advice the relevant parties, we have to first prove that there is a contract
between the parties. A voluntary agreement which may bring legal obligations is
define as a contract. An agreement
is make up of an offer and an acceptance. The agreement would only be legally
enforceable if it is supported by consideration, intention to create legal
relationship, certainty, capacity and free consent.
The first two parties to discuss in this
case are Sau Hao and Ho Sang. On 8th December Sau Hao telephoned Ho
Sang and told him that she is
ever ready to depart her
piano for a reasonable price of within the range of $6,000. She asked Ho Sang whether he is interested or not. If yes, Ho Sang will have to communicate his intention to her in writing by Christmas.
The first issue to discuss is whether there
is an offer. Section 2(a) Contracts Act
stated that an offer is made when the offeror express to other his willingness
to do or to abstain from doing anything with a view to come by the assent of
the offeree to the act or abstinence. Professor Treitel provides a leading definition of offer which an offer is a
certain promise to be bound if the
partiular terms proposed is accepted. The person making an offer is known as an
offeror ; the person making an acceptance is called offeree.
Besides, an offer has to be clear and
precise. An offer is invalid if it is not clear. In Guthing v Lynn (1831) 2B & AD 232, an offer to pay more
if the horse found to be lucky is not a valid offer. It can be understood as
Sau Hou is making a clear offer since he signifies his willingness to sell the
piano within the range of $6,000. However, it is also an arguable statement
because the range of $6,000 is not an absolute number of amount. The statement
of “Are you interested?” can also be argue that
Sau Hao is just asking a question.
Assume that there is a clear offer. An offer
also has to be conveyed to the offeree.
Section 4(1) Contracts Act 1950, the
communication of an offer is complete
when it come to the knowledge of the person to whom it is made.
A person cannot accept an offer if he is
unaware of the offer. In R v Clarke (1972) 1 All ER 219, it was held that a short periods
of forgetful fell far short of amounting to a shortcoming of reason. In this
case, the offer is communicated to the offeree since Sau Hao had make a call to
Ho Sang for the offer. This is because a contract can be made by orally, by
conduct, or in writing.
On 15th December, Ho Sang tries
to contact Sau Hao through phone but she has already left for Guang Chou for
holiday. Ho Sang left a message with Sau Hou’s answering machine stated that he will be happy to buy her piano. Ho Sang asked “But don’t you think it
is a little bit too expensive?” and shows that he hope that Sau Hou would consider
lowering the price as he
can afford $5,000 by that time.
The second element to discuss is whether there is an acceptance. An
acceptance must be complete and unqualified which means an offer must be
accepted completely without any modifications or variations. If there is a
modification the offer, it is not an acceptance of offer but an counter-offer.
A party who made a counter-offer cannot later accept the original proposal by
the offeree as it was being rejected. In Hyde
v Wrench (1840) 3 Beav 33, it was held that a counter offer is made
this demolish the native offer so that it is no longer available for the offeree to accept.
counter-offer must be tell apart from a mere request for further information.
In Stevenson Jaques & Co. v
McLean (1880) 5 QBD 346, Lush J held the
plaintiff`s telegram at 9.42am was not a refusal of the original offer.
In this case, Ho Sang is making a mere request for further information as “But
don’t you think it is a little bit too expensive?” is only asking a question.
Besides, he did not modify the term as $5,000 is still within $6,000.
In addition, the general rule of an acceptance
is it must be conveyed to the offeror. In Entores Ltd v Miles Far East Corporation  EWCA Civ 3,
it was held that the acceptance must come to the actual knowledge of the
An acceptance can be accepted by usual and
reasonable manner of communication. In this case, the form of acceptance should
be manner of acceptance prescribed by the offer. For example, the case of Holwell Securities Ltd v Hughes  1 WLR 155 sets a precedent for overriding the postal rule. Therefore,
Ho Sang’s reply was not a valid acceptance as acceptance through answering
machine is not in the form of writing which is the manner of acceptance
prescribed by Sau Hou.
On 20th December, Ho Sang sent a
letter informing that he is willing to accept to purchase the piano.
There are three exception to the
general rule that the acceptance need not come to the actual knowledge of the
offeror which are unilateral contract, postal rule and estoppel. Postal rule is
the exception involved in this case. In Adams
v Lindsell (1818) 1 B &
Ald 681, it was held that acceptance is
complete upon posting. In this case,
it can be assume that the acceptance is made by Ho Sang by 20th
December. Still, it can be argue that the letter of acceptance is not sent by
On 21st December, Sau
Hou faxed a message to Ho Sang stated that if she did not hear from Ho Sang in
two days, she will be intended to revoke her offer.” Ho Sang’s letter reached
Sau Hou’s office at Hong Kong on 22nd December.
The next issue to discuss will be revocation
of offer. Assuming the postal acceptance is made on 20th December,
the revocation of offer is invalid refer to the case Byrne &
Co v Leon Van Tien Hoven & Co  5 CPD 344, it was held that the repeal of the offer must be conveyed
by the offeree before it comes into consequence.
On the other hand,
assuming there is no postal acceptance made by Ho Sang. The next issue to
discuss is revocation of offer. In Section 5(1) Contracts Act 1950, a proposal can be repeal as long as it has not
been accepted. An offer can be revoke by
communication, lapse of time, failure to fulfil condition and death or mental
disorder before acceptance. The type of revocation involve in this case are
communication and lapse of time.
In this case,
Sau Hou was intended to revoke the offer by communication. Although Sau Hou promise to open the offer for Ho
Sang until Christmas, he can still revoke the offer because there is no
consideration provided by Ho Sang. Yet, he was just
intended to revoke. Hence, there is no revocation of offer made by Sau Hou.
On 23rd December, Sau Hou placed an advertisement in the
newspaper offering her piano for sale for $8,000 and promise that she will give
all her music books to the first successful buyer who brings in $8,000 to her.
An offer must be differentiate
from an invitation to treat. An invitation to treat is not an offer but just an
invitation for others to make an offer. An invitation cannot be accepted but
only a stage of negotiation. An invitation to treat included display of goods,
advertisement, auction and inviting tender. In Partridge v
Crittenden  1 WLR 1204, it was held that the advertisement is generally an invitation to treat and not an offer to sell.
However, not all advertisement
is an invitation to treat. An unilateral advertisement is consider as an offer.
An unilateral offer is bond in return for an act. Anyone with the knowledge of
the offer who fulfil the required act is considered as accepting the offer. In
this case, we can presume that Sau Hou is making an unilateral advertisement.
This is because there is a term to accept the offer which is to bring in the
$8,000 to Sau Hou.
On 24th December, Sau
Hou faxed was read by Ho Sang and he immediately faxed a letter to Sau Hou
confirming his acceptance of the offer. On the same day, Sau Hou came back to
her office in Hong Kong and listened to the answering machine first. She was
too busy to read any fax messages on that day.
In this case, Ho Sang has made
an acceptance. However, the acceptance is not communicated to the offeror. Section 4(2)
Contracts Act 1950 stated
that an acceptance must come to the knowledge of the offeror. Therefore, there is no valid acceptance. Besides,
the reply by Ho Sang communicated to Sau Hou was answering through answering
machine but not in writing form. Hence, there is no valid acceptance.
On 25th December, Hoi
Man Keong from Shanghai took the earliest flight to Hong Kong to deliver cheque
to Sau Hao. Hoi Man Keong is the only person that wish to buy the piano. Sau
Hao refused to sell it to Hoi Man Keong, merely giving her excuse that he could
not understand the traditional Chinese writing in her music books anyway.
Assuming Sau Hou had made an unilateral
advertisement on 23rd December. Hoi Man Keong who was the first
person who came for the piano should be the offeree. This is because he had
fulfil the term which is to be the first person who bring in $8,000. The
leading case of the unilateral advertisement is Carlill v Carbolic
Smoke Ball Company  EWCA Civ 1. It was held that Mrs Carlill can redeem the repay as this is
an unilateral contract which she had accepted by completing the conditions
stated in the advertisement. Hence, the
acceptance was made by Hoi Man Keong in this case.
December, Sau Hou read Ho Sang’s fax message. She immediately call Ho Sang that
the deal is off because she has just sold the piano to Ting Lik for $12,000.
Assuming the revocation on 20th
December was invalid, Ho Sang may want to take a legal action against Sau Hou
for breach of contract. However, the revocation may be effective due to the
lapse of time. An offer may be revoked by the lapsed of time stated in the
contract or lapse of a reasonable time. One of the case example of the
revocation through the lapse of reasonable time is Fraser v Everett
(1889) 4 ky 512,
the court held that the reasonable of time depends on the subject of matter.
Manchester Diocesan Council for Education v Commercial and
General Investments Ltd  3 All ER 1593 is the case law for revocation due to the lapsed
of time stated in the contract, it was held that the way of acceptance
suggested for a tender was not binding, it has to be clear it the offeror wish
that the suggestion to be bind. In this case, the offer can be revoked after 25th December as
the lapsed of time stated by Sau Hou in the proposal was before Christmas.
From the explanation above, we
can know that the involve parties will be Sau Hou, Ho Sang and Hoi Man Keong.
There is no contract between Sau Hou and Ho Sang. Hence, there is no legal
obligation by Sau Hou. However, there is a contract between Sau Hou and Hoi Man
Other than that, the contract
between Sau Hou and Hoi Man Keong has to be supported by some other element to
be valid. It can be assume that there is certainty in the offer made by Sau Hou
because the term to accept the offer and the promise given is clear. We can
also assume that they had enter into the contract with free consent because
they going into the contract voluntarily.
Currie v Misa (1875) LR
10 Ex 153; (1875-76) LR 1 App Cas 554 stated that a valuable consideration in law
may include either in some right, interest, profit, forbearance, detriment,
loss or responsibility given, suffered or undertaken by the other. Professor Atiyah views consideration as sufficient reason for
enforcing the promise. There are three type of consideration which is
executory, executed and past consideration.
this case, Hoi Man Keong had given a executed consideration which is usually
being use in an unilateral contract. Consideration is executed when Hoi Man
Keong has performed an act for the promise given by Sau Hou. Therefore, Hoi Man
Keong had accepted the unilateral contract made by Sau Hao.
& Frank Co v JR Crompton & Bros Ltd  UKHL
2 stated that parties
to a contract must intended to create a relationship and alert that the breach
of contract should have led to the legal consequences. It had been said that,
the parties going into a contract must have the same intention communicated
either expressly or impliedly to enter into a legal obligations.
There are two presumptios to further
determining whether there is an common
intention between the parties which are social and domestic agreement or
commercial and business agreement. In this case, Sau Hou is obviously making a
commercial and business agreement. Therefore, there is an common intention
Capacity to enter a contract
means that only persons of sound mind and of age of majority are competent to
contact. In this case, Sau Hou who is capable to work in an office can be
presume as a working adult with healthy mental. Besides, Hoi Man Keong who is
able to go overseas and deliver cheque can also be presume as a working adult
with healthy mental.
As a conclusion, the contract
made by Sau Hou and Hoi Man Keong is legally enforceable. Hence, Sau Hou will
be guilty of a breach of contract if Hoi Man Keong take legal action against