Offer - NOTES PDF

Preview

Summary

OFFER/ PROPOSALDEFINITION First element of a legally binding contract.  Must be a definite promise to be bound provided certain specific terms are accepted.  In a CA an offer is used as a proposal but still have the same meaning.  Defined Section 2(a) and Section 2(c).  Key phrases from Section...

Description

LAW436 | LAW OF CONTRACTS

OFFER/ PROPOSAL DEFINITION     

First element of a legally binding contract. Must be a definite promise to be bound provided certain specific terms are accepted. In a CA an offer is used as a proposal but still have the same meaning. Defined Section 2(a) and Section 2(c). Key phrases from Section 2(a): - Signifies to another his willingness - To do or abstain from doing anything - With a view to obtain the assent of that other Case: Preston Corp Sdn Bhd v Edward Leong Fact: The appellants were a company which publishes book while the respondent is the firm printer. The parties entered into a business relationship regarding the printing of the text book. There was an exchange of quotation for printing the books. This was followed by A issuing the printing order. Held: The court held that quotation never intended to be a binding offer. It was a merely a supply of information.

REQUIREMENTS OF OFFER 

A valid offer must satisfy certain requirements. 1) Offer made to specific person or to the world. - A proposal can be made to an individual, to a class of person, a firm, a company or to the public at large. Case: Carlill v Carbolic Smoke Ball Co. (1893) Fact: The defendant advertised that they will pay $100 to anyone who still succumbed to influenza after using their remedy after a period of time. Carlill used the remedy but still suffered from influenza. She sued for the money. Held: The court held that an offer can be made to the world. It becomes a contract when anybody come forward and performed the conditions. Carlill was entitled to the money because she accepted an offer made to the world at large.

LAW436 | LAW OF CONTRACTS

2) -

Expressly/ Impliedly. According to Section 9 of CA: EXPRESS: An offer made by words, written or oral. IMPLIED: An offer made by conduct – under the circumstances ; enforceable by both parties Case: Preston Corpn Sdn Bhd v Edward Leong Held: The FC had also referred to an offer made either expressly/ impliedly.

3) Clear meaning. - An offer that is not clear would be invalid for uncertain. It should be made with clear intent to contract with the other party. It should not be loose or vague. Case: Ahmad Meah & Anor v Nacodah Merican (1890) Fact: D promised to build and give P and his daughter a “house which must be a suitable building”. Held: It was too vague to be enforced. The subject of the contract was not certain. 4) Offer must be valid at law. - Offer itself must comply with the law. Otherwise, offer does not/cannot exists. Case: Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui (1984) Fact: The appellant let the motor-car to the respondent under a hire-purchase agreement. The respondent failed to pay the balance and the appellant brought an action for balance outstanding under hire-purchase agreements. The respondent stated that the offer did not comply with Section 4(1) of Hire-Purchase Act 1967 (Revised 1978). Held: The written offer signed by the defendant without the condition precedent being fulfilled was not an offer recognized by the Hire-Purchase Act. 5) Offer must be communicated. - According to Section 2(a), Section 3 and Section 4(1) and under Section 4(1) refer to illustration (a). - To have a legal effect, an offer must be communicated. - There can’t be not valid offer if there are two cross offer. Case: Tinn v Hoffman & Co (1873)

LAW436 | LAW OF CONTRACTS Held: Cross offers cannot form a contract. Case: R v Clarke (1927) Fact: The Australian Government offered a reward for information leading to the arrest and convictions of the criminals. One of the criminals, Clarke, gave information which lead to the arrest of Y. Clarke was later acquitted and claimed for the reward. Held: The court held that he was not entitled for the reward because he was not aware of the reward when he gave the information to the government.

INVITATION TO TREAT    

An indication of willingness for an offer to be made. It is not statement that is binding at law. An invitation to treat merely invites interested parties to make an offer. The one who is responding to the ITT is the one who is making the offer. Examples of ITT are: 1) Advertisement. - An advertisement is an attempt to induce an offer. It is usually an ITT. - Advertisements of bilateral contracts, however, are not usually offer. In this situation, an offeror makes a promise in return for a promise by the offeree. Case: Coelho v The Public Services Commission (1964) Fact: The D advertised a job vacancy in the newspaper. The P applied for the job and he was employed by the D. After a while, the D wanted to terminate his post on the ground that he was on probation and the D has the right to terminate his post. Held: The advertisement was an ITT. When he was employed, the D was accepting the proposal. Thus, a valid contract exists between them. The D cannot simply terminate his post. However, the rule is different in the case of Carlill v Carbolic Smoke Ball (1893) whereby advertisement is considered as a proposal. The wordings of the advertisement is important. 2) Display of goods. - It is also regarded as ITT. This reasoning behind this rule is to hold otherwise would require seller to sell whatever quantity of item displayed or the buyer cannot change his mind once an item is chosen and is taken off the display shelf. Case: Pharmaceutical Society of Great Britain v Boots Cash Chemist (1953)

LAW436 | LAW OF CONTRACTS Fact: A customer enters pharmacy and picked up the drugs from the shelf without supervision. Before the customer is able to purchase, his action was prevented by the chemist. The customer was so angry with the situation and reported the matter to the Pharmaceutical Society stating that Boots was selling drugs without supervision. Held: The display of goods in the shelf is an ITT. Thus, Boots has not made an unlawful sale. Case: Fisher v Bell (1961) Held: The act of displaying a knife in a shop window did not amount to an offer for sale. 3) Auctions. - When the auctioneer invites bids, he is merely making an invitation to treat. When the bidder makes a bid, he is making an offer. - The contract is only concluded when the auctioneer announces it is complete at the fall of the hammer. - Three principles concerning of auctions can be drawn from the cases: a) Auctioneer’s request for bids. The first principle is considered as an ITT. The bid itself is an offer which the vendor is free to accept or reject. Case: Payne v Cave (1789) Fact: The D’s bid for a worm-tub and a pewter worm was the highest at the auction, but withdrew his bid before the hammer fell. Held: No contract has been made. The bid was an offer which could be withdrawn at any time before the acceptance by the auctioneer’s hammer. b) Notice of auction. The second principle is that a notice that an auction will take place at a certain date is only an ITT. Case: Harris v Nickerson (1873) Fact: It was informed to the public that an auction sale was to include the office furniture on a certain day and the following two days. The P attended the sale on a third day and it was found out that there was no office furniture on auction. The P sued the D for the breach of contract.

LAW436 | LAW OF CONTRACTS Held: The court rejected the P’s claim and held that the advertisement that goods will be sold on auction on certain days doesn’t constitute a promise to potential bidders that sale will be actually held. c) Auction without reserve. The third principle is an offer.

REVOCATION OF AN OFFER   

When an offer may be revoked: Section 5(1) of CA & illustrations to 5(1) of CA. When the communication of acceptance is complete: Must be read together with Section 4(2) (a)of CA. When the communication of revocation is complete: Section 4(3) of CA. - The communication of revocation of a proposal is complete as against the proposer who revokes: when he has sent out the notice of his revocation. - The communication of revocation of a proposal is complete as against the person to whom it is made: when the said person receives the notice of revocation of the proposal. Case: Byrne v Tienhoven (1880) Fact: It involved communication by post. On 8 th October, the P had sent acceptance by telegram. On 20th October, the letter of acceptance reached the P. Held: The court held that, there was a contract between the parties because the letter of revocation reached the acceptor accepted the proposal.



In order for an offer to be revoked, 2 things must be adhered to: 1) HOW TO REVOKE - Section 6 CA provides for the methods of revocation:

-

-

a) Notice of revocation. According to Section 6(a), the notice must be given by the proposer to the other party. However, English Court held that revocation is valid even through the notice or knowledge concerning the revocation derived from the third party (the communication of revocation offer is done by other person than the proposer). The revocation is valid with Section 5(1) of CA.

LAW436 | LAW OF CONTRACTS

Case: Dickinson v Dodds (1876) Fact: On Wednesday, June 10, D gave P a written letter offer to sell a house for $800 and give until Friday, June 12, 9AM. However, on June 11, D sells the house to the third party Allan. P was informed with this by a fourth person Berry. Before 9AM on June 12, P sends a letter to D for acceptance. Held: The court held that, P cannot make the binding contract as P was aware of the revocation by a third party.

-

b) Lapse of time. Refer Section 6(b) & Section 47. An offer once received, must be accepted within the time prescribed in the offer or if no time is prescribed, within a reasonable time. Case: Macon Works & Trading Sdn Bhd v Phang Hon Chin & Anor (1976) Fact: The D gave an open dated option to purchase their land. Held: The court stated that an offer lapses after reasonable time not because this must be implied in offer but because failure to accept within a reasonable time implied rejection by the offeree. Case: Ramsgate Victoria Hotel Co v Montefiore (1866) Fact: The D applied for shares in P’s company in June and paid deposit into the company’s bank. He did not hear from the company until the end of November, when he was asked to pay for the balance due for the shares that had been allotted to him. He refused to take up the shares. Held: The interval between June and November was excessive. The D’s offer should have been accepted, if at all, within a reasonable time.

-

c) Failure to fulfill condition. Refer to Section 6(c) of CA. Some offer may have a condition precedent to be fulfilled prior to acceptance. Thus, if these conditions are not fulfilled, then the offer is revoked.

LAW436 | LAW OF CONTRACTS Case: Aberfoyle Plantations Ltd v Khaw Bian Cheng (1960) Fact: The vendor failed to fulfill a condition precedent in the contract which required renewal of several leases relating to the land bought. Held: The condition is unfulfilled. The purchaser was entitled to the return of his deposit paid.

-

-

d) Death or mental disorder. Refer to Section 6(d) of CA. If a proposer has died or has become mentally disordered and this fact is known by the acceptor before acceptance, the acceptor cannot thereafter accept the offer which is thus considered revoked. The reasoning is the same as in the case of Dickinson v Dodds (not meeting of the minds). Case: Bradbury v Morgan (1862) – A different view. Held: “Death does not in general operate as a revocation, but only in exceptional cases and this is not within them”. Performance requires personal services (stated in Section 38(2) – illustrations (a) & (b)).

2) WHEN CAN REVOKE - It is described in Section 5(1) of CA.

COUNTER-OFFER   

Counter-offer is a situation whereby after a proposal has been made, suddenly either one of the party make a new proposal. If any changes have been made to the proposal, this is also a counter-offer. A counter-offer is treated as rejection of the original proposal. Case: Hyde v Wrench (1840) Fact: The D offered to sell his estate for $1000. The P made a new proposal to buy for $950 and the D refused to accept the proposal. Later, the P wrote again to the D and agreed with $1000. Held: There was no acceptance because the P’s offer to buy for $950 is a counter-proposal which had automatically rejected the original proposal made by the P.

LAW436 | LAW OF CONTRACTS 

However, a counter-offer needs to be distinguished from a mere request for information (which does not reject or destroy an offer): Case: Stevenson, Jaques & Co v McLean (1879-1880) Fact: The D wrote to P offering to sell iron and would open the offer till Monday. On Monday, the P sent a telegram asking about methods of delivery. The D sent a telegram telling about the sale to another purchaser. The P again sent a telegram accepting the offer without knowing about the sale to another purchaser. Held: There was a contract between them. No counter-proposal is involved....