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Published: Fri, 02 Feb 2018
Valid contract between Robert and Joshua
A valid contract formed when offer, acceptance and consideration taken place. In Joshua’s case, there is a valid contract between Robert and Joshua. S.2 (a) Contract Act 1950 (hereinafter referred to as CA 1950) stated that when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal. An offer is made by one person to another with the intention to be bound. The terms in the offer must be specific or in detail. In this case, Robert is selling his shop for RM10 million to Joshua and offering to James at the price of RM9.5 million. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made as stated in s.4 (1) CA 1950.The communication of a proposal is complete when Joshua called Robert whether the price is negotiable as Joshua does not have enough money to pay for the deposit. The communication of proposal between Robert and James is complete when James who was so interested with the shop wanted to send his acceptance to Robert on 7th May 2007. According to s.9 CA 1950, a proposal made in words either oral or written is said to be expressed. In Joshua’s case, Robert made a telephone call to Joshua asked him whether he is interested to buy Robert’s shop for RM10 million. When Robert did not get any response from Joshua, he sent a SMS to James offering him the same shop at the price of RM9.5 million.
According to s.2 (b) CA 1950, “when a person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise”. When James responded Robert’s offer by SMS, the SMS is an acceptance. James accept Robert’s offer in absolute and unconditional conditions as defined in s.7 (a) CA 1950  . According to Neale v. Merret (1930)  , the court held that it was implied that the term £280 meant cash and not installments. The ‘acceptance’ was not valid because it was qualified as referred to Neale v. Merret (1930). S.7 (b) CA 1950 provides that an acceptance must be expressed in some usual and reasonable manner. James sent a SMS stipulating his acceptance to Robert on 7th May 2007. On 7th August 2007, Joshua posted his letter of acceptance to Robert after overheard two strangers talking about the said property had been sold to James. Joshua’s acceptance is still valid as time is not stipulated in the offer as referred to the case of Ramsgate Victoria Hotel Co. Ltd v. Montefiore (1866). All offers will last for a specified time only. When the specified time expired, the acceptance cannot be accepted. Robert did not specify the time that the offer will keep open. However, when Robert sent a SMS to James and James accepted it before Joshua accept it, the acceptance may not be valid. The communication of acceptance is complete when the acceptance reaches the offeror as stated in s.3 CA 1950. The communication of acceptance between James and Robert is complete the moment the SMS appeared on Robert’s phone. The communication of acceptance between Robert and Joshua is not complete as it is not stated whether Robert has received the letter yet.
Consideration has many case law definitions, for example Curre v. Misa (1875)  . Consideration is defined as the benefit received in exchange for the detriment suffered S.2 (d) CA 1950 states that when, at the desire of the promisor, the promise 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 abstinence or promise is called a consideration for the promise. There is an executory consideration between Robert and James where Robert agreed to sell his shop to James for RM9.5 million. It is stated: “something given or accepted in return for a promise, where the promised act remains to be performed on the future date”. (BusinessDictionary.com) James promised to pay the sum of RM9.5 million is the consideration for Robert’s promise to sell his shop and Robert’s promise to sell his shop is the consideration for James’s promise to pay RM9.5 million. Therefore, there are lawful considerations and this is stated in Illustration (a) of section 24. On the other hand, there is no consideration between Robert and Joshua. This main reason is Robert had already sold his shop to James before Joshua accepts the offer. There is nothing to exchange between Robert and Joshua.
When the shop has already been sold to James, the offer made to Joshua is revoked. According to s.5 (1) CA 1950, an offer can be revoked at anytime before the communication of its acceptance is complete. Since Joshua has not accepted the offer yet, Robert can revoke the offer as long as Robert is the owner of the shop. However, Robert made a mistake where he did not send a notice of revocation to Joshua. According to s.6 (a) CA 1950, a proposal is revoked by the communication of notice of revocation by the proposer to the other party. Therefore, the offer is not revoked and the offer is still open. If Robert is withdrawing his offer, he has to inform Joshua that he is withdrawing the offer. Besides that, revocation can be communicated either by the offeror or by the relevant third party. The offer is revoked as per Dickinson v. Dodds (1876)  . In Dickinson v. Dodds (1876), the intermediary between Dickinson and Dodds informed Dickinson that the defendant had sold the property to someone else. The intermediary involved is a reliable person. In this case, Joshua overheard two strangers talking about the shop been sold to James. The two strangers are not reliable and trustworthy individuals. Therefore, Robert’s offer is not revoked and Joshua can accept the offer after he learnt from unreliable information from two strangers. If Joshua knew these two people, he can rely on their statement and the offer may be revoked.
Furthermore, Joshua made a mistake that he took his own time to reply the offer. Joshua should accept the offer earlier. S.6 (b) CA 1950 stated that a proposal is revoked by the lapse of the time prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance. Initially, Robert did not inform Joshua about the duration of the offer. Joshua thought that he can delay the offer and accept it when came to his interest. Although time is not stipulated, the offer can be accepted unless the reasonable time passes. In Ramsgate Victoria Hotel Co. Ltd v. Montefiore (1866), the defendant offered to purchase shares but did not specify how long his offer would last. The plaintiff accepted after five months by letter. The defendant refused to pay. The court held that the defendant’s offer was only for a reasonable period. The five months were too long and not reasonable. In this case, I do agree that the three months are not reasonable. The main reason is Robert’s shop located in Kuala Lumpur. Kuala Lumpur is a big city and many tourist attractions are located. Most of the businessmen wanted to operate their businesses in Kuala Lumpur. The price of the shop is not stable as it follows the market price. If Joshua did not reply Robert at a reasonable time, Robert may incur losses in terms of money. Therefore, the offer will be revoked as there is no acceptance.
As a whole, when Robert told Joshua that the shop been sold to James, there is no revocation involved. Robert did not acknowledge Joshua that his offer has been revoked. Therefore, the offer is still open to Joshua. In this case, Robert had breached the contract with Joshua. S.40 CA 1950 states that when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promise may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. Joshua can sue for damages as stated in s.74 (1) CA 1950. When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract. For instance, Robert has to compensate to Joshua as he had breached the contract. To conclude, there is a contract between Robert and Joshua where offer and acceptance taken place. However, the acceptance by Joshua came too late after Robert had already sold the shop to James on 7th May 2007. As a result, three months did not amount to reasonable time as the owner of the shop will incur losses.
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