Law & Case Compilation (Offer - Free Consent)

Chapter Law Case

Section 2 (h) - Offer = "An agreement enforceable by

law"
Section 2 (a) - "When one person signifies to another
Thornton V Shoe Lane Parking
his willingness to do or to abstain from doing anything,
Ltd
Offer with a view to obtaining the assent of that other to the
Carlill V Carbolic Smoke Ball
act or abstinence, he is said to make a proposal."
Co. Ltd [1893]
Section 2 (c) - "Person who propose = Proposer,
offeror, promisor, Person who accept = Acceptor,
offeree, promisee"

R V Clarke [1927] 40 CLR 227

Stevenson Jaques & Co. v. Mc
Section 4(1) CA 1950 - Proposal is said to be complete Lean [1880] 5 QBD 346
when it is comes to the knowledge to whom it is made Fisher v Bell [1961] 1QB 394,
CA
Hyde V Wrench
 Section 2(b) - "When the person to whom the
proposal is made signifies his assent thereto, the
proposal is said to be accepted; a proposal when
Acceptance accepted, becomes a promise" Hyde V Wrench
Section 3 - "An acceptance must be communicated to
the proposer in order for the contract to be a binding
contract for both parties"

Section 6(b) - It must be accepted in a reasonable time

Section 7(b) - The acceptance may be expressed in
some usual and reasonable manner
Postal Rule = Rule governing acceptance through post Ignatius v Bell [1913] 2 FMSLR
Section 4(2)(a) = A communication of an acceptance is 115
complete against the proposer when it is being put in
the transmission to the proposer as it is out of power of
the acceptor
Section 4(2)(b) = The acceptance is complete against
the acceptor when the acceptance comes to the
knowledge of the proposer.
Section 5(1) = A proposal may be revoke at any time
before the communication of acceptance complete
against the proposer
Section 4(3)(b) = A revocation is complete against
whom it is made when the communication of revocation
comes to his knowledge
Section 6(a) = Revocation notice
Section 6(b) = By the expire of time given in the
contract, or if it is not stated, by the expire of reasonable
time, without communication of acceptance
Section 6(c) = By the failure of the acceptor to fulfill the
contract terms related to acceptance
Section 6(d) = By the death or the mental disorder of
the proposer, if these facts comes to the knowledge of
the acceptor, before acceptance
 Business Agreement: The law assume that both parties
is has the intention to bound to the legal relation,
making the contract is a binding contract, unless
Intention to
proven otherwise
create legal However, the party may rebut the presumption by
Winn v Bull

relationship looking at the words used by the parties in the contract.

For instance, the term “subject to a formal contract
being drawn up,”, or “binding in honour only”.

Domestic / Social Agreement: The law assume that

Balfour v Balfour
the parties does not intend to create legal relation
Merritt v Merritt
unless proven otherwise

Collective Bargaining in Industry = It is common for

trade unions to enter into contract with employers like
matter pertaining to the right of employees such as
annual increment, conditions of works, leave,
settlement of disputes etc
 Section 2(d) - When at the desire of the promisor, the
promisee or any other person has done or abstained
from doing, or does or abstains from doing , or
promises to do or to abstain from doing something,
such act or abstain or promise is called consideration
Consideration for the promise.
General Rule: The promisee must give something in
return to the promise made by the promisor
Section 26: All agreement without consideration is void
Type of Consideration: Executory, Executed, and Past

Executory Consideration: Promise for a promise to be

K Murugesu v Nadarajah
executed in the future

Executed Consideration: Happens at the moment the

promise was made, Consideration that consists of
doing an act.

Past Consideration: Consist of something that has

been done wholly before the promise was made
Re Mcardle [1951] 1 CH 669
Under English Law: Past consideration is not a
Kepong Prospecting Ltd & S.K.
consideration
Jagatheesan & ORS. v A.E.
Under Section 2 (d) of CA 1950; If the act done at the
Schmidt & Marjorie Schmidt
desire of the promisor, then such act would constitute
consideration
 Rules Governing Consideration: Must have some
value, must be sufficient but need not be adequate, can
move from the promisee or other person, and must be Collins v Godefroy (1831) 109
legal. ER 1040

Consideration must have some value

Section 26 of CA 1950: An agreement is not void Thomas v Thomas (1842) 114

merely to the consideration that is not adequate ER 330

Under English Law: Consideration must move from the

promisee
Venkata Chinnaya v
Under CA 1950: A party to a contract can enforce a
Verikatara'maya (1881) LR 4
promise even though he has given no consideration, as
long as somebody else has done so.

Exception to Section 26 (Agreement without consideration

is still valid): Section 26(a), Section 26(b), & Section 26(c)
Section 26(a): The agreement was made on account of
natural love and affection between parties standing in
near relation to each other.
Under English Law, natural love and affection is not Re Tan Soh Sim Ors v Tan Saw
accepted as a consideration Keow (1951)
Requirements: Must be in written formed, Must be
registered if required by law, & made on account of
natural love & affection

Section 26(b): An agreement made without

consideration is void unless it is a promise to
compensate wholly or in part, a person who has already
J.M Wotherspoon & Co v Henry
voluntarily done something for the promisor
Agency House
Requirements: A promise to compensate wholly or
partly to the promisee, & the promisee did the
voluntarily act
 Section 26(c): An agreement to pay statue-barred debt
Statute-barred Debt: Debt which cannot be recovered
through legal action because lapse of time fixed by law
Limitation Ordinance 1953: 6 years from the time of
course of action
Exceptions: A new promise was made by the debtor, &
the promised was in written formed & signed by
respective person

General Rule: If the terms of a contract are uncertain,

the contract is void
Section 30 CA 1950 - "Agreement, the meaning of
Certainty which is not certain, or capable of being made certain,
are void."
Terms & Regulations must be clearly stated in the
agreement and understood by both parties

Aspect of Uncertainty:-
Lack of Completeness: Still in negotiations or the
parties failed to include all essential terms in the
Karuppan Chetty v Suah Thian
agreement
Lack of Clarity: The terms are not clear/vague & open
to different interpretation
 General Rule: An agreement becomes a binding
contract if entered by a competent parties
Section 10 CA: All agreement is contract if it was made

Capacity to by free consent of parties that is competent to contract

Section 11 CA: Every person is competent to contract Mohori Bibee V Dhurmodas
enter into
if he has reached the age of majority according to the Ghose
contract law he is subject too, has sound mind and did not
disqualified from contracting by any law he is subject to
Effect: If the contract was entered by parties who is
incompetent, the contract is void

Minor: Person who did not reach age of majority

(below 18 years old)
General Rule: All contract entered by minor is void Tan Hee Juan V The Boon Keat
Reasoning: To protect the child from the consequences
of his action and presume lack of judgement
Exceptions: Contract of Marriage, Divorce, Dower &
Adoption, Contract of Necessaries, Scholarship
Contract, Insurance Contract, Apprenticeship
Contract of Marriage, Divorce, Dower & Adoption:- Rajeswary & Anor V
Section 4(a) of the Age Majority Act 1971: The Balakrisnan & Ors (1958) 3 MC
capacity of any person to act in the following matters, 178
namely marriage, divorce, dower and adoption
An agreement made by parent or guardian of a minor
or the minor itself pertaining to marriage is valid

Contract of Necessaries: A minor is liable for on

contract for necessaries
Section 69 of CA 1950: “If a person incapable of
Government of Malaysia V
entering into a contract is supplied by another person
Gurcharan Singh & Ors (1971)
with necessaries suited to his condition in life, the
1 MLJ 211
person who has furnished such supplies is entitled to
be reimbursed from the property of such incapable
person”

Necessaries vary to the condition of the minor Clyde Cycle Co. V Hargreaves
Test of Necessaries: Nature of the goods/service (1895)
supplied, the minor actual needs, & his station in life Nash V Inman

Minor is not liable in deceit Natesan V Thanaletchumi &

Minor is not estopped from pleading minority Anor (1952) MLJ 1
Scholarship Contract: Section 4(a) of Contract
(Amendment) Act 1976: “Notwithstanding anything
Government of Malaysia V
to the contrary contained in the principal act, no
Gurcharan Singh & Ors (1971)
scholarship agreement shall be invalidated on the
1 MLJ 211
ground that; the scholar entering into such agreement
is not of the age of majority”

Insurance Act 1963 (Revised 1972): Minor over 10

years old may enter into agreement, but if he is below
16 years old, his parent or guardian written consent is
essential
Reason: To protect the minor or his property against
contingencies
Section 13 of Children and Young Person
(Employment) Act 1966: “ Any child or young person
shall be competent to enter into a contract of service
under this Act otherwise than as an employer, and may
any action without a guardian ad litem. (appointed by
the court to represent them in legal action)”
Contract of Apprenticeship or Service is necessaries for
them
Position in England/Under English Law: A minor is
bound by the contract of apprenticeship/service Doyle V White City Stadium
because such contracts are beneficial to him Limited (1930)
If the contract's term does not seem beneficial and can De Francesco V Barnum (1890)
bring harm to him, the minor can revoke the contract

Section 12(1): A person said to have a sound mind to

entered an agreement if he can make rational
judgment, and understand the consequences of his
action, at the time the contract was made.
Section 12(2): A person that usually have unsound
mind, but sometimes have sound mind, can enter into
an agreement during he was sound mind.
Section 12(3): A person that usually have sound mind,
but sometimes have unsound mind, cannot enter into
an agreement during he was unsound mind.
The includes a person who is drunk or terminally ill, the
law assume they are unsound mind.
Effect of Contract with a person who is unsound
mind: The contract void by virtue of Section 10 of CA
1950.
English Common Law: Voidable at the option of the
person of unsound mind provided that the other party
knows of his condition
 Section 10 CA 1950: All agreement are contract if they
were made by free consent of competent parties
Section 13 CA 1950: Parties are said to consent when
they both agreed on the same thing on the same senses
Both parties understand the same thing regarding the
terms of the contract
Free Consent Section 14 CA: Consent is not given freely if it is
caused by coercion, undue influence, fraud,
misrepresentation, & mistake
The contract is voidable if it is under (Section 19 &
20): coercion, undue influence, fraud, misrepresentation
The contract is void if it is under (Section 21): mistake
Coercion (Section 15 CA 1950): Committing or
threatening to commit any forbidden act by the Penal
Code, or unlawful detaining or threatening to detain,
any property towards the other party, causing him to
enter an agreement
Kesarmal s/o Letchman Das v
2 Element of Section 15: Committing or threatening
Valiappa Chettiar
to commit any act forbidden by the Penal Code &
Welch v Cheeseman (1973)
Unlawful detaining or threatening to detain, any
Barton v Armstrong [1976] AC
property so that the other party will enter into an
104
agreement.
Under English Law: Coercion means duress
Duress: A threat of harm made to compel a person to
do something against his or her will or judgment;
Unlawful Compulsion

Section 16(1) of CA 1950: Undue Influence exist when

a party is in a position of dominating the will of other
party & uses that position to obtain an unfair
advantage over the other. Allcard V Skinner
2 Elements Undue Influence: In a position of
dominating the will of other party & obtain an unfair
advantage over the other.
Section 16(2) of CA 1950: A person is consider to be
in a position to dominate the will of another
Section 16(2)(a): Where he holds authority over the
other, or where he stands in a fiduciary relation to the
Tate V Williamson (1866) 2
other
Relationship of Trust &
Section 16(2)(b): Where he makes a contract with a
Confidence
person whose mental capacity is temporarily or
Inche Noriah V Shaikh Allie Bin
permanently affected by reason of age, illness, or
Omar [1920] Mental Incapacity
mental or bodily distress
Parties that can be affected by Undue Influence:
Doctor & Patient, Lawyer & Client, Guardian & Ward,
Trustee & Beneficiary, Teacher & Student

Presumption of Undue Influence & Shifting the

Chait Singh V Budin Bin
burden of proof must prove 2 things: Element of
Abdullah (1918)) 1 FMSLR 348
domination & obtaining unfair advantage
Coercion: The consent of the other party is taken by
committing or threatening to commit any act forbidden
by the penal code, Physical force is exercised,
&Relationship between the promisor & the promisee is
not necessary
Undue Influence: The consent of the other party is
obtained by dominating the will of another party and
taking an unfair advantage of his position, Moral force is
used in Undue Influence,& Some sort of relationship
must exist between the two parties to the contract
Section 17 CA 1950: An act done by a party to a
contract, or anyone on his behalf, with intent to deceive
another party or anyone on his behalf, or to induce him
to enter into the contract.
Important element: An act done to deceive
Section 17(a): The suggestion, as to a fact, of that
though he knew it is not true, but he said it is true
Section 17(b): Concealment of a fact by one having
knowledge of it
Section 17(c): A promise made without any intention of
performing it
Section 17(d): Any other act fitted to deceive
Section 17(e): Any such act or omission that the law
specially declare to be fraudulent
Essential of Fraud
Must be a representation & it must be false
The representation must relate to material fact (Not a
mere opinion)
The representation must have been made before the Weber v Brown
conclusion of the contract with the intention of Letchumy Arumugan V
inducing the other party to act upon it Annamalay (1982) 2 MLJ 198
The other party must have been induced to act upon
the representation
The other party must have relied upon the
representation & must have been deceived

Does Silent = Fraud? No.

Explanation to Section 17: “Mere silence which will
likely to effect the willingness of a person to enter into
a contract is not fraud”
General Principle: Silence Amount to Fraud
Exception: Silence Amount to Fraud when:
Agreement falling within the contract of utmost good
faith (above good faith). Example: Insurance contract,
company prospectus, contract for the sale of land
Fiduciary relationship (when someone put trust or
confidence or reliance to the other party)
The act of silence amounts to fraud
 Section 18 CA 1950: Misrepresentation is when a false
statement made by the representor and has induced
the other party to enter into an agreement
This include:
A person makes positive statement, which he believes it
is not true, but actually not
Any breach of duty which is made without intention to
deceive
Causing, however innocently, a party to an agreement
to make a mistake as to the substance of the thing
which is the subject of the agreement
Feature common to misrepresentation:
Must be a false representation
Must be one of fact, not law [ ie:- it is not a mere
expression of opinion]
Must be made by a party to the contract
The other party must have relied upon and acted upon
the misrepresentation when entering into the contract.
The plaintiff must have suffered damage.

Must be a false representation

There must be some positive statement. Mere silence
Keates V Lord Cardogan
which will likely to effect the willingness of a person to
enter into a contract is not a false representation
Must be a fact
Bissit V Wilkinson
Not a mere opinion

Misrepresentation & Fraud differences

Misrepresentation: No intention to deceive or to gain
any undue advantage & the contract only voidable at
the option of the other party
Fraud: Made with a clear intention of deceiving the other
party & the injured party may avoid the contract and claim for
damages

Section 21 CA 1950: When both parties to an

agreement is under a mistake pertaining to the
essential terms of the agreement, the agreement void Galloway V Galloway
Element of mistake: Must be of both parties &
pertaining to the essential terms of the agreement

Effect of Mistake: Section 23: A contract is not

voidable merely because it was caused by one of the Tamplin v James
parties to it being under a mistake pertaining to the Sheikh Bros Ltd V Ochner
contract
Mistake as to document
General Rule: A person who have made a mistake
Subramaniam V Retnam
pertaining to a document that he has signed, is bound
by the term of the contract that he signed.

Exceptions: It is not my deed [Plea of Non Est Factu ]

This plea is available in two circumstances:
Awang Bin Omar V Haji Omar
When the person signing is blind or illiterate or senile
& Anor
When the person is induced to sign the document
through fraud.