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QUESTION 3
RM50 000
Muthu wrote to Abu offering to sell his banana leaf restaurant in its current
state at a price of RM50,000 and Muthu asked Abu to confirm his acceptance
in writing by 4th July.
On 1st July Abu replied that he agrees to purchase the restaurant at
RM50,000 with conditions that certain renovations to its kitchen and toilet are
done by Muthu at his own expenses.
Muthu received the letter from Abu and being disappointed with Abus
response. Hence, Muthu sold the restaurant to Lim who agreed to purchase
the restaurant in its current condition.
When Abu knew about that, he got angry and alleged that Muthu has breach
the contract, for which he intends to bring a legal action against him. Muthu
is worried of being sued.
Advise Muthu.
ISSUE
The issue is whether there was a valid acceptance between
Muthu and Abu.
LAW APPLICABLE
Section 2(a) of the Contracts of Act 1950 defines an offer or a
proposal as 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.
Section 2(b) states that when the person to whom the
proposal is made signifies his assent thereto, the proposal is
said to be accepted.
Section 2(h) states that an agreement enforceable by law is a
contract.
Section 7(a) provides that in order to convert a proposal into
a promise, the acceptance must be absolute and unqualified.
1000
950
WRENCH
SELL - FARM
1000 POUND
HYDE
OFFER TO BUY A
PROPERTY
JONES
DANIEL
APPLICATION
Applying to this current situation :
Muthu offered Abu to sell his restaurant amounted to
RM50,000 at its current state by 4th July. Abu then
agreed to purchase the restaurant from Muthu on 1 July for
RM50,000, with the conditions that Muthu has to renovate
the restaurants kitchen and toilet by Muthus own
expenses.
Hence, this is not a valid acceptance but a counter offer.
Muthu received the letter on 4th July and got upset by Abus
respond. Muthu then sold the restaurant to another person,
Lim.
If there are a counter-offer in the agreement, it depends on
the offeror whether to accept or not. If the offeror agrees and
accepts the counter-offer, the agreement can be concluded.
In this case, Muthu as an offeror has the right to accept or
reject towards the counter-offer. Therefore, Muthu was not
bound to sell the restaurant to the Abu.
Hence, he reject the counter after made by Abu as he sold
the restaurant to the other party (Lim).
CONCLUSION
Abu
Muthu
Lim
THANK
YOU ...