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Edit Comment Close Premium member Presentation Transcript BUSINESS LAW UL 2023WEEK 1 – WEEK 2(Proposal & Acceptance) : BUSINESS LAW UL 2023WEEK 1 – WEEK 2(Proposal & Acceptance) INTRODUCTION TO LAW OF CONTRACT Prepared by: Nor Anita Abdullah LEARNING OUTCOME : Prepared by Nor Anita bt Abdullah 2 LEARNING OUTCOME What is offer/proposal? Whether an invitation to treat is a proposal? How to revoke an offer/proposal? What is acceptance? How to make an acceptance? Whether silent can amount to a valid acceptance? How to revoke? CONTRACT : Prepared by Nor Anita bt Abdullah 3 CONTRACT Definition: two or more persons to do or abstain for doing some act or acts, intention to create legal relations and not merely to exchange mutual promises. DEFINITION : Prepared by Nor Anita bt Abdullah 4 DEFINITION S.2(h) CA- an agreement enforceable by law is a contract S.2(g) CA- an agreement not enforceable by law is said to be void S.10(1) – all agreements are contract if they are made by 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 Slide 5: Prepared by Nor Anita bt Abdullah 5 All contracts is an agreement but not all agreement is a contract. Some agreements are not contract because they lack certain essential elements: CONTRACTS AGREEMENTS Slide 6: Prepared by Nor Anita bt Abdullah 6 Slide 7: Prepared by Nor Anita bt Abdullah 7 Slide 8: Prepared by Nor Anita bt Abdullah 8 PROPOSAL : PROPOSAL Slide 10: Prepared by Nor Anita bt Abdullah 10 Definition of an offer : Prepared by Nor Anita bt Abdullah 11 Definition of an offer Section 2 (a) of CA 1950 An offer is a proposal Once it is accepted, it creates a legally binding agreement An offer is a definite promise to be bound provided that certain specific terms are accepted A person who makes an offer is called an offeror A person to whom the offer is made is called an offeree. S.2(a) – when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal. Communication of proposal : Prepared by Nor Anita bt Abdullah 12 Communication of proposal S. 4(1) – the communication of proposal is complete when it comes to the knowledge of the person to whom it is made Kes : Carlill v. Carbolic Smoke Ball To whom can a proposal be made? : Prepared by Nor Anita bt Abdullah 13 To whom can a proposal be made? Facts The defendants the Carbolic Smoke Ball Co had placed an advertisement in several newspapers. The advertisement contained the following promise: ‘£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the influenza after having used the ball three times daily for two weeks according to the printed directions supplied with each ball.’ The plaintiff Carlill, on the faith of this advertisement, bought a smoke ball and used it as directed three times a day from 20 November 1891 to 17 January 1892, when she caught influenza. Slide 14: Prepared by Nor Anita bt Abdullah 14 Held (by the English CA): The Court of Appeal held that Carlill was entitled to the £100 because the advertisement amounted to a unilateral offer which had been accepted. The defendants were accordingly bound by the terms of the contract. Lindley LJ believed that the advertisement was a ‘distinct promise expressed in language which is perfectly unmistakable’. It was not a mere puff because of the accompanying statement in the advertisement: ‘£1000 is deposited with the Alliance Bank, shewing our sincerity in the matter.’ Bowen LJ said, ‘If a person chooses to make extravagant promises of this kind he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.’ Slide 15: Prepared by Nor Anita bt Abdullah 15 INVITATION TO TREAT (ITT) : Prepared by Nor Anita bt Abdullah 16 INVITATION TO TREAT (ITT) Display of goods auction tender advertisement Vending machine/ automatic ticket machine Harris v Nickersen Patridge v Crittenden Coelho v ThePublic Services Comission Majunder v AG of S’wak Pharmaceutical Society Great Britain v Boots Cash Chemist Ltd Fisher v Bell Spencer v Harding Thorthon v Shoe Lane Parking Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd.  2 QB 795. : Prepared by Nor Anita bt Abdullah 17 Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd.  2 QB 795. … it would be wrong to say that the shopkeeper is making an offer to sell every article in the shop to any person who might come in and that the person can insist on buying any article by saying ‘I accept your offer’. There is no contract by the shopkeeper to sell until the customer has taken the book to the shopkeeper and said ‘I want this book’ and the shopkeeper say ‘yes’. Counter proposal : Prepared by Nor Anita bt Abdullah 18 Counter proposal When proposal is accepted, it becomes a promise No modifications or variations It must be absolute and unqualified If yes – amounts to counter proposal Treated as rejection to the original offer Case: Hyde v Wrench  3 Beav. 334 “the court ruled that no acceptance had occurred because the plaintiff had rejected the original offer which could not be revived” However, further communication is still permissible REVOCATION OF OFFER : Prepared by Nor Anita bt Abdullah 19 REVOCATION OF OFFER S.5(1) – a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards S.6(1) – states the revocation of proposal A proposal, once communicated, remains open until it lapsed or withdrawn Revocation how made – S6 : Prepared by Nor Anita bt Abdullah 20 Revocation how made – S6 When communication of revocation of proposal is complete? : Prepared by Nor Anita bt Abdullah 21 When communication of revocation of proposal is complete? When it is communicated to the other side An acceptance, once given cannot be revoked unless the offeror consents ACCEPTANCE : ACCEPTANCE Slide 23: Prepared by Nor Anita bt Abdullah 23 Definition of acceptance : Prepared by Nor Anita bt Abdullah 24 Definition of acceptance It is a final expression of assent to the terms of a proposal S2(b) provides: “when a person to whom a proposal is made signifies his assent thereto, the proposal is said to be accepted; a proposal, when accepted becomes a promise” The person accepting the proposal is called the ‘promisee’ or the ‘acceptor’ Acceptance must be absolute and unqualified If it is different from those stipulated in the offer would not be an acceptance in law and it may amount to a counter offer. Slide 25: Prepared by Nor Anita bt Abdullah 25 Ramsgate Victoria v Montfiore Hyde v Wrench Silence : Prepared by Nor Anita bt Abdullah 26 Silence Silence cannot amount to an acceptance Case : Fraser v Everett (1889) 4 Ky 512, SC Singapore. Felthouse v Bindley (1826) 11 CB (NS) 869; 142 ER 1037 But, if the offeree himself stipulates that his silence shall constitute an acceptance or in a counter offer, there will be an intimation that silence would be regarded as an acceptance or the counter offer Silence also may amount to an acceptance if there are other facts like the conduct of the offeree to indicate the acepptance. S7(b) – acceptance must be in the manner prescribed by the offeror Where the proposal expressly stated that it can only be accepted in a certain way, the promisee is bound to accept in the prescribed manner. Counter offer : Prepared by Nor Anita bt Abdullah 27 Counter offer Proposal when accepted becomes a promise The acceptance must be made on exactly the same terms a proposed without modifications or variations. It must be absolute and unqualified as provided under s7(a) of the CA 1950. Any modifications or variation does not constitutes an acceptance but amounts to a counter proposal by the party to whom the original proposal was made. Case: Hyde v Wrench (1840) 3 Beav 334 “the court ruled that no acceptance had occurred because the plaintiff had rejected the original offer which could not be revived” Effects of counter offer : Prepared by Nor Anita bt Abdullah 28 Effects of counter offer The effect of counter offer is destroying the original offer But it does not mean that further communication between the parties is not permissible as long as both parties consent Slide 29: Prepared by Nor Anita bt Abdullah 29 Communication of acceptance : Prepared by Nor Anita bt Abdullah 30 Communication of acceptance As with the proposal, acceptance can be made in writing, or orally or by conduct or by a combination of these methods. General rule, acceptance must be communicated to the proposer. If no method of acceptance is prescribed, the acceptance must ordinarily be communicated and made in some usual and reasonable manner. the acceptance must be within reasonable time as embodied in s6(b) of Contracts Act 1950 – because failure to accept within a reasonable time may lead to a rejection. Slide 31: Prepared by Nor Anita bt Abdullah 31 Section 2(b) of CA 1950 acceptance must be communicated to the proposer offeree agrees to the terms of proposal required by the offeror. The offeror must know that the offer has been accepted. The acceptance must be made while the offer is still open. An acceptance is final and unqualified expression to the terms of the offer. COMMUNICATION OF AN ACCEPTANCE : Prepared by Nor Anita bt Abdullah 32 COMMUNICATION OF AN ACCEPTANCE GENERAL RULE EXCEPTION TO THE GENERAL RULE telegram Acceptance by post Direct acceptance, telex, oral or by phone Entores v Miles Far East Corp Ignatius v Bell Byrne v Tienhoven Entores v Miles Far East Corp Postal rule : Prepared by Nor Anita bt Abdullah 33 Postal rule General rule is that acceptance is effective or complete when it is communicated to the proposer. It is communicated when it comes to the actual knowledge of the proposer – brought to then notice of the proposer But s4(2) of the Contracts Act 1950 provides an exception to the general rule where the parties have contemplated the use of the post as a mean of communication. Illustration (b) of s4 stated : B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete as against A, when the letter is posted and as against B, when the letter is received by A. Slide 34: Prepared by Nor Anita bt Abdullah 34 The proposer is bound when the offeree posted the letter of acceptance even though the former has no knowledge of the acceptance. The transaction is binding irrespective of any delay, lost or disappearance in the course of transit. Illustrated in Entores Ltd v Miles Far East Corporation  2 QB 327 “when a contract is made by post it is clear law throughout the common law countries that acceptance is complete as soon as the letter is put into the post box, and that is the place where the contract is made” Slide 35: Prepared by Nor Anita bt Abdullah 35 Another case in Ignatius v Bell (1913) 2 FMSLR 115 where the principle stated: “ that acceptance is complete upon posting where communication by post is the method contemplated by the parties.” When the party used post as a method of acceptance, it must be reasonable in all of the circumstances. S7(b) of the Contracts Act 1950 provides that in order to convert a proposal into a promise the acceptance must be expressed in some usual and reasonable manner unless the proposer prescribed the manner in which it is to be accepted. Slide 36: Prepared by Nor Anita bt Abdullah 36 Postal rule does not apply in cases of instantaneous communications such as telephone and telex as it is governed by general rule. However, it is based on the rule of convenience where it will apply accordingly according to circumstances Revocation of acceptance : Prepared by Nor Anita bt Abdullah 37 Revocation of acceptance It may be revoked at any time before the communication is complete as against the acceptor but not afterwards It is effective as against as against the acceptor only when it comes to the knowledge of the proposer S4(2)(a) - As against the proposer, the communication of an acceptance is complete when it is put in the course of transmission to him. An acceptor may revoke his acceptance before it comes to the knowledge of the proposer. i.e – when he is able to revoke his acceptance by speedier means of communication. Revocation by post : Prepared by Nor Anita bt Abdullah 38 Revocation by post Therefore, once the acceptor put his revocation into a course of transmission, he cannot withdraw his revocation because the communication of revocation of acceptance is complete as against him upon dispatching the telegram. Eg: If the proposer receives the letter of acceptance on Tuesday and the telegram revoking the Wednesday, the revocation is ineffective Revocation by post : Prepared by Nor Anita bt Abdullah 39 Revocation by post S4(3)(a)CA S4(3)(b) CA Both sections clearly stated the communication of revocation of an acceptance As against the person who makes it (offeree)), when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it, As against the person to whom it is made (offeror), when it comes to his knowledge Illustration (d) of Section 4 of CA. B revokes his acceptance by telegram. B’s revocation is complete as against B when the telegram is despatched, and as against A when it reaches him Slide 40: Prepared by Nor Anita bt Abdullah 40 Where the acceptor can revoke his acceptance at any time before or at the moment when the letter of acceptance reaches the proposer. Illustration of Section 5 of the Contracts Act 1950 You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.