Whether or not a contract has been made by a valid offer and acceptance during the course of correspondence can sometimes be a question not free from difficulty. The conventional approach to this question in the words of Lord Diplock in Gibson v Manchester City Council [1979] 1 WLR 294 is that of "looking at the handful of documents relied upon as constituting the contract sued upon and seeing whether upon their true construction there is to be found in them a contractual offer to sell … and an acceptance of that offer …". It is this approach which I propose to adopt in determining the primary issue which arises for decision in this case.

This brings me to a consideration of the particular circumstances of this case.

The plaintiffs are the executors and trustees of the estate of Tan Tye Chek ("the deceased") who died on May 5, 1981 and have brought this action against the defendants, Paya Terubong Estate Sendirian Berhad, an incorporated family company, for specific performance of what is claimed to be a contract for sale of 20 acres of land comprised in part of what was originally Lot 59(1), later re-numbered Lot 2552 Mukim 13, North East District, Penang, but which is now part of Lot 3440 ("the land concerned") at the price of $3,000 per acre.

By way of background, certain facts must be mentioned.

According to the unchallenged evidence of Haji A. Kassim bin Mohd. Hussein, a licensed appraiser and valuer, who was familiar with all the lands of the defendants, Lot 2552 was originally 442.138 acres in area but the state government had acquired 192.028 acres of it. The unacquired portion was later sub-divided into three lots, namely, Lot 3439 in area 144.1 acres, Lot 3440 in area 44.18 acres and Lot 3441 in area 61.83 acres. The land concerned, as I have already mentioned, was an undivided portion of Lot 3440 in area 20 acres.

This witness expressed the view that as Lot 3440 was subject to the provisions of the Land Conservation Act 1960, it would not be possible to subdivide it into two lots of 20 acres and 24.18 acres. He explained that this was because it was "hill land" and that it was the practice of the Land Authority to refuse applications for subdivision of such land. He gave a further reason why it would not be possible to subdivide Lot 3440 into two lots; this was because there would be no access. Amplifying this part of his evidence, he pointed out that the land adjoining Lot 3440 to the north and west was state land which had been acquired by the state government before World War II.

Under cross-examination, the witness was asked whether it would be possible for the land concerned to be excised and he replied that this would depend on the State Executive Committee which would act on the advice of the State Planning Authority.

So much for the history of the land concerned. It is now necessary to mention the deceased's interest in Lot 2552 prior to the acquisition of part of it by the state government and prior to the correspondence which gave rise to the dispute the subject of this action.

This brings me to the testimony of Mrs. Jessie Lebroy, the managing director of the defendants, at the time of the hearing and a director at all material times to this suit.

She testified that the defendants were a family company established by her grandfather, Foo Choo Choon, and that after his death his children and grand-children became its directors and shareholders. Until today, no outsider has been admitted either as director or shareholder and that it was not the policy of the company to do so in the future.

It would appear from the evidence of this witness that the deceased had been well acquainted with the land concerned, for long before the events which gave rise to the dispute, the subject of this action, he had been granted a lease under an indenture dated April 6, 1959 over part of Lot 59(1) and Lot 59(4) which then were under blukar. By the terms of this indenture, the deceased was to plant the whole