Contracts LAW436 Notes

LAW436 Law of Contracts I Notes
INTRODUCTION OFFER
Definition of Contract Definition of offer

a. Section 2 (a) Contract Act 1950
Case Sri Kajang Rock Products v Maybank
➢ willingness to enter into a legally binding contract, on
Finance Bhd
parties must be in agreement (consensus) – intend
certain specified terms
to create legal relation – promises of each side are b. Section 7(a) and (b)
enforceable – promises of each party must be ➢ offeror confers on the offeree – an act which in law
supported by consideration constitutes an acceptance
Provision Section 2(h) Determining an offer

(Contract that an agreement enforceable by law is a contract
1. Must be definite
Act 1950) 2. Must be communicated before accepted
Section 10(1)
all agreements are contracts if they are made by the 3. May be made unconditionally/stated conditions
free consent of parties competent to contract, for a (acceptance then must correspond)
lawful consideration
Case Carlill v Carbolic Smokeball Co
Elements of a Contract Facts ➢ Advertisement – £100 – influenza – used in

1. Offer/Proposal a specific manner – Def deposited £1,000
2. Acceptance as sincerity
3. Consideration ➢ Pl used as instructed – still caught influenza
4. Intention to create legal relation (lmao same) – sued Def for £100
5. Capacity to contract
Held There is a contract – anyone who comes
forward and performs the conditions
How offers are made

Sect 5 (1) Proposal may be revoked any time as long as
Section 8 and Section 9 of CA 1950
it is before the acceptance is complete
➢ Orally – correspondence – quotations – orders – by
(2) Acceptance may be revoked any time as long
conduct
as it is before the communication of
➢ Case: Preston Corporation Sdn Bhd v Edward Leong &
acceptance is complete
Ors [1982] 2 MLJ22
❖ Offer may be made to one specific person or to more

General Rules of Offer persons or to the world at large
1. Offer must be communicated to the offeree ❖ Case: Carlill v Carbolic Smokeball Co
Sect 3 Communication, acceptance, and revocation of

2. Offer and acceptance must correspond
proposals – deemed to be made by any act or
➢ there must be a meeting of minds (consensus ad idem)
omission.
➢ offeree accepting the offeror’s offer on the same terms as
Sect 4 (1) Communication of proposal is complete when stated in the offer
it comes to the knowledge of the person whom ➢ Case: Ayer Hitam Tin Dredging Malaysia Bhd
it is made
(2) Communication of acceptance is complete 3. Offer must be distinguished from an option + definite
when– ➢ Offeror commits to keep his offer open for a specified time
(a) Put in course of transmission to the in return for a price (consideration)
proposer ➢ Since there is consideration, the agreement to keep open
(b) When it comes to the knowledge of the the offer for a specified period is itself a contract
proposer
(3) Communication of revocation is complete
when–
(a) When put in into a course of transmission
(b) When it comes to the knowledge of whom
it is made
4. Offer may be revoked before acceptance

Decision Pl asking Def was a request for information –
Def answering was not an offer, it was
Provision Section 5(1) of CA 1950 information – Pl agreeing on the £900 was the
offer
Case Routledge v Grant
Facts ● Def offered to buy Pl’s house in writing –

gives 6 weeks for Pl to accept the offer 6. Offer must distinguish from an ITT
● Def revoked the offer before 6 weeks – Pl ➢ ITT: invitation to make an offer, negotiate, or deal
accepted it after revocation but still within ➢ No legal consequences
the 6 weeks
Decision Original letter/offer is not binding – revocation

on time
5. Offer must be distinguished from preliminary negotiations
Case Harvey v Facey
Facts ● Pl sent a telegraph asking if the

defendant was willing to sell them a piece of
property – asked what price the defendant
would sell it for – Def responded ‘Lowest price
for £900’
● Pl agreed: ‘Please send us your
title-deed in order that we may get early
possession’ – Def did not reply
Invitation to Treat (ITT)

➢ Statement – not intended to be binding at law
Case Coelho v The Public Services Commission
➢ Merely invites interested parties to make an offer
Facts ➢ Appellant applied for post of Assistant
Types of ITT Passport Officer – advertised @ Malay Mail
1. Advertisements newspaper – was informed he was
Case Carlill v Carbolic Smokeball Co (NOT an ITT, accepted
just an offer shaped as an advertisement) ➢ After posted to the Immigration Office – gis
appointment (on probation was terminated
Facts ➢ Advertisement – £100 – influenza – used in ➢ Applied for certiorari to quash the decision
a specific manner – Def deposited £1,000
as sincerity Decision The advertisement was an invitation to qualified
➢ Pl used as instructed – still caught persons – applications was the offers –
influenza – sued Def for £100 information conveyed to the appellant was an
unqualified acceptance
Decision There is a contract – anyone who comes
forward and performs the conditions Type Bilateral Contract
● An outstanding obligation remains on both
Type Unilateral Contract sides
● An outstanding obligation is on one side ● I.e. offeror makes a promise in return for a
only promise by the offeree
● I.e. reward of £100 if a person contracted
influenza (if the smokeball failed)
2. Display of Goods 3. Tenders
Case Pharmaceutical Soc of Britain v Boots Case Cheng Keng Hong v Government of the
Federation of Malaya
Facts ➢ Def sells (legal) drugs – single room
adapted to the self-service system Facts ➢ Respondent issued a notice – inviting
➢ customers are provided wire baskets upon tenders to build a school
entering – place items in basket and take ➢ Appellent tendered for the work and his
them to cashier – cashier states the total tender was accepted – a contract was
price and receive payment entered into
Decision Sale was completed when customer’s offer to Decision The unconditional acceptance of the tenders by
buy was accepted by the seller upon receiving the respondent bound both parties – a contract
payment was formed
Case Fisher v Bell
Facts ➢ shopkeeper displayed in his shop window –

a flick knife
➢ Was the flick knife an offer to sale? –
contrary to Sect 1(1) of the Restriction of
Offensive Weapons Act 1959
Decision Was not an offer for sale

4. Auctions
Decision “Without reserve” – auctioneer and any party on
Principle: Auctioneer’s request for bids
his behalf should not be able to enter the
➢ The bid itself is an offer – vendor is free to accept or reject
auction as a bidder
➢ Case: Payne v Cave
Principle Notice of auction
Case Harris v Nickerson 5. Application for Club Memberships
Facts ● Def an auctioneer – advertised items to be

Case Abdul Rashid v Island Gold Properties
sold by him – Pl attended the sale
● On third day – furniture that was advertised Facts ● Pl applied to become a member of the golf
were withdrawn club
Decision Advertisement that the goods will be sold on a Decision Pl’s application was an ITT – offer is when Def
certain day does not constitute a promise that it considered the Pl’s application – acceptance
will actually be sold when Pl subscribes and pays for club fees
Principle Auction “without reserve”
Case Warlow v Harrison
Facts ● Def and a Mr B were auctioneers in a

partnership – auction: highest bidder gets
three horses, without reserve
● Pl bid 60 guineas for one of the horses – Mr
B immediately bid 61 guineas – Def put Mr
B’s name as the highest bidder and got the
horse
Revocation of Offer
Case Macon Works and Trading Sdn Bhd v Phang
Hon Chin & Anor
➢ Offer may be revoked or come to an end by:
○ Acceptance – offer becomes a contract Facts ● after their initial agreement to sell the
○ Rejection property to a man named Loong Koi fell
○ Revocation through – Def enlisted Loong Koi's solicitor
○ Lapse of time (revocation) to help them find a buyer
● Madam Kong Yoke Sam was given the
➢ Modes to revoke an offer: chance to buy the land – it was an
open-dated option that could only be
Section 6 (a) Communication of notice of revocation exercised once Loong Koi lost interest in the
of property
Contracts (b) Lapse of time ● Through the mentioned solicitor, the plaintiffs
Act 1950 exercised their option and demanded
(c) Failure to fulfil condition specific performance of the contract
(d) Death or mental disorder of proposer Decision no specific period of time stated before the lapse
of offer, hence the uncertainty resulted in a
contract that is not binding
Acceptance ❖ Counter-offer is different than a mere request for info
Section When offeree accepts a proposal, it becomes a Case Stevenson v Mclean

2(b) promise
Facts ● Def offered to sell iron – Pl asked if it could
Section Proposal to promise – acceptance must be: be lowered – Def did not reply and sold the
7 (a) Absolute and unqualified item to another person
(b) Expressed in some usual & reasonable
Decision Pl’s inquiry is not a counter offer, it was merely a
manner
question (for more info)
Acceptance must be absolute and unconditional
2. Terms of offer amended at time of acceptance

1. Counter-Offer
➢ If acceptance includes new clauses or amendments – it’s
not absolute and unconditional – no valid acceptance
Case Hyde v Wrench
Facts ● Def offers to sell £1,000 farm – Pl counter Case Jones v Daniel
offers £950 – Def refuses offer – Pl accepts
Facts ● Def accepted Pl’s offer – added an
initial offer – Def refuses
enclosed contract with it
Decision No binding contract – counter offer destroys
Decision Acceptance not valid – turned into a counter
original offer
offer instead
Cases 1. Malayan Flour Mills Bhd v Saw Eng Chee
applied
3. “Subject to Contract” Acceptance Must Correspond to Offer

➢ Formal agreement – Signing of a formal agreement 1. Cross offers
➢ Relates with intention ● Not considered as acceptance
➢ Can be no contract or yes contract ● When two parties make the same offer to one another
– not knowing the other party has made an offer –
terms of both offers are identical
Case Daiman Development
Facts ● The appellant, A, who was a housing developer, 2. Knowledge of offer before acceptance
received a $700 booking fee from the
respondent – also signed a booking pro forma. Case Gibbons v Proctor
● The respondent opposed the appellant's
attempt to raise the price – filed a specific Facts ● Def published a handbill reward @ May 29
performance claim – information about the conviction of a
● The appellant argued that pro forma was perpetrator – info to be given to the
"subject to contract" and that there were no superintendent
contractual duties between the parties until a ● Pl was a police officer – May 29 got info abt
different document was jointly agreed upon and the conviction of the perpetrator
signed ● May 30, Pl gave the info to the
Superintendent
Decision the pro forma can be considered as a binding
contract Decision Pl was entitled to the reward – info reached the
superintendent after the publication of the
Applied 1. Kam Mah Theatre Sdn Bhd handbill
cases 2. Lim Chia Min v Cheah Sang Ngeow
❖ Prism Leisure Sdn Bhd – signing a contract may be just

for formality
Case Fitch v Snedaker Case R v Clarke
Facts ● Sheriff offered a reward for info – informers Facts ● Gov of Western Australia – reward for any
(the plaintiffs) provided info, but did not get info for the arrest and conviction of persons
the reward who committed murder of 2 police officers
● Clarke gave info – he was also under arrest
Decision ➢ 1st Pl – gave info before the sheriff made on a charge of murder
the offer
➢ 2nd Pl – info was given before he was Decision ➢ Gov was in no contractual obligation to
aware of the offer pay him the reward
➢ Both did not get the reward ➢ He was not acting on the consideration
contained in the proclamation – only to clear
❖ Decision of Fitch v Snedaker is more in accord with the
himself of charge
contractual principles of offer and acceptance
❖ Tldr; Fitch v Snedaker has the decision that should be
followed
Q: How is acceptance made?
3. Motive of acceptor at time of acceptance
Section Acceptance by performing conditions, or receiving

Case Williams v Carwardine 8 consideration
Facts ● Pl knew abt the reward – gave info to ease Section Proposals or acceptance by words is expressed –
her conscience and forgiveness instead for 9 if made otherwise, it is said to be implied (through
the reward conduct)
Decision ➢ As long as she came within terms of the

handbill, it was sufficient ❖ See case: Carlill v Carbolic Smokeball
Modes of Accepting Acceptance 2. Acceptance by Telegram/Post

1. Communicating the acceptance
● An effective acceptance is to be communicated
Case Ignatius v Bell
● Mental assent alone is more likely to not be sufficient
● Case: Brodgen v Metropolitan Railway Co Facts ● Purchasing land of Def – should be
○ Was held that there was no acceptance, only exercised before 20 Aug by notice in writing
mental assent ● Pl sent letter on 16 Aug – letter did not
○ Appealed – held that there was acceptance reach until 25 Aug
though the course of dealings (correspondence) ● Def got the letter from the post office at 25
between the parties Aug
Sect 3 Communication, acceptance, and revocation of
Decision ➢ There was a valid acceptance – Section
proposals – deemed to be made by any act or
4(2)(a)
omission.
Sect 4 (2) Communication of acceptance is complete 3. Acceptance by Telex/Telephone

when–
(a) Put in course of transmission to the
Case Entores v Miles Far East Corp
proposer
(b) When it comes to the knowledge of the Facts ● Pl sent an offer to purchase 100 tons of
proposer copper cathodes to Def – Pl was based in
Amsterdam – offer was communicated by
Sect 7 Acceptance must be:
Telex – Def was a London company
(a) Absolute and unqualified
● Def sent an acceptance of this offer by
(b) Expressed in some usual & reasonable
Telex – the contract was not fulfilled – Pl
manner
tried to sue Def for damages
Decision ➢ postal rule did not apply for

instantaneous communications
4. Acceptance by Conduct 6. Acceptance by Silence

● An acceptor may by his conduct indicate his intention
whether he has or has not accepted an offer
Case Felthouse v Bindley
Case Woon Yoke Lin v. United Estate Projects Facts ● Uncle buys horse if there’s no reply –
Berhad nephew kept silent
● Nephew went to sell farm items –
Facts ● Def (owner of booth stall @ Subang Parade) accidentally sold the horse
did not reply within 14 days (the booking form
stated that if Pl’s application was not Decision No concluded contract – silence is ambiguous
accepted the deposit would be refunded thus does not amount to acceptance; must be
within 14 days) communicated
● Def accepted the booking fees and paid this
sum into their own account
Case Weatherby v Banham
● Def did not return this sum of money within
14 days as provided in the booking form Facts ● Pl supplied Racing Calendars to Mr
● Def could have rejected the tenancy Westbrooke – monthly thing
agreement and the money – but they kept it ● Mr Westbrooke dies – Def moves in the
● Def negotiated with the plaintiff to relocate place
instead of rejecting it ● Pl still sends the calendars, not knowing abt
the death – Def did nothing abt the
Decision Acceptance was valid
calendars
5. Acceptance by performing conditions stipulated in Decision “Silence” amounts to acceptance if there were
offer multiple reasonable opportunities to say
● Case: Carlill v Carbolic Smoke Ball Co otherwise
Revocation of Acceptance
Section Revocation of acceptance may be done before

5(2) the communication of acceptance is complete,
but not afterwards
Section Communication of revocation is complete when–

4(3) (a) When it’s put in a course of transmission
(b) When it comes to knowledge
Tldr; only complete as against the person to

whom it is made when the said person receives
the notice of revocation of the offer
Case Bryne & Co v Leon Van Tienhoven & Co
Facts ● Def posted a letter on October 1, addressed

to Pl – offering to sell 1,000 boxes of
tinplates – takes about 10-11 days to reach
● October 8 Def posted a letter revoking the
offer
● Pl telegraphed their acceptance on October
11 and confirmed it in a letter posted on
October 15 – letter of revocation reached Pl
on the October 20
Decision revocation was inoperative until October 20

Intention to Create Legal Relations Domestic/Social Agreements
➢ Sect 10 of CA1950 ➢ between friends and close relatives – presumed that there
○ certain elements need to be present before a contract is no legal consequence – contracts are not binding
can be enforceable
○ offer, acceptance, and consideration – both parties Case Balfour v Balfour
consent and with free will
➢ Exceptions: Facts ● Married and spent 15 years in Ceylon – year
○ Do both parties have an intention to be legally 1915 husband went to England for work –
bound? wife too ill to accompany him
➢ No specific law on intention – therefore uses common law ● Husband agreed to pay monthly allowance
○ No intention = no binding contract of 30 pounds – until wife could rejoin him on
her promise
Determining Intention to Create Legal Intention ● Wife remained in England permanently –
husband ceased payment
➢ courts will look into the totality of the evidence, written to
Decision ★ No contract
arrive to the decision – type of contracts
★ Domestic agreement – no intention to create
○ I.e. commercial transactions, domestic agreements
legal relations
Case Esso Standard Malaya
Notes Where a contract is formed through

correspondence, the court will view all the
correspondence to determine whether all the
elements including intention are complied with
★ Both parties have correspondence due to the
3 letters and 5 credit cards
Exceptions – Domestic/Social Agreements

● A year later – both parties argued – Def
a. Both parties are not in cordial terms
reneged his promise – sold his house and
Case Merritt v Merritt disinherited P
Facts ➢ Husband and wife – separated when they Decision ★ Contract was binding – Def was liable
made the agreement ★ The voluminous correspondence and the
➢ Husband promised to pay for certain seriousness of the move for the plaintiff
expenses, but did not showed that the parties had intended their
agreement to be binding
Decision Agreement was enforceable – they were not
living in amity
Business/Commercial Arrangements
➢ Presumed both parties have intention to be legally bound
b. Correspondence and the seriousness Q: Why presumed with intention?
Case Wakeling v Ripley A: To facilitate trade and commerce and to promote certainty
(Sect 30) – it involves not only rights but also profits,
Facts ● Def lived alone @ Sydney – Plaintiff (his commission and opportunity
sister and her husband)
● Def wrote letter – invited P to live with him
● Def promised both of them he would leave
them all his property upon his death and that
in the meantime he would provide them a
home and a living
● Considerable correspondence ensued – the
plaintiff agreed
● Husband resigned from work – P sold their
house and lived with Def
Exceptions – Business/Commercial Arrangements

Case Diamond Peak Sdn Bhd
Case: Rose v Frank
Facts ➢ Pl claimed specific performance of an oral
➢ Agreements made ‘subject to contract’ agreement that the defendant had agreed to
Case Daiman Development sell the 2nd plaintiff his land on certain
terms
Facts ● The appellant, A, who was a housing ➢ Pl also claimed specific performance of
developer, received a $700 booking fee from an agreement embodied in an exchange of
the respondent – also signed a booking pro letters culminating with a letter from Def –
forma. stating how Def was delighted that it was the
● The respondent opposed the appellant's Pl who was buying the land and that "the
attempt to raise the price – filed a specific technical details" he would leave to his
performance claim lawyers
● The appellant argued that pro forma was ➢ Pl claimed a contract as set out in an
"subject to contract" and that there were no engrossed agreement sent by the
contractual duties between the parties until a plaintiffs' solicitors to the defendant's
different document was jointly agreed upon solicitors on March 13, 1978
and signed
Decision ➢ there was a completed agreement sent out
Decision the pro forma can be considered as a binding in the 4 copies of agreement of sale which
contract had been sent by the plaintiffs' solicitors to
the defendant's solicitors, with their letter of
March 13, 1978
➢ Letters of intent
■ Courts will look for letters exchanged – language used
– correspondence between parties ➢ Conditional contracts
■ Based on actions
■ Case: Carlill v Carbolic Smokeball Co
➢ Uncertain terms Letters of Intent

■ Uncertainty – Sect 30 of CA 1950 ➢ Expression in writing – usually only to enter into a contract
in future dates
Case Macon Works and Trading Sdn Bhd v Phang
➢ There are exceptional circumstances that makes it not
Hon Chin & Anor
binding – language used, correspondence, actions, etc
Facts ● after their initial agreement to sell the
property to a man named Loong Koi fell “State of Negotiation”
through – Def enlisted Loong Koi's solicitor ➢ Cases:
to help them find a buyer ○ Ayer Hitam Dredging Malaysia Bhd*
● Madam Kong Yoke Sam was given the ○ Esso Standard Malaya Bhd*
chance to buy the land – it was an ○ Quek Choon Huat v RM Seow
open-dated option that could only be ○ Yap Eng Thong v Faber Union
exercised once Loong Koi lost interest in the
property Case Smith v Hughes
● Through the mentioned solicitor, the plaintiffs
exercised their option and demanded Notes ➢ the existence of an agreement depends
specific performance of the contract upon the intention of the parties
➢ there must be a consensus between them
Decision no specific period of time stated before the lapse ➢ Exceptions that needs to be taken into
of offer, hence the uncertainty resulted in a consideration:
contract that is not binding ○ Language used, conduct of parties,
object of the contract
Contracts Through Correspondence
➢ Sufficient correspondence = sufficient evidence = binding
contract
Consideration Requirements of Consideration

1. Act of forbearance refrain from exercising legal right (suffer detriment)
➢ Definition – the price of the promise ● Involves the forgoing of the exercise of a legal right
➢ Currie v Misa – consideration is ‘some right, interest, ● Consideration when Pl does not take action in court
profit or benefit accruing to one party or some (detriment), and Def saved from legal proceedings
forbearance, detriment, loss or responsibility given, (benefit)
suffered or undertaken by the other’
Case Osman bin Abdul Ghani
Section “when, at the desire of the promisor, the promisee
Facts ● Respondent granted the appellants overdraft
2(d) or any other person has done or abstained from
facilities – appellants executed guarantees in
doing … is called a consideration for the promise”
favour of the respondent
Section All agreements are contracts if they are made for
Decision ★ There was valid consideration – the
10(1) a lawful consideration and with a lawful object
guarantees were a request for forbearance
❖ Pollock v Mulla – consideration is sufficient as long as

both parties agree & with free consent – adequacy
depends on the parties, not the court
2. Mutual promises and Executory Consideration 3. Executed Consideration

● one party makes a promise in return for a promise ● One party makes a promise in return for the
from the other performance of the an act
● i.e. a seller’s promise to deliver goods in return for a ● Case: Carlill v Carbolic Smoke Ball Co
buyer’s promise to pay
4. Past consideration
● consists of something wholly performed before the
Section Promises which form the consideration or part of
promise is made – not made pursuant to a promise
2(f) the consideration for each other are called
but prior to it must be at the desire of the promisor
reciprocal promises
● Example
○ Promising a reward to someone after they did
Case Wong Hon Leong David v Noorazman bin something
Adnan
Case Kepong Prospecting Ltd v. Schmidt
Facts ● Respondent promised he would assist in
obtaining the required approval for Facts ● There was an initial promise made by Tan
conversion and sub-division of the and Schmidt – in the assistance of Schmidt,
company’s land – appellant in turn promised Tan would pay him 1% of the price of the ore
he would pay the respondent RM200k for from the land it was sold at
that service. ● A year later, Kepong Prospecting Ltd
● Applications were approved but there was undertook Tan’s agreement to Schmidt – It
refusal to pay RM200k on the ground that was terminated when the company was
there was no consideration for the alleged taken over – the 1% was used for indemnity
agreement and that the respondent did
nothing to earn his fee Decision Schmidt could sue for the sum that was owed on
the agreement between him and Kepong
Decision There was a promise in exchange for a promise Prospecting Ltd
General Rules of Consideration

Case Chappell and Co Ltd v Nestle Co Ltd
1. Sufficiency vs Adequacy Facts ● Def contracted with a company

manufacturing gramophone records to buy
❖ Pollock v Mulla – consideration is sufficient as long as several recordings of music – Pl held the
both parties agree & with free consent – adequacy copyright in these recordings
depends on the parties, not the court ● Pl offered to sell these records at a discount
price to anyone presenting three wrappers
Explanation Inadequacy of an agreement may be from their chocolate bars (as advertisement
2 of Sect 26 considered by the court if it is to decide for sales)
whether there was free consent or not ● Wrappers themselves were worthless and
were thrown away by Nestle – Pl sought an
Illustrations (f) A sells a $1,000 horse at the price of $10 injunction restraining the manufacture and
of Sect 26 to B – A’s consent to the price is with his sale of the records because they breached
free consent – there is consideration copyright
(g) A sells a horse worth $1,000 but without
his consent – no consideration Decision The wrappers did form part of the consideration
for the sale of records despite the fact that they
had no intrinsic economic value
Case Phang Swee Kem v Beh I Hock
Notes ➢ The court referred to Explanation 2 of section

26, and Section 2(d)
➢ There were no duress or fraud, hence it was
made with free consent of consideration
2. Agreements without consideration is void

affection
* Sect 2(g) — agreements not enforceable by law are void contracts
(b) Promise to compensate for something done
[Under Contract Act 1950] ● Promise to compensate someone who voluntarily did
something
Section 26 An agreement made without consideration is
void unless—
(a) It is made on account of natural love and Case Leong Huat Sawmill (Pte) Ltd v Lee Man See
affection
Decision ● The logging work done by the respondent
(b) It is a promise to compensate for smth
was not voluntary – Pl failed the case
done
(c) It is a promise to pay a debt barred by
limitation law (c) Promise to pay a debt barred by limitation
● Promise made in writing and signed by a person to be
charged – to pay a debt
(a) Natural love and affection
● Expressed in writing and registered under the law for
the time being in force
● Made on account of natural love and affection
between the parties in near relation to each other
Case Kwan Teck Meng v Liew Sam Lee
Facts ● Father executed a memorandum of transfer

● Transferred the whole of his title and interest
in certain land to four of his sons,
daughter-in-law, and youngest son
Decision The transfer was consideration of love and

[Under Common Law] 2. Pre-existing Contractual Duty

1. Pre-existing Public Duty ● Not a good consideration unless it confers a practical
● No valid consideration unless the performance benefit to the promisor
exceeds what is normally expected
Case Stilk v Myrick
Case Collins v Godefroy
Facts ● Pl (a seaman) agreed with the master of a
Facts ● Pl received a subpoena to appear as a ship to work on the ship on a voyage
witness – to give evidence for the Def in a ● Two seamen deserted and master unable to
court case find replacement – master agreed that the
● Def promised to pay him a sum of money for deserters’ wages will be split evenly among
appearing as a witness the rest of seamen including the Pl
● When voyage was over – master refused to
Decision No consideration – public duty when he receives pay the additional sum
a subpoena to appear in court
Decision Pl’s claim was refused – initial agreement was
already set
Case Glasbrook Bros Ltd v Glamorgan Country
Council
Case Williams v Roffey Bros & Nicholls
Facts ● National coal strike made it unsafe for the
“safety men” from working – Appellants Facts ● Def (building contractors) had subcontracted
(owners of a group of collieries) requested the refurbishment of some flats to the Pl – Pl
the police for assistance not able to complete in time bcs of financial
● Police wiling to patrol the area – appellants problems
insisted a police garrison of 100 (later ● Concerned, Def agreed to pay an additional
reduced to 70 men) £75 per flat on the timely completion
Decision There was consideration Decision Def obtained a benefit (able to avoid penalty) –
good consideration
3. Pre-existing Contractual Duty to a Third Party Pinnels’s Rule and Section 64

● Good consideration!! :D ● Common law → payment of a lesser sum cannot satisfy a
larger sum → Pinnel’s Rule
Case The New Zealand Shipping Co Ltd v AM
Satterthwaite & Co Ltd
Case Foakes v Beer
Facts ● Pl offered the Def – if Def unloaded Pl’s
Facts ● Beer loaned Foakes £2000 – When Foakes
goods from a ship (Def was already bound to
was unable to repay this loan, she received
do so by a third party) then Pl would treat the
a judgement in her favour to recover this
Def as exempt from liability for damage to
amount
the goods
● The pair then entered an agreement – ‘in
Decision Def’s act of unloading the ship was good consideration’ of an initial payment of £500
consideration and ‘on condition’ of six-monthly payments
of £250 until the whole amount was repaid,
she would not enforce her judgement
against him
● Foakes made these regular payments until
the entire amount was repaid
Decision Respondent’s promise not to enforce the

judgement was not binding as Dr Foakes had
not provided any consideration
Promissory Estoppel
Section 64 Promisee may dispense fully or partially the
● Applied when both parties are in an existing contractual
promised performance – extend time to
relationship → one party (A) promises to relieve another
perform or accept anything – to satisfy the
(B) of some previous obligations
promised performance
○ Promissory estoppel prevents A from reneging on his
promise
Case Kerpa Singh v Bariam Singh ● To use doctrine, must exist—
i. One party makes a promise with intention that the
Facts ● Def owed Pl RM8,000 other party should act in reliance on the promise
● Def then paid RM4,000 to the plaintiff as a ii. Promise has acted in reliance of the promise
full and final payment – mentioned to return iii. Is inequitable to allow the promisor to go back on his
the cheque if refused promise
● Pl’s lawyer took the cheque and cashed it
out – asked for the balance payment Privity of Contract
● Only persons who are parties to a contract cans sue or be
Decision The RM8,000 was already paid in full
sued on a contract
Capacity
Q: Why is capacity important? What is “of sound mind”?
A: Parties are able to understand & make a rational Section (1) At the time of making a contract – capable
agreement 12 of understanding it – capable of forming
Definition: a person’s competence of entering a contract CA1950 rational judgement – to its effect upon his
interests
Important Section 10 – What agreements are contracts
(2) Usually of unsound mind but occasionally of
Provisions (1) All agreements are contracts if they are
sound mind – can make a contract when is
from made by the free consent of parties
of sound mind
Contracts competent to contract, for a lawful
★ Illustration (a) – patient of mental
Act 1950 consideration and with a lawful object, and
hospital may make a contract when in
are not hereby expressly declared void.
intervals of sound mind
Section 11 – Who are competent to contract
(3) Usually of sound mind but occasionally of
➢ Every person is competent to contract who
unsound mind – may not make a contract
is of the age of majority1 according to the
when is of unsound mind
law to which he is subject, and who is of
★ Illustration (b) – sane man who is
sound mind2, and is not disqualified3 from
delirious of fever or drunk to not
contracting by any law to which he is
understand anything cannot make a
subject.
contract when in delirium or
drunkenness
1. Sect 2 of Age of Majority Act 1971 – 18
years old ★ Case: Che Som (unsound mind was proven)
2. Refer to Section 12 CA1950
3. Not bankrupt ❖ The law wants to protect these people (minors & people of
unsound mind) from doings of fraud by those with bad
Section 12 – What is a sound mind …
intentions
➢ More info @ Sound Mind subtopic
General Rules of Capacity Exceptions to the General Rule

● CA1950 is silent abt the validity of a contract entered into
by non-competent parties Marriage Contracts – Law Reform (Marriage & Divorce)
● Hence, Malaysia looks to cases in India (similar laws) Act 1976
Case Mohori Bibee v. Dharmodas Ghose Case Rajeswary & Anor v Balakrishnan & Ors
➢ Mortgage – money lender – minor – void
Facts ● Parties of this case were Hindus – P1 and
Notes Sections 10 and 11 of Indian Law is the same D1 completed a betrothal ceremony – it was
as CA1950 – an agreement entered into by an arranged marriage by P2 and D2 (P2 and
parties, including a minor, who are not D2 are fathers of P1 and D1)
competent to contract was void ● D1 rejected his promise to marry P1 – P1
claimed damages against D1 for breach of
M’sian 1. Tan Hee Juan v Teh Boon Keat promise to marry
cases ➢ held that the transfer of land executed by ● D1 pleaded – claimed the incapacity of P1 to
that an infant were void enter into a contract to marry (P1 was a
referred 2. Government of Malaysia v. Gurcharan minor at that time)
this case Singh & Ors
3. Leha bte Jusoh v. Awang Johari bin Decision ★ Contract to marry does not fall under general
Hashim principle of the case of Mohori Bibee
(principle of contracts with minors are void)
TLDR; contracts made by minors (or any non-competent

parties) are void1 HOWEVER!! Law Reform (Marriage & Divorce) Act 1976
superseded the general principle of “marriage contracts by
1. Section 2(g) CA1950 – agreements not enforceable by law are minors are not void”
void contracts
Sect 10 of LR(M&D) 1976 – Marriage solemnised in M’sia is Employment Contracts – Children and Young Persons
void if date of marriage of either party is under 18 years old (Employment Act 1966)
★ A female who completed her 16th year may apply for
a licence granted by the Chief Minister under s21(2) of
Sect 13 Any child1 or young person2 may enter into a
the Act
contract of service and be employed – said
★ Sect 21(2) – marriage solemnised with a minor is valid
child or young person cannot be an employer –
if there is discretion by Chief Minister, even if the
may sue as plaintiff without a guardian
female party of the marriage is under the age of 18,
but not if is below 16 years 1. Below 14 years old
➢ This Act is inapplicable to Muslims who married under 2. Not a “child” but not more than 16 years old
Muslim Laws – Aboriginal customs of Sabah and Sarawak
is acknowledged by this Act ❖ Concern of this provision is it legitimises
➢ Although minimum age of marriage is 18 years old, under child labour
Sect 21(1) – parties who are under 21 years old needs a ❖ But, it protects the rights of minors and
consent in writing by their father (unless the court decides gives recognition to such contracts, and
it is ok) gives the minor rights to enforce the
contract and sue for wages
Sect 18 Minors will not be relieved of any rights, duties,

or liabilities conferred or imposed upon him by
the provisions of any other written laws
Scholarship Agreements – Children and Young Persons

(Employment Act 1966)
❖ More info @ Necessaries subtopic
Necessaries (of a minor) Section 4(a) of the Contracts (Amendment) Act 1976 –
❖ No definition in CA 1950 – refer to common law cases Scholarship agreements
❖ Necessaries: things which are essential to the existence ● Scholarship agreements entered by minors are valid when
and reasonable comfort of the minor – not luxurious items the scholarship, award, bursary, or loan, is granted by the
❖ the law allows a minor to enter into a contract for federal or state government or an educational institution
necessaries – responsible to reimburse the person who such as a university
have furnished him with the necessaries
■ Case: Gurcharan Singh (scholarship agreement) Other types of necessaries
Case Government of Malaysia v Gurcharan Singh Type Clothes (necessaries)
Facts ➢ Pl to grant the Def a scholarship to study at Case Nash v Inman (can be used for definition of
the Malayan Teachers Training Institution – necessaries)
agreement that Def will serve the
government in consideration for training as a Facts ➢ Cambridge undergraduate, the son of an
teacher architect – was supplied with clothes – 11
➢ Duration of the contract is 5 years – Def ‘fancy waistcoats’ – total value of $122
served only 10 months for 3 years
Decision Contract was not enforceable – minor was
➢ Def was in a minor state during the time of
already adequately supplied with clothes – while
the contract.
clothes are a necessity, ‘fancy waistcoats’ are
Decision ➢ Contract entered into by Def was an invalid luxurious items
contract – he was a minor at the time of
issue
➢ However, in view of the exception to the
necessaries claim, Def was liable for
reimbursement of the amount spent on his
education and training as being spent on the
necessaries
!! Necessaries which contains harsh and burdensome terms Effect of agreements entered into by minors
would not be enforceable against the minor ➢ The agreement/contracts are void/unenforceable but the
law provides for some restitutionary relief
Case De Francesco v Barnum
➢ Gives minors benefit, thus needs reimbursement
Facts ● Def was the minor – entered into an Section Person incapable of entering into a contract1 (or
apprenticeship for 7 years (stage dancing) 69 of anyone whom he is legally bound to support2) –
● Terms of the contract were: CA1950 supplied by another person with necessaries
○ Minor would not accept any other suited to his condition in life3 – entitled to be
professional engagement reimbursed
○ Would not marry for 7 years unless with
permission from her Master 1. Minor, person of unsound mind
● Def (minor) got into a professional 2. Married, or have a child as a minor
engagement to stage dance with a third 3. Food, clothing, education, accommodation
party
Illustrations
Decision Provisions of the contract were unreasonable – (a) A supplies B (mentally disordered person)
contract not enforceable with necessaries – A is entitled to be
reimbursed from B’s property
(b) A supplies the wife and children of B
(mentally disordered person) with
necessaries – A is entitled to reimbursed
from B’s property
Section 66 of CA1950
Case: R Leslie Ltd v Sheill
(minor lied abt his age contract void – has to
restore/compensate the items)
Free Consent
Voidable [Definition] Why is the Section 10(1)

contracts Section 2(i) contract ● All agreements are contracts – if made by
● Voidable contract – an agreement voidable? the free consent of parties competent to
enforceable by law – at the option of one or contract
more of the parties to it – but not others
Section 13
Tldr;
● Consent → when two or more parties
i. a contract that’s initially valid
agree upon the same thing in the same
ii. one or more of the parties have the right to
sense
rescind (pull away) to render it invalid
iii. until then, it still remains a valid contract Section 14
● Consent is said to be free when it is not
[What contracts are voidable?]
caused by—
Section 19(1)
(a) Coercion – sect 15
● When consent to an agreement is caused
(b) Undue influence – sect 16
by coercion, fraud, or misrepresentation →
(c) Fraud – sect 17
contract voidable
(d) Misrepresentation – sect 18
Section 20
(e) Mistake – sect 21, 22, 23
● When consent to an agreement is caused
by undue influence → contract voidable
❖ Barton v Armstrong
○ the contract is voidable – the person threatened had
to make the decision whether to contract in
unacceptable circumstances
Coercion Coercion (ft. Economic Duress)

➢ English law refers coercion as duress
➢ Economic duress—
Sect 15 ● Committing or threatening to commit an act
○ coercion of the will of one party to a contract by
forbidden by the Penal Code
the other – the consent is induced by pressure
● Unlawful detaining or threatening to detain
which is not legitimate
● With intention to cause someone to enter
○ Contract becomes voidable
into a contract
❖ Contract becomes voidable – refer Sect 19(1) / Sect 2(i)

Case North Ocean Shipping Co Ltd v. Hyundai
Construction Co Ltd
Case Chin Nam Bee Development Sdn Bhd
Facts ● Def (shipbuilders) – agreed to build a tanker
Facts ● Respondents were purchasers of certain for Pl – price of over $30 million – payable in
houses – to be constructed by the appellant five instalments
● Respondent had signed a sale and purchase ● First instalment – US Dollar fell sharply – Def
agreement – purchase house for RM29.5k told that additional 10% has to be paid – or
● Respondents were asked to pay and lese the would not deliver the tanker on time
additional sum of RM4k – or else the house ● Pl made a lucrative contract to charter the
will be taken away tanker – had little choice but to agree
Decision ➢ Respondent claimed a refund of the Decision ➢ Pl failed to claim the 10% back – there was
additional sums paid affirmation of the agreement by them
➢ payment was not voluntary made – bcs of the ★ However, by principle, the 10% is voidable
threat by the appellant
Sect 76 Person who rightfully rescinds a contract →
Sect 73 Money paid or delivered by mistake, or undue entitled to compensation for any
coercion – must be returned/repaid damage/additional charges
Undue Influence Categories

1. Special relationships
● Undue influence presumed to exist
Definition General Definition
● Examples—
● unfair and improper conduct – some
○ Doctor and patient
coercion from outside – some
○ Guardian and ward
overreaching – some form of cheating –
● Plaintiff has to show that there was a relation of trust
some personal advantage obtained by the
and confidence between him and the other party
guilty party
Section 16 2. No special relationship

(1) One of the parties is in domination – uses ● the law will raise a presumption of undue influence –
that position to obtain an unfair advantage establish a confidential relationship on the facts
(2) A person is deemed to be in a position to ❖ Section 16(1) – for cases of actual undue influence
dominate— ❖ Section 16(2) – for cases presumed undue influence
(a) He holds real or apparent authority ❖ Section 16(3) – deals with burden of proof
over the other
(b) He makes a contract with a person
whose mental capacity is affected by
reasons of age, illness or mental/bodily
distress
(3) If undue influence is claimed – the person

in position to dominate – has to prove that
the contract was not induced by undue
influence
❖ Contract becomes voidable – refer Sect 19(1) / Sect 2(i)

Q: How does the Plaintiff claim for undue influence?

Case Allcard v Skinner
● At the time of contract, there was already a close
Facts ● Pl was introduced by her spiritual adviser to relationship – Def was in a dominating position
the Def (Lady Superior of the ‘SisTers of the ● Def made use of his dominating position
Poor’) ● There was unfair advantage to the plaintiff
● 3 years later – Pl joined the sisterhood –
required to surrender all he property (she Q: How to prove there is no influence exercised?
took a vow of poverty) – remained as a sister ● The dominant party has to establish this factor
for 8 years – those years she had transferred ○ Showing the transaction was the result of free
property worth £7k bcs of the sisterhood exercise of the victim’s independent will
○ Victim did receive independent legal advice
● 6 years later after she left the sisterhood – Pl
○ Victim understood what he was doing
claimed the return for the remaining money
Decision There was undue influence – claim failed bcs Pl

brought it up only after 6 years
★ Seeking relief on the ground of undue

influence is not for the transaction, but to
save people from being victimised
Fraud Case Wei Tah Construction (B) Co Sdn Bhd
Facts ● Pl purchased a land from Def – Def states

Definition General Definition
that the land is “near Sibu Airport”
● The maker knows that it’s wrong
● After buying the land, Pl found out it was
Section 17* false
Acts that may constitutes as fraud—
Decision Claim failed – Pl could find out the truth himself
(a) Suggestion of untrue fact
(b) Active concealment of a fact
(c) No intention to perform promise (a) Suggestion of untrue fact
(d) Act fitted to deceive ● Section 17(a) / Illustration (a)
(e) Any act or omission declared to be ● Suggestion as to a fact that is untrue – was made by
fraudulent a person who knows that it is untrue
* more details and cases will be mentioned after this
❖ May also refer with Section 3, 4, 5, 6 Case Kheng Chwee Lian v Wong Tak Thong
❖ Contract becomes voidable – refer Sect 19(1) / Sect 2(i) Facts ● Respondent bought a piece of land from
■ Exception— if victim has the opportunity to find out appellant and paid the purchase price – was
abt the fraud, then the contract is not voidable induced to to sign another agreement – was
■ Caveat emptor – the buyer alone is responsible for allocated a smaller portion of land than the
checking the quality and suitability of goods before a earlier agreement
purchase is made
Decision Respondent had been misled into signing the
second agreement
(b) Active concealment of facts (c) No intention to perform promise

● Section 17(b) / Illustration (c) and (d) ● Section 17(c)
● Active concealment of fact by the person who knows ● A promise was made – no intention to follow up the
it is false promise
Case Tay Tho Bok v Segar Oil Palm Estate Case Datuk Jagindar Singh
Facts ● Pl bought pieces of land from Def – found Facts ● Pl alleged that her land was transferred to
out a part of the land was used for water the second Def – later to the third Def –
pipelines and transmission cables – Pl through fraud from her solicitors (first and
argued and asked to reduce the purchase second Def)
price
● Def refused – said he did not know abt this Decision Fraud was proved – def did not have intention to
perform the promises made to the Pl
Decision Def’s actions were fraud – Def should know abt
it bcs he owns the land
(d) Act fitted to deceive
● Section 17(d)
● Case: Kheng Chwee Lian v Wong Tak Thong
(e) Act or omission declared to be fraudulent

● Section 17(e)
● The law specifically declares an act or omission to be
fraudulent
Q: Does silence amount to fraud? Misrepresentation

➢ a representation that is not true
Sect 17 Explanation
Mere silence as to facts does not constitute as Types of misrep under common law
fraud
1. Fraudulent
❖ Refer to illustration (a) – (d) of Sect 17 (as examples)
● Made with the intent to deceive
Exceptions—
2. Innocent
i. There exists a duty to speak
● Maker honestly thought the info was true when it was
ii. Silence is equivalent to speech
false
Case Haji Ahmad Yarkham 3. Negligent
Facts ● Marriage was arranged between two Case Hedley Bryne v Heller
persons – father of the groom conducted the
Facts ● Pl were interested in working with Easipower
negotiations on behalf of his son – third party
(a third party) – Pl sought a financial
on behalf of the bride
reference from their bank (the Def)
● The father discovered that the bride suffers
● Def provided a satisfactory report for
epileptic fits – claimed that the third party
Easipower – report was incorrect and
should have disclosed this fact
inappropriate
Decision There was a duty to disclose ● Pl suffered losses following non-payment
from Easipower
Decision Def was not liable bcs they had a disclaimer

Q: Can silence amount to misrepresentation?

Sect 18 Misrepresentation includes—
(a) Positive assertion – Maker honestly thought
the info was true when it was false Case Double Acres Sdn Bhd v Tiarasetia Sdn Bhd
(b) Any breach of duty – without the intent to
deceive Notes Abdul Malik Ishak J—
(c) Causing a party to an agreement to make a ● Distinct difference between fraud and misrep
mistake – the intention of the maker
● Similar to fraud – silence may amount to
misrepresentation under certain situations
Case Chuah Tong Yeong v Kuala Lumpur Golf &
Country Club
Facts ● Def issued a brochure – listed the facilities

and features of the club – Pl paid a sum of
RM90k to become a member
● Pl filed a complaint abt the non-existence of
some of the facilities listed – wanted a
recession of the membership, and claim for
damages
Decision Def breached their representation – but it

caused to actual loss or damage – not all
facilities are misrepresented – Pl awarded
compensation, but no recession
Effects and Relief of Fraud and Misrepresentation Mistake

General Definition
➢ An incorrect understanding by one or more parties to a
Sect 19 (1) When consent to an agreement is due to
contract – can be used as grounds to invalidate an
coercion, fraud, or misrepresentation –
agreement
contract becomes voidable
➢ Three types of mistake in contract (common law)—
(2) Person whose consent was caused by fraud
○ Common mistake
or misrepresentation – may insist the
○ Mutual mistake
contract be performed
○ Unilateral mistake
Sect 65 When a person rescinds a voidable contract –
the other party does not need to perform any Common mistake
promise ● Each party are mistaken on the same matter or
fundamental fact
Sect 73 Money paid or delivered by mistake, or undue ● Contract is void ab initio (from the beginning)
coercion – must be returned/repaid
Sect 76 Person who rightfully rescinds a contract → Case Courturier v Hastie

entitled to compensation for any
Facts ● A contract was made for the sale of a cargo
damage/additional charges
of corn – transit from Salonica to the UK
● Unknown to the parties, the cargo had been
❖ Case: Chin Nam Bee Development Sdn Bhd fermented – master of the ship had disposed
❖ Case: North Ocean Shipping Co Ltd v. Hyundai of it to a third part
Construction Co Ltd ● Seller claimed the price of the cargo
❖ Case: Haji Ahmad Yarkham
Decision Buyer was not liable – nothing to be sold under
the contract
Mutual mistake Unilateral mistake

● Each party misunderstands the other’s intention – are at ● Only one party is mistaken – one party makes a
cross purposes (no correspondence) fundamental mistake, to the knowledge of the other
● For mistake to be operative – mistake must have been a ● Contract not void
fundamental nature
Case Taylor v Johnson

Case Raffles v Wichelhaus
Facts ● Appellants exercised an option to buy a
Facts ● Parties agreed to sell and buy a shipment of piece of land (10 acres) – price specified in
cotton cargo – due to arrive “ex Peerless” the option & contract was $15k for 10 acres
from Bombay ● Before completion of sale – applicant was
● Unknown to both parties – two ships named made by the respondent – rectify or set
Peerless from Bombay – one in October and aside the contract – respondent had
another in December intended the price to be $15k per acre
● Seller thought it was the December ship, ● Evidence disclosed that land was worth
buyer thought it was October ship $50k-$195k – appellant knew the respondent
was labouring under serious mistake – took
Decision Buyer was not entitled to accept the December deliberate steps to make sure mistake was
cargo not discovered
Decision Contract was not void under common law –

would be set aside on equitable principles
Mistake as to Identity ➢ Q: was the innocent party prepared to deal with the
➢ One party is fraudulent and parades as somebody else – person present before him?
to deceive the other and the other party is unaware of this ○ There would be a contract even if the other party was
➢ Considered a variety of unilateral mistake a rogue and misrepresented himself
➢ If innocent party wants to claim operative mistake, he has
to prove— Effect of mistake in identity—
○ The intention was to deal with someone other than ○ Voidable for fraud and misrepresentation – may also end
the person whom he transacted up as void ad idem
○ The other party knew of this intention
○ Had taken reasonable steps to verify the identity
○ The identity of the other party was important to him in
the transaction
Case Cundy v Lindsay
Facts ● A rogue offered to buy goods from the Pl

pretending to be ‘Blenkiron & Co’ (a
reputable business)
● He signed a letter that could be read as
‘Blenkiron’ – Pl dispatched the goods, rogue
sold them to the Def (took them in good
faith)
Decision Pl sued the Def in conversion

Mistake under the Contracts Act 1950

Case United Asian Bank Berhad v Chun Chai Chai
Mistake of fact by both parties Facts ● Pl entered into a tenancy agreement with
Def – use the premises to carry out their
Sect 21 Both parties in an agreement are under mistake banking business
as to a matter of fact essential to an agreement ● Pl had trouble obtaining electricity – made
→ void agreement multiple attempts to obtain electricity – was
told that the “basic infrastructure” was not
sufficient and substation needs to be
Case Sheikh Brothers Ltd v Ochner constructed
Facts ● Appellant granted first respondent a licence Decision Common mistake – matter of fact was the
(later assigned to the second respondent) – requirement of a substation
licence to cut, process, and manufacture all
sisal growing on certain lands Mistake of fact by one party
● Agreement had a clause – licensee to
manufacture and deliver for sale sisal fibre in Sect 23 Contract not voidable → was caused by one of
average minimum 50 tons per month the parties to it being a mistake as to a matter of
● Argument started – parties believed that the fact
leaf potential of the sisal area would be ❖ Applies to unilateral mistake – one party only
sufficient to permit the manufacture and
delivery Mistake of law
Decision Mistake fundamental to a matter of fact essential Sect 22 Contract not voidable → caused by a mistake as
to the agreement – mutual mistake to any law in force in Malaysia
❖ “Ignorance of the law is no excuse” — person is expected

to know the laws of the nation when making contractual
dealings

Contracts LAW436 Notes

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LAW436 Law of Contracts I Notes

Definition of Contract Definition of offer

Provision Section 2(h) Determining an offer

Elements of a Contract Facts ➢ Advertisement – £100 – influenza – used in

How offers are made

❖ Offer may be made to one specific person or to more

Sect 3 Communication, acceptance, and revocation of

4. Offer may be revoked before acceptance

Facts ● Def offered to buy Pl’s house in writing –

Decision Original letter/offer is not binding – revocation

5. Offer must be distinguished from preliminary negotiations

Case Harvey v Facey

Facts ● Pl sent a telegraph asking if the

Invitation to Treat (ITT)

2. Display of Goods 3. Tenders

Case Fisher v Bell

Facts ➢ shopkeeper displayed in his shop window –

Decision Was not an offer for sale

Principle Notice of auction

Case Harris v Nickerson 5. Application for Club Memberships

Facts ● Def an auctioneer – advertised items to be

Principle Auction “without reserve”

Case Warlow v Harrison

Facts ● Def and a Mr B were auctioneers in a

Acceptance ❖ Counter-offer is different than a mere request for info

Section When offeree accepts a proposal, it becomes a Case Stevenson v Mclean

Acceptance must be absolute and unconditional

2. Terms of offer amended at time of acceptance

3. “Subject to Contract” Acceptance Must Correspond to Offer

❖ Prism Leisure Sdn Bhd – signing a contract may be just

Case Fitch v Snedaker Case R v Clarke

Section Acceptance by performing conditions, or receiving

Decision ➢ As long as she came within terms of the

Modes of Accepting Acceptance 2. Acceptance by Telegram/Post

Sect 4 (2) Communication of acceptance is complete 3. Acceptance by Telex/Telephone

Decision ➢ postal rule did not apply for

4. Acceptance by Conduct 6. Acceptance by Silence

Section Revocation of acceptance may be done before

Section Communication of revocation is complete when–

Tldr; only complete as against the person to

Case Bryne & Co v Leon Van Tienhoven & Co

Facts ● Def posted a letter on October 1, addressed

Decision revocation was inoperative until October 20

Intention to Create Legal Relations Domestic/Social Agreements

Case Esso Standard Malaya

Notes Where a contract is formed through

Exceptions – Domestic/Social Agreements

Exceptions – Business/Commercial Arrangements

➢ Uncertain terms Letters of Intent

Consideration Requirements of Consideration

❖ Pollock v Mulla – consideration is sufficient as long as

2. Mutual promises and Executory Consideration 3. Executed Consideration

General Rules of Consideration

1. Sufficiency vs Adequacy Facts ● Def contracted with a company

Case Phang Swee Kem v Beh I Hock

Notes ➢ The court referred to Explanation 2 of section

2. Agreements without consideration is void

Case Kwan Teck Meng v Liew Sam Lee

Facts ● Father executed a memorandum of transfer

Decision The transfer was consideration of love and

[Under Common Law] 2. Pre-existing Contractual Duty

3. Pre-existing Contractual Duty to a Third Party Pinnels’s Rule and Section 64