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Definition of offer

An offer is an explicit proposal to contract on certain terms, made with intention that it shall
become binding as soon as it is accepted by the person to whom it addressed as in Contracts Act
1950, Section 2(a) and Section 2 (b).
Section 2(a) Contract Act 1950 defines an offer to be "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 other words, an offer is an
indication to be legally bound under definite and prescribed terms.

Section 2(b) Contract Act 1950 defines an offer to be 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
For an offer to be valid, there must be an offerer (the person that making offer) and offeree (the
person that accept the offer) as in Contracts Act 1950, Section 2(c). If any of the party is missed,
the agreement will be void (Case: Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui [1984] 1
MLJ 169).
Section 2(c) Contract Act 1950 defines an offer to be the person making the proposal is called
the promisor and the person accepting the proposal is called the promisee
Case: Affin Credit (Malaysia) Sdn Bhd v Yap Yuen Fui [1984] 1 MLJ 169).
Fact: In this case the appellant had let a motor car to the respondent under a hire-purchase
agreement dated August 14, 1980. The respondent fell into arrears with the payment and the
motorcar was repossessed and sold by the plaintiff for the sum of RM12000.00. The appellant
brought and action for the balance outstanding under the hire-purchase agreement for the sum of
RM13147.97. The respondent denied the whole claim and sought the protection of the HirePurchase Act, 1967. He alleged that the appellant had
a) failed to comply with section 4(1) of the Act by failing to give him a written agreement
consisting of a summary of his financial obligations under the proposed hire-purchase
agreement as set out in Second Schedule to the Act,
b) failed to supply him with a copy of the hire-purchase agreement within fourteen days of
its execution, an obligation imposed under Section 5(1) of the Act.
Held:
The President of the Session Court found that both the provisions of Section 4(1) and 5(1) of the
Act had been breached and he dismissed the claim.
On appeal, Abdul Razak J. was inclined to agree with the appellant that on evidence there was in
fact had complied with the provision of section 5(1), but had violated section 4(1) by the plaintiff

for failure to serve the statement in the second schedule on the defendant before the hirepurchase agreement was entered. Therefore, appellant had failed to prove that it had entered into
a valid and proper agreement with the respondent. He therefore dismissed the appellants claims.

An offer must be communicated. Section 4(1) Contract Act 1950 states that the communication
of a proposal is complete when it comes to the knowledge of the person to whom it is made.
Section 3 Contract Act 1950 states that a proposal can be expressed or implied.

Definition of Invitation to Treat


An invitation to treat is an invitation to make an offer. It is not an offer but is an indication of
person`s willingness to negotiate a contract. So it is a pre-offer communication. An Invitation to
Treat can be show through advertisements, display of goods, tenders and auctions.
The following will be the case of invitation to treat:

Advertisement
Case: Partridge v Crittenden (1968)
Facts: appellant had inserted in a periodical entitled Cage and Aviary Birds a notice
Bramble finch cocks and hens, 25s each. It appeared under the general heading of
Classified Advertisement and the words offer for sale was not used. He was charged
with unlawfully offering for sale a wild live bird contrary to the provision of the
Protection of Birds Act 1954 and was convicted. He appealed.
Held (by Lord Parker) quashing the conviction: when one is dealing with advertisements
and circulars, unless they indeed come from manufacturers, there is business sense in
their being construed as invitations to treat and not offers for sale.

Display of goods
Case: Pharmaceutical Society of Great Britain v Boots Cash Chemist Ltd [1953]
Facts: The defendants were charged under the Pharmacy and Poisons Act 1933 (U.K.)
which provided that it was unlawful to sell certain poisons unless such sale was
supervised by a registered pharmacist. The case depended on whether a sale had occurred
in the self-service shop when a customer selected articles, which he desired to purchase
and placed them in a wire 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 to prevent a sale.
Held: the display was only an invitation to treat. A proposal to buy was made when the
customer placed the articles in the basket. Hence the contract of sale would only be made
at the cashiers desk. That being the principle, the shop owners had not made an unlawful
sale.
Tender

Case: Spencer v Harding (1870) LR 5 CP 561


Facts: The Defendants did not promise to sell the stock to the highest bidder for cash. The
Claimants sent a tender to the Defendants which, following the submission of all tenders,
was the highest tender. The Defendants refused to sell the stock to the Claimants.
The Defendants submitted that the circular was not intended to be a binding offer capable
of acceptance. Rather, it was merely a circular inviting others to make offers. The
Claimants submitted that the circular did constitute a valid offer and that the Claimant
had, by submitting the highest tender and attending all the necessary meetings, accepted
that offer.
Held: the circular was not an offer, but merely an invitation to gather tenders, upon which
the Defendants were entitled to act. Willes, J. held that the absence of any specific
wording such as "and we undertake to sell to the highest bidder" rebutted any
presumption that the Defendants had intended to be bound by a contract and
distinguished the present circumstances from instances of reward contract offers or an
offer to the world.

Auction Sales
Case: Payne v Cave (1789) 3 TR 148
Facts: Mr Cave made the highest bid for Mr Payne's goods at an auction. But then, Mr
Cave changed his mind and he withdrew his bid before the auctioneer brought down his
hammer.
It was held that the defendant was not bound to purchase the goods. His bid amounted to
an offer which he was entitled to withdraw at any time before the auctioneer signified
acceptance by knocking down the hammer. Note: The common law rule laid down in this
case has now been codified in many countries in variations of the Sale of Goods Act, e.g.
UK 1979 s57(2).
Held: the court held that Mr Cave was entitled to withdraw his offer at any time before
the auctioneer accepted it. The auctioneer's request for bids was an invitation to treat, and
each bid constituted an offer which could be withdrawn at any time until it's accepted,
and finally, the fall of the auctioneer's hammer constituted acceptance of the highest bid.