Business Law

Only available on StudyMode
  • Topic: Contract, Sale of Goods Act 1979, Contractual term
  • Pages : 7 (2828 words )
  • Download(s) : 17
  • Published : November 21, 2012
Open Document
Text Preview
Question 1 Base on the case presented in this question, there is a valid promise between Tina and Yatie. According to Section 2a of Contract Act, when one person signifies to another his willingness to do or abstain from doing anything, with a view to obtain assent of the other to such act or abstinence, he is said to make a proposal. Apparently in the case that Yatie had made an offer or proposal to her business partner, Tina to supply handcrafts by sending an offer letter to Tina. Tina had received the offer letter in the next day and she had accepted the offer by asking her staff, Anis to fax a letter of acceptance as soon as possible to Yatie. According to Section 2b of Contract Act, a proposal when accepted becomes a promise. Therefore, when Tina had accepted the offer made by Yatie, a promise or agreement had begun between them. According to Section 2c of Contract Act, it says that a person making the proposal is called the promisor (offeror) and the person accepting the proposal is called the promisee (offeree). Thus, in the case above, the promisor or offeror was Yatie and the promisee or offeree was Tina. However, there is no appropriate communication of acceptance between Yatie and Tina as the general rule states that acceptance of a proposal must be communicated to the proposer in the prescribed manner. The offer letter was clearly stated that a written acceptance has to be given. If the acceptance made does not follow as per letter of offer, the proposer is entitled to insist on it, where Yatie had actually insisted to Tina that the acceptance to be made in writing. If Tina’s staff fails to follow the prescribed manner of acceptance, then there will not be a binding contract between them. However, Yatie had accepted the offer earlier from Tina verbally, before Anis made the call to confirm on the acceptance. The promise between the business partners is valid. The general rule for acceptance states that acceptance is effective or complete only when it is communicated to the proposer.

However, section 4(2) of the Contract Act gives exclusion to the general rule, whereby the mean of communications used is through post. The communication of an acceptance by post is complete; as against the proposer, Yatie, when it is put in a course of transmission to her. As to be out of the power of the acceptor, Tina and as against Tina communication of an acceptance by post is complete, when it comes to the knowledge of Yatie. The proposer, Yatie is bound when Tina had posted the letter even though Yatie has no knowledge of the acceptance. When the letter of acceptance is posted by Anis, Tina’s staff, Tina no longer has any control over the transmission of the letter. The contract becomes obligatory regardless of any delay or disappearance in the process of transmission of the letter. According to Denning L.J in Entores Ltd v. Miles Far East Corporation [1955], states that when a contract is made by post the acceptance is complete as soon as the letter of acceptance is put into the post box and the contract will be made at the place the letter was posted. In similarity case happened to this question, there is a valid promise between Yatie and Tina where Yatie had sent the proposal and had been accepted by Tina. As a conclusion, contract is formed between them. In further of this case, the action taken by Yatie on withdrawing the proposal by sending a SMS to Tina, after received the information that her suppliers could not deliver the handcrafts is not valid. According to Section 5(1) of the act provides that a proposal may be revoked at any time before the communications of its acceptance is complete as against the proposer, but not afterwards. In the above case, the acceptance is already completed against Yatie as the written acceptance had been sent through post. Therefore, the withdrawal of the proposal is not valid. Referring to the case above, Section 6 states that a proposal is revoked by the communication of notice of...
tracking img