Element of a contract

2. Acceptance

Definition

Communication of a Acceptance

Mode of acceptance

Section 2 (b) of Contracts Act:
The proposal made by the other party has already been agreed, or it can be said that the proposed proposal is acceptable to both parties. It can be expressed or implied by the offeror’s behavior. If the proposal is accepted, it becomes a promise.

When offeree agrees or accepts the offer made by offeror.

Acceptance of notice is a binding agreement, one of contract law. Contracts are an important part of business. Can use written execution agreements to ensure that the information in the contract is clear and sign the contract in writing.

Section 7 (a) of Contracts Act:
The offeree’s acceptance must be absolute, but it is not qualified.

Case: Felthouse v. Bindley (1862)

Section 6(b) of Contracts Act:

  • Must be accepted within a reasonable time.
  • If the other party is silent, it means that the other party has accepted these conditions.

Postal Rule

Section 4(2) of Contracts Act provides that the acceptance is complete as against the offeror when it is put in the course of transmission to him.

Case: Adams v Lidsell (1818)

3. Consideration

Classification of Consideration

Elements of Consideration

Definition

Exceptions

Section 2(d) CA 1950: "When at the desire of the promisor, the promisee or any other person has done or abstained from doing or promises to do or abstain from doing, something, such act or abstinence or promise is called consideration of the promise".

Consideration is act or promise that done by one party as required by the other party in return for his promise.

1. Executory Consideration

2. Executed Consideration

3. Past Consideration

It is when a person promise to do something in return for his promise the other party promises to do something.

Section 24 CA 1950

Case: K.Murugesu v Nadarajah

Is promise in return for a promise

Is a promise for an act

When act is performed in return to a promise

It is when the other party performs the act as required by promisor.

Case: Carlill V Carbolic Smoke Ball Co (1893)

1. Consideration need not be adequate

  1. Consideration may move from the promisee or any other person.
  1. Part payment may discharge an obligation
  1. Past consideration is good consideration

Section 26 explanation 2

  • An agreement to which the consent of the promisor is not void merely because the consideration is inadequate, but the inadequacy will be questioned by the court whether the consent of the promisor is freely given.

It must be sufficient

Case: Phang Swee Kim v Beh I Hock(1964)

The act or forbearance may be done by the promisee himself or any other person on his behalf. In other words, consideration may be given by the promisee or any other person on his (promisee's) behalf.

Case: Venkata Chinnaya v Verikata Ma'ya (1881)

Section 64 CA 1950:

  • "Every promise may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit".

General rule is that payment of a smaller sum is a satisfaction of an obligation to pay a larger sum.

i. English Law

ii. Malaysian Law

Past consideration is not a good consideration.

Case: Pinnel' s Case (1602)

Past consideration is a good consideration.

Case: Pan Ah Ba & Anor v Nanyang Construction Sdn Bhd (1969)

  1. Is to compensate for past voluntary act
  1. Is to compensate an act the promisor was legally compelled to do
  1. Is made out of natural love & affection
  1. It is to pay a statute-barred debt

Section 26(a)

The agreement must fill the following condition such as made in writing, registered and made due to natural love & affection between parties standing in near relation to each other.

Case: Re Tan Soh Sim (1951)

Section 26(b)

Condition

  • Promisee did the act voluntarily

The promisor promises to give something to the promisee because the promises have done something voluntarily before the promise was made

Section 26(b)

The promisee has voluntarily done an act

The act was an act the promisor was bound/ compelled to do

It must be to compensate, wholly/partly the promisee for the act-

Section 26(c)

Although a debt cannot be recovered because of the statute-barred, it can be recovered if there is a fresh promise by the debtor to pay or the promise is made writing and signed.

Revocation of acceptance

Section 5 (2) of Contracts Act: "An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward."

The offeree can withdraw or cancel the acceptance anytime and anywhere before the acceptance letter reaches the offeror.