Offer and Acceptance

Posted by rIn On Sunday, April 25, 2010 0 comments

*Offer is also known as proposal. What is an offer?
“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 the act or abstinence, he is said to make a proposal.”
[Section 2(a) of the Contracts Act ] 

*There are two Types of Offer

  • Bilateral offer: Bilateral offer is made to a specific person or group of persons.
  • Unilateral offer: Unilateral offer is not made to any specific person rather it is made to the world at large.
*Case in  unilateral offer: Carlill v. The Carbolic Smoke Ball Company Ltd.

nFacts: Challenge that the medicine will cure influenza- if not ê1000 compensation- 
they deposited ê1000 in a bank account.
This case also distinguished offer from ITT, 
and also talks about consideration by conduct of the plaintiff.


“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.”
   [Section 2 (b) of the Contract Act]

Acceptance must be absolute and unqualified

“In order to convert a proposal into a promise the acceptance must be absolute and unqualified.”
[Section 7(a)] 

Case: Hyde v. Wrench

*Facts: The defendant on 6 June June offered to sell his farm to the plaintiff for £1000 
           and on 8 June the plaintiff replied that he was willing to buy the farm for £950. 
           The defendant refused to sell the farm for £950. 
           Then on 29 June the plaintiff was willing to buy the farm for £1000.
*Held:  No contract was made between them because the plaintiff made a counter-offer.

On the Nature, Definition, and Scope of SOGA

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What is ‘sale of goods’ contract?
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in good to the buyer for a price (s.4(1)). In other words, a sale occurs when the ownership or property in goods passes to the buyer.

What is ‘goods’ under the SOGA?

Explain and illustrate the difference between movable and immovable property?

Personal property or in civil law as known as movable property or movables means any property that can be moved from one location to another.Movable property on land, that which was not automatically sold with the land, included many kinds of livestock.
  • Tangible personal property refers to any type of property that can generally be moved (i.e., it is not attached to real property or land), touched or felt. These generally include items such as furniture, clothing, jewelry, art, writings, or household goods. In some cases, there can be formal title documents that show the ownership and transfer rights of that property after a person's death (for example, motor vehicles, boats, etc.) In many cases, however, tangible personal property will not be "titled" in an owner's name and is presumed to be whatever property he or she was in possession of at the time of his or her death.
  • Intangible personal property or "intangibles" refers to personal property that cannot actually be moved, touched or felt, but instead represents something of value such as negotiable instruments, securities,service (economics), and intangible assets including chose in action.

Immovable property is an immovable object, an item of property that cannot be moved without destroying or altering it - property that is fixed to the Earth, such as land or a house. Immovable property includes premises, and property rights (for example, inheritable building right), houses, land and associated goods and chattels if they are located on or have a fixed address. It is delimited by geographic coordinates or by reference to local landmarks, depending on the jurisdiction.

Doctrine of Utmost Good Faith

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Doctrine of utmost most good faith means that each party to a proposed contract is under a duty to disclose to the other all information which would influence his decision to enter into the contract, whether such information is requested or not. Failure to disclose material information gives the other party the right to avoid the contract. 

nThe duty to disclose all the material facts or information rests more heavily on the insured than the insurer because the insured knows more about the subject matter of the insurance. Insurance contract is based upon mutual trust and confidence between the insured and and the insurer. That’s why insurance contract is said to be uberrimae fidei, i.e. of the utmost good faith.

nA person is only required to disclose material facts. If a fact is not material, non-disclosure does not affect the validity of the contract.
nThe test of material facts is whether the facts would influence the mind of a prudent insurer in deciding whether to accept the risk, and if so, at what premium.

Case: Goh Chooi Leng v. Public Life Co. Ltd. [1964]
A life insurance contract was made with the defendant company. The plaintiff made a false statement in the insurance policy. In the previous occasion the plaintiff was treated for pulmonary tuberculosis.But he did not disclose this information in the policy. So, the insurance company denied to pay the insurance money.
nHeld: The contract is voidable for non-disclosure of material information.

Nanyang Insurance Co. Ltd. v. Salbiah & Anor

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A car was bought on behalf of a company. The company then entered into negotiations to sell the car to the purchaser. The terms of the proposed sale in the written contract included the obligation of the purchaser to make an initial payment and thereafter to continue paying for the car in instalments. The parties varied this term by oral agreement when the purchaser did not make this initial payment in full by allowing him to make this initial payment in instalments. The car was involved in an accident and judgment was obtained against the driver of the car who was the purchaser. The insurance company disputed liability for the claim against them to honour the judgment obtained as they argued that the seller of the car no longer had any insured interest with the proposed sale of the car and as such, the insurance policy has lapsed.
Held: A had insurable interest in the car on the day of accident and the car was driven by B with the permission of A. In this Nanyang case, the ownership has not been transferred from A to B. Thus A still has insurable interest in the car.

Income Tax

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What is income tax?
qWhen tax is levied on the income of a person it is called income tax. If there is no income, there is no income tax. There are different types of income upon which tax is imposed, such as business income, employment income, rental income, dividends, interest, royalties etc. In Malaysia, income tax is imposed, assessed and collected under the Income Tax Act (ITA) 1967.

nSection 3 of ITA 1967:
qA tax known as income tax shall be charged for each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia(foreign source income).