Week 2: [ Chapter 7: Offer and Acceptance ]

Contract: An agreement between two or more persons that the law will enforce.

Valid Contract: An agreement that satisfies all legal requirements. Contract

Void Contract: An agreement treated by law as nullity, never existed at all.
Unenforceable Contract: An agreement that is valid and legally binding but cannot be
enforced (i.e. Due to legal provision).
Forms of Contracts:
Bilateral Contract: An agreement where the offeror makes a promise in return for a (1) Valid / Void / Unenforceable
promise on the part of the offeree. (2) Bilateral / Unilateral
Unilateral Contract: An agreement where the offeror makes a promise in return for an act (3) Simple Contracts: Oral (Parol) / Written / Partial / By
to be performed by the offeree. conduct
(4) Special Contracts: By deed / Contracts under seal
Offer: An expression of willingness to contract on specified Refer to Chapter 8 Refer to relevant Chapters Acceptance: A final and unqualified expression of assent to
terms, made with the intention that it is to become binding as the terms of an offer
Absence of Vitiating
soon as it is accepted by the person to whom it is addressed. Capacity Requirements for Formation of Contract
Factors
Note: Acceptance can be signified orally, in writing or by
Requirements: conduct.
(1) Offer must be communicated
Intention to Create
(2) Proposal of the terms of the exchange Mention 1 Offer Consideration Acceptance Mention: Gay Choon Ing v Loh Sze Ti Terence Peter (2009)
Legal Relations
(3) Expression of willingness to be bound Mention 1
Refer to Chapter 8 Refer to Chapter 8
Mention 1: Gay Choon Ing v Loh Sze Ti Terence Peter (2009)

Objective Test of Agreement

Offers to Public Invitation to Treat Termination of Offer Must be Final and Unqualified Must be Communicated to Offeror Exceptions

Objective Test: Determines a party’s

An offer made to a group or to the An expression of willingness to If an offer is terminated prior to its intentions by looking at the way in which The offeree must agree to all the Before a binding contract can come (1) Postal acceptance rule
whole world. In such a case, any negotiate with the other party. At acceptance, no contract can come the party’s words and conduct would be terms contained in the offer. Any into existence, the acceptance must → Acceptance takes place at the
member of the group or any this stage, there is no intention to be into existence. understood by the reasonable person in attempt on his part to introduce new be communicated to the offeror. time when the letter of acceptance
member of the public may accept bound. the position of the recipient. terms would result in a is posted.
the offer. Modes of Termination: counter-offer. Apart from the direct oral or written → Conditions:
Invitation to treat is not to be (1) Revocation (Withdrawal) Case 1 Note: A contract comes into existence communication, acceptance can (a) Postal acceptance must be
Note: No notification of acceptance regarded as an offer. → Takes effect upon when a definite offer made by the offeror take place through conduct. Case 1 expressly or impliedly authorized.
is required for unilateral contracts. communication. is accepted unconditionally by the (b) Letter of acceptance must be
Determining Factors: (2) Counter-offer Case 4 offeree. Note: properly stamped and addressed.
Case: Carlill v Carbolic Smoke Ball (1) Intent of the party in question (3) Lapse of time Case 5 (1) The offeror can, however, (2) Acceptance by silence
Company (1893) (2) Based on prior cases (4) Failure of a condition Case 6 Mention: Norwest Holdings Pte Ltd (in choose to waive any requirement as → Acceptable: Offeree seeking the
(5) Death liquidation) v Newport Mining Ltd (2010) to the form of acceptance provided possibility of acceptance by his
General Forms of ITT: → Auto-terminate: Offeree knows of that the acceptance has not silence. Case 2
(1) Media advertisements Case 1 offeror’s death prejudiced the other party. → Unacceptable: Offeror who is
(2) Display of goods for sale Case 2 → Open offer: Offeree does not (2) The contract is only complete seeking to impose on the offeree
(3) Auction sales Statute 1 know when the acceptance is received by the term of acceptance by his
(4) Tenders Mention 1 → Terminate: Offeree dies before the offeror. Case 2 silence. Case 3
acceptance (3) Ignorance of offer
Note: Case 1: Brogden v Metropolitan → A person cannot accept an offer
(1) It is still possible for an Note: Railway (1877) to which he has no knowledge of.
advertisement on the internet to (1) For revocation, communication Case 2: Entores Ltd v Miles Far Case 4
constitute as an offer. can be through a third party. Case 2 East Corporation (1955) (4) Cross-offers
(2) At an auction sale, the call for (2) For revocation, it is uncertain for → There is no contract in the case
bids by the auctioneer is an exact point of the request to come of cross-offers as there is no
invitation to treat. to attention. Note: meeting of minds.
(3) For revocation, there is no legal (1) A contract will come into existence only if the terms of that agreement are both certain and complete. → Happens when two parties send
Case 1: Chwee Kin Keong v obligation for the offeror to keep the (2) There may be no enforceable contract if the agreement is conditional, incomplete or vague. offers to each other in identical
[Link] Pte Ltd (2004) offer open for a period even if he terms and at about the same time.
Case 2: Pharmaceutical Society of had promise to do so. Case 3 (5) Battle of forms
Great Britain v Boots Cash → Occurs when there are
Chemists (1953) Case 1: Byrne v Van Tienhoven Electronic Transactions Act: counter-offers constantly being
(1880) (1) Section 11(1): An offer and the acceptance of an offer may be expressed by means of electronic communications. made. No concluded concluded
Statute 1: Sale of Goods Act Case 2: Dickinson v Dodds (1876) (2) Section 11(2): Contracts shall not be denied validity or enforceability on the basis that electronic communication was used. contract can be made. Ultimately,
Case 3: Routledge v Grant (1828) (3) Section 12: Statements will not be denied legality, validity or enforceability when in the form of an electronic communication. the contract is formed on the terms
Mention 1: UOL Development Case 4: Hyde v Wrench (1840) (4) Section 13(1): The time of despatch of an electronic communication is: of the party who fires the last shot.
(Novena) Pte Ltd v Commissioner Case 5: Ramsgate Victoria Hotel v (a) the time when it leaves an information system under the control of the originator; or Case 5
of Stamp Duties (2008) Montefiore (1866) (b) if not left an information system under the control of the originator, the time or receival.
Case 6: Financings Ltd v Stimson (5) Section 13(2): Time of receipt of an electronic communication is when it is capable of being retrieved by the addressee. Case 1: Adams v Lindsell (1818)
(1962) (6) Section 13(3): Time of receipt of an electronic communication at an electronic address that has not been designated is when Case 2: Re Selectmove Ltd (1995)
it is capable of being retrieved by the addressee and when the addressee is aware of the electronic communication. Case 3: Felthouse v Bindley (1862)
(7) Section 13(4): Electronic communication is deemed to be capable of retrieval when it reaches the electronic address. Case 4: R v Clarke (1927)
(8) Section 13(5): Electronic communication is deemed to be despatched from the originator’s place of business and is deemed Case 5: Butler Machine Tool Co v
to be received at the addressee’s place of business. Ex-Cell-O Corporation (England)
(9) Section 14: Electronic proposals not addressed to specific parties are invitation to offers unless expressly mentioned. Ltd (1979)
Week 3: [ Chapter 8: Consideration and Intention to Create Legal Relations ]

Contract
Refer to Chapter 9 Refer to relevant Chapters
Absence of Vitiating
Capacity Requirements for Formation of Contract
Consideration: Something that has value in the eyes of the Factors
law and given in exchange for a promise. This is illustrated by
a “benefit-detriment” analysis.
Offer Acceptance Intention to Create Legal Relations: Parties must have
Consideration must be distinguished from a condition to which intended the agreement to be legally binding.
a promise is subject. Case 1
Refer to Chapter 7 Refer to Chapter 7
Mention: Norwest Holdings Pte Ltd (in liquidation) v Newport
Intention to Create
Case: Chappell & Co Ltd v Nestle Co Ltd (1960) Consideration Mining Ltd (2010)
Legal Relations

Benefit-Detriment Exchange Value in Eyes of Law Exceptions Social and Domestic Agreements For social or domestic arrangements, there
is a presumption that parties do not intend
the agreement to be legally binding. Case 1
A valuable consideration, in the sense of The law only enforces bargains as Consideration must be sufficient but Contract by Deed
Exception: Unless with clear intention.
the law, may consist either in some right, opposed to gifts. need not be adequate.
interest, profit, or benefit accruing to the
Case 1: Balfour v Balfour (1919)
one party, or some forbearance, Sometimes, a grossly inadequate
detriment, loss, or responsibility given, consideration may indicate duress or Formal contracts which have been
suffered, or undertaken by the other. undue influence (Chapter 14). signed by parties before a witness,
Conditions
sealed and delivered do not require Business and Commercial
consideration. Assessments For business and commercial agreements,
the presumption is that parties intend to
create legally enforceable obligations.
Consideration Must be Requested by the Consideration Must Move From the
Consideration Must Not be Past Promissory Estoppel Exception: Unless expressly mentioned.
Promisor Promisee
Case 1

Case 1: Rose & Frank Co v J R Crompton &

Benefit conferred or detriment suffered Any act done prior to and independently A person can only enforce a promise if Meant to prevent a person from going back on his promise even though the promise is not
Bros Ltd (1923)
by the promisee must be requested by of a promise cannot be regarded as valid the consideration for the promise is supported by consideration.
the promisor. consideration for the promise. furnished by him.
Requirements:
Case: Combe v Combe (1951) Note: Consideration does not need to (1) Clear and unequivocal promise.
move to the promisor. → Promise does not have to be express, but can be implied by words or conduct. Case 1
Exceptions
(2) Detrimental reliance.
Case: Tweddle v Atkinson (1861) → Did the promisee rely on the promise and act differently. Case 2
(3) Inequitable to revert on promise.
(1) Act was done at promisor’s request. → Unjust if the promise has been relied upon.
(2) Parties understood that the act will (4) Shield, not sword.
be compensated. → Principle may only be invoked to defend or resist a claim. Case 3
(3) Such payment would be enforceable
if it had been promised in advance. Case 1: Hughes v Metropolitan Railway Company (1877)
Case 2: Lam Chi Kin David v Deutsche Bank AG (2010)
Case: Pao On v Lau Yiu Long (1980) Case 3: Combe v Combe (1951)

Intangibles and Moral Obligations Forbearance and Compromise Existing Public or Legal Duty Existing Contractual Duty

In general, the law does not allow moral A party may agree to refrain (forbear) Legal obligations do not form good Owed to Third Party Owed to Promisor
obligations or good behaviour to be used from enforcing a claim, or to surrender consideration. Such a rule is said to be
to extort a favourable promise from the the claim (compromise) in consideration necessary to prevent public officers from
other party. for a promise. extorting money for services which they
The performance of an existing (1) In return for a promise for more.
were legally bound to render. Case 1
contractual duty owed to a third party → Such a promise is generally not regarded as sufficient consideration. Case 1
Case: White v Bluett (1853) Conditions:
amounts to sufficient consideration. → However, any performance which is over and above the promisee’s existing contractual duty
(1) Claim made on reasonable grounds. Exception: Where the act exceeds the
Case 1 is sufficient consideration. Case 2
(2) Belief in fair chance of success requirements of the legal duty. Case 2
(2) In return for a promise for less.
(3) No fact which may affect the validity
Case 1: Scotson v Pegg (1861) → The payment of a lesser sum does not form complete satisfaction of a debt. Case 3
of the claim is concealed from the other. Case 1: Estate of Lee Rui Feng
Dominique Sarron, deceased v Najib
Case 1: Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991)
Case: KLW Holdings Ltd v Straitsworld Hanuk bin Muhammad Jalal (2016)
Case 2: Hartley v Ponsonby (1857)
Advisory Ltd (2017) Case 2: Glasbrook Bros v Glamorgan
Case 3: Foakes v Beer (1884)
County Council (1925)
Week 4: [ Chapter 10: Terms of the Contract ]

Circumstances that Give Rise to Disputes Over Contractual Terms: Exemption Clauses Contract Objectives of the Law on Contractual Terms:
(1) Intervention of extrinsic evidence. (1) Promote certainty and predictability of contractual undertakings.
(2) Misrepresentation of claims. Refer to Chapter 11 (2) Integrate social and public interest policies.
(3) Unequal weightage of terms. (3) Provide remedies to address terms of lesser importance.
(4) Lack of particular eventuality.

Terms of Contract

Extrinsic Evidence Contractual Terms

Parol Evidence Rule Interpretation of Contracts Terms and Representations Implied Terms Relative Importance of Terms

General Rule: Clarifies whether, when and to what extent extrinsic Mere Puff: The normal exaggeration and Terms that are not “expressly” mentioned. When a term has been breached, the court has to
The parol evidence rule prohibits either party from evidence may be admitted for the purposes of grandstanding that is part of contractual negotiation. decide on the remedy to accord the innocent party.
attempting to displace the contents of a written interpreting a written contract under proviso (f) (S 94). → Legally insignificant. Note: An “entire agreement clause” in a written
contract by referencing to evidence extrinsic to the Representation: A statement that induces the contract would generally not exclude the implication of This is determined by classifying the terms and
document. contract to be formed. terms into a contract. providing remedies for their breach accordingly.
→ If false, liable under misrepresentation.
Term: A critical requirement for the execution of the
contract.
Exceptions: Approach: Terms Implied in Fact: Case 1 Condition:
→ If false, liable under breach of contract.
(1) To explain the invalidness of a contract. (1) Interpret the written words of a contract by → Premised on the failure by parties to address their The legal term for an important term.
→ Permits a contracting party to challenge the validity considering the plain language of the contract/term. minds on particular matters.
of a written contract by showing, through extrinsic (2) Courts may consider extrinsic evidence of context → A term would be implied only if necessary to give Effect of Breach of Condition:
evidence, that the contract was the result of a vitiating admitted under proviso (f) (S 94). Guidelines: efficacy to the contract. Option to terminate contract.
factor or was affected by a lack of consideration. → Such evidence may be admitted even if the plain (1) Request to verify. → Approach:
(2) To elaborate on the terms of agreement. Case 1 language is neither ambiguous nor absurd. → During a negotiation prior to the contract, when A (1) Ascertain if there is a true gap in the contract. Warranty:
→ Permits proof of a separate oral agreement (or → This is because the plain language, when viewed tells B something and then qualifies it to the effect (2) If there is, consider if it is necessary to imply a The legal term for a minor or unimportant term.
collateral contract) pertaining to any matter on which against the factual context in which the contract was “don’t take my word for it, get an independent term to give the contract “business efficacy”.
the written contract is silent, and that is not made, might become ambiguous or absurd. verification”, the court will likely hold what A told to B (3) Imply the suggested term only if it would pass the Effect of Breach of Warranty:
inconsistent with the terms of the contract. (3) However, such extrinsic evidence must meet all of as a representation (instead of a term). Case 1 “officious bystander” test. (“Oh, but of course!”) Rights to damages. In Singapore, the option to
(3) To explain the conditional precedent to a contract. the following criteria: (2) Importance of statement. terminate a contract is available for breaches of
→ Permits proof of a separate oral agreement that → Evidence must be relevant. → If the statement in question is so important to one Terms implied in law: Case 2 implied warranties under certain circumstances.
lays down a condition precedent for the attaching of → Evidence must be reasonably available to all party that he would not have entered into the contract → Concerns specific contracts, usually defining
any obligation in a written contract. contracting parties. but for such statement having been made, the court relationships between parties such as landlord and Innominate Term: Case 1
(4) To explain the modification of a contract. Case 2 → Evidence must relate to a clear or obvious context. will likely hold that statement to be a term and not a tenant, or employer and employee. Terms that have not been expressly designated or
→ Permits a party to adduce extrinsic evidence of a representation. Case 2 → Here, the courts imply a term to give effect to stated by parties to be conditions or warranties, and
subsequent oral agreement to rescind or modify any Note: (3) Timing of statement. policies intended to make the relationship work for that they cannot be immediately categorised as either type
terms of an existing written contract, if there is no law (1) There is no absolute ban on admitting extrinsic → If A makes a statement about the subject matter of particular category of work. simply by considering their content.
requiring the subsequent modification to be in writing. evidence of “previous negotiations” or “subsequent the contract to B shortly before they enter into the
(5) To explain the use of a customary practice. conduct” under proviso (f) (S 94). However, such contract, the courts would likely hold that this Terms implied by statute: Approach to Innominate Terms:
→ Permits a party to offer extrinsic evidence to evidence would be inadmissible for failing to satisfy all statement is a term and not a mere representation. → Terms that must be implied in some types of (1) Condition-Warranty approach.
demonstrate that a particular custom of the trade must of the required criteria. Case 3 contracts pursuant to law passed by Parliament. → Determines whether the contracting parties
be implied into, and therefore become part of, the (2) An “entire agreement clause” will usually not (4) Oral statements and written contracts. intended the term to be a condition or a warranty.
written contract except where this is inconsistent with exclude the admission of extrinsic evidence to aid in → Where parties, after negotiations, put their Terms implied by custom: Case 3 (2) Hongkong Fir approach.
its express terms. contractual interpretation under proviso (f) (S 94). agreement in writing, the courts are likely to hold what → Concerns contracts relating to specialist subjects → Only upon determining that the term is an
(6) To clarify the meaning of terms found in a contact. (3) Extrinsic evidence should only be “used to explain they say during the pre-contractual negotiation that is such as the sale of commodities, which take place in innominate term, the court must consider whether the
→ Permits the introduction of extrinsic evidence to and illuminate written words, and not to contradict or not put in writing as a representation and not a term. the context of trade associations and customary breach has deprived the innocent party of
illuminate the meaning to be ascribed to the written vary them. (5) Special skill and knowledge. practices that have developed rules on how the substantially the whole benefit he was intended to
terms in the contractual document. → A statement made by a person who possesses contract is to be performed and expands on the obtain.
Case: Zurich Insurance (Singapore) Pte Ltd v B-Gold special knowledge or skill in relation to the subject obligations of parties.
Note: An “entire agreement clause” can be used to Interior Design & Construction Pte Ltd (2008) matter of the statement, is more likely to be deemed Case 1: Hongkong Fir Shipping Co Ltd v Kawasaki
signify that the parties intend the written document to Case: Sandar Aung v Parkway Hospitals SIngapore as a term rather than a representation. Note: Kishen Kaisha Ltd (1962)
embody their complete contract. Pte Ltd (trading as Mount Elizabeth Hospital) (2007) → It is reasonable to assume that it is not the intention (1) For terms implied in fact, said terms depend on the
of a person making the statement, who has little or no facts of the case and does not set a precedent for
Case 1: Lemon Grass Pte Ltd v Peranakan Place expertise in the area, to someone, who has expertise future cases.
Complex Pte Ltd (2002) in the area, to expose herself to a breach of contract (2) For terms implied in fact, said terms will not be
Case 2: Stilk v Myrick (1809) action if the representation is false. Case 4 implied if contrary to the expressed intention of Approach to Classifying Terms Found in Next
contracting parties. Page
Case 1: Ecay v Godfrey (1947)
Case 2: Bannerman v White (1861) Case 1: The Moorcock (1889)
Case 3: Routledge v McKay (1954) Case 2: Liverpool City Council v Irwin (1977)
Case 4: Oscar Chess Ltd v Williams (1957) Case 3: Hutton v Warren (1836)
Week 4: [ Chapter 10: Terms of the Contract ]

Circumstances that Give Rise to Disputes Over Contractual Terms: Exemption Clauses Contract Objectives of the Law on Contractual Terms:
(1) Intervention of extrinsic evidence. (1) Promote certainty and predictability of contractual undertakings.
(2) Misrepresentation of claims. Refer to Chapter 11 (2) Integrate social and public interest policies.
(3) Unequal weightage of terms. (3) Provide remedies to address terms of lesser importance.
(4) Lack of particular eventuality.

Terms of Contract

Extrinsic Evidence Contractual Terms

Parol Evidence Rule Interpretation of Contracts Terms and Representations Implied Terms Relative Importance of Terms

Classifying Terms

Man Financial Approach The RDC Concrete Qualified by Sports Connection Approach

In Man Financial, the Singapore Court of Appeal Case: RDC Concrete Pte Ltd v Sato Kogyo (S) Pte
summarised the approach to determine the type of Ltd (2007)
term that has been breached.

Approach:
(1) Considering whether a statute classifies the term
as a condition.
→ For example, (S 13(1)) Sale of Goods Act provides
that in a contract of sale of goods by description, there
is an implied condition that the goods will correspond
with the description.
(2) Considers whether the term itself expressly states
that it is a condition.
→ The words “essential” or condition may serve as a
determining factor.
(3) Considers whether a prior case precedent is
available.
→ Sometimes, previous cases examining a standard
term in a generic contract would conclude that the
term was a condition.
→ When confronted with such a term in the same type
of contract, a court may conclude that the term was a
condition.
(4) Concerns whether the contractual term is given in
the context of a mercantile transaction.
→ Parties to commercial contracts place high value on
the certainty, predictability, and certain terms in
mercantile contracts have been regarded as
conditions in the absence of evidence to the contrary.

Case: Man Financial (S) Pte Ltd v Wong Bark Chuan

David (2008)
Week 4: [ Chapter 11: Exemption Clauses ]

Exemption Clauses: Terms that seek to exclude or limit the liability of one of the parties Terms of Contract Contract Non Est Factum: Occurs when there is a radical difference between what a party
in the event of a breach of contract. signed and what he thought he signed. The party must show that he had taken care in
Refer to Chapter 10 signing the document.
Types of Exemption Clauses:
(1) Exemption (or exclusion) clauses that seek to exclude liability completely. Misrepresentation: A false statement of fact made by one party to another party which
(2) Limitation of liability clauses that seek to limit liability (i.e. to a certain monetary induced the other party to enter into the contract. The statement must be one of a past
amount). or an existing fact, not a commendatory puff, opinion, or a statement of law.
(3) Indemnity clauses that seek to pass liability (or the risk thereof) to a third party).
Express Warranty: An express warranty is something that is explicitly guaranteed for
Exemption Clauses
Note: Reference to exclusion clauses in this chapter includes the three mentioned. any product or service.

Requirements for Exemption Clauses

Incorporation Construction Not Excluded or Restricted by Statutes

The courts will require the person relying on the exemption The exemption clause must include proper construction of Unfair Contract Terms Act (UCTA):
clause to show that the other party agreed to its incorporation the exemption clause to determine whether it actually covers Contracts that contain exemption clauses may be subject to
into the contract at the time of or prior to the contract; the breach that has occured. UCTA limitations. An exemption clause that is regulated by
otherwise, it will not be part of the contract. the UCTA could either be rendered totally inoperative, or
The interpretation of the clause is important because it allowed to operate if it passes a test of reasonableness.
Methods of Incorporation: determines the scope of protection available to the relying
(1) By signature. party. Effect:
(2) By notice. (1) Rendering the entire clause inoperative.
(3) By a previous course of dealing. Approaches to Limit the Scope of Exemption Clauses: (2) Allowing the clause to operate provided it passes the
(1) Contra proferentem rule. Case 1 “reasonableness test”.
→ In case of ambiguity, the term will be constructed against
the person seeking to rely on it. Contracts Where UCTA Does Not Apply:
By Signature By Notice Previous Course of Dealing → First stage: Determine the existence of ambiguity. Contra (1) Insurance
Proferentem would not apply when such clauses are clear (2) Creation, transfer or termination of rights, interests in land
and unambiguous. or intellectual property.
→ Second stage: Identify the proferens (the person against (3) Formation or dissolution of a company, or to its
Where the contract is not written or where the whose interest should be read). constitution or the rights and obligations of the corporation or
General Rule: Where the parties have previously made a
terms are in an unsigned document, the (2) Guidelines in the interpretation of exemption clauses its members.
The person signing the contract is bound by series of contracts, and those contracts
exemption clause may still be incorporated into attempting to exclude or limit negligence liability. Mention 1 (4) Creation or transfer of securities or any rights or interests
everything contained in the document, whether contained an exemption clause, that clause
the contract. → In cases of negligence, the party relying on the exemption therein.
he has read it or not. Case 1 may have been incorporated in a subsequent
clause must show that clear words in the clause fully covers (5) Others.
contract even though neither party made a
The person seeking to rely on it must show that his negligent liability.
Exceptions: reference to it at the time. Case 1
the other party knew, or ought to have known → First stage: Clause contains language which expressly Applicability of UCTA:
(1) Where non est factum is relied on.
that the document was one which could be exempts the party relying on the exemption clause by the (1) Business liability.
(2) Where there is misrepresentation as to the In order for a term to be incorporated on the
expected to contain such terms. use of the word “negligent”, “negligence” or a synonym. (2) Negligence liability.
existence, or precise scope of the extent of the basis of a previous course of dealing between
→ Second stage: If the first rule is not satisfied, the court will → S2(1): Cannot exclude liability for death or personal injury.
exemption clause. Case 2 parties, the course of dealing must be well
In both instances, he must show that he has consider whether the words used are wide enough to cover Exemption clause is inoperative.
(3) Where an express warranty that has established. Case 2
done everything reasonable to give sufficient negligence on the part of the party relying on the exemption → S2(2): May exclude liability for other than death or
become part of the contract overrides the
notice of the exemption to the other party. clause. personal injury subject to “reasonableness” test.
exemption clause. Case 3 Case 1: Spurling v Bradshaw (1956)
→ Third stage: If the second rule is not satisfied, the court (3) Breach of contract.
Case 2: Hollier v Rambler Motors (AMC) Ltd
Factors in Determining Reasonable Notice: must apply the third rule and consider whether the exemption → S3(1): Deals as consumer or the other’s written standard
Case 1: L’Estrange v F Graucob Ltd (1934) (1972)
(1) Type of document. clause may yet cover some kind of liability other than terms of business; and
Case 2: Curtis v Chemical Cleaning and
(2) Time of Notice. negligence. → S3(2): Cannot rely when he himself is in breach, or render
Dyeing Co (1951)
(3) Adequacy of Time. no such performance, or one substantially different, unless…
Case 3: Anti-Corrosion Pte Ltd v Berger Paints
Case 1: Houghton v Trafalgar Insurance Co (1954) → S3(2): The contract term satisfies the requirement of
Singapore Pte Ltd (2012)
Case: Parker v South Eastern Railway (1877) Mention 1: Canada Steamship Lines Ltd v R (1952) reasonableness.
(4) Sale or supply of goods.
(5) Consumer contracts.

Type of Document Time of Notice Adequacy of Time Test of Reasonableness:

The term shall have been a fair and reasonable one to be
included having regard to the circumstances which were, or
ought reasonably to have been known to or in the
An exemption clause will not be part of the For the exemption clause to be effective, the The party relying on the exemption clause must contemplation of the parties when the contract was made.
contract if it is contained in an unsigned notice must be given before or at the time of show that reasonable steps were taken to bring
document where a reasonable person would the contract. A notice given after the contract is the notice to the attention of the other. It must Courts generally refer to the guidelines provided in the
not be expected to find contractual terms. made is ineffective. be sufficiently conspicuous and legible. Second Schedule in every case.

Case: Chapelton v Barry Urban District Council Case: Olley v Marlborough Court Ltd (1949) Case: Thompson v London, Midland and Note: The burden of proof lies on the party seeking to rely on
(1940) Scottish Railway Co (1930) the exemption clause to show that it is reasonable.
Week 4: [ Chapter 11: Exemption Clauses ]

Exemption Clauses: Terms that seek to exclude or limit the liability of one of the parties Terms of Contract Contract Non Est Factum: Occurs when there is a radical difference between what a party
in the event of a breach of contract. signed and what he thought he signed. The party must show that he had taken care in
Refer to Chapter 10 signing the document.
Types of Exemption Clauses:
(1) Exemption (or exclusion) clauses that seek to exclude liability completely. Misrepresentation: A false statement of fact made by one party to another party which
(2) Limitation of liability clauses that seek to limit liability (i.e. to a certain monetary induced the other party to enter into the contract. The statement must be one of a past
amount). or an existing fact, not a commendatory puff, opinion, or a statement of law.
(3) Indemnity clauses that seek to pass liability (or the risk thereof) to a third party).
Express Warranty: An express warranty is something that is explicitly guaranteed for
Exemption Clauses
Note: Reference to exclusion clauses in this chapter includes the three mentioned. any product or service.

Unfair Contract Terms Act (UCTA)

Applicability to “Business Applicability to “Negligence Applicability to Breach of

With the proliferation of exemption clauses, it is only a matter Approach
Liability” Liability” Contract
of time before parties abuse them by inserting unfair terms in
contracts. The most effective way to remedy this situation
was through legislation via the Unfair Contract Terms Act
The UCTA applies to cases of The UCTA applies to cases of The UCTA applies to cases of (UCTA). Step 1: Does the contract fall within the scope of the UCTA? (First schedule)
both contract and tort, where negligence. It also applies to exclusions or restrictions of
the exemption clause in cases of negligence outside liabilities for breaches of However, the UCTA does not purport to change the common
question concerns a the context of contract. contract. law relating to exemption clauses. No
UCTA has no effect on EC.
“business liability”. Yes
Only common law restrictions
Applicability: Applicability: It is therefore necessary to consider whether the clause is
apply.
(1) A person cannot exclude (1) The contracting party who incorporated into the contract and whether the wording of the
or limit liability for death or is subjected to the exemption clause covers the breach (or events) that occured first,
personal injury resulting from clause must either “deal as a before considering the UCTA’s applicability and effect on the Step 2: Does the EC exempt or limit “business liability”? (S 1(3))
negligence. (S2(1) UCTA) consumer” or deals on the clause.
(2) For damage other than relying party’s “written
death or personal injury, a standard terms of business”. Effect: No
person cannot restrict his (S3(1)) (1) Exemption clause rendered totally inoperative. UCTA has no effect on EC.
Yes
liability for negligence unless (2) When the party relying on (2) Exemption clause rendered operative if it passes a test of Only common law restrictions
it passes the test of the EC is in breach of the reasonableness. apply.
reasonableness. (S2(2) contract, he cannot exclude or
UCTA) limit liability in respect to this
UCTA Applies
breach or claim to be entitled
to render a contractual Contracts to Which UCTA Does Not Apply
performance substantially
different from which it was
Step 3: Which relevant sections regulates the exemption clause? (Only for SS 2 and 3)
reasonably expected of him or
no performance at all. (S3(2) Types of Contracts:
UCTA) (1) Contracts of insurance. (ss 2-4)
(3) The contract term must (2) Creation, transfer or termination of rights or interests in
satisfy the requirement of land or intellectual property. (ss 2-4) And/Or
reasonableness. (S3(3) (3) Contracts relating to the formation or dissolution of a
UCTA) company, or to its constitution or the rights and obligations of EC excludes or restricts liability due to negligence. EC excludes or restricts liability for breach of
the corporation or its members. (ss 2-4) (S 2) contract between contracting parties where
(4) Contracts relating to the creation or transfer of securities (S 3(1)):
or any rights or interests therein. (ss 2-4) (1) One of them “deals as a consumer” (S 12); OR
(5) Others (2) One of them deals on the other contracting
party’s written standard terms of business.
Negligence results in Negligence results in
death or personal injury. other damages. Where EC is used by a contracting party against a
Test of Reasonableness: Reasonable Tests: (From case laws)
(1) S11(1): “In relation to a contract term, the requirement of reasonableness … is that the term shall have been a fair and (1) Equal bargaining power. consumer and/or party dealing on the first
reasonable one … having regard to the circumstances which were or ought reasonably to have been, known to or in the → Equal bargaining power > EC is most contracting party;s written standard terms of
contemplation of the parties when the contract was made”. likely to be reasonable. business to:
(2) S11(2): Refers to the Second Schedule which sets out guidelines for the application of the reasonableness test (for contracts (2) Availability of alternatives. EC is not allowed EC allowed if it satisfies (1) Exclude or restrict liability in respect of breach of
falling under subsections 6 & 7) → Can indicate reasonableness or (S 2(1)) test of reasonableness contract; OR
(a) The strength of the bargaining positions of the parties relative to each other, taking into account (among other things) unreasonableness of EC. under S 11 (2) Claim to be entitled:
alternative means by which the customer’s requirements could have been met. → However, lack of alternatives does not → To render a substantially different contractual
(b) Whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a inevitably result in unreasonableness. performance that is reasonably expected of him; OR
similar contract with other persons, but without having to accept a similar term. (3) Negotiations or absence of protest. → To render no performance at all for the whole or
(c) Whether the customer knew or ought reasonably to have known the existence and the extent of the term (having regard, → Presence of protest > Shows whether part of his contractual obligations
among other things, to any custom of the trade and any previous course of dealing between parties) there was free choice in agreeing to the EC.
(d) Where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at (4) Public policy considerations. (Excluding EC allowed if it satisfies
the time of the contract to expect that compliance with that condition would be practical. fraud) test of reasonableness
(e) Whether the goods were manufactured, processed or adapted to the special order of the customer. under S 11
Week 5: [ Chapter 12: Mistake ]

Vitiating Factor: A factor which, if present, renders the contract unenforceable by one
or both parties. Usually present at the formation of contract.
Misrepresentation Vitiating Factors Incapacity Effect:
The effect which a mistake has on a contract will depend on whether one is applying
Mistake: A situation where a parties’ consent was made based on mistaken facts or Refer to Chapter 13 Refer to Chapter 9 common law or equitable rule.
assumptions. However, only mistakes of serious nature are considered. Mistakes relate
to matters that occur before or at the time of contract. Illegality Undue Influence (1) Common law.
→ Contract is rendered void ab initio (void from the beginning).
Distinguished From: → No rights or obligations can pass under the contract.
Refer to Chapter 15 Refer to Chapter 14
(1) Misrepresentation. (2) Equitable rule.
(2) Frustration. → Contract is rendered voidable.
(3) Unjust Enrichment. Economic Duress Unconscionability → Rights or obligations can be passed under the contract if done before rescission.

Refer to Chapter 14 Refer to Chapter 14

Mistake

Common Mistake Mutual Mistake Non Est Factum Unilateral Mistake

Where both parties are of one mind but Where both parties are mistaken as to A more specific category of mistake Where only one party is mistaken as to
mistaken about the subject matter what is offered and what is accepted. which applies only to documents the term of the contract or the identity of
mistakenly signed. the counterparty and the other party
knows of the mistake.

Approach In such cases, no contract arises in the In general, a person is bound by a Categories
first place because there is a complete contract he has signed even if he has
lack of coincidence between offer and not read it or does not understand it.
Is there a misapprehension as to a contract matter shared by both parties at the point of
acceptance. Case 1
contract? Mistake as to a Term of Contract Mistaken Identity
Effect: Contract is void at common law. Exception: In very exceptional cases, a
Case: Couturier v Hastie (1856)
contracting party may be able to avoid a
Note: There is no room for equity to contract on the ground that the signature Unilateral mistake at common law Involves cases where one party’s consent to
intervene if there was no contract to on the contract is “not his deed”. an agreement is procured by the deception
Step 1: Has the contract allocated the risk of such mistake to either party? begin with.
In general, if A contracts to purchase goods of another.
Requirements: from B in the mistaken belief that the goods
Case: McRae v Commonwealth Disposals Commission (1951) Case: Raffles v Wichelhaus (1864) (1) Document signed is radically different are of a certain quality, A’s mistake has no If A agrees to sell his car to B (who has
from the document intended. effect on the contract unless B has caused deceived A into believing that B is C), the
(2) Party seeking to rely on the doctrine or contributed to A’s mistake. contract is affected by A’s unilateral mistake
Yes Doctrine of mistake does not
must not have been negligent. as to B’s true identity provided that it is clear
apply. Contract is valid, and the
No Requirements: Mention 1 that B’s identity is material.
party who has assumed risk is
Effect: Contract is void. (1) One party has made a mistake.
liable for breach of contract.
(2) The mistake is sufficiently important or Requirement:
Case 1: Saunders v Anglia Building fundamental mistake as to a term. Case 1 (1) Deception based on identity.
Step 2: Is the contract void at common law? Society (1971) (3) The non-mistaken party has actual (2) Identity of the defendant is material.
Does the mistake render the contract essentially and radically different from that which the knowledge of the mistaken party’s mistake.
parties had in mind? Case 2 General approach:
(1) Examine the facts to ascertain whether
Yes Effect: Contract void under common law. there is in fact an agreement between the
No Contract is void ab initio. mistaken party and the counterparty.
Unilateral mistake in equity (2) If there is an agreement (between A and
B), the contract is voidable.
England Singapore Requirements: (3) If there is no agreement (between A and
(1) Rationale of unconscionability. B), the contract is void.
Contract is valid and binding. No Step 3: Is the contract voidable in (2) Unnecessary to prove that the
recourse to equity. equity? non-mistaken party has actual knowledge of Face-to-face transactions Case 1
Is the mistake “fundamental”? (Test is the other party’s mistake. Constructive Presumption that A intended to deal with the
broader than that at common law. knowledge will suffice. physical person present.
(3) Presence of impropriety.
Effect: Contract is voidable.
No Yes
Effect: Contract voidable under equity.
Exception: With clear evidence to contrary.
Contract is valid. Contract is voidable Case 1: Smith v Hughes (1871)
and may be set aside Case 2: Chwee Kin Keong v Non face-to-face transactions Case 2
Case: Great Peace on terms. [Link] Pte Ltd (2005) Presumption in face-to-face situations not
Shipping Ltd v Mention 1: Broadley Construction Pte Ltd v applicable.
Tsavliris Salvage Ltd Alacran Design Pte Ltd (2018)
(2003) Case 1: Phillips v Brooks Ltd (1919)
Case 2: Shogun Finance Ltd v Hudson
(2004)
Week 5: [ Chapter 13: Misrepresentation ]

Vitiating Factor: A factor which, if present, renders the contract unenforceable by one
or both parties. Usually present at the formation of contract.
Illegality Vitiating Factors Mistake Effect:
Rescission is available to all three forms of misrepresentation. This decision to rescind
Refer to Chapter 15 Refer to Chapter 12 must be communicated to the other party.
Misrepresentation: A false representation of past or existing fact which materially
induces the innocent party to enter into the contract in reliance of it. Misrepresentation, if Unconscionability Incapacity Limits to Recission:
made out, puts you in a position before the contract. (1) Rescission is not available once affirmed by the other party.
Refer to Chapter 14 Refer to Chapter 9 (2) Rescission is not available once there is a lapse of time.
Effect: Contract is rendered voidable, not void. (3) Precise rescission may not be possible for the party.
→ However, equity allows a representee to rescind if he returns the subject matter in its
Note: In contrast a breach of contract places the party in a position after the contract.
Economic Duress Undue Influence altered state and makes an allowance for any diminution in its value or accounts for any
benefit he derived from using it.
Refer to Chapter 14 Refer to Chapter 14 (4) Rescission is not available if a third party has acquired the rights of the subject
Misrepresentation matter.

Note: The court may award damages instead of rescission under the Misrepresentation
Act.
Elements to Misrepresentation -
Types of Misrepresentation
Representation Must:

Induce the Contract and is

Be a Statement of Fact Be False Be Addressed to Party Misled Fraudulent Misrepresentation Negligent Misrepresentation Innocent Misrepresentation
Relied Upon

For misrepresentation to exist, For misrepresentation to exist, Generally, it is the direct For misrepresentation to exist, A statement made knowingly, without A statement that is made carelessly or A false statement that is made honestly
the statement must be one of the statement must be false. addressee or recipient of a the statement must be belief of its truth, or recklessly - not caring without reasonable grounds for believing it and with care.
past or an existing fact. representation who may bring material (would have whether it is true or false. Mention 1 to be true.
Ambiguity: an action for influenced a reasonable Statement Made:
Types of Representations: Sometimes, a statement may misrepresentation. person), and induce the Statement Made: Statement Made: (1) Honestly, and
The following are generally be ambiguous and bear two representee to rely on it and (1) Knowing it is untrue. (1) With no reasonable ground to believe (2) With reason to believe it is true.
not statement of facts. (or more) meanings, one of Exceptions: enter the contract. (2) Not believing it to be true. it is true (S 2(1) MA).
However, there are which is true and the other(s) (1) Where the representation (3) Recklessly, not caring if it is true or Remedy:
exceptions. false. is made to the representee’s The statement does not need not. Remedy: (1) Common law.
authorised agent. to be sole inducing. It is (1) Damages in an action under the tort of → No remedies for innocent
(1) Puffs (Exceptions): Determining Factors for → Where the recipient, is only sufficient as long as the Remedy: deceit. misrepresentation.
→ As the statements get more Falsity: an agent for passing on the representation played a real (1) Damages in an action under the tort of → Damages are awarded to compensate (2) Equity.
detailed, they are more likely (1) The representee must representation to his principal. and substantive part and deceit. the representee for all the losses which → Representee is entitled to rescission
to be representations. prove that he understood the (Principal is the representee) operated on the representee’s → Damages are awarded to compensate can properly be said to have been caused and possibly indemnity.
(2) Opinions (Exceptions): statement in the sense which → Where the representor mind. the representee for all the losses which by his reliance on fraudulent
→ A statement of opinion can is in fact false. intends that both the agent can properly be said to have been caused misrepresentation.
be a statement of fact if the (2) The representor must and principal will be Absence of Inducement: by his reliance on fraudulent
representor impliedly stated have intended the statement influenced by the (1) Where the party is not misrepresentation. Measurement of Damages:
that he held the opinion. to be understood in the sense representation. (Both the even aware of the (1) Contract measure.
(3) Intentions (Exceptions): that is false; he is not liable if principal and agent are representation. Burden of Proof: → To place the representee in a position
→ A statement of intention he honestly intended it in the representees) (2) Where the representee The representee bears the burden of he would have been had the
can be a statement of fact if sense that is true. may have been aware of the proving fraud. representation been true.
the representor held (2) Where, even though there representation but knew it (2) Tort measure.
reasonable grounds for is no agency between the was untrue or did not believe Note: The motive of the representer is → To place the representee in a position
thinking that he has the direct recipient and the it to be true. irrelevant. It suffices that the false he would have been if the
capacity to do it. indirect recipient, the (3) Where the representee statement was made knowingly with the misrepresentation was not committed.
(4) Law (Exceptions): representor intended or was simply not induced by it. intention that the representee should act
→ Such statements can serve reasonably expected the upon it. Burden of Proof:
as misrepresentations if the representation to be passed (1) The representee bears the burden of
representor did not hold that on to the indirect recipient. Mention 1: Derry v Peek (1889) proving that the statement is false.
opinion or belief of the law. → Subsequent parties are (2) The representor then has to prove that
addressed. he had reasonable grounds to believe that
the statement was true.

Other Types of Representations: Exclusion of Liability:

(1) Express representations. At common law, apart from where the representor is fraudulent, an exclusion of liability clause is valid and subject to the normal rules of
→ Expression can be made through various forms of media. incorporation and construction applicable to exemption clauses.
(2) Implied representations.
→ Expression can be made through implied representations. (Ratings, conduct, etc.) Requirements:
(3) Silence. Contract clause excluding liability for misrepresentation must be reasonable. (S (3) Misrepresentation Act)
→ Generally, silence does not amount to misrepresentation.
→ Exceptions: Note:
- Misleading half truth. (1) There is no exclusion allowed for own fraud.
- Representor knows it is false but does not correct. (2) It is possible to exclude someone else’s fraud.
- Alter in circumstances which makes previous statements false. (3) It is possible to exclude liability for negligent misrepresentation or innocent misrepresentation.
(4) An entire agreement clause can prevent a representee from alleging misrepresentation. (Estoppel by representation)
Week 6: [ Chapter 14: Economic Duress, Undue Influence and Unconscionability ]

Vitiating Factor: A factor which, if present, renders the contract unenforceable by one
or both parties. Usually present at the formation of contract.
Misrepresentation Vitiating Factors Mistake
Economic Duress: Occurs when the pressure exerted by a Effect: Economic Refer to Chapter 13 Refer to Chapter 12 Effect: Undue Undue Influence: Undue influence is the unconscientious
party is beyond what the law considers acceptable or duress renders a influence renders a use of one’s power or authority over another to acquire a
legitimate. contract voidable, contract voidable, benefit or to achieve a purpose. Under undue influence,
not void. Not
Illegality Incapacity there is no meaningful consent.
not void. Not
Commercial/ Economic Pressure: Occurs when pressure is applicable if contract applicable if contract
exerted by a party who is in a stronger bargaining position. is affirmed. Refer to Chapter 15 Refer to Chapter 9 Case: Lim Geok Hian v Lim Guan Chin (1993)
is affirmed.

Note: Economic Duress is different from Commercial/ Economic Duress Undue Influence
Economic Pressure. Commercial Pressure is acceptable.
Effect: Basic objective concerns restitution.
2 Tests
Case: North Ocean Shipping Co Ltd v Hyundai Construction
Co Ltd (The Atlantic Baron) (1979) Unconscionability

Illegitimate Pressure Class 1: Actual Undue

Sufficient to Coerce Overborne Will Theory A narrow doctrine which Class 2: Presumed Undue Influence Third Parties
Theory Influence
states that it is not right
for the strong to be
Determining Factors: allowed to push the
Where any apparent Where the pressure Where the guilty party Condition for Presumption - Where the claimant proves Where the person who
(1) Protest weak against a wall.
consent had been exerted is so great that it has so dominated over that: exercised undue
(2) Alternatives obtained by the exertion deprives the party the victim’s mind that the (1) Relationship of trust and confidence exists. influence was a third
(3) Independent advice of illegitimate pressure pressured of any ability latter’s independence of (2) Transaction is manifestly disadvantageous to the party.
(4) Prompt action to avoid modification by the other party. to exercise free will. decision was claimant.
(5) Reasonable response of the victim Conditions:
(1) Serious substantially Example: Wife was
Mention: Occidental disadvantage (Poverty, undermined. Note: The burden of proof shifts to the defendant to show unduly influenced by the
Note: These factors are not conclusive. Worldwide Investment that the victim in fact exercised independent will when bank (Wife v Husband v
Combination of both Ignorance, Lack of
Corp v Skibs A/S advice). Note: The victim holds entering into the contract. Bank).
Mention: Pao On v Lau Yiu Long (1980) theories: “A coercion of
Avainti, Skibs A/S (2) Weakness exploited the burden of proving
the will such that there is
Glarona, Skibs A/S by the other in a morally the case for undue
no true consent”
Navalis (The Siboen and influence.
3 Factors to be Satisfied

Illegitimacy culpable way. Conditions for which

the Sibotre) (1976) (3) Transaction is not Class 2B: No automatic
Mention: Pao On v Lau Class 2A: Presumption the creditor is
only hard and Case: Allcard v Skinner presumption. Trust and
Yiu Long (1980) arises automatically as a infected:
burdensome, but (1887) confidence is to be
Determining Factors: matter of law (1) Agency (Husband is
overreaching and proven an agent of Bank).
(1) Nature of pressure
oppressive. (2) Bank had notice of
→ Unlawful acts are illegitimate unless in good faith
(rescinding of contract). Case 2 husband’s undue
Mention: Cresswell v Recognised No automatic influence. Case 1
→ Lawful acts are illegitimate if nature of demand is
Potter (1978) Relationships: presumption, but the → Bank is put on inquiry
unreasonable (blackmail). Case 1
(1) Parent - Child court may presume (Did the Bank check for
(2) Nature of demand
(2) Guardian - Ward based on facts. presence of undue
→ Good faith or bad faith.
(3) Trustee - Beneficiary influence?).
→ Was the party exploiting the situation
(4) Doctor - Patient Relationships: → Did the Bank fail to
Note: A precise definition of unconscionability would not be useful. Its value lies in its (5) Lawyer - Client (1) Husband - Wife
Note: Lawful contracts are hard to argue when lawful take reasonable steps to
flexibility as a label to capture a wide range of conduct demonstrating a lack of bona fides. (6) Director - Company (2) Siblings
means were used. minimise the risk of
(7) Religious Advisor - (3) Employer - undue influence
Note: Courts in Singapore give effect to express term Mention: BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd (2012) Disciple Employee (Requiring the guarantor
that parties, in existing contractual relationship, would
negotiate in good faith. Case 3 to obtain legal advice)?
Note: In all cases, the Note: In these cases, Case 2
law deems the the victim must prove
Case 1: EC Investment v Ridout Residence (2010)
relationship to be one of that trust and confidence Case 1: Barclays Bank
Case 2: Sharon Global Solutions Ltd v LG International Broad Case: As long as the plaintiff is poor, ignorant, disabled or have the lack of access trust and confidence. was present. v O’Brien (1994)
Singapore Ptd Ltd (2001) to independent legal advice. Case 1
Case 3: HSBC v Toshin (2012) Case 2: Royal Bank of
Case: Lloyds Bank Ltd v Scotland v Etridge
Mention: R v Attorney-General for England and Wales Narrow Case (SG): Singapore takes a more conservative approach; infirmity is acutely Bundy (1975) (2002)
(2003) affected the plaintiff’s ability to conserve his own interests. Plaintiff need not prove the
undervalued transaction and whether he lacks access to independent legal advice. Case 2
Caused the Resultant Contract or Modification of
Case 1: Australia Ltd v Amadio (1983) Rebutting the Presumption
Contract
Case 2: Pek Nam Kee v Peh Lam Kong (1996)

But For Test: If the illegitimate pressure caused the Determining Factors:
making of the agreement in a sense that the contract (1) Did the plaintiff receive independent advice?
would not otherwise have been made either at all or in (2) Did the plaintiff have personal knowledge of the impugned transaction and not from an
terms it has been made. independent 3rd party?

Note: The burden of proof for causation is on the party

claiming duress.
Week 6: [ Chapter 15: Illegality and Public Policy ]

Vitiating Factor: A factor which, if present, renders the contract unenforceable by one
or both parties. Usually present at the formation of contract.
Misrepresentation Vitiating Factors Mistake

Illegality by Common Law Refer to Chapter 13 Refer to Chapter 12 Effect: Contracts Restraint to Trade: Contracts that involve Restraint to
that restrain trade Trade restrict the freedom of contracting parties. In
are generally void employment contracts, it attempts to prevent employees
Unconscionability Incapacity from working for another employer’s competitor.
as it is contrary to
Occurs when there has been a contravention
public policy and are
of a principle derived from a prior case. Refer to Chapter 14 Refer to Chapter 9
illegal in the eyes of
common law. Exception: Validity of Restraint Clause
Forms of Prohibited Contracts: Economic Duress Undue Influence
(1) Prejudicial to administration of justice
(Admission of false evidence) Refer to Chapter 14 Refer to Chapter 14
(2) To deceive public authorities. Case 1 Conditions:
(3) To avoid jurisdiction of courts. (1) There must be a legitimate interest that the party relying
(4) To commit crime, tort, fraud. Case 2 Illegality Restraint of Trade on the clause is seeking to protect.
(5) Prejudicial to public safety. (2) The clause has to be reasonable from the standpoint of
(6) Promoting sexual immorality. Case 3 both the public and parties involved.
(7) That are liable to corrupt public life.
Effect: Contracts that arise from illegality are Recovery of Benefits Factors in ascertaining reasonableness:
Case 1: Alexander v Rayson (1936) generally void.
(1) Geographic scope (area)
Case 2: Taylor v Bhail (1996) (2) Length of time (duration)
Case 3: Pearce v Brooks (1866) (3) Others (based on facts)
General Rule: Money paid or
property transferred under an
illegal contract is not Note: The wider and longer the restraint, the more difficult it
Illegality by Statute Intermediate Category recoverable. will be to prove that the restraint is reasonable.

Mention: Nordenfelt v Maxim Nordenfelt Guns and

Ammunition Co (1894)
Occurs when there has been a contravention Contracts tainted by illegality, but which are Exceptions
of the statute in question. not expressly or impliedly prohibited by
statute and are also not contrary to one of the
Key Focus - Whether the object of the established heads of common law public Exceptions: Employment Contracts Sale of Business Others Severance
statue is to: policy. (1) Where parties are not to be
(1) Prohibit the conduct that is the subject of equally at fault
the statute. Test for Proportionality: → Fraud Case 1
(2) Prohibit the making of such contracts. (1) Does the claim undermine the purpose of → Duress Case 2 Points: Points: Other Forms of Contracts: To save a contract by
the prohibiting rule. → Protection Case 2 (1) Every man shall be at (1) The purchaser of a (1) Extreme inequality Case 1 excising or cutting away the
Note: Where the legislative intention is not (2) Nature and gravity of the illegality. → Mistake Case 3 liberty to work for himself, and business must be protecting (2) Exclusive purchasing illegal portion.
clear from the plain wording of the relevant (3) The remoteness or centrality of the (2) Timely repudiation or shall not be at liberty to a legitimate proprietary agreement Case 2
provision, a further exercise in statutory illegality to the contract. repentance (while contract is deprive himself or the state of interest which will generally Methods of Severance:
interpretation is required. (4) The object, intent and conduct of the executory). Case 4 his labour, skill, or talent, by include the goodwill of the Case 1: A Schroeder Music (1) Severance of entire or
parties. (3) Recovery on independent any contract that he enters business. Publishing Co Ltd v Macaulay whole clauses.
(5) The consequences of denying the claim. cause of action. Conditions: into. (1974) (2) Severance via the “blue
→ Has the defendant benefitted (2) Courts would hold the Case: Vancouver Malt and Case 2: Esso Petroleum Co pencil test”
Case: Ting Siew May v Boon Lay Choo or enriched? protection of trade secrets as Sake Brewing Co Ltd v Ltd v Harper’s Garage
(2014) → Was the enrichment at the reasonable. Vancouver Breweries Ltd (Stourport) Ltd (1968) Blue Pencil Test: Run a line
expense of the plaintiff? (3) Courts would hold the (1934) through offending words
→ Was the enrichment unjust? protection of trade connection without altering the meaning
→ Are there any defences? as reasonable. Case 1 of the covenant itself while
(4) Non-solicitation can be allowing for the clause to
Express Prohibition by Statute No Express Prohibition by Statute applied to the solicitation of make sense.
Case 1: Hughes v Liverpool
Victoria Legal Friendly Society the former employer’s
(1916) customers or employees. Note: The blue pencil test
Case 2: Kiriri Cotton Co Ltd v can result in confusion as
Case: Phoenix General Insurance Co v Question: Is there a law that implies Mention: Man Financial v parties attempt to take
Ranchhoddas Keshavji Dewani
Administratia (1988) prohibition? Wong David (2007) advantage of its existence.
(1960)
Case: Re Mahmoud and Ispahani (1921) Case 1: Smile Inc Dental
Case 3: Aqua Art Pte Ltd v
Note - The effects of implied prohibition Surgeons Pte Ltd v Lui Mention: Man Financial v
Goodman Development (S) Pte
depends on the intent: Andrew Stewart (2012) Wong David (2007)
Ltd (2011)
(1) To prohibit the creation of contract (Void).
Case 4: Taylor v Bowers (1876)
(2) To prohibit the performance of the
contract (Voidable).

Examples of Restraint of Trade Clauses:

(1) Non-solicitation Clause: During the term of employment and for a period for 12 months after termination of employment… Employee agrees
not to solicit, entice or cause… directly or indirectly… on behalf of another party… current or past employees of the Company to leave the
Company’s employ in order to work for another entity that competes with the Company…
(2) Non-solicitation Clause: … Employee agrees not to solicit or attempt to solicit business… directly or indirectly… on own behalf or on behalf
of another party… from Company’s customers, potential customers… for a period of 12 months after termination of employment…
(3) Non-Compete: Upon termination of employment… Employee agrees not to perform… directly or indirectly… in any capacity… the same
duties… whether on own behalf or on behalf of another party… that would be in competition with the Company’s business for a period of 12
months...
Week 7: [ Chapter 9: Capacity and Privity of Contract ]

Legal Capacity: A legal right, power, or competency to perform some act. Offer Contract Acceptance Privity of Contract: The relation between the parties in a contract which entitles them
to sue each other but prevents a third party from doing so.
Legal Incapacity: Absence of a legal right, power, or competency to perform some act. Refer to Chapter 7 Refer to Chapter 7

Effect of Incapacity: Such contracts are not enforceable against the relevant parties. Intention to Create Rules from the Doctrine of Privity of Contract:
Consideration
Legal Relations (1) A third party to a contract cannot enforce a benefit promised under the contract. No
Refer to Chapter 8 Refer to Chapter 8 stranger to a consideration can take advantage of a contract although made for his
benefit. Mention 1
The law provides certainty to commercial dealings when contracts are upheld. However,
(2) The contracting parties cannot, by a contract between them, impose a burden on a
this ideal has to be counter-balanced against the need to protect the inexperienced Capacity Privity of Contract
third party. A person who is not a party to a contract can neither acquire rights under it,
and/or vulnerable individuals who may not be able to protect their own interests in the
nor have obligations imposed on him by it. Mention 2
commercial arena. Investors in a corporation also deserve protection against their
investment being applied towards unintended purposes by the persons running the
Techniques to Get Around the Privity Rule Mention 1: Tweddle v Atkinson (1816)
corporation. Incapacity
(Third Party Enforcement of Benefits) Mention 2: Dunlop v Selfridge (1915)

Minors Mental Incapacity Corporations Statutory Techniques Common Law Techniques

General Rule: Mental Incapacity: When a company is incorporated, the Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Action by Promisee on Behalf of Third Party:
A minor in Singapore is generally not (1) Mental retardation. common law confers upon it a legal Ed): The general rule is that the promisee is only entitled to sue for
liable under any contract entered before (2) Intoxication. personality in the sense that it is Enables the parties of a contract to confer a benefit on a third breach of contract to recover substantial damages in respect of
the age of 18. (3) Medication. considered a separate legal entity from its party which will be enforceable by the third party. the promisee’s own loss. Case 1
owners (shareholders) and has capacity (1) Exceptions.
The minor is only allowed to set up his General Rule: to enter into contracts. (1) Exclusions. → Narrow ground. Case 2
minority as a “defense” while his Contracts entered into by the mentally → Contracts on bills of exchange, promissory notes or other - The narrow ground permits the promisee to recover
obligation is still executory. incapacitated bind them unless and until However, a company may not retain negotiable instruments, registration documents of a limited substantial damages on behalf of the third party.
they choose to avoid or repudiate the capacity due to the following. liability partnership. - 3 Elements:
Hence, where the minority has already contracts. → Other exclusions to be found in the textbook. - Contemplation by parties that the proprietary interest in
executed his obligations, he cannot plead General Rule: (2) Requirements for third party to enforce term. Case 1 the goods may be transferred from one owner to another
his minority in order to recover any Requirements: (1) Doctrine of ultra vires. → The third party must be identified in the contract, though not after the contract has been entered into.
damages unless there has been a total (1) The mental incapacity prevents the → Any contract entered into by a necessarily by name. The party could be a class of persons, or - Promisee must account to the third party for damages.
failure of consideration on the part of the person under such a disability from company must align with the objectives as answering a particular description. (S 2(3)) - If the third party is given a direct cause of action against
counterparty. Case 1 understanding the general nature and stated in its objects clause. Any contract → The benefit is only enforceable “subject to and in accordance the promisor, there would be no need for narrow ground.
effect of the transaction he is entering that goes against this is considered ultra with other relevant terms”. (S 2(4)) → Broad ground. Case 3
Exceptions: into. vires, that is, beyond the capacity of the → Either of the following situations must occur: - The broad ground permits the promisee to recover
(1) Binding contracts. (2) The other party knows or should have company, and therefore, under common - The contract must expressly state that he may enforce the substantial damages on its own accord on the basis that it is
→ Beneficial contracts for necessities. known about the incapacity at the time of law, is null and void. term. (S 2(1)(a)) OR recovering for its own loss.
- Are the goods or services capable of entering into the contract. → However, the act of restraint or setting - A term in the contract purports to confer a benefit on him. - Subject to an objective test of reasonableness to prevent the
being “necessities” at law? aside of the contract can only be ordered (S 2(1)(b) promisee from obtaining a windfall.
- Does the minor have actual need for Note: by the court. (3) Remedies available to a third party.
the goods or services? (Supplier (1) The burden of proving such knowledge (2) Pre-incorporation contracts. → A third party who is entitled to enforce a term of the contract Collateral Contracts:
bears the burden of proving this) is on the party seeking to avoid the → Prior to a company’s incorporation, has available to him remedies for breach of contract as if he is a → A contract that stands alongside the main contract. It is a
→ Beneficial contract of employment, contract. contracts may need to be entered into to party to the contract. promise given prior to the main contract and “but for” which the
apprenticeship or education and (2) Though the mentally incapacitated set into motion the process of → These remedies include damages, specific performance and main contract would not have been made.
analogous contracts. may avoid the contract if the two incorporation. injunction.
(2) Voidable contracts. requirements mentioned above are → However, at this stage, the company (4) Variation and rescission of contract. Himalaya Clause:
→ At common law, a contract is binding satisfied, the counterparty to the contract has not come into existence and hence, is → If the third party acquires the right to enforce a term, the → Applicable to enable a third party to rely on an exemption
and enforceable against a minor unless is always bound. incapable of contracting. contract cannot be varied or rescinded so as to remove or alter clause in a contract to which they are not privy.
the minor avoids or repudiates the (3) However, if the counterparty does not → As a response to this, contracts the third party’s right without consent.
contract during his minority or within a know of the incapacity, he may enforce entered into before the company’s → However, this limitation can be preempted by an express term. Assignment:
reasonable time after he attains the age of the contract against the person under the formation can be ratified by the company (5) Other provisions. → If A assigns or transfers his right(s) under his contract with B
majority. disability. after its incorporation. → A third party’s right of enforcement is subject to defences or to a third party, the third party will be able to enforce those rights.
→ Minors can avoid: → In addition, the persons acting in the set-offs available to the promisor.
- Contracts to lease or purchase land. Exception: name of the company in entering into → The promisor is protected against double liability if sued twice. Tort of Negligence:
- Contracts to obtain shares. (1) Necessities. pre-incorporation contracts are legally → Where there is no cause of action in contract, there may be
- Partnership agreements. → A party who is mentally incapacitated bound to the contract unless there is Case 1: CLAAS Medical Centre Pte Ltd v Ng Boon Ching (2010) one in tort.
- Marriage settlements. will still have to pay a reasonable price for express agreement otherwise.
(3) Ratified contracts. necessary goods sold to him. Agency:
→ A contract may still be binding and → Where an agent is authorised by his principal to enter into a
enforceable against a minor if he ratifies contract with another on the principal’s behalf.
the contract on reaching the age of Techniques to Get Around the Privity Rule
Remedies Against a (Protected) Minor: (Imposing Burdens on Third Parties)
majority. Law of Trusts:
(1) Section 3(1) Minors’ Contracts Act.
→ Where a trust has been constituted for a third party’s benefit,
→ The court may, if it is just and equitable to do so, require the defendant to transfer to the
Note: Generally, a contract to lend money the law of trust will enable the third party to enforce the benefit
plaintiff any property acquired by the defendant under the contract, or any property Sub-bailment Contracts
to a minor for the purchase of necessaries against a contracting party.
representing it. If expressly or impliedly consented to terms of sub-bailment.
is unenforceable.
(2) Section 2 Minors’ Contracts Act.
Case 1: Jackson v Horizon Holidays (1975)
→ A guarantee given in respect of a minor’s contract, which may not be enforceable against Land Law
Case 1: Steinberg v Scala (Leeds) Ltd Case 2: Chia Kok Leong v Prosperland Pte Ltd (2015)
the minor, is nevertheless enforceable against the guarantor. Beyond the scope of the chapter.
(1923) Case 3: Family Food Court v Seah Boon Lock (2008)
Week 9: [ Chapter 16: Performance and Breach of Contract ]

Discharge: Where a valid contract that is not tainted by any vitiating factor comes to
an end.
Discharge

Agreement: Where parties

mutually agree to bring the Agreement Frustration Breach: A breach occurs when one party, without
Performance: When parties have fully contract to an end. lawful excuse, fails or refuses to perform fully his
performed their respective obligations, the Refer to Chapter 17 part of the contract. Failure to perform includes
contract comes to an end as there are no defective performance, which relates to the
outstanding obligations. Performance Breach quality of the promised performance.

General Rule: Parties must fully and precisely perform all his obligations under the contract. If performance is incomplete, no claim may be Actual Breach Anticipatory Breach
brought by that party for recovery of money for partial performance.

Note: This requires an express or implied term that there will be no remuneration until performance is complete. Occurs when performance is due but is Repudiation/ Renunciation: Where one Disablement: Where one party places
not rendered or rendered defectively. party refuses to perform. himself in a position rendering
Case: Cutter v Powell (1795) performance impossible

Exceptions Non-Repudiatory Breach Repudiatory Breach

Entire v Severable Doctrine of Substantive De Minimis

Claim in Quantum Meruit Express Warranty Implied Warranty Innominate Term Condition
Obligations Performance Failure to Perform
Did the breach substantially deprive the plaintiff of the benefit
under the contract?
Contractual obligations are If the plaintiff’s obligation is Where the plaintiff has If the defect in the plaintiff’s
divisible when there is no not an entire one and he has benefitted from the partial performance is trivial and
No Yes
effect that the payment was substantially performed the performance by the can be ignored, he is
not to pass until all contract, he can claim defendant, the latter might regarded as having
obligations have been payment from the defendant be able to invoke the performed his part of the
fulfilled. subject to a deduction of doctrine of quantum meruit contract so as to trigger the
Non-Repudiatory Note: Election can be Repudiatory
costs necessary to make or quantum valebat to defendant’s
Mention: Tong Aik (Far good the defect in his recover a reasonable sum. counter-performance. expressed or implied.
East) Ltd v Eastern Minerals performance.
& Trading (1959) Ltd (1963) Quantum Meruit: Where Case: Arcos, Ltd v E A Case: Jurong Town v
No Right to Terminate Wishing Star (2005) Election
Case: Hoenig v Isaacs goods have been delivered. Ronaasen & Son (1933)
(1952) Quantum Valebat: Where a
service has been rendered.
Termination Affirmation
Case: Sumpter v Hedges
(1898)

(1) Both parties are released from future obligations. (1) Innocent party must:
Strict Performance and Performance with Reasonable Care Personal Performance and Vicarious Performance → Contract-breaker’s future obligations are converted into → Know of the facts giving rise to his right to terminate and his
payment of damages. right to choose between affirming and terminating the contract.
Most contracts we encounter on a daily basis involve the delivery Many contracts do not require performance to be undertaken by → However, terms intended to survive termination remain. → Communicate his choice to the other party in clear and
of a specific end result. any particular person. (2) Both parties remain liable to perform all unperformed unequivocal terms. In particular, that he will not be held bound by
obligations which have accrued before the termination. a qualified or unconditional decision.
However, contracts for the provision of professional services often However, for more highly specialised work, personal performance → However, these may be subject to the innocent party’s right to
do not guarantee any end result. is commonly insisted upon. damages for breach. Effect: Contract remains on foot. Damages if actual breach.

Order of Performance Cases for Performances Time of Performance Lawful Excuses for Breach

In most cases, the agreed Many contracts will

timing of the parties’ expressly state when the
Precise Performance and Manner of Performance Discharge by Agreement Contractual Term Allowing Frustration Interdependent
respective performances will parties will render their
de Minimis Defects Termination Obligations
dictate the order of respective performances.
A separate contract to vary Where an unforeseeable
performance.
Even for contracts requiring Unless otherwise stated, the terms of the original A contract may sometimes event has caused If X’s performance is
Where the contract is silent,
strict performance, courts each party has a certain contract. Only valid if fresh contain terms allowing one performance to be contingent upon Y’s
Where the contract is silent, however, performance is to
have sometimes regarded degree of freedom in consideration is provided. or both parties to bring the impossible or substantially performance or occurence
default rules will apply in be provided within a
the performance to have deciding the manner of contract to an end. different from what was of a specified event, Y’s
certain stereotyped reasonable time.
been fully rendered despite performance, so long as the Effect: Both parties lose the originally intended, the non-performance or the
situations.
some minor shortfall or end result is achieved. right to sue for damages. contract is automatically non-happening of the event
defect. discharged for frustration. will excuse X.
Week 9: [ Chapter 16: Performance and Breach of Contract ]

Discharge: Where a valid contract that is not tainted by any vitiating factor comes to
an end.
Agreement Discharge
Breach: Occurs when one party, without lawful excuse, Refer to Previous Slide
(1) Damages for every breach
fails or refuses to perform fully his part of the contract.
(2) Right of rescission in some cases
Failure to perform includes defective performance, which Performance Frustration
relates to the quality of the promised performance.
Case: RDC Concrete Pte Ltd v Sato
Refer to Previous Slide Refer to Chapter 17 Kogyo (S) Pte Ltd (2007)
Case: Sports Connection Pte Ltd v Deuter
Breach Remedies for Breach Sports GmbH (2009)

Justifying Termination of Contract Types of Breaches Types of Breaches

Situations: Actual Breach Anticipatory Breach Non-repudiatory Breach Repudiatory Breach

(1) Express termination clause.
(2) Repudiation
(3) Singapore’s approach.
Occurs at the point when actual Occurs before performance is due. (1) Breach of warranty (1) Breach of a condition Note:
(a) Condition-warranty approach.
performance is due. Innocent party need not wait till when (2) Breach of an innominate term with (2) Breach of an innominate term with (1) Election can be express.
(b) Hongkong Fir approach.
actual performance is due to terminate. trivial consequences serious consequences (2) Election can be implied.
(3) Repudiation/ Renunciation - Outright → Where the innocent party acts in a way
The innocent party has the right to elect to Effect: Right to claim damages, but no refusal to perform which is consistent only with a decision to
Express Termination Clause affirm or terminate the contract. right to terminate (4) Disablement - Rendering performance keep the contract alive, or;
impossible → Where he exercises rights which would
Limits on Affirmation: only be available to him if the contract had
(1) The innocent party cannot insist on Effect: Right to terminate and claim been affirmed.
When the contractual term breached
affirming the contract where the damages.
clearly states that, in the event of a certain
cooperation of the breaching party is Case: Yukong Line v Rendsburg (1996)
event or events occuring, the innocent
required in order for the innocent party to Case: Jurong Town v Wishing Star (2005)
party is entitled to terminate the contract.
fully perform his part of the contract. Election
(2) The innocent party must have a
Note: This situation is actually a breach.
legitimate interest in continuing with the
contract. Mention
Termination Affirmation
Mention: White & Carter (Councils) v
McGregor (1962)
Condition: Effect:
(1) Innocent party must: (1) Contract remains of foot.
→ Know of the facts giving rise to his right → Both parties will be bound to perform
Repudiation Condition-warranty Approach Hongkong Fir Approach
to terminate and right to choose between all obligations under it.
affirming and terminating the contract. (2) Damages payable if actual breach; no
→ Communicate his choice to the other damages payable if anticipatory breach
Where the party in breach renounces the Where there is consideration whether the If the term is a warranty or if parties’ party in clear and unequivocal terms. (treat as if breach never occurred).
contract by clearly conveying to the term concerned is a condition or warranty intentions are unclear, proceed to ask
innocent party that it will not perform its based on the parties intentions. whether the nature of the breach is such Effect:
contractual obligations. This can be as to give rise to the right to terminate. (1) Both parties are released from future
through conduct. Case 1 Objective ascertainment of parties’ obligations.
intentions is used. If the consequences of breach are such → Contract-breaker’s future obligations
Where one party makes it impossible for as to deprive the innocent party of are converted into obligation to pay
the other party to perform. Case 2 Case: Man Financial (S) Pte Ltd v Wong substantially the whole benefit that the damages for breach.
Bark Chuan David (2008) innocent party was intended to obtain → However, terms intended to survive
Case 1: San International v Keppel from the contract, then the innocent party termination remain.
Engineering (1998) should be entitled to terminate. (2) Both parties remain liable to perform
Case 2: Universal Cargo Carriers all unperformed obligations which have
Corporation v Citati (1957) accrued before the termination.
→ However, this is subjected to the
innocent party’s right to damages for
breach.

Approach for Breach:

(1) Determine breach (Actual or Anticipatory)
(2) Determine breach (Repudiatory breach or Non-repudiatory)
(3a) Repudiatory: Choice to terminate or affirm
(3b) Non-repudiatory: Choice to claim damages
(4) Termination: Explain approach
(5) Termination: Explain effect
Week 9: [ Chapter 17: Frustration ]

Discharge: Where a valid contract that is not tainted by any vitiating factor comes to
an end.
Agreement Discharge
Courts Will Examine:
Frustration: Without default of either party, a contractual obligation has become Refer to Chapter 16
(1) Contractual promise.
incapable of being performed due to circumstances in which performance is called for
(2) Performance in the circumstances that
would render it radically different from that which was undertaken by the contract. Performance Breach existed at the formation of the contract.
(3) New event.
Frustration must be distinguished from mistake which relates to matters occurring
Refer to Chapter 16 Refer to Chapter 16 (4) Performance in light of the new event.
before or at the time of the contract.
(5) Contrast 2 and 4 to see if there is a
Mention: Davis Contractors v Fareham UDC (1956)
Frustration Court’s Approach radical difference.

Categories of Frustration Elements of Frustration

Supervening Impossibility Supervening Illegality Radical Change Discharged in Reasonable Time Occurring After Contract is Formed

Situations: Where at the tie of contract the Situations: Neither Party at Fault Unforeseeable
(1) Destruction of subject matter of performance is one which is already (1) Frustration of purpose. Case 1
contract. Case 1 prohibited by law, the contract is void ab → Where after a turn of events, the literal
→ Total destruction is not necessary. initio (from the start) for illegality. performance of a contractual obligation
(2) Death or incapacity. Case 2 remains possible, but the performance Rendering Performance Impossible Radically Different Performance
→ The duration of incapacity is of Note: While the doctrine of frustration can under the changed circumstances would
concern. be excluded by express agreement, not fulfil the original commercial purpose.
(3) Unavailability. frustration through supervening illegality → If a common purpose between both
→ The duration of unavailability is of cannot be excluded. parties is not achieved, frustration of Restrictions to the Doctrine of Frustration
concern. purpose arises.
(4) Failure of source of supply. Case 3 → The failure of the purpose of one party
→ Where expressly or impliedly provided alone does not bring about frustration.
that goods are to be supplied by a (2) Delay, unavailability.
Self-induced Frustration Negligence
particular source. → Where the delay is so abnormal in its
→ Both parties must be of the same mind. effect or expected duration as to fall
(5) Method of performance impossible. outside what was the reasonable
Case 4 contemplation of the parties at the time of Frustration should not be due to the act or In principle, a party who has been
→ Where expressly or impliedly required contract. election of the party seeking to rely on it. negligent should not be able to escape
for a particular method of performance to (3) Impracticability, increased costs. A party to a contract cannot rely on liability since he is at fault.
be used. → Includes extreme and unreasonable self-induced frustration.
difficulty, expense or loss. However, the main determining factor is in
Note: Ultimately, what is of concern is → The impracticability must be abnormal Although a contracting party cannot rely identifying deliberateness.
whether there is a radical change to as to create radical change to the on frustration induced by his own conduct,
contractual performance. contractual performance. the other contracting party is entitled to do Case: Constantine v Imperial Smelting
so. (1942)
Case 1: Taylor v Caldwell (1863) Case 1: Krell v Henry (1903)
Case 2: Poussard v Spiers & Pond (1876)
Case 3: Blackburn Bobbin Co Ltd v TW
Allen & Sons Ltd (1918) Express Provision and Construction Several Contracts Foresight and Foreseeability
Case 4: Holcim (Singapore) Pte Ltd v
Precise Development Pte Ltd (2010)
(1) Express Provision. A situation can arise where a contracting (1) Foreseen events.
→ If parties have made known the party is placed in a position where he is → The view generally adopted by
allocation of risks regarding the possible not able to perform all of several commentators is that the occurrence of
supervening events, the law will generally contracts, but is able to perform some of such events does not frustrate a contract.
uphold the allocation. them. (2) Foreseeable events.
Effects of Frustration → Express contractual provisions → An event which is highly foreseeable
regarding supervening events are often If the contracting party chooses to perform cannot frustrate a contract. Case 1
called force majeure clauses. some of the contracts, he cannot rely on
→ One exception, would be supervening frustration to discharge him from the other Case 1: Win Supreme Investment (S) Pte
(1) Severability. illegality. contracts. Frustration here, would be Ltd v Joharah bte Abdul Wahab (1997)
→ Parts of a contract may be frustrated (2) Construction. considered self-induced. Case: Glahe International Expo AG v
while other parts continue to be → While an express provision can ACS Computer Pte Ltd (1999)
unaffected. exclude frustration, the courts have An alternative, is to hold that the contracts
(2) Scope of act. tended to construe such a provision affected by the event are partially
→ Does not apply to carriage of goods by narrowly. frustrated and that the contracting party is
sea, insurance contracts and contracts for → A force majeure clause, must be full permitted to prorate the delivery to all
sale of specific goods where the cause of and complete and intended to cover the parties.
frustration is the perishing of goods. supervening event in question.
Week 10: [ Chapter 18: Remedies for Breach of Contract ]

Types of Remedies: Remedies

(1) Common law remedies.
→ Damages.
→ Action for a fixed sum.
(2) Equitable remedies.
→ Specific performance.
→ Injunction. Specific Relief: Where the plaintiff wants to enforce specifically the defendant’s
contractual obligation (other than an obligation to pay a fixed sum of money), the
Types of Damages: appropriate remedies would be specific performance (if the obligation is to do
Monetary Relief Specific Relief something) or injunction (if the obligation is to refrain from doing something.
(1) Unliquidated damages. (Court determines damages)
(2) Liquidated damages. (Pre-estimated amount of damages agreed by parties)
(3) Nominal damages. (Awarded for technical breaches)

Compensatory Damages Specific Performance Injunction

Damages: Damages are the main remedy for a breach of contract. When a contract is breached, the party in breach is generally required to pay Order to compel the party in breach to perform his contractual Where the defendant is in breach of a contractual undertaking to
damages to the injured party. Damages are not meant as a punitive measure. obligations. Only where damages will not provide adequate relief. refrain from doing something, an order for injunction will be an
effective remedy as it serves to restrain the infringing conduct.
General Rule: Suppose the plaintiff enters into a contract to purchase a house
(1) Contract measure. Case 1 that but the defendant reneges on his promise to sell. If the plaintiff Exception:
→ To place the innocent party, so far as money can do it, in the same position he would be in as if the contract had been performed properly. truly wants the house because of its unique features, his (1) An injunction will not be ordered if its practical effect would be
(Looking forward) expectation interest will be fully protected if the court by order of to indirectly compel performance of a service where no order for
(2) Tort measure. specific performance. specific performance would have been made.
→ To place the parties in the original position as if the contract had not been entered into. (Looking back)
Exceptions: Case: Warner Brothers Pictures Inc v Nelson (1937)
Case 1: Robinson v Harman (1848) (1) Where performance causes severe hardship to defendant. Case: Parkway Properties Pte Ltd v Page One - The Book Shop
(2) Where performance requires constant supervision of court. Pte Ltd (1985)
(3) Where performance involves personal service.

Case: E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd

Approach
(2012)

Step 1: Causation - Did the breach directly cause the loss suffered Conditions: Elaboration:
by the plaintiff? (1) Breach must cause the loss suffered by the plaintiff. Case 1 (1) 1st Limb. (Basic knowledge imputed to the defendant)
(2) Loss suffered by innocent party must be a direct result of the → Since everyone (including the contracting parties) must, as reasonable people, be taken to know of damage which flowed “naturally” from a
Case 1: Monarch Steamship Co. Limited v Karlshamns breach. breach of contract, the first limb of Hadley did no violence to the original bargain between the contracting parties.
Oljefabriker (A/B) (1949) (3) No break in chain of causation. (2) 2nd Limb. (When the contract-breaker has certain specific knowledge)
Case 2: South Australia Asset Management Corporation v York (4) No intervention from an external source. Case 2 → Such damage … was not, by its very nature, within the reasonable contemplation of the contracting parties. It would be both unjust and unfair
Montague Ltd (1997) to impute to them knowledge that such damage or loss would arise upon a breach of contract.
→ However, if, armed with such actual knowledge, the contracting parties did not make express provision in their contract for what was to
happen in the event of a breach of that contract resulting in “extraordinary” or “non-natural” damage, then they must have taken to have agreed
that should such damage occur, the contract-breaker would be liable for such damage.
Step 2: Remoteness - Is the loss too remote to allow for recovery? Test for Remoteness: Case 1
(1) 1st Limb - Damage that may fairly and reasonably be
Imputed Knowledge: Knowledge that everyone, as reasonable people must be taken to know. Everyone must be taken to know of damage
The remoteness rule prevents a limitless scenario from occurring. considered arising naturally.
flowing “naturally” from a breach of contract.
(2) 2nd Limb - Damage that may reasonably be supposed to have
Actual Knowledge: Knowledge which the contract breaker is actually aware of.
Case 1: Hadley v Baxendale (1854) been in the contemplation of both parties at the time of formation.
Case: Robertson Quay Investment v Steen Consultants (2008)
Note: Contemplation relates to the foreseeability of occurrence.

Step 3: Mitigation - Could the plaintiff have avoided some of the As it is the party in default who has brought about a situation which Elaboration:
loss? calls for measures to mitigate loss, he is in no position to be astute (1) Expectation loss. (Monetary)
in criticising the adequacy of the mitigating steps taken by the → Comes in the form of direct costs or the expected profits.
Any loss in respect of which the plaintiff could have taken innocent party. Mention 1 (2) Reliance loss. (Monetary)
reasonable steps to mitigate, but did not, is not compensable. → Comes in the form off expenditure incurred in reliance on the contract (including any purchase price paid).
Note: The burden of showing that the plaintiff has failed to take → Damages based on reliance loss would be unavailable if the defendant can show that the plaintiff had made a bad bargain. Mention 1
Mention 1: Tan Soo Leng David v Lim Thian Chai Charles (1998) reasonable steps to mitigate his loss is with the defendant. (3) Incidental loss. (Monetary)
→ Comes in the form of subsequent costs as a result of the response to the breach of contract.
(4) Non-pecuniary loss. (Non-monetary)
→ The general rule is that damages are not recoverable for non-pecuniary losses.
Step 4: Measurement - What is the value of the loss? Types of Losses:
→ Parties are not allowed to recover for distress, disappointment or loss of reputation. Case 1
(1) Expectation loss. (Usual approach in breaches)
→ Exceptions: (a) Breach caused personal injury leading to mental anguish. (b) Breach caused physical inconvenience leading to mental
Objective: To place the injured party in the position she would be (2) Reliance loss. (Secondary measure to expectation loss)
distress. (c) The major purpose of the contract is to provide employment, security, comfort or sentimental benefits.
in if the contract had been performed properly. (Contract measure) (3) Incidental loss. (Subsequent costs from breaches)
(4) Non-pecuniary losses. (Losses not relating to money)
Case 1: Haron bin Mundir v Singapore Amateur Athletic Association (1991)
Mention 1: Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua (2018)
Week 11: [ Chapter 6: Negligence ]

Tort: a civil wrong that causes a claimant to suffer loss or harm, resulting in legal
liability for the person who commits a tortious act.
Business Torts Torts Other Torts Legal Requirements:
(1) Existence of a duty of care owed by the defendant to the plaintiff.
Tort of Negligence: Deals with the legal liability and consequences arising from Not Part of Syllabus Not Part of Syllabus (2) Defendant must have breached his or her duty of care to the plaintiff.
negligent conduct. (3) Defendant’s breach must have caused the damage suffered by the plaintiff.

Basis: Duty of care imposed by law. Note: For the quantification of damages, we need to ascertain if the plaintiff failed to take
Liability: Breach of standard of care. reasonable steps to mitigate its losses. If so, the plaintiff cannot claim the portion of the
Consequences: Remedies. damages to the extent that it was not duly mitigated.
Tort of Negligence

If the above legal requirements are met, the plaintiff would succeed in his action in
negligence unless the defendant can raise valid defences.
Legal Requirements
Defences:
(1) Illegality (ex turpi causa).
(2) Voluntary assumption of risk (volenti non fit injuria).
Duty of Care Breach of Duty of Care Damage Resulting from Breach (3) Exemption of liability.
(4) Contributory negligence.

Note:
The Singapore Approach: Case 1 If the defendant’s conduct falls below the standard of care, The damage suffered by the plaintiff must have been caused (1) If either of the first two defences is proved, the defendant is not legally liable to the
(0) Factual foreseeability. we can say that he has “breached” the duty of care. by the defendant’s breach. This is analysed by considering plaintiff under the tort of negligence.
→ Can the defendant, on the facts of the case, reasonably both factual and legal causation. (2) If the defence of contributory negligence is proven, the defendant will only be partially
foresee that his negligence would likely cause harm to the Standard of Care: liable to the plaintiff.
class of people which includes the plaintiff. Measured by the objective standard of a reasonable person Factual Causation: (3) If an exemption of liability, it depends on whether the purported exemption entirely
(1) Proximity test. using ordinary care and skill. (1) “But for” test. Case 1 excludes or merely limits the extent of liability.
→ The focus here is on the closeness of relationship → Considers whether the plaintiff would have suffered harm
between the plaintiff and defendant. Factors Determining Standard of Care: if the defendant had not been negligent.
→ This includes physical (where), circumstantial (who), and (1) Level of skill. (2) Material contribution to damage. Case 2
Case: Donoghue v Stevenson (1932)
causal (how) proximity. → Assuming a reasonable person in the defendant’s shoes. → Considers whether the breach materially contributed to
→ Encompasses the twin criteria of voluntary assumption of (2) Likelihood of injury. the damage.
Neighbour Principle:
responsibility and reliance. → Where the likelihood of injury to the plaintiff is extremely → The word “material” indicates a non-negligible contribution
… reasonable care to avoid acts or omissions which you can reasonably foresee would
(2) Policy considerations. low, a high standard of care is not required. Case 1 to the damage.
be likely to injure your neighbour … persons who are so closely and directly affected by
→ Are there any considerations that ought to negative or limit (3) Severity of injury. → To satisfy this test, it is not necessary for the breach to be
my act that I ought reasonably to have them in contemplation as being so affected when I
the duty that has arisen under the first stage. → Where the severity of injury is low, a high standard of care the sole or dominant cause of the plaintiff’s loss or damage.
am directing my mind to the acts and omissions which are called in question.
→ These policy considerations involve the “weighing and is not required. Case 2
balancing of competing moral claims and broad social (4) Cost of avoiding injury. Legal Causation:
welfare goals”. → Where the cost of avoiding injury is low, a high standard of (1) Novus actus interveniens (new intervening act).
care is not required. Case 3 → This novus actus interveniens might be an act of the Case: Anns v Merton London Borough Council (1978)
Note: Not every factor of proximity needs to be satisfied in plaintiff, a third party, or even a natural event that takes place
order to establish proximity. The relative importance of any Standard of Care Relating to Professionals: between the defendant’s alleged negligence and the damage Two-stage Test:
factor would depend on the nature of the negligent deed and → Bolam test: Looks at the standard of an ordinary skilled that ensued. (1) Foreseeability test.
the type of harm resulted. man exercising and professing to have that skill. Case 4 → If there is a novus actus interveniens which is sufficient on (2) Consideration of any clear public policy.
the facts to break the chain of factual causation, the
Case 1: Spandeck Engineering (S) Pte Ltd v Defence Res Ipsa Loquitur: (Bottom right of Mindmap) defendant’s breach would not be regarded as the cause of
Science & Technology Agency (2007) the plaintiff’s damage.
Note: For advice, required that the information is relevant (2) Where one tort is followed by another tort or a natural
Case Sequence: and material and that the information was important. event. Case 3 Case: Caparo Industries plc v Dickman (1990)
(1) Neighbour Principle - Donoghue v Stevenson (1932) → Defendant is liable for the first injury, but not for the
(2) 2 Steps - Anns v Merton London Borough Council (1978) Case 1: Bolton v Stone (1951) subsequent injury. Three-stage test:
(3) 3 Steps - Caparo Industries plc v Dickman (1990) Case 2: Paris v Stepney Borough Council (1951) (1) Foreseeability test.
Case 3: Latimer v AEC Ltd (1953) Case 1: Barnett v Chelsea & Kensington Hospital (1969) (2) Proximity test.
Case 4: Bolam v Friern Hospital Management Committee Case 2: Bonnington Castings Ltd v Wardlaw (1956) (3) Just and reasonability.
(1957) Case 3: Baker v Willoughby (1970)

Negligent act or omission Negligent misstatements Negligent misstatements Negligent acts or omissions Negligent acts or omissions Res Ipsa Loquitur:
causing personal injury or causing economic loss. causing physical damage. causing economic loss. causing nervous shock or Used when the plaintiff experiences difficulties in proving a breach of duty of care.
physical damage. psychiatric harm.
Requirements: Claims for physical damage Case: RSP Architects Planners & Requirements:
Note: For negative acts, there is (1) Expertise of statement maker. arising from negligent Engineers v Ocean Front Pte Ltd Only to psychiatric illnesses. (1) The defendant must have been in control of the situation or thing which caused the
generally no duty of care arising (2) Whether the maker ought to misstatements are, as one can (1996) incident.
from mere omissions. know that the other party will rely imagine, relatively uncommon. Case: RSP Architects Planners & Requirements: (2) The accident would not have happened in the ordinary course of things, if proper care
on the statement. Engineers v Management (1) Closeness of relationship. had been taken; and
Exceptions: Special relationship, (3) Whether the maker voluntarily Case: Marc Rich & Co AG v Corporation Strata Title Plan No (2) Proximity of plaintiff to (3) The cause of the accident must be unknown to the plaintiff.
control by defendant over third undertakes responsibility for Bishop Rock Marine Co Ltd 1075 (“Eastern Lagoon”) accident in time and space.
party conduct, and where the making the statement. (1996) (3) Causal proximity. Note: The defendant can displace the effect of the doctrine by providing evidence to
defendant ought to know... show that he was not negligent.
Case: Hadley Byrne & Co Ltd v Mention: Ngiam Kong Seng v
Case: The Sunrise Crane (2004) Heller & Partners Ltd (1964) Lim Chiew Hock (2009) Case: Scott v London & St Katherine Docks Co (1865)
Week 11: [ Chapter 6: Negligence ]

Tort: a civil wrong that causes a claimant to suffer loss or harm, resulting in legal
liability for the person who commits a tortious act.
Business Torts Torts Other Torts Legal Requirements:
(1) Existence of a duty of care owed by the defendant to the plaintiff.
Tort of Negligence: Deals with the legal liability and consequences arising from Not Part of Syllabus Not Part of Syllabus (2) Defendant must have breached his or her duty of care to the plaintiff.
negligent conduct. (3) Defendant’s breach must have caused the damage suffered by the plaintiff.

Basis: Duty of care imposed by law. Note: For the quantification of damages, we need to ascertain if the plaintiff failed to take
Liability: Breach of standard of care. reasonable steps to mitigate its losses. If so, the plaintiff cannot claim the portion of the
Consequences: Remedies. damages to the extent that it was not duly mitigated.
Tort of Negligence

If the above legal requirements are met, the plaintiff would succeed in his action in
negligence unless the defendant can raise valid defences.
Remoteness of Damage Mitigation of Damage Assessment of Damage
Defences:
(1) Illegality (ex turpi causa).
(2) Voluntary assumption of risk (volenti non fit injuria).
The test for remoteness of damage lies in the “reasonable It is the defendant’s burden to show that the plaintiff ought to The main purpose of the damages in the tort of negligence is (3) Exemption of liability.
foreseeability” test. The test limits the scope of damage have taken reasonable steps to prevent or reduce the to compensate for the losses suffered. (to restore the plaintiff (4) Contributory negligence.
which may be claimed against a defendant. plaintiff’s own loss. as far as possible to the position he or she would have been
if not for the defendant’s negligence) Note:
Reasonable Foreseeability Test: Mention 1, Case 1 If the defendant is able to discharge its burden, the loss (1) If either of the first two defences is proved, the defendant is not legally liable to the
The loss would not be too remote where the type of loss claimable by the plaintiff would be reduced accordingly. (1) Personal injury cases. plaintiff under the tort of negligence.
which actually occurred was reasonably foreseeable, → Plaintiff can claim for general damages such as pain and (2) If the defence of contributory negligence is proven, the defendant will only be partially
notwithstanding that the precise extent of the loss was not suffering, loss of amenities, and future loss of earnings. liable to the plaintiff.
foreseeable. (2) Special damages. (3) If an exemption of liability, it depends on whether the purported exemption entirely
→ Special damages such as loss of earnings and medical excludes or merely limits the extent of liability.
Special Circumstances of the Plaintiff: expenses that have been reasonably incurred may, subject
The general rule is that the defendant has to take the plaintiff to proof, be recovered.
as he or she is, with existing predispositions. (eggshell skull (3) Death cases.
rule) Case 2 → A claim for bereavement expenses may be made for the
benefit of certain specified dependents.
Mention 1: Overseas Tankship (UK) Ltd v Morts Dock & (4) Property damage cases.
Engineering Co Ltd (or Wagon Mound (No 1)) (1961) → The quantum of damages for property damage is based
Case 1: Overseas Tankship (UK) Ltd v Morts Dock & on the costs of repair or diminution in value of property.
Engineering Co Ltd (or Wagon Mound (No 2)) (1961) (5) Economic loss cases.
Case 2: Smith v Leech Brain & Co Ltd (1962) → Ascertained by the precise scope of duty of care in a
particular case which may result in different damages.

Defences

Ex Turpi Causa Volenti Non Fit Injuria Exemption of Liability Contributory Negligence

Ex Turpi Causa Non Oritur Actio: No action ought to be Volenti Non Fit Injuria: Whether the plaintiff had acted Exemption clauses or notices may either attempt to exclude The doctrine of contributory negligence serves only as a
founded on a wicked act. freely and voluntarily with full knowledge of the nature and liability entirely or to merely limit the liability of the defendant. partial defence.
extent of the risks of the defendant’s negligence and
However, the fact that the plaintiff is involved in some consented, whether expressly or impliedly, to those risks that Requirements: Occurs where the injury is partly contributed by the plaintiffs
wrongdoing does not itself provide a good defence to the resulted in the tort. (1) Defendant to prove that the exemption clauses were own fault.
defendant. incorporated into the contract.
If this is the case, the defendant has a complete defence. (2) Defendant to show that the language of the clause or A plaintiff’s negligence will result in a reduction of damages
For the defence of ex turpi causa to arise, the plaintiff’s notice covers the situation in question. only where it is causally relevant to the damage which he or
wrongdoing must be serious and connected to the damage. (3) Exemption clause must not be unenforceable by UCTA. she has sustained.

Others

Vicarious Liability Director’s Liability for Company’s Negligence Concurrent Liability in Tort of Negligence and Contract Limitation Periods

Employers are vicariously liable for the torts committed by The director of a company is not generally liable for the The plaintiff, who had a contractual relationship with the An action founded on a tort shall not be brought after the
their employees in the course of their employment. company’s negligent conduct. defendants, can sue the defendants in tort to avail himself of expiration of six years from the date on which the cause of
the more favourable limitation period for tort claims. action accrued. (Limitation Act S 6(a))
This means that an employer is legally liable to the third party The director is regarded in law as a separate entity from the
who suffers harm due to the employee’s negligence in the company and hence the tortious acts or omissions of the The plaintiff can select the tortious remedy which is more This section is, however, subject to other provisions in the
course of employment. company cannot normally be imputed to the directors. advantageous in the circumstance. Act.
(1) Personal injuries - Three years from the occurrence.
Rationale: The employer has deeper pockets, exercises However, if the director may be personally liable for (2) Personal injuries - Three years from the earliest date the
control over the employee and benefits from his work. authorizing the company’s negligent acts. plaintiff has knowledge for bringing action for damages.