Contract Acts Example

Topics: Contract, Peter Pan, Hook Pages: 3 (1117 words) Published: June 15, 2012
Peter Pan owns a house in Never-land. On 21st of April 2011, Peter Pan posted a letter to Captain Hook offering to sell his house at RM200, 000. The next day he changed his mind and wrote a letter to Captain Hook revoking the offer. On the 25th of April, Captain Hook received Peter Pan’s offer letter. He gave it a thought and sent his acceptance by post on the 26th of April. On 28th of April, Peter Pan sold his house to Tinker Bell. Captain Hook only received the revocation letter on the 30th of April.

(a) Advise Peter Pan whether his revocation of offer by post is effective as against Captain Hook. (20 marks)

The issue in the given situation is whether the revocation of offer by post is effective as against Captain Hook. Section 2(h) of the Contracts Act 1950 defines contract as an agreement enforceable by law. In order for an agreement to be enforceable by law, it must consist of six essential elements which are offer, acceptance, consideration, intention to create legal relation, capacity and certainty. Offer is defined in Section 2(a) of the Contracts Act as something which is capable of being converted into an agreement by its acceptance. According to Section 5(1) of the Contacts Act, 1950, a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. The offer may be revoked by the offeror at any time until it is accepted. Under the postal rule, although an acceptance is effective upon posting but a revocation by post is only effective upon receipt. Therefore, even the letter of acceptance is to be posted after the letter of revocation of the offer has been posted but before it is delivered, acceptance will be complete at the time that the letter of acceptance was dispatched. Hence, the revocation will be ineffective. In the case of Byrne v Van Tienhoven (1880) 5 CPD 344, the plaintiff claim that a revocation is not effective prior to its communication and posting...
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