Q.
Johnson is an avid property investor. He has appointed Ali as his agent to negotiate and buy a bungalow from Ramu. Ramu offered to sell his bungalow in Mudah.my at RM1.4mio. Ali called Ramu for an appointment to view the house. Ramu was busy, so he SMS (Short Messages) back to Ali, indicating that he was in a meeting, and would prefer him to WhatsApp him. With appointment made on the coming Saturday, Ali brought Johnson to have a view of the bungalow, and all parties were satisfied apart from the final price of RM1.4mio. In the WhatsApp immediately after viewing the bungalow, Johnson specified to Ramu that he would pay first RM700 by way of loan from bank and second RM700 from his sale of some company shares - which would take probably a month. Johnson told Ramu in WhatsApp he wanted to buy the bungalow for and if Ramu would agree with this terms. He also WhatsApp that Ramu could informed Ali or himself soonest possible of this deal. Later that evening, after discussing with his wife, Johnson again WhatsApp to Ramu that he would buy the bungalow as its original deal with help from his wife.
Over the next 2 days, Ali or Johnson did not get any news from Ramu. On the following Wednesday, Ali could not wait no more and called Ramu. Ramu said there was another buyer on Monday who bought the bungalow at RM1.4mio. Deposit was already taken from this new buyer. Ramu said Johnson was too indecisive, like a woman.
Advice Ali and discuss the case above with landmark case laws.
A.
S.161 of Contract Act 1950 has effect on this case. A notice which was sent but not received (without knowledge) by the recipient does not effect the termination of contract. Refer "The seller changed his mind again!".
"The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them."
WhatsApp and SMS are new technologies not available in the old day, hence citing landmark cases would be impossible. The nearest to such scenario would be drawing from the use of telegraph in the case of Stevenson, Jacques & Co v McLean 1880 (hereafter Stevenson).
Stevenson was a case of dispute over a contract made via telegraph for purchase of iron. Stevenson was an iron merchant who was purchasing supply of iron from McLean who held warrant to trade iron. McLean offered to sell iron to Stevenson, specifying the quantity, price and time, the essence of time - "open till Monday" was particularly important in this case discussion.
However, on Monday morning, Stevenson telegraphed McLean stating that he would prefer to have the same quantity and price of iron to be delivered in staggered orders over 2 months period, or whatever longest period possible. On this inquiry, McLean did not reply to Stevenson.
Later that Monday, McLean sold all his available stock to a third party, rendering no more iron supply for Stevenson. Upon selling all his warrants, McLean then sent a telegraph to Stevenson informing him of the same. But, before Stevenson could receive this telegraph (as it took time to be delivered), Stevenson rushed to confirm the order in its original terms by another telegraph. This being the case as he was worried that he would have no iron supply if he did not take the original offer.
And, it was truly that there was no more stock left for Stevenson. Hence, Stevenson sue for the damage he suffered.
The similarity of the above case with Stevenson is relied upon in this WhatsApp and SMS case with Johnson and Ramu. The difference in today's technology is WhatsApp and SMS have replaced Telegraph.
Johnson has sought a modification to the contract where he would pay half now and half later by selling his shares in company. This part is like Stevenson wanted to stagger deliver his iron supply from McLean. In such scenerio, it was not counter offer. Therefore, the original contract was still intact. In Stevenson, Lush J held that the plaintiff's (Stevenson) telegram was not a rejection of the offer but a mere inquiry about whether the terms could be modified. It was also not 'counter offer' which would have terminated the contract, like in the case of Hyde v Wrench 1840 and Normile v. Miller 1985.
Although McLean was at liberty to revoke the offer before Monday finished, that was not effective until it reached the plaintiffs. Lush J charged the defendant the amount of £1900 to be paid to the plaintiffs subject to any reduction by subsequent ruling.
From above, the judgment in Stevenson's case was awarded as McLean had to pay damage to Stevenson for not filling his order. So, similar in this case Ramu has defaulted the contract he had with Johnson that he was to reject Johnson's acceptance before he could offer to a new party. Indeed, Ramu has sold the bungalow without first rejecting Johnson's acceptance. He has not even done the part of McLean when a telegraph was returned to Stevenson informing that there was no more iron warrant left for him! Ramu did not even have the courtesy to WhatsApp Johnson or Ali that his bungalow had been sold to a third party!
If Ramu had replied Johnson or Ali with WhatsApp or SMS that he could not accept the payment mode of half now half later or he did not like the idea of getting help from Johnson's wife, he would have avoid this consequences.
Ref:
Stevenson, Jacques & Co v McLean 1880. Available from:
http://en.m.wikipedia.org/wiki/Stevenson,_Jacques_%26_Co_v_McLean
http://en.wikipedia.org/wiki/Hyde_v_Wrench