Contract Law

 Types of Contract
- Bilateral Contract
i. Both parties make promises to one another.
ii. Mutual exchange of promises
iii. E.g. A promises to give supply goods to B, and B promises to pay
A for them.

- Unilateral Contract
iv. One party is making the promise whilst other party accepts by
merely performing the act.
v. E.g. X lost his dog and promise to reward RM 100 to anyone who
can find and return his dog.

 Elements of a contract

Element 1: Proposal or Offer

- Section 2(a) CA 1950 defines that a proposal to mean when one person signifies to
another his willingness to do or to abstain from doing anything.
- Bilateral Offer
- When the offer is made to particular person or a group of persons.

- Unilateral Offer
- Where the offer is made ‘to world a large’ or to the general public.
- Case Carlil v Carbolic Smokeball Co. Ltd.

Section 4(1) – the communication of a proposal is complete when it comes to the

knowledge of the person to whom it made.
  Invitation to treat
- It is a preliminary communication.
- Effort to invite or induce others to make offer.
- E.g. cases such as
i. Pharmaceutical Society of Great Britain v Boots Cash Chemist
Ltd.
ii. Fisher v Bell
iii. Harvey v Facey [1893]

Element 2: Acceptance
- Section 2(b) CA 1950 defines acceptance to mean when the person to whom the proposal is
made signifies his assent, the proposal is said to be accepted.

Section 9 – if the acceptance is made in words, the acceptance is ‘expressed (表达)’; if the
acceptance is made other than in words, the acceptance is implied (默示).

Section 2(c) – the person is making the proposal is now called the ‘promisor’ and the person
accepting the offer is called the ‘promisee’.

Rules of Acceptance

 Acceptance in only complete when it is communicated to the offeror

Section 4(2) (a) – the communication of an acceptance is complete as against the proposer when
it put in a course of transmission to him, so as to be out of the power of the acceptor.

E.g. Case Henthorn v Fraser (1892) – the acceptance is complete as soon as the letter is put
into the post box, and that is the place where the contract is made.

 Acceptance must be in reliance on the offer

- the person who wants to accept the offer must be aware of the offer.

E.g. Case R v Clarke – The information that Clarke give was to clear himself and not in reliance
on the offer of the reward. He was not aware of the offer when he gave the information but was
trying to clear himself from the charged of murder. Therefore, he fail to claim the reward that
offered by the government.
  Acceptance must be absolute and unqualified

Section 7 (a) – The acceptance must be absolute and unqualified so that there is complete
consensus. If the parties are still negotiating, there is no agreement yet or if any new terms or
conditions are brought into the picture then there would be no acceptance.

Situation where acceptance is qualified and not absolute:

i. Counter Offer
- the effect of counter offer is that it rejects or destroys the original offer and replaced it
with a new offer.

E.g. Case Hyde v Wrench

6 June – D offered to sell his estate to P for $1000
8 June – P replied that he will pay $950 (here P made a counter offer)
7 June – D refused to accept P’s proposal.
When D refused, P wrote again this time agreeing to pay $1000 (attempt to revive the
original proposal).
It was held that no acceptance had taken placed as P’s letter of 8 June amounts to a
rejection of the original proposal which count not be revived.

 Revocation of Proposal
Section 5 (1) – proposals may be revoked at any time before the communication of its
acceptance is complete as against the proposer.

 How can a proposal be revoke?

S6 (a) – the proposal can be revoke by the communication of the notice of revocation by
the proposer to other party.
E.g. In order to revoke his offer, X must communicate the notice of communication of his
offer to Y before Y accepts.

S6 (b) – an offer can be revoked by the lapse of time prescribed in the proposal for its
acceptance, or , if no time is so prescribe, by the lapse of reasonable time, without
communication of the acceptance.

S6 (c) – an offer can be revoked if the acceptor fail to fulfill a condition precedent to
acceptance.
E.g. if a company offers to employ a applicant on condition he passes a health test, if the
applicant fails his health test, he has failed to fulfill the condition precedent.
S6 (d) – an offer can be revoked by the death or mental disorder of the proposer, if the
fact of his death or mental disorder comes to the knowledge of the acceptor before
acceptance.