TEST LAW OF CONTRACT 1 Instruction:

1. This test is to be done individually.

2. Please submit to my email: nadiaomar123@gmail.com 3. All submissions should not be later than 8 am, Sunday (16/12/2012). Late submission will not be accepted.

Answer ONE question only

QUESTION 1 A client, Robert comes and see you seeking advice for the following matters: (a) Robert and Nabil enter into an agreement whereby Nabil promises to wash Robert's car if Robert pays Akmam RM20.00. Nabil washes Robert's car but Robert fails to pay Akmam RM20.00. Advise Robert. (10 marks) (b) Chloe, the daughter of a millionaire, aged 16, agreed to purchase six pairs of 'baju kurung' from Gaya Tailors for the sum of RM6000.00. When the goods were delivered, Gaya Tailors demanded payment from her. Chloe told them that she could not pay them because her father had already cut her allowances by half.

Advise Gaya Tailors.

(20 marks)

QUESTION 2 a) On I January 2005, Doris proposed to sell a computer to Andrew at RM3000.00. It was stated in the proposal that acceptance must be made at the latest by 15 January 2005. Andrew wrote a letter to Doris accepting the proposal and posted the said letter on 5 January 2005. Meanwhile, Doris received a letter from Kim offering to buy the said computer at RM3,800,00. On6 January 2005, Doris called Andrew to revoke her proposal. Since Andrew was not at home, Doris left a message with Andrew's wife, Fiona. The letter of acceptance by Andrew was misdirected and it reached Doris on 16 January 2005. Fiona had forgotten to inform Andrew about the revocation and only told him about it on 8 January 2005.

Based on the above facts, answer the following: i) Advise Andrew whether he is entitled to the computer.

(20 marks)
ii)

Would your answer to (a) above be different if the letter of acceptance by Andrew was posted on 9 January 2005?

(10 marks)

QUESTION 1 Question 1(a)

The issues in this case is whether there is binding contract between Robert and Nabil? The definition of an offer is stated in section 2(a) of Contract Act 1950 which states when one person signifies to another his willingness to do or to abstrain from doing anything, with a view to obtaining the assent of that other to the act of abstinence, he is said to make a proposal. Thus A, by offering to buy Bs car for $10,000 in the hope that B will accept, is making a proposal. For the agreement to stand there must be a meeting of the parties minds, and one must ask whether there has been a firm offer and acceptance of that offer in this light. In the case of Harvey v Facey, Facey (F) owns Bumper Hall Pen (BHP), Harvey (H) want to buy BHP, H send a telegraph to H asking Will you sell us BHP? Telegraph lowest cash price. F responded: Lowest price for BHP 900. H then responded: We agree to buy BHP for the sum of 900 asked by you. F refused to proceed with the sale and H sued for breach of contract. H argued that Fs response constituted an offer that H had then accepted. The Privy Council rejected Hs argument. F was merely supplying information as requested. There was no intention to make an offer. The only offer was, in fact, made by H. There was no contract between the parties. A person who is merely supplying information in response to an inquiry is not making an offer. Section 2(b) of Contract Act 1950 states that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise. Upon such acceptance by B, an agreement between the parties is created. The proposal has become a promise and the party making the proposal (proposer or offeror) is now referred to as the promisor and the party accepting the proposal, the promisee. Therefore in the example given above, Bs acceptance of As proposal to buy the car establishes an agreement or promise. A is the promisor and B the promisee. In addition, section 7 of Contract Act 1950 state that acceptance must be absolute. In order to convert a proposal into a promise the acceptance must be absolute and unqualified (section 7(a)); be expressed in some usual and reasonable manner, unless the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in that manner, the proposer may, within the reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribe manner, and not otherwise; but, if he fails to do so, he accepts the acceptance. Nabil offer to wash Robert car if Robert accept to pays Akmam RM20.00. Robert didnt pay Akmam RM20.00 but Nabil has already wash his car. In this case, there is no acceptance from Robert. To make a binding contract, there must exist offer n acceptance

between two parties. Therefore in this case, there is no legally binding contract between them.

Question 1(b) The issue in this case is whether there is legally binding contract between Gaya Tailors and Chloe? According to Section 2(a) of Contract Act 1950, offer is define as when a person signifies to another his willingness to do or 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) of Contract Act 1950 state that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise.

One of the elements constituting a valid contract is that the parties entering the contract are those who have the competency to contract. This is based on section 10 (1) of the Contract Act 1950 which states: All agreements are contracted if they are made by the free consent of parties competent to contact, for a lawful consideration and with a lawful object, and are not hereby expressly declared 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 11 of the Contract Act 1950 which provides that every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. In Malaysia, section 2 of the Age of Majority Act 1971 provides eighteen years as the age of majority. In addition, Section 4 of Age of Majority Act stated that, nothing in this Act shall affect; a) the capacity of any person to act in the following matters, namely, marriage, divorce, dower and adoption; b) the religion and religious usage of any class of person in Malaysia; c) any provision in any other written law contained fixing the age of majority for the purpose of that written law. The illustration that can determine the situation of Gaya Taylors as in the case of Government of Malaysia v Gurcharan Singh & Others. The fact of this case is Government of Malaysia had sued the first defendant as the promisor and the second and third defendant as sureties for breach an agreement in writing entered into by them with the plaintiff for providing a course of training at a Malayan Teachers Training Institution. The first defendant as in the agreement should serve the government as a teacher for five years after the training. But, he had served the government for three years and ten month. The court held that the scholarship agreement was void as defendant was an infant at the time of the contract. Besides that, the term necessaries

must be construed broadly. In this case, the training was a necessaries to him as to be qualified teachers, therefore the defendant need to repayment to all the sum expended for his education and training. Another cases that related to the situation is in the case of Mohori Bibee v Dharmodas Ghose. The fact in this case is the respondent is a minor had executed a mortgage in favour of Brahmo Dutt a money lander. Then respondent by his mother make an action against Brahmo Dutt stating that the respondent is under age when he executed the mortgage and claim for void and imperative declaration. The Privy Council held that the mortgage was void and unenforceable as a minor is incompetent to contract. All contracts entered by a minor is generally void and a minor cannot sue or be sued on such void contracts. However, there are some exceptions towards a minor binding a valid contract. Therefore, in the Gaya Taylors situation, by referring to these illustrations shows that the agreement with Chloe is void as she was a minor. Under section 69 of Contract Act 1950, it is said that if a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person. 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. In this case, Chloe is a daughter of a millionaire and its suitable of his station in life or lifestyles to purchase six pairs of baju kurung from Gaya Tailors worth RM6,000.00. Therefore, under remedies in section 69 of Contract Act 1950, there exist a binding contract between Gaya Tailor and Chloe.