Element of Formation Law Contract

A contract defines as a legally binding agreement between two or more parties to do a particular act. It's a contract for sale of house or a purchase of a car. Every contract is an agreement that consisting of an offer and acceptance. When the contract is a valid and binding agreement, the person can go to the court to seek for justice. Elements of contract are an offer must be made when the other parties accept that offer, there is an Acceptance of the Offer and both parties must provide a consideration for the contract.

The Law of Contract is governed by the Contract Act 1950 that is revised in1974. The Malaysian Contract law is based on the English Law, but it was a reproduction of the Indian Contract Act of 1872. The Contract Act 1950 is more than over 100 sections and it is an agreement that can be made by the way of writing, oral, conduct or a combination. In Section 2(a) of the Contract Act 1950, an offer is refers as a proposal and Section 2(h) of the Contract Act 1950, a contract is an agreement enforceable by law and legally binding. The proposal must make a communication with the promisee. There essential elements of a valid contract are offer, acceptance, consideration, intention to create a legal relationship, capacity and certainty.

The first element of a contract is offer. An offer is under Section 2(a) of the Contract Act 1950 and it is an expression of willingness to contract on certain terms that it must be made with the intention that it will become binding upon acceptance. An offer can be divided into offeror and offeree. Offeror is a person who makes the offer and offeree is a person to whom the offer is makes. Offer is a proposal offered by the offeror and offeree., An offer is capable of being converted into an agreement by its acceptance. The offer example is when A offers his car to B for the price of RM300, 000. B is accepts to offer by buying the car from A. Therefore, A is the offeror and B is the offeree. There are two types of offer which is true offer and invitation to treat. True offer is a valid binding agreement take offer and invitation to treat is an invitation to another person to make an offer to contract. Invitation to treat can be divided into display of good, advertisement, auction and tender. Display of good is a display goods with a price ticket attached on a supermarket shelf is invite customers to make an offer to buy it. Advertisement is advertising the goods with minimum price at which party willing to sell it that will not amount to an offer. Auction is the auctioneer call for bids to considering making an offer and is free to accept or reject the bid when called by someone. Tender is advertising the goods for sale and it is a request by the owner of the goods for offers to purchase them. The process of tender is come under scrutiny. Offer can be the counter offer which is can kill the original offer and cross offer which is identical offer are made at the same time. An offer has seven type of termination of an offer. First is acceptance in which an offer will come to an end when the offer has been accepted. Second is rejection in which an offeree can reject an offer anytime. Third is revocation in which an offer can be revoked by the offeror at any time until it is accepted. Fourth is counter offer in which an offeree makes a counter offer that can kill the original offer. Fifth is lapse of time in which the offer will be terminated when the offer time limit is expires. Sixth is failure of a condition in which the offer is not being accepted when the condition is not satisfied. Lastly is death in which the offeree cannot accept the offer when the offeror is dead. The example case for the offer is Carlill v The Carbolic Smoke Ball Company [1893]. The fact is the Carbolic Smoke Ball Company has made a product called smoke ball which claimed that it could protect the person from contracting flu. The company also advertised that they will offer 100 pounds to anyone who still contracting the flu after using the products in a fixed period. Furthermore, the company also already deposited 1000 pounds to the alliance bank to show their sincerity. The plaintiff; Mrs. Carlill has bought the smoke ball and used it for a fixed period but she still contracted suffer from this flu. While she asked for the reward, the Carbolic Company claimed that there was no enforceable contract. Conclusion is the Court of Appeal that the Mrs., Carlill was gets the 100 pounds as she had accepted the offer made to the world at large.

The second element of a contract is acceptance. An acceptance is under Section 2(b) of the Contract Act 1950 and it is an offeree agreed to the offer made by the offeror. When the person to whom the proposal is made signifies his assent. The proposal is said to be accepted and when a proposal is accepted, then becomes a promise. Acceptance can be divided into promise and acceptor. Promise is a proposal when accepted and acceptor is the person who accepting the proposal. An acceptor is also referred to as a promise. In Section 7(a) of the Contract Act 1950, an acceptance is a final and unqualified acceptance of an offer and Section 7(b) of the Contract Act 1950, the acceptance must make a binding contract that exactly matches the offer. The offeree must accept all the terms of the offer and the acceptance must exactly fit the proposal. In Section 3 of the Contract Act 1950, the communication of acceptance of the proposal is deemed to be made by any act. Acceptance must be communicated to the proposer in order to make a contract valid. Proposal an acceptance can be made in writing, oral, conduct or a combination. Silence is not considered as an acceptance. In Section 4 Contract Act 1950, the postal rule applies to communications of acceptance by cable, but not to instantaneous modes such as telephone. The postal rule will not apply when the letter of acceptance has not been properly posted or addressed. The acceptance must react to the offeror. The postal rule not apply when the offer require notice in writing and actual communication to accept. The rules of acceptance are an acceptance must be unqualified and communicated to the offeror. Silence does not constitute an acceptance. Only parties will do communication to the agreement. The acceptance example is when A makes an offer to sell his house to B but B did not communicate to A to buy his house. Finally, B was bought the house under the pressure that given. It was held that silence cannot be implied as acceptance. The example case for the acceptance is Felthouse v Bindley [1862]. Felthouse offered to buy a particular horse from his nephew and stated (in a written offer) that 'if I hear no more about him, I consider the horse is mine. His nephew did not reply but instructed the auctioneer, Bindley, not to sell the horse. Bindley mistakenly sold the horse. Felthouse sued the auctioneer for conversion. Conclusion is the Felthouse could