LIA 1004: LAW OF CONTRACT I

2019/2020

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LXEB 1112 ASSIGNMENT
2013/2014

MARKING SCHEME
LIA1004: Law of Contract I

Academic Session: 2019/2020

I) ASSIGNMENT QUESTION

In the case of Fisher v Bell [1961] QB 394, the justices were of the opinion that, “in

the absence of any definition in the Act of 1959, the words “offer for sale” ought to be

construed as they were in the law of contract, so that, in this instance [emphasis

added], the defendant’s action was but an invitation to treat.”

This implies that one can be held liable for a display of goods.

Do you agree? Discuss.

1) Introduction

The beginning of the formation of a contract starts with an offer. It is one of the

key concepts in the formation of a contract whereby by definition, it is a definite

promise to be bound provided that certain specified terms are accepted.

Section 2(a) of the Contracts Act 1950 defines a “proposal” as a situation when

a 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.1 In the case

of Preston Corp Sdn Bhd v Edward Leong2 on the other hand, Salleh Abas FJ stated:

“an offer is an intimation of willingness by an offeror to enter into a legally binding

contract whereby its terms are either expressly or impliedly must indicate that it is to

become binding on the offeror as soon as it has been accepted by the offeree”.3

Furthermore, the Federal Court also elaborated on the meaning of an offer

namely it is “binding at law”. This means an offer has legal effect and it binds the offeror

as soon as it is accepted by the offeree. A valid offer must also satisfy certain

requirements which are: (i) it may be made to a specific person or to the world; (ii) it

may be made expressly or impliedly; (iii) its meaning must be clear; and (iv) it must be

valid at law.4

1
Contracts Act 1950, Act 136.
2
Preston Corporation Sdn Bhd v Edward Leong & Ors. [1982] 2 MLJ 22
3
See footnote 2 above.
4
Cheong, M. F. (2013) Contract law in Malaysia. Petaling Jaya, Selangor, Malaysia: Sweet
& Maxwell Asia.

1
 However, there are certain differences between an offer and an invitation to

treat. While an offer may be binding at law and have legal effect as stated above, it is

different with an invitation to treat which is not intended to be binding at law. An

invitation to treat may take the form of advertisements, display of goods, tenders,

auctions and application for club membership.5 An invitation to treat is essentially an

invitation to interested parties to make an offer.

The general rule as propounded in the case of Fisher v Bell6 is that, a display

of goods is merely an invitation to treat. When a shop owner displays his goods at his

shop’s window, it is said that the shop owner is making an invitation to treat instead of

an offer. Only after the buyer comes in the store and expresses his wishes to buy, then

the buyer himself is said to be making an offer.

In the case of Pharmaceutical Society of Great Britain v Boots Cash Chemists,

there the judges propounded that problem may occur if every display of goods were

to be considered an offer. The shopkeeper would have no choice on whether to sell or

not to sell the goods to someone once they had removed the goods from the shelves,

which would prevent them to choose their customers. Similarly, acceptance had

occurred because the price of the goods were already specified when on display,

which meant that there can no longer be further negotiations although this is not

relevant in shops that is not negotiable. In addition, if display of goods is not considered

as an invitation to treat, thus, a customer would not be able to exchange their item

5
See footnote 3 above.
6
[1961] 1 QB 394

2
once the shopkeeper had removed it from the shelf, as acceptance had already

occurred because if not, the customer would be in breach of contract. 7

2) Case Note of Fisher v Bell

Fisher v Bell [1961] 1 QB 3948

Court : High Court of England and Wales (Queen’s Bench Division)

Judges : Lord Parker C.J., Ashworth J. & Elwes JJ.

Date of Judgement : 10th November 1960

Appellant : Chief Inspector George Fisher (Fisher)

Respondent : James Charles Bell (Bell)

Counsel : J.A. Cox (for the prosecutor)

: P. Chadd (for the defendant)

7
Ibid

8 See footnote 8 above.

3
Identification of Issue:

The issue raised is whether this knife displayed on the shop window with the

price ticket behind it was an offer for sale within the meaning of section 1 (1) of the

Restriction of Offensive Weapons Act, 1959.

Summary of Facts:

The respondent, Bell carries out business as a retail shopkeeper at a premise.

Police Constable John Kingston saw knife displayed at the window, behind which was

a price ticket attached. The police constable upon reason to believe it was a flick knife,

examined it and took it away from the shop for the superintendent of police to examine

it. Later, the police constable returned to the defendant's premises and informed him

that it was a flick knife. The constable informed the defendant that he would be

reported for offering for sale a flick knife which is an offence under Section 1(1) of the

Restriction of Offensive Weapons Act 1959. The respondent contended that on the

facts he at no time offered the knife for sale within the meaning of the Act.

Judgement:

The court held that no offence was committed, and the respondent is not guilty

of the offence of offering for sale a flick knife which is an offence under Section 1(1) of

the Restriction of Offensive Weapons Act 1959. The court also held that the judgement

of the magistrates’ court in City and County of Bristol were right and the appeal was

dismissed with costs.

4
Ratio Decidendi:

The court held that in the absence of any definition in the Act extending the

meaning of "offer for sale" that term must be given the meaning in the context of the

ordinary law of contract. Therefore, the display of goods in a shop window with a price

ticket attached was merely an invitation to treat and not an offer for sale, the

acceptance of which constituted a contract. The justice had correctly concluded that

no offence had been committed contrary to Section 1(1) of the Restriction of Offensive

Weapons Act 1959.

Reasons for the Decision:

Lord Parker C.J in the present case observed that the respondent’s act of

displaying flick knife at his shop window is not an offence contrary to Section 1(1) of

the Restriction of Offensive Weapons Act 1959 because of the lack of words “exposing

for sale” in the Act. Besides, it is also perceived that according to the ordinary law of

contract the showcase of an article with a price on it in a shop window is merely an

invitation to treat. Lord Parker C.J was of the view that it was not up to him to fill in the

lacuna in the Act as it was the power of the Parliament to legislate the Act.

Lord Parker C.J. distinguishes the present case from Keating v Horwood as

there was an obvious exposure for sale. In Keating v Horwood, a baker's van was

being driven on its rounds. There was bread in it that was for sale which had been

ordered. It was found that that bread was underweight which is contrary to the Sale of

Food Order, 1921. Keating v Horwood, however, had an obvious exposure for sale.

Therefore, Lord Parker C.J found it unnecessary for the court to decide whether there

was an offer for sale or not because first, is that the order plainly contained the words

" expose for sale," and on any view, there was an exposing for sale. Besides, the

5
principles of general contract law were never referred to, and thirdly, albeit all part of

the second ground. the respondent was not embodied and, there was no

disagreement. Lord Parker C.J stated that he cannot take as an authority for the

proposition that the display here in a shop window was an offer for sale.

Next, Lord Parker C.J again distinguishes the present case from Wiles v.

Maddison because it was established in this case that the defendant had the motive

to commit a crime. Viscount Caldecote, C.J. in Wiles v Maddison states that putting

an article at the shop window as exposing the article and not making an offer. And in

this case, exposing the article was, in fact, contrary to the Meat (Maximum Retail

Prices) Order, 1940. Lord Parker C.J was unable to find assistance from that passage

in favour of the prosecutor. In short, the Section 1(1) of the Restriction of Offensive

Weapons Act 1959 only contains the words “offer for sale” and not “exposing for sale”

which means only a real offer is an offence under this Act. Therefore, the respondent

has not committed an offence and appeal is dismissed with cost.

3. Can one be held liable for display of goods?

The general rule in Fisher v Bell9 was that the display of a flick knife with a price

marker in a shop window (display of goods) did not amount to commission of the

offence of offering such a knife for sale. A display of goods on the shelves was only

an Invitation to Treat (ITT). Such ITT was only an inducement to any customer to make

an offer to buy the goods. Thus, display of goods generally could not be an offer.

9
See footnote 8 above.

6
 Nonetheless, it is said that in certain situations, the general principle that the

display of goods is merely an invitation to treat is “less convincing in the light of modern

regulation of trading practices10” and such general rule is somewhat obscure and lost

in the mists of time11. Stringent application of such general rule that parties are free

from legal obligation by displaying goods may lead to situation that “a shopkeeper is

not bound by any price that is attached to goods displayed in the shop or in the

window.12” For instance, a shopkeeper may raise the price of an item when a customer

is ready to buy at a certain price13.

Therefore, there are situations where one can be held liable for display of

goods- when there is specific provision in the legislation stating so14, when there is an

intention to be bound exists15 or when the shop display is couched in the language of

offer.16

10 Beatson, J, A S. Burrows, and John Cartwright. Anson's Law of Contract. 28th ed. Oxford: Oxford
University Press, 2010. P. 33.
11 R. Paul. Law of Contract. 9th ed. UK: Pearson Education Ltd, 2009. P.18.
12 S. Richard. The Modern Law of Contract. 8th ed. Routledge: Cavendish, 2009. P. 49.
13All Answers ltd, 'Whether Display of Goods Constitutes an Offer', (November 2019) Lawteacher.net.
<https://www.lawteacher.net/free-law-essays/contract-law/whether-display-of-goods-constitutes-an-
offer-contract-law-essay.php?vref=1> accessed 24 November 2019
14 J.G. Starke QC. Cheshire and Fifoot’s Law of Contract. 6th ed. Sydney: Butterworths, 1992. P.118.
15 Chapelton v Barry Urban District Council [ [1940] 1 KB 532]
16 Reardon v Morley Ford Pty Ltd (1980) 49 FLR 401.

7
3.1. Legislation which gives rise to such enforceable rights.

Generally, exhibition of a product in a store with a price attached is not adequate

to be considered as an offer. It is a mere Invitation to treat. However, with the insertion

of relating provision in the legislation, one can be liable for an offer through display of

goods when there are specific provisions that interprets it that way.

Willes v Madison17 has a standing regarding “offer for sale” and “exposed for

sale”. In this case, there was a prosecution under section 4 of the Meat (Maximum

Retail Prices) Order 1940 and Article 2 of Rationing Order 1939.

By the Meat (Maximum Retail Prices) Order 1940, section 4, it is provided that:

'No person shall sell or offer or expose for sale or buy or offer to buy any meat

at a price exceeding the price applicable under this Order, or in connection with a sale

or disposition of any meat, enter or offer to enter into any artificial or fictitious

transaction or make or demand any unreasonable charge.'

The respondent butcher who carried on his business in a town, intend to supply

meat to his customers whom lived some miles away. Several men appointed by the

Ministry of Food entered the shop on a Thursday,and found that the meat that was

supposed to be sold to the three customers, was priced in excess of the permitted

maximum price and consisted of a larger quantity than was allowed under the

Rationing Orders. These prohibits the offer of, or, attempt to supply rationed food

except therein provided. Viscount Caldecote C.J.5 stated that by virtue of the Meat

(Maximum Retail Prices) Order 1940, s 4, a person who puts goods in his shop window

to be sold at an excessive price could be convicted of making an offer at a price too

17
[1943] 1 All ER 315

8
high. However, it was held that there were no offer within the meaning of the Order

because the butcher haven’t communicated his offer to the offeree, yet.

Another example whereby the general principle regarding the relationship

between an offer with a display of goods, were disregarded is in relation to judicial

interpretation of s56(2) of the Trade Practices Act 1974. Section 56(2) of the Trade

Practices Act 1974 provides that:

“A corporation that has, in trade or commerce, advertised goods or services for

supply at a special price shall offer such goods or services for supply at that

price for a period that is, and in quantities that are, reasonable having regard to

the nature of the market in which the corporation carries on business and the

nature of the advertisement.”

In other words, this section makes it compulsory for a corporation advertising to supply

goods or services to ‘offer’ them for sale.

It is necessary to note that some of the examples above may not be binding on

Malaysian Court. However, it was the crux of the decision that matters in order to

illustrate how can a display of goods constitute an offer, by which one can be liable in

breaching so.

In relation to the above examples, in Malaysia, we have the Price Control and

Anti-Profiteering Act 2011. 18 Section 11 mentioned that it is an offence for any

person who sells or offers to sell any price-controlled goods or provides or offers to

provide any charge-controlled services or who collects deposit otherwise than in

18
Act 723

9
accordance with the prices or charges determined by the Controller under section 4,

5 or 7. Besides that, Section 14(1) states that Any person who, in the course of trade

or business, profiteers (making profit unreasonably high) in selling or offering to sell or

supplying or offering to supply any goods or services commits an offence

By virtue of this Act 723, it can be an offence in Malaysia, should a retailer who

displayed his price-controlled goods with a price that is not in accordance with the

permitted price by the Government of Malaysia. For example, for Petrol19 in Malaysia,

each class of petrol (RON97, RON95, Diesel Euro2, Diesel Euro5) have their own

respective and price per litre. Should any petrol station dealer charge consumers with

price any higher than the price published according to the Federal Gazette, they can

be held liable for offering such display of goods that contravenes the legislation.

3.2 Existence of intention to be bound

Where the display clearly states that the goods will be sold to a person who

pays the required price, it is, however, likely to be held to be an offer20. In Warwickshire

C.C. v. Johnson21, a notice which stated that, “We will beat any TV, HiFi and Video

price by 20 pounds on the spot” was held to be “a continuing offer” and the shop

manager was criminally liable for a misleading indication as to the price at which goods

may be available.

19
Goods declared as controlled articles under the Control of Supplies Act 1961..
20
Beatson, J, A S. Burrows, and John Cartwright. Anson's Law of Contract. 28th ed. Oxford:
Oxford University Press, 2010. P. 33.
21
Warwickshire C.C. v. Johnson [1993] 1 All E.R. 299, at p.302.

10
 If it were made clear that the shopkeeper was willing to sell to anyone paying

the displayed price, then it is possible to treat the display as an offer. In the case of

Chapelton v Barry Urban District Council, 22 Barry Urban District Council (BUDC)

displayed a pile of deck chairs, and a notice was displayed near the goods with terms

written as:

“Barry Urban District Council. Cold Knap. Hire of Chairs 2d. per

session of 3 hours.”

The notice also respectfully requested the customers to obtain tickets and to

retain them for inspection. Chapelton (plaintiff) then hired the deck chairs, obtained

the ticket as advised which he later place in his pocket. However, he did not recognize

that some conditions were printed at the back of the ticket which stated that BUDC

would not be responsible for any accident which arose from the use of the chair. There

was nothing adjacent to the chairs, or on the face of the ticket to alert customers’

attention to the clauses on the back. He sat down, the canvas of the deck chair gave

way, and he injured himself.

The Court of Appeal held that there was a valid offer when the chairs were on

display, accepted when picked up the chairs from the defendant. Therefore, the ticket

was merely a receipt of the contract, and the exclusion clause could not be

incorporated as a term. Thus, it could not protect the local council from liability.

Sometimes, policy reasons may be taken into account. It was said that there

may have been policy reasons which explain why the display was treated as an offer

22
Chapelton v Barry Urban District Council [1940] 1 KB 532

11
in Chapelton’s case. 23.” Treating the display of goods as an offer allowed the court to

accelerate the point of contract formation in order to keep out harsh exclusion clause

which was introduced later24.

3.3 Shop Display is Couched in the Language of Offer

Similarly, the general rule which propounded that the display of article with a

price on it in a shop is merely an invitation to treat may not be invariably accepted by

a court if the shop display is couched in the language of offer25.

In the American authority of Lasky v Economy Grocery Stores26, although the

court held that, in the absence of a sale or a contract of sale, the plaintiff was not

entitled to claim for breach of warranty, particularly for her personal injury due to

explosion of a bottle of carbonated beverage described as ”tonic” that she had taken

from one of several wooden cases which had been set up in the defendant’s store, the

display of goods (“tonic”) in the self-service store was an offer. The Superior Court

judge agreed with the plaintiff’s contention that the display of the tonic with the signs

advising her to serve herself constitutes an offer to sell. However, until there was

23
P. Jill. Textbook on Contract Law. 9th edn. Oxford: New York, 2008. p48.

24
C.W. Mindy. Contract Law. 2nd edn. New York: Oxford University Press. p73.
Retrieved from
https://books.google.com.my/books?id=Tcjwe6v_xnsC&pg=PA73&lpg=PA73&dq=chapelton
+v+barry+policy+reason&source=bl&ots=fTHxnZBNIn&sig=ACfU3U1rgtQDtf18epzt3YRzuSI
4b261Ag&hl=en&sa=X&ved=2ahUKEwjCxdqlkoPmAhV1zDgGHXPABzkQ6AEwBnoECAoQ
AQ#v=onepage&q=chapelton%20v%20barry%20policy%20reason&f=false
25
See footnote 15 above. p 118
26
Lasky v Economy Grocery Stores 1946) 319 Mass 224, 65 NE 2d 305

12
acceptance by her of this offer via the presenting of goods to cashier, no contractual

relation arose between the parties in reference to the sale of the tonic.

In addition, Reardon v Morley Ford Pty Ltd was a case which indicated that a

shop display may in appropriate circumstances amount to an offer27. Whether display

of goods in the shop window or shelf, complete with price markings was an offer,

depended on the intention of the trader to be gathered from all the circumstances of

the case.

In this case, the defendant was liable under S56(1) and S56(2) of the Trade

Practices Act28. Under ss.56(2) of the Trade Practices Act, a corporation which had

“advertised” goods or services at a special price was required to “offer” such goods or

services for supply for a period and in quantities which are reasonable in the

circumstances. Therefore, the duty imposed on a corporation by ss.56(2) of the Trade

Practices Act 29 to “offer” goods or services in accordance with its advertisement

requires the advertiser to take some positive action to offer the goods or services on

the specified terms30.

27
Reardon v Morley Ford Pty Ltd (1980) 49 FLR 401
28
Trade Practices Act 1974 (Cth)

29
Section 56 (2) Trade Practices Act 1974: “A corporation that has, in trade or commerce,
advertised goods or services for supply at a special price shall offer such goods or services
for supply at that price for a period that is, and in quantities that are, reasonable having
regard to the nature of the market in which the corporation carries on business and the
nature of the advertisement.”

13
 In Reardon’s case, the Federal Court of Australia explained in great length on

some instances which could show that the trader had an intention to “offer” such goods

or services- the advertiser (or trader) must take such reasonable steps as would be

taken by a trader who genuinely intended to offer to supply the goods to any person

at that price in the course of his business or throughout the relevant period. It need not

encourage persons to accept the offer and is free to urge the benefits of some

alternative goods or services instead.

However, the court further elaborated that the charge under S56(2) needed to

be proven beyond reasonable doubt 31 Although the defendant's obligations

under s. 56 (2) could have been satisfied by the display of one vehicle with its price

marking; that conduct did not in this instance constitute an offer, as there was no

intention that it should become binding as soon as it was accepted especially when

the defendant, having advertised goods for supply at a special price, failed to

offer such goods at the special price when requested to do so.

In Malaysia, Section 13 of Consumer Protection Act 1999 32 has an almost

similar provision as Section 56 of Trade Practices Act 1974.

Section 13 of Act 599 stated:

“Bait advertising

13. (1) No person shall advertise for supply at a specified price goods or services

which that person— (a) does not intend to offer for supply; or (b) does not have

reasonable grounds for believing can be supplied, at that price for a period that is, and

31
See footnote 45 above. p 405
32
Act 599

14
in quantities that are, reasonable having regard to the nature of the market in which

the person carries on business and the nature of the advertisement.”

4) Conclusion

In a conclusion, a display of goods indeed can be an offer by way of existence

of specific provision in the legislation33,when there is an intention to be bound exists34

or when the shop display is couched in the language of offer.35

Therefore, if Parliament intended to employ the meaning of offer for sale to

include the display of goods, thereby rendering the latter to have legal effect, there

should be a specific provision in the legislation stating so or there should be a definition

section for “offer for sale” which clearly included “exposing for sale” in the legislation.

Otherwise, it should not be an omission or a mistake on the part of Parliament, and,

even if it were, it would not be for the court to read words into the Act to perfect it36.

Nonetheless, it is necessary to note that some of the examples above may not

be binding on Malaysian Court. For instance, although in Reardon’s case, the Federal

Court of Australia opined that a display of goods with its price marking may be an offer

if various circumstantial evidence could be drawn to prove so, the intention of the

offeror that it should become binding as soon as it was accepted was the determining

factor. All reasonable steps taken did not constitute an offer unless they were

33
See footnote 8 above.
34
See footnote 16 above.
35
See footnote 35 above.
36
Bristol Guardians v. Bristol Waterworks Co.14.

15
accompanied by an intention that it should become binding as soon as it was

accepted.37 Eventually, it was the crux of the decision that matters in order to illustrate

how can a display of goods constitute an offer, by which one can be liable in breaching

so.

37 See footnote 35 above.

16
 II) BIBLIOGRAPHY

Legislation

Consumer Protection Act 1999, Act 599

Contracts Act 1950, Act 136

Price Control and Anti-Profiteering Act 2011, Act 723

Restriction of Offensive Weapons Act 1959

Trade Practices Act 1974

Cases

Bristol Guardians v. Bristol Waterworks Co.14

Chapelton v Barry Urban District Council [ [1940] 1 KB 532]

Fisher v Bell [1961] 1 QB 394

Keating v Harwood [1926] All ER Rep 88

Lasky v Economy Grocery Stores 1946) 319 Mass 224, 65 NE 2d 305

Preston Corporation Sdn Bhd v Edward Leong & Ors. [1982] 2 MLJ 22

Reardon Morley Ford Pty Ltd (1980) 49 FLR 401

Warwickshire C.C. v. Johnson [1993] 1 All E.R. 299, at p.302

Wiles v Maddison ([1943] 1 All ER 315)

Beatson, J, A S. Burrows, and John Cartwright. Anson's Law of Contract. 28th ed.

Oxford: Oxford University Press, 2010.

Cheong, M. F. (2013) Contract law in Malaysia. Petaling Jaya, Selangor, Malaysia:

G. Starke QC. Cheshire and Fifoot’s Law of Contract. 6th ed. Sydney: Butterworths,
1992.

P. Jill. Textbook on Contract Law. 9th edn. Oxford: New York, 2008.

R. Paul. Law of Contract. 9th ed. UK: Pearson Education Ltd, 2009.

S. Richard. The Modern Law of Contract. 8th ed. Routledge: Cavendish, 2009.

Online Sources

All Answers ltd, 'Whether Display of Goods Constitutes an Offer', (November 2019)
Lawteacher.net. Retrieved from

<https://www.lawteacher.net/free-law-essays/contract-law/whether-display-of-goods-
constitutes-an-offer-contract-law-essay.php?vref=1> accessed 24 November 2019

C.W. Mindy. Contract Law. 2nd edn. New York: Oxford University Press. p73.
Retrieved from
https://books.google.com.my/books?id=Tcjwe6v_xnsC&pg=PA73&lpg=PA73&dq=ch
apelton+v+barry+policy+reason&source=bl&ots=fTHxnZBNIn&sig=ACfU3U1rgtQDtf
18epzt3YRzuSI4b261Ag&hl=en&sa=X&ved=2ahUKEwjCxdqlkoPmAhV1zDgGHXPA
BzkQ6AEwBnoECAoQAQ#v=onepage&q=chapelton%20v%20barry%20policy%20re
ason&f=false