7 - Offer and acceptance

1. Requirements for contract (7.2)

a. Meeting of the minds between parties
i. Test of agreement is determined objectively
b. Consideration and intention to create legal relations
c. Capacity to contract
d. Parties must freely consent to the agreement

2. Offer
a. 3 elements:
i. Terms of exchange
ii. Indication of the willingness to be bound
iii. Confers on the offeree the power to bind the offeror upon acceptance of the
offer such that the offerer can no longer withdraw the offer
b. Offer made to the public
i. Carlill v Carbolic Smoke Ball Company (1893)
c. Invitation to treat vs offer
i. Party inviting others to make an offer have NO intention to be bound at the
stage of invitation. (7.11)
ii. Advertisements in newspapers and magazines  invitation to treat
7.18 – Online advertisements – Chwee Kin Keong and others v Digilandmall.com
Pte Ltd (2004) : Can either be offer (unilateral) or invitation to treat
*Whether the advertisement is an offer or merely an invitation to treat turns on
whether there is an intention to be bound.
iii. Displays of goods for sale  invitation to treat
Pharmaceutical Society of Great Britain v Boots Cash Chemists (1953)
iv. Auction sales  invitation to treat
v. Tender  invitation to treat
d. Termination of offer
i. Revocation before being accepted. Notice of withdrawal must reach the offeree
to be effective.
Byrne v Van Tienhoven (1880)
Can be implied / notified through third party
By post – effective when letter reaches his business / when he reads it.
By telex – if during ordinary business hours, effective when it was received on
the telex machine
7.34 - No legal obligation on the part of the offeror to keep the offer open for a
specified period even if he had promised to do so. UNLESS option created.
Unilateral offers – 7.36
ii. Rejection and counter-offer
1. 2 effects of a counter offer :
- Rejection of original offer
- stands as a new offer capable of being accepted by the offeror
 iii. Lapse of time
State time period
If no time limit – lapse after a reasonable period of time.
iv. Failure of a condition
v. Death
Give notice of death to terminate.

3. Acceptance
a. Must be communicated to the offeror
i. All instantaneous communications – Must be brought to the notice of the
offeror
ii. May not be an universal rule – 7.55
iii. Email = instantaneous? – not conclusive – 7.54
b. Exception: The postal acceptance rule
i. Acceptance takes place at the time the letter of acceptance is posted
ii. Applies equally to telegrams
iii. 2 conditions:
- where it is reasonable to do so
- letter of acceptance must be properly stamped and addressed.
iv. Offerors can overcome the exception by prescribing the mode of acceptance or
expressly excluding the application of the postal rule.
v. Emails?
If instantaneous – general rule apply
If not – postal acceptance rule apply
Position remains inconclusive.
c. By silence
i. Must take some form of objective manifestation of his intention through
positive action.
ii. Still inconclusive
iii. Singapore – silence can in certain exceptional circumstances be construed as
acceptance (7.68)
d. Ignorance of offer
i. General rule – A person cannot accept an offer of which he has no knowledge
ii. Exception – Gibbons v Proctor (1891)
iii. Motive of the person claiming the reward is irrelevant
e. Cross-offers
i. General principle – No contract because there is no meeting of the minds
ii. HOWEVER, it can be a contract (7.72 bottom half)
f. Battle of forms
i. Where this is a constant offer and counter-offer
ii. Counter-offer = no contract
iii. Exception - Butler Machine Tool Co v Ex-Cell-O Corporation (England) Ltd (1979)

4. Certainty and completeness

a. There may be no enforceable contract if the agreement is conditional, incomplete or
vague
b. 7.78 – Postpone liability until a document has been drafted and signed.
 c. BUT IF, the actual facts and/or language merit it, the court will hold that a valid and
binding contract has been concluded.
d. Court are willing to uphold contracts where possible by filling the gaps.
i. Brown v Gould (1972)
ii. By taking into consideration a previous course of dealing between parties or a
trade practice
Sudbrook Trading Estate v Eggleton (1983)
e. Vague = incomplete = no contract
i. Scammell and Nephew Ltd v Ouston (1941)
ii. Court may fill in the gaps to uphold a contract by reference to the parties’
previous dealings, the custom of the trade and the standard of reasonableness.
Hillas v Acros (1932)
f. Fairness 7.83  uphold contract even if vague
i. Foley v Classique Coaches (1934)
g. Agreement to negotiate / not to negotiate
i. Walford v Miles (1992) – 7.84-85
A ‘lock-out’ agreement may be enforceable if there is a time limit on its duration

5. Artificiality of offer and acceptance rules

a. Court may have a desirable solution in mind and will reason back to ‘find’ the presence
or absence of the labels of offer and acceptance in order to justify that solution
i. The Eurymedon
ii. Chapelton v Barry Urban District Council (1940)
iii. Thornton v Shoe Lane Parking Ltd (1971)

6. Electronic Transactions Act

a. s 14

8- Consideration
1. General rule : Promise is only enforceable if it is supported by consideration, that is, where the
promise is given in exchange for something of value
2. Law only requires consideration to be either benefit or detriment
3. Where the fulfillment of the condition is not within the control of the promise, the promise is
likely to be a mere conditional gift.

Rules for consideration:

1. A benefit or detriment must have been requested by the promisor in order to constitute a valid
consideration
a. Combe v Combe (1951) – 8.10
2. Past consideration is no consideration
a. Executed consideration is also the acceptance of an offer in a unilateral contract – Carlill
v Carbolic Smoke Ball Co (1893) – 8.13
b. Executed consideration is an act or forbearance undertaken in return for the promisor’s
offer
c. Exception: Pao On v Lau Yiu Long (1980) - 8.15
i. Past consideration is good consideration IF it satisfies the following:
 1. Act was done at the promisor’s request
2. There was an understanding between the parties, at the time the
request was made, that the act would be paid for; and
3. Such payment would be enforceable if it had been promised in advance
ii. The important question is whether the preceding act and the subsequent
promise are in substance part and parcel of one and the same transaction
iii. Exception endorsed in Singapore: Sim Tony v Lim Ah Ghee (1995)
3. Consideration must move from the promisee
a. Does not have to move to the promisor

Consideration must be sufficient in the eyes of the law

1. Consideration must be sufficient but need not be adequate

2. Only need to show sufficiency
3. Nominal consideration can be sufficient consideration as long as parties freely consented to it
a. Chappell & Co Ltd v Nestle Co Ltd (1960)
4. Where the consideration is given in monetary terms or is readily measured in economic terms,
such consideration is sufficient in the eyes of the law

Intangibles and moral obligations

1. Consideration is not sufficient

2. White v Bluett (1853) – 8.24 – father agreed to release son from his debt obligation if he would
cease complaining

Forbearance and compromise

1. Forebearance – where a party has a claim against another and agree to refrain from enforcing
the claim for a promise given by the latter
2. Compromise – whereby one party agrees to surrender his claim in consideration for the other’s
payment or other promises, as costly and time-consuming litigation to enforce the claim can be
avoided
3. Both are good considerations
4. BUT : Where a person promises not to enforce an invalid claim and it is shown that he knew
such claim to be invalid at the time of his promise, such forbearance is no consideration.
Wade v Simeon (1846)
5. Not necessary for the person surrendering his claim to show that he has given up a valid claim. It
is sufficient if he could establish:
a. He has reasonable grounds for his claim
b. He honestly believes that he has a fair chance of success
c. He has not concealed from the other party any fact which he knows may affect the
validity of the claim
d. Callisher v Bischoffsheim (1870)
6. Consideration furnished lies not in giving up a valid claim, but rather, in giving up a right to claim

Existing public or legal duty

1. No good consideration
 2. Where the act or conduct in question exceeds the requirements of the legal duty, it may
constitute good consideration
a. Glasbrook Bros v Glamorgan County Council (1925) – 8.28

Existing contractual duty

1. Owed to third party  sufficient

Scotson v Pegg (1861)
2. Owed to the promisor  not sufficient
a. In return for a promise for more
i. Stilk v Myrick (1809)  not sufficient – 8.30
ii. Exception : Any performance which is over and above the promisee’s existing
contractual duty is sufficient consideration for a promise given in exchange
1. Hartley v Ponsonby (1857) – 8.32
iii. Exception : Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991) – factual
benefit and no economic duress. 8.33 – 8.35
*Only a real and sufficient benefit would constitute sufficient consideration
Sea-Land Service Inc v Cheong Fook Chee Vincent (1994) – 8.36/37
iv. Sharon Global Solutions Pte Ltd v LG International (Singapore) Pte Ltd (2001) –
exception construed more broadly – 8.38
v. Contract modifications are valid as long as it can be shown that both parties
intended to be bound by the modification and that no improper pressure has
been applied on the promisor in the bargaining process
b. In return for a promise for less
i. Pinnel’s case (1602) the payment of a lesser sum is not a complete
satisfaction of the debt  not sufficient, not enforceable in the absence of
consideration
1. Affirmed and applied in Foakes v Beer (1884)
ii. BUT does not apply where the debtor has provided something different to the
creditor at the creditor’s
iii. Critique – Foakes v Beer (1884) – “All men of business… act on the ground that
prompt payment of a part of their demand may be more beneficial to them than
to insist on their rights and enforce payment of the whole”
1. Practical benefit is given
iv. 8.42 – Law in Singapore is unresolved.

When consideration is not required – The exceptions

1. Contract by deed – 8.43

Promissory Estoppel

1. Prevents a person from going back on his promise even though the promise is not supported by
consideration
2. Central London Property Trust Ltd v High Trees House Ltd (1947)
3. Requirements (ALL must be present)
a. Clear and unequivocal promise by the promisor not to insist upon his original
contractual rights (8.47)
 i. Silence / inaction would not generally constitute a clear promise as it lacks
certainty
ii. Can be implied by words or conduct – Hughes v Metropolitan Railway Company
(1877)
b. Reliance by the promise (such reliance is evidence by the promisee’s change in position
on the faith of the promise, by doing or omitting to do something which he would
otherwise not have done or omitted to do. 8.48)
i. Is detrimental reliance by the promisee necessary?
ii. UK – no
1. W J Alan & Co LTd v El Nasr Export and Import Co (1972) – all the
promisee needed to demonstrate was that he had, in reliance on the
promise, acted differently from what he otherwise would have done
iii. Singapore – unsettled. (8.51 – 8.52)
1. Fu Loong Lithographer Pte Ltd v Mun Hean Realty Pte Ltd (1989) –
detriment needed
2. Abdul Jalil bin Ahmad bin Talib v A Formation Construction Pte Ltd
(2006) – not essential “and all that is necessary is that the promisee
should have acted in reliance on the promise in such a way as to make it
inequitable to allow the promisor to act inconsistently with it” –
detriment is only important when considering whether it is in fact
inequitable for the promisor to retract his promise in all the
circumstances
c. Such that it is inequitable for the promisor to go back on his promise
i. It must be detrimental to the promisee if the promisor retracts his promise –
8.53
ii. Issue of inequity must be determined by taking into account all the relevant
circumstances
1. Eg. D & C Builders v Rees (1966)
d. Doctrine is invoked as a shield, not a sword (8.55)
i. Invoked to defend or resist a claim, but it cannot be used to create a new cause
of action where none existed before
ii. Eg. Combe v Combe (1951)
4. Merely suspends the enforcement of an obligation such that it may be revived by the promisor
upon giving due notice to the promisee
5. An express notice and precise time need not be specified
6. It would suffice if the promisor has by his conduct made clear his intention to withdraw his
concession and the promise is given a reasonable time to make the necessary adjustments
thereafter
a. HOWEVER. Inconsistency in the High Trees case (8.58)
b. Better to determine the effects of the doctrine by reference to the nature, intent and
circumstances of the promise made. (8.59)
c. If periodic payments  may or may not be able to claim for past accrued payments
before the notice
d. If one-off payments, where the creditor accepts a lesser sum in satisfaction of a larger
debt, the effect of promissory estoppels should ultimately depend on whether the
creditor’s intention (objectively determined) is to forgive the entire debt or merely allow
the debtor more time to pay
Intention to create legal relations

1. Even where an agreement is supported by consideration, it is not necessarily enforceable unless

the parties intended the agreement to be legally binding
2. Determined by the facts on an objective basis

Social and domestic agreements

1. Presumption that the parties do not intend to be legally binding

a. Balfour v Balfour (1919), Jones v Padavatton (1969) – 8.63/64
2. BUT can be rebutted by clear evidence of the parties’ intention to create legal obligations
a. Merritt v Merritt (1970)
b. All the surrounding facts of a case are relevant in considering whether the presumption
against the contractual intent has been displaced
i. Rebut by checking the certainty of the terms and the actual reliance placed on
the agreement. (8.66)

Business and commercial agreements

1. Presumption that the parties intended to create legally enforceable obligations

2. Burden of rebutting the presumption lies on the party who asserts the absence of contractual
intent
3. BUT rebut by expressly stating in their agreement that they have no intention to create legal
relations in clear terms
a. Rose & Frank Co v J R Crompton & Bros Ltd (1923)
4. Letter of comfort
a. UK – not binding
i. Kleinwort Benson Ltd v Malaysia Mining Corp Bhd (1989) – 8.70
b. Aust – Binding
i. Banque Brussels Lambert SA v Australian National Industries Ltd (1989)
c. Singapore – not binding
i. Hongkong and Shanghai Bank Corporation Ltd v Jurong Engineering Ltd (2000)
1. Letter of comfort should be presumed to have legal effect but displaced
by 2 considerations – 8.71
a. Parties did not seriously place any reliance on the comfort letter
b. Text of the letter was not sufficiently certain to support the
creation of binding obligations.
ii. Conclusion – Documents of this nature are unlikely to be given contractual force
except where there is irrefutable evidence of such intention

Consideration and contractual intention

1. Role of consideration is whittled down

2. Traditional argument – consideration is good evidence of the contracting parties’ intention to
create legal relations
3. Where there’s intention but no consideration – court ‘invent’ consideration
a. Chwee Kin Keong and others v Digilandmall.com Pte Ltd (2004)
 i. The marrow of contractual relationships should be the parties’ intention to
create a legal relationship (8.74)
b. Williams v Roffey

9 – Privity
1. Third party to a contract cannot enforce a benefit promised under that contract
2. The contracting parties cannot, by a contract between them, impose a burden on a third party
3. Privity vs consideration
a. Tweddle v Atkinson (1861)  same
b. Beswick v Beswick (1968)  different
c. Joint promisee doctrine : consideration is provided by either one of the promisees 
different

CRTPA

1. Expressly dispels the possibility of any argument based on the doctrine of consideration being
raised to defeat a third party’s claim
2. Does not override the existing common law or ad hoc statutory techniques for evading the
privity rule (s 8(1)) nor does it prevent new techniques from being created.

Applicable?

1. s 1(2) – Automatically applies to contracts entered into from 1 July 2002

s 1(3) – Applies if contract expressly provides for its application between 1 Jan and 30 June 02
2. Check if the kind of contract is covered / limited under the act (s 7)
3. s 2(4) – Contracting parties are at liberty to exclude or impose conditions precedent upon the
application of the CRTPA by inserting an EXPRESS TERM to this effect in their contract
4. Check if third party can enforce a contractual term by satisfying 2 requirements:
a. s 2(3) – “Expressly identified”
b. s 2(1)(a) – Contract expressly states that he may enforce the term
OR
s 2(1)(b) – Term in the contract purports to confer a benefit on him
c. s 2(6) : If satisfy  a benefit enforceable by the third party includes his being able to
avail himself of the protection of an exemption clause in a contract between the original
contracting parties and s 4(6) : provided he would have been able to do so if he had
been a party to the contract.

What remedies are available?

1. s 2(5) – Shall have available to him remedies for breach of contract as if he is a party to the
contract.

Protection of third party – Variation and rescission of contract

1. If s 2 satisfied, s 3(1) – the contract cannot be varied or rescinded so as to remove or alter the
third party’s right without his consent
 2. This limitation may be pre-empted by contracting parties’ insertion of an express term reserving
their right to vary or rescind their contract without the third party’s consent (s 3(2)(a)).
3. The contracting parties may, by an express term, even specify that the third party’s consent is
required in circumstances other than those stated above (s 3(3)(b))

Limitations to third parties – other provisions

1. s 4 – Right of enforcement is subject to defences or set-offs available to the promisor (cannot

sue the same thing as the other party, the promisee) – 9.56
2. s 8(2) – precluded from challenging an exemption clause relied upon the promisor (in his
defence to a suit against him by the third party) on the basis of s 2(2) UCTA.
 if promisor’s negligence resulted in loss or damage to the third party other than death or
personal injury, the third party cannot require that the promisor’s exemption clause be subject
to the test of reasonableness.

Other statutes to protect 3rd parties

1. Introduced on an ad hoc basis

Techniques

Action by promisee on behalf of third party

1. If damages are an adequate remedy, specific performance will not be ordered

2. Promisee is entitled to sue for breach of contract to recover substantial damages in respect of
the promisee’s own loss.
3. If the promise himself has suffered no loss upon a breach of a term, he will only be entitled to
nominal damages (possibly only $1)
4. HOWEVER. Jackson v Horizon Holidays (1975)
a. Contracts such as host contracts with a restaurant for dinner for himself and his friends
or where a vicar books a coach outing for the church choir, the contracting party-
promisee should be allowed to claim for the loss of the third parties.
b. Contracts for family holidays, for meals in a restaurant for a party or for hiring a taxi for
a group was suggested to be given special treatment that a promise can recover
damages on behalf of a third party.
c. What happens if the defect is only found out after the good was passed on to a third
party?
i. Linden Gardens Trust v Lenesta Sludge Disposals (1994)
 The Albazero (1977) exception (NARROW GROUND)
9.61 – Promisee is entitled to recover by way of damages for breach of contract
the actual loss sustained by those for whose benefit the contract is entered into.
1. Applied in Singapore Court of Appeal in Chia Kok Leong and another v
Prosperland Pte Ltd (2005)
a. Exception was applied even though the third party had a direct
action in the tort of negligence against the promisor
ii. Exception extended to cover cases involving real property BUT not to cases
where the third party had a direct right of action against the promisor.
 iii. Extended to cover a situation where the promisee did not originally own the
property which was the subject of the building contract with the promisor but
nevertheless the promisee was held to be entitled to claim in respect of the loss
of the third party for defects in the property (eg. Darlington Borough Council v
Wiltshire Northern Ltd (1995))
iv. Broad ground – Third party’s loss = promisee’s own loss as he did not receive
what he bargained for

Collateral contracts

1. Between 3rd party and promisor : Shanklin Pier LD v Detel Products LD (1951) – 9.64 3rd party
allowed to sue
2. Prove the existence of a collateral contract using textbook 10.13 (page 267 – 268)

Himalaya clause (where the third party is at fault)

1. Technique is applicable ONLY to enable a third party to rely on an exemption clause in a contract
to which they are not privy.
2. Scruttons Ltd v Midland Silicones Ltd (1962) and New Zealand Shipping Co Ltd v AM Sattherwaite
& Co Ltd (The Eurymedon) (1975)
3. Scruttons: 4 conditions have to be satisfied 9.66
a. The bill of lading (the contract of carriage of goods by sea) makes it clear that the
stevedore is intended to be protected by the provisions in it which limit liability
b. The bill of lading makes it clear that the carrier, in addition to contracting for these
provisions on his own behalf, is also contracting as agent for the stevedore that these
provisions should apply to the stevedore
c. The carrier has authority from the stevedore to do that
d. Any difficulties about consideration moving from the stevedore were overcome
4. s 2(6) of CRTPA – third parties are given a more direct method of enforcing an exemption clause
in a contract to which he is not privy  no longer be a need to resort to this complicated
technique

Assignment

1. If one of the contracting parties assigns / transfers his right(s) to a third party, he will be able to
enforce those rights in his own name – 9.68

Tort of negligence

Agency

1. Person authorized by his principal to enter into a contract with another on the principal’s behalf

11 – Exemption clauses

Check validity
 Incorporation

1. The person relying on the exemption clause must show that the other party agreed to its
incorporation into the contract at the time of or prior to the contract
2. By signature  incorporated.
a. General rule: where a contract is made in writing, the person signing the contract is
bound by everything contained in the document, whether he has read it or not
b. Eg. L’Estrange v F Graucob Ltd (1934) – “When a 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 document or not”
c. Exceptions? 11.18
i. A party may be able to avoid a contract that he has signed if he can bring
himself within the doctrine of non est factum (“it was not my deed”). This
narrow doctrine is available especially to vulnerable persons who sign
documents under a mistaken belief as to their nature or effect (eg. Saunders v
Anglia Building Society (1971))
ii. The rule does not apply where there is any misrepresentation as to the nature
of the document signed (eg. Curtis v Chemical Cleaning and Dyeing Co (1951))
iii. A collateral contract may sometimes override a written contract. It is sometimes
possible that an oral undertaking given at the time of signing a written contract
may overshadow the written contract and neuralise the exemption clause in the
written contract. (Eg. Evans (J) & Sonc (Portsmouth) Ltd v Andrea Merzario Ltd
(1976) – storage of equipment on deck  lost)
3. By notice
a. the person seeking to rely on it must show that the other party knew, or ought to have
known that the document was one which could be expected to contain such terms
b. He also must show that he has done everything reasonable to give sufficient notice of
the exemption clause to the other party
c. Reasonableness depends on type of document, time of notice, adequacy of notice and
effect of clause)
d. Type of document
i. Unsigned document where a reasonable person would not be expected to find
contractual terms : INVALID
ii. Eg. Chapelton v Barry Urban District Council (1940) – 11.10 – deck chairs
e. Time of notice
i. Before or at the time of the contract : VALID
ii. Eg. Olley v Marlborough Court Ltd (1949) – clause in hotel bedroom
iii. Eg. Thornton v Shoe Lane Parking Ltd (1971) – carpark – there must have been
reasonable sufficiency of notice prior to or at the time of contract
f. Adequacy of notice
i. Person relying must show that he did take reasonable steps to bring the notice
to the attention of the other party : VALID
ii. Notice must be sufficiently conspicuous and legible
iii. No need to show that the injured party had actual notice of it.
iv. Eg. Thompson v London, Midland and Scottish Railway Co (1930)
I. “illiteracy is a misfortune, not a privilege”
 v. BUT if injured party is under some disability and the person knows about it :
INVALID
I. Geier v Kujawa, Weston & Warne Bros (Transport) Ltd (1970) – taxi
inciden
g. Effect of the clause
i. The more unusual, the greater the degree of notice required to incorporate it
ii. Party seeking to rely on it must take special steps to draw attention to it
I. Eg. Interfoto Picture Library v Stiletto Visual Programmes Ltd (1989)
4. By previous course of dealing  course of dealing must be well established.
a. Eg. Spurling v Bradshaw (1956) – 11.18 – orange juice
b. Eg. Hollier v Rambler Motors (AMC) Ltd (1972)

Construction

1. Determines the effectiveness of the clause

2. Contra proferentem rule (= against the maker)
a. Ambiguity or doubt?  cannot rely on clause
b. Eg. Houghton v Trafalgar Insurance Co (1954) – 11.22 – car load
*Courts have tended to apply it less rigorously to those that merely limit liability rather
than exclude it completely due to UCTA.
c. Eg. Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd and Securicor (Scotland) Ltd
(1983) – 11.23 – Limitation clauses need not be construed as strictly as exclusion
clauses. Limitation clauses are more likely to express the genuine intentions of the
parties, and to be considered as part of the bargain than exclusion clauses
3. Rule in cases of negligence liability
a. Party relying on the exemption clause to escape liability must show that clear words in
the clause fully cover the facts that have occurred.
b. Not clear  not applicable
c. Eg. White v John Warrick & Co Ltd (1953)
*Arguable that there is no longer a need for the courts to apply such strict
interpretation due to UCTA.
d. Guidelines on the rules of construction. 11.26 – Canada Steamship Lines Ltd v R (1952)
i. If a clause contains language which expressly exempts the party relying on the
exemption clause from the consequences of his own negligence then effect
must be given to the clause
ii. If the first rule is not satisfied, then the court will proceed to apply the 2 nd and
3rd rule. Under the 2nd rule, the court must consider whether the words are wide
enough, in their ordinary meaning, to cover negligence on the part of the party
relying on the exemption clause. If there is any doubt as to whether the words
are wide enough to cover negligence, the doubt must be resolved against the
party relying on the clause; and
iii. If the 2nd rule is satisfied, the court must apply the 3 rd rule and consider whether
the exemption clause may yet cover some kind of liability other than negligence.
If there is such a liability, the clause will then apply to such liability and will not
extend to negligence
4. Doctrine of fundamental breach
a. Rule of law – Exemption clause ineffective even if the wording of the clause clearly
covered the breach that had occurred
 b. Rule of construction – Whether or not a fundamental breach could be o excluded or
limited depended upon the proper interpretation of the exception clause.
c. Eg. Photo Productions Ltd v Securicor Transport Ltd (1980) – 11.30
i. If the parties are of equal bargaining power, the clause will be examined in the
context of the contract as a whole
ii. If the exemption clause is clear and comprehensive, the courts will uphold it
even in case of fundamental breach.
d. *In commercial contracts, the parties were likely to be of roughly equal bargaining
power and able to cover their own risks by insurance  doctrine of fundamental
breach is useless.
Use UCTA for consumer contracts.

UCTA

1. Singapore – published in 1994

2. s 2 – UCTA applies to exemption clauses not only in contract but also in non-contractual
situations
3. Deals with ONLY unfair exemption clauses
4. Apply to “business liability” (s 1(3)) or “consumer” transactions (s 12)
5. Will apply even in non-consumer or non-business situations where exemption clauses are
invoked in cases of misrepresentation
6. Must check clause through steps 1 and 2 above (common law) before using UCTA
7. 2 results : totally inoperative / subject to test of reasonableness

Check if UCTA applies

 First Schedule

“Business Liability”

1. S 1(3) - Ss 2-7 apply in the case of both contract and tort only in cases where the exemption
clause concerns a “business liability”
2. “liability for breach of obligations or duties arising from things done or to be done by a person
in the course of a business (whether his own or another’s)

Negligence Liability

1. S 1(1) – Negligence is either the breach of “any obligation, arising from the express or implied
terms of a contract, to take reasonable care or exercise reasonable skill in the performance” of
that contract or the breach of “any common law duty to take reasonable care or exercise
reasonable skill (but not any stricter duty)”
2. s 2(1) : Death or personal injury  cannot exclude or restrict liability. Operates also in non-
contractual cases of negligence
3. s 2(2) : Others cannot UNLESS the term or notice satisfies the requirement of reasonableness
(s 11)

Breach of contract
 1. s 3
a. one must “deal as consumer or on the other’s written standard terms of business.”
b. Includes claim of a contractual performance that is “substantially different” or of non-
performance
2. s 3(2) : Cannot exclude or restrict liability UNLESS it satisfies the requirement of
reasonableness.

Sale or supply of goods

1. 11.41

Consumer contracts

1. Where one party to the contract “deals as consumer” s 12(1)

a. Exceptions : s 12(2)
b. s 12(3) – Burden of proof is upon the party who claims that the other party does not
deal as consumer
c. Companies can also be “dealing as a consumer” eg. R&B Customs Brokers Co Ltd v
United Dominions Trust Ltd (1988) – 11.44
Guidelines to what would NOT constitute “dealing as consumer” in pg 310 11.44
2. Test of reasonableness
a. s 11(1) : definition
b. Courts generally refer to the guidelines given in the Second Schedule in every case.
11.47
c. Reasonableness is a very factual enquiry – George Mitchell (Chesterhall) Ltd v Finney
Lock Seeds Ltd (1983)
d. Other factors
i. Smith v Eric Bush (1989) – 11.47
1. Whether it would have been reasonably practicable to obtain advice
from an alternative source having regard to the time and cost involved
2. Whether the liability in question was for a difficult task or obligation
that may impose additional burden on the performing party
3. Practical consequences of determining whether or not the clause is in
fact reasonable (eg. Whether it would have been open to either party to
protect themselves against the risk by taking insurance)
e. The more unreasonable an exemption clause, the greater is the burden upon the party
relying upon it to establish reasonableness
f. The fact that the parties entered into the contract willingly does not prevent one party
from later questioning the reasonableness of an exemption clause

Exception clauses and consumer protection legislation in Singapore

1. Since 1 March 2004

As defense for 3rd parties?

1. 9.65 – 9.67 – Himalaya clause
2. Scruttons : can rely on the exemption clause if 4 conditions were satisfied (9.66)
 3. CRTPA : s 8(2)
UCTA shall not apply where the negligence consists of an obligation arising from a term of a
contract and the person seeking to enforce it is a third party acting in reliance on section 2

10 – Terms of the contract

1. Conditions
a. When breached, innocent party may terminate the contract and sue for breach
2. Warranties
a. When breached, the innocent party may not terminate the contract but must continue
to perform the contract and recover compensation for the loss caused by the breach of
the warranty by way of damages
3. Innominate terms
a. May attract the legal consequences of a breach of either a warranty or a condition
depending on how serious the breach of the innominate term is
b. Focus is on the actual consequences of the breach in so far as a finding of whether or
not the innocent party is justified in terminating the contract is concerned

Parol evidence rule

1. When parties have reduced their contract to writing, either party may not attempt to show by
extrinsic evidence that the terms in the written contract must be changed, added to, or
contradicted
2. Sections 93 and 94, Evidence Act
3. Exceptions
a. A party may dispute the validity of the written contract by showing, through extrinsic
evidence, that the contract was the result of mistake, a lack of consideration, or of
misrepresentation
b. A party may show by extrinsic evidence a mistake in the written contract and prove
what the contract should have read instead of its disputed term (eg. Joscelyne v Nissen
(1970) – 10.10)
c. A party may also adduce extrinsic evidence to show that the written contract has not yet
come into existence or that it is no longer in operation (eg. Pym v Campbell (1856)) (s
94(c)EA)
d. A party may be allowed to offer extrinsic evidence to demonstrate that a particular
custom of the trade must be implied into, and therefore become part of, the written
agreement (eg. Smith v Wilson (1832))
e. S 93 – where the parties have reduced their contract to writing, “no evidence shall be
given in proof of the terms of such contract… except the document itself, or secondary
evidence… in which secondary evidence is admissible under the provisions of this Act”
f. S 94 – where a written contract is shown to exist, no oral evidence shall be admitted “for
the purpose of contradicting, varying, adding to, or subtracting from its terms” subject
to certain exceptions
g. Singapore – Those common law exceptions to the parol evidence rule in so far as they
are consistent with the EA continue to be applicable
i. BUT – Latham v Credit Suisse First Boston (2000)
 1. S 94 exceptions are exhaustive, common law exceptions are
inconsistent with the s 93  s 2(2) may not be capable of being invoked
in the first place

Collateral contracts

1. Where one party, in consideration of the other party making a separate and distinct contract,
makes a contract with that other party by giving that other party a collateral warranty
a. Eg. Shanklin Pier LD v Detel Products LD (1951) – 10.10 – paint issue
b. Before a collateral contract can be said to exist, it must be shown that one party made a
representation intending to persuade the other to conclude the contract and that in fact
that person concluded the contract with the result that the representation is in the form
of a warranty collateral to the main contract and exists side by side with the main
contract
c. Heilbut, Symons & Co v Buckleton (1913) – courts should be slow to hold that there is a
collateral contract
2. EA s 94(b) – terms of any collateral contract must not be inconsistent with those contained in
the main agreement
a. No application where there are three parties and 2 separate contracts, one of which is
alleged to be the collateral contract (eg. Shanklin Pier)
b. Where the collateral contract is alleged to exist between the same two parties, there
could be a problem
3. Are in most case oral agreements – the party asserting this must show a clear link between this
oral contract and the written agreement.
a. This party will not only have the burden of proving that the two contracts are linked but
also the terms of this oral contract
b. Limitations:
i. Circumstances in which there is a need for collateral contracts are few
ii. A responsible lawyer will not advance the collateral contract argument in court
in absence of credible proof of the existence of the oral contract

Terms and representations

1. Puff
a. Normal exaggeration and grandstanding that is a part of contract negotiation
b. Legally insignificant as it is not meant to be taken seriously
c. Borderline of opinion and a statement of fact
2. Representations
a. When a statement of fact to another party with the intention of inducing the other
party to enter into a contract and that factual statement does in fact induce the other
party to enter into the contract but it cannot be said that the statement was intended
by the parties to form part of the contract
b. 2(1) MA – expose a maker of a misrepresentation, who cannot prove that he had
objectively reasonable grounds for making that misrepresentation, to the same liability
as the maker of a fraudulent representation
3. Whether something said by one party to another during a pre-contractual negotiation is a
representation or a term depends on the intention of the parties
 Request to verify

1. When one party tells the other party something and then qualifies that statement by telling that
party to the effect “don’t take my word for it, get an independent verification and satisfy
yourself”, the court will probably hold that the party made a representation
2. Eg. Ecay v Godfrey (1947)
3. Eg. Schawel v Reade (1913) – 10.19 – horse incident  court held it to be a term

Importance of the statement

1. The statement in question is so important to one party that they would not have entered into
the contract but for such statement having been made, the court will likely hold that statement
is intended to be a term and not a representation
2. Eg. Bannerman v White (1861) – 10.20 – Hops and sulphur

Timing of the statement

1. If one party makes a statement about the subject matter of the contract to the other party
shortly before they enter into the contract, the court would probably hold that this statement is
a term and not a representation
2. Relevant time frame would depend on the type of contract
3. Whether a statement is a term or a representation is eventually a question of the intention of
the parties, a fact to be determined by looking at the surrounding circumstances

Oral statements and written contracts

1. Where the parties, after negotiations, put their agreement in writing, the courts would probably
hold that what they say during the pre-contractual negotiation, that is not put in writing, is a
representation and not a term
2. BUT – in special circumstances  court might hold that the parties entered into a contract that
was partly written and partly oral (eg. J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd
(1976))

Special skill and knowledge

1. Term or representation dependent on whether the party has special skill or knowledge in that
area
2. Eg. Oscar Chess Ltd v Williams (1957) - 10.24
3. Eg. Dick Bentley Productions Ltd v Harold Smith (1965) – 10.25
4. Where the knowledge of the person who receives the statement is about the same or superior
to that of the party making the statement, the courts would likely hold that such a statement is
intended as a representation and not a term of the contract

Relative importance of terms

Warranties, conditions and innominate terms

1. Condition  breach  discharge + sue for damages

2. Warranty  breach  damages
3. Innominate term
a. Term that the parties have expressly or, more usually, impliedly agreed that the effect of
non-performance would depend upon the nature and consequences of the breach
4. Court will seek to assess the objective language of the contract to determine whether the
parties intended the term in question to be a condition, an innominate term, condition or
warranty
5. Bentsen v Taylor, Sons & Co (1893)
a. Where there is no express characterization of a term, the courts will look
i. “at the contract in the light of the surrounding circumstances,
ii. And then (make up its mind) whether the intention of the parties, as gathered
from the instrument itself, will best be carried out by treating the promise as a
warranty sounding only in damages or as a condition precedent by the failure to
perform which the other party is relieved of his liability.”
6. Sometimes, a statue will classify a particular term as a condition and it will not usually be open
to the parties to designate it as a warranty
7. However, if after examining the term in question, the court decides that it is not a condition but
also concludes at the same time that the breach of the term “may be attended by trivial, minor
or very grave consequences”  innominate term (Bunge Corporation, New York v Tradax Export
SA Panama (1981))
8. Layman vs technical sense
a. L Schuler AG v Wickman Machine Tool Sales Ltd (1974) – condition in the contract under
review was not meant in the technical sense but in the layperson sense
i. If they had concluded that the parties knew what they were doing when they
stated that a particular term was a condition, then they would have treated that
term as a condition in the technical sense without regard to whether or not the
term contained an objectively important obligation

Differentiating between conditions and warranties

1. Courts should not be too ready to characterize terms as conditions (Eg. Cehave NV v Bremer
Handelsgesellschaft mbH (The Hansa Nord) (1976))
2. Those relating to time have been regarded as conditions in the absence of evidence to the
contrary
3. Traditional approach – if its not a condition, it would be a warranty
4. Poussard v Spiers (1876) – 10.32 – rejected suit
5. Bettini v Gye (1876) – 10.33 – accepted suit
6. 10.34

The “Hong Kong Fir Approach” and a suggested synthesis between the condition-warranty and
Hong Kong Fir Approaches

1. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962)
a. Focus is on the nature and consequences of the breach of the term rather than on the
intention of the parties
2. 2 step process:
a. Court must determine whether the language of the term requires it to be classified as a
condition according to the traditional condition-warranty approach.
 b. It is only after determining that the term is not a condition but, rather, an innominate
term, must the court consider whether in the circumstances of the case, the breach has
deprived the innocent party of substantially the entirety of the benefit of the contract it
was intended that the innocent party should have, in which case the consequences of a
breach of a condition would follow
9. It is always possible for the parties to agree that a particular term should be regarded as a
condition even though the consequences of its breach could be minor (Bunge Corporation, New
York v Tradax Export SA Panama (1981))
10. Singapore – RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd (2007) – 10.39
a. Explicit intentions of the parties, with respect to the force to be given to particular
terms, must be given paramount importance
b. If the parties had not made their intentions explicit, the court’s task would be to parse
the contract and discern the intentions of the parties as objectively expressed in the
contract
c. Where a breach of a term was alleged, the court will first consider whether that term
was a warranty
d. If it were a warranty, the court “would, as a question of fairness, go further and examine
the consequences of the breach as well. In the result, if the consequences of the breach
are such as to deprive the innocent party of substantially the whole benefit that it was
intended that the innocent party should obtain from the contract, then the innocent
party would be entitled to terminate the contract, notwithstanding that it only
constitutes a warranty”

Implied terms

1. Implied in fact
a. Parties had certain intentions that they did not express
b. The court asks itself that the parties would have unequivocally agreed upon had they
addressed their minds to the problem or alternatively the court tries to supply a term
that would give business efficacy to the contract
2. Implied by law
a. Concerns specific types of contracts, usually defining relationships between the parties,
where the courts imply a term not because of the presumed intention of the parties but
because the implied term gives effect to policies intended to make the relationship work
in that particular category of contract

Terms implied in fact

1. Officious bystander test (Shirlaw v Southern Foundries (1926) Ltd (1939))

a. Ask an officious bystander whether they would have included the term to be implied as
an express term ”oh, of course”
b. The term to be implied must be so obvious as to not admit possible disagreement
2. Business efficacy
a. Terms may not be obvious but the contract will not work if they are not implied
b. Imply terms where the implied term would inject business efficacy to the contract
c. Eg. The Moorcock (1889) – 10.47
3. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) – 10.48 – conditions that must be
present in order for a term to be implied
 a. Term to be implied must be reasonable and equitable
b. Term implied must be necessary to give business efficacy to the contract. Thus, no term
will be implied if the contract is effective without it
c. The term implied must be so obvious that “it goes without saying”
d. It must be capable of clear expression
e. It must not contradict any express term of the contract

Terms implied in law

1. Courts imply terms in certain types of contracts, usually those that establish a relationship
between the parties
2. Standardised terms

Terms implied by statute

1. When a statute implies terms in a contract, it is not trying to anticipate and provide for the
intentions of the parties
2. Implication is on grounds of public policy with Parliament believing that such contracts must
contain these implied terms unless explicitly dislodged by the parties

Terms implied by custom

1. Where a party engages in contracting within a particular trade, that party will be bound by the
usage in that trade if the usage is well-known, certain, reasonable and legal
a. Eg. Nelson v Dahl (1879)
2. IF f it can be shown that those doing business in a particular community had a generally
accepted custom and that anyone inquiring would have been told about that custom, then this
custom would bind the parties even if both of them were ignorant of its existence
a. Eg. Chan Cheng Kum v Wah Tat Bank Ltd (1971))
3. To be implied, a custom must be a usage that is sufficiently uniform and accepted by the
relevant community as controlling in the absence of express agreements

16 – Performance, breach and agreement

Discharge by performance

1. De minimis defects  no breach

a. Arcos, Ld v E A Ronaasen & Son (1993)  “If the written contract specifies conditions of
weight, measurement and the like, those conditions must be complied with... No doubt
there may be microscopic deviations which business men and therefore lawyers will
ignore”  some degree of “microscopic” or “de minimis” shortfall in performance will
be ignored  no breach
2. Vicarious performance  where it is not specified as to who will carry out the obligation,
promisor can outsource work
a. The promisor remains liable for any defects in the performance of his sub-contractors
b. Exception: employment contract
3. Time of performance
 a. Where no date or timing for performance is expressly specified, it is likely that a term
requiring performance to be provided within a reasonable time from the formation of
contract will be implied
b. Time is NOT of the essence unless it has been either expressly or impliedly made to be
so
c. If time is made of the essence
i. Failure to comply = breach
d. If time is not made of the essence (neither express nor implied)
i. Will be made to be of the essence if, following undue delay by one party, the
other gives notice that the contract will be treated as at an end unless
performance is completed within a reasonable space of time
ii. Eg. Charles Rickards Ltd v Oppenheim (1950) and Lee Eunice (Executors of the
Estate of Lee Teck Soon) (1993)
e. Timing may be set by reference to other contingent events
i. If the other party to the contract refuses to accept performance, the promisor
may plead tender as a defence to any action by the other party against him for
failure to perform
ii. Promisor must show that he has always been willing to perform his side of the
contract and has done so as far as is possible given the non-cooperation of the
other party
iii. Refusal to cooperate may also give the promisor the option to elect to discharge
the contract

Breach of a promissory obligation

Lawful excuses for breach of contract (16.18)

1. Discharge by agreement
a. Where the party, who is owed the obligation in question, does not have any outstanding
obligations under the original contract, the party seeking to be released from that
obligation will have to provide some form of valuable consideration in exchange for the
release.
b. In the alternative, the release must be executed under a seal to be effective
2. Contractual provision for termination
a. By giving each other a reasonable period of notice
b. Force majeure clause
c. Open to contracting parties to provide such issues as the return and refund of advance
payments, reimbursements for expenses incurred in preparation for the performance of
the contract…
3. Frustration of contract
4. Promissory and contingent obligations, interdependent and independent obligations 16.30
a. Where independent, tends to prevent an aggrieved party from being able to rely on the
self-help remedy of discharge for breach
i. Court usually begin by assuming that the parties would have intended the
contract to impose obligations which are interdependent

Repudiatory breaches (Actual / anticipatory)

1. A party clearly and unequivocally informs the other party that he cannot or will not perform any
of his obligations under that contract orally, in writing or inferred from inactivity
a. Prove clearly the intention not to be bound by the terms of the contract  contract may be
repudiated
b. Either actual / anticipatory
c. If entire and indivisible contract  discharge
d. If only some but not all obligations under a contract  cannot unless breach condition /
deprived him of substantially the whole benefit
e. How to prove repudiatory intention
i. San International Pte Ltd v Keppel Engineering Pte Ltd (1998) – the test is to
ascertain whether the action or actions of the party in default are such as to
lead a reasonable person to conclude that he (the party in default) no longer
intends to be bound by its provisions… Also, the part in default “may intend in
fact to fulfil (the contract) but may be determined to do so only in a manner
substantially inconsistent with his obligations” or may refuse to perform the
contract unless the other party complies with certain conditions not required by
its terms.

Making performance impossible (Anticipatory breach)

1. Interdependent obligations
2. Defense of tender available to excuse the promisor for the non-performance
3. May also give the promisor the option to elect to treat the contract as having been discharged
by breach
4. Burden of proof on the promisor to show that further performance is in fact impossible
a. It is not enough to show that a reasonable person would conclude that further
performance is impossible
b. Universal Cargo Carriers Corporation v Citati (1957) – 16.38 – Must show that it was in
fact impossible for the party in breach to actually perform his obligations without
incurring a delay as would negate the commercial purpose of the hire contract
5. Where the fact of impossibility of further performance is equivocal, great difficulty in continued
performance may well be enough in certain circumstances as to amount to an implied
repudiation.

Effects of a breach

1. Aggrieved party have the right to bring the contract to an end

2. Party in breach may be ordered by the courts to compensate the aggrieved party a sum of
money for those losses.

Actual Breach

1. Show that it’s a condition or innominate term where it deprives the aggrieved party of
substantially the whole of the benefit of the contract
2. Availability of judicial remedies such as damages does not have any necessary relationship to
the question as to whether a contract has been discharged or affirmed.
3. Elect to discharge
a. Effective at the time the election is communicated to the other contracting parties
 b. Communication of decision to discharge may be in the form of words, acts or silence
(exceptional cases)
c. Prior to receipt of such communication, election may be withdrawn
d. Any obligations which arise prior to the time of such discharge will continue to bind
4. Elect to affirm
a. Loses the right to have the contract discharged
b. Right to sue and recover money damages for any losses incurred as a result of the delay
in procuring full performance will usually be retained UNLESS the aggrieved party also
elects to waive his or her right to compensatory money damages.

Anticipatory repudiatory breach

1. Elect to discharge
a. Can discharge immediately
b. Immediately entitled to sue for damages as compensation for any loss suffered as a
result of the non-performance of the contract
c. Moschi v Lep Air Services Ltd (1973) – “the damages are assessed by reference to the old
obligations”
2. Elect to affirm
a. Anticipatory breach is ignored
b. No liability for money damages for that anticipatory breach since it is treated as if the
breach never occurred
c. Unless and until an anticipatory breach is accepted by the innocent party, the contract
will stay on foot and the anticipatory breach will be ignored as if it had never occurred.
d. “writ in water”

Limits on right of election to affirm contract

1. White and Carter (Councils) Ltd v McGregor (1962) – 16.58

a. When there is no legitimate interest, financial or otherwise, in performing the contract
rather than claiming damages  cannot saddle the other party with an additional
burden with no benefit to himself
b. If a party has no interest to insist on a particular remedy  cannot insist (by affirmation)
c. He ought not to be allowed to penalize the other party by taking one course when
another is equally advantageous to him
d. CONCLUSION  repudiating party have the burden of proving the absence of a
legitimate interest on the part of the innocent party in the performance of the contract.
If it is difficult to prove the presence of a concept as ill-defined as ‘legitimate interest’,
the difficulty to prove its absence must surely be even greater.
2. Limitation of the doctrine – Singapore’s case of MP-Bilt Pte Ltd v Oey Widarto (1999)
a. Requirement of “legitimate interest” cannot apply retrospectively to accrued debts 
can be sued even after acceptance of repudiation
b. Does not apply where the innocent party can reasonably perform his obligation without
the co-operation of the contract breaker
c. Doctrine was conceived in the context of the innocent party rejecting the repudiation by
the other party and exercising his right to complete performance when the former has a
legitimate interest to protect
 d. It cannot apply when the innocent party is under a legal obligation or practical
compulsion to complete performance of the contract in question and other contracts he
has entered into on the basis of the contract in question – 16.65

Partial performance and discharge by breach

1. If partial performance (not paid for)  breach  sue for damages

a. Entire obligation: confer no benefit, no claims can be made. Cutter v Powell (1795)
BUT Apportionment Act / quantum meruit can be used.
b. Substantial benefit: Substantial performance doctrine  claim full price. BUT price
payable off set liability in damages as he is still in breach. OR severable / divisible
obligations  staggered payments / periodic payments
c. Little benefit : Quantum Meruit / Apportionment Act
2. If payment was made before breach by performance 18.98
a. Claim money by “Total Failure of Consideration”
i. Applicable for both parties, whether in breach or not
ii. Success of the claim depends on the claimant being able to establish that he or
she received no part of the promised benefit.
iii. Rover International Ltd v Cannon Film Sales Ltd (1989)
b. Claim for services (Quantum Meruit) / goods (Quantum Valebant)
i. If its incontrovertible benefit conferred, the pro rata contract price should
rightfully be ignored.
d. Cannot be done if the claimant is the party in breach

Apportionment act

1. S 3 – 16.74 – If the obligation to pay is of a periodic nature, partial completion of work will still
be paid for by reference to the period for which work was done

Quantum Meruit

1. In order for quantum meruit to work, the person must have shown that he can freely accept or
reject the action
2. Lee Siong Kee v Beng Tiong Trading, Import and Export (1988) Pte Ltd (2000)
a. 2 varieties of quantum meruit:
i. Quantum meruit on a contractual basis; and
ii. Quantum meruit on a restitutionary basis
3. Do not excuse any potential liability in damages for the partial performance

Quantum meruit on a contractual basis

4. Contracts expressly provide that payment in return for performance will be made in proportion
to the amount of work done
5. Price will simply be made in accordance with the manner of apportionment as described in such
a term
6. Implied in the area of sale of goods
a. S 30(1) Sale of Goods Act
 7. Terms providing for quantum meruit payment can be implied at common law if it was necessary
for business efficacy or if it passed the test of the “officious bystander” test
8. Imply the existence of an entirely new contract with such terms – 16.82

Quantum meruit on a restitutionary basis

3. Lies within the law of unjust enrichment (law of restitution)

4. A claim may be made for a reasonable sum in relation to the partial provision of work or
services, if the party who has received the alleged benefit of this partial performance had the
option of freely accepting or rejecting the benefit of this partial performance

17 – Frustration
1. Rules of the doctrine
a. Should not be used by a contracting party to escape what has turned out to be a bad
bargain
b. Parties are free to make contractual provision with respect to eventualities
2. Legal basis
a. Uncertain
b. Implied theory that the parties had contracted “on the footing that a particular thing or
state of things would continue to exist” (Tamplin Steamship v Anglo-Mexican Petroleum
Products (1916))
c. “Foundation” of the contract disappears, the contract itself also vanishes (Tamplin
Steamship v Anglo-Mexican Petroleum Products (1916))
d. A court may exercise its discretion and hold that a contract is frustrated when justice
demands it
3. Doctrine of frustration can be excluded by express agreement
a. BUT frustration through illegality cannot be excluded

Elements

1. Definition – Davis Contractors v Fareham UDC (1956)

a. “Without default of either party, a contractual obligation has become incapable of being
performed because the circumstances in which performance is called for would render
it a thing radically different from that which was undertaken by the contract”
2. Test – Does the event make the performance of the contract now radically different from what
was originally contemplated by the parties?
3. If discharged by frustration  takes place by operation of law, not to any action on the part of a
contracting party

Radically different performance

1. Court:
a. first looks at the contractual promise and the circumstances that existed at the time of
the contract
b. Then looks at the supervening event and what performance would be like if the promise
were to be enforced in the new circumstances
 c. Compare the performance in the two scenarios and ask whether the latter is radically or
significantly different from the former
2. Davis Contractors v Fareham UDC (1956 )- 78 houses in 8 months inadequate labour supply 
delay completion by 14 months  increased contractors’ expenses by some 17000 pounds 
argued that it has been frustrated + claim quantum meruit
 not radically different, no frustration

Neither party at fault

1. A contracting party cannot rely on “self-induced” frustration

Time of frustration

2. Contract is discharged automatically

3. Effect of a supervening event is determined at the time the event occurs, or a reasonable time
thereafter
4. Parties’ right should not be left indefinitely in suspense

Foresight and foreseeability

1. Unexpected events, not foreseen or even foreseeable

 Singapore : cannot be foreseen or highly foreseeable

Classification

General impossibility

Impossibility – Destruction of subject-matter of contract

1. Total destruction may not be necessary
a. Suffices if the thing is so seriously damaged that, for commercial purposes, it has
become something else; or that destruction of a part of the subject matter defeats the
main purpose of the contract.
b. Destruction of something which is not the subject matter of the contract but is
nevertheless necessary for its performance will also frustrate the contract

Death or incapacity
1. Death : if contract is of a personal nature, frustrated. If personal element absent, not frustrated
2. Incapacity : Whether the contract has been frustrated depends on the likely duration of the
incapacity or unavailability, and whether the disruption would make a radical change to the
contractual performance.

Unavailability
1. Whether temporary unavailability results in frustration would again depend on various factors
such as the length of the anticipated unavailability, the period of the contract and the
commercial purpose of the contract

Failure of source of supply

1. If expressly provided that goods are to be supplied by a particular source  frustrated
2. Where there is no express provision, both parties contemplated supply by the particular source
 frustrated
3. Where only one party intends to use that source, failure of that source does not amount to
frustration

Method of performance impossible

1. Method must be specified in order to be applicable
1. Must have been intended to be exclusive
2. Otherwise, alternative methods may have to be resorted to, so long as they are not
fundamentally different from the prescribed method
2. Tsakiroglou & Co Ltd v Noblee Thorl GmbH (1960) – pg 456

Illegality

1. Where at the time of contract the performance is one which is already prohibited by law, the
contract is void ab initio (from the start)
2. Where the contract is to be performed abroad and its performance has become illegal by the
law of the place of performance  frustrated
3. Frustration of this sort cannot be excluded
4. Contract may be frustrated by supervening illegality which was foreseeable or even foreseen but
for which no express provision has been made

Radical change

1. Frustration of purpose
a. Krell v Henry (1903) – 17.22
i. Key question is whether the enjoyment of the event was the common purpose
of BOTH parties
ii. If it was, FRUSTRATED, even though the continuation of the contract is
physically possible
b. The failure of the purpose of one party alone does not bring about frustration
2. Delay, unavailability
a. Delay must be so abnormal in its effect or expected duration as to fall outside what was
the reasonable contemplation of the parties at the time of contract.
3. Impracticibility, increased costs
a. Insufficient to frustrate a contract
i. Tsakiroglou v Noblee Thorl (17.19) and Davis Contractors
b. BUT where the supervening impracticability is so abnormal as to be outside the ordinary
range of commercial risk, performance in the changed circumstances may be considered
radically different performance

Frustration of a lease/Sale of land

1. Singapore – Doctrine applies to a lease of land

a. Eg. Singapore Woodcraft Manufacturing v Mok Ah Sai (1979)
b. LimKim Som v Sheriffa Taibah bte Abdul Rahman (1994)

Self-induced frustration
1. Onus of proving that the frustration was self-induced lies with the party who asserts that it is so
a. Although a contracting party cannot rely on frustration induced by his own conduct, the
other contracting party is entitled to do so.
i. Harrington v Kent (1980)

Negligence

1. Careless but not deliberate  Frustration

a. Joseph Constantine v Imperial Smelting (1942)
2. Not careless but deliberate  no frustration

Choosing between several contracts

1. Where a supervening event results in a contracting party to be in a position where he is not able
to perform all of several contracts but can perform some of them
2. Maritime National Fish v Ocean Trawlers (1935) and The Super Servant Two (1990) – if the
contracting party chooses to perform some of the contracts, he cannot rely on frustration to
discharge him from the other contracts
3. Alternative – hold that all the contracts affected by the supervening event are partially
frustrated  permitted to pro-rate the delivery to all the parties
4. A satisfactory solution has yet to be found

Partial frustration

1. Reasonable threshold would be whether the contract is still “substantially performable” in the
changed circumstances
2. Current legal position remains unclear

Express provision

1. If parties have made their own allocation of risks with regard to possible supervening events 
law would uphold their contractual allocaiont
a. EXCEPTION: Supervening illegality
2. Court may imply a provision excluding frustration where, eg. The nature of the contract makes it
clear that it was intended that one party assumes the risk of the supervening event
3. Force majeure clauses
a. Deal with supervening events in a variety of ways
i. Put the risks of the supervening events on one party alone  making his
performance obligation an absolute one
ii. Provide that upon the occurrence of any supervening events, the contract is at
an end and the clause could provide in further detail for the legal consequences
iii. Provide that upon the occurrence of a supervening event, the parties will meet
and negotiate as to the continuation of the contract
1. Eg. China Resources v Magenta Resources (1997)

Construction
1. Construe narrowly
2. Force majeure clause must be “full and complete” (Bank Line v Arthur Capel (1919)) and
intented to cover the supervening event in question
3. More devastating  the more the court will require particularly clear words
4. Events which would not have frustrated a contract may also be dealt with
a. Contract will be discharged by contractual term either automatically or upon one party
exercising his right to cancel, as the clause so provides (not by frustration)

Foresight and foreseeability

Foreseen events
1. Foreseen events  does not frustrate
2. Singapore  may be assumed that an event foreseen by both contracting parties does not
frustrate a contract

Foreseeable events
1. Would not lead to frustration if the degree of foreseeability is high and is one which any person
of ordinary intelligence would regard as likely to occur
2. Singapore – an event which is highly foreseeable cannot frustrate a contract
a. Win Supreme Investment v Joharah bte Abdul Wahab (1997) and Glahe International
Expo v ACS Computer (1999)

Effects

1. Brings the contract to an end from the time of the frustrating event
2. Operates automatically without the need for any election by either party
3. Common law  remedies is summarized “the losses lie where they fall”
4. Parties released from future obligations
5. Accrued obligations remain
6. Sums paid prior to the event are not recoverable, while sums payable at the time of frustration
remain payable
7. No recovery of monies for a failure of consideration
a. Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour. Ld (1943) – claim was
permitted
b. No such recourse where the failure of consideration was only partial

Frustrated Contracts Act

1. General application does not apply to contracts for the carriage of goods by sea, insurance
contracts and contracts for the sale of specific goods where the cause of frustration is the
perishing of the goods (s3(5))
2. Alters common law remedies in (17.43)
a. Payments
b. Expenses
c. Benefits
3. S2(2)
a. All sums paid before the time of discharge  recoverable
b. All sums payable at that time cease to be so payable
 c. If the party to whom the sums are paid or payable had incurred expenses prior to the
time of discharge in or for the performance of the contract, the court may, if it considers
it just to do so, allow him to retain or recover part of the sum so paid or payable
d. He cannot recover more than his actual expenses
4. Recognises and compensates for benefits enjoyed
a. S 2(3)
5. Court is to have regard to the expenses that the benefited party had incurred in the
performance of the contract as well as the payments retained or recoverable by the first party
under s2(2)
6. Court also has to consider the effect, if any, that the frustrating event had on the benefit
7. S3(4) – severable parts of a contract to be treated separately, so that parts of a contract may be
frustrated while other parts continue unaffected

Remedies
1. Common law remedy of damages
2. Common law remedy of an action for a fixed sum
3. Equitable remedy of specific performance
4. Equitable remedy of injunction

Check if right to seek judicial remedies is available

1. For common law remedies (available as of right)

a. S 6 Limitation Act – No action may be brought for a breach of contract after 6 years have
lapsed from the time when the contract was breached.
2. For equitable remedies (discretionary)
a. Equitable doctrine of laches, s 32 Limitation Act
i. Application will be turned away where the delay is inordinate and inexcusable
such that it would be inequitable to grant such relief.
ii. It may be turned away if the application is not made as soon as the nature of
the case might permit.
iii. 2 important factors to be considered:
1. Length of delay (from the time the plaintiff knew he could have brought
the case to court
2. Whether the defendant acquiesced in the delay

Liquidated damages

1. Compensation
a. Addis v Gramophone Company, Ltd (1909) – common law does not traditionally award
punitive (punishing) damages in cases of breach of contract
b. Whiten v Pilot Insurance Co (2002) – Mrs Whiten had a contract of insurance with the
defendant against risk of fire. Fire  want to claim, but defendant alleged arson on the
part of Mrs Whiten or members of her family, although there was absolutely no
 evidence in support of it  appear to be a ploy to force Mrs Whiten to settle her claim
for a lower sum than she was entitled to  defence failed  ordered to pay C$300,000
based on the terms of the insurance policy  but defendant found to have contested
claim in bad faith, breaching their duty of good faith and fair dealing under the contract
of insurance  jury awarded C$1mil to plaintiff as punitive damages in denunciation of
defendant’s exceptionally reprehensible behavior
2. Liquidated compared with unliquidated damages
a. Compensation for losses resulting from breach may have been pre-agreed by the
contracting parties as a term of contract
i. If agreed sum is a genuine pre-estimate of the loss which could be suffered as a
result of a breach of the contract  court will order that the sum to be paid in
compensation as liquidated damages
ii. If sum is intended to be a penalty aimed at ‘punishing’ the party in breach, court
will strike down the ‘penalty’ clause and award unliquidated damages instead.
1. May result in the plaintiff being able to recover unliquidated damages in
a sum greater than that set by the penalty clause (Public Works
Commissioner v Hills (1906))
iii. Distinguishing between penalty clause v liquidated damages clause – 18.12

Claiming unliquidated damages

1. Causation in fact – Was the breach an effective cause of the loss? Apply “but for” test.
2. Remoteness – Are the losses too remote? Consider tests in Hadley v Baxendale read with The
Heron II
3. There must be causation in fact and the loss must not be too remote to claim for damages
4. Quantification (or assessment) of damages: What is the sum required to put the innocent party
in a position as though the contract has been properly performed?
5. Mitigation : Have reasonable steps been taken to minimize the loss?
a. No – Quantum of damages awarded will be reduced by amount that could have been
saved through mitigation

Causation of loss

1. Evidential and factual enquiry.

2. “but for” test of causation is applied
3. Example : South Australia Asset Management Corporation v York Montague Ltd (1997) or
SAAMCO (18.47- 18.50) – valuers over-valued the securities  negligent  got more loans than
needed  market fell tremendously  huge losses  cannot claim for the losses as a result of
the market fluctuations

Remoteness of loss

1. Too remote  not compensable

2. Losses which arise in the usual course of things as a result of the breach  not too remote 
compensable
3. Losses out of the ordinary which would not ordinarily have been in the contemplation of either
party to the contract are not – unless the party in breach knew or ought to have known about
the possibility of such unusual losses at the time of entering into the contract
4. Damage suffered by a plaintiff may recoverable as not being too remote if he can demonstrate
that
a. The defendant can be taken to have known or actually knew of the circumstances
surrounding the plaintiff which resulted in the plaintiff’s loss
b. It would have been obvious to a reasonable man in the defendant’s shoes that if he
breached the contract, there was a significant likelihood or serious possibility that such
a breach would result in loss of the type which the plaintiff suffered
5. Knowledge of the defendant as to the probability and nature of the losses that could be suffered
by the plaintiff in the event of a breach of contract is critical (Hadley v Baxendale (1854)) –
a. Damages which the plaintiff ought to receive in respect of such a breach of contract
should be such as may fairly and reasonably be considered either arising naturally, or
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 of it.
b. If the special circumstances under which the contract was actually made were
communicated by the plaintiffs to the defendants, the damages resulting from the
breach of such a contract, which they would reasonably contemplate, would be the
amount of injury which would ordinarily follow from a breach of contract under these
special circumstances so known and communicated
c. But if these special circumstances were wholly unknown to the party breaking the
contract, he (at most) could only be supposed to have had in his contemplation the
amount of injury which would arise generally
6. If the plaintiff is trying to recover ordinary losses which flow naturally from the defendant’s
breach  no need to prove that the defendant had any actual knowledge that this might be the
result of his breach  he is taken to know that such damage would ordinarily result from his
breach (Victoria Laundry (Windsor) Ld v Newman Industries Ld (1949))
7. If the plaintiff is trying to recover special losses that would not ordinarily be expected to flow
from a breach, he can only recover if he can prove that the defendant had actual knowledge of
the special circumstances that gave rise to these special losses (Victoria Laundry (Windsor) Ld v
Newman Industries Ld (1949))
a. Plaintiff must pass the objective test to satisfactorily prove that the defendant had
actual knowledge of such special circumstances
i. “Have the facts in question come to the defendant’s knowledge in such
circumstances that a reasonable person in the shoes of the defendant would, if
he had considered the matter at the time of making the contract, have
contemplated that, in the even to of a breach by him, such facts were to be
taken into account when considering his responsibility for loss suffered by the
 plaintiff as a result of such breach?” Satef-Huttenes Albertus SpA v Paloma
Tercera Shipping Co SA (The Pegase)
b. Principles from Windsor have been adopted in Singapore – Teck Tai Hardware (S) Pte
Ltd v Corten Furniture Pte Ltd (1998)
8. Probability of type of loss
a. Confusion over the exact degree of perceived probability as to whether the damage will
occur as a result of the breach.
b. Koufos v C Czarnikow Ltd (The Heron II) (1969) – common ground  degree of
probability required to demonstrate that contract damages are not too remote is higher
than that in tort
c. H Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd (1978)  Defendants supplied a
defective container for pig feed  nuts stored in it became mouldy  fed to pigs,
contracted a rare intestinal disease  died
i. 2 tests for remoteness depending on the type of damage or loss involved
1. Physical loss  test of “reasonable foreseeability” of the type of
damage as a bare possibility (similar to that applied to tort cases)
2. Economic loss  test of “reasonable contemplation” (stricter approach)
3. Approach has not been followed
ii. If the damage cause is a type of damage that could be reasonably contemplated
as liable to occur  liable
iii. If the damage caused is merely reflective of the extent of damage  not within
reasonable contemplation  not liable
iv. 2 and 3  applied in a series of cases  Brown v KMR Services Ltd (1995)

Quantification and measurement of unliquidated damages

1. Quantification by reference to ‘expectation’, ‘reliance’ or other losses

a. Claim for (nett) expectation loss – nett profit that the Plaintiff expects to make on the
basis that his contract with the defendant is performed
i. = expected revenue if the contract was performed – costs incurred
ii. Not advisable for the plaintiff to quantify his damages on an expectation basis
where the losses are speculative (Anglia Television Ltd v Reed (1972) 18.23)
iii. Diminution in value – aims to give the plaintiff the financial benefit that he
would otherwise have obtained if the contract had been performed.
2 forms (either or)
1. Difference between the market or resale value of the contractual
performance and the value as stated in the contract
2. Where the contractual performance entails the production of
something which the plaintiff intends to use in order to generate a
profit, the loss of user profit which ought to have been earned had the
defendant performed his obligations
 iv. Cost of cure – aims to give the plaintiff a sum of money to repair any defects
due to the defendant’s breach of contract.
v. Cost of cure can be recovered even if there is no diminution in value (Radford v
De Froberville (1977) – Plaintiff contracted to have a wall built to screen his
property from a new property development  wall not built  claim
compensation for the exact same wall to be built by another party)
vi. BUT the plaintiff need not demonstrate that he intends to use the damages (if
awarded) to ‘cure’ the breach before the court is willing to allow them. Instead,
it is all a question of reasonableness of such an award, among other factors.
1. Ruxley Electronics and Construction Ltd v Forsyth (1996)  not
reasonable for Forsyth “to create a loss, which does not exist, in order
to punish the defendants for their breach of contract” (unreasonable to
pay Forsyth to cure the defective work done)
vii. iii. And iv. Are mutually exclusive.
1. Where the plaintiff has sought to mitigate his losses  recover cost of
cure where he has, or ought to have, incurred that cost in reasonably
seeking to minimize his losses
2. Where the plaintiff has cured or intends to cure the defective
performance by the defendant  more likely to allow the award of
damages based on the cost of cure
3. Plaintiff’s intentions or aims in entering into the contract and desiring
the defendant’s performance may be important. So if the plaintiff
wanted performance in order to profit from it in the sense of making an
economic gain, difference in value would more likely than other
purposes, perhaps for his own use and enjoyment, difference in value
would not, or not as fully, compensate him
4. The factors above only help the court to determine in it is reasonable to
order for “cost of cure” damages to be paid to the plaintiff.
b. Claim for reliance loss
i. Loss incurred as a result of a reliance on the contract
ii. Damages which would put the plaintiff in the same position as he or she would
have been had the contract never been entered into
iii. Can be made impossible if the defendant proves that the plaintiff made a bad
bargain such that the reliance expenditure > expected gains (CCC Films (London)
Ltd v Impact Quadrant Films Ltd (1985) – CCC cannot prove that the gains from
the exhibition and exploitation of the films that they did not receive  claim for
cost of acquiring the licence from Impact. Impact produced no evidence either
that CCC would have failed to recoup their expenditure had there been no
breach at all  CCC made a ‘bad bargain’ right from the outset.  cannot claim
1. Plaintiff’s choice whether to claim loss of profits or wasted expenditure
can only be limited if the defendant is able to prove that the plaintiff
would never have recovered his expenditure in reliance on the contract,
 even if the contract had been properly performed  burden of proof
reversed
c. Possible to claim BOTH expectation and reliance loss if there is no double-counting
d. Cannot claim reliance loss instead of expectation loss if one has made a bad bargain
e. Claim for other losses – 18.17
2. Placing the innocent party in the position as if contract was fully performed 18.18
a. Court will usually quantify unliquidated damages so as to place the aggrieved party, as
far as money can do so, in the position he or she would have been had the contract
been performed fully instead of being breached (Robinson v Harman (1848))
b. Losses claimable = sum of all 1a,b and e.
3. Time of quantification
a. Unliquidated damages will be assessed as at the time of breach
b. Singapore – Tay Joo Sing v Ku Yu Sang (1994) – where appropriate, damages could be
assessed at a point in time other than the date of breach
c. Flexibility guided by the following:
i. Starting point : ascertain damage suffered as at the time of the breach,
assuming that the plaintiff knows of the breach once it has been committed, and
is able to take steps to mitigate his losses
ii. If it was not possible for the plaintiff to know of the breach or to discover it with
reasonable diligence at the time it occurs  assess damages at the time when
the plaintiff would have discovered the breach with reasonable diligence.
iii. If at the point of reasonable discovery, it is not possible to act on that
knowledge to cut his losses (mitigate)  delay assessment until the point at
which when it is possible for the plaintiff to do so
iv. Given reasonable discovery and possibility of mitigation, if the plaintiff can
nonetheless demonstrate that he has failed to act to mitigate at that point in
time because there was a reasonable probability that the defendant would
make good his default, then the court may defer the time of assessment until
the time when it is no longer probable that this would be the case
v. Late performance  time of assessment will be the time of the late
performance
vi. Anticipatory breach  assess damages as at the time when the defendant
ought to have performed his part of the bargain

Restrictions on recovery of unliquidated damages

1. Non-pecuniary loss (eg. Hurt feelings, disappointment…)

a. Watts v Morrow (1991) – not compensable on policy grounds
b. Loss of reputation or embarrassment suffered  not recoverable – Addis v
Gramophone Company, Ltd (1909), Singapore: Arul Chandran v Gartshore (2000)
c. Exceptions – 18.41 – 18.42
i. More importantly, Farley v Skinner (2002)
 1. If the cause is no more than disappointment that the contractual
obligation has been broken, damages are not recoverable even if the
disappointment has led to a complete mental breakdown.
2. If the cause of the inconvenience or discomfort is a sensory experience,
damages can, subject to the remoteness rules, be recovered
3. Also points to a potentially more relaxed approached where non-
pecuniary losses by consumers are concerned (18.44)
2. Mitigation of loss
a. Losses which the aggrieved party could have taken reasonable steps to void, but did not,
are not compensable
b. Burden of proof is on the defendant to show that the plaintiff has not taken steps
towards the mitigation of his loss.
i. Not easy as the courts appear to be willing to find in favour of the plaintiff even
in doubtful cases (Strutt v Whitnell (1975))
c. Need to mitigate only arises after the contract has been discharged, following the
breach of contract
d. Mitigation has no relevance in relation to the manner in which the victim of the breach
seeks to have his damages quantified.
i. Radford v De Froberville (1977) – Plaintiff can be awarded damages to enable
him to have performed for him what the defendant failed to provide under their
agreement, even if more cost-effective ways of enabling him to achieve that
performance can be found (wall incident)
e. British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways
Company of London Ltd (1912) – “… does not impose on the plaintiff an obligation to
take any step which a reasonable and prudent man would not ordinarily take in the
course of his business”
f. If, in taking objectively reasonable steps to mitigate, the aggrieved party incurs greater
loss than if no steps been taken at all, such increased losses will still be recoverable from
the party-in-breach (Banco de Portugal v Waterlow & Sons Ltd (1932))
i. Singapore approved these observations and followed them – Tan Soo Leng
David v Lim Thian Chai Charles (1998)
g. Actions taken were reasonable if:
i. “In certain cases of personal service it may be unreasonable to expect a plaintiff
to consider an offer from the other party who has grossly injured him; but in
commercial contracts it is generally reasonable to accept an offer [of alternative
performance] from the party in default” – Payzu, Limited v Saunders (1919)
ii. The plaintiff is not usually required to take steps in mitigation of its loss which it
is financially unable to afford
iii. The plaintiff is not required to take steps in mitigation of its loss, which would
place its commercial reputation or good public relations at risk
iv. The plaintiff is not required to take steps in mitigation of its loss that would
involve complex litigation
 h. No duty to mitigate in the context of an action for a fixed sum (eg. White & Carter
(Councils) v McGregor)

Action for a fixed sum

1. Where the contractual breach relates solely to an obligation to pay a fixed sum of money,
instead of damages, the court will order that the fixed sum, due and owing, be paid
a. Singapore – MP-Bilt Pte Ltd v Oey Widarto (1999) – “there is no duty to mitigate where a
debt is claimed.
2. NO damages for a breach of an obligation to pay money
a. London, Chatham and Dover Railway Company v The South Eastern Railway Company
(1893)
b. President of India v La Pintada Compania Navigacion SA (1985)
c. Exceptions:
i. Contractual provision for interest must be expressly provided for, but on the
appropriate facts, courts may be willing to imply such a provision (F G Minter v
Welsh Health Technical Services Organisation (1980))
ii. Knowledge that the breach would cause losses
1. Wadsworth v Lydall (1981)  “If a plaintiff pleads and can prove that he
has suffered special damage as a result of the defendant’s failure to
perform his obligation under a contract, and such damage is not too
remote on the principle of Hadley v Baxendale… I can see no logical
reason why such special damage should be irrecoverable”
iii. Damages arising apart from non-payment
1. If it is possible to characterize the loss as arising from matters which are
distinct from the failure to pay  plaintiff could possibly recover
damages as well as the fixed sum owed.
2. Overstone Ltd v Shipway (1962) – 18.81
3. Timing of claim
a. Claim based on an action for a fixed sum or for the payment of the debt can only be
successful if the sum or the debt is due
b. White and Carter (Councils) Ltd v McGregor (1962) – Plaintiffs only pressed their suit for
payment of the contract price for their services after they had finished performance of
the contractually stipulated obligations on their part  defendants were obliged to pay
 refused  plaintiffs were perfectly entitled to sue them to recover the sum owed in
an action for debt, subject to the possible limitation of legitimate interest)
4. Where the plaintiff is in breach of the contract
a. Refer to Discharge by breach….
b. 18.84

Specific performance

1. When damages will not be an adequate remedy for a breach of contract

 2. “The court gives specific performance instead of damages, only when it can by that means do
more perfect and complete justice” (Wilson v Northampton and Banbury Junction Railway
Company (1874))
3. Where the breach involves delivery of property which is unique
4. Failure to obey such an order would amount to a contempt of court and would attract penal
sanctions such as a fine or even imprisonment
5. Singapore : Not against the Government (s 27(1)(a) Government Proceedings Act)
6. Limitations:
a. Discretionary may be withheld if it would be inequitable to make such an order (Tay
Ah Poon v Chionh Hai Guan (1997))
b. Substantial delay  withheld due to operation of the doctrine of laches
c. Withheld if the applicant does not come to court with ‘clean hands’
d. Refused if
i. Proposed order would require constant supervision by the court
ii. Court is not able to specify the terms of the order which is to be complied with
iii. The proposed order would require the performance of something which is
impossible to achieve
iv. The order relates to a contract of personal service because such an order could
amount to judicial compulsion of involuntary servitude
v. Where an order, if granted, would adversely affect the rights of third parties to
the contract between the applicant and the respondent

Injunction

1. When the contractual obligation is a negative one / where the party in breach fails to honour his
or her promise not to do something  application for a prohibitory injunction may be made by
the aggrieved party
2. Likely to be granted unless
a. The remedy would be inequitable or oppressive
b. Balance of convenience does not favour making such an order
c. Presence of factors mentioned in 6d above
3. If breach of negative obligation lies wholly in the past  mandatory injunction
a. Requires the party in breach to reverse the effects of the breach so as to restore the
aggrieved party to the position he or she would have been, had the negative obligation
not been breached
b. Subject to “balance of convenience’ test
c. Refused in relation to contracts of personal service (18.94)

Statutory damages in lieu of or in addition to specific performance or injunction

1. If both the order of specific performance or injunction cannot be made  only nominal
damages could have been recovered
 2. Singapore courts empowered under the Supreme Court of Judicature Act (para 14 First
Schedule) to grant all reliefs and remedies at law and in equity, including damages in addition
to, or in substitution for, an injunction or specific performance. Power is also extended to
District and Magistrates’ Courts via ss 31(1) and 52 Subordinate Courts Act.
a. Ho Kian Siang v Ong Cheng Hoo (2000)  damages in liew of or in addition to specific
performance or injunction are also discretionary
3. Time of assessment of statutory damages in lieu of an order for specific performance or
injunction is different from that for common law contract damages
a. Ho Kian Siang v Ong Cheng Hoo (2000)  followed the English position that “the
principle that damages should be assessed at the date of the breach of contract.. does
not normally apply. The selection of the appropriate date is a matter for the court’s
discretion, but the date usually chosen is the date at which the remedy of specific
performance ceases to be available”

Restitutionary Awards

1. Seeks to reverse any ‘unjust enrichment’

2. Plaintiff can establish liability for unjust enrichment so long as he can show all of the factors
that:
a. Defendant was enriched
b. At the expense of the plaintiff
c. In circumstances such that the enrichment was ‘unjust’, which is to say that there is
some reason within the law which would make it unfair for the defendant to keep that
enrichment
d. There is no defence available to the defendant to resist the justice of disgorgement of
his unjust enrichment in favour of the plaintiff
3. It is only when there is no contract at all, or perhaps, after a contract has been terminated or
vitiated that the law of unjust enrichment may be applied to determine the rights and liabilities
between the parties. (Info-communications Development Authority of Singapore v Singapore
Telecommunications Ltd (No 2) (2002))

Benefits in money : Total failure of consideration

1. Doctrine of “total failure of consideration”

2. Success of such a claim depends on the claimant being able to establish that he or she received
no part of the promised benefit
3. Money paid to the defendant on the basis that he will perform his obligations under a contract
may be recovered if he fails to perform those obligations in such a way that it can be said that
the basis of the money payment has failed
4. “Consideration” refers to the actual performance and completion of the contractual promises
5. Business context – most common reason for failure of consideration is the termination or
vitiation of an otherwise valid contractual relationship
6. Available regardless of whether the plaintiff is in breach of its own obligations under the
contract (Rover International Ltd v Cannon Film Sales Ltd (1989) – 18.108-109)

Benefits in Kind: Quantum Meruit and Quantum Valebant

1. Quantum Meruit – for cases of services

2. Quantum Valeband – for cases of goods
3. Possible for plaintiff to claim by successful pleading by quantum meruit or valebant where the
value of such quantum meruit or valebant would exceed the contractually agreed price
a. Lodder v Slowey (1901) – Slowey contracted to carry out certain construction works by
Lodder  in breach of the agreement, Lodder prevented Slowey from completing his
work  Slowey allowed to recover on the basis of quantum meruit for the value of the
work he had completed up tot the time when the contract was breached
b. “Benefit” is determined subjectively
4. Plaintiff may be able to show that his partial provision of benefits in kind has relieved the
defendant from expenses which he would inevitably have had to incur  incontrovertible
benefit  contract price should rightfully be ignored (Exception for incontrovertibly beneficial
partial performance)
5. Demonstrate benefit by other means  full performance regarded by defendant to be
beneficial  non-payment would amount to a saved expense saved part of the expense that
it would otherwise have incurred
a. Defendant’s defense – Subjective devaluation – to show that the plaintiff’s partial
performance was not a benefit at all in his particular case.
6. Availability of quantum meruit or quantum valebant arguments to a plaintiff appear to depend
on the plaintiff’s blameworthiness
a. Where the plaintiff is himself at fault for causing the contract to come to an end:
Singapore – Lee Siong Kee v Beng Tiong Trading, Import and Export (1988) Pte Ltd
(2000) – quantum meruit is not available to a contract-breaker
b. True position has yet to be clearly and authoritatively formulated

Restrictions on recovery for unjust enrichment

1. Defenses by the defendant

a. Info-communications Development Authority of Singapore v Singapore
Telecommunications Ltd (No 2) (2002) – A defendant recipient of a benefit from the
plaintiff will be able to resist or minimize restitution if:
i. Payee has changed his position (must occur after the receipt of the payment)
ii. Change is bona fide (done in good faith)
iii. It would be inequitable to require him to make restitution or to make restitution
in full; and
iv. There is a casual link between receipt of the benefit and the recipient’s change
of position
Misrepresentation
1. Innocent party may have rights under both contract and tort (Henderson v Merrett Syndicates
Ltd (1995)
2. Where a representation is or becomes part of the contract, the innocent party may have
remedies in both misrepresentation and breach
a. S 1 MA – a person is not to be deprived of the right to rescind for misrepresentation
merely because the representation has become part of the contract
3. Can sue if there was:
a. False representation of fact
b. Made by one contracting party to the other
c. Which induced the other to enter into the contract

Operative Misrepresentation

1. Misrepresentation – false statement of fact made by one party to another party which induced
the other party to enter into the contract.
a. Must be one of a past or an existing fact, not a commendatory puff, an opinion, a
statement of intention or a statement of law
b. Statement will be treated as true if it is substantially correct and the difference would
not have induced a reasonable person to enter into the contract (Avon Insurance v
Swire Fraser (2000))

Statement of fact

1. Puffs
a. Harmless and are regarded as mere sales talk  no legal liability
b. As the statements get more detailed / precise  more likely to be representations
2. Opinions
a. If it turns out to be unfounded  does not give rise to liability
b. Exceptions:
i. A statement of opinion can be statement of fact in that the representor
impliedly stated that he held the opinion. If he did not hold the opinion or could
not, as a reasonable man having his knowledge, honestly have held it, there
would be a misrepresentation
1. The misrepresentation would be one concerning his state of mind, and
it has been said that the state of a person’s mind is “as much a fact as
the state of his digestion” (Edgington v Fitzmaurice (1885))
ii. Statement of opinion may carry with it the implication that the representor had
an objectively reasonable basis for his opinion
3. Intentions
a. An expression as to the future and does not involve any past or existing fact
b. If not so held  would be a false statement of fact
 c. A person who states his intention to do something may be impliedly asserting that he
has reasonable grounds for thinking that he has the capacity to do it
4. Law
a. Statement of law cannot be a misrepresentation
b. Can be a misrepresentation if the representor did not hold that opinion or belief of the
law, or if the statement carries an implication of fact which is untrue.
c. Where it involves both fact and law  tendency for courts to regard it as a statement of
fact

Representation by conduct

1. Express representations
a. Spoken or written / visual
2. Conduct
a. Person’s conduct
b. So long as it is intended to induce the other party to believe in a certain state of facts,
the gesture or conduct can amount to a representation (Walters v Morgan (1861))
3. Silence
a. General rule: does not amount to a representation; some active conduct is required
b. General contract law: One party does not have a duty to disclose to the other party
material facts which the former knows may influence the latter’s decision whether or
not to enter into the contract
i. Exceptions:
1. Where silence makes what has been said a half-truth or an untruth
a. Spice Girls v Aprilia World Service (2002) – to say that a pop
group currently comprises 5 named individuals without going on
to say that one of them will be leaving is a misrepresentation
b. Once a contracting party begins making statements, he must
make full and frank disclosure
2. Where a statement (which the representor knows is false) is made by
the representee or by a third party to the representee while the
representor listens in silence, his reticence may amount to tacit
confirmation of the truth of the statement (Pilmore v Hood (1838))
a. By keeping silent  impliedly representing that the statement is
true
3. Law regards a representation as having a continuing effect until the
contract is concluded
a. If true when made, to the representor’s knowledge, ceases to
be true before the contract is concluded, the representor is
required to inform the representee of the change in
circumstances
 b. Representor has a duty to ensure that his representation
remains true up to the time of the contract (With v O’Flanagan
(1936) and Spice Girls v Aprilia World Service (2002))
4. Law imposes a duty of utmost good faith

Ambiguity and Falsity

1. Where a statement made is ambiguous and may bear 2 (or more) meanings, one of which is true
and the other false.
2. Misrepresentation or not depends on:
a. Representee must prove that he understood the statement in the sense which is in fact
false
b. Representor must have intended the statement to be understood in the sense that is
false, he is not liable if he honestly intended it in the sense that is true.
3. Ambiguous statements can amount to fraudulent misrepresentation but not negligent or
innocent misrepresentation
4. Representor’s intention is relevant for determining the type of misrepresentation: Fraudulent,
negligent or innocent.

Materiality

1. Is there a need to prove that it is material in the sense that a reasonable man would have been
influenced by it to enter into the contract?  Treitel asserts that materiality is a requirement
2. Position is not settled

Inducement

1. It must induce the representee to enter into the contract  representee must have relied on
the representation
2. Misrepresentation need not be the sole cause that induced the representee to enter into the
contract
a. Sufficient that, in deciding whether to enter into the contract, he was materially
influenced by the misrepresentation as well as by his own mistaken belief (Panatron v
Lee Cheow Lee (2001))
3. The fact that a representee had the opportunity to discover the truth but did not use the
opportunity does not disentitle him of relief (Redgrave v Hurd (1881))
4. Where it is reasonable to expect the representee to avail himself of the opportunity to discover
the truth:
a. Singapore: Once inducement is proved, it is no defence that the representee failed to
take the steps which a prudent man would have taken to verify the truth (Panatron v
Lee Cheow Lee (2001))
b. Fraudulent Misrepresentation - JTC v Wishing Star (No 2) (2005) 13.24
 i. A person who has made a false representation cannot escape its consequences
just because the innocent party has made his own inquiry or due diligence but
failed, to discover the fraud
ii. So long as the innocent party does not learn of the misrepresentation, the
misrepresentation remains operative
iii. But if the misrepresentation is a negligent one, stand is not as clear because
contributory negligence is a partial defence to a negligence claim.

Addressed to the other party

1. It is the direct addressee or recipient of a representation who may bring an action for
misrepresentation
2. Can be a person who is a member of a class of persons to whom the representation is addressed
3. Exceptions:
a. Where the representation is made to the representee’s authorized agent
i. The recipient, to the representor’s knowledge, is only an agent for passing on
the representation to his principal. (Principal = representee)
ii. The representor intends that both the agent and principal will be influenced by
the representation (Principal and agent = representee)
b. Where, even though there is no agency between the direct recipient and the indirect
recipient, the representor intended or reasonably expected the representation to be
passed on to the indirect recipient (13.27) (eg. Gross v Lewis Hillman (1970))
c. Indirect misrepresentation arises either through agency or through the intention or
knowledge of the representor

Types of misrepresentation

1. (Scale of diminishing culpability)

a. Fraudulent misrepresentation – Statement made knowing it is untrue; not believing it to
be true; recklessly, not caring if it is true or not
i. Innocent party may rescind or affirm contract
ii. Damages claimable
b. Negligent misrepresentation – Statement made with no reasonable ground to believe it
is true (s 2(1) MA)
i. Innocent party may rescind or affirm contract
ii. Court may order damages instead of rescission (s 2(2) MA)
iii. Damages claimable
c. Innocent misrepresentation – Statement made honestly and with reason to believe it is
true
i. Innocent party may rescind or affirm contract
ii. Court may order damages instead of rescission (s 2(2) MA)
iii. Indemnity (equity basis)
2. Remedies of rescission and damages are available for all 3
Fraudulent misrepresentation

1. Derry v Peek (1889) – “a fraudulent statement is one made knowingly, without belief of its truth,
or recklessly – not caring whether it is true or false”
2. Representee has the burden of proving fraud and the onus is a heavy one.
3. Remedy
a. Recover damages in an action under the tort of deceit
b. Damages are awarded to compensate the representee for all the losses which can
properly be said to have been caused by his reliance on the fraudulent
misrepresentation.
c. Contributory negligence is not a defence (eg. Standard Chartered Bank v Pakistan
National Shipping (No 2) (2002))
d. Losses may be recoverable even though they were not of a foreseeable kind
4. Motive of the representor is irrelevant. It suffices that the false statement was made knowingly
with the intention that the representee should act unpon it (eg. Standard Chartered Bank v
Pakistan National Shipping (No 2) (2002))
5. Immaterial that the representor thought the statement irrelevant or unimportant
6. Involving a principal and agent(s)
a. If an agent knowingly makes a false statement within the scope of his authority, the
principal is liable for fraudulent misrepresentation
b. If an agent knowingly makes a false statement to another agent intending that agent to
pass the statement on to a third party
c. If the agent makes a statement which he honestly believes is true but which the
principal knows is untrue, then the position depends on the culpability of the principal.
If the principal was aware that the statement will be or had been made and did not
intervene, the principal is liable for fraudulent misrepresentation. If he was not aware
that the statement will be or had been made, he is not liable (eg. Armstrong v Strain
(1952))

Negligent Misrepresentation

1. Negligence at common law

a. One that is made carelessly or without reasonable grounds for believing it to be true
b. Prior to MA, would not be considered negligent unless the representor owed a duty of
care to the representee
c. “Special relationship” must have existed before such duty can arise (Hedley Byrne & Co
Ltd v Heller & Partners Ltd (1964))
2. Liable to damages unless the defendant proves that he had reasonable ground to believe and
did believe up to the time the contract was made that the facts represented were true MA s2(1)
3. Measure of damages
a. Position is not settled
 b. To put the representee into the position he would have been had the representation
been true
c. OR. To put the claimant in a position he would have been if the tort (misrepresentation)
had not been committed (tort measure)
4. Burden of proof
a. Once the representee proves that the statement was false, burden shifts to the
representor to prove that he had reasonable grounds to believe that the statement was
true
b. Representor has to show that his misrepresentation was not negligently made
c. Representor’s responsibility to show that he was not ‘negligent’
d. Defense for representor: Contributory negligence

Innocent Misrepresentation

1. False statement made honestly and with care

2. No remedies in common law but in equity, the representee is entitled to rescission and,
possibly, an indemnity
3. Indemnity allows the representee to be indemnified against all obligations necessarily created
by the contract (eg. Whittington v Seal-Hayne (1900))

Representation as a term

1. Statement made before or at the time of the contract, which induced the representee to enter
into the contract
2. Conceivable that such a statement could be a term of the contract
3. Determined by:
a. Whether the representor asks the representee to verify its truth (Ecoy v Godfrey (1947))
b. Relative abilities of the parties: if the representee is in a better position, the
representation is unlikely to be a term (Oscar Chess Ltd v Williams (1957))
c. Importance of the statement: If it is so important that the representee would not have
entered into the contract had the statement not been made, the statement is likely to
be a term of the contract (Bannerman v White (1861))
4. May be precluded from being a term of contract by the parol evidence rule
a. BUT a representation may amount to a collateral contract upon which the representee
may bring an action

Rescission

1. Operative misrepresentation makes the contract voidable at the option of the representee
2. Representee entitled to rescind the contract from the beginning, as if the contract never existed
(different from breach of contract)
a. Representee termintes the contract and returns what he received under the contract
3. Fraudulent misrepresentation  damages recoverable under common law in tort of deceit for
ALL loss flowing directly from the entry into the contract in question, regardless whether or not
such loss was foreseeable (ie. All consequential losses)
4. Negligent misrepresentation
a. Common law nelgligent misstatement
i. Damages in the tort of negligence under the principles set out in Hedley Byrne
can be recovered for all loss (even for pure economic loss) that is reasonably
foreseeable
b. Statutory negligent misstatement under MA 2(1)
i. Royscot Trust v Rogerson (1991)
1. Mersure of damages under MA 2(1) is the same as that for fraudulent
misrepresentation
2. Excepted in Singapore – Ng Buay Hock v Tan Keng Huat (1997)
c. Discretionary damages under s2(2) are also possible, although in practice, this is unlikely
to be requested for
5. Negligent and innocent misrepresentation  right to rescind subject to court’s discretion to
award damages in lieu of rescission under s 2(2))
6. Innocent misrepresentation
a. Damages may be available under s 2(2) if
i. Damages are awarded in lieu of rescission
ii. The court thinks it is equitable to do so in the exercise of its discretion, ie. The
plaintiff does not have any automatic right to such damages, it is only granted if
the court thinks it is fair to do so in all the circumstances
iii. Measure of damages under s2(2) is uncertain but Poole suggests that the
measure should be the loss that the representee would suffer if the contract is
upheld. The measure should be the difference in value because the subject
matter of the contract is not what it was represented to be – accordingly, it
appears that consequential losses might not be recoverable under s2(2)

Limitations

1. Restitution impossible
a. If it is impossible to return what the representee received under the contract 
rescission not permitted
b. Substantial restitution: Equity allows a representee to rescind if he returns the subject
matter in its altered state and makes allowance for any diminution in its value or
accounts for any benefit he derived from using it.
c. Where substantial restitution not possible  not barred from rescinding if the
diminution is due either to the very defect in the subject matter which it was
represented not to have or to external causes, such as damage caused by a third party
2. Affirmation
a. Representee may elect either to affirm or to rescind the contract
 b. Affirm  right to rescind is lost
c. Affirmation can be express or implied by conduct
d. Before an election can be made, the representee must have knowledge not only of the
untruth but also that the law gives him a right to rescind
e. Where the election is conditional, upon the failure of the condition, the right to rescind
re-emerges (JTC v Wishing Star (No 2) (2005))
3. Lapse of time
a. If a reasonable period of time has passed and the representee still does not exercise his
right to rescind, his inaction may be evidence of affirmation
b. Negligent / Innocent misrepresentation  lapse of reasonable time may be a bar to
rescission even if the representee has not discovered the truth (eg. Leaf v International
Galleries (1950))
c. Fraudulent misrepresentation  lapse of time without discovery of the truth would not
prevent a representee from rescinding
4. Third party rights
a. If before a representee rescinds a contract, an innocent third party has acquired an
interest in the subject-matter, the right to rescission is lost

S 2(2) MA

1. Restrains the representee’s right to rescission for negligent and innocent misrepresentation
2. Gives the court the discretion to declare that the contract subsists and to award damages in
place of rescission
3. Does not apply to fraudulent misrepresentation
4. Negligent misrepresentation  2 sets of damages:
a. Damages as of right (s 2(1)); AND
b. Damages in lieu of rescission (s 2(2))
5. Innocent misrepresentation  rights in equity to rescission and indemnity are qualified by the
court’s power to award damages in lieu of rescission
6. Where right to rescind is lost
a. Entitlement to rescind must still be available in order for damages to be given in lieu (eg.
Government of Zanzibar v British Aerospace (Lancaster House) (2000))
7. Measure of damages
a. 2 possibilities:
i. Tortious measure
1. but seems inappropriate for innocent misrepresentation since no tort
has been committed
2. negligent misrepresentation: complication is whether the tortuous
measure, assuming it is to apply, is the fraud measure or the negligence
measure
ii. Contractual measure
 b. 2(3) – damages may be awarded under subs (2) whether or not the representor is liable
to damages under subs (1), and that any damages awarded under subs (2) will be taken
into account I assessing the damages under subs (1)

Exclusion of liability

1. By the insertion of an exemption clause

a. NOT valid when representor is fraudulent
b. Subject to normal rules of construction applicable to exemption clauses
2. S3 MA (amended by UCTA s 11(1)
a. Invalidates exclusion clauses that exclude or restrict any liability or remedy for
misrepresentation unless they are reasonable (test of reasonableness)
b. Burden of proving that an exclusion clause is reasonable lies with the party seeking to
rely on it
3. Clauses which seek to prevent liability from arising by negativing one or more of the elements of
liability do not attract UCTA  not an exclusion clause (eg. Overbrook Estate v Glencombe
Properties (1974))
a. If the clause is genuine, that there really had been no representation, or no reliance, or
no authority, then the clause is effective to prevent misrepresentation liability from
arising (eg. Government of Zanzibar v British Aerospace (Lancaster House) (2000))
b. The clause should not avail where the party seeking to rely on it is well aware that
representations have in fact been made (eg. Cremdean Properties Ltd v Nash (1997))
4. Clauses which seek to limit rather than altogether exclude liability, eg. By limiting liability to a
certain sum of money, are viewed less stringently by the courts (Ailsa Craig Fishing v Malvern
Fishing (1983))
5. To determine if a clause excluding liability for misrepresentation is reasonable,
a. Check relative knowledge or access to knowledge of the parties (eg. South Western
General Property v Marton (1982))
b. If the facts on which the representation is based are only within the knowledge of the
representor, the clause is likely to be unreasonable
c. Check guidelines set out in the Second Schedule of UCTA

Economic Duress, Undue Influence and Unconscionability

Economic duress

1. Pressure exerted go beyond what the law considers acceptable or legitimate  contract
voidable at the option of the party pressured
2. Pressure that is exerted through the device of a threat to physically harm the other party or his
property would be considered illegitimate (Barton v Armstrong (1976) and Occidental
Worldwide Investment Corp v Skibs A/S Avainti, Skibs A/S Glarona, Skibs A/S Navalis (The Siboen
and the Sibotre) (1976))
3. Commercial pressure (usually in the form of a threat to breach an existing contract) may also be
worthy of relief
a. Exerted to induce a modification of an existing contract (Eg. North Ocean Shipping Co
Ltd v Hyundai Construction Co Ltd (The Atlantic Baron) (1979))

Basis for intervention

1. No real consensus as to the true basis of the doctrine of economic duress

2. Occidental Worldwide Investment Corp v Skibs A/S Avainti, Skibs A/S Glarona, Skibs A/S Navalis
(The Siboen and the Sibotre) (1976)
a. “the court must in every case at least be satisfied that the consent of the other party
was overborne by compulsion so as to deprive him of any animus contrahendi (intention
to contract)”
b. Before pressure amounts to duress, it must be so great as to deprive the party
pressured of any ability to exercise free will.
3. Singapore: Third World Development v Atang Latief (1990), referred to Pao On v Lau Yiu Long
(1980) – “pressure does not constitute economic duress unless it amounts to a coercion of his
will which vitiates consent”
4. Question is whether the victim’s consent has been vitiated (made legally invalid) by the pressure
exerted, because although his will might have been deflected, it has not been destroyed (eg.
Lynch v DPP of Northern Ireland (1975))
5. Objection to contracts induced by duress is because the other party had brought about the
impugned action by exerting illegitimate pressure (Universe Tankships Inc of Monrovia v
International Transport Workers Federation (1983))
a. Therefore: Focus the inquiry on the propriety of the pressure exerted and whether this
crossed the boundaries of what is legally acceptable

General Principles

1. Universe Tankships Inc of Monrovia v International Transport Workers Federation, The Universe
Sentinel (1983)
a. Two elements in the wrong of duress:
i. Pressure amounting to compulsion of the will of the victim
ii. The illegitimacy of the pressure exerted
1. Presence of bad faith?
2. Link between the pressure applied and the pressured party’s entry
into the impugned transaction
2. Sufficient pressure
a. Pao On v Lau Yiu Long (1980) – guidelines to aid in determining whether the pressure
applied suffices to vitiate contract (not conclusive)
i. Whether the person alleged to have been to have been coerced did or did not
protest
 ii. Whether, at the time he was allegedly coerced into making the contract, he did
or did not have an alternative course open to him such as an adequate legal
remedy
iii. Whether he was independently advised
iv. Whether after entering the contract he took steps to avoid it
v. From other cases: The alleged victim must prove that he or she had acted
reasonably in taking the other party’s threats seriously (The Alev (1989), Atlas
Express Ltd v Kafco (Importers and Distributors) Ltd (1989))
b. Focus of the inquiry is the gravity of the pressure applied and the availability of an
adequate practical alternative (the context in which the threat was made is relevant in
the determination of what is a practical choice)
3. Illegitimacy
a. R v Attorney-General for England and Wales (2003) – Legitimacy of a threat had to be
considered from 2 aspects:
i. The nature of the pressure
ii. The nature of the demand which the pressure is applied to support
iii. Where the threat is of any form of unlawful action  illegitimate
b. Lawful threat
i. Nature of the demand would determine if the threat, albeit lawful in nature, is
nevertheless illegitimate
ii. Lawful threat made in a commercial context  difficult to establish duress
1. CTN Cash and Carry Ltd v Gallaher Ltd (1994)
c. Treat all threats to break a contract as illegitimate
d. Reduces the inquiry whether there is duress or not to a consideration of whether the
threatened party had in fact been coerced, which is arguably an issue of causation: was
it the threat that pushed the claimant to enter into the transaction?
e. Pao On (1980) – threat to breach a contract was held to amount to mere commercial
pressure not amounting to duress because the threatened party’s will had not been
coerced, because the threatened party had not protested, had considered the matter
thoroughly and, with the benefit of legal advice, had weighed all the risks involved
before finally agreeing to the renegotiation.
f. Threat to breach a contract, made in the absence of bad faith, should not be an
illegitimate threat (some support found in Sharon Global Solutions Pte Ltd v LG
International (Singapore) Pte Ltd (2001) 14.21 – even though the threat was of an
unlawful action, there was nevertheless no duress as there was an absence of bad faith)
g. Presence of bad faith could be relevant in deciding if lawful threats might nevertheless
amount to illegitimate pressure
i. Huyton SA v Peter Cremer GmbH & Co (1999)
h. Must establish the causal link between the pressure applied and the pressured party’s
entry into the impugned transaction
i. Exact degree of causation required appears to depend on the nature of the
threat
 1. Where the threat is of injury to the person of the victim, as long as the
illegitimate pressure was a reason for the victim entering into the
contract, that would suffice in a plea of duress (Barton v Armstrong
(1976))
2. A stronger causation requirement appears necessary in the case of
economic duress (Huyton SA v Peter Cremer GmbH & Co (1999))
a. Minimum basic test: “but for” test

Effect

1. Economic duress  contract voidable, not void (Eg. Pao On v Lau Yiu Long (1980))
a. BUT might be prevented from rescinding the contract if he or she is found to have
affirmed the contract

Undue Influence – SEE pg 388 for flowchart

1. Party may be relieved from a transaction if that transaction was entered into upon the undue
influence of the other party
2. No single universally accepted view as to the true basis of the doctrine
a. Focus on the wrongful or unconscionable conduct on the part of the defendant – R v
Attorney-General for England and Wales (2003)
i. “based upon the principle that a transaction to which consent has been
obtained by unacceptable means should not be allowed to stand. Undue
influence has concentrated in particular upon the unfair exploitation by one
party of a relationship which gives him ascendancy or influence over the other”
b. Alternative: focus on the claimant’s inability to give real or meaningful consent because
of an excessive dependence on the defendant – Daniel v Drew (2005)
i. “There is no undue influence unless the donor if she were free and informed
could say ‘This is not my wish but I must do it.’”
ii. Does not require wrongdoing or unconscionable conduct on the part of the
defendant
c. Singapore: tended to justify the doctrine on the basis of the defendant’s unconscionable
behavior or the unacceptable means by which a party’s assent to the transaction is
procured
i. Lim Geok Hian v Lim Guan Chin (1994) – “undue influence is the unconscientious
use of one’s power or authority over another to acquire a benefit or to achieve
a purpose”
ii. Rjabali Jumabhoy v Ameerali R Jumabhoy (1997) – “there must be something
wrong in the way that the influence was exercised”
d. Common denominator is really the impaired consent of the claimant

Categories of undue influence

Actual undue influence: Class 1

1. Does not depend upon the existence of some special relationship between the parties
2. The party alleging undue influence bears the burden of proving affirmatively that the defendant
had exercised undue influence over him and this influence brought about the impugned
transaction
3. No need for a special relationship to exist between the parties
4. Relief does not depend on the claimant establishing that the impugned transaction was
manifestly disadvantageous to him (CIBC Mortages Ltd v Pitt (1994)
5. Rare to find undue influence where the transaction is a fair one – Royal Bank of Scotland plc v
Etridge (No 2)

Presumed undue influence: Class 2

1. Class 2A – presumption of influence or ascendancy arises automatically by force of law

a. Claimant need only prove the existence of the relationship, and not that he has reposed
trust and confidence in the defendant – 14.36
2. Class 2B – Deals with relationships that do not fall within the above-mentioned classes, and to
which no presumption of influence applies
3. Where the claimant proves
a. That a relationship of trust and confidence existed between the parties and
b. That the resulting transaction is manifestly disadvantageous to the claimant
c.  court will draw the factual inference that the transaction must have been procured
by the undue influence of the defendant
4. Requirement of manifest disadvantage
a. Claimant must show that the transaction was to his manifest disadvantage
b. Royal Bank of Scotland plc v Etridge (No 2) (2002) and Allcard v Skinner (1887) – 14.39 –
test if the transaction is one that calls for explanation rather than the manifest
disadvantage test
c. Reformulation of the test is not settled in Singapore
i. Not consistently been applied
ii. Oversea-Chinese Banking Corp Ltd v Tan Teck Khong (2005)  apply Entridge
test
iii. Gan Cheng Chan v Gan Meng Hui (2005)  apply the manifest disadvantage
test
iv. Ultimately, court remains mindful of the factual context within which the
impugned transaction occurs
v. Some process of balancing is necessary : Weighing of the seriousness of the risk
to the claimant of enforcing the transaction, in practical terms; and the benefits
gained by the claimant in accepting the risk, considered in the context of the
relationship between the parties.
 5. Defendant then bears the burden of producing evidence to rebut or counter the inference that
would otherwise be drawn
a. Not relevant where the influence has been proved in actual fact (Class 1) and where the
parties are within one of the special protected classes (Class 2A)
b. Done by proving that the claimant had exercised a truly independent will
i. Show that the claimant had received independent (in particular, legal) advice
1. Inche Noriah v Shaik Allie bin Omar (1929)
a. Independent legal advice was not the only way in which the
presumption of undue influence could be rebutted
b. Independent legal advice did not necessarily need to be taken in
order for the presumption to be rebutted
c. The legal adviser must have given his or her advice “with a
knowledge of all relevant circumstances and must be such as a
competent and honest adviser would give if acting solely in the
interests of the donor”
d. Whether the receipt of independent legal advice is sufficient to
“emancipate” the claimant from the influence of the defendant
is a question of fact
2. Royal Bank of Scotland plc v Etridge (No 2) (2002)
a. “… so completely as to satisfy the Court that the [complainant]
was acting independently of any influence from the
[wrongdoer] and with the full appreciation of what [she] was
doing”
3. Lawyer acting for both plaintiff and defendant (eg. Husband and wife) –
14.43
6. Royal Bank of Scotland plc v Etridge (No 2) (2002) – fundamental concern is with the drawing of
“appropriate inferences of fact upon a balanced consideration of the whole of the evidence”
before the court
7. Singapore – emphasize on factual inquiry and is acutely aware of the need to take into account
the individual circumstances of the particular case (eg. The Bank of East Asia Ltd v Mody Sonal
M (2004) and Oversea-Chinese Banking Corp Ltd v Chng Sock Lee & Anor (2001))

Effect

1. Voidable
2. Restore the parties concerned as close to their original positions as possible
3. Guideline  achievement of “practical justice”
4. Cheese v Thomas (1994) – the court “will look at all the circumstances and do what fairness
requires” – 14.45

Creditors and Doctrine of “Infection” (where the undue influence is exercised by the third party)

1. Involving creditor and surety and guarantor and debtor

2. Creditor is not itself guilty of undue influence
3. Creditor would be “infected” in one of two main ways
a. Agency – Might have entrusted the guilty party as its agent with the task of obtaining
the execution of the document it is presently suing under
b. Might have had notice, actual or constructive (or, where the defendant is “put on
enquiry”), of the wrongdoing by the guilty party and, hence its rights would be
“infected” accordingly
4. Two conditions must be present in order for the doctrine to apply:
a. The creditor was put on inquiry
b. It failed to take reasonable steps to minimize the risk that the wrong of undue influence
may be commited

When the creditor is put on inquiry

1. Husband and wife cases:

a. Royal Bank of Scotland plc v Etridge (No 2) (2002)
i. The threshold instead is simply that the creditor is put on inquiry whenever a
wife (or husband) offers to stand surety for the debts of her husband (or his
wife); or
ii. For the debts of a company owned jointly by them, even if the wife (or husband)
is involve in the company’s management
iii. It suffices that the creditor knows of the husband-wife relationship
iv. Creditor will not be put on inquiry if the loan is advanced for their joint purposes
2. Put on inquiry in every case where the relationship between the surety and the debtor is non-
commercial (Royal Bank of Scotland plc v Etridge (No 2) (2002))
a. Mere knowledge of non-commercial nature of the relationship suffices to place the
creditor on inquiry

Reasonable steps

1. Royal Bank of Scotland plc v Etridge (No 2) (2002)

a. “The furthest a bank can be expected to go is to take reasonable steps to satisfy itself
that the wife has had brought home to her, in a meaningful way, the practical
implications of the proposed transaction”
b. Steps would involve:
i. Requiring that the guarantor obtain her own legal advice
ii. Informing her that the purpose of the solicitor’s involvement is so that the
creditor may obtain and rely on written confirmation from the legal advisers
that the guarantor had been properly advised
iii. These steps are for the creditor’s protection
c. Where the creditor knows of facts that indicate that the guarantor had been
inappropriately advised or leads the creditor to suspect an aggravated risk of undue
 influence being exercised or other wrongdoing  more is required of the creditor to
take reasonable steps
i. Creditor may need to satisfy itself that there was no undue influence

Unconscionability

1. May be found in the terms of the bargain and in the behavior of the stronger party
2. Merely showing that the bargain is a hard or unreasonable one is insufficient for relief
3. Basis of the doctrine is the unconscionable conduct of the stronger party
4. Multiservice Bookbinding Ltd v Marden (1979) – “a bargain cannot be unfair and unconscionable
unless one of the parties to it has imposed the objectionable terms in a morally reprehensible
manner, that is to say, in a way which affects his conscience”

Narrow doctrine

1. English law – applying to protect a somewhat circumscribed class of persons with personal or
circumstantial weeknesses
2. Cresswell v Potter (1978)
a. 3 requirements:
i. Whether the plaintiff is poor (a member of the lower income group) and
ignorant (less highly educated)
ii. Whether the sale was at a considerable undervalue
iii. Whether the vendor had independent advice
3. Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd (1983) – 3 elements (broader than above)
– 14.56
4. Australia – Broader development – Commercial Bank of Australia Ltd v Amadio (1983)- 14.57
5. Singapore – endorsed the narrower English position
a. Eg. Lim Geok Hian v Lim Guan Chin (1994) and Pek Nam Kee v Peh Lam Kong (1996)
b. Due mainly to a fear of the exercise of excessive judicial discretion because the general
criteria underlying the doctrine, being ideals of fairness and justice, are rather broad
c. Court is concerned for the fairness of the bargain reached by the parties and the
protection of their legitimate expectations

Illegality
1. General rule: no action will arise from a wrong done
2. Courts will not assist a person whose action is based on a contract which is tainted by illegality
or is contrary to public policy
a. Result: contracts may be totally or partially unenforceable
b. If both parties are before the courts with a contract that is illegal or contrary to public
policy then the court through its own observation of the presence of either of these
features will decline enforcement of the contract
 3. At the outset that the party who tries to rely on illegality will be the party who does not want to
observe his contractual obligations
4. General rule: loss will lie where it falls

Statutory illegality

1. Can only arise when there has been a violation of the statute in question
2. Key focus is whether the object of the statute is only to prohibit the conduct that is subject of
the statutory penalty or is the object also to prohibit the making of such contracts
3. Where a statute expressly prohibits certain contracts and contracts of such nature are entered
into  illegal contract is unenforceable (void)  innocence of either or both parties would be
irrelevant (eg. Phoenix General Insurance Co of Greece SA v Administratia Asiguralor de Stat
(1988) 15.5)
a. Re Mahmoud and Ispahani (1921) – It was held that the language of the statute was
plain irrespective of guilt or innocence, knowledge or otherwise because the general
rule requires that the courts are not to enforce an illegal contract
4. Where the legislative intention is not clear from the plain wording of the relevant provision,
statutory interpretation is necessary to discern if the provision impliedly prohibits the contract.
a. Consider the objective(s) for introducing the provision in the first place
b. Eg. Cope v Rowlands (1836) – 15.7
c. Important test is to distinguish whether:
i. The statutory provision intends to prohibit the contract, or
ii. Merely the performance of the contract in a certain way – depends on
legislative intent underlying the provision concerned
iii. If it is the contract that is prohibited, then that contract is wholly void
iv. The imposition of a criminal penalty per se is not conclusive
v. Construction of the statutory provision(s) is the key and, hence, the various
principles of statutory interpretation become of importance

Situations where there is no statutory prohibition

1. Contract is enforceable
2. Where the statute merely imposes a penalty and does not deprive the parties of their
contractual rights
3. Both parties would be entitled to sue on the contract
a. Eg. St John Shipping Corporation v Joseph Rank Ltd (1957) – 15.8
4. Exception to the general rule
a. Focuses on the intention or knowledge of one or both of the contracting parties
b. Applies if both parties enter into a contract with the intention of violating a statue
c. Consequent : Neither of them will be able to enforce the contract
i. Eg. Ashmore, Benson, Pease & Co Ltd v AV Dawson Ltd (1973) – 15.9 –
performing the obligation despite knowing about the illegality  cannot sue
 d. If only one party has such an intention or knowledge, then that party, being the guilty
party, will not be able to enforce it.
i. Eg. Archbolds (Freightage) Ltd v S Spanglett Ltd (1961) 15.10
ii. To be “guilty party”, some degree of participation is necessary

Illegality at common law

1. Source of the illegality lies in general principles propounded in case law which have evolved
through decisions of judges and is generally referred to as the common law
2. The principles of the illegality have been identified in case law as being capable of tainting the
contract, and it may apply in the context of a prohibition even in a statute

Types of common law illegality

1. Contracts prejudicial to administration of justice (contracts to either stifle prosecution or

perhaps to give false evidence in a court of law)
2. Contracts to deceive public authorities
a. Eg. Alexander v Rayson (1936) – 15.12
3. Contracts to oust jurisdiction of the courts
a. Where a contract or agreement deprives a party of the right to seek the redress of the
courts
b. Eg. Hyman v Hyman (1929) – 15.12
4. Contracts to commit (or involving) a crime, tort or fraud
a. Eg. Taylor v Bhail (1996) – 15.12
b. Crime committed at the time the agreement takes place  in the case of fraud, it has
both criminal and civil consequences
5. Contracts prejudicial to public safety
6. Contracts promoting sexual immorality
a. Eg. Pearce v Brooks (1866) – 15.12
7. Contracts that are liable to corrupt public life
8. All are unenforceable

Consequences or effects of illegality

1. General rule: no action will arise from a wrong done

2. A party trying to claim any rights, including the right to damages for breach of contract will be
unsuccessful
3. No question of recovering the full contractual loss

Recovery of benefits conferred under illegal contract (restitution – restoration to former or

original state)

1. General rule: money paid or property transferred under an illegal contract is not recoverable
2. Where both are at fault: law favours the defendant  gains and losses remain where they have
accrued or fallen
3. Exceptions:
a. Recovery where parties are not in pari delicto (in equal fault)
i. When the parties are not to be equally at fault
ii. When one party is guilty of fraud (eg. Hughes v Liverpool Victoria Legal Friendly
Society (1916) – 15.17)
iii. When there has been oppression by one party on the other (eg. Kiriri Cotton Co
Ltd v Ranchhoddas Keshavji Dewani (1960) – 15.18)
iv. Where a statute is a class protecting statue – 15.20
b. Timely repudiation or repentance
i. When one party repudiates in time
ii. Before an illegal contract is performed it is open to either party to repent while
the contract is still executor
iii. Eg. Taylor v Bowers (1876) – 15.21 – the plaintiff could recover the machinery as
the illegal purpose had not been carried out
iv. Kearley v Thomson (1890) – 15.22 – The plaintiff could not recover the money
because the contract was partly performed
v. There must be genuine repentance for this exception to apply
1. Eg. Bigos v Boustead (1951) – 15.23
c. Recovery when plaintiff does not rely on the illegal contract
i. Allowed because the plaintiff relies upon a basis that is separate and
independent of the illegality
ii. 2 main categories of recovery: in tort and under a collateral contract
iii. When a person wants to assert his rights to goods, especially his rights of
ownership, against a person who has the goods, he will usually rely on the tort
of conversion, committed by doing either of the following:
1. Wrongfully taking possession of goods;
2. Wrongfully disposing of them;
3. Wrongfully refusing to give them up when demanded
iv. Contract of bailment (although there is the delivery of goods by A to B, the
goods still belong to A)
1. Eg. Bowmakers Ltd v Barnet Instruments Ltd (1945) – 15.26 – bailor /
owner can recover the goods as he is relying on his proprietary rights
and not on the contract of bailment
v. Allowed recovery by way of a collateral contract despite the main contract being
tainted by illegality
1. Eg. Strongman (1945) Ltd v Sincock (1955)- 15.27
2. Problem: plaintiff would be allowed to recover what could not
otherwise be recovered under the illegal contract which precludes all
recovery whatsoever
 3. Only in exceptional circumstances will recovery be allowed by way of a
collateral contract for failure to observe a statutory obligation

Restraint of trade

1. Covenants in contracts in restraint of trade restrict the freedom of contracting parties in one
way or another
2. Obligations undertaken voluntarily and are not themselves illegal
3. When plaintiff tries to enforce it, the defendant will argue that it should not be enforced on the
ground of illegality
4. Employment contracts  prevent an employee from leaving the employment + prevent the
employee from working for the employer’s competitor
5. Court has 2 competing public policy considerations:
a. Interest of society to encourage competition and such clauses are not in the interest of
society generally as they prevent competition
b. But they are also equally important and in the interest of society that covenants
voluntarily entered into should be upheld
6. Even though an employee has agreed to the restrictive covenants, he is not precluded from
arguing later that the covenants are restrictive (eg. TSC Europe (UK) Ltd v Massey (1999) and
National Aerated Water Co Pte Ltd v Monarch Co Inc (2000))

Validity of “restraint of trade” clause

1. 2 requirements:
a. There must be a legitimate interest that the party relying on the clause is seeking to
protect
b. Clause has to be reasonable, having regard to the interest of the parties and the public
generally
2. Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co (1894) –
a. General rule: “All interence with individual liberty of action in trading, and all restraints
of trade of themselves, if there is nothing more, are contrary to public policy, and
therefore void”
b. Exception:
i. May only be valid if it is reasonable both in the interests of the parties and in
the interests of the public
ii. Measure of reasonableness is viewed from the standpoint of both the public
and the parties
c. Singapore case that followed this approach: Thomas Cowan & Co Ltd v Orme (1961) –
15.35
3. Burden of proof is on the party seeking to rely upon the covenant in restraint of trade to show
that the covenant was reasonable at the time at which the contract was made
4. Several factors influence a court’s decision on reasonableness
a. Eg. Geographical range
 i. Heller Factoring (Singapore) Ltd v Ng Tong Yang (1998) – 15.38 – “the area must
be no more than adequate for the protection of the plaintiffs = the area where
the plaintiffs’ customers are situated  Singapore is a small country 
prohibition applicable for the whole country would be necessary

Employment Contracts

1. To justify a covenant in restraint of trade, the employer must have some proprietary interest
that requires protection
2. Trade secrets and business connections  owned by employer  legitimate interest
3. Singapore: Maintenance of a stable workforce = legitimate interest (eg. Wong Bark Chuan,
David v Man Financial (S) Pte Ltd (2007))
4. Business connections  employee must have personal knowledge of and influence over the
customers of the employer (eg Faccenda Chicken Ltd v Fowler (1987))
5. Where an employee has acquired additional skill and knowledge of a trade or profession in the
course of his employment  belongs to the employee  use of it will be extremely difficult to
inhibit by the employer (eg. Mason v Provident Clothing and Supply Co Ltd (1913) – 15.40)
6. Fitch v Dewes (1921) – clause was reasonable even though it was for an unlimited duration 
locality was a significant factor
7. Buckman Laboratories (Asia) Pte Ltd v Lee Wei Hoong (1999) – 15.42
a. “In ascertaining the validity of such a clause, the first step is to determine what those
interests are and the second is to consider whether the clause as drafted is no wider
than is necessary to protect such interests. The court will not give effect to a clause if its
main function is to inhibit competition in business”
8. To determine the interest intended to be protected
a. Court must construe the contractual wording to determine whether it indicates what
that interest is
b. Where the wording of a restriction does not specifically state the interest of the
employer which is intended to protect, the court is entitled to look both at the wording
and the surround circumstances for the purpose of ascertaining that interest by
reference to what appear to have been the intentions of the parties
c. If employer states specifically what interest the covenant is intended to protect 
employer cannot thereafter seek to justify it by reference to a separate interest which
has not been specified
9. Singapore
a. Stratech Systems Ltd v Nyam Chiu Shin (alias Yan Qiuxin) and others (2005) court will
never uphold a restrictive covenant which served only to protect an employer from
competition from a former employee. There must had to be some subject-matter which
an employer could legitimately protect by a restrictive covenant
b. Wong Bark Chuan, David v Man Financial (S) Pte Ltd (2007)- 15.44
i. “The rule against unreasonable restraint is based on public policy and may not
be excluded by mutual consent”
 Sale of a business

1. More readily upheld by the courts than in employment contracts

2. Purchaser of a business must be protecting a legitimate proprietary interest which will generally
include the goodwill of the business
3. Eg. Vancouver Malt and Sake Brewing Co Ltd v Vancouver Breweries Ltd (1934) – 15.47

Severance

1. Used to save a contract which would otherwise be illegal or contrary to public policy, by excising
or cutting away the illegal portion
2. Severance of entire clauses
a. Test: whether the covenants in restraint of trade constitute the whole or main
consideration for the promise sought to be enforced  if its not the case  severance
may be applied
b. Wyatt v Kreglinger & Fernau (1933)- 15.52
3. Severance within covenants: “Blue Pencil Test”
a. Excision is permissible so long as the “blue pencil” running through and striking out the
objectionable words in the covenant concerned does not alter the meaning of the
covenant and does not “mutilate” the covenant to the point where it does not make any
sense
b. Goldsoll v Goldman (1915)

Negligence
*If plaintiff is able to sue using the Misrepresentation Act, it is better to use MA since the
representee would only need to show that the representation was false and the burden of proof
would shift to the representor to show that he had reasonable ground to believe and did believe, up
to the time the contract was made, that the facts represented were true. Furthermore, the
representee suing pursuant to s 2(1) MA might be able to recover damages which are quantified
based on the fraud measure, rather than the negligence measure under the tort of negligence.
Under the fraud measure, damages are recoverable so long as causation is established,
notwithstanding that the loss might be too remote, unlike in a typical negligence action.

Must prove that the defendant:

1. Owes a duty of care

a. Caparo Industries plc v Dickman (1990) 6.9 – 3 part test :
i. Foreseeability of damage (class of persons)
ii. Relationship of proximity between the plaintiff and defendant (precise
relationship)
iii. Whether it is fair, just and reasonable to impose a duty (floodgates?)
b. Singapore : 2 stage process
 i. RSP Architects Planners & Engineers v Ocean Front Pte Ltd (1996) (“Ocean
Front”)
ii. RSP Architects Planners & Engineers v Management Corporation Strata Title
Plan No 1075 (1999) (‘Eastern Lagoon’)
iii. Court first examines facts and factors to determine if there Is a sufficient degree
of proximity. Next considers whether there is any material factor or policy which
precludes such duty from arising.
iv. 6.22 - United Project Consultants Pte Ltd v Leong Kwok Onn (trading as Leong
Kwok Onn & Co) (2005) – IRAS
v. 3 part test for personal injury cases (TV Media Pte Ltd v De Cruz Andrea Heidi
and another appeal (2004)) and property damage (The Sunrise Crane (2004))
vi. Singapore (6.103 – 104)
1. Spandeck Engineering (S) Pte Ltd v Defence Science & Technology
Agency (2007) – Court held that a single test was preferred to
determine the scope of duty of care in negligence cases
2. Single test is the two-stage test premised on proximity and policy
considerations; the application of the test is to be preceded by a
preliminary requirement of factual foreseeability.
c. General rules:
i. Physical damage (does not include future damage) and economic losses
consequent upon physical damage are generally recoverable
ii. Negligent act causing personal injury or physical damage
1. Establish duty of care
2. No necessity to separately consider the element of proximity
3. Requirement of “reasonable foreseeability” would normally suffice
4. Test of reasonable foreseeability – Donoghue v Stevenson (1932)
5. Singapore – utilized the Caparo three-part test (Mohd bin Sapri v Soil-
Build (Pte) Ltd (1996))
6. Same test appears to be applicable to claims for property damage – The
Sunrise Crane (2004) – 6.30
iii. Negligent omission causing personal injury or physical damage
1. Normally no duty of care arising from mere omissions
iv. Negligent acts or omissions causing economic loss
1. Not recoverable in England (Murphy v Brentwood (1991) – 6.41)
2. Singapore – departed from the English position. (RSP Architects
Planners & Engineers v Ocean Front Pte Ltd (1996) (“Ocean Front”) –
6.43)
v. Negligent misstatements causing physical damage
1. Marc Rich & Co AG v Bishop Rock Marine Co Ltd (1996)  no duty of
care
vi. Negligent misstatements causing economic loss
1. Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) – 6.33
 a. Factors to be considered when determining whether a duty of
care had arisen
i. The skill and expertise of the maker of the statement
ii. Whether the maker knows or ought to know that the
other person will rely on the statement
iii. Whether the maker of the statement voluntarily
undertakes or assumes responsibility for making the
statement
2. Caparo Industries plc v Dickman (1990)
a. No duty of care is owed by the auditors of a company to
members of the public at large who rely on the information to
buy shares in the company
b. Statutory accounts of the company were to be used at the
general meeting for shareholders as a whole and were not
intended for use by individual shareholders or potential advisers
in making investments
c. Requirements for establishing a duty of care
i. Purpose was made known to the adviser at the time of
the advice
ii. Adviser knows or ought to know that his or her advice
will be communicated to the plaintiff for the above
purpose
iii. The adviser knows or ought to know that his or her
advice will be acted upon by the plaintiff without
independent inquiry
iv. Advice was acted upon the plaintiff to his or her
detriment
vii. Pure economic loss is generally not recoverable
1. Exceptions:
a. Pure economic loss caused by negligent misstatements – Refer
to misrepresentation (negligence seminar notes pg 10)
b. Pure economic loss which arises as a result of negligence with
regard to real property damage (notes page 12)
viii. Nervous shock or psychiatric harm?
1. Primary victim - Page v Smith (1996) car crash – recoverable
2. Secondary victim – McLoughlin v O’Brian (1983) – satisfy 3 requirements
a. Class of persons whose claims should be recognized (based on a
close relationship between the plaintiff and the primary victim)
b. Proximity of secondary victims to the accident in time and space
c. Means by which the shock is caused
d. Singapore : Pang Koi Fa v Lim Djoe Phing (1993) – Plaintiff didn’t
satisfy 2. And 3. But able to claim because she was proximate in
 both time and space to the tortuous event (saw the death of her
daughter, witnessed throughout the effects of the defendant
doctor’s negligent diagnosis, negligent operation and negligent
post-operative treatment.
*Only applicable for medical negligence cases

2. Breached his / her duty of care to the plaintiff (Did his conduct fall below the standard of care?)
a. Factors to consider in determining the standard expected of the defendant:
i. Likelihood of injury
ii. Seriousness of injury
iii. Cost of avoiding the risk
b. Burden of proof is generally on the plaintiff to show on a balance of probabilities that
the defendant had breached the duty of care
i. Done in 2 ways:
1. Actual proof; OR
2. Via the doctrine of res ipsa loquitur, where the court will presume that
the defendant has breached the duty of care if:
a. The defendant was in control of the thing which caused the
accident; and
b. The cause of the accident must also be unknown
3. Res ipsa loquitur is a rule of evidence only and, the defendant can
displace the effect of the doctrine by adducing evidence consistent with
the absence of negligence on its part
c. Nettleship v Weston (1971) – The standard of care is the objective standard of a
reasonable person using ordinary care.
d. Professionals and professional standards and practice
i. Standard of care is that which is reasonably expected of a reasonably competent
professional with respect to a particular field.
ii. Even if the professional had acted consistent with the professional standards, he
may still be found liable under the tort of negligence (Fong Maun Yee v Yoon
Weng Ho Robert (1997))
e. Use of expert evidence in determining the standard of care
i. Court would generally determine the standard of care expected of professionals
based on the evidence of experts within the same or similar profession - Bolam
v Friern Hospital Management Committee (1957)
ii. Singapore – Bolitho test (Bolitho v City and Hackney Health Authority (1998))
1. Judge hearing the medical negligence case had to be satisfied that the
medical opinion had a logical basis which would involve weighing the
risks against the benefits to reach a ‘defensible conclusion’ (medical
opinion must be internally consistent on its face)
 2. If in a rare case, it can be demonstrated that the professional opinion is
not capable of withstanding logical analysis, the judge is entitled to hold
that the body of opinion is not reasonable or responsible
iii. Standard of care is based on the test of reasonable man as objectively
determined.
1. Likelihood of injury to the plaintiff is extremely low or remote, a high
standard of care is not required to prevent the injury. (Bolton v Stone
(1951) – injured by cricket ball, high cricket fence)
2. Likely injury is serious, a higher standard of care would be required
(Paris v Stepney Borough Council (1951)) 6.58
3. Cost of avoiding injury on the part of the defendant balanced against
the risk of harm occurring
a. 6.59 Latimer v AEC Ltd (1953) – slippery floor in the factory
b. A reasonable man would only neglect a small risk provided he
had some valid reason for doing so, because it would involve
considerable expense to eliminate the risk. He would weigh the
risk against the difficulty of eliminating it. (Wagon Mound (No
2) (1967))
iv. Res Ipsa Loquitur (The thing speaks for itself)
1. 2 criteria
a. Defendant must have been in control of the situation or thing
which resulted in the accident and the accident would not have
happened, in the ordinary course of things, if proper care had
been taken
b. Cause of the accident must be unknown to the plaintiff
c. Scott v London & St Katherine Docks Co (1865) – sacks of sugar
fell
d. Teng Ah Kow and another v Ho Sek Chiu and others (1993) – Res
Ipsa Loquitur is a rule of evidence in Singapore
e. *Defendant can displace the effect of the doctrine by showing
that he or she was not negligent
3. Caused loss
a. Causation requirement needs to be established by the plaintiff on a balance of
probabilities.
b. “But for” Test – will the plaintiff suffer harm if the defendant had not been negligent?
i. If satisfied  liable
ii. Does not appear to be applicable in the context of a medical practitioner’s
failure to warn of risks of surgery to the plaintiff (Chester v Afshar (2005)- doctor
liable for negligent omission)
c. Material contribution to damage
i. Considers the question as to whether the breach materially contributed to the
damage
 ii. “Novus actus interveniens (“new intervening act”) (Muirhead v Industrial Tank
Specialities Ltd (1986); TV Media Pte Ltd v De Cruz Andrea Heidi and another
appeal (2004))
iii. Where additional damage is caused by a second tort, each tortfeasor is liable for
the damage which he has caused. (Baker v Willoughby (1970) – injured left leg
from accident, then got shot in the same leg by an armed robber)
iv. If the second tort is a natural event which wipes out the physical effects of the
first tort, the tortfeasor’s liability ceases at the point when the natural
supervening condition manifests itself (Jobling v Associated Dairies (1982))
d. Multiple causes and material contribution to risks of damage
i. Basic rule – Plaintiff can succeed only if he proves on a balance of probabilities
that the damage in question is attributable to the tort (Wilsher v Essex Area
Health Authority (1988))
1. Exception : Fairchild v Glenhaven Funeral Services Ltd (2003) – several
defendants consecutively expose the plaintiff to the same risk involving
the same agent of harm, all can be jointly and severally liable, even
when it is impossible to determine which of them actually caused the
plaintiff’s damage.
a. BUT! Barker v Corus (UK) plc (2006) 6.73 – case similar to
Fairchild but the last exposure involved a failure by the plaintiff
himself to take reasonable care for his own safety during the
period of his self-employment. Defendants are not jointly and
severally liable in such an instance, but are liable only for an
aliquot share, apportioned according to their respective
contributions to the risks.
2. Similarly : McGhee v National Coal Board (1973) – Where a defendant
has sole control over the agent of harm, he may be liable even if the
plaintiff can establish only that the defendant negligently increased the
risk of harm.
e. Loss of chance
i. Hotson v East Berkshire Health Authority (1987)
Plaintiff fell and injured knee. Doctor negligent. If not 25% chance of healing and
complications would not have developed  causation was not proven on a
balance of probabilities and the defendants were not liable
ii. Similaryly, Gregg v Scott (2005) 6.75
4. Damage is not too remote
a. Test of direct consequence – Re Polemis and Furness Withy & Co (1921) – plaintiff’s ship
was destroyed by the defendant’s falling plank  direct consequence
b. Test of “reasonable foreseeability” – relates to the type of damage or injury which is
foreseeable
i. Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (or Wagon
Mound (No 1) (1961) – loss is not too remote where the type of loss which
 actually occurred was reasonably foreseeable, notwithstanding that the precise
extent of the loss was not foreseeable.
ii. Jolley v Sutton London Borough Council (2000) – Boy injured when repairing an
abandoned car, defendant held negligent – 6.81
iii. Hughes v Lord Advocte (1963) – As long as the cause of the accident was a
‘known source of danger’, the defendant would be liable even if the accident
was caused in a way which could not have been foreseen.
c. Special circumstances of the plaintiff
i. General rule – the defendant has to take the plaintiff as he or she is, with
existing predispositions (Eggshell skull rule)
ii. Smith v Leech Brain & Co Ltd (1962) – burnt lip with pre-cancerous condition 
cancerous due to the burn  defendant held liable
iii. BUT! Defendant not liable for additional damage which the plaintiff suffers due
to its impecuniosity (poor) : Liesbosch Dredger v SS Edison (1933)  ship sank
due to defendant’s negligence. But POOR, hired ship instead of buying a new
ship (cheaper to buy)  cannot claim for additional costs of hire
1. Courts moving away from this stand – Lagden v O’Connor (2004)
2. Singapore : Ho Soo Fong and another v Standard Chartered Bank (2007)
 Liesbosch Dredger principle should not be applied
5. Show reasonable steps to mitigate its losses (cannot claim for damages that was not duly
mitigated)

Assessment of damage 6.56

1. Compensate for losses suffered (restore the plaintiff as far as possible to the position he or she
would have been if not for the defendant’s negligence)
2. Personal injury  claim for general damages eg. Pain and suffering, loss of amenities and future
loss of earnings
3. Special damages eg. Loss of earnings (pre-trial) and medical expenses that have been reasonably
incurred may, subject to proof, be recovered.
4. Death cases : Claim for bereavement expenses may be made for the benefit of certain specified
dependents.
5. Economic loss : connected to the ascertainment of the precise scope of duty of care in a
particular case which may result in different quantifications of damages.

Limitation periods

1. S 6(a) Limitation Act – action founded on a tort shall not be brought after the expiration of 6
years from the date on which the cause of action accrued.
2. S 24A – negligence claim for personal injuries, action shall not be brought after the expiration of:
a. 3 years from the date on which the cause of action accrued; or
b. 3 years from the earliest date on which the plaintiff has the knowledge required for
bringing an action for damages in respect of the relevant injury, if that period expires
 later than the period mentioned in (a) (plaintiff has the burden to show that it had
acquired the knowledge on a certain date. Defendants have to show knowledge on the
part of the plaintiff was at an earlier date.

Defences that can be made by the defendant:

1. Illegality
a. Very limited application in tort
b. The fact that the plaintiff is involved in some wrongdoing does not of itself provide a
good defence to the defendant.
i. Singapore – plaintiff who does not have a work permit to work does not prevent
him from claiming damages against the defendant who had negligently caused
injuries. BUT plaintiff cannot be compensated on the basis of what he might
have earned by working illegally – Ooi Han Sun v Bee Hua Meng (1991)
c. Plaintiff’s wrong must be sufficiently connected with his damage, and the damage
caused by the defendant should be proportionate to the plaintiff’s wrong
i. Clunis v Camden and Islington Health Authority (1998) – Plaintiff claimed against
defendant for its negligent omission to provide him with psychiatric cre which, it
was alleged, resulted in the plaintiff killing a person
ii. United Project Consultants Pte Ltd v Leong Kwok Onn (trading as Leong Kwok
Onn & Co) (2005) – IRAS - Illegality defence could include other forms of
reprehensible or grossly immoral conduct, but did not apply to defeat the action
in negligence. (6.89)
2. Voluntary assumption of risk (Volenti Non Fit Injuria)
a. Defence applies where the plaintiff is conscious of the risks and consented to those
risks in the participation of inherently dangerous activities (ICI v Shatwell (1965))
b. Defence does not apply where the plaintiff takes conscious risks in rescue cases and the
plaintiff’s negligence results in harm to the defendant (Haynes v Harwood (1935))
c. Plaintiff can use UCTA s 2 – person’s agreement to or awareness of a term or notice
purporting to exclude or restrict liability does not constitute a voluntary acceptance of
risks  defendant cannot exclude or restrict its liability for negligence which results in
personal injury or death. Other than that, test of reasonableness.
3. Contributory negligence  partially liable
a. S 3 Contributory Negligence and personal injuries Act - Damages recoverable in respect
thereof shall be reduced to such extent as the court thinks just and equitable having
regard to the claimant’s share in the responsibility for the damage. Provided that :
i. Shall not operate to defeat any defence arising under a contract
ii. Where any contract or written law providing for the limitation of liability is
applicable to the claim the amount of damages recoverable by the claimant by
virtue of this subsection shall not exceed the maximum limit so applicable
b. Plaintiff’s negligence will result in a reduction of damages only where It is causally
relevant to the damage which he or she has sustained.
 c. No need for the defendant to show that the plaintiff had been in breach of a legal duty
of care – Khoo Bee Keong v Ang Chun Hong and another (2005)

*Only 1 and 2 can result in the defendant not legally liable.

Vicarious liability

1. Employer is legally liable to the third party who suffers harm due to the employee’s
negligence in the course of employment
2. No liability in negligence for employing an independent contractor and where the damage is
caused by the negligence of the contractor as long as the defendant proved that he
exercised reasonable care and skill in employing the independent contractor (MCST Plan No
2297 v Seasons Park Ltd (No 2) (2005).
3. Employer may be under a duty, where the working conditions are inherently dangerous, to
exercise a significant degree of supervision and control over the independent contractors
(Mohd bin Sapri v Soil-Build (Pte) Ltd (1996))

Director’s liability for company’s negligence

1. Not liable
2. Where he is clearly the “controlling mind and spirit” of the company, he may be personally liable
for authorizing, directing or procuring the company’s negligent acts (TV Media Pte Ltd v De Cruz
Andrea Heidi and another appeal (2004))

Joint Torts

1. Dingle v Associated Newspapers Ltd (1961) – “where the injury has been done to the plaintiff
and the injury is indivisible, any tortfeasor whose act has been a proximate cause of the injury
must compensate for the whole of it”
2. Plaintiff can sue any one of the defendants who has been a proximate cause of injury for the
whole damage, thought eh defendant(s) may subsequently claim against other tortfeasors for
contribution

Concurrent Liability in the tort of negligence and in contract

1. Henderson v Merrett (1995) – Plaintiffs could select the tortuous remedy which was more
advantageous in the circumstances. Tort remedy is applicable unless it is limited or excluded by
the agreement of the parties concerned.