Suggested answers
Proposal:
1. What is a proposal and what manner or form can a proposal be made?
i.
Section 2 CA defines proposal to mean ‘when one person signifies to another his
willingness to do something and in the hope that the other person would signify
his consent, the person is said to make a proposal.
ii.
A proposal can be made either orally or in writing. Section 9 states that a proposal
made in words (oral or written) is expressed. Otherwise it is implied.
2. Why must you communicate your offer and when is the communication of a
proposal said to be completed?
i.
Must communicate - because the person who wants to accept the offer must be
made aware of the offer - R v Clarke (Where Clarke could not benefit from the
reward offered as he was not aware of the reward at the time he gave the
information).
ii.
The communication of a proposal is complete when it comes to the knowledge of
the person to whom it was made - Section 4(1) CA.
3. Explain with the use of case law the principle of unilateral contract. What is its
difference with a bilateral contract?
Ans:
i.
A unilateral contract is where one party makes an offer to the public at large and
the person or party who wants to accept may do so by just performing the act
prescribe in that offer. Only the identity of the offerror is known.
In Carlill v Carbolic Smokeball Co., the company made an offer to the public that
any one who bought and used their smokeball according to the prescribed manner
and still suffer influenza would be given $100.00.
Mrs. Carlill bought the drugs and used it according to instruction as prescribed and
still got influenza.
The court held that she had accepted the offer by merely performing the acts
prescribed in the offer.
ii.
In a bilateral contract, the offer is made to a particular party. The identity of the
offerror/proposer and the identity of the offeree/proposee are known to the parties
(to each other). Here, both parties make promises to each other e.g. X promise to
sell the item to Y, and in return Y promise to pay for it.
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Invitation to treat:
4. In a display of goods in the supermarkets, explain using case law, how a contract is
made.
i. The legal principle is that display of goods, with or without price tags, on the
shelves are not offers but an invitation to treat.
ii. When the customer picks an item and gives is to the cashier at the payment counter,
he is making an offer to buy. He is the offeror.
iii. When the cashier takes the item and tells the price or ‘rings’ the cash registered, this
is acceptance, by the offeree i.e. the supermarket.
iv. The case to support this principle is Pharmaceutical Society of Great Britain v
Boots Cash Chemist Ltd.
Revocation of offer:
5. A made an offer to B to sell his used laptop for RM1000.00. He told B that B must
decide within 7 days. On the 3rd day A informed B he has decided to withdraw his
offer. Advise B.
Party:
A is the Offeror and B is the Offeree.
Issue:
The issue here is whether an offer, giving a time period for acceptance, can be revoked
before the time period has expired.
Law:
The law as in Section 5(1) states that an offer can be revoke at any time before
acceptance. In Routledge v Grant, Grant had offered to buy Routledge’s horse and gave
him 6 weeks to decide but before the 6 weeks had lapsed, Grant withdrew his offer. It
was held that in the absence of acceptance by Routledge, Grant was entitled to revoke his
offer even though the time period of 6 weeks was still current.
Apply:
A can revoke or withdraw his offer on the 3rd day as B not yet communicates his
acceptance to A.
Conclusion:
I advise B that based on S5(1) and the principle enacted in the above case law, A can
revoke or withdraw his offer as long as before B communicates his acceptance.
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6. Ali had an agreement with Ben, a contractor, that Ben can extract timber from his
land on condition that he obtains a timber license before entering his land to extract
the timber. Ben told his employees to begin timber extraction whilst he applied for
the license. Advise Ben.
Party:
The party involved are Ali and Ben. Ali is offeror and Ben is offeree.
Issue:
The issue here is whether Ben has a contract with Ali when the agreement is subject to a
condition precedent i.e. to obtain a timber license.
Law:
The law in Section 6 (c) states that a proposal is revoke if the acceptor fail to fulfill a
condition precedent to acceptance.
Apply:
Obtaining the license first is the condition precedent to acceptance which Ben must fulfill
otherwise the proposal is revoked.
Conclusion:
I advise Ben that he cannot extract any timber before he obtains the license. Since he has
gone ahead without the license the proposal is now revoked and there is not contract
between Ben and Ali.
7. Ali offered to sell his car, a 2 year old Toyota Vios 1.5s, to Chan for RM60000.
Cindy advertised for sale in the local magazine her ‘Mountain Bike – Offer price
RM300’. Chan is interested in buying both the car and the mountain bike. Advise
Chan as to how he can own both items?
There are 2 scenario here – 1. Offer. 2. Invitation to treat:
Offer
Ali is making a proposal. A proposal is an undertaking which is certain and definite,
made with the intention that it shall become binding as soon as it is accepted by the other
party. (Student may use definition in Section 2 (a) Contracts Act 1956).
Thus, if Chan wants to buy the car he has to inform Ali that he accepts Ali’s offer
Invitation to treat
Cindy’s advertisement is an invitation to treat. An invitation to treat is a preliminary
communication. It is not an offer. It is an effort to invite others to make an offer as in
Hart v Mills. Chan must make an offer to buy if he want the mountain bike.
8. Alan was at Christies, an auction house, to buy one of Michael Jackson’s costumes.
The auctioneer asks the bidders to bid for the costume. Alan manages to bid at the
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highest price. Then he changes his mind and decided to withdraw. Advise Alan his
legal rights.
Ans:
a. The issue here is whether there is a binding contract between Alan and the
auctioneer.
b. When the auctioneer asks for biddings, this is an invitation to treat.
c. When Alan put in his bid, he is making an offer. The highest bid is the final offer.
d. Section 5(1) CA 1950 states that a proposal can be revoke at any time before
acceptance.
e. In the auction house, by trade practice, the fall of the hammer indicates acceptance
by the auctioneer – Payne v Cave.
f. If Alan decides to withdraw his offer he must do so before the hammer falls. If he
withdrew after the hammer has fallen, then he is bound as the auctioneer has
accepted his offer, and a contract is formed.
Would your answer be different if the auctioneer refuse to hit the hammer and told
Alan that they have decided to withdraw the item for auction after Alan had made
the highest bid?
Answer:
a. Offeror is Alan, Offere is the auctioner.
b. The issue here is whether the auctioneer can refuse to accept the highest bid.
c. In contract law when one party makes an offer the other party, the offeree, may
accept or reject the offer.
d. In an auction, by trade practice the price bidding is the offer and the fall of the
hammer signifies acceptance as in Payne v Cave.
e. Here the offeror is Alan and the highest bid is the highest offer. The offeree in
this case is the auctioneer. The offeree can either accept or refuse the offer. Since
the auctioneer’s hammer did not fall this means the offer was not accepted. Thus
there is no contract.
f. The auctioneer as the offeree has every right to reject an offer as long as it is before
he accepts.
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