Business Law: Law of Contract

Q1:

In this particular problem, the major issue is whether there is an option between Lewis and Benny. And the acceptance of Benny is effective or not. Next, the revocation of Lewis is complete or not. Moreover, we need to examine whether there is a valid contract (offer and acceptance), option contract between the Lewis and Benny, a valid contract between Lewis and James and the revocation is effective or not.

A most basic element of legally binding contract is offer and acceptance. Offer and acceptance is a traditional approach in law of contract used to determine whether an agreement exists between two parties. So explanation of an offer and acceptance will be needed. For offer, according to the section 2(a), Contracts Act 1950 – ‘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’. In simply word, an offer is a promise to be bound on particular terms. Section 2(c) of the Act calls the person making the proposal/offer as offeror. The person to whom makes the offer is ‘an offeree’.

When a people make the offer, if it is accepted by an offeree, then will result in a legally enforceable contract. Section 2(b) of said Act state that ‘when the person to whom the proposal is made signifies his assent thereto, the proposal is said to have been accepted’. Once the offeree has assented to the terms offered, a contract comes into effect and both parties are bound to perform it. The offeror can’t longer to withdraw his or her offer. And the offeree also can’t withdraw his or her acceptance.  For example, in a contract for the sale of a piano, the seller may offer the piano to the buyer for $1,000.00. The buyer's acceptance of that offer is a necessary part of creating a binding contract for the sale of the piano.

In this case, Lewis made an offer to sell his fridge and washing machine to Benny for Rm800. That...