Discharge by Agreement & 5 Sources Law in Msia

a. Under the law of contract:

(i) Explain the meaning of ‘proposal’ and ‘acceptance’. (3 marks)

(ii) Distinguish between a ‘proposal’ and ‘an invitation to treat’. (3 marks)

(iii) Explain how a contract may be ‘discharged by agreement’ under the Contracts Act, 1950. (3 marks)

b. N/A Sale of Goods Act 1957

c. State at least five of the sources of both ‘written’ and ‘unwritten’ law in Malaysia. (5 marks)

(MIA QE 2010/3 Q1, 20 marks)

Similar question was asked in:
MIA QE 2009/9 Q1 (a)(i) explain the conditions of accepting an offer.
MIA QE 2010/3 Q1 (a)(i) Explain the meaning of ‘proposal’ and ‘acceptance’.
MIA QE 2012/9 Q1 (b)(i) Explain the meaning of the terms ‘proposal’ and ‘acceptance’.
MIA QE 2014/3 Q1 (b)(i) Define “offer” and “acceptance”.
MIA QE 2015/3 Q1 (b)(i) What is the meaning of the terms ‘offer’ and ‘acceptance’?

(i) Meaning of 'Proposal' and 'Acceptance'.

S.2 (a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal;

S.2 (b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted; a proposal, when accepted, becomes a promise;

'Proposal' is when one signifies to another his willingness to do or to abstain from doing something, with a view to obtaining the assent (or agreement) of the other person to act or abstinence from acting on something.

'Acceptance' is when the person to whom the proposal is made signifies his assent (agreed) to do or abstain from doing something.

(ii) Proposal vs Invitation to Treat

See Invitation to Treat vs Offer in earlier posting.

There is no provision in the Contracts Act, 1950 on definition of 'Invitation to treat'. So, guidance is sought from common law. MIA model answer has the definition below:

Invitation to treat: a situation when the offer is actually an invitation to make a proposal. When this situation occurs, the offer is actually known as an invitation to treat.

Fisher v Bell (1961)
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1953)

(iii) Contract discharged by agreement.

This question is about the parties to a contract agreeing together to either:

1. call it off before even starting, meaning to no more carry out the promise at all. This may have another new contract being formed instead of the old one. Thus, rescind, or rescission. This is not repudiating (or revocation), as the relationship of principal - agent still exists.

2. call it off halfway, meaning to settle at some mid-way and be it.

Under the sub chapter of "Contracts which need not be Performed"

S.63 Effort of novation, rescission and alteration of contract.
If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the origin contract need not be performed.

(a) A owes money to B under a contract. It is agreed between A, B and C that B shall henceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.

(b) A owes B RM10,000. A enters into an arrangement with B, and gives B a mortgage of his (A’s) estate for RM5,000 in place of the debt of RM10,000. This is a new contract and extinguishes the old.

(c) A owes B RM1,000 under a contract. B owes C RM1,000. B orders A to credit C with RM1,000 in his books, but C does not assent to the agreement. B still owes C RM 1,000, and no new contract has been entered into.

S.64 Promisee may dispense with or remit performance of promise.
Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

(a) A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.

(b) A owes B RM5, 000. A pays to B, and B accepts, in satisfaction of the whole debt, RM2, 000 paid at the time and place at which the RM5,000 were payable. The whole debt is discharged.

(c) A owes B RM5,000. C pays to B RM1,000 and B accepts them, in satisfaction of his claim on A. This payment is a discharge of the whole claim.

(d) A owes B under a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts the sum of RM2,000. This is a discharge of the whole debt, whatever may be its amount.

(e) A owes B RM2,000, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a composition of fifty cents in the dollar upon their respective demands. Payment to B of RM1,000 is a discharge of B’s demand.

In both S.63 and S.64, the parties to the contract are thereof discharged of the contract by agreement.

(b) Not included in Syllabus.

(c) 5 sources of both ‘written’ and ‘unwritten’ law in Malaysia.

Please see earlier posts:

Sources of Malaysian Law 1
Sources of Malaysian Law 2 - ACCA Model Answer

Sources of unwritten law:

  1. Principles of English Law
  2. Judicial precedents
  3. Customs of natives of East Malaysia
  4. Adat Perpatih (Negeri Sembilan) and Adat Temenggung (Other West Malaysian States)
  5. Islamic law

Sources of written law:

  1. Federal Constitution
  2. State Constitution
  3. Legislation enacted by Parliament
  4. Legislation enacted by the State Assemblies.
  5. Subsidiary legislation by the local governments.

S.63-64 Contracts Act, 1950.
Earlier posts.