Question 1 Issue: Whether Michael can revoke the offer made by Joey when make the revocation of the offer by phone call before the acceptance letter from him was sent before the revocation was made. Law: Based on section 2(a) of Contract Act 1950 defines that when one person (offeror) signifies to another (offeree) his willingness to abstain from doing anything, with a view of to obtain the assent of that other to the act or abstinence, he is said to make a proposal (Coursehero 2015). Based on section 2(b) CA 1950 defines the proposal is to be a valid contract when the offeree must convey his or her acceptance to the offeror (Coursehero 2015). As the same time, Section 2 (a) & (b) of CA 1950, offer was a signification of willingness for an individual to become binding with another party when acceptance are present (Lawteacher 2017). Section 9 CA 1950 states that if the acceptance is made in words, then the acceptance is expressed. If the acceptance is made other than in words, then the acceptance is implied (Coursehero 2015). The person who make the proposal is called as ‘promisor’ while the person who accepts the proposal is called as ‘promisee’ under section 2(c) CA 1950 (Coursehero 2015). If a person who makes an offer is known as an offeror while a person to whom an offer is made is known as an offeree (MacIntyre 2011). Acceptance of an offer means unconditional agreement to all the terms of that offer (Elliott & Quinn 2009). Acceptance can be oral form or in writing, but in some cases an offeree may accept an offer by doing something, such as delivering goods in response to an offer to buy (Elliott & Quinn 2009). In addition, Section 5(2) CA 1950 states that revocation of acceptance can happen at any time before the communication of acceptance is completed against the acceptor but not afterwards (Lawteacher 2017). This is illustrated in the case of Byrne & Co v. Van Tienhoven & Co. This is when on 1 October 1879, the defendants mailed offer to plaintiff regarding to tin plates and posted an offer to sell 1,000 boxes of tinplate to the plaintiff in New York. On 8 October, the defendants emailed a revocation of the offer. The defendants’ offer was received by the plaintiff on 11 October and a telegram of acceptance was sent the same day. On 20 October the defendants’ letter of revocation reached the plaintiff. The court held that there was
a good contract came into existence on 11 October (Casebrief 2012). The revocation was not effective until it was received on 20 October which is not fulfilled under section 5(2) CA 1950. In Contract Act 1950, section 4(2) (a) stated that the communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor. According to the Section 4(2) (b) CA 1950, it stated that the communication of an acceptance is complete as against the acceptor, when it comes to the knowledge of the proposer. Section 4(3) CA 1950 states that the revocation of acceptance must be communicated to the offeror. The postal rule was laid down in Adams v Lindsell (1818) where the defendant wrote to the plaintiff offering to sell them some wool and asking for a reply 'in the course of post'. The letter was delayed in the post. On receiving the letter, the plaintiff posted a letter of acceptance the same day. However, due to the delay the defendant's had assumed the plaintiff was not interested in the wool and sold it on to a third party. The claimant sued for breach of contract. The court held that there was a valid contract which came in to existence the moment the letter of acceptance was placed in the post box. But, this case established the postal rule. This applies where post is the agreed form of communication between the parties and the letter of acceptance is correctly addressed and carries the right postage stamp. The acceptance then becomes effective when the letter is posted.
Application: Answer 1: In the Contracts Act 1950 of section 2(b) states that acceptance can be defined as when offeree dignifies his assent to the offer, the offer is said to be accepted and becomes a promise. On 7th November 2016, Joey signifies her willingness to sell his car for RM 80,000.00 by letter to Michael. On 15th November, the offer letter has come to the knowledge of Michael and he convey his acceptance by letter to Joey. An agreement has become valid as offeror convey his acceptance to the offeree. However, the agreement is not valid as Michael changed his mind and revoked his acceptance by telephoned Joey before the letter of acceptance approached her. Then, his revocation of acceptance by telephone call has come to the knowledge of Joey before the letter of acceptance approach her. But, Joey only received the acceptance of Michael’s letter on 18 November. The
revoking by telephone of the acceptance is effective because Michael’s acceptance has not already come to the knowledge of Joey. Answer 2: Based on the case, Joey is the offeror and Michael is the offeree. A revocation of an offer by Michael (offeree) must be made by any communication tools that can deliver information immediately to Joey, the offeror. In this case, Michael contacted Joey by phone call to inform about the revocation of the offer to her. So, there was a revocation made by the offeree, Michael. In postal rules, if the letter of acceptance made by the offeror was sent before the revocation was made by the offeror, so there was existing a binding contract. Revocation can happen at any time before the communication of acceptance is completed against the proposal but not afterwards, this scenario is fulfilled under section 5(2) CA 1950.In this case, Michael has sent the revocation of offer by phone call to Joey before Joey received the acceptance letter. So, the revocation was valid and there was no binding contract between them.
Conclusion: The revocation made by Michael was valid before the letter of acceptance received by Joey. There was no binding contract between them, Joey cannot claim the offer.
Question 2 Issue:
Whether there is an agreement between Johnny and Lim when Lim makes a counter offer, does the original offer remains open?
Law: The definition of proposal or offer is defined under section 2(a) of Contract Act 1950 as when one person (offeror) signifies to another (offeree) his willingness to abstain from doing anything, with a view of to obtaining the assent of that other to the act or abstinence, he is said to make a proposal. When the offeree agree with the proposal, then the proposal is said to be accepted and the contract is formed between the offeror and offeree will be legally binding under section 2 (a) of Contract Act 1950. The proposal can be rejected by offeree if there is an introduction of new term, condition or offer is known as counter offer. If offerees change their minds and try to accept, then they are said to be making a new offer. This is an attempt to get more favourable terms, a price reduction. A counter offer is defined as where an offeree responds to an offer by making an offer on different terms (E-lawresources 2017). This has the effect of destroying the original offer so that is no longer open for the offeree to accept (E-lawresources 2017). A counter offer means no acceptance between the parties. This situation similar with the case law Hyde v Wrench in 1840 (Casebrief 2015). The case is about the Wrench, the defendant wrote to Hyde, the plaintiff offering to sell his farm for 1000 pounds but plaintiff responded with an offer of price 950 pounds in which defendant needs some time to think about it. After two weeks, defendant rejected the offer and the plaintiff immediately replied that he accepted Wrench’s earlier offer to sell to real estate for 1000 pounds. In this case, defendant was offering to sell his estate to plaintiff at the price of 1000 pounds. Wrench refused to accept and then Hyde sue him for breach of contract and bring to a specific performance. The court held that there was no contract was made between the parties as the earlier offer to sell the land was terminated by the counter offer and it could not be revived. Plaintiff made a counter offer that he only accept the offer when it reduces to 950 pounds but defendant refused to accept plaintiff new offer. The court held that there was no acceptance between the parties.
Lim rejects the price offered by Johnny. Lim is making counter offer by reducing the original price from RM 5,000.00 to RM 4,800.00. Here, Lim is making bilateral offer to Johnny. Lim make an offer to Johnny that he will buy the farm with the price of RM 4,800.00 to Johnny. This situation similar with the case law Hyde v Wrench. In this case, Johnny is the offeror who signifies his willingness to Lim that he want to sell his farm at a price of RM5000 to him. However, Lim did not accept the Johnny’s original offer and said that he would only paid if the price reduced to RM4800 which is a new price, then Lim is making a counter-offer. However, Johnny rejected and there was no acceptance by Johnny on Lim’s counter offer. A counter offer means no acceptance between the parties. But after that, Lim said that he agreed on the original price and tried to revive the original offer.
Conclusion: From this case, we know that by making counter offer, Lim rejected the original offer and he was not entitled to revive it. Under this condition, there are no binding contracts between both parties.
Issue: Whether Ben have the right to sue Sam for breach of contract. Law: Consideration is defined as being something which represents either some benefit to the person who making a promise (the promisor) or some detriment to the person to whom the promise is made (the promise) or both (Elliott & Quinn 2009). In most contracts, two promises will exchanged each other, so that each party is a promisor and a promisee in the contract. Based on section 2(a) of Contract Act 1950 defines that when one person (offeror) signifies to another (offeree) his willingness to abstain from doing anything, with a view of to obtaining the assent of that other to the act or abstinence, he is said to make a proposal. Based on section 26 of Contract Act 1950, an agreement made without consideration is void. However, under Malaysia law, promisee or third party may provide consideration. Section 2(d) of Contract Act 1950 provides that when the promise or any other person has done or abstained from doing something such act is called a consideration for the promise. However, consideration can move from the promisee in which a person other than the promisee the consideration, the promisee cannot enforce the agreement (E-lawresources 2017). The principle applied in Venkata Chinnaya v. Verikatara Ma’ya (1881) where a sister agreed to pay an annuity of 653 Rupee to her brothers who provided no consideration for the promise (Lawteacher 2017). But, on the same day their mother had given the sister some land, stipulating that she must pay the annuity to her brothers. However, the sister subsequently failed to pay the annuity and was sued by her brothers. The court held that she was liable to pay the annuity. There was good consideration for the promise even though it did not move from her brothers (Lawteacher 2017) Where the sister was liable on the promise on the promise on the ground that there was a valid consideration for the promise even though it did not move from the brothers. In this case, sister paid the education fees for her brother where her mother provided consideration.
When something is given in return for something else, it is clearly shows that there is consideration that makes the agreement valid. In this case, Sam is the promisor who promise to provide financial support for Ben’s education by paying for his school fees and monthly living expenses is the consideration for his mother to transfer the ownership of her land to him. The consideration by his mother is a good consideration. Land is the consideration for Sam to pay school fees and monthly living expenses to his younger brother, Ben. In this case, only Sam and his mother provide consideration whereas Ben did not provide any consideration. According to the Section 2(d) of Contract Act 1950 and the case of Venkata Chinnaya v. Verikataya Maya, consideration can move from the promise or any other person. This means that the consideration can be done by any other person, not necessary from the promisee. Even though his brother did not provide any consideration, the agreement is still valid.
Conclusion: Sam hereby advised to pay the school fees and monthly living expenses to his brother, Ben. This is due to there is no doubt in the validity of the agreement made by the persons involved. Ben has a right to sue Sam for breach of contract if he fails to provide him the school fees and monthly living expenses.
References Quinn, C. E. &. F., 2009. Contract Law. 7th Edition ed. England: Pearson Education Limited.
https://www.coursehero.com/file/p1bvvth/Revised-by-Gilbert-Sim-LLBHons-CLP-May2015-Page-4-BBBL-2023-Commercial-Law-Law/ http://www.doyoubuzz.com/var/f/RW/2A/RW2AizGjMaur6peVC7lZng3Sx0yQEJH1FqKt9csX4BI8mDPfb.pdf (book) https://www.scribd.com/presentation/60802677/2-Law-of-Contract https://www.lawteacher.net/free-law-essays/contract-law/malaysian-contract-lawessay.php http://casebrief.me/casebriefs/byrne-v-van-tienhoven/ http://www.e-lawresources.co.uk/Adams-v-Lindsell.php