CASES FOR LAW OF CONTRACT

1. Offer to the world at large- Definition refer to slides. If there is a question on advertisement
and a reward will be given to those who fulfill the conditions of offer it is offer to the world
at large.
Carlill v Carb0lic Smoke Co
The Defendants made an advertisement that they would a reward to anyone who would still
get an influenza after using a certain product according to the instructions given for a fixed
period. The plaintiff used the product and followed all the instructions given but still became
ill. The plaintiff then claimed for a reward but the defendants refused to fulfill their promise.
The plaintiff then sued the defendants. It was held that the plaintiff was entitled to claim for
the reward because the offer made by the company(the defendants) was an offer to the
world at large. Since the plaintiff has fulfilled the conditions of an offer so she made an
acceptance.

2. Communication of an offer plus offer to the world at large

s.$4(1) – offer must come to the knowledge of acceptor.
If he forgets about the reward he is in in the same position as if he doesn’t know about the
reward.
R v Clarke
The Western Australian Government offered a reward to anyone who can give an
information which lead to the arrest and conviction of the murder of two police officers. X
and Clarke were arrested and charged with the murders but later on Clarke gave the
information which lead to the arrest Y. X and Y were lated convicted for the offence, Clarke
then claimed for the reward . Held his claimed because the information given by him was to
clear himself. Though he has seen the offer before but at the time he gave the information
he forgot about the reward. There cannot be an assent without knowing the offer. Ignoring
of offer is the same thing due to never hearing or forgetting it.

The above judgement is different from the case of Williams v Cawardine

The facts of the case are just the same with the above case. Held The plaintiff can claim for
the reward because at the time she gave the information she knew about the offer of the
reward.

3. Invitation to treat
a. Display of goods
Pharmaceutical Society of Great Britain v. Boots Cash Chemist Ltd
The defendants were charged under the Pharmacy and Poisons Act 1933 which provided
that it was unlawful to sell certain poisons unless such sale was supervised by a registered
pharmacist. Issue occurred here whether the acceptance and the sale exist when the
customer selected the goods which he wanted to buy and put them in a wire basket.
Payment was to be made at the counter. Usually when such sale involving drugs a
pharmacist supervised the transaction and will prevent a sale. The court held that the
cashier made an acceptance not the customer. The customer made an offer when he
selected the goods and put them in a basket. The display of goods or product in a store is
not an offer but an invitation to treat. Hence the acceptance ( the contract) happened at the
cashier desk the sale was a lawful transaction.

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 Fisher v. Bell
The defendant had a flick knife displayed in his shop window with a price tag on it. Statute
made it a criminal offence to offer such flick knives for sale. Then he was charged with
offering for a sale of a flick knife. The court held the display of a flick knife in a shop together
with a price label is treated as an Invitation to treat by the seller and not an offer.

b. Advertisements (selling goods in newspapers, magazines, pamplets etc or for job

application)
Partridge v. Crittenden
The defendant advertised for sale a number of Bramblefinch cocks and hens stating that the
price was to be 25 shillings for each. Under the Protection of Birds Act 1954, it was unlawful
to offer for sale any wild live bird. The defendant was charged under the Act. It was held the
advertisement was not an offer but an invitation to treat. Therefore such defendant was not
guilty.

4. Revocation of offer
S. 5(1), S.6(a) and S.4(3) (b)

Byrne v Tienvoven

The defendant offered to sell 1,000 boxes of tinplates to the plaintiff. 1 oct. Defendant
posted a letter of offer to the plaintiff. 8 Oct. defendant sent a letter of revocation. Plaintiff
on the 11 Oct. sent an acceptance by telegram and followed up by posting a letter of
acceptance. On the 20 Oct letter of revocation of offer received by the plaintiff.
Held there was an acceptance and therefore there was contract on the 11 Oct. when the
plaintiff sent a telegram.( postal rule applies). The revocation of offer is effective only on the
20 Oct. but at the meantime at the moment when the plaintiff made an acceptance he didn’t
know about the revocation of offer. So the contract happened on the 11 Oct.

Under English law the communication of revocation of an offer is effective even though
through a third party. ( it’s different from our law s.6(a), the revocation of offer can be done
by the offeror or the appointed/authorized agent).
Dickinson v Dodds
The defendant offered to sell his house to the plaintiff and promised to keep the offer open
until Friday. However on Thursday the defendant accepted an offer from someone else to
purchase the house. The defendant then asked his friend to tell the plaintiff that the offer
was revoked. So the plaintiff sued the defendant for breach of contract. It was held that the
offer had been effectively revoked. Notification by a third party of an offer’s
withdrawal/revocation is effective like a revocation done by the offeror. Therefore there
was no contract existed between them.

s. 6(b)
Ramsgate Victoria Hotel v. Montefiore

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 The defendant wanted to buy shares in the plaintiff’s hotel. He paid a deposit to his bank
account in June. This was for a certain price. He did not hear anything until six months later;
in November when the offer was accepted and he received a letter of acceptance of
acceptance from the plaintiff. By this time, the value of the shares had been dropped and
the defendant was no longer interested to buy shares. The defendant did not go through
with the sale. The plaintiff informed that the shares had been allotted to the defendant and
claimed for the balance of the purchase price. The court held that the offer should be
accepted within reasonable time. The period between June and November was clearly not
reasonable. The offer already terminated because failure of the plaintiff to accept the offer
within reasonable time.

S.6(c)
Financings Ltd. V Stimson
The defendant (the hirer) signed an offer to buy a car on hire purchase from a finance
company. The document had been given by the car dealer. The document had a clause that
the agreement would not be binding until it had been accepted by the finance company. The
defendant paid the first instalment, insured the car and took it away. Being unhappy with
the car performance he returned the car to the dealer and cancelled his insurance.
Unfortunately one night the car was stolen from the dealer and damaged. Not knowing of
this situation, the finance company accepted the written offer. The defendant refused to
pay for the charges and the finance company sued for breach of hire purchase agreement. It
was held that when the hirer returned the car and revoked his offer, there was no longer a
contract for the car. The car was not in the same condition as when the offer is made and
on the failure of that condition, the offer terminated/lapsed.

5. Communication of Acceptance
General rule silence does not mean consent. Acceptance must be communicated.
S.4(2)(b)- refer to slide
Felthouse v. Bindley
The uncle made a discussion for buying a horse from his nephew. Then followed up by a
letter sent to his nephew. The letter contained” If I hear no more from you I’ll consider the
horse is mine. The nephew did not communicate his acceptance that is he did not reply a
letter but he told the third party the defendant ( the auctioneer) to put aside the horse.
However the defendant mistakenly sold the horse to someone else. The uncle (the plaintiff)
then sued the defendant. It was held that there was no contract between the plaintiff and
the nephew because the nephew did not communicate his acceptance.

Fraser v. Everett
It was held that there was no rule of law saying that “silence gives consent applicable to
mercantile contracts.

Postal Rule
S.4(2)(a)

Adams v Lindsell

The defendant wrote a letter to the plaintiff to sell the wool. The Plaintiff then accepted the
offer by posted a letter of acceptance. But in the meantime the defendant had sold the wool

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 to the third party. The plaintiff then sued the defendant. It was held that there was contract
between them at the moment the plaintiff posted the letter of acceptance.

Ignatius v. Bell

In this case both parties are using post as method of communication. The plaintiff made an
agreement which he wanted to buy the defendant’s land. The acceptance has to be made
before 20th August. The plaintiff sent an acceptance by registered post on August 16 th but it
was not delivered till the evening of 25 th August. The letter remained in the post office until
picked up by the defendant. The court held that by applying s.4(2)(a) the acceptance made
by the plaintiff when he posted the letter on the 16 th August.

Entores Ltd. v. Miles far East Corporation

Lord Denning said “ When a contract is made by post it is clear that an acceptance is
complete as soon the letter is put into the post box and that is the place where the contract
is made.”

6. Counter Proposal
Hyde v. Wrench
The defendant offered to sell his estate to the plaintiff for 1000 pounds. In reply the plaintiff
made a counter proposal to buy at 950 pounds. When the defendant refused to accept to
accept his offer then the plaintiff wrote a letter to the defendant that he wanted to buy the
estate at the original price. The court held that no acceptance happened because the
plaintiff had rejected the original offer. Once it is rejected the original offer has terminated
and it cannot be accepted anymore.

7. Consideration
Types of Consideration
Past consideration
Kepong Prospecting v. A.E Schmidt & Marjorie Schmidt
A consulting engineer, had assisted another in getting a permit for mining iron ore. After the
formation of the company he also helped Kepong Prospecting Ltd and was appointed as
Managing Director. After the company was formed, an agreement was entered into
between them where the company agreed to pay him 1% of the value of all ore sold from
the mining land. This was in consideration of the services given by the engineer for and on
behalf of the company before its formation, after incorporation and for future services.
Issues to be determined whether the services given after the agreement is sufficient to be a
valid consideration because it was clearly past. It was held that it did constitute a valid
consideration so Schmidt was entitled to claim on the amount promised by the company.

Exception rule- agreements without consideration are valid

S.26(a)
Re Tan Soh Sim
The issue arose in this case whether an agreement was made between members of a
Chinese family and affection between three sisters and seven half sisters and brothers of Re

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Tan Soh Sim stood in near relationship to their adopted nephews and nieces. The deceased
Re Tan Soh Sim in her last illness had expressed a wish to their sisters and brothers that her
estate should be divided amongst the two adopted sons and adopted daughters. The legal
next of kin( Re Tan Soh Sim’s brothers and sisters), respecting this wish made an agreement
withdraw their rights in favour of the four adopted children; their adopted nieces and
nephews. The Court said that in this case the relationship and near must be applied and
interpreted. It was held that the adopted nieces and nephews were not nearly related to
their adopted uncles and aunties. There was no natural love and affection between them.

S.26(b)
J.M Wotherspoon & Co. Ltd v. Henry
A dispute arose between a Malaysian and an English firm regarding the arrangements
between them. Both are agents for various products. The Malaysian firm would find buyers
whereas English firm would find the sellers. When a sale had been arranged, the Malaysian
firm would be given a commission. However the business when wrong and the English firm
sued the Malaysian firm for the loss suffered because non payment by the buyer. The court
held that there was a promise made by the defendant( the Malaysian firm) to compensate
the plaintiff( the English firm) in respect of consignment but whether the act done by the
plaintiff was voluntarily done for the defendant. In this case the court found that the plaintiff
not acted voluntarily but he had acted on the suggestion of the defendant. Therefore the
promise made by the defendant firm to compensate the plaintiff was not enforceable
because it did not fulfill the explanation of s.26(b).

Adequacy of Consideration
Phang Swee Kim V. Beh I Hock
The respondent agreed to transfer to the appellant a parcel of land for $500 although the
value of the land is worth much more. The respondent later refused to do so contending
that the promise was unenforceable. It was held that even though the consideration is not
sufficient but the respondent had entered the agreement with free consent. Therefore there
was a valid contract.

Consideration Need Not Move From Promisee( acceptor)

Venkata Chinnaya v. Verikatara’ma’ya
A sister agreed to pay an annuity to her brothers who did not give consideration for the
promise. But on the same day their mother had given the sister some land by giving
condition that she must pay the annuity to her brothers. When the sister failed to fulfil her
promise, her brothers sued her on the promise. The court held that she was liable on the
promise on the ground that there was valid consideration for the promise because the
mother had given consideration on behalf of the brothers( even though the brothers did not
give the consideration).

Waiver of Performance
Kerpa Singh v. Bariam Singh
Bariam Singh( the debtor) owed Kerpa Singh RM8, 869.94. Bariam Singh’s son wrote a letter
to Kerpa Singh offering to pay $4,000 in full satisfaction of his father’s debt( the son given
consideration on behalf of the father) and sent a cheque by telling that if Kerpa Singh refuse
to accept his offer, he must return the cheque. However Kerpal Singh legal advisers having
cashed the cheque and retained the money. Then they claimed the balance of the debt by

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 issuing a bankruptcy notice on the debtor. The Court ruled that the acceptance of the
cheque from the debtor’s son in full satisfaction prevented them from claiming the balance.

8. Intention to create legal relations

General rule for domestic/ family agreements the husband and wife and husband have no
intention to create legal relations when they made an oral agreement.
Balfour v. Balfour
The defendant was a civil servant in Sri Lanka. While on leave in England. He had a promised
to pay his wife monthly allowance as maintenance. The wife was unable to accompany the
defendant because of her poor health. He defaulted and the wife sued for breach of
contract. The court held that the agreement was not enforceable because they have no
intention to create legal relations.

The above presumption can be rebutted if the husband and wife made a written agreement.
So they have an intention to create legal relations.
Meritt v. Merrit
The husband left the matrimonial home which was joint names in the joint names of
husband and wife. The house was mortgaged. The husband and wife made a discussion in
which the husband agreed to pay the wife 40 pounds a month whereas the wife would pay
an outstanding mortgage payments and when such payments had been completed, the
husband agreed to transfer the name of the house to his wife. The agreement was recorded
in writing and signed by the husband. Upon completion of the payment the husband
refused to transfer the house. It was held that by looking all the circumstances of the case
the parties have an intention to create legal relations and therefore ordered the house to be
transferred to the wife.

9. Capacity
Tan Hee Juan’s case and Nash v. Inman facts of these cases refer to handouts.
Government of Malaysia v. Gurcharan Singh
The government sued the first defendant as the promisor and the second and third
defendant as sureties for breach of contract. The claim was $11,500 alleged to be the sum
actually spent by the government in educating the first defendant. At the time of contract,
the first defendant was a minor. The court when looking at the point of scholarship the
agreement is void( because this case happened before the amendment of s.4(a) of the
Contract Act 1976. After the amendment when scholarship is given it is valid). The court
further ruled that since education was necessaries, so the agreement is valid and binding on
the first defendant. But according to s.69 he has to pay a reasonable price instead of
contractual price. Since the first defendant had served the government for three years and
ten months out of contractual period of five years , so he has to pay $2,683 to the
government.

10. Uncertainty
Karuppan Chetty v. Suah Thian
The contract was declared void for uncertainty because the parties agreed to a lease of $35
per month “ for as long he likes”.

# This information is for the facts of the case. For explanation refer to your slides, books,
whatever materials and handouts.