Business Law Lecture Notes

Understanding Contracts

• Definition: A contract is a legally binding agreement enforceable by law (Section 2(h) of the Contract Act 1950).
• Not all agreements are legally enforceable contracts.
• A legally enforceable agreement is one which the court recognizes as a contract.

Essential Elements of a Valid Contract

1. Offer

   • Defined under Section 38(1) and Section 2(a) of CA 1950.
   • Must be clear, certain, and specific.
   • Offeror: Person making the offer.
   • Offeree: Person accepting the offer.
   • Example: Display of goods in shops is generally an invitation to treat, not an offer.

2. Acceptance

   • Must be absolute and unqualified (Section 7 of CA 1950).
   • Can be expressed or implied (Section 9 of CA 1950).
   • Introduction of new terms in acceptance is a counter-offer, not acceptance.

3. Consideration

4. Intention to Create Legal Relations

5. Certainty

6. Legal Capacity

Offer vs. Invitation to Treat

• Invitation to Treat
  • An invitation to others to make offers.
  • Common examples: Goods displayed in shop windows, public advertisements, auctions.
  • Case: Pharmaceutical Society of Great Britain v. Boots Cash Chemist Ltd [1953]1 QB 401 clarifies the difference between offer and invitation to treat in self-service shops.

Case Study: Pharmaceutical Society of Great Britain v. Boots Cash Chemist Ltd

• Fact: Boots had a self-service system with a pharmacist at the cashier.
• Issue: Determining when the sale is complete.
• Judgment: Sale completed at cashier’s counter when the offer to buy is accepted, not when the goods are picked up.

Acceptance of Offer

• Must be communicated and expressed in a usual and reasonable manner.
• Once acceptance occurs, neither the offeror nor the offeree can withdraw.
• Case: Hyde v. Wrench demonstrates counter-offers negate the original offer.

Revocation of Offer and Acceptance

• Can be revoked before acceptance is communicated.
• Must be effectively communicated.
• Section 6(a), 4(3)(b), 5(1), 5(2) of CA 1950 details the rules for revocation.

Important Cases

1. Carlill v. Smoke Ball Co.

   • An offer can be made to the public and accepted by anyone meeting the terms.

2. Hyde v. Wrench

   • A counter-offer nullifies the original offer.

References

• Lee Mei Pheng, Ivan Jeron Detta (2022), Business Law, 3rd Edition, Oxford University Press.
• Dr Loganathan Krishnan et al., Principles of Business and Corporate Law, Malaysia, 4th Edition.
• Relevant Malaysian laws: Contracts Act 1950, Civil Law Act 1965, Courts of Judicature Act 1964, etc.

These notes offer a comprehensive overview of business law regarding contracts, covering definitions, essential elements, and case laws to understand the practical application of these laws.