Business Law

Andy Tan Weng Hong

SCSJ-0011556

Business Law I BA302

Mr. Ananda

Spring 2014

In our daily life, we enter into contracts constantly, be it orally or in written form. According to Visu Sinnadurai the author of Law of Contract said that an offer is an indication by one party to another party of his willingness to enter into a legally binding contract, under certain specified terms. The Contracts Act 1950 of Malaysia governs the law of contract, and under section 2(h), it is stated that an agreement enforceable by law is a contract. However, in order to form a valid binding contract that is enforceable by law, the following six elements must be fulfilled:

1. Offer

2. Acceptance

3. Consideration

4. Intention to create legal relationship

5. Capacity

6. Certainty

The first element to establish a valid contract is Offer. In the Contracts Act 1950, the world proposal is used instead of offer. They both bring about a similar meaning however it is inaccurate to say they are the same. According to Section 2(a) of the Contracts Act, a proposal is when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtain the assent of that other to such act or abstinence. Furthermore, Section 2(c) states that the person making the proposal is called the “promisor” (offeror) and the person accepting the proposal is called the “promisee” (offeree).

It is important to know the difference between a true offer and an invitation to treat. There are three requirements that need to be fulfilled in order for it to be a true offer:

1. Offeree must enter into an agreement willingly and voluntary (shall not have duress or undue influence).

2. Offeror must have a firm or legal intention.

3. Offeror must communicate with offeree.

An invitation to treat is not an offer itself but is an invitation to others to make an offer. There are four principles in invitation to treat; they are (1) display of...