About 5 minutes later, Awang found another site run by Saloma Moden Sdn. Bhd a rival company of Rekod LAbu Labi offering the same set of CDs for RM75. Karim immediately moved to Saloma Moden's website and selected this set.He was asked to fill out a form giving his details of his orders and requiring him to click on the confirmation order icon if he wishes to purchase the item. Karim did so. He then immediately sent second email to Rekod Labu Labi canceling his previous order. 10 minutes later he received an e-mail, from Rekod Labu Labi in response to his original email informing him that his order had been accepted and was being processed.
Karim was also interested in purchasing a mobile hand phone through email order. He browsed the internet on email order and saw the site run by Global Mobile Company offering cheap mobile hand phones at RM300 each for students. He immediately made the order and filled out the form as required in the email. A few minutes later Karim received an email form Global Company confirming their acceptance of Karim's order.
Based on the facts given in the question above, we can highlight some main issues in order to advise Karim. Firstly the issues are whether there are legally agreement between Karim and Saloma Moden Sdn Bhd, Rekod Labu Labi Sdn Bhd, Global Mobile Company. Secondly, whether Karim can hold Saloma Moden Sdn Bhd to the price stated on website, whether revocation of offer by Karim to Labu Labi Sdn Bhd will take effective or not and lastly whether Karim can get back his money by return back the mobile phone that he had brought from Global Mobile Company.
A contract maybe defines as an agreement between two or more parties that is intended to be legally binding. The first requisite of any contract is an agreement consisting of an offer and acceptance. At least two parties are required. One of them, the offeror which makes an offer and the other is offeree which accepts the offer. According to sec 2a of Contract Act 1950, an offer is an expression of willingness to contract made with the intention that it shall become binding on the offeror as soon as it is accepted by the offeree.
A genuine offer is different from what is known as "invitation to treat" where a party is merely inviting offers which is then free to accept or reject. Invitation to treat also can be define as invitation to enter into negotiation. There are differences between offer and invitation to treat. When offer is made by a party, he intend and legally bound by his offer but when the invitation to treat is made by a party, he does not intend and legally bound by his invitation to treat. Thus, the acceptance of an offer can form a contract while acceptance of an invitation to treat does not result in contract.
Based on the fact of the question, Saloma Moden Sdn Bhd, Rekod Labu Labi Sdn Bhd and Global Mobile Company had advertised their product in the internet. Advertisements of goods for sale are normally interpreted as invitation to treat. This was illustrated in the case of Partriedge v Crittenden where the appellant inserted an advertisement in a periodical a notice "bramblefinch cocks and hens 25s each". It appeared under general heading 'classified advertisement' and words offer for sale were not used. He was charged with unlawfully offering for sale a wildlife bird contrary to the provision of the Protection of Birds Act 1954.It was held that there had been no offer for sale. When one is dealing with advertisement and circulars, there is business sense in their being construct as invitation to treat.
So, Saloma Moden Sdn Bhd, Rekod Labu Labi Sdn Bhd and Global Mobile Company advertise their goods in order to invite buyers to enter into negotiation or make an offer to them. The acceptance of invitation to treat is when Karim submit an orders to buy CD from Saloma Moden Sdn Bhd, Rekod Labu Labi Sdn Bhd and mobile phone from Global Mobile Company. At this moment also, Karim is said to make an offer to them.
An acceptance is a final and unqualified acceptance of the terms of an offer. To make a binding contract, the acceptance must exactly match the offer. The offeree must accept all the terms of the offer. According to section 2 (b) of Contract Act 1950, when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted become a promise. In section 3 of the same act stated that the communication of offer, acceptance of an offer and revocation of offer or acceptance are deemed to be made by any act of party offering, accepting and revoking by which he intends to communicate the offer, acceptance or revocation or which has the effect of communicating it. And based on section 7 (a) same act the acceptance must be absolute and unqualified. Acceptance must be communicated. Communications of an acceptance take place when it is brought to the knowledge of offeror. Refer to the question, the email by internet services is practically an instantaneous means of communication. It enables a massage to be dispatch by an email operated like a typewriter in one country and almost instantaneously received and type in another.
In the case of Entores Limited v Miles Far East Corporation, the plaintiffs in London made an offer to the defendants in Amsterdam. The defendants accepted by telex. The question was whether was the contract entered into in Amsterdam where the telex was sent or in London where it was received. Court of Appeal held that the contract was only complete when acceptance was received by the plaintiffs in London.
The first issues are whether there is a legally agreement between Karim and Saloma Moden Sdn Bhd and wheter Karim can hold Saloma Moden Sdn Bhd to the price stated on website. When Saloma Moden Sdn Bhd make an advertisement, they is said to make an invitation to treat. Karim accept the invitation to treat and make an offer by sent an order form through email to the company. The acceptance by Karim does not amount into contract. This is because when Saloma Moden Sdn Bhd make an invitation to treat, they does not intend and legally bound by their invitation to treat. Furthermore, in the question it is not stated that Saloma Moden Sdn Bhd had accept offer made by Karim to them.
So, since there is no acceptance at all, then there is no legal agreement between Saloma Moden Sdn Bhd and Karim. As the result of this, Saloma Moden Sdn Bhd can change the original price of the product and Karim can not hold Saloma Moden Sdn Bhd to the price stated on the website. However, if Saloma Moden Sdn Bhd had accept the offer made by Karim by reply their acceptance through email, then there is a legally contract between them and Saloma Moden Sdn Bhd can not change the original price that stated on the website. Same as Malaysian case of Coelho v Public Services Commission, where the respondent advertised in the Malay Mail inviting applications for the post of an Assistant Passport Officer. The applicant applied was subsequently accepted. Later, due to misconduct, the applicant was informed that his appointment on probation to be terminated. Judge Ong held that the advertisement was an invitation to treat and the resulting applications were offer. The respondent’s acceptance of the applicant’s application was unqualified and there was no question that his appointment was on probation. Therefore, the respondent was wrong in terminating his employment in the manner applicable to officers on probation.
The second issues are whether there are legally agreement between Karim and Rekod Labu Labi Sdn Bhd and, whether revocation of offer by Karim to Labu Labi Sdn Bhd will take effective or not. Here, when Karim made offer to buy CD form Labu Labi Sdn Bhd he is now known as offeror and the other party known as offeree. Same as in the case of Entores v Miles Far East, the question is when the acceptance was completed and where the contract was made between Karim and the company. The communication of acceptance was complete when it is brought to the knowledge of offeror (Karim) and the contract was made at the place where the acceptance was received. However, Karim had made a revocation to his offer 5 minutes after he offer to buy the CD. 10 minutes after he made the offer, he received an email from Labu Labi Sdn Bhd informing him that his order had been accepted.
Unfortunately, the next day he received a further email from Labu Labi Sdn Bhd stating that his second email which contains revocation of his offer had come too late. In this situation, the contract between these parties is made when Karim received an email from Labu Labi Sdn Bhd informing him that his order had been accepted. According to the section 4 (3) (b) of Contract Act 1950 the communication of a revocation is complete as against the person to whom it is made, when it comes to his knowledge. And by refer to section 5(1) of the same act stated that a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. As in the case of Byrne v Van Tienhoven(1880) where on October1, the defendants posted a letter in Cardiff to the plaintiffs in New York offering to sell them tin plates. On October 8, the defendants revoked their offer by post. On October 11, the plaintiffs accepted the offer by telegraph, and confirm their acceptance by a letter dated October 15. on October 20, the plaintiff received the defendant’s letter of revocation. It was held that the revocation of the offer was not effective because it was only communicated on October 20, which was after the acceptance of the offer on October 11.
By apply the law into this circumstances, Karim's revocation of offer will not take effective at all. This is because the email consist of the revocation only come to the knowledge of Labu Labi Sdn Bhd after the acceptance had been made which means the revocation come to the knowledge of offeree afterwards the acceptance being made. Thus, there is a contract between them and since the revocation of offer is not effective then Karim was entitled to pay RM100 to Labu Labi Sdn Bhd. But if the email of revocation came before the acceptance of the offer being made, then Karim is not enforceable to pay RM100 as the revocation of offer will take effective.
The third issues are whether there are legally agreements between Karim and Global Mobile Company and whether he can get back his money by return back the mobile phone that he had brought from Global Mobile Company. According to the question, there is a contract between Karim and Global Mobile Company when Karim's offer had been accepted by Global Mobile Company and in fact Karim had received the mobile phone and had used it. So, Karim cannot return back the mobile hand phone to the company because he had entered into contract with the company and the contract between them is valid. The reason of heavy maintenance fees of the phone will not make their contract become void. Unless there are undue influence, coercion, mistake and misrepresentation then the contract is said to become void or viodable. It is up to the innocent party ( Karim) to continue the contract or not. Thus, Karim cannot return the phone and cannot get back his money.
However, in section 10 (1) of Contract Act 1950 said that all agreement are contract if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declare to be void.
Who are competent to contract? According to section 11 of the same act, every person is competent to contract who is of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. Further in section 2 of Age of Majority Act 1971 stated that a person of majority is 18 years old. Below 18 years old can be label as minor. In English Law, a minor does not have the full capacity to enter into contracts and the contract entered into by minor can be divided in to 3 part which are valid (where contract for necessaries), voidable and unenforceable (contract for luxury goods).
However this is different in the Indian case of Mohori Bibee v Dhurmodas Ghose (1903). In this case it was held that contract enter by minor is void. A minor cannot enter contract with adults. An infant would not be able to obtain any damages for breach of contract.
In Malaysia, the Mohari Bibee case was followed in the case of Tan Hee Juan v Teh Boon Kiat (1934). Plaintiff who is a minor said that contract that involved a minor is said to be void. So there is no contract at all. So it was held that the plaintiff succeeds in his claimed and therefore Tan Hee Juan should not have to pay back to the defendant.
Later, in 1950 Contract Act had been made and in the section 69 of the Act provides that if a person, incapable of entering contract or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitle to be reimbursed from property of such incapable person. But the word necessary is not defined in the Act. But later, in the case of Government of Malaysia v Gucharan Singh & Ors, Judge Chang Min Tat concluded the word necessaries must be construed broadly and in any decision involving whether what are supplied are or are not necessaries, it is incumbent to have regard to the facts of the case, the conditions and circumstances in which the supply was made and the purposed which is served. Thus an infant is totally incompetent and incapable of entering into contract and there is no contract on which he can be sued.
By applying the law into the question, it was stated that Karim is 17 years old and he is a minor. When Karim cannot enter contact of buying CDs from Saloma Moden Sdn Bhd, Rekod Labu Labi Sdn Bhd and mobile hand phone from Global Mobile Company because he is an infant or minor. As the result, if Karim enter into these contracts, those contracts will become void. The main question regarding this circumstance is whether what is supplied is a necessary to the infant's condition in life. Based on the facts in this case, CDs and mobile hand phone are not necessaries to the minor's condition in life.
So, the contract between Karim and Global Mobile Company is said to be void.
When the contract between them in void, then Karim can return back the mobile hand phone and receive back his money. This is because under minor’s contract, the property transferred can be recovery. In section 66 of Contract Act 1950, when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it. This section had been used is the case of Leha bte v Awang Johari bin Hasim ( 1978) where it is the minor who has paid money in pursuance of a contract then it enables the minor to recover the money upon returning the property transferred to him. Apply to this condition, the Global Mobile Company have to give back money to Karim because the company had received advantages under the agreement.
Lastly, as the conclusion of the questions, there are contract between Karim and Rekod Labu Labi Sdn Bhd, Global Mobile Company but those contracts had become void as Karim is a minor. So, Rekod Labu Labi cannot enforce Karim to pay RM100 for the CD. As for Global Mobile Company, they are liable to give back Karim's money. Meanwhile, there is no contract between Karim and Saloma Moden Sdn Bhd. This is because there is no acceptance at all. So, Saloma Moden Sdn Bhd can change the original price and Karim cannot hold the company to the price stated on the website.
