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Appendix B

An Approach to Answering Problem Questions This appendix explains an approach to answering problem questions in contract. There is no model answer to any examination problem question. However a systematic approach to answering such questions will ensure that the question is answered clearly, logically and thoroughly. There is a four-step approach to answering problem questions: 1. Identify the issue or issues in the question; 2. State the law on the issue or issues; 3. Apply the law to the facts of the problem; and 4. Conclusion. Students can also apply this approach to any other law subject and not just necessarily on the subject of contract. Those studying Shariah law subjects will also find this approach practical. SAMPLE QUESTION On 1 November, Ahmad who lives next door to Hussain called on Hussain and offered to sell his IBM computer for RM2,000. On 3 November, Hussain wrote and posted a letter to Ahmad accepting the offer. The letter was not addressed properly. Hence Ahmad received the letter of acceptance on 8 November instead of on 5 November. On the evening of 6th November, Ahmad telephoned Hussain and said I revoke my offer to you.

Advise. Step 1 - Identify the issue or issues in the question. Problem solving questions are normally drafted in a form requiring students to address their minds to certain issues raised by the problem. The issue or issues once identified will enable the students to move on to answer the question systematically. The issue can be drafted in different styles or ways but it should narrow down the particular area of law that the examiner wants the students to elucidate. In the above sample question, to say that the issue in the question is whether there is a contract between Ahmad and Hussain is to put the issue too broadly. This will apply to almost every question relating to the formation of a contract, whether the issue is on offer, acceptance, consideration or intention to create legal relations, for ultimately one has to conclude whether or not there was a contract between the parties. Similarly to say that the issue is whether Ahmad can sue Hussain or whether Ahmad can obtain damages from Hussain for breach of contract again states the conclusion rather than identifying the issue.
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Appendix B

Therefore students should state the issue or issues specifically. In the above question, there are several issues: (a) whether Hussains acceptance of the offer through the post is a usual and reasonable manner of communicating acceptance under section 7(b) of the Contracts Act 1950; (b) when was the communication of acceptance complete; and (c) was Hussains communication of revocation of his offer by telephone on 6 November effective to revoke the offer? Students are advised to tackle one issue at a time and bring it to its logical conclusion. This will ensure clarity in presentation and avoid unnecessary confusion that may set in if the issues are all tackled together. FIRST ISSUE Step 2 - State the law You should state the law that is relevant to the issue. Remember that the Contracts Act 1950 is the primary source of law for contracts entered into in Malaysia. Therefore the provisions of the Contracts Act 1950 should always be the starting point. If there are no provisions in the Contracts Act 1950 on the issue in question, state so in your answer. In the above issue, the relevant sections are sections 3 and 7(b) of the Act. Section 3 provides that the law deems that the communication of acceptance is made by any act or omission of the party accepting by which he intends to communicate the acceptance or which has the effect of communicating it. If there are any relevant cases, they should be stated here. Section 7(b) provides that in order to convert a proposal into a promise the acceptance must be expressed in some usual and reasonable manner unless the proposal prescribes the manner in which it is to be accepted. Here it is clear that there was no prescribed manner of acceptance. Therefore the issue is whether it was usual and reasonable for Hussain to accept the offer by return of post. Students should then state any relevant cases on the issue of the usual and reasonable manner of communicating acceptance. Step 3 - Apply the law Having thus stated the law on the first issue, the next step is to apply the law to the facts of the problem.
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Appendix B

Hussain and Ahmad are neighbours. Ahmad had called on Hussain in making the offer. The word called on may be taken to be a little ambiguous by some students whether Ahmad went to Hussains house or called him by telephone. This is a minor point and either way makes no difference to the result. Students may like to point this out to the examiner, but should do so briefly and move on to the real crux of the matter. Being neighbours, was it usual and reasonable for Hussain to use the post? He could have just called over to Ahmads house or gave a telephone call. There may be a difference of opinion here. Apparently, it is unreasonable. But some students may point out that a letter would give Ahmad an acceptance in writing, which is certainly better than an oral acceptance. However it may be rebutted that Hussain could have handed over the letter to Ahmad, which is reasonable, rather than to post it. It is at this stage of applying the law to the facts of the problem that students will be able to display their understanding of the relevant principles of the law of contract to the examiner. Many students skip this stage by doing what is termed as a matching game - since the facts of the problem is similar to the case of A v B cited above, therefore there is a contract between Ahmad and Hussain (premature because there are yet other issues to be considered) or since the facts of the problem is similar to the case of A v B, therefore the communication of acceptance was reasonable or was unreasonable. No two cases are similar. There are bound to be differences in the facts or circumstances. Rarely would a good examiner require you to do such a matching game by giving the facts of the question exactly as those of a decided case. Usually the question would involve a situation where there are no decided cases exactly on the point, a novel situation where there are conflicting decisions on the issue and the examiner wants you to discuss the areas of conflict. But by just repeating the facts of a decided case ad nauseam and then match it with the problem question does not display your understanding of the principles. It shows that you have a good memory, but in todays communication age, a computer can do a much better job than you! Step 4 - Conclusion Having applied the relevant law to the facts of the problem in issue, you are ready to arrive at a conclusion. In the first issue most students may conclude that in the circumstances of the case it was unusual and unreasonable for Hussain to use the post to communicate his acceptance to Ahmad, his neighbour, who was living next door to him. Therefore Hussains purported acceptance did not convert the proposal into a promise when it was posted on 3 November.

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Appendix B

Other students may arrive at the conclusion that it was reasonable and that there was an effective acceptance by Hussain when he posted the letter on 3 November. So long as good logical reasons are given when discussing Step 3, examiners do give leeway for such differences of opinion and eventual conclusions. Even judges in the Federal Court differ in their reasoning and conclusions. Having concluded the first issue, the second issue may then be tackled using the same process of Steps 2, 3 and 4. SECOND ISSUE Step 2 - State the law State the law starting with the provisions of the Contracts Act 1950 on the postal rule, that is, section 4(2). Provide relevant cases on the issue including the issue of delay in the post. Steps 3 and 4 - Apply law to facts Applying the law to the facts, students may argue that although under section 4(2)(a) and decided cases, acceptance is complete against Ahmad upon Hussain posting the letter, the fact that the manner of acceptance was unusual and unreasonable may call for a departure from the normal rule. It may be submitted that in this case the acceptance should not be deemed complete on 3 November but on 8 November. It is only fair that Ahmad be bound in contract to Hussain when he actually received the letter of acceptance on 8 November. Students who concluded that the manner of acceptance was reasonable would naturally argue that acceptance was complete against Ahmad on 3 November despite the delay in the post. However it must not be forgotten that the letter was misdirected and caused Ahmad to receive it later than usual. Students conversant with the facts of Adams v Lindsell would be able to point out the difference that whilst in that case the offeror misdirected the letter and caused a delay in the communication of the offer, here it was the acceptor who misdirected it. Though this misdirection makes no difference to students who concluded that the communication was complete on 8 November, it is a contentious point whether with this misdirected acceptance was completed on 3 November. The reason is that the law has already placed a disadvantage on the offeror by binding him in contract at the point of posting of the acceptance when, at the said time, he is not aware of it. When Hussain posted it on 3 November Ahmad only came to know of it on 8 November when he received the letter of acceptance. However the law says that Ahmad is bound on 3 November (section 4(2)(a) whereas Hussain is only bound on 8 November (section 4(2)(b)). Although a delay in the post normally does not affect the postal rule, here it was Hussain who caused the delay and not the postal
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Appendix B

authorities. It is arguable that Hussain should be penalised here and that the communication of acceptance should only be deemed complete as against both Hussain and Ahmad on 8 November. THIRD ISSUE Step 2 - State relevant law State the relevant law on revocation of offer - section 6(a) and section 5(1) read with section 4(2)(a) - and relevant cases. Step 3 - Display understanding of the law From the foregoing arguments, there are two possible dates of completion of communication of acceptance against Ahmad 3 November and 8 November. Whatever may be your position, you should tackle both possibilities and display your understanding of the law. In this question, whether the acceptance was complete against Ahmad on 3 November or 8 November is vital. If the acceptance is deemed complete against Ahmad on 3 November, his revocation on 6 November came too late. He is already bound in contract under section 4(2)(a) and cannot revoke his acceptance: section 5(1). If the acceptance is deemed complete on 8 November, then by virtue of section 5(1), Ahmad could revoke his offer at any time before the communication of acceptance is complete as against him, ie. at any time before 8 November. He did revoke it well in time on 6 November and therefore there was a valid revocation of his offer- section 4(3)(b). Step 4 - Conclusion Students may then conclude that if there was a valid revocation by Ahmad, then, there was no valid and binding contract between Hussain and Ahmad. However if the revocation came too late, there was a binding contract between Ahmad and Hussain on 3 November. POINTS TO NOTE 1. Do not waste time in repeating or rephrasing the facts of the problem question when starting to write your answer. 2. For every authority on the issue, the starting point should be the provisions of the Contracts Act 1950. If there is none, say so in your answer. 3. When citing decided cases as authority, always cite Malaysian cases first, in preference to Indian or English cases. Indian and English cases are not binding on Malaysian courts.
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Appendix B

4. You should know at your fingertips, the hierarchy of courts in Malaysia (today and in the past) and which case is of a higher authority than another. A rough guidance is as follows: (a) Federal Court decisions (24 June 1994 onwards) (b) Supreme Court decisions (1 January 1985 to 23 June 1994) (c) Decisions of the Privy Council on appeals from Malaysia (before 1985) (d) Decisions of the Privy Council on appeals from Commonwealth countries (including India) before 1985 on provisions of their statute on contracts which are in pari materia to the Contracts Act 1950. Note: Appeals from Singapore to the Privy Council do not bind Malaysian courts because Singapore follows the common law and does not have a statute on the law of contract. The decisions of the above superior appellate courts bind the Court of Appeal of Malaysia. (e) Court of Appeal decisions (24 June 1994 onwards) (f) The former Federal Court decisions (before 1985). The decisions of the above superior appellate courts bind the High Courts of Malaysia. (g) High Court decisions (does not bind other High Courts in Malaysia). The decisions of the High Court bind the Sessions Courts in Malaysia. The decisions of the following courts do not bind Malaysian Courts but are of persuasive authority. (h) Decisions of the Privy Council on appeals from Commonwealth countries, as in (4) above, after 1984. (i) Decisions of the highest tribunal in any Commonwealth country where the provision of their statute on contracts is in pari materia to the Contracts Act 1950, for example, decisions of the Supreme Court of India. (j) Decisions of the Privy Council on appeals from Commonwealth countries, for example, Singapore, Hong Kong (before 1997) Australia, New Zealand, South Africa, etc. (k) House of Lords decisions. (l) The English Court of Appeal decisions. (m) The decisions of the highest tribunal in any Commonwealth country, for example, Singapore, Hong Kong (before 1997), Australia, New Zealand, South Africa, etc. (n) Decisions of the highest tribunal in any other non-Commonwealth country, for example, the United States of America.
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