SMU Biz Law Bible 1 PDF

lOMoARcPSD|4880004
AB1301 Business Law Bible 1
Business Law (Nanyang Technological University)
StuDocu is not sponsored or endorsed by any college or university

Downloaded by Starr Ya (starryynights01@gmail.com)
lOMoARcPSD|4880004
Chapter 1: Society, Business & the Law
Law is a set of rules laid down by state to govern behaviours, it sets
 Do s, Do ts
 Penalties for non-compliances
 Protects you from others and others from you
Area of Law
 Law on spitting & littering

 Law on setting up & running business entities
 Contract Law vs Criminal Law (Penal Code)
Structure of Government
1. Executive
-Runs country, set policies, implement law passed by Parliament
(E.g. President, Cabinet, Attorney General) Closely
Linked
2. Legislative
-Power to make law enacts legislation (written law)
-Legislative process whereby legislation is enacted,
-Bill is read 3 times before voting. If successful, written law made by parliament is legislation
=statute= act of parliament
(E.g. President, Parliament)
3. Judiciary Separation of power: Avoid one

-Sits in courts of Singapore arm being excessive power
-Interpret and administrate the law (Applies Law)
-Decision becomes case-law
(E.g. CJ, Judges, Judicial commissioners, districts judges, magistrates)
Judicial Hierarchy
Court Of Appeal
-Appeal Cases only,
Appelate Jurisdiction Supreme Court
High Court
-First instance and appeal cases
Family Juvenile District Magistrate Small

Court Court Court Court Claims
Subordinate Court- Jurisdiction $250,000

lOMoARcPSD|4880004
Sources of Law
1. Constitution
- Supreme law of the land, prevails over all other laws
-Lays down structure of the government
-Basic principle: Freedom of religion, speech, expression and equality
2. Acts of Parliament (Written Law)
3. Subsidiary Legislation (Subordinate Legislation)

- Laws made under authority delegated by Parliament (Minister to Committees)
-Form of written law
4. Case Law
-Past cases decided by judges
-Stare Decisis (Theory of Binding Precedence)
i. Vertical: Lower courts have to follow decision of higher courts
ii. Horizontal: Court of Appeal not bound by own previous decisions, adapting to new
changes/trends
5. Customary Law- Trade Customs
6. International Law
-Law made applicable through international treaties, mutual agreements by countries to abide and
enact.
Application of English Law

2nd Charter of Justice 1826 made English Law as 27/11/1826 applicable in Singapore (General
Reception of English Law)
- Conditions of General Reception
 Only of General policy and application (Must be relevant, London Town Planning Act not
brought in
 Subject to local legislation
Su se ue tl …..
Application of English Law Act enacted, as there are confusion over the interpretation and
application of law to SG
-S3. English common law (case law) and equity continues to apply
-S4. English Acts listed in 1st Schedule or specified in any other written law are applicable
-S5. No other English Act applicable
CASE LAW TECHNIQUE

1. From cases found in law reports
-Format of Law reports: Name of Case, Summary and Judgement (>10 pages)
2. Cases become law because of the doctrine of Stare Decisis, that 1) binds the lower court of the
same hierarchy to the decision of a higher court where the relevant facts are the same 2) Courts
not bound by its own prior decision, if it fits change the principle of law to make a better decision.
3. Only the Ration Decidendi of the earlier case is binding

- Reason for deciding
-Rule of Law upon which decision/judgment is made
AB 1301 – Business Law Page 2

lOMoARcPSD|4880004
4. Obiter Dicta
Mere saying by the ways or a chance remark based on hypothetical facts
-Comments/opinion made by judge but not used in judgement
- Not binding on lower courts, merely of persuasive authority
E.g I a ot su e this is a ase of f aud ut…
Question: Are relevant facts sufficiently similar for previous case to apply? What was the ratio
decidendi in the previous case?
STATUTORY INTERPRETATION
Sole object of statutory interpretation: TO DETERMINE INTENTION OF PARLIAMENT OF ENACTING
HE STATUTE. What effect do they want to have?
1. Interpretation Act
 Contains definition of words frequently used in statutes

 S9A: can use e t i si ate ials if statute is ambiguous OR giving the words their ordinary
meaning would lead to absurd or unreasonable result.
Extrinsic Materials are materials outside statute. (E.g. Parliamentary debates, what they said
and what they actually meant, intention)
2. Rules to guide statutory interpretation
 Literal Rule: If statute is clear & unambiguous, word of statute would be given grammatical
meaning, not deviating from the literal meaning.
 Golden Rule: If statute has >1 interpretation (ambiguity) , should consider one that avoids
absurd result
 Mischief Rule: To interpret ambiguous statute, should consider mischief that statute is
trying to cure. Statutes are unclear and capable of >1 interpretation.
3. Unity of an act: Statute should be read as a whole
4. Expressio unius est exclusion alterius( Express/Specific mention of 1 thing is the exclusion of all
others)
 Statute fo id Motorcycles, T i les, a s, a s , t u ks a d lo ies

 Bicycles are left out, so can ride.
5. Ejusdem Generis Follo s sa e t pe of thi gs that a e efo e it of the sa e ki d
 Statute fo ids apples, o a ges, a a as, papa as a d othe food ; a othe food should
be treated as any other fruits.
6. Noscitur a socns
 Dependent on context being used

 E.g. Vehicle= mode of transport OR business organisations for business contracts
7. Penal and Tax statutes: Ambiguity resolved in favour of defendant/accused, as it affects liberty
and composes of serious punishments.

lOMoARcPSD|4880004
CLASSIFICATION OF LAW
Criminal Law Civil Law

-Mainly Penal code, law governing actions which -Govern civil wrong, offences against people
are crimes and they are offences against the
state
-Punishment for crime and deter potential -No aim to punish the offender but to
offenders compensate wrong person
Accused: Person accused of crime Plaintiff: Person bringing the action , requires
sues and initiates court proceedings
State: Party prosecuting accused, brought by Defendant: Person whom the action is brought.
Public Prosecutor on behalf of state
Judge(s): Person listening to and deciding case Judge(s): Person listening to and deciding case
Sentences accused if convicted of crime. order Remedies if defendant found liable.
Common Law Equity

Developed by common law courts of England Developed by England Court of Chancery
-To deal with unfairness arising from rigid rules
of common law courts
-Applied equitable principles which prevailed in
event of conflict over common law principles
-Singapore (+Eng) has 1 courts system dispensing
both types of principles.
*Civil Law legal system: All written law only, no common law.

lOMoARcPSD|4880004
Chapter 3: Contract: Offer and Acceptance (pg 57 – 83)

Principles of Contract Law
Contra ct
Vi tiating Factors - Remedies - The

Forma tion - How Terms - The Di s charge - How a
Fa ctors which Cures for a
a Contra ct i s Subs tance of contra ct i s
Undermine a Brea ch of
Ma de Contra ct ful filled or ended
Contra ct Contra ct
Nature of Contracts
Elements of Contract(4)
 Offer
 Acceptance
 Consideration
 Intention to create legal relations
Format
1. Cite legal p i iples, i.e. fo a o t a t to e i di g the e ust e…

2. Explaining the case
3. Application of principles and explaining the legal effects
Simple Contracts
1. Oral Contracts (Parol Contracts)
 Difficult to ascertain the precise terms of the contact in event of dispute
2. Written Contracts
 Useful as it p o ides e ide e of the pa ties o t a tual o ligatio s – Forefront
TYPES OF CONTRACT (pg60)
Medical Technology (Pte) Ltd v Modern Pak Pte Ld (2006)
 Contracts for certain transactions must be evidenced by a written note of

memorandum otherwise they are unenforceable
Eg. Assignment of copyright and transfer of real property
Parol Evidence Rule

 Oral (Parol) evidence will not be admitted in a court action to add to , vary, amend
or contradict a written contract – Evidence Act s 94 – Engelin Teh Practice LLC v
Wee Soon Kim Anthony (2004)
Special Contracts
 Written contracts under seal, deed of indenture do not require consideration to
be enforceable

lOMoARcPSD|4880004
Offer (pg 63)
Can be made to:

Offer 1. Particular Offeree/ Group of People
Criteria & 2. To the whole world [Unilateral Contracts- Carlill v Carbolic Smoke
Terms Ball Co.(1892)]
Communication of offer
Intention 1. Offer effective only when communicated to offeree
To 2. Offe ee ust e a a e of offe s e iste e a d te s
bound 3. Once offeree knows of offer, motive of acceptance is irrelevant.
E.g. Public finds dogs without knowing bounty, may claim bounty if he knows
of such reward even though it was never his intention to receive award
Types of A. Bilateral(pg 64)

Offer -Pa ties k o ea h othe s ide tit
-Upon Acceptance by communication, contract is formed.
B. Unilateral: Irrevocable if people started to act on it(pg 63)

-May not know offeree identity
AN OFFER
-Co t a t ought i to e iste e o e pa t espo se to offe o s p o ise

- Upon acceptance to perform conditions attached in response to the
offe o s conditional promise, contract is formed- Harvela Investments Ltd v
Royal Trust Co of Canada (CI) Ltd and Ors (1984)
-Constitute an offer if there is sufficient detail/intention to be bound
*Implied waiver of communication, need not communicate acceptance,

performance by offeree is construed as acceptance- Carlill v Carbolic Smoke
Ball Co.(1892)
- Carlill v Carbolic Smoke Ball Co.(1892)

Facts: Defe da ts e e p op ieto s of The Ca oli S oke Ball .
Advertisement offered to pay anyone 100 if they caught influenza after
using smoke ball in specified manner for specified period. Defendants
deposited 1,000 with bankers to sho thei si e it . Plaintiff on fait of
advert used smoke ball as required and caught flu, thus sued for the 100.
Held: Advertisements are normally invitations to treat due to their lack of

detail and intention to be bound. However, in the instant case, sufficient
detail was present, and the intention to be bound could be ascertained from
the alleged deposit with the bankers. Although the offer was made to the
whole world, the contract is formed when the limited portion of the public
who came forward and performed the condition at the faith of the
advertisement.

lOMoARcPSD|4880004
Invitation to Expression of willingness to commence negotiations. (Offer to make an offer)

Treat Followings are invitation to treat:
. Me e Puffs u suppo ted lai s o pa /Ad e tise e t
2. Catalogs, Price List, shop displays with prices
3. Invited bids (Auctions)- Bidders offer, Auctioneer accept offer when
hammer falls
4. Tenders – Invitation for offerors to submit tender/ Quotations
Advertisements
Advertisement generally invitations to treat- Partridge v Crittenden (1968)
Facts: Appella t ad i lassifieds o ks a d he s, s ea h - o ds offe fo
sale ot used. Cha ged ith offe i g fo sale li e ild i ds o t a to
Protection of Birds Act 1954.
Held: Lo d Pa ke : he o e is deali g ith advertisements and circulars,
unless they indeed come from manufacturers, there is business sense in
thei ei g o st ued as i itatio to t eat a d ot offe s fo sale. Cou t felt
normal sellers want to reserve right to see and decide who to sell generally
the do t a t the i te tio to e ou d. * Word offer used loosel i
stores are ot offer i legal se se.
Priced Goods on Display

NOT AN OFFER
Display of goods and prices in a shop considered to be an invitation to treat-

No Intention Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern)
to Bound Ltd (1952)
Held: Display of Goods with prices constituted an invitation to treat, buyer
selecting the goods as his offer to buy it and sale took place at the counter
when buyers offer is accepted by the acceptance of the price.
Auctions
Payne v Cave (1789) 3 Term Rep 148
Held: Court held auctionee s e uest fo ids is ot a offe . The id itself is
an offer which the auctioneer is free to accept or reject. Sale is completed
when auctioneer indicates his acceptance by fall of hammer.
UK Sale of Goods Act 1979
Sale is complete when the auctioneer announces its completion by the fall of
hammer or in other customary manner and until such announcement is
made, any bid may be retracted.
Quotes
The Barranduna (1985)
Held: Quotations of Freight rates was not an offer but. Material terms were
not clearly stated, quote was too vague to amount to offer.
*Internet Sales: // Cite Digilandmall (2004)

Held: be careful with words, can be unilateral offer. Depending on how it s
worded/shown, it could be ITT/Offer. Being very explicit in words, saying
goods will be delivered once order is placed vs Just placing goods on the web
catalog
Provision of Mere response to a request for information does not constitute an offer
Information Harvey v Facey (1893)
Held: The court held that there was no contract because provision of

lOMoARcPSD|4880004
information was not an offer. (Asking for lowest price of pen and answering
it)
The Master Stelios : Mo ia Motorship Corporatio Keppel Ship ard
(1983)
When response is an inquiry or a request of information , it should not
construe as an offer

lOMoARcPSD|4880004
1. REJECTION OR COUNTER-OFFER
- Terminated when offeree rejects offer
- Rejection can be in the form of writing, oral or by conduct
- Once communicated, rejection extinguishes offer and offer cannot be
revived
Counter-offer rejects the initial offer (Offeree accepts offer but with
condition)
Anything less than an unconditional acceptance viewed as counter-offer

which rejects the original offer.
Hyde v Wrench (1840)
Facts: Defendant offered to sell estate to Plaintiff for 1,000. Plaintiff
countered-offered 950. Defendant rejected counter-offer. Plaintiff
purported to accept original offer.
Held: The e as o o t a t e ause H de s epl as a ou te -offer, which
e ti guished the o igi al offe . Thus, the H de s a epta e as ot alid.
*Inquiry is not counter-offer
2.WITHDRAWAL/REVOCATION OF OFFER
General Rule: Offer can be withdrawn/revoked at any time prior to
acceptance.
A. Revocation must be communicated to Offeree

-either by offeror or reliable 3rd party can also communicate revocation.
Dickinson v Dodds (1876)
Facts: Dodds had validly withdrawn his offer to Dickinson even though this
was done through 3rd party
Held: Plai tiff k e Defe da t ould o lo ge sell the house a d Plai tiff s
attempted acceptance was too late as Defendant has validly withdrawn the
offer.
TERMINATION OF OFFER (5)
-Informing revocation of offer

•Offe ade o e spape Mediu , use sa e ediu to e oke
BY •Bilate al Offe Absolute revocation (Must inform party)
OFFEREE •U ilate al Offe Constructive revocation (try best to inform all)
Revocation is only effective when offeree received notice of revocation

Byrne v Van Tienhoven (1880)
Held: Revocation was ineffective until received by Plaintiff. Since offer was
accepted prior to revocation, contract is valid.
B. Notice of Withdrawal need not be explicit

Enough if offereee knows offeror changed his mind. Enough it offeree given
information which showed offeror has changed his mind and no longer wants
to proceed with offer- Union Insurance v Turegum Insurance (2001)

lOMoARcPSD|4880004
C. Revocation done during fixed period that offer was promised to be

opened; who cares? Revocation still valid
Routledge v Grant (1828)
Held: It was permissible for Grant to withdraw his offer during the 6 weeks
period despite the implied assurance that the offer would remain open
during this pe iod. Ratio ale is that a offe ee a ot e fo e a offe o s
promise to keep his offer open unless there is separate contract (options)
supported by consideration to do so
Banque Paribas v Citibank NA (1989)

Revocation of an offer can also occur if the offer is replaced or substituted by
a fresh offer, fresh offer must state that it supersedes the earlier offer.
D. UNILATERAL CONTRACTS – OFFEROR CAN T REVOKE IF.

General Rule: Offer can be revoked before acceptance (Full Performance) 

Unfair
BY
OFFEROR Alternative view in favor in SG = Offer is irrevocable once oferee has started
to act
Dickinson Trading (S) Pte Ltd v Transmarco Ltd
Held: 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.
Start to perform act Completed performance of act
Irrevocable Acceptance
Implication that given proper circumstances, revocation of unilateral offer

may or may not be allowed after performance has begun.
E.g Unreasonable when people start finding your cat.
Luxor (Eastbourne) Ltd v Cooper (1941)

Facts: Owner promised agent 10,000 if he effected a sale of land at 175,000.
Held: Lordships held that in the case, it would not be proper to imply an
undertaking by owner not to revoke his offer once performance had begun.
Errington v Errington and Woods

Facts: Father told son and daughter-in-law that if they paid the weekly
installments, he would give them the house after the payment was complete.
They duly did so.
Held: As lo g s the e e pa i g the i stall e ts, the fathe s p o ise as
irrevocable.
3. LAPSE OF TIME
Acceptance after specific/ reasonable period stipulated by offeror =
ineffective
-In certain circumstances, court may imply that offeror has specified the
period of offer even if he has not done so expressly.
Wee Ah Lian v Teo Siak Weng (1992)

lOMoARcPSD|4880004
When no specified period of time is expressed, an offer lapse after a

reasonable amount of time (depending on facts of case: nature of good and
industrial practice)
Ramsgate Victorial Hotel Co v Montefiore (1866)

Facts: Montefiore could refuse to take up the shares because offer had
lapsed after reasonable time of 5 months.
Held: In case where there is no express/implied period when offer is open,
law usually presumes that an offer will lapse after a reasonable time has
passed.
Panwell Pte Ltd & Anor v Indian Bank (No 2) (2002)

Held: Offer is still valid and capable of acceptance after deadline if it is clear
f o the offe o s o du t a d othe e ide e that the te s of the
supposedly lapsed offer continue to govern their relationship after the
specified period.
4.FAILURE OF CONDITION
BY Offer is automatically terminated if conditions not met.
OFFEROR Offer made subject to condition regardless of express/implied.
Financings Ltd v Stimson (1962)
Held: Stimson was not bound to contract because there was implied
condition that time of acceptance by Plaintiff, the car would be in the same
state as when the offer was made by Stimson. The condition was broken as
the car was stolen and damaged; therefore the offer was no longer valid.
5.Death
A valid contract exists if
- Offeree accepted the offer u a a e of the offe o s death; a d
- the contract can still be performed by the estate
Offe a ot e a epted if the offe ee k o s of the offe o s death

Bradbury v Morgan (1862)
Facts: Deceased acted as guarantor of credit extended by Plaintiffs. Plaintiffs
unaware of his death, continued to extend credit. Debtor faulted and
Plai tiffs t ied to e o e f o de eased s e e uto s.
Held: Death of an offeror did not terminate the offer unless the offeree had
oti e of the offe o s death
Offer cannot be accepted at the death of the offeree

Reynolds v Atherton (1921)
Held- Offeree dies before acceptance, this offer cease to be capable of
acceptance.

lOMoARcPSD|4880004
Acceptance (pg 67) & Termination of Acceptance (pg 80)
Unconditional assent to the terms of the offer = Acceptance

-Conditional Acceptance= Counter-offer not acceptance – Stuttgard Auto Pte Ltd v Ng Shwu Yong
(2005)
- Su je t to o t a t , te s a d o ditio s ill e ag eed upo a late date ot t eated as
acceptance - Thomson Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte Ltd
(in liquidation) (2001)
- Shall e te i to ele a t ag ee e ts, te s a d o ditio s e ag eed upo a late date ( no
contract) - Cendekia Candranegara Tjiang v Yin Kum Choy & Others (2002)
Winn v Bull (1877)

Held: Do u e t e od i g ph ase su je t to p epa atio a d app o al of fo al o t a t o othe
such expression is merely a conditional accent and not a binding contract.
Compaq Computer Asia Pte Ltd v Computer Interface (S) Pte Ltd (2004)
Communication constitutes an acceptance only if it is an unconditional expression of agreement to
the terms of the offer
FOR OFFER TO BE ACCEPTED

Offeree must be (state criteria)
-Aware of existence of terms of offer (Knowledge)
-Communicated acceptance
As long as offeree has knowledge of offer, motive is irrelevant. Upon awareness, it does
not matter that he was prompted to act for reasons other than the desire to accept the
KNOWLEDGE OF OFFER
offer.
William v Carwardine (1833)
Held: Plaintiff was entitled to 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.
Identical Cross offers do not make a contract

Tinn v Hoffman & Co (1873)
Held: A X-offer implies lack of consensus or meeting of minds between parties at time of
making the offers.
Contract could be formed even if offeree is ignorant of the offer and offeree performs
obligations which amounts to acceptance of contract
Gibbons v Proctor (1891)
Opposite view was taken in US case
Fitch v Snedaker (1868) and Australian Case – R v Clarke (1927)
General Rule: Acceptance effective when communicated to/ received by offeror

COMMUNICATION OF
(Receipt Rule)
Obiter Dictum in Entores Ltd v Mild Far East Corporation (1955)or Cs Bored Pile System
Pte Ltd v Evan Lim & Co Pte Ltd (2006)
ACCEPTNANCE
Writing: Physically received by Offeror

Oral: Heard by offeror
Offeror usually specify mode of communication of acceptance to avoid disputes.
Acceptance can be expressed/implied, it can be communicated indirectly by conduct.

lOMoARcPSD|4880004
Brogden v Metropolitan Railway Co (1877)

Facts: Brogden supplied Defendants with coal without formal agreement. Defendants
se t d aft ag ee e t to B ogde ho sig ed it a d etu ed it. Defe da ts left it o desk
and did nothing further to execute contract. Both parties conducted business in
accordance with contract until dispute arose and Brogden denied any binding contract
existed.
Held: A contract implied in this situation, and came into existence either when company
ordered its 1st load of coal from Brogden upon these terms or when Brogden supplied it.
*UNILATERAL CONTRACT HAS IMPLIED WAIVER FOR COMMUNICATION OF ACCEPTANCE-

3 Situation where communication need not be communicated/received of offeror
General Rule: Acceptance effective when communicated to/received by offeror.
Exception to General Rule where acceptance need not be communicated

A. Waiver of communication
-Express waiver: Offeree: If ou do t hea f o ei ti e, take it that I e
a epted. Co ditio a ot e i posed o offe ee without his consent.
-Implied waiver (Unilateral): Facts show offeror waived communication (unilateral

contract) whereby performance by offeree is construed as acceptance.
Carlill v Carbolic Smoke Ball Co.( 1862)
Bo e LJ said I ad e tise e t, it seems to me to follow as an inference to be drawn
from transaction itself that a person is not to notify his acceptance of the offer before he
performs the condition
B. Silence constitutes to acceptance

EXCEPTIONS OF COMMUNICATION
For this to be effective, both parties must agree that silence is consent.
If offe o i poses o offe ee ithout offe ee s o se t, it is ot e fo ea le.
Felthouse v Bindley (1862)
Held: There was no contract between the 2 parties. The plaintiff has no right to impose a
condition that a sale contract involving horses would come into existence if the defendant
remains silent.
In case, where offeror waive communication offer, saying silence mean acceptance,
offeree keeps quiet, offeree have liberty to:
-rely on silence means consent to accept offer OR
-reject offe lai i g that he did t ag ee that sile e ea s o se t/a epta e to offe
Both the offeror and offeree agree that he offeree would have a positive obligation to
communicate only he wishes to reject the offer (rare)
Midlink Development Pte Ltd v The Standsfield Group Pte Ltd (2004) or Southern Ocean
Shipbuilding Co Pte Ltd v Deutche Bank AG (1993)
Held: Requirement for acceptance to be communicated (Receipt Rule) which serves as a
p ote tio to offe o . Offe ee a t lai that his essage got lost half-way and that
essage as t o u i ated.
*Is silent inactivity after an offer is made is tantamount to acceptance.

lOMoARcPSD|4880004
C.The Postal Rule (ONLY FOR ACCEPTANCE by POSTAL SERVICE NOT DISPATCH BOY) –
NON INSTANTANEOUS COMMUNICATION
Acceptance is deemed to have been effective as soon as the letter is posted, regardless as
EXCEPTIONS OF COMMUNICATION
to when it reaches the offeror or whether it reaches him at all – Adams v Lindsell (1818)
Held: Acceptance was communicated and contract formed as soon as the plaintiff posted
acceptance letter
Postal Rule do not apply to revocation/withdrawal of offer

-All easo a le a ts should e pe fo ed to ake a epta e posta le
-If mode of communication where offer is not sent via post, unreasonable to use post to
send acceptance - Quenerduaine v Cole (1883)
Held: Application valid when parties have agreed that acceptance should be sent by post.
Depending on the urgency and previous mode of communication, it would be reasonable
to use post. However, offer made by telegram give rises to a presumption that offeror
wishes a speedy reply such that an acceptance by post would not attract Postal Rule.
General Rule will apply here whereby acceptance is valid when posted letter is received
instead of when posted out.
*Posted rule would be invalid when parties expressly stated it, then acceptance should be
e ei ed physi ally. Offe o ight state that postal ule does t apply
Electronic Transactions Act

1. Instantaneous Communication (E.g Phone, - Receipt Rule)
-communication is instant in its fullest sense, acceptance must be received by offeror,
similar to contract made orally.
INSTANTANEOUS COMMUNICATIONS
2.Near Instantaneous Communication (E.g. ICQ MSN – Receipt Rule)

-similar to contract made orally (difference= over a written medium)
Entores Ltd v Mile Far East Corporation
Acceptance effective when heard by offeror = General Rule Applies
3.Instantaneous Transmission but not instantaneous communication

Chwee Kin Keong v Digilandmall.com Pte Ltd suggests that General Rule applies where
acceptance is valid upon receipt (Physically receive)
Eg, acceptance is by facsimile, email or voice mail but no one is manning the receiving
equipment
- S11 ETA states that an offer or acceptance can be sent electronically in the form of an
electronic communication. S12 covers intent.
-s13(1), s13(2) ETA states generally electronic record is deemed sent by originator
himself, someone authorized by him or by information system programmed by or on
behalf of the originator to operate automatically.
S14 ETA states that there are provisions for a party to require an acknowledgement of
receipt to ensure msg have been received properly.
Time of Receipt
S13 (2) ETA – Time of receipt is when user is capable of retrieving electronic
communication at a designated email.
S13 (4) ETA – When Electronic communication reached email address (inbox) it is capable
of being retrieved.

lOMoARcPSD|4880004
Fo i te et t a sa tio , default ule states that offe of goods ill o l e o side ed as

an invitation to treat, unless offer makes it clear that he intends to be bound by it.
S14 – Invitation to offer The intention to accept an offer is no undermined merely
because it is communicated via automatically generated responses.
QUESTION: Are there any specific information system designated by addressee for
receiving messages?
S15 (2b) – N0: Receipts Occurs at the time electronic records enter any information
system of addressee.
S15 (2a) – Yes: 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 received by addressee.
S15(4)  Email is deemed to be sent from and received at parties place of business.
S15 : No clear purport to regulate or clarify the legal principles governing contract
formation w.r.t electronic record, it does not definitively state if acceptance occurs upon
dispatch or receipt of the electronic msg or upon retrieval by addressee.
*Mention Consequence if general receipt rule is used for electronic records. Offeror got
ad a tage as he a de he has t see the a epta e, despite the a epta e ail
entering his system.
Acceptance once communicated becomes irrevocable

TERMINATION OF
When Postal Rule applies: acceptance through faster means of communication and no
E glish/S po e autho ities o this poi t
ACCEPTANCE
Wenkhiem v Arndt (1873)

An acceptance cannot be revoked once posted.

lOMoARcPSD|4880004
Chapter 4: Consideration and Intention to Create Legal Relations (pg 85 – 112)
Act or forbearance of one party, or the promise thereof, is the price for which the promise of the
other is bought, and the promise thus given for value is enforceable -Sir Frederick Pollock in Dunlop v
Selfridge (1915)
For each act, forbearance or promise, person who makes or performs it is the promisor and the
person to whom it is made or performed is the promise
- In consideration, there are 2 promisor and 2 promissee. We always assume that promisor always
breaks promise and promisee must show consideration move from him to enforce contract. (Refer
to diagram)
In order for a promise to be enforceable, consideration must first be given.
Consideration which is yet to be performed. Promise to perform an act in future.

Executory
Promisee would need to show he is able and willing to fulfil his side of bargain or
Consideration
promise.
Consideration which has been performed. Involves an act or forbearance, which

Executed has been fulfilled.
Consideration *Executed vs Past : Vital to show that time of performing act, parties intended
pro isees a tio ould e o pe sated pro isor.
Refers to an act performed prior to and to that extent independent of, the
promises being exchanged. The act was performed without the reciprocal promise
in mind. Past consideration is no consideration.
Roscorla v Thomas (1842)
Held: The promise was made after the transaction had already been concluded and
therefore past consideration.
Exceptions (Past consideration becomes executed & thus good consideration)

Pao On v Lau Yiu Long (1980)
An act before the giving of a promise to make a payment or to confer some other
Past benefit can sometimes be consideration for the promise.
Consideration
- A t do e at p o iso s e uest
- Parties understood act is to be remunerated

further or the conferment of a benefit Have to satisfy ALL 3 rules
- Payment/Conferment of a benefit
otherwise be legally enforceable
E.g. A give book, no intention to sell. B likes book, offer to give $10. B breaks
p o ise, a t sue as ook gift is o side ed as past o side atio .

lOMoARcPSD|4880004
Two Main Rules on Consideration (Pg 88)

1. Must move from promisee but need not move to promisor
Tweedle v Atkinson (1861)
Held: Tweedle could not enforce the contract between the two fathers because he is not a
party, and secondly, no consideration flowed from him. E.g A sends book to 3rd pa ty at B s
request, 3rd party cannot sue as no consideration flowed.
2. Need not be adequate but must be sufficient – Law will not interfere with parties contract so
lo g as o side atio is of so e alue i the e es of the la .
Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Construction Pte Ltd and
Another (2003)
Once the subject of exchange is recognized in law as suitable consideration,
Need not be quantity is irrelevant as long as the parties agree to it willingly.
Adequate
(Pg 90) Law does not measure value
Chappell & Co Ltd v Nestle Co Ltd (1960)
Held: that the consideration included the wrappers even though they were of no
value to Nestle.
Goods, Services, Any gds, svcs or property with some value in the eyes of the
Money and law is clearly sufficient/valuable consideration, thus good
Property consideration.
Promise not to sue/enforce a valid claim or settlement of

legal action = sufficient consideration same applies to a
compromise of legal action, e.g. out of court settlement.
Miles v New Zealand Alford Estate Co (1886)- Out of court

A. Forbearance
settlement was real and not because cannot win!
to sue
The requirement is that the legal action must be reasonable
Sufficient – and not frivolous [silly or unimportant], that the claimant has
Considers to be an honest belief in the chance of success of the claim and that
good/valuable the claimant has not concealed from the other party any fact
consideration which, to the lai a t s k o ledge, ight affe t its alidit .
(Pg 91)
Performance of existing contractual duty to 3rd party =
sufficient consideration
Eurymedon (1975)
The Privy Council held that even though the defendant was
B. Performance
already contractually bound to a third party to do so, the
of existing
defe da t s a t of u loadi g the ship fo ed good
contractual duty
consideration for the contract with the plaintiff. (double
to third party
jeopardy to labourers as they a e sued t i e if the did t
unload in time)  Even though promise is already
contractually bound to promisor to perform the act: good
consideration for a separate promise from a 3rd party.

lOMoARcPSD|4880004
Promisee did something more than required by an existing

contract/public duty = sufficient consideration
C. Perform more
Glassbrook v Glamorgan (1925) – sufficient consideration as
than required by
police went beyond public duty by providing more men than
existing contract
they deemed adequate
or public duty
Hartley v Ponsonby (1857) – sailor required to do much more
than expected from him originally
Williams v Roffey (1991) (Pg 95) promise of extra $ by

defendants (main contractor) to plaintiffs (sub-contractors)
enforceable.
Performance of existing contract = sufficient consideration as

D. Performance
long as
of existing
contract if - Promise not made under fraud (threaten to
promisor breach/not perform) E.g. Sub contractor say he does
obtained not want to do it if he gets paid higher
p a ti al .
e efit - defe da t o tai ed p a ti al e efit I Williams v
Roffey, the practical benefit was that the defendants
would not be liable under the main contract for late
completion) – avoidance of disbenefit = consideration
– avoidance of legal liabilities to 3rd party
An existing moral obligation cannot support a fresh promise.

Eastwood v Kenyon (1840) – Cou t eje ted the plai tiff s
view and held that moral obligation is insufficient
A. Moral consideration for a fresh promise.
obligation &
motives Thomas v Thomas (1842) –The nominal rent was sufficient
o side atio ut the hus a d s ishes e e i ele a t;
Insufficient oti es the hus a d s wishes) not legally enforceable as it
(Pg 93) lacks good consideration.
Consideration was too vague or insubstantial in nature to be

enforceable.
B. Vague or
White v Bluett (1853) – Bluett s p o ise as othi g o e
insubstantial
tha a p o ise ot to o e his fathe .
consideration
Held: As such it was too vague & was insufficient
consideration for the alleged discharge by his father.

lOMoARcPSD|4880004
Generally not sufficient consideration, where promise is

already under public duty to perform an act and the same acct
is the purported consideration.
Collins v Godefroy (1831)

C. Performance
Held: In a duty imposed by law to present as a witness, a
of existing public
promise for remuneration for loss of time is a promise without
duty
consideration.
Glassbrook Bros Ltd v Glamorgan City Council

Held: There was insufficient consideration as the police went
beyond their public duty by providing a stationary force.
When the purported consideration is the performance of an

existing contractual = insufficient consideration
Stilk v Myrick (1809)
Held: Promise is not enforceable as there was no
o side atio fo the aptai s p o ise as the e ai i g e
did what they were contractually required to do.
But sufficient if performed over and above contractual duty

Hartley v Ponsonby
D. Performance Held: There was sufficient consideration as Hartley was
of existing required to do much more than what would have been
contractual duty expected from him originally.
Limited Exception:
William v Roffrey Bros (1991)
Held: The extra payment was not given under duress or fraud,
the oral promise was enforceable because the defendant
o tai ed p a ti al e efits f o the plai tiff s o k. The
benefit was that they would not be liable under the main
contract for late completion.
Pi el s Case (Pg 97) – Part payment of a debt does not

discharge the entire debt and so it is insufficient
E. Performance consideration, unless:
of Existing Debt -part payment was requested and accepted by creditor
(part payment)
-payment was made earlier, at a different place, or in
*Promissory conjunction with some other valuable consideration
Estoppel can
counter (Prevent Foakes Beer affir ed Pi el s Case – the HOL held
from denying the that Bee s p o ise ot to take fu ther action was not
promise) supported by consideration & payment not made in advance
but stretched over 10 weeks. Mrs Beers could claim the
money.
F. Past Consideration – Refer to front

lOMoARcPSD|4880004
When Promissory Estoppel is established, the promisee may have a valid defence
agai st a p o iso s lai e e if o o side atio flo s from the promisee.
Hughes v Metropolitan Railway Co (1877) or doctrine was explained in the obiter

dictum by Denning J in the case of Central London Property Trust v High Tree
House Ltd (1947)
– 4 Requirements for Promissory Estoppel
- Parties must have existing legal relationship (E.g Debtor/Creditor or

Employer/Employee)
- Clear and unequivocal promise which affects the legal relationship

P o iso o t i sist o legal ights  Likely this one will fail)
- Promisee relied upon promise and altered his position (Reliance)

Enforce
promise
- Inequitable (unfair) for the promisor to go back on his promise.
without
consideration
Effect of promissory estoppel = SUSPENSIVE/EXTINCTIVE
Suspensive: Once elememts of Promissory Estoppel is established, it is tantamount

to upholding a promise even though no consideration flowed from the promise.
Original legal relationship suspended for duration of promise (the edited promise?)
Promissory
When promisor gives reasonable notice of his intention to revert to the original
Estoppel
legal relationship, the original relationship is restored .
(For no
consideration) Effect of PE is to suspe d p o iso s ights temporarily
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd (1995)
(Pg 98) Held : The House of Lords affirmed the principle of PE. Tool Metal was entitled to
revoke their voluntary suspension by giving adequate notice to Tungsten Electric.
The parties were deemed to have returned to their original agreement
Ajayi v R T Briscoe (Nigeria) Ltd (1964)

Extinctive: The p o ise edited ould e o e fi al a d i e o a le if the
p o issee a ot esu e his positio
* Applicable to 3rd parties even if no consideration was given
Use as a Shield not sword

- Can only be used as a defense against a claim by a plaintiff (E.g. Plaintiff
sues that the promise to suspend repayments is not valid w/o
consideration.)
- Cannot be used to commence a suit. Combe v Combe (1951); Lai Yew

Send v Pilecon Engineering (2002)

lOMoARcPSD|4880004
Privity of General Rule: Only parties to the contract are entitled to enforce of bound by the
Contract contract, 3rd party cannot sue or be sued.
Price v Easton
Held: Price could not sue as he was not a party to the contract between debtor
and Easton. Alternatively, he could have sued debtor.
Exceptions (3rd party who is 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 (of choice in action)
-Letter of credit issued to bank (sue bank for non-payment) , Trust, Tort
Contracts (Rights of 3rd Parties) Act – CRTA

3rd parties can enforce contractual terms made for their benefit in ce rtain
circumstances.
Does not abolish privity rule but adds additional exception:

1. S2(1a) CRTA – Contract states expressly that he may do so
2. S2 (1b) and S2 (2) CRTA- Contract purports to confer benefit on 3rd party
3. S2 (3) CRTA – Contract expressly identifies 3rd party by name/member of the
class/ particular description
4. S2 (6) CRTA – Entitles the 3rd party to take advantage of any exemption or
limitation clauses in the contract.
Intention to Create Legal Relations
To determine if promisor has an intention to create legal relation

 Objective Test: Whether a reasonable man viewing all circumstances of the case would consider
that promisor intended his promise to have legal consequences.
Chwee Kin Keong v Digilandmal.com Pte Ltd
General Presumption: No legal intention

Balfour v Balfour (1919)
Facts: Wife alleged that while couple was in England, it became clear that she was
too ill to follow him back to Ceylon where his job was, her husband and promised to
pay her 30/mth in maintenance during the time that they were forced to live apart.
Held: Claim failed as the parties did not intend the promise o be legally binding.
Choo Tiong Hin v Choo Hock Swee (1959)

Social and Held : Plai tiff s p o ises a d o t a t o e p ope t ith his adopted so s e e ot
Domestic enforceable because lack of intention to create legal relations.
Agreement
Merritt v Merritt (1970)- Legal Intention
Facts: Wife recorded agreement and was going to divorce. She recorded the whole
conversation/ agreement down over house mortgage payments.
Held : Necessary intention and that the wife succeeded in her clai m for breach of
contract
OR if couples were business partners

lOMoARcPSD|4880004
General Presumption: Legal intention

Edwards v Skyway (1964)
Held: Skyway legally bound as there is necessary intention to create legal relation
Exceptions:
1. Honour Clauses
When parties have expressly stated that their agreement is not to be legally binding
Rose & Frank Co v J R Crompton & Bros Ltd (1952)
Held: Document was specifically declared not to have any legal consequences, there
was no obligation to give orders, receive them or stand by any clause in the
ag ee e t a d the Plai tiff s st action would fail
Commercial 2.Letter of comfort, intent, awareness and Memoranda of Understanding

Agreements HSBC v Jurong Engineering (2000) – Letter of awareness held not binding
Kleinwort Benson Ltd v Malaysian Mining Corporation Berhad (1989)
Facts: Plai tiff a k as o l p epa ed to ake loa to defe da t s su sidia afte
Defe da ts p o ided a lette of o fo t stati g that it as thei poli to e su e
that the subsidiary was able to meet its liabilities. Subsidiary became insolvent and
Plaintiff claimed Defendants should reimburse them.
Held: Court only found moral but no legal obligation.
3. Administrative Relationships
MCST 473 v de Beers (2001) – Application for license does not give rise to legal
relationship

lOMoARcPSD|4880004
Chapter 4: Contract Terms (pg 113 – 140)
Puffs, Representation Terms
Puffs (No legal Effect) Statement with no legal effects.

Vague as they are imprecise or exaggerating/over the top.
Dimmock v Hallet (1866)
Held: Des iptio of the la d fe tile a d i p o a le as a e e puff.
Representation (Not Statement made before/at the time contract is formed concerning matter
part of the contract) relating to the contract.
Written but not an integral part of the contract
False:
Misrepresentation Contract is not breached when representation held to be untrue.
Behn v Burness (1863)
Held: Parties can only take action under law of misrepresentation and have
remedy but cannot initiate action for breach of contract.
Terms (Part of the Statements which form part of the contract.

contract)
*Similar to representation as they originate as oral and written before
False: contract is formed.
Misrepresentation
Both create different rights and obligations for contracting party.
Jet Holding Ltd and Others V Cooper Cameron (Singapore) Pte Ltd and
Another
Held : Representation cannot in law be elevated to terms of contract
whether express or implied.
Guidelines to Distinguish Terms from Representations
Main Criteria: Intention of both parties

Basic Test: whether there is evidence that one or both contracting parties intended there be
contractual liability in respect of the statement.
Tan Chin Seng & Others v Raffles Town Club Pte Ltd
*Not necessary to apply or use all the guidelines.
When statement was Statement made close to the time of conclusion contract = term
made (Timing) A long interval between the time the statement is made and the point
the contract is formed suggests that statement is relatively
unimportant.
Routledge v Mckay (1954)
Held: There was a clear & significant interval of 1 week between
making of statement & making of the contract over sale of motorcycle.
So the statement was no a term of the contract.

lOMoARcPSD|4880004
Make s E phasis The greater the emphasis, the more likely the statement is a term
Fact: White told Bannerman that he would not even bother to ask the
price if sulphur had been used.
Bannerman v White
Held: The query regarding the sulphur was significant. The reply was a
condition upon which White agreed to buy. So reply was a term.
Make s Spe ial Maker of the statement has greater knowledge concerning statement
Knowledge = more likely a term
Oscar Chess Ltd v Williams (1957)
Held : Willia s state e t as ot a te of the o t a t e ause as a
private individual, Williams was not in a position to guarantee the
accuracy of the year of registration given.
DDick Bentley Productions Ltd v Harold Smith (Motors) Ltd (1965)

Held: There was a ea h of o t a t e ause the defe da t s
statement was a term of the contract. The seller, a motorcar dealer,
was in a better position to know the true facts regarding the Bentley
(as opposed to Oscar Chess v Williams where the seller was an
individual who had no way of knowing otherwise).
*Rationale: Buyers would rely on professional statements..

Invitation to Verify Maker of the statement invited other party to verify truth of
Statement statement made = representation. Maker dissuaded the other party
from verifying the truth of statement = term
Ecay v Godfrey (1947)
Held : Suggestion by buyer that seller independently survey the boat
was crucial in deciding whether there was intention that the statement
e a te of the o t a t ake do t a t contractual liability).
Hence statement – representation.
Written Statement Oral statement later reduced into writing = term (Parol Evidence
Rule) Written contract is exhaustive (complete), anything not written
is not part of the contract.
Evidence Act S93 & S94
Parol evidence cannot be introduced to court to add to, vary, or
amend or contradict a written contract. Applicable only if contract is
entirely written unless words of written contract were ambiguous.
Express and Implied Term (pg 117)
Express Term Expressly agreed between parties. Can be made orally or in writing.
If put down in writing  Parol evidence rule
Once written agreements/terms are reduced to written, evidence cannot be raised

to contradict, vary, + or – from the agreement.
Hawkrish v Bank of Montreal (1969)
Applicable only if contract is entirely written (can rebut that contract may be partly
written/ partly oral.)

lOMoARcPSD|4880004
Not expressly agreed by parties, nevertheless implied into the contract
Terms cannot be implied if implication of such a term would be plainly against the
express terms of the contract - Tan Hin Leong v Lee Teck Im (2001); Telestop Pte
IMPLIED Ltd v Telecom Equipment Pte Ltd (2004)
TERMS
Where terms are clear and unambiguous, they must be given their natural meaning
as there is no room for rewriting or implying terms into contract in those
circumstances – Bayerische Hypo- und Vereinsbank AG v C K Tang Ltd (2004)
Custom Unwritten terms hallowed by long usage or custom.

& Hutton v Warren(1836)
Usage Held: – Hutton was entitled to such 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 seeds and labor
Bernard Desker Gary & Others v Thwaites Racing Pte Ltd & Another (2003)
Held: Practise from which terms of contact were drawn was not accepted by all
trainers and owners, thus they could not be implied into the contract by
custom and practice.
Biz Court will supply a term which it considers as having been intended by the
Efficacy parties so as to ensure that their contract will proceed on normal business
lines.
The Moorcock (1889)
Held: Even though the defendant did not give any warranty that the ground
below the jetty was safe, it was an implied undertaking to this effect. Hence the
plaintiff succeeded.
Officious Bystander Test: So obvious it goes without saying

IMPLIED
TERMS Shirlaw v Southern Foundries (1926) Ltd v Anor (1939)
Held: Both the Biz efficacy test and officious bystander test were used in this
case.
Hiap Hong & Co Pte Ltd v Hong Huat Development Co (Pte) Ltd (2001)
Whichever test is adopted, the important point is that implied term must be
necessary for the contract. Court will not exercise its discretion to ensure biz
efficacy whenever reasonable to do so. MUST BE NECESSARY NOT MERELY
REASONABLE.
Statute Implied condition in Sales of Goods Act (Not for svc)

S12: Title – seller must have rights to sell goods (legal ownership)
S13 : Sale by description – Good will match description
S14(2) : Satisfactory Quality – Must fulfill certain factors for quality
S14(3) : Fitness for specific purpose – Buyer must tell seller specific purposes
and abnormal features. (Goods sold for specific purpose)
S15: Sale by sample- Bulk shall match sample in quality
S15A: Breach of condition to be treated as warranty in non-consumer cases
where beach is slight (Reasonableness)

lOMoARcPSD|4880004
Classification of Terms – Intention and purpose of contract

Classify Terms: Time and Importance of the term to the contract
Important, essential and fundamental to the contract

Statements of fact or promise which go to the root of the contract
Behn v Burness (1863)
Intention : Did parties intend and ought to know that breach will deprive innocent party
CONDITION
substantially whole benefit  Can extrapolate that parties thus will intend that this term is a
condition (even if they state it as condition, must look at substantially whole benefit)
Breach of condition entitled injured party to (Regardless of seriousness):

- Affirm
-Discharge contract( all obligation cease from date of breach)
-Either case, can claim damages for both ways
Less important terms and constitute secondary obligations which parties have intended it
to be.
Statement ould ot go to the oot of the o t a t, pa ties do t i te d to oid o t a t just
because of this breach.
WARRANTY
Breach of warranty entitled injured party to claim damages only and the contract remains on
foot.
Bettini v Gye (1876)
Held : Rehearsal clause was ot ital to the o t a t. Betti i s ea h of the a a t ot
going rehearsal) did not entitle Gye to repudiate the contract. The contract remains on foot
and Gye could claim for damages.
NEW CONDITION: However, the case of RDC concrete says that its o ite …
RDC Concrete (2007)
If term was a warranty, HongKong Fir might still apply, allowing innocent party to discharge
o t a t if o se ue es a e se ious. If o se ue es dep i es i o e t pa t of
substantially the whole benefit that it was intended that the innocent party should obtain
f o o t a t, the i o e t pa t ould e a le to te i ate the o t a t. Cou t has
upgraded a warranty to the status of a condition
*Look at consequences of breach
Complex, covering terms (consisting of obligations which are important/unimportant)

Hong Kong Fir Shipping Co Ltd v Kawasaki Kaisen Kaisha Ltd (1962)
Held: Plaintiff breached innominate term (shipped not well staffed/trained resulting in delay
sea-worthiness), but breach was not sufficiently serious to entitle Kwasaki to repudiate
INNOMINATE TERM
contract, can only claim damages.
The Test
Hong Kong Fir: The breach is such as to deprive the injured party of substantially the whole
benefit which it was intended to obtain as the consideration for his own undertakings.
Breach of innominate terms results in:
1. Trivial Consequence (Breach of warranty) : Entitles injured party to claim damages only &
contract remains on foot
2. Serious Consequences (Breach of condition): Entitles injured party option to affirm or
discharge & either case claim damages.
*Seriousness depends on whether the breach deprives the injured party of substantially the
whole benefit which he was intended to obtain

lOMoARcPSD|4880004
Chapter 5 – Exemption Clause (pg 124)
An express term in the contract which seeks to exclude total liability of party relying on the clause.
Another type of clause called the limitation of liability clause which seeks to limit the liability of the
party relying on it to a sum specified in the contract.
Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd & Securicor (Scotland) (1983)
Held : Clauses of limitation are not regarded by the courts with the same hostility as clauses of
exclusion as they must be related to other contractual terms in particular to the risks to which the
defending party may be exposed, the remuneration which he received and possibly also the
opportunity of the other party to insure.
Party who wishes to rely on an exemption clause & limitation clause must establish ALL 4 points:
A. Incorporation- Clause must be incorporated in the contract
B. Construction-Clause properly construed, must cover loss or injury which occured
C. Unusual Factors- Must not be any extraordinary facts in the case which prevent operation of EC
D. UCTA- Clause must not contravene UCTA
Incorporated by signature or notice
Signed: L Estra ge Grau o

Held: The document containing contractual terms is signed, then in the absence of fraud or
misrepresentation. The party signing it is bound, and it is wholly immaterial whether he has
read the documents or not.
Not Signed, EC can be incorporated if given sufficient notice:

1. Contemporaneity (When notice of EC was given)
Effective notice must be given before or at the time contract was made for EC to be
incorporated.
Olley v Marlborough Court Ltd (1949) – T
Held: Contract was already formed before the couple entered their room and that
therefore the notice given on the bedroom wall was too late.
A. INCORPORATION
Thornton v Shoe Lane Parking Ltd (1971)

Held: The custo,er is bound by those terms as long as they are sufficiently brought to his
notice before-hand, but not otherwise. He is not bound by terms printed on the ticket
because the ticket comes late.
2. Reasonable Sufficient Notice (Where)- Reasonable Man Test

Should be located at a place which a reasonable person would have expected to find
contracted term for EC to be incorporated.
Chapelton v Barry Urban District Council (1940)
Held :No reasonable person would expect to find contractual terms on the ticket since it
would be regarded simply as a receipt for money paid.(Past contract)
3. Adequacy of Notice - Reasonable steps taken to bring notice to attention of injured party
to be effective.
Notice must be sufficiently conspicuous and legible.
Thornton v Shoe Lane Parking Ltd (1971)
Held: Contract was formed when Thornton paid his money into the machine, which later
issued the ticket. A notice on the ticket was too late (1st Rule not fulfilled). A notice on
outside the carpark was not reasonable sufficient notice as driver would not have time to
look at the term and conditions.

lOMoARcPSD|4880004
Thomson v London Midland Scottish Railway Co (1930)

Held: Reasonably sufficient notice was given since the ticket made reference, albeit rather
i uitousl , to the e e ptio lause. Plai tiff s illite a did ot help he . This ase suggest
that as long as the party relying on the exemption clause has done what is reasonable to
bring the notice to the attention of the injured party, he will be entitled to rely on the
clause despite the fact that the injured party may be under some disability preventing him
from understanding the notice
Geier v Kujawa, Weston & Warne Bros (Transport) Ltd (1970)

A. INCORPORATION
Held: There was no sufficiency of notice because did not take the reasonable step of
t a slati g the oti e despite k o i g Geie s disa ilit .
Jet Holding Ltd & Others v Cooper Cameron (Singapore) Pte Ltd & Another (2005)
Held: No adequate notice was given as the standard form clauses involved should have
ee ought fai l a d easo a l to the plai tiff s atte tio poi ti g the out, o e
so he the te s a d o ditio s e e ot p i ted o the e e se of the uotatio
4. Previous Course of Dealings

If there has been previous course of dealings (frequently and consistently over a period of
time) between the parties which included an exemption clause, and parties would have
indicated that present contract would be bound by the terms of e earlier contract, then the
exemption clause may be incorporated through the previous course of dealings.
Henry Kendall & Sons v William Lillico & Sons & Ors (1969)
Held: The EC formed part of the contracts (But in this instance, the EC was held to be
ineffective from shielding from liability).
Hollier v Rambler Motors (1972)

Held: As the customer had only used the service 3 times in 5 years, there was not sufficient
time/frequency, hence EC not incorporated into contract by course of dealings.
2 Rules of Construction (Interpretation of EC and how it is constructed)

A. Contra Proferentum Rule
Where there is any ambiguity in interpreting a clause, the construction to be adopted is the
one which is least favourable to the person who put forward the clause
Hollier v Rambler Motors (AMC) Ltd (1972) + Hong Realty Pte Ltd v Chuan Keng Mong
(1994) + Singapore Telecommunications Ltd v Starhub Cable Vision Ltd
B. Main Purpose Rule

B. CONSTRUCTION
EC is ineffective when there is a fundamental breach of contract. EC defeats the main

purpose of a contract, unless the EC uses clear and unambiguous words.
Photo Production Ltd v Securicor Transport Ltd (1980)

Held: The EC was invalid because the breach was fundamental. The House of Lords later
ruled that the clause clearly did include the breach, yet innocent party agreed to it. Thus,
Securicor was not liable.
Rule is a rule of interpretation and thus if EC uses clear and unambiguous words, it can be
effective even in the case of fundamental breach

lOMoARcPSD|4880004
Exemption Clause and Third Parties

Privity of contract rule: Allow only contractual parties the rights under the contract but in
recent years, there appears to be a loosening of this general rule. 3rd party may take
advantage of an EC in a contract to which he is not a party, subject to requirements
B. CONSTRUCTION
contained in the CRTA.
New Zealand Shipping Co Ltd v AM Satterrthwaite & Co Ltd (1975)

3rd party as an agent of the party which provided the EC may benefit from the EC if
circumstances allows. 3rd party stevedores engaged by carrier to unload goods, found
negligent and damaged goods. Court held stevedores under EC since EC clearly extended
protection o them (To protect carrier, agents and servants in cases where negligence or
default happens)
A.Misrepresentation as to true scope of exemption clauses

Curtis v Chemical Cleaning & Dyeing Co (1951)
Held: Unusual clause limits effectiveness of clause. Only exempting liability for damage to
beads and sequins on dress renders entire clause invalid.
B. Overriding Oral Undertaking

An oral undertaking made before or when a written contract is signed may overshadow the
C. UNUSUAL FACTORS
written term. It creates a second subsidiary contract known as a collateral contract which is
implied by court and run parallel with the main contract. It can be used to add or vary the
terms of the main contract as an exception to the Parol evidence rule. It can also defeat an
EC in the main contract. (E.g. Selle says Do t o y a out EC, o effe t o e )
Evans (J) & Sons (Portsmouth) Ltf v Andrea Merzario Ltd (1976)
Facts: Written contract say goods to be placed on deck, oral contract assures plaintiff that
goods will be placed below deck to be safe. But goods still placed on deck and went loss
when it slipped into sea.
Held: O al assu a e eated a ollate al o t a t eut alized the itte o t a t s EC.
D P Oral assurance must occur before

agreement(Reliance on oral
Agree to enter into main contract assurance)- if not past consideration
(Consideration)
The UCTA e ui es EC to e easo a le to e alid, does ot appl to all EC

- not only applies to contract cases but also EC in Tort cases
-All EX starts out being ineffective, unless excluder satisfies judge that EC is reasonable.
-Burden of proving reasonableness falls upon the party seeking to rely on the EC- S11(5)
2 key sections of 2 & 3:

S1 and S3(1) – Applies only to Biz Liabilities arising from the course of Biz
D. UCTA
S2(1)- Liability of death & personal injury arising from negligence cannot be excluded
(from breach can)
Xu Jin Long v Nian Chuan Construction Pte Ltd (2001)
Held: Any contractual term that prevents a party from being sued in negligence for death
or personal injury is a restriction of liability under s 2 of the Act and such term is not
enforceable.

lOMoARcPSD|4880004
S2 (2)-Liability for other types of damages (financial loss or property damages) arising from
negligence can be excluded if EC satisfies reasonableness (if it can be insured, cannot
exclude but if fail to include then EC slant to unreasonableness)
S3-Consumer & Non- o su e t a sa tio s, EC ust satisf easo a le ess to e alid. –
 Consumers protected by S6 UCTA in relation to SOGA. Consumer rights enshrined

in S(12-15) SOGA are entrenched by s 6 UCTA such that a seller cannot exclude his
liability under the SGA by using an exemption clause. This is an absolute
prohibition.
 Non-Consumer uses a standard written contact and it contains an exemption
clause, the exemption clause must be reasonable if it is to be valid. Prohibition in s
UCTA hi h seeks to e t e h the u e s ights spe ified i the sale of good
legislation is relaxed when transaction is non consumer
D. UCTA
Liability under SOGA, UCTA applicable to any contract for sale of goods -S6(4):
S12 SOGA Not allowed S6(1)
S13-15 SOGA : Consumer Not allowed S6(2)
S13-15 SOGA: Non- Allowed if reasonable S6(3)
Consumer
S3 Misrep Act- Liability arises from misrepresentation; the misrepresentor can only seek
protection behind EC if it is reasonable. (B2C)
*If UCTA does not apply, EC will be effective as long as other 3 elements are fulfilled
WHAT CONSTITUTE TO REASONABLENESS?

S11- reasonableness judged at the time contract was MADE and not at the time the breach
occurred.
Person relying on that clause has burden of proving it to be such.
EC must be fair and reasonable, actually known, reasonably ought to have been known or
contemplated by parties when contract was made.
Second schedule of UCTA, factors considered:

1. Bargaining strength of parties
If bargaining strength of parties are equal = EC reasonable.
Party relying on EC have strong bargaining power vis-a-via injured party = EC unreasonable
Cosmat Singapore (Pte) Ltd v American National Trust and Savings Association (1992) and
Metro (Pte) Ltd v Wormald Security (S.E.A) Pte Ltd (1981)
Held: In both cases, EC was held to be valid as both parties considered to have equal
bargaining strength. Bank relied on an exemption clause in its standard contract. UCTA not
applicable on the facts but state that the clause would be enforceable if the UCTA is
assumed
Elis Tjoa v United Overseas Bank (2003) – Similar Bank cases (1)
Not u easo a le fo a a k s EC to e ui e its usto e s to he k thei state e t
regularly and to notify the bank promptly of any unauthorised transactions
However if the bank had inadvertently and unilaterally made a wrong debit without any
instruction whatsoever it may then be unreasonable and against public policy to allow it to
rely on the clause

lOMoARcPSD|4880004
2. Customer received an inducement to accept EC

If customer received such inducement ten, all other things being equal= EC reasonable.
I du e e t is ega ded as a s eete e i e ha ge fo a epti g the EC.
E.g Biz offer to cover more liability if the customer is to pay a higher amount
3.Whether customer knows about EC

All factors in the incorporation of EC. If knows, all other thi ngs being equal, EC=reasonable
4.Previous Course of dealing

Dealed with party for a long time= harder to claim EC unreasonable
5.Compliance with some condition

Compliance with certain conditions not practicable= unreasonable (clause includes
conditions under which liability is limited= reasonable)
George Mitchell (Cherterhall) Ltd v Finney Lock Seeds Ltd (1983)
Facts: A firm contacted to sell Dutch winter cabbage seeds but delivered autumn seeds of
inferior quality.
Held: EC was unreasonable because the buyer could not discover breach until the plants
grew whereas seller was at all times in a position where it should have known whether the
wrong seed was supplied.
6. Whether goods specifically ordered

Unclear whether the fact that the goods were specially ordered =EC reasonable
E.g. O e possi le a gu e t is that if goods a e a ufa tu ed to usto e s spe ifi atio s
but causes damage to customer, then the clause should be considered reasonable as any
defe t is due to usto e s o spe ifi atio
Kenwell & Co Pte Ltd v Southern Ocean Shipbuilding Co Pte Ltd (1999)
Held: Defendant failed to adduce evidence of reasonableness and hence clause could not
be relied upon. EC used commonly in the industry may still be unreasonable under UCTA.
More unreasonable an EC is = More burden upon the party relying upon it to establish
reasonableness. Fact that parties entered into contract willingly does not prevent one
party from later questioning the reasonableness of an EC.

lOMoARcPSD|4880004
Chapter 6: Vitiating Factors (pg 141 – pg 178)

Factor which may prevent a contract from being enforceable and deprive the contract from its
efficacy
FACTOR 1: INCAPACITY
-Lack of capacity which may characterize a contracting party
MINORS
-Persons who have not reached age of majority (21)
-Civil Law Act gives contracts entered into by minors (18yrs same effect as if they were contracts
entered into by persons of full age, can start biz)
S35 to give to contracts entered into by minors who have attained the age of 18 years the same
effect as if they were contracts entered into by persons of full age; except in cases where:
-any contract for the sale, purchase, mortgage, assignment or settlement of any land, other than a
contract for a lease of land not exceeding 3 years;
-any contract for a lease of land for more than 3 years;
-a y o t a t he e y the i o s e efi ial i te est u de a t ust is sold o othe ise t a sfe ed to
another person, or pledged as a collateral for any purpose; and
-any contract for the settlement of
i)any legal proceedings or action in respect of which the minor is, pursuant to any written law,
considered to be a person under disability on account of his age; or
ii) any claim from which any such legal proceedings or action may arise.
S36 to allow such minors to bring certain legal proceedings and actions in their names as if they
were of full age
lasses of Mi o s Co ta ts
1. Valid Contacts – Binds both Minor and other party

2. Voidable Contacts – Binds other party & binds minor unless minor repudiates
3. Ratifiable Contracts – Binds other party and binds minor only if minor ratifies
-Must benefit the minor= Enforceable/Binding

-If contains onerous terms prejudicial to the minor= Not binding (Voided)
A.VALID CONTRACT- BINDS BOTH PATIES
A. BENEFICIAL CONTRACT FOR NECESSARIES

-Necessaries refer to g & svc which law deems reasonably required by a minor in
his particular station in life
S3 of SOGA: suitable to the condition in life of the minor and suitable to his actual
MINORS
requirements at the time of sales and delivery.

Nash v Inman (1908) - Contract was unenforceable because Nash failed to prove
that the clothes were necessaries to defendant.
Having shown that the goods were suitable to the condition in life of the infant,
[the plaintiff] must then go on to show that they were suitable to his actual
requirements at the time of sale and delivery
Peters v Fleming (1840) - Necessaries may include luxurious items of utility if they
are considered appropriate for the minor in his position (suitable to condition of
rich and he needed it at time of sale/delivery)
Effect: S3(2): Mi o ust pa easo a le p i e fo su h goods

lOMoARcPSD|4880004
Condition for valid contracts: Before it is binding on minor

Executory on the part of the other party( Adult):
Nash v Inman (Goods) – The other party must have intended to or performed his
obligations before the contract is binding upon the minor.
Roberts v Gray (Services) – Binding upon the minor regardless whether the other
party has performed his obligations or not.
A.VALID CONTRACT- BINDS BOTH PATIES
B. Beneficial Contracts for Employment

Contract must benefit the minor and it remains binding even if there are certain
aspects which are not advantageous.
Chaplin v Leslie Frewin (Publishers) Ltd (1966) – Winn LJJ took the view that the
o t a t as e efi ial to Chapli , stati g that the ud a li g ut the p ofits
ill e se u ed. Held: Contracts beneficial
De Francesco v Barnum (1890)

Facts: 7 years, no marriage or professional engagements, De Francesco was under
no obligation to provide her with engagements and her pay was totally
unsatisfactory.
Held: Fry LJ held that the terms of the deed were unreasonable and not beneficial
to the girl and, therefore, unenforceable.
C. LOANS FOR NECESSARIES

Person who lends money to a minor is generally unable to enforce the contract and
recover the money from the minor
Marlow v Pitfeild (1719)
exception arises if money was used to purchase necessaries –Financial Institutions
in Singapore typically lend money to minors only if minor can supply a guarantor
who will guarantee the loan. Such a guarantee is enforceable (guarantor liable)
even if loan agreement is unenforceable (S2MCA)
MINORS
Minor acquire interest in a subject matter where the minor faces recurring future
obligations. (E.g Contracts for a lease, partnership and purchase of shares)- Opt out
Contract is valid and binds upon other party and minor unless minor repudiate
B. VOIDABLE CONTRACT – OPT OUT
(refuse to accept). Minor is entitled to repudiate the contract without any liability
on his part any time during his infancy or within a reasonable period of time af ter
he attains majority.
Until he repudiates, the contract remains enforceable.
Davies v Benyon-Harris (1931)
Held: Minor entered into a lease for flat. Lease was not void but voidable.
Enforceable if repudiated within a reasonable time after attaining majority.
Reasonable time to repudiate the voidable contract: Dependent on the

circumstance of the case
Steinberg v Scala (Leeds) Ltd (1923)

Once repudiated, the minor is no longer bound to perform any future obligations
but can be sued for accrued liabilties. 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.

lOMoARcPSD|4880004
Covers all other contracts that are not valid or voidable
C. RATIFIABLE – OPT IN
Binds other party and binds minor only of minor ratifies after he attains maturity
Such contracts would not be valid or enforceable against the minor unless he
ratifies it after he attains majority.
The contract nevertheless binds the other party
MINORS
S3 (1) MCA): For ratifiable and voidable contract, compels minor must return property
improperly obtained by him by virtue of unenforceable contract. Partial remedy to person
who enters into contract with minor, at least can recover property even though canno t get
paid for property sold.
S(2) MCA: Gua a tee gi e i espe t of i o s o t a tual o ligatio , e fo ea le agai st

guarantor even though it cannot be enforced on minor due to its incapacity.
EFFECTS OF VOIDABLE/INVALID CONTRACTS AND MINOR OBLIGATIONS

Executed on minor part : Minor has performed his obligations by payment of money or
delivery of g & svc, the minor is unable to recover any money paid or goods delivered by him
unless total failure of consideration by other party. (E.g. Minor never receives anything in
return. If Coy has not performed svcs, even though they intend to perform later which is an
executory consideration, the minor can still take back the money)
Executory on minor part: If not yet performed obligations, the contract is not enforceable
against minor unless it is necessary. Minor can return goods and cease to continue.
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:
MENTALL UNSOUND INTOXICATED PERSONS
-He was incapable of understanding the nature of the contract;

-The other party knew or ought to have known of his incapacity.
S3(2) SGA also applies to mentally unsound and intoxicated persons, where they have
obtained goods which are necessaries, they may be required to pay a reasonable price for
the goods
Che Som bte Yip & Ors Maha Pte Ltd & Ors (1989)
Held: Mentally unsound man executed the mortgage in favor o bank in respect to property
which he was co-owner under brother inducement. Mortgage can be voided, if bank knows
of a k s age t: B othe s k o ledge of the thi d plai tiff s o ditio as i puted to the
bank. Hence the mortgage was voidable.

lOMoARcPSD|4880004
FACTOR 2: ILLEGALITY –Statements made must be term of contract
Contract contravene some aspect of public policy
Apthorp v Neville & Co (1907) and in Kong Seng Construction Pte Ltd v
Chenab Contractor Pte Ltd and Another (2008)
An agreement was made with the object of deceiving a third party Contract
to commit a crime, a tort or a fraud on a third party .
Ahvena Ravena Mana Aroogmoogum Chitty v Lim Ah Han, Ah Gee and

Chop Lee Watt (1894)
Promote sexual immorality such as contracts to lend money to finance a
brothel
A.Contracts Regazzoni v KC Sethia (1944) Ltd (1958), which was cited in Everbright
Contrary to Commercial Pte Ltd & Another v AXA Insurance Singapore Pte Ltd (2000)
Public Policy and Wu Shun Foods Co Ltd v Ken Ken Food Manufacturing Pte Ltd (2002)
To benefit a foreign enemy or undermines the relationship with a friendly
country
ILLEGALITY: STATEMENTS MUST BE TERM OF CONTRACT
R v Andrews (1973)
Contract inimical to administration of justice such as contract to give false
evidence at a trial
Baker v Jones (1954)

Contract to oust the jurisdiction of the courts, such as a provision specifying
that the right to interpret the rules of an association vests only in its council
B.Gaming S5 Civil Law Act- contracts of gaming and wagering are generally void by
and statute.
Wagering General Rule of Betting Act: Money paid or won under a wagering or
Contract gaming contract cannot be recovered
If parties cannot prove that they did not have the intent to enter into an
illegal contract then the contract is treated as void ab initio. Neither party
has any rights in the contract.
Exception : Singapore Pool, IR
Illegal due to statutory provisions which prohibit them. Some statutes

expressly or impliedly prohibit certain types of contract and prevent their
inception altogether while others seek only to penalize certain types of
unlawful conduct without prohibiting the underlying lawful contract
C. Contracts Expressly Prohibited(Contract goes against statute)

Contrary to Whe e legislatu e s i te tio to p ohi it a t pe of o ta t is lea f o the
Statue statute, then the contact may be void and unenforceable by all the parties,
whether or not they are aware of the statutory illegality
Re Mahmoud and Ispahani (1921)- War time regulations prohibited the
buying or selling of linseed oil
Held: lea a d u e ui o al de la atio … that this pa ti ula ki d of
o t a t shall ot e e te ed i to a d that, o se ue tl , the o t a t
was void.

lOMoARcPSD|4880004
Effect: Unenforceable and void by all parties, property not recoverable

unless recovery proceedings can be made without relying on illegality
which voided the contract.
Impliedly Prohibited (Contract allowed, but actions/performance not

allowed)
An unlawful performance on an otherwise lawful contract does
unnecessarily render the entire contract void.
St John Shipping Corporation v Joseph Rank Ltd (1957)
Held: Overloading a ship which was illegal in itself might not cause a
contract for transporting goods on that ship to be void because the act
C. Contracts which contravenes the statute was considered to be at the periphery of the
Contrary to contact
Statue Effect: Contract still continues since contract not affected by illegality, but
wrong doer is penalized. Statute nature is penal, impose fine on
wrongdoer, civil contract still continues.
Guilty party prevented from enforcing contract (unless illegality is penal
rather than penal) innocent party may recover damages from defaulting
party. If both equally at fault (pari delicto), then neither can establish cause
of action.
Contract entirely void/continue to be partly enforceable despite being

tainted in some aspect of its performance depends on the construction of
statutory provision Any intention to prohibit the contract?
Shaw v Groom (1970)

Imposition of fine suggest that the illegality does not strike to the root of
the contract(Formation) but merely render the illegal performance of the
contract (Periphery)
Prohibited under Competition Act
Agreements under which a biz/person agrees to refrain from undertaking
certain types of trade/employment in which is used to prevent biz/person
from entering into a field in which the other party operates ( E.g.
D.Contracts Employment contracts, sales of Biz contracts, exclusive dealing contracts)
in Restraint
of Trade General Rule
Clauses and hence contracts in restraint of trade are void and can be
Covenantee enforceable if it can be shown that the restraint of trade is reasonable given
restricts the interests of the parties and the public generally
others
1. Legitimate Interest(Proven by Covenantee)
The restraint must protect some proprietary or legitimate interest of the
covenantee.
Covenantor Asia Business Forum Pte Ltd v Long Ai Sin & Another (2003)
is restricted Restrain a former employee from exploiting trade secrets or trade contracts
obtained from his employment
Restraint is intended merely to minimize competition or to prevent an

employee from using the personal skills or knowledge acquired during his
previous employment, then it is likely to be void
Stratech Systems Ltd v Nyam Chiu Shin & Others (2005)

lOMoARcPSD|4880004
Held: Although restriction period of nine months was not unreasonably

long, the duration of the prohibition was only one factor to be considered –
not most important. Court will not uphold a covenant benefitting an
employer merely to protect itself from competition by a former employee.
D.Contracts As there was no demonstration of any legitimate interest that required
in Restraint protection by a restraint of trade clause, the main function of the clause
of Trade was to indeed inhibit competition in business and clause was therefore
invalid.
Covenantee
restricts 2.Reasonable Scope (Proven by covenantee)
others Must be reasonable in terms of its period (Time) , geographical scope
(wide) and subject matter (personal skills, knowledge, trade secrets,
IP ,rights and goodwill). Even where legitimate proprietary interest is
shown, the court will ensure that the covenant foes no further than what is
Covenantor necessary to protect the interest concerned.
is restricted Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed Ahmad &
Another (2004)
Held: clause was prima facie void as the business carried on by the
company in the clause must be read narrowly to mean only the actual
business already undertaken by the plaintiff. Restraint was invalid since it is
different from existing Biz.
3.Public Interest(Covenantor)
Micro view rather than Macro whether restraint on this particular person to
compete will affect public.
Contrary to public (Restrict competition, significant impact on trading
agreements, monopolies, treaties, deprivation of rice bowl)
Esso Petroleu Co Ltd Harper s Garage Stourtport Ltd
Restraint too long. Test of reasonableness requires a consideration of the
public interest which must be protected in such exclusive dealing
agreements.
General Effect: Contract Voided, the law treats the contract as if it had not
existed in the first place and no party can sue on the contract.
1.Making of contract is prohibited by statute or contrary to public policy
Void Ab initio (from the beginning)
2.Intention to perform illegally at time of making contract Unenforceable
by any party with the intent (Both have intent, both cannot enforce)
3.If plaintiff rely on illegal act to prove his rights, contract unrecoverable
Effects of (disregard intent and knowledge of illegality)
Illegality
Recovering Property
General Rule: Property that has passed under the illegal contract is
unrecoverable. In some cases the court may allow an innocent party to
recover property which would otherwise pass to the defaulting party under
the illegal contract.
Tokyo Investment Pte Ltd v Tan Chor Thing (1993)
Held: Court held that TCT could recover his shares from appellant as
-he was not relying on the illegal contract to claim his shares
-FTA was intended to protect the class of investing public of which TCT was
a member

lOMoARcPSD|4880004
-TCT was not equally at fault with the appellant since burden to obtain
license was on appellant
-Not to allow TCT to recover would be encouraging illegality
- TCT did not know he was dealing with an unlicensed futures broker
Siow Soon Kim & Others v Lim Eng Beng alias Lim Jia Le (2004)
Held: Court held that test to apply to determine if court should assist a
plaintiff to enforce an agreement was whether the plaintiff was able to
establish his cause of action independently of the illegality. In the case,
respondent was not asking the court to enforce an illegal arrangement but
a wholly legitimate partnership agreement. Therefore respondent was
ruled in favor.
Recovering Damages
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)
If there was knowledge of an illegal cause, there can be no lawsuit.
However the innocent party may be able to recover damages from the
defaulting party.
Ar h old s Freightage Ltd Spa glett
Held : The contract as illegal i its pe fo a e ut si e A h old s as
Effects of not aware of the illegality, it was entitled to claim damages. Lack of
Illegality awareness of illegality Is different from lack of awareness of law.
SOLUTION
Severance (If cannot severe th unreasonable terms, the whole contract
fails). Sometimes within the clause itself particular words can be severed so
as to save the rest of the clause. Severance is possible if:
-Promises are severable in nature
-It is possible to sever the void part by deleting the offending words or
clause without adding, substitution, rearranging or re-drafting the
contract (Blue Pencil Rule- If it applies, the ROT clause can apply, it is a
rule of deletion not addition whereby clause makes sense after that.)
-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.

lOMoARcPSD|4880004
FACTOR 3: MISRPRESENTATION
A false statement (not all) of fact made by one party (representor) to another (representee) which
induces and is relied upon by the representee to alter his position.
ALL THE FOLLOWING CONDITIONS MUST BE FULFILLED FOR IT TO BE A FALSE STATEMENT:

False statement must be one of past/existing fact. It cannot be:
1. A mere statement of opinion or statement of some likely future event. ( E.g. RTC
intention to build XXX in the future, this would not be a statement of the past or present)
2. A statement of Intention unless at that time of making the statement of intention, the
representor did not in fact hold that intention.
Edgington v Fitzmaurice (1885)
Held: Information in the prospectus is different from the real intention of raising money.
Stated intention was not actually held because company raised money for liabilities instead
of improvements.
3. A statement of Opinion unless the representor had access to the relevant facts and had
no reasonable ground for holding such an opinion
Bisset v Wilkinson (1927)
Held: Opinion was given but the property could not hold that much. That claim was a
statement of opinion and did not amount to misrepresentation.
4. When facts are not equally known to both sides, then a statement of opinion by the one
who knows the facts best involves very often a statement of a material fact for he impliedly
1. FALSE STATEMENT OF FACT
states that he knows facts which justify his opinion.

Where an opinion is expressed, it must be expressed upon reasonable grounds and made
honestly. Where opinion is stated as if it is a positive fact, it can constitute a
misrepresentation
Tai Kim San v Lim Cher Kia (2001) made a careful distinction between a misrepresentation
of fact and an expression of opinion
5. General Rule: Silence does not amount to misrepresentation.

Keates v Lord Cadogan (1851)
Held: There is no duty to disclose the state of his house, thus, no misrepresentation.
Exceptions
a. Partial Non-Disclosure: What is stated becomes a half-truth by what is left unsaid
Dimmock v Hallett (1866)
Held: Saying the place is fully let but did not say the tenants had given notice to quit. This
constitutes misrepresentation.
b. Change of Circumstances rendered a previously truthful statement misleading.

With O Fla aga
c. Fiduciary Contracts, a duty is imposed upon party to disclose facts to other party
(Insurance Contracts)
6. Mere Puffs
7. Erroneous Statements of law will not five rise to misrepresentation (ignorantia lexis non
excusat) unless representor makes a separate assurance that he has reasonable grounds for
holding his opinion.

lOMoARcPSD|4880004
It must be made by one party (representor) to the other (representee)

UNICATED
2.COMM
Reliance: Need not only inducing cause, person must have knowledge and reliance of
statement
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)
Tai Kim San v Lim Cher Kia (1884)
Held: Being experienced businessman, they were expected not to rely on the statements,
thus no inducement.
Opportunity to investigate does not void Inducement + No inducement if innocent party

has come to learn of the misrepresentation before entering into contract, or does not reply
3. INDUCEMENT
on misrepresentation when entering into contract.

Redgrave v Hurd (1881)
Fact: Representee had an opportunity to investigate and ascertain whether a
representation is true or false was not sufficient to deprive him of his right to rely on
misrepresentation.
Held: A mere opportunity of a chance to investigate or having investigated/exercised due
diligence does not remove the possibility of reliance or inducement. If the representee did
not make use of the opportunity, or took steps to verify the truth but failed to discover the
fraud, there is still inducement. (verify, bound by the verification, cannot sue) .No fraud or
negligence found, the misrepresentation was thus an innocent one and contract was
rescinded
Categories of Misrepresentation (Must prove it is misrepresentation FIRSTthen select outcome for

each misrepresentation)
Prove Representor: Rescission +

-Know that is false makes the false statement (Tort of Damages
Deceit) (Monetary
- Disbelieve it is true and makes the false statement compensation)
Representee must prove that there is dishonesty on the part *Rep ese tee s
of the representor, there is no fraud even if the statement is choice but the
Fraudulent Misrep farfetched, negligent, or ill-conceived. choice is final.
(Representee
must prove fraud) Derry v Peek (1889)
Held: House of Lords held that for fraudulent
misrepresentation to arise, the false representation must be
made knowingly or without belief in its truth or recklessly,
careless whether it be true or false. Since none was present,
no fraudulent misrep.
A high degree of proof is required by the innocent party who

asserts fraud/deceit.
Panatron Pte Ltd v Lee Cheow Lee & Another (2001)

lOMoARcPSD|4880004
Held: Alleged misrepresentations were made to the

respondents and the representor knew that these
representations were false. False statements in turn induced
the respondents to subscribe for the shares.
Negligent Misrep False statement made by representor without due care. He Rescission (or
(Representor must had belief that it was true. (Same as Tort of Negligence) damages in
disprove lieu) +
negligence) S2(1) – Representor who makes a false statement without Damages
fraudulent intent liable unless he can prove he has
reasonable grounds to believe the statement to be true at
the time of making the statement up to time of contract.
Howard Marine & Dredging Co Ltd v A Ogden & Sons

(Excavations) Ltd (1978)
Held: The representor was still liable as a reasonable person
would have checked the shipping documents and not relied
on the Loyds Register for barges capacity. Negligent
misrepresentation pursuant to s 2 MA is statute based and
arises in the context of a contract.
Innocent Misrep Redgrave V Hurd Rescission (or

(Reliant on expert Held: Made in the absence of fraud and fault. He honestly damages in
opinion) believed and had reasonable grounds to believe in its truth. lieu) +
Indemnity
-No rescission if you affirm the contract (carry on)

-Damages in lieu of rescission only possible if parties have right to rescind.(withdraw). Once dmg in
lieu awarded cannot withdraw, it not double benefit for victim.
-If not possible to rescind/both has no rights to rescind: Cannot award dmg in lieu/ rescission. Since
there is no rescission to talk about, do not talk about lieu.
*If t sla t to a ds of getti g out of the o t a t ost likey is is ep.
Remedies for Misrepresentation
1.Rescission (Void Ab Initio- Treat as if contract has never existed)

-Representee can elect to terminate the contract due to misrep, contract voidable
-Restitutio In Integrum(Must be possible to restore both parties to original position)
-Representee must give reasonable notice of rescission to the other party, contract become Void Ab
Initio.
-Rescission is final and contract cannot be revived.
-Even if false statement becomes a term of contract, rescission is still possible. (S1 Misrep Act)
Bars to Rescission
-Contract is affirmed expressly/impliedly by the representee (wants to cont). Representee must state
this in clear and unequivocal terms. Representee will not be bound by qualified/conditional decision
to rescind. (ask representor to reconsider his position before the representee will affirm the
contract= lose rights)

lOMoARcPSD|4880004
-Reasonable amount of time lapsed since discovery of misrepresentation.

Leaf v International Galleries (1950)
- Parties cannot be restored to their original position before the contract (restitutio in integrum
impossible)
-Court exercises its discretion pursuant to s 2(2) Misrepresentation Act to award damages in lieu of
rescission (If it is equitable not to grant innocent party the right of rescission)
2.Damages
-Monetary compensation for all losses caused by misrepresentation as long as it is not too remote.
Common law allows damages for fraudulent misrep.
S2(1)- Misrep Act allow damages award for negligent misrep
S2(2)- Misrep Act allow damages in lieu for both negligent and innocent misrep
3. Indemnity
Compensating loss arising out of obligations necessarily (was it necessary to and must to have this
obligation?) created by contract induced by misrep
An obligation whereby one person (the indemnifier) is held responsible for the liability or loss of
another person (the indemnifiee). It helps to restore the injured party to hi s status quo ante (the
position he was in beforehand) Used when damages is not an available remedy.
EC fails on UCTA
S3 (Misrep Act)- EC which attempts to exclude or restrict liability arising from a misrepresentation
will not be enforceable unless it meets the reasonableness test expressed in s 11(1) UCTA.
Held: A non-reliance clause which prevents the representee from establishing reliance on the
ep ese tatio a e effe ti e to e lude the ep ese to s lia ilit fo is ep.
Mistake- Parties make mistake in contracting (Void Contract)

At common law, contract become void ab initio. In equity, mistake does no neces sarily render a
contract ab initio. Equitable remedies (Injunction/SP etc) may be ordered to correct the mistake
while allowing contract to remain on foot.
Common Both parties to the contract make the same fundamental mistake of fact
Couturier v Hastie (1852)
Held: Both parties unaware that the corn for which they contracted had perished.
Mutual Parties misunderstand each other and are at cross purposes (A sells BMW, B thought A
Mistakes selling Jaguar, A thought B was aware of the BMW sale) – Lack coincidence
Wellmix Organics (International) Pte Ltd v Lau Yu Man (2006)
Unilateral Only one party is mistaken, the other party knows or ought to have known the first
Mistake pa t s istake. Based o hat a easo a le pe so ould ha e k o i si ila
circumstances
Ho Seng Lee Construction Pte Ltd v Nian Chuan Construction Pte Ltd (2001)
Non Est Arises when a person signs a document that is fundamentally different in character
Factum(it from that which he contemplated -Lee Siew Chun v Sourgrapes Packaging Products Pte
is not my Ltd (1993)
deed)
To avoid contract on this basis, plaintiff must show
-The document signed is radically different or totally different in character or substance
from that which he intended to sign

lOMoARcPSD|4880004
-Had not been careless in signing the document

-He took such care as a person in his position ought to have taken (subjective test
considering any disabilities he could have suffered)
Other Vitiating Factors

Forced to enter into contract under the constraint of threat or actual injury may
be held to be void or voidable
Economic Duress – otio of i e ualit of a gai i g po e efe s to u la ful
or illegitimate commercial pressure. If a party to a commercial transaction is left
with no choice but to agree to certain terms and agrees to those terms under
protest such economic duress may be made out.
Atlas Express v Kafco (1989)
Held: Plai tiff s lai ould ot e e fo ea le as te as o l o tai ed as
defendant was by that stage in a difficult position of not being able to find an
alternative
Duress
The party must have objected in the first place (protest) and take steps ASAP to
avoid changes to contract. If not, they would lose their rights as in North Ocean
Shipping Co Ltd v Hyundai Construction Co Ltd (1979)
Criteria for economic duress

-Did defendant protest?
-At time of coercion, defendant got any other alternatives open to him?
-Was the defendant independently advised
-After entering the contract, did defendant took steps to avoid
*Commercial pressure not economic duress unless amounted to coercion of
o plai a t s ill.
Co t a t a ot e e te ed i to s o f ee ill, seeks to p e e t
victimization. Inche Noriah v Shaik Allie Bin Omar (1929)- Undue influence is
presumed in some relationships like solicitors and clients, doctors and patient.
Brother/Sisters, Husband/wife not presumed MUST BE PROVED. The party who

wants raise complaint must show:
-Other person had the capacity to influence the complainant
-Influence was exercised
-Exercise was undue
-Its exercise brought about the transaction
Undue If presumed, presumed party has the burden of proving that there is no undue
Influence influence. If presumption absent, alleging party has the burden to prove it based
on:
-Nature of relationship
-Pa t s u de sta di g of the t a sa tio depe di g o the edu atio a d
medical background
-Party relying on the other suffer manifest disadvantage
-Alleged has obtained benefit?
-Party received independent legal advice which made it clear to him the eff ect of
what he was doing

lOMoARcPSD|4880004
Suggests that any agreement which is manifestly inequitable and constitutes an

unconscionable bargain should be set aside (e.g. Making a contract with
Unconscionable disadvantaged party- old woman)
Bargain Lim Geok Hian v Lim Guan Chin (1994)
the concept of inequality of bargaining power is insufficient in itself and in the
absence of unconscionable conduct, to justify the setting aside of a contract.

lOMoARcPSD|4880004
Chapter 7: Contract Discharge (pg 179 – 204)

Termination of a contact and parties are relieved of their obligations under contract.
4 main ways: Performance, breach, agreement and frustration
Performance (For party that breach the contract to claim)
General Rule for Precise Performance: Parties must perform their obligations fully and precisely.
Cutter v Powell (1795)
Held: Payment was conditional upon the completion of the voyage; even part payment may not be
made.
Re Moore & Co and Landauer & Co (1921)

Held: Buyer was lawfully entitled to reject the shipment on the basis of less than full and precise
performance.
To soften the rule and prevent unfairness. (State all more emphasis on relevant ones)
1.De Minimis Deviation in performance is microscopic (insignificant- a matter of
Rule judg e t a d e aluated ased o ea h ase s fa t , o t a t o side ed
(No Breach) to have been performed fully and precisely- NO BREACH!
Arcos Ltd v E A Ronaasen & Son (1933)
Held: Although the staves were of merchantable quality and could be
used to manufacture cement barrels, the contract was breached
because the staves did not correspond to the description of the goods.
If written contract specifies contract specifies conditions of the
measurement and the like, conditions must be compiled.
Exceptions to Precise Performance Rule
2.Divisible Contract may in certain circumstance be viewed as several separate

Contracts i depe de t o ligatio s th ough pa ties i te tio .These may be
(Breach) deemed as severable sub-contracts. e.g. Employment Contracts
Cutter v Powell (1795)
Held: The employment contract was needed to be completed in full
before payment. (Unfair outcome can be avoided).
*Contract that expressly says lump sum would not apply here.
Boone v Eyre (1779)

According to the principle in the case, where a promisor has
substantially performed his obligations under a contract, he can:
-Cost of Cure: Claim agreed payment but defendant will claim the
amount necessary to make good the defect, so in all not full payment
rendered)
-Difference in Value: Full – difference in value which the other party
3.Substantial would have gained had the contract been performed, putting the
Performance innocent party to position if contract was performed
(Breach)
Prove 2 Criteria
Intention of Parties to make payment upon substantial performance
1. The contact is an entire contract (X divisible) and payment is made
conditional upon the performance of the entire contact, then the
promisor may not be able to invoke substantial performance to claim
payment. Doctrine of substantial performance should be applied only if
it is easily rectifiable.
Bolton v Mahadeva (1972)
Held: The court of appeal refused to grant Bolton compensation on a

lOMoARcPSD|4880004
quantum meruit basis because it held that the use of the word lump
sum suggested that the contract was an entire one.(Criteria 1) and
nature and amount of defects were such that contract could not have
been said to be substantially performed (Criteria 2). Since no substantial
performance, Bolton received nothing.
Exceptions to Precise Performance Rule
3.Substantial Hoenig v Isaacs (1952)

Performance The Official Referee held that this was not an entire contact. Further
(Breach) there was substantial performance although there were some defects.
Hoenig was entitled to receive the amount less the cost of rectifying the
-Applicable to defects.
each divisible
obligation Whether substantial performance was performed by the other party
2. There is always a practical problem of determining what exacts to
-Apply to su sta tial pe fo a e . The deg ee of o pletio e ui ed ould
contract as a again depend on the facts of the case. (e.g. Use wrong material for
whole playground and have to consider destroying current one and rebuild. X
substantial/costly)
*Make Assumptions
4.Prevented When a promisor has performed part of his obligations but is prevented
Performance by the other party from performing the rest of his obligations, the
(Quantum contract may be treated as discharged on the basis of prevented
Meruit) performance.
Promisor may claim payment to commensurate with the obligations
performed on the basis of quantum meruit.
Planche v Colburn (1831)
Held: Party was entitled to reasonable remuneration based on quantum
e uit e ause the o t a t as dis ha ged othe pa t s a tio i
abandoning the project.
When promisee voluntarily accepts the partial performance of the

5.Acceptance
promisor –the promisor is entitled to pay the promisee the reasonable
of Partial
remuneration under the law of restitution.
Performance
-Usually for structures on your land
(Quantum
Promisee may claim dmg from promisor for not completing
Meruit)
Sumpter v Hedges (1898)
Held:The court did not allo Su pte s lai e ause Hedges did ot
have a clear choice of accepting it. It was on his land, so he had to
accept it. If the facts of the case were different, then Sumpter may have
succeeded.
*Quantum Meruit: Payment based on value provided to other party so far before contract was
discharged.

lOMoARcPSD|4880004
Breach
Actual Breach Time of performance has arrived and promisor fails to perform
Anticipatory Breach Time of performance has not arrived but promisor by words/conduct has
clearly expressed intentioned not to perform obligation.
*Innocent party must communicate if he accept repudiation/discharge or
affirm the contract.
Non-Repudiatory Breach (only warrant) can claim for damages if contract is not discharged
Repudiatory Breach can choose to affirm and claim for damages or discharge and claim for damages
RDC Concrete vs Sato Kogyo (2007)

Innocent party can discharge contract if any one of the following factor satisfied:
1.Contract clearly states can terminate for the particular breach
2.Party in breach renounces the contract (conveys to innocent party that he will not perform his
contractual obligations at all)
3.Party in breach has breached a condition of the contract
4.Consequences of the breach are such as to deprive the innocent party 0f substantially the whole
benefit which it was intended that innocent party should obtain from the contract ( e.g.
warranty/innominate term)
Sports Connection (2009)
Clause expressly stated to be a warranty and clearly and unambiguously also states that a breach of
it would never entitle innocent party to terminate the contract, contract is not terminated.
Failure to Perform 1.Breach of Condition (condition in a contract is breach)

(Actual Behn v Burnes (1863)
Repudiatory)
2. Fundamental Breach (goes to root of contract, warranty has serious
o se ue es…
-Consequences of the breach is serious, it deprives a party of substantially
the whole benefit which it was intended the contract should confer.
Hong First Shipping Co Ltd v Kawasake Kaisen Kaisha Ltd
-Performance of obligations outside time limits specified in contract (Time is

of Essence)
Tate & Another v Sihan Sadikan (1992)
Held: The failure to produce and pass title on time was fundamental and
went to the root of the contract. Plaintiffs entitled to recover thei r payment.
Mizuho Corporate Bank Limited v Woori Bank (2004)

Held: There is no evidence to show either form of breach.Parties have not
expressly agreed that the clause was a condition, neither can it be said that it
must be so by necessary implication. Court also fail to see how the breach of
the … lause goes to oot of o t a t o dep i ed the defe da ts of
substantially the whole benefit which it was the intention of the parties as
expressed in the contract that he should obtain as the consideration for
reimbursing the plaintiffs

lOMoARcPSD|4880004
Renunciation Intimation by words or conduct of a clear intention not to perform/ go on

(Anticipatory with the contract.
Repudiatory) Hochster v De La Tour (1853)
Held: De La Tou s lette o stituted a epudiato ea h e titling Hochster
to sue prior to the contracted date and claim damages.
Renunciation/repudiatory breach must be clear

Actual/anitipatory, repudiation must be unequivocal (clear).
A ho est isapp ehe sio as to o e s o ligatio s u de a o ta t hi h
leads to non-performance would not amount to repudiation if there is
u de l i g illi g ess to o e t o e s u de sta di g a d fulfil those
obligations.
Mersey Steel and Iron Co v Naylor Benson & Co (1884)
Held: There was 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)

Held: Mere non-payment of an installment or breach of one term does not
e essa il put a e d to a o t a t. The defe da t s pu po ted epudiatio
was wrongful.
Whether part renunciating has acted in such a way as to lead a reasonable

perdon to conclude he does not intent to fulfil his part of the contract.
By Products Traders Pte Ltd & Another v JAK Alhadad & Co Pte Ltd (2004)
Held: Plai tiff s o du t as ot a ti ipato epudiato ea h e ause
plaintiff has made It clear they still intended to make purchase if JAK prove
that it was in a position to sell.
EFFECTS OF ANTICIPATED REPUDIATORY BREACH

-Contract not automatically discharged, the innocent party is granted with a right of election as to
whether to accept the repudiation or affirm the contract.
Arokiasamy Joseph Clement Louis v Singapore Airlines Ltd (2004)

Held: Although plaintiff was deemed to have repudiated the employment contract, the contract was
not discharged automatically.SIA had elect to accept his repudiation and had thereafter effectively
communicated their acceptance to him by sending a termination letter to his last known postal
address.
1.Accept Contract is discharged and he entitled to claim damages to put him into the
Repudiation position as if the contract has been performed properly – Hong Fok Realty
Pte Ltd v Bima Investment Pte Ltd (1993)
Discharge only releases parties from obligations under contract that have not
been performed yet. (E.g. Obligations that already arisen before discharge-
Payment to supplier after delivery remain unaffected)
2.Affirm Contract Status Quo Ante is preserved, future obligations remain. Contract remains on
foot and both parties must continue to fulfil their obligations and complete
the contract. Innocent party still retains the right to claim damages for the
breach.
In affirming under anticipatory breach, two points should be noted:

lOMoARcPSD|4880004
1) Innocent party places himself at risk that a supervening event may occur,
discharging the contract by frustration. Defaulting party may be relieved of
his liability because the frustrating event discharges the contract, wiping the
slate clean
Avery v Bowen (1855)
Held: Bo de s lia ilit fo the a ti ipato epudiatio as elie ed a
which frustrated the contract.
2) The right to affirm is not unfettered (unrestrained). In the absence of

legitimate reasons, the innocent party must accept the anticipatory breach,
treat the contract as discharged and claim damages.
Legitimate: White & Carter V McGregor (1962)
Held: Advertising ontractors were entitled to full contract um despite
affirming the contract and increasing their costs. Because they had legitimate
financial/reputation interest and did not need cooperation of other party to
carry out contract May affirm contract as no cooperation needed, got
legitimate interest and should mitigate loss.
Not Legitimate: Clea Shippi g Corporatio Bulk Oil I ter atio al. The
Alaska Trader
Rationale: If damages would be a sufficient compensation. He should not be
permitted to perpetuate contract which result in even greater detriment to
the defaulting party.
Existing A term (foreseeable and included) that it would be discharged upon

Agreement occurrence of stipulated event or at expiration of a certain period.
Certain statutory provisions might modify the right of parties to discharge a
contract by agreement
The Employment Act: minimum periods of notice required to be given by
employers to certain classes of employees in cases of termination of
employment
Subsequent Agreement
Contract may be discharged by the parties entering into a fresh agreement seeking to extinguish the
earlier contract
-After contract formed
-Need 4 ELEMENTS to support the termination of agreement
Mutual When the contract is partially or entire executory, the parties may execute a mutual
Discharge release which discharges each party from all their obligations under that contract.
Li Hwee Building Construction Pte Ltd v Advanced Construction & Engineering Pte
Ltd (2002)
Unilateral When one party who had performed all his obligations seeks to discharge the other
Release party who has not performed all his obligations, then the first party may execute a
release in the form of a deed, so that no consideration is required.
Accord and When one party purchases his release with fresh valuable consideration provided to
Satisfaction the other party, the understanding to do so is the accord and the consideration

lOMoARcPSD|4880004
provided is the satisfaction. This discharges the earlier contract.
Variation Where the contract is altered by a subsequent agreement, supported by fresh

consideration. Depending on the case, the contract may be discharged entirely or
amended by the subsequent agreement.
Waiver Where one party, at or without the request of the other party voluntarily grant the
(Express/Im other party an indulgence not to perform an obligation under a contract without
plied, consideration passing, the first party has been given a waiver.
contract still
existent) Usually given in respect of specific modes of performance but not usually in respect
of the whole contract. i.e. an employee consistently late. Employer can prevent by
i ludi g the lause o ai e u less i iti g i the e plo e t o t a t.
Leivest International Pte Ltd v Top Ten Entertainment Pte Ltd (2006)
Held that when Top Ten failed to pay the costs and interest on time, Leivest could
have terminated the lease; but Leivest demanded & accepted delayed payment
which implied waiver of breaches.
Frustration
The situation where a supervening event occurs, for neither party is responsible, with the result that
the very basis of the contract is destroyed so that the venture to which the parties now find
themselves committed is radically different from that originally contemplated.
Supervening event + Not parties fault + Radical change in circumstances = Frustration
After making the contract but before completion of the contract which makes the contract either
illegal (wartime prohibition) or impossible to perform (Destruction of subj matter. Inability to provide
service due to death or incapacity) or radically different from what was originally envisaged (purpose
of both parties understood to be the basis if contract is no longer attainable) Established Parties
will be executed from performing their obligation.
Destruction of Subject matter of the contract was destroyed due to no fault of the parties
Subject Matter Taylor v Caldwell (1863)
Held: The hall was destroyed and the court held that the contract was discharged
by frustration.
Non- An event whose occurrence forms the underlying basis of the contract is cancelled
Occurrence of or postponed due to no fault of the parties.
Event The 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
such that if the event did not take place, the parties would not have contemplated
entering into the contract in the first place.
Krell v Henry (1903)
Held: the purpose for which the flat was rented was vanished and contract was
thus frustrated
Herne Bay Steamboat v Hutton (1903)

Held: The contract was not frustrated as a tour of the fleet was still possible
although the naval review was cancelled.
Government In the form of an unexpected government action or ruling which prevents the

lOMoARcPSD|4880004
Interference performance of a contract.

Metropolitan Water Board v Dick, Kerr & Co. (1918)
Held: Contract was frustrated as the works was halted by the Minister of
Munitions, acting under statutory powers
Oakwell Engineering Ltd v Energy Power Systems Ltd (2003)

Held: Contract was not frustrated as the defendants had already assumed a risk
under the agreement (Risk that payable tariffs will be reduced by government)
Lim Kim Som v Sheriffa Taibah bte Abdul Rahman (1994)

Held:Contract was frustrated as Government issued an order for the compulsory
acquisition of the property under the Land Acquisition Act, this enables the
government to acquire the property for public purposes
Shenyin Wangou-APS Management Pte Ltd & Another v Commerzbank (South

East Asia) Ltd (2001)
Held: Contract had been frustrated by the act of the Malaysian Government which
implement capital control measures
Change of Davis Contractors V Farenam

Circumstances Mere facts of unforeseen circumstances that delayed performance and making it
more onerous did not mean contract was frustrated. Must be radical change of
circumstance (E.g. Seuz Canal closed during war affects the ship not just the cost)
Personal A contract for personal services may be frustrated by personal incapacity if the
Incapacity incapacity affects the performance of the contract in a fundamental way.
Possard v Spiers v Pond (1876)
Held: Contract was frustrated because party had fallen ill and unable to perform.
Frustration can also discharge a contract for personal service if the service provider
dies. NOT FOR CONTRACT OF SERVICES
Lau Lay Hong v Hexapillar Pte Ltd (1993)

Held: Personal incapacity which affects the performance of such a contract in a
fundamental way will frustrate the contract (must be that particular person to
perform), the death of a part to a contract does not affect the enforceability of
contract.
Factors Limiting Frustration- Where frustration is unlikely to apply
Foreseeability The more foreseeable the event the more unlikely the event will be held to
frustrate a contract. Since we assume both parties impliedly agreed and provided
for such situations. However, mere foreseeability of the event is no bar to
frustration.
Housing & Development Board V Microform Precision Industries Pte Ltd (2003)
Held: The defe da ts a gu e ts e e dis issed a d that the o t a t as ot
frustrated as they had been aware of the problem for a long time.
Force Majeure -Expressly provide for the occurrence of events such as war or natural disasters
Clause (FCM) which will normally fall within the class of events which lead to frustration.
Attempts to
cover events -The effect of such a clause depends greatly on its construction.
and protect the
m from effects -If clause is constructed as a complete provision fully governing the situation which

lOMoARcPSD|4880004
of frustration has arisen, then it will be effective to prevent frustration from arising
-There will be no breach of contract despite its non-performance (if covered by

FMC) and FMC determines how outstanding obligations are resolved upon
happening of a foreseeable event.
-Parties must take all reasonable steps to avoid its operations/mitigate losses.
China Resources (S) Pte Ltd v Magenta Resources (s) Pte Ltd (1997)
Held:FMC applied a d that the USSR e ass lette as the e t est thi g a d
therefore adequate evidence of the force majeure. If an FMC turns out to be an
exemption clause, then it would be subjected under the UCTA.
Self-Induced If frustrating event is the result of voluntary action of one of the parties, then there
Frustration is no frustration.
Maritime National Fish v Ocean Trawlers (1935)
Held: The privy council held that the unavailability of a license was due to the
allocative decision of Maritime National.
EFFECTS OF FRUSTRATION (Excludes

-Frustration automatically discharges a contract.
-Unlike repudiation which must be accepted before it can discharge the contract, frustration is
effective immediately and requires no communication or advice from one party to the other.
-Contract is terminated not ab initio but only as for the future
- All outstanding obligations are no longer required to be performed – Fibrosa Spolka Akcyjna v
Fairbairn Lawson Combe Barbour Ltd (1943)
Overall effect of the common law and the statutory provisions can be summarised as follows:
All future obligations of the parties cease
S2(2): money paid prior to time of discharge is recoverable, money payable ceases to be payable,
expenses incurred prior to time of discharge can be recovered.
S2(3): benefits conferred (other than money) prior to time of discharge can be compensated with an
amount the court considers just
S3(5): the provisions of the legislation apply to all contracts other than contract of carriage of good by
sea, charter parties, insurance, S7 of SOGA, perished goods

lOMoARcPSD|4880004
Chapter 8: Contract Remedies (pg 205 – 235)

Damages
General Rule: Damages are intended to place the plaintiff as far as money can do it, in the same
position he would be in if the contract had been performed properly.
To compensate and not to punish.
Anything more becomes punitive damages.
If no losses, only nominal damages are payable:
-Rights of injured party to claim and he must prove loss. (Difficult of assessment of damages is no
bar to recovery)
-Injured party should mitigate and not expand loss
Four aspects of damages: Causation, remoteness, mitigation and assessment
Recovery of damages apply for all (Both the causation and Probability)
Causation In But fo Test : But fo s ea h of o t a t, ould ha e suffe ed the loss?

Fact ould ot ha e suffe ed the lost ut fo s ea h Loss ust e aused
the breach.
Monarch SS Co v Karlshamns Oljefabriker (A/B) (1949)

Held: HOL that the effe ti e ause of the dela as the essel s
u sea o thi ess a d he e it as the appella t s fault. The p ohi itio the
British authorities was not the cause of the delay. (BUT-FOR TEST PASS)
Must use the
ph ase ut-for Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd &
the ea h Another (2005)
Held: SGCAAHI had only to show that it had a substantial chance rather than a
speculative one to secure the acquisition stake. Since it failed to obtain finances
to acquire the stake, the chance to acquire the hotel was unlikely and not
substantial. It was not because of the breach! (BUT-FOR TEST FAIL)
E.g If the loss is not due to the breach of the other party  Fail No Causation
If A never do this, B would not have suffered, so A caused B to suffer this loss.
Causation In For damages to be recoverable, damages must be proximate and not remote.
Law: Remoteness determines if losses claimed by plaintiff as a result of the breach is
Remoteness considered to be too remote.
The concept of remoteness prevents a limitless scenario. The law considers the
loss, although caused by or a consequence of the breach, to be beyond the scope
of compensation.
Hadley v Baxendale (1854) – 2 Limbs damages can recover for
Facts:A case of unusual loss as it was unusual for mill not to have spare crank
shaft. Ba e dale did t k o that Hadle had o spa e a k shaft esulti g i
loss of profit
Held: Not imputed/actual knowledge, therefore not liable for the loss of profit.
Loss is too remote
Must prove 1st Limb (Normal loss, Imputed knowledge): Such damage as may fairly or
imputed/actual reasonably be considered arising naturally, i.e. According to the usual course of
knowledge things from the breach itself. Presumed that defendant know his breach will lead
to consequences, usually rational/industry/trade would know that under
To protect natural/normal biz, these losses can be expected -Koufos v C Czarnikow Ltd (The
defendant that Heron II)(1969)

lOMoARcPSD|4880004
he is only liable
for damages he 2nd Limb (Abnormal loss, Actual Knowledge): Such damages as may reasonably
has be supposed to have been in contemplation of both parties at the time they made
imputed/actual the contract – Victoria Laundry (Windsor) Ltd v Newman Industries Ltd (1949)
knowledge
(reasonably 4 things when applying Hadley v Baxendale:
contemplated) -Usual Course of Things
-Imputed and actual knowledge
-Probability of occurrence
-Knowledge of nature of damage
1. Usual Course of Things

K o ledge of the o di a p a ti es a d e ige ies of the plai tiff s t ade o
usi ess is o side ed to e pa t of the usual ou se of thi gs .
Accordingly, the loss arising from normal business activity will usually fall within in
the first limb.
Koufos C Czar iko Ltd The Hero II
Held: HOL that Koufos must be imputed to know the ordinary practices and
e ige ies of Cza iko s usi ess. Koufos as lia le u de the fi st li of
Hadley v Baxendale.
2. Imputed and Actual Knowledge

Both the 1st limb and 2nd limb imply that the defaulting party has some knowledge
of the likely loss suffered by the plaintiff. This knowledge includes imputed
knowledge (presumed to be known by the parties) and actual knowledge
(knowledge actually possessed by the parties).
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)
Held: In the absence of actual knowledge concerning the Ministry of Supply,
Newman Industries would not be liable for the substantial profits foregone
because of the failure to obtain that contract.
3. Probability of Occurrence and 4. Types of Damages covered below
Defendant must know the likely loss/damage is a serious possibility or a real

danger. If defendant was aware (reasonable contemplation) of probability of such
loss occurring, then he is liable.
Probability of Types of Damages: Defendant only need to know type/kind of damage, need not
Occurrence know exact damage suffered.
Parsons (livestock) Ltd V Uttley Ingham & Co Ltd (1978)
Held: Loss fell within 2nd limb because it was sufficient if the parties could
contemplate the type of damage involved (loss due to pigs being adversely
affected); it was not necessary that the exact nature or amount of damage be
contemplated.

lOMoARcPSD|4880004
Mitigation
Mitigation Plaintiff cannot claim losses which could have been avoided and he is obliged to
take reasonable steps to minimize his losses. Failure to do so and not aggravate
it will prevent plaintiff from claiming any sum when he could reasonable have
Courts tend to avoided.
favor innocent
party 1.No actions taken
Loss irrecoverable (e.g you got fired unfairly and not attempting to find 2 nd job)
British Westinghouse Electric & Manufactory Co v Underground Electric
Railway Co of London (1912) + Chua Keng Mong v Hong Realty Pte Ltd (1994)
Held: The plaintiff ought to minimize the loss. If he fails to do so, the amount he
*Once party would be awarded would be reduced by the amount he would have saved.
elects to accept
breach and not 2.Reasonable actions taken
affirm Mitigated loss recoverable
Reasonable expenses incurred for such actions + Additional unintended loss
during the course of mitigation
Melachrino v Nicholl & Knight (1920)
Held: When a plaintiff who attempts to mitigate suffer even more, he can still
*Plaintiff must recover the additional loss
take all If upon mitigation, you gained more than the benefit you would have derived,
reasonable steps then only nominal damages given.
to minimize the
losses. 3. Unreasonable Actions taken
Additional losses irrecoverable
It is not reasonable to affirm the contract after anticipatory breach which later
incurs additional loss as duty to mitigate DOES NOT happen when you affirm.
White & Carter (Councils) Ltd v McGregor (1962)
Facts: No attempt was made by White to mitigate its loss after affirming the
contract with McGregor. White & Carter than sued McGregor for the full
contract price. House of Lords held that it was entitled to succeed.
Held: Although against principle of mitigating losses, in this case, White & Carter
affirmed because they had legitimate interest. Affirmation is only available in
cases where the plaintiff has some legitimate interest to protect which cannot
be compensated merely through the payment of damages.(Reputation)
Ei-Nets Ltd & Another v Yeo Nai Meng (2004)

Held: The burden of proof is upon the defendant to show that the plaintiff has
failed to take reasonable steps to minimize the loss.
For Anticipatory Breach: If plaintiff chooses to discharge and claim damages,

mitigation rule will apply and he will be required to mitigate his loss. When he
affirms the contract, there must be legitimate interest to protect, so can affirm.
MP-Bilt Pte Ltd v Oey Widarto (1999)
Held: In Singapore, there is no obligation on the plaintiff part to mitigate his loss
before there has been any breach which he has accepted as a breach
*Mitigation needed when actual breach X anticipatory breach (contract not

officially breach)

lOMoARcPSD|4880004
Types of damages:
1.Unliquidated damages: unascertained damages
2.Liquidated damages: pre-estimated damages
3.Nominal damages – minute sum awarded when plaintiff suffer no loss, mainly symbolic (usually $2)
4. General & special damages
- General damages: Recoverable (pain for personal injury)

- Special damages : specifically pleaded and proven, then recoverable (medical costs
incurred/loss of earnings)
Assessment of Damages
Injured party is to be placed in the same financial position he would be in if the co ntract had been
properly performed.
Rule of least benefit to plaintiff: The award of damages is calculated on the benefit which would
accrue to the injured party and not on the cost of performing the obligation by the defaulting party.
Expectation Amount which the injured party would have expected to gain had the contract
Loss (Pecuniary been performed properly
Loss) Anglia Television Ltd v Reed (1970) –
Held: Anglia Television was entitled to recover damages regardless of whether the
Loss of Profit expenditure (reliance loss) was incurred before or after the contract was entered
into with Reed.
Reliance Loss the expenses incurred by the injured party who relying upon the contract,
(Pecuniary prepares to perform his obligations, incurring expenses which are rendered
Loss) wasted because of breach
Wasted
Expenditure
Injured party may claim expectation loss or reliance loss, not both to prevent double-recovery. Or he
may claim both if expectation loss is net figure exclusive of expenses.
Hong Fok Realty Pte Ltd v Bima Investment Pte Ltd (1993)
Held: Can either sue for the bargain, (price between the market value and the property at the date
of breach) or the wasted expenditure provided they are within the contemplation of the parties.
Difficulties in Assessing
The fact that damages are difficult to assess should not prevent the injured party from obtaining
them. Court may take into account probabilities involved and award damages accordingly
Chaplin v Hicks (1911)
Held: Although there was no certainty that Chaplin would be among the 12 chosen for employment,
she would still be allowed the damages awarded by the jury.
Raffles Town Club Pte Ltd v Tan Chin Seng & Others (2005)
-Was the diminution in value of the club membership due to weakened market condition or breach
of contract?
-Causation in fact (but-for): Not solely caused by breach
-Members paid 28k now its work 10.8k at time of breach
-Deptn of 17.2k was caused by both downturn and RTC breach
-Look at other comparable club membership to access the effect of downturn and subtract from
deptn.
Trial judge awarded $1000 in damages to the plaintiff members for loss of amenity, accessibility and
enjoyment but decline to award damages for their pecuniary loss.

lOMoARcPSD|4880004
Despite the difficulties, it must still do its best to assess the loss as RTC had clearly breached its
contractual obligation of providing a premier club to the plaintiffs and to maintain it as such
Court eventually awarded each plaintiff $3000 for the diminution in value of membership.
Pure Economic Loss

Fi a ial loss ot asso iated ith ph si al da ages to a plai tiff s o p ope t flo i g f o
negligent act might be recoverable. (E.g. Drop in property vale w/o damage to person/property.)
RSP Architects Planners & Engineers v Ocean Front Pte Ltd after using 2 stage test held that the pure
economic loss was recoverable for design defects.
Hurt feelings, anxiety, or loss of reputation arising from breach of contract. Courts
are generally reluctant to award damages for non-pecuniary losses.
Haron bin Mundir v Singapore Amateur Athletic Association (1992)
Held: The plaintiff was 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.
Exceptions to Non-Pecuniary Loss

1. Holiday/ Enjoyment Cases
Farley v Skinner (2001)
Held :A substantial or important part of contract(need not be entire contract) was
to give pleasure, relaxation or peace of mind, damages are recoverable if the
contract is breached and mental distress results
Non Pecuniary Jarvis Swan Tours Ltd (1973)

Losses (Non- Held: A contract whose aim is to provide enjoyment or security is breached,
Monetary Loss) damages was awarded with cost comprising of disappointment or distress
2.Once in a Lifetime crisis

Wedding pics of memorable events
3.Physical Discomfort Cases

Bailey v Bullock (1950)
Held: Plaintiff suffers substantial physical inconvenience for trudging in the snow
for miles following train breakdown.
4. Loss of reputation, humiliation

Haron bin Mundir v Singapore Amateur Athletic Association (1992)
Held: Irrecoverable, over the years judges have been more liberal in awarding
such losses.
Liquidated Clause specifies amount of damages to be paid to injured party. Pre-estimated

Damages (LDC) damages which have been agreed upon by the parties.
vs Penalties -Generally, the courts will enforce a liquidated damage clause as long as it is a
genuine pre-estimate of loss.
-If such clause was imposed to cause fear/penalty to the other party, it may not
be enforceable.
-Enforceable even when actual loss >/< since it is a term in the contract

lOMoARcPSD|4880004
*If breach falls within LDC, do not have to prove causation in law/ causation in
fact or mitigation, since LDC has a clause that state in an event that this has
happened, the damages are as follows.
To determine if the clause is genuine pre-estimate of loss/ Penalty

Dunlop Pneumatic Tyres Co Ltd v New Garage & Motor Co Ltd (1915) established
the guidelines for construction of the clause:
-If the liquidated damages are extravagant and unconscionable in comparison
with the greatest conceivable loss, then it is likely to be a penalty
-If a single lump sum is payable on the occurrence of one or more breaches, some
of which are serious and others trifling, then it is likely to be a penalty. Normally
less serious= Lower penalty (e.g withdrawing from tour earlier vs last min)
-> sum payable under contract is usually applicable in obligation to make payment
and not obligation to deliver services. LDC will come into effect when obligation
to make payment has been reached. (e.g failure to pay $100 obligation, have to
pay $1mil)
The des iptio of the lause as a pe alt o li uidated da ages lause is

relevant but not conclusive
Court ruled that LDC is:

Penalty (generally not enforceable)
Ford Motor Co v Armstrong (1915)
Held: Higher than actual loss – LDC not enforceable, can claim only actual loss
Bulsing Ltd v Joo Seng & Co (1972)

Held: Lower than actual loss – Can claim either actual loss or as per LDC
Genuine (Pre-estimate of loss generally enforceable)

Higher than actual loss/ Lower than actual loss  LDC enforceable
LDC prescribed by statute: can only claim amount stipulated in the clause as he is
not allowed to elect to claim damages at common law nor recover more than
stipulated.
Taxation
Teo Sing Keng v Sim Ban Kiat (1994).
Held: The ou t ill dedu t a a ou t ep ese ti g the plai tiff s ta lia ilit as if
contract has been performed and paid. Plaintiff should not recover > actual loss
Interest
Under the contract, or if the court exercises its discretion under paragraph 6 of
the First Schedule, Supreme Court of Judicature Act
Held: Interest will only be awarded if it is a contract provided for payment of
interest, (but not a debt) or parties have impliedly agreed to pay interest.

lOMoARcPSD|4880004
Equitable Remedies (Depends on discretion of judge, may not be ordered)

Specific Performance
-An order of the court requiring the party in breach to perform the contractual obligations
-Contracts to lend $$ will not be enforced by specific performance
Damages are Beswick v Beswick (1967)

inadequate Held: Damages would have to be adequate remedy, specific performance may not
be available.
Subject matter of contract is a thing of intrinsic value so damages may not be

sufficient (unique/rare, company shares, debentures, land which are all
unique/different)
Falcke v Gray (1859)
Held: G a ted sales of goods he e hattels possess spe ial eaut , a it o
i te est . Beaut i the e e of eholde E.g. E uisite fi e a t, eal p ope t
Supervision Not granted if it requires court to supervise the performance of obligations on an

ongoing basis. (E.g. Construction contract)
Mutuality Remedy of specific performance must be in principle available to both parties.

When 1 of them is a minor, SP not available as contract lacks mutuality. (E.g. If
adult cannot get SP against an infant, infant cannot get an order of SP against adult)
Contracts of An order of SP generally would not be granted in contract of personal service

personal (otherwise tantamount to slavery)
service Lumley v Wagner (1852)
Held: Application for SP to get the party to sing at own theatre failed because this is
a contract for personal service.
Injunction
-Court order forcing the other party to the contract to observe a negative covenant (agreement not
to do something/ to revert back to promise not to do something)
-Granted when damages not adequate
Injunction cannot be used indirectly to compel specific performance

General principle is that contracts for personal service such as employment are not enforceab le by
specific performance. It is not feasible nor desirable for a person to be forced to enter into personal
relations with others against his will. Court will enforce negative covenants in contracts for personal
service as long as in doing so, it would not amount to an indirect way of compelling specific
performance.
Warner Brothers Pictures Inc v Nelson (1936)
Held: Cou t efused to g a t i ju tio to e fo e the pa t s egati e o e a t ot to e gage i
any other occupation as this would tantamount to an order specific performance for her to work
with Warner Bros. However court ordered an injunction to stop her from working as an actress for
any other party during contract period
Mareva Injunction
Where plaintiff suspects that defendant intends to dispose of or remove assets from the jurisdiction.
Ma e a i ju tio f eezes defe da t s assets u til ai legal p o eedi gs a e o pleted.

lOMoARcPSD|4880004
Interlocutory Obtained by a party facing a threat of breach of covenant by the other party.
(Temporary) Temporary injunction: Maintain status quo while main legal proceedings are
pursued.
Perpetual Permanent Injunction: Granted after the main legal proceedings have shown that
(Permanent) the plaintiff has a right to injunctive remedy
Prohibitory Preventive in that it seeks to restrain a person from conduct which he has agreed
not to do. (E.g. Preventing you from building the wall you agreed not to build)
Mandatory Restorative: compels action to restore a breach of covenant which has already
occurred (E.g Destroying wall you agreed not to build)
*A mandatory injunction is ordered to enforce a negative covenant which has been breached; specific
performance is ordered to enforce a positive obligation which has not yet been performed
Anton Piller Order
Order authorises plaintiff to inspect, photograph and take into custody documents or property of
another person.
Computerland Corp v Yew Seng Computers Pte Ltd (1991) -3 Basic Conditions
-Must be a prima facie case (On first examination, matter appears to be self-evident)
-Damage, potential or actual, must be very serious for the applicant.
-Clear evidence that defendant have in their possession incriminating documents or things that and
there is a real possibility that defendant may destroy such material.
Limitations of Action against defendant (Time delay to Action)

If plaintiff delays in bringing an action to obtain these remedies, his rights/interests may be
adversely affected. Law provides time limits for parties to seek legal remedies in court
After limitation period, no person can initiate legal proceedings seeking remedies
This is so as legal claim becomes stale after some time:
-Deterioration or destruction of evidence
-Personal recollections become fuzzy
-Unfair for potential defendant to have a perpetual threat of proceedings
Limitation Act
S6: For contractual actions, claim has to be made within 6 years from the date of breach. If contract
is under seal/deed, the actions is barred after 12years from dare of the course of action accrued.
S29: For fraud cases, the 6 years begin to run from the date the plaintiff discovers the breach or
could with reasonable diligence discovers it
Ching Mun Fong v Liu Cho Chit (2001)
Held: It s the plai tiff ea s of as e tai i g the istake a d ot hat the ou t eventually decides
that is relevant
For actions in respect of latent injury or damage, the section postpones the commencement of the
limitation period to the date on which the plaintiff first had knowledge of his rights to bring such a
claim
Chia Kok Leong & Another v Prosperland Pte Ltd
Held: The plaintiff is required to institute the action within three years of such commencement date
Laches (Effluxion of time)

S32: Length of the delay + Whether such delay caused prejudice or injustice

lOMoARcPSD|4880004
In seeking SP and Injunction, if there is an unreasonable delay, then these remedies may not be
granted as it causes unfairness.
Tay Joo Sing v Ku Yu Sang (1994)
High Court ruled in favour of KYS ordering TJS to specifically performing his obligations. On appeal,
Court of Appeal held that order for specific performance should not be made as the legal action was
initiated after 25 monthsCourt also took judicial notice of the fact that in 1987, Singapore was
getting out of a recession and by 1989, the price of property had increased substantially
Quantum Meruit
-Claiming damages on the as much as he has earned
Court ordered compensation on a quantum meruit basis despite the fact that there was no valid
contract- Craven-Ellis v Canons Ltd (1936)
Singapore Court of Appeal held that the respondent could succeed in claiming quantum meruit
based in contract as there included an implied promise to pay commission- Gold Coin Ltd v Tay Kim
Wee (1987)
where contract expressly provides for the agent to be paid only upon happening of a specific event,
payment to him on a quantum merit basis would not normally arise as an implied promise to pay
would then be inconsistent with the express terms of the contract – Grossner Jens v Raffles
Holdings Ltd (2004)
Refund of Money Paid

There must be total failure of consideration
Where money is paid by a plaintiff to a defendant under a contract and the defendant fails
completely to discharge his obligations, the plaintiff has the option of either claiming in contract for
damages for breach or he may elect to terminate the contract on the ground that the defendant has
repudiated it and sue for the refund of the money in quasi contract – Ooi Ching Ching Shirley v Just
Gems Ltd (2003)
Test has ee stated hethe o not the party claiming total failure of consideration has, in fact
e ei ed a pa t of the e efit a gai ed fo u de the o t a t – Rover International Ltd v Canon
Film Sales Ltd (No 3) (1989)
Perspective to take is that of the payor-plaintiff – Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe
Barbour Limited (1943)
If plaintiff obtains something from the contractual agreement, this remedy would not be available to
him although he can still claim for damages from the defendant.

lOMoARcPSD|4880004
Lecture 9- Tort Law
Tort
-Civil wrong with a legally enforceable remedy
-System of rules about how people should/should not have behave towards others
-3 elements must be proved: Duty of Care, Breach of Duty and Resulting damage to Plaintiff
Spandeck Engineering Pte Ltd v Singapore Defence Science Technology Agency

(2007)
(Preliminary):Factual Forseeability
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric (2007)
Held: Defendant ought to know that claimant would suffer damage from the
defe da t s a eless ess.
*Briefly touched as this would almost always be satisfied, , because of its very wide
atu e et it asts
Exception: Man Mohan Singh s/o Jothirambal Singh and another v Zurich Insurance
(Singapore) Pte Ltd
Held: not reasonably foreseeable for the negligent driver to have known that victims
killed would comprise all children of appellants and that this would cause the
appellants to undertake fertility treatment in their desire to conceive additional
children
1st stage: Proximity (Closeness of parties)

Legal proximity focusing on the closeness and directness of the relationship between
Duty of Care the parties.
(Applied in Physical Proximity (space and time): Motorist owes duty of care to drive and
sequence) maintain control of vehicle in a way not to injure other motorists and road users in
immediate vicinity
Circumstantial proximity (relationship between parties): Employer may owe duty of

care to 3rd parties who deal with the employee in course of his employment
Causal proximity (closeness and directness of causal connect or relationship

between particular act or course of conduct and loss or injury sustained):
Donoghue v Stevenson (1932)- Ho di e t is Defe da t s i pa t o Plai tiff s i ju y
Property valuer who issues a valuation report prepared negligently owe duty of care
to a 3rd party whom the valuer knows is likely to rely on that report to make
investment decision
*Once proximity is established, a prima facie duty of care exists
2nd stage: Policy Considerations

-Are there relevant policy considerations which would negate/limit the prima facie
duty of care? Floodgates: Indeterminate liability to an indeterminate class for an
indeterminate amount.
Is there a contractual relationship which regulates rights and obligations of the
parties?
What are the relative bargaining positions of the parties? Are there any broader
public policy issues relevant to the case?

lOMoARcPSD|4880004
Explain and Apply the 1.Level of Skill -Skill required is that of the reasonable
test: man in the shoes of the defendant (Profession.
Defendant is highly likely to meet the standard of care
Blyth v Birmingham expected of him if he follows accepted practice in his
Waterworks (1856) as profession
the omission to do Wells v Cooper (1958)
something which a Held: No breach of duty of care as the defendant has
easo a le a … ould met the standard of care of a reasonably competent
or doing something which amateur carpenter. Professional expertise was not
a prudent and reasonable required of him.
man would not do
2.Likelihood of Injury- Likelihood of injury to the
Standard of care: Level of plaintiff is high court will require a higher standard of
care, which is expected to care upon the defendant.
be exhibited in the Bolton v Stone (1951)
Breach of defe da t s o du t. Held: The HOL  chances of such accidents are too
Duty small for the cricket club to take steps to prevent them.
It follows that if his
conduct does not meet 3.Seriousness of Injury –More serious the likely injury
the standard of care, then higher the standard of care is required of the defendant.
he is said to have Paris v Stepney Borough Council (1951)
breached his duty of care. Held: The failure to provide goggles for the plaintiff was
a breach of duty because the plaintiff had only one good
eye.
4.Cost of Avoiding Risk –Risk of harm is highexpected

to take steps to minimize the risk even if such steps
involve substantial cost.
Latimer v AEC Ltd (1953)
Held: HOL plaintiff failed to prove breach of duty on
the part of the defendant. The management had done
everything possible to remove the effects of the flood.
6.Res Ipsa Loquitur – The event speaks for itself. This

principle states that the breach is so self-evident the fact
the event occurred in it proves the breach
Scott v London & St. Katherine Docks (1865)
Held: 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.
Effect of res ipsa loquitur: Shift burden of proof to the
defendant and that they must show they were not
negligent whereas usually the plaintiff has to prove tha
the defendant is negligent.
-Must have control and management of the thing that
causes injury and the accident would not normally
happen without negligence.

lOMoARcPSD|4880004
Plaintiff: Show that he suffered da aged due to defe da t s ea h
But Fo Test – But fo defe da t s eglige e, ould Plai tiff ha e

suffered injury/damaged?  If no (P ould ot suffe ed fo D s
negligence D caused the injury  got causation)
Barnett v Chelsea & Kensington Hospital
Held: do to s eglige e did ot ause hus a d s death as death
would have taken place anyway. If ot fo the hospital s eglige e,
he would still have died. Therefore, no causation.
Tan Hun Hoe v Harte Denis Mathew (2001)
1.Causation Held: 60% of the injury was attributable to post-operative
negligence so defendant will be liable for 60% of the assessed
damages, not negligible during the operation.
Resulting Novus Actus Interveniens- A new intervening act that breaks the
Damage chain of causation caused by defendant, thus relieving defendant of
(BOTH further liability for the consequences of this act.
FACTOR Lord Wright in The Oropesa (1943)
MUST Held: Must show ultraneous, unwarrantable, a new cause which can
PROVE) be either unreasonable or extraneous or extrinsic.
To limit the scope of damage claimed by defendant.

Reasonable Foreseeability Test – Exact damage suffered not
necessary to be foreseen but sufficient if the type of injury is
reasonable and defendant is liable for the full extent.
Wagon Mound (No1)(1961)
Held: Although defendant was negligent in spilling the oil and would
not have happen but-for his negligence. It was unforeseeable that
the fuel oil would burn in water. Damage was not reasonably
foreseen, thus, plaintiff claim failed.
2.Causation Bradford v Robinson Rentals Ltd (1967)
in Law Held: Plaintiff suffered frostbite from a long drive during very cold
(Remoteness) weather. As the injury from cold weather was foreseeable, damaged
was rewarded. Frostbite is a type of injury that arises from cold
weather; need not know the EXACT damage.
Egg-Shell Skull Rule- defendant could still be liable for the full extent
if the damage suffered by plaintiff is more severe that what could be
reasonably foreseen.
Smith v Leech Brain & Co (1962)
Held: Although it was generally not foreseeable that a burn could
cause cancer and death, Plaintiff existing pre-disposition meant that
the damage was not too remote. Plaintiff physical weakness
exacerbated his injury and defendant has to that.
*Apportionment of liability can be several tortfeasors and judge apportions liability between them to
plaintiff.

lOMoARcPSD|4880004
Resulti g Da age o t….
Enables a defendant to avoid liability by

arguing that the plaintiff has consented to the
risks.(Consenting to participate in dangerous
1.Volenti Non sports)
Fit Injuria Morris v Murray (1991)
(Complete Held: Plai tiff ag eed to defe da t s p oposal
Defence) to take him on a plane even though defendant
was very drunk. It was held that plaintiff had
voluntarily assumed the risk so defendant was
not liable.
S3 (1) Contributory Negligence and Personal

Injuries Act: Partial defence raised in situations
he e the plai tiff s i ju as pa tl
2.Contributory contributed to by his own fault. Court will
Defences Negligence apportion liability between the parties.
(Defendant must raised) (Partial Defendant will be liable for damages due to
Defence) him.
Sayers v Harlow UDC (1958)
Held: Plaintiff contributed to her own injury,
damages were reduced.
S2 (1) UCTA: A clause to exclude liability for

death and personal injury arising out of
negligence is totally invalid.
3. Disclaimer S2 (2) UCTA: In relation to liability for losses
(Exclusion of such as property damage or economic losses, a
Liability) clause would be upheld if it is reasonable.
Effectiveness of EC: Prominent, whether
sufficient notice of disclaimer was made
known.
Common Cases for Duty of Care
. Ma ufa tu e Lia ilit Neigh ou Test

Donoghue v Stevenson (1932)
Fact: No contract with him, therefore cannot sue under contract. Thus, she sued manufacturer for
breach of duty of care.
Held: Who then in law are my neighbors? I ought reasonable to have them in contemplation as
being so affected when I am directing my minds to acts or omissions which are called in question.
Thus, manufacturer deemed to owe a duty of care to consumers.
. B sta de s No Dut to A t
3.No Duty to also prevent 3rd pa t ot ithi defe da t s o t ol f o ausi g loss to plaintiff.
4.Pure Economic Loss claimable
-Ph si al Da age to a plai tiff s pe so o p ope t Pe so al I ju
-Financial Loss not associated with physical damage of plaintiff/property flowing from negligent act
might be recoverable. (Drop in property value without any physical harm to plaintiff or property)
Spanrtan Steel v Martin (1972)
Held: Any economic loss truly consequential on the material damage to property or person can be
recovered
Exceptions: Negligent Misstatements usually result in pure economic loss and is recoverable.

lOMoARcPSD|4880004
Courts generally reluctant to allow compensation so as to prevent floodgates.
1. Factual Foreseeability (To be applied first): Show that defendant ought to know
plaintiff would have suffered damage from his carelessness
2.Phychiatric Condition recognized: Depression? Grief and sorrow not recoverable
3. Primary/Secondary Victim
Pri suffer psychiatric harm as a result of immediate fear of injury to himself
Secsuffer psychiatric harm as a result of witnessing injury to others.
4.To recover damages(Sec)

-Show close tie of love and affection with the Pri victim
-Proximity in time and place to the scene of accident (must have witnessed either
accident/immediate aftermath)
-Means by which shock was caused (must have own sight/hearing of the event or of its
immediate aftermath)
Psychiatric 5. Public Policy Reasons

Harm
Secondary Victim
Pang Koi v Lim Djoe Phing (1993)
Held: Plaintiff claimed for psychiatric illness she now suffered as a result of the trauma
and shock she underwent when she watched her daughter throughout her painful
ordeal to death after an operation negligently performed by the defendant.
M loughli O Bria
Held: Plaintiff suffered severe mental trauma after seeing husband and 3 children in
hospital shortly after a serious car accident. The accident was caused by negligence of
the defendant. Plaintiff can recover damages for her trauma.
Lack of Proximity: link to point 4

Ngiam Kong Seng & Anor v Lim Chiew Hock (2008)
Held: Point 1 not fulfilled as not reasonable foreseeable that communication between
the parties could have caused the psychiatric harm. No legal proximity as means by
which the alleged harm was caused was one for which the law should be slow to
accept (Far-fetched)
Negligent Misstatements
1.Factual Forseeability (to be applied first): Show defendant ought to have known that
the plaintiff would suffer damage from his carelessness
2.Proximity
Advisor possesses special skill/knowledge(capacity)
-Advice given by professional or by person who held himself as having skill/knowledge
Duty Of -If ot i li e of Biz, a still e lia le if it is easo a le fo ad isee to el o ad iso s
Care skills and judgment and advice given
Esso v Mardon (1976)
Held: Defendant is liable even though not in biz of giving advice
Advisor knows/ought to know advisee would rely on advice for purpose for which
advisor intended
Carparo Industries plc v Dickman (1990)

lOMoARcPSD|4880004
Held: The accounts that the defendant prepared were for use in General Meeting of all
shareholders. The duty was owed to shareholders in GM, not to an individual
shareholder for making investment decisions.
3.Policy
-Reasonable for advisee to rely on advice?
-Payment good evidence that advice being relied on and advisor knows it
-Where there is no consideration, it will be necessary to exercise greater care in
distinguishing between social and professional relationships and those of a contractual
character or not – Hedley Bryne & Co Ltd v Heller & Partners (1964)
-Even if advisor knows that advisee ill rely upon his advice but if it is reasonable for the
advisor to believe that advisee will not solely reply upon his advice, advisor will not be
liable- James Mchaughton v Hicks Anderson (1991)
Floodgates: Open to multitude of legal actions against professional advisors, creating

liability in an indeterminate amount for an indeterminate time to an indeterminate
class.
Standard of care: A reasonably competent fellow professional in the same field

Lancphier v Phipos (1838)
Breach of Held: Fair, reasonable and competent degree of skill
Duty Cook Fal o er s Represe tati e
Held: An act of gross negligence could not have been committed by any other ordiarily
informed member of the profession.
JSI Shipping (S) Pte Ltd v Teofoongwonglcloong(2007)

Breach of Held: Conduct of auditor is examined in the light of the facts reasonable known and
Duty E.g. measures which could have reasonably been adopted by auditor at material time.
Audito s dut i luded o ligatio to e if a d to e se siti e to possi ilit of f aud. I
the case of doubt, the audit report should have been qualified.
Causation (But-For): Reliance on advice, but-for this advice, there would not be
financial loss
Resulting Remoteness: Reasonable for advisee to rely on advice, foreseeable upon relying on
Damage advice, he would have made losses
To minimize claims:
1. Ensure highest order of standard of professional practice is adopted
-Follow standards set by professional bodies or leading practitioners in that field
If not followedClear breach of duty of care
Defences If followed  can be breach of duty of care if individual cases required higher standard
2.Disclaimer used (Comply with reasonableness test under UCTA)

3.Purchase Professional Indemnity Insurance
*Contract and Tortious duties can run together (E.g. Auditor sued for breach of contract and
negligence, no double compensation). People usually claim in tort when there is no contract
between them.
Negligent Misstatement (Hedley Bryne) Negligent Misrepresentation

-Requires special relationship -No special Relationship required
-No contract required -Must induce a contract
Remedy: Damages -Remedy: Damages/Rescission

lOMoARcPSD|4880004
Similar to Trade Mark Act: If a mark is not capable of registration under the act or
there has been no registration, then the only avenue is tort of passing off.
Reckitt & Coleman Products v Borden Inc (1990)- Meeting 3 conditions
1.Goodwill or reputation attached to biz must be establish (Customer trust and
loyalty)
2.Misrepresentation by defendant Goods/Svcs offered are the same as those
offered by plaintiff (Same Logo, Pronunciation, Goods, Types)
3. Plaintiff must suffer/likely to suffer loss
Tort of CDL Hotels International Ltd v Pontiac Marina Pte Ltd (1998)
Passing Off Held: Goodwill established and damages awarded.
White Hudson & Co Ltd v Asian Organization Ltd(1964)
Held: Although names were different, the circumstance id result in the tort of
passing off.
Lifestyle 199 Pte Ltd v $1.99 Ltd (2000)
Held: Claim failed as title was descriptive of products
*If passing off with registered trademark 2 cases, copyright infringement and
passing off
Remedy: Injunction/damages/account for profits
Non-Permanent Form/Oral (Slander) or Permanent Form/Written (Libel)

3 elements to meet:
1.Demafory: Lowers plaintiff reputation in minds of right thinking member of society
(not 3rd party, if super absurd and unbelievable than might not be defamatory)
Defamation 2.False Statement
3.Publication: Communicated to someone other than plaintiff
Defences: Fair comment/ Privileges to excuses publication of defamatory matter (E.g.

Parliamentary or judicial proceedings)
Defendant knowingly and intentionally induces 3rd party to breach his contract with
plaintiff.
Satisfy 3 elements:
Inducing 1.Defendant have knowledge of existence of contract
Breach of 2.Defendant acted with intention of procuring a breach of contract
Contract 3.Actual Breach of Contract
*Sue defendant for inducing breach with tort but sue party who breached with
contract law
1 person made answerable for the action of another, 2 conditions:
1.Employee must be legally at fault: Establish tort of negligence first
2.Action give rise to legal liability in the course of his employment: Scope of
authority/conditions of employment. IT does not matter if actions are undertaken
Tort of intentionally, negligently, recklessly, fraudulently or they are against the express
Vicarious order of the employer.
Liability Koh Get Kee v Low Beng Hwee (1987)
Held: Employers liable as act was done in course of employment.
Samin v Government of Malaysia (1976)

Held:Employers not vicariously liable as act was not done in course of employment.

lOMoARcPSD|4880004
Employers held vicariously liable:

1.Institute action against his employee to get indemnity/reimbursement
2.Terminate contract of employment depending on circumstances
-Intention of parties
-Integration within business (Work done as part of business)
-Financial Risk (Work for wages, does not participate in profits/run risk of loss)
*Generally, 3rd party(Independent Contractor) will not make hirer vicariously liable
even the actions was done in the course of his work because there will not be any
control

lOMoARcPSD|4880004
Lecture 10 Agency
Agent: Authority conferred to him by principal to establish legal relations with a 3 rd party on
p i ipal s effe t.
Creation of Agency in 4 ways: Agreement (Express/Implied Authority), Ostensible Authority,
Ratification and Operations of Law
General Rule: Not liable if agent acts within scope of authority given to him by
Liability of principal
Agent -Liability falls upon agent only if he acts outside scope of authority given to him by
principal
Employees (Servant): Person employed by & under control of employer

-engaged under contract of service
Employees -authorised to enter into legal relationship with 3rd parties on behalf of principal
& -high degree of supervision & control
Contractors Independent Contractor:
-Engaged under contract for service free to choose how to perform work
-authorised to enter legal relationship with 3rd parties and the contractor himself is
principal
1.Power of Attorney :Deed(Doc) where donor authorize done to act on his behalf (E.g.
Bank A/C Mgt, settling transactions)
2.General Agent: Authorised in all matters relating to a specific trade or business
Types of 3.Special Agent: Authorised to perform task outside scope of general agent
Agency 4.Commission Agent: Agents working for a commission
5. Del Credere Agents: Commission agents that further guarantees payment to 3rd
party, higher commission awarded for addition risk taken
1. Express Authority: Rights and obligations expressly specified

-Depends on actual terms of appointment and a proper construction of words used
P i ipal i e p essi g s ope of Age t s autho it
2. Implied Authority: Make agent think he has authority

-Authority to act within reasonable customs & usage of trade or progression
1.Actual (industry practice)
Authority -Act reasonable incidental (casual) or expressly authorised or necessary for
effective execution of the duties expressly entrusted to agent (Put Ads to sell flat)
Main Focus: *Only applicable when there is no expressed prohibitions/contradictions with
Agent w.r.t. expressed authority
Principal Binding Effects of Authorised Acts: Principal refused to be part of the contract
-If P is disclosed at time of contract, P would be bound A s autho ised
Acts(Principal and 3rd party has binding contract)
-If P is undisclosed at the time of contract, 3rd party will be entitled to elect to sue P
o A o the o t a t, upo dis o e i g P s e iste e Does ot atte if P is a ed
or not, as long as 3rd party knows that there is someone behind the
agent=disclosed)
Undisclosed P will be able to enforce contract against 3rd party except:

-Terms of contract expressly stated A is contracting as the real and only P
-Personality of Agent is important to 3rd party

lOMoARcPSD|4880004
Rule: P is ot ou d A s u autho ized A ts

-P s o du t o o d held out to rd party that A appear to have authority to act,
then if 3rd party enter into contract with A, relying on that appearance, P estopped
from denying existence of A (As if P is disclosed already)
-3rd party must not know that A has lack of authority (No actual knowledge)
S5 Partnership Act: Each partner is an agent of partnership and other partners

has appa e t autho it to a fi s usi ess i the usual a a d his a ts ill e
binding on firm and other partners.
3 conditions to fulfilled to established apparent authority:

1.Representation must be made to 3rd party by principal/person who has authority
that agent has authority when in fact A has no authority
-can be expressed/implied
2.Reliance: 3rd party relied on the representation to enter contract with principal
-3rd party must know that agent has lack of authority
3. P has capacity to contract and 3rd party suffer loss

2. Ostensible
Authority Freeman & Lockyer v Buckhurst Park (1964)
(Apparent) Held: 3rd party did not have actual authority but with full knowledge of the other
directors, acted as managing director and hence having apparent authority, BP was
Main Focus: bound.
3rd Party
perspective Prevention of Apparent Authority (Principal)
w.r.t Principal -Coy disclose to 3rd pa t the li its of A s autho it
 Benefit 3rd -Public notices in newspaper to advertise when A cease employment
party when A -Notify consumers individually
has no
authority Company Officers and their ostensible authority (Finance GM to represent firm on
everything)
Hong Kong and Shanghai Banking Corp Ltd v Jurong Engineering Ltd & others
(2009)
Held: If coy expressly authorised A to make representation on its behalf, then any
representation made by A that he himself has authority to do an act is a good
representation for the purposes of conferring apparent authority on A to do that
act, even if he has been expressly prohibited to do I, and even i f it is not something
that A in his position usually have power to do.
*If A s oste si le autho ity a ot e esta lished to i d p i ipal, 3 rd party may

sue A in action of breach of warranty of authority  Agent to 3rd party relationship

lOMoARcPSD|4880004
-A exceed authority but P wants to benefit from contract

-Deemed to have taken effect from the date A acted
Offer A a epted a d e te ed i to o t a t o ehalf of P ithout P s
authority Law allow P to ratify
-Expressed/Implied (show clear affirmation of unauthorized acr
-Within reasonable time period
4 conditions for Ratifications:

1.Principal must be identified: Need not be named but at least must be
disclosed that A is acting on behalf of P.
Keighley Maxstead v Durant (1901)
Held: Contract is not binding as P is undisclosed, A has contracted in his own
name.
2. Principal must exist at time contract is made

Kelner v Baxter
3.Ratification Held: Non-existence P cannot ratify. There is exception in S41 of Companies
Act that allows company to ratify prior to incorporation.
Main Focus: 3rd 3.Principal must have legal capacity to enter into and perform the contract at
part/Principal to the time of contract and ratification: If minor, then cannot.
enforce the contract
4.Principal must ratify within reasonable time: At least done before time of
performance or delivery
Exceptions to Ratification
.A ept su je t to atifi atio p i ipal: When A tells salesperson that
he needs check first, he is not sure his boss allows conditional acceptance
is not acceptance. Hence 3rd party can withdraw his offer at any time before
ratification.
2.3rd Party knows that A has no authority
Retrospective effect of Ratification: A deemed to have authority, contract

deemed to have been concluded between P and 3rd party on date A entered
into contract.
Bolton v Lambert (1889)
Held: Co atified di e to s a tio , thus rd party bound by his acceptance
even when he tried to revoke his offer. Contract is deemd to have been
concluded already.
Rule: Agency exist even if no agreement between principal and agent

1.Agency of necessity
-Require immediate action when communication with principal impossible
-In emergencies, people conferred with authority to act for others
4.Operation of Law Couturier v Hastie (1852)
Held: Shipmaster disposed perishable cargo at nearest port at best prices
without authority of owner.
2.Co-habitation
-Women co-habits with husband presumed to have authority to pledge his
credit for necessaries Implied authority to manage home. Implied Agency

lOMoARcPSD|4880004
gone if given notice not to supply credit.
Implied Actual Authority Ostensible Authority

-Position gives power -Position naturally gives power, but P restricted it
-No restriction explicitly mentioned -Restriction not made known to 3rd party (A and P
did not specify)
-A did not know he does not have power and -P held it as though A had the authority
acted
1. Principal to 3rd party Relationship
Issues Raised:
-Is transaction binding on principal and 3rd party?
-Do the 2 parties have any rights/obligations vis-à-vis each other?
-Answers depend largely on whether agent had acted with the requisite authority
General
Rule 1.Agent does not exceed actual authority
2.Agent has ostensible authority
3.Principle ratified contract with 3rd party
Applicable even when agent fraudulently/detrimental to principal as long as he acted

within actual authority/ostensible authority.
Lee Feng Steel v First Commercial Bank (1997)
Held: LFS liable for forged credit application even though agent act was fraudulent
but it was still within authority
*P i ipal ill e lia le fo A s is ep ese tatio if he k e a out it a d atif it.
Doctrine for undisclosed principal:

1.Undisclosed P may sue/be sued on a contract made by A on his behalf.
2.A of undisclosed P may sue/be sued on contract
3.Any Defence 3rd party has against A is available against P
.Co t a t ade e p essl /i pliedl e lude P s ight to sue a d lia ilit to e sued
(E.g. Implication: Show agent to be true and only P)
A acted within actual authority with disclosing he is acting for P, can bind P where 3 rd
party can choose to sue P/A, P can also sue 3rd party unless unfair to him.
-Undisclosed P may be bound even if at the time of contract, 3 rd party has no idea A
was acting on behalf of P.
Undisclosed -Allows undisclosed P to be bound by contract even when he is not part of the
Principal picture
Exception where undisclosed P not bound to 3rd party(link to actual authority):

.A s autho it f o oste si le autho it / atifi atio (both, principal is disclosed)
.A s o t a t as P, o t a t e p essi g A is o t a ti g as the eal a d o l P
Humble v Hunter (1848)
Held: A e e utes o t a t as o e of ship, u dis losed P eal o e ight ot
assume rights under contract
3.Contra t is u i ue to A/A s ide tit is u ial to o t a t
4.3rd party elects to sue A after undisclosed P is revealed (cannot change mind to sue
P instead)

lOMoARcPSD|4880004
Trigen Industries Ltd v Sinko Technologies Pte Ltd & Another (2003)
Held: Sinko (A) represented Trigen(P) using their own name without disclosing
existence of P, is found personally liable to other contracting part even when P is
undisclosed unless contracting party wants to look P alone.
2. Principal to Agent Relationship
1.Duty to follow instructions

-A t i a o da e ith P s i st u tio s, if not breach of agency contract with P
-if i st u tio s u lea , A should la if ith P s i te tio / Risk ei g eglige t
Bertram, Armstrong & Co v Godfray (1830)
Held: Broker instructed by P to sell stock, broker did not and P suffered losses. P
succeeded in claiming damages from broker
2.Duty t use care & skills

-Standard a reasonable person would expect from A in that field/ reason in which
A is engaged for (e.g. Property agent should fulfilled his role up to the standard
expected of property agent Help find highest offer for houses)
Keppel v Wheeler (1927)
Held: A failed to communicate to P the higher offer, P can sue A for difference in
profit
3.Duty to avoid conflicts of interest

-A ust ot pla e hi self i a positio he e his i te ests o fli t ith P s
interests unless he disclosed conflict of interest and consented by P.
A. Cannot accept bribes/secret commission
Hong Kong v Reid (1994)
Held: Reid (A) accepted bribes and invested the fortune in 3 properties. The 3
properties belonged to the government.
Duties of Agent
(OWED TO P) B. Cannot make secret profits even if A acted in good faith and P suffered no
damage
Hippisley v Knee Brothers (1905)
Held: A kept advertising discount and charged full fee to P
C. Cannot have conflict of interest: become counterparty in transaction with

p i ipal esulti g i di e t o fli t ith dut to p ote t P s i te est
De Bussche v Alt (1878)
Held: A bought P ship at base price
Principal can claim the bribe, secret commission or, secret profit from the agent
th ough the e edy of a ou t of p ofit
D. Duty not to delegate

-perform personally
-P assumed to have selected A because of personal character and ability
John McCann v Pow (1975)
Held:A not entitled to commission when flat sold by sub-agent
E. Duty to keep separate accounts

-A has dut to keep p ope sepa ate a/ fo P sho i g all P s p ope t a d all
transactions undertaken on behalf of P
-On demand by P, A must show these a/c (E.g. Lawyers, stockbrokers place client
funds in trust a/c

lOMoARcPSD|4880004
1.Right to remunerate
-A can claim fees only when his duties under his agency has fulfilled/
-can claim expenses if reasonable, incurred in line of duty (E.g. Ads to sell)
Luxor Ltd v Cooper (1975)
Held: Contract explicitly state commission payable if sale is completed, sale not
completed = No commission
Rights of Agent 2.Right to indemnity(Protection against possible damage/loss)

(OWED BY P) -Right to be indemnified by P for liability/expenses incurred legally in performing
duties unless liability caused by his negligence, breach of duty or he acted beyond
scope of authority.
3.Right of Lien(Right to take and hold/sell property of a debtor)

-Right to hold o to P s p ope t hi h is i A s possessio so lo g as P s i de ted
to A.
rd
3. Agent to 3 party relationship
A is not bound to 3rd party as long as A has actual/ostensible authority/P ratified

A s a t Ratifi atio
Circumstances where A personally Liable:

1.Breach of warranty of authority: A may be sued by 3rd party where A act without
authority but professes to 3rd party that he has the authority (cannot sue A under
contract but can sue for BOWA)
2.Undisclosed Principal: Link P to 3rd party relationship and Actual authority
3.A agrees to be liable: A signs contract in his own name without reference to P,
General Rule presumption is that he is the P and A is liable to 3rd party.
4.Non-existent P: Company not yet incorporated

Kel er Ba ter Note: I S pore S Co pa ies Act
Held: Coy can ratify prior to incorporation and if contract is explicitly mention
o t a ti g ith P ut P s o -existent then no one liable to 3rd party.
5.Customer & Trade usage in some Biz sectors: A s o t a t e tails pe so al lia ilit
on the part of A (E.g. Stockholder liable for transactions entered on behalf on P s
client
6.Negotiable instrument: Bill of exchange attributes Liability to A
Applicable when P is not bound to 3rd party through ostensible authority (E.g. P
did not make representation to 3rd party that A had authority)
Breach of When A represents to 3rd party that he has authority when he does not:
Warrant of -3rd party can sue for BOWA and claim damages
Authority -A s ep ese tatio = P o ise a d 3rd pa t s atte pt to e te
contract=consideration

lOMoARcPSD|4880004
Ku Yu Sang v Tay Joo Sing (1993)

Held: A personally liable when fraudulently represented he had authority when he
had not (Tort of deceit) or innocently represented he had authority when he never
had authority/authority has ceased (whether he knew or not- Tort of
Misstatement)
Termination of Agency
-Express termination/revocation clause in contract

-Full performance/ Repudiatory Breach ( A discovered to have accepted bribe)
By Act of Parties of agency contract
- P e oke A s autho it
-Unilateral termination by 1 party (might be breach of agency agreement)
By Operation of -P/A= Bankrupt/Dissolved/Dies/Mentally incompetent

Law -Destruction of Subject Matter (Frustration)
-A s a tual autho it e ds
Effe t o A s -P may still be liable to 3rd party under Ostensible Authority if he continues to
authority hold A as having his authority and 3rd party has no notice of termination of
authority

lOMoARcPSD|4880004
Chapter 11 Business Organisation
Unincorporated Entities (Firm) Incorporated (Coy/Corporation)

-Not separate legal entity and unlimited personal -Separate legal entity with own rights and
liabilities liability
-Owner die= Firm cease to exist -Existence Separate + Independent
E.g Sole Proprietorship, Partnership, Joint Corporation can continue to function even when
Ventures founder die
1. Sole Proprietorship (Unincorporated)
-Owed by single owner
Same Legal Unlimited liability: Rights/Liabilities of Biz= Sole proprietor, not separated from
Entity its creator
Business Registration Act BRA (S5): Biz must be registered under BRA.
Exempted: Taxi Driver, Hawkers, registered under another act such as
Professional Act
Effect of not registering:

- S12 (2):Amount to offence & liable to fine
-S21 (1): Cannot enforce contract against 3rd party
-S21 (5):3rd party can enforce contract against him
-S12 (1): unable to use biz name not registered
Registration
Process:
S13(1)(b): Registrar can refuse to register name identical/resembles already
registered name
S12 (3): Registration of name does not grant any proprietary rights/protection
against infringement. (E.g. registered IBM shop will still get sued by IMB)
*XXX Company not implication that business is a company. Companies

incorporated have the word Ltd or Berhad after the coy name.
Voluntarily: S15(1)Biz stop operating and notice given to Registry of Biz within
Dissolution 14 days
Involuntarily: Sole Proprietor dies/bankrupt
Risk: Sole proprietor not protected from biz debt

Evaluation Ease & Low cost of setting up, maintaining (renew license) & closing down
Closedown: send cessation of biz to Registrar of Biz within 14 days
2.Parnership (Unincorporated)
-relationship between person carry on business in common view for profit
S1(1) Partnership Act: >/2 person carrying on biz with common objective of
generating profits (E.g. clubs/ non-profit falls outside as they do not operate with
profit in mind)
-S2(1) Interpretation Act: Person = Coy/Corporate bodies/Minors
Definition -S45 PA: Biz = Trade (sales of goods)/ Occupation/ Profession
-S2 PA: Receipt of share of profit= Prima Facie evidence that the person is partner
Rabiah Bee Bte Mohamed Ibrahim v Salem Ibrahim (2007)

Held: When parties transacted a piece of biz /with limited duration, they would not

lOMoARcPSD|4880004
be partners as there is no continuing relationship

1.Not separate legal entity
2.Unlimited personal liability: Rights/Liabilities of partnership= partners
.Pa t e s lia le fo fi s de t
-By contract (oral/written): stipulates rights/obligations of parties

-Register under BRA, no formalities
-May draw up partnership agreement (oral/written)
Formation -S17 (3): Min No= 2, Max No=20 except S17(4) CA: Professional Partnership
-Dissolution(S34 PA): Auto dissolve if partnership biz is illegal
- S5 BRA: Firms name must be registered  S4 PA: Pa t e ship a e = Fi s a e
Overall Rights: Governed by Partnership Act which can be varied with of all parties
under S19 PA
1.Property
-S20(1): brought in by partners = Partnership property
-S21 :brought in by partnership fund = Partnership property
-S20 (1): must be used for partnership purpose
-S23 (1): creditor cannot execute against partnership property if judgment against
individual partner unless it is a judgment against firm
(E.g. Partner has personal debt, creditor cannot execute against firm property.
S23 (2): But, edito a ha ge pa t e s i te est i the pa t e ship p ope t ,
appoi ti g a e ei e to li uidate pa t e s sha e of p ofit to satisf his outsta di g
debt.)
Relationship 2.Management
among -S24(5): E e pa t e has ight to take pa t i fi s a agement
Partners, -S24 (6): Partners only entitled to share of profits and not payment for work
Property
and Assets 3. Liability and Indemnity
-S24(1):Subject to any agreement b/w partners and they share equally in profit/loss
*In practice dependant on contribution of capital/amount of work
. Pa t e s Fidu ia Dut
-Duty of utmost good faith
-S28: Full disclosure of info on all things affecting the firm
-S29: Cannot make secret profit through partnership transaction
-S30:Cannot engage in biz competing with firm unless all partners in both firm
consent
A. Actions binding firm: Partners and Non-Partner Actions

-Every partner is an Agent of the firm and his other partners
S5: Any partner can bind 3rd party as long as act:

-done in usual course of biz and partners acts with authority
-partner acts with authority (Actual/Ostensible) unless:
1.S8 and S5: Partners acted without authority
2.3rd party either knew partner has no authority / did not know that he was partner
(Apparent/Actual=Agent=Bind)

lOMoARcPSD|4880004
Tortious Liability
S10: When a tortfeasor partner commits a tort against 3rd party, law rules that firm is
liable when:
1.Tort is committed while acting in ordinary course of biz
2.Partner acts with authority of co-partners
B.Firm binding partners

S9:Partners liable jointly in contract/debt  3rd party can only bring 1 legal action
against partners/firm (jointly liable) and cannot seek to sue other partners if he fails
S6: Firm and every partner bound by the act/agreement with 3rd party entered into
u de the fi s a e a pe so autho ised to do so ega dless pe so is a pa t e
or not)
S10, S12: Breach of fiduciary duties, tort: Partners liable jointly and severally in
wrongful acts and omissions
-3rd party can bring more than 1 legal actions against the partners
-For partnership/other partners to be liable wrongful acts be closely
linked/connected to job scope of partner or usual course of biz.
Relationship Lim Kok Koon v Tan Cheng Yew & Another (2004)
among Held: Tan, the lawyer absconded $ from Lim, court ruled it was not within scope of
Partners, biz for lawyer to act as express trustee and Tan acted on a frolic of his own which
Property does not make firm liable.
and Assets
Sleeping Partners (passive investors but treated like any other partner-Non Partner)
S14:Person Lia le holdi g out = 3rd party hold him as partner (Assume/appear to
be partner)
-Salaried partner is given the title of partner and he hold himself to 3 rd party as
partner (Non-denial of partnership/allow representation or suffering it to be made)=
Liable as partner
Everyone by spoken/written or by conduct represent himself, or who knowingly

suffers himself to be represented as a partner and is liable as a partner.
-To anyone who on such representation given credit to the firm, whether
representation has or has not been made or communicated to the person so giving
credit by or with the knowledge of the apparent partner making representation or
suffering it to be made.
New Incoming & outgoing retiring partners (change in constitution=Retirement)

S17 (2), (3): Retiring Partner remains liable for partnership debt incurred before
retirement.
Retiring partner remains liable for partnership debts incurred after retirement unless:
S36: Retiring partner took reasonable steps to ensure 3rd party know he is no longer
a partner for biz with no previous dealings (Ads in Gazette sufficient) or for biz with
previous dealings, personal notice must be given (Letters, Official Email)
S36(3): Retiring partner is not liable for debt after his retirement if 3rd party is
unaware that the retired partner was a partner before his retirement
Colin Ng v Engelin (1995)
Held: Name was changed to Colin and Partners allowed as retiring partner would not
be exposed to liability.
S24(7): All existing partner must consent before new partner can be added

lOMoARcPSD|4880004
Dissolution With accordance to Partnership Agreement: If there is no agreement, act in

of accordance to provisions of Partnership Act.
Partnership
Situation for Voluntary Dissolution (Partners want to dissolve)
S32(1)(a), (b): Expiry of fixed term/specific projects
S32(1)(c): Any partners give notice to others
Partnership Agreement: Provision for any other reason for dissolution
Situation for involuntary Dissolution (Processed by Law)

S33(1), (2): 1 of the partners bankrupt/partnership property charged for personal
debts
S34: Partnership biz become unlawful
S35: 1 partner petitions court to dissolve partnership as other partner unable to
perform or guilty of conduct prejudicial to business/ Courts think it is equitable to
dissolve partnership
Consequences
S39: Partnership property applied to debt payment & remaining balance distributed
among partners
-If pa t e ship p ope t is i suffi ie t to pa de ts, pa t e ship de ts=pa t e s
personal debts
S44: Distribution of partnership assets subject to contrary partnership agreement.
3. Limited Partnership
-NOT Separate legal entity, all provision of partnership applies unless LP act stated otherwise.
Formation -Min: 2partners (1 General and 1 limited)

-Manager must be appointed (if general not ordinarily Singapore residents)
-Not separate legal entity (same)
-Limited partners cannot take part in management (if take part= general partner with
unlimited liability)
Limited Partnership Act : General partners is subjected to partnership act unless

otherwise mentioned in LP Act.
Liabilities -General liable for debts and obligations of LP (same as PA)

-Li ited pa t e s lia ilit apped at a ou t of ag eed i est e t i LP a d the a e
not liable for debt/obligations of LP beyond agreed investment
Cessation -LP cease biz General must file notice of cessation of biz
-Easier dissolution process (vs LLP/ Coy) as creditor may pursue General and Limited (up
to agreed investment in LP)

lOMoARcPSD|4880004
4. Joint Ventures (Unincorporated)

-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 or corporation in
legal sense.
-No joint/several liability : Each venture bears his own liability

-No authority to bind joint venture: No mutual Agreement
-Can transfer interest to 3rd party without approval from another
venture
Canadian Pacific (Bermuda) Ltd v Nederkoorn Pte Ltd (1998)
Difference from Held: operates on a one-off nature or so, if on continual basis it would
Partnership be a partnership
*Careful when drafting joint venture contract else might be deemed as

Partnership when meet the partnership requirement under PA. It can
be a useful form of organization to pool resources but avoid
responsibilities of partnership.
5. Limited Liability Partnership

-Incorporated Partnership with limited liability (separate legal entity), has perpetual succession
Formation -Registered under LLP Act by 2 or more person

-At least 1 manager (may/may not be partner) ordinarily Singapore resident
Rights/Duties -Governed by partnership agreement, no agreement then 1st schedule of LLP Act
S4(1):Separate legal entity and S8: Own rights and liabilities
-Pa t e s ha e li ited lia ilit : LLP assets/lia ilities a e ot pa t e s
assets/liabilities
-Privacy: A/C not required to be filed
Benefits -Tax Transparency
-Existence separate & independent of people who establish it
S4(2), S3: Perpetual Succession (changes in partners will not affect existence, rights
or liabilities)
-can sue/be sued

Powers of LLP -acquire and hold property in its name
(S5) -Liabilities are its own
-Common seal in its name
-Do such acts in its name such as corporation can legally do
S9(1): Every partner of a LLP is the agent of LLP
S9(2): LLP is not bound by anything done by partner in dealing with a person if
(prove actual authority/apparent authority to bind):
Partners -the partner no authority to act for LLP
action bind -person know that he has no authority /does not know or believe him to be a
LLP partner of LLP
S9(3): A person ceased to be partner of a LLP, the former parties is to be regarded

as still being part a partner unless:
-the person has notice that the former partner has ceased to be partner of LLP
- oti e that the fo e pa t e essatio has ee deli e ed to the Regist a

lOMoARcPSD|4880004
-Partner is agent of LLP (firm only) but not of other partners

S8(1)(2): No personal liability for Biz debts
Pa t e s S8(3): Partners are not liable for wrongful acts & omissions (tort) of other partners
Liability to (only the one who committed wrongful act personally liable)
LLP -Authorised act binds LLP
To tious Lia ilit : if pa t e o its to ts hile a ti g i ou se of LLP s iz o with

LLP s autho it  LLP liable for tort (other partners not liable vs GP)
-Keep accounting and records, explaining transaction and financial position

S25(1): give true and fair view of state of affairs, failure to comply= LLP and every
Housekeeping partner fine/imprisonment
S24:submit registrar of LLP annual declaration of solvency else criminal sanctions
-Taxed as partnership
-Pa t e s olu ta il i di g up when they can repay debts within 12 months
-C edito s olu ta i di g up when partners cannot pay within 12 months
(protect creditors as they cannot pursue partners for debts)
Dissolution -Winding up petition granted by Court (raised by creditors)
Liquidator appointed to gather assets and pay debts in accordance of order set out
in 5th schedule of LLPA
6. Limited Companies
S19(5): Incorporation creates an artificial entity capable of possessing rights/liabilities and owing
duties independent of its members
-Separate legal entity with own rights and liabilities (members of the company
would not be held personally liable for obligation of the company unless business
has been carried on to defraud creditors, people responsible can be personally
Legal liable for debts)
Characteristics -Sha eholde s ha e li ited lia ilit : Co assets/lia ilities a e ot sha eholde s
-If coy fails to pay debt, coy sued NOT shareholders
-Coy can hold property in its own name
-Perpetual succession: change in shareholders will not affect existence, rights or
liabilities
* If person incurs debts on behalf of the company when no reasonable expectation
of settling debts, he can be personally liable for debts
-Higher tax rate + Higher admin cost + More Formalities + High cost to close down
-Company secretary required
Disadvantages -Compulsory audit if turnover more than $5million
-More formalities
Dissolution -Only after going through liquidation Liquidators sells coy assets and
liabilitiesCoy ceased
-Order of liabilities payment in accordance to CA with surplus given to members
1.Members voluntary winding up

-coy is solvent and appointment of liquidator done by members

lOMoARcPSD|4880004
. C edito s voluntary winding up

-Coy not solvent and appointment of liquidator done by creditors
3. Winding up by court
-compulsory wind up and court grants petitions
* In questions that deal with company, most of the time, the person who is sued or whatsoever is the
agent and the company is the principal, hence refer to Agency notes!

SMU Biz Law Bible 1 PDF

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

SMU Biz Law Bible 1 PDF

Hochgeladen von

Copyright:

Verfügbare Formate

lOMoARcPSD|4880004

AB1301 Business Law Bible 1

Business Law (Nanyang Technological University)

StuDocu is not sponsored or endorsed by any college or university

Chapter 1: Society, Business & the Law

Law is a set of rules laid down by state to govern behaviours, it sets

 Law on spitting & littering

3. Judiciary Separation of power: Avoid one

Family Juvenile District Magistrate Small

Subordinate Court- Jurisdiction $250,000

Downloaded by Starr Ya (starryynights01@gmail.com)

2. Acts of Parliament (Written Law)

3. Subsidiary Legislation (Subordinate Legislation)

5. Customary Law- Trade Customs

Application of English Law

CASE LAW TECHNIQUE

3. Only the Ration Decidendi of the earlier case is binding

AB 1301 – Business Law Page 2

Downloaded by Starr Ya (starryynights01@gmail.com)

 Contains definition of words frequently used in statutes

2. Rules to guide statutory interpretation

3. Unity of an act: Statute should be read as a whole

 Statute fo id Motorcycles, T i les, a s, a s , t u ks a d lo ies

5. Ejusdem Generis Follo s sa e t pe of thi gs that a e efo e it of the sa e ki d

 Dependent on context being used

AB 1301 – Business Law Page 3

Downloaded by Starr Ya (starryynights01@gmail.com)

Criminal Law Civil Law

Common Law Equity

AB 1301 – Business Law Page 4

Downloaded by Starr Ya (starryynights01@gmail.com)

Chapter 3: Contract: Offer and Acceptance (pg 57 – 83)

Vi tiating Factors - Remedies - The

1. Cite legal p i iples, i.e. fo a o t a t to e i di g the e ust e…

Medical Technology (Pte) Ltd v Modern Pak Pte Ld (2006)

 Contracts for certain transactions must be evidenced by a written note of

Parol Evidence Rule

AB 1301 – Business Law Page 5

Downloaded by Starr Ya (starryynights01@gmail.com)

Offer (pg 63)

Can be made to:

Types of A. Bilateral(pg 64)

B. Unilateral: Irrevocable if people started to act on it(pg 63)

-Co t a t ought i to e iste e o e pa t espo se to offe o s p o ise

*Implied waiver of communication, need not communicate acceptance,

- Carlill v Carbolic Smoke Ball Co.(1892)

Held: Advertisements are normally invitations to treat due to their lack of

AB 1301 – Business Law Page 6

Downloaded by Starr Ya (starryynights01@gmail.com)

Invitation to Expression of willingness to commence negotiations. (Offer to make an offer)

Priced Goods on Display

Display of goods and prices in a shop considered to be an invitation to treat-

*Internet Sales: // Cite Digilandmall (2004)

AB 1301 – Business Law Page 7

Downloaded by Starr Ya (starryynights01@gmail.com)

AB 1301 – Business Law Page 8

Downloaded by Starr Ya (starryynights01@gmail.com)

Anything less than an unconditional acceptance viewed as counter-offer

A. Revocation must be communicated to Offeree

-Informing revocation of offer

Revocation is only effective when offeree received notice of revocation

B. Notice of Withdrawal need not be explicit