LAW240

Tutorial on acceptance

1.C

2.B

3.D

4.C

5.D

6.C

7.C

8.A

9.C

10.B

11.D

12.B

13.A

14.A
PROBLEMATIC QUESTION

Question 1

Question

On 7th May, Mr. Sham made a written- offer to Mrs. Tasha for the sale of his house for a sum of RM1
Million. Sham mentioned in the same written- offer that the offer would be opened till the 15th of May
09:00pm. On 14th May, Sham sold the house to Didi without any notification to Tasha. On the same day,
i.e. 14th May Mrs.Tasha accepted the offer Ly posting her acceptance letter. Mr Sham claimed there was
no contract between them. Advise Mrs.Tasha.

Issues

a) Whether the acceptance letter posted by Mrs. Tasha amounts to a valid acceptance?
b) Whether the is a valid contract between the Mr. Sham and Mrs Tasha?
c) Whether Mrs Tasha could sue Mr Sham for breach of contract?

Law

Section 2(a) of the contract Act 1950 provides:

“When the person signifies to another his willingness to do or to abstain from doing anything with a
view to obtaining the assent of the other … he is said to make a proposal”

According to above situation, when a person promises or propose something to other party, he is said
to make an offer. The person who make an offer is called as an offeror/promiser/proposer. The
offeror/promiser make the offer with the intention to create a legal binding contract with the other
party (i.e offeror/promiser/acceptor).

Section 2 (b) provides :

" when the person to whom the proposal is made signifies his assent...the proposal is said to be
accepted…”

According to the above provision, an acceptance is binding on the offeror when the addressee of the
offer (" ...to whom the proposal is made...") gives his consent.

Illustration: A offers to sell his car to B. This is a specific offer because the offer is only addressed to B.B
is the addressee of the offer. Therefore only B can make the acceptance. Once B gives his acceptance, A
is bound to the contract.

Any other person, who is not the addressee, cannot make the acceptance to such offer. If that person
made an acceptance, the acceptance is not binding on the offeror. This is because the offer was not
addressed to him and of course, he is not entitled to make any acceptance.

According to section 4 (2) (a) of the Act :

"The communication of an acceptance is complete as against the proposer, when it is put in a course of
transmission to him..”

- Illustration : "B accepts A's proposal by a letter sent by post. The communication of the acceptance is
complete...as against A, when the letter is posted."

The offeror is bound to the contract when the offeree posts the letter of acceptance. This means, the
offeror is bound to the contract without his knowledge because he did not know when is the actual time
that the letter of acceptance is posted to him. The contract is binding on the offeror, irrespective of any
delay or disappearance of the letter of acceptance.

Case 1: ENTORES LTD V MILES FAR EAST CORP. (1955)

Held by Denning L.J.: "When a contract is made by post, the acceptance is complete as soon as the letter
is put into the post box, and that is the place where the contract is made"

Case 2: IGNATIUS v BELL (1913)

The Defendant offered to sell his land to the Plaintiff on condition that if the Plaintiff would like to
accept the offer, he must make the acceptance on or before 20th August 1912. The Plaintiff sent an
acceptance by registered post on 16th August but the letter (did not reach the Defendant until 25th
August, because the Defendant was away.

Held : The acceptance was exercised by the Plaintiff when the letter was posted on 16th August.
Therefore, the Defendant was bound to the contract.

Application

By applying to the fact of the case we can see that Mr Sham was bound to the contract when Mrs Tasha
posts the letter of acceptance. This means, Mr Sham was bound to the contract without his knowledge
because he did not know when is the actual time that the letter of acceptance is posted to him. Mrs
Tasha can sue Mr Sham because Mr Sham should not sell his hpuse to other person as acceptance has
been completed against him when Mrs Tasha posted the acceptance letter. There will be a clear breach
of contract. There is an offer and there is an acceptance.So, there is a contract.

Conclusion

In conclusion, once a letter of acceptance is posted, a valid contract comes into existence. Hence, we
must always make sure that we have a communication between two parties.
Question 2

Question

Datuk Chan's daughter has ran away from the house. He sent his bodyguard to trace his missing
daughter. When the bodyguard had left, Datuk Chan announced that anybody who has returned the girl
back, would be given a reward of RM5000. The bodyguard discovered the girl and returned her back to
her father without knowing the reward. When the bodyguard came to know about the reward, he
claimed the amount promised but Datuk Chan refused to pay him. Advise Datuk Chan.

Issues

a) Whether The Bodyguard has a knowledge/communicate with Datuk Chan regarding the reward
RM5000 advertised by Datuk Chan to the public when he returned Datuk Chan’s daughter to
him?
b) Whether The Bodyguard can sue Datuk Chan if he refuse to pay/give the reward?
c) Whether the bodyguard can claim the reward as of RM5000 as advertised by Datuk Chan to the
public?
d) Whether there is a binding contract between The Bodyguard and Datuk Chan?

Law

Section 2(a) of the contract Act 1950 provides:

“When the person signifies to another his willingness to do or to abstain from doing anything with a
view to obtaining the assent of the other … he is said to make a proposal”

According to above situation, when a person promises or propose something to other party, he is said
to make an offer. The person who make an offer is called as an offeror/promiser/proposer. The
offeror/promiser make the offer with the intention to create a legal binding contract with the other
party (i.e offeror/promiser/acceptor).

Illustration: A ask B do you want to buy my car RM50 000 ? In this situation, when A ask B whether B
wants to buy his car for that price, it means that A is proposing or offering to sell his car to B, with the
intention that B will agree to his proposal. A is the offeror.

An offer must be communicated.

An offer must be communicated to the promise. Otherwise the offer letter is not valid.

Section 2(a) provides:

“when a person signifies to another…”

The word “signifies” in this provision indicates that the offer must be “communicated” which mean
that the offer must reach the knowledge of the offeree. The “communication” of offer is complete only
when the offer comes to the knowledge of the offeree.
Section 4(1) of the contract Act 1950 provides:

“The communication of the proposal is complete when it comes to the knowledge of the person to
whom it is made”

If the offeree does not know about the offer, the offer itself is not valid. Thus, there would be no binding
contract.

Case 1: Taylor v Laird (1856) 25 LJ Ex 329

The claimant was employed as the captain of a ship which was owned by the defendants. Whilst in a
foreign port during the course of the voyage, he voluntarily gave up his position as captain, and worked
as an ordinary crew member during his passage back to Britain. The defendant was not made aware of
this change of position. Upon his return, he sought to claim wages from the defendant for his work as a
crew member during this journey.

Held:

The court held that the claimant was not entitled to wages for the return journey on the basis that he
had not entered into any contractual agreement with the defendant for the performance of his work as
an ordinary crew member. The defendant had not received any communication or offer of work in this
capacity from the claimant, and there was therefore no basis for a contract. The court reasoned that it
would be unjust to hold a party bound by an offer which he had not been made aware of, and therefore
had no opportunity to accept or reject; as such it is not possible in English contract law to accept an
offer ‘in ignorance’.

Case 2: R v Clarke

Evan Clarke tried to claim the reward of £1000 for giving information that led to the conviction of a
murderer, Treffene , of two policemen called Walsh and Pitman, under the Crown Suits Act 1898.[2] A
proclamation stated there would be such a reward, which he had seen in May. However, Clarke gave the
information in June while he was on trial himself as an accessory for murder. He had originally covered
for the murderer, but then had changed his mind and given information. The evidence was reported to
be that he gave information to clear himself and not necessarily for the reward. He told the police
"exclusively in order to clear himself". It was uncertain whether he was thinking about the reward at the
time he provided the information.

Held:

The High Court held that Clarke could not claim the reward because it was necessary to act in "reliance
on" an offer in order to accept it, and therefore create a contract.[1]: p 235 Isaacs ACJ and Starke J
held that Clarke had not intended to accept the offer. Higgins J (interpreted the evidence to say that
Clarke had forgotten about the offer of the reward.
Application

By applying to the fact of the case we can see that The Bodyguard has no knowledge regarding the
reward of RM5000 as announced by Datuk Chan since The Bodyguard heard about the reward after
return Datuk Chan’s daughter to him. The Bodyguard cannot sue Datuk Chan if he refuse to pay the
reward of RM5000 and not entitled to receive the RM5000 reward as no binding contract between
Datuk Chan and The Bodyguard. We may support with case RV Clarke.

Conclusion

In a conclusion, we should make sure that we have a communication between two parties. Hence, we
must always aware of current issues that happen either in newspaper or other resources.