Elements of contractCommunication of proposalStatements which are not proposalTermination of a proposalAcceptanceManner of acceptance

Revocation of a proposal and acceptanceIntention to create legal relations ( ICLR)ConsiderationCertaintyLegal capacity (Competency)Free consentLawful objects & lawful considerationDischarge of a contract

A CASE IS NORMALLY CITED IN SUPPORT OF A LEGAL PROPOSITION AND THIS IS DONE BY QUOTING THE NAME, DATE, VOLUME NUMBER, FIRST PAGE OF THE REPORT EG- Tan Bing Hock v. Abu Samah [1968] 2MLJ 221.This means that the case of Tan, the plaintiff, against Abu, the defendant, is reported in the Malayan Law Journal of 1968, Volume 2 at page 221

Based on section 2(h) of the Contracts Act, 1950, a contract is an agreement enforceable by lawA contract is an agreement between 2 or more parties that is enforceable by law and is legally bindingIt can only be binding if the contract has ALL the essential elements

THE 8 ESSENTIAL ELEMENTS

When is an offer made?Section 2(a) of the Contracts Act: when one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinencee.g. Ms. Yee Wen makes a booking for a Junior Suite at the Hilton for 3 days, 2 nights

Proposal is not the same as invitation to treat It is a sort of prelim communication which passes between the parties at the stage of negotiation e.g. price list, a display of goods with price tags in a self-service supermarket, an advertisement or an auctioneer inviting bids.Displays of goods in a shop generally do not constitute a proposal to sell

The invitation is not capable of being accepted as it is not a proposalThe proposal is in fact made when the customer takes the goods up for paymentCASE LAW: Pharmaceutical Society of G.B v. Boots Cash Chemist Ltd [1953]( registered pharmacist to supervise sales), Coelho v. The Public Services Commission [1964](probation, dismissal)e.g. An advertisement in the newspaper for a promotional package holiday to Bali

A customer picking up a souvenir from the shelves of a display counter in a souvenir shop is he making an offer?David displayed an 8-tier wedding cake in his window, with the price tag of RM2 on it- is he making an offer?Case law: Fisher v. Bell ( offensive weapon, invitation to treat )

To a person or to the general publicMade to a person, only the addressee may accept the proposal (Section 2(b))- Bilateral offerWhen made to the public, anyone who meets all the terms of the proposal may accept it- Unilateral offerCase law: Carlill v. Carbolic Smoke Ball Co. [1893]- influenza, compensation. Applies to rewards for the return of lost property too.

2(b) when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be acceptedUpon such acceptance by the Hilton of Ms. Yee Wens booking , an agreement between the parties has been created.The person making the promise/offer is called the promisorThe person accepting the promise/offer is called the promisee

Any modification of a proposal does not constitute an acceptance: it is a counter-proposal, and interpreted as a rejection of the original proposalHyde v. Wrench [1890]- defendant offered to sell his property for 1000 pounds, plaintiff countered with 950. This was rejected, and the plaintiff accepted the original offer. Ruling: he had rejected the original proposal, and it cannot be revived.

An alteration or change of an original offer amounts to a counter offer and will not mean an acceptance.For example: Phuket Paradise Hotel offers accommodation in a deluxe room at THB5000 per night. Mr. Ivan replies he wants to accept the offer at THB4000 per night. Mr. Ivans reply is not an acceptance, but a counter-offer.

General rule: acceptance must ordinarily be communicated and made in some usual and reasonable manner if no method of acceptance is prescribedIf the proposal specifies a particular mode of acceptance and it is not followed, the proposer is entitled to insist on it. Important for the proposer to act within a reasonable time after the communication of the acceptance, otherwise it will be deemed as being accepted

By telephone: acceptance is only complete when the words of acceptance are transmitted to the other personWhat would happen if the call was disconnected?By post: s. 4(2)(a) Contract Act 1950: acceptance is said to be communicated when the letter is posted even if the proposer has no knowledge of the acceptance or if the letter is lost or delayed

A proposal, once communicated, remains open until it lapses or is withdrawnSection 5(1) a proposal may be revoked at any time before the communication of its acceptance is complete, but not afterwards

Definition: the value one party pays in exchange for the promise of anotherSection 26, an agreement made without consideration is void, unless-A) it is in writing and registered orB) is a promise to compensate for something doneC) or is a promise to pay a debt

Inadequate consideration will not make an agreement void, if both parties entered into it with free consente.g. Matthew agrees to sell his vintage wine worth RM10,000 for RM10. Matthews consent to the agreement was freely given. The agreement is a contract despite the inadequacy of the consideration

- A CONSIDERATION MAY BE VIEWED AS A SORT OF BARGAIN, OR THE PRICE ONE PARTY PAYS TO BUY THE PROMISE OR ACT OF THE OTHERe.g. Anastasha has lost her camera while traveling on a train and she offers a reward of RM50 to anyone who finds and returns it to her. Stanley finds it, returns it to Anastasha. Anastasia promises to pay RM50 to anyone in return for an act. Stanley pays the price for Anastashas promise by performing the act- this is the consideration for the promise

INTENTION TO CREATE LEGAL RELATIONSLEGAL CAPACITYCERTAINTY

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