ELEMENTS

SECTION #

Contract

Section 2 (h) CA

DEFINITION
Agreement enforceable by law. Can be in
written, oral or implied by action.

RULES
1. Contract by deed:Speciality contract.
2. Wirtten
3. Evidenced in writing
1. Can be made to anyone and everyone

Proposal or offer

2(a)

Readiness of the person who makes the offer

to create a legal relation and to be bound by
the law, whenever the terms of the proposal
are agreed upon the acceptance. (proposal=
able to convert into agreement upon
acceptance)

2. Express or implied (S9)

- Can be orally, in written, by conduct or
combination

3. Obligation by inference

4. Legally capable of acceptance

5. Must be clear, certain and commnunicated

- Propsal must not be vague, in definite or
uncertain(impossible to hold there was an
agreement btw parties)

6. Must be different from invitation to treat

eg: display of goods in shop window
-auctioners invitation for bids
-circulars and advertisements
-tenders
-supply of information
-statement of intention

Acceptance

1. S2(b)

1. Acceptance must be absolute and

unqualified - S7(a)
1. An agreement by the acceptor to the term -Acceptance must be made on the same term
contained in the proposal made by the
as provided in the proposal and there must
proposer, with that acceptance, binding
not be any variation and modification.
contract exist. Silence is not an acceptance.
2. Must be communicated - S3- Can be
written orally/by conduct/combine method.
-S7(b)- the acceptance may be expressed in
some usual and resonable manner unless the
proposal prescribes a manner in which it is to
be accepted.
3. Communication of acceptance may be
waived- S8
-Performance of the condition of the proposal
is an acceptance, therefore promisee need
not to communicate to the proposer that he
had accept the proposal (unilateral contract)

4. When communication of acceptance is

completed- S4(2)(a), Postal rule:
-the acceptance is complete/effective as soon
as the acceptor post his letter of acceptance
though is not yet reach the proposer.

Consideration

S26

As a general rule, an agreement witout

consideration is void. The word consideration
is defined in S2(d)-when there is an offer,
1. must have vakue in the eye of law
there is an acceptance, there must be a
consideration to accept which call
promise(promisee/acceptor must give
something in return for the promise by
promisor/offeror

2. Executory, executed and past

consideration

3. Adequacy of consideration
S26(2)-adequacy of consideration is
immaterial(cannot merely void because of it)

4. Consideration need not be adequate but

sufficient
S26(f)- As long as the consideration has some
economic value then the consideration is
sufficient and valid.

CASES

RESULTS

Contract is valid because offer is

made, not invitation to treat because the
Carlil v Carbolic Smoke Ball Co Ltd (1893)
offer is specific in term of the amount,
-Co. advetised they would offer $100 to any1 who consume time & usage.
the ball for fixed period of time but still attacked by influenza Lady won (dpt duit beb)
1. Oral contract is valid because the
1. Oral contract: Syed Jaafar bin Syed Ibrahim v. Maju Mehar agreement created a binding contract.
Singh Travel & Tours Sdn Bhd 1999
Syed Jaafar won
-Plaintiff entered into an oral agreement with the defendant's
Managing Director that he will provide the passengers and
thed efendant will provide tickets and visas to Syed Jaafar
2. Contract by conduct is valid
becasue by entering the race on the club
2. Contract by conduct: Clarke v. Earl of Dunraven 1895
terms the competitors entered into a
-2 yatchs entered club race, Clarke damaged Earl's yatch by contract with each other on those terms
fouling. Both agreed to undertook payment of damage
consequently Earl Dunraven had to
caused by fouling.
pay.

Thornton v. Shoe Lane Park Ltd 1971

Thornton parked his car at at Shoe Lane Parking but did not
notice the warning at the entrance "Park at your risk" sign.
Eventually his car damaged, he sued SLP.

Affin Credit (M) Sdn Bhd v. Yap Yuen Fui 1984

-Affin made hire purchase agreement with Yap and sued Yap
for pending payments.

The offer is made when the proprietor

of the machine holds it out as
beingreadytoreceivemoney.The
acceptance takes place when the
customerputs his money into theslot.
SLP won
Agreement is voidab initio (no
effectfrom the beginning) since lack of
offer and acceptance because the
agreement signed did follow HP act
1967, S4 (1).

1. Agreement is valid, Paya has to pay

for the damages since the aagreement
fall within 12 years, Paya break the
agrement in 6th year.

1. Ho Ah Kim v. Paya Trubong Estate Sdn Bhd 1987

-There was a written agreement to purchase a part of
defendants land in Penang to the maximum extent of about
15 acres or less. The contract is made for 12 years but by
6th year, Paya unable continue to pay to Ho.
2. Contract is invalid due to the fact that
the terms of the proposal were not clear
2. Sou Yong v. Yuzin bte Abdullah @ Ho Yuzin
or certaain.

There is no contract but only invitation to

treat. The defendant was merely inviting
the customer to choose items from the
Pharmaceutical Society of Great Britain v. Boots Cash
shelves and there is no sale affected
Chemist (Southern) Ltd 1953.
until the customer's offer to buy is
D- anowner ofa selfservice shop selling drugs. P charged D accepted by the registered pharmacist at
forselling listed poison without supervision of
the counter by accepting the price
registeredpharmacist.
money.

Hyde v. Wrench 1840

Wrench offers to sell his estate to Hyde for $1000, but Hyde
counter-proposed with $950 but Wrench disagree. Hyde
agrees for $1000 later but Wrench refuse to sell.

No acceptance had occurred since the

counter proposal made by Hyde
constitutes the rejection tp the original
proposal.

Felthouse v. Bindley 1826

Silence is no acceptance.

Carlil v Carbolic Smoke Ball Co Ltd (1893)

An acceptance is made when Carlil
-Co. advetised they would offer $100 to any1 who consume purchased the product which no need an
the ball for fixed period of time but still attacked by influenza acceptance letter.

1. Acceptor post his letter of acceptance, the proposal is

bound to perform his obligation even though he did not know
about the acceptance. S42aa
-Ignitius v. Bell 1913: Bell made a proposal to sell his land to
Ignatius. The offer open until 20 Aug 1912. Ignstius replied
on 16 Aug, but only received by Bell on 25 Aug.
2. S4(2)(a)(b)- the acceptor post his letter of acceptance, he
is not bound to perform his obligation until his letter of
acceptance reach the proposer. Eg. A propose to sell his car
to B by letter, B accept the proposal by letter, A is bound
with the obligation even without receiving the letter, but B is
bound ONLY when the A received the letter.

Communication of offer was completed

when acceptance was post on 16 Aug
1912 even though Bell did not know
about it.

it was clear that there was consideration

University of Malaya v. Lee Ming Chong 1986
on the part of the University. The fact
-alkisahnya, University of Malaya appointed the Lee to a
that the University appointed him to the
scholarship to pursue studies. agreement stated that Lee
scholarship was the consideration on its
have to serve the University five years min if fail to fulfill, Lee part fo rLees promise to serve it for five
has to pay fine RM5000. Lee breached the term and
years after completing the course, which
contended that the scholarship agreement was void as it was he would not be able to take without the
made without consideration
appointment of the University

transaction remains in the future (promise in return for a

promise in future
-K Murugesu v. Nadarajah 1986- Nadarajah pestered
Murugesu to sell the house to him. Murugesu wrote piece of
agreement to sell the house to Nadarajah for $26000 within
the 3 month from the date of agreement. Murugesu
contended there was no consideration for the offer to sell
and the agreement was void for want of the consideration.
2. Executed consideration- doing an act -an offer of reward
for an act.
-A offers RM500 to whom return his car. B return A's car in
accordance with the offer. Therefore, B act as executed
consideration.

1. Agreement was a case of executory

consideration.

3. Past consideration-Something wholly performed before

making of the promise. 3 conditions: act must done on
promisor request,act to be remunerated either by payment
of confirmant of some benefit, and must be legally enformed
and promised in advanced.
2. B will receive the money if he
-Kepong Prospecting Ltd v. Schmidt 1969-Schmidt was
successfully returned A's car.
consulting engineer, he help formation of the Kepong and
was appointed as MD, in agreement co. agree to pay 1% of
the value of all the iron sold which considered as
consideration of the service rendered by Schmidt on behalf
of Kepong before its formation, ofter incorporation and for
future service. Is it a valid consideration even though the
were past???
3. It was a valued consideration and
Schmidt was entitled to claim the amt.

Phang Swee Kim v. Beh Ihock 1964

Agreement is valid due to adequacy of
-Beh agreed to transfer land to Phang on payment of $500 bt consideration because the consent was
the worth more than that. So, Beh refuse to honour the
freely given by Beh. Although the
promise and claimt promise was unenfoceable.
consideration was inadequate.
Chappel & Co Ltd v. Nestle Co Ltd 1960
To Nestle choc bar, they offer a record for 1 shiling and 60
pence plus 3 wrapper from 6 penny choc bar. Whether
chocolate wrappers formed a part of consideration?

Nestls contention that acquiring and

delivering the wrappers was merely a
condition which gave the qualification to
purchase and wasnt part of the
consideration.

CASES

REVOCATION
1. Rejection

Malayan Flour Mills Bhd v. Saw Eng Chee 1997

2. Lapse of time S6(b)

-Propsal can be revoked by the lapse of the time
prescribe in the proposal for its acceptance. If there is
no time prescribe, by lapse of reasonable time.

3. Failure of acceptor to fullfill condition precedence

Ramsgate Victoria Hotel Co v. MonteFiore 1866

Montefiore offered to buy Ramsgate's co chare by
letter dated 8 June 1864. Co only replied on 23
Nov 1864, but Montefiore refused to take the
share.

Aberfoyle Plantation Ltd v. Khaw Bian Cheng 1960

-Parties agrees to sell and buy plantation, the
purchase is conditional on the vendor obtaining
the renewal of the 7 leases. Unable to fulfill the
condition, the agreement shall become null and
void.

4. Death of the party

-It is important that the acceptor knows about the fact
of the death or mental disorder of the proposer. If the
acceptance is made without the knowledge of the
death or the mental disorder of the proposer then it is
a good acceptance.
-

5. Merger

6. Revocate
-Must be made before acceptance.
- Must be communicated by notice to other party
S6(a).
- Mustbe brought to the mind of the promisee/offerer

Postal Rule:
1.Byrne v Tienoven 1880
-Revocation of proposal is made by post, the
revocation is only effective when it comes to the
knowledge of the acceptor, and not at the time
when the letter of revocation is posted
2. Dickinsons v. Dodds(1876)
-Revocation of proposal need to be communicated
by third party who is acting on behalf of the
proposer as the agent.

S5 (2)-Acceptance may be revoked at any time before

comm of acceptance is complete against the acceptor
Dunmore (Countess Of) v. Alexander 1830
but not afterwards.
-The letter of acceptance and revocation letter
(sent by express), received simultaneously.

EXCEPTIONS-S26 agreement without

consideration=void but there are exceptions on
agreement made
1. on account of natural love and affection
-S26(a) contract valid if it expressed in writing,
Re Tan Soh Sim Case 1991,
registered under existing law, the parties stand in a
-In this case, a woman on her deathbed expressed
near relation to each other.
her intention to leave all her properties to her four
adopted children.

2. Agreement to compensate past voluntary act

S26(b)-consideration is valid if promisee has done
some voluntary act on his own for the promisor and
subsequently the promisor promise to compensate the
promisee for the act, then the promise is enforceable.

-Kepong Prospecting Ltd v. Schmidt 1969-Schmidt

was consulting engineer, he help formation of the
Kepong and was appointed as MD, in agreement
co. agree to pay 1% of the value of all the iron
sold which considered as consideration of the
service rendered
3. Agreement to pay debt barred by limitation of law
S26(c)-the promisor is liable to pay previous debt
which the creditor cant recover through legal action
due to the time limited by statute if the following
condition arised:
-debtor make a fresh promise to pay the debt.
-promise is made in writting and signed by the person
to be charged/his authorised agent.

University of Malaya v. Lee Ming Chong 1986

-alkisahnya, University of Malaya appointed the
Lee to a scholarship to pursue studies. agreement
stated that Lee have to serve the University five
years min if fail to fulfill, Lee has to pay fine
RM5000. Lee breached the term and contended
that the scholarship agreement was void as it was
made without consideration

RESULTS
The telex offer was nothing but an invitation ot
treat in view of the condition imposed.
Accecptance by the Malayan did not constitute a
valid cotract. In addition to accept the offer
before the deadline, Malayan must fulfill all the
terms and condition in the telex offer but they
failed. So, Saw has every right to treat there was
no valid contract between parties.

Montefiore's refusal was justified because co's

delay in acceptance the offer within resonable
time. June to Novemebr is not considered
reasonable time.

The contract become null and void because

Khaw did not renew the leases.

2. Defendant was free to revoke his offer at any

time because there was no consideration given
by the claimant of the promise, to keep the offer
open.

Revocation completed.

The court held that the claims of the adopted

children were not effective as it was contrary to
Section 26(a) - that it was not in writing, and
there was no natural love and affection between
parties standing in near relation to each other,
since the four children were adopted and did not
have natural relations (blood ties) to that
woman.

It was a valued consideration and Schmidt was

entitled to claim the amt.

it was clear that there was consideration on the

part of the University. The fact that the
University appointed him to the scholarship was
the consideration on its part fo rLees promise to
serve it for five years after completing the
course, which he would not be able to take
without the appointment of the University