THE LAW OF CONTRACT 1
LAW OF CONTRACT 2 1.INTRODUCTIO N 2. ELEMENTS OF CONTRACT 4. UNLAWFUL, VOID AND VOIDABLE CONTRACTS 5. DISCHARGE OF CONTRACT 6. REMEDIES i) Offer/Proposal ii) Acceptance iii) Intention to create legal relations iv) Consideration v) Certainty vi) Capacity v) Free Consent i) Coercion ii) Undue Influence iii) Fraud iv) Misrepresentation i) Discharge by Performance ii) Discharge by Frustration i) Damages ii) Specific Performance iii) Injunction 3. TERMS OF CONTRACT & IMPLICATIONS Exemption & Exclusion clause
1. DEFINITION OF CONTRACT Section 2(h) of the Contracts Act 1950: “ A contract is an agreement enforceable by law” It means a contract is an agreement which is legally binding/legally enforceable between the parties ie: When one party fails to perform his bargain, the other may bring action against him in Court A contract may be written or unwritten (oral) 3
2. ELEMENTS OF CONTRACT All contracts are agreement, but not all agreement are contract. This is because some agreements do not have the elements of a contract. Thus, in order for an agreement to become a contract, there are certain elements to be fulfilled:- 1. Proposal/ Offer 2. Acceptance 3. Intention to create legal relations 4. Consideration 5. Certainty 6. Legal capacity 7. Free Consent 4
2.1 OFFER/PROPOSAL Section 2(a) of the Contracts Act 1950 : “Proposal is made 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 such act or abstinence” An offer is an indication by one person that he is prepared/ready to do something or to enter into binding contract or to stop from doing something with another person on certain terms in exchange for a value Section 2(c): the one making the offer is called a promisor . Also known as “offeror” Section 2(b): the person who accepts the proposal made is called a promisee . Also known as “offeree” 5
An offer must be a definite promise to be bound provided certain terms are accepted by the other party. Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui  1 MLJ 169 Held : Lack of offer and acceptance in the hire- purchase agreement had rendered the agreement void ab initio (void from the beginning). 6
In Gutling v Lynn P agreed to purchase horse from the D for $63 and extra $5 if the horse if “lucky” Held: Court says the extra $5 is dependant upon the “luck” of the horse, is a vague offer. Hence , there is no contract Offer can be made either:- a) Unilateral offer- where offeror has no specific offeree in mind ; OR b) Bilateral offer- where offer is made to an identifiable offeree 7
HOW OFFER CAN BE MADE Section 9 of the Contracts Act 1950 Offer can either be made expressly (ie: when it is in writing or made verbally) OR Implied (ie: when there is no words used and have to look at the conduct of parties or circumstances of the case) OR Mixture of words and implied (ie: fax, letters, emails) 8
COMMUNICATION OF THE PROPOSAL A proposal must be communicated to the promisee Section 4(1) of the Contracts Act 1950: The communication of an offer is complete when it comes to the knowledge of the person to whom it is made.
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