CHAPTER 1

OFFER
Introduction

There are 3 main aspects of the law governing offers:

(i) meaning and requirements of offer;

(ii) distinction between offer and invitation to treat; and

(iii) communication and revocation of offers.

2
 1

Definition of Offer

3
Section 2(a) of
the Contracts
Act 1950
Sec. 2(a) CA states:
“When one person signifies to another his willingness to
do or to abstain from doing anything, with a view to
obtaining the assent of that other to the act or abstinence,
he is said to make a proposal.”

4
Section 2(a) of
the Contracts “When one person signifies to another his
Act 1950 willingness to do or to abstain from doing
anything, with a view to obtaining the assent
of that other to the act or abstinence, he is
said to make a proposal.”

s. 2(a) CA: “proposal”

Common law: “offer”

5
Preston Corpn
Sdn Bhd v
 In this case, the appellants were a company carrying on the
Edward Leong
business of publishing books. The respondents were a firm of
[1982] 2 MLJ
printers. The parties entered into a business relationship
22, FC. regarding the printing of school textbooks. There was an
exchange of letters which commenced with the respondents
submitting quotations for the printing of the books. This was
followed by the appellants issuing the printing orders.

 The question before the Federal Court was whether the

respondents' quotations constituted a binding offer which
when accepted by the appellants by the issuing of the
relevant printing orders, resulted in a contract between
them.

6
Preston Corpn
Sdn Bhd v
Edward Leong  After examining the quotations, the Court held that the
[1982] 2 MLJ quotations were never intended to be a binding offer but
22, FC. was a mere supply of information. The offer in this case was
actually constituted by the printing offers issued by the
appellants.

7
Salleh Abas
FJ stated as
follows:  An offer is an intimation of willingness by an offeror to enter
into a legally binding contract. Its terms either expressly or
impliedly must indicate that it is to become binding on the
offeror as soon as it has been accepted by the offeree.
 An examination of all the quotations in case did not seem to
express such intention.
 They were nothing more than a mere supply of information by
the respondents in response to the appellants' inquiry as to the
price of books to be printed and their delivery dates.”

8
 2

Requirements of
Offer

9
Concept of
Offer

▹ “Offer” and “acceptance” have always represented the basic

mechanism of the formation of contract.
▹ An offer, capable of being converted into an agreement by
acceptance, must consist of a definite promise to be bound by it.
▹ A offer must be clear, definite and unequivocal.

10
Concept of
Offer
▹ An offer is a proposition or proposal which can ripen into a
contract upon acceptance of its terms.
▹ An offer must indicate the intention of the offeror to be legally
bound by the acceptance.
▹ It may be made to a specified person or persons or to the whole
world.
▹ It may be made expressly by words or by conduct.
▹ An offer is distinguished from an invitation to treat, a mere puff, a
statement of price etc.

11
 Valid Offer
It may be A valid offer must satisfy certain requirements:
made to a
(i) it may be made to a specific person(s) or to the world;
specific
person(s) or (ii) it may be made expressly or impliedly;
to the world (iii) its meaning must be clear; and
(iv) it must be valid at law.

(i) Offer made to specific person or to the world

▹ An offer may be made to a specific person or persons, or it
may be made to the world or the public at large.

12
Continue…

▹ In the classic case of Carlill v Carbolic Smoke Ball Co. [1892]

2 QB 484, QB; [18931 1 QB 256, CA., the defendants,
proprietors of a medical preparation called "The Carbolic
Smoke Ball", issued an advertisement offering to pay £100 to
any person who contracted influenza after using the smoke ball
in a specified manner for a specified period. The advertisement
stated that the defendants had deposited £1,000 with bankers to
show their sincerity. The plaintiff after seeing advertisement,
bought and used the ball in the manner prescribed caught
influenza. The plaintiff sued the defendants for £100.
.

13
Continue…
▹ In their defence, the defendants contended that the
advertisement was a mere puff and was not intended
to create any binding obligation. There was no offer to
any particular person and the plaintiff had failed to
notify them of her acceptance.

▹ The Court of Appeal held that an offer can be

made to the world. It becomes a contract when
anybody comes forward and performs the conditions.
In this case, there was an acceptance of the offer
by the plaintiff's conduct.

14
Offer may be
express or
implied
Section 9 of the Contracts Act 1950
“So far as the proposal or acceptance of any promise is made in
words, the promise is said to be express. So far as the proposal
or acceptance is made otherwise than in words, the promise is
said to be implied. “

▹ In Preston Corpn Sdn Bhd v Edward Leong [1982] 2 MLJ

22, FC., the Federal Court had also referred to an offer
made either expressly or impliedly.

15
Offer must be
clear in ▹ Agreements void for uncertainty:
meaning S. 30. “Agreements, the meaning of which is not certain, or
capable of being made certain, are void.”
▹ An offer, therefore, which is not clear may be held to be
invalid for uncertainty.
▹ In an old case, Ahmed Meah & Anor v Nacodah Merican
(1890) 4 Ky 583 an agreement was made between the parties
whereby, in consideration of the plaintiff marrying the
defendant's daughter, the defendant promised to build and the
plaintiff and his daughter a "house which must be a suitable
buillding”.The plaintiff sought specific performance of the
agreement.

16
Offer must be
clear in
meaning ▹ The plaintiff sought specific performance of the agreement.
(continue…) ▹ Pellereau J held that it was too vague to be enforced:
“There must be certainty as to the subject of the contract. If it is
uncertain as to the nature of the house to be built, if uncertain as
to value, it would be difficult for the Court to enforce it. The
house is said to be a 'suitable house.' Suitable to whom? To the
bridegroom or father of the bride? The Court is left in doubt as to
what way it is to be suitable …I therefore hold the promise is
void fix uncertainty, and cannot be deemed to be specifically
performed. I can give no damages for the same reason.”

17
Offer must be
valid at law
▹ An offer must not contravene any provisions of the law
otherwise it amount to a non-existent offer not capable of
acceptance by the offeree.
▹ In Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui [1984] 1
MLJ 169, FC. the appellant let a motor-car to the respondent
under a hire-purchase agreement. The respondent fell into
arrears with the payment and the appellant brought an action for
the balance outstanding under the hire-purchase agreement.

18
Offer must be
valid at law ▹ The respondent alleged that the appellant had failed to comply
with various provisions of the Hire-Purchase Act 1967 (Rev
1978) Act 212. The issue which arose was whether non-
compliance with s 4(1) of the Hire-Purchase Act, which requires
the owner of the goods to the prospective hirer a written
agreement consisting of a summary of the hirer's financial
obligations under the proposed hire-purchase agreement, would
render a the hire-purchase agreement void ab initio.
▹ The respondent alleged that the appellant had failed to comply
with various provisions of the Hire-Purchase Act 1967 (Revised
1978) (Act 212).

19
Continue…

 The Federal Court held that the fulfilment of the condition

set out in s 4(1) of the Hire-Purchase Act was a condition
precedent for the hire-purchase agreement :

“… the plaintiff's claim was rightly dismissed by the

lower court, not because the hire-purchase agreement
was unenforceable, but because no agreement had in
fact been entered into by the parties.”

20
An offer must
be
distinguished
from an ▹ An offer must be distinguished from an invitation to treat.
invitation to ▹ An invitation to treat cannot result in any binding obligation,
treat as it is not a firm offer.
▹ Thus, examples of an invitation to treat, unless otherwise
intended, are:
▸ “offers to negotiate”; “offers to receive offers”; “offers to
chaffer”;
▸ an invitation made to another to make an offer (“an offer
to make an offer”);

21
An offer must be
distinguished
from an
▸ an advertisement in the newspaper (e.g. one has got a
invitation to
treat stock of books to sell, or house to let);
(Continue…)
▸ a display of goods in the supermarket with price stickers,
or

▸ a statement of price;

▸ an announcement that a person will sell goods by tender

or auction, or statements of intention, and the supply of
information.

22
 3

Invitation to Treat

23
 Offer and
Invitation to
treat ▹ An offer must be distinguished from an
must be invitation to treat:
distinguished
▸ an invitation made to another to make an
offer,
▸ an offer to make an offer;
▸ a statement of price,
▸ statements of intention, or
▸ the supply of information.

24
▹ An invitation to treat cannot result in any
binding obligation.
▹ Thus, an advertisement in the newspaper, a
display of goods in the supermarket at certain
prices, or an announcement that a person will
sell goods by tender or auction, are examples
of an invitation to treat, unless otherwise
intended.

25
Other devices:
Offer or
Invitation to ▹ Quotation
treat
▹ Estimate
▹ Letter of Intent
▹ Letter of Comfort
▹ MOU & MOA
▹ Invitation to Tender & Tender

26
Introduction
▹ An offer should be distinguished from an invitation
to treat.
▹ Unlike an offer, an invitation to treat is a
statement which is not intended to be binding at
law. An invitation to treat merely invites in parties
to make an offer.
▹ Invitations to treat often appear in the
advertisements, display of goods and invitation to
tenders. Other aspects considered are auctions and
applications for club membership.

27
Advertisement
▹ Whether an advertisement is an offer or an
invitation to treat is a question of the intention
of the party placing the advertisement.

▹ In most cases, advertisements are treated as

attempts to induce offers unless on exceptional
fact situations as in Carlill's case.

28
Continue…

UNILATERAL BILATERAL

29
Unilateral
Contract ▹ Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 is an example
of advertisements of unilateral contracts which will usually be
held as offers. In this case, the advertisement promising reward of
£100 if a person contracted influenza after using the smoke was a
promise in return for an act.
▸ Such a contract, when made, is called a unilateral contract.
The outstanding obligation is on one side only.
▸ In this case, the plaintiff having performed (used the smoke
ball and contracted influenza), the only outstanding
obligation was on the defendants to perform their promise
to pay the £100.
▹ Section 8 of the Contracts Act is a statutory recognition of
acceptance by conduct and of the concept of a unilateral
contract.

30
Bilateral
Contract

▹ A bilateral contract is one where the outstanding

obligations remain on both sides. In this situation,
an offeror makes a promise in return for a promise
by the offeree.

31
Bilateral
Contract
▹ The case of Partridge v Crittenden [1968] 1 WLR 1204
illustrates the general rule that advertisements are
normally regarded as an invitation to treat. In this case,
the appellant inserted in a magazine an advertisement
containing the words "Quality British A.B.C.R. ...
Bramblefinch cocks, Bramblefinch hens, 25s. each".
The advertisement was inserted under the general
heading of "Classified Advertisements" and nowhere
was any direct use of the words "offers for sale". One
Mr Thompson answered the advertisement, wrote and
enclosed a cheque for 30s to the appellant.

32
Continue…
▹ On the appellant's appeal against his conviction for unlawfully
offering sale a Bramblefinch hen contrary to s 6(1) of the
Protection of Birds 1954, the issue arose whether the
advertisement he inserted was merely an invitation to treat or an
offer for sale. The Court allowed the appeal and held that the
advertisement was not an offer, but only an invitation to treat.
Ashworth J stated:
“…in my judgment the law of the country is equally plain as it was
in regard to articles in a shop window, namely that the insertion of
an advertisement in the form adopted here under the title "Classified
Advertisements" is simply an invitation to treat.”

33
Malaysian
▹ The Malaysian position is similar to advertisements amounts to an
Position
invitation to treat only.
▹ In Coelho v The Public Services Commission [1964]MLJ 12, the
appellant applied for the post of Assistant Passport Officer advertised
in the Malay mail newspaper. Subsequently, he was informed that he
was accepted. After being posted to the Immigration Office, he was
informed that his appointment (on probation) was terminated
forthwith by payment of one month’s salary in lieu of notice. He
applied for a certiorari to quash the decision. The Court held that the
resulting applications was an invitation to qualified persons. The
resulting applications were offers. The information conveyed to the
appellant was an unqualified acceptance. Therefore, the respondent
had acted ultra vires in purporting to terminate his appointment in a
manner for officers on probation.

34
Continue..
▹ In a Malaysian case of MN Guha Majumder v RE Donough
[1974] 2 MLJ 114 an advertisement appeared in the Sarawak
Tribune (headed "Property for Quick Sale") for the sale by the
defendant of his house.
▹ The plaintiff, desiring to purchase the property inspected the house
twice and a number of telephone conversations took place
between the plaintiff and the defendant's agent.
▹ The plaintiff alleged that the defendant had accepted his offer to
purchase the house, but the defendant denied it. In this case, the
High Court did not discuss advertisement.
▹ On the facts, the Court held that there was no contract in
existence between the parties at the material time as there was
no clear intention of the parties to enter into a formal legal
relationship from the evidence adduced.

35
Display of
▹ A display of goods is also generally regarded as an invitation to
Goods
treat.
▹ In Pharmaceutical Society of Great Britain v Boots [1953] 1 QB
401, CA, the defendants carried business in the retail sale of drugs.
The sale premises comprised a single room adapted to the self-
service system. On entering the shop, the customer was provided
with a wire basket; and having selected the items which he wished
to buy, would put them in the basket and take them to the cashier's
desk at the exit, where the cashier would state total price and
receive payment.
▹ The Court of Appeal held that the play of goods on the shelves was
only an invitation to treat. It was for the customer to offer to buy
the goods. The contract of sale was completed when the customer's
offer to buy was accepted by the seller in receiving the payment at
the cashier's desk.

36
Continue…
▹ In Fisher v Bell [1961] 1 QB 394, the Court held that the
act of displaying a knife in a shop window did not amount
to an offer for sale. The issue in this case whether- the
shopkeeper's display in his shop window of a "flick knife
amounted to an offer of the knife for sale contrary to s 1(1)
of the Restriction of Offensive Weapons Act 1959.
▹ The Court held that it is perfectly clear that according to the
ordinary law of contract the display of an article with a
price on it in a shop window is merely an invitation to treat.
It is in no sense an offer for sale the acceptance of which
constitutes a contract ... In those circumstances I am driven
to the conclusion, although I confess reluctantly, that no
offence was here committed!

37
Tenders
▹ Invitations to tender are not normally considered to be offers
unless accompanied by words that the highest tender will be
accepted. The general rule relating to tenders can be found in
Spencer & Ors v Harding & Ors (1869-1870) LR 5 CP 561.
▹ In this case, the defendants issued to the plaintiffs and other
persons in the wholesale trade a circular in the following words:
“We are instructed to offer to the wholesale trade for sale by
tender the stock in trade of Messrs G. Eilbeck & Co ... which
will be sold at a discount in one lot. Payment to be made in cash
...".
▹ The plaintiffs sent in a tender which turned out to be the highest
tender; but it was not accepted. The plaintiffs insisted that the
circular amounted to a promise to sell to highest bidder.

38
Continue…
▹ The Court held that the circular was only an attempt to ascertain
whether an offer could be obtained. Further, there was a total
absence of any words to the effect that the highest bidder would be
the purchaser. Willes J explained as follows:
“… the question is, whether there is here any offer to enter into a
contract at all, or whether the circular amounts to anything more
than a mere proclamation that the defendants are ready to chaffer
for the sale of goods, and to receive offers for the purchase of
them. In advertisements for tenders for buildings it is not usual
to say that the contract will be given to the lowest bidder, and it
is not always that the contract is made with the lowest bidder.
Here there is a total absence of any words intimate that the
highest bidder is to be the purchaser. It is a mere attempt to
ascertain whether an offer can be obtained within such a margin
as the sellers are willing to adopt.”

39
Exceptional
situations ▹ However, there are exceptional situations where an invitation to
make a tender is not treated as an invitation to treat but bears
legal consequences as occurred in Blackpool and Fylde Aero
Club v Blackpool BC [1990] 3 All ER 25, CA.
▹ In this case the defendant council owned an airport. It granted
concessions to operate flights. It sent an invitation to tender to
the plaintiff and six other parties all of whom were connected to
the airport. The plaintiff had been granted similar concessions
in 1975, 1978 and 1980. The invitation to tender stated that the
tenders were to be submitted in the envelope provided and
before the deadline and that late tender would not be
considered. The plaintiff sent the tender in time to the post box
but the post box was not cleared.

40
Continue…
▸ The tender was marked late when it reached the defendant was
not considered. The plaintiff brought an action against the
defendant for breach of contract as the defendant had warranted
that tenders sent before deadline would be considered. The issue
was whether there ' contract between the parties.
▸ The Court of Appeal held that in the circumstances, an
invitation to tender can give rise to a binding obligation to
consider tenders which conform with the conditions of the
tender. In the present case, the tender was solicited by the
council from selected parties, all of whom were known to the
council. The invitation to tender set out a clear, orderly and
familiar procedure. It was only right that the tenderer who
submitted a tender conforming to the deadline should have it
considered.

41
Auction
▹ The principles concerning auctions can be drawn from the
cases. First, an auctioneer’s request for bids is only an
invitation to treat.
▹ Second, a notice that an auction will take place at a certain date
is also an invitation to treat and no claim can be made to
recover for loss of time and expenses incurred.
▹ Third, while an auctioneer's request for bids and notice of
auction are only invitations to treat, if an advertisement states
that the sale by auction is "without reserve", then such sale will
be treated as an offer.

42
Auctioneer's
request ▹ The first principle is that an auctioneer's request for bids is
forbids considered to be an invitation to treat. The bid itself is an
offer which the vendor is free to accept or reject.”
▹ In Payne v Cave (1789) 3 Term Rep 148, Lord Kenyon CJ
explained as follows:
 “The auctioneer is the agent of the vendor and the assent
of both parties is necessary to make the contract binding.
That is signified on the part of the seller by knocking
down the hammer which was not done here till the
defendant had retracted ... Every bidding is nothing more
than an offer on one side which is not binding on either
side till it is assented to.”

43
Continue..
▹ The general rule that in an auction, the sale is concluded at the
fall of the hammer is also applied in the Malaysia.
▹ In M & J Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd &
Anor [1994] 1 MLJ 294, SC, in a case involving a sale of land
in a public auction, the Supreme Court held that at the fall of the
hammer, an agreement is concluded between the vendor and the
highest bidder. Thereafter, the vendor cannot offer the goods to
other prospective buyers and the bidder cannot retract his
acceptance. WanYahya SCJ stated:
 “So a reference to a sale being concluded at the fall of the
auctioneer's hammer could only refer to that stage of the
transaction of sale when there is concluded an agreement
between the vendor and the highest bidder, the former to sell
and the latter to purchase the goods.”

44
Notice of
Auction ▹ The second principle that a notice that an auction will take
place at a certain date is only an invitation to treat is derived
from Harris v Nickerson (1873) LR 8 QB 286.
▹ In this case, the defendant, an auctioneer, advertised in the
London papers that certain brewing materials, plant and
furniture would be sold by him at Bury St Edmunds on a
certain day and the following two days. The plaintiff attended
the sale but on the third day, on which the furniture was
advertised for sale, all the furniture were withdrawn. The
plaintiff brought an action against the defendant to recover
for his loss of time and expenses on the ground that the
advertisement amounted to a contract by the defendant the
things advertised would be actually put up for sale.

45
Continue…

▹ The Court rejected the plaintiff's claim and held that an

advertisement that goods will be sold on auction on a
certain day does not constitute a promise to potential
bidders that the sale will be actually held. To hold
otherwise or to require an auctioneer to give notice of
withdrawal of the sale would be excessively inconvenient
and costly.

46
Auction
Without ▹ The third principle that an advertisement stating a sale by
Reserve "without reserve" is an offer can be seen in Warlow v Harrison
(1859) 1 E & E 309, the defendant and a Mr Bretherton were
auctioneers in a partnership who advertised a sale by auction
which contained the following: “three following horses, the
property of a gentleman, without reserve”. The plaintiff
attended the sale and made a bid of 60 guineas for one of the
horses. A Mr Henderson, the owner of the horse, immediately
made bid of 61 guineas. The defendant therefore entered Mr
Henderson's name as purchaser in the sale book and refused to
receive the money or deliver the horse to the plaintiff, stating
that he had knocked it down to highest bidder and could not
interfere in the matter.

47
Continue…

▹ The Court held that the sale should be without

reserve: the auctioneer in his advertisement had made
a definite offer to this effect, and the plaintiff, by
making his bid in reliance upon it had accepted the
offer. In this case, the Court also ruled that in a sale
by auction "without reserve", the vendor cannot bid at
the auction.

48
Continue…
Cases on Auction

▹ Sinar Wang Sdn Bhd v Ng Kee Seng [2005] 2 MLJ 42 (CA)

▹ Eckhardt Marine GMBH v Sheriff, High Court of Malaysia,
Seremban & Ors [2001] 4 MLJ 49

49
Application
for club ▹ In Abdul Rashid v Island Golf Properties Sdn Bhd [1989] 3
MLJ 376, the issue was whether application for club membership
membership
was an offer, or was the offer made by the club after considering
the application. In this case, the plaintiff applied to become a
member of the golf club owned, managed and operated by the
defendants. Here, the High Court did not use the language of an
invitation to treat but used the term "preliminary step”. Wan
Adnan J stated as follows:
“In my view the plaintiff's application for membership was
merely a preliminary step. The offer for membership came from
the defendants after the defendants had considered the
plaintiff's application. The contract between the plaintiff and
the defendants was formed only when the plaintiff accepted the
offer by making the payment of the entrance fee and the first
subscription” .
▹  
50
Legal Issues
Items on Internet website: Invitation to treat or offer?

▹ The Electronic Commerce Act 2006 (ECA) introduced on

31 August 2006 and came into force on 19 October 2006.

▹ The Act was to facilitate some legal issues that arises in

electronic transaction, however, there are some legal issues
remain unanswered.

51
Continue…
▹ Section 7 of ECA:
(1) In the formation of the contract, the communication of
proposals, acceptance of proposals, and revocation of
proposals and acceptance or any related communication
may be expressed by electronic message.
(2) A contract shall not be denied legal effect, validity or
enforceability on the ground that an electronic message is
used in its information.
▹ Section 5 of the ECA, “electronic message”, information
generated, sent, received or stored by electronic means.

52
Continue…
▹ The rules on advertisements on websites may be dealt with the
same manner with shop displays due to interactivity of
websites.
▹ There is no determinative case law in Malaysia. The actual legal
position is as illustrate in the United Kingdom.
▹ The issue whether website advertisement is an invitation to treat
or an offer is yet be solved.

53
 4
Communication of
Offer

54
Section 3 of
the Contracts
Act 1950 ▹ Section 3 of the Contracts Act is the general provision on the
communication of acceptance of offers as well as the revocation
of offers and acceptances.
▹ The communication of proposals, the acceptance of proposals,
revocation of proposals and acceptances, respectively, are
deemed to be made by any act or omission of the party
proposing, accepting, or revoking, by which he intends to
communicate the proposal, acceptance, or revocation, or which
has the effect of communicating it.

55
Section 4(1) of
the Contracts Sec. 4(1) CA:
Act 1950
“The communication of a proposal is complete when it
comes knowledge of the person to whom it is made.”

This section is further explained through Illustration (a):

“A proposes by letter, to sell a house to B at a certain
price. The communication of proposal is complete when
B receives the letter.

56
Cross Offers ▹ There can be no valid offer if there are two cross offers.
▹ In Tinn v Hoffman & Co (1873) 29 LT 271, HL , the House of
Lords discussed the effect of two offers, identical in terms,
which had crossed in the post. It was held by five judges against
two that on the facts of that case no contract had been
concluded. Two of the judges were of the view that the parties
were not ad idem as the letter in question contained diverse
terms. The majority judges considered that cross-offers could
not form a contract.

57
 5

Revocation of Offer

58
Introduction ▹ There may be situations where an offeror who has
communicated his offer changes his mind and wishes to
withdraw his offer.

▹ The Contracts Act provides for the rules as to

(i) when an offer may be revoked and when the
communication of the revocation is complete; and
(ii) the different modes to revoke an offer.

59
Section 5(1) When offer may be revoked and when communication complete
and Section ▹ Section 5(1) of the Contracts Act sets out when an offer may be
4(2)(a) of the revoked.
“A proposal may be revoked at any time before the
Contracts Act
communication of its acceptance is complete as against the
1950 proposer, but not afterwards. “
▹ This section must be read with s 4(2)(a) of the Contracts Act (on
communication of acceptance as against the proposer) which
states that:
“The communication of an acceptance is complete -
(a) as against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the
acceptor;…”

60
Continue…
▹ Reading both sections together, thus, an offer may be revoked at
any before the acceptance has been sent to the proposer.
▹ Therefore, even the proposer has put his proposal in a course of
transmission to the acceptor, the proposer is still free to revoke
it as long as the acceptor's acceptance has not been put in a
course of transmission to the proposer, so as to be out of the
power of the acceptor.

61
 “A proposes, by a letter sent by post, to sell his house to B.
Illustration
section 5 CA B accepts the proposal by a letter sent by post.

A may revoke his proposal at any time before or at the

moment when B posts his letter of acceptance, but not
afterwards.

B may revoke his acceptance at any time before or at the

moment when the letter communicating it reaches A, but not
afterwards.”

62
Section 4(3) of
the Contracts ▹ Section 4(3) CA provides:
Act 1950 “The communication of a revocation is complete--
(a) as against the person who makes it, when it is put into a
course of transmission to the person to whom it is made,
so as to be out of the power of the person who makes it;
and
(b) as against the person to whom it is made, when it comes
to his knowledge.

63
 ▹ Thus, the communication of revocation of a proposal is complete as
Continue.. against the proposer who revokes, when he has sent out the notice
of his revocation. However, it will only be complete as against the
person to whom it is made when the said person receives the notice
of revocation of the proposal.
▹ In Byrne & Co v Leon Van Tienhoven & Co. [1874-1880] All ER
1432, the defendants posted a letter in Cardiff on October 1,
addressed to the plaintiffs in New York, offering to sell 1,000 boxes
of tinplates. It should be noted that it takes 10 or 11 days for a letter
posted at either place to reach the other.
▹ On October 8, the defendants posted a letter revoking the offer. The
plaintiffs telegraphed their acceptance on October 11 and confirmed
it in a letter posted on October 15. The letter of revocation reached
the plaintiffs October 20.

64
 ▹ It was held that the revocation was inoperative until October 20,
Continue…
that the offer, therefore, continued to be open up to that date, and
that it had been accepted by the plaintiffs in the interim.
▹ It may be taken as now settled that where an offer is made and
accept by letters sent through the post, the contract is completed the
moment the letter accepting the offer is posted (Harris's Case
(1872) 26 LT 78L Ch App 587; Dunlop v. Higgins (1848) 1 HL
Cas 381), even although it never reaches its destination ... they are
based upon the principle that the writer of the offer has expressly or
impliedly assented to treat an assented to him by a letter duly
posted as a sufficient acceptance and notification to himself, or, in
other words, he has made the post office his agent receive the
acceptance and notification of it; but this principle appears to me to
be inapplicable to the case of the withdrawal of an offer.

65
Continue…  In this particular case I can find no evidence of any authority in fact
given by the plaintiffs to the defendants to notify a withdrawal of
their offer by merely posting a letter; and there is no legal principle
or decision which compels me to hold, contrary to the fact, that the
letter of the 8 October is to be treated as communicated to the
plaintiffs on that day or on day before the 20th, when the letter
reached them.
 But before that letter had reached the plaintiffs, they had accepted
the offer, both by telegram and by post; and they had themselves
resold the tin plates at a profit. In my opinion the withdrawal by the
defendants on the 8 October of their offer of the 1st was
inoperative; and a complete contract bind on both parties was
entered into on the 11 October, when the plaintiff accepted the offer
of the 1st, which they had no reason to suppose had been withdrawn.

66
 6
Modes of Revoking
Offer

67
Section 6 of ▹ The Contracts Act also sets out various modes to revoke an offer.
the Contracts Section 6 of the Contracts Act provides:
Act 1950 “A proposal is revoked -
(a) by the communication of notice of revocation by the proposer to
the other party;
(b) by the lapse of the time prescribed in the proposal for its
acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
(c) by the failure of the acceptor to fulfil a condition precedent to
acceptance; or
(d) by the death or mental disorder of the proposer, if the fact of his
death or mental disorder comes to the knowledge of the acceptor
before acceptance.”

68
Notice of ▹ The most common mode of revoking an offer is to give notice
revocation revoking the offer. The rules explained above as to when an offer
may be revoked and its communication is complete applies to this
mode of revoking.
▹ In Offord v Davies & Anor (1862) CBNS 748; 142 ER 1336 the
Court explained why the promisor has not to revoke a promise
made. Erie CJ stated:
“… the demurrer raises the question whether the defendants
had a right to revoke the promise. We are of opinion that they
had… This promise by itself creates no obligation. It is in
effect conditioned to be binding if the plaintiff acts upon it,
either to the benefit of the defendants, or to the detriment of
himself. But, until the condition has been at least in part
fulfilled, the defendants have the power of revoking it.”

69
 ▹ Section 6(a) CA provides that the notice must be given for the
Continue… proposer to the other party. However, the English courts have held
that a revocation is valid even though the notice or knowledge
concerning the revocation was derived from a third party.
▹ In Dickinson v Dodds (1876) 2 Ch D 463, CA. the defendant, on
Wednesday, June 10, gave the plaintiff a written offer to sell a house
for £800, "to be left over until Friday, June 12, 9.00 a.m.". On
Thursday, June 11, the defendant sold the house to a third party;
Allan, for £800. On that evening the plaintiff was told that the
property was sold to Allan by a fourth man, Berry. Before 9.00 a.m.
on June 12, the plaintiff handed to the defendant a formal letter of
acceptance. The Court of Appeal held that the plaintiff could not as
it cannot be said thereafter that there was in existence the same
mind between the plaintiff and the defendant to make a contract.

70
Lapse of time ▹ An offer once received, must be accepted within the time
prescribed in the offer or if no time is prescribed, within a
reasonable time. Failure to do so may deem the said offer to be
revoked as provided in s 6(b) of if Contracts Act.
▹ In Macon Works & Trading Sdn Bhd v Phang Hon Chin&
Anor [1976] 2 MLJ 177, in relation to an option to purchase
land, the Court stated that an offer lapses after a reasonable time
not because this must be implied in the offer but because failure
to accept within a reasonable time implied rejection by the
offeree. As a consequence, the Court can take into account the
conduct of the parties after the offer was made in deciding
whether the offeree has allowed too long a time lapse before
accepting. In the case, based on the facts, the option was in fact
revoked well before if purported intention to exercise the option.

71
Continue.. ▹ What is a reasonable time is a question of fact in each case. An
offer to take up shares in a company was held to be revoked by the
lapse of six months without hearing anything from the company.
▹ In Ramsgate Victoria Co v Montefiore (1866) LR 1 Ex 109, the
defendant applied for shares in the plaintiff company in June and
paid a deposit into the company's bank. He did not hear from the
company until the end of November, when he was asked to pay for
the balance due for the shares that had been allotted to him. His
refusal to take up the shares was upheld by the Court on the ground
that the interval between June and November was excessive. The
defendant's offer should have been accepted, if at all, within a
reasonable time.

72
Failure of
acceptor to ▹ Under s 6(c) of the Contracts Act, where there are condition
precedents to be fulfilled prior to acceptance, the failure to do so
fulfil
will cause the offer to be revoked.
condition ▹ In Aberfoyle Plantations Ltd v Khaw Bian Cheng [1960] MLJ 47, PC
precedent to (Appeal from Malaysia) the vendor failed to fulfil a condition
acceptance precedent specified in the contract, namely to obtain the renewal
of several leases relating to the land which was the subject matter
of the contract. The condition being unfulfilled, the purchaser was
entitled to the return of his deposits paid.
▹ In Am Financings Ltd v Stimson [1962] 1 WLR 1184, CA., the Court
of Appeal held that there was no concluded contract as the offer
made by the defendant to purchase the car was conditional upon
the car remaining in substantially the same condition until the
moment of acceptance. In this case, the car was stolen and
recovered in a badly damaged condition.

73
Section 6(d) of
the Contracts
Act 1950
▹ Under s 6(d) of the Contracts Act, if a proposer has died or has
become mentally disordered and this fact is known by the
acceptor before acceptance, the acceptor cannot thereafter
accept the offer which is thus considered revoked.
▹ The reasoning is the same as in Dickinson v Dodds (1876) 2
ChD 463, CA. of a potential acceptor who wished to purchase
property and was informed by a third party that the seller had
already sold the land to another. In such a situation, there cannot
be said to be a consensus of mind between the parties.

74
Continue…
▹ Section 6(d) provides for the effect of death on the
revocation of offers.
▹ A general provision in the Contracts Act on the effect of death
contractual obligations is s 38(2) which states:
“Promises bind the representatives of the promisors in case of
death the promisors before performance, unless a contrary
intention appears from the contract.”
▹ Thus, the general rule is that death does not revoke all
contractual obligations entered into unless a contrary intention
appears from contract.

75
Continue…

▹ Section 6(d) of the Contracts Act also provides that a proposal is

revoked by the mental disorder of the proposer. The Contracts
Act requires that persons who enter into contract must be
competent to contract, that is, they have reached the age of
majority and are of sound mind (ss 10, 11 and 12 of Contracts
Act).

76