1. How do you distinguish between an offer and an invitation to treat?

The word proposal bears the same meaning as offer in English law. Offer is an agreement between two or more parties is constituted by a proposal and an acceptance of it. An offer 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. For instance, thus A, by offering to buy s car for !"#,### in the hope that will accept, is ma$ing a proposal. According to section %&b', when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted . (pon such acceptance by , an agreement between the parties is created. The proposal has become a promise and the party ma$ing the proposal &proposer or offeror' is now referred to as the promisor and the party accepting the proposal, the promisee. Therefore, in the e)ample given above, s acceptance of As proposal to buy the car the promise. establishes an agreement or promise. A is the promisor and

An invitation to treat is a pre offer to the interested party to ma$e an offer. *nvitation to treat not a proposal but a sort of preliminary communication which passes between the parties of the stage of negotiation, for instance, a price list, a display of goods with price tags in a self+service supermar$et, an advertisement or an auctioneer inviting bids for a particular article. For e)ample, the case relevant is a ,harmaceutical -ociety of .reat ritain v. oots /ash /hemist 0td &"123' " 4 5#". The case was about selling dangerous drugs without the supervision of pharmacist. The court decided that goods that are on shelves or display of goods are invitation to treat and will only be considered as offer once the interested party placed the goods on the counter and then it is depends on the cashier whether to accept or decline the offer.

%. 6hat is the importance of an acceptance in a contract and what is the effect of a counter+offer7 6hen 8the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted9 a proposal, when accepted, becomes a promise.: The acceptance must be made on e)actly the same terms as proposed without modifications or variations. *n other words, an acceptance must be 8absolute and un;ualified: as provided in section <&a'. Any modification or variation of the proposal does not constitute an acceptance but amounts to a counter+proposal by the party to whom the original proposal was made. A counter+proposal is treated as a re=ection of the original proposal. This rule was determined in the English case of >yde v. 6rench &"?5#' 3 eav. 335. The defendant offered to sell his estate to the plaintiff on @une A for "### pounds. On @une ? in reply, the plaintiff made a counter+proposal to purchase at 12# pounds. 6hen the defendant refused to accept this proposal on @une %<, the plaintiff wrote again purportedly accepting the original proposal. The /ourt ruled that no acceptance had occurred because the plaintiffs letter of @une ? had re=ected the original proposal which could not be revived. >owever, the rule that a counter+proposal has the effect of destroying the original proposal does not mean that further communication between the parties subse;uent to the original proposal is not permissible. A distinction needs to be drawn between a counter+proposal and a re;uest for further information although such a distinction is often a fine one. *n Stevenson Jaques& Co. v. McLean &"??#' 2 4 B. 35A, the defendant wrote to the plaintiffs offering to sell them iron at 5#s, net cash, and indicating that he would hold the offer open till Conday. On Conday morning at 1.5%, the plaintiffs sent a telegram to the defendant saying9 8,lease write whether you would accept forty for delivery over two months, or if not, longest limit you would give. Do response to this telegram was received from the defendant, but after receiving it, he sold the iron to another purchaser and then at ".%2pm sent a telegram to the plaintiffs advising them of the sale. At ".35pm before the defendants telegram was received, the plaintiffs sent the defendant a further telegram accepting the original offer. The plaintiffs claimed that the last telegram was an acceptance of the defendants offer and the court agreed with the claim. The

court held, amongst others, that the principle in Hyde v. Wrench, supra, could not be applied in this case. *n the =udgement of 0ush @., E there is no counter+proposal. The words are, ,lease wire whether you would accept forty for delivery over two months, or, if not, the longest limit you would give. There is nothing specific by way of offer or re=ection, but a mere in;uiry, which should have been answered and not treated as a re=ection of the offerE they had a right to regard it as a continuing offer, and their acceptance of it made the contract, which was initiated by the proposal, complete and binding on both partiesE &pp.351+32#'

Short Essay Assignment (EXTRA) 3. Cust consideration move from the promisee7 Biscuss this principle of law with reference to the /ontracts Act, "12# and the common law principle.

As we $now that under the common law of England, consideration must move from the promisee that is the person who receives the promise must himself give something in return. /onsideration must move from the promisee but it does not necessarily have to move to the promisor. The promisee may provide consideration to a third party, if this is agreed at the time the parties contracted. (nder local law in Calaysia which is /ontracts Act "12#, section %&d' states that 8 when, at the desire of the promisor, the promise or any other person has done or abstrained from doin , or does orabstains from doin , or promises to do or to abstain from doin , somethin , such act or abstinence or promise is ca!!ed a consideration of the promiseF: 6e can see that 8any other person: from section %&d' prove that consideration can move from the promisee or any other person in an agreement. A party to an agreement can enforce a promise even though he has given no consideration from promisor, so long as somebody else has done so. 6hen A, and / are enter into an agreement in which / promises to pay A certain amount of

money in return that .

will repair /s house.

repairs /s house but / does not pay A anything.

A may sue / although A has not given any consideration because consideration has moved from

-ection % &d' was applied in *ndian case of "en#ata Chinnaya v. "eri#atara$ma$ya &"??"' *.0.G. 5 Cad. "3<. *n this case A sister agreed to pay an annuity of GsA23 to her brothers who provided no consideration for the promise. ut on the same day, their mother had given the sister, her estate stipulating that the sister must pay the annuity to her brother. -ubse;uently, the sister failed to fulfill her promise to pay the annuity, her brother sued her on the promise. The court ruled that she was liable on the promise on the ground that there was a valid consideration for the promise even though it did not move from the brothers. *n conclusion that there is a clear divergence between the Act and English common law for the 8consideration need not move from promise:. (nder English common law, the consideration must move from the promisee while under /ontract Act "12#, consideration can move from the promisee or any other person.

4. Identify whether the intention to create legal relation arises in the following agreements: a) Family agreements b) Social agreements c) Business agreements

Answer: In Contract Law requires the intention to create legal relation. It means that the arties to the agreement must be intended to be legally bound by the agreement. Such intention may be either e! ress or im lied from the circumstances. "wo resum tions# though rebuttable# ha$e de$elo ed in the determination of intention with res ect to agreement# as illustrated in the following chart.

So ia! and fami!y agreements

(Presumption parties do not intend legal relations

Business or commercial agreements )Presumption parties do intend to create legal relations

In contract law there are two resum tions the court will use when deciding whether the arties to an agreement had the intention of creating legal relations. Firstly# the court will resume that any commercial or business contract# such as an em loyment contract or a news a er sale# was made with the intention of creating legal relations. Secondly# the court will resume that there was no intention to create legal relations in the case of family and social agreements. "he resum tions are used only where there e!ists an agreement whose binding nature is in dis ute and both may be rebutted with sufficient e$idence. %s with all e$idence in ci$il cases# e$idence rebutting a resum tion is &udged on the balance of robabilities' i.e. the resum tion will be disregarded where it can be shown it is more li(ely than not that it is false.

*n business agreement, there is a presumption that the parties intend legal conse;uences to follow unless the parties specify otherwise. The intention to create legal relations is so readily assumed that a heavy burden would lie upon the party challenging it to refute the presumption. The parties may have by formal clauses sought to negative contractual intention, such as 8sub=ect to contract: clause, fre;uently used by lawyers to e)press the intention that informal agreement is not binding until e)ecution of final agreement in a formal written form. On the other hand, many $inds of family and social agreements are unenforceable on the basis of public policy, for instance between children and parents. One early e)ample is found in Balfour v. Balfour case. Cr. alfour had agreed to give his wife H3# a month as maintenance

while he was living in -ri 0an$a. Once he left, they separated and Cr.

alfour stopped

payments. Crs. alfour brought an action to enforce the payments. At the /ourt of Appeal, the /ourt held that there was no enforceable agreement as there was not enough evidence to suggest that they were intending to be legally bound by the promise. >owever, the presumption is rebuttable as illustrated in Merritt v. Merritt case. >ere the court distinguished the case from Balfour v. Balfour because Cr. and Crs. Cerritt, although married again, were estranged at the time the agreement was made. Therefore any agreement between them was made with the intention to create legal relations.

2.

6hat is the legal effect of a contract entered into by a minor and is there any e)ception to

the rule7 The general rule is that all contracts entered into by a minor are void. There are two e)ceptions to the general rule are created by the /ontract Act which are contracts for necessaries and contracts of scholarship. According to section A1 of /ontract Act, 8if a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.: Thus, as long as the person who has supplied something for minor and able to prove that it is necessaries to the minor suited to his condition or position, the person is entitled to be reimbursed. Decessaries definition is much wider than =ust bare essentials of life and includes goods and services reasonably necessary to the minors actual re;uirements, such as food, shelter, clothing, medical services and even education, but they must be tested against the particular minors station in life. *n other words, what constitutes necessaries may vary considerably according to the position of the particular individual. For the contracts of scholarship, section 5 &a' provides that no scholarship agreements shall be invalidated on the ground that the scholar entering into such agreement is not of the age of ma=ority. *n this case, scholarship agreements has been defined widely as any contract or agreement

between an appropriate authority and any person, with respect to any scholarship, award, bursary, loan, sponsorship or appointment to a course of study, the provision of leave with or without pay or any other facility for the purpose of education or learning. Therefore, age of ma=ority will be immaterial even though a person entered into agreements when he or she is a minor.

A. >ow can duress and undue influence affect the validity of a contract7 8Buress: is encompasses the same harm, threats, or restraint e)ercised that affected individuals spouse, child or parent. Buress occurs when a person is influenced another person to sign a contract under pressure. *t is occurs when a person has been forced to do something or sign a contract by means of a threats. A person may raise a duress defense when force or violence is used to compel him to enter into a contract or to discharge one. 6hen a person raises a duress defense, the accused asserts that the contract should be invalid because he did not voluntarily enter into the contract. A person who enters into a contract under duress may cancel or breach that contract. Another form of duress in contracts law is economic duress. This form of duress is commonly found in commercial contract disputes. Economic duress occurs when one party uses economic pressure to unfairly force another party into a contract. /ourts will loo$ the nature of the economic duress to determine whether the pressure is unfair or fair. >owever, not all threats to breach a contract will constitute economic duress, especially if the threats were lawfully made. &0egalCatch, %##1'. 8(ndue influence: is refer to the amount of pressure which one uses to force someone to e)ecute a will leaving assets in a particular way, to ma$e a direct gift while alive, or to sign a contract.&TheFreeBictionary, %##1'. (ndue influence is a person ma$es people feel that one party persuade the other people through some $ind of influence in a general sense. *n the words of section "A of the /ontract Act, it is

Where the re!ations subsistin between the parties are such that one of the parties is in a position to dominate the wi!! of the other and uses that position to obtain an unfair advanta es over the other. The two essential ingredients are, first, the domination of the will by one party over the other and second, obtaining an unfair advantages. >owever, a party the sub=ect of undue influence is not precluded from rescinding a contract if he is so entitled simply because he has received a benefit under it.

htt :**www.legalmatch.com*law+library*article*duress+lawyers.html ,.) -hat is mean by .e!clusion clause/ and what do you thin( the reason for inserting such clause in a contract0

%n e!clusion clause is usually found in a contract that e!em t or e!cused either one

arty

liability. It is im ortant to insert such clause in a contract so that both arties right are rotected and they are unable to ta(e ad$antage of each other. % good e!am le will be a tenancy agreement# under the indemnity clause with is similar to e!clusion clause# it rotect the landlord against any claims demands fines enalties losses damages cost charges and e! enses whatsoe$er which may be ta(en# made or im osed against or suffered or incurred by the Landlord in res ect of any in&ury# death# loss or damage to the erson or the ro erty of the ser$ants agents $isitors in$itees or licensees of the tenant. If there is no e!clusion clause# the landlord will be res onsible for all the action of the tenant.

?. 1! lain the situation in which a restraint is allowed to rotect the goodwill of the business sold.

2estraint on goodwill of business sold used to

rotect the buyer/s interest in goodwill by

rohibiting the seller from ta(ing away the old customers of the business sold. "o form restraint# it must be sub&ect to the ro$iso that whether the court is satisfied the restraint reasonableness# regard being aid to the nature of the business. For e!am le# the urchaser of a sho whose business within a radius of one (ilometer may fairly restrict the $endor from setting u a similar business within that radius for a eriod of time# but it would be manifestly unreasonable if the restriction is e!tended beyond that geogra hic range. 3ature of the business and ublic olicy is the manner for the court to consider reasonableness whether to allow the restraint or not. 4. 5iscuss briefly the circumstances under which a contract is discharged by frustration or im ossibility of erformance.

Section 6, of Contract Law states that law relating to two categories of im ossibility of erformance# first# im ossibility of erformance for the agreement at the time a contract is made. Second# the contract becomes im ossible after their ma(ing. % contract may be discharged by su er$ening im ossibility of circumstances below: i) 5estruction of the sub&ect matter of the contract. In Taylor v. Caldwell )789:) B;S 8<9# where a music hall hired by the defendant to the laintiff for a series of concerts was accidentally burnt down before date of concert. ii) Su er$ening e$ents defeat whole ur ose of contract. Case# in Krell v.Henry =74>:? < @B ,4># a room hired for the sole ur ose of watching the rocession# but owing to @ing/s illness# the rocession was cancelled. iii) i$) 5eath or ersonal inca acity. 1s ecially in contract of em loyment# where the em loyee losing the ersonal ca acity to erform# the contract is frustrated. Su er$ening illegality. "he contract is legal when formed# after a change in law# its erformance becomes unlawful. Case# in Abdul Kader v. Shaw Bros Ltd =744>? ALB 2e <79# a monthly tenancy agreement was frustrated by the enactment of a law with retros ecti$e effect. $) 5eclaration of war. "he general rule is frustration of all contracts with enemy aliens. 5eclaration of war renders the erformance of all contracts illegal.