Essay on Business Law
This paper is to discuss and analyze various elements in the formation of contract using legal provisions in Contract Act 1950 of Malaysia and legal precedence.
1. What is a contract?
According to section 2(h) of Contract Act 1950 (hereinafter referred to as CA1950), a contract is an agreement enforceable by law.
There is a common misconception that the term ‘agreement’ is interchangeable to the term a ‘contract’. In fact, this is legally incorrect.
An agreement is simply an unconditional acceptance to a definite offer. For example, Fathun finds her friend Sanya’s scooter to be attractive and expresses her willingness to buy it and offers a price. In response, Sanya accepted and told Fathun that she will sell it to …show more content…
According to Martin J. & Gibbins M. (1999), an offer is a definite proposal to enter into a contract. The offeror intends the offer to form a binding contract if that offer is accepted by the person whom it is made.
An offer is differed from invitation to treat such as request for proposals, job vacancy advertisements and product catalogues. An invitation to treat is merely an offer to make an offer. It is an invitation to given to the prospective offeror/s to make an offer.
Offers can be made to either and individual, a group or to the public as whole. For example, a car manufacturer can offer a certain customer (an individual) a reward to find manufacturing fault in his product. He also can offer his employees that any employee other than production staff (a group) who finds manufacturing fault will be rewarded. The same offer can be made to any customer (public at large) who finds manufacturing fault will be rewarded.
An offer can be made either orally, in written form or by conduct. Either way, it must be communicated to the offeree for him to accept it unconditionally or make a counter offer. 3.2.1. Legal provisions on offer:
According to S2 (a) and s2(b) of CA1950, an offer is an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person