1606A

COURT OF APPEAL, MALAYSIA

2016

FANN WOW GALLERY

(APPELLANT)

V.

DATO’ RASHID

(RESPONDENT)

MEMORIAL FOR THE APPELLANT

______________________________________________________________________________

1

TABLE OF CONTENT

TABLE OF CONTENTS ............................................................................................................ 1

INDEX ........................................................................................................................................... 3

SUMMARY OF FACTS ..............................................................................................................4

SUMMARY OF PLEADING……………………………………………………………………5

1. THERE IS NO CONTRACT MADE BY FANN WOW GALLERY AND DATO’

RASHID SINCE IT IS MERELY AN INVITATION TO TREAT AND THERE

WAS NO ACCEPTANCE MADE BY FANN WOW GALLERY TO DATO’

RASHID SINCE SILENCE DOES NOT AMOUNTED TO ACCEPTANCE ……..6

A. Display of goods is only an invitation to treat………………………………………...6

B. There was no acceptance made by Fann Wow Gallery in response to Dato‟ Rashid

offer................................................................................................................................8

C. Silence on part of Fann Wow Gallery to the offer made by Dato‟ Rashid does not

amount to acceptance………………………………………………………………….9

2. EVEN IF THE NOTICE DID AMOUNT TO AN OFFER, FAN WOW GALLERY

HAS THE RIGHT TO REVOKE THE ACCEPTANCE DUE TO NO

CONSIDERATION FROM DATO’ RASHID IN THE FORM OF DEPOSIT……11

A. Deposit as the consideration………………………………………………………. 11

3. THE COURT ORDER OF SPECIFIC PERFORMANCE WAS

INAPPROPRIATE……………………………………………………………………..14

A. The painting of the Majestic Dawn is easily replaceable

monetarily………………............................................................................................14

2

B. Serene Ocean, another painting of Dong Ying, can be a good replacement to Majestic

Dawn…………………………………………………………………………………………...16

4. CONCLUSION AND PRAYER FOR RELIEF……………………………………...17

3

INDEX

CASES

Fisher v Bell [1961] 1 Q.B. 394

Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd [1953] 1 Q.B. 410

Rabophone Facilities Ltd v Blank [1966] 3 All ER 128, [1966] 1 WLR 1428.

Felthouse v Bindley [1862] 11 CBNS 869

Guthrie Waugh Bhd v Malaippan Muthucumaru [1972] 2 MLJ 62, FC.

Thomas v Thomas (1842) 2 QB 851 at p 859

Tweddle v Atkinson (1861) B & S 393 at p 169

Pollway v Abdullah [1974] 1 WLR 493

Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd [2007] 2 MLJ, CA

Wallis v Smith (1882) 21 ChD 243

STATUTE

Restriction of Offensive Weapons Act, 1959

Contract Act 1950 (Act 136)

4

SUMMARY OF FACT

Fann Wow Gallery is an art dealer of traditional Chinese paintings from different artists.

This year, Dong Ying produces five walls –sized paintings which are described as rare and

exquisite paintings by various art dealers‟ website due to the Chinese birds and flowers theme

had drawn using “great freehand style”. Fifty types of dye used for the paintings are prepared by

the Dong Ying herself using variety of colorful raw stones found in Changliang Mountain, in

northern Tibet, China. Fann Wow Gallery managed to buy all these paintings at RM1 million

each.

On Monday, 15 February 2016, Dato‟ Rashid, a private collector of Chinese Art, visited

the gallery and impressed with the Majestic Dawn. He immediately placed the order at the price

of RM1.5 million. The painting will be delivered to his house in three working days. However,

the painting also attracts Dr Lawrence‟s interest, an art collector. Dr Lawrence contacted Fann

Wow Gallery to buy it at the price of RM2 million and the offer had changed Mr Kenny‟s mind,

the owner of the gallery, which he instructed the delivery of the Majestic Dawn to Dato‟ Rashid

to be withhold. Mr Kenny offered Dato‟ Rashid another Dong Ying‟s painting, Serene Ocean

which is done with similar painting technique but of somber blend of colour.

Dato‟ Rashid commenced proceedings against the gallery for breach of contract and won.

The judge ordered for rescission of the contract and specific performance due to the failure of the

gallery to deliver Majestic Dawn.

5

SUMMARY OF PLEADING

Counsel for appellant will submit on three issues which are;

1. THERE IS NO CONTRACT MADE BY FANN WOW GALLERY AND

DATO’ RASHID.

This due to the display of Majestic Dawn is only an invitation to treat. Even there

is an offer from Dato‟ Rashid to buy the painting, there is no acceptance from

Fann Wow Gallery and silence on part of the gallery in response to Dato‟

Rahshid‟s offer does not amount to acceptance.

2. EVEN IF THE DISPLAY OF MAJESTIC DAWN DID AMOUNT TO AN

OFFER, FANN WOW GALLERY HAS THE RIGHT TO REVOKE THE

ACCEPTANCE.

This is due to no consideration from Dato‟ Rashid in the form of deposit. Since

there is no consideration from Dato‟ Rashid, Fann Wow Gallery can revoke the

acceptance made by Dato‟ Rashid.

3. THE HIGH COURT ORDER OF SPECIFIC PERFORMANCE WAS

INAPPROPRIATE

Majestic Dawn is replaceable monetarily and Serene Ocean, another painting of Dong

Ying, is a good replacement to Majestic Dawn. There is no contract between Fann

Wow Gallery and Dato‟ Rashid, thus the gallery should not have meet the obligation

to deliver the painting to Dato‟ Rashid.

6

1. THERE IS NO CONTRACT MADE BY FANN WOW GALLERY AND DATO’

RASHID SINCE IT IS MERELY AN INVITATION TO TREAT AND THERE

WAS NO ACCEPTANCE MADE BY FANN WOW GALLERY TO DATO’

RASHID SINCE SILENT DOES NOT AMOUNTED TO ACCEPTANCE

The action made by Fann Wow Gallery is constituted as an invitation to treat as it falls

under category display of goods.

A. DISPLAY OF GOODS IS ONLY AN INVITATION TO TREAT

The general rule relating to display of goods is, a display of goods at a fixed price in a

shop window1 or on shelf in a self-service store

2 is an invitation to treat and not an

offer. The offer is made by the prospective buyer and the retailer has the right to turn

down or to reject the offer made.

The display of the paintings on the wall of the gallery3 is only an invitation to treat

under form display of goods.

In case of Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern)

Ltd4 the defendant adapted one of their shops to a „self-service‟ system. The issue in

this case is whether the display of the goods with prices attached was an offer or an

invitation to treat.

Lord Goddard affirmed that display of goods was only an invitation of treat due to the

fact that an offer to buy was made when the customer put an article in the basket, and

the defendant, the shop keeper was free whether to accept or to reject the offer. This

1 Fisher v Bell [1961] 1 Q.B. 394

2 Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) Ltd [1953] 1 Q.B. 410

3 Moot Problem, Para 3, Line 2-3

4 [1952] 2 QB 795, [1952] 2 All ER 456, affirmed [1953] 1 QB 401, [1953] 1 All ER 482

7

decision was being affirmed by the Lord Chief Justice Court of Appeal5 in which

picking up a bottle of medicine from the shelves does not amount to an acceptance of

an offer to sell. It is an offer by the customer to buy and there is no sale affected until

the buyer‟s offer to buy is accepted by the acceptance of the price.

Thus, in application to the current case, the display of Majestic Dawn at Fann Wow

Gallery is only an invitation to treat under the form of display of goods with the

attached price. Therefore, it cannot be there was an offer made by Fann Wow Gallery

to the customers. In contrast, Dato‟ Rashid as the customer is the one who make offer

at the price of RM1.5 million. The gallery owns the right to accept or reject the offer

made by Dato‟ Rashid following the illustration made in Pharmaceutical‟s case.6

In another case7, a shopkeeper displayed in his shop window a knife with a price

ticket behind it. He was charged with offering for sale a flick knife, contrary to s 1(1)

of the Restriction of Offensive Weapons Act, 1959.

Lord Parker in decided the display of an article with a price on it in a shop window is

merely an invitation to treat. It is in no sense an offer is made for the sale.8

In conclusion, the display of goods with the price tag attached is only an invitation to

treat. If the customer wants to buy such goods, he needs to show his intention by

making an offer to offer to the owner of the goods.

5 [1953] 1 QB 401 at 802, [1953] 1 All ER 482 at 458, 459

6 The Learned Judge agreed with the illustration put forward during a case of a person who might go into

a shop where books are displayed. In most book-shops customers are invited to go in and pick up books

and look at the books even if they do not eventually buy them. There is no contract by the shopkeeper to

sell until the customer has taken the book to the shopkeeper and offer to buy the book. However, the

shopkeeper has the right either to accept or reject the offer made by the customer.

7 [1961] 1 QB 394 at 399, [1960] 3 All ER 731 at 733

8 Ibid 734

8

The act of Dato‟ Rashid placing the order for the painting at a price of RM1.5

million9 is an offer made by him to Fann Wow Gallery. Thus, it depends on Mr.

Kenny either to accept or reject the offer.

B. THERE WAS NO ACCEPTANCE MADE BY FANN WOW GALLERY IN

RESPONSE TO DATO’ RASHID OFFER

Under the rule of invitation to treat, the offer must come from the customer i.e. person

who interested to get engaged into a legal contract. In order to create a legal and valid

contract, acceptance must be present.10

In regard to acceptance, even if the offeree has made up his mind to final acceptance,

the agreement is not yet complete. There must be the communication of the

acceptance to the offeror.11

By referring to Malaysian Law of Contract, it is clear that acceptance of the offer by

the offerree must be communicated to the offeror.12

The communication of

acceptance is completed when it has come to the knowledge of the offeror.13

In applying to the present, Fann Wow Gallery does not inform their acceptance to

Dato‟ Rashid‟s offer. The mere fact stating that the wall-sized painting will be

delivered to Dato‟ Rashid house in three working days14

is only an official standard of

practice (SOP) of any company.

9 Moot problem, Para 4, line 4-5

10 Sinnadurai. V. (2011) Law of Contract (fourth Edition) Selangor, Malaysia : Lexis Nexis

11 Rabophone Facilities Ltd v Blank [1966] 3 All ER 128, [1966] 1 WLR 1428. The general rule

undoubtedly is that, when an offer is made, it is necessary, in order to make a binding contract, not only

that it should be accepted, but that the acceptance should be notified

12 Section 3 of the Contract Act 1950 (Act 136)

13 Section 4(2)(b) of Contract Act 1950 (Act 136)

14 Moot problem, Para 3, line 5-6

9

Although, at the first place, there may be an acceptance from Fann Wow Gallery in

response to Dato‟ Rashid‟s offer at the price RM1.5 Million, however Fann Wow

Gallery change or revoked the acceptance before communication of the acceptance.

C. SILENT ON PART OF FANN WOW GALLERY TO THE OFFER MADE BY

DATO’ RASHID DOES NOT AMOUNT TO ACCEPTANCE

An offeror may not arbitrarily impose contractual liability upon an offeree merely by

proclaiming that silence shall deemed consent.15

In the case of Felthouse v Bindley16

the plaintiff, Paul Felthouse, wrote to his nephew,

John, on 2 February, offering to buy his horse and adding, „if I hear no more about

him, I consider the horse mine at that price.‟ The nephew made no reply to this letter,

but intimated to the defendant, an auctioneer, who was going to sell his stock, that the

horse was to be kept out of the sale. The defendant inadvertently sold the horse to a

third party at an auction held on 25 February, and the plaintiff sued him in

conversion.

The Court of Common Pleas held that the action must fail as there had been no

acceptance of the plaintiff‟s offer before 25 February, and the plaintiff had therefore,

at the date, no title to maintain the conversion.

In the present case, even though Dato‟ Rashid placed an order to buy Majestic

Dawn,17

however, Fann Wow Gallery was silent by not giving any response to Dato‟

15

Leong. A.P (1998) Cheshire, Fifoot and Furmston‟s Law of Contract Second Singapore and Malaysia

Edition. Kuala Lumpur. Butterworths Asia.

16 [1862] 11 CBNS 869

17 Moot problem, para 5, line 5

10

Rashid. The act of Fann Wow Gallery cannot be interpreted as an acceptance by

applying the principle decided in the Case of Felthouse v Bindley.18

18

[1862] 11 CBNS 869

11

2. EVEN IF THE NOTICE DID AMOUNT TO AN OFFER, FAN WOW GALLERY

HAS THE RIGHT TO REVOKE THE ACCEPTANCE DUE TO NO

CONSIDERATION FROM DATO’ RASHID IN THE FORM OF DEPOSIT.

Even though the act of Dato‟ Rashid placing an order for Majestic Dawn for RM1.5

million19

is considered as an acceptance in response to Fann Wow Gallery, Mr. Kenny as

the owner of the gallery can easily revoke the acceptance as there is no consideration

from Dato‟ Rashid as the promisee.

Consideration for a promise may consist in either some benefit conferred on the

promisor, or detriment suffered by the promise, or both. Consideration may be executed

or executor, but it may not be past; it need not be adequate, but it must move from the

promise.20

A. DEPOSIT AS THE CONSIDERATION

When a customer does not pay a deposit for the reservation nor provide credit card

details it would be hard to say that "consideration" had passed from the customer to

the restaurant and, in this instance it can be said that no legal contract exists between

the parties.21

The promisee should do some act to the promisor in consideration for the promise22

whilst Section 2623

provides that an agreement without consideration is void.

19

Moot Problem, Para 3, line 5

20 9(1) Halsbury‟s Law of England (4

th Edn Reissue) paragraph 728

21 Lilliwhite. L (2012, March 27) .Wake-up call: When a booking becomes a legally binding contract.

Retrieved from https://www.thecaterer.com

22 Section 2(d) of Contract Act 1950 (Act 136)

12

The Federal Court in Guthrie Waugh Bhd v Malaippan Muthucumaru,24

whilst

reversing the decision of Sharma J in the High Court25

, agreed with the propositions

of law propounded by Sharma J in relation to the doctrine of consideration under

Malaysian law. On the scope of sections 2 and 26 of the Contracts Act, his Lordship

made the following comment26

:

In order for the contract to be valid and lawful, the contract must have

consideration as stated in section 26(a). Otherwise the contract can be void at the

operation of law. The contract must be a legal obligation and not merely moral,

social or religious.27

Besides, in the case of According to the case of Thomas v Thomas28

, the Learned

Judge decided that in order to make a promise enforceable as a contract there must be

'something which is of some value in the eye of the law'. And this is the basic feature

of the doctrine of consideration. Lord Judge in the case of Tweddle v Atkinson29

decided that consideration must move from the promisee himself and this means that

a person can only enforce a promise if he himself has provided consideration for it.

And the consideration has 'some value in the eye of the law'.30

In applying to the present case, Dato‟ Rashid only placed the order for Majestic Dawn

without give the consideration that have some value in the eye of law which can be

interpreted as deposit. Dato‟ Rashid only booked for the painting without giving any

23

Contract Act 1950 (Act 136)

24 [1972] 2 MLJ 62, FC.

25 [1972] 1 MLJ 35, HC

26 Sinnadurai. V. (2011) Law of Contract (fourth Edition) Selangor, Malaysia : Lexis Nexis

27 [1972] 1 MLJ 35 at 39, HC

28 (1842) 2 QB 851 at p 859

29 (1861) B & S 393 at p 169

30 Pollway v Abdullah [1974] 1 WLR 493 at p 497 see also Thomas v Thomas(1842) 2 QB 851

13

deposit that can confirm that his acceptance of the offer. According to the applicable

law of contract in Malaysia, an agreement without consideration is void31

By referring to the above cases and statutory provisions, it can be stated that giving

acceptance only is not enough to create an agreement in the eye of law. The

acceptance must come with the valuable and lawful consideration from the offeree to

the offeror. Since there is no valid consideration which is deposit from Dato‟ Rashid

to Fann Wow Gallery, Fann Wow Gallery has the right to revoke the acceptance of

Dato‟ Rashid to buy the painting.

31

Section 26 of the Contract Act 1950 (Act 136)

14

3. THE COURT ORDER OF SPECIFIC PERFORMANCE WAS INAPPROPRIATE.

A. THE PAINTING OF THE MAJESTIC DAWN IS EASILY REPLACEABLE

MONETARILY.

As a general rule, specific performance is applied in breach of contract actions where

monetary damages are inadequate, primarily where the contract involves land or

unique chattel. However, the application of specific performance in this present case

is inappropriate since it involves the painting of32

the Serene Ocean and it can be

easily replaceable monetarily.

The law grants damages to a party as monetary compensation for the damage, loss or

injury that he suffered through a breach of contract. To succeed in respondent‟s claim

for damages, he must show that it was the appellant‟s wrong or breach of contract that

caused the respondent to suffer the said loss.

The manner of evaluating the loss in terms of money is called the measure or

quantum of damages. The general rule is that the appellant must pay monetary

compensation to the respondent so as to put him in the same or similar position, as far

as possible, as he would have been had the contract not been breached by the

appellant. The purpose of the award of damages is to compensate the respondent

rather than to punish or to recover any profit made by the appellant.

a. Nominal damages.

Where there is breach of contract, the party in breach is liable to pay damages. If

the breach did not cause any loss to the plaintiff, the court will award the plaintiff

nominal damages so as to acknowledge the fact that there was an infraction of the

plaintiff‟s legal right by the defendant. Nominal damages may also be awarded

32

Parakunnam Veetill Joseph's Son Mathew v Nedumbara Kuruvilla's Son and Others

15

where the fact of a loss is shown but the necessary evidence as to its amount is not

given.

In Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd33

, the appellant and

the respondent entered into a written agreement in April 1994 wherein the

respondent transported goods to and from the appellant‟s factory premises. The

agreement was for 10 years but the appellant terminated it in September 1997.

The respondent claimed damages for the losses suffered due to the breach. The

respondent tendered in evidence its audited statements of account did not show

how the loss was attributable to the alleged breach. The deputy registrar awarded

nominal damages of RM500 only to the respondent but the trial judge set it aside

and awarded damages for loss of profit and loss of capital. The appellant

appealed. The Court of Appeal allowed the appeal and restored the award of

RM500 as nominal damages. The respondent failed to prove the contents of the

statements of account and show how the contents were related to the alleged

breach of agreement.

The parties to a contract may agree beforehand what sum shall be payable by way

of damages in the event of breach, as, for example, where a builder agrees that he

will pay $50 a day for every day that the building remains unfinished after the

contractual date for completion. A sum fixed in this manner falls into first class.

First class: it may be a genuine pre-estimate of the loss that will be caused to one

party if the contract is broken by the other. In this case it is called liquidated

damages and it constitutes the amount, no more and no less, that the plaintiff is

entitled to recover in the event of breach without being required to prove actual

damage.34

In this present case, it is liquidated damages as the intention is to assess the

damages for breach of the contract. The respondent, Dato‟ Rashid placed an order

for Majestic Dawn at a price of RM1.5 million and the price is measurable. It

33

[2007] 2 MLJ, CA.

34 Wallis v Smith (1882) 21 ChD 243 at 267, per Cotton LJ

16

would, in addition, appear that in order to recover compensation, the plaintiff

must prove the actual damaged suffered.35

However since, Dato‟ Rashid does not

pay any deposit to Fann Wow Gallery, Dato‟ Rashid does not suffer any damage

due to the revocation of this contract.

B. SERENE OCEAN, ANOTHER PAINTING OF DONG YING, CAN BE A

GOOD REPLACEMENT TO MAJESTIC DAWN.

The act of Mr. Kenny to offer Serene Ocean36

to Dato‟ Rashid as the replacement of

Majestic Dawn is a great deal on the reason that Serene Ocean has the same quality

and value as the Majestic Dawn.

The quality and the value of Serene Ocean was proved by various art dealer‟s website

who described every painting of Dong Ying as rare and exquisite due to the

uniqueness of the Chinese birds and flowers theme or motive37

. Besides, all the

painting drawn by Dong Ying including Serene Ocean was drawn using “great

freehand style” painting technique38

. Besides, all of fifty types of dye used for the

painting are prepared by Dong Ying herself, using the material of shale, a variety of

colourful raw stones, obtained from Changliang Mountain in northern Tibet, China39

.

Thus, apart from there is no contract between Dato‟ Rashid and Fann Wow Gallery,

specific performance is inappropriate because the painting of Serene Ocean can be a

great and good replacement to Majestic Dawn as Serene Ocean has the same quality

and rare and exquisite artistic value as the Majestic Dawn.

35

Sinnadurai. V. (2011) Law of Contract (fourth Edition) Selangor, Malaysia : Lexis Nexis at page 671-

672

36 Moot Problem, Para 4, line 5-6

37 Moot problem, Para 2, line 4-5

38 Moot problem, Para 2, line 6

39 Moot Problem, Para 2, line 6-9

17

CONCLUSION AND PRAYER FOR RELIEF

Based on the foregoing reasons, Fann Wow Gallery respectfully requests this honourable

court l to ADJUDGE and DECLARE that:

1. There is no contract made by Fann Wow Gallery and Dato‟ Rashid since it is merely

an invitation to treat.

2. There was no acceptance made by Fann Wow Gallery to Dato‟ Rashid since silence

does not amounted to acceptance.

3. Even if the notice did amount to an offer, Fann Wow Gallery has the right to revoke

the acceptance due to no consideration from Dato‟ Rashid in the form of deposit.

4. The specific performance ordered by High Court was inappropriate since the unique

Majestic Dawn is easily replaceable monetarily and Serene Ocean can be a good

replacement to Majestic Dawn.