INTRODUCTION TO LAW 3

LAW 087

Puan Ibtisam Ilyana Ilias

Faculty of Law
1

UiTM

COURSE CODE: LAW 087

CREDIT UNIT: 3
CONTACT HOURS PER WEEK:
DURATION OF COURSE:

1 SEMESTER

STATUS OF COURSE: CORE

SYNOPSIS
This is part 3 of an introductory course
in law meant to prepare students
intending to pursue a law degree at the
Faculty of Law, UiTM. This part of the
course will look at the legal concepts of
fault and liability. In addition, students
will also be taught the practical aspects
of legal skills in order to assist them in
their legal education.

COURSE OBJECTIVES
To introduce basic elements of valid and
enforceable contract based on Contract Act 1950
and cases
To highlight the factors which render the
contract to be void or voidable
To introduce various types of tortious liability
and their respective elements
To introduce basic elements of crime and
various defences under Penal Code

COURSE OUTCOMES
At the end of this course, the students shall be
able to : Explain basic elements of valid and enforceable
contract based on Contract Act 1950 and cases
Explain factors which render the contract to be
void or voidable
Comprehend various types of tortious liability
and their respective elements
Discuss basic elements of crime and various
defences under Penal Code

ASSESSMENT

Coursework
(Tests and Assignments)

Final Examination

40%
60%

REFERENCES
Main texts
Nuraisyah Chua Abdullah (2004) Introdction to Malaysian
Law: Understanding Statutes and Cases, Criminal, Tort and
Contract ILBS.
KL Koh, CMV Clarkson (1989) Criminal Law in Singapore and
Malaysia, Malayan Law Journal.
Lee Mei Pheng (2001) General Principles of Malaysian Law,
Penerbit Fajar Bakti.
Holland, James A. & Webb, Julian S. (1999) Learning Legal
Rules (4th ed) Blackstone.
Lee, Simon & Fox, Marie (1999) Learning Legal Skills (3rd ed)
Blackstone
7

FURTHER REFERENCES

Bradney, et. Al. (1995) How to Study Law, Sweet and

Maxwell.
Williams, Glanville Llewellyn (1982) Learning the Law
(11th ed.) Stevens & Sons.
Nuraisyah Chua Abdullah (2004) Business Law in
Malaysia (Questions and Answers), UPENA.

LAW OF
CONTRAC
T

LAW OF
TORT

CRIMINAL
LAW

INTRODUCTIO
N TO LAW 3

LAW
OF
CONTRACT

10

10

WHAT AND WHY ?

WHAT

ARE THE ELEMENTS

OF A VALID CONTRACT ?

WHY

IT IS IMPORTANT
HAVE A VALID CONTRACT ?

11

TO

LAW OF CONTRACT
The law applicable: Contracts Act
1950 and case law.
Definition of contract Consensus ad idem.
Is an agreement between 2 or more
persons that is legally binding
between them.
Sec 2(h) CA: An agreement
enforceable by law is a contract.
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GUESS
WHAT
?

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ORPOPSLA
PROPOSAL
PCECATCNA
E
ACCEPTANC
E
14

14

NOIDSERTIANCO
CONSIDERATIO
N
TIENTOINN
INTENTION
15

15

ACIPCATY
CAPACITY
YAINCERTT
CERTAINTY
16

16

PROPOSAL

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PROPOSAL
Also known as promise or proposal.
A proposal made by one party to
another party, with the intention that,
that other party would accept his
proposal.
Made by a person called as offeror
or promisor who offers of promises
something to another person.
Sec 2(a) CA- A proposal is made when
one person signifies to another his
willingness to do or to abstain from
doing anything, with a view to
obtaining the assent of that other to
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such act or abstinence.

TO WHOM IT CAN BE MADE

Proposal can be made to Individual
Public in general

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Case: Carlill v Carbolic Smoke Ball Co.

[1983] 1 QB 256.
The defendants had made an advertisement
about a medicine, smoke ball that was used
to cure influenza. They also mentioned they
would pay 1000 to anyone who still suffer
influenza
after
taking
the
medicine
according to its prescription. To show their
true intention, defendants had deposited
1000 into a bank account for this
particular purpose. Mrs Carlill, who had
bought and used the smoke ball but still
suffer influenza, claimed the 100 from the
defendants but was denied by them.
Held: The advertisement was made to the
whole world at large and anyone who is
willing to consume the medicine as
prescribed was said to have accepted the
offer. Furthermore, by depositing 1000 the
defendants had shown their earnest
intention to make a valid contract with
their
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prospective buyers or consumers. Thus, Mrs

PROPOSAL v INVITATION TO
TREAT

An offer must be distinguished

invitation to treat (ITT)

from

Offer must be distinguished from ITT in

order to ascertain when will the actual
offer takes place.
If a person does something with the
intention to make an offer, then such act
may bind the promisor/offeror if there is
an acceptance by another person to such
an offer.
However, if a person does something with
the intention to make an ITT, then
anything done by another person in
response to such ITT is only an offer.
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There is no binding contract yet
until

PROPOSAL v INVITATION TO
TREAT
It is merely an invitation from one party
to another party to make an offer.
It is an early stage before an offer could
be made.
ITT
Is
a
sort
of
preliminary
communication, which passes between
the parties at the stage of negotiation
that might lead to an offer.

Examples of ITT are advertisement,

display of goods with price tags in a
self
service
shop,tender,price
list/quotation
and
an
auctioneer
inviting bids in an auction sale
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ITT:DISPLAY OF GOODS IN A
SELF-SERVICE SHOP

The act of the seller displaying the

goods with the price tags, in a self
service shop is an ITT.

The customer would make the offer

when they selected what they want and
bring them to the counter for payment.

The cashier will make the acceptance.

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Case :
Pharmaceutical Society of Great
Britain v. Boots Cash Chemist Ltd. (1953)
Whether the display of goods with the
price tags in a self-service shop is an
offer or an ITT.
Held: The display of goods was only an
ITT. An offer is made when the customer
placed the articles into the basket and
brings them to the counter for payment.
Hence the contract would only be made
at the cashiers desk. As such the shop
owners had not made an unlawful sale.

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Case: Fisher v. Bell

Display of several kinds of flickknives in a glass shop window is not
an offer but only an invitation to the
customers to make an offer to buy.
Whether the offer is accepted or not,
it depends on the discretion of the
shop owner.

ITT: ADVERTISEMENT
Case : Harris v Nickerson
The defendant, an auctioneer has made an
advertisement regarding an auction on number
of items including offices furniture to be carried
out on a specified date and place. The plaintiff
who intended to purchase offices furniture
went to the place on that particular day only to
find that the defendant has withdrawn the
items from the auction. The plaintiff then
claimed damages for breach of contract. He
argued that the advertisement was a proposal
of which he has accepted.
Held: The advertisement was an ITT. It only
expressed the defendants intention to conduct
an
auction.
The
plaintiffs
claimed
was
dismissed.
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1ST REQUIREMENT:
MUST BE COMMUNICATED
An offer must be communicated to the
promisee/offeree. Otherwise the offer is not valid.
Refer to Sec 2(a) CA: When one person signifies
to another
The word signifies in this section indicates that
the offer must be communicated, which means
that the offer must reach the knowledge of the
promisee/offeree.
Sec 3 CA: The communication of proposals
, respectively, are deemed to be made
by any act or omission of the party proposing
.., by which he intends to communicate
the proposal ., or which has the effect of
communicating it.

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2ND REQUIREMENT:
COMMUNICATION MUST
COMPLETE
Sec 4(1) CA: The communication of a
proposal is complete when it comes to
the knowledge of the person to whom it
is made.
Sec 4 Illustration (a) CA: A proposes, by
letter, to sell a house to B at a certain
price. The communication of the proposal
is complete when B receives the letter.

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Case:
R v. Clarke (1927) 40 CLR 227.
Clarke, was an accomplice to the murder
of two policeman. Following a notice by
the Australian government to grant a
free pardon and a reward of $1000 for
information leading to the arrest of the
murderers,
Clarke
supplied
the
information. He admitted at the hearing
that he had supplied the information to
save his skin and at the material time
the
thought
of
the
reward
had
completely passed out of his mind.
Held: Ignorance of the offer is the same
as never hearing it or forgetting it after
hearing of it. Therefore, Clarke failed to
get the reward.
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The position would be different if the

proposal was present in the promisees
mind when he acted upon it although he
may have been motivated by some other
considerations.
Case: Williams v. Carwardine
The defendant offered a reward of 20 for
information leading to the conviction of a
certain murderer. The plaintiff gave the
information not for the reward but to ease
her own conscience although she knew of
the reward.
Held: The plaintiffs motive in giving the
information was irrelevant. The act was
done by the plaintiff with knowledge of
the reward.

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PROPOSAL v COUNTER OFFER

Case: Hyde v. Wrench (1840) 3 BEAV
334
D offered to sell a piece of land to
the P for 1000 on 6th of June. P then
made a counter-offer to purchase at
950 on 8TH of June. However, D
refused to accept the new price. P
then
immediately
wrote
to
D
accepting the original offer of 1000
on 27th of June.
Held: There was no acceptance
because the plaintiffs letter on 8th of
June had rejected the original offer
and not to be revived. Therefore,
there was no valid contract.
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ACCEPTANCE

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ACCEPTANCE

Sec 2(b) of CA- 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.
The person accepting the proposal is
called promisee.

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1ST REQUIREMENT : ABSOLUTE &

UNQUALIFIED

Acceptance must
unqualified.

Sec 7(a) of CA- In order to convert a

proposal
into
a
promise
the
acceptance must be

be

absolute

and

(a)absolute and unqualified

Case: Hyde v. Wrench

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2ND REQUIREMENT : EXPRESSED

IN USUAL & REASONABLE
MANNER

Sec 7(b) CA: ..The acceptance must

be expressed in some usual and
reasonable manner, unless the proposal
prescribes the manner in which it is to
be accepted.

If there is a mode of acceptance

prescribed by the offeror it must be
followed by the offeree in order to make
a valid acceptance.

However the proposer cannot prescribe

silence as a manner of acceptance.

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Case: Felthouse v. Bindley

Felthouse offered by letter to buy his
nephews horse and said If I hear no
more about him, I shall consider the
horse is mine. His nephew did not
give any answer, but the nephew told
Bindley (the auctioneer) to keep the
horse out of the auction sale, as he
intended to reserve it for his uncle,
Felthouse. However, Bindley had sold
the horse by mistake. Felthouse sued
Bindley claiming that Bindley should
not sell the horse to other person
because there was already a contract
between him and his nephew.
Held: There was no contract between
Felthouse and his nephew because the
nephew
had
never
signified
to
Felthouse his acceptance of the offer
before the auction sale took place.
Silence
does
not
constitute
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acceptance.

3RD REQUIREMENT : MUST BE

COMMUNICATED & COMPLETE
Under CA, the rules on communication of
acceptance is governed by s. 4(2), which
stipulates different times when the
communication of an acceptance is
complete.
Communication of an acceptance is
complete as against:a) Proposer-Once posted
[Sec 4(2)(a) CA].
b) Acceptor-Comes to the knowledge of the
proposer
[Sec 4(2)(b) CA]; Illustration (b) of Sec 4
CA].
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Acceptance through post is complete

when the letter of acceptance is
posted, even though it has not come to
the actual knowledge/received by the
proposer; the proposer is bound to the
contract when the acceptor posts the
letter of acceptance, even though the
proposer has no knowledge of the
acceptance.
Nevertheless, the acceptor is only
bound
by
the
contract
if
the
acceptance has came to proposers
knowledge.
It is important to determine the when
communication
of
acceptance
is
complete because it will affect the
validity of revocation either by the
proposer or by the acceptor in the
event they decide to do so.
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Case: Ignatius v. Bell (1913) 2 FMSLR

115
The D offered to sell his land to the P on
condition that if the P would like to
accept the offer, he must make the
acceptance on or before 20th August
1912. The P sent an acceptance by
registered post on 16th August but the
letter did not reach the D until 25th
August, because the D was away.
Held: The acceptance was exercised by
the P when the letter was posted on 16th
of August. Therefore the D was bound to
the contract.
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Byrne v Van Tienhoven

(1880) LR 5 CPD 344

Facts
D'sofferedtosellgoodstoPbyletterdated1October.On8
October,priortoacceptance,D'spostedaletterrevokingthe
offer.ThisletterwasreceivedbyPon20October.Inthe
meantime,on11OctoberPreceivedtheletteranddispatchedan
acceptance.Wasthereacontract?
Held (Lindley J)
Tobeeffectiverevocationmustbecommunicated.Wherepostis
usedforacceptance,acceptanceoccurswhenandwheresent
(provideditiscontemplatedasameansofacceptance)(the
'postalrule').However,thisruledoesnotapplyinrelationto
revocationofoffers-thus,ifpostisusedforrevocation,
communicationisonlyeffectiveifandwhenitisreceivedbythe
offeree.Asthisoccurredafteracceptancetherewasacontract
formedinthiscase.
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EXCEPTIONS:

In the case of instantaneous mode of

communication such as telephone, telex
and telefax.
Entores Ltd v Miles Far East Corporation
[1955] 2 QB 327

If it is excluded in the agreement

Holwell Securities Ltd v Hughes

41

Entores Ltd v Miles Far East Corporation [1955] 2

QB 327
Entores was a London-based trading company that
sent an offer for the purchase of copper cathodes
by telex from a company based in Amsterdam.
The Dutch company sent an acceptance by telex.
The contract was not fulfilled by the Dutch
Company and so Entores attempted to sue the
owner of the Dutch company for damages.
The controlling company, Miles Far East Corp., was
based in the U.S. and so Entores could only bring
the action in the U.S. if it could be found that the
contract was formed in London rather than
Amsterdam.
It was held that the contract was formed in London.
The instantaneous nature of telex meant that
regular rules of acceptance by post did not apply.
The general principle that acceptance takes42place
when communicated applies to all instantaneous

REVOCATION
OF PROPOSAL
AND
ACCEPTANCE

43

Revocation refers to withdrawal of

proposal by the proposer or withdrawal
of acceptance by the acceptor.

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1ST REQUIREMENT :
COMMUNICATED & COMPLETE

The communication of a revocation is

complete as against the:-

a) Person who makes it; when it is put in

the course of transmission to the
person to whom it is made
(Sec 4(3)(a) CA).
b) Person who receives it;when comes to
his knowledge
(Sec 4(3)(b) CA).
Refer to Illustration (d) of Sec 4 CA.

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2ND REQUIREMENT : TIME OF

REVOCATION
Proposal (Sec 5(1) CA)
At
any
time
before
the
communication of its acceptance is
complete as against the proposer, but
not afterwards.
Acceptance (Sec 5(2) CA)
At
any
time
before
the
communication of its acceptance is
complete as against the acceptor, but
not afterwards.
Refer to Illustration of Sec 5 CA.
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3RD

REQUIREMENT : MODES OF
REVOCATION

Communication of notice of revocation by

the proposer to the other party (Sec 6(a)
CA).
By the lapse of time prescribed in the
proposal for its acceptance or if there is
no such prescription, by the lapse of
reasonable
time,
without
the
communication of its acceptance (Sec
6(b) CA).
When the acceptor fails to fulfill a
condition precedent to acceptance (Sec
6(c) CA).
Death or mental disorder of the proposer
(Sec 6(d) CA). However, if the acceptor
has no knowledge about the death or
mental disorder of the proposer, his
acceptance is valid and binding. Such 47a
contract can be enforced against the

TO BE CONTINUED.

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