LAW RELATING TO BUSINESS

Student Name : ZAIMI BIN RAPIEI

KU – AEU

EXECUTIVE BACHELOR IN BUSINESS

MANAGEMENT

Awarded by the Asia E University

Assignment

LAW RELATING TO BUSINESS

Name of student : ZAIME BIN RAPIEI

Facilitator : MR ASOKAN
KU Centre : KU JB
Index no : KUJB00037
Question no : LRB ASSIGNMENT
Word count : 2629
Submission date : 15-May-2010

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LAW RELATING TO BUSINESS
Student Name : ZAIMI BIN RAPIEI

EXECUTIVE BACHELOR
ASSIGNMENT QUESTIONS

MODULE TITLE:

LAW RELATING TO BUSINESS

Due Date: 15 May 2010

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LAW RELATING TO BUSINESS
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EXECUTIVE BACHELOR
ASSIGNMENT QUESTIONS

MODULE TITLE: LAW RELATING TO BUSINESS

Assignment Question Due Date: 15 May

2010

Question 1
Philmore Pty Ltd displays its antique furniture in a large show room.

Each item having the price displayed clearly on it. Mr Smith selects a
particularly beautiful Georgian chair and approaches the salesman to
buy it. The salesman refuses to sell the chair to Mr.Smith having
warned by the director of Phoilmore that Mr. Smith was a particularly
disagreeable customer, being slow to pay up.

What is Mr. Smith’s position and why?

(20 marks)

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LAW RELATING TO BUSINESS
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Question 2
On June 1, S wrote to P offering to sell P his car for RM 1.200, the offer
to remain open until 7 June. However, soon after posting that letter, S
changed his mind, and on the morning of June 2, he posted a second
letter to P advising him that the car was no longer for sale.

P received S’s first letter at 10 am on 3 June, and at 2pm on the same

day P posted the following reply to S:

‘I like your offer, but, due to my present financial position, will you
accept payment of RM 100 per month over a year?’.

This letter reached S on the morning of 4 June. That afternoon (4 June),

P also changed his mind; at 3pm he posted the following letter to S;

‘Forget my last letter. I accept your offer and can pay immediately I
receive the car’. An hour after posting that letter, P received S’s
second letter and S received P’s second letter the following morning.

(a) Is there a contract between S and P? If there is no contract then

explain why
there is no contract and if there is a contract then explain why there is
a contract.

(b) Would there be any difference if the methods of communication

used was
sophisticated electronic communication, faxes or courier.
(10 marks)

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LAW RELATING TO BUSINESS
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Question 3
Felicia owns a pet dog called Dex. One morning, Felicia woke up to find
that Dex had disappeared from home. Distraught, she placed the
following advertisement (with a picture of Dex) in the local daily
newspaper called The Star:

MISSING DOG, OFFER OF REWARD

This friendly and trusting black Alsatian, Dex, disappeared from home
few days ago. I am offering RM 3500 for its safe return. Contact
Details: Felicia, No. 9, Persiaran Batu Hampar, Taman Batu View, 6 ¾
Miles, Jalan Ipoh, 68100 Kuala Lumpur, Telephone number: 03-
61520020.

Suzana saw the advertisement in the The Star the following morning.
She suddenly remembered that she had seen a dog matching Dex’s
description roaming the nearby playground the previous day. Suzana
quickly returned to the playground, where she met Dex playing with
another dog. Suzana caught Dex and took it to Felicia’s address.

Felicia took Dex from Suzana and thanked her for her effort. However,
when reminded of the RM3,500 offer, Felicia retorted: “Stop being so
silly, Suzana! I never made an offer to you as an individual; I therefore
do not consider myself bound to give you any reward.” Felicia then
asked Suzana to leave her
home and shut her door.

Suzana is very disappointed, and seeks your advice as to whether she

is legally entitled to the RM3,500 reward.
Advice her, drawing on your knowledge of contract law.
(40 marks)

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LAW RELATING TO BUSINESS
Student Name : ZAIMI BIN RAPIEI

Executive Summary

Commercial law (sometimes known as business law) is the body of law that
governs business and commercial transactions. It is often considered to be a
branch of civil law and deals with issues of both private law and public law.

Commercial law includes within its compass such titles as principal and agent;
carriage by land and sea; merchant shipping; guarantee; marine, fire, life, and
accident insurance; bills of exchange and partnership. It can also be understood
to regulate corporate contracts, hiring practices, and the manufacture and sales of
consumer goods. Many countries have adopted civil codes that contain
comprehensive statements of their commercial law. In the United States,
commercial law is the province of both the United States Congress, under its
power to regulate interstate commerce, and the states, under their police power.
Efforts have been made to create a unified body of commercial law in the United
States; the most successful of these attempts has resulted in the general adoption
of the Uniform Commercial Code.

Various regulatory schemes control how commerce is conducted. Privacy laws,

safety laws (e.g., the Occupational Safety and Health Act in the United States),
and food and drug laws are some examples.

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LAW RELATING TO BUSINESS
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Table of Contents
No. DETAILS PAGE #
1.0 Introduction 8
1.1 Answer for Questions 1 8-12
1.2 Answer for Questions 2 13-15
1.3 Answer for Questions 3 16-17
2.0 Bibliography 18

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LAW RELATING TO BUSINESS
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1.0 INTRODUCTION

1.1 Answer for Question 1

Definition of Offer

Treitel defines an offer as "an expression of willingness to contract on certain

terms, made with the intention that it shall become binding as soon as it is
accepted by the person to whom it is addressed", the "offeree". An offer is a
statement of the terms on which the offeror is willing to be bound.

The "expression" referred to in the definition may take different forms, such as a
letter, newspaper, fax, email and even conduct, as long as it communicates the
basis on which the offeror is prepared to contract.

Whether two parties have an agreement or a valid offer is an issue which is

determined by the court using the Objective test (Smith v. Hughes). Therefore
the "intention" referred to in the definition is objectively judged by the courts. In
the English case of Smith v. Hughes the court emphasised that the important
thing is not a party's real intentions but how a reasonable person would view the
situation. This is due mainly to common sense as each party would not wish to
breach his side of the contract if it would make him or her culpable to damages, it
would especially be contrary to the principle of certainty and clarity in commercial
contract and the topic of mistake and how it affects the contract. As a minimum
requirement the conditions for an offer should include at least the following 4
conditions: Delivery date, price, terms of payment that includes the date of
payment and detail description of the item on offer including a fair description of
the condition or type of service. Without one of the minimum requirements of
condition an offer of sale is not seen as a legal offer but rather seen as an
advertisement.

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LAW RELATING TO BUSINESS
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Invitation to treat An invitation to tender (ITT) is a special procedure for

generating competing offers from different bidders looking to obtain an award of
business activity in works, supply, or service contracts. An invitation to treat is an
indication that someone is prepared to receive offers with the view to forming a
binding contract. It is not an offer in itself.

There are four types of an invitation to treat.

1. Auction sales
At an auction the bid itself is an offer and then the auctioneer can either accept or
reject the offer. A good example of this is the case of Payne and Cave 1789, the
defendant made the highest bid for the plaintiff's goods at an auction sale, but he
withdrew his bid before the fall of the auctioneer's hammer. It was held that the
defendant was not bound to purchase the goods. His bid amounted to an offer
which he was entitled to withdraw at any time before the auctioneer signified
acceptance by knocking down the hammer.

2. Advertisements
This is an attempt to induce offers and is therefore classified as an invitation to
treat. A very good example of this is the case of Partridge V Crittenden 1968. Mr
Partridge placed an advertisement for selling a protected species of bird in a
magazine. Then RSPCA then brought a prosecution of the Birds Act 1953 but the
case was quashed as Mr Partridge was not making an offer as it was the
advertisement constituted an invitation to treat.

3. Exhibition of goods for sale

This is displaying goods in a shop such as Tesco etc. this constitutes inviting
customers to make offers to purchases such items or invitation to treat. An
example of this is the case of Fisher V Bell; a shopkeeper was prosecuted for
offering for sale an offensive weapon by exhibiting a flick knife in his shop window.
Displaying an item with a price in a shop window is an invitation to treat so he was

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LAW RELATING TO BUSINESS
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inviting offers from potential buyers which the shopkeeper could either accept or
reject the offer.

4. An invitation for tenders A tender is an estimate submitted in response to a

prior request. When a person tenders for a contract he is making an offer to the
person who has advertised a contract as being available. An example would be if
you wanted to borrow a loan you might obtain tenders from three different banks,
you therefore receive three different offers and you then decide which one to
accept.

In Mr. Smith’s case he can sue but he will not be able to enforce the contract or
claim damages. The reason is the chair was displayed in the shop together with
price, the salesman refuse to sell the chair to Mr. Smith. There is no acceptance
and there is no contract. This is illustrated in the case ofFisher v Bell.

Fisher v Bell [1961] is a case concerning the requirements of offer and

acceptance in the formation of a contract. The case established that, where goods
are displayed in a shop together with a price label, such display is treated as an
invitation to treat by the seller, and not an offer. The offer is instead made when
the customer presents the item to the cashier together with payment. Acceptance
occurs at the point the cashier takes payment.

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LAW RELATING TO BUSINESS
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Facts

The Defendant displayed a flick knife in the window of his shop next to a ticket
bearing the words "Ejector knife – 4s." Under the Restriction of Offensive
Weapons Act, section 1(1), it was illegal to manufacture, sell, hire, or offer for sale
or hire, or lend to any other person, amongst other things, any knife "which has a
blade which opens automatically by hand pressure applied to a button, spring or
other device in or attached to the handle of the knife". On 14 December 1959, the
Claimant, a chief inspector of police force, brought forward information against the
Defendant alleging the Defendant has contravened section 1(1) by offering the
flick knife for sale.

Judgment
High Court

At first instance, the Prosecutor submitted that the Defendant has displayed the
knife and ticket in the window with the object of attracting a buyer, and that this
constituted an offer of sale sufficient to create a criminal liability under section 1(1)
of the Act. The Defendant submitted that this was not sufficient to constitute an
offer. The judges at first instance found that displaying the knife was merely an
invitation to treat, not an offer, and thus no liability arose. The Prosecutor
appealed the judges' decision.

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LAW RELATING TO BUSINESS
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Court of Appeal

The court upheld that, although the display of a knife in a window might at first
appear to "lay people" to be an offer inviting people to buy it, and that it would be
"nonsense to say that [it] was not offering it for sale", whether an item is offered for
the purpose of the statute in question must be construed in the context of the
general law of the country. He stated that the general law of the country clearly
established that merely displaying an item constituted an invitation to treat. He
also read the statute on an exclusive construction (inclusion unius exclusion
alterius est), noting that other legislation prohibiting the sale of weapons referred
to "offering or exposing for sale" (emphasis added). The lack of the words
exposing for sale in the Restriction of Offensive Weapons Act 1959 suggested
that only a true offer would be prohibited by the Act. The court dismissed the
appeal.

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LAW RELATING TO BUSINESS
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1.2 Answer for Question 2

In order to one party to sue, they have to establish a contract. There are 4
elements, which are in offer, consideration and intension. If the 4 elements are
satisfy then they will be a valid binding contract between the parties. In order to
advise S and P, we have to consider if there is any contract between them. To
answer this question we have to consider the principles of offer acceptance and
consideration. The issue of intention is of little relevance because clearly there is
intension between S and P.

In the question, S wrote to P offering to sell his car for RM1200. S also stated the
offer will remain open until 7th June. This is a difficult issue to clarify in contract law
if you are to keep the offer to remain open. Then some form of consideration must
be given. The question does not say whether P offered any consideration for
keeping the offer open until 7th June. However, S changed his mind on the
morning on 2nd June and posted the 2nd letter to P and advising him that the car
was no longer for sale. This in law is call revoke.

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LAW RELATING TO BUSINESS
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The law allows an offer to revoke his offer. This is illustrated in the case of
Routledge v Grant. However, certain condition must be satisfies.
There are,- Before Acceptance. [Routledge v Grant]
- It must be Communicated. Must let the party know (by read and
understand). [Bryne v Van Tienhoven]
- Third party must reliable (ex-wife cannot be third party). [Dickinson v
Dodds]
P received S first letter at 10am on the 3rd June posting the acceptance
letter at 2pm on the same day. The difficult part here is he stated his like the offer
but due to his present financial position whether S will accept one hundred per
month over a year. This is call counter offer. Here there may be a counter offer in
contract law, a counter offer will destroy the original offer. A case in point isHyde
v Wrench.
The fact of the case was that the Defendant offer £1000 but the Plaintiff
offered £950. The Defendant refuse but later the Plaintiff accepted the £1000 but
defendant change his mind and refuse to sell. It was held by the court that there
was no contract.

Similarly in this case he is making a counter offer when he asked for installment
payment of RM1000 per month over a year. This will destroy the initial offer of
RM1200 made by S. however, the question state that the letter reach S on the
morning of 4th June to which P changed his mind at 3pm and posted a 2nd letter to
forget his last letter and he accept the offer and can pay immediately for the car.
Here we need to answer whether this acceptance is a valid acceptance or not.
The most important issue of consider for this question is the Postal Rule in
acceptance. In contract law, like the offer and allocation, if must be communicated
which means the other party must actually know the knowledge there is an
acception in the Postal Rule the rule states that when parties contemplate the use
of the post then the communication is complete against the offeror once the letter
is posted. In simple word it means once posted deemed communicated.Adams v
Lindsell is the authority for this point.

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LAW RELATING TO BUSINESS
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So, P’s 1st letter reach S on the morning of 4th June. However, P received
the revocation letter an hour after posting the acceptance. This shows that the
revocation was after posting the acceptance letter. So the question here is S only
receive P’s acceptance the following morning which is the 5th June. However, S
revocation letter was received by P on the 4th according to Byrne v Van
Tienhoven and Routledge v Grant. The revocation must come before
acceptance and must be communicated on the 5th. Technically that is no binding
contract between S and P. However, there is an acceptation to the rules of
communication in acceptance. The rule is the Postal Rule. The rule stats that
once posted deemed communicated. Therefore, in S and P’s case, P posted the
letter an hour before he receive S revocation. Once he posted on the 4th, the
contract is form on the 4th and not the following morning (5th June). Since the
revocation was after posting it is not valid and is comes after acceptance.

Thus there is a valid binding contract between S & P due to the postal rule.
In conclusion, S will be bound by his offer to P and a contract is form with P
because of the Postal Rule. However, it is submitted that the Postal Rule only
supply to communication by post and not any other mode of communication. This
is illustrated in the well known case on Adams v Lindsell. There will no contract if
by fax, because email, fax and courier will not follow Postal Rule.

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LAW RELATING TO BUSINESS
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1.3 Answer for Question 3

Offer and Acceptance

Offer and Acceptance analysis is a traditional approach in contract law used to

determine whether an agreement exists between two parties. As a contract is an
agreement, an offer is an indication by one person (the "offeror") to another (the
"offeree") of the offeror's willingness to enter into a contract on certain terms
without further negotiations. A contract is said to come into existence when
acceptance of an offer (agreement to the terms in it) has been communicated to
the offeror by the offeree.

The offer and acceptance formula, developed in the 19th century, identifies a
moment of formation when the parties are of one mind. This classical approach
to contract formation has been weakened by developments in the law of
estoppels, misleading conduct, misrepresentation and unjust enrichment.

Acceptance is a final and unqualified expression of assent to the terms of an

offer. It is no defense to an action based on a contract for the defendant to claim
that he had not intended to be bound by the agreement, if his conduct
demonstrated that he had. The essential requirement is that the parties had each
from a subjective perspective engaged in conduct manifesting their assent.
Under this meeting of the minds theory of contract, a party could resist a claim of
breach by proving that he had not intended to be bound by the agreement, only if
it appeared subjectively that he had so intended. This is unsatisfactory, as one
party has no way to know another's undisclosed intentions. One party can only
act upon what the other party reveals objectively to be his intent. Hence, an
actual meeting of the minds is not required. Indeed, it has been argued that the
"meeting of the minds" idea is entirely a modern error: 19th century judges spoke
of "consensus ad idem" which modern teachers have wrongly translated as
"meeting of minds" but actually means "agreement to the [same] thing".

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LAW RELATING TO BUSINESS
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The requirement of an objective perspective is important in cases where a party

claims that an offer was not accepted and seeks to take advantage of the
performance of the other party. Here, we can apply the test of whether a
reasonable bystander (a "fly on the wall") would have perceived that the party
has impliedly accepted the offer by conduct.

In the question, Felicia placed an advertisement to find her pet dog called Dex.
Newspaper advertisement is an ITT, this can be seem in the case of Carlill v
Carbolic Smoke Ball Company [1892].

Felicia was inducing offer and Suzana making offer, Felicia didn’t accept.
There is no contract between Felicia and Suzana, Felicia no need to pay RM3500.

However, rewards case is exception. Acceptance express can be oral and writing,
acceptance also can implied from conduct (Brogden v Metropolitan Railway).
Looking back again at Suzana’s case I will advise her that in her case. Felicia
placed an advertisement, it is Real offer because it is a Reward Case. Felicia
make an offer and reward RM3500. Suzana did not accept expressly that is rally
or in writing. But when Suzana started to look for Dex and found Dex playing with
another dog, she returned Dex to Felicia. When she did this, her conduct shows
she accepted. Suzana’s conduct is implied from the facts and circumstances
which are evident when she found Dex and returned him to Felicia.

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LAW RELATING TO BUSINESS
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2.0 BIBLIOGRAPHY

1. Textbook, I-Systems, Business Law

2. http://en.wikipedia.org/wiki/Brogden_v._Metropolitan_Railway_Company

3. http://hubpages.com/hub/offerandacceptance

4. http://en.wikipedia.org/wiki/Payne_v_Cave

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