Question 2—- On 1st August 2006, Samy received a written offer from Chong for the purchase

of Samy’s antique gramophone for the sum of RM15, 000. The letter expressly stated that if
Samy did not reply within two weeks, Chong would presume that Samy had accepted the offer.
Samy did not reply. Chong now claims that there is a binding contract between him and Samy.
Advise Samy on his legal position.

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Introduction

Law of Contract

Contract law is a law that deals with the formation, performance, and enforcement of legally
binding agreements (contracts) between parties. It establishes the rules and principles that govern
how parties enter into contracts, the terms and conditions they must abide by, and the remedies
available if one party fails to fulfill its contractual obligations. It is used to ensure that the
aggrieved party gets what he paid for and that those who fail to perform cannot simply get away
with their breach of the agreement. Besides that, the part of the principle of fairness that can be
formed by the law of contract. By enforcing agreements and resolving disputes, contract law
contributes to the overall order and stability of society. It helps maintain a predictable and
reliable legal system that facilitates smooth interactions between individuals and businesses.

Body

Issue

Samy received a written offer from Chong on August 1st, 2006, for the price of RM15,000 to
buy Samy's vintage gramophone. In the letter, it was made clear that Chong would assume Samy
had accepted the offer if Samy didn't respond within two weeks. Samy did not reply. At this
point, Chong asserts that he and Samy have a legal binding contract. The issue is whether or not
there is a legally binding contract between Samy and Chong.

Law

There is no legally binding contract between Samy and Chong because: -

1. Section 2(b) of the Contracts Act 1950

Define: The act that deals with acceptance is Section 2(b) of the Contract Act 1950 states that
the offer is said to be accepted and turns into a promise when the person to whom it was made
indicates his approval. Unless the proposal specifies how it is to be approved, it can be expressed
in any reasonable or common form (Ltd, 2023c).

Elaboration: Thus, silence on the part of the offeree cannot amount to acceptance. Neither can a
proposer state in the proposal that if the offeree does not reply within a stipulated time, the offer
is deemed to be accepted. This is because if the letter expressly stated that if the offeree did not
reply within the stipulated time, the offeror would presume that the offeree had accepted the
offer, which was not expressed in a reasonable manner, and the contract would be assumed to
not have formed.

Case example: In the case of Stevenson v. McLean (1880), Mr. Stevenson received an offer
from Mr. McLean to buy iron, stating that silence would imply acceptance. Mr. Stevenson did
not respond within the given time frame. Later, when Mr. Stevenson communicated his
acceptance with a proposed modification, Mr. McLean rejected it and claimed a binding
contract. However, the court held in favor of Mr. Stevenson, stating that the initial offer had
lapsed due to non-acceptance within the specified time. Mr. Stevenson’s subsequent
communication amounted to a counteroffer, and no binding contract was formed (Ltd, 2023e).

2. Section 4(2) of the Contracts Act 1950

Define: "Without a communication of acceptance, a proposal cannot turn into a promise."
Before the offeror receives notification that the offeree has accepted his offer, a contract cannot
be formed (Admin, 2020).

Elaboration: The rationale for this rule is that, without communication, people might be bound
by a contract without knowing that their offers had been accepted. With this justification,
previous cases have proven that silence can never be considered acceptance.

Case example: In the case of Byrne & Co v Leon Van Tien Hoven & Co [1880] 5 CPD 344,
Van Tienhoven & Co sent an offer to purchase tin plates but later revoked it before the
acceptance was communicated. The court, applying Section 4(2) of the Contracts Act 1950, held
that the revocation was valid. This case exemplifies that an offer can be revoked by the proposer
before acceptance is communicated, highlighting the significance of timely communication in
forming a binding contract (Ltd, 2023a).

3. Section 2(a) of the Contracts Act 1950

Define: According to Section 2(a) of the Contracts Act of 1950, a person makes an offer or a
proposal when they indicate to another person that they are willing to do or refrain from doing
something with the goal of obtaining the other person's consent to the act or abstinence (Admin,
2020).

Elaboration: This section clarifies that for a contract to exist, one party must make a clear and
unequivocal offer or proposal to another party. The offeror expresses their willingness to
perform or refrain from performing a specific action, seeking the offeree's agreement to that
action or abstention. The offer represents the initial step in the formation of a contract. Any
failure to fulfill these requirements will leave the contract in limbo and, technically, cause it to
not exist. It is crucial that there be a clear offer and a clear acceptance of that offer.

Case Example: A relevant case example that exemplifies the application of Section 2(a) is the
case of Carlill v. Carbolic Smoke Ball Co. [1893] 1 QB 256. In this case, the Carbolic Smoke
Ball Company advertised their product as a remedy for the flu and offered a reward to anyone
who contracted the flu after using their product as directed. Mrs. Carlill purchased and used the
product but still contracted the flu. The court held that the advertisement constituted an offer to
the world at large. By purchasing and using the product as directed, Mrs. Carlill accepted the
offer, and a binding contract was formed (Ltd, 2023b).

4. Section 2(h) of the Contracts Act 1950

Define: According to the Contracts Act of 1950's Section 2(h), "An agreement enforceable by
law is a contract." It means that it can only be enforced legally when both parties are bound by a
legal obligation (Admin, 2020).

Elaboration: For an agreement to be recognized as a contract, it must meet certain criteria.

These criteria include a clear offer and acceptance, an intention to create legal relations,
consideration (exchange of value), legal capacity of the parties, and a lawful object. When these
conditions are met, the agreement becomes legally binding, and the parties have the right to seek
legal remedies in case of a breach.

Case Example: In the case of Hartog v. Colin & Shields (1939), where a fur dealer mistakenly
quoted a price per piece instead of per pound, the court ruled that there was no binding contract
due to the essential terms not being mutually agreed upon (Ltd, 2023d).

Application

1. Section 2(b) of the Contracts Act 1950

Based on Section 2(b) of the Contract Act 1950, Samy is likely to be in a favorable legal
position. Samy received a written offer from Chong to sell him his vintage gramophone, with the
proviso that Samy would be deemed to have accepted the deal if she didn't respond within two
weeks. However, it might be argued that there is no legally-binding agreement between them
because Samy did not answer within the allotted time frame. Silence or inaction generally cannot
be considered as acceptance, and therefore Samy is not obligated to sell the gramophone to
Chong for RM15,000.
 2. Section 4(2) of the Contracts Act 1950

In Samy's case, Section4(2) of the Contract Act 1950 can be invoked to argue that Chong's offer
did not convert into a binding promise because Samy did not communicate his acceptance. The
provision requires acceptance to be communicated clearly, and Samy's lack of response indicates
a failure to meet this requirement. As a result, Chong's offer cannot be transformed into a legally
enforceable promise. By relying on Section 4(2) of the Contracts Act 1950, Samy can bolster his
defense and emphasize that the absence of communication of acceptance prevents the formation
of a binding contract.

3. Section 2(a) of the Contracts Act 1950

In Samy's case, Section 2(a) of the Contarct Act 1950 can be used to support his defense. Samy
can argue that Chong's written offer to purchase his antique gramophone represents a clear
proposal under Section 2(a). Chong expressed his willingness to buy the gramophone, seeking
Samy's agreement to sell it. Samy can contend that by not responding to the offer, he did not
provide his assent or acceptance, and silence or inaction generally cannot be considered as
acceptance. Therefore, no binding contract was formed.

4. Section 2(h) of the Contracts Act 1950

This case illustrates a situation similar to Samy’s, where his lack of explicit acceptance and the
inclusion of a presumption clause in Chong’s offer may not create a binding contract. In Samy's
case, he can potentially win by applying Section 2(h) of the Contracts Act 1950. Chong made a
written offer to purchase Samy's antique gramophone, stating that Samy's silence would be
deemed acceptance. However, Samy did not respond, and his silence should not be considered as
acceptance under Section 2(h). Thus, Samy can argue that there is no binding contract between
him and Chong since he did not explicitly accept the offer. Consulting with a legal professional
is advised to assess Samy's specific circumstances and the application of Section 2(h) for a
stronger legal position.
Conclusion

1. Section 2(b): Samy can argue that Chong's offer was not accepted due to Samy's silence.
Section 2(b) proves that silence on the part of the offeree does not amount to acceptance.
Samy can contend that since he did not respond within the specified time frame, there is
no binding contract between him and Chong.

2. Section 4(2): Samy can assert that he did not communicate his acceptance of Chong's
offer. Section 4(2) requires acceptance to be communicated clearly and unequivocally.
Samy's lack of response indicates a failure to meet this requirement, strengthening his
argument that no binding contract was formed.

3. Section 2(a): Samy can rely on Section 2(a) to support his defense. He can argue that
Chong's written offer represents a proposal under Section 2(a). However, by not
responding, Samy did not provide his assent or acceptance, and silence or inaction
generally cannot be considered as acceptance. Therefore, Samy can assert that no binding
contract exists.

4. Section 2(h): Samy can invoke Section 2(h) to emphasize that there is no binding contract
between him and Chong. Section 2(h) states a legal agreement is considered a contract.
Samy can argue that the absence of his explicit acceptance and the inclusion of a
presumption clause in Chong's offer prevent the formation of a binding contract.

In conclusion, Samy can use Section 2(b), Section 4(2), Section 2(a), and Section 2(h) of the
Contracts Act 1950 to defend his position. He can argue that his silence does not amount to
acceptance, the lack of communication of acceptance prevents the formation of a contract, and
the vital elements required for a binding contract are not met.
References

Admin. (2020, November 24). Contract of Laws - Contract Law Essays. LawAspect.com.
https://lawaspect.com/contract-of-laws/#:~:text=Section%202(h)%20of%20the,or
%20abstain%20from%20doing%20something.
Ltd, A. A. (2023a). Byrne and Co v Van Tienhoven. www.lawteacher.net.
https://www.lawteacher.net/cases/byrne-and-co-v-van-tienhoven.php
Ltd, A. A. (2023b). Carlill v Carbolic Smoke Ball Co - 1893. www.lawteacher.net.
https://www.lawteacher.net/cases/carlill-v-carbolic-smoke-ball-co.php#:~:text=Carlill
%20v%20Carbolic%20Smoke%20Ball%20Co%20%5B1893%5D%201%20QB
%20256,offers%20and%20invitations%20to%20treat
Ltd, A. A. (2023c). Contract Act 1950 Summary. www.lawteacher.net.
https://www.lawteacher.net/free-law-essays/contract-law/principal-of-contract-law-
essay.php#:~:text=The%20act%20that%20deals%20with,accepted%20and%20become
%20a%20promise
Ltd, A. A. (2023d). Hartog v Colin and Shields. www.lawteacher.net.
https://www.lawteacher.net/cases/hartog-v-colin-shields.php
Ltd, A. A. (2023e). Stevenson Jacques & Co v Mclean. www.lawteacher.net.
https://www.lawteacher.net/cases/stevenson-jacques-v-mclean.php