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SUMMARY OF CASES : OFFER AND ACCEPTANCE

Business qnd cvber law

7. Pharmaceutical Society of Greot Britdin v Boots [19531 1 qB 401 Court ofAppeal

Boots introduced the then new self service system into their shops

whereby eustomers would pick up goods from the shelf put them in their

basket and then take them to the cash till to pay. The Pharmaceutical

Society of Great Britain brought an action to determine the leBality of the

system with regard to the sale of pharmaceutical products which were

required by law to be sold in the presence of a pharmacist. The court thus

needed to determine where the contract came into existence.

Held:

Goods on the shelf constitute an invitation to treat not an offer. A

customer takes the goods to the till and makes an offer to purchase. The

shop assistant then ehooses whether to accept the offer. The contract is

therefore concluded at the till in the presence of a pharmacist

2" Fisher v Bellll96Ll 1 qB 394

The defendant had a flick knife displayed in his shop window with a priee

tag on it. Statute made it a criminal offence to 'offer' such flick knives forsale. His csnvietion was quashed as goods on display in shops are not

'offers'in the teehniealsense but an invitation to treat. The court applied

the literal rule of statutory interpretation.

3, Mdzumderv Attorney General of Sarawak- where the Federal Court held

that an advertisement in the newspaper for the post of a doctor was an

invitation to treat.

4. Partridge v Crittenden (1958) 2 All ER 421

The defendant placed an advert in a classified section of a magazine

offering some bramble finches for sale. 5.6 of the Protection of Birds Act

1954 made it an offence to offer such birds for sale. He was charged and

convicted of the offence and appealed against his convietion"

Held:

The defendant's conviction was quashed. The advert was an invitation to

treat not an offer. The literal rule of statutory interpretation was applied"

5, PaYne v Cave

The auctioneer is free to accept or reject any bid. lt is the bid which is the

offer"

The Sale of Goods Acts - (1895 - 1923) a separate Act for each State, but

the provisions are similar - provide that a sale by auction is complete when

the auctioneer anRounces that fact by the fall of the hammer, or in another

eustomarymanner.Untilthattime,anybidmayberetracted.

6. Spencerv Harding Law Rep.5 C. P.561

The defendants advertised a sale by tender of the stock in trade belonging

Eilbeck & eo. The advertisement specified where the goods could be

viewed, the time of opening for tenders and that the goods must be paid

for in eash. No reserve was stated. The claimant submitted the highest

tender but the defendant refused to sell to him'

Held:

Unless the advertisement speeifies that the highest tender would be

accepted there was no obligation to sell to the person submitting the

highest tender. The advert amounted to an invitation to treat, the tender

was an offer, the defendant eould choose whether to accept the offer or

not.

7. Hyde v wrench (1840) 49 ER 132 Chancery Division (Decided by Lord

Langdale MR)

The defendant offered to sell a farm to the claimant for €1,000' The

claimant in reply offered €950 which the defendant refused. The claimant

then sought to aceept the original offer of €1,000. The defendant refused

to sell to the elaimant and the clalmant brought an action for specific

performance.

Held:

There was no eontract. where a counter offer is made this destroys the

original offer so that lt is no longer open to the offeree to acceBt.

8, Bryne VTlenhovdn

on october 1st Van Tienhoven mailed a proposal to sell 1,000 boxes of tin

platestoByrneatafixedprice.onoctoberSth,VanTienhovenmailedarevocation of offer, however that revocation was not received until the

20th. ln the interim, on october llth, Byrne received the original offer and

accepted by telegram and turned around and resold the merchandise to a

thirdpartyonthel5th'Byrnebroughtanactionfornon-performance.

lssue : what is the relation between the postal acceptance rule and

revocation?

Held :

The court granted plaintiff claim. Judge Lindley held that the revocation of

the offer was not effective until it had been communicated to Byrne. while

the postal rule remains good law for acceptance, he finds no support for

the premise that revocation of an offer is also completed once it has been

put in the mail. As a result, the revocation was not communicated to Byrne

until the zoth, at whieh point the eontract was already formed and thus the

revocation is of no effeet. To rule otherwise would be impractical for

commercial realities.

Principles for revocation of on ofler in mdil box rule

Revocation must be communicated to the offeree so that the offeree has

knowledge of the revocation.

Mere posting of a revocation is not sufficient communication.

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MTNORS' CAPACITY TO CONTRACT

One of the elements eonstituting a valid contract is that the parties entering the

contract are those who have the eompetency to contract. This is based

on section 10 (1) of the Contract Act 1950 which states: "All ogreements ore

cantracted if they are made by the free cansent of parties campetent to contact, fora tawfut consideration and wlth o tawful abiect, and are not hereby expressly

declored to be void."

Competency refers to the capacity of being an adult, having a sound mind and not

forbidden by law to enter any contract (e.g, bankruptcy). This principle is based

on section 1t of the Contract Act 1950 which provides lhat "every person is

competent to eantract wha is af the age of maiority accarding to the law to which

he is subject, and who is of sound mind, and is not disqualified fram cantrocting by

any law ta which he is subiect",

ln Malaysia, the age of majority is recognized as above eighteen years of age as

stated in the Age of Maiority Act 1971: "The minority al all males and females at

the age a! eighteen years and every such male ond female attaining that oge shall

be of the age of moiaritY."

tn effect of section 10 and 11 of contract Act 1950, the courts held in the cases

of Mohori Eihee V Dharmodas Ghose (7903), Tan Hee Juan V Teh Boon Kiat (1934)

and Government af Malaysid V Gurcharon Singh (1971) that all such agreements

are void. Therefore, all contracts entered by a minor is generally void and a minor

cannot sue or be sued on such void eontracts.

However, there are some exceptions towards a minor binding a valid contract.

Under section 69 of Contract Act 1950, it is said that ? a persan, incapable of

entering inta a contrlct, or anyane wham he is legally baund ta support, is supplied

by another person with nacessaries suited ta his candition in life, the person who

has furnished such supplies is entltled ta be reimbursed fram the property af such

incapable persan." Under necessaries a minor can enter valid contract if only it is

the basic need of the minor and suitable of his station in life or lifestyle.

contract of Scholarship between a minor and the government or non governmental

organizations is also valid under section 4 (a) Contracts (Amendment) Aet 1976 -

,'the scholar entering into such agreement is not of the age of moiority".

Similarly, a minor may enter into a contract of marriage or divorcement as provided

by section (al Aee Majority Act 1971: "Nothing in this Act sholl affect the capacity

of ony person to act in the following motters, nomely, marrioge, divorce, dower and

adoption".

A minor may also enter into a contract of insurance, pursuant to the lnsurance Act1966.

IHE REQUIREMENT OF FREE CONSENT FOR A VALID CONTRACT

The general rule is that the Court will not give any assistance to a party whose cause

of action is based on an illegality.

Contracts which are voidable under the Contracts Act 1950.

Section 10 of the CA 1950 states that all agreements are contracts only if they are

made by the free consent of the parties.And free consent is defined in Section 14

CA 1950 as

" Consent is said to be free when it is not caused by -

{a) eoereion, as defined in Seetion 15

(b) undue influence as defined in Section 16

(c) fraud as defined in sectlon 17

(d) misrepresentation as defined in section 18

(e) mistake ( to be read together with sections 21,22,23)

Section 15- " Coercion is the committing, or threatening to commit any act

forbiddcn by Pena! eode or the unlawful detaining or threatening, any property,

to the prejudice of any person whatevcr,with thc intention of causing any pcrson

to enter into an agreement""

Internal

tn the case of Kanhaya Lal v National Bank of India ILR (1913) the definition of

coercion was interpreted to mean an unlawful act done "with the intention of

causing the person to enter into the agreement."

Section 15 Undue influence

A contract is said to be induced by undue influence when the relations subsisting

between the parties are such that one of the parties is in a position to dominate

the will of the other and uses that position to obtain an unfair advantage over the

other.

Section 17

Fraud includes any of the following acts committed by a party to a contraet, or

with his connivance, or by his agent, with intent to deceive another party thereto

or his agent, or to induce him to enter into the contract:

(a)the suggestion, as to a faet, of that which is not true by one who does

not believe it to be true

(b) the active eoncealment of a fact by one having knowledge of bclief of

the faeU

(c) a promise made without any intention of performing it.

(d) any other act fitted to deceive

(e) any such act or omission as the law specially declares to be fraudulent.

Section 18- Mlsreprcsentation' lneluder

(a) the positive asscrtion,in a manner not warranted by the information of

the person making it, of that which is not true, though he believes it to be

true

(b) any breach of duty whlch, without an intention to deceive, gives an

advantage

ts the person eommittin6 it, or anyone claiming under him, by misleading

to his preJudice , or to the prejudice of anyone claiming under him; and

(c) causing, however innocently, a party to an agreement to make a mistake

as to the substance of the thing which is the subject of the agreement.

Section 19 - Voidability of agreemenB without free consent

(1) When consent to an agreement is caused by coercion, fraud or

misrepresentaion, the agreement is a contract voidable at the option of the

party whose consent was so eaused.

(2) A party to a contract whose consent was caused by fraud or

misrepresentation,may, if he thinks fit, insisit that the contract shall be

performed, and that he shall be put in the position in which he would have

been if the representations made had been true.

Exceptions- if such consent was caused by misrepresentation or by silence,

fraudulent within th emeaning of Section 17, the contract is nevertheless not

voidable, if the party whose consent was so caused had the means of discovering

the truth with ordinary diligenee.