Business Law Chapter 2 – Contract Formation

These flashcards review key principles, statutory provisions, and landmark cases on contract formation, offer, acceptance, invitation to treat, revocation, and consideration under Malaysian and common law as covered in Chapter 2 of the Business Law notes.

Boulton v Jones

This case illustrates that a specific offer, made to a particular party, cannot be accepted by someone else who was not the intended offeree. (Topic: Offer – Specific Offer)

Carlill v Carbolic Smoke Ball Co.

This famous case demonstrates a valid general offer made through an advertisement, where acceptance was by performance without prior notification (unilateral contract). (Topic: Offer – General Offer, Unilateral Contracts)

Guthing v Lynn

This case illustrates that an offer must be clear and complete; an unclear offer with uncertain terms (e.g., relating to a ‘luck’ horse) is invalid. (Topic: Offer – Certainty)

R v Clarke; Fitch v Snedaker

These cases show that if an offeree performs the requested act without knowledge of the offer, there is no valid acceptance, thus no contract is formed. (Topic: Offer – Communication)

Williams v Carwardine

This case allowed recovery of a reward where the offeree knew of the offer, even if their motive for performing the act was not primarily to claim the reward. (Topic: Offer – Communication)

Partridge v Crittenden

This case established that newspaper advertisements for goods are generally considered invitations to treat, not offers. (Topic: Invitation to Treat – Advertisements)

Coelho v Public Services Commission

This Malaysian case held that a job advertisement was an invitation to treat, with the contract arising upon the issuance of an unconditional acceptance letter to the applicant. (Topic: Invitation to Treat – Advertisements)

Pharmaceutical Society v Boots

This case ruled that the display of goods on shelves in a self-service store is an invitation to treat, and the offer is made by the customer at the till. (Topic: Invitation to Treat – Display of Goods)

Fisher v Bell

This case decided that the shop-window display of a flick knife was an invitation to treat, not an offer for sale, under the relevant statute. (Topic: Invitation to Treat – Display of Goods)

Hyde v Wrench

This case established that a counter-offer, which varies the original terms, rejects and terminates the original offer, making it incapable of later acceptance. (Topic: Acceptance – Counter-Offer)

Stevenson, Jacques & Co v McLean

This case distinguished a mere request for information from a counter-offer, stating that the former does not reject the original offer, which thus remains open. (Topic: Acceptance – Request for Information)

Western Electric v Welsh Development Agency

This case illustrates that if an offeror prescribes a mode of acceptance, they may still be bound if they choose to treat an irregular acceptance as valid. (Topic: Acceptance – Mode of Acceptance)

Felthouse v Bindley

This case illustrates that silence generally does not constitute acceptance of an offer. (Topic: Acceptance – Communication)

Carlill v Carbolic Smoke Ball Co.

This case involving a unilateral offer demonstrates an exception where communication of acceptance is not required, as acceptance occurs through performance of the specified conditions. (Topic: Acceptance – Communication Exception)

Household Fire Insurance v Grant

This case established the ‘postal rule,’ stating that acceptance sent by post is effective when the letter is properly posted, not when it is received by the offeror. (Topic: Acceptance – Postal Rule)

Payne v Cave

This case illustrates that an offer may be revoked any time before acceptance is complete against the proposer (e.g., at an auction before the fall of the hammer). (Topic: Revocation of Offer)

Dunmore v Alexander

This case, referenced in the context of Section 5(2), relates to when an offeree can revoke their acceptance, which is before the revocation comes to the knowledge of the offeror. (Topic: Revocation of Acceptance)

Currie v Misa

Lush J's statement in this case defines valuable consideration as consisting of either a benefit accruing to one party or a detriment suffered by the other. (Topic: Consideration – Definition)

Phang Swee Kim v Beh I Hock

This Malaysian case confirmed that mere inadequacy of consideration does not invalidate a contract and will not render it void. (Topic: Consideration – Adequacy)

Venkata Chinnaya v Verikataramaya

This case illustrates that valid consideration can be supplied by a third party, not necessarily the promisee, proving the principle that consideration can move from 'any other person' (annuity case). (Topic: Consideration – Third Party)

Thornton v Shoe Lane Parking

This case on vending machines can be analogized to interactive websites allowing full transaction completion, where the machine/website constitutes the offer and customer action is acceptance. (Topic: Offer – Vending Machines/Digital Transactions)

Harvey v Facey

This case illustrates that merely stating the lowest price for an item (a price list or quotation) is generally a supply of information or an invitation to treat, not a definitive offer. (Topic: Invitation to Treat – Price Lists)

Spencer v Harding

In this case, an invitation for tenders was held not to be an offer because it merely invited parties to submit bids, with no promise to accept the highest or any tender. (Topic: Invitation to Treat – Tenders)

Fraser v Everett

This case relates to the concept of 'reasonable time' for acceptance when no specific time limit is stated, which is judged by circumstances, nature of goods, and trade practice. (Topic: Acceptance – Lapse of Time)