A valid enforceable contract exists despite the absence of a formal agreement if essential elements of the contract are established.

Shaik Daud Ismail JCA:

This is an appeal against the decision of the High Court Seremban given on 29 April 1998 whereby the learned judge dismissed the originating summons dated 7 November 1997 (the OS). The OS was filed by the appellant for a declaration that, the appellant had accepted the respondent's offer to purchase a piece of land and for an order that the respondent do sign the sales and purchase agreement and complete the sale.

The facts of the case which are not in dispute are that by a letter dated 13 September 1997, the respondent informed the appellant that the respondent's head office had approved the sale of 9,461.107/10,000 shares in a piece of land held under Geran No. 17268 Lot No. 4034, Mukim of Port Dickson (hereinafter referred to as "the said land"). This sale was to be by private treaty to the appellant subject to the terms and conditions contained therein. They are:

(a) Sale price shall be RM1.9 million.

(b) The sale is subject to all existing incumbrances.

(c) The official assignee shall not be responsible should the purchaser fail to effect a transfer of the title.

(d) The official assignee shall be absolved from any costs incurred in the sale.

(e) Payment of 10% of the purchase price shall be made within seven days from the receipt of the letter of offer and to pay the balance within a period of three months, thereafter.

The terms appeared to be quite normal and the appellant duly accepted the offer and on 15 September 1997, paid a sum of RM190,000 being 10% of the purchase price. The respondent issued a receipt for the same. Thereafter the appellant forwarded a draft copy of the sale and purchase agreement for the attention and approval of the respondent. The respondent made several amendments to the draft and returned the same to the appellant. The appellant agreed to the amendments and fair copies of the agreement were forwarded to the respondent for execution. The respondent did not execute the agreement. One month later the respondent requested the government valuer to value the said land. The government valuer in his report dated 27 October 1997, valued the said land to be RM3.765 million. Based on this report the respondent refused to conclude the sale, and filed a summons in chambers for an order to cancel the sale and purchase agreement under s. 85(3) of the Bankruptcy Act 1967. This was later withdrawn.

The appellant then filed the originating summons for a declaration that the respondent had accepted the offer to purchase the said land and for an order that the respondent do execute the sale and purchase agreement and complete the sale. There are two issues to be decided. First and more importantly, whether a valid contract has been formed between the parties even though a valid sale and purchase agreement had not been executed yet. Secondly whether it is justifiable to refuse the appellant the reliefs sought for.

In the circumstances of this case we find no difficulty in holding that a valid enforceable contract had materialised between the parties. The offer to sell was made by the respondent and this offer was accepted by the appellant. In accordance with the terms of the sale, the appellant remitted the 10% deposit amounting to RM190,000 which amount was duly received by the respondent and they issued a receipt for it. Therefore, a valid enforceable contract had been formed. The parties have been identified, the property, the price and the terms too have been identified with sufficient certainty. Such an agreement is enforceable as if it was embodied in a sale and purchase agreement. Our finding is fortified by the decision in Charles Grenier Sdn. Bhd. V. Lau Wing Hong 1997 MarsdenLR 1514 .

After the respondent had accepted the RM190,000 they appeared to have a change of heart. They then requested the government valuer to value the said land and the government valuers came out with a report that the said land was worth RM3.765 million. The learned judge accepted t