CHAPTER 2;

Law of Contract

Prepared by;
Alizah Ali
Department of Law
UITM Bandaraya Larkin
 Definition of Contract
1.Agreement
between 2 or more persons
 legally binding between them

2. Section 2(h) of Contract Act 1950;

“An agreement enforceable by law
is a contract”
 Contract vs Agrement

“ALL CONTRACTS ARE

AGREEMENT S
BUT
not ALL AGREEMENTS ARE
CONTRACTS”
Elements of Contract

Offer
Acceptance
Consideration
Capacity
Intention to Create Legal Relation
Certainty
Free consent
Question….

What will happen if one of the

element is not there?
 How To Form a Contract

ORAL

CONTRACT

WRITING
IMPLIED
-
CONDUC
T
Element no 1: OFFER
At the end of this chapter, student will be able to
understand …

1. Definition of offer
2. How Offer Could Be Made
3. Types of Offer
4. Conditions of Offer
5. Offer vs ITT
1. Definition of Offer
Sect 2(a) of Contract Act 1950
 “when one person signifies to another
his willingness to do … anything, with a view

to obtaining the assent of that person

… he is said to make a PROPOSAL”
1. Definition of Offer
Sect 2(a) of Contract Act 1950

promise/agreement/proposal
OFFER

made by offeror

to offeree

with intention
to create legal relation
2. How Offer Could Be Made

Making the Offer

Sect. 9 of Contract Act 1950

express implied

writing verbal conduct

3. Types of Offer
2.2 Types of Offer
Types of Offer

Specific Offer General Offer

Boulton vs Jones Carlill vs Carbolic
Smoke Ball Company

=
4. Conditions of Offer
1. Offer must be
certain
Certain = clear/complete/final/detail
 to avoid doubt
Case : GUTHING VS LYNN

Conditions of
Offer 2. Offer must be
communicated
•Section 2(a) CA 1950 : “signifies”
•Section 4(1) CA 1950 : when the

communication of acceptance is
complete
•Case : TAYLOR vs LAIRD
4. Conditions of Offer
X communication  X offer  X acceptance

= X Contract
X communication  X offer  √ acceptance (coincident)

= X Contract
R vs Clarke
5. Offer vs Invitation To Treat
 Definition of ITT

Pre-liminary communication

Between the parties

At the stage of negotiation

Which might lead to an offer

5. Offer vs Invitation To Treat
 Invitation To Treat
 Merely invitation
 Early stage before an offer could be made

 The difference
 When the actual offer take place
5. Offer vs Invitation To Treat
 Situation
a) A does something with intention to make an
offer (to sell a pen)
if B accept such offer  * A is bind to sell
the pen.

b) A does something with intention to make an

ITT (advertise to sell a pen)
* B is make an offer
If B respond such invitation 
* A has no duty to
sell the pen.
5. Offer vs Invitation To Treat
 Example of ITT
1. Advertisement
2. Display of goods in self service shop
3. Tender
4. Quotation/Price List
5. Auction
Invitation To Treat -
ADVERTISEMENT
 Definition of advertisement
Invitation to attract people’s interest to make an offer
 Concept of ITT
advertisor = making ITT / X offeror
advertise the advertisement
offero
= the one who read/saw/notice the
r advertisement
advertisor = making acceptance
by responding the offer
Invitation To Treat -
ADVERTISEMENT
 Cases

HARRIS vs NICKERSON

COELHO vs PUBLIC SERVICES

COMMISSIONER
Invitation To Treat -
ADVERTISEMENT
 Exception

Another
Advertisement + offer/promise/ = offer
reward

CARLILL vs CARBOLIC SMOKE

BALL COMPANY
Invitation To Treat – DISPLAY OF
GOODS IN SELF SERVICE SHOP
 Definition of display of goods in self
service shop
goods with a tag price display in shelve of self service
shop
 Concept of ITT
seller = making ITT / X offeror
display the goods in the shelve
customer = the one who select the goods – bring
to the counter – pay
seller = making acceptance
accept payment
Invitation To Treat – DISPLAY OF
GOODS IN SELF SERVICE SHOP

 As long as the SELLER not make any

acceptance, the CUSTOMER can
withdraw his OFFER at ANYTIME

before the SELLER make an

acceptance by receive the payment.
Invitation To Treat – DISPLAY OF
GOODS IN SELF SERVICE SHOP
 Cases
 PHARMACEUTICAL SOCIETY vs
BOOTS CASH CHEMIST LTD
Court held: display of goods is ITT
: concept of ITT
 FISHER vs BELL
Court held: display of several
flick knives in a glass shop
window is ITT
Invitation To Treat – TENDER

 Concept of ITT
government = making ITT / X offeror
produce the notice
contrac = the one who
tor
read/saw/notice the tender
government = making acceptance
by choosing the contractor
Invitation To Treat – TENDER

 Case
 SPENSER VS HARDING
Discretion power to choose the offerror /
contractor for the project tendered
Invitation To Treat –
QUOTATION / PRICE LIST
 Definition of quotation
early information which gives opportunity to
the BUYER to choose the best price
according to the list
 Concept of ITT
seller = making ITT / X offeror
list the prices
offerr = the one who read/saw/notice the
price or
seller by choosing the selective package
= making acceptance
by responding the offerror
Invitation To Treat –
QUOTATION / PRICE LIST
 Case
1. HARVEY VS FACEY
Quotation via telegram
Bumper Hall Pen £900

2. PRESTON CORP vs EDWARD

LEONG
Quotation/listing price of
printing machine
Invitation To Treat –
AUCTIONEER INVITING BIDS
 Situation
when the auctioneer requests bids and inviting the
assembly of bidders to make an offer
 Concept of ITT
auctione = making ITT / X offeror
er invite the bidders

bidders = the one who bid the price

auctione
er = making acceptance
by accepting the highest price made by bidder
Invitation To Treat –
AUCTIONEER INVITING BIDS
 Section 10 of the Auction Sales Act
“A sale by public auction shall be completed
when the auctioneer announces its
completion by the fall of the hammer..”
Thank You