acceptance contract act 1950

1. 1
Case Analysis of Kenanga Innovasi Sdn Bhd v Toh Kin Lam & Ors
By: Latifah Kaiyisah Bt. Mohd Latib
Type of Court: High Court (Melaka)
Judge: Low Hop Bing
Date: 5th April 2006
The case citation is :
Malayan Law Journal Reports/2006/Volume 4/Kenanga Innovasi Sdn Bhd v Toh Kin Lam & Ors -
[2006] 4 MLJ 590 - 5 April 2006
The Fact
The plaintiff as purchaser claims for the refund of RM250,075 being the excess of the purchase
price paid to the defendants as vendors in respect of the sale and purchase of 24 lots of agricultural
land.
The defendants' counterclaim is for RM112,946.93 being the balance of interest due by the plaintiff
to the defendants.
In 1996, the plaintiff paid the defendants a total sum of RM972,573.30, leaving a balance of
RM6,252,409.71 ('the balance sum').
The defendants had given the plaintiff four extensions of time viz up to 31 October 1996. Upon the
plaintiff's default in paying the balance sum at the expiry of the fourth extension, the defendants
terminated the Sale and Purcahse Agreements (SPA) on 6 May 1997.
Issues:
Whether the oral negotiation between the plaintiff and defendant were unqualified acceptance for
contract.
Held, allowing the defendants' counterclaim with costs:

2. 2
(1) From the affidavits, it is abundantly clear that the parties have embarked on several
discussions in relation to the extensions of time and the variation of
interest for such extensions. The evidence adduced by the parties respectively in their
affidavits pertaining to the existence or otherwise of the oral agreement on the variation
is sharply conflicting. Therefore the safer approach as set out by Chang Min Tat FJ (as
he then was) for the Federal Court in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979]
2 MLJ 229 (refd), ie to refer to and rely on the witness' (here, the deponents') acts and
deeds which were contemporaneous with the event and to draw reasonable inferences
from them, adding that judicial reception of evidence requires that the oral evidence (in
the instant case, the affidavits) be critically tested against the whole of the other
evidence (in the instant case, by way of affidavits) and circumstances of the case, and
that plausibility should never be mistaken for veracity
(2) Although negotiations for extensions of time and the variation were oral in nature,
these terms and conditions have been expressly stated in the letters of the defendants'
solicitor to the plaintiff and the plaintiff's solicitor. The fact that the plaintiff's chief
executive officer had found it necessary to request the defendants for a waiver of the
variation for the month of January 1997 is an unqualified acceptance of the variation
and an affirmation of the oral supplementary agreement between the parties, which
clearly fortifies and strengthens the defendants' version
(3) The payment of interest for the four extensions and the forfeiture of 10% of the
purchase price are separate and distinct elements, to both of which the defendants are
entitled (see Paramount Corporation Bhd v Mulpha Pacific Sdn Bhd [1999] 5 CLJ 539
(refd), HC). There can be no doubt that the granting of the four extensions was subject
to the variation which has to be paid whether or not the SPA has been terminated

3. 3
Introduction
First and foremost to go further into this case, we should know the meaning of a contract. It’s
acontract when there is an agreement enforceable by law1 It is still a contract even though the
agreement were make through unwritten means if there is a mutual promises between the offeror
and acceptor, in s2 when the person to whom the proposal is made signifies his assent thereto,
the proposal is said to be accepted, becomes a promise.2 Furthermore on the case above, is the
plaintiff claim on defendant termination of contract if accepted by the court or vice versa.
Analysis
The main legal issue discussed within this case is section 7 of Contract Act 1950 which
deal with the communication, acceptance and revocation of proposal. In section 7 acceptance
must be absolute and section 7 (a) be absolute and unqualified. Thus the plaintiff had agreed to
purchase the land from the defendants and the purchase price was to be apportioned according to
the defendants' respective acreage in the land. Shown that there is contract between plaintiff and
defendant. Plaintiff claimed a refund because the defendant has terminated the contract of Sale
and Purchase Agreement(SPA). However, plaintiff claim is backfire due to the fact that the
defendant has given the plaintiff four extension of time to pay the balance sum of the interest of
the purchase and the plaintiff has failed to do so.
Taking the case of Carlill v Smoke ball as references, where Carlill has accepted an offer
made by Carbolic thru an advertisement. As Carbolic state in their advertisement saying that
whoever buy and use their smoke ball, and still contracted the influenza hence will receive
£1000 that Carbolic. The court held that the Carbolic argument was that if this was an offer the
rule was that acceptance must be communicated. The judges are pointing out that the principle of
requiring communication is not an absolute. Here the general rule argument of requiring
communication was rejected because it was established that the performance of the required act
was acceptance. Lindley LJ pointed out there was no need to communicate to the Company that
performance had begun. If communication was needed, then this was communicated to the
1 (Alsagoff,2015)
2 (Board, 1stJuly 2015)

4. 4
Company when Carlill applied for the £100 after catching the flu. If this was done before the
Company had .revoked the offer then there is a binding contract.3
Here it shows that the acceptance of Kenanga on the SPA is absolute hence it is for the
plaintiff to pay the balance sum. Furthermore, the letter of the defendant’s solicitor to the
plaintiff and plaintiff’s solicitor expressly stated the terms and condition even though the
extension of time and variation of negotiation were oral in nature. Hence there is acceptance by
the plaintiff to the time frame of paying the interest. So the act of paying the interest after the
expired date of the time frame is an act of breach of the contract. This is because plaintiff have
fail to perform the term of contract between the defendant.
Conclusion
The plaintiff claim is subject to be otiose as the defendant counterclaim is approve as there is no
breach of contract on the defendant parties. Thus the plaintiff is subject to pay the balance sum of
RM112,946.93 being the balance of interest due to the defendants and RM6,252,409.71 ('the
balance sum').
3 Carlill v Carbolic Smoke Ball