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LAW240

SUIENTY BINTI INSUNG


(2014914661)
EYLIA NAFISA BINTI AB
RAZAK(2014165657)
MUHD IZZUDIN BIN AZLIN
SHAH (2014327305)

QUESTION 3

RM50 000
Muthu wrote to Abu offering to sell his banana leaf restaurant in its current
state at a price of RM50,000 and Muthu asked Abu to confirm his acceptance
in writing by 4th July.
On 1st July Abu replied that he agrees to purchase the restaurant at
RM50,000 with conditions that certain renovations to its kitchen and toilet are
done by Muthu at his own expenses.
Muthu received the letter from Abu and being disappointed with Abus
response. Hence, Muthu sold the restaurant to Lim who agreed to purchase
the restaurant in its current condition.
When Abu knew about that, he got angry and alleged that Muthu has breach
the contract, for which he intends to bring a legal action against him. Muthu
is worried of being sued.
Advise Muthu.

ISSUE
The issue is whether there was a valid acceptance between
Muthu and Abu.

LAW APPLICABLE
Section 2(a) of the Contracts of Act 1950 defines an offer or a
proposal as 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 the act or
abstinence, he is said to make a proposal.
Section 2(b) states that when the person to whom the
proposal is made signifies his assent thereto, the proposal is
said to be accepted.
Section 2(h) states that an agreement enforceable by law is a
contract.
Section 7(a) provides that in order to convert a proposal into
a promise, the acceptance must be absolute and unqualified.

Section 7(a) clearly states that the acceptance must be


absolute and unqualified. This means that the acceptance
must be in accordance with the original condition as it is
proposed. It must not contain any modification or
variation. If there is any modification or variation to the
original offer, that is not an acceptance but a counter-offer.
When a counter offer is made, the original offer is
rejected and can no longer be accepted.

1000

950
WRENCH

SELL - FARM
1000 POUND

HYDE

This issue is similar to Hyde v Wrench which in this case,


Wrench offered to sell his estate to Hyde for 1000 pounds.
Hyde made a counter-offer to purchase the land at 950
pounds. Wrench refused to accept the counter-offer.
Subsequently, Hyde later accepted the original offer.
However, there was no acceptance because the counter offer
contained in the Hydes letter offer had rejected the original
offer which could not be revived.

40s per ton


McLean

Stevenson, Jacques & Co

Another case related to this issue is Stevenson, Jacques &


Co v McLean, McLean offered to sell some more iron SJC
for cash. SJC asked whether they could have four months
credit. However, there was no response from McLean and he
then sold the iron to another person. The court held that
there was no counter-offer but a mere inquiry which should
have been answered by the McLean.

OFFER TO BUY A
PROPERTY
JONES

DANIEL

In the case Jones v Daniel, Daniel offered to buy a


property from Jones for 1450 pounds. Jones accepted the
offer and enclosed a letter of acceptance to Daniel, which
contained conditions which had never been suggested in
the offer made by Daniel. The Court held that there was no
valid contract, Jones had not accepted Daniels offer but
made his own counter-offer, which was rejected by Daniel.

APPLICATION
Applying to this current situation :
Muthu offered Abu to sell his restaurant amounted to
RM50,000 at its current state by 4th July. Abu then
agreed to purchase the restaurant from Muthu on 1 July for
RM50,000, with the conditions that Muthu has to renovate
the restaurants kitchen and toilet by Muthus own
expenses.
Hence, this is not a valid acceptance but a counter offer.

Muthu received the letter on 4th July and got upset by Abus
respond. Muthu then sold the restaurant to another person,
Lim.
If there are a counter-offer in the agreement, it depends on
the offeror whether to accept or not. If the offeror agrees and
accepts the counter-offer, the agreement can be concluded.
In this case, Muthu as an offeror has the right to accept or
reject towards the counter-offer. Therefore, Muthu was not
bound to sell the restaurant to the Abu.
Hence, he reject the counter after made by Abu as he sold
the restaurant to the other party (Lim).

CONCLUSION
Abu
Muthu
Lim

To sum up, there was no valid acceptance between Muthu


and Abu but only a counter offer.

THANK
YOU ...