Contract Law

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GENERAL PRINCIPLES OF THE LAW OF CONTRACT

INTRODUCTION
Definition


S.2(h) Contract Act 1950 : An agreement enforceable by law. Legally binding between parties.



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 (a) (b)

Legislation governing contracts: Contracts Act 1950 English Law - By virtue of S.5 of the Civil Law Act (When there are no provisions in the Contract Act)

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OFFER / PROPOSAL
Definition


S. 2(a) Contracts Act
“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.” 5

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Something which is capable of being converted into an agreement by its acceptance.



A definite promise to be bound provided certain specified terms are accepted.

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The person making the proposal is known as the “promisor” / “offeror” / “proposer”.



The person expected to accept the offer is known as the “promisee” / “offeree” / “acceptor”. 7

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Makes the offer

Promisor/ Offeror/ Accepts the offer

Promisee/ Offeree/

Proposer

Acceptor

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Affin Credit (Malaysia) Sdn Bhd. v. Yap Yuen Fui * Lack of offer & acceptance in a purported hire-purchase agreement. * The court declared it void ab initio (void from the beginning).

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A proposal must be distinguished from an invitation to treat. Examples of invitation to treat: – goods displayed in shop windows and shelves – advertisement – auctions – catalogues – price lists 10

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Display of goods:
* * Not a proposal to sell – invitation not capable of being accepted. Shop-owner merely holds himself prepared to consider proposals made to him at the suggested prices. An offer to buy is made when the customer puts the goods in a basket or takes the item off the shelf. The contract is only made at the cashier’s desk when the customer pays for the item.

*

*

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Pharmaceutical Society of Great Britain v. Boots Cash Chemist Ltd. Facts of the case: Defendants charged under the Pharmacy and Poisons Act 1933 (U.K.) which provided that it was unlawful to sell certain poisons unless such sale was supervised by a registered pharmacist. The defendant argued that in every case involving drugs, a pharmacist supervised the transaction at the cashier’s desk and was authorized to prevent a sale. Held: The display was only an invitation to treat. A proposal to buy was made when the customer placed the articles in the basket. Contract of sale would only be made at the cashier’s desk. Therefore, shop owners had 12 not made an unlawful sale.

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Advertisement: * Only an invitation to applicants to make an offer and not an offer itself. * It is an attempt to induce offer. 13

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Coelho v. The Public Services Commission Fact of the case: Applicant applied for a position in response to a newspaper advertisement. He was later informed that his application had been accepted. Subsequently, the Public Service Commission attempted to terminate his employment on the basis that he was appointed on probation. Applicant then applied to the court for an order to quash the decision. Held: The advertisement was an invitation to qualified persons to apply and the resulting application were offers. Termination of applicant invalid. 14

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Auction: * When an auctioneer invites bids, he is merely making an invitation to treat, and when a bidder makes a bid, he is making an offer. * The contract (i.e. the sale), is only made when the auctioneer announces its completion by the fall of the hammer.

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