FACULTY OF LAW

UNIVERSITI MALAYA

LIA 1004
LAW OF CONTRACT I
SESSION 2022/2023

TUTORIAL MATERIALS

(Only for the use of the Faculty of Law, Universiti Malaya)

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OFFER AND ACCEPTANCE

A. In the case of Preston Corporation Sdn Bhd v Edward Leong [1982] 2 MLJ 22,
the quotation was not deemed to be an offer. Explain.

An offer is a definite promise to be bound provided that certain specified terms

are accepted. An offer is capable of being converted to an agreement by its
acceptance. This is because the quotes provided by the respondents are merely
a supply of information for the appellants in the inquiries about the price of the
printed book and its delivery date. There was no have any contract formed at that
time. That was concluded with an effective communication at printing order by
the appellants and the acceptance of confirmation by respondents.

The court held that the quotations were never intended to be a binding offer but
were a mere supply of information. An offer must indicate a willingness on the
part of the offeror to become bound as soon as it has been accepted by the
offeree. The quotations made were a mere supply of information or an invitation
to enter into a contract.

B. For an offer to be valid, it has to fulfill four conditions/requirements. Using

decided cases, explain each of these conditions/requirements.

For an offer to be valid, it must fulfill four requirements which are:

i. Offer must be valid at law
ii. Offer can be made expressly or impliedly
iii. Must be communicated
iv. Must be clear in meaning

i. An offer must be valid at law

The offer itself must comply with the law, otherwise it does not and cannot
exist. In the case of Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui, the
appellant(A) is the Affin Credit while the respondent(R) is Yap Yuen Fui. In
this case, the appellant let a motorcar to the respondent under a hire-
purchase agreement. Respondent fell into arrears with the payment and the
appellant brought an action to the court. The respondent alleged that the
appellant had failed to comply with various provisions of the Hire-Purchase
Act 1967 (Revised 1978). The appellant failed to provide the respondent with
a written statement consisting of a summary of his financial obligations under

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the proposal hire-purchase agreement. Therefore, the written offer signed by

the defendant without the condition precedent being fulfilled was not an offer
recognized by the hire-purchased agreement and there could not be
acceptance by the plaintiff of a non-existent offer.

ii. An offer can be made expressly or impliedly

So far as the proposal/acceptance of any promise is made in words, the

promise is said to be expressed. So far as the proposal/acceptance is made
otherwise than in words, the promise is said to be implied. In the case of
Preston Corp Sdn Bhd v Edward Leong, the appellant is a book publisher
while the respondent is a film about printers. The parties entered a business
relationship regarding the printing of school textbooks. The issue is whether
the film positives belong to the appellant or the respondent as the appellant
paid a sum of 28052 dollar as charges of the book printing. The respondent
claims that the amount offered was only the surcharge for printing and that
the film positive belongs to them as stated in the quotations. However, after
examining all the offers in this case, they did not appear to indicate a
willingness to enter in a legal binding contract. The respondents are merely
provided with the information about the price of the printing and delivery
requirements that the appellants needed. Hence, if a quotation does not
appear to express such intention, it is merely providing information to the
inquiry. The court had also referred to an offer made either expressly or
impliedly.

iii. An offer must be communicated to the promisee

S.4(1) Contracts Act 1950 states that 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 states that the communication of proposals,
acceptance of proposals and the revocation of proposals are deemed to be
made by any act or omission of the party proposing, accepting or revoking by
which he intends to communicate the proposal, acceptance and revocation or
which has the effect of communicating it. In the case of Tinn v Hoffman Co,
the defendant wrote to the plaintiff offering to sell iron. At the same day, the
plaintiff wrote a letter to the defendant for buying the iron before the letter
reached the knowledge of the plaintiff. Both are crossed in the past. The
offeree must be aware of the offer before they can validly accept it. In this
case, the offer never reached the plaintiff, so the promiser did not know about
the offer. The court held in favour of the defendant because the letter was not
valid acceptance.

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iv. An offer must be clear in meaning

An offer that is not clear would be invalid for uncertainty. In an old case,
Ahmad Meah & Anor v Nacodah Merican, an agreement was made between
the defendant promised to build and give to the plaintiff and his daughter a
“house which must be a suitable building” if the plaintiff is marrying the
defendant’s daughter. However, it is not clear about the definition of “suitable
building” and does not mention that the “suitable building” belongs to the
bridegroom or father of the bride. The plaintiff sought the specific
performance of the agreement. Pellereau J held that it was too vague to be
enforced. Hence, the offer is not clear and would be invalid for uncertainty.

C. Ali tells Ah Kow that he wants to sell his house in Bangsar for RM1.5 million.
Using the ILAC method, argue whether Ali has made an offer to Ah Kow.

Issue

Whether Ali's action of offering his house in Bangsar for 1.5 million ringgit be considered
an offer or not? (whether there is an offer or not) 

Law
The offer is an intimation of willingness from the offeror's intention to enter into a legally
binding contract. According to Section 2 of the Contracts Act of 1950, a person makes a
proposal when he expresses his willingness to do or refrain from doing something with
the intention of obtaining the consent of another. The offer must be capable of being
converted into a contract by its acceptance. Consequently, the offer becomes legally
valid and binding when it meets all four of the above conditions. The four conditions are
that an offer must be made to a specific person or to the world, an offer may be
expressed or implied, an offer must be clear in meaning and an offer must be valid at
law. 

The offer must be distinguished from the invitation to treat (ITT). The ITT is an indication
of willingness to make an offer, not a legally binding declaration. There are many types of
ITT, such as the display of goods, brochures, advertisements, and tender. The case of
Partridge v. Crittenden illustrates what an advertisement may look like. The defendant
advertised a number of Bramblefinch cocks and hens for sale for $25 each. Someone
was attracted by the advertisement and decided to buy it. The chicken was paid for and
delivered to the buyer. However, the defendant was charged under the Protection of
Birds Act 1954 for unlawfully selling the birds. He argued that the advertisement was
merely an ITT and not an offer. The court ruled that the advertisement in question was
not an offer to sell. Thus, the crime and charge in this case were not proven. Wording
plays a major role in determining whether an advertisement is to be considered an offer
or an ITT.

Application

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In this case of Ali, the statement of Ali to Ah Kow can be classified as an invitation to
treat (ITT). This is because the wording used by Ali indicates that he only wanted to tell
his friends that he was going to sell his house and ask Ah Kow for the invitation to buy
Ali's house. Ali wanted to sell his house to Ah Kow without entering into a legal contract.
Furthermore, the words Ali used show no willingness to contractually commit to Ah Kow.
This shows that Ali is merely advertising his house and indicating a willingness to make
an offer. 

Besides that, an offer was made if Ah Kow was interested in buying the house. At this
point, Ah Kow is the offeror while Ali is the recipient of the offer. This situation can relate
to the case of Partridge v. Critteden, as Ali and Critteden were only trying to advertise
their goods to the people around them. They did not intend to make an offer to others.
Since the four requirements were not met in this case either, there is an invalid offer.

Conclusion
In conclusion, there is no offer between Ali and Ah Know. His action is then to tell Ah
Kow that dealing the house may not be considered an offer as he is  unlikely to satisfy all
the four requirements of an offer. On the other hand, there is no imitation of willingness
to be bound fairly with Ah Kow through his wordings.

Not related to itt but can argue to show that it is not an offer because it is an itt (supply of
information) 

If you want to argue that it is an offer, argue on implied offer (presumption) 

D. An advertisement in the newspaper is normally regarded as an invitation to treat

yet in the case of Carlill v Carbolic Smoke Ball [1893] 1 QB 256, the court held
that it was an offer. Explain and elaborate.

An advertisement might be an offer if the wording of the advertisement is

important and has the intimation of willingness to be bound. In the case of Carlill
v Carbolic Smoke Ball, the defendant posted an advertisement about he
promised to any person contracted influenza after using the smoke ball in a
specified manner for a specific period will be given £100 as a reward. Carbolic
Smoke Ball deposited £1000 in the Alliance Bank to show their sincerity in the
matter. Mrs. Carlill used the item as advertised but still contracted influenza. The
plaintiff sued the defendants for £100. In their defense, the defendants
contended that the advertisement was made to the whole world and was not
intended to create any binding obligation. The court held that the advertisement
is an offer because intention to be bound can be determined in this case. £1000

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is deposited with the Alliance Bank showing the intimation of the willingness of
Carbolic Smoke Ball to be bound by the contract. Hence, the advertisement can
be an offer in this case.

E. Ali sees in a fruiterer’s window, peaches marked “English peaches: RM1 each”.
He enters the shop and asks for four English peaches, tendering the price. The
fruiter reaches to a box of inferior peaches on the counter and is about to scan it.
Ali stops him and insisted on having peaches from the window.

What is Ali’s legal position?

It’s not an offer but is an ITT. That is because Ali stopped him.
The offer is not an ITT unless I take it and put it at the counter, the cashier
scanned, and I paid it – offer and acceptance will be occurred.
Why is an ITT – because there is no have any offer, the offer must fulfil the four
requirements.
If Ali didn’t stop him, it will be an offer.

I:
L: Pharmaceutical Society of Great Britain v Boots
A:
C:

F. When is acceptance deemed made? Can silence be a mode of acceptance in

Malaysia? (Yes or no) Discuss with reference to decided cases. (Landmark
cases) – any cases that mentioned in the law of contract textbook

Silence cannot be a mode of acceptance unless in the case of Re Selectmove

Ltd [1995] Court of Appeal (in UK)
If we referred to the case in UK, we could accept silence be a mode of
acceptance in Malaysia.

G. Elaborate on the difference between ‘counter-offer’, ‘changes to the offer’ and

‘enquiry for more information’. How would one distinguish between the three?

Counter-offer – new offer is made; previous one is void; the price will be not the
same
Changes to the offer – the offer will remain just the terms will be changed, within
the agreement, the price are still the same but added more details – pen wants to
come with a free cover, the additional terms are required in the contract

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Enquiry for more information – is not an offer, is only asking for more information
Conclusions need to relate to the cases.

H. Explain, with reference to decided cases, the principles when the communication
of acceptance is complete when using the post and when talking face-to-face.

Postal rule –
Instantaneous communication –
facts, issues, decisions

I. Ah Kow offers a reward of RM50 for the return of his lost wallet by an
advertisement in the Nanyang Siang Pau. Arumugam, who does not read
Chinese, finds the wallet and seeing Ah Kow’s address on it, returns it to Ah
Kow. Is Arumugam entitled to the reward?

Discuss.

Make it to become one issue

Ah Know v Arumugam
There is no have any contract. Why? It must be communicated and reached the
knowledge of both parties. (Look at the intention) This is because he didn’t know
about the offer, he didn’t know how to read Chinese – Fitch & Anor v Snedaker

*Would be one sentence that can strengthen your answer

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J. Ali, from Wanted Printers, sent brochures to his customers to inform them of a
special price that would be given from 1 until 20 April 2022 for the printing of
certain type of flyers.

On 20 March 2022, Ah Kow called Ali and said, “I would like to order 200 flyers to
be printed. When can it be printed and delivered?”. Ali told him that it would take
three days and that the cost of delivery would be charged. Ah Kow then told him
that he needed several days to make a decision.

On 10 April 2022, Arumugam wrote a letter to Ali. this letter was received by Ali
on 12 April 2022. In that letter, Arumugam said that he would order 2000 flyers to
be printed if Ali would give him a 10% discount. Ali sent his acceptance letter on
19 April 2022, and this letter was received by Arumugam on 21 April 2022.
Arumugam, who had thought Ali did not agree, had already made a contract with
another printing company on 20 April 2022.

On 20 April 2022, Ah Kow called Ali again and told him that Ali could proceed
with the printing and send the finished flyers to his shop. Ali refused, saying that
he could not do so as he had received a huge order the day before. Ah Kow
became very angry and insisted that Ali honour the contract.

Advise Ali, Ah Kow and Arumugam of their rights and liabilities, if any. -
conclusion

- Ppt slide
- Identify the issue and statements (strong)
- ILAC

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CONSIDERATION

A. Discuss the decision in the case of Guthrie Waugh v Muthucumaru [1972] 1 MLJ
35 (HC) in relation to the doctrine of consideration. Are the learned judges
comments with regard to s.2(d) of the Contracts Act 1950 correct?

B. With reference to Re Tan Soh Sim [1951] MLJ 21, explain the requirement of
‘love and affection’ under s.26(a) Contracts Act 1950.

C. The meaning of ‘past consideration’ under s.2(d) and s.26(b) of the Contracts Act
1950 is different. Explain.

D. Aminah has been in several jobs since leaving school at the age of 18. She
enters into a contract with Dante Bhd to work for them for six months as a trainee
salesperson. Aminah’s uncle, Ali, promises her RM500 if she will stay with Dante
Bhd for the full six months. Ali stays the full period, but when she asks Ali for the
RM500, he says that he is hard up and offers her a cheque for RM200. Aminah
accepts it and cashes it. Later, Aminah writes to Ali claiming the balance of
RM300.

Advise Ali whether he is legally bound to pay the RM300. In this question, only
focus on the issues of consideration.

E. The law of promissory estoppel in Malaysia and common law are different. Using
decided cases, elaborate.

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INTENTION TO CREATE LEGAL RELATIONS

A. Differentiate between a ‘domestic and social agreement’ and a commercial

contract.

B. Can a domestic and social agreement arise between non-family members?

Discuss with reference to decided cases.

C. State the general rule and exceptions in relation to:

(i) Domestic and social agreements

(ii) Commercial contracts

D. Compare the cases of Rose and Frank Co v Crompton Bros Ltd [1925] AC 445
with Esso Petroleum v Commissioners of Customs and Excise [1976] 1 All ER
117, and explain why the court held that no contract existed in relation to the
issue of ‘intention’ only.

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CAPACITY

A. A contract entered into by a minor is void ab initio. Discuss.

B. Using decided cases, explain what are is needed under section 69 Contracts Act
1950 in order to claim from the minor?

C. Section 69 Contracts Act 1950 reflects the common law position that a minor can
enter into a contract for necessaries. Discuss.

D. Cloud, who is 17 years old, looks older than his actual age due to his physique
and somber expression. As such, he managed to obtain employment at Shinra
Security and is undergoing training as a personal bodyguard, known as
SOLDIER. The terms of employment stipulated that while under training, Cloud
would receive an allowance of RM1,000 a month and is not allowed to quit a year
after training is over. Otherwise, Cloud would have to pay Shinra Security
RM15,000 as penalty.

With his future seemingly secure, Cloud proposed to Tifa, his childhood
friend, to marry her when he turns 19 years old. In the meantime, an engagement
party was held whereby Cloud purchased a diamond ring from Nibelheim
Diamond worth RM3,000 for Tifa. Payment for the diamond ring was to be made
in 6 monthly installments. Cloud paid the first installment of RM500.

Cloud’s performance as a trainee impressed B.Diddy, a famous singer,

who then wanted Cloud to be his personal bodyguard. However, just after Cloud
finished his training, Shinra Security terminated Cloud’s employment as they
discovered his real age. As a result, B.Diddy took Sephiroth, another trainee as
his personal bodyguard as he wanted someone under Shinra Security. Cloud
was angry at Soldier Security, stating that there had been a breach of contract
and would like to claim damages. Shinra Security, on the other hand, states that
because Cloud is underage, no contract existed.

In addition, the relationship between Cloud and Tifa turned sour after the
termination due to Cloud becoming severely depressed. Cloud decided not to
proceed with the engagement, disappearing from town and stopped the
payments to Nibelheim Diamond.

Advise all the parties concerned as to their rights and liabilities.

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CONTENTS OF CONTRACT

Terms of Contract

A. Explain and elaborate on the guidelines that the court will use in order to
establish whether a pre-existing contractual statement is binding.

B. With reference to decided cases, explain the Parol Evidence Rule and all of its
statutory exceptions.

C. A pre-existing contractual statement that is binding is a term but it cannot

contradict the written contract. A collateral contract, however, can. Explain and
elaborate.

D. Sara comes to you, claiming that there are terms agreed to during the
negotiations which had not been included in the written contract she had signed
with Terence. However, when Sara tried to get Terence to include them, Terence
refuses to do so as he says that the statements are mere representations.
Furthermore, Terence points out that section 92 of the Evidence Act 1950 would
not allow such an inclusion when there is a written contract.

With reference to decided cases, explain Terence’s arguments and critically

discuss whether the statements can be legally binding.

E. Since the introduction of ‘innominate terms’ in the case of Hong Kong Fir
Shipping Co Ltd v Kawasaki Kishen Kaisha Ltd. [1962] 2 QB 26, the traditional
categories of ‘warranty’ and ‘conditions’ have become redundant. Discuss.

Implied Terms

A. “… the court cannot rewrite the sales and purchase agreement executed by the
plaintiffs and the defendant. The court will only imply such a term or terms as
may be necessary to render the agreement effective or complete in the manner
in which the plaintiffs and the defendant are presumed to have intended.”

As per Ahmad Maarop JC in

Ong Chong Wah & Anor v Seyhuat Sdn Bhd [2001] 4 MLJ 524

With reference to decided cases, discuss the principles which the court would
apply in implying terms into a contract.

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B. On 1 January 2010, Aerith and Zack negotiated the terms regarding the
renovation of Aerith’s house. Aerith wanted the ceiling to be plastered, the
parquet floor to be polished and the toilet piping to be covered. Zack repeatedly
assured Aerith that all of her needs would be done.

A written contract was entered into after a price was agreed upon. The contract
listed out the job scope, time of completion and cost of renovation. When Aerith
signed the contract, she missed the fact that the toilet piping job had not been
included in the listing of the job scope.

The work was done well and on time. However, upon inspecting the completed
work, Aerith discovered that the toilet piping had not been covered. When she
insisted on this, Zack pointed out that it had not been included in the written
contract. Thus, if Aerith wanted Zack to do it, she must pay more since it was not
in the job scope.

(i) With reference to decided cases, advise Aerith as to whether she is able
to imply the statement into the contract. Elaborate on the legal principles
that are involved.

(ii) What would your answer be, if the piping job had been the deciding factor
to enter into the written contract?

(iii) Would your answer differ if the piping job was not the deciding factor of
the written contract, but that it was extremely important to Aerith for it to be
done?

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EXEMPTION CLAUSE

A. On 1 May 2022, three friends, Carny, Wendy and Chynna went to Sabah and
stayed at the Wilson Phillips Hotel. The terms and conditions of the hotel had an
exemption clause which stated :

“Wilson Phillips Hotel will NOT be responsible for any loss or damage,
howsoever caused, to the customer’s goods whilst staying in this hotel.”

This was placed on a notice at the reception counter and wall.

Carny had booked her room online, whereby full payment was made to
secure the booking. In order to complete the booking, she had to agree to the
terms and conditions on the hotel’s webpage. She clicked “I accept” to those
terms and conditions which included the exemption clause, although she had not
read the terms and conditions.

Wendy made her booking through a travel agent, who then explained the
terms and conditions of the travel agency. Wendy was also warned that if she
was not satisfied with the hotel in any way, the travel agency would not be
responsible. Chynna did not make any prior bookings, but managed to get a
room as a walk-in guest. Both Wendy and Chynna were only aware of the terms
and conditions that were put behind the door in their rooms.

During their stay in the hotel, their rooms were broken into and several
valuable items were stolen. They would like to bring an action against the hotel
but the hotel states that they are protected by the exemption clause.

(a) Advise Carny, Wendy and Chynna.

(b) What would your advice be if this incident had occurred in the year 2000?

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