Preston Corporation Sdn. Bhd. v.

Edward
Leong & Ors
Law of Contract I (LAW 1210)Tutorial 3-4pm
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CASE REVIEW on
PRESTON CORPORATION SDN. BHD.
v.
EDWARD LEONG & ORS[1982] 2 MLJ 22
Appellants
: Preston Corporation Sdn. Bhd.
Respondents
: Edward Leong & ORS.
Judges
:

Suffian L.P,

Salleh Abas and

Abdul Hamid F.JJ.

Court
: Federal Court Civil Appeal (Kuala Lumpur)In this case the appellants were a company carrying on the
business of publishing books and the respondents were a firm of printers. There was a relationship
between the appellants and the respondents. The appellants paid all the printing charges except the
disputed sum of $500 which they claimed was an overcharged by the respondents. They also withheld
payment of the extra charges claimed by the respondents for reproducing the film positives used in the
printing of the books because the respondents claimed ownership of the films. The respondents sued the
appellants for the sum of $500 which they alleged was the balance of printing charges and a further sum
of $28,052 as extra charges for reproducing the films positive whose ownership was disputed. The
respondents pleaded that they were entitled to the ownership of the film positives because of the express
terms of the contract between them to that effect and also because of a trade usage prevalent in the
printing industry. The appellants on the other hand denied that the contract contained such terms and
alleged trade usage.

Law of Contract I (LAW 1210)Tutorial 3-4pm

–
Miss KhadijahSemester 1, 2010/2011
MAGNIFICIENT & CO.
‘Adilah binti Sabri
(1019536)Farrah Nadia binti Mazlan (1012990)Nadra Fatima binti Mannan (1016122) Page 2

The Issues:

Whether or not the appellants were bound to pay the disputed sum of $500 to therespondents.

Whether the respondents were entitled to the payment for the extra charges.

Whether the respondents can claim ownership of the film positives on the basis of trade usage.

Whether the evidence was sufficient to establish the fact intended to be proved.
The Principles:

No contract between the parties could come into existence at the moment when the
appellants’ printing orders were issued, but did so only at the time when these orders
were confirmed or accepted by the respondents.

The quotation was merely a supply of information or an invitation to enter into acontract.

The characteristics of usage are notoriety, certainty and reasonableness. Thus, a usagewhich outrages
the sense of justice and common sense is not reasonable.

The alleged usage is completely unilateral as it does not take into consideration the
mutual interest of printers’ customers.

Ratio Decidendi
–
(Judgement):
The judgment of learned judge must be reversed and that the appeal should be allowed with a
cost. Therefore, the respondent’s claim was dismissed and the deposit should be
refunded tothe appellant. The judgement was on the basis ground of:1)

The learned judge’s finding and order as regards the sum $500 were clearly erroneous
and could not be supported by the evidence as he took no account at all of theadmissions made by the
respondents that the disputed item was an overcharge.2)

The contracts was formed and existed with offers of printing orders from the appellant
and the acceptance by respondent’s confirmation. Consequently, the film ownership

clause contained in the quotations was completely irrelevant which not part of contract at all.3)

The alleged trade usage was not sufficiently proved by the respondents which isreproduced film positives
belonged to printers who reproduce them, although theirreproduction costs are borne by the customer.4)
The basis of the alleged trade usage seemed unreasonable because it conflicted withthe ordinary sense
of justice commonly understood by reasonable men in that a personwho pays for an article or for making
it should be entitled to it and not be deprived of its ownership for which he has paid or required to pay.
Conclusion:
This case signifies one of the principles in contract law which is to distinguish offer frominvitation to treat
(ITT) in order to identify existence of a contract between two parties. Asthe quotations stated by the
respondents are merely a supply of information for appellants inthe inquiries of the price of printed books
and their delivery dates. Thus, there was nocontract formed at the time but only was concluded with an
effective communication throughoffer of printing orders by the appellants and acceptance of confirmation
by respondents.Plus, the ownership of the reproduced film positives should not be claimed by
respondents asterms in the quotations submitted by them because it was neither a binding offer nor a
part of contract at all.