TUTORIAL PRESENTATION

SESSION 2018/19
LLB 10503
LAW OF CONTRACT 1

Group 4
Nurin Hidayah Binti Mohd Hadi (051109)
Nur Hazwani Binti Hilmi (050485)

QUESTION 2
 The main issue in this case is whether there is a contract between Rania
Enterprise (RE) and Husin Electronic Enterprise (HEE).

The first substantive issue is whether there is a valid offer made by Rania
Enterprise to Husin Electronic Enterprise.

An offer is a proposal made on certain terms by the offeror together with a

promise to be bound by that proposal if the offeree accepts the stated terms.

Section 2(a) of Contracts Act 1950 stated that when

one person signifies to another his willingness to do or to
abstain from doing anything, with a view of obtaining the
assent of that other to the act or abstinence, he is said make
a proposal. Means a promise to do (or not do) something
provided the offeree does (or does not do) something in return.
 Section 2(c) of Contracts Act 1950 stated that “the person making the
proposal is called the “promisor” and the person accepting the proposal is called the
“promisee”.

In this case, RE is the promisor who is making the offer to Hussin to sell the
computers sent by a letter and Hussin is the promisee, who has the choice to accept
or reject the offer by communicating his decision to RE.

Generally, the offeror may make an offer by oral,

conduct or writing. Section 9 of Contracts Act 1950 said
that so far as the proposal is made in words, the proposal is
said to be express. When the proposal is made otherwise in
words, the proposal is implied. Contract law does not
specifically state that a contract must be in writing, but it is
better to have a written contract to prove the terms of the
offer.
 Applying in the present case, Rania expressly communicated her offer by
sending a letter offering to sell 500 Toshiibe computers at a discounted price to
Hussin.

There are two types of offer such as bilateral offer and unilateral contract.
Bilateral offer is a type of offer that takes the form of a promise to do something in
return for the promise of the offeree to do something while unilateral contract,
which the offeror promises to pay for an act done by the offeree accepts the offer by
performing his or her side of the bargain.

Applying in the present case, the offer made by

Rania fall under bilateral offer because she offers to sell the
computers to Hussin and Hussin must pay in order for him to
get the computers.
 There are three requirements to constitute a valid offer. Firstly, an offer must be
definite promise to be bound. Thus, an offer must be certain and unqualified. Supported by
the case of Ho Ah Kim v Paya Trubong Estate Sdn Bhd (1987), the court held that it is
necessary requirement that an agreement in the order to be binding must be sufficiently
definite to enable a court to give it a practical meaning. It is also illustrated in the case of
Sou Young v Yuzin Bt Abdullah @ Ho Yuzin (1999), it was held that there was no contract
between the parties due to uncertainty. Section 30 of Contracts Act 1950 also stated that
any type of agreement with the meaning of which is not certain, or capable of being made
certain, are void.

In the present case, Rania has made a certain offer

by stating that she offers to sell 500 Toshiibe computers to
HEE at a discounted price to Hussin. Thus, the terms of the
offer made by Rania to Hussin are certain and unqualified.
 The second requirement is offer can be made to a specific person, or to a
group of persons or to the world at large. Where the offer is made to one person,
only that person may accept the offer.

In this case, Rania has made the offer specifically to Hussin and only Hussin
may accept it.

The third requirement is the offer must be accepted within a reasonable

time if no time is prescribed in the offer. A proposal must be
accepted within a reasonable time unless, a time for its
acceptance is prescribed in the offer. Section 6 (b) of
Contracts Act 1950 stated that a proposal is revoked by the
lapse of the time prescribed in the proposal for its
acceptance or if no time prescribed, by the lapse of
reasonable time without communication of acceptance.
 In the present case, RE has stated that the acceptance must be in writing
and must reach RE’s office in Kedah by 15 February 2018. Thus, the acceptance
must be made while the offer is still in force.

The next requirement is the communication of proposal must be complete

and comes into the knowledge of the offeree. An offer has no validity unless and
until it is communicated to the offeree to give the offeree the opportunity to accept or
reject. Section 3 of Contracts Act 1950 stated that the communication of proposal
is deemed to be made by any act or omission of the party proposing by which he
intends to communicate the proposal, or which has the effect
of communicating it. Section 4(1) of Contracts Act 1950
also said that the communication of proposal is complete
when it comes to the knowledge of the person to whom it is
made. So, for an offer to be valid, it must come to the
knowledge of the offeree.
 The communication of offer made by Rania is complete and effective against
Hussin as the letter of offers has been sent and come to the knowledge of him.

In conclusion, the offer that made by Rania to Hussin is considered as valid

because it fulfilled the requirements for an offer to be valid.

The second substantive issue is whether the letter of acceptance made by

Hussin posted on 10th February 2018 to Rania’s office binds the contract.

Acceptance is the exercise of the power by the person to whom the offer has
been made, to enter a contract by manifesting assent in return. According to Anson,
acceptance of an offer is the expression, by words or conduct of assent to the
terms of the offer in the manner prescribed or indicated by the offeror. Section 2
(b) of the Contracts Act 1950 governs the definition of acceptance which stated
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. As stated in Section 9 of Contracts Act 1950, so far as the acceptance of
any promise is made in words, the promise is said to be express.

As regard to Hussin’s case, RE specifically sent a letter to Hussin offering to sell

500 Toshiibe computers at a discounted price. When Hussin received the offer and
his assent to the offer must be done according to the manner prescribed. Hussin
posted a letter of acceptance to RE’s office in Kedah on 10th February 2018, this
means that the acceptance communicated expressly by the letter.

The requirements for an acceptance to be valid are first, the

acceptance must be accepted only by the offeree, agree with
the offer, and be communicated to the offeror by the offeree.
In Boulton v. Jones (1857), stated that Boulton bought
Brocklehurst’s business but Brocklehurst did not inform all
his creditors about the same. Jones, a creditor of Brocklehurst placed
an order with him. Boulton accepted and supplied the goods. Jones refused to pay
since he had debts to settle with Brocklehurst. It was held that since the offer was
never made to Boulton, he cannot accept the offer and there is no contract.

In Rania’s case of a specific offer, it can only be accepted by Hussin as the person it
was made to. No third person without the knowledge of Hussin can accept the offer.

The second requirement is the acceptance must be absolute and

unqualified. According to Section 7 (a) of the Contracts Act 1950, stated that for a
proposal to be converted into a promise, its acceptance must be absolute and
unqualified. This means that it must be unconditional agreement or changed by the
offeree to all the essential terms of that offer. According to Chitty, an acceptance is a
final and unqualified expression of assent to the terms of an offer. Supported by the
case of Hyde v Wrench, the Defendant wrote to the Plaintiffs offering to sell his farm
for $1000. The Plaintiff immediately called on the Defendant and offered to purchase
the farm for $950. The Defendant replied to the Plaintiff that he was unable to accept
the Plaintiff’s offer. Later, Plaintiff immediately wrote to the Defendant accepting the
Defendant’s earlier offer of $1000. It was held that there was no binding contract
between the parties. Plaintiff rejected the original offer by the counter offer of $950.

It can be illustrated in the case of Kam Mah Theatre Sdn. Bhd. v. Tan Lay
Soon [1994] 1 M.L.J. 108, SC, whereby the Court held that acceptance must be
absolute and unqualified so that there is complete consensus, if the parties are still
negotiating, an agreement is not yet formed.

In the present case, when Hussin sent the letter of acceptance,

he must not include any types of new condition or modified in
contrast to the terms stated in the proposal. There should be no
conditional acceptance by Hussin that would amount to a counter
offer which nullifies the original offer. Therefore, the reply is effective
if it accepts all the terms of the proposal without addition.
 The third requirement is the acceptance must be communicated. For a
proposal to become a contract, the acceptance of such a proposal must be
communicated to the offeror. The communication must occur in the prescribed form,
or any such form in the normal course of business if no specific form has been
prescribed. Further, when the offeree accepts the proposal, he must have known that
an offer was made. He cannot communicate acceptance without knowledge of the
offer. According to Section 3 of Contracts Act 1950, communication of the
acceptance of proposal is deemed to be made by any act or omission of the party
accepting by which he intends to communicate the acceptance.

Applying this in Husin’s case, it is necessary that he must

be aware on the existence of the offer before he accepts it.
The letter of acceptance must be sent or posted to RE’s office
for it to be valid.
 Next requirement is the acceptance must be in the prescribed manner.
Acceptance of the offer must be in the prescribed manner that is demanded by the
offeror. This can be supported by the case of Bhangwandas Goverdhandas Kedia v
Girdharlal Parshottamdas and Co and Ors Air 1966 sc 543, Shah J said that if
there be no “meeting of minds” no contract may result. There should, therefore, be an
offer by one party, express or implied and acceptance of that offer by the other in the
same sense in which it was made by the other…Acceptance and intimation of
acceptance of offer are, therefore, both necessary to result in a binding contract.

Referring to Husin’s situation, the offer stated that the

acceptance must be in writing and must reach RE’s office in
Kedah by 15 February 2018. Hence, the acceptance by Hussin
fulfilled the prescribed mode as stated in the offer because it
was written in a letter.
 Postal rule is the exception to the general rule of acceptance is effective only
when it is communicated to the offeror. Postal rule means that the acceptance by post
takes effect when the offeree posts the letter and not when the letter reaches the
offeror. Hence, owing to the postal rule, the offeror is bound when the offeree posts
the letter of acceptance even if the letter is delayed, destroyed and the offeror has no
knowledge of acceptance. As stated in Section 4 (2)(a) of Contracts Act 1950, the
communication of acceptance is complete 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.

Supported by the case of Adam v Lindsell, on 2nd

September, the Defendant wrote to the Plaintiff offering to sell them
a quantity of wool. On September 5th, the letter arrived. On receipt
of the letter, the Plaintiff immediately posted an acceptance. On
September 9th, the letter arrived, but meanwhile the Defendant
had already sold the wool to a third party, not having received a
reply as expected on September 7th. It was held that the
acceptance was complete upon posting on September 5th.
 Applying to the present case, Rania stated in her offer that the acceptance must
be in writing and must reach her office in Kedah by 15th February 2018. Postal rule
applied in this case, so Rania is bound when Hussin posted the letter on 10th
February 2018 even though she has no knowledge of the acceptance.

For the conclusion, the letter sent by Hussin is an unqualified assent to the terms
in the offer and he posted the letter to RE’s office in Kedah on 10th February 2018.
So since the letter of acceptance arrives on 14th February 2018 and is communicated
before the due date which is on 15th February 2018, it may be deemed valid.

The next substantive issue is whether the revocation

of acceptance made by Husin is valid or not.

According to the Section 5 (2) of Contracts Act 1950, an

acceptance may be revoked at any time before the communication
of the acceptance is complete against the acceptor, but not
afterwards.
 Based on Section 6 (a), an acceptance is revoked by the communication of
notice of revocation by the acceptor to the other party.

Applying in this case, Hussin must revoke his acceptance by give a notice to
Rania before the letter of acceptance come to the knowledge of Rania. But if the letter
of acceptance come to the knowledge of Rania, the revocation cannot be made
anymore.

Generally, the revocation of acceptance must be communicated. Based on

Section 3 of Contracts Act 1950, the communication of revocation of acceptance
are deemed to be made by any act or omission of the party revoking by which he
intends to communicate the revocation, or which has the effect of communicating it. If
the communication of acceptance is not yet complete against the offeror, the offeree
must communicate his intention to revoke the acceptance by any positive act or
omission by which he intends to communicate the revocation.
 In the present case, Hussin as the offeree must communicate his revocation of
acceptance by any positive act to make the effective revocation. He cannot just stay
silent and not doing anything.

Based on Section 4(3)(a) of Contracts Act 1950, the communication of a

revocation is complete against the acceptor, when it is put into a course of
transmission to the proposer as to be out of power of the acceptor. Section 4(3)(b)
stated that the revocation is complete against the proposer, when it comes to the
knowledge of the proposer. Once the acceptor puts his revocation into a course of
transmission, he cannot withdraw his revocation because the communication of
revocation is complete as against him upon posting or dispatching the telegram.

In this case, if Hussin has communicate his revocation of

acceptance, his revocation is complete against him and it is complete
against Rania when it comes to her knowledge. Once Hussin has
revoke his acceptance, he cannot withdraw the revocation anymore. It
already become effective revocation.
 Supported in the case of Dunmore v Alexander, the letter of acceptance and
the letter revoking the acceptance which was sent by express, were received by
Alexander simultaneously. It was held that the acceptance had been effectively
withdrawn and there was no contract. It shows that the acceptor could post the letter
of acceptance and in the meantime, may withdraw or revoke the acceptance by using
speedier means of communication before the letter of acceptance reaches the
proposer.
So, the revocation of acceptance made by Hussin by sending a telegram on 13
February is valid as the communication of revocation of acceptance has complete
before the letter of acceptance arrived and come to the knowledge of proposer. Thus,
the acceptance had been effectively withdrawn as the telegram arrived at 4:00 pm
and come to the knowledge of Rania. There was no contract between Rania and
Hussin. So Rania did not breach any contract when she signed a contract with Tuah
Enterprise (TE).
Another issue arises in this case when HEE changes his mind. Whether the
acceptance made by Hee using the telephone call to RE on 14th February
2018 can be considered as valid or not.

One of the main essentials of acceptance is prescribed manner of

acceptance. It is the legal rule of the acceptance that it must be accepted in the
prescribed manner. If the offer is not accepted in the prescribed manner, then the
offeror may reject the acceptance within reasonable time. It may, however, be
noted that, if the offeror does not reject the acceptance within a reasonable time
then he becomes bound by acceptance as stated in Section 7(b) of Contracts
Act 1950. Supported by Compaigne De Commerce Et Commission Sarl v
Parkinson Stove Co. Ltd (1953) 2 LIOYD’S REP. 487, Plaintiff made an offer to C
with the stipulation that acceptance should be made on a particular form and no
other manner of acceptance would be valid. C accepted by letter. It was held that
no valid acceptance had been made. Also in the case of Tinn v Hoffman & Co,
where the offeree was asked ‘to reply by return of post’ and the court held that an
equally expeditious method would suffice.
 In order for acceptance by Hussin to be effective, he must send a letter of
acceptance through the post before the due date on 15th February 2018 as stated in
the terms of the offer. However, in fact Hussin only telephones the owner of RE,
Hussin did not comply to RE’s requirement which stated that acceptance in writing
must reach RE’s office in Kedah. RE may reject the acceptance within the reasonable
time, by any positive act and must not be in silence because it must be
communicated to Hussin.

For the conclusion, even Hussin reply the offer on 14th February 2018 which was
before the due date, he fails to comply with RE’s requirement. RE’s owner insisted
that HEE must accept in writing and RE has the right to insist that the communication
must be made by the prescribed manner. That being the case, the acceptance made
by HEE using the telephone call to RE on 14th February 2018 may be considered as
invalid.
Next, the substantive issue arise is whether the email of acceptance sent by
Hussin to Rania constituted a valid acceptance.

Instantaneous is one of the methods of communication of acceptance. In

cases of instantaneous means of communication, such as e-mail, the receipt rule or
instantaneous rule will be applicable. The receipt rule requires that the
communication of acceptance is complete when in fact it comes to the knowledge
of the offeror. Thus, if the acceptance is communicated by e-mail, the acceptance is
complete and binding against the offeror when the acceptance e-mail reaches the
computer system of offeror. But there is some exception that an acceptance must
exactly match the terms of the offer. When the offeror stipulates a form of
acceptance, and states only that stipulated form will be sufficed, the offeree must
comply with the offeror’s requirement in order for the acceptance to be effective.
Thus, if the prescribed manner of acceptance is prescribed by the offeror, the
offeree must abide the prescribed manner.
 It is supported by the case of Compaigne De commerce Et Commission Sarl v
Parkinson Stove Co. Ltd (1953), in this case, P made an offer to C with stipulation
that acceptance should be made on a form and no other manner of acceptance would
be valid. C accepted the letter. It was held that no valid acceptance had been made.
Also illustrated in the case of Western Electric Ltd v Welsh Development Agency,
the Defendant offered the Plaintiff a license to occupy a factory in a letter which
stated :”if you accept this license on the above terms, will you please complete the
acknowledgment and acceptance at the foot of the enclosed copy and return it to us
at your earliest convenience”. The Plaintiff did not complete the acknowledgment but
went into occupation of the factory. The Court held that the act of going into
occupation of the factory by the Plaintiff was not an acceptance of the Defendant offer
since the offer had required acceptance in another manner.
 Applying to the present case, on 15 February, Hussin sends an email to the
owner of RE stated that he is accepting the offer while at that time the owner of RE
was attending a business conference in Penang. The acceptance does not comply
with the requirement of acceptance that been stated by owner of RE. The owner of
RE had stated that she wants the acceptance in a writing, not other matter as she has
insisted when Hussin made a telephone call before.

So, the act of acceptance made by email from Hussin is not valid as he did not
abide the prescribed manner for an acceptance to be effective.

By discussing all the elements of offer and acceptance and the issues arise, it
can be concluded that there may be no valid contract between Rania Enterprise and
Hussin Electricals Enterprise.