Business Law

Proposal & Acceptance

Tutorial 4

Question 1

Ken is doing his weekly shopping for

groceries in Star supermarket. When would
the contract for the sale of his groceries
come into existence?
(10 marks)

Answer

Identification of Issues

When does the contract between Ken and Star Supermarket come into existence?

Explanation of the law

State the legal principles

Explain that display of goods in supermarket shelves amounts to ITT with relevant cases:

Pharmaceutical Society of Great Britain v Boots Cash Chemist Ltd. (1953)

Fisher v Bell (1961)

Application of the Law

Define ITT: An invitation to enter into negotiation

State the difference between ITT and a proposal with relevant cases: The difference lies in the intention of the
parties

State when the contract takes place on the facts of the question i.e. who makes the ITT, who
makes the offer and when the contract is concluded

Concluding Advice

Contract is formed at the cashier

Question 2

Sony writes to Ron and offers to sell his

trumpet for RM800. One week later, Ron
writes to Sony accepting the offer despite
knowing that Sony had died in a tragic car
accident. Explain whether a contract exists
between Sony and Ron.
(10 marks)

Answer

Identification of Issues

Explanation of the law

Legal Principles s6(d) CA 1950 states that a proposal is revoked by the death or
mental disorder of the proposer, if the fact of his death or mental disorder comes
to the knowledge of the acceptor before acceptance

Application of the Law

Whether there is a valid contract between Sony and Ron?

Application of the legal principles Applying s6(d) CA 1950, Ron had knowledge
of Sonys death before acceptance thus there is no contract between Sony and
Ron because the proposal is deemed to be terminated

Concluding Advice

No contract

Question 3

Pat lost her cat, Mimi. She advertised in the

newspaper offering to any person who
returns Mimi to her. Range found Mimi and
returned the cat to Pat but without knowledge
of the reward. Will Range be entitled to the
reward upon reading about it in the
newspaper?
(10 marks)

Answer

Identification of Issues

Explanation of the law

S2(a) CA 1950, the word signify means proposal must be

communicated. S4(1) CA 1950 states that proposal is communicated
when it is brought to the knowledge of the acceptor as illustrated in the
case of R v Clarke (1927)

Application of the Law

Whether Range can claim the reward?

Applying s4(1) CA 1950, Range had no knowledge of the reward when

she returned the cat to Pat thus Range is not entitled to the reward
offered by Pat

Concluding Advice

No contract

Question 4

Bo writes to Sam offering to sell his trumpet

for RM1,500. Sam accepts the offer but only
if the price is reduced to RM800. Bo is not
willing to sell the trumpet for RM800. Sam
then writes to Bo agreeing to buy the trumpet
for RM1,500. Advise Bo as to whether he is
bound to sell the trumpet to Sam.
(10 marks)

Answer

Identification of Issues

Explanation of the law

Acceptance must be absolute and unqualified as stated in s7(a) CA 1950

Counter-offer (s6(c) CA 1950)
Case Hyde v Wrench

Application of the Law

Is there a contract between Bo and Sam?

Discuss whether Sams offer is absolute and unqualified or is it a

counter-offer and what is the consequence

Concluding Advice

No contract

Question 5
In Dec 1999, Johny borrowed RM10,000 from Tony.
Johny promised to repay the loan within a month.
However, Johny did not repay the loan and Tony
went overseas for further studies. He returned to
Malaysia last month and demanded repayment from
Johny. He refuses to pay. Advise Tony if he could
sue Johny to recover the loan.
Would it make any difference to your answer, if when
Tony demanded repayment, Johny told him that he
would pay the loan the very next day but never kept
his word?
(10 marks)

Answer

Issue
Wht Tony can claim the money?
Law
S26 GR
A creditor cannot recover the loan back if he did not sue the
debtor within 6 yrs from the date of the accrual of cause of action
(s6 Limitation Act)
S26 (c) Exception

Fresh promise to pay in whole or in part of a statute-barred debt

Promise must be made in writing
Signed by the debtor

Application of law
Based on the fact of the case, the debt was statute barred as
Tony did not sue Johny within 6yrs

Question 6
Mr. Lim enters Smartshop Supermarket and
selects some canned food, soap, shampoo,
eggs, vegetables and fish. He puts these items
into his shopping trolley.
Has a contract been made between Smartshop
Supermarket and Mr. Lim at this juncture?
Give reasons for your answer

Q&A