LAW OF THE CONTRACTA contract is an agreement which is legally binding between the parties which enforceable by law.

There are six elements to constitute a contract : -

1. Offer 2. Acceptance of the offer 3. Intention to create legal relations4. Consideration5. Certainty6. Capacity

Offer

Under sections of the Contract Act 1950 : -

Section 2(a) - when one person signifies to another his willingness to do or to abstain from doing anything, with a view of obtaining the assent of that other to the act or abstinence, he is said to make a proposal.

Section 2(c) - person making the proposal is called “promisor” and the person accepting the proposal is called the “promisee”.

Section 4(1) - the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

Section 3 - the communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting, or revoking, by which he intends to communicate the proposal, acceptance, or revocation, or which has the effect of communicating it.

Section 9 - so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. So far as the proposal or acceptance is made otherwise than in words, the promise is said to be implied.

Cases: -

COELHO vs THE PULBIC SERVICES COMMISSION (1964) M.L.J.12 (Section 3-Option)

Fact : -

The applicant, a Health Inspector under the Town Board, Tanjung Malim, applied for the post of Assistant Passport Officer in the Federation of Malaya Government Oversea Missions(FMGOM) advertised in the Malay Mail dated 19 February 1957.

The applicant was informed that he was accepted and undergoing for training.

He was posted to the Immigration Office Kuala Lumpur until December 1958 and he was transferred to Immigration Office at Johor Bahru.

On 5 November 1959, the applicant received a letter(Assistant Passport Officer on Probation) from the Secretary to the Public Service Commission informed that the Controller Immigration concerning conduct in irregular issue of certain passports.

A disciplinary action was being taken against the applicant to a view with his dismissal.

On 24 December 1959, the applicant was informed that he should not be dismissed but his appointment on probation be terminated forthwith by payment a month salary in lieu of notice.

The applicant moved to the court for an order of certiorari to quash the decision of the respondents on the grounds of error in law, want of jurisdiction, and failure to observe the principles of natural justice.

Held: -

o The Malay Mail advertisement was an invitation to qualified persons to apply and the resulting application were offers.

o The information conveyed to the applicant was an unqualified acceptance to join the overseas mission and he so understood it.

M.N. GUHA MAJUMDER vs R.E.DONOUGH (1974) 2 M.L.J. 114 (Not a valid offer)

Fact: -

Property owned by defendant was advertised for sale, written offers are to purchase were invited.

Plaintiff viewed the property on two occasions. Was in communication with the defendant’s agent and it was alleged that the

defendant had accepted the plaintiff’s offer to purchase the property for RM70,000.

Discussion on the mode payment when second visit to the property and there was no clear agreement on the sale of orchid plants which the defendant wish to sell separately.

The defendant denied that he had decide to go on with the sale. Whether there was a contract between the plaintiff and the defendant at the

material time.

Held: -

o The law does not impute an intention to enter into such a legal relationship as the vendor and purchaser where the circumstances and the conduct of the parties negative any intention of the kind.

o The evidence indicated that the parties did not intend to be immediately bound. They had not the necessary animus contrahendi. What passed was only a negotiation from the beginning to end.

Advertisement – sometimes is an offer, sometimes is an invitation to treat (example Pharmaceutical Society of Great Britain vs Boots Cash Chemist Ltd.) depend on the intention of the parties in each case. And its bring two kind of contract also: -

1. Bilateral contracts – an exchange of promises.2. Unilateral contracts – involves the exchange of an act for a promise. (Example

Carlill vs Carbolic Smoke Ball Co. Ltd.)

Which the courts held that advertisements of bilateral contracts are not offers whereas advertisements of unilateral contracts are construed to be offers.

Cases

Pharmaceutical Society of Great Britain vs Boots Cash Chemist Ltd.

Fact: -

Statute requires that the sale of certain pharmaceuticals must be carried out under the supervision of a qualified pharmacist.

Boots (defendant) operated a store where the drugs were displayed on a self-service basis and the customers paid at a cash desk for the goods they had selected.

A pharmacist was present at the cash desk but not at the shelves where the goods were displayed with a price tag.

The Pharmaceutical Society claimed that the statute was being contravened.

Held: -

o The display of goods in a shop was not an offer but an invitation to treat.o It was the customers made the offer and Boots could either accept or reject this

offer at the cash desk (in the presence of the qualified pharmacist).o The act constituting the acceptance is the ringing up of the price on the till by the

cashier and at that moment a binding contract of sale is made.

CARLILL VS CARBOLIC SMOKE BALL CO. LTD.

Fact: -

The manufacturer of a medicinal ‘smoke ball’ advertised in a newspaper that anyone who bought and used the ball properly and nevertheless contracted influenza would be paid a 100 pounds reward.

Mrs. Calill used the ball as directed and did catch flu. The manufacturers claimed that they did not have to pay her the 100 pounds as an

offer could not be made to the whole world.

Held: -

o That an offer could be made to the whole world, that the wording of the advert amounted to such an offer, and that Mrs. Carlill had accepted it by properly using the smoke ball.

Acceptance

Section: -

Section 2(b) - when one person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted : a proposal, when accepted, becomes a promise

Section 2(c) – the person accepting the proposal is called the ‘promisee’. Section 9

To convert a proposal into a promise the acceptance must: -

Be absolute and unqualified