BT B E 3 0 5 3

CO N S T R UC T I O N L A W
TUT O R I A L 4
CONS TR U C TI O N C O NT RA C T LA W
QUESTION 1
On 1 April 2021, Mandy who lives in Kota Kinabalu is contemplating migrating to the
United States to settle down with her two children who live in New York. She offers to sell
her busy Chartered Surveyor firm to Valerie for RM 2.5 million. The offer was made via
fax and it stated that the offer would expire on 15 April 2021. Valerie is interested to
expand her restaurant business to East Malaysia. After thinking seriously about it for
almost 10 days, she decided to purchase it.
She sent a registered letter to Mandy on 10 April 2021, accepting the offer. Due to
unexplained delays in the postal service, Mandy did not receive the letter until 20 April
2021. Since there was no reply within the stipulated time set in the offer, Mandy wishes to
sell the Chartered Surveyor firm to another buyer, who is willing to accept the offer at RM
2.6 million.
a) Explain if there is a valid contract between Mandy and Valerie?
b) Identify whether your answer to Q1 (a) differ if Mandy stated in her offer that the
acceptance must be by fax?
c) Examine whether Mandy could change her mind on 12 April 2021 and revoke her
offer?
ANSWER (1a)
• True offer has been made by Mandy.
• she has fulfil the 3 requirements for a valid offer.
• In order for an offer to be valid, it must be clearly communicated, giving the offeree a
chance to accept or reject it. Terms of the offer must be clear and definite and must create
a legal relationship.
• Mandy has made a valid offer based on Sec 2 CA 1950.
• Offer received by Valarie and posted letter of acceptance as Sec 4 and 7 CA 1950.
• Valerie has fulfil the 3 requirements for a valid acceptance.
• Acceptance unqualified, done by the party to agreement and communicated.
ANSWER 1a (Cont’d)
• Refer to case Powell v Lee, acceptance of an offer must be communicated to offeror by offeree
himself or authorized agent.
• Refer to case Felthouse v Bindley, silence did not amount to acceptance and an obligation
cannot be imposed by another.
• Postal rule applies and acceptance one the day of posting
• Refer to case Adam v Lindsell, establishment of the "postal rule" for acceptance of an offer.
Ordinarily, any form of acceptance must be communicated expressly to an offeror; however, it
was found that where a letter of acceptance is posted, an offer is accepted "in course of post".
• If delay or loss as long as posted right registered address
• Refer to Household Fire Insurance v Grant, the contract had been concluded from the time
they posted the acceptance letter. With concerns to the postal rule, Grant should have
expected that the contract be formed from the time the Household Fire Insurance company
sent out their letter of acceptance, irrespective of when the letter would arrive or whether the
letter would arrive at all.
• Therefore there is valid contract binding between Mandy and Valerie.
ANSWER 1b (Cont’d)
• Yes it would have effect on the acceptance.

• Since Mandy requesting for fax a speedier mode of acceptance

• Therefore Valerie need to comply if not will be no valid acceptance.

• Valerie doing changes to the request in the offer and the laws say can be
speedier but not slower mode.

• Acceptance will be lapse on the 10th April

ANSWER 1c (Cont’d)
• Revocation can take place any time before acceptance
• Refer to case Byrne V Van Tienhoven, case on the issue of revocation in
relation to the postal rule. In it Lindley J of the High Court's Common Pleas
Division ruled that an offer is only revoked by direct communication with the
offeree, and that the postal rule does not apply in revocation; while simply
posting a letter counts as a valid acceptance, it does not count as valid
revocation.
• Sec 5 Contract Act 1950
• Mandy can revoke if before the acceptance
• Since acceptance has taken place on the 10th April therefore Mandy cannot
revoke the offer.
QUESTION 2
Analyse the case of NAI YAU JUU V PASDEC CORP SDN BHD
& ANOR [2005] 3 MLJ 431?
ANSWER
Issues:
1) Whether an offer or merely an invitation to treat?
2) Whether there was acceptance?
3) Whether there was a concluded contract?
4) Whether plaintif available to claim specific performance?
ANSWER (CONT’D)
FACTS

•The plaintiff had registered as an interested buyer which project being

developed by the first defendant thereafter invited to 'membuat
tempahan pada 21 Ogos 1995‘ with the booking fees paid and official
receipt was issued to acknowledge the payment of RM3,000 booking
fee. The booking fee would form part of the payments upon execution
of a sale and purchase agreement which was to be executed at a date
to be informed later.Besides it was accompanied with a brochure
giving a general description of the project, layout plan indicating the
premises and list of the prices of the lots including the lot selected by
the plaintiff. Earlier the purchase price was RM188,000.
ANSWER (CONT’D)
•On 21 October 1995 the plaintiff received letter from the first
defendant, for 'Tawaran Jualan' with the price of RM230,000 and
the transaction 'urusan perjanjian jual-beli' on 1 November 1995,
that there would be a price increase, the offer valid until 14
November 1995 or until vacant lots were still available otherwise
the deposit would be forfeited if the plaintiff revoked the purchase
after the sale and purchase agreement was concluded.
•The plaintiff sent a letter did not agree to the new price ie
RM230,000 and therefore the plaintiff will only pay RM188,000 for
the property. The first defendant denied that the first letter was
accompanied by a price list.
ANSWER (CONT’D)
•The plaintiff claimed for specific performance of the agreement between
the plaintiff and the first defendant dated 21 August 1995 for the sale by
the first defendant to the plaintiff of the said property. The plaintiff also
claimed for damages for breach of contract in the alternative.
WHETHER AN OFFER OR MERELY AN INVITATION TO TREAT?

•In advertisements a seller circulating a price list or other promotional

materials giving particulars of the products for sale is usually also said
not to be making an offer, even if the word 'offer' were to be used.
Circulars and advertisements pose different and varying contents. Each
document would need to be construed according to the terms set out.
Therefore it was an invitation to treat in the form of a continuing option.
ANSWER (CONT’D)
WHETHER THERE WAS ACCEPTANCE?
•An offer is an expression of willingness to a contract made with the intention
(actual or apparent) that it shall become binding on the person making it as
soon as it is accepted by the person to whom it addressed.

•The price was on the basis of the amount of booking fee paid. And did not
constitute an offer. The payment of RM3,000 also did not constitute an
acceptance of an offer. Neither was the issuance of a receipt, conduct which
constituted an acceptance of an offer. The price was on the basis of the
amount of booking fee paid and did not constitute an offer. The payment of
RM3,000 also did not constitute an acceptance of an offer. Neither was the
issuance of a receipt, conduct which constituted an acceptance of an offer.
ANSWER (CONT’D)
WHETHER THERE WAS A CONCLUDED CONTRACT?

•No contract was therefore concluded on 21 August 1995.

•Expressly stated that the booking fee (or bayaran tempahan) was to form part
of the purchase price at the time that the sale and purchase agreement was to
be executed.

WHETHER PLAINTIFF ELIGIBLE FOR SPECIFIC PERFORMANCE OF THE

AGREEMENT ?

•The court held that, dismissing the plaintiff claim for specific performance. Since
no contract had been concluded the amount of RM3,000 paid as booking fee
was ordered to be returned to the plaintiff