JOM LULUS LAW 7.

0 (LAW299/LAW438)

LAW OF CONTRACT

06/05/2023 Saturday, 10 am – 12 pm

FACILITATOR: MUHAMMAD IZWAN BIN IKHSAN

izwanikhsan@uitm.edu.my

TIPS FOR ILAC QUESTION

1. ILAC question typically assess students’ understanding and ability to apply legalprinciples to
legal problems. It often asks students to advise the parties involved in the legal disputes.
2. Typically, the answer should contain:
• Issue – The issue is whether ................................................. (specific issue)
• Law – Legal provisions (sections and illustration if any + cases)
• Application – Application of the legal principles to the question
• Conclusion – Answer to the issue
3. Legal issues:
“The issue that arises in this question is whether _ can take legal action against
under the law of ”. (WEAKEST ANSWER)

List of Issues Law

of Contract

No Subtopic Issue
1 Offer • The issue is whether there is a valid offer made by
to ?
• The issue is whether the advertisement/ display of goods/
tender/ brochure/ tender/ auction by _ is a
valid offer or an invitation to treat?
• The issue is whether the offer by
communicated to the ?
• The issue is whether the counteroffer/ counter-proposal
made by _ destroyed the original offer
made by ?
•The issue is whether the offer by to
has been validly revoked due to counter offer/
lapse of time/ failure to fulfill conditions precedent to the offer/
death of the offeror/ unsoundness of mind of the offeror?*
*Choose only 1
2 Acceptance • The issue is whether the acceptance by to
the offer made by _ was absolute and
unqualified?
• The issue is whether the acceptance by
(offeree) was communicated to
(offeror)?
• The issue is whether the acceptance by to
the offer made by was validly revoked?
3 Consideration • The issue is whether there is a valid consideration in the
agreement between and ?
(answer of type of consideration – executory/executed/ past)
• The issue is whether the promise made by
to is valid despite the
lack of consideration? (answer of exceptions to consideration
– natural love & affection/ agreement to compensate past
voluntary act/ agreement to compensate act the promisor
legally compelled to do/ agreement to pay statute-barred
debt)
• The issue is whether the consideration that moved from
(3rd party) is a valid consideration in the
agreement between and ?
• The issue is whether the (amount/
value) is a sufficient or adequate consideration?

4 Intention to create • The issue is whether there is intention to create legal

legal relations relations in the agreement between _ and
?
5 Certainty • The issue is whether the terms of the agreement between
and are certain or not?
6 Capacity • The issue is whether the agreement between
and is valid due to lack of capacity of
in term of age/ unsoundness of mind/
disqualification by law from contracting?*
*Choose 1 only
7 Free consent • The issue is whether the agreement between
(coercion, undue and voidable due to lack of free
influence, fraud, consent induced by *coercion/undue influence/
misrepresentation) fraud/misrepresentation by [party who
caused it]
 *Choose 1 only
8 Free consent • The issue is whether the agreement between
(mistake) and void due to mistake of
[party(ies) who make(s) mistakes]
9 Discharge by • The issue is whether the contract between
performance and has been discharged by performance?
10 Discharge by • The issue is whether the contract between
consent and has been discharged by consent?
11 Discharge by • The issue is whether the contract between
breach and has been discharged by breach of
(party who commits the breach]
12 Discharge by • The issue is whether the contract between
frustration and has been discharged by frustration due
to (the frustrating event)
SHORT NOTES ON LAW OF CONTRACT

Topic Question Content in Law

OFFER Offer vs ITT 1. Definition of offer – s 2(a) CA 1950
2. Who is offeror and offeree
3. Definition of ITT
4. Effects of ITT
5. Types of ITT (choose 1 only):
a. Advertisement (General rule: Coelho v Public Service
Commission/ Partridge v Crittenden. Exception –
reward: Carlill v Carbolic Smoke Ball Co.)
b. Auction (Harrison v Nickerson / Payne v Cave)
c. Display of Goods (Pharmaceutical Society of Britain v
Boots Cash Chemist/ Fisher v Bell)
d. Tender (Spencer v Harding)
Communication of 1. Definition of offer – s 2(a) CA 1950
offer 2. Who is offeror and offeree
3. Offer must be communicated – s 4(1) CA 1950
4. Cases: R v Clarke/ Taylor v Laird
Termination of 1. Definition of offer – s 2(a) CA 1950
offer 2. Who is offeror and offeree
3. Ways to terminate an offer (choose 1 only):
a. Rejection (Malaysian Flour Mills Sdn Bhd v Saw Eng
Chee)
b. Lapse of time – s 6(b) CA 1950 (Ramsgate Victoria Hotel
v Montefiore)
c. Death/ mental disorder of offeror – s 6(d) (Bradbury v
Morgan)
d. Revocation – s 5(1) CA 1950 (Routledge v Grant/ Byrne
v Tienhoven)
e. Failure to fulfill conditions precedent (Financing Ltd v
Stimson/ Aberfoyle Plantation v Khaw Bian Heng)
ACCEPTANCE Absolute & 1. Definition of acceptance – s 2(b) CA
unqualified 2. Who is offeror and offeree?
acceptance
3. Acceptance must exactly fit the offer - S 7(a) CA
4. Counter offer = not acceptance (Hyde v Wrench)
Communication of 1. Definition of acceptance – s 2(b) CA
acceptance 2. Who is offeror and offeree?
3. Must be made in stipulated/ reasonable manner – s 7(b) CA
(Eliason v Henshaw)
4. Silence is not acceptance (if relevant) (Felthouse v Bindley)
5. Mode of acceptance (choose 1 only):
 a. Instantaneous communication – Entores Ltd v Miles Far
East Corporation
b. Postal rule – s 4(2)(a) & s 4(2)(b) CA – Adams v Lindsell/
Holwell Securities v Hughes
Acceptance made 1. Definition of acceptance – s 2(b) CA
within reasonable 2. Who is offeror and offeree?
time
3. Made within stipulated/ reasonable time – Fraser v Everett
Revocation of 1. Definition of acceptance – s 2(b) CA
acceptance 2. Who is offeror and offeree?
3. Before communication of acceptance is complete – s 5(2)
CA & illustration
4. S 4(3)(a) CA – valid against the party making it, binding on
the other party once he has knowledge (Dunmore v
Alexander)

CONSIDERATION Types of 1. Definition of consideration – s 2(d) CA

consideration 2. Agreement without consideration is void – s 26 CA (Macon
Works & Trading v Phang Hon Chin)
3. Types of consideration (choose 1): s 2(d)
a. Executory consideration (Wong Hon Leong David v
Noorazman bin Adnan)
b. Executed consideration
c. Past consideration (Kepong Prospecting v Schmidt)
Exception – 1. Definition of consideration – s 2(d) CA
agreement 2. Agreement without consideration is void – s 26 CA (Macon
without Works & Trading v Phang Hon Chin)
consideration 3. Exception (choose 1 only):
a Natural love & S 26(a) CA:
affection - In writing
- Registered (if required)
- Stand in near relations (Re
Tan Soh Sim/ Queck Poh
Guan v Quick Awang/
Illustration (b) to s 26
b To compensate S 26(b) CA:
past voluntary - Promise to compensate
act
- Wholly/ in part
- Past voluntary act
- Illustration (c) to s 26/ JM
Wotherspoon v Henry
Agency House)
c To compensate S 26(b) CA:
for things - Promise to compensate
promisor legally
 compelled to do - Wholly/ in part
- Promisor legally compelled
to do
- Illustration (d) to s 26
d To pay statute S 26(c) CA:
barred debt - Fresh promise
- In writing & signed
- Wholly/ in part
- Debt barred by law (> 6
years)
- Illustration (e) s 26 CA/
Unitel Technology v SMP
International
Adequacy of 1. Definition of consideration – s 2(d) CA
consideration 2. Agreement without consideration is void – s 26 CA
(Macon Works & Trading v Phang Hon Chin)
3. Explanation 2 to s 26 CA
4. Illustration (f) to s 26 CA, Phang Swee Kim v Beh I Hock/
Thomas v Thomas)
Consideration 1. Definition of consideration – s 2(d) CA
from 3rd party 2. Agreement without consideration is void – s 26 CA (Macon
Works & Trading v Phang Hon Chin)
3. S 2(d) CA (Venkata Chinnaya v Verikataramaya)
CAPACITY Age 1. S 10(1) CA
2. S 11 CA
3. S 2 Age of Majority Act 1971 – 18 y/o
4. General rule – VOID - Mohari Bibee v Dharmodas Ghose/
Tan Hee Juan v The Boon Keat)
5. Exceptions (choose 1 only):
a Contract for - S 69 CA – conditions of life
necessaries & necessities at the time of
transaction
- Factors to determine
necessaries
- Cases: Nash v Inman/
Scarborough v Sturkazer
b Scholarship - S 4(a) Contracts
(Amendment) Act
- Case: Govt of Malaysia v
Gurcharan Singh
c Service/ - Employment Act 1955 &
apprenticeship Children and Young
Persons (Employment) Act
1966
 - Cases: Boyle v White City
Stadium/ Clements v
London & North Eastern
Railway
Soundness of 1. S 10(1) CA
mind 2. S 12(1) CA
3. S 12(2) CA
4. S 12(3) CA
5. Illustrations (a) & (b) to s 12
6. Case: Sim Kon Sang Peter v Datin Shim Tok Keng

INTENTION TO Social vs 1. Definition of intention to create legal relation

CREATE LEGAL commercial 2. Common law principle
RELATIONS agreement
3. Purpose of intention – bound by the agreement & have legal
effect
4. Social agreement (Balfour v Balfour, Meritt v Meritt)
5. Commercial agreement (Edwards v Skyways Ltd/ Kok Kia
Hong v Guo Enterprises)
CERTAINTY Clear, certain & 1. S 30 CA
not vague 2. Illustration (a) - (f) to s 30
3. Cases: Karuppan Chetty v Suah Thian/ Phiong Kon v Chonch
Chai Fah

FREE CONSENT Coercion 1. S 10(1) CA – free consent

2. Definition of coercion – s 15 CA
3. Effect – voidable – s 19 CA
4. Illustration to s 15 CA
5. Cases: Ranganayakamma v Alwar Seth/ Kesarmal v
Valiappar Chettiar
Undue influence 1. S 10(1) CA – free consent
2. Definition of undue influence – s 16(1) CA
3. Types of situation – s 16(2) CA
4. Illustrations (a) – (d) to s 16 CA
5. Cases: Chait Singh v Budin Abdullah/ Salwath Haneth v
Hadjee Abdullah
6. Effect – s 20 CA - voidable
Fraud 1. S 10(1) CA – free consent
2. Definition of fraud – s 17 CA
3. Mere silence/ active concealment – explanation to s 17
CA
4. Illustrations (a) – (d) to s 17 CA
5. Cases: Weber v Brown/ Letchemy Arumugam v
Annamalay
 6. Effect – s 19 CA – voidable

Misrepresentation 1. S 10(1) CA – free consent

2. Definition of misrepresentation – s 18 CA
3. Effect – s 19 CA – voidable
4. Case: Tan Chye Chew & Anor v Eastern Mining & Metals
Co
Mistake 1. S 10(1) CA – free consent
2. Types of mistake (choose 1 only):
a. Unilateral mistake by 1 party – s 23 CA – not voidable
b. Mutual mistake of matter of fact – s 21 – illustrations
(b) – void (Sheikh Brothers Ltd v Ochsner/ Raffles v
Wichelhaus)
c. Mistake of law of Malaysia – s 22 – not voidable (Seck
v Wong & Lee)
d. Mistake of document – only voidable if the person is
illiterate/ blind/ entered it due to fraud (cases:
L’Estrange v F Graucob/ Awang Omar v Hj Omar)
DISCHARGE OF Discharge by 1. Definition of breach – s 40 CA
CONTRACT breach 2. Illustrations (a) & (b) to s 40 CA
3. Case: Smith Construction v Phit Krivata

Discharge by 1. Definition of frustration

frustration 2. 2 types of impossibility to perform: (choose 1 only)
a. Contract is impossible to perform – s 57(1) CA,
illustration (a) to s 57, awareness of impossibility – s
57(3) CA & illustration (c) to s 57 CA (case: Ramli Zakaria
v Govt of Malaysia)
b. Subsequent impossibility – s 57(2) CA, illustration (d) &
(e) to s 57 CA – cases: Taylor v Caldwell/ Krell v Henry/
Lee Kin v Chen Suan Eng
QUESTION

Annie is a huge fan of a popular boy band from South Korea known as CTS. On 25 September 2022, Big Hot
Entertainment; the company that manages CTS and Sooria Mall; a shopping complex in Kota Kinabalu,
Sabah announced that they will open a pop-up store (a temporary salespace) from 1 October 2022 to 1
November 2022 inside the mall to sell official goods and merchandises of the band. On 5 October 2022,
Annie went to the pop-up store. As a fan of Vee (one of the CTS’ members) she took the following items
from the shelves and put them into a basket.

Item Price (RM)

1. Plush toy of Vee 99.00
2. Ball pen with Vee’s caricature 49.00
3. Vee’s photocard sets 99.00
TOTAL PRICE 247.00

As she was queuing to make payment for those items at the payment counter, she saw a notice in front
of the counter desk stating, “CASH PAYMENT ONLY DUE TO THE TEMPORARY BREAKDOWN OF OUR CARD
READERS. ANY INCONVENIENCE CAUSED IS DEEPLY REGRETTED”. When she opened her purse, she
realised that she had only RM100.00. She tried to leave the queue to return item No. (2) and (3) to their
respective shelves but she was prevented from so doing by one of the staff, Bibi. Bibi insisted that Annie
must pay for all the items she hadin her basket, otherwise she was not allowed to leave the store. Advise
Annie. (15 MARKS)

SKELETAL DRAFT

• General rule on offer

o Definition of offer – s 2(a) CA 1950
• ITT
o Definition of ITT
o Differences between offer & ITT
o Display of goods (case: Pharmaceutical Society v Boots, Fisher v Bell)

SAMPLE ANSWER

Issue

The issue that arises in this case is whether the display of CTS’ merchandises at Sooria Mall is an invitation
to treat or an offer. (1m)

OR
The issue that arises in this case is whether there is a valid offer when Annie put CTS’merchandises in her
basket and queued up at the payment counter.
OR
The issue that arises in this case is whether Annie can take legal action against Bibi under the law of
contract.

Law and Application

An offer or proposal is an element of a valid contract. Section 2(a) of the Contracts Act 1950 defines an
offer as when a person signifies his willingness to do or abstain from doing anything, with a view of
obtaining the assent of the other person. An offeror is the person/ party makes the offer while the offeror
is the person/ party to whom the offer is made. (1m)

An offer must be distinguished from an invitation to treat (ITT). An ITT is not considered as an offer/
proposal. It is just a mere invitation to attract other parties to make an offer. The person whois making an
ITT does not intend to be bound by the person as soon as it is accepted by a person to whom the statement
is addressed. It is a preliminary communication – the expression of willingness to negotiate. (1m)

The display of goods on the shelves in shop is considered as an ITT; not an offer. The offer comes from the
buyers when they come to the shop, select the items from the shelves and bring them to counter for payment.
The offer is made by the buyer when he is ready to make payment at the counter. Meanwhile, acceptance
takes place when the seller accepts payment from the buyer. In short, the offer and acceptance are made at
the payment counter. (2m)

In the case of Pharmaceutical Society of Britain v Boots Cash Chemist, there was a law in the UKthat
required the sale of drugs to be supervised by a registered chemist. In the self-service pharmacy, the
customer selected articles he wanted to buy and placed them in wire basket and went to the counter to
make payment. Prior to making payment, the chemist would check whetherthe customer could buy the
drugs or not. The court held that when the customer chose the items from the shelves, it was merely an
ITT. The contract of sale was only made at the counter when the cashier accepted the customer’s offer to
buy what he had chosen. (2m)

In application of the above principles to the question, it is clear that when Annie chose the CTS’
merchandises and put them in a basket, there was yet to be a valid offer. (1m) It can only be regarded as an
invitation to treat as display of goods is not a valid offer. (1m)

When she queued up to make the payment, there was still no valid offer yet and Annie may still return the
purchase to the shelves. (2m) An offer is only to be made when it was Annie’s turn to make payment at the
counter. Acceptance is only complete if the cashier accepts Annie’s offer to buy the items. (1m) Bibi, the
staff of CTS’ pop-up store cannot prevent Annie from returning the items she decided not to buy as there
was no valid offer and acceptance yet. The acts of Annie seeing the items of the shelves, taking the items,
and queuing up have yet to form a valid offer to buy. (2m)

Conclusion

In conclusion, therefore, no legal action can be taken against Annie because the display of the CTS’ items
is merely an invitation to treat, and not a valid offer. (1m)
EXERCISE

On 5 January 2022, Rahayu offered to sell her diamond necklace to Leticia and Rohini for RM14,000. The
offer was open until 25 January 2022 and whoever accepted the offer first will get to purchase the
necklace. Leticia sent a text message to Rahayu on 19 January 2022 accepting to buy the necklace at the
price of RM13,000. Rahayu read the text message but did not reply. Rohini phoned Rahayu on 21 January
2022 and agreed to buy the necklace for RM14,000. Rahayu then sold the necklace to Rohini. When Leticia
heard about this, she threatened to sue Rahayu for breach of contract.

Advise Rahayu. (15 MARKS)