INDIVIDUAL ASSIGNMENT

APT 2033 (BUSINESS LAW)

NAME NUR AIN SYAFIQAH BINTI NIK MAT

MATRIKS NUMBER A21A2762
CLASS L3 T1
NAME OF LECTURE’S ADI AIZAT BIN YAJID
1.0 INTRODUCTION
An agreement to establish legally enforceable mutual duties between two or more parties is
called a contract. Agreement, represented by a valid offer and acceptance, sufficient consideration,
capability, and legality, is the fundamental component needed for an agreement to constitute a
contract and be enforceable under law. A legitimate alternative may satisfy the element of
consideration in some states. Specific performance, consequential damages, general damages, and
contingent damages are examples of possible remedies for contract breaches. A legally enforceable
promise is also a contract. State laws typically regulate contracts, but contract law is applied
nationwide.
Based on the text we can know that there is a contract between Lim and Arthur. this happened
because Lim had promised to give Arthur a PS5 if he managed to get a RM50 note with serial number
AA0000001. When it involves communication between two parties and is agreed upon by them, then
a contract will exist.
Though generally speaking, the offeror cannot bind the offeree by saying that they will be
bound by the terms of the contract if the offeree does nothing. Nevertheless, depending on the
particulars of each instance, this rule might not always apply. For instance, the offeree himself may
state that he will accept the offer, or he may choose to say nothing at all and not notify the offer of his
acceptance or rejection. This is one of the parts of the contract that makes the offer legitimate. If
further information is present, such as the recipient of the offer acting to indicate acceptance, silence
may also be interpreted as acceptance. Arthur makes it rather evident in the text that he is interested in
Lim offers to get PS5.
According to section 7(b) of the Contract Act 1950, acceptance must be made in the manner
prescribed by the offeror. When the recipient does not follow the prescribed manner, the offeror
cannot remain silent. If he does so and fails to assert the manner prescribed in the contract, he is
deemed to have accepted the acceptance in a modified manner in accordance with the Contracts Act
1950 section 7(b).
Cancellation communications must likewise be done at two distinct times, in accordance with
the guidelines governing acceptance communications mentioned above. When a cancellation is
followed by delivery to the intended recipient, it is considered complete and is not subject to the
person issuing the cancellation's authority under section 4(3)(a) of the Contracts Act 1950. On the
other hand, under section 4(3)(b) of the Contracts Act 1950, notification of cancellation is complete
when the party wishing to rescind the contract makes his intention known to do so. A proposal may be
withdrawn at any moment prior to the proposer receiving a complete notification of its acceptance,
but only up until that point, according to Section 5(1). According to Section 5(2) of the Act,
acceptance may be withdrawn at any point up to the recipient receiving a complete message of
acceptance, but not after that. By examining the contract's constituent parts, it is possible to determine
whether a legally binding agreement was made between Lim and Arthur. But Lim called off their deal
when Arthur was able to obtain an RM50 note with a serial number. There was no written contract;
their prior agreement was solely verbal. Additionally, the parties concerned are limited to only the two
of them. As a result, Lim and Arthur were unable to come to an agreement that was legitimate.
2.0 LAW AND CASES
For an agreement to be considered a contract, six requirements must be met. The first step in
reaching an agreement is to make an "offer". Every agreement starts with an offer from one party to
buy something, provide services, etc. A proposal or offer is required for an agreement to be formed.
The Contract Act 1950 states in Section 2(a) that "a person makes a proposal" when "he shows his
willingness to do or refrain from doing anything, in order to obtain the consent of another to that act.
For example, in the Federal Court it was decided that an advertisement a newspaper for a medical post
is an invitation to treat in the case of Majumder v Attorney General of Sarawak. The auctioneer
merely conveys an "invitation to treat". When he invites bids, and the bidder makes an offer it causes
the offer to be formed. The sale, or contract, is only concluded when the auctioneer drops the hammer
to declare transaction completed.
After the offer is accepted, an agreement is formed. Acceptance is the second step required to
complete the agreement. The act of the offeree expressing his agreement to the terms of the offer is
known as acceptance. The acceptance must inform the offeror to provide clear terms of the offer to be
considered valid. According to Section 2(b) of the Contract Act 1950, a proposal is considered
accepted when the party making the proposal expresses its agreement. As in the case of Lau Brothers
& Co. v. China Pacific Navigation Co. Ltd. In this regard, discussions on the delivery of logs were
carried out through a series of telegrams and letters. While still in the negotiation stage, the defendant
withdrew. The court ruled that the parties were still negotiating, and no agreement had been reached.
According to Section 26 of the Contract Act 1950, a contract made without consideration is
usually void. Section 2(d) defines "consideration" as the discretionary act of the promisor who
promises to do an act or refrain from doing something, or refrain from doing something, in return for
the promise. The legal consideration and reciprocity of the agreement should be enforced by law.
Consequently, the goal is to create a legal relationship. The High Court ruled that there was no cause
of action in the statement of claim as in the case of Guthrie Waugh Bhd v Malaippan Muthucumaru
because the claim was founded on a deed of agreement without consideration. The court held that the
defendant did not execute the deed in exchange for anything in the past, forbear from suing him for
supplies given to the farm, or a commitment to give him goods on credit in the future.
The intention to establish a legal connection is the next component in the relationships Act of
1950. It is merely a quasi-agreement and does not give rise to a legally binding contract. Two
presumptions—a business agreement and a social, domestic, or familial agreement—are used to
ascertain the intention. An instance of a case where the parties sought to establish a legal bond under
the terms of the business negotiations is Yap Eng Thong & Anor. v. Faber Union Ltd. The cases of
Phiong Khon vs. Chonh Chai Fah and Choo Tiong Hin & Ors. vs. Choo Hock Swee deal with social,
domestic, and family accords. There is no purpose to establish a legal tie because this agreement
between families does not come into a legal relationship.
Furthermore, capacity. To enter a contract, the parties involved must also be competent, or
have the necessary legal capacity. The ability of the parties to the contract to fully comprehend its
terms and obligations is referred to as capacity. According to Section 11 of the Contract Act 1950,
anybody who is of sound mind, has reached the age of majority under the applicable law, and is not
prohibited from contracting by any other legislation is competent to enter a contract. For instance, the
Privy Council ruled in Mohori Bibee v. Dharmodas Ghose that a minor is ineligible to engage into
any kind of legal transaction. The court decided in Tan Hee Juan v. Teh Boon Keat that a land transfer
made by a minor is void. Because the Malaysian age limit is after turning 18, the common rule in
Malaysia is that contracts established by infants are void.
 Finally, the element of certainty. Agreements that are not clear or ascertainable are null and
void, as per section 30 of the Contract Act. Furthermore, one of the components of the Contract Act
1950 is certainty. Understanding a precise and clear description of the facts giving rise to an action is
the definition of certainty. An agreement must contain certain conditions for it to be enforceable;
otherwise, it will be considered void. Karuppan Chetty v. Suah Thian is one such case.

3.0 APPLICATIONS
In the contract we can learn that Lim has made an offer to Arthur if he gets a RM50 note with
a special serial number then he will buy a PS5. Both parties have agreed to it resulting in a legally
binding contract. Accordingly, there are several indicators that can be referred to in determining
whether it can be used or not. In the context of the case, they both live as a roommate, and they are
also game players. Lim found out that Arthur was very interested in the PS5, and he planned to prank
by making an exchange where Arthur could give him RM50 with a special serial number. In
exchange, Lim will buy Arthur a PS5. As gamers, PS5 is one of the games they are most interested in.
Through this case, there is a concept of offer and acceptance between Lim and Arthur. This is because
Lim has made an offer to Arthur through the exchange of goods between RM50 and PS5. When both
parties agree then there is acceptance.
However, in this case, based on the given facts, Arthur has fulfilled part of his responsibility
based on the contract which is to get the RM50 banknote. But after the incident where he managed to
get the money, Lim has revealed that he pranks Arthur into giving him the PS5. This case is an
incident of intention to create a legal relationship. In term of general rules of social friend’s relations,
there is no presumption to be legally binding. Otherwise, in term of exception the presumption is
rebuttable. The intention to create a legal relationship is one of the essential elements of a contract.
So, if there is no intention to create a legal relationship, the contract can be assumed to be invalid.
Because of that, a contract may be unenforceable because there was no intention to create a legal
relationship at the outset which does not make the contracting parties legally bound. Through the case
of Lim and Arthur, they have no intention to contract and only as a game in exchange. So, in this
context, Arthur cannot claim his rights because they do not have any legal contractual bond. In
addition, without the intention to create a legal relationship, it will make any contract a mere promise.
Mere promises such as simple promises arise when there is no intention to create a legal relationship.
Also, because the incident not due to any party to the contract could be discharged by way of
frustration.
4.0 CONCLUSION
In conclusion, there are various forms of contracts such as indemnity contracts, guarantee
contracts, agency contracts and others. The contract act describes the elements that must be met for a
valid contract along with exceptions and after wards. This is to prove that it is related to the section
that describes the remedies for both parties if the contract has been breached or has been considered
void if any element is not fulfilled. Contracts are very important for various types of purposes whether
it is normal day-to-day trading and regular affairs. A valid and effective contract needs to be made
affectively under the Contract Act to avoid wrongdoing and injustice on the part of the parties. Based
on the text, Lim had promised to give Arthur a PS5 if he managed to get a RM50 note with serial
number AA0000001. When it involves communication between two parties and is agreed upon by
them, then a contract will exist. However, after Arthur managed to get a RM50 note with a serial
number, Lim cancelled their agreement. The agreement they made before was only verbal and there
was no written contract. The parties involved are also only between the two of them. This resulted in
no valid contract being created between Lim and Arthur.
REFERENCE
Susan Buckner. J.D. 19 September 2023. What is Contracts Law?
https://www.findlaw.com/hirealawyer/choosing-the-right-lawyer/contracts-law.html
Malaysian Law. 31 August 2021. Intention to Create Legal Relations.
https://www.lawteacher.net/free-law-essays/contract-law/intention-to-create-legal- relations.php