Ratio Decidendi of Cases (No facts of case):

BLAW Week 2: Formation of Contract 1

Felthouse v Bindley (1862)
- If offeror, without consent of offeree, impose a condition that offeree’s
silence would be taken as acceptance, then such a condition would not be
enforceable.
Acceptance

Ong Hong Kiat v RIQ Pte Ltd (2013)

- Acceptance does not have to re-state all the terms of the offer as long as it
is clear that both parties intended to be bound by the same offer terms.
- Intention to create legal relations as it is a commercial transaction.
Stuttgart Auto Pte Ltd v Ng Shwu Yong (2005)
- Conditional acceptance is treated as no acceptance.
Harris v Nickerson (1872)
- Advertisement for auction does not constitute a legally binding offer of sale.
Auction

- Merely declaration to inform potential purchasers of sale.

Payne v Cave (1789)
- Offeror entitled to withdraw offer before fall of auctioneer’s hammer
signifies acceptance.
CS Bored Pile System Pte Ltd v Evan Lim & Co Pte Ltd (2006)
Communication

- For acceptance to be effective, it must be communicated to the offeror.

- If acceptance is in writing, it must be physically received by the offeror or, if
made orally, be actually heard by the offeror.
Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004)
- Silence can be construed as acceptance.
- Silence and implicit acceptance are not invariably antagonistic concepts.
Lim Koon Park v Yap Jin Meng Bryan (2013)
- Court would scrutinize the objective conduct of the parties in determining if an
agreement has been reached.
- Consensus ad idem (Meeting of minds) – What parties agree on must be
clear and unambiguous.
Gibson v Manchester City Council (1979)
- Agreement only exists if there is a clear offer mirrored by a clear
Consensus ad idem

acceptance.
Routledge v Grant (1828)
- Fundamental principle of contract law is that one party cannot be bound
whilst the other is not; contract must be mutual.
- Offeror may retract an offer.
T2 Networks Pte Ltd v Nasioncom Sdn Bhd (2008)
- What the parties agree on must be clear and unambiguous.
- Contracts often fail on the grounds of uncertainty, or because in fact, “the
parties were not ad idem”.
Counteroffer Hyde v Wrench (1840)
- A counteroffer supersedes and destroys the original offer.
- Original offer is no longer available on the table.
Stevenson Jaques & Co v McLean (1880)
- Complainant was only inquiring for more information about whether terms
of the offer could be changed there was no specific wording to indicate that
it was a counteroffer or rejection.
Bradbury v Morgan (1862)
- Death of offeror did not terminate the offer unless the offeree had notice of
the offeree’s death.
Chia Kim Huay v Saw Shu Mawa Min Min (2012)
Death

- Offer would not survive offeree’s death if it was an offer personal to the
offeree.
Reynolds v Atherton (1921)
- Offer having been made to a living person, who ceases to be a living person
before the offer is accepted, is no longer an offer at all.
Balfour v Balfour (1919); Cohen v Cohen (1929)
- When married persons enter into domestic agreements, reasonable
Domestic Agreements

assumption is that they do not intend such agreements to be legally

enforceable.
Errington v Errington and Woods (1952)
- Domestic agreement with intention to create legal relations.
- Offeror is estopped from revoking unilateral offers once performance has
commenced since it would be unconscionable to do so.
Merritt v Merritt (1970)
- When married persons whose relationship has already broken down enter
into agreements, even of a domestic nature, the reasonable assumption is that
they do not intend such agreements to be legally enforceable.
Financings Ltd v Stimson (1962)
Failure of
Conditio

- If condition is not met, offer is automatically terminated.

- Implied condition of state of car was broken; offer was no longer available for
acceptance.
Fisher v Bell (1961)
- Display of an item in a shop window is an invitation to potential customers to
treat.
Partridge v Critenden (1968)
Invitation to Treat

- Advertisement was not an offer but an invitation to treat.

- Court’s role is not to alter the understanding of legislature and its function.
Chwee Kin Keong and Others v Digilandmall.com Pte Ltd (2004)
- Display of goods and prices in a shop is usually considered to be an
invitation to treat and not an offer.
- Offer is made when a customer selects the item he wants and brings it to the
cashier to pay for it.
 Pharmaceutical Soc of GB v Boots Cash Chemists (Southern) LD (1953)
- Display of goods on shelves does not constitute an offer.
- Contract of sale was concluded when the customer made an offer to the cashier
upon arriving at the till and accepted when payment was taken.
Gibbons v Proctor (1891)
- Contract could be formed in those circumstances even if the offeree is
Knowledge of Offer

ignorant of the offer.

Tinn v Hoffman & Co (1873)
- Cross-offer does not make a contract.
- Cross-offer implies a lack of consensus or meeting of minds between parties at
the time of making the offers.
Williams v Carwardine
- Once offeree is aware of the offer, it does not matter that he was prompted
to act for reasons other than the desire to accept the offer.
Panwell Pte Ltd & Anor v Indian Bank (No 2) (2002)
- If it is clear from the offeror’s conduct and other evidence that the terms of
Lapse of Time

the supposedly lapsed offer continue to govern their relationship after the
specified period, then offer is valid and capable of acceptance after
deadline.
Ramsgate Victoria Hotel Co v Montefiore (1866)
- Reasonable period depends on circumstances of each case.
- In commercial transactions, period tends to be shorter since prices continually
fluctuate in the business world.
Harvey v Facey (1893)
- An offer cannot be implied by writing.
Offer

- Offer has to be concrete and sound.

Mary Ann Williams v William Carwardine (1833)
- Once offeree is aware of the offer, it does not matter that he was prompted
to act for reasons other than the desire to accept the offer.
Adams and Others v Lindsell and Another (1818)
- Postal Acceptance Rule
(1) Posted acceptance prevails over previously posted withdrawal of offer
which has not yet reach offeree when acceptance was posted.
(2) Acceptance takes effect on posting even where it never reaches offeror
Postal Acceptance Rule

or only does so after delay.

(3) Contract taken to have been made at the time of posting and takes
priority over another contract made after original acceptance was
posted.
Chia Kim Huay v Saw Shu Mawa Min Min and another (2012)
- Postal rule does not apply to an acceptance of an offer to settle litigation
where the acceptance was sent by post.
Entores v Miles Far East Corporation (1995)
- Postal rule does not apply for instantaneous communication methods.
- Acceptance via these forms of instantaneous communication has to be clear
before contract creation.
 Harvey v Facey (1893)
Information
Provision of
- Communication may not be an offer but a mere response to a request for
information.

Brader Daniel John and others v Commerzbank AG (2014)

- Announcement made to employees at a Townhall meeting regarding bonus
payments was held to be sufficiently certain binding unilateral contract
Unilateral Offers

collateral to their employment contracts.

- Unilateral offer does not require acceptance from employees.
Carlill v Carbolic Smoke Ball Co (1893)
- An advertisement containing certain terms to get a reward constituted a
binding unilateral offer that could be accepted by anyone who performed
its terms.
Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd & Ors (1984)
- Unilateral contract is brought into existence by the act of one party in
response to a conditional promise by another.
Banque Paribas v Citibank NA (1989)
- Revocation can occur if offer is replaced or substituted by new offer.
- Fresh offer must stipulate that it supersedes the earlier offer.
Brader Daniel John v Commerzbank AG (2013)
- Once employees commence performance, defendant would come under
obligation not to revoke the offer.
Byrne & Co v Leon Van Tien Hoven & Co (1880)
- Withdrawal of offer was ineffective as plaintiff accepted offer before letter
of withdrawal reached plaintiff.
- Withdrawal of offer for sale of goods cannot be withdrawn by simply posting a
secondary letter which does not arrive until after the first letter had been
Withdrawal of Offer

responded to and accepted.

Dickinson v Dodds (1876)
- Notification by a third party of an offer’s withdrawal is effective just like a
withdrawal by the offeror.
- If offeror dies, the offer cannot be accepted after he is dead.
Dickson Trading (S) Pte Ltd v Transmarco Ltd (1989)
- Offeror in unilateral contract has an obligation not to revoke the offer after
offeree has embarked on the performance of the conditions.
Overseas Union Insurance Ltd v Turegum Insurance Co (2001)
- Offeror is free to withdraw offer any time before acceptance.
- Notice of withdrawal must be given and actually reach the offeree to be
effective.
Routledge v Grant (1828)
- Offeror is permitted to withdraw his offer even if it is expressly stipulated
that the offer be open for a fixed period.
T

The Great Northern Railway Company v Witham (1873)

Others ender - A person who submits tenders which outline their ability to provide goods
s and services at a set price must be able to do so when called upon should
their tender be accepted.
Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd (2006)
- Court’s strong view that best objective evidence is a written agreement that
does not fall afoul of any vitiating factors.
Electronic Transactions Act
(1) The time of dispatch of an electronic communication is –
(a) the time when it leaves an information system under the control of the
originator or of the party who sent it on behalf of the originator; or
(b) if the electronic communicator has not left an information system under
the control of the originator or of the party who sent it on behalf of the
originator, the time when the electronic communication is received.

(2) The time of receipt of an electronic communication is the time when the
electronic communication becomes capable of being retrieved by the
addressee at an electronic address designated by the addressee.

(3) The time of receipt of an electronic communication at an electronic address

that has not been designated by the addressee is the time when the electronic
communication becomes capable of being retrieved by the addressee at
that address and the addressee becomes aware that the electronic
communication has been sent to that address.

(4) For purposes of subsection (3), an electronic communication is presumed to

Statutes

be capable of being retrieved by the addressee when it reaches the

electronic address of the addressee.

(5) An electronic communication is deemed to be dispatched at the place where

the originator has its place of business and is deemed to be received at the
place where the addressee has its place of business.

(6) Subsections (2), (3) and (4) shall apply notwithstanding that the place where
the information system supporting an electronic address is located may be
different from the place where the electronic communication is deemed to be
received under subsection (5).

Parol Evidence Rule – s(94) Evidence Act

S
 (1) When the terms of any such contract, grant or other disposition of property, or
any matter required by law to be reduced to the form of a document, have
been proved according to section 93, no evidence of any oral agreement or
statement shall be admitted as between the parties to any such instrument or
their representatives in interest for the purpose of contradicting, varying,
adding to, or subtracting from its terms subject to the following provisions:

(a) Any fact may be proved which would invalidate any document or which
would entitle any person to any decree or order relating thereto; such as
fraud, intimidation, illegality, want of due execution, want of capacity in
any contracting party, the fact that it is wrongly dated, want or failure of
consideration, or mistake in fact or law;

(b) The existence of any separate oral agreement, as to any matter on which
a document is silent and which is not inconsistent with its terms, may
be proved; in considering whether or not this proviso applies, the court
shall regard to the degree of formality of the document;
tatutes

(c) The existence of any separate oral agreement constituting a condition

precedent to the attaching of any obligation under any such contract,
grant or disposition of property, may be proved;

(d) The existence of any distinct subsequent oral agreement, to rescind or

modify any such contract, grant or disposition of property, may be proved
except in cases in which such contract, grant or disposition of property is
by law required to be in writing, or has been registered according to the
law in force for the time being as to the registration of document;

(e) Any usage or custom by which incidents not expressly mentioned in any
contract are usually annexed to contracts of that description may be
proved; except that the annexing of such incident would not be repugnant
to or inconsistent with the express terms of the contract;

(f) Any fact may be proved which shows in what manner the language of a
document is related to existing facts.
 BLAW Week 3: Formation of Contract 2
Malayan Banking Bhd v Lauw Wisanggeni (2003)
Move from Promisee

- Promisee must provide consideration, but the consideration need not benefit
Consideration Must

promisor.
- Must move from promisee but need not move to the promisor.
Tweddle v Atkinson (1861)
- General rule is that for a promisee to enforce the promise, he must show that
consideration has moved from him.
- No consideration flowed from Tweddle, thus Tweddle could not enforce
contract.
Hartley v Ponsonby (1857)
- Work done by sailors in non-emergency situation amounted to
consideration.
- Performance of existing duty can be consideration.
- Contract was valid.
Stilk v Myrick (1809)
Existing Duty

- Performance of existing duty is no consideration.

- Agreements cannot be altered without provision of fresh consideration to
underpin the promise and contractually bind the parties.
The Eurymedon
- Performance of an existing contractual duty to a third party may constitute
valuable consideration.
Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991)
- Performance of existing duty may constitute consideration if there was
practical benefit and the promise was not given under duress or by fraud.
Collins v Godefroy (1831)
- Duty imposed by law does not require consideration.
Public
Duty

Glasbrook Bros Ltd v Glamorgan County Council (1925)

- Going beyond their existing public duty entitled the officers to payment.
Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (2001)
Part Debt Payment

- Where creditor promises to accept less than what is already due, the creditor
is entitled to claim for the balance of the of the full amount of the debt.
- Creditor’s promise to accept lesser sum is not supported by consideration.
Pinnel’s Case (1602)
- General rule is that part payment of a debt cannot be satisfaction for the whole.
- However, part payment made early was sufficient to discharge the debt.
- Early payment provided plaintiff with further benefit, thus good consideration.
Eastwood v Kenyon (1840)
- Promises are not sufficient to form a contract.
- Past consideration is no consideration at all.
Past

- Moral obligation does not constitute consideration.

Lampleigh v Braithwaite (1615)

 C - Past consideration may be good consideration.
on - Original request contained an implied promise to pay plaintiff for his
si efforts.
de Pao On and Others v Lau Yiu Long and Others (1980)
ra - When past consideration is good consideration.
ti - An act done before a promise was made was good consideration for that
on promise if it was done at the promisor’s request and the parties
understood the act was to be paid at a later date, and the payment or
benefit would have been enforceable had it been promised in advance.

Rainforest Trading Ltd and another v State Bank of India Singapore (2012)
- Strictly chronological approach in determining past consideration is deeply
unrealistic and unnecessarily restrictive.
- Connected (to promise) consideration:
(a) Services rendered in the past to the benefit of promisor;
a. If consideration is attached to the reward, it constitutes an agreement
to pay a reasonable sum.
b. Else, no.
(b) Promise given in the past for the benefit of promisor;
a. Pao On exception is likely important
(c) Services rendered in the past but not to the benefit of promisor
- Likely promisor is not liable.
Re McArdle (1951)
- Past consideration is no consideration.
- Already completed work before asking for payment.
Roscorla v Thomas (1842)
- Past consideration is no consideration.
- Cannot sue for false promise made after contract formed.
T2 Networks Pte ltd v Nasioncom Sdn Bhd (2008)
- Past consideration is no consideration.
Price v Easton (1883)
Privity

- A stranger to the contract cannot sue on the contract. (Privity of contract)

- Even though money owed would have been paid to the stranger.
Central London Property Trust Limited v High Trees House Limited (1947)
- Parties should be prevented from going back on a promise to waive certain
rights.
Promissory Estoppel

- Promissory estoppel consists of:

1. A promise
2. Intention to create legal relationship
3. Reliance on the other party on promise
4. Detriment

Combe v Combe (1951)

- Promissory estoppel can only be raised as a shield and not as a sword.
 Oriental Investments (SH) Pte Ltd v Catalla Investments Pte Ltd (2012)
- Doctrine of promissory estoppel protects a party’s reliance on promises not
supported by consideration, on the basis that the party as acted on the
promise to his detriment and it is not inequitable for the promisor to go
back on his promise.
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd (1955)
- When the promisor gives reasonable notice of his intention to revert to the
original legal relationship, the original relationship is restored.
Chappell & Co Ltd v Nestle Co Ltd (1960)
- A contracting party can stipulate for what consideration he chooses.
Sufficiency Not

- Wrappers were considered good consideration.

Adequacy

Lam Hong Leong Aluminum Pte Ltd v Lian Teck Huat Construction Pte Ltd and
Another (2003)
- Common law will not inquire as to the fairness of the consideration, as
long as the parties agree to it willingly.
- Generally, a promise to forbear from suing or enforcing a valid claim can
constitute sufficient or valuable consideration.
White v Bluett (1853)
Consideration

- Consideration which is too vague or insubstantial in nature is insufficient.

Vague

Contract (Rights of Third Party) Act (CRTPA)

(1) Subject to the provisions of this Act, a person who is not a party to the
contract (referred to in this Act as a third party) may, in his own right,
enforce a term of the contract if -
(a) the contract expressly provides that he may; or
(b) subject to subsection (2), the term purports to confer a benefit on him.

(2) Subsection (1)(b) shall not apply if, on a proper construction of the
contract, it appears that the parties did not intend the term to be
enforceable by the third party.

(3) The third party shall be expressly identified in the contract by name, as a
member of a class or as answering a particular description but need not be
in existence when the contract is entered into.

(4) This section shall not confer a right on a third party to enforce a term of
a contract otherwise than subject to and in accordance with any other
relevant terms of the contract.

(5) For the purpose of exercising his right to enforce a term of the contract,
there shall be available to the third party any remedy that would have
been available to him in an action for breach of contract if he had been a
contract (and the rules relating to damages, injunctions, specific
performance and other remedy shall apply accordingly) and such remedy
shall not be refused on the ground that, as against the promisor, the third
party is a volunteer.

(6) Where a term of a contract excludes or limits liability in relation to any

matter, references in this Act to the third party enforcing the term shall be
construed as references to his availing himself of the exclusion or
limitation.

(7) In this Act, in relation to a term of the contract which is enforceable by a

third party – “promisee” means the party to the contract by whom the term
is enforceable against the promisor; “promisor” means the party to the
contract against whom the term is enforceable by the third party.
 BLAW Week 4: Contents of Contracts (Terms 1)
Terms and Representations
Bettini v Gye (1876)
- In breach of warranty, contract remains on foot and the injured party only
has claim in damages.
RDC v Sato (2007)
- Legally justified Termination
Express Reference:
1. Contractual term breached clearly states that, in event of certain event or
events occurring, the innocent party is entitled to terminate the contract.

No Express Reference:
2. Party in breach renounces the contract by clearly conveying to the innocent
Breach of Contract

party that it will not perform its contractual obligations at all. Quaere
whether the innocent party can terminate the contract if the party in breach
deliberately chooses to perform its part of the contract in a manner that
amounts to a substantial breach.

3a. Condition-Warranty approach –

Party in breach has breached a condition of the contract (as opposed to a
warranty)
(a) Should be applied before the “Hongkong Fir Approach” in Situation 3(b).

3b. Hongkong Fir Approach –

Party in breach which has committed a breach, the consequences of which
will deprive the innocent party of substantially the whole benefit which it
intended that the innocent party should obtain from the contract.
(a) Should be applied only after the Condition-warranty approach in Situation
3(a) and if the term breached is not found to be a condition.
- Innominate term focuses not on the nature of the term breached but on the
actual consequences of the breach.
ATS Specialized Inc. (trading as ATA Wind Energy Services) v LAP Projects (Asia)
Pte Ltd (2012)
- Not enough certainty of terms to render any agreement enforceable.
- Parties did not intend to be bound until they had agreed on the price.
Bayerische Hypo- und Vereinsbank AG v CK Tang Ltd (2004)
- Where terms are clear and unambiguous, they must be given their natural
Clarity of Terms

meaning because “there is no room for re-writing or implying terms”.

Lim Koon Park and another v Yap Jin Meng Bryan and another (2013)
- Court would scrutinize the objective conduct of the parties in determining if an
agreement has been reached.
- Consensus ad idem (Meeting of minds) – What parties agree on must be
clear and unambiguous.
 Mohamed Bassatne and others v Rifaat El Gohary and Others (2004)
- Parties’ conduct had determined that the respective agreements were indeed
binding.
The Moorcock
- Court implies term in contract to ensure business efficacy.
- Considers as having been intended by the parties, so as to ensure that their
contract will proceed on normal business lines.
- Court determines the presumed intention of the parties.
Sembcorp Marine Ltd v PPL Holding Pte Ltd and another and another appeal
(2013)
- Term cannot be implied if doing so would be plainly against the express
terms of the contract.
Implied Terms

- Implication of terms is to be considered using 3-steps:

(a) The first step is to ascertain how the gap in the contract arises.
Implication will be considered only if the court discerns that the gap arose
because the parties did not contemplate the gap.
(b) At the second step, the court considers whether it is necessary in the
business or commercial sense to imply a term in order to give the
contract efficacy.
- Finally, the court considers the specific term to be implied. This must be one
which the parties, having regard to the need for business efficacy, would have
responded “Oh, of course!” had the proposed term been put to them at the
time of the contract. If it is not possible to find such a clear response, then, the
gap persists, and the consequences of that gap ensue.
Shirlaw v Southern Foundries (1926) LTd (1939)
- Officious bystander test
- Something so obvious that it goes without saying.
- If an officious bystander were to suggest some express provision for it in the
agreement, they would testily suppress him with a common: “Oh, of course.”
Edwards v Skyways (1969)
- Intention to create legal relations in formation of commercial contracts.
- Onus is on party rebutting this assumption to show that they expressly
Intention to Create Legal Relations

intended to create a mere ‘moral’ agreement and not a legal obligation.

- ‘Ex gratia’ does not show or imply that agreement is without legal effect.
Kleinwort Benson Ltd v Malaysian Mining Corp Bhd (1989)
- No intention to create legal relations in the formation of contracts.
- The words were merely a comfort of moral responsibility; no legally binding
effect.
Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
- When considering legal impact of a breach, it is more important to consider
the intention of the parties in respect of such breach rather than considering
the actual consequences of such breach.
 Behn v Burness (1863)
Misrepresentation - Representation is not an integral part of contract
- Contract is not breached if there is misrepresentation.
Proving

Ecay v Godfrey (1947)

- If maker of the statement invited other party to verify the truth of
statement made, then statement is more likely to be a representation.

Balfour v Balfour (1919)

- When married persons enter into domestic agreements, the reasonable
Social & Domestic Agreements

assumption is that they do not intend such agreements to be legally

enforceable.
De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd and Others
(2003)
- No intention to create legal relations, thus no contract.
- Even if defendant made profits, it would not elevate to a commercial
transaction; merely means friend doing favor was keeping some discount for
himself as compensation for his time and expense.
Merritt v Merritt (1970)
- When parties are in the process of separating or are separated, the
presumption of there being no intention to create legal relations does not
apply.
Bannerman v White (1861)
- The greater the emphasis, the more likely a statement is a term.
Dick Bentley Productions Ltd and Another v Harold Smith (Motors) Ltd. (1965)
- Representation from an experienced party to an inexperienced party is
likely to be interpreted as a contractual term rather than a representation.
Hutton v Warren
Proving Terms

- Unwritten terms may be hallowed by long usage or custom.

- Allowed fair compensation as it was an accepted custom.
Oscar Chess Ltd v Williams (1957)
- William, a private individual, was not in a position to guarantee the accuracy
of year of registration given.
- Private individual did not have greater knowledge than other party.
Routledge v McKay (1954)
- Statement made closer to time contract was concluded is more likely to be
a term than a representation.
- Statement was not a term because it was made 1 week after contract was made.
Exemption Clauses
Evans (J) & Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976)
Collateral Contract

- Oral undertaking may create a collateral contract which neutralizes the

exemption clause.
- An exception to the Parol Evidence Rule.
 Kenwell & Co Pte Ltd v Southern Ocean Shipbuilding Co Pte Ltd (1999)
- Reasonableness of exemption clause depends on the facts of a particular
case.
- The more unreasonable an exemption clause, the greater is the burden of the
party relying upon it to establish reasonableness.
- Fact that parties entered into the contract willingly does not prevent one party
from later questioning the reasonableness of an exemption clause.
Construction of EC

Photo Production Ltd v Securicor Transport Ltd (1980)

- View the main purpose rule simply as a rule of interpretation or construction.
- If the exemption clause uses clear and unambiguous words, it can be
effective even in the case of a fundamental breach.
- Exemption clause has to be reasonable to be valid under s3 UCTA.
Singapore Telecommunications Ltd v Starhub Cable Vision Ltd (2006)
- Contra Proferentem Rule
- Where there is ambiguity in interpreting a clause, the construction to be
adopted is the one which is least favorable to the person who put forward
the clause.
- Exemption clauses are to be construed strictly.
- If party seeks to exclude or limit his liability, he must do so in clear words.
Henry Kendall & Sons v William Lillico & Sons & Ors (1969)
Incorporation of EC

- Exemption clause may be incorporated by previous course of dealings

between parties which included exemption clause, and the parties indicated
that the present contract would be bound by terms of the earlier contracts.

L’Estrange v Graucob (1934)

- Exemption clause is validly incorporated into a signed contract; it is
immaterial if the party resisting its effect did not have the chance to read it.

Xu Jin Long v Nian Chuan Construction Pte Ltd (2001)

Negligence

- Any contractual term that prevents a party from being sued in negligence for
of EC

death or personal injury, is a restriction of liability under s2 of the UCTA,

and such a term is unenforceable.

Chapelton v Barry Urban District Council (1940)

- Affixing of exemption clause.
- A reasonable person should have expected to find contractual terms on the
unsigned document containing exemption clause.
Notification of EC

Geier v Kujawa, Weston & Warne Bros (Transport) Ltd (1970)

- Notice is insufficient if relying party knew of injured party’s disability and
failed to take reasonable steps to accommodate the disability.
Holland Leedon Pte Ltd (in liquidation) v C & P Transport Pte Ltd (2013)
- Reasonable steps must be taken to ensure notice of exemption clause is
sufficiently conspicuous and legible.
- Failure to point out relevant exclusion and limitation clause on an unsigned
quotation meant that the clauses had not been fairly brought to attention of
plaintiff.
 Olley v Marlborough Court Ltd (1949)
- Notice must be given before or at the time the contract was made for
exemption clause to be effective.
Thompson v LM&S Railway Co (1930)
- Disability does not matter, so 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.
- Relying party must not have known of the disability.
New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (1975)
Third Party

- Third party is able to take advantage of an exemption clause in the contract

EC Rights

to which he is not a party, subject to requirements contained in Contracts

(Rights of Third Parties) Act.
- Court held that third party could shelter behind the exemption clause because
the exemption clause clearly extended protection to them.
Misrepresentation Act
- If a contract contains a term which would exclude or restrict –
(a) any liability to which a party to the contract may be subject by reason of
Statutes

any misrepresentation made by him before the contract was made; or

(b) any remedy available to another party to the contract by reason of such
misrepresentation,
- that term shall be of no effect except in so far as it satisfies the requirement
of reasonableness as stated in s 11(1) of the Unfair Contract Terms Act, and
it is for those claiming that the term satisfies that requirement to show that it
does.
 BLAW Week 6: Vitiating Factors
Re Yeh Ee Swan (2003)
Incapacity

- People of unsound mind or people who are intoxicated are also considered to
lack capacity to enter into a contract.

De Francesco v Barnum (1890)

- Contract of service involving a minor will be binding upon the minor if the
Contracts for

contract is, on the whole, beneficial to him.

Beneficial

- Contract was not enforceable as it was not beneficial to minor.

Chaplin v Leslie Frewin (Publishers) Ltd (1966)
- Rule regarding a minor’s beneficial contract of service has been extended to
contracts through which minor could make a living.
Nash v Inman (1908)
Beneficial Contracts

- Necessaries
for Necessaries

- Show that the goods were suitable to the condition in life of the infant.
- 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.
Ahvena Ravena Mana Aroogmoogum Chitty v Lim Ah Han, Ah Gee and Chop Lee
Watt (1894)
- Contract to lend money to finance a brothel.
Apthorp v Neville & Co (i1907)
- Contract to publish a libel is illegal.
Contracts Contrary to Public Policy

R & Andrews (1973)

- Contract to give false evidence at a trial.
Regazzoni v KC Sethia (1944) Ltd (1958)
- Contract which benefits a foreign enemy or undermines the relationship
with a friendly country, such as for a transaction to be done in a friendly
foreign country which is illegal under its local law.
Ting Siew May v Boon Lay Choo
- Back-dated option agreement had been entered into with the object of
committing an illegal act and was void under common law.

Re Mahamoud and Ispahani (1921)

C
 - Legislature has made a “clear and unequivocal” declaration that this
particular kind of contract shall not be entered into, and that, consequently,
the contract was void.
ontracts Contrary to Statute

Shaw v Groom (1970)

- If statutory provision simply imposes a fine for non-compliance, the
likelihood is that non-compliance would not cause entire contract to fail.
Sinnathamby Rajespathy & Another v Lim Chong Seng & Another (2002)
- Where the legislature’s intention to prohibit a type of contract is clear from
the statute, then the contract may be void and unenforceable by all parties,
whether or not they were aware of the statutory illegality.
St John Shipping Corporation v Joseph Ranking Ltd (1957)
- Some provisions only penalize certain conduct without rendering the entire
contract void.
- Act which contravenes the statute was considered to be at the periphery of
the contract.
Archbold’s (Freightage) Ltd v S Spanglett Ltd (1961)
- The defaulting party may be prevented from enforcing the contract by the
maxim ex turpi causa non oritur action (action does not arise from a base
cause).
Koon Seng Construction Pte Ltd v Chenab Contractor Pte Ltd and Another (2008)
Effects of Illegality

- Where both parties are in pari delicto (equally at fault), then neither can
establish a cause of action against the other without relying on its own
wrongdoing.
Goldsoll v Goldman
- “Blue pencil” test
- It is possible to sever the void part by deleting the offending words or clause
without adding, substituting, re-arranging or re-drafting the contract.
Siow Soon Kim & Others v Lim Eng Beng alias Lim Jia Le (2004)
- Court may allow an innocent party to recover property which would
otherwise pass to the defaulting party under the illegal contract.
Nash v Inman (1908)
Executory Contracts

- Minor is not bound unless goods have been delivered by the other
for Necessaries

party.
Roberts v Gray (1913)
- Necessaries which are services.
- Contract is binding upon the minor regardless whether the other party
has performed his obligations or not.

Marlow v Pitfield (1719)

Necessaries

- Loans for necessaries

Loans for

- Generally, person who lends money to a minor is unable to enforce the

contract and recover the money from the minor.
- Exception exists if the money was used by the minor to purchase
necessaries.
Mentally Unsound and Che Som btr Yip & Ors v Maha Pte Ltd & Ors (1989)
Intoxiacated persons - Contract is unenforceable if other party knew or ought to have known
of his incapacity.

Rai Bahadur Singh & Anor v Bank of India (1993)

- Common law age of majority is 21 years old.
- Minors lacked capacity to sign off on letter of set-off for credit facility.
Minors

Valentini v Canali (1889)

- Minor is unable to recover any money paid or goods delivered by him
unless there has been total failure of consideration by the other party.
Misrepresentation
Koh Keow Neo & Others v Johnny & Others(2004)
Elements

- For a statement to be a misrepresentation, it must be a false statement which

is relied upon by the representee and induced the contract.

Bisset v Wilkinson (1927)

- Statement of opinion usually cannot form the basis of a misrepresentation
unless the representor had access to relevant facts and had no reasonable
ground for holding such an opinion.
Dimmock v Hallett (1866)
- Silence could amount to a partial non-disclosure if what is stated becomes a
half-truth by what is left unsaid.
False Statement of Fact

Tai Kim San v Lim Cher Kia (2001)

- Opinion must be made on reasonable grounds and made honestly.
- Opinion stated as if it is a positive fact can constitute a misrepresentation.
- Where facts are not equally well known to both sides, then statement of
opinion by the one who knows the facts best involves very often a statement
of a material fact, for he impliedly states that he knows facts which justify
his opinion.

Tan Chin Seng & Others v Raffles Town Club Pte Ltd (No 2)
- Statement of intention as to future action could be a false statement of fact
if, at the time of making the statement of intention, the representor did not in
fact hold that intention.
Trans-World (Aluminium) Ltd v Cornelder China (Singapore) (2003)
 - Misrepresentation by silence entails more than mere silence.
- Misrepresentation of statement comes from a wilful suppression of material
and important facts thereby rendering the statements untrue.
Edgington v Fitzmaurice (1885)
- Immaterial that it is not the sole inducing cause.
Panatron Pte Ltd v Lee Cheow Lee & Another (2001)
- Existence of opportunity to investigate truth of statement does not
Inducement

automatically remove the possibility of reliance or inducement.

Redgrave v Hurd (1881)
- Mere fact that representee had opportunity to investigate and ascertain
whether a representation was true or false was not sufficient to deprive him
of his right to rely on the misrepresentation.
Tai Kim San v Lim Cher Kia (2001)
- Misrepresentation is considered harmless if, amongst other things, a plaintiff
did not allow it to affect his judgement.
Types of Misrepresentation
Derry v Peek (1889)
- False representation must be made knowingly, or without belief in its truth,
Misrepresentation

or recklessly, careless as to whether it is true or false.

Fraudulent

Panatron Pte Ltd v Lee Cheow Lee & Another (2001)

- Representor knew statement was false.
- Induced respondents to rely on the statement
Vellasamy Lakshimi v Muthusamy Suppiah David (2003)
- Whether fraud or deceit is alleged, a high degree of proof is required on he
who asserts.
RBC Properties Pte Ltd v Defu Furniture Pte Ltd (2015)
- Successful defence claiming innocent misrepresentation requires the
Innocent Misrepresentation

representor to show that he subjectively believed in the trbuuth of the

representation and that, objectively, he had reasonable grounds for that
belief.

Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd (1978)
N
 - Negligent misrepresentation arise when false statement is made by the
Misrepresentat representor without due care.
egligent

ion - Manager made statement honestly but had no reasonable grounds for it.

Remedies for Misrepresentation

RBC Properties Pte Ltd v Defu Furniture Pte Ltd (2015)
Damages

- Damages in lieu of rescission may be a more appropriate remedy.

- Where rescission becomes a disproportionately harsh remedy to the representor
because the representation was slight or relatively unimportant.
Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed Ahmad (2004)
Restraint of

- General rule is that such clauses and contracts in restraint of trade are void.
Trade

Barang Barang Pte Ltd v Boey Ng San & Others (2002)

- Restraint of Trade clauses are used to prevent a business or person from
entering into a field in which the other party operates.
Criteria for Restraint of Trade
Asia Business Forum Pte Ltd v Long Ai Sin & Another (2003)
- Restraint must protect some proprietary or legitimate interest of the
covenantee.
Legitimate Interest

- In the case of employment contracts, an employer (covenantee) may restrain

a former employee from exploiting trade secrets or trade contracts obtained
from his employment.
Herbert Morris Ltd v Saxelby (1916)
- If restraint is intended merely to minimise competition or knowledge
acquired during his previous employment, then it is likely to be void.
Stratech Systems Ltd v Nyam Chiu Shin & Others (2005)
- Main function of restraint clause was to inhibit competition in business and
was therefore invalid.
Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd (1968)
Interest
Public

- Test of reasonableness requires a consideration of the public interest which

must be protected in such exclusive dealing agreements.

Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008)
Reasonable Scope

- Court will ensure that the covenant in restraint of trade “goes no further
than what is necessary to protect the interest concerned”.
- Severance does not change basic nature of the contract.
Mason v Provident Clothing & Supply Co Ltd (1913)

- Restraint must be reasonable in terms of its period, geographical scope, and

subject matter.
- Area of restraint was too large.
Davies v Benyon-Harris (1931)
V
oidable Contracts - Minor is entitled to repudiate the contract – without any liability on his part.
- Any time during his infancy or within a reasonable period after he attains
majority.
Steinberg v Scala (Leeds) Ltd (1923)
- Minor would not be entitled to recover any money or property transferred
by him to the other party unless there has been a total failure of
consideration.
Civil Law Act
s (5)
(1) All contracts or agreements, whether by parol or in writing, by way of
gaming or wagering shall be null and void.

(2) No action shall be brought or maintained in the court for recovering any
sum or money or valuable thing alleged to be won upon any wager or which
has been deposited in the hands of any person to abide the event on which any
wager has been made.
Minors’ Contract Act
s (2)
Where –
(a) A guarantee is given in respect of an obligation of a party to a contract
made after the commencement of this Act; and

(b) The obligation is unenforceable against him (or repudiates the contract)
because he was a minor when the contract was made,

The guarantee shall not for the reason alone be unenforceable against the
Statutes

guarantor.

s 3(1)
Where –
(a) A person (the plaintiff) has, after the commence of this Act, entered into a
contract with another (the defendant); and

(b) The contract is unenforceable against the defendant (or he reupdiates it)
because he was a minor when the contract was made,

The court may, if it is just and equitable to do so, require the defendant to transfer
to the plaintiff any property acquired by the defendant under the contract, or any
property representing it.

Sale of Goods Act (SOGA)

s (3)
(1) Capacity to buy and sell is regulated by the general law concerning capacity to
contract and to transfer and acquire property,

(2) Where necessaries are sold and delivered to a minor or to a person who by
reason of mental incapacity or drunkenness is incompetent to contract, he must
pay a reasonable price for them.

In sub-section (2), “necessaries” means goods suitable to the condition in life of

the minor or other person concerned and to his actual requirements at the time of
the sale and delivery.
 BLAW Week 7: Discharge of Contract
Avery v Bowden (1855)
- By affirming contract, innocent party places himself at risk of
supervening event occurring and discharging the contract by
frustration.
Clea Shipping Corporation v Bulk Oil International, “The Alaskan Trader” (1984)
- In the absence of “legitimate interest”, innocent party must accept
Affirming

anticipatory breach, treat contract as discharged and claim for

damages.
- If damages were a sufficient compensation, innocent party should not be
permitted to perpetuate the contract, which may result in even greater
detriment to the defaulting party.
White and Carter (Councils) Ltd v McGregor Respondent (1962)
- Claimant was not obliged to accept breach of contract and could
continue with contract.
Leivest International Pte Ltd v Top Ten Entertainment Pte Ltd (2006)
- Discharge by waiver.
- Where one party voluntarily grants the other party an indulgence not to
perform an obligation under a contract without any consideration
passing.
- Courts traditionally enforce waivers on the basis of reasoning similar to
that used in estoppel.
Agreement

- Waivers may be given in respect of specific modes of performance but

not usually in respect of the whole contract.
Li Hwee Building Construction Pte Ltd v Advanced Construction & Engineering
Pte Ltd (2002)
- Discharge by mutual release.
- Parties may have acted in such a manner as to be construed as having
abandoned the contract, such that the contract is terminated as a result
of the common intention of the parties that it should no longer bind
them.
RDC v Sato (2007)
- Legally justified Termination
Express Reference:
1. Contractual term breached clearly states that, in event of certain event or
events occurring, the innocent party is entitled to terminate the contract.
Breach

No Express Reference:
2. Party in breach renounces the contract by clearly conveying to the innocent
party that it will not perform its contractual obligations at all. Quaere
whether the innocent party can terminate the contract if the party in breach
deliberately chooses to perform its part of the contract in a manner that
amounts to a substantial breach.

3a. Condition-Warranty approach –

 Party in breach has breached a condition of the contract (as opposed to a
warranty)
(a) Should be applied before the “Hongkong Fir Approach” in Situation 3(b).

3b. Hongkong Fir Approach –

Party in breach which has committed a breach, the consequences of which
will deprive the innocent party of substantially the whole benefit which it
intended that the innocent party should obtain from the contract.
(a) Should be applied only after the Condition-warranty approach in Situation
3(a) and if the term breached is not found to be a condition.
- Innominate term focuses not on the nature of the term breached but on
the actual consequences of the breach.
STX Mumbai
- In the case of executed contracts where the only remaining obligation
was for one party to make payment at a future date, the doctrine of
anticipatory breach may not apply.
- Other party may have to wait for the time of performance to arrive
before taking action.
Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd (2013)
- Possible for innocent party to elect to affirm contract for the time being
when a repudiatory breach occurs.
- But innocent party must communicate unequivocally to the other party
his decision as to whether he accepts or discharges the contract.
Arokiasamy Joseph Clement Louis v Singapore Airlines Ltd (2004)
Discharge

- Repudiatory breach does not immediately discharge the contract.

- Innocent party may choose to accept the repudiation and treat the
contract as discharged or he may affirm the contract so that it remains on
foot.
Hong Fok Realty Pte Ltd v Bima Investment Pte Ltd (1993)
- When contract is discharged, innocent party is entitled to claim
damages to put him in the position as if the contract had been
performed properly.
Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd (2014)
- Frustrating event is a supervening event which rendered the
contractual obligation radically or fundamentally different from what
had been agreed in the contract.
Krell v Henry (1903)
- Frustration by non-occurrence of event.
Frustration

- Issue is whether the event which failed to occur could reasonably be

considered to be one which both parties held to be the very basis of the
contract.
- If event did not take place, parties would not have contemplated entering
into the contract in the first place.
- Postponement of King Edward VII coronation.

Lau Lay Hong v Hexapillar Pte Ltd (1993)

 - Contract for personal services may be discharged if service provider
dies.
- Contract for services cannot be discharged upon death.
Metropolitan Water Board v Dick, Kerr & Co (1918)
- Frustration by government interference is usually in the form of
unexpected government action or ruling which prevents the
performance of the contract.
Poussard v Spiers & Pond (1976)
- Frustration by personal incapacity if the incapacity affects the
performance of the contract in a fundamental way.
- Contract frustrated by her illness.
Shenyin Wangou-APS Management Pte Ltd and Another v Commerzbank (SEA) Ltd
(2001)
- Contracts may be frustrated because of government interference.
- Exchange rate affect by Malaysian government frustrated contract.
Taylor v Caldwell (1863)
- Destruction of subject matter leads to frustration.
- No fault of the parties.
Factors Limiting Frustration
China Resources (S) Pte Ltd v Magenta Resources (S) Pte Ltd (1997)
- Force majeure clauses expressly provide for occurrence of events (“acts
of God”) which will normally fall within the class of events which lead to
frustration.
- Plaintiff could rely on the force majeure clause.
- No breach by the plaintiff
- Defendant would not have been entitled to call on the performance bond
provided by the plaintiff.
Force Majeure Clause

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd & Another Appeal (2007)
 - General principles relating to force majeure clauses:
(a) The key purpose of such a clause is to contractually allocate the
risks of specified future events between the parties;

(b) Precise construction of the clause is crucial in order to determine its

scope. The intention of the parties must be given effect to;

(c) Force majeure clauses may exclude frustration and also provide for
discharge or other relief for non-frustrating events;

(d) Whilst a force majeure clause determines how outstanding obligations

could be resolved upon the happening of a foreseeable event, the
doctrine of frustration determines how these obligations should be
treated due to an unforeseeable event. Hence the doctrine of
frustration is still very relevant to the construction of force majeure
clauses. On the whole, such clauses, by their very nature and function,
would usually meet the criteria required of the doctrine of frustration.

(e) Whilst parties can exclude the doctrine of frustration in a force

majeure clause, the language used to do so must be clear and
unambiguous. The courts will construe such clauses strictly;

(f) A party who relies on a force majeure clause must not only bring
himself within the clause, but also take “all reasonable steps to avoid
its operation, or mitigate its results”.
Lim Kim Som v Sheriffa Taibah bte Abdul Rahman (1994)
Foreseeability

- Greater the foreseeability of the event, the more difficult it is to

establish frustration.
WJ Tatem Ltd v Gamboa (1939)
- Mere foreseeability of the event is no bar to frustration.
Maritime National Fish v Ocean Trawlers (1935)
induced

-
Self-

If frustrating event is the result of the voluntary action of one of the

parties, there is no frustration.

Cutter v Powell
Precise Performance

- Parties must perform their obligations fully and precisely.

- Payment was conditional on completion of voyage.
Re Moore & Co and Laudauer & Co
- Buyer is entitled to reject shipment on the basis of less than full and
precise performance.

Afovos Shipping Co SA v Pagnan (1983)

R
 - For anticipatory breach to be considered repudiatory, threatened non-
performance must have the effect of depriving the other party of
substantially the whole benefit of which the contract was intended to
bestow upon him.
Behn v Burness (1863)
- Breach of condition entitled the innocent party to repudiate the contract.
- Whereabouts of ship was a condition, hence charterers were entitled to
repudiate contract.
Mersey Steel and Iron Co v Naylor Benson & Co (1884)
- Honest misapprehension as to one’s obligations under a contract which
epudiation

leads to non-performance would not amount to repudiation if there is an

underlying willingness to correct one’s understanding and fulfil those
obligations.
Mizuho Corporate Bank Limited v Woori Bank (2004)
- Fundamental breach, that goes to the root of the contract is
repudiatory.
Sports Connection Pte Ltd v Deuter Sports GmbH (2009)
- If parties expressly agree in clear and unambiguous language that the
term concerned is a warranty such that a breach of it would never
entitle the innocent party to terminate the contract.
- Regardless of the serious consequences of breach, the court would give
effect to such intention and contract will not be terminated.
Exceptions to Precise Performance
Arcos Ltd v E A Ronaasen & Son
- Contract specifying weight, measurement, and the like must be
De Minimis Rule

complied with.
- What is microscopic is a matter of judgement and each case must be
evaluated on its own facts.
President Marine (Pte) Ltd v Kojima Singapore (Pte) Ltd (1994)
- If deviation in performance is microscopic, then the contract is
deemed to have been performed fully and precisely.
Empresswood Enterprise Pte Ltd v Kao Shin Ping (2005)
- If promisee voluntarily accepts partial performance of the promisor,
the promisor is entitled to reasonable remuneration on a quantum
Partial Performance

meruit basis.
Sumpter v Hedges (1898)
- If promisee did not have a clear choice of accepting or rejecting the
partially completed work, promisor’s argument of acceptance of partial
performance will fail.
P

Planche v Colburn (1831)

 - Where a promisor has performed part of his obligations but is
Performanc
revented
prevented by the other party from performing the rest of his obligations,
e contract is discharged on basis of prevented performance.
- Promisor may sue for breach of contract or, more commonly, claim
payment on a quantum meruit basis.
Boone v Eyre (1779)
Substantial Performance

- Where a promisor has substantially performed his obligations under a

contract, he can claim the agreed payment, less the amount necessary to
make good the defect.
Hoenig v Isaacs (1952)
- First question is whether, on true construction of the contract, entire
performance was a condition precedent to payment.
- Where contract provides for a specific sum to be paid on completion of
specified work, the courts lean against construction of contract that
would deprive the contractor of any payment at all simply because of
some defects or omissions.
Frustrated Contracts Act s(2)
(3) Where a contract has become impossible of
performance or been otherwise frustrated, and the
parties to the contract have for that reason been
discharged from the further performance of the
contract, this section shall, subject to section 3
have effect in relation to that contract.

(4) Subject to subsection (3), all sums paid or payable

to any party in pursuance of the contract before
the time when the parties were so discharged
(referred to in the Act as the time of discharge)
shall, in the case of sums so paid, be recoverable
from him as money received by him for the use of
the party by whom the sums were paid, and, in the
Statutes

case of sums so payable, cease to be so payable.

(5) If the party to whom the sums were so paid or

payable under subsection (2) incurred expenses
before the time of discharge in, or for the purpose
of, the performance of the contract, the court may,
if it considers it just to do so having regard to all
the circumstances of the case, allow him to retain
or, as the case may be, recover the whole or any
part of the sums to be paid or payable, not being
an amount in excess of the expenses so incurred.

(6) Where any party to the contract has, by reason of

anything done by any other party to the contract
in, or for the purpose of, the performance of the
contract, obtained a valuable benefit (other than a
payment of money to which subsection (2)
 applies) before the time of discharge there shall
be recoverable from him by that other party such
sum (if any), not exceeding the value of that
benefit to the party obtaining it, as the court
considers just having regard to all the
circumstances of the case and in particular –
(a) the amount of any expense incurred before the time of discharge by the
benefitted party in, or for the purpose of, the performance of the contract,
including sums paid or payable by him to any other party in pursuance of
the contract and retained or recoverable by that party under subsection (3);
and
(b) the effect, in relation to that benefit, of the circumstances giving rise to the
frustration of the contract.
 BLAW Week 9: Remedies for Breach of Contract
The Cherry (2003)
- Claimant can recover damages for a breach of contract or in tort where breach
was the effective or dominant cause of the loss.
- Courts adopt a common sense approach in interpreting the facts of each case
to determine whether the breach was the cause of the loss or merely gave the
opportunity for the loss to be sustained.
- Plaintiff would not have suffered loss but for the breach.
Galoo Ltd (in liquidation) and others v Bright Grahame Murray and another
(1993)
Causation

- Court must first assess if the breach of contract was an “effective” or

“dominant” cause of his loss, before determining plaintiff’s entitlement to
damages.
- Was the breach of duty a cause of the loss or merely the occasion for the loss?
Irawan Darsono & Another v Ong Soon Kiat (2002)
- For damages to flow, the loss must have been caused by the breach.
- Plaintiff should not be entitled to recover damages for breach of contract if
the breach did not cause the loss suffered by the plaintiff.
Monarch SS Co v Karlshamns Oljefabriker (AIB) (1949)
- Court held that effective cause of delay was the vessel’s unworthiness not the
prohibition by British authorities.
Chaplin v Hicks (1991)
Difficult in Assessment

- Loss is to some degree speculative in nature.

- Substantial damages awarded for loss of chance to make a profit.
- Plaintiff missed out on right to be considered as a finalist in a beauty contest.
MK Distripark Pte Ltd v Pedder Warehousing & Logistics (S) Pte Ltd
- Necessary to show that breach cause loss of a chance and whether the chance
lost was a real and substantial one.
- Where chance is rated at a point so low as to be speculative, the loss of
chance would be precluded.
Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd (2013)
- Damages for wasted expenditure
Expectation and Reliance Loss

- Expense incurred by the injured party who, relying upon the contract,
prepares to perform his obligations, incurring expenses which are rendered
wasted because of the breach.
Cullinane v British “Rema” Manufacturing Co Ltd (1954)
- Injured party can claim both expectation loss and reliance loss as long as
the expectation loss is calculated as a net figure exclusive of expenses.
- If the expectation loss is calculated on a gross basis inclusive of expenses,
the injured party cannot also claim reliance loss as this will result in double-
recovery.
 AS Nordlandsbanken v Nederkoorn(2001)
- Damages will be awarded on the basis of minimum legal obligation.
- Method least onerous to the defendant and least beneficial to the plaintiff
General Assessment of Damages

will be preferred.
Johnson v Agnew (1979)
- General principle for the assessment of damages in contract law is
compensatory.
- Innocent party is to be placed, so far as money can do so, in the same position
as if the contract had been performed.
Robinson v Harman (1848)
- General principal in governing damages for breach of contract is that
damages is 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.
Trigen Industries Ltd v Sinko Technologies Pte Ltd & Another (2004)
- Injured party is to be placed in the same financial position he would be in if
the contract had been properly performed.

Lumley v Wagner (1852)

- If the contract is a contract for the provision of special services, the promise
Injunctions

not to work for a competitor will be enforced.

- Enforceability of restraint clause.
Mareva Compania Naviera SA v International Bulkcarriers SA, The Mareva (1975)
- Interlocutory injunction against a defendant ordering him not to remove
particular assets from the jurisdiction.
Bulsing Ltd v Joon Seng & Co (1972)
- If liquidated damages clause is construed as a penalty and the amount
stipulated is higher than the actual loss suffered, at best the injured party
could obtain damages for the actual loss suffered.
- If liquidated damages clause is construed as a penalty and the amount is in
fact less than the actual loss suffered then the injured party may:
Liquidated Damages Clause

(a) Sue on the clause and recover no more than the amount stipulated;
- Sue for breach of contract generally, avoiding the clause, and seek to recover
damages in full.
Dunlop Pneumatic Tyre Company Ltd v New Garage and Motor Company (1914)
- Guidelines for construing liquidated damages clauses:
(a) If the liquidated damages are extravagant and unconscionable in
comparison with the greatest conceivable loss, then it is likely to be a
penalty;
(b) 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;
- The description of the clause as a “penalty” or “liquidated damage clause”
is relevant but not conclusive.
 Harris Hakim v Allgreen Properties Ltd (2001)
- Where the liquidated damages is prescribed by statute, the injured party
can only claim the amount stipulated in the clause.
- He is not allowed to elect to claim damages at common law nor to recover
more than what he is entitled to under the clause.
British Westinghouse Electric & Manufacturing Co Ltf v Underground Electric
Railways Co of London (1912)
- Fundamental basis of damages is compensation for pecuniary loss naturally
flowing from the breach.
- Plaintiff has the duty of taking all reasonable steps to mitigate the loss
consequent on the breach, and debars him from claiming any p art of the
damage which is due to his neglect to take such steps.
Mitigation

Chua Keng Mong v Hong Realty Pte Ltd (1994)

- Burden of proof is upon the defendant to show that a plaintiff has failed to
take reasonable steps to mitigate his loss.
Melachrino v Nickoll & Knight (1920)
- A plaintiff can recover any inadvertent additional loss from attempted
mitigation.
White & Carter (Councils) Ltd v McGregor (1962)
- Because of the principal of mitigation, the right to affirm a contract in the
face of an anticipatory breach is limited.
- 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.
Bailey v Bullock (1950)
- Damages may be awarded for non-pecuniary losses if the plaintiff suffers
substantial physical inconvenience.
Haron bin Mundir v Singapore Amateur Athletic Association (1992)
Non-pecuniary Losses

- As a general rule, damages for non-pecuniary losses such as frustration,

injured feelings, mental distress, humiliation and loss of reputation will not as
a rule be awarded for breach of contract.
- Over the years, there has been some loosening of this approach.
Jarvis v Swan Tours Ltd (1973)
- Damages for non-pecuniary losses may be compensated where a contract,
whose very aim is to provide enjoyment or security, is breached, giving rise
to disappointment or distress.
Wee Poh Hueh Florence v Performance Motors Ltd (2004)
- Damages were awarded for loss of amenity due to loss of prestige in driving
an inferior car.
Grossner Jens v Raffles Holdings Ltd (2004)
- Where contract expressly provides for an agent to be paid only upon the
Quantum
Meruit

happening of a specified event, payment to him on a quantum meruit basis

would not normally arise.
- Implied promise to pay would then be inconsistent with the express terms of
the contract.
 Rover International Ltd v Cannon Film Sales Ltd (No 3) (1989)
Money Paid
Refund of
- In order for plaintiff to succeed in claim for a refund, there must be total
failure of consideration.
- Plaintiff did not receive any part of the benefit bargained for under the
contract.
Beswick v Beswick (1967)
- Where damages would be an adequate remedy, specific performance may
not be available.
Specific Performance

Coastland Properties Pte Ltd v Lin Geok Choo (2001)

- Specific performance would not be granted unless the order can be
enforced, and provided the subject matter of the contract is a thing of
intrinsic value by reason of which damages may not be a sufficient
recompense.
Falcke v Gray (1859)
- Where damages are not an adequate remedy, specific performance may be
an equitable and discretionary remedy.
- Monetary compensation was not satisfactory where the subject matter
was a unique painting.
Remoteness
Hadley v Baxendale (1854)
- Damages which the other party ought to receive in respect of a breach of
contract should be such as may:
(a) Fairly and reasonably be considered either arising naturally or
(b) Such as may reasonably be supposed to have been in the
contemplation of both parties at the time they made the contract as
the probable result of the breach.
Two-limb Test

- “Two-limb Test”
(a) 1st Limb – Deals with normal damage or loss arising naturally
(b) 2nd Limb – Deals with abnormal damage or loss arising from special
circumstances.
- Application
(a) Usual course of things: Normal business activity.
(b) Knowledge includes imputed and actual knowledge.
i. Imputed knowledge: First limb
ii. Actual knowledge: Second limb
(c) Probability of occurrence: Serious possibility, quite likely.
(d) Knowledge of nature of damage: Need not be exact damage.
Koufous v Czarnikow Ltd (“The Heron II”) (1969)
Usual Course of Things

- Knowledge of ordinary practices and exigencies of plaintiff’s trade or

business is considered to be part of the “usual course of things”.
- Falls within first limb.
- Damage was “not unlikely”, “quite likely” or “liable to result”.
- Court held that appellant was liable as he must be imputed to now the
ordinary practices and exigencies of the defendant’s business.
 Out of the Box Pte Ltd v Wanin Industries Pte Ltd (2013)
- Person with actual knowledge of special circumstances will be liable for
higher loss which may arise if the breach occurred in those circumstances.
- Appellant could only claim part of the advertising expenses in failed venture
Knowledge

resulting from the respondent’s breach of contract, because the latter had no
knowledge of the exorbitant costs.
Victoria Laundry (Windsor) Ltd v Newman Industries (1949)
- Person with actual knowledge of special circumstances will be liable for
higher loss which may arise if the breach occurred in those circumstances.
- Defendant must know that the likely loss is a “serious possibility” or a “real
danger”.
- Newman was not liable for substantial profits foregone due to lack of
knowledge.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and another (2008)
Probability of
Occurrence

- Correct terminology for remoteness of damage in contract as seen in

Hadley v Baxendale, is “reasonable contemplation”, rather than
“reasonable foreseeability” as used in the law of tort.

Chuan Hup Marine Ltd v Sembawang Engineering Pte Ltd (1995)

- Defendant need not have in mind the exact damage actually suffered as
long as he is aware of the type or kind of damage in question.
Jackson & Another v Royal Bank of Scotland
Knowledge of Nature of Damage

- Once the test of remoteness in Hadley v Baxendale is satisfied, the amount

of damages to be awarded must not be artificially limited if the contract
itself does not provide for it.
- As long as the kind of damage is contemplated by the parties, the extent of
it need not be.
- Court overruled previous decision to limit amount of damages to a certain
period.
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd (1978)
- Court held that the loss fell under the second limb because it was within the
reasonable contemplation of the parties that there was a serious possibility
that the pigs might suffer as a result of the defendant’s breach.
- It was sufficient if the parties could contemplate the type or kind of
damage involved; exact nature or amount of damage need not be
contemplated.
Korea Jonmyong Trading Co v Sea-shore Transportation Pte Ltd & Another (2003)
- For damages to be recoverable, the damage must be proximate not remote.
Remote
 RDC v Sato (2007)
- Legally justified Termination
Express Reference:
1. Contractual term breached clearly states that, in event of certain event or
events occurring, the innocent party is entitled to terminate the contract.

No Express Reference:
2. Party in breach renounces the contract by clearly conveying to the
innocent party that it will not perform its contractual obligations at all.
Quaere whether the innocent party can terminate the contract if the party
Second Limb

in breach deliberately chooses to perform its part of the contract in a

manner that amounts to a substantial breach.

3a. Condition-Warranty approach –

- Party in breach has breached a condition of the contract (as opposed to a
warranty)
- Should be applied before the “Hongkong Fir Approach” in Situation 3(b).

3b. Hongkong Fir Approach –

- Party in breach which has committed a breach, the consequences of which
will deprive the innocent party of substantially the whole benefit which it
intended that the innocent party should obtain from the contract.
(a) Should be applied only after the Condition-warranty approach in Situation
3(a) and if the term breached is not found to be a condition.
Innominate term focuses not on the nature of the term breached but on the
actual consequences of the breach.
 BLAW Week 10: Agency
The Swan
Agrees
Agent

- If agent agrees to be liable to the third party, Court may find that it was
intended that both principal and agent be liable to the third party under the
contract.
Cain Sales & Consultancy Pte Ltd v Beyonics Technology Limited (2003)
Rights
Agent

- Generally, an agent has right to remuneration when he has fulfilled his

duties under the agency contract.
Fong Maun Yee & Another v Yoong Weng Ho Robert (1997)
- Where an agent knows he does not have principal’s authority, he may face
concurrent liability in both tort (negligent misstatement) as well as contract
(implied contract)
Lee Feng Steel Pte Ltd v First Commercial Bank (1997)
- Fraudulent agent can create substantial liability for a principal.
Ng Kong Teck v Sia Kiok Kok & Another (1997)
- If agent had no actual or ostensible authority to make the representation, his
principal is not bound by it.
Sigma Cable v NEI Parsons (1992)
- Agent cannot make representations as to his own authority and bind the
principal by the what the agent himself says.
- If not, anybody with some nexus to the principal could claim to have authority
to bind the principal and cause the principal to incur obligations to a third
party.
Breach of Agency

Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific-

Breweries (Singapore) Pte Ltd and another and another appeal (2011)
- The principle is that if an employee is not authorized to communicate with
the company’s solicitors for the purpose of obtaining legal advice, then that
communication is not protected by legal advice privilege.
- Authorization need not be express but may be implied.
Yonge v Toynbee (1910)
- Breach of warranty of authority
- Liability of the person who professes to act as agent arises:
(a) If he has been fraudulent;
(b) If he has without fraud untruly represented that he had authority when
he had not; and
(c) Where he innocently misrepresents that he has authority where the fact
is either:
(1) He never had authority or
- His original authority has ceased by reason of facts of which he has no
knowledge or means of knowledge. He professed to act as an agent; impliedly
contracting that he has no authority, and it is immaterial whether he knew of
the defect of his authority or not.

Bertram, Armstrong & Co v Godfray (1830)

D
 - Agent has general duty to follow his principal’s instructions.
- If agent fails to follow his principal’s instructions, this constitutes a breach of
their agency contract and agent is liable in damages to principal.
De Bussche v Alt (1878)
- Agent should not without consent of principal, become in his own right the
counterparty in a transaction with his principal.
Hippisley v Knee Brothers (1905)
- Agent is not allowed to make a secret profit by virtue of his position as an
uties of Agent

agent.
John McCann & Co v Pow (1975)
- Agent cannot delegate responsibilities from principal.
- Principal is assumed to have selected the agent because of the agent’s personal
character and abilities.
Keppel v Wheeler (1927)
- Agent must discharge his duties with reasonable care and skill.
Property agent failed to pass on higher offer to client.
N K Rajarh v Tan Eng Chuan (2013)
- Agents cannot be allowed to enter into engagements which their personal
interest conflict with or which may possibly conflict with the interests of
those whom they are bound to protect.
Black v Smallwood (1966)
- If the proper construction of the contract shows that the intention was for
the third party to contract only with the principal and not the agent then,
where the principal does not exist, the third party actually contracted with
no one.
- No one is liable to the third party.
Kelner v Baxter and Others (1866)
- Company before coming into existence cannot attain a legal status to attain
Non-existent Principal

contractual rights or sustain contractual liabilities existing from a pre-

incorporation agreement.
- Pre-incorporation agreements are not legally enforceable against the company.
- The Principal, who was not in existence, cannot ratify the contract made by
agent when he comes into existence – But s41 Companies Act allows
ratification.
- Agent that purports the contract on behalf of an unformed company will be
personally liable, provided he was a party to the contract; even if he is
contracting as an agent.
- Rights & obligations created between 2 parties of the contract cannot be
transferred to a third person who was not in a condition to be bound by it at the
time it was made.
O

Couturier v Hastie (1852)

 - Agency can be created by operation of law through an agency of necessity.
- Shipmaster realizing that cargo is unexpectedly perishing can dispose of the
peration of

cargo without authority of owner of cargo.

Law

Ng Hock Kon v Sembawang Capital Pte Ltd (2009)

- In law, a wife is not presumed to be the agent of her husband simply
because of her status as his spouse.
Abdul Jalil bin Ahmad bin Talib and Others v A Formation Construction Pte Ltd
(2007)
- In order to nullify the third party’s reliance on ostensible authority, such
knowledge must be actual knowledge rather than constructive knowledge.
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964)
- If agent acts within his ostensible authority, his action will bind the
principal to the third party.
- To establish ostensible authority, 4 conditions must be fulfilled:
(1) A representation that the agent had authority to enter on behalf of the
company into a contract of the kind sought to be enforced was made to
the contractor;
(2) Such representation was made by a person or persons who had
“actual” authority to manage the business of the company either
generally or in respect of those matters which the contract relates;
(3) The contractor was induced by such representation to enter into the
contract (relied on it);
(4) Under the memorandum or articles of association, the company was
Ostensible Authority

not deprived of the capacity either to enter into a contract of the kind
sought to be enforced or to delegate authority to enter into a contract of
that kind to the agent.”
Hely-Hutchinson v Brayhead Ltd.
- A person may have both ostensible authority and implied authority.
Jurong Shipyard Pte Ltd v BNP Paribas (2008)
- If third party cannot raise ostensible authority if he knew that the agent
did not have actual authority to carry out the act.
Viknesh Dairy Farm Pte Ltd v Balakrishnan s/o P S Maniam (2015)
- Ostensible authority arises only if, prior to the agent’s act, the principal has
in some way held out to the third party that the agent has the principal’s
authority to act.
First Energy (U.K.) Limited v Hungarian International Bank Limited (1993)
- A third party may be entitled to rely on an agent who lacks authority but by
reason of the agent’s position expect that the agent ordinarily has authority.
- Reasonable expectations of honest man must be protected.
- Manager had no actual authority to approve loan.

Hongkong and Shanghai Banking Corp Ltd v Jurong Engineering Ltd & Others
(2000)
- If a company has expressly authorized the agent to make representations on
 its behalf, then any representation made by that agent that he himself has
authority to do the act is a good representation for the purposes of
conferring apparent authority on the agent to do that act, even if he has been
expressly prohibited to do it, and even if it is not something that agents in his
position usually have power to do.
- Secretaries
Kelly v Fraser (2012)
- Agent had apparent authority to deal with administrative functions relating to
contributor’s money.
- Acceptance of payment was binding.
Ashbury Railway Carriage and Iron Co v Riche (1875)
- Ultra vires rules meant that a company only had the legal capacity to do
Principal
Capacity

what its objects clauses enabled it to do.

- Third party could not claim breach of contract as the contract was considered
to be beyond, or outside of, the powers of the company because it was not
included in the objects clause in its memorandum.
Keighley, Maxsted & Co. v Durant (Carrying on business as Bryan) (1901)
- Agent must profess himself as agent to principal to third party during the
Identified
Principal

time of the contract.

- Principal must be identified.
- Principal is not liable to third party since there was no ratification as there was
no disclosure of agency made by the agent during time of contract.
Bolton Partners v Lambert (1889)
- Effect of ratification is to grant retrospectively to the agent authority to act
on behalf of the principal.
- Ratification takes effect from the date of the agent’s act.
Cavenagh Investment Pte Ltd v Kaushik Rajiv (2013)
Ratification

- Principal’s inaction – to disown a transaction – may inadvertently allow a

transaction to be deemed ratified.
- Principal’s inaction must, when interpreted in the context and circumstances,
be of a nature which unequivocally signifies such an assent.
Warehousing & Forwarding Co of East Africa Ltd v Jafferali & Sons Ltd
- If the offer has a qualification that the acceptance is “subject to ratification”
by his principal or if third party knew that agent has no authority, principal
relating back will not apply.
- Unconditional acceptance will take place at the point of ratification.
Perishables Tansport Co Ltd v N Spyropoulos (London) Ltd (1964)
- Custom and trade usage may establish that an agent’s contract entails
Trade Usage

personal liability.

Collins v Associated Greyhound Racecourses Ltd (1930)

Undis

- If agent’s identity is critical to the contract, then the undisclosed principal

may not intervene in the contract subsequently.
cl Grace Humble v Hunter (1848)
os - An undisclosed principal may lose his rights under the contract.
ed - An undisclosed principal is not permitted to intervene in a contract made
Pr between his agent and a third party if there is an express or implied term in
in the contract to that effect.
ci - Description of agent as the “owner” was unambiguous.
pa - In Singapore, this case is now limited to contracts which specifically refer to
l the agent as “owner” or “proprietor” and where it is a term of the agreement
that he should contract as so. (Mario-Ville Boarding House v Palau Properties
(1995))
Siu Yin Kwan & Another v Eastern Insurance Co Ltd (1994)
- Doctrine of the undisclosed principal:
(a) An undisclosed principal may sue and be sued on a contract made by an
agent on his behalf, acting within the scope of his actual authority;
(b) In entering into the contract, the agent must intend to act on the
principal’s behalf;
(c) The agent of an undisclosed principal may also sue and be sued on the
contract;
(d) Any defence which the third party may have against the agent is
available against his principal; and
- The terms of the contract may, expressly or by implication, exclude the
principal’s right to sue, and his liability to be sued. The contract itself, or the
circumstances surrounding the contract, may show that the agent is the true
and only principal.
Trigen Industries Ltd v Sinko Technologies Pte Ltd & Another (2003)
- When an undisclosed principal is revealed to the third party, the third party
can elect either to sue the agent or principal.
- Once the third party has made his election, he cannot change his mind.
- Third party can only bring one legal action – either against agent or principal.
BLAW Week 11: Business Organizations