Student ID : CGSSO00015314 Student Name : Abdulkadir Mohamud Sofe Course Code : BMLW5103 Course Name : Business Law Program : MBA Semester : THREE Assignment : Individual Assignment Facilitator : Abdulkadir Omar Katib Date due : 26/3/2014 Submission Date : 26/3/2014 1
PART ONE: 1.1 Advice to kelly.3 1.2 Advice to Tina.5 PART TWO: 2.1 Introduction...7 2.1 Title....7 2.2 Description...7 2.4 Fitness for purpose and merchantable quality...8 2.4.1 Goods must be reasonably fit for the buyer purpose....8 2.4.2 Goods must be of merchantable quality....9 2.5 Sales by sample......9 PART THREE: 3.1 Advise to Hamid 9 PART FOUR 4.1 Amendment of section 45....10 4.2 Substitution of section 46...11 4.3 Amendment of section 50........11 4.4 New sections 50A and 50B.... 12 4.5 New sections 51C, 51D and 51E..13 References...... 14 2
PART ONE: LAW OF CONTRACT 1.1 Advice to Kelly (claimant) The case explanation In October 2012, Maxine Sdn Bhd advertised its new notebook computer Maxira in its website. The advertisement clearly stated that for every purchase of Maxira, the buyer shall receive one SX mobile phone worth RM500. Kelly read the advertisement and decided to buy Maxira because she wants the SX mobile phone. On 20 November 2012, Kelly bought a Maxira notebook computer but to her disappointment, she was given a BZ mobile phone and not SX mobile phone. The seller told Kelly that as SX mobile phone stocks have finished, they are requested by Maxine Bhd to give BZ mobile phone which also worth RM500 as a replacement. Unilateral contract The case is unilateral contract: unilateral contract is a promise exchanged for performance or something else; only one promise exists. The person performing is not bound to perform the act, but once he performs, the promise becomes enforceable. Under common law, unilateral offer was not careful accepted until full completion of performance. Thus offer could be canceled in the middle of performance. More recent common law Gives that once offeree has begun requested performance, offer may not be withdrawn until offeree has had reasonable opportunity to complete performance. Part performance makes the offer irrevocable subject to completion of the invited performance in accordance w/ offer s terms (Miller and Jentz, 2011). Therefore, I would like to recommend to Kelly to claim from Maxine Sdn Bhd the SX mobile phone instead of accepting the BZ mobile phone. Because there is a rule which supports the unilateral contracts and defends the claimants. 3
Cases that are related include Carlill v Carbolic Smoke Ball Co (1893) The company inserted advertisements in a number of newspapers stating that it would pay 100 to anyone who caught flu after using its smoke balls as directed for 14 days. The company further stated that to show its sincerity in the matter it had deposited 1,000 at the Alliance Bank to meet possible claims. Mrs Carlill bought one of the smoke balls, used it as directed but still caught flu. She claimed the 100 reward but was refused, so she sued the company in contract. The company put forward a number of arguments in its defence: (a) It claimed that it had attempted to contract with the whole world, which was clearly impossible. The Court of Appeal held that the company had made an offer to the whole world and it would be liable to anyone who came forward and performed the required conditions. (b) The company further submitted that the advertisement was in the nature of a trade puff and too vague to be a contract. The court dealt with this argument by asking what ordinary members of the public would understand by the advertisement. The court took the view that the details of use were sufficiently definite to constitute the terms of a contract and that the reference to the 1,000 deposited at a bank was evidence of an intention to be bound. (c) The company also argued that the claimant had not provided any consideration in return for its promise. The court held that the inconvenience of using the smoke ball as directed was sufficient consideration. (d) Finally, the company submitted that there was no notification of acceptance in accordance with the general rule. The court held that in this kind of contract, which is known as a unilateral contract, acceptance consists of performing the requested act and notification of acceptance is not necessary. The court concluded that Mrs Carlill was entitled to recover the 100 reward 4
1.2 Advice to Tina The case explanation On 1st December 2012, Tina sent a fax to Riz Sdn Bhd to inquire for the best price which Riz Sdn Bhd could give them for the supplies of cat food Kitties which is imported from Thailand. On the same day, Danny, the sales manager of Riz Sdn Bhd called Tina and told her that the best price that they could give her is RM15 per bag of 1.5 kg. Tina told Danny that she will call Danny again once she decided the quantity to order. On 3rd December 2012, Tina sent a fax to Riz Sdn Bhd which requested for a delivery of 200 bags of Kitties to be delivered to her by 9th December 2012. As all the staff at Riz Sdn Bhd was having their family day on that day, the fax was only read by Danny on 4th December 2012. On the same day, Danny sent a fax to Tina which stated that the order shall be delivered to her on 7th December 2012. However, as Tina was having a meeting with her client, Mary outside her office on that day, she did not know about Danny s reply. During her meeting with Mary, Tina got to know that she could get Kitties from a factory outlet in Kota Bharu for the price of RM 10 for the 1.5 kg bag. Tina immediately called Danny at the office but as it was already 7 p.m, nobody picked up the phone. Tina left a message in the answering machine that she decided to cancel her order. On 5th December 2012, Tina received a call from Danny that the order cannot be cancelled as the delivery is already on its way from Thailand. I. Answer Generally, the proposer may cancel his proposal at any time before acceptance. Under Section 5(1) of the Contracts Act 1950, a proposal may be cancelled at any time before the communication of its acceptance is complete as against the proposer, but not after that (Rahman, 2011). 5
Acceptance can be made through different communication modes including telephone, telex, fax or oral so if the above mentioned communication modes used it is said that the communication of acceptance depends on the knowledge of the person to whom it is made.. But, if the acceptance is made by post or telegram, the acceptance is complete as against the proposer at the time when the letter of acceptance is posted. Therefore, such condition the revocation of the proposal must be made before the acceptance letter is posted. In the case of Tina the offer was from her and the acceptance was made by Danny early so I would like to advice to Tina not to revoke the offer or not to cancel the proposal since it is accepted (Rahman, 2011) II. Answer At the other side if postal service is used the answer may be the same or not very different. It may be little harder than the other communication modes. Because there a rule which says An acceptance of an offer becomes effective on dispatch (on being pl aced in an offi cial mailbox), if mail is, expressly or impliedly, an authorized means of communication of acceptance to the offeror (Miller and Jentz, 2011). Case Byrne v Van Tienhoven (1880) The defendants posted a letter in Cardiff on 1 October to the claimants in New York, offering to sell them 1,000 boxes of tinplates. On 8 October the defendants posted a letter withdrawing the offer, which was received by the claimants on 20 October. However, on 11 October the claimants telegraphed their acceptance which they confirmed by letter posted on 15 October. It was held that a revocation takes effect only when communicated to the offeree. The contract in this case came into existence when the defendants offer was accepted by the claimants on 11 October. The letter of revocation was ineffective as it was received after the acceptance was complete. 6
PART TWO: IMPLIED TERMS 2.1 Introduction In a sale of goods contract, there are terms which exist even though they are not expressly stated in the written contract, this statement is very big statement which illustrates or explains that the there are implied terms rather than the written terms in the contracts these implied terms include; the title, the sale of goods by description, the fitness for purpose and merchantable quality and lastly sale by sample (Rahman, 2011). The implied terms are those situations implied into specific contracts. This condition is provided under the sale of goods Act 1957. These implied conditions and warranties bind the contracting parties which are the buyer (Rahman, 2011). 2.2 Title The implied condition the seller has the right to sell the goods, and in the case of an agreement to sell and also he will have the right to sell when the property is to pass. This provides for a situation where the seller is unsure about his title to goods. He can sell them on the basis that he is transferring only such rights of ownership as he may have. If he does this, there is no implied condition that he has the right to sell the goods, but the sale is subject to implied warranties relating to freedom from third-party rights and quiet possession. In the case of Rowland v Divall [1923] 2 KB 500, the plaintiff bought a car from the defendant. After using the car for four months, the plaintiff discovered that it was a stolen car and he had to return it to the true owner. The Court of Appeal held that the defendant had breached the condition as to title and the plaintiff could recover the full price because of total failure of consideration. 7
2.3 Description In section 15 it is given a rule relating to sale of goods by description in Act 157. This gives that: Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description. ( Rahman, 2011) In addition, If the sale is by sample as well as by description, it is not sufficient that the bulk of the goods correspond with the sample if the goods do not also correspond with the description. (Rahman, 2011). Beale v Taylor (1967) The defendant advertised a car for sale as a 1961 Triumph Herald. The claimant inspected the car before he bought it. He later discovered that the vehicle consisted of a rear half of a 1961 Herald, which had been welded to the front half of an earlier model. The Court of Appeal held that the claimant was entitled to damages for breach of s 13, even though he had seen and inspected the car. He had relied to some extent on the description contained in the advertisement. 2.4 Fitness for purpose and merchantable quality In section 16 of the sale of goods Act 1957 gives that there is implied situation as the fitness and quality for any specific aim of goods supplied under the contract of sale. Goods must be reasonably fit for the buyer purpose. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller skill or judgement, and the goods are of a description which is in the course of the seller business to 8
supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose. (Rahman, 2011). Goods must be of merchantable quality Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality. (Rahman, 2010). In Wilson v. Ricket, Cockerall & Co. Ltd [1954] 1 All ER 868, fuel by its trade name ÂCoaliteÊ was ordered from a fuel merchant. The consignment was contaminated in that a detonator was embedded in the coal, resulting in an explosion in the fire-place when used. The Court held that the consignment as a whole was unmerchantable, having defects making it unfit for burning. 2.5 Sale by Sample Under Act 1957 In section 17 provides that in a contract for the sale of goods by sample, there is an implied situation of the bulk shall correspond with the sample in quality, the buyer shall have reasonable opportunity of balancing the bulk with the sample and the goods shall be free from any defect rendering them unmerchantable which would not be apparent on reasonable examination of the sample (Rhaman, 2011). PART THREE HIRE PURCHASE CASE Explanation of the case Hamid decided to buy a second hand car from Fast Cars Sdn Bhd (FC) During a discussion at FC s office, Hamid was requested to sign few blank documents by Yana, one of the staff at FC. Hamid was also informed that he has to pay 10% deposit once he confirmed his order for the car. 9
Hamid paid the deposit but 3 days after he signed the documents, Hamid decided to cancel his order and claim back the deposit as he needs the money to pay his daughter s college fees. However, Hamid was shocked when Yana told him that the order cannot be cancelled as the hire purchase agreement has already been signed. The case is about hire purchase contract and According to Rahman (2011) defined hire purchase as A letting of goods with an option to purchase and an agreement for the purchase of goods by installments (whether the agreement describes the installments as rent or hire or otherwise), but does not include any agreement: The hire purchase Act states that if the hirer cannot afford to proceed with the installment payment, he may terminate the hire-purchase agreement by returning the goods to the owner therefore, I would like to recommend to Hamid to use his legal and return his initial deposits since he signed blanket documents. PART FOUR: AMENDMENTS MADE TO THE HIRE PURCHASE ACT 1967 IN 2010 There are twenty six amendments to the fourty three year old hire purchase Act tabled in parliament for second and third reading. Let us first see and understand some of those amendments or modifications. 4.1 Amendment of section 45 Subsection 45(1) of the principal Act is amended:- (a) by deleting the word "or" appearing at the end of paragraph (a); (b) in paragraph (b), by substituting for the comma the word "; or"; and (c) by inserting after paragraph (b) the following paragraph: "(c) that is not printed in black,". 10
4.2 Substitution of section 46 The principal Act is amended by substituting for section 46 the following section:- "46. Penalty (1) Any person who is guilty of an offence under this Act or any regulations made thereunder for which no penalty is expressly provided shall, on conviction, be liable:- (a) if such person is a body corporate, to a fine not exceeding one hundred thousand ringgit, and for a second or subsequent offence, to a fine not exceeding two hundred and fifty thousand ringgit; (b) if such person is not a body corporate, to a fine not exceeding twenty-five thousand ringgit or to imprisonment for a term not exceeding three years or to both, and for a second or subsequent offence, to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding five years or to both. (2) Where a person, being a director, manager or an officer concerned in the management of the body corporate or was purporting to act in such capacity, is guilty, by virtue of section 47, of an offence under this Act or any regulations made thereunder for which no penalty is expressly provided, he shall be liable to the penalty provided for under paragraph (1)(b).". 4.3 Amendment of section 50 Section 50 of the principal Act is amended:- (a) in subsection (1):- (i) in paragraph (a):- (A) by substituting for the words "goods or any documents" the words "goods, document or computerized data"; and (B) by inserting after the words "such document" the words "or computerized data"; and 11
(ii) in paragraph (b), by substituting for the words "goods and document" the words "goods, document or computerized data"; (b) in subsection (2):- (i) by substituting for the words "documents and goods" the words "any goods, document or computerized data"; and (ii) by substituting for the words "the documents and goods" the words "the goods, documents or computerized data"; and (c) in subsection (3), by substituting for the words "document or goods" the words "goods, document or computerized data". 4.4 New sections 50A and 50B The principal Act is amended by inserting after section 50 the following sections: "50A. Access to computerized data (1) An Assistant Controller conducting a search under this Act shall be given access to computerized data whether stored in a computer or otherwise. (2) For the purpose of this section, "access":- (a) includes being provided with the necessary password, encryption code, decryption code, software or hardware and any other means required to enable comprehension of such computerized data; and (b) has the same meaning assigned to it by subsections 2(2) and (5) of the Computer Crimes Act 1997 [Act 563]. 50B. List of things seized (1) Where any goods, document or computerized data is seized under this Part, the Assistant Controller shall, as soon as practicable, prepare a list of the things seized and of the places in 12
which they are respectively found and deliver a copy of the list signed by him to the occupier of the premises which has been searched, or to his agent or servant, at the premises. (2) Where the premises are unoccupied, the Assistant Controller shall whenever possible post a list of the things seized conspicuously on the premises.". 4.5 New sections 51C, 51D and 51E The principal Act is amended by inserting after section 51B the following sections: "51C. Power of arrest (1) An Assistant Controller may arrest without warrant any person whom he reasonably believes has committed or is attempting to commit an offence under this Act if the person refuses to furnish his name and address or furnishes an address out of Malaysia or there are reasonable grounds for believing that he has furnished a false name or address or that he is likely to abscond. (2) An Assistant Controller making an arrest under subsection (1) shall without unnecessary delay make over the person so arrested to the nearest police officer or, in the absence of a police officer, take such person to the nearest police station, and thereafter the person shall be dealt with as provided under the law relating to criminal procedure for the time being in force as if he had been arrested by a police officer. 51D. Power to require attendance of person acquainted with case (1) An Assistant Controller making an investigation under this Act or any regulations made thereunder may, by order in writing, require the attendance before himself of any person who appears to him to be acquainted with the facts and circumstances of the case, and such person shall attend as so required. 13
(2) If any person refuses to attend as so required, the Assistant Controller may report such refusal to a Magistrate who shall issue a warrant to secure the attendance of such person as may be required by the order made under subsection (1). 51E. Examination of person acquainted with case (1) An Assistant Controller making an investigation under this Act or any regulations made thereunder may examine orally any person supposed to be acquainted with the facts and circumstances of the case and shall reduce into writing any statement made by the person so examined. (2) The person examined under subsection (1) shall be legally bound to answer all questions relating to such case put to him by the Assistant Controller, but such person may refuse to answer any question the answer to which would have a tendency to expose him to a criminal charge or penalty or forfeiture. (3) A person making a statement under this section shall be legally bound to state the truth, whether or not such statement is made wholly or partly in answer to questions. (4) The Assistant Controller examining a person under subsection (1) shall first inform that person of the provisions of subsections (2) and (3). (5) A statement made by any person under this section shall, wherever possible, be reduced into writing and signed by the person making it or affixed with his thumbprint, as the case may be, after:- (a) it has been read to him in the language in which he made it; and (b) he has been given an opportunity to make any correction he may wish.". 14
REFERENCE Miller, R. L., & Jentz, G. A. (2011). Business Law Today. London: South-Western, Cengage Learning. Rahman,A.,R. ( 2011) Business Law: Course Guide.(2nd ed ). Open University Malaysia (OUM). 15