The
Federal Court held that even though the basis of her claim was an oral agreement made between
her and the respondent in 1958 and the learned trial judge accepted her evidence but held that the
agreement was void due to the inadequacy of consideration. The bench in the Federal court held
that there was adequate consideration in this case as there being no evidence of fraud or duress
because the respondent agreed to transfer the land to the appellant on payment of $500 when the
land was sub-divided. The appellant was therefore entitled to the declaration sought by her.

It seems that Kevin’s uncle ground might be rebutted by Kevin by relying on the Federal Court
case as above mentioned but on the other hand, one of the general principles is that it must
contains of economical value, whether now or in the future. In the case of White v Bluett, a son
brought an action against his father’s appointed will executors by relying on the ground that his
late father had promised to pay him an amount of money if he agreed to stay away from making
noise about his father’s act which was according to the son, unfair. The court held that such a
promise was too vague to be a valid consideration. The act of staying quiet does not carry any
value of economic to bring any advantages for the father.

In conclusion, it is humbly submitted that there is no intention to create a legal relation between
Kevin’s uncle and him, this is because there is no consideration provided by Kevin which will
render benefit to his uncle. His hard work of studying merely make himself better and there is no
reason for his uncle to buy him the latest play station as it is only a mere promise.
References:

Statute:

1. Contracts Act 1950 (Cth) s.10 (MY.)

2. Contracts Act 1950 (Cth) s.2.a (MY.)
3. Contracts Act 1950 (Cth) s.2.d (MY.)
4. Contracts Act 1950 (Cth) s.26 (MY.)
5. Contracts Act 1950 (Cth) s.4.1 (MY.)
6. Contracts Act 1950 (Cth) s.4.3 (MY.)
7. Contracts Act 1950 (Cth) s.40 (MY.)
8. Contracts Act 1950 (Cth) s.5.1 (MY.)
9. Contracts Act 1950 (Cth) s.6.a (MY.)
10. Contracts Act 1950 (Cth) s.74 (MY.)
11. Contracts Act 1950 (Cth) s.75 (MY.)
12. Contracts Act 1950 (Cth) s.76 (MY.)
13. Specific Relief Act 1956(Cth) s.27.a (MY.)

Case Law:

1. Balfour v Balfour [1919] 2 KB 571

2. Carlill v Carbolic Smoke Ball [1892] EWCA Civ 1
3. Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd [1997] 1 CLJ
287
4. Cubic Electronics v Mars Telecommunications [2019] CLJ 723
5. Cullianane v British “Rema” Manufacturing Co. Ltd [1954] 1 Q.B. 292
6. Felthouse v Bindley [1862] EWHC CP J35
7. Fisher v Bell [1961] 1 QB 394
8. Hydraulic Engineering [1961] 1 QB 394
9. Phang Swee Kim v Beh I Hock [1964] MLJ, 383
10. Preston Corporation Sdn Bhd v Edward Leong [1982] 2 MLJ 22
11. Re Tan Soh Sim [1951] 1 MLJ 21
12. Robinson v Harman (1848) 1 Ex 850
13. White v Bluett (1853) 23 LJ Ex 36