Law Casestudy

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Is John’s advertisement an offer or “invitation to treat”? On 10.3.2012, John advertised his car for sale at RM50, 000 in the local newspaper. The advertisement is either an offer or “invitation to treat”. An offer is required to form an agreement. Under S2(a) Contracts Act 1950 offer is when one person indicated to another his willingness to do or refrain from doing anything, with a view to obtaining the consent of that other to the act or restrain, he is said to made a proposal or offer. The person making the proposal or offer is called the “promisor” or “offeror” and the person accepting the proposal or offer is called the “promise” or “offeree” – S2 (c) Contracts Act 1950. Invitation to Treat (ITT) is not an offer but a statement to induce other person to come and negotiate or to make an offer. ITT cannot be accepted as a form of contract. Advertisements in newspapers, catalogues, auctions and displays are generally regarded as invitations to treat. Partridge v Crittenden [1968] 1 WLR 204 – “plaintiff not guilty because advertisement was ITT and not an offer for sale” Majumder v Attorney-General of Sarawak - the court concluded that the advertisement in the newspaper for post of a doctor was an ITT instead of an offer. John conducts an invitation to treat. ITT is not an offer but is a statement used to induce another party to make offer or negotiate. John’s intention of advertisement is to attract buyers to negotiate with him. John’s advertisement to sell his car for RM50, 000 is not an offer. Conclusion: The advertisement is an invitation to treat.

Is John liable to Sarah for breach of contract?
Sarah who saw the advertisement wants to buy John’s car for RM45, 000 but John rejected it. There is an issue rose whether did John breached the contract or otherwise. As mentioned above, John’s advertisement is an ITT. Sarah is induced by John’s advertisement to make an offer instead of accepting an offer. In this case, Sarah is the offeror while John is the offeree. Sarah offered to buy John’s car at the price of RM45, 000. A rejection was made by John. John is said to have breached the contract. Contract is a legally binding or enforceable agreement between two or more competent parties or entities in which there is a promise to perform or refrain from performing some specified act(s) in return for a valuable benefit known as consideration. Contracts Act 1950 (Act 136) (Revised 1974) An agreement must be met between John and Sarah to enter into a contract. John is selling at the price of RM50, 000 while Sarah is offering to buy at RM45, 000. No agreement was met. When John made a rejection, the offer is no longer valid. Therefore there is no contract between John and Sarah and no breach can be made. Conclusion: John is not liable to Sarah for breach of contract. Is John liable to Farah for breach of contract?

On 12.3.2012, Farah made on offer to John to buy his car for RM50, 000 in a letter enclosed with a cheque. On 15.3.2012, Farah went to collect the car but to find out that John has sold the car and returned her cheque of RM50, 000. John is sued for breach of contract. But it is questioned whether did Farah effectively communicated her offer. In this case, Farah is the offeror while John is the offeree. Farah made an offer and communicated it to John. But was there an effective communication of offer? After Farah has written to John enclosing a cheque, it is vital to ensure that John is aware of the cheque and offer. There cannot be an acceptance when John is not aware of the offer and its terms. Offer is required to be communicated in S4 (1) Contracts act 1950. Ayer Hitam Tin Dredging Malaysia Bhd v Y.C. Chin Enterprises Sdn Bhd [1994] 2 MLJ 754 –“for there are to be an agreement, parties must be ad idem” Acceptance is when the person to whom the offer is made signifies his assent thereto, the offer is said to be accepted – S2 (b) Contracts Act 1950. Farah made an offer to John but he did not...
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