Preston corporation sdn bhd case law of contract
Published on: Mar 4, 2016
Transcripts - Preston corporation sdn bhd case law of contract
PRESTON CORPORATION SDN BHD
EDWARD LEONG ORS
PRESENTED BY :
MOHAMAD ZULFAKAR BIN ZULRAMLI :]
Appellants : Preston Corporation Sdn Bhd.
Respondents : Edward Leong & ORS.
Judges : 1) Suffian L.P
2) Salleh Abbas
3) Abdul Hamid F.JJ.
Court : Federal Court Civil Appeal (Kuala
In this case the appellants were a company carrying on the business of
publishing books and the respondents were a firm of printers. There was
a relationship between the appellants and the respondents. The
appellants paid all the printing charges except the disputed sum of $500
which they claimed was an overcharged by the respondents. They also
withheld payment of the extra charges claimed by the respondents for
reproducing the film positives used in the printing of the books because
the respondents claimed ownership of the films. The respondents sued
the appellants for the sum of $500 which they alleged was the balance
of printing charges and a further sum of $28,052 as extra charges for
reproducing the films positive whose ownership was disputed. The
respondents pleaded that they were entitled to the ownership of the film
positives because of the express terms of the contract between them to
that effect and also because of a trade usage prevalent in the printing
industry. The appellants on the other hand denied that the contract
contained such terms and alleged trade usage.
THE ISSUE OF THE CASE :
There were an exchange of letters which
commenced with the respondents submitting
quotations for the printing of the books and
was followed by the appellants issuing the
The question is :
Thus the question i have to ask myself is this :
Were the parties ad idem when the quotations
were accepted or did these quotations
constitute binding offers? Because if they were
not, no contract between the parties could
come into existence at the moment when the
appellants’ printing orders were issued, but did
so only at the time when these orders were
confirmed or accepted by the respondents.
In the Federal Court decision of Preston
Corp Sdn Bhd (supra) ;
Salleh Abas FJ observes:
“an offer is an intimation of willingness by an offeror
to enter into a legally 15 binding contract. Its
terms 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.”
The Other Issues:
Whether or not the appellants were bound to pay
the disputed sum of $500 to the respondents.
Whether the respondents were entitled to the
payment for the extra charges.
Whether the respondents can claim ownership of
the film positives on the basis of trade usage.
Whether the evidence was sufficient to establish
the fact intended to be proved.
Ratio Decidendi - Judgement
The judgment of learned judge must be reversed
and that the appeal should be allowed with a
cost. Therefore, the respondents claim was
dismissed and the deposit should be refunded to
the appellant. The judgement was on the basis
ground of :
The learned judges finding and order as regards
the sum $500 were clearly erroneous and could
not be supported by the evidence as he took no
account at all of the admissions made by the
respondents that the disputed item was an
The contracts was formed and existed with offers
of printing orders from the appellant and the
acceptance by respondents confirmation.
Consequently, the film ownership clause
contained in the quotations was completely
irrelevant which not part of contract at all.
The alleged trade usage was not sufficiently
proved by the respondents which is reproduced
film positives belonged to printers who reproduce
them, although their reproduction costs are borne
by the customer.
The basis of the alleged trade usage seemed
unreasonable because it conflicted with the
ordinary sense of justice commonly understood
by reasonable men in that a person who pays for
an article or for making it should be entitled to it
and not be deprived of its ownership for which he
has paid or required to pay
This case signifies one of the principles in
contract law which is to distinguish offer from
invitation to treat (ITT) in order to identify
existence of a contract between two parties. As
the quotations stated by the respondents are
merely a supply of information for appellants in
the inquiries of the price of printed books and
their delivery dates. Thus, there was no contract
formed at the time but only was concluded with
an effective communication through offer of
printing orders by the appellants and acceptance
of confirmation by respondents.
Plus, the ownership of the reproduced film
positives should not be claimed by respondents
as terms in the quotations submitted by them
because it was neither a binding offer nor a part
of contract at all.