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Case Study

2496 words - 10 pages


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Family Name


Given Names

Xiao Rong

Program/Intake & your program manager

Business Law/ 9/ Ms Karen Yap

Student No.



Business Law


Mr. David Chang

Assignment No.


Assignment Due Date

18th November 2008

DECLARATION: I hereby declare that the attached assignment is my own work. I understand that if I am suspected of plagiarism or another form of cheating, my work will be referred to the Academic Review Committee/Registrar, which may result in me being expelled from the program.



Submission Date

18th November 2008



On Monday, A proposed to B to buy B's car for $12,000 by post. It is primary to distinguish between an invitation to treat and an offer, as an offer once accepted creates a legally binding contract in which does not apply to the alleged acceptance of an invitation to treat. Therefore, the issue is whether the proposal from A is an offer or an invitation to treat.An offer is defined in Preston Corpn Sdn Bhd v Edward Leong [1982] as an intimation of willingness by an offeror to enter into a legally binding contract. Its terms either expressly or impliedly must indicate that it is to be become binding on the offeror as soon as it has been accepted by the offeree. The crucial factor that determines whether something amounts to an offer is the intention to be bound, which is usually shown by the wording.Conversely, an invitation to treat is a proposal to negotiate or an attempt to receive proposals. The person extending the invitation is merely indicating that he/she is willing to enter into negotiations but is not bound to accept any offers made.Nonetheless, in the English of Smith v Hughes [1871], the court emphasized that the important thing is not a party's real intentions but how a reasonable person would view the situation. This is due mainly to common sense as each party would not wish to breach his side of the contract if it would make him/her blameworthy to damages.The details of A's letter are omitted, thus making it the more difficult to assess the express and implied terms of the proposal, which would come in handy to determine whether or not there is an intention to be bound. Although buyers may have the inclination to negotiate on the terms, rarely will there be one who will do so after initiating a proposal. Once taken the initiative and had gone through the hassle to write out a letter and have it sent, this shows an...

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