Business Law Case Study Question

There is a case law which found on the web regarding on the
law of binding contract.
It was on 9 February 2010, James received a written offer
from Bond for the purchase of James's antique car for the
sum of RM55,000. The letter stated that if Bond did not give
a reply within this two weeks James will made an assumption that
Bond had accepted that offer. However, Bond did no reply on this.
Therefore, James claim that there is a binding contract between
him and Bond.

However, i personally think that there is no binding contract in
this issue. Silence never represent acceptance. Other than that
to make a binding contract to be lawful, there are six elements to
be considered. The elements are :
1) Offer
2) Acceptance
3) Mutual Agreement
4) Capacity
5) Consideration
6) Legality

Therefore , i think there is no binding contract developed
between them in this issue.

Question of the day


I found a question on the internet which voice out the cases like this:

If a subsidiary company increase its authorized and paid up share capital
without knowledge of holding company just to dilute the
shareholding percentage. Kindly inform what are the precautions
in legal terms to be taken by a Holding Company to Control
the increase or decrease the Paid up as well as Authorized Share
Capital in its Subsidiary Companies.

According to the law of company, the authorised capital of the
company can be increased at the EGM of the shareholders by
passing a ordinary as well as special resolution. At this kind of
situation, the authorised capital can not be increased by t
he subsidiary company on its own or without the consent of
the holding company. On the other hand, in the case of
increase of paid up capital by the subisidiary company
within the limit of authorised capital, precaution such
as by having control over the composition of board of
directors of the subsidiary company can be taken by
the holding company.

Revenue/ Income tax law

Sources of income which is subject to income tax are as follow:

• Gains and profits from trade, profession and business
• Salaries, remunerations, gains and profits from an employment
• Dividends, interests or discounts
• Rents, royalties or premiums
• Pensions, annuities or other periodic payments/li>
• Other gains or profits of an income nature not mentioned above.

in an example:
Harlina operates a petrol station in Greenlane, Penang,
under the dealership operated by Petronas. under
the dealership agreement with Petronas, the principal
agreed to reimburse Harlina in respect of sums expended
by heron sales promotion, advertising, etc, in return for Harlina
agreeing to buy for resale only the company's brand
of petrol. During the year 2007, a reimbursement
of RM50,000 was receivable from Petronas in respect
to a lucky draw organizedby the petrol station.

Issue: Advise Harlina on whether the reimbursement of RM50,000 payable
by Petronas is taxable.

Discussion : It is taxable. Such a receipt is in essence a recovery of advertising and
promotion expenses which are deductible business expenses.