By definition under Sec 2(h) Contract Act 1950, “an agreement enforceable by law is a contract”. A contract is a promise or agreement between two or more parties that is enforced by law to be legally binding. It may involve a duty to do or refrain from doing something, and the failure to perform such duty is a breach of contract. The role of law in a contract is not to punish the breaching party but to provide remedies to restore the person wronged to the position they ought to occupy if the contract had not been breached. To distinguish contracts from other types of promises and agreements, 6 vital elements have been established that are necessary for a contract to exist and they are Offer, Acceptance, Consideration, Intention to create a legal relationship, Capacity and Certainty. A contract is only legally binding once the elements are in existence. Absence of any of the elements in a contract will be void or voidable.
According to Section 2(a) Contracts Act 1950, an offer or proposal is made “When one person signifies to another his willingness to do or abstain from doing, with the view to obtaining the assent of that to the act or abstinence, he is said to make a proposal”. Example, Jeff proposes to sell his van to Kim for RM20, 000. This makes Jeff the offeror and Kim the offeree. An offer need not be made to a specific person. It may be addressed either to an individual, or to a group of persons, or to the world at large, and may be made expressly or by conduct. a) A particular person: Jeff went to Kim’s shop and is offered to buy a pair of shoes. Kim’s offer cannot be accepted by Rony who owns a shoe shop nearby because Rony was not the addressed person in the offer. Furthermore, Section 2(b) Contracts Act provides that “…when a person to whom the proposal is made” which appears to say that only the addressee may accept the proposal.
Boulton v Jones (1857) 2H & N 564
Defendant had business dealing with a shopkeeper named Brocklehurst. The defendant had ordered some stocks from Brocklehurst but on the day of the order Brocklehurst had sold his business to the Plaintiff. The Plaintiff delivered the goods without informing the Defendant of the change of ownership. The Defendant then refused to make any payments. It was held that the plaintiff had no rights to accept an offer not made to him. b) To the General Public: Here anyone who meets all the terms of the proposal may accept the proposal. For example, Jeff offered RM100 for the safe return of his cat at an address advertised. Jeff’s offer is to the general public and those who read or knew of the offer may accept the offer and claim for the reward
Carlil v Carbolic Smoke Ball Co
The defendant’s advertised that they would offer a sum of 100 pounds to anyone who would still succumb to influenza after using a certain product according to the instructions for a fixed period. The plaintiff read the advertisement and used the product accordingly but still contracted with influenza. He claimed the 100 pounds from the defendants. The court held that the advertisement was an offer to the world at large and those who were willing to use the product as instructed had then accepted the offer. Acceptance need not be communicated to the Defendants. The defendants had in fact deposited 100 pounds into a bank account for any claims. An offer must be clear, complete, final and specific to avoid any vagueness.
Guthing v Lynn (1831) 2B & AD 232
Lynn offered to buy a horse from Guthing. He was to pay 5 pounds extra if the horse brought him good luck. The condition laid was held by the court to be too vague to constitute a binding contract. Tan Geok Khoon & Gerald Francis Robless v Pava Terubong Estate Sdn Bhd  2 MLJ 672 Plaintiff were executors and trustees of deceased’s estate. They claimed various correspondences between the deceased and the defendant constituted a contract. The court agreed because the deceased had agreed to and...