ELEMENTS OF A CONTRACT

Basic Elements:
 Offer

BUSINESS LAW  Acceptance

 Intention to Create Legal Relations
-OFFER-
 Consideration
 Certainty
 Capacity

OFFER OFFER (cont.)

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 S 2 (a) Contract Act:  GIST: 2 points:-

 or a proposal: “…when a person signifies to another
his willingness TO DO/TO ABSTAIN from doing
anything, with a view to obtaining the assent of that
other to the act/abstinence, he is said to make an
offer.”
 (i). A signification of willingness to enter into a
contract based on certified requirements;
 (ii) Intention to bind the parties of the contract

OFFER (cont.) OFFER (cont.)

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 Examples:???  Ways to make an offer:

(i) Expressed – oral; written

(ii) Implied – actions/behaviour

S 2 (c): a promisor & promisee

S 2 (b): when a promisee accepts an offer, the offer
becomes a promise
 OFFER (cont.) OFFER (cont.)
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 Types of an offer: When J knows that the goods are not supplied by BH,
(i) To a specific person J refused to pay for the price.
Boulton vs Jones B sues J for the price.
F: B is taking over BH’s business. Before that, J deals
with BH. So, J orders goods from BH & B supplies Issue: Does J make an offer to B?
the goods to J without telling that the business has
been changed hands.

OFFER (cont.) OFFER (cont.)

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Held: In this case, the order has been made in writing (2) To a specific group of persons
to BH and B has supplied the goods to J.
So, B has no rights to claim from J b’coz J never makes E.g: Is this course offered to all UPSI students?
any offer to him.

OFFER (cont.) OFFER (cont.)

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(3) To a specific group of persons F:

A general offer is made to the public and it may be Issue:
accepted by anyone who fulfils the terms & Held:
conditions (requirements in the offer)

Carlill vs Carbolic Smoke Ball Co

 INVITATION TO TREAT INVITATION TO TREAT (cont.)
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 Invitation to treat (comes from sellers)  E.g:

 A seller invites a potential buyer to make an offer
 A person who makes an invitation can accept or (i) Advertisements
reject the offer – still nego (ii) Self-service stores
 The person who makes the invitation has no (iii) Auction
intention to bind himself with the nego.
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INVITATION TO TREAT (cont.) The Communication of An Offer

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 Principles:  S 3: “... to have been made by any act/omission of

 i. Options available for owner/seller. the party proposing by which he intends to
 ii. When the offer is created?
communicate the proposal or which has the effect of
communicating it...”

The Communication of an Offer (cont.) The Communication of An Offer (cont.)

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 The communication of an offer is presumed to be  S 4(1): the communication of an offer is complete

made when the offeror intends to communicate the
offer effectively (by oral / writing)
 Why the offer must be communicated?
 So the potential promisee will:
i. Know about the offer
ii. Can make options (to accept/reject)
when it comes to the knowledge of the person to
whom it is made.
 Effective once it is communicated to the offeree by
the offeror.
 The Communication of An Offer (cont.)
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 Requirements of an offer: 3 Cs + 1 C
i. Clear, complete & conclusive
ii. Communicated.
The Communication of An Offer (cont.)
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Ahmad Meah lwn. Nacodah Marecan
I: Can NM do that?
H: ???
Offer: Other Issues (cont.)
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(2) Potential Offerer fulfills the terms of offer after
knowing about the existence of the OFFER but he
fulfills the terms not b’coz of wanting the rewards.
Williams vs. Carwadine (1833)
P: ???
The Communication of An Offer (cont.)
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i. Clear, complete & conclusive
Ahmad Meah lwn. Nacodah Marecan
F: NM to AM: “… Build a house suitable for me”. AM
then built the house as what he thought will suit
NM. Later, when the house is ready, NM refused to
pay the price b’coz the house does not suit him.
Offer: Other Issues (cont.)
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(1) Potential Offerer fulfills the terms of offer without
knowing about the existence of the OFFER
Fitch vs. Snedaker (1868)
P: Rewards may not be claimed by a person (offeree)
who doesn’t know about the offer b’coz there’s no
consensus btw the offerer & offeree.
Offer: Other Issues (cont.)
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(3) Counter Offer
Tinn vs. Hoffman & Co. (1873)
F: On 28/11/1871, H wrote to T to sell 800 tonnes (steel)
with a certain price. On the same day, T wrote to H to
buy the 800 tonnes (steel) with a certain price too.
Both letters crossed in the middle of the journey.
Q: Was there any communication of offer?
H: Counter offer: the communication of offer doesn’t exist
– both parties did not know the other’s offer.
 S. 4(2)(a):
Offer: REVOCATION (cont.) the communication26of an acceptance is
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Q: When?
A: S 5(1): a proposal may be revoked at any time
before the communication of its acceptance is
complete against the proposer, but not
afterwards.
complete:
 (a) as against the proposer, when it is put in a course
of transmission to him, so as to be out of the power
of the acceptor;
 (b) as against the acceptor, when it comes to the
knowledge of the proposer.

S. 4(3):
the communication of a revocation
is complete:
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 (a) as against the person who makes it, when it is put
into a course of transmission to the person to whom
it is made, so as to be out of the power of the person
who makes it; and
 (b) as against the person to whom it is made, when it
comes to his knowledge.
 S4 (3) applies to only communications using posts
(mails), telegrams etc. NOT by oral; telephone; telex;
SMS; fax
 Q: Muslim marriage : revocation via SMS: ???

Offer: REVOCATION (cont.) Offer: REVOCATION (cont.)

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Q: How? Q: How?
A: 4 ways that a proposal may be withdrawn: A: 4 ways that a proposal may be withdrawn:

i. Communicating the notice of revocation by the
proposer to the party to whom the proposal is
made. S 6(a)
Byrne & Co. vs. Leon Van Tienhoven (1880)
ii. Lapse of time prescribed for its acceptance OR if
not time prescribed  due to the lapse of a
reasonable time.
Ramsgate Victoria Hotel Co. vs. Montefiore
(1866)
 Offer: REVOCATION (cont.) Offer: REVOCATION (cont.)
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Q: How? Q: How?
A: 4 ways that a proposal may be withdrawn: A: 4 ways that a proposal may be withdrawn:
iv. The death / mental disorder of the proposer if
iii. The failure of the acceptor to fulfill a condition the fact of the proposer’s death/mental disorder
precedent to acceptance. comes to the knowledge of the acceptor before
Hyde vs. Wrench (1840) acceptance.
Bradbury vs. Morgan (1862)