Proposal/Offer Tutorial Wk 1: Interrogram Please prepare answers to the following

questions. We will discuss them on Friday (26/8). Questions

1. How does the Contracts Act 1950 define a ‘proposal’? Which section is relevant here?

According to section 2(a), when one person signifies to another his willingness to do or

abstain from doing anything, with a view to on taking the assent of that other to the act or

abstinence, is said to make a proposal.

2. A proposal must be in writing. True or False?

False, a proposal can also be in oral, conduct or combination.

3. To whom can a proposal be made?

Anyone and everyone

4. What is a condition precedent? How does this relate to proposals?

It is a condition that must be fulfilled proposal is given. If the condition precedent has not

been reached, the proposal cannot be accepted.

5. Pao says to Kuih one day as they are having breakfast, ‘I will buy the Apple watch

that you are wearing now for some money.’ Is this a valid proposal?

The issue is whether there is a valid proposal between Pao and Kuih. According to

Section 2(a) of the Contracts Act 1950, when one person signifies to another his willingness

to do or abstain from doing anything, with a view to taking the assent of that other to the act

or abstinence, is said to make a proposal.

Invalid, too void

6. A proposal must be communicated to the promisee. When is such communication

complete?
Such communication is completed when it comes to the knowledge of the person to whom it

is made.

7. Sven read an advertisement outside his apartment on the way to work. It offered a

reward of RM100 for the safe return of a white cat named ‘Olaf’ to Ms. Anna at an

address.

He made his way to work and forgot all about the advertisement.

After he left his office, he found a white cat with an address on its collar and decided to

drop by the apartment (which was on his way home) to return it.

When he arrived at Anna’s home, she was overjoyed to know that Olaf had been found.

Is Anna bound to give the RM100 to Sven? ( Topic : Knowledge )

The issue is whether Anna is bound to give the RM100 to Sven? In order to form a

valid proposal, there must be knowledge of the proposal by the promisee. This was illustrated

in the case of R v Clarke where a claimant who knew of the reward but have forgotten it at

the time he supplied the information or performed the act, is in the same position as a person

who had not known of the reward at all. The court held that ignorance of the offer is the same

as never hearing it or forgetting it after hearing it.

Similar in this case, Sven had read the advertisement and found the said white cat that

belongs to Anna, but he had forgotten all about the advertisement when he made his way to

work. Therefore, Sven is considered as does not have knowledge of the proposal.

In conclusion, there is no valid proposal between Sven and Anna and Sven could not

claim the RM100 reward for finding the cat from Anna.

Advertisement: Unilateral offer

8. What is an invitation to treat?

9. Tony is at a mall one weekend and sees a figurine on display at a shop window. It is

the latest model of a popular comic character and is a collector’s item. He entered the

shop, made his way to the figurine, picked it up, and went to the cashier. However, the

owner of the shop, Bruce, refused to sell it to him. Can Tony insist on buying the

figurine? (Topic: Invitation to treat- display goods on windows)

The issue is whether there is a valid proposal from the shop and does Tony can insist

on buying the figurine.

It was said that the display of goods in a shop window is not an offer but merely an

invitation to treat. An invitation to treat is a proposal to negotiate and a proposal to receive

proposals. The response to the invitation to treat is a proposal. This could be seen in the case

Fisher v Bell, in this case, the defendant displayed a flick knife with the price tag on the shop

windows. It was a criminal offence to offer such a knife. However, the English Court of

Appeal held that the display of goods is merely an invitation to treat. It is in no sense an offer

for sale, the acceptance of which constitutes a contract.

Similar to this case, the figurine on display at a shop window is merely an invitation

to treat, it is not a proposal. Therefore, Tony cannot insist to buy it because Tony is the one

who makes a proposal and the owner of the shop, Bruce can refuse to accept it.

In conclusion, there is no valid proposal in this case and Tony cannot insist on buying

the figurine.

10. State three ways in which a proposal can be terminated.

- Rejection and counter-proposal

- Lapse of time

- Failure to fulfill a condition precedent

- Merger

- Death of a party, revocation

11. Mr. Green applied to buy some shares from White Bhd, a successful company, at a

time when its share price was competitive. He paid a deposit and sent the application.

However, he heard nothing from the company until two months later, when White Bhd

sent him a letter that the shares had been allotted to him and that he should pay the

balance due on the shares. The shares had increased in value five-fold and are thus

more expensive. Can Mr. Green be made to pay for the shares?

Topic- Termination – Lapse of time

The issue is whether there is a valid when the proposal time lapse. Adhering to

Section 6(b) of the Contract Act 1950, a proposal is revoked by the lapse of the time

prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a

reasonable time, without communication or acceptance. This could be seen in the case

Ramsgate Victoria Hotel Co Ltd v Montefiore. In this case, A applied for shares in B

company and paid a deposit. A received no further news until B informed A that the shares

had been allotted to him and that A should pay the balance due on them. The court held that

there was no valid binding contract because B did not accept it within a reasonable time.

Similar in this case, two months is not a reasonable time as the price of shares can

change quickly or even every day. Especially when White Bhd tells Mr. Green that he should

pay the balance, the shares had increased in value five-fold and are thus more expensive.
Therefore, a reasonable time for the proposal had lapsed and the proposal should have been

terminated.

In conclusion, the reasonable time of the proposal had lapsed so there is no valid

proposal, in this case, Mr.Green could not be made to pay the shares.

(b) Danielle runs a home-based baking business. She sells different types of cakes. On

Tuesday, she received a call on her handphone from Nadiya.

‘Good morning, Danielle. It’s Nadiya. Do you sell blueberry cheesecakes?’

‘Good morning. Yes, I do. I currently have one baking in the oven. Would you like to

buy it? It costs RM70.’

‘Please let me think it over. I’ll call you back soon.’ Nadiya states.

‘All right, but please don’t take too long. My refrigerator broke down earlier today.’

Danielle ended.

Nadiya does not call again that day. However, two days later she called Danielle to

accept her proposal for the blueberry cheesecake but Danielle informed her that it had

already been sold to Tharshini early on Wednesday.

The issue is whether there is a valid offer when the proposal time lapses. Adhering to

Section 6(b) of Contract Act 1950, a proposal is revoked by the lapse of the time prescribed

in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable

time, without communication of the acceptance. This could be seen in the case Ramsgate
Victoria Hotel v Montefiore. In this case, there is no contract between Ramsgate and

Montefiore because the court held that six months was the reasonable time before the

automatic expiration of the offer for shares as the price of shares could change easily.

Therefore, a reasonable time for shares is short.

Similar to this case, blueberry cheesecake is a cake that should not be left too long,

especially when it was unrefrigerated. The reasonable time for an unrefrigerated blueberry

cheesecake is short too.

Additionally, Danielle had advised Nadiya to decide right away because her

refrigerator had malfunctioned earlier in the day and it was not recommended to keep the

blueberry cheesecakes there for an extended period. Nadiya did not call Danielle back on that

specific day, but two days later, only she did. This proposal is rescinded in accordance with

Section 6(b) of the Contracts Act of 1950 when there is no period specified under the passage

of a reasonable amount of time and the communication of the acceptance.

In conclusion, there is no valid proposal between Nadiya and Danielle as the proposal

had been terminated when a reasonable time had lapsed, and Nadiya could not take any

specific performance to purchase the blueberry cheesecake.

(c) Yang has an antique watch that he inherited from his great-grandfather and

displays it in a glass box in his home. Ahmad is interested in buying the watch for his

own antique collection and says to Yang, ‘I’d like to buy your antique watch for

RM15,000. If I don’t hear from you by Friday, I’ll consider the watch sold to me for

that price.’ Yang did not respond to that. On Saturday, since he had not heard anything

from Yang, Ahmad made a trip to Yang’s home to collect the watch, which Yang

refused to sell to him.

Ahmad, ‘Ahmad, if you don’t hear anything from me by Friday, the watch is yours at

RM15,000’?

The issue is whether would there is a valid acceptance when Yang did not respond to

Ahmad’s offer. A proposer cannot without the promisee’s consent put a condition in his

proposal that the promisee’s silence shall amount to acceptance. This could be seen in the

case Felthouse v Bindley. In this case, the plaintiff had discussed with his nephew on the

purchase of the nephew’s house and wrote to him that ‘if I hear no more about him, I

consider this horse as mine at 30 15 s’. The nephew did not reply and the auctioneer sold the

horse to the others. The court held that there is no acceptance of the plaintiff’s proposal to the

nephew and the plaintiff had no right to impose upon his nephew a sale of his horse by

silence. Similar to this case Ahmad told Yang that he would like to buy his antique watch for

RM15,000 and if Ahmad does not hear from Yang by Friday, he will consider the watch sold

to him for that price. Yang did not respond to that so there is no vaild acceptance.

In conclusion, there is no valid acceptance between yang and Ahmad and Yang can

refuse to sell the watch to him.

Another issue is whether there is a valid acceptance when Yang said if Ahmad does

not hear anything from him by Friday, the watch is considered his. Where offeree himself

stipulates that his silence shall constitute acceptance, the Court may regard such acceptance

by silence as valid. This could be seen in the case Re Selectmove Ltd, the English Court of

Appeal observed that where the offeree himself indicated that an offer is to be taken as

accepted if he does not indicate to a contrary by an ascertainable time, he is undertaking to

promisee, was the one to stipulate that if Ahmad does not hear anything from me by Friday,

his silence will be considered acceptance.

In conclusion, there is a valid acceptance between Ahamd and Yang if Yang - the

promisee - had been the one to say that his silence meant acceptance.