Advise to Alfa Sdn Bhd.

Validity of Alfa Sdn Bhds acceptance

According to Section 7b of contract act 1950, acceptance must be communicated to the offeror
( Powell v Lee ). While the type of communication of acceptance divided by 3: Instantaneous
Mode, Postal Acceptance Rule and Internet Communication.
Each of those classifications brings their own rule to apply in acceptance. Of course fax is not an
Internet Communication, so our focus is whether fax is Instantaneous Mode of Communication
or it belongs to Postal Acceptance Rule.
While the Instantaneous Mode of Communication determine the valid acceptance when the
message, at any form, received by the other party and there is an actual communication
between them (S.4(1) contract act 1950) ( Entores v. Miles Far East Corporation).
However the postal rule says the acceptance valid when the first party send the acceptance
letter, or any other, to other party regardless the letter is received by the second or not.
It is arguably that postal rule apply to the fax considering the fact that fax is a kind of letter,
using paper and writing as media of communication. However, English law classified fax as the
Instantaneous Mode of Communication (Entores v Miles Far Eastern Corp, Brinkibon Ltd v
Stahag Stahl).
In Conclusion, Alfa Sdn Bhds acceptance is not valid since Legally Sdn Bhd did not receive any
acceptance.
Other reason that maybe strengthen why the acceptance is not valid, that the form of
acceptance required by Legally Sdn Bhd was a phone acceptance, but Alfa Sdn Bhd deliver their
acceptance by fax (see Re Selectmove Ltd).
When offeror required offeree to deliver acceptance with some form of communication, the
offeree must deliver the acceptance as it required (Yates Building Co. Ltd v. R.J. Pulleyn & Sons
(York) Ltd).

a) Alfa faxed a withdrawal of its acceptance before noon, by which time

Legally fax was operating properly.
Problem statement
Alfa Sdn Bhd sent acceptance fax at 10, states that they accept Legally Sdn Bhds offer. Legally
Sdn Bhd received the acceptance since their fax was working properly at that time. Then later
at 11(before noon), Alfa Sdn Bhd sent the withdrawal of acceptance fax to Legally Sdn Bhd,
stated that they changed their mind and decided to not buying Legally Sdn Bhds steel.
Point of consideration

Alfa sent the withdrawal after their acceptance

Alfa sent the withdrawal before noon

Validity of Alfa Sdn Bhds withdrawal

Acceptance can bind an offerors to do what they are offering in contract. Means that when
acceptance made, there is an obligation to oferror fulfill the duty that promised (Carlill v
Carbolic Smoke Ball Co).
Meanwhile in the other hand the bind is not for the acceptance, the offeree is not bounded.
Offeree can still withdraw his acceptance by sending an overtaking withdrawal. Therefore he
might speculate during the period when he is not bound by watching the market to see if it is to
his advantage to withdraw his acceptance.
However, Malaysian contract act 1950, section 5(2) stated: An acceptance may be revoked at
any time before the communication of the acceptance is complete as against the acceptor, but
not afterwards.
Means that the withdrawal of acceptance only can occurs in the time of communication
between offeree and offeror. The acceptance withdrawal cannot occurs if the contract
communication ended, or in other word, when the time limit that stated for negotiation is
passed.
We can found in this case that the communication time limit of the contract is stated by Legally
Sdn Bhd which is at noon of that day, by saying Please telephone an acceptance by noon
today. Means that Alfa Sdn Bhd has right to revoke their acceptance until noon.

In conclusion we can say that Alfa Sdn Bhds acceptance withdrawal is valid because they have
right to revoke before the noon. And there are no contract bind between Alfa Sdn Bhd and
Legally Sdn Bhd in the end.

Reference :
http://en.wikipedia.org/wiki/Offer_and_acceptance
http://www.unistudyguides.com/wiki/Acceptance
http://www.cisg.law.pace.edu/cisg/biblio/farnsworth-bb22.html
http://netk.net.au/Contract/03Acceptance.asp