Business law regulates business transactions and activities through rules like various acts related to trade, industry and commerce. A contract is a legally enforceable agreement that differs from void or voidable agreements which are not enforceable. For an agreement to be considered a contract, it requires elements like offer, acceptance, consideration, capacity and lawful objective.

2. Business law is a rule which helps us to regulate and manage
our business transactions and activities system. It has direct relation
with trade, industry and commerce. e.g. insurance act, contract act, tax
act, sale of goods act, agency act etc.
Business Law

3. What is a Contract?
An agreement which is legally enforceable alone is a contract.
Agreements which are not legally enforceable are not contracts but
remain as void agreements which are not enforceable at all or as
voidable agreements which are enforceable by only one of the parties
to the agreement.
“All contracts are agreements, But all agreements are not contracts.”

4. OFFER/PROPOSAL ACCEPTANCE PROMISE

5. Offer/Proposal sec 2(a) - 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 person either to such act or abstinence,
he is said to make a proposal.
Acceptance sec 2(b) - When the person to whom the proposal is made,
signifies his assent there to , the proposal is said to be accepted.
Promise sec 2(b) - A Proposal when accepted becomes a promise. In
simple words, when an offer is accepted it becomes promise.
Promisor and promise sec 2(c) - When the proposal is accepted, the
person making the proposal is called as promisor and the person
accepting the proposal is called as promisee.

6. PROMISE
CONSIDERATION
AGREEMENT

7. Consideration sec 2(d) - When at the desire of the promisor, the
promisee or any other person has done or abstained from doing
something or does or abstains from doing something or promises to do
or abstain from doing something, such act or abstinence or promise is
called a consideration for the promise.
Price paid by the one party for the promise of the other Technical word
meaning QUID-PRO-QUO i.e. something in return.
Agreement sec 2(e) - Every promise and set of promises forming the
consideration for each other.

8. Contract sec 2(h) - An agreement enforceable by Law is a contract.
AGREEMENT ENFORCEABLE BY LAW CONTRACT

9. PROPOSAL
PROMISE
CONSIDERATION
AGREEMENT
LEGALLY ENFORCEABLE
CONTRACT
VOIDABLE
AGREEMENT
LEGALLY NOT ENFORCEABLE
VOID AGREEMENT

10. As per Section 10 “All agreements are contracts, if they are
made – by free consent of the parties, competent to contract,
for a lawful consideration and with a lawful object, and not
hereby expressly declared to be void .”
OFFE
R
ACCEPTAN
CE PROMISE
CONSIDERATI
ON
AGREEME
NT
ENFORCEABILI
TY BY LAW
CONTRAC
T
ESSENTIALS OF A VALID CONTRACT

11. ESSENTIAL ELEMENTS OF A VALID CONTRACT
• Offer and acceptance
• consideration
• Free consent.
• Capacity or competency of parties
• Lawful object
• Certainty

12. DEFINATION OF OFFER
• An agreement between two or more parties is constitued
by a proposal.
•An offer or proposal is necessary is for the formation of
an agreement
• Section 2(a) provides:
“When a 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.”
• Section 2( c ) states that the person who making
the proposal is the “promisor”

13. Example
• : Lina wanted to sell her bike to Azmin.
• Lina: Hi, Azmin, I would like to sell my bike to you for rm 15k.
Would you like to buy it?
• The above statement is equavelent to offer.
• When the Offer has been made it become promise.
• A person who make an offer is now referred as promisor
and the party accepting the proposal as promisee.

14. Case
• Case Harvey vs. Facey[1893]A.C.552
A send a telegraph to B saying that "Can You sell
to us Bumper Hall Pen Hall? Answer for the lowest cash price
by telegraph. B replied by telegraph" the lowest price for
Bumper Hall Pen is 900 pounds. A send telegraph, we agree
to buy Bumper Hall Pen at 900 pounds, as requested by
you.
A claim that this telegraph exchange was a valid offer and
acceptance
Privy Council decided that a statement
of fact which has been made only to provide
information should not be construed as an offer.

15. Invitation To Treat
• An offer should be contrasted with an option and an
advertisement.
• An option is merely an undertaking to keep the offer
open for a certain period of time.
• Advertisement is an attempt to induce offer.

16. INVITATION TO TREAT
Goods displayed in shops:
Pharmaceutical Society of
Great Britain v Boots
Fisher v Bell
Advertisement:
Partridge v Critenden
Carlill v Carbolic Smoke
Ball co
Auction
Heathcote Ball v Barry
Spencer v. Harding

17. EXAMPLE (ITT)
i. .
Invitation to treat is not equivalent to offer
Example 1: Lina goes to a supermarket. She took a dress , went to the counter to pay for the dress.
At the counter , the cashier refuses to receive the payment as the dress was not for sale.
Is there any offer and acceptance had taken place?
No, goods displayed goes under Invitation to treat
Super market display goods Lina
Lina to supermarket
Supermarket
Cashier accepts the money(price) = Acceptance
Cashier rejects the money = no acceptance
ITT/Inivitation to make offer
make offer
may/may not accept the offer

18. ITT CASE LAW
Case Partridge v. Crittenden [1968] 1 W.L.R. 1204.
Patridge advertised live wild birds for sale in a periodical bird
magazine as “Quality British ABCR ….Bramblefinch
cocks for 25 pound each. The advertisements section of
the magazine. Patridge was charged with offering live
wild birds for sale.
Held: The advertisement was only an invitation to treat
because nowhere was there any
indication of an expression of intention to be
bound.

19. EXAMPLE (ITT)
Example 2: Lina goes to a supermarket . She took a dress and put it in her basket. On the way to the
cashier, she realises that she forgot to bring her purse. Can the cashier forces Lina to pay as she had
selected the dress and put it in the basket?
Answer: the cashier can not force Lina to pay
Super market display goods Lina
Lina to supermarket
Supermarket Lina
Cashier accepts the money(price) = Acceptance
Lina did not perform any payment to the cashier= no acceptance
make offer
may/may not accept the offer
ITT/Inivitation to make offer

20. Remember: the elements of offer + acceptance takes place at the cashier’s table :
Lina pay the price/money/consideration
Cashier/supermarket money/consideration
= offer + acceptance= promise + consideration = Agreement
Auction: acceptance takes place at the fall of third knock hammer.
make offer
accept

21. ITT CASE LAW
iii. Display Of Good in Shop
- An offer is made when the customer puts the articles in the cashier’s desk.
• a) : Pharmaceutical Society of Great Britain v Boots
• The Def who ran a self service chemist shop, were charged under the pharmacy and Poison
Act 1933 which made it unlawful to sell certain poisons unless such sale was supervised by a
registered pharmacist. The case depended on whether there was a sale when a customer
selected items he wished to buy and placed them is basket. Payment was to be made at the exit
where a cashier was stationed and, in every case involving drugs, a pharmacist supervised the
transaction and was authorized prevent a sale.
• Held ; The display even with prices marked, was only and invitation to treat. A proposal to buy
was made when the customer put the articles in the basket. Hence the contract would only be
made at the cashier’s desk. As such the chemist in this case had not made an unlawful sale.

22. EXAMPLE (ITT)
iii. Display Of Good in Shop
b) Fisher v. Bell [1961] 1 QB 394
- Restriction of Offensive Weapons Act 1959 (UK) “offer
for sale” offensive weapons is illegal self service window
displaying a flick knife with a price tag – an invitation to
treat.

23. ITT
iv. Tenders
Invitation for tenders is invitation to treat. It’s also same
with bidder which act as an offeror
Case : Spencer v. Harding
The defendants advertised a sale by tender of the stock in trade
belonging Eilbeck & co. The advertisement specified where the goods
could be viewed, the time of opening for tenders and that the goods
must be paid for in cash. No reserve was stated. The claimant
submitted the highest tender but the defendant refused to sell to him.
Held:Unless the advertisement specifies that the highest tender would
be accepted there was no obligation to sell to the person submitting
the highest tender. The advert amounted to an invitation to treat, the
tender was an offer, the defendant could choose whether to accept the
offer or not.

24. 2
ACCEPTANCE

26. ACCEPTANCE
 When the person to whom the proposal is made signifies his assent
thereto, the proposal is said to be accepted.
 When it’s comes into existence after the offeree
unconditionally accepts the offer. A proposal when accepted,
become a promise.
 When 1 party introduces variations/conditions to the terms of the
latest proposal, there is no acceptance. Such variations/conditions
amount to a counter proposal/offer. No agreement.

27. ACCEPTANCE
 Sec. 2(b) Contract Act 1950 say that:
“ when the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted: a proposal, when accepted, becomes a promise;”
* Sec. 2(c) Contract Act 1950 state that:
“ The person accepting the proposal is “promisee”
• Sec. 9 Contract Act 1950
“So far as the proposal or acceptance of any promise is made in words, the
promise is said to be express. So far as the proposal or acceptance is made
otherwise than in words, the promise is said to be implied.”

28. ELEMENTS OF ACCEPTANCE
1. The acceptance of that proposal must
be absolute and unqualified by virtue
of section 7(a).
Section 7(a) “In order to convert a proposal into a promise
the acceptance must—
(a) be absolute and unqualified;”

29. ELEMENTS OF ACCEPTANCE
CASE : HYDE V. WRENCH [1840] 3 Beav. 344 ER 132
The Def. offered to sell his estate to the Pl. on 6 Jun for 1000 pound. On 8 June, in reply,
the Pl. made a counter proposal to purchase at 950 pound. When the Def. refused
to accept this offer on 27 June, the Pl. wrote again that he was prepared to pay the
original sum demanded.
The Court held that no contracted existed between them. The Pl. had rejected the
original proposal on 8 June so that he was no longer capable of accepting it later.

30. ELEMENTS OF ACCEPTANCE
• 2. An acceptance must be made within a
reasonable period under section 6(b).
“ by the lapse of the time prescribed in the
proposal for its acceptance, or, if no time is so
prescribed, by the lapse of a reasonable time,
without communication of the acceptance;”

31. Ramsgate Victoria Hotel Co. Ltd v
Montefiore [1866] LR 1 EXCH 109
• Montefiore applied for shares on 8 June but he was not told untill 23
November that his offer had been accepted and that the share had been
alloted to him and that the balance owing on the shares was now due.
Montefiore refused to pay and the company threatened to sue, allerging
breach of contract. The issue was whether the offer lapsed through
passage of time.
The court held that, the offer to purchase shares had not been accepted
within a reasonable time and the
offer had therefore lapsed. There was no
contract created.

32. ELEMENTS OF ACCEPTANCE
3. Acceptance must be expressed is some usual and reasonable manner, unless
the proposer prescribe the manner in which it is to be accepted under
section 7(b).
Sec . 7(b)
“ In oder to convert a proposal into a promise the acceptance must-
(b) be expressed in some usual and reasonable manner, unless the
proposal prescribes the manner in which it is to be accepted. If the
proposal prescribes the manner in which it is to be accepted, and the
acceptance is not made in that manner, the proposal may within a
reasonable time after the acceptance is communicated to him, insist that
his proposal shall be accepted in the prescribed manner, and not
otherwise; but, if he fails to do so, he accepts the
acceptance.

33. COMMUNICATION OF ACCEPTANCE
1. Acceptance is only effective when it has been communicated. It’s
can be made by word or mouth, letter, telex, facsimile or
recorded message.
2. In England, the communication of acceptance is complete upon
posting.
3. In Malaysia the Contract Act stipulates different times when the
communication of an acceptance is complete.
- Section 4(2)(a) To Offeror when it is put in a course of
transmission to him.
- Section 4(2)(b) To Offeree when it comes to the knowledge of
the Offeror

34. 3
CONSIDERATION

35. DEFINATION
1. Consideration is what distinguishes a bargain or contract
form gift.
2. Section 26, the general rule in a contract is that an
agreement without consideration is void.
An agreement made without consideration is void, unless—.

36. Guthrie Waugh Bhd v Malaippan
Muthucumaru [1972] 1 MLJ 35
• Court Held that there was no cause of action in the statement
of claim as the claim was base on deed of arrangement for
which there was no consideration,

37. DEFINATION
3. Section 2(d) defined the word consideration is when at the 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 abstains from doing,
something, such act or abstinence or promise is
called a consideration for the promise.

38. DEFINATION
1. Something of value in the eyes of the law (need not
be of market value).
2. Hence, the saying :”Consideration must be sufficient but
not adequate.”
Chappel & Co. Ltd v Nestle Co. Ltd [1960] AC 87
Phang Swee Kim v Beh I Hock [1964] MLJ 383

39. DEFINATION

40. DEFINATION

41. DEFINATION
3. Price to be paid for the promise. May consists of money, goods,
promise, suffering some detriment
(e.g. forbearance to sue).
In Curie v. Misa. The court held that a valuable consideration in the sense
of the law may consist either in some right, interest, profit or benefit
acruing to one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by the other.

42. DEFINATION
3. Price to be paid for the promise. May consists of money, goods,
promise, suffering some detriment
(e.g. forbearance to sue).
4. Consideration must flow from the propose in respect of any promise.

43. TYPES OF CONSIDERATION
1. Past Consideration
2. Executed Consideration
3. Executory Consideration

44. TYPES OF CONSIDERATION
1. Past Consideration
- Something wholly performed before the promise was
made.
- Under the English Law past consideration is not a
good consideration. However in Malaysia, Past
Consideration is a good consideration.

45. Kepong Prospecting Ltd & Ors v
Schmidt [1968] 1 MLJ 170

46. TYPES OF CONSIDERATION
2. Executed Consideration
- An act which has been done to fulfill the contract.
3. Executory Consideration
- An act or promise that will be done in future

47. Natural Love And Affection
• Agreement made on account of natural love and affection would be held to
be binding in Malaysia but not in England.

48. Natural Love And Affection
• Section 26(a) An agreement made
without consideration is void, unless—
it is in writing and registered
(a) it is expressed in writing and registered under the law (if
any) for the time being in force for the registration of such
documents, and is made on account of natural love and
affection between parties standing in a near relation to each
other;

49. Tan Soh Sim, Chan Law Keong & Ors v Tan
Saw Keow & Ors [1951] MLJ 21