Business Cyber Law

Assignment BCL's Answer

Question 1

Valid contract according to contract law 1950 Highlight

     The contract is a written or spoken agreement. It also can be known as an official agreement within the parties which allow the courts to make a judgment. It can be written using formal or informal terms, or entirely verbal or spoken. There will be a law or important elements that a contract need to follow so that it will be a valid contract. Basically, the law regulating contracts in Malaysia is governed by Contract Act 1950 which is the objective is to protect the legal rights of all parties that involved in the contract and to make sure that the contract followed by the parties based on the contract agreement. This contract can be invalid if you failed to follow the six essential elements which are offer, acceptance, consideration, intention to create a legal relation, certainty, and capacity.

        The first element among the six essential elements that mentioned in Contracts Act 1950  is an offer or also known as preliminary, proposal, promise or an agreement. Without the offer, there will be no contract. It is one of the elements to make sure that the contract is legally valid or acceptable. To make an offer, there should be at least two or more parties so that the agreement can be forming by the consideration of both or more parties. If only one person tries to make an offer the contract can avoidable as you are not fulfilling the requirements that have been stated. If the offer is accepted then it would constitute a legally valid contract. Nevertheless, when an offer is being made, the other party or person should know what is being offered and what the person or party who made the offer expect to have in return. It can avoid misunderstanding or misinterpretation by the other party. For example of offer or promise is, A agrees to sell his house to B for RM 10,000.00. Here, B is promising by filled the form to pay the sum of RM 10,000.00 is the consideration for A is also promise to sell the house, and A promises to sell the house is the consideration for B is a promise to pay RM 10,000.00. Then, A and B sign the contract that has a clear with the rules and regulation as an agreement that forming by the consideration of both parties. Eventually, the contract being made that formed by both parties.

        The second essential element is acceptance. After the offer is made, there should be accepted. All the discussion must be accepted by both parties. Acceptance is an agreement with or belief in an idea, opinion or explanation. According to the Contracts Act 1950 when the other party is clear with the offer, there would make an acceptance once they are clear with the rules and regulations being offered in the contract. There will be no contract if the parties are still negotiating or discussing and have not made accept the offer. It depends on the person or party how they want to make an acceptance of the offer whether in writing or orally which is made verbally or being spoken out as long as it is agreed by both parties. There is few rules of acceptance that mentioned in Contract Act 1950 are the acceptance must be communicated to the offeror , acceptance cannot be silence , acceptance cannot occur if offeree does not have knowledge of the offer , motive of acceptance is irrelevant , acceptance must be made by the offeree of his agent , acceptance cannot be in the form of a cross offer and complete performance amounts to acceptance in unilateral contracts . For example of acceptance, a family writes to D Hotel requesting information about the cost and availability of accommodation for their family day on 17th April 2015. The staff at D Hotel answers the inquiry by the family and states that the accommodation available for that week would cost RM 600 and if they respond with the deposit of RM 100 within a week, then the room will be allocated to for the family. If the family accepts the offer, then the contract has been made for the family and D Hotel. So here, there is an acceptable situation when the family needs to respond to the D Hotel within the time given for D Hotel to fulfill the demands.

     The third essential elements according to the Contracts Act 1950 is a consideration . Consideration is a fact or a motive taken into account in deciding or judging something. Whereby, consideration in a contract would mean the other person would be giving back something in return. It would be considered as an exchange which would be made between the promise and promisor. Promisee is the person that accepting the offer or proposal and promisor is the person who made the offer or proposal. In a contract, there should be a consideration among the parties so that it would be legally valid. As mentioned in Section 26 of the Contracts Act 1950, that an agreement without consideration is void. Even though there is a question about just a consideration be adequate according to Explanation 2 to Section 26 of the Contacts Act 1950, states that an agreement is not void merely because the consideration is not adequate. Consideration must be sufficient but need not be adequate.For example of consideration, a customer goes buy a fast food in a restaurant like McDonalds and orders a set lunch which costs RM7.95. By ordering the set lunch, the customer is agreeing to pay RM7.95 as consideration. However, consideration does not give any threats to on ' line holiday contracts. Holiday services which are being provided by the on ' line holiday providers and also the consideration by giving something back in return which would be the payment money or even the payment made by the holiday makers would eventually follow the requirements for consideration of a contract.

        The forth essential elements according to the Contracts Act 1950 is an intention to create legal relations. It is important to have this element in a contract. It is a necessity of the intention to create legal relations although the Contracts Act 1950 is silent on the intention to create legal relations as one of the requirements of a valid contract. This is because the determination of whether or not the parties intended to create or enter into a legal relationship is an objective one and context is all important. After all the courts will not examine the states of mind of the parties to the agreement but will ask whether or not reasonable parties to such an agreement would possess an intention to create legal relations. If there is no intention to create legal relations in a contract. the contract could be subject to a lawsuit. That is why this element also important for the contract to be valid even though the Contracts Act 1950 is silent on the intention to create legal relations. Social and domestic agreements are considered not have a legal effect such as husband and wife, parent and child and friends while commercial and business agreements are considered to have legal effect. For example of intention to create legal relations, when there is a contract or an agreement made between the parent and the children. If the parent passes away, the children would have whatever property or possession which is left by the parent.

        The fifth essential elements according to the Contracts Act 1950 is a certainty . Certainty is a fact that is definitely true or an event that is definitely going to take place. The terms and regulations being made in a contract should be stated clearly and understood by the parties to the contract. This is also to avoid misunderstanding or misinterpretation by the other party. If the agreement is not certain, it would be no longer valid. For example, if the guest wants to stay in a hotel, the guest needs to inform how many days he or she is staying at the hotel, the type of room, and also the date when he or she are going stay and the number of days he or she is staying.

       The last one that mentioned in Contracts Act 1950 is capacity. Capacity is the ability or power to do, experience, or understand something. Capacity in a contract is the parties to the contract must have the legal capacity to do so. 18 years old is stated as the age of a major. Minors who are people below the age of eighteen have no capacity to enter into contracts. Therefore, insane people or people with unsound minds also cannot enter into any valid contracts. This is to avoid being that the contract being misused by other parties that in the age of minor, insane people or people with unsound minds because they can’t think with a right mind. So it will make the contract become uncertainty which may cause by the incompleteness of rules and regulation that according to the Contract Act 1950. For example, a person who is at the age of sixteen years old could not stay at a hotel. The hotel staff would not allow having the person who is sixteen years old to stay at the hotel since that person is not eighteen years old or above. For the person to stay at the hotel, he or she must have a guardian who is above eighteen years old or a parent to accompany him or her to stay in the hotel.

       In conclusion, it is important to have the main elements in a contract such as an offer, acceptance, consideration, intention to create a legal relation, certainty, and capacity. Without all of these important elements, the contract can be invalid. For offer, it is one of the elements to make sure that the contract is legally valid or acceptable. Without an offer, there is no contract. After the offer is made there will be acceptance.All the discussion must be accepted by both parties. After the offer being accepted by both parties, there will be consideration whereby, consideration in a contract would mean the other person would be giving back something in return. Then there will be an intention to create legal relation because it is one of the requirements of a valid contract. After that is certainly where the terms and regulations being made in a contract should be stated clearly and understood by the parties to the contract and the last one is capacity were parties to the contract must have the legal capacity to do so. This is all the main important element that being mentioned by Contracts Act 1950.

Question 2

Explanation regarding its application in Malaysian legal system with the support of three (3) decided cases for each element put forward

The third element is about consideration. The issue is between Liyana and the bus conductor, Ahmad, who left her file in the bus and luckily the bus conductor voluntary return the file to Liyana. Meanwhile, Liyana decided and make a promise that she will reward Ahmad with RM700 but in the end, she refuses to hand over the reward due to there was no black and white agreement. Furthermore, there is no solid reason and prove to support the agreement. The bus conductor, Ahmad can actually sue Liyana can get the RM700 according to Section 2 (a) Contracts Act 1950 states that “when one person signifies to another her willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, she is said to make a proposal.” The bus conductor is keen and willing to contact and return her the file. Also, Under Section 26 (b) Contracts Act 1950 provides that agreement made without consideration is void unless it is a promise to compensate a person who has already voluntarily done something for the promisor. It is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally forced to do. Liyana promised to give a reward to the bus conductor with RM 700.

Next, consideration is defined by Section 2 (d) Contracts Act 1950 that “When at desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise. We can see the exemplary through Currie v Misa(1875). Therefore, each party must also decide and do the promise by giving or doing something for the other and the promise between two parties will be valid. In addition, past consideration is about something that has already been done before a promise in return is given to make the promise binding. However, refer to English case of Lampleigh v Brathwaite (1615), an act originally done at the demand or request of the promisor, a promise made to do that act, was deemed binding since the act constituted consideration. 

Finally, past consideration in the circumstances and obstacles provided constitutes a valid consideration and it is provided that the person C found the person B`s purse and gives it to her. The person B gives the person C $70 to fulfill the promise and this is what we called a contract. The bus conductor found the Liyana’s file and the bus conductor return to Liyana. As a result, Liyana then promises to give the bus conductor RM700. In conclusion, we can say that the contract is valid between Liyana and the bus conductor.