Faculty of Business

Commercial Law
BBCL2013

Assessment I
Phase Test

Instructions

1. You are required to complete this task INDIVIDUALLY and submit on or before the due
date provided on each of the task.
2. The test shall be submit in a form of soft copy via email. You are required to
complete your test, and email me your answer.
3. As in your email, please state your name and ID number.
 Test 1

5%

Due Date: 5 November 2017

1. Define contract according to Contract Act.

Contract as 'an agreement enforceable by law.'

2. Discuss the categories of invitation to treat.

There are 4 types of invitation to treat
a) An advertisement is only an invitation to applicants to make an offer.
b) Display of Goods
- Self service shop / shop window display
- Do not constitute a proposal to sell=ITT
- The proposal /OFFER:
- when the customer selects the desired goods for payments at the counter
- Offer comes from the customer, not from the shop/supermarket
c) Auction
- An auction is only ITT.
- The auctioneer is merely inviting the people present to make proposals
which the auctioneer may accept or decline to accept.
- Person who bids the price is the offeror.
d) Price Quotation
- Not an offer= only ITT.
- As early information to invite the prospective buyer to make an offer.
- Given opportunity to the buyers to choose the best price.
- Seller entitled to reject/accept as well as to make counter offer with a new
price.
3. Illustrate the SEVEN (7) elements of Law of contract.

1. Offer/proposal
- the action of consenting to receive or
- undertake something offered.

2. Acceptance
- Rule : it must be communicated
Section 2(b)CA :
When the person to whom the proposal is made signifies his assent thereto,
the proposal is said to be accepted.
Once offer be accepted, it will become a promise.

3. Intention to create legal relation

- Parties involve shall have intention to create legal relation - agreement
- agreement does not create a binding contract
- Law requires that parties to an agreement intend that it to be legally
enforceable
- rebuttable presumptions to determine intention :
- a) Business Agreement;
- b) Social, Domestic or Family Agreements.
-
4.Consideration
- Section 26 CA :
An agreement without consideration is void
Consideration = the price which one party pays
Types of Consideration
Executory : one promise made in return of another. A goods for goods.
Executed : a promise made in return for the performance of an act. Offering
something based on performance.
Past : a promise be made in return for an act that has already been performed.

5.Certainty
- Terms of a contract cannot be vague and unclear
 it must be certain
Section 30 CA : an agreement which is uncertain or is not capaable of being made
certain is void.
at common law, there is two aspects of uncertainty :
a) Language used is too vague;
b) Failure to reach an agreement on a vital term of the contract.

6. Capacity
Section 11 CA :
Every person is competent to contract who is of the age of majority and who is of
sound mind and is not disqualified from contracting by any law.

7. Free consent
Terms of a contract cannot be vague and unclear
it must be certain
Section 30 CA : an agreement which is uncertain or is not capaable of being made
certain is void.
at common law, there is two aspects of uncertainty :
a) Language used is too vague;
b) Failure to reach an agreement on a vital term of the contract.

4. Summarize FOUR(4) discharge of contract.

1. A contract may be discharged :

a) by performance;

- When parties have carried out exactly what is to be done, there is a

complete discharge.

General Rule : performance of a contract must be exact & precise and should
be in accordance with what the parties had promised.

Section 38(1) CA - parties to a contract must perform or offer to perform

their respective promises, unless such performance had been dispensed with
by any law.
 Performance may be from a third party & not necessarily from the promisor.

Section 42 CA - when a promisee accepts performance of the promise from

a third person, he cannot afterwards enforce it against the promisor.

2. by frustration or impossibility;

- A contract is frustrated when there is a change in the circumstances which

renders the contract legally/physically impossible to perform.

Section 57 CA lays down two types of impossibility :

- impossibility of performance at the time of the contract is made; and

- impossibility of performance after a contract had been made.

When a party promises to carry out a particular act, the law will hold them
to their promise.

H A Berney v Tronoh Mines Ltd

Held : The invasion of Malaya by the Japanese, frustrated the performance

of the contract and therefore, there was no breach of contract by the
defendant.

3. by consent or agreement of parties;

Contract may be terminated with the consent of all parties.
The consent by all parties to discharge the contract.

4. by breach.
- occur when a party to a contract has failed to fulfill obligations under the
contract.
- when one party indicates to another party his intention not to go on with the
contract or unable to go on with the contract, contract will be discharge.
- When a party fails to perform their obligations as agreed, they are in a breach
of contract. A breach can occur in some ways:
= failure to comply with a term of the contract;
= by a party announcing to another party that they are no longer interested in
carrying out their obligations prior to the time for performance;
= a delay in the performance where time is of the essence in the contract.