Legal Capacity of an Offer in Contract Law

This assignment examines the legal capacity of an offer in contract law using a hypothetical scenario between Khalid and Siti. The discussion begins with an analysis of what constitutes a valid offer under Contract Act 1950, including its necessity to be complete, sufficient, and unambiguous. A court ruling from Byrne v Van Tienhoven (1880) LR 5 CPD 344 is referenced in this context. Subsequent negotiations between Khalid and Siti are examined, culminating in the conclusion that there was no contract formed due to various legal reasons discussed throughout the assignment.

Running head: CONTRACT LAW
Contract Law
Name of the Student
Name of the University
Author Note

1
CONTRACT LAW
Question 1
(a)
The courts system of Malaysia is inspired by the English legal system. The
system continues both types of trials namely civil and criminal. There is a hierarchy
systems of court in Malaysia which means that the powers and responsibilities of courts
gets diminished while moving down the hierarchal pyramid. The highest court in the
country is the federal court and the subordinate courts comprise of the magistrate court
and the sessions court.
The federal court
This is the highest court in the country. Appeals which arise out of the court of
appeal in relation to civil matters are dealt by this court. The court also deals with
criminal matters where the matters have been subjected to the original jurisdiction of the
first High Court.
Court of Appeal
All civil appeals against the decisions of the high court are heard by the court of
appeal.
High courts
The country has two high courts having general supervisory and revisionary
jurisdictions over the subordinate courts. Unlimited civil jurisdiction along with criminal
matters is provided to these courts other than matters on Islamic family and law.
Subordinate courts
Sessions courts are same as that of quarter session courts in England.
Magistrate courts cannot try offences which have a sentence of 10 years or more. The
court of Malay Village or Penghulu are other courts which deal with minor matters (Ng
2017).

2
CONTRACT LAW
(b)
As defined by Barrett (2016) the doctrine of stare decisis is a principle through
which the courts are guided to rely upon principles which have been established in the
past in relation to addressing an issue. The doctrine signifies that a ruling which has
been made by the judge a higher court (In the Hierarchy) is binding legally upon the
judges of the lower court when they are to address an issue having related and similar
fact patterns. For example a decision which is made by the high court will have a
binding effect on the magistrate court and a decision of the federal court would be
legally binding on the judges of the High court. However the decisions from lower court
or the same level of court is not binding. Decision of a same level of court is merely
persuasive.
Question 2
Issue
Whether negligence has been caused by Chan against Alias according to the
provisions relating to the tort of Negligence
Rule
In the case of Arab Malaysian Finance Bhd v Steven Phoa Cheng Loon (CA,
2002) it had been stated by the court that the required elements for establishing the tort
of negligence includes in the first place the presence of a duty of care where an
unauthorized or wrongful act has been committed by the party, second the act is
infringed the rights of another person (breach of duty), third injury has been caused to
the victim for the negligent act and finally actual damages have been caused which
cannot be considered as very remote. In this case the court made it clear that English
principles of tort are applicable in Malaysia.
The English case Donoghue v Stevenson 1932 AC 562 is the first which has
discussed provisions regarding the tort of negligence. In the case the plaintiff had
suffered injury because of the actions of a manufacturer who he was not directly

3
CONTRACT LAW
associated with. The court ruled in the case that as the manufacturer could reasonable
foresee harm to the plaintiff he had a duty of care towards him and thus as the duty was
breached and the harm was caused the manufacturer was held liable for negligence.
The case of Haley v London Electricity Board [1965] AC 778 also discussed the
foreseeability test. The test signified that of the harm can be foreseen reasonably based
on proximity then duty of care is present. The test in relation to standard of care is
objective as provided by the case of Bolton v Stone [1951] AC 850. Here the court ruled
that where a reasonable person observed the same standard of care to avoid the injury
then no negligence is caused. The test for damages is the “but for” test as per Wu Siew
Ying v Gunung Tunggal Quarry & Construction Sdn Bhd (FC, 2010) case. As per the
test injury is held to be a result of the negligent action only if it would have not happed
otherwise.
Application
The facts of the case study signify that an accident has been caused where Alias
has been injured. The injury has been caused as a signboard which was being carried
on by a crane operated by Chan has hit the car which Alias was driving. As per the
principles of the Haley case and the reasonable foreseeability test it can be stated that it
is was foreseeable for Chan to known that his actions can injure a driver. As per the
objective test a reasonable person would have ensured that the ropes are properly in
place. As per the “but for” test no injury had been caused to Alias where the signboard
had not fallen. Thus there is negligence on the part of Chan.
Conclusion
Chan has committed negligence in relation to Alias
2
Issue
Whether any defenses are available to Chan in relation the claim of negligence
by Alias

4
CONTRACT LAW
Rule
A significant defense which can be raised by a party which has been alleged to
have committed the tort of negligence is the case of Contributory Negligence. The
provisions in relation to the defense of contributory negligence have been discussed in
the case of ICI v Shatwell [1965]. In this case it had been ruled by the court that the
person who has been alleged of negligence can partially or wholly defeat the claim of
the plaintiff if it is established that there was a contribution made by the plaintiff towards
the injury which has been faced by him. Further whether a party has committed
contributory negligence or not is assessed by the same standard which is observed
which determining negligence.
Provisions relating to contributor negligence are also provided in s. 12 of the Civil
Law Act 1956. According to the section when damages have been suffered by a party
because of their own fault as well as in part the fault of another person, then the claim of
negligence would not be defeated totally and rather would be proportionated by the
court in a manner which it thinks just and equitable.
Application
It has been provided through the case study that a clear indication had been
provided to Alias to stop the car 50 feet away from where the accident took place.
However Alias did not stop upon the request to Chan’s assistance as he was getting
late for a meeting. In this situation Alias had the duty of care to himself as he was in a
position to harm himself. The duty was breached as he did not stop. This was the main
cause of the injury as if would have stopped there would have been no accident and
thus the “but for” test is satisfied. Alias is liable for contributory negligence. The court
will therefore proportionate the damages according to the contribution.
Conclusion
Chan can avail the defense of contributory negligence.
3.

5
CONTRACT LAW
Issue
Whether a contract has been established between Khalid and Siti or not is the
issue in this case.
Rule
According to McKendrick (2014) for a contract to be validly formed a proper offer
is required followed by a valid acceptance according to the legal provisions relating to
offer and acceptance.
In the case of Gibson v Manchester City Council [1979] 1 WLR 294 the court
ruled that an offer has the legal capacity of being accepted if it is complete, sufficient
and unambiguous. Any offer which is not sufficient and clear in nature is to be treated
as an invitation to treat against which an acceptance cannot be made.
As per S4 (1) Contract Act 1950 an offer has to be accepted legally in order to be
binding as a contract. The acceptance in relation to the offer has to be communicated in
the required manner to the person who has made the offer. In addition the acceptance
is also required to be “unequivocal”. The term signifies that the acceptance cannot
contain any conditions which were not present in the original offer.
In the case of Byrne v Van Tienhoven (1880) LR 5 CPD 344 it was ruled by the
court that once an offer has been revoked it cannot be accepted again and comes to an
end.
In the case of Hyde v Wrench (1840) 49 ER 132 the plaintiff has made an offer to
the defendant for the purchase of a farm at a price of 900. However the defendant
asked for a price of 1000. The plaintiff provided a price of 950 which was rejected by the
defendant stating that he will not sell the farm below 1000. The plaintiff subsequently
made an offer to purchase the farm at 1000 but the defendant denied. The court in this
case held that there was no contract between the parties as the offer had never been
legally accepted.
Application

6
CONTRACT LAW
In the given situation it has been provided that the Khalid has made an offer to
Siti for the purchase of her painting at a price of RM 5000. However the Siti asked for a
price of RM 7000. Khalid said that the price is too high. Khalid subsequently made an
offer to purchase the painting at 7000 but Siti stated that she will not be selling the
paining below RM10000. In this case there was a valid offer made by Khalid for the
purchase of the painting at RM5000 however a counter offer was made by Siti for a
price of 7000. This was a counter offer as it had additional terms as compared to the
first offer. Thus there was no acceptance. The offer of RM 7000 made by Siti was
rejected by Khalid and thus the offer came to an end in a legal manner and is no longer
eligible to be accepted again. Khalid attempted to accept the offer of RM7000 but as
the offer had already been revoked it cannot be accepted again. Thus Siti is under no
obligation to accept the price of RM7000 her offer was no longer there. Further the
position of Siti can be strengthened by the application of the Hyde v Wrench case where
the same facts took place and the court held that there was no contract
Conclusion
There is no contract between Khalid and Siti

7
CONTRACT LAW
References
Arab Malaysian Finance Bhd v Steven Phoa Cheng Loon (CA, 2002)
Barrett, A.C., 2016. Originalism and Stare Decisis. Notre Dame L. Rev., 92, p.1921.
Bolton v Stone [1951] AC 850
Byrne v Van Tienhoven (1880) LR 5 CPD 344
Civil Law Act 1956
Donoghue v Stevenson 1932 AC 562
Gibson v Manchester City Council [1979] 1 WLR 294
Haley v London Electricity Board [1965] AC 778
Hyde v Wrench (1840) 49 ER 132
ICI v Shatwell [1965]
McKendrick, E., 2014. Contract law: text, cases, and materials. Oxford University Press
(UK).
Ng, K.P., 2017. Malaysian court rules on scope of protection for well-known trademarks.
Journal of Intellectual Property Law & Practice.
Wu Siew Ying v Gunung Tunggal Quarry & Construction Sdn Bhd (FC, 2010)
1.