1606A COURT OF APPEAL, MALAYSIA 2016 FANN WOW GALLERY (APPELLANT) V. DATO RASHID (RESPONDENT) MEMORIAL FOR THE APPELLANT
TABLE OF CONTENT TABLE OF CONTENTS... 1 INDEX... 3 SUMMARY OF FACTS...4 SUMMARY OF PLEADING 5 1. THERE IS NO CONTRACT MADE BY FANN WOW GALLERY AND DATO RASHID SINCE IT IS MERELY AN INVITATION TO TREAT AND THERE WAS NO ACCEPTANCE MADE BY FANN WOW GALLERY TO DATO RASHID SINCE SILENCE DOES NOT AMOUNTED TO ACCEPTANCE..6 A. Display of goods is only an invitation to treat...6 B. There was no acceptance made by Fann Wow Gallery in response to Dato Rashid offer...8 C. Silence on part of Fann Wow Gallery to the offer made by Dato Rashid does not amount to acceptance.9 2. EVEN IF THE NOTICE DID AMOUNT TO AN OFFER, FAN WOW GALLERY HAS THE RIGHT TO REVOKE THE ACCEPTANCE DUE TO NO CONSIDERATION FROM DATO RASHID IN THE FORM OF DEPOSIT 11 A. Deposit as the consideration. 11 3. THE COURT ORDER OF SPECIFIC PERFORMANCE WAS INAPPROPRIATE..14 A. The painting of the Majestic Dawn is easily replaceable monetarily...14 1
B. Serene Ocean, another painting of Dong Ying, can be a good replacement to Majestic Dawn...16 4. CONCLUSION AND PRAYER FOR RELIEF...17 2
INDEX CASES Fisher v Bell [1961] 1 Q.B. 394 Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd [1953] 1 Q.B. 410 Rabophone Facilities Ltd v Blank [1966] 3 All ER 128, [1966] 1 WLR 1428. Felthouse v Bindley [1862] 11 CBNS 869 Guthrie Waugh Bhd v Malaippan Muthucumaru [1972] 2 MLJ 62, FC. Thomas v Thomas (1842) 2 QB 851 at p 859 Tweddle v Atkinson (1861) B & S 393 at p 169 Pollway v Abdullah [1974] 1 WLR 493 Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd [2007] 2 MLJ, CA Wallis v Smith (1882) 21 ChD 243 STATUTE Restriction of Offensive Weapons Act, 1959 Contract Act 1950 (Act 136) 3
SUMMARY OF FACT Fann Wow Gallery is an art dealer of traditional Chinese paintings from different artists. This year, Dong Ying produces five walls sized paintings which are described as rare and exquisite paintings by various art dealers website due to the Chinese birds and flowers theme had drawn using great freehand style. Fifty types of dye used for the paintings are prepared by the Dong Ying herself using variety of colorful raw stones found in Changliang Mountain, in northern Tibet, China. Fann Wow Gallery managed to buy all these paintings at RM1 million each. On Monday, 15 February 2016, Dato Rashid, a private collector of Chinese Art, visited the gallery and impressed with the Majestic Dawn. He immediately placed the order at the price of RM1.5 million. The painting will be delivered to his house in three working days. However, the painting also attracts Dr Lawrence s interest, an art collector. Dr Lawrence contacted Fann Wow Gallery to buy it at the price of RM2 million and the offer had changed Mr Kenny s mind, the owner of the gallery, which he instructed the delivery of the Majestic Dawn to Dato Rashid to be withhold. Mr Kenny offered Dato Rashid another Dong Ying s painting, Serene Ocean which is done with similar painting technique but of somber blend of colour. Dato Rashid commenced proceedings against the gallery for breach of contract and won. The judge ordered for rescission of the contract and specific performance due to the failure of the gallery to deliver Majestic Dawn. 4
SUMMARY OF PLEADING Counsel for appellant will submit on three issues which are; 1. THERE IS NO CONTRACT MADE BY FANN WOW GALLERY AND DATO RASHID. This due to the display of Majestic Dawn is only an invitation to treat. Even there is an offer from Dato Rashid to buy the painting, there is no acceptance from Fann Wow Gallery and silence on part of the gallery in response to Dato Rahshid s offer does not amount to acceptance. 2. EVEN IF THE DISPLAY OF MAJESTIC DAWN DID AMOUNT TO AN OFFER, FANN WOW GALLERY HAS THE RIGHT TO REVOKE THE ACCEPTANCE. This is due to no consideration from Dato Rashid in the form of deposit. Since there is no consideration from Dato Rashid, Fann Wow Gallery can revoke the acceptance made by Dato Rashid. 3. THE HIGH COURT ORDER OF SPECIFIC PERFORMANCE WAS INAPPROPRIATE Majestic Dawn is replaceable monetarily and Serene Ocean, another painting of Dong Ying, is a good replacement to Majestic Dawn. There is no contract between Fann Wow Gallery and Dato Rashid, thus the gallery should not have meet the obligation to deliver the painting to Dato Rashid. 5
1. THERE IS NO CONTRACT MADE BY FANN WOW GALLERY AND DATO RASHID SINCE IT IS MERELY AN INVITATION TO TREAT AND THERE WAS NO ACCEPTANCE MADE BY FANN WOW GALLERY TO DATO RASHID SINCE SILENT DOES NOT AMOUNTED TO ACCEPTANCE The action made by Fann Wow Gallery is constituted as an invitation to treat as it falls under category display of goods. A. DISPLAY OF GOODS IS ONLY AN INVITATION TO TREAT The general rule relating to display of goods is, a display of goods at a fixed price in a shop window 1 or on shelf in a self-service store 2 is an invitation to treat and not an offer. The offer is made by the prospective buyer and the retailer has the right to turn down or to reject the offer made. The display of the paintings on the wall of the gallery 3 is only an invitation to treat under form display of goods. In case of Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd 4 the defendant adapted one of their shops to a self-service system. The issue in this case is whether the display of the goods with prices attached was an offer or an invitation to treat. Lord Goddard affirmed that display of goods was only an invitation of treat due to the fact that an offer to buy was made when the customer put an article in the basket, and the defendant, the shop keeper was free whether to accept or to reject the offer. This 1 Fisher v Bell [1961] 1 Q.B. 394 2 Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd [1953] 1 Q.B. 410 3 Moot Problem, Para 3, Line 2-3 4 [1952] 2 QB 795, [1952] 2 All ER 456, affirmed [1953] 1 QB 401, [1953] 1 All ER 482 6
decision was being affirmed by the Lord Chief Justice Court of Appeal 5 in which picking up a bottle of medicine from the shelves does not amount to an acceptance of an offer to sell. It is an offer by the customer to buy and there is no sale affected until the buyer s offer to buy is accepted by the acceptance of the price. Thus, in application to the current case, the display of Majestic Dawn at Fann Wow Gallery is only an invitation to treat under the form of display of goods with the attached price. Therefore, it cannot be there was an offer made by Fann Wow Gallery to the customers. In contrast, Dato Rashid as the customer is the one who make offer at the price of RM1.5 million. The gallery owns the right to accept or reject the offer made by Dato Rashid following the illustration made in Pharmaceutical s case. 6 In another case 7, a shopkeeper displayed in his shop window a knife with a price ticket behind it. He was charged with offering for sale a flick knife, contrary to s 1(1) of the Restriction of Offensive Weapons Act, 1959. Lord Parker in decided the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer is made for the sale. 8 In conclusion, the display of goods with the price tag attached is only an invitation to treat. If the customer wants to buy such goods, he needs to show his intention by making an offer to offer to the owner of the goods. 5 [1953] 1 QB 401 at 802, [1953] 1 All ER 482 at 458, 459 6 The Learned Judge agreed with the illustration put forward during a case of a person who might go into a shop where books are displayed. In most book-shops customers are invited to go in and pick up books and look at the books even if they do not eventually buy them. There is no contract by the shopkeeper to sell until the customer has taken the book to the shopkeeper and offer to buy the book. However, the shopkeeper has the right either to accept or reject the offer made by the customer. 7 [1961] 1 QB 394 at 399, [1960] 3 All ER 731 at 733 8 Ibid 734 7
The act of Dato Rashid placing the order for the painting at a price of RM1.5 million 9 is an offer made by him to Fann Wow Gallery. Thus, it depends on Mr. Kenny either to accept or reject the offer. B. THERE WAS NO ACCEPTANCE MADE BY FANN WOW GALLERY IN RESPONSE TO DATO RASHID OFFER Under the rule of invitation to treat, the offer must come from the customer i.e. person who interested to get engaged into a legal contract. In order to create a legal and valid contract, acceptance must be present. 10 In regard to acceptance, even if the offeree has made up his mind to final acceptance, the agreement is not yet complete. There must be the communication of the acceptance to the offeror. 11 By referring to Malaysian Law of Contract, it is clear that acceptance of the offer by the offerree must be communicated to the offeror. 12 The communication of acceptance is completed when it has come to the knowledge of the offeror. 13 In applying to the present, Fann Wow Gallery does not inform their acceptance to Dato Rashid s offer. The mere fact stating that the wall-sized painting will be delivered to Dato Rashid house in three working days 14 is only an official standard of practice (SOP) of any company. 9 Moot problem, Para 4, line 4-5 10 Sinnadurai. V. (2011) Law of Contract (fourth Edition) Selangor, Malaysia : Lexis Nexis 11 Rabophone Facilities Ltd v Blank [1966] 3 All ER 128, [1966] 1 WLR 1428. The general rule undoubtedly is that, when an offer is made, it is necessary, in order to make a binding contract, not only that it should be accepted, but that the acceptance should be notified 12 Section 3 of the Contract Act 1950 (Act 136) 13 Section 4(2)(b) of Contract Act 1950 (Act 136) 14 Moot problem, Para 3, line 5-6 8
Although, at the first place, there may be an acceptance from Fann Wow Gallery in response to Dato Rashid s offer at the price RM1.5 Million, however Fann Wow Gallery change or revoked the acceptance before communication of the acceptance. C. SILENT ON PART OF FANN WOW GALLERY TO THE OFFER MADE BY DATO RASHID DOES NOT AMOUNT TO ACCEPTANCE An offeror may not arbitrarily impose contractual liability upon an offeree merely by proclaiming that silence shall deemed consent. 15 In the case of Felthouse v Bindley 16 the plaintiff, Paul Felthouse, wrote to his nephew, John, on 2 February, offering to buy his horse and adding, if I hear no more about him, I consider the horse mine at that price. The nephew made no reply to this letter, but intimated to the defendant, an auctioneer, who was going to sell his stock, that the horse was to be kept out of the sale. The defendant inadvertently sold the horse to a third party at an auction held on 25 February, and the plaintiff sued him in conversion. The Court of Common Pleas held that the action must fail as there had been no acceptance of the plaintiff s offer before 25 February, and the plaintiff had therefore, at the date, no title to maintain the conversion. In the present case, even though Dato Rashid placed an order to buy Majestic Dawn, 17 however, Fann Wow Gallery was silent by not giving any response to Dato 15 Leong. A.P (1998) Cheshire, Fifoot and Furmston s Law of Contract Second Singapore and Malaysia Edition. Kuala Lumpur. Butterworths Asia. 16 [1862] 11 CBNS 869 17 Moot problem, para 5, line 5 9
Rashid. The act of Fann Wow Gallery cannot be interpreted as an acceptance by applying the principle decided in the Case of Felthouse v Bindley. 18 18 [1862] 11 CBNS 869 10
2. EVEN IF THE NOTICE DID AMOUNT TO AN OFFER, FAN WOW GALLERY HAS THE RIGHT TO REVOKE THE ACCEPTANCE DUE TO NO CONSIDERATION FROM DATO RASHID IN THE FORM OF DEPOSIT. Even though the act of Dato Rashid placing an order for Majestic Dawn for RM1.5 million 19 is considered as an acceptance in response to Fann Wow Gallery, Mr. Kenny as the owner of the gallery can easily revoke the acceptance as there is no consideration from Dato Rashid as the promisee. Consideration for a promise may consist in either some benefit conferred on the promisor, or detriment suffered by the promise, or both. Consideration may be executed or executor, but it may not be past; it need not be adequate, but it must move from the promise. 20 A. DEPOSIT AS THE CONSIDERATION When a customer does not pay a deposit for the reservation nor provide credit card details it would be hard to say that "consideration" had passed from the customer to the restaurant and, in this instance it can be said that no legal contract exists between the parties. 21 The promisee should do some act to the promisor in consideration for the promise 22 whilst Section 26 23 provides that an agreement without consideration is void. 19 Moot Problem, Para 3, line 5 20 9(1) Halsbury s Law of England (4 th Edn Reissue) paragraph 728 21 Lilliwhite. L (2012, March 27).Wake-up call: When a booking becomes a legally binding contract. Retrieved from https://www.thecaterer.com 22 Section 2(d) of Contract Act 1950 (Act 136) 11
The Federal Court in Guthrie Waugh Bhd v Malaippan Muthucumaru, 24 whilst reversing the decision of Sharma J in the High Court 25, agreed with the propositions of law propounded by Sharma J in relation to the doctrine of consideration under Malaysian law. On the scope of sections 2 and 26 of the Contracts Act, his Lordship made the following comment 26 : In order for the contract to be valid and lawful, the contract must have consideration as stated in section 26(a). Otherwise the contract can be void at the operation of law. The contract must be a legal obligation and not merely moral, social or religious. 27 Besides, in the case of According to the case of Thomas v Thomas 28, the Learned Judge decided that in order to make a promise enforceable as a contract there must be 'something which is of some value in the eye of the law'. And this is the basic feature of the doctrine of consideration. Lord Judge in the case of Tweddle v Atkinson 29 decided that consideration must move from the promisee himself and this means that a person can only enforce a promise if he himself has provided consideration for it. And the consideration has 'some value in the eye of the law'. 30 In applying to the present case, Dato Rashid only placed the order for Majestic Dawn without give the consideration that have some value in the eye of law which can be interpreted as deposit. Dato Rashid only booked for the painting without giving any 23 Contract Act 1950 (Act 136) 24 [1972] 2 MLJ 62, FC. 25 [1972] 1 MLJ 35, HC 26 Sinnadurai. V. (2011) Law of Contract (fourth Edition) Selangor, Malaysia : Lexis Nexis 27 [1972] 1 MLJ 35 at 39, HC 28 (1842) 2 QB 851 at p 859 29 (1861) B & S 393 at p 169 30 Pollway v Abdullah [1974] 1 WLR 493 at p 497 see also Thomas v Thomas(1842) 2 QB 851 12
deposit that can confirm that his acceptance of the offer. According to the applicable law of contract in Malaysia, an agreement without consideration is void 31 By referring to the above cases and statutory provisions, it can be stated that giving acceptance only is not enough to create an agreement in the eye of law. The acceptance must come with the valuable and lawful consideration from the offeree to the offeror. Since there is no valid consideration which is deposit from Dato Rashid to Fann Wow Gallery, Fann Wow Gallery has the right to revoke the acceptance of Dato Rashid to buy the painting. 31 Section 26 of the Contract Act 1950 (Act 136) 13
3. THE COURT ORDER OF SPECIFIC PERFORMANCE WAS INAPPROPRIATE. A. THE PAINTING OF THE MAJESTIC DAWN IS EASILY REPLACEABLE MONETARILY. As a general rule, specific performance is applied in breach of contract actions where monetary damages are inadequate, primarily where the contract involves land or unique chattel. However, the application of specific performance in this present case is inappropriate since it involves the painting of 32 the Serene Ocean and it can be easily replaceable monetarily. The law grants damages to a party as monetary compensation for the damage, loss or injury that he suffered through a breach of contract. To succeed in respondent s claim for damages, he must show that it was the appellant s wrong or breach of contract that caused the respondent to suffer the said loss. The manner of evaluating the loss in terms of money is called the measure or quantum of damages. The general rule is that the appellant must pay monetary compensation to the respondent so as to put him in the same or similar position, as far as possible, as he would have been had the contract not been breached by the appellant. The purpose of the award of damages is to compensate the respondent rather than to punish or to recover any profit made by the appellant. a. Nominal damages. Where there is breach of contract, the party in breach is liable to pay damages. If the breach did not cause any loss to the plaintiff, the court will award the plaintiff nominal damages so as to acknowledge the fact that there was an infraction of the plaintiff s legal right by the defendant. Nominal damages may also be awarded 32 Parakunnam Veetill Joseph's Son Mathew v Nedumbara Kuruvilla's Son and Others 14
where the fact of a loss is shown but the necessary evidence as to its amount is not given. In Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd 33, the appellant and the respondent entered into a written agreement in April 1994 wherein the respondent transported goods to and from the appellant s factory premises. The agreement was for 10 years but the appellant terminated it in September 1997. The respondent claimed damages for the losses suffered due to the breach. The respondent tendered in evidence its audited statements of account did not show how the loss was attributable to the alleged breach. The deputy registrar awarded nominal damages of RM500 only to the respondent but the trial judge set it aside and awarded damages for loss of profit and loss of capital. The appellant appealed. The Court of Appeal allowed the appeal and restored the award of RM500 as nominal damages. The respondent failed to prove the contents of the statements of account and show how the contents were related to the alleged breach of agreement. The parties to a contract may agree beforehand what sum shall be payable by way of damages in the event of breach, as, for example, where a builder agrees that he will pay $50 a day for every day that the building remains unfinished after the contractual date for completion. A sum fixed in this manner falls into first class. First class: it may be a genuine pre-estimate of the loss that will be caused to one party if the contract is broken by the other. In this case it is called liquidated damages and it constitutes the amount, no more and no less, that the plaintiff is entitled to recover in the event of breach without being required to prove actual damage. 34 In this present case, it is liquidated damages as the intention is to assess the damages for breach of the contract. The respondent, Dato Rashid placed an order for Majestic Dawn at a price of RM1.5 million and the price is measurable. It 33 [2007] 2 MLJ, CA. 34 Wallis v Smith (1882) 21 ChD 243 at 267, per Cotton LJ 15
would, in addition, appear that in order to recover compensation, the plaintiff must prove the actual damaged suffered. 35 However since, Dato Rashid does not pay any deposit to Fann Wow Gallery, Dato Rashid does not suffer any damage due to the revocation of this contract. B. SERENE OCEAN, ANOTHER PAINTING OF DONG YING, CAN BE A GOOD REPLACEMENT TO MAJESTIC DAWN. The act of Mr. Kenny to offer Serene Ocean 36 to Dato Rashid as the replacement of Majestic Dawn is a great deal on the reason that Serene Ocean has the same quality and value as the Majestic Dawn. The quality and the value of Serene Ocean was proved by various art dealer s website who described every painting of Dong Ying as rare and exquisite due to the uniqueness of the Chinese birds and flowers theme or motive 37. Besides, all the painting drawn by Dong Ying including Serene Ocean was drawn using great freehand style painting technique 38. Besides, all of fifty types of dye used for the painting are prepared by Dong Ying herself, using the material of shale, a variety of colourful raw stones, obtained from Changliang Mountain in northern Tibet, China 39. Thus, apart from there is no contract between Dato Rashid and Fann Wow Gallery, specific performance is inappropriate because the painting of Serene Ocean can be a great and good replacement to Majestic Dawn as Serene Ocean has the same quality and rare and exquisite artistic value as the Majestic Dawn. 35 Sinnadurai. V. (2011) Law of Contract (fourth Edition) Selangor, Malaysia : Lexis Nexis at page 671-672 36 Moot Problem, Para 4, line 5-6 37 Moot problem, Para 2, line 4-5 38 Moot problem, Para 2, line 6 39 Moot Problem, Para 2, line 6-9 16
CONCLUSION AND PRAYER FOR RELIEF Based on the foregoing reasons, Fann Wow Gallery respectfully requests this honourable court l to ADJUDGE and DECLARE that: 1. There is no contract made by Fann Wow Gallery and Dato Rashid since it is merely an invitation to treat. 2. There was no acceptance made by Fann Wow Gallery to Dato Rashid since silence does not amounted to acceptance. 3. Even if the notice did amount to an offer, Fann Wow Gallery has the right to revoke the acceptance due to no consideration from Dato Rashid in the form of deposit. 4. The specific performance ordered by High Court was inappropriate since the unique Majestic Dawn is easily replaceable monetarily and Serene Ocean can be a good replacement to Majestic Dawn. 17