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THE LAW OF

CONTRACT

Introduction
Everyday in our life we enter into contracts
We enter into contracts when :
we buy groceries in the supermarket
we eat in a restaurant
we get into a bus to travel
we get a can of coca cola from the vending
machine

Strictly speaking contracts need not be in


writing or even verbal as it can be inferred
from the conduct of parties
A contract need not be formally written down
and need not involve documents with
complicated rules and regulations
A contract need not involve millions or
billions of dollars

What is a contract?
A contract is an agreement between 2 or
more parties that is legally binding
between them.
Under Section 2(h) of the CA 1950, a
contract is an agreement enforceable by
law
The principal legislation for the law of
contract is the Contracts Act 1950

Continue
The basis of all contracts is an agreement, that is to say, all
contracts must be built upon an agreement.
But not all agreements are automatically contracts.

Contracts
Agreements

Agreements are contracts if they fulfill the essential elements


of a contract.

Essential elements
of a contract

The main elements of a valid contract are:


1. Offer/Proposal and acceptance
2. Consideration
3. Intention to create legal relation
4. Certainty
5. Legal capacity
6. Free consent
7. Objects
8. Required formalities

PROPOSAL
AND
ACCEPTANCE

What is a proposal?
A PROPOSAL IS NOT AN AGREEMENT
An agreement between 2 or more parties is
constituted by a proposal and an acceptance
(proposal + acceptance = agreement)
The word proposal in the Contracts Act 1950 bears
the same meaning as offer in English law (i.e
proposal = offer)

A proposal is made when one person


signifies to another his willingness to do
something or to abstain from doing anything,
with a view to obtaining the assent of that
other to such act or abstinence (S2(a) CA
1950).
Eg A by offering to buy Bs car for
RM10,000.00 in the hope that B will accept is
making a proposal.

Then according to S2(b), when the person to whom


the proposal is made signifies his assent thereto, the
proposal is said to be accepted.
Upon such acceptance by B an agreement between
the parties is created (proposal + acceptance =
agreement).
The proposal has become a promise & the party
making the proposal is now referred to as the
promisor & the party accepting the proposal, is
known as the promisee.

Thus, from the example, Bs


acceptance of As proposal to buy the
car establishes an agreement or
promise
A is the promisor
B is the promisee

Proposal -vs- Invitation to Treat


(ITT)
A proposal must be distinguished from an ITT.
The Contracts Act does not contain any provision with respect
to ITT thus English Law is applicable.
An ITT is not a proposal but a sort of preliminary
communication which passes between the parties at the stage
of negotiation.
ITT is only an invitation to induce offers or to instigate
negotiations.
Thus upon the customer making an offer it is up to the person
making the ITT to accept or reject the offer.

Examples of ITT
A price list
A display of goods with price tags in a
self-service supermarket
An advertisement (of bilateral contract)
A tender
An auctioneer inviting bids for a
particular article

Why isnt ITT a proposal?


Auction
If an auctioneer is considered making a
proposal (not an ITT) when inviting bids then
when a bidder makes a bid he is accepting the
proposal and an agreement comes into being
at that stage
This defeats the very purpose of an auction ie
to get the highest price for the auctioned
article

Thus the actual state of law is


that the auctioneer is only making
an invitation to treat ie merely
inviting bidders to make proposal
which the auctioneer may accept
or decline.

Continue
Display of goods in a shop
Generally a display of goods in a shop does not
constitute a proposal to sell.
The shop owner merely holds himself prepared to
consider proposals made to him at the suggested
prices.
The invitation is not capable of being accepted
[and thereafter turned into an agreement] as it is
not a proposal.
The proposal is in fact made by the customer
when he selects the desired goods.

Continue
This well established rule was
clearly determined by the
celebrated case of
Pharmaceutical Society of Great
Britain v Boots Cash Chemist
Ltd [1953] .

Pharmaceutical Society of Great Britain


v Boots Cash Chemist Ltd [1953]
Facts:
The defendants were charged under the Pharmacy and
Poisons Act 1933 (U.K.) which provided that it was
unlawful to sell certain poisons unless such sale was
supervised by a registered pharmacist. The case depended
on whether a sale had occurred in the self-service shop
when a customer selected articles, which he desired to
purchase and placed them in a wire basket. Payment was
to be made at the exit where a cashier was stationed and in
every case involving drugs, a pharmacist supervised the
transaction and was authorized to prevent a sale.

Continue
Held: the display was only an invitation to
treat. A proposal to buy was made when the
customer placed the articles in the basket.
Hence the contract of sale would only be
made at the cashiers desk. That being the
principle, the shop owners had not made an
unlawful sale.

Rationale of ITT
Common sense and realities of commercial
transactions
If selecting an article from the display shelf
constitutes a sale ownership will have passed
to the customer at the point of selection
though he has not paid for it and the customer
will not be able to change his mind about the
purchase.

Advertisement
Similar problems would arise in advertisement
if they were treated as a proposal to be
accepted by readers.
Items for sale may have been completely sold
out and sellers would be liable for breach if
they could not supply all the items offered.

Partridge v Crittenden (1968)


Facts : appellant had inserted in a periodical entitled Cage
and Aviary Birds a notice Bramblefinch cocks and hens, 25s
each. It appeared under the general heading of Classified
Advertisement and the words offer for sale was not used.
He was charged with unlawfully offering for sale a wild live
bird contrary to the provision of the Protection of Birds Act
1954 and was convicted. He appealed.
Held (by Lord Parker) quashing the conviction : when one is
dealing with advertisements and circulars, unless they indeed
come from manufacturers, there is business sense in their
being construed as invitations to treat and not offers for sale.

Harris v Nickerson (1873)


Facts : the defendant, acting in good faith, advertised
that certain furniture would be auctioned on a
particular day. The plaintiff travelled to the auction
with a commission to buy the furniture but it was
withdrawn from the sale. The plaintiff failed to
recover damages for loss suffered in travelling to the
advertised place of the auction sale as the court held
that the advertisement was an invitation to treat and
not an offer.

To whom can
A proposal be made?
A proposal can either be made to
1. a particular person or
2. to the general public
Proposal made to a particular person, may only be
accepted by that person. This is based on the
wordings of Section 2(b) of the CA, which provides
when the person to whom the proposal is made

If proposal is made to the general public, then


anyone who meets all the terms of the proposal may
accept.

Carlill v Carbolic Smoke Ball Co.


[1893]
Facts:
The defendants company advertised that they
would offer 100 each to anyone who still
succumbed to influenza after using the companys
medicine according to the instructions for a fixed
period. The plaintiff duly used the product, but
nevertheless contracted influenza. The plaintiff
then sued for the money. The defendants denied
liability by saying that a contract could not be
made with all the world

Held : The Court of Appeal decided that the plaintiff


had accepted the offer of the company made to the
world at large and is therefore entitled for the money.
(Bowen LJ : It was not a contract made with all the
world but an offer made to all the world to become
liable to anyone who performed the condition.
Though the offer was made to the world the contract
was made with that limited portion of the public who
came forward and performed the condition on the
faith of the advertisement)

Similarly, as a general rule, an


advertisement of reward for the
return of lost property would be
treated as an offer to the general
public.

WARNING!
An advertisement could be an invitation to treat
or a proposal.
Whether an advertisement is a proposal or an invitation to treat
depends on the intention of the parties in each case.

The courts have held that advertisements of bilateral


contracts (like job advertisement) are not
offers/proposals, whereas advertisements of
unilateral contracts (like Carlills case and
advertisements of rewards for returning lost things)
are construed to be proposal/offers.

Bilateral Contracts
In bilateral contracts, all parties promise to do
something for one another; bilateral contracts bind all
parties and are enforceable against all parties.
For instance, in a job advertisement, the job
advertisement itself is not an offer but an ITT, the
applicant is actually making an offer to work for
the advertiser when he applies for the job and the
advertiser, if they accept the applicants offer,
promise to give the applicant a position and
remuneration in accordance with the
advertisement. (a promise for a promise)

In Majumder v Attorney General of Sarawak


(1967) 1 MLJ 101 a newspaper advertisement
stated a medical officer was required in
Sarawak for general medical duties and the
advertisement set out the salary scale. The
Federal Court held that the advertisement in
the newspaper for the post of a medical officer
was an invitation to treat.

Unilateral Contracts
In unilateral contracts, one party promises to
do something to induce the other party to do
something; unilateral contracts are binding on
and enforceable against only one party, i.e. the
party that makes the promise.
For instance, an advertisement to pay a
reward for returning lost pets. (a promise
for an act). This advertisement is an offer.

Communication of proposal
S4(1) the communication of a proposal is complete
when it comes to the knowledge of the person to
whom it is made.
Unless there is communication of the proposal as
suggested in S2(a) ie when one person signifies to
another his willingness to do or abstain from doing
anything.. there can be no acceptance to form an
agreement.
In other words, a party accepting a proposal must be
aware of the existence of the proposal.

The fact that the person accepting the offer has


done something which coincides with the
proposal without being aware of the proposal
does not bring an agreement into being.
Eg a party who casually returns a lost property
to its owner cannot legally claim a reward if he
is unaware of it at the time but subsequently
discovers the existence of an offer of reward for
its return.

R v Clarke (1927)
Facts:
The Western Australian Government offered a reward for information
leading to the arrest and conviction of persons responsible for the
murder of 2 police officers. X and Clarke were arrested and charged
with murders but shortly after, Clarke gave information, which led to
the arrest of another person, Y. X & Y were later convicted for the
offence and Clarke who did not commit the murders claimed the
reward.
Held:
The court refused to grant his claim. It failed on the grounds that the
information was given to clear himself from the murder charge and not
in reliance on the offer of reward.

What is an acceptance?
S2(b) of the Contracts Act 1950
When the 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; (proposal + acceptance =
promise/agreement).

Section 2(c) calls the person accepting


the proposal the promisee.
S9 provides that if the acceptance is
made in words it is an express acceptance
and if it is made otherwise than in words
it is an implied acceptance.

Rules of acceptance
1. acceptance must be absolute and
unqualified
2. acceptance must be made within reasonable
time
3. acceptance must be expressed in some usual
and reasonable manner
4. acceptance must be made in positive
manner
5. acceptance must be communicated

Rule 1: Acceptance must be absolute and unqualified


For a proposal to be converted into a promise the acceptance
of that proposal must be absolute and unqualified - S7(a).
Acceptance must be made on exactly the same terms as
proposed without modifications or variations.
Modification or variation of proposal does not constitute
acceptance but amounts to counter proposal by the party to
whom the original proposal was made.
A counter proposal is a rejection of the original proposal.

Hyde v. Wrench [1840]


Facts:
The defendant offered to sell his estate to the plaintiff on
June 6 for 1000. On June 8 in reply, plaintiff made a
counter proposal to purchase the estate at 950. On June
27, the defendant refused to accept this offer. Two days
later, the plaintiff wrote to the defendant that he was
prepared to pay 1000. The defendant refused and the
plaintiff sued for specific performance.
Held:
The Court ruled that theres no acceptance because the
plaintiffs letter on 8th June had rejected the original
proposal, which could not be revived.

A distinction needs to be drawn between a


counter proposal and a request for further
information
Whether a communication amounts to a
counter offer or not is sometimes difficult to
determine.
The offeree may reply to the offer in terms
which leave it uncertain whether he is making
a counter offer or merely seeking further
information before making up his mind.
A mere request for information does not
destroy the offer.

Stevenson v. Mclean (1880)


Facts: the defendant offered on Saturday to sell to the
plaintiff 3,300 tons of iron at 40s nett cash, open till
Monday. Early on Monday the plaintiffs
telegraphed to the defendant : Please wire whether
you would accept 40 for delivery over 2 months or if
not the longest limit you would give. No reply was
received, so by a telegram sent at 1.34 pm on the
same day the plaintiffs accepted the offer to sell at 40
cash. Meanwhile the defendant sold the iron to a 3rd
person and informed the plaintiffs of this in a
telegram dispatched at 1.25. The telegrams crossed.

The plaintiffs sued to recover damages


for breach of contract.
Court : the plaintiffs had not made a
counter offer but had addressed to the
defendant a mere inquiry which should
have been answered and not treated as a
rejection of the offer.

Acceptance must be absolute and


unqualified so that there is
complete consensus.
If parties are still negotiating, an
agreement is not yet formed.

Lau Brothers & Co v China Pacific Navigation


Co. Ltd (1965)
Facts : Negotiations for the delivery of logs were
conducted through a series of telegrams and letters.
Whilst still in the negotiating stage the defendants
withdrew.
Held : the parties were still in a state of negotiation
and no agreement was formed. Therefore the
defendants were justified in withdrawing.

A conditional assent is not an acceptance.


For example if a document contains a clause to the
effect that it is subject to a formal contract to be
drawn up by our solicitors a contract does not come
into existence until a formal document has been
drawn up and accepted by the parties.
The first document is merely a proposal to enter into
a contract ie a tentative agreement that may be
disregarded by either party.

Low Kar Yit & Ors v Mohd Isa & Anor (1963)
The defendants gave an option to the agent of the
plaintiffs to buy a piece of land subject to a formal
contract to be drawn up and agreed upon by the
parties. The plaintiffs agent duly exercised the
option. On the defendants failing to sign the
agreement of sale, the plaintiffs claimed specific
performance and damages for breach of contract.

Held : on the construction of the document sued


upon, the option was conditional upon and
subject to a formal contract to be drawn up and
agreed upon between the parties so that the
exercise of the option amounted to nothing
more than an agreement to enter into an
agreement. Thus there was no concluded
contract between the parties.

Note : an option is a contract


to keep an offer open for a
specified period of time so that
the person making the offer
cannot suddenly withdraw it
during that period.

However the mere use of the words subject


to contract does not necessarily mean that the
contract is not yet binding.
Whether the parties contemplated a binding
contract to take immediate effect or whether
they were postponing their rights and
obligations under the proposed contract until
formalization is a question of fact and depends
on the circumstances of each case.

Rule 2 : Acceptance must be made


within reasonable time
The rule that acceptance must be made
within reasonable time is embodied in
S6(b) which reads a proposal is revoked
by the lapse of the time prescribed in the
proposal for its acceptance or if no time is
so prescribed by the lapse of a
reasonable time without communication of
the acceptance

Ramsgate Victoria Hotel Co Ltd v


Montefiore (1866)
Facts:
The defendant applied for shares in the company in June
and paid a deposit into the companys bank. It was not till
November that the company informed the defendant that
shares had been allotted to him and that the balance of the
purchase price should be paid. The defendant refused to
accept the shares.
Held:
The offer to purchase shares had not been accepted within
reasonable time, the period between June and November
was clearly not reasonable and the offer had therefore
lapsed. There was no contract.

Fraser v Everett (1889)


The contract was for shares expected to be mailed
about the end of March and which if mailed would
have arrived on 23 April. The court held that it was
not a delivery within reasonable time to have scripts
mailed early in April and offered to defendant on 15
May. The fact that the mining shares were of a very
fluctuating character was a significant factor in
determining the issue of time

What constitute a reasonable time is a


question of fact depending on the
circumstances such as the nature of the subject
matter
In Fraser v Everett the nature of the shares
was such that they were of fluctuating
character so that one would expect prompt
delivery

The rationale for this rule, was stated by Hashim


Yeop A Sani J. in Macon Works & Trading Sdn Bhd
v. Phang Hon Chin & Anor. [1976] - An offer
lapses after a reasonable time not because this must
be implied in the offer but because failure to accept
within a reasonable time implies rejection by the
offeree. As a consequence, the Court can take into
account the conduct of the parties after the offer was
made in deciding whether the offeree has allowed too
long a time to lapse before accepting.

Rule 3 : acceptance must be expressed


in some usual and reasonable manner
S7(b) provides that acceptance must be
expressed in some usual and reasonable
manner unless the proposer prescribes
the manner in which it is to be accepted.
But the proposer cannot prescribe silence
as a manner of acceptance. See Felthouse
v Bindley (1862) and Fraser v Everett
(1889)

Acceptance must be made in the manner


prescribed by the proposer S7(b)
If the acceptor deviates from the prescribed
manner the proposer must not keep silent.
If the proposer keeps silent and fails to insist
upon the prescribed manner he is considered
as having accepted the acceptance in the
modified manner S7(b)

Acceptance may be made by


performance of the conditions of the
proposal or the acceptance of any
consideration for a reciprocal promise
which may be offered with a proposal
See S8 and Carlill v Carbolic Smoke Ball
Co Ltd (1893)

Reciprocal promise = promise which forms the


consideration or part of consideration for each
offer S2(f)
Eg where X sends B a cheque for RM500.00
with proposal that it will be the consideration
for Bs agreement to sell his motorcycle, B will
be deemed to have accepted the proposal if he
cashes the cheque though he has not
communicated his acceptance to X

Rule 4 :

Acceptance must be made in positive


manner

Though communication of acceptance may be


waived it is still necessary to do something
positive to accept a proposal like actually
performing the conditions of proposal or
express acceptance in acceptable manner
S2(b) requires person to whom the proposal is
made to signify his assent which implies
positive act of acceptance on part of addressee

Silence, absence of response or


just total disregard of proposal is
not acceptance as there is no
positive act relating to the
proposal

Felthouse v. Bindley (1862)


Facts : the Plaintiff, Paul Felthouse, wrote to his
nephew, John, on 2 February offering to buy his
horse for 30 pounds 15 s, and adding If I hear no
more about him, I consider the horse mine at that
price. The nephew made no reply to this letter but
intimated to the defendant, an auctioneer, who was
going to sell his stock, that the horse was to be kept
out of the sale. The defendant inadvertently sold the
horse to a 3rd party at an auction held on 25 February
and the Plaintiff sued him in conversion.

The court held that the action must fail as there


had been no acceptance by the nephew of the
plaintiffs offer before 25 February and the
plaintiff had therefore at that date no title to
maintain conversion
Note : conversion is a tort of wrongfully dealing with a
persons goods in a way that constitutes a denial of the
owners right

Rule 5 : Acceptance must be


communicated
The Contracts Act stipulates different times
when the communication of an acceptance is
complete.
S4(2)(a) provides that the communication of
an acceptance is complete as against the
proposer when it is put in a course of
transmission to him so as to be out of the
power of the acceptor.

With respect to the acceptor S4(2)(b)


provides that the communication of an
acceptance is complete as against the
acceptor when it comes to the
knowledge of the proposer.
Thus in cases of acceptance through post,
acceptance is complete upon posting.

When is communication of
acceptance complete?
General Rule:
An acceptance is completely
communicated when it is actually
brought to the notice or comes to the
actual knowledge of the offeror.

Exception : The Postal Rule


Section 4(2) of the CA provides an exception to the
general rule of communication of acceptance where
the parties have intended the use of the post as a
means of communication.
According to S4(2) :
The communication of an acceptance is complete
(a) as against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the acceptor;
&
(b) as against the acceptor, when it comes to the knowledge of the
proposer.

Continue
See illustration (b) of Section 4:
B accepts As proposal by a letter sent by
post.
The communication is complete:
as against A, when the letter is posted;
as against B, when the letter is received
by A.

Effect of the Postal Rule


According to S4(2)(a) the proposer is bound when
the offeree posts the letter of acceptance even though
the proposer has no knowledge of the acceptance.
When the letter is posted, the acceptor has put it in a
course of transmission in such a way that he no
longer has any control over it.
The transaction becomes binding upon the proposer
irrespective of any delay or disappearance of the
letter of acceptance in the course of
transit/transmission.

Entores Ltd v Miles far East


Corporation (1955)
Denning LJ : when a contract is made by
post .. acceptance is complete as soon
as the letter is put into the post box and
that is the place where the contract is
made

Adams v Lindsell (1818)


Facts:The defendant wrote to the plaintiff offering to
sell wool on certain terms. The defendant however,
misdirected the letter and it reached the plaintiff later
than usual. Upon receiving the letter of offer, the
plaintiff immediately posted his acceptance.
Meanwhile, the defendant (thinking that the plaintiff
was not interested in the offer) had already sold the
wool to a third party.
Held: It was held by the court that acceptance was
complete upon posting.

Ignatius v Bell (1913)


Facts : Plaintiff sued for specific performance of an option
agreement which purported to give him an option of
purchasing the defendants rights over a piece of land. The
option was to be exercised on or before 20.08.1912. parties
had contemplated the use of post as means of communication.
Plaintiff sent notice of acceptance by registered post in Klang
on 16.08.1912 but it was not delivered to the defendant until
25.08.1912 as the defendant was away. The letter had
remained in the post office at Kuala Selangor until picked up
by the defendant

Held : the option was duly


exercised by plaintiff when
the letter was posted on
16 August

Rationale of Postal Rule

Postal rule has evolved from


reasons of practical
convenience arising from
delay that is inevitable in
delivering letters

Continue
On the other hand, acceptance is complete as
against the acceptor only when the letter of
acceptance reaches and comes to the
knowledge of the proposer.
This means that while the proposer is bound
upon dispatch of acceptance by the acceptor,
the acceptor himself is not bound until it is
actually received by the proposer.

Criticism of the Rule


When there is a delay in the post or the letter of
acceptance is misplaced by the postal authority
the proposer is bound irrespective of his
knowledge of the acceptance
On the other hand the acceptor remains free till
actual receipt by the proposer
This implies that pending receipt of the
acceptance by the proposer the acceptor may
withdraw his acceptance
The proposer is severely disadvantaged by the
rule and is placed in an unequal position

Protection of proposers
Stipulate in proposal that
acceptance is complete only upon
receipt not upon posting
This would exclude the postal
rule by express terms of proposal

Scope of the Rule


The postal rule also applies to
telegram sent through post office.
But instantaneous communication
such as telephone and telex are
governed by the general rule.

Entores Ltd v Miles Far East Corp (1955)


So far as Telex messages are concerned .
the parties are . in each others presence .
just as in telephonic communication .. the
general rule [is] that there is no binding
contract until notice of the acceptance is
received by the offeror

Revocation of proposal
Once a proposal is communicated, it remains
open until it lapses or is withdrawn. A
proposal may be revoked at any time before
acceptance.
Section 5(1) of the CA provides that a
proposal may be revoked at any time before
the communication of its acceptance is
complete as against the proposer, but not
afterwards.

Continue
There are a few ways by which a proposal may be revoked.
Section 6 states that a proposal is revoked:
a) By communication of notice of revocation
b) By lapse of the time prescribed/ by lapse of reasonable
time
c) By failure of the acceptor to fulfill the condition of the
proposal
d) By death /mental disorder of the proposer, if the fact of
his death or mental disorder comes to the knowledge of
the acceptor before acceptance.

S6(a) Revocation by communication of


Notice of Revocation by proposer to the other
party
Revocation of the proposal must be communicated
by the proposer to the other party before the other
party accepts the proposal.
In the event of acceptance by post or telegram, the
acceptance is complete as against the proposer upon
posting or delivery of the telegram to the appropriate
telegraph office. Therefore, withdrawal of the
proposal must necessarily be communicated by the
proposer to the offeree before such posting or
delivery.

Continue
The application of this rule is found in the
Illustration to Sec. 5:
A proposes, by a letter sent by post, to sell his house
to B.
B accepts the proposal by a letter sent by post.
A may revoke his proposal at any time before or at the
moment when B posts his letter of acceptance, but not
afterwards.

Byrne v. Tienhoven (1880)


Facts:
In this case the defendant offered to sell 1,000 boxes
of tinplates to the plaintiff. The following
communications took place:
1 October: Defendant posted letter of offer in
Cardiff to the plaintiff in New York.
8 October: Defendant posted a letter revoking the
offer of October 1.
11 October: Plaintiff received the letter of offer
posted on October 1 and sent acceptance by
telegram the same day. It also followed up with
letter of acceptance on 15 October.
20 October: Defendants letter of revocation
received by plaintiff.

Continue
Held:
The court ruled that there was a contract
between the parties because the revocation
of the offer posted on 8 October was not
effective till 20 October when it was
received by the plaintiff who had already
accepted the offer on 11 October when the
telegram was sent.

S6(b) Revocation by lapse of time


prescribed/ lapse of reasonable time
Subsection (b) deals with revocation by lapse of
time and provides for two situations:
i. Lapse of time occurring upon the expiration of
the time prescribed in the proposal for its
acceptance; &
ii. Where no time is prescribed, by the lapse of a
reasonable time.
What a reasonable time is depends on the facts and
circumstances of each case.

Ramsgate Victoria Hotel Co. v


Montefiore (1866)
Facts:
The defendant applied for shares in the company in June
and paid a deposit into the companys bank. It was not till
November that the company informed the defendant that
shares had been allotted to him and that the balance of the
purchase price should be paid. The defendant refused to
accept the shares.
Held:
The refusal was justified because such a proposal should
have been accepted within a reasonable time. The period
between June and November was clearly not reasonable.
The rationale for this rule, was stated by Hashim Yeop A
Sani J. in Macon Works & Trading Sdn Bhd v. Phang
Hon Chin & Anor. [1976]

S6(c) Revocation by failure of the acceptor


to fulfill the condition precedent to
acceptance
Subsection (c) provides that a proposal may
be revoked where the acceptor fails to fulfill a
condition precedent to acceptance.
For instance, a company offers to employ an
applicant on condition that he passes a skills
test. If the applicant fails the test, the proposal
is obviously revoked because the applicant
has failed to fulfill a condition precedent.

S6(d) Revocation by death /mental


disorder of the proposer
Subsection (d) deals with death or mental disorder of
the proposer subsequent to the communication of the
proposal.
The happening of these two events does not
automatically result in the demise of the proposal. The
fact of the death or mental disorder must be known to
the acceptor before acceptance. Only then the
proposal is no longer available for acceptance.
Acceptance without prior knowledge of the death or
mental disorder of the proposer is nevertheless, a good
acceptance.

Revocation of acceptance
It may seem strange that an acceptance can be
revoked but that is the law with respect to those
acceptance which is not complete as against the
acceptor.
Section 5(2) states An acceptance may be
revoked at any time before the communication
of the acceptance is complete as against the
acceptor, but not afterwards.

Continue
The Illustration to section 5 provides an example of
revocation of acceptance made by post:
A proposes by a letter sent by post, to sell his
house to B.
B accepts the proposal by letter sent by post.
B may revoke his acceptance at any time before or
at the moment when the letter communicating it
reaches A, but not afterwards

Communication of Revocation
Section 3(a) the communication of a
revocation is complete as against the person
who makes it when it is put into a course of
transmission to the person to whom it is made
so as to be out of the power of the person who
makes it.
Section 3(b) the communication of a
revocation is complete as against the person to
whom it is made when it comes to his
knowledge

Illustration
A proposes by letter to sell a house to B at
a certain price.
B accepts As proposal by a letter sent by
post.
The communication of the acceptance is
complete as against A when the letter is
posted and as against B when the letter is
received by A.

A revokes his proposal by telegram.


The revocation of proposal is complete as
against A when the telegram is despatched.
The revocation is complete as against B
when B receives it (but if B receives the
revocation of proposal after he has posted
his acceptance then the revocation of
proposal is not effective)

B revokes his acceptance by telegram.


Bs revocation of acceptance is complete as
against B when the telegram is despatched.
Bs revocation of acceptance is complete as
against A when it reaches A.
Thus for Bs revocation of acceptance to be
effective it must reach A before A receives
Bs acceptance.