Beruflich Dokumente
Kultur Dokumente
Special contracts
- contracts under seal, deed or indenture
do not need consideration
Internet sales?- Web advertisement which use “loose language” may create an unilateral contract
that can bind the advertiser. Chwee Kin Keong & others V Digilandmall.com Pte Ltd (2004)
(pg65)
Auctions & Invitation to treat = display of goods & services and auctioneer invite bids
Tenders Offer = Bids made by audience
Acceptance = Auctioneer indicates bids accepted
Provision of Mere response to a request for information does not constitute an offer Harvey v Facey
Information (1893) – The court held that there was no contract because provision of information was not an
offer.
Termination of Offer (Pg 74)
General rule = offer can be withdrawn at any time prior to acceptance. When an offer is
withdrawn, the offer is said to be revoked.
- A revocation of an offer must be communicated to the offeree.
- Revocation is only effective when the offeree receives notice of the revocation
Byrne v Van Tienhoven (1880) – It was held that the revocation was not effective until it was
received by the plaintiff. Since the offer was accepted prior to the revocation, there was a
valid contract.
A reliable third party can also communicate a valid revocation. Dickinson v Dodds (1876) The
English Court of Appeal held that Dodds had validly withdrawn his offer to Dickinson even though this
was done through a third party.
Unilateral Contracts
General rule = Offer can be revoked before acceptance (full performance) Unfair!
Constructive revocation- Advertise withdrawal on the same medium provided offeree had not done
the obligation
Alter view = Offer cannot be revoked once offeree begins to perform
Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has
started to act. Dickinson Trading (S) Pte Ltd v Transmarco Ltd, obiter dictum the offeror in a
unilateral contract has an obligation not to revoke the offer after the offeree has embarked on the
performance of the conditions.
An offer can also be terminated when an offeree rejects offer. Rejection may be made in writing,
orally or by conduct, and must be communicated to the offeror. Once communicated, a rejection
extinguishes the offer and the offer cannot be revived.
Rejection Counter offer construed as rejecting the initial offer. (Offeree accepts offer but on condition of
and new term)
counter - Anything less than an unconditional acceptance may be viewed as a counter offer which
offer (Pg rejects the original offer. Hyde v Wrench (1840) – The court held that there was no contract
78) because Hyde’s reply was a counter offer, which extinguished the earlier offer.
- When the response is an inquiry or a request of information, it should not be construed as an
offer. ‘The Masters Stelios’; Monvia Motorship Corporation v Keppel Shipyard (Pte) Ltd
(1983)
Acceptance after specific period which offeror states that his offer is open = Ineffective
- If the offer is opened for a specified period, a purported acceptance after that period would be
ineffective since the offer had lapsed.
Lapse of
- In certain circumstance, the court may imply that the offeror has specified the period of offer
even if he has not done so expressly. Wee Ah Lian v Teo Siak Weng (1992)
time (Pg
79) When no specified period of time is expressed, an offer would lapse after a reasonable
amount of time, (depending on the facts of the case). Ramsgate Victoria Hotel Co v
Montefiore (1866) – the court held that Montefiore could refuse to take up the shares
because his offer had lapsed after a reasonable time. For commercial transcations, the
period tends to be shorter since prices continually fluctuate in the business world.
Offer automatically terminated if condition not met
Offer made subject to condition either expressly stated in offer or implied.
For purchase of goods, goods must remain in the same state as when the offer is first made for offer
Failure of to be valid. If goods are severely damaged, offer may be deemed lapsed as the conditions are no
Condition longer met.
(Pg 80) Financings Ltd v Stimson (1962) – The English Court of Appeal held that Stimson was not bound to
the contract because there was an implied condition that at the time of acceptance by the
plaintiff(Financings), the car would be in substantially the same state as when the offer was made by
Stimson. The condition was broken and therefore the offer was no longer available for acceptance.
- When the offeror/offeree dies, there is no more offer
Dickinson v Dodds if a man makes an offer dies; the offer cannot be accepted after he is dead.
Death (Pg Reynolds v Atherton (1921) Offeree dies before acceptance, this offer cease to be capable of
80) acceptance.
Bradbury v Morgan (1862) the court held that the death of an offeror did not terminate the offer
unless the offeree had notice of the offeror’s death.
As long as offeree has knowledge of offer, motive is irrelevant. Once the offeree is aware of the offer, it
does not matter that he was prompted to act for reasons other than the desire to accept the offer.
William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward because when giving
the information sought by the police, she had done so with knowledge of the reward even though her motive
for giving the information was her own remorse.
Cross Offers do not make a contract – Tinn v Hoffman & Co (1873) The reasoning appears to imply that
the lack of consensus or meeting of minds between the parties at the time of making the offers.
Unilateral contract- Acceptance when offeree had done the conditional promise stated by the offeror. In the
first place, Offeree must know of the contract for the contract to be effective- offer must be communicated to
the offeree.
However, there are 3 situations where acceptance need not be communicated to/received by the
offeror, they are discussed below:
Waiver of communication
Offeror waives need for communication of acceptance, eg unilateral contract where the offer is made to the
whole world. In such a situation, acceptance = act of one person in response to the conditional promise
made. Carlill v Carbolic Smoke Ball Co. (1892)
obligation to communicate only if he wishes to reject the offer, is rare. Southern Ocean
Shipbuilding Co Ltd v Deutsche Bank AG (1993)
“If you wish to reject the offer, you must communicate to me or else silence is acceptance.”
- When there is implicit acceptance. Midlink Development pte ltd V The stansfield Group pte
ltd(2004)- The conduct of paying the rent showed that he had accepted and therefore the contract
exist.
- s14 ETA states that there are provisions for a party to require an acknowledgement of receipt to
ensure messages have been received properly.
Specific Information System [e.g: e-mail, FAX, voice-mail] designated by addressee for receiving
messages
No s15(2b) receipt occurs at the time electronic record enters ANY information system of the
addressee.
Yes s15(2a)
Is it sent to the designated Information System?
Yes receipt occurs and acceptance communicated when electronic record enters the
designated information system
No receipt occurs when electronic record is retrieved by addressee.
1) If acceptance is received within normal business hours, communication occurs upon receipt.
2) If acceptance is received outside normal business hours, communication occurs at the start of the next
business day.
Chwee Kin Keong & others V Digilandmall.com Pte Ltd (2004)- Found in favour of the receipt rule.
Automated email response could constitute unequivocal acceptance. The intention to accept an offer is not
undermined merely because it is communicated via automated response. However, defendant won the case
on the basis of unilateral mistake. (pg65)
AcceptanceTermination of
Exceptions (Past consideration becomes executed & thus good consideration): State of mind,
Past especially the on performing the act, is critical.
Consideration - Act done at promisor’s request
pg87 - Parties understood act is to be remunerated Have to satisfy ALL 3 rules
- Contract must otherwise be enforceable
Pao On v Lau Yiu Long (1980) – “an act before the giving of a promise to make a payment or to
confer some other benefit can sometimes be consideration for the promise. The act must have
been done at the promisor’s request, the parties must have understood that the act was to be
remunerated further by a payment or the conferment of some other benefit, and payment, or the
conferment of a benefit, must have been legally enforceable had it been promised in advance.”
Followed in Sim Tony v Lim Ah Ghee (1995).
Two Main Rules on Consideration (Pg 88)
1. Must move from promisee but need not move to promisor Promisee must have promised to give up
something in exchange for the promise of another. Tweedle v Atkinson (1861) – the court held that
Tweedle could not enforce the contract between the two fathers (privity of contract) because he is not a
party, and secondly, no consideration flowed from him.
2. Need not be adequate but must be sufficient – Law will not interfere with parties contract so long as
consideration is of “some value” in the eyes of the law.
Law does not measure value Chappell & Co Ltd v Nestle Co Ltd (1960) – The HOL
held that the consideration included the wrappers even though they were of no value to
Nestle.
Need not be
Once the subject of exchange is recognized in law as suitable consideration, quantity is
Adequate
irrelevant.
(Pg 90)
Law will not inquire as to the fairness of the consideration as long as the parties agreed
to it willingly.
Sufficient Goods, Any gds, svcs or property with some value in the eyes of the law is clearly
(Pg 91) Services, sufficient/valuable consideration, thus good consideration.
Money and
Property
Forbearance Promise not to sue or enforce a valid claim or settlement of legal action =
to sue sufficient consideration Alliance Bank Ltd v Broom (1864). K-Rex Finance
Ltd v Cheng Chih Cheng (1993)
However, the promise (the edited promise?) could become ‘final and irrevocable if the promisee
cannot resume his position.” Ajayi v R T Briscoe (Nigeria) Ltd (1964)pg100
Shield not sword
- Can only be used as a defense against a claim by a plaintiff
- Cannot be used to commence a suit. Combe v Combe (1951); Lai Yew Send v
Pilecon Engineering (2002)
Intention to Create Legal Relations (Pg 101)
- To determine if the promisor has an intention to create legal relations, Objective Test is used.
- The test is whether a reasonable person viewing all the circumstances of the case would consider that the
promisor intended his promise to have legal consequences.
General presumption = no legal intention
- Such agreements lack the necessary intention to form a contract Balfour v Balfour (1919) – The
English Court of Appeal held that the claim failed because the parties did not intend the promise to
be legally binding. Choo Tiong Hin v Choo Hock Swee (1959) – the plaintiff’s promises were not
Social and
enforceable because the lack of intention to create legal relations.
Domestic
Agreements
However, in Merritt v Merritt (1970) – The English Court of Appeal found the necessary intention
and held that the wife succeeded in her claim for breach of contract. For example, if the couple are
not on good terms, it can be argued that there is an intention to create legal relations and thus
promise is enforceable.
General presumption = Legal intention
- Edwards v Skyway Ltd (1964) - There is necessary intention to create legal relations. The court
held that Skyways was legally bound.
3. Administrative relationships
MCST 473 v de Beers (2001) – Application for license does not give rise to legal relationship
Exceptions (3rd party who’s not a party of the contract, entitled to enforce or be bound by terms of contract)
Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993)
- Agency relationship [pg. 107]
A person (principal) authorizes another person (agent) to act on his behalf
According to general rules of agency, the principal, although not a party to the contract, has a direct
contractual relationship with the Third party.
Implied term = Term which has not been expressly agreed by the parties but is nevertheless implied into the contract.
Implied terms can be implied into the contract by a court to give efficacy to the contract or it may be implied by a
statute.
Implied Terms
UsageCustom &
Terms can be implied into the contract because such contracts are subjected to unwritten terms
hallowed by long usage or custom. Hutton v Warren (1836) – Hutton was entitled to such the
allowance because it was an accepted custom that a tenant was bound to a farm for the entire tenancy
but upon quitting, may claim an allowance for seed and labor.
The court will supply a term which it considers must have been intended by the parties, so as to
ensure that their contract will proceed on normal business lines. The Moorcock (1889) – Even though
Business Efficacy
the defendant did not give any warranty that the ground below the jetty was safe, there was an implied
undertaking to this effect. Hence the plaintiff succeeded.
Officious bystander test – So obvious it goes without saying Shirlaw v Southern Foundries (1926)
Ltd v Anor (1939)
Energy Shipping Co Ltd v UDL Shipping (Singapore) Pte Ltd (1995) – The above tests were used
in the case. However, whichever test is adopted, the important point is that the term to be implied must
be necessary for the contract. Having power to imply terms to ensure business efficacy does not mean
that a court will exercise its discretion whenever reasonable to do so. [Must be necessary not merely
reasonable]
Statute
Breach
A breach of condition entitles injured party option to affirm or discharge contract. In either case,
he may also claim damages.
Warranties are less important terms and constitute secondary obligations. If a warranty was breached,
the breach would not go to the root of the contract.
Warranty
Breach
A breach of warranty entitles injured party to claim damages only & the contract remains on foot.
Bettimi v Gye (1876) – the court held that the rehearsal clause was not vital to the contract. Bettini’s
breach of the warranty did not entitle Gye to repudiate the contract. The contract remains on foot and
Gye could claim for damages.
Innominate terms cover terms which can be breached resulting in trivial consequences, or in
serious consequences. Hong Kong Fir Shipping Co Ltd v Kawasaki Kaisen Kaisha Ltd (1962) –
the court held that the plaintiff breached an innominate term, but the breach was not sufficiently
serious to entitle Kawasaki to repudiate the contract. Kawasaki could only claim damages.
Innominate Term
Trivial consequences like breach of warranty - entitles injured party to claim damages only &
the contract remains on foot.
Serious consequences like breach of condition - entitles injured party option to affirm or
discharge contract & either case can claim damages.
- What are serious consequences? It depends on whether the breach deprives the injured party
of substantially the whole benefit which he was intended to obtain as the consideration for his
undertakings.
There is another type of clause called the limitation of liability clause which seeks to limit the liability of the party
relying on the clause
.
The party who wishes to rely on an exemption clause must establish the four points below:
1. Incorporation – the clause must be incorporated into the contract
2. Construction – the clause, properly construed, must cover the loss or injury which occurred.
3. Unusual factors – There must not be any extraordinary facts in the case which prevents the operation of
the clause
4. UCTA – the clause must not contravene the UCTA.
Signed
L’Estrange v Graucob (1934) – The document containing contractual terms is signed, then in the absence
of fraud or misrepresentation, the party signing it is bound, and it doesn’t matter if he has read the
documents or not.
To be effective the notice must be given before or at time the contract was made. Olley v Marlborough
Court Ltd (1949) – Contract was already formed before couple entered room & therefore notice given on
the bedroom wall was too late.
The wider the clause the more protection it will provide to the party relying on it.
2 rules of construction
Contra Proferentum Rule
Where there is any ambiguity in interpreting a clause, the construction to be adopted is the one which is
least favorable to the person who put forward the clause Hollier v Rambler Motors (AMC) Ltd (1972
Main Purpose Rule
It states that there is a general presumption that the parties do not intend an exemption clause to defeat or
Constructon (Pg 129)
Curtis v Chemical Cleaning & Dyeing Co (1951) – a misrepresentation to the true scope of the EC could
render the entire clause invalid.
Evans (J) & Sons (Portsmouth) Ltf v Andrea Merzario Ltd (1976) – The court held that the oral assurance
which created a collateral contract neutralized the written contract’s EC.
Collateral contract that runs parallel to the main contract as an exception to the parol evidence rule.
(Pg 131)
S3 Misrepresentation act- If liability arises from misrepresentation, the misrepresentator can only
(Pg
seek protection behind an exemption clause if the clause is reasonable and applies even in non-business
liability transaction unlike UCTA
133)Misrepresentation
occurred and the person who is alleging that the clause is reasonable has the burden of proving it to be
such.
2nd Schedule Guidelines:
1. Bargaining strength of parties – if bargaining strengths of parties are equal, EC considered to be
reasonable. Cosmat Singapore (Pte) Ltd v American National Trust and Savings Association
(1992) – the EC was held to be valid. Both parties considered to have equal bargaining strength.
2. Whether customer received an inducement to accept EC – if received an inducement to
accept EC, more likely to be reasonable.
3. Whether customer knows about exemption clause – All factors in the incorporation of EC. If he
knows then reasonable.
4. Compliance with some condition – If compliance with certain condition practical, more likely to
be reasonable.
Geoge Mitchell Ltd v Finney Lock Seeds ltd (1983)- Exemption clause was unreasonable
pursuant the equivalent s6(3) UCTA because the buyer could not discover the breach until the
plants grew whereas the seller was at all times in postion to know if the wrong seed was supplied
5. Whether goods specifically ordered – Special order probably makes EC more reasonable. E.g.:
A good is manufactured according to specifications by the customer and it causes damage to him,
the EC is reasonable, such that any defect in the good is due to customer’s specifications.
Even if a party knowingly enters a contract with a restrictive condition, he will still be able to seek protection
of UTCA (refer to bk for more reference)
CONTRACT - VITIATING FACTORS
There are 4 main factors, which can affect the enforceability of a contract.
INCAPACITY (Pg 142) – Lack of capacity which may characterize a contracting party.
Minors The category of persons who lack capacity are called minors.
Relevant Acts / Cases
Valid Contracts – Binds If minor has performed his obligations by payment of money or
both minor and other party, delivery of goods and services, he is unable to recover any monsy
but on the whole must paid or goods delivered by him unless there is a total failure of
benefit the minor consideration by the other party. Valenti v Canali (1889)
Nash v Inman (1908), Pg145
Beneficial Contracts (Ctt. Unenforceable because Nash fail to prove that the clothes were
for necessaries – necessaries)
Necessaries refer to
those goods and Peters v Flemings (1840) Pg145
services which the law (Flemmings bought gold watch and chains which could be
deems reasonably necessaries for his position)
required by a minor in
his particular station in S3 SGA defines necessaries
life. S3 (2) SGA deals only with executed contracts in that the goods must
have been ‘sold and delivered’ to the minor.
Goods: (Nash v Inman) the other party must have performed his
obligations before the contract is binding upon the minor ( provided
Executory Contracts that it is a valid contract)
for Necessaries
Services: (Roberts v Gray) binding upon the minor regardless
whether the other party has performed his obligations or not.
De Francesco v Barnum (1890) Pg147
Beneficial Contracts
(Contract is totally not beneficial to the minor)
for Employment – The
important point is that,
Chaplin v Leslie Frewin (Publishers) Ltd (1966) Pg 147
overall the contract
(Contract on the whole is beneficial to the minor even though there
must benefit the minor
are certain aspects that are not advantages to the minor)
Loans for Exception exists if money is used by minor to purchase necessities.
Necessaries – A
person who lends Financial Institutions in Singapore typically lend money to minors only
money to a minor if minor can supply a guarantor who will guarantee the loan. Can
is generally unable enforce the contract against the guarantor
to enforce the
contract and
recover the
money.
Voidable Contracts – Binds
other party and binds minor
unless minor repudiate. Minor is entitled to repudiate the contract without any liability on his
Arises when a minor part any time during his infancy or within a reasonable period of time
acquires an interest in a after he attains majority. Until he repudiates, the contract remains
subject matter where the enforceable. Davies v Benyon-Harris (1931) Pg148
minor faces recurring future (Minor entered into a lease for flat. Held that contract is not void but
obligations. Eg, lease, voidable and thus enforceable against him
partnership and purchase of
shares in a company.
What amounts to reasonable time within to repudiate a voidable contract is a question of fact which
depends on the circumstance of the case. Once repudiated, the minor is no longer bound to perform
any future obligations. He would not be entitled to recover any money paid or property transferred by
him to the other party unless there is a total failure of consideration: Steinberg v Scala(leeds)
Ltd(1923).
Ratifiable Contracts – If a minor’s contract does not within the class of valid or voidable, it
binds minor only if minor would be ratifiable. Such contracts would not be valid or enforceable
ratifies after he attains against the minor unless he ratifies it after he attains majority. The
majority. Nevertheless, contract nevertheless binds the other party.
contract binds the other
party. If ratified, defendant to transfer to the plaintiff(minor) any property
acquired by the defendant under the contract, or any property
representing it
Contract with persons stated is valid but may not be enforceable against him if it can be shown that at
the time the contract was made:
Mentally
- he was incapable of understanding the nature of the contract;
Unsound
- the other party knew or ought to have known of his incapacity.
and
Che Som bte Yip & Ors Maha Pte Ltd & Ors (1989)
Intoxicated
Persons
S 3(2) SGA also applies to mentally unsound and intoxicated persons. When they have obtained
goods which are necessaries, they may be required to pay a reasonable price for the goods.
ILLEGALITY (Pg 150) – When the source of law is infringed – whether statue or common law.
Illegal Gaming and S6 Civil Law Act, contracts of gaming and wagering are generally
Contracts void by statute. Thus, no legal effect and unenforceable. May involve
Wagering (Pg Betting Act. Exception will be legalize gaming and wagering
151) contracts authorized by Singapore totalisator board act.
When the ctt contravenes some aspect of public policy.
1)To commit a crime,tort or a fraud on a third party Apthorp v
Neville & co(1907)
Contracts Contrary to 2) promote sexual immorality
Public Policy (Pg 152) 3) benefit a foreign enemy or undermines the relationship with a
friendly country
4) Inimical to administration of justice(give false evidence in trial, 5)
oust the jurisdiction of the courts.
Contracts Contrary to Illegal because statutory provisions prohibit them.
statute(Pg 152) Refer to 1) Contract expressly prohibited. Re Mahmoud and
lecture notes. The issue is ispahani(1921)- Held that contract was unenforceable as it is clear
whether the relevant that this particular kind of contract shall not be entered into and thus
statute intended only to contract is void. Property not recoverable.
prohibit the offending
conduct, resulting in 2) Only penalize certain conduct without rendering the entire contract
criminal sanctions, or void.St John Shipping Corporation v Joseph Rank ltd (1957)-
whether it intended to Held that overloading of ship is illegal but might not cause a contract
prohibit the contract as of transporting goods to be void. an unlawful performance on an
well, resulting additional otherwise lawful contract does not necessarily renfer the entire
civil consequences. contract void.
- Legitimate interest
The restraint must protect some proprietary or legitimate interest of the employer ( the
person benefitting from the restraint). Trade Secrets and trade contracts may constitute
legitimate interests. A restraint intended merely to minimize competition or to prevent an
employee from using personal skills or knowledge acquired during his previous employment
is then likely to be void. Sratech Systems Ltd v Nyam Chiu Shin & Others (2005)
(restraint invalid)
- Reasonable Scope
Reasonable in terms of its period, geographical scope and subject matter.
Mason v Provident Clothing & Supply Co Ltd (1913) –Held that the area of restraint was
1000 times larger than the area in which he was employed)
Asiawerks Global investment Group Pte Ltd v Ismail bin Syed Ahmad & Another
(2004)
(Restraint void because scope too broad)
Court will ensure that the restraint of trade goes no further than what is necessary to protect
the interest concerned.
- Public Interest
Contrary to public interest.
Esso Petroleum Co Ltd v Harper’s Garage (Stourtport) Ltd (1968)
(Restraint too long and the test of reasonableness requires a consideration of the public
interest which must be protected in such exclusive dealing agreements.
At common law, the general effect of illegality is that the contract is void. The law treats the
contract as if it had not existed in the first place and no party can sue on the contract.
In some cases the court may allow an innocent party to recover property which
Recovering
would otherwise pass to the defaulting party under the illegal contract.
Property
However,claim cannot rely on an illegal contract. Tokyo Investment v Tan Chor
(Pg 157)
Thing (1993) (TCT allowed to recover the shares)(refer to pag157)
The defaulting party may be prevented from enforcing the contract by the maxim
ex turpi causa non oritur action (an action does not arise from a base cause).
Recovering However the innocent party may be able to recover damages from the defaulting
Damages party. Archbold’s (Freightage) Ltd v Spanglett Ltd (1961)-Contract was illegal in
Effects of performance and plaintiff was not aware of the illegality. The lack of awareness of
Illegality the illegality(a fact) is different from the lack of awareness of law.
Sometimes within the clause itself particular words cab be severed so as to save
the rest of the clause. Generally, severance is possible in cases of illegality if:
a) the promises are severable in nature
b) it is possible to sever the void part by deleting the offending words or
clause without adding, substitutin, rearranging or re-drafting the contract
Severance
(blue pencil test)
c) severance must not change the basic nature of the contract. Goldsoll v
Goldman (1915) (using the blue pencil test, the court severed the other
locations and the reference to real jewellery and allowed the remaining
clause to stand)
MISREPRESENTATION (Pg 159) – When the source of law is infringed – whether statue or common law. A
misrepresentation is a false statement of fact made by one party (representor) to another (representee) which
induces and is relied upon by the representee to alter his position.
In a claim for misrep., the operative statement must be one of past or existing fact. It cannot be a
mere statement of opinion or statement of some likely future event. A statement of intention as to
future action could be a false statement of fact if at the point of making the statement, the
representor did not in fact hold that intention. Edgington v Fitzmaurice (1885) (Information in the
prospectus is different from the real intention.)
A statement of opinion usually cannot form the basis of a misrepresentation. Unless respresentor
had access to relevant facts and had no reasonable ground for holding such and opinion. Bisset v
Wilkinson (1927) (The property cannot hold that much sheep but that claim was a statement of
False opinion and did not amount to misrep.)
Statement of
Fact Silence does not amount to misrepresentation. Keates v Lord Cadogan (1851) (Court held that
Pg 162 Lord Cadogan had no duty to disclose the state of his house, therefore, no misrep.) However, if
silence:
a. is a partial non-disclosure if what is stated becomes a half-truth by what is left unsaid. E.g.
Saying the place is fully let but did not say the tenants had given notice to quit. This
constitute misrepresentation. Dimmock v Hallett (1866)
b. a change of circumstance arose which rendered a previously truthful statement misleading.
With v O’Flanagan (1936)
c. in fiduciary contracts, a duty is imposed upon one party to disclose facts to the other party.
e.g. insurance contracts.
For a false statement to be a misrepresentation, the statement must induce the representee to
enter into the contract. As long as it is one of the inducing causes; it is immaterial that it is not the
sole inducing cause. Edgington v Fitzmaurice (1885) In the case of Tai Kim San v Lim Cher Kia
(2001), the false statement did not induce the plaintiff, thus there was no misrepresentation.
Inducement
Pg 164
A mere opportunity to investigate the truth of the statement but did not does not deprive the other
party to rely on the misrepresentation unless the innocent party knew about the misrepresentation
before entering the contract or did not rely on the misrep when entering the contract. In Redgrave
v Hurd (1881), the misrepresentation was an innocent one and the contract was rescinded.
Common mistake occurs when both parties to the contract make the same fundamental
Common
mistake. Couturier v Hastie (1852)
Mutual Mutual mistake occurs when the parties misunderstand each other and are at cross purposes.
Only when one party is mistaken. Chwee Kin Keong & Others v Digilandmall.com Pte Ltd
Unilateral
(2005) – The appellants have constructive knowledge of the mistake in pricing of the printers
Non est factum means “it is not my deed”. Arises when a person signs a document that is
fundamentally different in character from that which he contemplated. Lee Sire Chun v
Sourgrapes Packaging Products Pte Ltd (1993) To avoid a contract on the this basis, the
plaintiff must show
Non est factum
a. the document signed is radically different or totally different in character or substance
from that which he intended to sign
b. he had not been careless in signing the document
c. he took such care as a person in his position ought to have taken.
If a person is forced to enter into a contract as a result of actual violence or threats of actual
violence, the contract would be unenforceable.
The party must have objected in the first place (protest) and take steps asap to avoid changes
to the contract. If not they would lose their right as in North Ocean Shipping Co Ltd v Hyundai
Construction Co Ltd (1979)
Undue Undue influence is the unconscientious use of one’s power or authority over another to obtain a
Influence benefit or achieve a purpose by exerting improper pressure.A situation when the contract may
(Pg 174) not be entered into by one’s own free will. Undue influence seeks to prevent victimization.
Undue influence is also presumed in some relationships like solicitors and clients, doctors and
patient
Lim Geok Hian v Lim Guan Chin (1994).. Brother and sister is not presumed and must be
proved.
1) To establish undue influence, the person who raises the complaint must establish the
following:
a. that the other party had the capacity to influence the complainant
b. the influence was exercised
c. its exercise was undue
d. its exercise brought about the transaction
2) When it is presumed, the presumed party has the burden of proving that
Vague concept suggests that any agreement which is manifestly inequitable and constitutes an
Unconscionable unconscionable bargain should be set aside.
Bargain
(Pg 174) This can be an exception under Singapore law and does in fact constitute a vitiating factor for
contracts involving performance bonds.
Discharge = termination of a contract. After a contract is discharged, the parties are relieved of
their obligations under the contract. There are four ways Performance, Breach, Agreement and
Frustration.
Hoenig v Isaacs (1952) - The Official Referee held that this was not an entire
contact. Further there was substantial performance although there were some
defects. Hoenig was entitled to receive the amount less the cost of rectifying the
defects.
Anticipatory When the time for performance of obligation has not yet arrived, the Promisor, by words or conduct,
Breach clearly expressed his intention not to perform the obligation.
- Not every breach of contract results in the contract from being discharged.
- For the breach to result in a discharge of the contract, the breach has to be repudiatory breach.- Fundamental
breach or breach of condition.
- If it is non-repudiatory breach, the innocent party can only sue for damages, and the contract remains on foot.
- In all cases of breach, actual or anticipatory, repudiation must be unequivocal (clear).
- An honest misapprehension as to one’s obligations under a contact which leads to non-performance would not
amount to repudiation if there is underlying willingness to correct one’s understanding and fulfill those obligations.
- Mersey Steel and Iron Co v Naylor Benson & Co (1884) – No repudiation because Mersey Steel was
under a genuine misapprehension that they should not pay for the shipments.
- Wong Poh Oi v Gertrude Guok and Another (1966) – Mere non payment of an installment or breach of one
term does not necessarily put an end to a contract. The defendant’s purported repudiation was wrongful.
For an Actual Breach to be a Repudiatory Breach, it For a Anticipatory Breach to be a Repudiatory
must either: Breach:
1. Breach of condition - Behn v Burness - the threatened non-performance must have the effect
(1863) of depriving the other party of substantially the whole
2. Fundamental Breach [breach goes to the benefit which the contract was intended to bestow on
root of the contract] - arises where the him. The party must indicate an inability to perform its
breach of an innominate term brings about obligations or it is indicative that he refuse to perform
serious consequences, such that it deprives his obligation.
the innocent party of substantially the whole - Hochster v De La Tour (1853) – De La Tour’s letter
benefit which it was intended to confer. constituted a repudiatory breach entitling Hochster to
- Hong Kong Fir Shipping Co Ltd v sue prior to contracted date & claim damages.
Kawasaki Kaisen Kaisha Ltd.
Performance of obligations outside the
time limits specified in the contract can
amount to a fundamental breach.
- Tate & Another v Sihan Sadikan
(1992) – failure to produce & pass title
on time was fundamental thus plaintiffs
entitled to recover their payment.
Effects of Repudiatory Breach:
- Breach of condition or fundamental breach Entitles
innocent party to sue for damages &
discharge/terminate the contract
- OR he may choose to affirm the contract so that it
remains on foot. He can also claim for damages.
[See Election below].
Effects of Non-repudiatory Breach:
- Breach of a warranty or non-serious breach of an
innominate term Only entitles innocent party to sue for
damages & contract NOT considered as discharged.
Election (Pg 188)
When a repudiatory breach is present, contract not automatically discharged. Innocent party can choose to
either:
- accept the repudiation
acceptance of repudiatory breach & treat contract as discharged
claim damages to put him into the position as if the contract has been performed properly
Hong Fok Realty Pte Ltd v Bima Investment Pte Ltd (1993)
- affirm the contract
contract remains on foot
innocent party still retains the right to claim damages for the breach.
In both cases, innocent party must communicate choice to other party.
Note: Supervening event + Not parties fault + Radical change in circumstances = Frustration
of parties.
Real issue is whether the event which failed to occur, could reasonably be
considered to be one which both parties hold to be the very basis of the contract
Non-
occurrence
of event
such that if the event did not take place, the parties would not have contemplated
Krell v Henry (1903) – Once the coronation was postpones, the purpose for which the flat was
rented was vanished.
Herne Bay Steamboat v Hutton (1903) Pg 194 – The Court of Appeal held that the contract was not
frustrated. One reason was that a tour of the fleet was still possible although the naval review was
cancelled.
Unexpected government action or ruling preventing performance of contract. Metropolitan
Water Board v Dick, Kerr & Co. (1918) – The contract was frustrated. Lim Kim Som v Sheriffa
Government
Taibah bte Abdul Rahman (1994) – Court of Appeal agreed & held that the contract was frustrated.
Interference
Oakwell Engineering ltd v Energy power systems ltd (2003)- held that insufficient to frustrate the
contract because the defendants had already assumed the risk under the agreement.
Contract for personal service frustrated when personal incapacity affects performance of
contract in a fundamental way. Possard v Spiers v Pond (1876) - Contract was frustrated
because she had fallen ill. Personal incapacity which affects the performance of such a contract in a
Personal
fundamental way will frustrate the contract Lau Lay Hong v Hexapillar Pte Ltd (1993).
Incapacity
Contract for personal services = contract for services of a particular person.
Contract for services will not be treated in a similar way. Service can be provided by another
person and need not be a particular individual.
More foreseeable event, less likely event will be held to frustrate a contract –
rationale is that the more foreseeable the event is, the parties can be expected to have
provided for it in their contract.
Fordeseeabilit However, mere foreseeability of the event is no bar to frustration.
y Housing & Development Board v Microform Precision Industries Pte Ltd (2003) –
The defendant had been aware that Plot 2 had been land locked for a long time and
thus it is cannot be regarded as an unforeseen contingency, hence frustration cannot be
established.
Clauses that expressly provide for occurrence of events which will normally fall
within class of events leading to frustration eg. war, natural disaster. Effect of such a
clause depends greatly on its construction. China Resources (S) Pte Ltd v Magenta
Resources (s) Pte Ltd (1997) – Force majeure clause applied & the USSR embassy
(Pg 197)Factors Limiting Frustration
letter was ‘next best thing’ & therefore adequate evidence of the force majeure. If a FMC
turns out to be an exemption clause, it would be subjected under UCTA.
Examples of FMC:
a) include events leading to frustration & events not leading to frustration
Force Majeure
b) progress payment
Clauses
c) exclusion of liability
d) optimal solution = both parties discharged, further payment not payable & work
done before frustration must be compensated
Principles of a FMC:
Allocate risk of specified future events between the parties
Precise construction is crucial in order to determine the scope
A party who relies on FMC must not only bring himself within the clause but also
take all reasonable steps to avoid its operation or mitigate its results
No frustration if it is self-induced, i.e.: No Frustration if it is the result of voluntary
Self induced action of one of the parties. Maritime National Fish v Ocean Trawlers (1935) – The
frustration privy council held that the unavailability of a license was due to the allocative decision of
Maritime National.
- Frustration automatically discharges a contract (Unlike repudiation which must be accepted before
it can discharge the contract)
- Frustration effective immediately & requires no communication or advice from one party to the
other party
of Frustration
d) Benefits other than $ conferred prior to time of discharge can be compensated with an
amount the court considers just S2(3) FCA
(Pg 201)
Once causation is established, extent of loss can be quite extensive. The concept of remoteness prevents
a limitless scenario. The law considers a remote loss to be beyond the scope of compensation by the
defendant, even though caused by or a consequence of the breach.
Damage must be proximate & not remote = damages recoverable
Hadley v Baxendale (1854)
1. First Limb:
- normal loss/damage arising from usual circumstances
- such damage may be fairly or reasonably considered as arising naturally, ie according to the
usual course of things from the breach itself.
- defendant has imputed knowledge of what happens in usual circumstances
2. Second Limb:
- abnormal loss/damages arising from special circumstances
- such damages may reasonably be supposed to have been in contemplation of both parties at
time contract made.
- defendant has actual knowledge of special circumstances
Usual course of things
Knowledge of ordinary practices and demand of plaintiff’s trade or business is considered to be part of
‘usual course of things’. Loss arising from normal business activity falls within 1st limb. Koufos v C
Czarnikow Ltd (‘The Heron II) (1969) - Koufos has imputed knowledge of ordinary practices &
exigencies of Czarnikow’s business. Koufos was liable under 1st limb of Hadley v Baxendale.
A person with actual knowledge of special circumstances will be liable for the higher loss which may arise
if the breach occurred in those circumstances. Victoria Laundry (Windsor) Ltd v Newman Industries
Ltd (1949) – In absence of actual knowledge concerning Ministry of Supply contract, Newman Industries
not liable for substantial profits foregone due to failure to obtain that contract.
Probability of Occurrence
Defendant must know the likely loss/damage is a serious possibility or a real danger. Defendant’s
awareness of the probability of such loss occurring – if Defendant is fully aware that it is probable that a
loss will occur as a result of his act then he is liable. “reasonable contemplation”
Type of Damage
Defendant only needs to know type/kind of damage, need not know exact damage
suffered. Parsons (livestock) Ltd v Uttley Ingham & Co Ltd (1978) – It was
within the reasonable contemplation of the parties that there was a serious
possibility that the pigs might suffer as a result of the defendant’s breach; it was
not necessary that the exact nature or amount of damage be contemplated.
Plaintiff cannot recover loss which he could have avoided.
Plaintiff must minimize loss after defendant’s breach:
- Cannot recover loss, which could have been avoided
- Plaintiff should take all reasonable steps to mitigate his loss British Westinghouse Electric
& Manufactory Co v Underground Electric Railway Co of London (1912)
- If plaintiff fails to mitigate, damages amount awarded would be reduced by amount he would have
Mitigation (Pg 213)
Difficulty in Assessment
Difficulties in assessing damages often arise in cases where the loss is to some degree speculative in
nature.
In such a situation, the court may take into account the probabilities involved and award damages
accordingly.
Chaplin v Hicks (1911) – Although there was no certainty that Chaplin would be among the 12 chosen
for employment, she should still be allowed the 100 pounds damages awarded by the jury.
Raffles Town Club Pte Ltd v Tan Chin Seng & others (2005)- Held there the is pecuniary losses and
the damages loss is the difference represented the decline due to the breach.
Non-pecuniary Losses
Assessment (Pg 215)
Courts are generally reluctant to award damages for non-pecuniary losses eg hurt feelings, anxiety, loss
of reputation. Exceptions:
- when important object of contract is to provide enjoyment, security, pleasure, relaxation Jarvis v
Swan Tours Ltd (1973) – Jarvis was entitled to damages comprising cost & disappointment he suffered.
Haron bin Mundir v Singapore Amateur Athletic Association (1992) – Plaintiff awarded damages,
being the amount he would have received from the defendant if he had won medals at the SEA Games.
Claim for non-pecuniary losses was rejected.
Farley v Skinner (2001) – The House of Lords held that damages for mental distress resulting from
breach of contract could be awarded in exceptional cases where a major or important object of the
contract had been to give pleasure, relaxation and peace of mind, and where physical inconveniences
and discomfort had been caused by the breach.
Court order requiring a party to abide by a negative covenant in a contract If the distributor breaches this
covenant, his supplier may seek an injunction to restrain him from doing so.
Mandatory Restorative injunction compels action to restore negative covenant already breached.
Mandatory injunction = enforce –ve agreement which has been breached
Specific performance = enforce +ve obligation which has not yet been performed
Not enforceable by specific performance. Remedy for breaches of such contracts is
usually damages.
Case law shoes that the court will enforce negative covenants in contracts for personal
service, as long as it would not amount to an indirect way of compelling specific
Contracts for performance
personal Service Warner Brothers Pictures Inc v Nelson (1937) – Court refused to grant an injucnction to
enforce her negative covenant “not to engage in any other occupation” as this would be
tantamount to an order of specific performance for her to work with them. However, court
ordered Injunction to stop her working as an actress for any other party during the
contract period
Prevent defendant from removing assets from jurisdiction until main legal proceedings
Mareva Injunction
over
Anton Piller Order & Quantum Meruit (Pg 228)
Anton Piller Order allows plaintiff to seize defendant’s documents/property.
- Plaintiff has extremely strong prima facie case
- Very serious damage (actual/potential) to plaintiff
- Defendants have incriminating evidence & will destroy the evidence
Quantum Meruit is an alternative remedy to damages based on “as much as he has earned”.
- Contract: implied promise to pay for obligations performed Gold Coin Ltd v Tay Kim Wee (1987)
- quasi-contract: unjust situation Craven-Ellis v Canons Ltd (1936)
Refund of Money Paid
In order to succeed in a claim for refund, there must be a total failure of consideration. This occurs when the
plaintiff has not enjoyed the benefit of any part of what he bargained for. Rover International Ltd v Cannon Film
Sales Ltd(1943)
If plaintiff received any benefits from the contract, this remedy would not be available but he can still claim
damages.
Misrepresentation: recission if there is misrep which means that there is total failure of consideration since
consideration would be regarded as non-existent.
Laches
Extinction of a plaintiff’s right to remedies through the passing of time.
This test is for all negligence cases regardless of the kind of loss and includes negligent misstatement.
Two Prong
Factual Foreseeability
Test - – Preliminary requirement of reasonable foreseeability from a factual
perspective
Spandeck – Is established if it can be shown that “the defendant ought to have known
that the claimant would suffer damage from his (the defendant’s)
carelessness”
1. There
must be Proximity
Duty of care (Pg 498)
Scott v London & St. Katherine Docks (1865) The court held that things would
not have occurred if not for the negligence of the defendant. There was no need to
establish the fact that the defendant breached the duty of care.
(Pg 508)Resulting Damage
Causation – The damage suffered by a plaintiff who is making his claim in
negligence must have resulted from the breach of duty by the defendant. BUT-
The plaintiff must
FOR test is used to determine causation. Barnett v Chelsea & Kensington
show that he
Hospital (1969) The court held that there was a duty of care owed by the hospital
suffered damage
and this duty was breached. However, the doctor’s negligence did not cause the
as a result of the
husband’s death because death would have taken place anyway.
defendant’s
Tan Hun Toe v Harte Benis Mathew (2001)- Held that although he was not
breach.
negligent during the operations, there was negligence in the post- operative care
given to Harte. His injury was attributed to this post-operative negligence.
The concept is The Wagon Mound (No 1) (1961) It was held that the fire was a direct
used to limit the consequence of the defendant’s breach of duty. However, it was unforeseeable
scope of the that the fuel oil would burn in water. Damage was not reasonably foreseeable,
damage, which thus, the plaintiff’s claim failed.
may be claimed
against a It is not necessary to foresee the exact damage. It is sufficient if the type or kind of
defendant. damage is reasonably foreseeable. Bradford v Robinson Rentals Ltd (1967)
The plaintiff suffered frostbite from a long drive during very cold weather. The court
held that injury from cold weather was foreseeable although frostbite was not.
Damages were awarded as that kind of injury is reasonably foreseeable.
Egg-Shell Skull Rule – damage is not too remote even if damage suffered by
plaintiff maybe more severe than could be reasonably foreseen by defendant.
Smith v Leech Brain & Co (1962) Although it was generally not foreseeable that
a burn could cause cancer and death, the plaintiff’s existing pre-disposition meant
that the damage was not too remote. The plaintiff’s physical weakness
exacerbated his injury and the defendant had to accept that.
Defenses (Pg 512)
Volenti Non Fit Injuria, (meaning that a man consents cannot be considered an injury.)
enables a defendant to avoid liability by arguing that the plaintiff has consented to the
risks involved in the relevant circumstance which led to the tort. E.g.: A player in a rugby
match impliedly assumes risk associated with the sport, so no liability to him if a tort is
Volenti Non committed. Complete Defence.
Fit
Injuria Morris v Murray (1991) – The plaintiff agreed to the defendant’s proposal to take him on a
plane even though the defendant was very drunk. It was held that the plaintiff had voluntarily
assumed the risk so defendant was not liable. Smith v Baker & Sons (1891) Court held
that there was no voluntary assumption of risk in the true sense of the phrase. Damages
awarded because there is no true voluntary assumption of risk.
S3(1) Contributory Negligence and Personal Injuries Act describes the situation where a
Contributory defendant can raise the defense of contributory negligence.(Partial Defense) In the
Neglige situation where the plaintiff injury was partly contributed by his own fault, the court will
nce apportion the liability.Sayers v Harlow UDC (1958) Plaintiff contributed to her own injury.
Damages were reduced by 25%.
Exclusion of S2(1) UCTA, a clause to exclude liability for death and personal injury arising out of
Liability negligence is totally invalid. In relation to liability for other losses such as property damage
(Disclai or economic loss, S2(2) UCTA says that such a clause would be upheld if it is reasonable.
mer)
Psychiatric Harm
Psychiatric Harm (Pg 513)
Cases when a plaintiff suffers anxiety, distress or psychiatric harm after seeing a scenario or witnessing or
hearing an incident which was negligently caused by a defendant.
– Depends on whether the court is willing to find that a defendant owes a duty of care to the plaintiff
– The courts are generally reluctant to allow compensation in such cases, partly because of difficulties in
determining objectively that the plaintiff suffers from psychiatric harm and assessing the claim
generally.
– Must pass the spandeck test
The parties affected by such incidents can be separated into two categories:
a) Primary victims
– where a defendant’s negligent act or omission caused an immediate fear of physical injury to
himself.
b) Secondary victims
– Where a person suffers psychiatric harm as a result of witnessing injury to others.
– Pang Koi Fa v Lim Djoe Phing (1993)- Plaintiff suffers from psychiatric illness she now
suffers as result of the trauma and shock she underwent with her daughter.( closeness of time
and space, visual and aural perception)
– Three elements to be taken into consideration- McLoughlin v O’Brian (1983)
The class( must be love & affection) of the persons whose claims should be
recognized
The proximity of the claimants (both time and space) to the accident
The means by which the shock was caused ( the shock must come through sight or
hearing of the event or of its immediate aftermath.
Refers to financial loss which is not associated with any damage to plaintiff’s body or property.
Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd (1973). Court held that the plaintiff could
sue for the loss of those materials [physical loss] and for the loss of profits for those materials that were
damaged [consequential economic loss]. However, they could not sue for the loss of profits due to the lack
of power [pure economic loss].
Pure economic loss generally not recoverable. Exception: RSP Architects Planners & Engineers
(Raglan Squire & Partners) v MCST Plan No 1075 (1999) [Holistic Approach]
If pure economic loss NOT accompanied by physical injury or property damage was allowed, it could lead
to unlimited liability.
Thus restrictive approach adopted, but 2 qualifications:
p.e.l. recoverable for negligent misstatement
p.e.l. recoverable in some countries (S’pore)
RSP Architects Planners & Engineers v Ocean Front Pte Ltd (1996) The court held that
– developers owed a duty of care
– very close proximity between them
– not a case of unlimited liability
RSP Architects Planners & Engineers (Raglan Squire & Partners) v MCST Plan No 1075 (1999) –
Close proximity. Management relied on skill and judgment, defective buildings different from consumer
goods.
Statement published which tends to lower a person’s reputation in the estimation of right thinking members
(Pg 527)Tort of Defamation of society.
- Oral defamatory statements = slander
- Written defamatory statements = libel [piece of writing that contains bad/false things about a
person]
Remedies
Damages and injunction
Tortfeasor passes off gds/svcs as those of another - falsely promotes his own gds/svcs as having same
origin/quality as the other or somehow being associated with the other.
According to the case law in Reckitt & Coleman Products v Borden Inc (1990). To establish passing off,
plaintiff has to prove 3 elements:
he must establish there is goodwill or reputation attached to his business
Tort of Passing Off (Pg 526)
CDL Hotels International Ltd v Pontiac Marina Pte Ltd (1998) - goodwill established and damages
awarded. Held that there was goodwill generated by the advertisement, there is real risk of misrep because
of their visual and phonetic similarities, and strong likelihood of their goodwill since theirs was a five star
and CDL was only 4 star.
Lifestyle 199 Pte Ltd v $1.99 Ltd (2000) Claim failed because title was descriptive of products.
If Tort of Passing off is established, Injunction, Damages or Account for profits may be obtained.
Vicarious Liability 528)Tort of Inducing Breach of Contract (Pg
Not common as contracts have termination clauses that enables either party to end contract upon meeting
certain conditions. So, there will be a breach only when contract termination is not in accordance with the
clause.
1) Employer is variously liable for torts committed by employee if acting within scope of authority or
conditions of employment.
2)Employer is vicariously liable only if has strict control of employee’s conduct in performance of work.
- Eg, employer not liable for torts of independent contractor
- Plaintiff prefer to sue employer cause they got $ but employee do not have.
Duty of Care: “Special Relationship” – Plaintiff could “reasonably rely on defendant’s judgement” (similar to
Spandeck)
2. Advisor in business of giving advice (given by a professional or by a person who held himself as
having knowledge or skill in that particular matter)
If not in line of business, can still be liable if reasonable for advisee to rely on adviser’s skill &
judgment & the advice given.( Proximity)
Esso v Mardon (1976) pg517 Esso liable even though not in biz of giving advice
If advice is given with the purpose or knowledge that it may be relied upon by a third party, then the adviser
may owe a duty of care to the third party. Morgan Crucible Co plc V Hill Samuel & Co ltd & Ors(1991)
United Project Consultants Pte ltd v Leong Kwok Onn (2005)- Held that there was a duty of care as he
Negligence Misstatements (Pg 516)
should have foreseen such damages will result from this and since he was hired as a tax agent, he had
assumed some responsibility.
4. Disclaimer? (exclusion clause)
To limit or exclude liability
Must satisfy the UCTA, if not then not effective Duty of care exists.
Smith v Eric S Bush (1990) defendants held liable for their negligent misstatements. Furthermore the
disclaimer they had was subjected to the UCTA, and thus invalid. They owed a duty of care.
1. To prevent Breach of Duty of Care, there must be a Standard of reasonably competent fellow
professional in same field:
“fair, reasonable and competent degree of skill” Lanphier v Phipos (1838)
“an act of gross negligence such as could not have been committed by any other ordinarily
informed member of the profession” Cook v Falconer’s Representative (1850)
JSI Shipping (s) Pte Ltd v Teofoongwonglcloong (2007)- Held that auditor’s duty
Hely-Hutchinson v Brayhead Ltd (1968)-Held that had apparent authority due to his position and also
had implied actual authority being implied from the conduct of his board over many months. (Pg 442)
Law deem agency to exist even if no agreement between principal & agent
Agency of necessity
- In emergencies, some people conferred with authority to act for others
- Require immediate action when communication with principal impossible
Co-habitation
- Woman co-habits with husband presumed to have husband authority to pledge his credit for
necessaries
- Implied authority
Property
- partnership property = all property originally brought into partnership by partners S20(1) PA
- partnership property = all property bought with partnership fund S21 PA
- must be used for partnership purpose S20(1) PA
- creditor cannot execute against partnership property if judgment against individual partner, unless the
(Pg 246)Relationship among partners
Fiduciary duty
- duty of ‘utmost good faith’
- cannot engage in biz competing with firm S30 PA – hence, a person cannot be a partner in 2 retailing
firms, unless all the partners in BOTH firms consent
- cannot make secret profits S29 PA
- must make full disclosure of info on all things affecting the firm S28 PA
Partner’s actions binding firm
- Every partner is an Agent of the firm
- any partner can bind firm to 3rd party as long as act done in usual course of business S5 PA unless:
- 3rd party knows partner is not authorized S8 PA not binding
- 3rd party does not believe him to be partner S5 PA not binding
- The firm & every partner are bound by the act/agreement with 3rd party entered into under the firm’s
name by a person authorized to do so [regardless whether that person is a partner or not] S6 PA
Nature of liability
- Partners liable jointly in contract/debt. This means that 3 rd party can only bring 1 legal action against
partners and cannot seek to sue other partners if he fails S9 PA. tp will normally sue the firm under the
firm’s name to avoid omitting any of the partner’s names.
Relationship between partners & 3rd parties (Pg 249)
- Once partner held liable, the judgment can be enforced against the firm. If firm’s assets are
insufficient, personal property of the individual partners may also be seized to satisfy the partnership
debts.
- Partners liable jointly & severally in wrongful acts & omissions. – 3 rd party can bring more than 1 legal
action against the partners (breach of fiduciary duties, breach of tort) Once partner is sued, unpaid
claimant may still seek to sue other partners. S10, 12 PA
- For partnership/other partners to be liable, wrongful acts must be so closely linked/connected to
jobscope of partner OR usual course of biz.
- The liability of the firm for the misapplication of funds by a partner while the funds are in the firm’s
custody. If the funds are received by the firm in the course of business, then even if one of the partners
acts entires and take the money, other partners will be liable. 11 PA
Lim kok Koon v Tan Cheng Yew & another (2004) pg 250
Consequences of dissolution
- Partnership property applied to payment of debts & remaining balance is distributed among partners
S39 PA
- If partnership property insufficient to pay debts, partnership debts becomes partners’ personal debts:
unlimited personal liability
Joint Ventures (Pg 255)
Association of persons, natural/corporate, who agree by contract to engage in common undertaking for joint profit
by combining respective resources, without forming a partnership
Differences - no joint or several liability – each venturer bears his own liability
with - no authority to bind joint-venturer
partnership - a joint-venturer can transfer interest to 3 rd party without approval of other joint-venturer
Limited Companies
Incorporation creates an artificial entity capable of possessing rights/liabilities & owing duties independent of its
members S19(5) Companies Act CA
- Separate legal entity with its own rights and liabilities
- Shareholders have limited liability: Company assets/liabilities are not shareholders
assets/liabilities
Consequences
- If company fails to pay debt, company sued & not shareholders
- Company can hold property in its own name
- Perpetual succession: changes in shareholders will not affect existence, rights or liabilities
- Higher tax rate
- Higher admin cost
Disadv. - Company secretary required
- Compulsory audit if turnover more than $5million
- More formalities
- More costly to close down