This Case is About the Contract Agreement

Steven advertised in the NewFocus Paper on the 29th October 2010 stating that he is selling Yamaha Piano latest model which is in excellent condition at the price of RM15,000. An advertisement can define as a promotion of goods and services publicly. Advertisement can either be an offer or invitation to treat. Whether an advertisement is an offer or an invitation to treat, it is based on the intention of the parties in each case. However, most of the advertisements are invitation to treat.

An invitation to treat is define as inviting the public to make an offer. The examples are display of good and advertisement. An advertisement of bilateral contract is an invitation to treat but no offer. In the case of Partridge v Crittenden, 2 the defendant advertized “Bramblefinch cocks and hens 25 shillings each” in a magazine. He was getting sued for offering a wild bird for sale. Offering a wild bird for sale is contrary to the Protection of Birds Act 1954. Yet, the High Court said he must be acquitted. It was explained that the advertisement was an invitation to treat, not an offer to sell.

An offer also called as a proposal. Offer is defined in Section 2(a) Contracts Act, 1950 as ‘when one person signifies to another his willingness to do or 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’. 3 An advertisement of unilateral contract is construed to be an offer. This principal was upheld in the case of Carlill v Carbolic Smoke Ball Co. 4 In this case, the defendant, Carbolic Smoke Ball co. Ltd had advertized a health product on the newspaper and promise to pay £100 to anyone who still contracted to flu after buying their smoke balls and used it as directed. In order to show their sincerity, the defendant had deposited £1000 to a named bank. The plaintiff, Carlill sued them for the £100 promised because she still caught flu after she bought and used the smoke ball as directed. The Court of Appeal held that the plaintiff was entitled to the £100. It is because the advertisement in this case was an offer. The wording in the advertisement clearly showed that there is an intention to be bound to anyone accepting and there is a promise involved.

Therefore, based on the definition and case of invitation to treat, the advertisement Steven place up in the NewFocus Paper is an invitation to treat but not an offer. He is just inviting the public whoever is interested in the piano to make an offer and there is no promise involved.

On the 1st November 2010, Tanny offered RM10,000 after seeing the piano. An offer must be clear, definite and certain. This principle was upheld in the case of White v Bluett.5 ‘A son sued his father for breaking promise. However the offer was not clear, definite and certain. So, the son was unsuccessful in the suit’6. Besides, there are two types of offer, bilateral offer and unilateral offer. Bilateral offer is the offer made between two people and you can know the identity of the offeree. However, unilateral offer is the offer between two or more people and you do not know who will be the offeree.

According to the definition of offer in Section 2(a) Contracts Act, 1950, we know Tanny is making an offer after seeing the piano on the 1st November 2010. The offer made by Tanny is clear, definite and certain because the price RM10,000 offered to Steven to purchase the piano is stated clearly by Tanny. And, the offer is bilateral offer because it is made specifically to Steven only and therefore only Steven can accept or reject the offer.

However, Steven said “I will not sell it below RM14,000 and I will not sell it to anyone else before 7th November 2010″. A counter offer can be defined as a rejection of the original offer. A counter offer can be clearly seen in the case of Hyde v Wrench. 7 In the case of Hyde v Wrench, Defendent offer the Plaintiff to sell him the farm he owned for $1000. Plaintiff responded with an offer of $950 immediately. Defendent took his time to consider about the offer made by Plaintiff. Defendent told Plaintiff he was not able to accept the lower offer made by Plaintiff after a fortnight. Plaintiff then wanted to accept Defendent’s original offer which is $1000. However, in the Rolls Court, the judge said there was no contract because Plaintiff offer have rejected the offer made by Defendent and therefore the offer cannot be revive and accept once again. From the case and definition, we know that Steven is making a counter offer when he says he will not sell it below RM14,000. It is also known that after Steven make the counter offer of RM14,000, the previous offer cannot be revive and accept again.

Therefore, Steven’s counter offer of RM14,000 automatically turned into an offer. This is because offer is defined in Section 2(a) Contracts Act, 1950 as ‘when one person signifies to another his willingness to do or 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’. 8 Steven offering Tanny at the price of RM14,000 with a condition. The statement “I will not sell it to anyone before 7th November 2010″ are terms made by Steven. This time frame is a term that is essential for the formation of a contact. At that moment, Steven is making an offer to Tanny at the price of RM14,000 with the condition that Tanny must get back to him by 7th November 2010. The offer made by Steven is a bilateral offer. Bilateral offer is an offer which only involves 2 parties, one offeror and one offeree. If Tanny accept the offer made by Steven by 7th November 2010, then it is a binding agreement.

Tanny went to Australia for a few days and came back to Malaysia on the 7th of November 2010. On the 7th November 2010, Tanny did not respond to Steven’s offer and she did nothing on that day. However, Tanny decided to post a letter to Steven accepting to buy the piano for RM14,000 on the 8th November 2010. An acceptance is defined in Section 2(b) Contracts Act, 1950. Section 2(b) Contracts Act, 1950 states that when the offeree signifies his assent to the offer, the offer is said to be acceptance. The offer when accepted becomes a promise. ‘Acceptance must be absolute, unqualified and must correspond with all the terms of the offer.’ 9 This principle was upheld in the case of Neale v Merrett 10, the defendent offered to sell land to the plaintiff for £280. The plaintiff ‘accepted’ this offer, sent a cheque for £80 and promised to pay the rest by installments of £50. It was held that there was no contract because the purported acceptance introduced credit terms which the seller did not want. Besides, silence does not represent as a manner of acceptance. Acceptance can communicated by post and instantaneous, such as email and fax. ‘According to the postal rule, acceptance by post is deemed to take effect the moment the latter is correctly addressed and stamped and placed in the post box.’11 The case which states that acceptance is said to be complete as soon as the letter is posted is the Adams v Lindsell 12 case. In the case, defendent wrote to Plaintiff offering to sell some wool and asked for a reply in post. However, there was a delay of 2 days in the post and Plaintiff acceptance was received late. One day before, Defendant sold the wool to someone else. The court said Plaintiff was entitled to damages as the acceptance was complete and took place when the letter was posted. The contract is there before the Defendant sell the wool to someone else. Here, Tanny did not reply Steven on 7th November 2010. Tanny post the letter of acceptance on 8th November 2010. However, the offer made by Steven has expired on the 7th of November 2010 but not 8th November 2010. Therefore, Tanny’s letter of acceptance is not valid. Revocation of offer can be occurred by lapse of time. Now, the letter posted by Tanny turned out to be an offer letter since the offer made by Steven has expired. Therefore, when Steven received the letter on the 11th November 2010, it is now up to Steven to accept the offer made by Tanny or not.

TAR College Note

[1968] 2 All ER 421, HC QBD

TAR College Note

[1893] 1 QB 256, CA

[1853] 23 LJ Ex 36

TAR College Note

[1840] 49 ER 132, Lord Langdale MR

TAR College Note

TAR College Note

[1930] WN 189

TAR College Note

[1818] 106 ER 250, Lord Ellenborough