BUSINESS LAW

LAW 299
DEPARTMENT OF LAW
MARA UNIVERSITY OF
TECHNOLOGY

NURULHASNI SHAARI (UITMJ)

LECTURERS CONTACT:

NURULHASNI BT SHAARI
079352165/0194545677
nurul015@johor.uitm.edu.my

NURULHASNI SHAARI (UITMJ)

COURSE INFORMATION
Code: Law 251
Course: Business Law
Level: Diploma
Credit Unit: 3
Contact Hours: 3
Part: 4

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Course Assessment / Evaluation

Quizzes: 10m
Assignment: 10m
Mid-term examination: 20m (Test1+ Test2)
Statutes
Bills of Exchange Act 1949
Consumer Protection Act 1999
Contracts Act 1950
Hire-Purchase Act 1967
Sale of Goods Act 1957
NURULHASNI SHAARI (UITMJ)

REFERENCES
Manual Law 251, Lecturers Law Department, Uitm
Johor (2011)
Beatrix Vohrah, Wu Min Aun,The Commercial Law of
Malaysia (1996)
Lee Mei Pheng (2005), General Principles of
Malaysian Law. 5th Edition, Penerbit Fajar Bakti Sdn.
Bhd. Kuala Lumpur.
Lee Mei Pheng, Detta Samen (1997), Commercial
Law in Malaysia, Malayan Law Journal, Kuala
Lumpur.
Abdul Aziz Hussin, Undang-Undang Berkaitan Cek
(1996)
NURULHASNI SHAARI (UITMJ)

Objective

to enable students to understand

the main elements in creating
a valid contract laws in Malaysia

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LERANING OUTCOMES
At the end of the lecture, students will be able to
To understand the definition of contract
To understand the main element that lead to have a
a valid and binding contract.
To differentiate offer and invitation to treat
To apply the laws when they are involved in the
business or commercial transactions.

NURULHASNI SHAARI (UITMJ)

LAW OF CONTRACT
1

ELEMENTS AND
FORMATION OF
CONTRACT

DISCHARGE OF
CONTRACT

3 TYPES OF REMEDIES
AVAILABLE
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INTRODUCTION
The law applicable:
Contracts Act 1950 and case law.
Definition of contractConsensus ad idem.
Is an agreement between 2 or more persons that
is legally binding between them.
Sec 2(h) CA: An agreement enforceable by
law is a contract.
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ELEMENTS OF CONTRACT

Offer
Acceptance
Consideration
Capacity
Intention to Create Legal Relations
Certainty
Free Consent

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OFFER
Also known as promise or proposal.
A proposal made by one party to another
party, with the intention that, that other
party would accept his proposal.
Made by a person called as offeror or
promisor who offers of promises
something to another person.

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OFFER
Sec 2(a) CA 1950- A proposal is made when
one person signifies to another his
willingness to do or to abstain from doing
anything, with a view to obtaining the
assent of that other to such act or
abstinence.

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Offer can be made toSpecific (Individual)

- make to a particular person
- only that particular person can accept the
offer

General (Public in general)

- Is addressed to public at large
- anyone can accept the offer provided the
terms and conditions are fulfilled.

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BOULTON V JONES

Boulton accepted the offer which was

addressed to other person.
Defendant (def) was not liable to pay
for the goods. There was no contract
between the plaintiff (plf) and def. Plf
had no right to accept the offer which
was not addressed to him.

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CARLILL V CARBOLIC SMOKE

BALL CO.
The defendants had made an advertisement
about a medicine, smoke ball that was used
to cure influenza. They also mentioned they
would pay 100 to anyone who still suffer
influenza after taking the medicine
according to its prescription. To show their
true intention, defendants had deposited
1000 into a bank account for this particular
purpose. Mrs Carlill, who had bought and
used the smoke ball but still suffer influenza,
claimed the 100 from the defendants but
was denied by them.
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Held:
The advertisement was made to
the whole world at large and anyone who is
willing to consume the medicine as
prescribed was said to have accepted the
offer. Furthermore, by depositing 1000 the
defendants had shown their earnest
intention to make a valid contract with their
prospective buyers or consumers. Thus,
Mrs Carlill claimed was successful.

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CONDITION OF A VALID OFFER

1)

Offer must be certain

- clear, complete, final &
details
- to avoid obscurity, doubt

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GUTHING v LYNN
Lynn offred to buy a horse from Guthing
on Condition that if the horse brings
luck to him,he will pay another 5
pound extra.
Held: the offer was not
final & incomplete.
Therefore. It was invalid.

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2) Offer must be communicated

An offer must be communicated to the
promisee/offeree. Otherwise the offer is not
valid.
Refer to Sec 2(a) CA: When one person
signifies to another
The word signifies in this section indicates
that the offer must be communicated, which
means that the offer must reach the
knowledge of the promisee/offeree.
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Sec 4(1) CA: The communication of a

proposal is complete when it comes to the
knowledge of the person to whom it is
made.
Sec 4 Illustration (a) CA: A proposes, by
letter, to sell a house to B at a certain price.
The communication of the proposal is
complete when B receives the letter.

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R v. Clarke (1927) 40 CLR 227.

Clarke, was an accomplice to the murder of two
policeman. Following a notice by the Australian
government to grant a free pardon and a reward of
$1000 for information leading to the arrest of the
murderers, Clarke supplied the information. He
admitted at the hearing that he had supplied the
information to save his skin and at the material time
the thought of the reward had completely passed
out of his mind.
Held: Ignorance of the offer is the same as never
hearing it or forgetting it after hearing of it.
Therefore, Clarke failed to get the reward.

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EXCEPTIONS TO THE GENERAL

RULE
An offer must be distinguished from
invitation to treat (ITT)
Offer must be distinguished from ITT in
order to ascertain when will the actual offer
takes place.
If a person does something with the
intention to make an offer, then such act
may bind the promisor/offeror if there is an
acceptance by another person to such an
offer.
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However, if a person does something with

the intention to make an ITT, then anything
done by another person in response to such
ITT is only an offer.
There is no binding contract yet until there is
an acceptance to such offer.

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It is merely an invitation from one party to

another party to make an offer.
It is an early stage before an offer could be
made.
ITT Is a sort of preliminary communication,
which passes between the parties at the
stage of negotiation that might lead to an
offer.

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Examples of ITT
Advertisement
Display of goods with price tags in a self
service shop
Tender
Price list/Quotation
An auctioneer inviting bids in an auction
sale

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Advertisement
-

Invitation to attract peoples

interest to make an offer.
The person who READ/ SAW
/ NOTICED the advertisement
and decided to buy would be the
offeror.
The advertiser / seller then will
make an acceptance.
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HARRIS v NICKERSON
Held: an advertisement is only an ITT,
not an offer. There was no contract
between the parties and Harris was not
entitled for any damages from
Nickerson

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Display of goods with price tags in

a self service shop
The act of the seller displaying the goods
with the price tags, in a self service shop is
an ITT.
The customer would make the offer when
they selected what they want and bring
them to the counter for payment.
The cashier will make the acceptance.

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Pharmaceutical Society of Great

Britain v.
Boots Cash Chemist
Ltd. (1953)
Whether the display of goods with the price tags
in a self-service shop is an offer or an ITT.
Held: The display of goods was only an ITT. An
offer is made when the customer placed the
articles into the basket and brings them to the
counter for payment. Acceptance would only be
made when the cashier or the shop owner
accepted the payment made by the customer. So
long as the cashier did not accept the payment,
there is no contract yet.

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Fisher v. Bell
Display of several kinds of flick-knives in a
glass shop window is not an offer but only
an invitation to the customers to make an
offer to buy. Whether the offer is accepted
or not, it depends on the discretion of the
shop owner.

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Tender
SPENCER v HARDING
Held: the def has the right to reject the
offer because the was no any valid
contract. An announcement / a notice
inviting tenders is only an ITT.

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Price list/Quotation
- to give an opportunity to the buyer to
choose the best price.
HARVEY v FACEY
Held: there was no contract between
them. What was done by the plf in
stating the lowest price for the land
was not an offer but only a quotation
which is an ITT.
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An auctioneer inviting bids in an

auction sale

Sec 10 of the Auction Sale Act:

a sale by public auction shall be
complete when the auctioneer
announces its completion by the fall of
the hammer

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CONCLUSION

SUMMARY OF THE TOPIC

THANK YOU.

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