Introduction

As we able to see that business law is essential for any

entrepreneurs when entering the world of business due to he or she

require to understand the legibility of each activity that require

where it is important for both parties which also it enable for the

entrepreneur to apply the in the court by obeying certain law where

in most cases it will involving the other party suing the company

for the breach of contract inside the law hence it important for the

entrepreneur to understand which and what is the legal contract and

the clause that will cause the contract for breach or it able to

terminate the contract.

Supported by:

Business law encompasses all of the laws that dictate how to form

and run a business. This includes all of the laws that govern how to

start, buy, manage and close or sell any type of business. Business

laws establish the rules that all businesses should follow. A savvy

businessperson will be generally familiar with business laws and

know when to seek the advice of a licensed attorney. Business law

includes state and federal laws, as well as administrative

regulations. Let's take a look at some of the areas included under

the umbrella of business law

Retrieve : What Is Business Law? - Definition & Overview Video -

Lesson and Example | Education Portal

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definition-overview.html#lesson

Valid contract

A contract that complies with all the essentials of a contract and

is binding and enforceable on all parties.

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There are few elements that require for the contract become valid

such as below:

Element for the formation valid contract

i. Intention To Create Legal Agreement

ii. Offer

iii. Acceptance

iv. Consideration

v. Capacity

vi. Acceptor

vii. Free Consent

viii. Proposer

i) Consideration

In contract law consideration is concerned with the bargain of the

contract. A contract is based on an exchange of promises. Each party

to a contract must be both a promisor and a promisee. They must

each receive a benefit and each suffer a detriment. This benefit or

detriment is referred to as consideration.

 

Consideration must be something of value in the eyes of the law -

(Thomas v Thomas) (1842) 2 QB 851. This excludes promises of love and

affection, gaming and betting etc. A one sided promise which is not

supported by consideration is a gift. The law does not enforce gifts

unless they are made by deed.

 

Whilst the common law strictly adheres to the requirement

of consideration (although in some instances the courts seem to go

to some lengths to invent consideration eg Ward v Byham [1956] 1 WLR

496, Williams v Roffey Bros [1990] 2 WLR 1153) equity will, in some

instances, uphold promises which are not supported by consideration

through the doctrine of promissory estoppel.

Retrieve from: Contract consideration

http://www.e-lawresources.co.uk/Consideration.php

Where we able to see that the consideration is part of forming

contract where the both parties decide to exchange of promises where

mostly this promises should brought benefits towards both parties

and this promises should be conducted under legal promises where it

enable for any of the party to apply the dissatisfaction regarding

the impact of the promises inside the court where it’s must be a

legal contract and it should come with a proof, however if the

promises it conduct illegal and against the law the result is the

case unable to use it inside the court.

There are 3 types of consideration which is:

Type of consideration

i) Present Consideration

Consideration which moves simultaneously with the promise, is called

‘present consideration’ or ‘executed consideration’.

Retrieve from: Business Law: Types of Consideration

http://mercantilelaws.blogspot.com/2012/05/types-of-

consideration.html

In the present consideration, the situation is occur during

that time where the consideration are made not before nor after by

the person where in present consideration the person require to

analyse and make decision for the promises.

Example,

Razak decide to purchase the Iphone from the Easy RED Mobile

store where during that time Razak and the Easy RED Mobile store

already manage a promises due both of the promisor and promisee

TypesConsiderat

ion

Past Consideration

Present ConsiderationFuture Consideration

already accept the terms and conditions that lead towards the action

of purchases where it consider as present consideration due Razak

make decision at the present time.

ii) Future Consideration

When the consideration on both sides is to move at a future date, it

is called ‘future consideration’ or ‘executory consideration’. It

consists of an exchange of promises and each promise is a

consideration for the” other

Retrieve from: Business Law: Types of Consideration

http://mercantilelaws.blogspot.com/2012/05/types-of-

consideration.html

While in future consideration that both parties require to

make a further consideration where the decision are made in the

future date where mostly it involving for further discussion

regarding the benefits and term of the promises where as we can see

that both parties are try to fully maximise their needs and want by

stating the terms and requirement inside the promises that both

party are agree to make.

Example,

Rasyeed make promises with Badri that he will pay Badri for

amount of RM 300 if he manage to deliver Rasyeed packages at the

present where it display that Rasyeed make a deal that he will pay

Badri in the future and not at the present, after Badri finish the

task given to him at the present.

iii) Past Consideration

 When something is done or suffered before the date of the agreement,

at the desire of the promisor, it is called ‘past considera-tion.’ It

must be noted that past consideration is good consideration only if it

is given by the promisee, ‘at the desire of the promisor. 

Retrieve from: Business Law: Types of Consideration

http://mercantilelaws.blogspot.com/2012/05/types-of-

consideration.html

This consideration occur in the past where the agreement

already establish however the promisee look back at the terms and

agreement that already made to bring it into the court where mostly

it involving the result of the contract or agreement is not fully

expected by the promisee where it cause dissatisfaction towards

individual.

Example,

Farah manage to acquire great result at the end of graduation day

where she expected for her father to kept the promises where Farah

father make a promise that he will buy Farah a new car if she

manages to score high grade at the end of graduation day hence the

promises that her father made never been fulfil which to display

that his father make agreement with Farah where the agreement still

continued up until the graduation date eventhough he make the deal

in the past.

Rules Of Consideration 

This rule of aspect must be followed by both promisor and promisee

in order for the promises to become valid and legal where there are

few rules in the consideration aspect which is:

Part payment of a debt isnot valid considerationfor a promise to forego

The consideration mustbe sufficient but need

An existing public dutywill not amount to valid

An existing contractualduty will not amount to

The consideration mustbe move from the

Rules ofconsiderat

ion

 1. The consideration must be sufficient but need not be adequate.

 

There is no requirement that the consideration must be market value,

providing something of value is given eg £1 given in exchange for a

house would be valid. The courts are not concerned with whether the

parties have made a good or bad bargain

Retrieve from: Contract consideration

http://www.e-lawresources.co.uk/Consideration.php

Chappel v Nestle [1960] AC 87 House of Lords

Nestle ran a sales promotion whereby if persons sent in 3

chocolate bar wrappers and a postal order for 1 shilling 6d

they would be sent a record. Chappel owned the copyright in

one of the records offered and disputed the right of Nestle to

offer the records and sought an injunction to prevent the

sales of the records which normally retailed at 6 shillings

8d. Under s.8 of the Copyright Act 1956 retailers were

protected from breach of copyright if they gave notice to the

copyright holders of the ordinary retail selling price and

paid them 6.25% of this. Nestle gave notice stating the

ordinary selling price was the 1 shilling 6d and three

chocolate bar wrappers. The question for the court was whether

the chocolate bar wrappers formed part of the consideration.

If they did it was impossible to ascertain the value they

represented and therefore Nestle would not have complied with

their obligation to give notice of the ordinary retail selling

price. If the wrappers were a mere token or condition of sale

rather than constituting consideration, then the notice would

be valid and Nestle could sell the records.

Held:

The wrappers did form part of the consideration as the object

was to increase sales and therefore provided value. The fact

that the wrappers were simply to be thrown away did not

detract from this. Therefore Chappel were granted the

injunction and Nestle could not sell the records as they had

not complied with the notice requirements under s.8.

Retrieve from: Chappel v Nestle

http://www.e-lawresources.co.uk/Chappel-v-Nestle.php

Where in this case it doesn’t important the value of the

offerer whether the value of the subjected offer by the promisor are

equally or unreasonable price due to the important that is as long

as it is accepted by the promisee and the value are reasonable with

the subjected offer hence the promisor able to place any price for

the subjected offer as long as it is accepted by the promisee.

2. The consideration must move from the promisee.

 

If a person other than the promisee is to provide the consideration,

the promisee cannot enforce the agreement

Tweddle v Atkinson [1861] EWHC QB J57 Queen's Bench Division

A couple were getting married. The father of the bride entered

an agreement with the father of the groom that they would each

pay the couple a sum of money. The father of the bride died

without having paid. The father of the son also died so was

unable to sue on the agreement. The groom made a claim against

the executor of the will.

Held:

The claim failed: The groom was not party to the agreement and

the consideration did not move from him. Therefore he was not

entitled to enforce the contract.

Retrieve from: Tweddle v Atkinson

http://www.e-lawresources.co.uk/Tweddle-v-Atkinson.php

It state that when making the promises, it is important to

state who entitle to responsible for the current state of the

promises that made between past promisor and promisee so that when

the past promisor or promisee past away or decease the agreement or

contract is able to persist in the future.

3. An existing public duty will not amount to valid consideration.

 

Where a party has a public duty to act, this cannot be used as

consideration for a new promise:

Collins v Godefrey (1831) 1 B & Ad 950 King's Bench Division

The claimant, Collins, had been subpoenaed to attend court as

a witness in separate court case involving the defendant,

Godefrey. Godefrey had sued his attorney for malpractice and

Collins was required by the court to attend as an expert

witness. In fact Collins never gave evidence but was required

to be on standby for six days in case he was called. After the

trial Collins gave Godefrey an invoice to cover his time spent

at court and demanded payment by the next day. Without giving

him the full day to pay, Collins commenced an action to

enforce payment.

Held:

Collins was under a public duty to attend court due to the

subpoena. Where there exists an existing public duty this

cannot be used as consideration for a new promise. Godefrey

was not required to pay him.

Retrieve from: Collins v Godefrey

http://www.e-lawresources.co.uk/Collins-v-Godefrey.php

Unless the promisor goes beyond their duty

(i) Glasbrook Bros v Glamorgan County Council [1925] AC 270 House of

Lords

The defendant owners of a colliery asked the police to provide

protection during a miner's strike. The police provided the

protection as requested and provided the man power as directed

by the defendants although they disputed the level of

protection required to keep the peace. At the end of the

strike the police submitted an invoice to cover the extra

costs of providing the protection. The defendants refused to

pay arguing that the police were under an existing public duty

to provide protection and keep the peace.

Held 3:2 decision:

In providing additional officers to that required, the police

had gone beyond their existing duty. They were therefore

entitled to payment.

Retrieve from: Glasbrook Bros v Glamorgan County Council

http://www.e-lawresources.co.uk/Glasbrook-Bros-v-Glamorgan-County-

Council.php

(ii) Ward v Byham [1956] 1 WLR 496 Court of Appeal

An unmarried couple had a child together and lived together

for five years. The father then turned the mother out of the

house and sent the child to live with a neighbour and the

father paid the neighbour £1 per week. The mother then got a

job as a live in house keeper and wished to have the daughter

live with her. The father agreed to allow the daughter live

with the mother and agreed to pay her £1 per week provided she

ensured the child was well looked after and happy. The father

made payments but then when the mother remarried he stopped

making payments. The mother brought an action to enforce the

agreement. The father argued that the Mother was under an

existing legal duty to look after and maintain the child and

therefore was not providing any consideration for the promise

to make payment.

Held:

By promising to ensure the child was well looked after and

happy she had gone beyond her existing legal duty and

therefore had provided consideration. She was entitled to the

payment.

Retrieve from: Ward v Byham

http://www.e-lawresources.co.uk/cases/Ward-v-Byham.php

4. An existing contractual duty will not amount to valid

consideration.

If a party has an existing contractual duty to do an act, this

act cannot be used as consideration for a new promise:

(i) Stilk v Myrick [1809] EWHC KB J58 King's Bench Division

The claimant was a seaman on a voyage from London to the

Baltic and back. He was to be paid £5 per month. During the

voyage two of the 12 crew deserted. The captain promised the

remaining crew members that if they worked the ship

undermanned as it was back to London he would divide the wages

due to the deserters between them. The claimant agreed. The

captain never made the extra payment promised.

Held:

The claimant was under an existing duty to work the ship back

to London and undertook to submit to all the emergencies that

entailed. Therefore he had not provided any consideration for

the promise for extra money. Consequently he was entitled to

nothing.

Retrieve: Stilk v Myrick

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Unless the party goes beyond their existing duty

(ii) Hartley v Ponsonby [1857] 7 EB 872 

Half of a ship's crew deserted on a voyage. The captain

promised the remaining crew members extra money if they worked

the ship and completed the voyage. The captain then refused to

pay up.

Held:

The crew were entitled to the extra payment promised on the

grounds that either they had gone beyond their existing

contractual duty or that the voyage had become too dangerous

frustrating the original contract and leaving the crew free to

negotiate a new contract

Retrieve from: Hartley v Ponsonby

http://www.e-lawresources.co.uk/Hartley-v-Ponsonby.php

or if they confer a practical advantage

(iii) Williams v Roffey Bros [1990] 2 WLR 1153

The defendants were building contractors who entered an

agreement with Shepherds Bush Housing Association to refurbish

a block of 27 flats. This contract was subject to a liquidated

damages clause if they did not complete the contract on time.

The defendants engaged the claimant to do the carpentry work

for an agreed price of £20,000. 6 months after commencing the

work, the claimant realised he had priced the job too low and

would be unable to complete at the originally agreed price. He

approached the defendant who had recognised that the price was

particularly low and was concerned about completing the

contract on time. The defendant agreed to pay the claimant an

additional £575 per flat. The claimant continued work on the

flats for a further 6 weeks but only received an additional

£500. He then ran out of money and refused to continue unless

payment was made. The defendant engaged another carpenter to

complete the contract and refused to pay the claimant the

further sums promised arguing that the claimant had not

provided any consideration as he was already under an existing

contractual duty to complete the work.

Held:

Consideration was provided by the claimant conferring a

benefit on the defendant by helping them to avoid the penalty

clause. Therefore the defendant was liable to make the extra

payments promised.

Retrieve from: Williams v Roffey Bros

http://www.e-lawresources.co.uk/cases/Williams-v-Roffey-Bros.php

If the existing contractual duty is owed to a 3rd party this may be

used as valid consideration for a new promise

(iv) New Zealand Shipping v Satterthwaite [1975] AC 154 Privy

Council

A contract for the carriage of a machine by ship to New

Zealand provided that the owners of the goods could not sue

the carriers or stevedores unless any claim was brought within

one year of the action giving rise to the cause of action. The

stevedores were independent contractors who were engaged to

load and unload the ship by the ship owner. A stevedore

damaged the machine whilst unloading it. The owner of the

machine brought an action against the stevedore after the

limitation period specified in the contract. The stevedore

sought to rely upon the clause in order to escape liability.

The owner of the machine argued that the stevedores could not

rely on the clause as they were not privy to the contract and

had not provided them with any consideration.

Held:

The stevedores had provided consideration in the form of

services of unloading the machine. Relying on the case

of Scotson v Pegg, there is nothing to prevent consideration owed

to a 3rd party being valid consideration for a new promise to

another party. Therefore the stevedores had protection from

the limitation clause. The claimant's action was unsuccessful.

Retrieve from: New Zealand Shipping v Satterthwaite

http://www.e-lawresources.co.uk/New-Zealand-Shipping-v-

Satterthwaite.php

(v) Scotson v Pegg [1861] EWHC Exch J2

A purchaser of some coal paid the defendant to carry and to

unload the coal. The claimant was the supplier of the coal who

had also paid the defendant to carry and unload the coal. The

claimant brought an action to recover the money paid arguing

the defendant was already under an existing duty to carry and

unload the coal and thus provided no consideration.

Held: 

An existing contractual duty owed to a 3rd party to the

contract can amount to valid consideration for a new promise.

Consequently the claimant could not recover the sums paid and

the defendant was entitled to get paid twice for doing the

same thing

Retrieve from: Scotson v Pegg

http://www.e-lawresources.co.uk/Scotson-v-Pegg.php

5. Part payment of a debt is not valid consideration for a promise

to forego the balance.

Part payment of a debt is not valid consideration for a promise to

release the debt in full

Pinnel's Case 1602 5 Rep, 117  Court of Common Pleas

The claimant was owed £8 10 shillings. The defendant paid £5 2

shillings and 2p. The claimant sued for the amount

outstanding.

Held:

The claimant was entitled to the full amount even if they

agreed to accept less. Part payment of a debt is not valid

consideration for a promise to forebear the balance unless at

the promisor's request part payment is made either:

a). before the due date or

b). with a chattel or

c). to a different destination

Retrieve from: Pinnel's Case

http://www.e-lawresources.co.uk/Pinnel%27s-Case.php

Part payment of a debt is not valid consideration for a

promise to forebear the balance unless at the promisor's

request part payment is made:

a). before the due date

b). with a chattel

c). to a different destination

This rule from Pinnel's case was affirmed by the House of Lords in:

Foakes v Beer (1883-84) LR 9 App Cas 605 House of Lords

Dr Foakes owed Mrs Beer £2,000 after she had obtained judgment

against him in an earlier case. Dr Foakes offered to pay £500

immediately and the rest by instalments, Mrs Beer agreed to

this and agreed she would not seek enforcement of the payment

provided he kept up the instalments. No mention was made in

this agreement of interest although judgment debts generally

incurred interest. Dr Foakes paid all the instalments as

agreed and Mrs Beer then brought an action for the interest.

Held:

Dr Foakes was liable to pay the interest. The agreement

reached amounted to part payment of a debt and under the rule

in Pinnel's case this was not good consideration for a promise

not to enforce the full amount due

Retrieve from: Contract consideration

http://www.e-lawresources.co.uk/Consideration.php

In UK there another rules of consideration that require in order

that agreement to become valid where,

7.The consideration must not be past.

 

Re McArdle (1951) Ch 669 Court of Appeal

Majorie McArdle carried out certain improvements and repairs

on a bungalow. The bungalow formed part of the estate of her

husband's father who had died leaving the property to his wife

for life and then on trust for Majorie's husband and his four

siblings. After the work had been carried out the brothers and

sisters signed a document stating in consideration of you

carrying out the repairs we agree that the executors pay you

£480 from the proceeds of sale. However, the payment was never

made

Held:

The promise to make payment came after the consideration had

been performed therefore the promise to make payment was not

binding. Past consideration is not valid.

Retrieve from: Re McArdle

http://www.e-lawresources.co.uk/Re-McArdle.php

Which to display that, it is important for promisor and

promisee to understand the when making consideration it is important

for promise to acknowledge the term inside the contract before agree

to make the agreement due to “ past consideration” consider as not

valid when the promises inside the agreement already being fulfil.

However,

Past consideration may be valid where it was proceeded by a request

Lampleigh v Braithwaite [1615] EWHC KB J17

The defendant had killed a man and was due to be hung for

murder. He asked the claimant to do everything in his power to

obtain a pardon from the King. The claimant went to great

efforts and managed to get the pardon requested. The defendant

then promised to pay him £100 for his efforts but never paid

up.

Held:

Whilst the promise to make payment came after the performance

and was thus past consideration, the consideration was

proceeded by a request from the defendant which meant the

consideration was valid. The defendant was obliged to pay the

claimant £100.

Retrieve from: Lampleigh v Braithwaite

http://www.e-lawresources.co.uk/Lampleigh-v-Braithwaite.php

For example when the promisor agree to offer the term inside

the promises as a request even though the agreement yet not been

fulfil by promisee, but since the promisee already accepted the term

and the offer of the promisor, the request become valid even though

it occur after the agreement.

Impact of the Consideration

Strengthen the contract agreement between both promisor and

promisee

By understanding and applying the consideration method

into the law, it enable to strengthen the contract

agreement and term within the promises due to both

parties are able to fully aware and understand the

consequences when accepting the term and condition that

stated within the promises.

The elements of agreement or promises between promisor and

promisee become invalid and unable to use it inside the court.

When making a decision it is important for the promisor

and promisee to understand the terms and condition within

the contract where for both promisor and promisee to

fully understand and acknowledge the elements that would

make the agreement to becoming valid.

Consideration explain the main motive of the promises

Consideration also may able to explain the main objective

of the contract hence that the promisor and promisee able

to review back the main motive or objective that they

both agree to make the contract which in most cases

inside the court they will review back to the main

objective of the agreement made by the both promisor and

promisee.

ii) Capacity

Capacity is term where it explain regarding the subject is in

a perfect or suitable condition which that in business law study

where there will entitle towards the person who able and capable to

make promises with the promisor which it involving both of mentality

and physically state of the promisee, however there are certain

types of people that are entitle for not capable or have the ability

to perform the promises with the promisor.

Where supported by,

The ability, capability, or fitness to do something; a legal right, power, or competency to perf

orm some act. An ability to comprehend boththe nature and consequences of one's acts.

Capacity relates to soundness of mind and to an intelligent understa

nding and perception of one's actions. It is the power either to cre

ate orto enter into a legal relation under the same conditions or ci

rcumstances as a person of sound mind or normal intelligence would h

ave thepower to create or to enter.

A person of normal intelligence and sound mind has the capacity to d

ispose of his or her property by will as he or she sees fit.

A capacity defense is used in both criminal and civil actions to describ

e a lack of fundamental ability to be accountable for one's action t

hatnullifies the element of intent when intent is essential to the a

ction, thereby relieving a person of responsibility for it.

An individual under duress lacks the capacity to contract; a child u

nder the age of seven accused of committing a crime lacks criminalca

pacity.

Retrieve from: capacity legal definition of capacity

http://legal-dictionary.thefreedictionary.com/capacity

Competent Promisee

A person who are capable to entitle or entrust to become a

promisee where the person should be in the well state whether mental

and physical which it is important for the promisee to read the term

and decide to accept the offer or reject the offer by the promisor

where to display that the decision that are made by the promisee are

base on the promisee own consideration and judgement which to

display that the promisee already acknowledge the terms and

consiquenses of the promises.

Capacity to contract means the legal competence of a person to enter

into a valid contract. Usually the capacity to contract refers to

the capacity to enter into a legal agreement and the competence to

perform some act. The basic element to enter into a valid contract

is that s/he much have a sound mind

Retrieve from: Capacity to Contract Law & Legal Definition

http://definitions.uslegal.com/c/capacity-to-contract/

Certain class of people are exempted from the category of people who

are capable of entering into contract:

Incompetent Promisee

There also certain types of person that are not capable and entitle

of making promises or future promises until the present of

interdiction that cause them to become an incompetent promisee where

these promisee are unable to make a promises. These are few of the

class of promisee or group of people that not entitle for making the

promises until the interdiction of present are being settle.

Infants/Minors

MentalIncapacity

BankruptClassof

Peopl

i) Infant/Minor

Person that below 18 years old are considers as minor where

they can’t officially made the decision by themselves unless they

come with guardians to make the contract for them such as the minor

still able to make any agreement or contract but their guardians

must available with them when they making the contract and the

guardians must fully aware and conscious when make the agreement for

the minor as representative where in law any agreement or contract

made by the minor are consider as temporally incomplete due to the

minor unable to make the valid and true decision when making

decision, however it is legal if the contract is related with the

minor basic of need for living such as food, cloth etc.

Supported by:

The law governing minors’ contact display how the law must

compromise between 2 principles. The first and more important is

that the minor must be protected against his own inexperience. The

second is that the pursuing this object the law should not cause

unnecessary hardship to those who deal with minors. The compromise

between these principles results in certain contracts with minors

being valid (contracts for necessaries and contracts of service)

other are void or voidable, and in some cases the minor may be

liable in tort or in equity.

Retrieve: Business Law (8th Edition)

And,

The Minors’ Contracts Act 1987

This act was introduced to protect minors, and provide guarantees,

when involved in contracts with adults. Section 2 and 3 of the act

outline rules with minors and contracts.

In Section 2, a contract would be enforced against the adult

where the adult provides a guarantee against the agreement

made by the minor.  Therefore, if a minor breaches the

contract, the adult would be responsible.

In Section 3, a court can have, for example, non-necessaries,

property or property representing it returned, if the minor

refuses to pay.

Retrieve: Capacity in Contract Law

http://www.inbrief.co.uk/contract-law/capacity-in-contract-law.htm

Example,

Rasyeed as a promoter and personal entrepreneur selling a

prepaid phone plan where in the deal if the buyer agree to buy the

prepaid phone plan, he or she acquire a mobile phone and the sim

card as well however it require for the buyer to pay the monthly

fees furthermore if the buyer unable to maintain the post paid plan

and decide to terminate the contract the buyer require to pay extra

fees toward the phone company where Rasyeed approach Diana with the

interesting offer where Diana were very excited and accept the offer

without further reading and understand the contract. However by the

end of that month Diana unable to continue the post-paid plan due

to she still studying in the high school and don’t have sufficient

expenses to pay the bill where the mobile phone company decide to

charge Diana with extra fees due to she unable to stay within the

contract period but then she refuse to pay the fees hence the case

bring to the court.

Held,

The contract or promises between Diana and the mobile phone

company are consider as not valid due to it turn out that Diana is

16 years old while she making the contract which she still under

consider as minor. Hence it proven that it require for the promisee

to achieve certain age range in order for the agreement or contract

to becoming valid.

ii) Mental Incapacity

In this part it cover the drunkenness section and under

influence of drug where the main concept in this part is the person

is unable to make a valid and precise decision when signing the

contract where mostly in this cases the person is unable

differentiate precisely when considering or making decision due to

the mental state are unstable during that time.

Under influence of drug is situation where the person who

require to sign or make the agreement is under drug influence where

the person brain are temporally mentally ill whether intentionally

or unintentionally hence the decision that are made is unclear due

to the user are lack of consciousness and consideration during

signing the agreement or contract which in most cases the other

parties will able to use this opportunity to dominate over the other

parties by applying their certain rule where the other parties lack

of consciousness and awareness when agreeing to sign the contract

which display that in this cases that it’s clearly that the person

who drug the other parties have the ascendancy over that person

where its legal if the situation is unable to be proven in the

court.

Supported by,

People who are intoxicated by drugs or alcohol are usually not

considered to lack capacity to contract. Courts generally rule that

those who are voluntarily intoxicated shouldn't be allowed to avoid

their contractual obligations, but should instead have to take

responsibility for the results of their self-induced altered state

of mind. However, if a party is so far gone as to be unable to

understand even the nature and consequences of the agreement, and

the other (sober) party takes advantage of the person's condition,

then the contract may be voidable by the inebriated party.

Retrieve: Who Lacks the Capacity to Contract? | Nolo.com

http://www.nolo.com/legal-encyclopedia/lack-capacity-to-contract-

32647.html

Example,

Alex being sue for breach the promises made between Alex and

Xena where Alex agree to pay Xena RM 50,000 and other extra

expansion fees if Xena car were confront with any accident during

their vacation at Las Vegas where during that time Alex drove the

car at night accompany by Xena.

Held.

However the sue are being rejected due to the report receive

by the health and forensic department proven that Alex is in

intoxication condition or drunk during drove the car that night

where to prove that within the making agreement or promises it is

important for the promisee is in well state by mentality and

physically and able to think wisely during making the promises hence

that also include the toxication and mental incapacity.

iv) Bankrupt

A person that owed or in debt towards other parties while he

or she is the state where unable to generate money for living yet

still in debt to other people are entitle bankrupt where it consider

one of incapacity of making contract nor agreement due the person in

debt are unable to settle the previous debt and unable to generate

more income to cover the liability which cause that person lose the

position for making any future promises with others where if that

debtor found proven guilty of making any promises while still in

bankruptcy state that person will be charge as guilty in the court

due to unable to finish the responsibility as debtor.

Example;

Razak unable to make a loan from any of the bank or loan

agencies due to Razak is being consider as in the bankruptcy state

where in the previous case that Razak unable to finish the payment

for the loan that he borrowed before and yet he still own the

financial company while most of Razak asset are being confiscated by

the financial agencies.

Held;

The court decide that Razak has lost the title as guarding or

promisee or promisor as the bankrupt where in future cases Razak

unable to make an agreement whether as promisor or promosee unless

Razak able to settle or clear the previous debt hence that Razak

title as bankruptcy are being drop by the court.

Impact Of Capacity

Determined the person capability of making promises

By having the emergence of capacity, it enable for the

promisor to determined or detect whether the promisee is

capable of making a valid promises or not which mostly it

able to aid the promisor to avoid from suffering extra

losses hence it enable for the promisor to determine the

condition of the person state as a promisee.

Further restrain the condition of making promises

The capacity concept also aid to further restrain the

condition of making promise where in most case to secure

the concept and terms of the agreement between both

parties which it enable to improve and strengthen the

agreement bond between the promisor and promisee hence it

create a quality transaction from the strict concept of

promises.

Enable for fair trade

By having the capacity it enable to encourage for public

to make more fair trade between the promisor and promisee

by adding and following the capacity term during making

the agreement hence it enable to create a legal and valid

promises that able to be used in the court within the

future where the promisee able to use it in the court

which most cases involving the promises are not being met

and deliver by the promisor.

Differentiate between competent and incompetent promisee.

Important of capacity is to differentiate between the

competent and incompetent promisee where by studying and

understanding the availability and terms of the capacity

the promisor easily detect whether the promisee are

consider as competent or incompetent promisee which is

crucial for the promisor hence that the promisor would

not make a waste decision when involving create a

agreement with the promisor where it able to reduce the

expenses and time consume of the promisor by finding the

conformable promisee.

Question 2

In the Contract Act 1950 are focusing on the elements that

will make the contract becoming valid where it cover all aspect of

the agreement from the beginning of making the promises until the

end of the promises which it involving both parties, the promisor

and promisee where both of this parties require to follow a stated

rules and term in order for the agreement to becoming valid and it

enable for any of the parties to use it the rules and term inside

the court in the future which mostly it involving the

dissatisfaction factor and the terms inside the promises are not

being fulfil by the promisor.

We are more focus at the Contract Act 1950 Section 4 (2) where

the content is more focusing on the elements that require to make

the contracts valid such the terms of deliver the contract and the

acceptance concept when accepting the agreement or contract where it

require both of the parties fully aware and conscious when making

and deliver the agreement or contract.

Section 4 (2) of the Contract Act 1950 states:

The communication of an acceptance is complete

i) As against the proposer, when it is put in a course of

transmission to him, so as to be out of the power of the acceptor;

and

ii) As against the acceptor, when it comes to the knowledge of the

proposer.

In this case we can relate it with the post and via e-mail where:

i. Via post

An acceptance is defined in Section 2(b) of Contracts

Act, 1950   as an unconditional and unqualified assent of

the offeree to all the terms of the offer-Neale v.

Merrett. Here, there is an acceptance because postal rule

applies.

According to Section 4(2)(a) of Contracts Act,1950, once

a properly stamped and properly addressed letter of

acceptance is posted into the mail box, the contract is

valid, even if the letter is lost. Under Section 4(2)(b)

of COntracts Act, 1950, the offeree can withdraw his

acceptance , before it is received by the offeror.

Through post method, the agreement become valid by

the time the promisee decide to reply and place the mail

into the post where it display that the promisee already

read the term and decide to reply the mail then it

proceed to last step where the contract or promises to

become valid which the promisee require to reply the

letter and send the letter through mail where by the time

the promisee already place the mail into the post the

promises or contract between promisor and promisee

already consider valid. However the promisee able to

claim back the contract as long as the mail do not reach

at the hand of the promisor but the agreement still

consider as valid and it can be accepted and still able

to be argue into the court.

Supported through case Adams v Lisdsell where,

Adams v Lindsell (1818) 106 ER 250

The defendant wrote to the claimant offering to sell

them some wool and asking for a reply 'in the course

of post'. The letter was delayed in the post. On

receiving the letter the claimant posted a letter of

acceptance the same day. However, due to the delay

the defendant's had assumed the claimant was not

interested in the wool and sold it on to a third

party. The claimant sued for breach of contract.

Held:

There was a valid contract which came in to

existence the moment the letter of acceptance was

placed in the post box.

This case established the postal rule. This applies

where post is the agreed form of communication

between the parties and the letter of acceptance is

correctly addressed and carries the right postage

stamp. The acceptance then becomes effective when

the letter is posted.

The case explain that the claimant already

agree upon the terms and promises offer by the

defendant however the letter of offer receive late

to the claimant where the date that claimant should

reply whether claimant is on the date that claimant

receive the letter hence due to the delay of the

answering from the claimant, the defendant sell it

to the third parties, soon after the claimant

discover that the promises already sold towards

third parties, the claimant decide to sue defendant

for breaching the promises.

Where to display that eventhough the letter

may come late it still consider as valid agreement

whereby the time there are acceptance of letter

between both parties even the letter may come delay.

ii. Via e-mail

Through e-mail procedure, the agreement is valid by

the time of the promisee click the “send” or accept

button on the web page where the promisor should display

the terms and rules applied in the web page which the

terms and the rules should display clearly, reasonable to

read and understandable by the promisee.

Example;

Shafeeqah interested in purchase a camrecorder made

by the Rafiq one of the personal entrepreneur that

selling gadgets and mobile devices on internet. In order

to make purchase with Rafiq, she require to send the item

detail towards him which explain exactly the Shafeeqah

request hence, soon Rafiq reply through e-mail that state

the price that she require to pay and the explanation of

terms and condition that state by Rafiq as entrepenuers.

Shafeeqah agree to accept the offer by reply the e-mail

towards Rafiq and click on the send button after reading

and fully understand the terms applied.

Held;

By the time of Shafeeqah click on send button, it

proven that Shafeeq already read all the terms and

condition applied by Rafiq and agree to make promises

with him as one of the customer where the agreement

become valid which if Shafeeqah decide to revoke back her

promises or acceptance she can be sue.

Differences Between E-mail and Post servicesPost Services Services E-mail ServicesVia Mail Sending Method Via InternetPostal Stem Elements Requirements Internet ConnectionsBy placing the mail

into the post mail Acceptance Method

By clicking on

“Accept” or “Send”

button through e-mail

As state above via the post services method it require to send

a mail for the promisor and promisee which they able to communicate

through mail service while the e-mail services require internet

connection which to display that each of the method require a

specific traits for the promisor and promisee to create a promises

or agreement where mostly people would prefer the email services

method due to its convenience and low cost rather than via posting

services.

There are few elements or traits that require in order for the

post services and e-mail services to become serviceable which is

when applying postal services the promisor and promisee require to

apply the postal stem at each of the mail before send it due with

the availability of the postal stem with the mail then the mail

become valid while for e-mail services the promisor and promisee

only require internet connection where now days are at ease to

connect with digital web world where it enable to reduce the

difficulty among user when communicate.

Lastly is the method of acceptance where it display the time

of the promises made and agree by both promisor and promisee where

both of them already had specific method and it different from one

another which via posting the promises become valid when the

promisee decide to place the mail into post mail and by the time the

mail is inside the post mail it become a valid process however if

the promisee decide to revoke back the promises it important that

the promises require to acquire the mail via any method as long as

the mail didn’t receive to the promisor but the agreement still

consider as valid while, via e-mail the acceptance procedure occur

by the time of the promisee agree to click on the button that

display the traits of acceptances regarding the promises made by

both promisor and promisee.

Impact of New Technology advance in Business Law

Increase violation of privacy (negative)

By emergence of new technology in the business law there will

be possibility of violation privacy among the web user due to

their personal information are kept inside the server,

eventhough the server security are highly sophisticated but

still criminals will develop a new and counter method in order

to breach the security.

Reduce the difficulty to acquire related data or cases

(positive)

With the existence of the new advance technology able to

reduce the difficulty of requirethe related data or case in

business law where the user able to acquire the data much more

easier by excessing the web network where inside the web

network display a lots of research data made by other research

where it is share for public use.

Increase the various method for crime net (negative)

It also enable for increasing the various of method for crime

net where inside the new work there is a lot number of

anonymous user that able to fraud the user back ground

information or create a false promises towards promisee where

mostly they are just prefer to earn money much more easy

rather than hardwork.

Ease the transaction between promisor and promisee (positive)

Lastly apply the advance technology into the business law it

enable to reduce the difficulty of communication that

encounter by the promisor and promisee where to display the

crucials key for making promises is the communication method

whereby through the network frame it enable for the

information and message deliver at more efficient where the

more ease of communication method the easier for the message

delivery services.

Question 3

Rental Agreement Contract

1. Rahman Syaufiq, the owner of Angel Beats Music Shop and………………………………….,Renter agree to oblige to the following rental.

2. Equipment Being Rented. Owner agrees to rent those followingequipment towards the renter:-

MusicEquipment

Number

Guitar(Electronic)Guitar BassAmplifierMicrophoneMicrophoneStandPianoGuitar(Acoustic)Drum (Set)Drum (Parts)

3. Duration Of Rental Period. Then begin at ……………… am/pm on………/………/……….. and will end at ……………….. am/pm on ………/………./…………

4. Payment Amount. The rental amount is (RM)……………. Per {select: oneday/week/year}.

5. Payment. Renter require to pay (RM)…………………. to owner to cover therental period specified in paragraph 3.

[ ] Security Deposit. In addition to rent, Renter hasdeposited (RM)…………………...with owner. This deposit will be appliedtoward any additional rent and any amounts owed for any additionalrent and any amount owed for damage to or loss of the Equipment,which Owner and renter agree has the current value stated inparagraph 8. Owner will return any unused portion of the deposit.

6. Delivery. Owner will deliver equipment towards Renteron…........./…………/…………..at

[ ] Owner Place

[ ] Renter Place

[ ] Other Place

State:……………………………………………………………………………….

7. Late Return Policy. If returns the Equipment to Owner after thetime and date the rental period ends. Renter will pay Owner a rentalcharge of (RM)……………………..per day for each day or partial day beyondthe end of rental period until the Equipment is returned. Owner ableto subtracted these rental charges from the security deposit.

8. Damages or Loss. Renter acknowledge the responsibility ofreceiving the Equipment in good condition except as follows:……………………………………………………………………………………

Renter will return the Equipment to Owner in good condition exceptas noted above.

Agreement

Agreement or promises is a contract or form of terms that

connected between both promisee and promisor where inside the

agreement explain the terms and condition that promisor and promisee

agree upon which it require for both parties to take

responsibilities in order for the agreement to become valid which

during accepting the agreement the condition of the promisee require

in proper state whether both mentality and physically state so that

when the promisee agree the to accept the agreement or promises, the

promisee have fully conscious and well state hence to display the

promisee that agree regarding the terms and consequences that might

occur during or after the contract.

Where it supported by;

A negotiated and usually legally enforceable understanding between

two or more legally competent parties.

Although a binding contract can (and often does) result from an

agreement, an agreement typically documents the give-and-take of

a negotiated settlement and a contract specifies the minimum

acceptable standard of performance.

Retrieve from: What is agreement? definition and meaning

http://www.businessdictionary.com/definition/

agreement.html#ixzz3CN4x49V6

Term

Term is a statement which creates contractual obligations

between e’ parties, breach o which will result in e injured party

being able to sue.

Types of Term

i) Express

The term that are clearly vision by the person where it is clear

state inside the agreement where if any of this term being breach

that person able to being sue

Where the express term are more focus on the main objective of

the promises that agree by promisor and promisee where the other

subjected matter are not affected the promises unless the other

subject matter are the terms that stated inside the promises where

the promisor agree to fulfil and offer towards the promisee.

Types Of Terms

Express

Condition

Exclusion Clause

Warranty

Implied

ii) Condition

The term that explain the purpose of the agreement where it consider

as the root o e agreement. If the person breaches the condition, the

agreement can be either:

i) Terminate the contract

ii) Compensation

iii)Terminate & Compensation

which to display that if one of the promises condition are being

breach then the promisee able to either to terminate the contract or

the promisee able to claim for compensation or the promisee are

entitle to claim both of them where according to the Associated

Metal Smelters LTD v. Tham Cheow Toh,

"Associated Metal Smelters LTD. v. Tham Cheow Toh" . The defendant had agreed

to sell the plaintiff a melting furnace that would have a

temperature not lower than 2600°F, but rather supplied the plaintiff

with a furnace which did not reach the required temperature. In this

case, the plaintiff claimed damages for breach of warranty of a

metal melting furnace.

Retrieve from: legal wizard: Conditions and Warranties

http://ramalebang.blogspot.com/2010/04/conditions-and-

warranties.html

Which the case above state that the Tham Cheow Toh unable to

fulfil the main purpose of the promises where he require to offer a

metal furnace that able to sustain more than 2600 (Fahrenheit)

however the AMS company claim that the metal furnace unable to

sustain and yet it only function is only reach below 2600

(Fahrenheit) where the main purpose of the AMS agree to purchase the

metal furnace is to melt the metal where melt able to melt above

than 2600 Fahrenheit where the metal furnace that offer by the Tham

Cheow Toh are proven unable to fulfil those demands hence the AMS

claim for damages for breach of warranty of metal furnace.

Where relate to the Rental Agreement Term which, the promisor

should provide the equipment based on the main purpose of the

promises however if the promisor unable to fulfil the main purpose

of use inside the promises, the promisee able to sue the promisor

for breaching the contract.

iii) Exclusion clause

The term that explain the limitation or exception towards the person

from any liabilities that will or not occur during the contract

Where in the exclusion clause state the limitation or requirement

where it display clearly toward promisee before apply the services

due to avoid any future damages when the promisee agree to use the

services offer by the promisor which there are few require for the

exclusion clause to be acceptable and valid towards any service

which is:

Requirement for exclusion clause

i) Simultaneous

The clause must be before and not after making the contract

ii) Reasonable Sufficient

The clause must be reasonable and clearly state towards the reader.

iv) Implied

The term that are not state inside the agreement however if the

person breach the term it able for the other parties able to sue the

person.

Characteristic of implied term

i) Reasonable

ii) Necessary to give business efficacy to e contract

iii) “It does without saying”

v) Warranty

Warranty is a part where it display the guaranty of the object or

promises offer by the promisor where it claim that the subjected

offer are being deliver in good condition where it supported,

An assurance, promise, or guaranty by one party that a particular statement of fact is true

and may be relied upon by the other party.

Warranties are used in a variety of commercial situations. In many

instances a business may voluntarily make a warranty. In other

situations the law implies a warranty where no express warranty was

made. Most warranties are made with respect to real estate,

insurance, and sales and leases of goods and services.

Retrieve from: warranty legal definition of warranty

http://legal-dictionary.thefreedictionary.com/warranty

The warranty concept is being able to be proven more in the case of Bettni v Gye

(1876), below:

Bettini v Gye (1876) QBD 183

Bettini agreed by contract to perform as an opera singer for a three

month period. He became ill and missed 6 days of rehearsals. The

employer sacked him and replaced him with another opera singer.

Held:

Bettini was in breach of warranty and therefore the employer was not

entitled to end the contract. Missing the rehearsals did not go to

the root of the contract.

Retrieve: Bettini v Gye

http://www.e-lawresources.co.uk/Bettini-v-Gye.php

Where in this case it state that the Bettini is agreed to sing as

opera singer for 3 month when sudden he struck by illness that

require for him to rest for 6 days which at the same time the

employer are frustrated and decide to replaced him with another

opera singer. Soon the Bettini discover that he being replace and

decide to sue Gye for breaching the contract law where the subject

gated offer is that Bettini will sing as Opera singer for 3 month.

Hence He able to won over Gye due to the main purpose of the

promises that Bettini agree was that he will sing for 3 month where

it not include the MC during his sickness.

Related to Rental Agreement give, the promisor responsible to inform

the condition of the equipment towards promisee before the promises

establish, furthermore the promisee also should acknowledge the

responsibility and the consequences that state inside the agreement

if any of the equipment are discover damages or broken or the state

of the equipment return are not as the same as was it given for the

first time.

Conclusion.

By able to understand and study the consideration and terms of

the agreement it proven that it is essential for both promisor and

promisee to understand and acknowledge the responsibility and the

terms that require to be follow in order for the agreement or the

promises to become valid which it able to be use inside the court

for the future references where it mostly involving the

dissatisfaction of promises that is not deliver or kept by it

promisee due to the terms of the promisee or agreement is not being

fulfil by the promisor. It display it is crucial for the promisor to

deliver and kept the promises that agree within the agreement hence

it important to study the legal term and condition for the agreement

between the promisor and promisee to become valid and legal that

able to be use inside the court.

Recommendation

Study the term and condition

By studying the term and condition both

promisor and promisee able to fully understand the

elements of the term that will make the promises

become valid and able to be use inside the court in

the future hence it enable for the case to be used

as references or secondary data for further study in

law.

Understand the term

It is important for the promisor and promisee

to acknowledge the term and the apply function where

it able to aid the promisee to claim the

compensation or termination or both of them for the

contract if the promisor unable to kept the terms or

promises inside the agreement hence it proven that

by understanding and apply the correct term the

agreement able to be proven valid.

Avoid from breaking the promises

By able to fully the term and condition, and

fully practices those study, it enable for the both

of parties whether the promisee and promisor to kept

their promises and continue their agreement hence in

most cases it able for the organisation to increase

the organisation profits by continue to supply and

conduct an honest and liable agreement with the

consumer.

Fully Analyse the Term and Consideration of the Agreement

By able to fully analyse the terms and

consideration of the Agreement, it enable for

the promisor and promisee to form a litigable

and valid contract that able to be used inside

the court if any conflict that occur which

related with the promises where it able for

either the promisor nor the promisee to avoid

from executed any illegal action that might

cause for liability towards the owner.

References

businessdictionary. (n.d.). definition/condition. Retrieved August 31,

2014, from businessdictionary:

http://www.businessdictionary.com/definition/condition.html

businessdictionary. (n.d.). definition/term-contract. Retrieved August 31,

2014, from businessdictionary:

http://www.businessdictionary.com/definition/term-

contract.html

LegalDictionary. (n.d.). Acceptance. Retrieved August 31, 2014, from

LegalDictionary:

http://www.duhaime.org/LegalDictionary/A/Acceptance.aspx

LegalDictionary. (n.d.). PostalRule. Retrieved August 31, 2014, from

LegalDictionary:

http://www.duhaime.org/LegalDictionary/P/PostalRule.aspx

oxforddictionaries. (n.d.). definition/english/warranty. Retrieved August

31, 2014, from oxforddictionaries:

http://www.oxforddictionaries.com/definition/english/warranty

uslegal. (n.d.). capacity-to-contract. Retrieved August 30, 2014, from

uslegal: http://definitions.uslegal.com/c/capacity-to-

contract/

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consideration/