1. 2.4 Consideration
1.1. According to Section 2(d) of the CA 1950:- "When at the desire of the promisor, the promisee or any other person has done or abstained (restrained) from doing, or does or abstains from doing, or promises to do or abstain from doing, something, such act or abstinence (act of refraining from something) or promise is called consideration for the promise."
1.2. Types of Consideration
1.2.1. Executory Consideration
1.2.2. Executed Consideration
2. 2.5 Capacity to Contract
3. 2.6 Intention to Create Legal Relations
4. 2.7 Certainty
5. 2.1 Introduction, Definition, and Basic Elements of a Contract
5.1. 1. DEFINITION OF CONTRACT
5.1.1. Contract Act 1950 - Section 2(h): "an agreement enforceable by law is a contract"
5.1.2. We need to ensure agreement is valid to be enforceable in law. If not, the parties involved will not obtain any redress (compensation) from the court for any damages suffered.
5.1.3. Based on Section 2(g) which states that "an agreement not enforceable by law is said to be void."
5.1.4. Not necessarily written. It can be in oral too.
5.1.5. Which agreement is a contract?
5.1.6. Section 10(1) states that "all agreements are contracts if they were made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void"
5.2. 2. BASIC ELEMENTS IN THE FORMATION OF CONTRACT
5.2.1. Offer
5.2.2. Acceptance
5.2.3. Consideration
5.2.4. Capacity
5.2.5. Intention
5.2.6. Free Consent
5.2.7. Certainty
5.2.8. Valid Object
6. 2.2 Definition of an Offer/Proposal
6.1. Under Section 2(a) CA 1950: When one person signifies (indicate) his willingness to do or to abstain (decline) from doing anything, with a view to obtaining the assent (express approval) of that other person to the act or abstinence (to the act of refraining from something), he is said to make a proposal."
6.1.1. Whom Can an Offer be Made to?
6.1.1.1. An Individual
6.1.1.2. A Class of Persons
6.1.1.3. The Public at Large
6.1.2. Offer vs Invitation to Treat
6.1.2.1. An invitation to treat is when you are inviting the other person to make you an offer, which you can accept or refuse. i.e a step before offer
6.1.3. Invitation to Treat
6.1.3.1. Advertisements in Newspapers Directed to the Public
6.1.3.1.1. An advertisement of a job vacancy in a newspaper is an invitation to treat while the application sent, or a response to the said advertisement, is actually an offer. It constitutes a binding contract once the application is accepted.
6.1.3.2. Display of Goods in Self-service Shops
6.1.3.2.1. This refers to sales made in supermarkets where the shop owners only display goods and invite customers to make an offer. A customer who chooses the goods that he wants to buy and puts them into the basket is said to make an offer. There is an acceptance when the cashier accepts the money as payment for the said goods at the counter, and this therefore constitutes a contract.
6.1.3.3. Auctions
6.1.3.3.1. In a public auction, the auctioneer invites the public to make an offer, that is to offer the highest bid. When those who attend make an offer, it is up to the auctioneer whether to accept it or not. An acceptance is considered to be made at the fall of the hammer.
6.1.4. Communication of Offer
6.1.4.1. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. -Section 4(1) of the CA 1950
6.1.5. Revocation of an Offer
6.1.5.1. According to Section 5(1) of the CA 1950, "A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards".
6.1.5.1.1. Section 6 of the CA 1950 provides 4 ways in which a revocation of an offer is made:-
7. 2.3 Acceptance
7.1. Definition
7.1.1. According to Section 2(b) of the CA 1950:- "When the person to whom the proposal is made signifies his assent (expression of approval) thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise.
7.2. Terms
7.2.1. Section 7 of the CA 1950 stated there are 2 conditions to an acceptance:-
7.2.1.1. Absolute and Unqualified
7.2.1.2. Be Expressed in Some Usual and Reasonable Manner
7.3. Form
7.3.1. An act of silence does not amount to acceptance since an acceptance must be communicated. (But, it depends whether the silence benefits the promisee.)
7.4. Time Limit
7.4.1. If a proposal prescribes a time limit for an acceptance to be made, such a proposal must be accepted within the prescribed time. Any failure will nullify (invalidate) the proposal. If no time is prescribed, acceptance then must be made within a reasonable time (Section 6(b) of the CA 1950)
7.5. Communication of Acceptance
7.5.1. According to general principle, if communication of acceptance is made by instantaneous conversation such as f2f tel., or fax, a contract is formed when communication of acceptance comes to the knowledge of the proposer.
7.5.2. Section 4(2) exception to the general rule. The contract binds both parties, that is the proposer and the promisee at two different times. Contract formed the moment the promisee posted the letter of acceptance. Whether the letter arrives to the proposer or not is not a relevant issue.
7.6. Revocation
7.6.1. According to Section 5(2), "A promisee can revoke an acceptance if the revocation is done within the permitted time."
7.7. Communication of Revocation
7.7.1. Revocation of acceptance must be communicated to the proposer. The same rule applies as in the communication of revocation of a proposal.