Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. The law of contracts differs from other branches of law in a very important respect. It does not lay down so many precise rights and duties which the law will protect and enforce. Instead, the law of contract is a division of law which contains rather a number of limiting principles, subject to which the parties may create rights and duties for themselves, and the law will uphold those rights and duties. As long as all parties do not transgress some legal prohibition, all related parties make the law by framing any rule they like in regard to the subject matter of their contract for themselves. The law of contract is a set of legal rules related to instruct the formulation, lapse, termination of legally binding agreement made between between two or more persons regarding the exchange of interests or asset ownership. Contract can be viewed as a kind of obligatory promise made by the offeror to the offeree, which ensures the execution of contract or provides the remedy during a breach of contract. Malaysian Contract Act 1950 defines the scope of an enforceable contract and duties of parties to a contract. Section 2(h) of Contracts Act 1950 defines a contract as a set of agreements enforceable by law. Although all contracts must be established upon an agreement, a mere agreement which does not fulfill the criteria of contract is not a contract. This is because the enforceability of a contract cannot be formed if certain essential elements of formulating a contract are omitted. In other word, to create a legal obligation, both parties must establish a set of agreements which meets the essential elements of a contract via either writing format or oral communication to validly create a contract. Three parties are involved in this subject case: Melissa, Dory and Alice. At the commencement, Melissa wanted to sell her bike to Dory at the price tag of RM 2, 000. Melissa sent Dory a letter to convey her intention to offer her bike on 1st December. Dory received Melissa’s letter on 3rd December and responded Melissa’s offer with an intention to reduce the bike’s price to RM 1,800 on 5th December. Melissa acknowledged Dory’s request on 6th December and further sent Dory a letter to withdraw her initial offer on 7th December. On 7th December, Dory changed her mind and wished to revoke her counter offer to purchase the bike from Melissa at RM 2,000 again. Dory received Melissa’s letter on 11th December and Melissa received Dory’s letter on 10th December. However, in the meantime, Melissa had sold her bike to Alice at RM 2,000. Issues
There are several issues must be clarified before advising all parties. 1. Whether Melissa’s intention to sell her bike is adequate to classify her intention as an offer to Dory? 2. If Melissa’s letter is a valid offer to Dory, is Dory’s response considered a counter offer to terminate Melissa’s initial offer? 3. Does Melissa successfully withdraw her initial offer from Dory? 4. Does Dory successfully revoke her request to reduce the bike’s price? 5. Who should get the bike eventually?
6. Should any remedy be made in this subject case?
To assess whether Melissa’s letter to Dory is an offer, the content of Melissa’s letter must fulfill the criteria of forming a valid offer. According to Section 2(a) of Contract Act 1950, 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. In other word, an offer is an intimation or explicit expression of willingness by both parties to enter into a legally binding contract enforceable by law. An offer can be established on the basis of oral communication, writing and way of conduct. Criteria of a valid offer can be illustrated in the case of Carlill v Carbolic Smoke...
References: Abbot, K., Pendlebury, N. and Wardman, K. (2002) Business Law, Cengage Learning.
Abdullah, N. I., Razali, S. S. and Ghadas, Z. A. A. (2011), Malaysian Business Law, p 79.
Gulshan and Kapoor (2008), Business Law including Company Law, New Age International, p 2.
Maggs, G. E. (1999), Comparative Contract Law: American and European, abstract from URL: http://docs.law.gwu.edu/facweb/gmaggs/maggs-augsburg.pdf
[ 2 ]. Maggs, G. E. (1999), Comparative Contract Law: American and European, abstract from URL: http://docs.law.gwu.edu/facweb/gmaggs/maggs-augsburg.pdf
[ 3 ]
[ 4 ]. Abdullah, N. I., Razali, S. S. and Ghadas, Z. A. A. (2011), Malaysian Business Law, p 79.
[ 6 ]. Meiners, R. E., Ringleb, Al. H. and Edwards, F. L. (2006), The Legal Environment of Business, 9th Edition, Thomson Higher Education, p 245.
Please join StudyMode to read the full document