BLW 2033

TOPIC 1 CONTRACT
INTRO
BY:
MS MAHERAN MOHAMED
 Definition

• A legally binding agreement made

between 2/more parties, by which rights
are acquired by one or more to acts /
forbearances on the part of the
other/others”- Sir William Anson
 Definition

•G.H Treitel (An Outline of the Law

of contract):
“An agreement which is either
enforced by law/ recognized by
law as affecting the legal rights/
duties of the parties”
Continue..

• Section 2(b) Contract Act 1950 defined it as

‘an agreement enforceable by law’

• The ‘agreement’ here means a meeting of

minds, which called in law consensus ad
idem, signifying that the parties are agreed
together about the same thing
• S.2(e) : every promise and every set of promises,
forming the consideration for each other, is an
agreement.
• S.2(h) : an agreement enforceable by law is a
contract.
• S.10(1) : all agreements are contract if they are
made by the free consent of parties competent to
contract, for a lawful consideration and with a
lawful object, and are not hereby expressly
declared to be void.
 CONTRACT FORMATION:
• Offer
• Acceptance
• Consideration
• Intention to create legal relation
• Capacity
• Certainty
• Formality
 VOID, VOIDABLE AND UNENFORCEABLE
CONTRACTS
Void: an agreement that is not enforceable by
law.
-contravention with law, for illegal consideration
If a contract is held to be void, the contract has
never come into existence. Void ab initio : void at
the beginning

Voidable: A contract is voidable if one of the

parties has the option to terminate the contract.
Unenforceable: is those which are valid but
is unenforceable at law because of the
absence of:
i) evidence of the contract or ii) the form
required by law.
If a contract is unenforceable, neither party
may enforce the other's obligations.
E.g : a contract which barred by Limitation
Act
 BILATERAL V. UNILATERAL CONTRACTS

• A bilateral contract, is an agreement in

which each of the parties to the
contract makes a promise or promises
to the other party.
• In a unilateral contract, only one party
to the contract makes a promise
 Unilateral Contract
Example: the reward contract
A promises to pay a reward to B if B
finds A's dog. B is not obliged to find A's
dog, but A is obliged to pay the reward
to B if B finds the dog. In this example,
the finding of the dog is a
condition precedent to A's obligation to
pay.
Continue.. Unilateral Contract

• An offer of a unilateral contract may

often be made to many people (or 'to the
world') by means of an advertisement.
• In that situation, acceptance will only
occur on satisfaction of the condition
(such as the finding of the offeror's dog).
• In unilateral contracts, the requirement
that acceptance be communicated to the
offeror is waived.
• The offeree accepts by performing the
condition, and the offeree's performance
is also treated as the price, or
consideration, for the offeror's promise.
• A patent–medicine company advertised that it
would give $100 to anyone who contracted
influenza after using their smoke ball for a
certain period
• Plaintiff (Mrs Carlill) bought the article, used it
as directed and contracted influenza
nevertheless. She claimed the reward $100
• HELD : that plaintiff accepted by complying
with the conditions of the offer. There was an
offer capable of acceptance by all who used
the smoke ball and it mattered not that the
plaintiff did not communicate her acceptance
to the offeror.
• The advertisement of an unilateral contract
was held to be an offer.
ELEMENT OF CONTRACT
 OFFER
• An offer/ proposal is necessary for the
formation of an agreement.

• S.2(a) of Contract Act states : “ when one

person signifies to another his willingness to
do/ to abstain from doing anything, with a
view to obtaining the assent of that other to
act/ abstinence, he is said to make a
proposal”.
• Offer : ‘an expression of willingness to contract
on certain terms, made with the intention that it
shall become binding as soon as it is accepted by
the person to whom it is addressed, the
"offeree“-GH Treitel
• The person who makes the proposal is called
‘promisor’ or ‘offeror (first limb of s.2 (c)).
• The party to whom the offer is made is known as
the ‘offeree.
 Offer

• Refers to benefits or promise that

converts into agreement with
acceptance of the offeree.
• While ITT is indication for starting the
negotiation process.
• No formation of contract in ITT; not
contain any clear term.
 Preston Corp. Sdn Bhd v Edward Leong:

• Tun Salleh Abbas: “ An offer is an

intimation of willingness by an offeror
to enter into a legally binding contract.
It’s a term either expressly/ impliedly
must indicates that it is to becomes
binding on the offeror as soon as it has
been accepted by the offeree”
• An offer may be made orally, in writing
or by conduct.

An example of an offer made by

conduct is where a customer in a
supermarket chooses goods and hands
them to the cashier, who then accepts
the customer’s offer to buy
 TO WHOM AN OFFER IS MADE?

• An offer may be made to a definite person

(or group of persons), or to the world
• Where an offer is made to one person only,
or a group of persons, only that person may
accept
• When an offer is made to the whole world,
anyone may accept by complying with the
terms of the offer (Unilateral contract)
 BOULTON v JONES (1857)

• B brought a hose-pipe business from one Brocklehurst.

• J, the defendant, to whom Brocklehurst owed a debt,
addressed an order to Brocklehurst for some piping.
• B supplied the order even thought it was not addressed to
him.
• J refused to pay B for the piping, and contended that he
meant to deal with Brocklehurst only because he had a
set-off (contra) account against Brocklehurst.
• HELD : that offer was made to Brocklehurst and that J was
not liable to B for the goods as there was no contract.
 AN OFFER MUST BE DISTINGUISHED FROM AN INVITATION TO TREAT

Q “Invitation to treat’ means an invitation to

make offers.
• An invitation to treat is not an offer, but an
indication of a person's willingness to
negotiate a contract
q Where goods are displayed in a shop
window/ on shelves in a self-service store,
the display is construed as an invitation to
treat, not an offer to sell.
 INVITATION TO TREAT

•Displaying goods in shop windows/ on

shelves
•Advertisement
•Tender/ auction
•A statement of price
1) DISPLAYING GOODS IN SHOP WINDOW/ ON SHELVES
• PHARMACEUTICAL SOCIETY OF GREAT BRITAIN v BOOTS
CASH CHEMIST LTD [1953]1 QB 401
• The defendants were charged under the Pharmacy and
Poison Act 1933 which made it unlawful to sell certain
poisons unless such sale was supervised by a registered
pharmacist.
• The case depended on whether there was a sale when a
customer selected items he wished to buy and placed
them in his basket.
• Payment was to be made at the exit where a
cashier was stationed and, in every case
involving drugs, a pharmacist supervised
the transaction and was authorized to
prevent a sale
• HELD : the display was only an invitation to
treat. A proposal to buy was made when the
customer put the articles in the basket
 FISHER v BELL (1960)

• A shopkeeper displayed in his shop window

a flick-knife behind which was a ticket
reading ‘Ejector knife-4s’.
• He was charged with offering for sale a flick-
knife, contrary to the Restriction of Offensive
Weapons Act 1959.
• HELD : that the display of goods in a shop
window is not itself an offer for sale.
 ADVERTISEMENT

PARTRIDGE v CRITTENDEN [1968]2 All ER 421

• The appellant had inserted in a periodical entitled
‘Cage and Aviary Birds’ a notice ‘Bramblefinch
cocks and hens, 25s each’.

• It appeared under the general heading of

‘Classified Advertisements’ and the words ‘offer for
sale’ were not used.

• He was charged with unlawfully offering for sale a

wild life bird contrary to provisions of the Protection
• The divisional court quashed the conviction,
there had been no ‘offer for sale’
• Lord Parker : “ I think that when one is
dealing with advertisements and circulars,
unless they indeed come from manufacturers,
there is business sense in their being
construed as invitations to treat and not offer
for sale”.
 TENDER/ AUCTION

HARRIS v NICKERSON (1873)

• An auctioneer, N, advertised that a sale of office
furniture would take place at Bury St. Edmunds.

• H traveled down from London to attend the sale,

but found the furniture was withdrawn from the
sale. H therefore sued N for his loss of time and
expenses.

• HELD : that the advertisement was a mere

declaration of intention and did not create a
 A STATEMENT OF PRICE

CASE : HARVEY v FACEY [1893] AC 552

The plaintiff telegraphed to the defendant, “Will you sell us Bumper
Hall Pen? Telegraph lowest cash price”.

• Defendant telegraphed in reply “Lowest price for Bumper Hall Pen

$900”

• The plaintiff then replied “We agree to buy Bumper Hall pen for $900
asked by you. Please send us your title-deeds. No reply from
defendants. Plaintiff claimed that there was a contract between
himself and defendant.

• HELD : there was no contract. The 2nd telegram was not an offer but in
the nature of an invitation to treat(i.e the lowest price if it were
decided to sell). The final message could not be looked upon as an
acceptance.
 TERMINATION OF AN OFFER

• An offer terminates :
a) on the death of either offeror/ offeree before
acceptance
b) by non-acceptance within the time stipulated for
acceptance, or within a reasonable time
c) when revoked BEFORE ACCEPTANCE
d) when rejected by the offeree
• S.6 : a proposal is revoked :
(a) by the COMMUNICATION OF NOTICE OF REVOCATION by the
proposer to the other party

(b) by the LAPSE OF TIME prescribed in the proposal for its

acceptance, or if no time is so prescribed, by the lapse of
reasonable time, without communication of the acceptance.

(c) by the FAILURE OF THE ACCEPTOR TO FULFILL A CONDITION

precedent to acceptance; or

(d) by the DEATH / MENTAL DISORDER of the proposer, if the fact of

his death / mental disorder comes to the knowledge of the acceptor
 REVOCATION OF OFFER

• Withdrawal/ revocation of an offer must be

communicated to the offeree before acceptance.

• The revocation may be made directly by the offeror/

indirectly.

• The important point to note is that revocation is of

no effect until it is actually brought to the notice of
the offeree.
 REJECTION OF OFFER
It may takes in two forms :
• where the offeree
communicates his rejection to
the offeror
• where the offeree makes a
counter-offer
 CASE : HYDE v WRENCH

• W offered to sell a farm to H for £1,000. H

said he would gives £950.
• W refused, and H then said he would gives
£1,000. When W refused, H sought to obtain
an order of specific performance.
• HELD : there was no contract. H’s offer of
£950 was a counter-offer which evidently
rejected the original offer.
 FIRST UP
CONSULTANTS

THANK YOU
Maheran Mohamed 0167255733

Maheran.Mohamed@mila.edu.my

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