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ELEMENTS OF A VALID CONTRACT (2) - Coggle Diagram
ELEMENTS OF A VALID CONTRACT (2)
Acceptance
Definition
:
S. 2 (b) ‘When a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted’
Once there is acceptance, an agreement between
the parties is created.
Condition
Must be absolute & unqualified - S.7(a)
Counter offer/proposal
Effect – destroy the original offer
Case: Hyde V Wrench
Facts
: 6 June W offered to sell his estate to H for £1000; 8 June H replied and offered to buy for £950. 27 June W rejected H’s offer. 29 June H offered £1000. W refused to sell and H sued for breach of contract.
Held
: No acceptance had occurred because the H’s letter of June 8 had rejected the original proposal which could not be revived.
Must be expressed in usual & reasonable manner - S.7 (b)
When the acceptor deviates from the prescribed form the offeror
must not keep silent
.
If he does so and
fails to insist
upon the prescribed manner, he is considered as having accepted the acceptance in the
modified manner
under Section 7(b).
Mode of Acceptance
General rule
Acceptance must be communicated (s. 2(b))
Offeror must have the knowledge that offeree is accepting his offer.
Communication - means offeror must have knowledge that offeree is accepting the offer.
Silence is not acceptance
Exceptions
When the offeror dispensed with the need of communication of acceptance (unilateral contract)
Where there is an offer to the public
Reciprocal promise
Acceptance through post
Offer
Definition
: is a proposal. Once it is accepted, it creates a
legally binding
agreement. A person who
makes an offer is callled an offeror or promisor
. A person to
whom the offer is made is called an offeree or promisee.
Example: A offer to B to buy B’s car for RM20, 000 in the hope that B will accept – A is making a proposal/Offer
How offer could be made?
General
addressed to people at large/public
anyone who meets all the terms of the offer is considered as making the acceptance to such offer
Carlill v Carbolic Smoke Ball
Facts
- An advertisement was placed for ‘smoke balls’ to prevent influenza. The advertisement offered to pay £100 if anyone contracted influenza after using the ball. The company deposited £1000 with the Alliance Bank to show their sincerity in the matter. The plaintiff bought one of the balls but contracted influenza.
Heal
- Plaintiff was entitled to recover £100. The court further held:
1) The deposit of money showed an intention to be bound, therefore an advert was offer;
2) It was possible to make an offer an offer to the world at large, which as accepted by anyone who buys a smoke ball;
3) The buying and using of the smoke ball amounted to acceptance.
Specific
addressed to specific person
only addressee may accept the offer
Boulton v Jones
Facts
- Defendant had business dealing with a shopkeeper named Brocklehurst. The defendant had ordered some stocks from B but on the day of the order B had sold his business to the Plaintiff. The Plaintiff delivered the goods without informing the Defendant of the change of ownership.; The Defendant then refused to make any payments.
Heal
- It was held that the plaintiff had no rights to accept an offer not made to him.
Types of Offer
: “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”.
Express - in writing or verbally
Implied - implied from the conducts of the parties
Conditions of Offer
:
Must be Communicated
S. 2(a) CA – word ‘signifies’ indicates that the offer must be communicated
S. 4(1) CA – communication offer only complete when the offer comes to the knowledge of offeree
If the offeree does not know about the offer, the offer itself is not valids
Therefore if a party accepting a proposal is not aware about the proposal, then there is no contract.
Cases - Taylor v Laird
Facts
: T resigned as a skipper of L’s ship in the middle of a voyage. T however assisted to sail the ship home. The court held T cannot claim for fees due as he had failed to make known his offer to sail the ship home and L had no opportunity either to accept or refuse the offer.
Held
: No contract existed.
Must be certain
a proposal must be clear, certain, definite and absolute which is completed in all terms condition and consequence and no doubt.
the offer must be firm. there must be definite intention to adhere(mematuhi) to the offer
Example: Lynn offered to buy a horse from Guthing. He was to pay 5 pounds extra if the horse brought him good luck. The condition laid was held by the court to be too vague to constitute a binding contract. (Guthing v Lynn)
Offer & Invitation to Treat(ITT)
Offer
is a proposal
Offer + Acceptance = Contract (binding)
ITT
not a proposal but a sort of preliminary communication which passes between the parties at the stage of negotiation
ITT +Offer + Acceptance = Contract (binding)
Example of ITT: Advertisement, Display of Good, Tender, Auction, Price-list