Offer & Acceptance Legal cases

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Text of Offer & Acceptance Legal cases

  • \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 shopswhereby eustomers would pick up goods from the shelf put them in theirbasket and then take them to the cash till to pay. The PharmaceuticalSociety of Great Britain brought an action to determine the leBality of thesystem with regard to the sale of pharmaceutical products which wererequired by law to be sold in the presence of a pharmacist. The court thusneeded to determine where the contract came into existence.

    Held:

    Goods on the shelf constitute an invitation to treat not an offer. Acustomer takes the goods to the till and makes an offer to purchase. Theshop assistant then ehooses whether to accept the offer. The contract istherefore 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 prieetag 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 appliedthe literal rule of statutory interpretation.

    3, Mdzumderv Attorney General of Sarawak- where the Federal Court heldthat an advertisement in the newspaper for the post of a doctor was aninvitation to treat.

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

    The defendant placed an advert in a classified section of a magazineoffering some bramble finches for sale. 5.6 of the Protection of Birds Act1954 made it an offence to offer such birds for sale. He was charged andconvicted 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 CaveThe auctioneer is free to accept or reject any bid. lt is the bid which is theoffer"

    The Sale of Goods Acts - (1895 - 1923) a separate Act for each State, butthe 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.561The defendants advertised a sale by tender of the stock in trade belonging

    Eilbeck & eo. The advertisement specified where the goods could beviewed, the time of opening for tenders and that the goods must be paid

    for in eash. No reserve was stated. The claimant submitted the highesttender but the defendant refused to sell to him'

    Held:

    Unless the advertisement speeifies that the highest tender would beaccepted there was no obligation to sell to the person submitting thehighest 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 LordLangdale MR)The defendant offered to sell a farm to the claimant for 1,000' Theclaimant 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 specificperformance.

    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 VTlenhovdnon 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 the20th. ln the interim, on october llth, Byrne received the original offer andaccepted by telegram and turned around and resold the merchandise to a

    thirdpartyonthel5th'Byrnebroughtanactionfornon-performance.

    lssue : what is the relation between the postal acceptance rule andrevocation?

    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 beenput 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 forcommercial 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.

  • rMTNORS' CAPACITY TO CONTRACT

    One of the elements eonstituting a valid contract is that the parties entering thecontract are those who have the eompetency to contract. This is basedon section 10 (1) of the Contract Act 1950 which states: "All ogreements orecantracted 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 expresslydeclored to be void."

    Competency refers to the capacity of being an adult, having a sound mind and notforbidden by law to enter any contract (e.g, bankruptcy). This principle is basedon section 1t of the Contract Act 1950 which provides lhat "every person iscompetent to eantract wha is af the age of maiority accarding to the law to whichhe is subject, and who is of sound mind, and is not disqualified fram cantrocting byany law ta which he is subiect",

    ln Malaysia, the age of majority is recognized as above eighteen years of age asstated in the Age of Maiority Act 1971: "The minority al all males and females atthe age a! eighteen years and every such male ond female attaining that oge shallbe of the age of moiaritY."

    tn effect of section 10 and 11 of contract Act 1950, the courts held in the casesof 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 agreementsare void. Therefore, all contracts entered by a minor is generally void and a minorcannot 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 ofentering inta a contrlct, or anyane wham he is legally baund ta support, is suppliedby another person with nacessaries suited ta his candition in life, the person whohas furnished such supplies is entltled ta be reimbursed fram the property af suchincapable persan." Under necessaries a minor can enter valid contract if only it isthe 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 providedby section (al Aee Majority Act 1971: "Nothing in this Act sholl affect the capacityof ony person to act in the following motters, nomely, marrioge, divorce, dower andadoption".

    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 causeof 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 aremade by the free consent of the parties.And free consent is defined in Section 14CA 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 actforbiddcn by Pena! eode or the unlawful detaining or threatening, any property,to the prejudice of any person whatevcr,with thc intention of causing any pcrsonto enter into an agreement""

    Internal

  • tn the case of Kanhaya Lal v National Bank of India ILR (1913) the definition ofcoercion was interpreted to mean an unlawful act done "with the intention ofcausing the person to enter into the agreement."

    Section 15 Undue influence

    A contract is said to be induced by undue influence when the relations subsistingbetween the parties are such that one of the parties is in a position to dominatethe will of the other and uses that position to obtain an unfair advantage over theother.

    Section 17

    Fraud includes any of the following acts committed by a party to a contraet, orwith his connivance, or by his agent, with intent to deceive another party theretoor 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 doesnot believe it to be true

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