University Contract Law Assignment: Cruisers' Legal Actions Analysis

This assignment presents a comprehensive analysis of contract law principles, focusing on the elements of offer, acceptance, and consideration. The assignment uses real-world case studies involving a car leasing company, Cruisers, and its clients, Donald and Edwina, to illustrate these concepts. The analysis delves into the validity of contracts, the impact of changes to contract terms, and the legal consequences of non-compliance. It examines the application of contract law principles, including the postal rule, the requirement of knowledge of an offer, the role of consideration, and the implications of part payment. The assignment references relevant legal cases and statutes, such as the Malaysian Contracts Act 1950, to support its arguments. The primary issues explored include whether Cruisers can take legal action against Donald and Edwina for non-compliance with their contracts, considering the specific circumstances of each case. The assignment concludes with recommendations for Cruisers based on the legal analysis.

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

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Issue:
The main issue of the case is to determine whether Cruisers can take any action against
Donald for non-compliance of the offer or not.
Rule:
The subject matter of the case is based on the basic principle of acceptance and
compliance of an offer. Offer is one of the main elements of contract. According to the Contract
law, a contract could be regarded as valid on meeting certain requirements. Offer is a
willingness of the person who has a legal intention to be bound with another regarding a
subject. The offer will be legally binding in nature when it accepts by another. It has been held
in Esso Petroleum Ltd v Commissioners of Customs and Excise1 that intention is necessary in
case of forming a contract. If the parties do not have a legal intention to be bind with each
other, no contract will be formed validly. There are certain norms laid down behind the offer
and acceptance of the offer. According to the general rule of contract, an offer can be accepted
directly that is the person to whom the offer has been made should accept the offer by direct
communication with the person who made the offer. However, there are certain exceptions to
this rule. One of such provision is the postal rule where it has been stated that an offer will be
treated as accepted if the person to whom the offer has been made has posted his consent
statement. In this case, it is not necessary that the offer maker received the posted consent
letter. This rule has been established for the first time in the case of Adam v Lindsell2. There are
certain rules mentioned regarding the process of acceptance too. According to the general
principle of law, if an offer could not come in the knowledge of any person, the offer could not
be treated as effective and valid in nature. It has been observed in Jacques & Co v McLean3 that
the person accepts the offer should have a knowledge about the offer and contents of the offer.
Apart from the offer and acceptance, consideration plays an important role in this
regard. It has been stated under the general provision of law that there should be certain
consideration regarding a contract. Contract is an exchange of promise and therefore, there
1 [1976] 1 All ER 117
2 [1818] B & Ald 681
3 [1880] 5 QBD 346

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should be certain benefit substances, which is known as consideration. In Thomas v Thomas4, it
has been observed that consideration should be something that has a legal value in the eyes of
law. However, the subject matter of consideration should be differed from any things that
gained by love and affection. Therefore, a gift could not be regarded as consideration. There are
certain rules regarding the consideration. The subject matter of the consideration should not be
a past event. The principle has been established in the case of Re McArdle5 . However, it has
been observed in Lampleigh v Braithwaite6 that in case there are any request proceeded in the
past event, the said past thing could be regarded as valid consideration. Further, the amount of
consideration should be sufficient and it will be transferable in nature. The subject matter of
the consideration is required to be transferred to the person to whom the promise has been
made. This principle has been made in Tweddle v Atkinson7. Any existing contractual or public
duty could not be regarded as consideration. Further, it has been held that any part
performance or part payment regarding any debt is invalid consideration. it has been made in
the case of Pinnel’s case 1602 5 Rep 117 that part payment of any consideration will not be
treated as valid unless the promise for part payment has been made by the promise maker
before the due date of the payment. According to the general provision of law, if not all these
elements could be met, the same will not be treated as valid consideration and in the absence
of valid consideration, no offer will take place.
However, it can be stated that if the person to whom the offer has been made should
have received the offer and he should have certain knowledge regarding the offer or if there is
any reward mentioned in the offer. In case, he is totally unknown regarding the facts of the
newly generated offer, the benefit or detriment of the offer will not be applied to him. in that
case the person is required to maintain all the terms of the previous offer.
Application:
In this given case, it has been observed that Cruisers has made a leasing contract with
Donald and provide car to him. it has been contracted between them that Donald will pay £400
4 (1842) 2 QB 851
5 (1951) Ch 669
6 [1615] EWHC KB J17
7 [1861] EWHC QB J57

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to the company and enjoy the use of car. However, the company had made certain changes
regarding the previously decided price due to sudden financial crisis and it has been decided
that Donald had to pay £300 in lieu of £400. However, it has been observed that Donald had
received the offer letter but did not open the same. Therefore, according to the case of Jacques
& Co v McLean, it can be stated that the newly made offer price will not be applied on him and
he has to pay the money as decided in the previous contract. However, it has been observed in
the case that Donald had paid less than the previously generated contract and in that case, the
company can bring action against him. Further, it can be stated that Donald had made part
payment and according to the general provision, it be stated that this does not create valid
nature of consideration. it can be stated that the company is allowed to take proper action for
non-maintenance of previously generated contract and not for the newly offered price.
Conclusion:
Therefore, it can be stated that Cruisers can bring action against Donald for non-
maintenance of previously decided contractual consideration.
Issue:
The present issue in this case is to decide whether Cruisers can take any action against
Edwina or not.
Rule:
The subject matter of the case is based on the effects of contractual terms. According to
the general provision of contract, it can be stated that it is an agreement by which one party
promises to give something as against any consideration and the party has accepted the same.
In Malaysia, the nature of the contract has been described in the Contracts Act 1950. All the
provisions of the Act has followed the English rule of contract. According to section 2 (h) of the
Act, it can be stated that contract is a legally enforceable contract and all the terms of the
contract will be imposed on both the parties mandatorily. The parties are required to maintain
all the rules of the contract and in case of any breach, legal action can be taken against them.
According to the Malaysian Contract Act, it has been stated that not all the agreements are
contract and there are certain elements must be fulfilled in all this case to make an agreement

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valid contract. An offer and acceptance to the contract should be mentioned in the agreement.
Further, there should be valid consideration as against the offer and the nature of the
consideration should be transferable. In addition, both the parties should have the intention to
bind with each other legally. This principle has been observed in the case of Preston Corp Sdn
Bhd v Edward Leong & Ors (1982). Both the parties to the contract should have the capacity to
enter into a valid contract.
On the other hand, the offer and acceptance to the offer should be made in accordance
with the legal principle. According to the contract law, when an offer has been made, the
person to whom the offer has been made should know the same. According to section 4(1) of
the Act, an offer can be effective when communicated. In case, any person does not know
about the content of the offer, the rules of the offer will not be applied to the person and the
offer could not treated as effective. On accepting the offer, it is the right of the intended person
to accept or reject the content of the offer. However, if the person has accepted the offer, it
will be legally bind the parties to the contract. The same principle has been established in the
case of R. v Clarke8 where it has been observed that if any person is very unaware of the
contents or reward mentioned in an offer, he is restricted to make any claim regarding the
reward mentioned in the offer in any subsequent event. It has further been observed under the
Malaysian Contract Act that if the person to whom an offer has been made make any changes
in the offer, the application of the offer in all the future circumstances could not be accepted.
This principle has been established in the case of Hyde v Wrench. However, it can be stated
that if the party on previous occasion nd a contract has been signed in between them has
accepted all the offers, the parties are legally enforceable and the parties are bound by the
nature and terms of the contract. According to section 7(a) of the Contracts Act 1950, the
nature of the acceptance should be absolute and there should not be any confusion. The
parties to the contract should have to meet all the requirements and conditions of the contract
and in case of any breach made to these terms, legal actions can be taken against the infringing
parties. Further, according to section 6 (a) of the Act, if any party to the contract wants to
make any changes regarding the previous offer, the same should be acknowledged by the
8 (1927), 40 CLR 227

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person to whom such changes have been addressed. This rule has been mentioned in the case
of Ignatiues vs. Bell9. Therefore, it can be stated that the contents of the offer should have to
be accepted by the party. Otherwise the terms of the previous contract will be maintained.
Application:
In this case, it has been observed that Cruisers is a car lending company who leased off
their cars and it has made a contract with Edwina. It has been decided in between them that
Edwina could enjoy the use of the car if she paid £400 on monthly basis. A contract has been
made in between them regarding this and it can be stated that all the terms of the contract will
be validly imposed on both the parties and the same bind the parties. However, the company
has made a change regarding the leasing price and reduced it due to make a balance due to
financial downturn. The company had sent the offer letter to Edwina who received the letter
after making the payment for the month of February. It has been observed that she had paid
less to the previously contracted price. According to the case of R. v Clarke, it can be stated that
the provision of the newly made offer will not be applied to her as she had received and
acknowledged the offer letter after making the payment for the month of February. According
to the terms of the previous contract, she had to pay £400 and she had pay £300. Therefore,
the company can bring action against Edwina for breaching the provision of previously
generated contract. however, it has been observed that Edwina had stated that she could not
afford much money and therefore, it is the discretion power of the company whether to accept
or reject the proposal made by Edwina.
Conclusion:
Therefore, it can be stated that Cruisers can take action against Edwina for the making
part payment regarding the previously agreed consideration and breaching the provision of the
contract.
9 (1913) 2 FMSLR 115

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Issue:
The main issue of the case is to determine whether the company can make any legal
action against the payment made by Fiona or not.
Rule:
The subject matter of the case is based on non-performance of contractual terms. Every
contract consists of certain terms and conditions that are mandatorily imposed on the parties
to the contract. It has been mentioned in Rose and Frank Co. v J.R. Crompton & Bros Ltd10 that
the parties to the contract should have to comply all the terms of the contract and legal action
will be taken in case of any failure to meet the requirements. In case the offer maker makes any
changes in the previously contracted offer, the person to whom the offer has been made
should acknowledge it. The contract includes offeror who make the offer and offeree to whom
the offer has been made. This principle has been established in Scammell & Nephew v.
Ouston11. There are certain provisions by which an offer can be revoked. According to the
general principle of law, a person can revoke the offer before the intended person had
accepted the previous offer. This has been held in the Hyde v Wrench12. However, if the offeree
has made any thing adverse after acknowledging the newly generated offer, then it will be
regarded as the violation to the offer. However, according to the general principle of contract
law, it is the discretionary rights of the offeree either to accept or reject the offer. Further, it
has been observed in Felthouse v Bindley13 that if an offer has been communicated and
accepted, valid contract will be made and both the parties to the contract will be bound by the
terms and conditions of the contract.
The present case is based on the general principle of consideration and according to the
decision made in Thomas v Thomas14, it can be stated that the rate of consideration should not
be adequate but sufficient in the eyes of law. Further, it has been observed in the case of
10 [1924] UKHL 2
11 [1941] AC 251
12 (1840) 49 ER 132
13 [1862] EWHC CP J35
14 (1842) QB 851

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Foakes v Beer15 that once the offer has been accepted, the offeree is required to make full
payment regarding the considered price and no part payment will be treated as valid. The
parties to the contract are obliged to abide by all the rules of the contract and the offer.
According to Section 7(1) of the Malaysian contracts Act 1950, if the offeree has not maintained
the terms and condition of the offer or contract, the offeror can take legal action and revoke
the contract.
Further, in case of any exemption clause made by the offeror to the offeree and the
same has been accepted or acknowledged by the offeree, the offeror could get certain benefits
if the person to whom the offer has been made has taken any wrong step. Further, legal action
for non-maintenance of contractual terms will be taken against the person in case he has failed
to meet all the requirements properly mentioned in the offer or contract. In Curtis v Chemical
Cleaning16, it has been observed that the parties to the contract should have to acknowledge
the exemption provision.
In addition to this, it can be stated that the rules regarding postal offer and acceptance
has been observed in this case. According to Henthorn v Fraser17, where an offer has been
made through post, the acceptance will be made once the person to whom the offer has been
made has posted the consent letter regarding the offer. However, in case the offeror wants to
revoke the offer, he should have to send another letter regarding the same to that person and
the same should be received by the offeree before he send the consent letter. This is regarded
as the basic principle of offer and acceptance in postal rule.
Application:
In this case, it has been observed that Fiona had made a contract with Cruisers and
leased a car. Further, it has been decided in between them that Fiona will pay £400 per month.
When the partiers have signed the contract, all the contractual terms of the contract has
become mandatorily applied on the parties. However, certain financial downturn has been
started and the company had reduced the amount of considered payment and send offer letter
15 (1883-84) L.R. 9 App. Cas. 605
16 [1951] 1 KB 805
17 2 Ch. 27

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to all the parties including Fiona. However, later the company felt that the financial crisis has
not affect Fiona, revoke the offer, and send letter to Fiona. Considering the case law, it has
been observed that Fiona had received and acknowledged the fact that the company has
revoked the newly made offer. However, it has been observed that Fiona had not abided by the
contents of the revoke letter. According to the Contract Act, the revocation letter has been
received and acknowledged by Fiona before she has made any transaction regarding the same.
Therefore, it can be stated that she had made a breach regarding the contents of the contract
signed in between the company and her. Further, it has been observed in the case that Fiona
has not paid the lease amount in full and she had made a part payment of the same. Therefore,
according to the Foakes’ case it can be stated that she ought to make full payment until the
company has made any changes regarding the same. However, nothing has been observed in
this case and therefore, Fiona became liable for non-maintenance of the contractual terms and
it has been observed that she had made breach regarding the contractual terms.
Conclusion:
Therefore, it can be stated that Cruisers can validly take action against Fiona for non-
performing all the contractual terms and made part payment to the considered price. In case of
any damage suffered by the company, it can claim compensation from Fiona.

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Reference:
Adam v Lindsell [1818] B & Ald 681
Contracts Act 1950
Curtis v Chemical Cleaning [1951] 1 KB 805
Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] 1 All ER 117
Felthouse v Bindley [1862] EWHC CP J35
Foakes v Beer (1883-84) L.R. 9 App. Cas. 605
Henthorn v Fraser, 2 Ch. 27
Hyde v Wrench (1840) 49 ER 132
Ignatiues vs. Bell (1913) 2 FMSLR 115
Jacques & Co v McLean [1880] 5 QBD 346
Lampleigh v Braithwaite [1615] EWHC KB J17
R. v Clarke (1927), 40 CLR 227
Re McArdle (1951) Ch 669
Rose and Frank Co. v J.R. Crompton & Bros Ltd [1924] UKHL 2
Scammell & Nephew v. Ouston [1941] AC 251
Sdn Bhd v Edward Leong & Ors (1982)
Thomas v Thomas (1842) QB 851
Tweddle v Atkinson [1861] EWHC QB J57

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