Business Law: Contracts and Agreements

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author’s Note

BUSINESS LAW1
Question 1
Issue
Whether Susan would be held liable for the breach of the contract between her and Jim.
Rule
The Contract Act 1950 (Act 136) (Revised 1974) governs the contracts in Malaysia. A
contract can be of an expressed contract or an implied contract. There are six elements of
contract under the Contract Act 1950 (Act 136) (Revised 1974) which are considered essential
for the formation of a valid contract, some of them are:
Offer and Acceptance: An offer is considered as a major element of contract which
makes a contract valid between the parties, the offerer and the offeree. The offer made can be in
terms of money or of anything which has a value in the exchange of the other party’s
performance. Acceptance is considered as an express implication or act by a conduct which
manifests the assent to offer terms in such a manner required or invited by such offer so the
formation of a binding contract can be made. Acceptance can be of three kinds which are,
express acceptance, implied acceptance and conditional acceptance. In Felthouse v Bindley
(1862) EWHC CP J 35 it was held that a communication of acceptance must be made to the
offerer.
Intention of creating legal relationship: There needs to be an intention of the both parties
of creating a legal relationship for binding a contract or agreement. In Balfour v Balfour [1919]

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2 KB 571 it was held that a rebuttable presumption is there against the intention of creating
agreement that is legally enforceable.
Consideration: A consideration is made on the basis of the promise exchange between the
promisor and the promisee. Both the promisor and the promisee need to receive benefits as well
as suffer detriments. In Ward v Byham [1956] 1 WLR 496 it was held that a person would be
entitled of the payment if consideration is provided by him.
Application
In this given scenario, Susan entered into a contract with Jim when Jim asked for
payment of his RM 60,000 to Susan for some urgent purpose and promised of foregoing the
remaining amount. Susan paid RM 60,000 to Jim but after the completion of the six months Jim
demanded the remaining amount of which Susan declined. Jim sued Susan on such basis. There
is presence of offer by Jim who offered Susan to pay RM 60,000 to her which was accepted by
Susan, thus there is presence of acceptance under the Contract Act 1950 (Act 136) (Revised
1974). This can be supported with the case of Felthouse v Bindley (1862) EWHC CP J 35.
There is also presence of consideration under the Contract Act 1950 (Act 136) (Revised 1974) as
Jim promised of foregoing the remaining balance of RM 40,000. This can be supported with the
case of Ward v Byham [1956] 1 WLR 496. There was also presence of intention of the parties of
entering into a legal relationship which can be supported with the case of Balfour v Balfour
[1919] 2 KB 571. Thus there is formation of a contract between Susan and Jim and on the basis
of such contract Susan would not be liable of paying the remaining amount of RM 40,000 to Jim.

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Conclusion
Therefore, it concludes that Susan would not be held liable for the breach of the contract
between her and Jim.
Question 2
Issue
Whether Andy would be able of claiming the RM 1000 from DG Network under the
Contract Act 1950.
Rule
The Contract Act 1950 (Act 136) (Revised 1974) is the legislation which governs the
Malaysian contracts. There are two kinds of contract which are expressed contracts and implied
contracts. For the formation of a valid contract certain essential elements are to be fulfilled under
the Contract Act 1950 (Act 136) (Revised 1974).
The Offer and the Acceptance: A major element of contract is the offer which constitutes
a valid contract between the contracting parties who are the offerer and the offeree. An offer can
be made in monetary terms or of anything which has a value in the exchange of the other party’s
performance. Acceptance is generally considered as the implication of express nature or an act
by any conduct which manifests the assent to offer terms in such a manner required or invited by
such offer so the formation of a binding contract can be made. Acceptance can be of three kinds
which are, express acceptance, implied acceptance and conditional acceptance. In Felthouse v