Tutorial 4

Topic 3

Formation of Contract - First Element: Proposal

True/false (Support your answer with relevant authorities)

1. All contracts are agreements but not all agreements are contracts.

True. According to S.2(h) of CA defines a contract as “an agreement enforceable by law”. This means the
basis of contract is agreement but not all agreement constitute contracts. There is a condition, only
agreement enforceable by law are contracts

Based on S2(g) of CA, an agreement which is not enforceable by law is a void agreement i.e. it is not a
valid contract. Not enforceable by law means no enforceable by both parties.

S10(1) of CA states that “all agreements are contracts if they are made by free consent of parties
competent to contract for a lawful consideration and with a lawful object, and not hereby expressly
declared to be void.”

Contracts have legal obligation one did not comply another can sued for breach of contract

Full case name

Judge name

2. An agreement which is not enforceable by law is a voidable(depence on circumstances

False. The reason is that according to S.2(g) of Contract Act1950 ,an agreement which is not enforceable
by law is a void(not enforceable by law) agreement

3. Free consent of the parties is one of the pre-requisites for formation of a valid contract.

True. Based on S.10(1) of CA 1950, it is understood that to be a valid contract, the agreement must be
made by free concern of the parties; made by parties competent to contract; made for a lawful
consideration and a lawful object; and not expressly to be void under the Contract 1950.

S 19 (1) When consent to an agreement is caused by coercion, fraud, or misrepresentatiom, the

4. A promise is made when a proposal is accepted by the intended person.

True.According to S.2(b) a promise is made when a proposal has been accepted. It is understand that an
agreement is made of promises between two parties and a promise is made when a proposal has been
accepted.While S.2(e) of Act 136 defines agreement as “every promise and every set of
promises,forming the consideration of each other.”

5. Alex proposes to Brown, a famous painter, RM 5,000 for a portrait. Christ, who is standing
nearby may accept the proposal. (F)
False. According to S.4(1) of CA provides that “the communication of a proposal is complete when it
comes to the knowledge of whom it is made”. When a proposal is being made to a specific person, only
that particular person can accept the proposal. S 2(b) a promise is made when a proposal has been
accepted

6. A proposal may be revoked by the lapse of the time prescribed in the proposal for its
acceptance.

True. According to S.6(b) of CA 1950, a proposal may come to an end by lapse of time. A proposal which
expressly stated to last for a period of time cannot be accepted after that time.

7. A enters a shop and picks up a drink at RM1.50. He shows it to B, the shop-owner and silently
puts RM1.50 on the counter. There is no valid proposal from A.

False. Based on S.9 of CA 1950 states that “so far as the proposal or acceptance of any promise is made
in words, the promise is said to be express. So far as the proposal or acceptance is made otherwise in
words, the promise is said to be implied”. Based on S.9, there are two forms of proposal or acceptance-
express or implied. A proposal or acceptance is in express form when it is made orally or writing. In
certain situations a proposal or acceptance can also be in implied form. It may be inferred from the
conduct of the parties or from the circumstances concerned.

8. Harry sent a whatsapp message to Frankie, offering to sell his car for RM 34,000. The
communication of a proposal is complete after Frankie read the message from Harry.

True. According S 4(1) of CA 1950 provides that “the communication of a proposal is complete when it
comes to the knowledge of whom it is made”.

9. Ashley revokes his proposal to Ben by email. The revocation is complete as against Ashley, when
the email is sent. It is complete as against Ben, when Ben receives(lecture said forgot to write receive
and read) the email.

True. S 4(3) of CA 1950 makes it compulsory for the proposer to communicate his intention to revoke
the proposal. The communication of his revocation is complete as against himself (as the person who
make the notice), when it is posted or transmitted to the acceptor and complete as against the
acceptor(as the person whom made it), when the acceptor receives the letter.

S 5(1) of CA, a proposal may be revoked at any time before the communication of its acceptance is
complete as against the proposer, but not afterwards. henton vessel???/

10. Display of goods on the shelves at the hypermarket is considered as a proposal.

False. Display of goods is considered as Invitation to Treat. The Contract Act 1950 does not have any
provision regarding this aspect and it is generally accepted that English law is applicable here. There are
3 situations where a statement is not regarded by the law as ‘proposal’ which is Invitation to Treat,
reliminary Negotiations and antecedent communication.

CasesPharmaceutical Society of Great Britain

Fishell and Bell

False. Advertisement inviting people to submit applications or to sale goods is regarded as an Invitation
to Treat. The advertisement is not a proposal, it only an attempt to induce people to make an
application or to make a proposal to buy. The proposal is actually made by or come from the applicant
through his application.

Coelho /Naiyaju/cretendant

12. An application to enter a college is only an antecedent step towards communication and does
not constitute a proposal.

True. An application to enter a college was merely a preliminary step and does not constitute an offer.
Offer for membership came from the applicant had considered the applicant’s application

University accepted the proposal potential student will breach contact .Receive an offer letter still can
decide .University make an offer, students accept offer