Law of Contract

Vocabulary flashcards covering key terms, principles and landmark cases related to offer, acceptance, and invitation to treat under Malaysian Contract Law and common law precedents.

Contract

An agreement enforceable by law (s.2(h) Contracts Act 1950) creating a legally binding obligation between parties.

Contracts Act 1950 (Malaysia)

Principal Malaysian statute governing formation, validity and enforcement of contracts.

Agreement

A promise or set of promises forming consideration for each other; becomes legally enforceable when all contract elements exist.

Offer (Proposal)

Expression of willingness to do or abstain from doing something with a view to obtaining the other party’s assent (s.2(a) CA 1950).

Offeror / Promisor

Party who makes the offer or proposal.

Offeree / Promisee

Party to whom the offer is made and who may accept it.

Acceptance

Unqualified assent to all terms of an offer; upon acceptance the proposal becomes a promise (s.2(b) CA 1950).

Consensus ad idem

‘Meeting of the minds’; parties must be of one mind on the same thing for a contract to exist.

Intention to Create Legal Relations

Element requiring parties to intend their agreement to be legally binding.

Consideration

Something of value exchanged between parties; necessary for most enforceable contracts.

Legal Capacity

Parties’ ability in law to enter a binding contract (e.g., age, sound mind).

Certainty

Contract terms must be clear and definite; vague promises are unenforceable.

Legality

Object and consideration of the contract must not be illegal or contrary to public policy.

Free Consent

Agreement must be free from coercion, fraud, misrepresentation, undue influence or mistake.

Invitation to Treat (ITT)

Preliminary communication inviting negotiations; cannot itself be accepted to form a contract.

Supply of Information

Statement of price or facts (e.g., Harvey v Facey) that is not an offer but mere information.

Display of Goods

Placing items in shop window or shelf is ITT; customer’s act of presenting goods is the offer (Fisher v Bell; Boots case).

Fisher v Bell (1961)

Case holding shop display of a flick-knife was an ITT, not an offer to sell a prohibited weapon.

Pharmaceutical Society v Boots (1953)

Established that self-service store displays are ITT; contract forms at cashier under pharmacist supervision.

Advertisement (general rule)

Usually an ITT inviting offers from the public (Partridge v Crittenden).

Partridge v Crittenden (1968)

Advertisement for sale of wild birds was an ITT; seller not guilty of ‘offering’ prohibited birds.

Carlill v Carbolic Smoke Ball Co. (1893)

Advertisement with performance conditions and deposit of £1,000 constituted a unilateral offer to the world; performance = acceptance.

Tenders

Invitation to submit bids is ITT; each tender submitted is the offer, which may be accepted or rejected.

Auctions

Auctioneer’s call for bids is ITT; each bid is an offer; acceptance occurs at fall of hammer (Payne v Cave).

Reserve Price (Auctions)

Minimum price; auctioneer cannot accept bids below reserve.

Revocation of Offer

Withdrawal of offer any time before acceptance is communicated to offeror (s.5(1) CA 1950).

Byrne v Van Tienhoven (1880)

Revocation effective only when communicated to offeree; posting a revocation letter insufficient until received.

Dickinson v Dodds (1876)

Offer may be revoked through reliable third-party notice; promise to keep offer open unenforceable without consideration.

Lapse of Time

Offer terminates when stated acceptance period expires or after reasonable time if none stated (s.6(b) CA).

Condition Precedent

Offer lapses if acceptor fails to meet a required condition before acceptance (s.6(c) CA).

Death or Mental Disorder of Offeror

Offer terminates if offeree learns of offeror’s death or insanity before acceptance (s.6(d) CA).

Rejection

Offeree expressly declines offer; original offer cannot later be accepted unless renewed.

Counter-Offer

Offeree’s variation of terms; rejects original offer and proposes new one (Hyde v Wrench).

Hyde v Wrench (1840)

Counter-offer of £950 destroyed original £1,000 offer; no contract when original terms later ‘accepted’.

Postal Rule

Acceptance complete when letter is posted (against proposer) and when received (against acceptor) (s.4 CA).

Ignatius v Bell (1913)

Option accepted by posting letter within time limit; contract formed at posting under postal rule.

Felthouse v Bindley (1862)

Silence cannot constitute acceptance; no contract where nephew failed to communicate assent to buy horse.

Entores v Miles Far East (1955)

For instantaneous communications (telex), contract formed where acceptance is received by offeror.

Revocation of Acceptance

Accepting party may revoke acceptance before it reaches offeror (s.5(2) CA 1950).

Modes of Contract Formation

Contracts may be made orally, in writing, or by conduct; no particular form generally required.

Express Offer

Offer made in words, spoken or written (s.9 CA).

Implied Offer

Offer inferred from conduct, not expressed in words (s.9 CA).

Meeting Requirements of Offer

Offer must be legal, communicated, certain, and made with intention to obtain assent.

Consensus ad idem Case (Ayer Hitam Tin Dredging v YC Chin)

Malaysian case emphasising necessity of parties’ matching intentions for contract formation.