BUSINESS COMPANY LAW
Question 1
Refer to the case concerns whether any contract bound between Ray and Jack on the proposal made on the machinery.
An agreement which is legally binding between the parties where Ray make a counter offer to Jack. According to “ Section 2 (a) of Contract Act 1950 in an act signifying the willingness of the person to be bound by this promises implied in the act with a view to obtaining the assent of the other person to the act” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009). Furthermore, in “Section 2 (b) of Contract Act 1950 stated that offeree indicate his consent to the offer, means the offer is said to be accepted” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009). Refer to the situation, there is a offer but no acceptance between offeror and offeree. Besides, there is not invitation to treat as difference with offer. “Invitation to treat may be regards of preliminary communication at stage of negotiation. The factor to differentiate between offer and invitation to treat is the intention of parties” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009).
Ray offered to sell Jack machine at cost RM30,000. Jack replied to Ray that he would need 10 days to consider it and Ray agreed to his request. When Ray agreed for Jack consideration in 10 days, there is an option formed a period of time given whether to accept or reject the offer and the ability to execute which must consider the option of money or money’s worth. If not, the offeror can revoke the offer at anytime even where he has said they will keep the offer open for a certain period of time. In “Goldsbrough, Mort & Co Ltd, V Quinn (1910) where Quinn (Defendant) offered Mort (Plaintiff) a written and signed contract transferring his lands to them for a price. Mort paid 5 shillings to keep the offer open for a week. When Mort considers to accept, but Quinn withdrew the offer, stated that it was a mistake. Plaintiff has won and given specific performance. An offer cannot be revoked if the offeree has provided consideration for an option. The offeree is entitled to the full amount of time given to them to decide whether to accept the offer” (https://en-au.oxbridgenotes.com). Besides, in another case lawDickinson v. Dodds 2 Ch. Div. 463 (1876) where Dodds (Defendant) offer Dickinson (Plaintiff) to sell a property mentioned that will be away until Friday 9am. On Thursday 7pm Dickinson reply to Dodd and noticed that Dodds property had sold to another. There was only an offer and not supported by consideration or acceptance by Dickinson. There was no binding agreement to keep the property unsold until 9 o’clock Friday morning. As same issue to ray and Jack, there was no consideration between both of them due to it is no any agreement stated that the machinery couldn’t be sold within these 10 days. (http://www.casebriefs.com)
After that, on 18 February 2015 Jack wrote to Ray asking if he would accept payment within 6 weeks of delivery. Under negotiation, action of two or more parties consulting about a possible arrangement of partnership. Their goal is to make an agreement that will be advantages for all parties involved. Refer to case “Harvey v Facey (1893), Harvey (Plaintiff) wrote to Facey (Defendant) interested buying a land at lowest price. When the defendant replied with a lowest price. The plaintiff replied that agree to buy the land that requested by defendant” (Adam.A, 2000). There was no counter offer between Jack and Ray and their negotiation is invalid.
However, on 20th February 2015, Ray received an offer of RM35,000 of the machinery from Marina through email. In this situation, acceptance is necessary formation of contract. “Acceptance as an unconditional assent, communicated by the offeree to the offeror, to all terms of the offer made with the intention of accepting” (http://www.allaboutlaw.co.uk). “Section 2 (b) of Contract Act 1950 stated that offeree indicate his consent to the offer, means the offer is said to be accepted” (Loganathan, Parimaladevi and Anne 2009). Besides, “Section 2 (c) states the person making the proposal is now called the ‘promisor’ and the person accepting the proposal is called ‘promisee” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009). This is a valid contract where Ray accept offer from Marina, acceptance is effective when acceptance is actually received. In Entores Ltd. v Miles Far East Corporation (1955) where received a telegraph from England to Holland and acceptance was telegraph from Holland to England, this contract is valid due to acceptance was received.
Meanwhile, Ray immediately wrote to Jack withdrawing the offer. “Dickinson v. Dodds 2 Ch. Div. 463 (1876) where Dodds (Defendant) offer Dickinson (Plaintiff) to sell a property mentioned that will be away until Friday 9am. On Thursday 7pm Dickinson reply to Dodd and noticed that Dodds property had sold to another. There was only an offer and not supported by consideration or acceptance by Dickinson. There was no binding agreement to keep the property unsold until 9 o’clock Friday morning. As same issue to ray and Jack, there was no consideration between both of them due to it is no any agreement stated that the machinery couldn’t be sold within these 10 days” (http://www.casebriefs.com).
Since Ray rejected Jack offer and accepted Marina offer, acceptance only completed when communicated to the offeror. Under Section 4(2) (a) of Contract Act states that the communication complete acceptance of the offer, when it is placed a process of transmission of power to be eliminated.
Nevertheless, Jack does not heard any reply from Ray, he wrote to Ray accept his offer to sell the machinery at cost RM30,000. Section 7 (b) acceptance must be expressed in some usual and reasonable manner, held that the offeror cannot be silence as manner of acceptance. “Felthouse v Bindley (1862)P’s uncle wanted to buy a horse from P, said that if he did not received any response form P, he will consider the horse is belongs to him. However, P did not reply the letter and whether uncle’s letter made good acceptance. It shows that P silence did not amount to acceptance of the offer to buy the horse” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009).
Once the offeree posts the letter of acceptance is effective as against the offeror eventhough the offeror has no knowledge of its acceptance. In the case, “Ignatius v Bell (1913) the plaintiff sued for specific performance of an option to give him a chances of purchase defandant’s land. But he has to made decision before 20 August 1912. However, on 16 August 1912 plaintiff sent a notice of acceptance by post in Klang but not send until 25 August 1912 as defendant away. The letter had remainded in the post office at Kuala Selangor until picked up by the defendant” (https://www.academia.edu).
On 22 August 2015, Ray’s letter received by Jack which means there are no contract formed between Jack and Ray. Besides, since Ray accepted Marina offer there is revocation of an acceptance between Jack and Ray. Under “Section 5 of Contract Act 1950 acceptance may be revoked at any time as completion of the offer but not after that before receiving communication” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009).
In conclusion, Jack can’t sue Ray breach of contract due to both of them no consideration, if option not effective as no contract between them. Besides, there is no any agreement formed between Jack and Ray.
Question 2
If Jack had paid RM500 to Ray to keep the offer open 10 days, the final outcome will be a valid contract between Jack and Ray. “Section 2 (a) of Contract Act 1950 in an act signifying the willingness of the person to be bound by this promises implied in the act with a view to obtaining the assent of the other person to the act” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009). There is consideration formed, where desire of the promisor do something that promises which refer to the case that Jack paid RM500 to Ray to keep for offer open 10 days. “Under Section 26 of Contract Act 1950 states that agreement without consideration is void. Section 2(d) of Contract Act states when promisor desire and promisee has done or abstained from doing or promise to do is called consideration for the promise” (Krishnan.L, Rajoo.P and Vergis.A.C, 2009).
Since Jack had paid RM500 to Ray, if Ray sell the machine to Marina, Jack can sue Ray due to breach of contract.
Question 3
There is a breach of contract between Ray and Jack, below are few remedies available for Jack :
Special Performance
Special Performance is an equitable remedy available at the discretion of the judge. It is an order by the court requiring one party to perform their contractual obligation. Refer to the case law “Nutbrown v Thornton (1805) 10 Ves 159, The claimant bought some machinery from the defendant. The defendant in breach of contract and refused to deliver the machines. The defendant was the only manufacturer of this type of machinery. The claimant bought an action for breach of contract seeking performance of contract” (http://e-lawresources.co.uk).
Injunction
An injunction is an order of the court directing a person to refrain from doing an act or continuing to do an act complained of. An injunction is not granted where damages are a sufficient remedy, the court could not effectively enforce its order and it cause a indirect way of implement a contract of personal service. “Page One Records v Britton (1968) the claimant have a record company owned by Larry Page, in the contract the Troggs stated that Page one records will be the manager and sole agent for 5 years in return for 20% profits and not appoint anyone as manager. However, during the years the Toggs breach the contract due to appoint a manager” (http://e-lawresources.co.uk).
Rescission
Rescission is a breach of condition the injured party at the end may cancelled the contract and refused perform or fulfill his part of contract. Refer to case law “Long v Lloyd (1958) the claimant buy a lorry from the defendant. The defendant told that it was in good condition, but after the claimant test drive the lorry noticed that the lorry not in a good condition. However, the claimant still decided to buy the lorry” (http://e-lawresources.co.uk).
Damages
Damages is injured party or party bear for the loss or damage has right to compensation caused by breach of contract. In the case law Hadley v Baxendale (1854) the plaintiff was a miller whose stopped operation due to crank shaft breakdown and the shaft had sent to repair. The plaintiff told the defendant have to repair the shaft as soon as possible due to the plaintiff had stopped operation. The defendant promised that repairing the shaft will be done by one day but the defendant break his promise as took several days to completed. The plaintiff sued the defendant for caused him loss profit.
Based on the four remedies, damages is available for Jack as he can sued Ray for compensation.
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