BTW1042 - MALAYSIAN BUSINESS LAW ASSIGNMENT (SEM.

2, 2015)
Part A
Introduction
The issue at hand is whether or not Beatrice and Jackie have entered into a contract in
relation to the piano.

Offer
The issue that should be dealt with is to determine whether Beatrice’s advertising is an
invitation to treat or an offer. An invitation to treat is defined as an expression inviting a
person to whom it is made to make the proposal. On the other hand, an offer is a proposal to
enter into an agreement that expresses the intent of the person making the offer to form a
contract. An offer and an invitation to treat is not the same, an invitation to treat is not an
offer, but rather is an offer to consider offers, instances which are generally regarded as
invitations to treat include auctions, advertisement, catalogues, price list and goods displayed
in shop windows and shelves. Advertisements of goods for sales are normally interpreted as
invitation to treat, a fine example would be in the case of Partridge v Crittenden 1, where
Partridge advertised live wild birds for sale in a magazine and was charged with offering live
wild birds for sale, and it was concluded that the advertisement was only an invitation to treat
because nowhere was there any indication of an expression of intention to be bound.
However, if it is clear in the circumstances that a party intends their words or conduct to
constitute an offer, then the court will be prepared to construe it as such. For example, in
Carlill v Carbolic Smoke Ball Co Ltd 2, the advertisement of a unilateral contract was held to
be an offer, because they advertised that they would offer $1000 to anyone who still had
influenza after using the remedy for a fixed period, because of this the plaintiff was entitled to
$1000 as she accepted the offer made to the world at large. Relating it back to the question,
because Beatrice was advertising it on newspaper, this means Beatrice is only giving an
invitation to treat and not an offer. When Jackie called Beatrice on 12 August and offered to
pay Rm8000 when the original price is RM10000, it is merely just an offer to Beatrice.
The following issue that arose was Beatrice making an offer back to Jackie, stating that she
will take RM9,000. This means Beatrice made a counter offer to Jackie, however it does not
constitute as acceptance of Jackie’s offer. Referring to the case of Hyde v Wrench 3, whereby

1 [1968] 1 WLR 1204.

2 [1892] EWCA Civ 1
3 Hyde v Wrench (1840) 49 ER 132
the plaintiff sues the defendant for refusing to sell his farm at the price of 1000 pounds after
the plaintiff counter offered 950 pounds and was rejected by the defendant, it did not go
through since there wasn’t a binding contract as Plaintiff has already rejected the original
offer of 1000 pounds by the counter-offer of 950 pounds. Counter offer is an offer made in
response to a previous offer by the other party during negotiation for a final contract, making
a counter offer automatically rejects the prior offer, and requires an acceptance under the
terms of the counter offer or there is no contract. In section 2b of the contract acts 1950 4, it
states that “when the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted: a proposal, when accepted, becomes a promise”, and for a
proposal to be converted into a promise, the acceptance of that proposal must be absolute and
unqualified. Because Beatrice did not accept the offer, but made a counter offer to Jackie,
there will be no legal binding between them. At the same time, Beatrice also made a
gratuitous promise to Jackie stating that she would give Jackie until close of business
(5.30pm) on 19 August to make up her mind, meaning Jackie can choose to accept the offer
of Rm9000 at any time up till 5.30pm on 19 August. However, Beatrice has no obligation to
keep the promise as it was a gratuitous promise, this is because there was no consideration
involved in making the agreement binding. A gratuitous promise is one, the object of which is
for the benefit of the person with whom is made. It is a contract in which one party promises
to do something without receiving anything in exchange, in such contracts, only one party is
benefiting from it. To transform an agreement into a legally binding contract, considerations
has to be made which is of benefit to the promisor or detriment to the Eromise. This is
because consideration is what distinguishes enforceable promises from those promises which
are gratuitous as courts will not enforce gift or gratuitous promises but they will enforce
promises which are supported by consideration.

When Jackie asked Beatrice whether if she bought the piano, would she be able to
leave the piano at Beatrice’s house for a month until she moved into the new apartment was
only an acquisition of information. An acquisition of information, does not amount to an
acceptance as acceptance has to be absolute or unqualified, it also does not amount to making
a counter-offer and does not terminate the original offer. This can be seen in the case of
Stevenson Jaques v Mclean5, whereby the defendant offered to sell iron to the plaintiff at 40
shillings a ton, and plaintiff sent a telegram asking if he could have it on credit terms, but

4 Section 2(b) of Contracts Act 1950

5 [1880] 5 QBD 346
defendant has already sold iron to another party, and then defendant was sued for breach of
contract but it did not go through because the plaintiff’s telegram was only a acquisition of
information and was not a form of acceptance. Relating it back to the issue, as Jackie was
only making an acquisition of information, therefore there is no legal binding between them.

Communication
On 16th of August, Jackie posted a letter of acceptance to Beatrice which was only received
on 19th of August at 4.30pm. But on the 17th of August, Beatrice sent Jackie an email wanting
to withdraw the offer. Is the contract concluded for Beatrice before she withdrew her offer?
In contracts act 1950 section 4 (2), postal rule defines that the communication of acceptance
is 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. A contract will be formed for the proposer as soon as the letter of
acceptance was posted, and a contract will be concluded for the acceptor as soon as the
acceptance came to a knowledge to the proposer. In the case of Adams v Lindsell (1818) 6,
Lindsell sent a post to Adams to sell some wool during September 2, 1817 and requested for a
reply. Due to addressing the letter incorrectly, Adams only received the letter by September 5.
Immediately Adams posted his letter of acceptance to Lindsell and was received on
September 9. Unfortunately, the wool was sold to other party on September 8. The English
Court held that in the case of postal acceptance, acceptance is certain at the time the letter
was posted. There was a breach of contract for Lindsell.

According to Beatrice and Jackie’s case, Jackie wrote a letter agreeing unconditionally to
Beatrice, and from here contract concludes for Beatrice, according to postal rule, she will
then not able to withdraw her offer anymore, any such act will be taken as breach of contract.
As for Jackie, contract will be concluded for her as soon as Beatrice have acknowledged her
acceptance. However, postal rule will not apply when the letter was not properly posted or
addressed and if the express terms of the offer exclude the postal rule; the case of Holwell
Securities v Hughes (1974)7, Hughes did not received any postal acceptance and had already
addressed that acceptance must be notice in writing for him in order to complete the contract,
thus Holwell’s sue against Hughes with postal rule did not apply.

6 [1818] 1 B & Ald 681

7 [1974] 1 WLR 155
Acceptance must be absolute, according to contracts act 1950 section 7(a), in order to convert
a proposal into a promise the acceptance must be absolute and unqualified. With Jackie’s
unconditional acceptance, hence her acceptance was absolute and qualified.

Revocation
The next issue would be whether the revocation of offer by Beatrice has been effectively
communicated. An offer may be revoked by the offeror at any time before acceptance: Payne
v Cave8. However, once a valid acceptance has been made, offeror is bound by the terms of
the offer. An offer cannot be revoked after acceptance. In Payne v Cave 9, it was held that
Cave’s bid was an offer and could be revoked before acceptance which in this case, before the
fall of the hammer and there was an effective revocation by Cave. In this case, Beatrice is
bound by the terms of her offer. Beatrice has told Jackie that she would keep her offer open
until close of business (5:30p.m.) on 19 August for Jackie to make up her mind. But Beatrice
changed her mind about selling her grand piano and sent Jackie an e-mail for withdrawing
her offer to sell the piano on 17 August. Therefore, Beatrice has terminated her offer to
Jackie. However, a revocation of offer must generally be communicated to the offeree for it to
be effective. 10 The requirement of communication can be deduced from the decision in Byrne
v Van Tienhoven11, in which it was held that a telegram containing a revocation did not have
effect until it was received by the offeree. In this case, Beatrice sent Jackie an E-mail
regarding withdrawal of her offer to sell the piano on 17 August. But Jackie did not see the e-
mail until she returned home and turned on her computer on 18 August.

Under Section 21(b) of The Electronic Commerce Act 2006, an electronic message is deemed
received where the addressee has not designated an information processing system for the
purpose of receiving electronic messages, when the electronic message comes to the
knowledge of the addressee. In application to this case, the e-mail that Beatrice sent to Jackie
on 17 August to revoke her offer will only be valid when it comes to the knowledge of Jackie
when she opens the e-mail on 18 August.

8 [1789] AER (Rep) (1775-1802) 492.

9 [1789] AER (Rep) (1775-1802) 492.
10 Chitty on Contracts (H G Beale gen ed) (Sweet & Maxwell, 30. Ed, 2008) at p190.
11 [1880] 5 CPD 344.
As seen in the case of Byrne v Van Tienhoven12 the defendant’s revocation was inoperative
because it did not reach Byrne until acceptance has been made. In this case, Jackie will still
be able to accept the offer on 17 August. At the time of the acceptance, Beatrice has decided
she no longer wishes to contract with Jackie as she already changed her mind on selling her
grand piano to Jackie. Beatrice’s offer, which was not due until the close of business 19
August, remains open to Jackie and acceptance has been made from Jackie to Beatrice on 16
August in response to the offer made by Beatrice of selling her grand piano. Therefore, postal
acceptance rule applied when Jackie send the letter of acceptance to Beatrice.

The case of Dickinson v Dodds13 suggested that it does not matter how the revocation comes
to the attention of the offeree provided that the offeree is aware that the offer has been
withdrawn, it cannot be accepted. In this case, Jackie is unaware that the offer has been
withdrawn as she only read the e-mail regarding the termination of offer on 18 August after
she posted the acceptance letter on 16 August; revocation of offer is not effective as it is
communicated after the acceptance made according to section 5(1) of Contract Act 1950.
Therefore, in this case, Beatrice has breached the contract, and there is a damage of RM1000
of Jackie because she already booked a piano removalist, which is non-refundable deposit, to
pick up and transport the piano as soon as she returned from Singapore.

(1986 words)

Bibliography
12 [1880] 5 CPD 344.
13 [1876] 2 Ch D 463.
Chitty, J., & Beale, H. (2008). Chitty on contracts. London: Sweet & Maxwell.
Koffman, L., & Macdonald, E. (2010). The law of contract (7th ed.). New York: Oxford
University Press.
Peter, G. (2004). Business Law (12th ed.). Sydney, Australia: The Federation Press.
Trakic, A., Ramasamy, N., Cheah, YS., Andrews, P., Murugan, S., Vijayganesh, P &
Chandran, K. Law For Business. Selangor: Thomson Reuters Malaysia Sdn Bhd,
2014.
Trakic, A. (2014). Law for business. Subang Jaya, Selangor: Thomson Reuters Malaysia Sdn
Bhd.

Part (b)
Introduction
The issue is whether there is a breach of contract between Mark and the Sydney Athletic team
in the Australian league. Another issue is to identify the Sydney Athletic team’s rights and
remedies if Mark had breached the contract.

Term and Representation

A representation is defined as an unbinding comment made during the course of negotiations,
whereas terms is defined as statements which are promissory 14. Part of a contract is formed
by a term. Hence, a party is able to sue for a breach of it. On the other hand, a representation
does not form part of a contract. Therefore, a party cannot sue for a breach of contract if it
turns out to be untrue. The remedy will be for “misrepresentation” 15, which means that the
contract will be repudiated and there will be no claims for damages.
As a general rule, the courts will look into what was “intended” by the parties at the time of
making the statement. Oscar Chess Ltd v Williams16 was referred to by Gopal Sri Ram JCA
that a particular statement made in the course of negotiations leading to the making of a
contract is a representation or a term depends upon the intention of the parties and is to be
deduced from the totality of the evidence.
Mark and the Sydney Athletic team assumed that there was an obligation to perform an act in
exchange for the other party’s act. Hence, there is a bilateral contract between them. Mark
signed a three-year contract last year with the Sydney Athletic team with two years remaining
in the contract. The term that has been incorporated into the contract is that Mark will play
for the team for 3 years and that the Sydney Athletic team will pay him RM300,000 per year.

Condition and Warranty

A condition is defined as a vital term of a contract, the breach of which would go to the root
of the contract17. Therefore, the breach of a condition would entitle the innocent party to
repudiate the contract and to claim damages for any loss suffered.

14 See Brendan Sweeney, Jennifer O’Reilly and Andrew Coleman, Law in Commerce, 4th edn
(Australia: LexisNexis, 2010), at p239.
15 Section 18(a) of Contracts Act 1950
16 [1957] 1 All ER 325. See also Couchman v Hill [1947] 1 All ER 103 and Harling v Eddy [1951] 2
All ER 212
17 See Syed Ahmad Alsagoff, Principles of the Law of Contract in Malaysia, 3rd edn (Malaysia:
LexisNexis, 2010), at p 232.
The case on breach of conditions is Poussard v Spiers and Pond18, where Madame Poussard
entered into a written contract with Spiers and Pond’s where she was to perform as the lead
opera singer for three months. However, she became ill five days before the opening night
and missed the final rehearsals. When she had recovered, she approached Spiers and Pond to
be reinstated but they refused to have her back. She then sued them for breach of contract and
wrongful dismissal. The court decided that she breached the contract by failing to perform
during the opening night and the first few nights. This fundamentally changed the contract
which was initially signed between them. This amounted to a breach of a condition of a
contract which entitled Spiers and Pond to repudiate her contract.

A warranty is defined as a less vital term of a contract, the breach of which would not make
the contract fundamentally different from what it was before the breach. The breach of
warranty does not entitle the party to repudiate the contract, however, they can only claim
damages for any loss suffered.

The case on breach of warranty is Bettini v Gye19. The issue before the court was whether
there was a breach of condition or a breach of warranty. In the end, the court decided that the
plaintiff breached a warranty of the contract by failing to perform during the first few days of
rehearsal. Therefore, the defendant was not entitled to repudiate to contract.

In this case, there is a breach of condition in the contract rather than a breach of warranty.
This is because he is a professional basketball player and plays an important role in the team.
This is vital to the contract because his absence will cause a loss to the team. The remedy for
a breach of condition is that the party is able to repudiate the contract and/or gets damages up
to RM300,000 for a breach of contract as he left the team after a year.

Test to distinguish condition from warranty

A test to distinguish condition from warranty is the classical test. This test referred by the
learned judge in Ching Yik Development Sdn Bhd v Setapak Development Sdn Bhd 20 is the
situation whereby the courts decide the category of the term according to its relative
importance and is done by looking into two factors.

18 [1876] 1 QBD 410

19 [1876] 1 QBD 183
20 [1996] 3 MLJ 675
The first factor is whether the breach of a term goes to the root of a contract. The term will be
regarded as a condition if the breach of the term goes to the root of the contract. Similarly, if
the term has no effect on the contract in a significant way, the term would be regarded as a
subsidiary term. The second factor is the importance of the term to a party. If reliance on the
term by a party was a decisive factor to enter into the contract, the term would be regarded as
a condition.

In the contract, Mark is to play for the Sydney Athletic team for three years. This contractual
term is considered a condition because if he breached the terms, there would be a significant
impact on the team. Moreover, the term is essential to the party as it carries a decisive factor
when entering into a contract. Based on the classical test, the term in the contract is a
condition.

Conclusion
From the discussion above, it is proven that there is a breach of condition between Mark and
the Sydney Athletic team. It is said “When a contract is broken, the party who suffers by the
breach is entitled to receive, from the party who has broken the contract, the compensation
for any loss or damage caused to him…” 21. The Sydney Athletic team has the rights to claim
for damages or to repudiate the contract due to the breach of contract by Mark.

(1000 words)

Bibliography
21 Section 74(1) of Contracts Act 1950
Bettini v Gye. (n.d.). Retrieved from http://www.e-lawresources.co.uk/Bettini-v-Gye.php
Breach of Warranty legal definition of Breach of Warranty. (n.d.). Retrieved from
http://legal-dictionary.thefreedictionary.com/Breach+of+Warranty
Koffman, L., & Macdonald, E. (2010). The law of contract (7th ed.). New York: Oxford
University Press.
Peter, G. (2004). Business Law (12th ed.). Sydney, Australia: The Federation Press.
Trakic, A. (2014). Law for business. Subang Jaya, Selangor: Thomson Reuters Malaysia Sdn
Bhd.