LAWS6991 Fundamentals of Contract Law

Answer I

Issues

Is there any contract that is made by Jasmine with Lily or Lalitha or May Li?

Law

A contract is an agreement which has the support of law. But to make any agreement the two most common elements are offer and acceptance.

An offer can be made by an offeror in which he communicates his terms to another person and expects that such other person will act as per the terms of the statements. This, communication when made is called an offer (Ahmad Meah & & Anor v. Nacodah Merican [1890]). As per Preston Corporation Sdn Bhd v Edward Leong [1982], an offer is the willingness of the offeror to make a contract with the offeree.

But, when any person does not make offers but make any advertisements, tenders or auctions or display, wherein he wishes to seek offers from some specific person or group, etc, then, it is an invitation (Fisher v Bell [1961] and Partridge v Crittenden [1968].

When an offer is made, then, it is the duty of the offeree that he/she has to confirm the same or reject the same. Now, when the offeree confirms the offer then she should convey the acceptance to the offeror in order to hold it biding. An acceptance must correspond to the terms of the offer (Brogden v Metropolitan Railway (1877).

If there is variation in the acceptance with the terms of the offer, then, it is not acceptance but is called the counter offer and is considered as a new offer in law (Hyde v Wrench (1840).

Whenever, any acceptance is made by post then the acceptance is considered to be complete when the same letter of acceptance is posted by the offeree and not when the letter is received by the offeror. The contract is made as soon as the letter is posted.

But, when the letter is made by instant mode of communication, then, the acceptance is made when the offeror comes in the knowledge of the acceptance (Entores Ltd v Miles Far East Corporation [1955] ) 

Application

The presence of consideration, intention and capacity is presumed.

Jasmine is indulged in selling disposable surgical masks. On 1^st January 2020, Jasmine issued letter to several of her customers showing her intention that she is willing to sell masks to them. The main terms of the letter include that the masks will be on sale from 19-21 January @ discount 3%. Also, if the order is for more than 10 boxes then the discount is @5%. By 3^rd January 2020, all of her customers has received the said letter.

It is now submitted that the letter that is issued by Jasmine is nothing but an invitation to offer as per Partridge v Crittenden Jasmine has not made any kind of offer, rather, she has issued letter and invited her customers to make offers to her and is she wishes to accept the offer pf any of her customers the will gave her acceptance. So, the letter is an invitation.

Contract with Lily

On 10^th January, Lily submitted to Jasmine that she is willing to purchase 15 boxes of the masks and as per discount 5%. She further stated that she will not be able to pick or pay for the same until 31^st January 2020. The letter was received by Jasmine on 12^th January 2020. Thus, a valid offer is made by Lili and if this offer is accepted by Jasmine without changing the terms of the offer then there will be a valid contract between the parties.

On 14^th Jasmine submitted that she will keep 15 boxes of masks aside. So, as soon as this letter of acceptance is posted, there is a contract amid Lily and Jasmine regardless whether the letter will reach Lily after some time.

The letter of revocation by Lily was received by Jasmine on 15^th has no relevance.

Contract with Lalitha

On 19^th Lalitha visited the store of Jasmine. She looked at the masks boxes with price before discount @RM15. She take two boxes and stated that she is willing to buy the boxes @5% discount and gave the money. However, the letter by Jasmine was an invitation and the statement by Lalitha is nothing but an offer which is made to the counter. As per in the leading case of Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] only an offer is made.

The cashier asked the price after 3% discount which was refused by Lalitha. Thus, the offer that was made Lalitha is refused by the cashier while the payment is made by Lalitha. So, there is no contract that is made by the parties.

Contract with May Li

On 20^th May Li called Jasmine, and wish to buy 50 boxes of different colours. However, while stating his desires he also submitted that he is willing to seek discount @10%. So, the offer that is made by May Li is that he is willing to buy 50bioxes @10% discount. This offer must be accepted by Jasmine to make a valid offer. But, Jasmine did not hear the same and ask to repeat the same. Now, the offer that is made by May Li is not reached the knowledge of Jasmine and thus the offer was said to be incomplete. May Li again repeated and the same is now heard by Jasmine and thus the offer is made.

But, before Jasmine could have accepted the offer, the line got disconnected and May Li did not hear the words of Jasmine and assumed that May Li would have agreed.

Now, when any acceptance is made electronically, that is, via phone, then, the acceptance is said to be complete only when the same is in the knowledge of the offeror. Since May Li did not hear the acceptance that is made by Jasmine. Thus, there is no valid contract amid the parties.  

Conclusion 

There is a valid contract that is made amid Jasmine and Lily. However, there is no contract that is made with Lalitha and May Li.

Answer II

As per the common law, if any person confirms that he is paying his liabilities then there is need to make full payment. Part payment by the person cannot be considered as the complete payment of the debt of such person. This rule is applicable even if both the parties to the contract agree to the same.  However, thus rule is not same when compared with the contracts Act 1950 of Malaysia.

To make a contract, there is a need for the presence of the contract essentials, which includes an offer, an acceptance, a consideration, a legal intention of the parties and that the parties must be capable to make contracts. An offer can be made by an offeror in which he communicates his terms to another person and expects that such other person will act as per the terms of the statements. This, communication when made is called an offer in the leading case of Ahmad Meah & & Anor v. Nacodah Merican [1890]). The offeree affirmation to the offer is called an acceptance in law and when the offeree confirms the offer then she should convey the acceptance to the offeror in order to hold it biding. An acceptance must correspond to the terms of the offer in the leading case of Brogden v Metropolitan Railway (1877).

One of the most important element in contract law is consideration. As analysed in the leading case of Currie v Misa (1875), when an offer and acceptance are exchanged amid the parties, then, the same are made with an underline intention that both the parties will vary their position in form or the other whether the parties will benefit, or deter or seek gain or any loss etc. so, there must be some value to hold the promises valid in the eyes of law and this value is called consideration. Thus, presence of consideration is very important to make the promises enforceable in law.

Section 64 of the Contract Act of the Malaysia deals with part payment of the debt and considers the rules regarding the same as whether part payment is held to be a good consideration for the settlement of the entire debt. In Malaysia, any kind of consideration whether, executory, executed or past consideration, all valid provided the same are moved at the desire of the promisor and is held in the leading case of Re McArdle [1951].

However, though there are several rules that deals with the law of consideration, however, there are few exceptions that also guide the law of consideration which includes exception 26, section 64 and promissory stopple.

One of the exceptions to the rules of consideration is section 64 of the contract Act. Section 64 of the Act deals with part payment of the debt. As per the law, every promise has the right to remit/dispense in part or whole the act or the promises made to him or extend the time or accept anything which satisfies him. In the leading case of Kerpa Singh v Bariam Singh (1966), the court submitted that when the creditor accepted the cheque of lessor money from the son of the debtor and encashed the same, then, such encashment must be considered as the discharge of the full amount.

The position of the Malaysian law is much different from what is settled in common law. In common law, the rule in the leading case of Pinnel's Case [1602] is prevalent and as per the leading case, when any payment is made by one party to the contract to another as the payment of the larger amount then such small payment is not enough and cannot discharge the liabilities when if both the parties to the contract have accepted the same. Thus, lesser amount to discharge the higher amount of debt is not a good consideration in common law and this rule of common law is not applicable when the laws of consideration are evaluated in Malaysia.

Section 64 of the contract law which deals with part payment is nothing but the exception to the rule of consideration and is applicable in Malaysia.

So, as per the common law, if any person confirms that he is paying his liabilities then there is need to make full payment. Part payment by the person cannot be considered as the complete payment of the debt of such person. This rule is applicable even if both the parties to the contract agree to the same.  However, thus rule is not same when compared with the contracts Act 1950 of Malaysia.

Bibliography

Case laws

Ahmad Meah & & Anor v. Nacodah Merican [1890] 4 Ky 583.

Brogden v Metropolitan Railway (1877) 2 App Cas 666.

Currie v Misa (1875) LR 10Ex 15

Entores Ltd v Miles Far East Corporation [1955] 2 QB 327, CA

Hyde v Wrench (1840) 3 Beav 334

Fisher v Bell [1961] QB 394 .

Kerpa Singh v Bariam Singh (1966), 

Partridge v Crittenden [1968] 1 WLR 1204.

Re McArdle [1951] Ch 669

Preston Corporation Sdn Bhd v Edward Leong [1982] 2 MLJ 22.

Pinnel's Case [1602] 5 Co. Rep. 117a, 

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