AB1301

Business Law

Guidelines to Business Law Examination Answers

Issue: What is the problem to be solved?

What are the applicable legal principles?

General Principle:
Define the principle:
Explanation:
Supporting cases/statue/examples

Exception/Limitations:
Define the principle:
Explanation:
Supporting cases/statue/examples

Application: Apply principles to relevant facts with accurate REASONING

 AB1301
Business Law
Week 2: Formation of Contract 1
Offer
- An offer is an expression of willingness to contract on certain terms, with the intention
that, upon acceptance by the offeree, a binding agreement is formed
- For offer to be effective, it must be communicated to offeree
Bilateral Contract
- There is an exchange of promise  Parties would know each other’s identity
- Upon the offeree’s effective acceptance (by words or actions), a bilateral contract would
be formed and both parties would be bounded by the contract
Unilateral Contracts
- Open for anyone to accept
- No exchange of promise  Offeror may not know offeree’s identity immediately
- Upon offeree’s performance of that condition, a unilateral contract is formed hence both
parties would be bounded by the contract
Invitation to Treat
- Advertisement, catalogues and price lists are regarded as invitations to treat
o Advertisements usually lack details for the buyer to go into a contract. Without
specific information about the item, no buyer will be willing to be bound by it
o There is no intention for the advertiser to be bound, due to the practical reason of
limited stock. Unless the seller has the ability to produce the stock to meet the
requirements of potential buyers, the advertiser would not be willing to be bound
by the advertisement
- Invitation to treat is an invitation to commence negotiations to make an offer
- Display of goods and prices in a shop is usually considered to be an invitation to treat as
well
o If displaying of goods and prices are considered as an offer, any person who picks
up the item would show his/her interest in the item. This would amount to an
acceptance and a contract would be formed. In this case, no buyer would be
willing to touch the item as it would lead to a binding contract
Carlill v Carbolic Smoke Ball Co (1892)
- Carbolic Smoke Ball Co advertised their products saying that
they will pay $100 to any person who contracted influenza
using their products despite following their instructions.
Carlill used the product and caught a flu.
- She was entitled to the $100. Although the offer is made to the
world, the contract is made with that limited portion of the
public who came forward to perform the condition on the faith
of the ad
Patridge v Crittenden (1968)
- Patridge paid for an advertisement in a magazine stating to
sell wild birds and was sued for selling live wild birds
contrary to the prevailing legislation
- There was no offer for sale as the advertisement is merely an
invitation to treat. Therefore the relevant legislation was not
contravened
- Since there is no intention of the seller to form a binding
contract at the point of time, it is considered as an invitation to
treat and hence acceptance of an invitation to treat does not
lead to a legally binding contract
Pharmaceutical Society of Great Britain v Boots Cash Chemists
(Southern) Ltd (1952)
- Boots operated self-service chemist shops where customers
pick up the items and proceed to pay at the cashier. The issue
was whether Boots had contravened a statute which prohibited
the sale of poisons “unless the sale is effected under the
supervision of a registered pharmacist”
- The display of goods with prices constituted an invitation of

- Under the new s14 of ETA 2010, the default rule for the placement of internet orders is
considered to be an invitation to treat
o Unless the offeror makes it clear that he intends to be bounded by it
o By acceptance to the internet order, no legally binding contract is formed
Provision of Information
- A mere response to request for an information does not constitute an offer
o Party responding has no intention to get into an agreement upon providing the
information
Acceptance
- Final and unconditional assent to all of the terms in the offer
o Can be made orally or in writing (expressed)
o Can be made by conduct (Implied)
- Following are NOT acceptance
o Counter-offer
o Conditional acceptance or acceptance subjected to contract etc
Knowledge of offer
- Once offeree is aware of offer, his/her motive for the acceptance is irrelevant
- Does not matter that he was prompted to act for reasons other than the desire to accept the
offer
-Cross offers do not made a contract
o Lack of consensus or meeting of minds between the parties at the time if making
the offers
o If A offers to sell her book to B for $10 and B offers to buy the book for $10.
Their letters crossed in the mail. Here, A is not bound to sell her book to B.
Communication of Acceptance (General Rule)
- For an acceptance to be effective, it must be communicated to the offeror. If in writing, it
must be physically received by the offeree and if orally, heard by the offeree
treat and the sale took place at the counter in the presence of
the pharmacist. Hence, Boots did not contravene the statute
- Since there is no intention of the seller to form a binding
contract at the point of time, it is considered as an invitation to
treat and hence acceptance of an invitation to treat does not
lead to a legally binding contract
Chwee Kin Keong v Digilandmall (2004)
- Through an error, Digiland website had laser printers for sale
at $66 when it is supposed to be $3854 each.
- Digiland eventually won on the basis of unilateral mistake
Harvey v Facey (1893)
- Harvey requested for the lowest quoted price of a piece of
property and Facey replied. Harvey proceeded to “accept” the
price and no further communication was made
- The provision of information was not an offer. Hence there is
no contract
William v Carwardine (1833)
- The court held that the plaintiff was entitled to a reward
because when giving the information sought by the police, she
had done so with knowledge of the reward even though her
motive for giving the information was her own remorse
Tinn v Hoffman & Co (1873)
- Court held that cross offers did not make a contract
Obiter Dictum in Entores Ltd v Miles Far East Corporation
(1955)
Communication of Acceptance (Exceptions)
1. Waiver of Communication
o Facts show that the offeror has waived the need for communication of acceptance
 Case where the offer is made to the whole world (unilateral contract)
2. Silence
o If the offeror imposes silence to be construed as acceptance and the offeree did
not consent to it, then the offeree’s silence is not enforceable
o When the parties agree that the offeree would have a positive obligation to
communicate only if he wishes to reject the offer, silence would be construed as
acceptance
o Unless both parties agree to it, silence is not construed to be acceptance. No
contract is formed and there will not be a legal effect
3. The Postal Acceptance Rule (applies to acceptance only)
o The acceptance is deemed to be effective as soon as the letter is posted, regardless
as to when it reaches the offeror or whether it reaches him at all
o However, the postal rule applies only in circumstances where it is clear that
parties agree that acceptance should be sent by post
 When an offer is sent by telegram, we can presume that the offeror wants
a speedy reply. If an acceptance was subsequently made by post, it would
not attract the postal rule and the general rule would hold instead
o If legislation authorizes or required a document to be sent by post, postal rule does
not apply  S2(5) Interpretation Act
4. Instantaneous Communications
o For the case of instantaneous communications proper, such as telephone call,
communication between parties is instantaneous in its fullest sense
 As such, it would be identical to making an oral contract face to face
hence general rule applies
o For the case of near instantaneous communications such as telex or instant
messaging over the internet, both parties respond to each other in real time
Carlill v Carbolic Smoke Ball Co (1892)
- There was no requirement for Carlill to communicate her
acceptance of offer. Her very act of using the Carbolic Smoke
Ball as instructed constitutes acceptance and she was entitled
to the $100
Felthouse v Bindley (1862)
- Felthouse wrote to Bindley to make an offer to buy his horse.
In the letter, he added that upon not hearing any information
from him, the horse will be considered as Felthouse’s.
- There was no contract between the 2 parties. The plantiff had
no right to impose a condition that a sale contract would come
into existence if the defendant remain silent
Southern Ocean Shipping Co Ltd v Deutsche Bank AG (1993)
Adams v Lindsell (1818)
- A wool dealer wrote to a woolen manufacturer offering to sell
wool. The manufacturer posted a letter of acceptance which
reached the wool-dealer. However, the wool-dealer sold the
wool to someone else a day before receiving the letter of
acceptance
- Acceptance was communicated and the contract was formed
as soon as plaintiff posted the acceptance letter
Quenerduaine v Cole (1883)
Chia Kim Huay v Saw Shu Mawa Min Min (2012)
Entores Ltd v Niles Far East Corp (1955)
- Telex was used to make a contract between the 2 parties. The
court had to decide where the contract was made
- Contract was made when the communication is actually
received. The general rule applies and the contract was made
in London where the telex was received
  It would be identical to making an oral contract face to face except that
their conversation is made on written form. Hence general rule applies
here
o For the case of instantaneous transmission but not instantaneous communication,
such as emails, facsimile or voice mail, since the offeror may not be manning the
receiving equipment all the time, the offeror may not be immediately aware of the
acceptance

o S13 ETA 2010:

 If there is a designated electronic address, time of receipt is when email
becomes capable to being retrieved by the recipient (Postal rule applies)
 If there is no designated electronic address or email is sent to a non-
designated one, time of receipt is when the email becomes capable of
being retrieved by the recipient at that address and he comes aware that
the email is being sent to that address (General rule)
o S15 ETA 2010: an electronic record is deemed sent by the sender is it is sent by
the sender himself, someone authorized by him or by an information system Chwee Kin Keong v Digilandmall (2004)
programmed by or on behalf of the sender to operate automatically

Termination of Offer and Acceptance Bryne v Van Tienhoven (1880)

Withdrawl/Revocation
General Rule
- An offer can be withdrawn at any time prior to acceptance.
- Revocation is only effective when the offeree receives the notice of revocation
Reliable Third Party
- A reliable third party can also communicate a valid revocation
- Revocation is effective as long as the offeree receives the notice of revocation
Fresh Offer
- A fresh offer would not supersede and terminate the earlier offer
o Unless the fresh offer expressly says so. If so, the earlier offer would then be
revoked
- Defendant mailed an offer to sell tin plates. The defendant
then mailed a letter of revocation but the plaintiff telegraphed
their acceptance before they received the letter of revocation
- The revocation was not effective until it was received by the
plaintiff. Since the offer was accepted prior to the revocation,
there was a valid contract
Dickinson v Dodds (1876)
- Dodds made a written offer to Dickinson to sell his house.
However, Dodds sold his house to someone else. That same
day, another person told Dickinson about the sale. Dickinson
then purported to accept Dodd’s offer
- Dodds had validly withdrawn his offer to Dickinson even
though this was done through a third party
Banque Paribus v Citibank NA (1989)
- The Singapore High Court held that the first offer which had
not been accepted was withdrawn successfully. Hence
Citibank’s acceptance failed and there is no legally binding
contract
When offer is opened for a fixed period Routledge v Grant (1828)
- Even when the offer is expressed stated to open for a specific period of time, there is no - Grant made an offer to Routledge to buy his house, specifying
legal obligations to do so. a date of reply within 6 weeks
o There is no consideration for the offeror to do so. Unless the contract is supported - It was permissible for Grant to withdraw his offer during the 6
by consideration (such as option contracts), the offeror need not be bound to keep weeks period despite the implied assurance that the offer
his offer open would remain open during this period
Revocation of an offer in a unilateral contract Abbot v Lance (1860)
- If an offeree within a reasonable time from making of the offer begins to perform his Obiter Dictum in Dickinson Trading (S) Pte Ltd v Transmarco
obligations, the offeror cannot revoke the offer Ltd
Rejection
- An offer can also be terminated when an offeree rejects then offer. Rejection may be made
in writing, orally or by conduct. Once communicated, a rejection extinguishes the offer
and the offer cannot be revived
Counter-Offer Hyde v Wrench (1840)
- A counter offer is regarded as rejecting the initial offer - Wrench offered to sell property to Hyde at a certain price.
o An unconditional acceptance may be viewed as a counter offer which rejects the Hyde replied offering to purchase at a lower price. Wrench
original offer refused and Hyde wrote to accept the previous price.
- There was no contract because Hyde’s reply was a counter
offer, which extinguishes the earlier offer
The ‘Masters Stelios’; Monvia Motorship Corporation v Keppel
- If the offeree’s response is an inquiry or a request of information, it should not be Shipyard (Pte) Ltd (1983)
regarded as a counter offer
Lapse of Time Ramsagte Victoria Hotel Co v Montefiore (1866)
- If the offer is opened for a specified period, a purported acceptance after that period would - Montefiore wrote to the company offering to take up shares in
not be effective since the offer had lapsed the company and paid a deposit. There was no reply. Later on,
o When no specified period of time is expressed, the Court may imply a specific the company accepted the offer , issued shares to him and
period. In such cases, an offer would lapse after the reasonable amount of time asked for the remaining payment. Montefiore refused
implied by the Court - Montefiore could refuse to take up the shares because his offer
had lapsed after a reasonable time
Failure of condition Financings Ltd v Stimson (1962)
- If the offer is made conditional and the condition is not met, the offer is automatically - Stimson ws not bound to the contract because there was an
terminated implied condition that at the time of acceptance by the
plaintiff, the car would be in substantially the same state as
when the offer was made by Stimson. The condition was
broken and thereforehe offer was no longer available for
acceptance
Death
- If the offeror dies, the offer cannot be accepted after he is dead Dickinson v Dodds (1876)
- The above point will only hold provided that the offeree had notice of the offeror’s death Obiter Dictum in Bradbury v Morgan (1862)
 - If the offeree dies before accepting, the offer is terminated
Reynolds v Atherton (1921)
Once an acceptance has been communicated to an offeror, it cannot be revoked Wenkhiem v Arndt (1873)
- If the acceptance is sent via post, the acceptance cannot be revoked, even before the letter
reaches the offeror (Postal Acceptance Rule)
Week 3: Formation of Contract 2
Consideration
- Price or compensation for the promise given by one party to another
- Something which is given in exchange for another thing
- Rationale is that the promisee must pay a certain price in order to get something in return
Executory Consideration
- Consideration which is yet to be performed
- Executory consideration is good consideration and both promise can be enforced in Court
Executed Consideration
- Consideration which has been performed
- Executed consideration is good consideration and the promise can be enforced in Court
Past Consideration
- An act performed before the promises are exchanged
- Action performed was done independent of the promise given. Hence past consideration is
no consideration
Pao On’s 3 requirements (Exception for Past Consideration)
1. Act done at promisor’s request
2. Parties understood act would be remunerated by payment or conferment of some other
benefit
3. Contract must be enforceable had it been promised in advance
- If all 3 conditions are met, the consideration for the promise is enforceable, even if the act is
done before the giving of the promise
Rule 1: The consideration must move from the promisee but need not move to promisor
- Bata’s father promises to pay Ali $10 for his book. The consideration for the promise of
$10 is the book. As long as the book moves from Ali, it is good consideration. Bata’s father
need not receive the book
- Ali promises to sell the book to Bata. The consideration for the promise of the book is $10.
Since the $10 does not move from Bata but Bata’s father, it is not good consideration. The
$10 must move from Bata
- The rule is associated with the rule of privity of contract
Rule 2: The consideration need not be adequate but must be sufficient
Sufficient
Sir Frederick Pollock in Dunlop v Selfridge (1915)
- “An act or forbearance of one party, or the promise thereof,
is the price for which the promise of the other is bought, and
the promise thus given for value is enforceable”
Roscorla v Thomas (1842)
- Roscorla bought a horse from Thomas. Thomas then made a
declaration which promised Roscorla that the horse is sound
and free from vice. The horse turned out to be vicious.
- The promise was made after the transaction had already been
concluded and therefore past consideration. Hence Roscorla
could not enforce the promise
Pao On v Lau Yiu Long (1980)
- Lord Scarman “An act done before the giving of a promise
to make a payment or to confer some other benefit can
sometimes be consideration for the promise. The act must
have been at the promisor’s request: the parties must have
understood that the act was to be remunerated either by a
payment or the conferment of some other benefit, and
payment, or the conferment of a benefit, must have been
legally enforceable had it been promised in advance
Tweedle v Atkinson (1861)
- Both fathers of a married couple contracted to pay a
specified sum to the husband, but the fathers later died. The
husband sued one of the father’s estate for the money due to
him
- There is no consideration for the promise of the money
moving from the husband. The promise of the money is
NOT enforceable
Chappel & Co Ltd v Nestle Co Ltd (1960)
- Nestle was giving away records of a dance tune to people
 - Goods, services, money and other form of property who sent in a specified sum of money and 3 chocolate bar
- Forbearance to sue wrappers. As the dance tune belongs to Chappell, a royalty
- Performance of existing contractual duty to third party price of 6.25% of the ordinary selling price” has to be paid
to the record company. The question was to determine the
Insufficient value of the “ordinary selling price” of the records
- Moral obligations and motives - The consideration for the records included the wrappers
- Vague or insubstantial consideration even though they were of no value to Nestle
- Performance of existing public duty
- Performance of existing contractual duty owed to promisor
Sufficient consideration: Forbearance to sue Miles v New Zealand Alford Estate Co (1886); Abdul Jalil bin
- A promise to forbear from suing or enforcing a valid claim can constitute sufficient Ahmad bin Talib and Others v A Formation Construction Pte
consideration Ltd (2006)
- Giving away a benefit of avoiding a lawsuit
- For point to be sufficient, both conditions must be fulfilled:
1. The legal action must be reasonable but not frivolous (not having any serious
purpose/value)
2. The claimant has an honest belief in the chance of success of the claim and that the
claimant has not concealed from the other party any fact which to the claimant’s
knowledge, might affect its validity
Sufficient consideration: Performance of Existing Contractual Duty to Third Party The Eurymedon (1975)
- Performance of an existing contractual duty to a third party can constitute sufficient - The defendant stevedores were already contractually bound
consideration to unload goods from the ship. The plaintiff shipping
company made a separate offer to pay the defendant if they
would unload the plaintiff’s goods from the ship.
- Even though the defendant was already contractually bound
to a 3rd party to do so, the defendant’s act of unloading still
formed good consideration for the contract with the plaintiff
- The above point is valid regardless of whether the existing contractual duty has yet to be Pao On v Lau Yiu Long (1980); Singapore High Court in SSAB
performed (executory consideration) or is in the middle of its performance (executed Oxelosund AB v Xendral Trading Pte Ltd (1992)
consideration)
Insufficient consideration: Moral Obligations and Motives Eastwood v Kenyon (1840)
1. Promisor feels obliged to give a promise - Eastwood is the guardian of Sarah and incurred expenses on
o The wishes or motives of the promisee would not be a sufficient consideration for her behalf. When Sarah got married, her husband promised
the promise in the eyes of the law to repay Eastwood for the expenses. The husband failed to
pay and Eastwood sued.
- A moral obligation is insufficient consideration for a fresh
promise. Her husband’s promise was not enforceable in
Court.
2. Promisor decides to fulfill promisee’s wishes Thomas v Thomas (1842)
o The wishes or motives of the promisee would not be a sufficient consideration for - Mrs Thomas had a husband who died. Before his death, Mr
the promise in the eyes of the law Thomas expressed his wish that Mrs Thomas should

Insufficient consideration: Vague or Insubstantial Consideration
Insufficient consideration: Performance of Existing Public Duty
- If the promisee is already under a public duty to perform an act, that same act cannot
provide sufficient consideration for the promise and the promise would not have any legal
effect
- Exception:
o If the promisee did something more than required by an existing public duty, then
the Court deems the consideration sufficient. Then the promise would be
enforceable in Court.
- If the promisee is already under an existing contractual duty to perform an act, that same act
cannot provide sufficient consideration for the fresh promise and the promise will not have
any legal effect
- Exception:
o If the promisee did something more than required by an existing contractual duty,
continue to use his house after his death. Mr Thomas’
executor allowed Mrs Thomas to use the house in return for
$1 rent and the consideration of Mr Thomas’ wish
- The $1 rent was sufficient consideration but the husband’s
wishes were not as motives are not the same thing as
consideration
White v Bluett (1853)
- Bluett’s father wrote a note which promised to discharge
Bluett’s liability in consideration of Bluett’s promise to
cease complaining about the liability. When Bluett’s father
died, his executor White sued Bluett on the note
- Bluett’s promise was too vague and was insufficient
consideration for the alleged discharge by his father. Hence,
Bluett is still liable for whatever he owed to his father
Collins v Godefroy (1831)
Glassbrook Bros Ltd b Glamorgan City Council (1925)
- The manager of a coal mine sought additional policemen to
protect the mine during a strike. The police concluded that a
mobile force was adequate but the manager insisted a
stationary force. The police agreed to provide a stationary
force for a sum of money, but the manager refused to pay
- The police went beyond their public duty to provide a
stationary force. Hence it is good consideration and contract
exists. The manager is liable to pay the sum.
Stilk v Myrick (1809)
- Stilk was a seaman of a ship and during the voyage, 2 sailors
deserted the ship. The captain promised the remaining crew
that the wages of the deserting sailors would be divided
among them if the crew brings the ship home, Stilk sought
for the extra wages.
- There was no consideration for the captain’s promise
because the remaining crew did what they were
contractually required. Deserting of sailors was within the
usual emergencies found in such a voyage. Hence the
captain’s promise was unenforceable and Stilk cannot claim
his extra wages
Hartley v Pondonby (1857)
- The number of sailors who deserted was so large that the
 then the Court deems the consideration sufficient. Then the fresh promise would be
enforceable in Court
- Exception 2:
o Even if the promise did not do anything more than required by an existing
contractual duty, as long as certain conditions are fulfilled, the contractual duty can
act as sufficient consideration
1. Promisee did not apply any duress (threats, violenc, constraints) or
pressure to the promisor
2. Promisor obtained a practical benefit
Part Payment of Debt
- The part payment of a debt does not discharge the entire debt
- General rule that only precise and exact performance leads to discharge
- Exception (both must be fulfilled)
o The part payment was made at the request of the creditor
o The payment was made earlier, at a different place, or in conjunction with some
other valuable consideration
Doctrine of Promissory Estoppel
- Where promissory estoppel is established, a promisee may have a valid defence against a
promisor’s claim even though no consideration has been given by the promisee
ship became unseaworthy. Hartly was required to so much
more than what he was expected to do originally.
Williams v Roffey Bros and Nicholls (Contractors) Ltd (1991)
- Roffey Bros subcontracted carpentry work to Williams for a
fee. Williams ran into difficulties and could not complete on
time. Roffey Bros was anxious that the delay would make
them liable under the main contract for late completion,
hence Roffey Bros promised to pay an additional sum.
Williams completed the work on time but Roffey Bros
refused to pay the additional sum.
- As long as the extra payment was not given under duress or
fraud, the fresh promise was enforceable because Roffey
Bros obtained “practical benefits” from William’s work. The
benefit was that they would be liable under the main contract
for late completion
Foakes v Beer (1884)
- Beer was awarded a judgement of a sum of money against
Foakes. It was agreed that Foakes would return a sum of
money in a small initial sum followed by monthly
installments till the balance is paid off. Beer agreed that she
would no further action on the judgement. After the entire
judgement was paid, it turned out there was accumulated
interest amounting to $360. Beer claimed the interest.
- Beer’s promise not to take further action was not supported
by consideration
Pinnel’s Case (1602)
- Pinnel sued Cole for a debt of $8.50 due on Nov 11. Cole
argued that, at Pinnel’s request, he had paid $5.11 to Pinnel
on Oct 1, which Pinnel accepted in full satisfaction of the
debt.
- Cole paid the part payment earlier that the date of debt and
was accepted by Pinnel in full discharge of the debt. Pinnel
would have failed in his claim on this point.
Orbiter Dictum in Central London Property Trust v High Trees
House Ltd (1947)
 - 4 elements required to establish promissory estoppel
o Parties must have existing legal relationship
o Clear and unequivocal promise which affects the legal relationship
o Promisee relied upon promise and altered his position
o Inequitable for the promisor to go back to his promise
Suspensive v Extinctive
- Once the promissory estoppel is established, the original legal relationship is generally
suspended temporarily for the duration of the promise
o When the promisor gives reasonable notice of his intention to revert to the original
legal relationship, the original relationship is restored.
o Once doctrine is dissolved, the promise cannot be enforced as it is unsupported by
consideration
- Promissory Estoppel can totally extinguish the rights of the promisor under the original
agreement
o The promise becomes final and irrevocable if the promisee cannot resume his
position
o As the doctrine holds, the promise can be enforced even if it is unsupported by
consideration
Shield Not Sword
- The doctrine can only be raised as a defense against a claim and not to commence a suit
Intention to Create Legal Relations
- If intention is absent, the promise cannot create a binding contract at all
Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd
(1955)
- Tungsten was to pay royalties for using Tool’s patent rights
to produce certain materials. In 1939, because of war, Tool
agreed to suspend the collection of royalties. In 1945, Tool
revoked their voluntary suspension of royalties. In 1950,
Tool Metal sued claiming compensation from 1947.
- Tool was entitled to revoke their voluntary suspension by
giving adequate notice to Tungsten. The parties were
deemed to have returned to their original agreement by 1947
Ajayi v R T Briscoe (Nigeria) Ltd (1964)
Combe v Combe (1951)
- After a divorce, a husband promised to pay his wife $100
each year as allowance. Relying on this promise, she chose
not to obtain a formal Court order for maintenance. The
husband failed to pay and the wife sued.
- Promissory Estoppel can only be “used as a shield and not a
sword”. The husband’s promise has no consideration and is
unenforceable in Court

Objective Test:
- If a reasonable person viewing all the circumstances of the case would consider that the
promisor intended his promise to have legal consequences, there is intention to create legal
relations between the parties and the promise is enforceable in Court
Social and Domestic Agreements Balfour v Balfour (1919)
- The Court makes a general presumption that social and domestic agreements lack the - Mr Balfour was stationed in Ceylon. His wife claimed that
necessary intention to form a contract he promised to give her $30 a month as allowance when they
are apart. Mr Balfour failed to pay and she sued.
 - The parties did not intend the promise to be legally binding,
hence the claim failed
- Exception: Merritt v Merritt (1970)
o If there is a written contract, or that a lawyer is consulted, such evidences would
show that legal relations are intended
Commercial Agreements Edwards v Skyway Ltd (1964)
- The Court makes a general presumption that in a commercial agreement, there is necessary - Edwards was employed as a pilot by Skyways. Skyways
intention to create legal relations promised a payment favor should he terminate his service.
Edwards left Skyways
- A payment of favor did not rebut the general presumption of
intention in commercial agreements and Skyways was
legally bound to pay
- Exception: Honour clauses Rose & Frank Co v J R Crompton & Bros Ltd (1925)
o In the presence of an honour clause, parties have expressly states that their
agreement is not to be legally binding
- Exception 2: Enforcing a Letter of Comfort, Letter of Intent or Memorandum of Keinwort Benson Ltd v Malaysian Mining Corporation Berhad
Understanding (MOU) (1989)
 Promises based on any of the above agreements lack the necessary
intentions and would not be legally binding in the eyes of the law
Privity of Contract Price v Easton (1833)
- Based on the doctrine of privity, the general rule is that only the parties to a contract can sue
and be sued on it
Exception: Agency relationship
- In a agency relationship, a principal authorizes an agent to act on his behalf by entering into
a contract with a third party
- Generally, although the principal is not a party to the contract, he has a direct contractual
relationship with the 3rd party
- If an agency relationship is estabished, doctrine of privity is dissolved and the principal can
sue/be sued on the contract
Exception: Assignment of Choses in Action
- The rights or liabilities relating to a right to sue under a contract between 2 parties can be
transferred to a 3rd party under an assignment, under the full consent of all 3 parties
o If such an assignment is present, doctrine of privity is dissolved and the 3 rd party
can sue/be sued on the contract
Exception: Letter of Credit
- A buyer who orders goods from overseas may be asked to open a letter of credit with his
bank in favour of the seller
o If the letter of credit is confirmed by the bank, the seller can sue the bank for non-
payment even though the sale contract is between the buyer and seller and the letter
of credit is between the buyer and bank
Exception: Contracts (Rights of Third Parties) Act (CRTA)
- According to S2 of CRTA, a third party to a contract is able to enforce any term of the
contract if:
o The contract expressly stated so
o The contract confers a benefit on him
 But will not apply if evidence show that the parties did not intend the term
to be enforceable by the third party
o The third party is expressly identified in the contract by name
Week 4: Contents of Contract 1
Puffs
- Statements which are vague because of imprecision or exaggeration
- Such statements have no legal effect whatsoever
Representation
- Statement made before or at the time a contract is formed concerning some matter relating
to the contract
- Although it may be in writing, it is not an integral part of the contract
- If the representation is false, the party can take action under the law of misrepresentation
Terms
- Statements which form part of the contract
- If a term is breached, the party can initiate an action for breach of contract
Guidelines to Distinguish Terms from Representation
1. When statement was made
o If the statement was made closer to the time the contract was finally concluded, it is
more likely to be a term
o The long interval before the contract is formed suggests that the statement is
relatively unimportant
o If a term is breached, the party can initiate an action for breach of contract whereas
an action under misrepresentation can only amount to rescission (the revocation,
cancellation, or repeal of a law, order, or agreement.)
2. Maker’s Emphasis
o The greater the emphasis, the more likely the statement is a term
o A greater emphasis suggests that the statement is important
3. Written statement
o If a statement was originally made orally and later reduced into writing, then it is
more likely to have become a term of the contract
o Where there is a written contract, all the terms of the contract are presumed to be
contained within the written document
4. Maker’s special knowledge
o If the maker of the statement has greater knowledge concerning the statement as
compared to the other party, it is more likely the statement is a term
Dimmock v Hallet (1866)
- Held that the description of land as being “fertile and
improvable” was a mere puff
Routledge v McKay (1954)
- Routledge was interested in purchasing Mckay’s motorcycle.
Mckay told Routledge that the motorcycle was a 1942
model. They entered into a written contract one week later.
Later, Routledge discovered that the motorcycle was an
older model. He sued claiming a breach of contract
- There was clear and significant interval of one week
between the making of the statement and the making of the
contract. This indicates that the statement was not a term of
the contract
Bannerman v White (1861)
- In negotiations for the sale of hops used for brewing beer,
White asked if any sulphur was used to grow the hops.
Bannerman replied “no”. White emphasized that he would
not even bother to ask the price is Sulphur had been used.
They went into a contract and later on, White found traces of
Sulphur in the hops.
- The query regarding Sulphur was significant and acts as a
term to the contract
Oscar Chess Ltd v Williams (1957)
- Williams sold his car to the motor car dealer. He told the
dealer that the car was a 1948 model as showed on the
 o The other party will be dependent upon the maker for its accuracy
5. Invitation to verify statement
o If the maker of the statement invited the other party to verify the truth of the
statement made, then the statement is more likely a representation
o Shows that he does not intend contractual liability to result from his statement
o Inversely, if the maker of the statement dissuades the party to verify the truth of the
statement made, then the statement is more likely to be a term
o Shows that he fears contractual liability to result from the statement
Expressed terms
- If a term has been expressly agreed between the parties, the term is an expressed term
- Either orally or in writing
Implied terms
- A term which has not been expressly agreed by the parties but is nevertheless implied into
the contract
Implied by court
Custom and Usage
o Implied terms can be implied by Court to give efficacy (effectiveness) to the
contract
o The term can be implied because such contracts are subject to unwritten terms
hallowed by long usage or custom
Business Efficacy and Officious Bystander Test
registration book. It was later realized that the book was
tampered with and the car was actually a 1939 model. The
dealer sued for the breach of contract
- William’s statement was not a term of the contract because
as a private individual, Williams was not in a position to
guarantee the accuracy of the year of the registration given
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd
(1965)
- The motor car dealer told Dick that the car had done only
20,000 miles when in fact it had done 100,000 miles. Dick
bought the car, found out the true mileage later on and sued.
- The seller, a motorcar dealer, was in a better position to
know the true facts regarding the Bentley. Hence, the
defendant’s statement was a term of the contract and there
was a breach of contract
Ecay v Godfrey (1947)
- A seller of a boat told a buyer that the boat was sound. He
expressly gave the buyer the opportunity to survey the boat
- The statement was held to be a representation
Hutton v Warren (1836)
- Hutton was a tenant on Warren’s farm. Warren gave Hutton
6 months notice to quit. As requested by Warren, Hutton
continued to cultivate the land during this period. Upon
quitting, Hutton requested for payment for seed and labour
which he had forgone before the harvest
- Hutton was entitled to such payment as it is an accepted
custom that the tenant was bound to a farm for the entire
tenancy but may claim an allowance for seeds and labour
upon quitting
The Moorcock (1889)
 o Implied terms can be implied by Court to ensure business efficacy to the contact
o A term that the Court would supply to ensure that their contract will proceed on
normal business lines
o Term is based on the presumed intention of the parties drawn from the facts of the
case
o Additionally, by applying the officious bystander test, if the term is so obvious that
it goes without saying, the term passes the test and is implied as a term in the
contract by the Court.
Implied by statute
- Terms can also be implied by statute
- It is irrelevant that the parties are unaware of the statute
- Implied terms by the statute are terms to a contract
- A ship owner agreed to pay the jetty owner for allowing the
ship to unload at the jetty. The parties understood that at low
tide, the ship would rest on the mud at the bottom of the
river. However, the ship was damaged when, at low tide, she
settled on a hard ground beneath the mud. The ship owner
sued for damages.
- Even though the jetty owner did not give any warranty that
the ground below the jetty is safe, this effect is implied as a
term by Court. Hence the statement is a term to the contract
Sales of Good Act

Parol Evidence Rule Engelin The Practice LLC v Wee Soon Kim Anthony (2004)
- Codified under s93-94 of the Evidence Act, oral evidence will not be admitted in a Court - Court rejected a client’s contention that a written contract on
action to add to, vary, amend or contradict a written contract costs with a law firm had been varied orally with the
managing partner of the firm. This is because the client was
- Exception replying on patrol evidence to contradict the written contract
o Extrinsic evidence was only admissible where words of a written contract were
ambiguous
o If evidences show, the presumption that the written document forms the entire
contract can be rebutted
Classification of terms
1. Condition
2. Warranty
3. Innominate term
Condition
- Terms which are essential and fundamental to the contract
- The intention of the parties would determine whether the statement is a term or not
o Ali hired Bata to transport fragile items. Bata specializes in handling fragile items.
Since the intention of both parties involves hiring and providing a professional
service, the statement “to pack and protect goods in a suitable manner” would be a
term to the contract
- A breach of a condition us a repudiatory breach
o Injured party receives damages
o Gives the injured party the option to affirm or discharge the contract
o To discharge is to cease all obligations from date of breach
Warranty
- Warranty is a term that is less important and gives rise to secondary obligations
 - The intention of the parties would determine whether the statement is a term or not
- The law generally takes that time and dates in the contract are considered to be
representations. This is because many contracts have time and dates. Hence the date is only
a warranty
- Exception:
o However, the goods had to be transported in time for the exhibition. (Based on a
reasonable man test) A reasonable man would argue that the date is cruicial in this
case. Hence the date is a term
- Trivial Consequences Bettini v Gye (1876)
o A breach of warranty is a simple breach - Gye contracted Bettini to sing in England. The contract
o The injured party only has claims in damages included a term that required Bettini to take part on
o The injured party does not have the rights to affirm or discharge the contract rehearsals at least 6 days prior to the concert. However,
Bettini fell ill and could not participate in the rehearsals. Gye
refused to continue with the contract and Bettini sued
- The rehearsal clause is not vital to the contract and is a
warranty. Bettini’s breach of warranty did not entitle Gye to
repudiate the contract. The contract remains but Gye can
claim damages for the breach of warranty

Obiter Dictum in RDC Concrete Pte Led v Sata Kogyo (S) Pte
- Serious Consequence Ltd (2007)
o If the breach of warranty entailed serious consequence, it might be a repudiatory
breach
o The injured party may have the right to affirm or discharge the contract
o To discharge is to cease all obligations from date to breach
o Nevertheless, damages are awarded
Innominate Term Hongkong Fir Shipping Co Ltd v Kawasaki Kaisen Kaisha Led
- Comprises of varying obligations and is hard to classify (1962)
- If the statement comprises of varying obligations, it is an innominate term - Kawasaki chartered Fir’s ship but the ship’s engine-room
- Trivial consequences crew was insufficient in number. Fir admitted it had
o If the consequence of the breach is trivial, it is a simple breach breached the term which required the ship to be seaworthy.
o The injured party only has claims in damages Kawasaki repudiated the contract and refused to pay.
o The injured party does not have the rights to affirm or discharge the contract - Fir breached an innominate term, but the breach was not
- Serious consequences sufficiently serious to entitle Kawasaki to repudiate the
o If the breach deprives the injured party of substantially the whole benefit, the contract. Kawasaki could only claim damages
breach is a repudiatory breach.
o The injured party receives damages
o Gives the injured party the option to affirm or discharge the contract
o To discharge is to cease all obligations from date of breach
Week 5: Contents of Contract 2
Exemption clause Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd &
- Term in the contract which seeks to exclude the liability of the party relying on the clause Securicor (Scotland) (1983)
- If the EC is valid, it excludes the liability of the party. Injured party cannot enforce the
contract
- A limitation of a liability seeks to limit the liability of a party relying on it to a sum
specified
- A clause of limitation is not regarded by the Courts with the same hostility as clauses of
exclusion
- If EC is valid, it limits the liability of the party. Injured party can only claim the sum stated

- To ensure EC is valid, all 4 points must be established

o Incorporation
o Construction
o Unusual Factors
o UCTA
Incorporation L’Estrange v Graucob (1934)
1. By Signature - L’Estrange purchased a machine from Graucob. The sale
o To ensure EC is valid, EC must be incorporated into the contract agreement included an EC in legible but small print.
o An EC can be incorporated by the signatures of the parties - The document containing contractual terms is signed in the
absence of fraud or misrepresentation. Hence the party
signing it is bound, and it is wholly immaterial whether he
has read the documents or not
2. By Notice Chapelton v Barry Urban District Council (1940)
o To ensure that the EC is valid, EC must be incorporated into the contract - Chapelton hired 2 deck-chairs from Barry. There was a
notice near the chairs that instructed hirers to collect and
Where Notice is Placed retain a ticket. Chapelton collected the ticket without reading
- If the EC is printed on a type of document which a reasonable person would it. He sat on one of the chairs which collapsed under him. He
have expected to find contractual terms, the person relying on the EC has given sued Barry for damages and Barry sought to rely on the EC
sufficient notice of the EC to the injured party printed on the ticket
- No reasonable person would expect to find contractual terms
on the tickets since it would be regarded simply as a receipt.
Barry cannot rely on the EC to exclude the liability of the
contract
When Notice is Given Olley v Marlborough Court Ltd (1949)
- If the notice is given before or at the time the contract is made, the person - A couple rented a hotel room for one week, paying in
relying on the EC has given sufficient notice of the EC to the injured party advance. When they entered the bedroom, they saw a notice
- (In the case of an EC on a receipt, getting into a contract and receiving a receipt on the wall with an EC. Later on, the bedroom key was
is considered a continuous motion). The notice is considered to be timely and wrongfully taken from the hotel reception by a third party
would be seen at time of contract who opened the couple’s room and stole some properly. The

Adequacy of Notice
- If party relying on the EC took reasonable steps to bring the notice to the
attention of the injured party, he has given notice of the EC to the injured party
- If the notice is sufficiently conspicuous and legible to a reasonable person
reading the notice, the person relying on the EC has given sufficient notice of
the EC to the injured party
- Special Case: if the injured party has some disability preventing him from
understanding the notice, as long as the party relying on the EC took reasonable
steps to address the disability and bring the notice to the attention of the injured
party, he has given sufficient notice of the EC to the injured party
- The party relying on the EC must address the disability. If not, there is
insufficient notice even if he brought notice to the attention of the injured party
- The party relying on the EC must know the existence of the injured party’s
disability. If not, the normal case is applied
Previous Course of Dealings
- If there had been a previous course of dealings between the parties which
included an EC, and the parties indicated that the present contract would be
bound by the terms of the earlier contracts, then the EC is incorporated through
the previous course of dealings
hotel sought to rely on the EC
-The contract was already formed before the couple entered
the room. As such, the notice given is too late. The hotel
cannot rely on the EC to exclude the liability of the contract.
Thompson v London Midland Scottish Railway Co (1930)
- Thompson bought a railway ticket which contained the
words, “for conditions, see back” The back of the ticket
contained an EC against personal injury. Thompson
subsequently suffered an injury and sued the railway
company.
- The ticket pointed out that the EC was at the back of the
ticket. Hence there is reasonably sufficient notice was given
and the EC was valid
Jet Holding Ltd & Others v Cooper Cameron (Singapore) Pte
Ltd (2005)
- Jet Holding owned an oil exploration drill ship. They sued
for breach of contract a\when the ship’s slip joint
manufactured by Cooper broke into 2 due to overload. The
slip joint broke because the material used was significantly
thinner than specified. Cooper sought to rely on the standard
form EC that it claimed had been incorporated into the
contract by way of a separate provision in a sales quotation
- No adequate notice is given. Cooper should have brought
fairly and reasonably to Jet Holding’s attention by pointing
the EC out
Geier v Kujawa, Weston & Warne Bros (Transport) Ltd (1970)
- Geier was a passenger in a taxi. Inside the taxi was an EC
written in English. The driver realized that Geier did not
understand English but nevertheless pointed out the EC.
When Geier sued for an issue, the driver sought to reply on
the EC
- The driver knew of Geier’s disability and did not take the
reasonable step to translate the notice. Hence there is no
sufficiency of notice.
Henry Kendall & Sons v William Lillico & Sons & Ors (1969)
- An agricultural association has constantly contracted with a
supplier to purchase stock feed over the past 3 years. The
supplier would send a contract note with an EC. The Court
realized that over the course of time, the association knew
that when the supplier sold the feed, it did so on the terms it

Construction
- To ensure the effectiveness if the EC, its construction must be determined
- If the EC does not cover the liability in question, it cannot be used to exclude the liability
Contra Preferentem Rule
o According to contra preferentem rule, wherever there is any ambiguity in
interpreting a clause, the construction to be adopted is the one which is the least
favourable to the person who put forward the clause
o If rule applies, the EC is construed to be ineffective and cannot be enforced in
Court
Main Purpose Rule
o According to main purpose rule, there is a general presumption that the parties do
not intend an EC to defeat the main purpose of the contract
o If rule applies, EC is construed to be ineffective and cannot be enforced in Court
- Exception: If the words of the EC are clear and unambiguous, it can be construed as
effective even if the case is a fundamental breach. If so, EC can be enforced in Court
Unusual Factors
- If there are any unusual factors, it may limit the effectiveness of the clause
Misrepresentations
o If there is a misrepresentation about the true scope of the EC, it will render the
entire clause invalid
had continuously made known to the association.
B-Gold Interior Design & Construction v Zurich Insurance
(Singapore)
- The construction company was contracted to renovate
Mediacorp’s premises. The contractor took out an all-risk
policy with an insurer as required under the contract. The
policy included an EC excluding all liability for any loss or
damage of property owned by Mediacorp. When the
contractor was found liable for a fire that damaged
Mediacorp’s property, the contractor tried to claim from the
insurer
- The EC denied the contractor the very purpose of the policy.
It led to an absurdity and the Court held the clause
ineffective
Photo Production Ltd v Securicor Transport Ltd (1980)
Sample of good EC: The coy shall not be liable for, or in respect of,
any loss or damage suffered by the customer however caused or
arising & without limiting the generality of the forgoing, whether
caused or arising by reason of or on accounting of any act or
omission, whether negligence or otherwise, on the part of the coy or
its employees
Curtis v Chemical Cleaning & Dyeing Co (1951)
- Curtis contracted with a laundry shop for a dress to be
cleaned. Upon signing the contract, Curtis asked what the
contract would bind her to. The shopkeeper said it was to
claim liability for damage done to “beads and sequins” on
 the dress. The dress was stained and the EC in fact was for
all damages of any kind
- The company cannot rely on the EC to exclude its liability
due to the misrepresentation given about the EC
Overriding Oral Undertakings Evans & Son Ltd v Andrea Merzario Ltd (1976)
o If there is an oral undertaking made before or when a written contract is signed, the
oral undertaking can overshadow the written terms
o The oral undertaking creates a collateral contract that runs with the main contract.
This is an exception to the parol evidence rule.
o In this way, a collateral contract can neutralize the EC in the main contract
Unfair Contract Terms Act (UCTA)
- For EC to be effective, it must comply with the UCTA
- Applies to both EC against liability in contracts and liability in tort
- S11(5) of UCTA highlighted that he EC is ineffective until the EC is proven reasonable by
the party relying on the EC

UCTA does not apply to all contracts

o Contracts of insurance
o Contracts relating to the creation or transfer on interest in land
o Contracts relating to the creation or transfer of right or interest in patents, trademark
copyrights, registered designs or other intellectual property
o Contracts relating to the creation or transfer of securities
o S3 UCTA does not apply to international supply contracts
Business Liability vs Non-business liability
o Under s1(3) of UCTA, if the breach of obligation/duty arises from things done in
the course of a business, it is a business liability
o Under s12 of UCTA, if the person does not make the contract in the course of his
business but the other person does, the person is dealing as a consumer
Negligence Liability
o Under s1(1) of UCTA, negligence liability arises from the breach of an obligation,
arising from the terms of a contract, to take reasonable care or skill to perform the
contract
o Under s2(1) of UCTA, liability of negligence for death or personal injury cannot be Xu Jin Long v Nian Chuan Construction Pte Ltd
excluded by an EC
o Under s2(2) of UCTA, liability of negligence for other losses or damage can be
excluded if the clause passes the test of reasonableness

Contractual Liability
o Under s3 of UCTA, where one of the contracting parties deals as a consumer, if the
EC passes the reasonableness test, it is then valid
 o Under s3 of UCTA, where a business liability uses an EC in a standard written
contract, if the EC passes the reasonableness test, it is then valid
Liability under Sales of Goods Act
o The SOGS is applicable to all contracts involving the sales of goods
o For business liability
 Under s12 of SOGA, if the seller does not have the right to sell the good (ie
stolen), the seller cannot exclude his liability using an EC
 Under s13 of SOGA, if the goods do not match the description, the seller
can exclude his liability if the clause passes the test of reasonableness
 Under s14(2) of SOGA, if the goods do not fulfill certain factors for
quality, the seller can exclude his liability if the clause passes the test of
reasonableness
 Under s14(3) of SOGA, if the buyer informs the seller the specific
performance required from the good and the good did not fulfill that
specific performance, the seller can exclude his liability if the clause passes
the test of reasonableness.
 The case of sale by sample is governed under s15 of SOGA. If the buyer
buys in bulk and the bulk did not match the sample in quality, the seller can
exclude his liability if the clause passes the test of reasonableness.
o For consumer transactions
 Under s12 of SOGA, if the seller does not have the right to sell the good,
the seller cannot exclude his liability using an EC
 Under s13 SOGA, if the goods do not match the description, the seller
cannot exclude his liability using an EC
 Under s14(2) of SOGA, if the goods do not match fulfill certain factors for
quality, the seller cannot exclude his liability using an EC
 Under s14(3) of SOGA, if the buyer informs the seller the specific
performance required from the good and the good did not fulfill that
specific performance, the seller cannot exclude his liability using an EC
 The case of sale by sample is governed under s15 of SOGA. If the buyer
buys in bulk and the bulk did not match the sample in quality, the seller
cannot exclude his liability using an EC,
Misrepresentation
o Under s3 of Misrepresentation Act, if liability arises from a misrepresentation and
the EC passes the reasonableness test, the misrepresentor can rely on the EC to seek
protection
Reasonableness Test
o Under s11(1) of UCTA, if the party relying on the EC can show either
 The injured party knew of the existence of the EC
 The injured party reasonably ought to have known about the EC
  The EC was in contemplation of the parties when contract was made
o If any one of the above is shown, EC will pass the reasonableness test
Guidelines for Reasonableness Test
o The Court will have to determine reasonableness as specified in the second
schedule under s11(2) of UCTA
 If the party relying on the EC has a stronger bargaining position than the
injured party, all things being equal, the EC is more likely to be
unreasonable
 If the injured party received an inducement to accept the EC, all things
being equal, the EC is more likely to be reasonable
 If the injured party knew the existence of the EC, all things being equal, the
EC is more likely to be reasonable
 If compliance of the EC is impractical, all things being equal, the EC is George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd
more likely to be unreasonable (1983)
- A firm sold winter cabbage seeds but delivered autumn
seeds of inferior quality. In the contract, there was an EC
- The buyer could not discover the breach until the plants
grew. Hence the EC is unreasonable

 If the customer makes a special order but the goods cause damage to the
customer, the defect in the goods is considered to be due to the customer’s
own specifications. Hence, the EC is considered reasonable.
Week 6: Vitiating Factors
Incapacity
- Generally, if the parties do not have the capacity to form a contract, the contract is invalid
Minor
- Minor is one who lacks capacity to form contracts. The age of majority defines the stage
which a person is considered legally responsible for his actions.
- Although the age of majority is 21 years, in Singapore, minors above 18 are given
contractual capacity in certain commercial activities under the Civil Law (Amendment) Act
- If a minor’s contract is valid, the contract binds both the minor and the other party and is
fully enforceable  Valid contracts
- If minor has paid for the good, he cannot recover the money paid
o When an infant has paid for something and has consumed or used it, it is contrary Valenti v Canali (1889)
to natural justice that he should recover back the money which he has paid
Beneficial Contracts for Necessaries Nash v Inman (1908)
- Necessaries are goods and services which the law deems reasonably required by a minor in - Nash sought to recover $122 for some clothes delivered to a
his particular station in like minor
- Under s3 of SGA, if the good suits the minor’s actual requirements at the time of sale, the - Nash failed to prove that the clothes were necessaries – the
good is a necessary minor already had an ample supply of clothes. Hence the
- If the minor gets into a contract for necessaries, the minors’ contract is valid and fully contract is unenforceable
enforceable
- Luxurious items of utility can be considered as necessaries if they are appropriate for the Peters v Fleming (1840)
minor in his position - Issue was whether an undergrad who was the eldest son of a
wealthy Member of Parliament had to pay for gold jewelry
that he had bought.
- The gold items could constitute necessaries in the minor’s
position. Hence the contract is enforceable.
Executory Contracts for Necessaries
- If the necessaries are goods, the other party must have performed his obligations before the Nash v Inman (1908)
contract is binding on the minor
- If the necessaries are services, the contract is binding on the minor regardless whether the Roberts v Gray (1913)
other party has performed his obligations or not
Loans for Necessaries Marlow v Pitfeild (1719)
- A person who lends money to a minor is generally unable to enforce the contract and
recover the money from the minor
- However, if the money was used by the minor to purchase the necessaries, the effect is
reversed and the minors’ contract is valid
- In practice, financial institutions would require the minor to supply a guarantor who will
guarantee the loan. Under s2 of Minors’ Contracts Act (MCA), the guarantee is enforceable
even if the underlying loan is unenforceable
Beneficial Contracts for Employment De Francesco v Barnum (1890)
 - A contract of service involving a minor is fully binding on both parties if the contract is
beneficial to him
o Rationale is that the contract enables the minor to earn a livelihood
- Conversely, if the contract is not beneficial to the minor, the contract is invalid and cannot
be enforced on both sides
Chaplin v Leslie Frewin (Publishers) Ltd (1966)
- As long as the contract is beneficial to the minor as a whole, a contract of service is valid
and fully binding on both parties, even if there are certain aspects that are not advantageous
to the minor
- S12 Employment Act – A person below the age of 21 shall—be competent to enter into a
contract of service [provided that] no contract of service … shall be enforceable against
[that] person … unless it is for his benefit
Voidable contracts
Cases where Minor faces Recurring Future Obligations
- A 14 year old girl entered in a deed of apprenticeship with
De Francesco to learn stage dancing. The contract stated that
the girl cannot marry and would not accept other
engagements without her approval. Yet, she was under no
obligation to provide the girl with engagements
- The terms were not beneficial to the girl and hence the deed
in unenforceable
- A minor agreed to have his biography written by ghost
writers and earning royalties in return. The book turned out
to show him as a ‘depraved creature’.
- The contract helped the minor to start out as an author and
earn money. Hence the contract is beneficial to him as a
whole and the minor is bound by the contract

- If a minor enters into a contract which the minor faces recurring future obligations eg lease,
the contract is a voidable contract
- In a voidable minor’s contract, it is valid and binding upon the other party
o Minor is entitled to repudiate the contract without any liability. If so, the contract is
terminated
o Rationale is that the minor should be entitled to end the agreement should he wish
to do so.
- However, the minor’s entitlement to repudiate without a penalty is limited to anytime Davies v Benyon Harris (1931)
during his infancy or within a reasonable period after he attains majority - A minor entered into a lease for a flat. 3 years later after he
attained majority, the landlord sued him for unpaid rent
- The lease was voidable and is binding unless he repudiated
the lease within a reasonable time after attaining majority
Ratifiable Contracts
Cases which are neither Valid or Voidable
- If a minors’ contract is neither valid nor a voidable contract, it is then a ratifiable contract.
- In a ratifiable contract, the contract is not enforceable against the minor unless the minor
ratifies it after he attains majority
o If the contract is ratified, the other party is bound by it
Remedies

For a valid minors’ contract

- If a minors’ contract is valid, the contract binds both the minor and the other party and is
fully enforceable
For an invalid/void minors’ contract
- If the minor has already performed his obligations in the minors’ contract, the minor is
unable to return back to his original position unless there is a total failure of consideration
by the other party
- Under s3 of the Minors’ Contracts Act (MCA), if a voidable or ratifiable contract becomes
unenforceable, the other party can recover any property improperly obtained by the minor
by the virtue of an unenforceable contract
o Rationale is that the minor has improperly obtained property as a result of the
contract being unenforceable or repudiated
Valentini v Canali (1889)
- A minor contracted to lease a house from Canali for $102.
He paid $68 and occupied the house for a few months. He
later claimed the contract was not binding and sought to
recover the $68
- The minor already had the benefit of the house, hence he
cannot recover the money

Mentally unsound and intoxicated persons

- If a contract is made to/by one who is mentally unsound or intoxicated, the contract can be
unenforceable in court even if the contract is valid
- The facts must show that
o He is incapable of understanding the nature of the contract and
o The other party knew or ought to have known of his incapacity
- Exception: Under s3 of SGA, if the person obtained goods which are necessaries, the
contract is valid and is enforceable, even if he was intoxicated or mentally unsound
Illegality
1. Gaming and wagering contracts
2. Contracts contrary to public policy
3. Contracts contrary to statute
4. Contracts in restraint of trade
Gaming and wagering
- In Singapore, under s5 of the Civil Law Act, all wagering and gaming contracts are
generally void by statute
o A wager is a contract where one must lose for the other to win
o A gaming contract is one where parties play a game where the stakes are money or
something of value
o Such contracts are of no legal effect and cannot be enforced
o The legal effect of illegality is that the law treats the contract like it ever existed and
no parties can sue on the contract
 If property is passed under an illegal contract, the property is generally
unrecoverable
 The innocent party cannot claim damages as there is no contract to enforce
 If the illegality can be severed, the rest of the contract is still valid
- Exception: Gaming contracts that are authorized and legalized by law
Contracts contrary to public policy
 - If the contract involves committing a crime, a tort, or fraud on a third party, it contravenes Anthorp v Nerville & Co (1907)
some aspect of public policy and is illegal - Publishing a libel
- If the contract promotes sexual immorality, it contravenes some aspect of public policy and Ahvena Ravena Mana Argmoogum Chitty v Lim Ah Han, Ah
is illegal Gee and Chop Lee Watt (1894)
- Contract to lend money to finance a brothel

- If the contract benefits an enemy country or undermines a relationship with a friendly

country, it contravenes some aspect of public policy and is illegal Regazzoni v KC Sethia (1944)
- Contract for a transaction that is done in a friendly foreign
- If the contract obstructs the administration of justice, it contravenes some aspect of public country and the contract is illegal in its local law
policy and is illegal R v Andrews (1973)
- If the contract seeks to oust the jurisdiction of the Courts, it contravenes some aspect of - Contract to give false evidence in Court
public policy and is illegal Baker v Jones (1954)
- Contract giving only the council the right to make final
- The legal effect of illegality is that the law treats the contract like it ever existed and no decisions on questions of the rules of its association
parties can sue on the contract
o If property is passed under an illegal contract, the property is generally
unrecoverable
o The innocent party cannot claim damages as there is no contract to enforce
 If the illegality can be severed, the rest of the contract is still valid
Contracts contrary to statute

Statute expressly prohibits contract

- If a statute expressly disallows a certain contract, the contract is illegal
- The legal effect of illegality is that the law treats the contract like it ever existed and no
parties can sue on the contract
o If property is passed under an illegal contract, the property is generally
unrecoverable
o The innocent party cannot claim damages as there is no contract to enforce
o If the illegality can be severed, the rest of the contract is still valid

Statute impliedly prohibits contract Re Mahmoud and Ispahani (!921)

- The statute allows the certain contract but subject to certain requirements
- If the Court’s intention to prohibit a type of contract is clear from the statute, then the
contract is illegal and unenforceable, even if they are unaware of the statue’s illegality
- The legal effect of illegality is that the law treats the contract like it never existed and no
parties can sue on the contract
- Conversely, if there is no intention by the Court, the contract is valid
Statute prohibits unlawful conduct of a contract
- Wartime regulations prohibited the buying and selling of
linseed oil unless both parties have a license. A buyer
without a license contracted to buy linseed oil from a seller,
but repudiated the contract saying that he in fact did not have
a license
- The legislature has made it clear that such contracts are
prohibited without a license. Hence the contract is void
St John Shipping Corp v Joseph Rank Ltd (1957)
 - If the statue allows the contract but subjected to requirements, yet the contract’s - A statute allows that contracts for shipping goods but
performance failed to fulfill that requirements, that contract is tainted with illegality regulates the amount of load on ships. By overloading the
- The legal effect of a contract tainted with illegality: ship, the contract is tainted with illegality, but it does not
o The contract continues to exist as it is not void render the contract void. Hence, the ship owner is still
o The defaulting party is prevented from enforcing the contract entitled to claim the freight specified in the contract
 An action cannot be arisen from a dishonorable cause
o If property is passed under an illegal contract, the property is generally
unrecoverable
 Exception: (must show both to show property is recoverable)
 If the recovery proceedings can be made without relying on the
illegality
 The innocent party has no intent to break the law or does not know
that the contract is illegal
o Generally, the innocent party can recover damages from the defaulting party
 Exception: if both parties are at equal fault, or both parties contracted with
the intention to perform the contract illegally, the innocent party cannot
recover damages
 If the illegality can be severed, the rest of the contract is still valid

Statute penalizes unlawful conduct of a contract

- If the statue allows the contract but subjected to requirements, and the statue is penal in
nature (imposes a fine on the wrongdoer), the contract is not affected by illegality even if
the contract’s performance failed to fulfill that requirement
o The rationale is that the wrongdoer is already penalized by the statue and it would
not be fair for the wrongdoer to lose the contract
o If so, both parties can enforce on the contract as if the contract was legal
- Eg: if a taxi driver is fined for speeding, his passenger cannot rely on the illegal act to
refuse payment of the fare

Contracts in Restraint of Trade

- Contracts in restraint of trade are generally void
- Rationale is such contracts promote anti-competitive behavior

- For the restraint of trade to be valid, all 3 criteria must be fulfilled:

o Must protect the proprietary or legitimate interest of the covenantee
o Must be reasonable in duration, scope and subject matter
o Must not be contrary to public interest
1. Legitimate interest
o If there is a proprietary or legitimate interest to safeguard, the first criterion is met
o The covenantee must show that without the clause, his business will not hold
 o In the case of a sale of business, the main interest is goodwill
o In the case of employment contracts, the main interest is to safeguard the trade
secrets or contacts obtained from his employment
o Exception: if the clause is solely intended to minimize competition, it can be seen
as an unreasonable restraint of trade
o Exception 2: If the restraint is intended to prevent an employee from using his
personal skills or knowledge acquired during his previous employment, the restraint
is likely to be void
2. Reasonable scope
o If the restraint is reasonable in duration, scope and subject matter, the second
criterion is met
o If the clause is too wide, it goes further than what is necessary to protect the interest
concerned
o If the clause is too narrow, the clause would not cover the issue in question
3. Public interest
o If the restraint is not contrary to public interest, the third criterion is met
 If there are many other businesses/workers in the market, the public good is
not deprived
If all 3 criteria are met, the restraint of trade clause is valid and is enforceable
Blue pencil test
- By using the blue pencil test, the party relying on the clause can confine the illegality to
only part of the contract
o If so, the rest of the contract is valid and enforceable
- Severance is possible if all conditions are met:
o The promises are severable in nature
o It is possible to sever the void part by deleting the offending words with adding,
substituting or rearranging the contract
Asia Business Forum Pte Ltd v Long Ai Sin & Another (2003)
Stratech Systems Ltd v Nyam Chiu Shin & Others (2005)
- A employment contract had a clause restraining the
employee from joining a company for 9 months. Stratech
was unable to demonstrate any legitimate interest that
required protection by a restraint. The court ruled that the
clause was made to inhibit competition in business and was
held invalid
Herbert Morris Ltd v Saxelby (1916)
Mason v Provident Clothing & Supply Co Ltd (1913)
- A restraint of trade clause prohibited a worker from entering
into a similar business 25 miles from London and was held
to be void because the area of restraint was 1000 times larger
than the area he was employed
Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed
Ahmad & Another (2004)
- A restraint of trade clause prohibited a worker from
competing with any “business carried on by the company”.
The company taps and exports pine resin, while the worker
purported to set up a cocoa business. The court read scope of
the clause narrowly to mean only the actual business already
undertaken by the company
Goldsoll v Goldman (1915)
- When the owner of an imitation jewelry business in London
sold it to a buyer, he covenanted that he would not “ for the
period of 2 years, either solely or jointly carry on the
business of a vendor or dealer in real of imitation jewelry in
the country of London, England, Scotland or any part of the
UK
- The clause was unreasonable but by using the blue pencil
 o The severance must not change the nature of the contract
Misrepresentation
- For a false representation to be a misrepresentation, it must satisfy 3 conditions:
o The representation is a false statement of a past or existing fact
o The statement must be made from the representor to the representee
o The statement induced the representee into the contract
False statement of fact
- If the statement is one of past or existing fact, the first condition is satisfied
False statement of intention
- However, a statement of intention to a future action can be a false statement of fact if the
representor did not intend to hold that intention at all
Representor had Access to the Facts
- If the representor had access to the relevant facts and has no reasonable ground to hold such
an opinion, his statement of opinion can be a false statement of fact
Silence
- The general rule is that silence itself does not amount to misrepresentation
- A representor has no duty to disclose the information
- If the statement is not a misrepresentation, there is no legal effect
- Exception 1: if the silence amounts to another statement to become a half-truth, it can
amount to a misrepresentation
- The willful suppression of material and important fact would render the previous statement
untrue as well
- Exception 2: if there is a change of circumstances that rendered a previous statement to be
misleading, the silence can amount to a misrepresentation
- Exception 3: if the law imposes a duty to disclose facts, any form of silence would
constitute a misrepresentation
test, the Court severed the other locations and reference to
real jewelry and allowed the remaining clause to stand
Edgington v Fitzmaurice (1885)
- A company issued a prospectus stating that the money raised
was used to improve buildings when the real intention was
to pay off some debts
- The stated intention was not held, and hence it was a
misrepresentation
Bisset v Wilkinson (1927)
- A seller of a farm which was never used to raise sheep told
the buyer that the farm could sustain 2000 sheep when in
fact the farm cannot do so
- The seller had never raised sheep and had no access to the
facts. The statement was only an opinion of the capacity of
the farm
Keates v Lord Cadogan (1851)
- The defendant’s house was in poor condition and he kept
silent about it when Keates wanted to rent it
- The defendant had no duty to disclose the information hence
it did not amount to a misrepresentation
Dimmock v Hallett (1866)
- If the seller if a land tells the buyer that the land is fully let
and did not mention that the tenants were given notice to
quit, the unsaid fact becomes a misrepresentation
With v O’Flanagan (1936)
From 1 party
- The statement must be made from the representor to representee
Inducement Redgrave v Hurd (1881)
- If the false statement induced the representee to enter into the contract, the second condition - When Redgrave sold his house together with his law practice
is met to Hurd, Redgrave had misrepresented the value of his
- Even if the representee has the opportunity to investigate the truth, it still amounts to a practice. Although Hurd had the opportunity to check, he
misrepresentation didn’t do so
- It would not remove the possibility of inducement or reliance - The opportunity to check did not deprive Hurd of his right to
rely on misrepresentation, hence there was a
- Exception: if the representee has come to learn of the misrepresentation before entering into misrepresentation
the contract, or does not rely on the misrepresentation to enter into the contract, the false
statement would not be the inducing cause. Hence it would not amount to a
misrepresentation
Categories of Misrepresentation
1. Fraudulent Misrepresentation
2. Negligent Misrepresentation
3. Innocent Misrepresentation
Fraudulent misrepresentation
- If the representor knows that he statement was false, the misrepresentation us then a
fraudulent one
- The representee must show that there is dishonesty on the part of the representor for the
misrepresentation to amount to a fraud
- As set under Derry v Peek, for a misrepresentation to be fraudulent, it must either
o Be made knowingly
o Be made without belief in its truth
o Be made carelessly or recklessly whether it be true or false
Negligent misrepresentation Howard Marine v Ogden (1978)
- If the representor made the false statement without due care, it is then a negligent
misrepresentation
- Unless the representor is able to prove that he has reasonable grounds to believe that the
statement is true, it would be a negligent misrepresentation
Innocent misrepresentation
- If the representor made the false statement believing that the statement is true, it is then an
innocent misrepresentation

Remedies:
1. Fraudulent: Rescission + Damages in tort of intentional conduct
2. Negligent: Rescission (or damages in lieu) + Statutory Damages
3. Innocent: Rescission (or damages in lieu) + Indemnity
Rescission
s1 Misrepresentation Act – Rescission is available in all 3 types of misrepresentation, even if the
false statement has become a term of the contract.

Once representee chooses to rescind the contract, it becomes void ab initio, meaning that it is treated
as if is has never existed. The representee must give notice of rescission to the other party

Rescission is not possible when:

a. The contract is affirmed expressly or impliedly by the representee after he discovered the
misrepresentation, although the court would not hold that a contract had been affirmed
without very clear evidence to this effect: Jurong Town Corp v Wishing Star Ltd (No 2)
(2005)
b. A reasonable amount of time has lapsed since the discovery of the misrepresentation
Leaf v International Galleries (1950) – The defendant only discovered the truth after 5
years, and the court held that the right to rescind had long been lost.
c. The parties cannot be restored to their original position before the contract (restitution in
integrum impossible)
The court exercises its discretion pursuant to s2(2) Misrepresentation Act to award damages in lieu
of rescission
Damages
- monetary compensation ordered by a court requiring the defaulting party to pay money to
the injured party.

Common Law allows damages for fraudulent misrepresentation.

s2(1) Misrepresentation Act allows the court to award damages for negligent misrepresentation.
s2(2) Misrepresentation Act grants to the court a discretion to order damages in lieu of rescission for
both negligent and innocent misrepresentation.
Indemnity
An Indemnity is an obligation whereby one person is held responsible for the liability of another
person. An indemnity is used to help restore the injured party to his status quo ante (the position he
was in beforehand).
Week 7: Discharge of Contract
There are 4 ways in which a contract can come to an end
1. Discharge by performance
2. Discharge by breach
3. Discharge by agreement
4. Discharge by frustration
Performance Cutter v Powell (1795)
- The general rule is that only the precise and exact performance of the contract would lead to a - Cutter is a sailor to be paid for working on board a ship.
discharge of the contract and payment He died before the ship arrived its destination
- An incomplete performance is considered a breach when the time of performance is due - His window was not even entitled to part payment as
payment was conditional upon full completion and
Cutter did not complete the voyage
Exception: De Minimis Rule Arcos Ltd v E A Ronaasen & Son (1933)
o If the deviation in performance is microscopic, then the contract is deemed to be - A buyer contracts with the seller to buy wooden staves
performed fully and precisely. Then, the promisor is entitled to the payment for use in making cement barrels. They were specified
to be ½ inch thick. However 80% of the shipments were
9/16 inch thick.
- The differences in specifications are not microscopic as
it would cause the buyer to be unable to make the
intended cement barrels. Hence the contract was
breached as it was not performed fully
Exception: Divisible Contracts
o If the contract can be viewed as comprising several independent obligations, then the
“sub-contracts” which are fulfilled can be discharged separately. Then, the promisor is
entitled to payment according to the completion of the “sub-contracts”
o Examples care contracts with obligations severable on a monthly or weekly basis
Exception: Substantial Performance
o If the promisor has substantially performed his obligations under a contract, he can
claim the agreed payment, less the amount necessary to make good the defect
o To determine whether the performance is substantial, we need to look at the facts of the
case
 If a builder is contracted to build a gate but only built gate posts, it would not be
substantial
 If a builder is contracted to build a gate, completed the entire gate but did not
paint it, it would be substantial
o Exception:
 If the contract is a non-divisible one and is made such that payment is only
given upon the full performance of the entire contract, then substantial
performance cannot be evoked to claim payment
Exception: Prevented Performance Planche v Colburn (1831)
 o If the promisee prevents the promisor from performing the rest of his obligations, the - Planche agreed with Colburn to write a book for $100.
promisor’s partial performance is considered to have discharged the contract on the basis He completed part of the book when Colburn abandons
of prevented performance the entire project
o The promisor will be able to sue the promisee for the breach of contract as well as claim - The contract is discharged by Colburn’s action in
payment equal to the amount of work he has done (on a quantum meruit basis) abandoning the project. Hence, Planche is entitled to
renumeration based on quantum meruit
Exception: Acceptance of Partial Performance
o If the promisee voluntarily accepted the partial performance, the contract is discharged
and the promisor id entitled to claim payment equal to the amount of work he has done
(on a quantum meruit basis)
o Exception: Sumpter v Hedges (1898)
 If the promisee has no choice but to accept the partial performance, it would - Sumpter agreed to contruct a building on Hedges’ land.
constitute to a voluntary acceptance. As such, the contract is not discharged and He could not complete the work, and Hedges had to
the promisor cannot claim payment complete the rest of the work. Sumpter sued for
payment
- As the partially completed work is on Hedges’ land, he
had no choice but to accept the partially completed
work. As such the claim failed
Breach
Actual Breach of Condition
- If the time of performance has arrived and the promisor fails to performed it, the breach is an
actual breach
- If the breach is a condition, it is a repudiatory breach
o The injured party receives the damages
o Gives the injured party the option to affirm or discharge the contract
o To discharge is to cease all obligations from date of breach
Actual Breach of Innominate Term
- If the time of performance has arrived and the promisor fails to perform it, the breach is an
actual breach
- If the breach is an innominate term and the breach deprives the injured party of substantially the
whole benefit, it is a fundamental breach
o The injured party receives the damages
o Gives the injured party the option to affirm or discharge the contract
o To discharge is to cease all obligations from date of breach
Actual Breach of Warranty
- If the time of performance has arrived and the promisor fails to perform it, the breach is an
actual breach.
- If the breach is a warranty and it entailed serious consequences, it can be a fundamental breach
o The injured party has the option to affirm or discharge the contract
o To discharge is to cease all obligations from date of breach
 o Nevertheless, damages are awarded
Anticipatory Breach
- If the time of performance is not yet due and the promisor indicates that he will not perform, the
breach is an anticipatory breach
o The injured party has the option to affirm or discharge the contract
o To discharge is to cease all obligations from date of breach
o Nevertheless, damages are awarded
Affirmation of Contract White & Carter v McGregor (1962)
- If the injured party decides to affirm the contract, status quo ante is preserved and all obligations - White & Carter agreed to make advertisement plates for
continue dustbins for McGregor. In an anticipatory breach,
- Affirmations is not possible when: White & Carter affirmed the contract and made the
o There is no legitimate interest to guard plates and later sued for the agreed price
o Damages act as a sufficient substitute - Even when their action in affirming the contract led to
o Coorporation of the guilty party is necessary an increase in losses, they had a legitimate interest to
o Looks should be mitigates not increased guard as there are subcontracts under the contract that
- By affirming the contract, the innocent party places himself at a risk that a supervening event would be affected. Hence, they are entitled to affirm the
may occur that may discharge the contract by frustration instead contract
o The defaulting party would be relieved of his liability under the frustration
Agreement
Existing Agreement
- The contract can include a term that makes provision for the contract’s discharge upon the
occurrence of an event or the expiration of a period
o If so, once the conditions are met, the contract is automatically discharged
- However, there may be certain statutory provisions that negate the term’s effectiveness
o For example, the Employment Act specifies the minimum number of notice required to
be given by employers to employees in cases of termination of employment
Subsequent Agreement
- If the parties enter into a fresh agreement seeking to extinguish the earlier contract, the contract
can be discharged
o As long as the 4 elements of offer, acceptance, consideration and intention are met in the
fresh agreement
- Examples of such agreements
o Mutual discharge
 Intention of the parties not to be bound anymore
o Unilateral release by deed
 If A has performed his obligation, he can discharge the contract by executing a
release
o Waiver
 When A grants B that he does not need to perform the contract, and B did not
provide a consideration for this non-performance, A has given a waiver. This is
 similar to the doctrine of Estoppel
o Variation
 Contract is altered with fresh consideration
Frustration
- Frustration occurs when
o There is superventing event
o It is not the fault of either oarty
o Caused a radical change in circumstances

Types of Frustration Contracts

- Destruction of subject matter Taylor v Caldwell (1863)
o A contract to lease a hall is discharged by frustration when the hall was destroyed by
fire. The hall is the subject of the contract
- Non-occurrence of events Krell v Henry (1903)
o A contract to rent a room is discharged by frustration when the parade is cancelled. The
room was rented with the purpose of watching the parade
- Government interference Metropolitan Water Board v Dick, Kerr & Co (1918)
o A contract to construct a reservoir is discharged by frustration when a statute set up
during World War 1 halted the work
- Change of circumstances
o Introduction of war, natural disasters
- Personal incapacity Poussard v Spiers & Pond (1876)
o A contract to perform in an opera production is discharged by frustration when the opera
singer fell ill
Limitations to Frustration
- If any of the points below are true, frustration cannot be applied
o The frustrating event is foreseeable
o There is a Force majeure clause
o The frustration is self induced
Foreseeability
- If the frustration event is reasonably foreseeable, frustration cannot be applied to terminate the
contract
o If the parties are aware of the problem for a long time, frustration cannot be applied HDP v Microform Precision Industries Pte Ltd (2003)
o (A company like SBD dealing with sensitive materials like blood & using sophisticated
machines would be expected to have a backup generator. Yet SBD did not take any self-
measures)
Force majeure Clause
- If there is a clause that expressly provide for the occurrence of events that would lead to
 frustration, such as war or natural disasters, frustration cannot be applied to terminate the
contract
- The effectiveness is subjected to the provisions of UCTA (exemption clause)

Self-Induced Frustration Maritime National Fish v Ocean Travellers (1935)

- If the frustrating event is the result of the voluntary action of one of the parties, there is no - Maritime chartered a fishing trawler from Ocean. The
frustration fishing trawler required a license to be used, but
Maritime chose to allocate the license he obtained from
the government to other ships. Then Maritime argued
that its contract with Ocean is frustrated as the
government did not issue the license
- The event is self-induced as the unavailability of the
license was due to the allocative decision of Maritime
Legal Effect
- If a contract is frustrated, the contract is discharged
o All outstanding obligations are no longer required to be performed
- Under s2(2) of Frustrated Contracts Act (FCA), any monetary benefits conferred prior to the
time of discharge are recoverable
o Examples are money paid and expenses are incurred
- Under s2(2) of FCA, money payable ceases to be payable (outstanding obligations no longer
required to be performed)
- Under s2(3) of FCA, any non-monetary benefits conferred can be compensated with an amount
the Court considers just.
Week 8: Remedies for Breach of Contract
Breach
- Implies wrongdoing by the defaulting party. Hence, injured party should be compensated for the
breach by remedies such as the awarding of damages and other equitable remedies
Remedies
- Cures which are available to the injured party to rectify or compensate for the breach
Damages
- The general principle of awarding damages is to place the injured party, as far as money can do
it, in the same position he would be in if the contract had been performed properly
- Meant to compensate for the loss caused by the breach, and not to punish the defaulting party
- To determine whether the lost can be recovered as damages, 4 aspects are to be established
o Show that there is causation in fact
o Show that the loss is not remote
o Injured party must show reasonable mitigation to minimize loss
o Assessment of the damages awarded
- If there are no losses resulting from the breach, the plaintiff would not be awarded nominal
damages
o There is a technical breach of contract, but the plaintiff suffered no loss
Causation in fact
o By using the “But for” test, if the plaintiff would not have suffered a loss for the breach,
there is causation in fact
o The loss must have been caused by the breach
Causation in Law: Remoteness
o By using the “Hadley v Baxendale” test, losses that are too remote are not recoverable
o Under the “Hadley v Baxendale” test, damages can be recovered if losses fall within one
of the 2 limbs
 Losses that arise naturally from the usual course of things (normal business
activities)
 Loss must be likely to occur
 Once defendant is aware of the type of loss, it does not matter whether
he is aware of the extent of loss
 Unusual losses that are within the reasonable contemplation of the 2 parties at
the time they made the contact
 Defendant must have actual knowledge of the unusual loss
 Defendant must identify the unusual loss before/ at the time of the
contract, so that he can make an informed decision
 Loss must be likely to occur
 Once defendant is aware of the type of loss, it does not matter whether
he is aware of the extent of loss
 Mitigation
o Plaintiff is obliged to minimize his loss
o If Plaintiff failed to take any action
 The amount of damages awarded would be reduced by the amount which he
could have saved if he had mitigated his loss
o If Reasonable Action is taken Melachrino v Nicholl & Knight (1920)
 The amount of damages awarded would be the mitigated loss, the cost of the
mitigation, as well as the unintended loss resulting from the mitigation
o If Unreasonable Action is taken
 The amount of damages awarded would be the loss before the action is taken.
Any additional loss is not recoverable
o If plaintiff chooses to affirm an anticipatory breach
 If there is a legitimate interest to guard, there is no obligation for the plaintiff to White & Carter v McGregor (1962)
mitigate his loss. The amount of damages awarded would be the total losses
suffered
Assessment
- Where there are many ways to assess the damage, the method used will be the one that is least
onerous to the defendant and least beneficial to the plaintiff on the basis of minimum legal
obligation
- Rationale is that the law seeks to merely compensate, the plaintiff is not entitled to a windfall.

Expectation Loss and Reliance Loss

- An expectation loss is the loss of the benefit the injured party would expect to receive out of the
contract
o Examples are damages for loss of profit, or less of a bargain
- Reliance loss is the wasted expenses incurred by the injured party in preparing to perform his
obligations, which are now rendered useless
- If the expectation loss is calculated as a net figure exclusive of expenses, then both expectation
loss and reliance loss can be claimed at the same time
- Conversely, if the expectation loss is calculated as a gross figure inclusive of expenses, claiming
both expectation loss and reliance loss would amount to double recovery so injured party can
only choose one
Difficulty in Assessing Damage Sei Jaya (Sendirian) Berhad v RHB Bank Berhad (2001)
- The difficulty in assessing damage would not be a reason to award nominal damages
Non-pecuniary Losses Jervis v Swan Tours Ltd (1973)
- Non-pecuniary losses are losses such as hurt feelings, anxiety or loss of reputation etc - Swan Tours promised a welcome party, candlelight
- The Courts are generally reluctant to award damages for non-precunianry losses dinner and other events under its holiday package. The
- Exception: if the contract’s important objective is to give pleasure, relaxation or piece of mine, holiday turned out to be disastrous
the injured party will be awarded damages for the losses of such pecuniary losses - Jarvis is entitled to damages, inclusive of $60 for the
 disappointment he suffered
Liquidated damages and penalties
- Generally, the law will enforce a liquidated damages clauses (LDC) as long as it is genuine pre-
estimates of loss
- If a clause amounts to a penalty, it is not enforceable as damages are meant to compensate and
not to punish
Guidelines
- To determine whether the LDC is a genuine pre-estimate of loss, we can look at the guidelines as
set in Dunlop Tyre v New Garage (1915)
o If the stipulated sum in LDC is extravagant & unconscionable compared with the
greatest conceivable loss flowing from the breach, the LDC is a penalty
o If the stipulated sum in LDC is payable as a lump sum regardless of different possible
breaches, some of which are serious while others are trivial
o If the stipulated sum in LDC is greater than the sum payable under the contract
- Note: an LDC can cover losses that are larger than the cost of the contract
o A distributor contracts with an author to buy a book, and the contracted cost price of the
book is $2 but the selling price is $4. The distributor can have an LDC claiming for $4
as that would be a genuine pre-estimate of the distributor’s loss
 It is the ordinary course of business to have revenue that is greater than the cost.
Hence a genuine pre-estimate of loss should be greater than the cost of $2.
- If the LDC is a genuine pre-estimate of loss, it is enforceable and the injured party can only
claim the amount stipulated in the LDC
o The injured party would not be able to recover more than the amount stated in LDC
through common law
- If the LDC is a penalty, it is not enforceable and the Court would have to reassess the damages
Equitable Remedies
- The law may seek equitable remedies in place of monetary compensation
Specific performance
o The Court may call for specific performance, which requires the defaulting party to
perform his contractual obligations
o Only given when damages are an inadequate remedy:
 Such as contracts involving unique or rare items or contracts involving land
o Will not be given where
 Damages are adequate for the injured party to purchase from the open market
 Ongoing supervision is needed
 The contract involves the provision of personal service
Injunctions
o The court may call for an injunction which requires the defaulting party to abide by a
negative covenant (an agreement not to do something)
o Only given when damages are an inadequate remedy
 - Prohibitory injunctions: prevents the defaulting party from performing an action
- Mandatory injunctions: orders the defaulting party to undo an action
- Contracts for Personal Service : The Court will enforce injunctions in contracts for personal
services as long as it would not amount to an indirect way of compelling specific performance
Warner Brothers v Nelson (1937)
- Nelson breached a contract with WB when she agreed
to act for another studio, and WB sought an injunction
to prevent this.
- The injunction which requires Nelson not to work
elsewhere would leave her no choice but to work for
WB. As such, it would be similar to a specific
performance and hence it was not granted
Limitation of Actions
- Under s6 of the Limitation Act, for actions founded on contract, the limitation period is 6 years
from the date that the cause of action is accrued
o Hence the claiming of damages will only be effective if the injured party sues and
enforces the contract within 6 years from the date of the breach
o If the date of breach has passed 6 years, he injured party would not be able to claim any
damages
- Under s29 of the Limitation Act, where fraud and mistake are involved, the limitation period
begins to run only when the fraud or mistake is discovered by the plaintiff.
Week 9: Agency
Privity of Contract Price v Easton (1833)
- General rule: only the parties to a contract can sue and be sued on it - A debtor owed Price $13. The debtor agreed to perform
work for Easton on the condition that Easton would pay
off the debt which the debtor owed to Price. The work
was performed but Easton failed to pay off the debt.
Price sued Easton on the debt.
- Price could not succeed, as he was not a party to the
contract between the debtor and Easton

- Exception 1: Contracts (Rights of Third Parties) Act (CRTA)

o S2 of CRTA: a third party to a contract is able to enforce any term of the contract if
 Contract expressly stated so
 The contract confers a benefit on him
 But will not apply if evidence show that the parties did not intend the
term to be enforceable by the third party
 The third party is expressly identified in the contract by name
- Exception 2: (Privity of contract under elements of a contract)
o One exception would be that when the contracting party is an agent
Agency
- Relationship where the agent acts on behalf of the principal and has the power to affect the
principal’s legal position with regard to a third party
- If an agency relationship is shown, the principal adopts the benefit and suffers the liability of the
contract, even though he is not a party to the contract
- The agent is not liable to his principal or the third party as long as he acts within the scope of
authority given to him (Any liability flowing from his act flows to the principal)
- If the agent acts outside the scope of authority given to him, the agent would be liable personally
Creation of Agency (Ways which one person’s actions can bind another through agency)
(a) Actual Authority
(b) Ostensible or apparent authority
(c) Ratification
(d) Operation of Law
Actual Authority
- If the principal clothes the agent with authority to act on his behalf, an agency relationship is
created

Express Actual Authority

- When the principal expressly empowers the agent to act either by writing or orally, there is an
express actual authority
- If an agency relationship can be shown, the principal can enforce the contract and the 3 rd party
 can enforce the liability conferred to him.
- Exception: If the contract was procured under a bribe, it is against public policy and the law
would hold the contract illegal. As such, the 3 rd party would not be able to enforce the contract
on the principal

Implied Actual Authority

- When the agent is empowered to do all acts or which are within the reasonable customs and
usages of the particular trade where he is engaged, he has an implied actual authority
- If an agency relationship can be shown, the principal can enforce the contract and the 3 rd party
can enforce the liability conferred to him
- Exception: If the contract was procured under a bribe, it is against public policy and the law
would hold the contract illegal. As such, the 3 rd party would not be able to enforce the contract
on the principal
- Eg: An agent employed to sell a house has an implied authority to sign a memorandum of the
contract. The agent is implied to have the actual authority by his title as a property agent
Ratification
- If the principal did not provide the agent with actual authority but still wants to be bounded by
the contract, he can ratify the contract
- Once the contract is ratified, the principal adopts all the benefits and liabilities of the contract
made by the agent on his behalf
- If any of the below conditions are not met, the principal cannot ratify the contract
- The Principal must Accept the Contract Unconditionally
o The principal must accept the contract unconditionally Warehousing & Forwarding Co of East Africa v Jafferali &
o If the principal makes a conditional acceptance, the doctrine of relating back would not Sons Ltd (1964)
apply and the acceptance will take place at the point of ratification
- The Principal must be Named or Identifiable
o The agent must expressly state that he is acting on behalf of his principal. If the principal
is not named, he must at least be ascertainable
 If there are no facts to show that the agent is acting as a principal, we can
presume that the 3rd party knows that the agent is acting on behalf of his
principal
 Undisclosed principals cannot ratify
- The Principal must Exist when the Contract is made
o At the time the agent made the contract, the principal must exist
o Under s41 of Companies Act, a company can ratify a contract made on its behalf even
though it has yet to be incorporated at the time of contracting. However it is limited to
certain conditions and ratification must be done within a reasonable period
- The Principal must have the Capacity to contract all the time of contract and ratification
o The principal must have the capacity to contract at the time of contract and ratification
o A minor cannot ratify a contract made by his agent as he lacks the capacity to contract
 - Ratification must be Given within a Reasonable Period
o If the ratification is made after the contract was to be performed, generally the principal
would not be able to ratify at all
o If the contract involves dealing with perishables, the reasonable time would be short
o Eg: The principal would not be able to ratify a contract of purchasing stocks past a short
reasonable time of 1 day

Legal Effect
- Under the doctrine of “relation back”, the legal effect of ratification is to grant retrospectively to
the agent authority to act on behalf of the principal and the ratification us effected at the time of
contract
Bolton Partners v Lambert (1888)
- An agent of a company, purporting to act on the
company’s behalf but without its authority, accepted an
offer by a TP. The TP then withdrew his offer but the
company ratifies the agent’s acceptance.
- The ratification related back to the time of the agent’s
acceptance and prevent TP’s subsequent revocation.
Hence, TP was bound to the company
Ostensible Authority Freeman & Lockyer v Buckhurst Park Properties (Mangal)
- If the principal did not provide the agent with actual authority and does not want to be bound by Ltd (1964)
the contract, the third party can argue ostensible authority to bind the principal to the contract
- If the principal, by words or conduct, create an inference to the third party that can agent has
authority to act on the principal’s behalf, there is ostensible authority even though no authority
exists in fact
- To show that there is ostensible authority, all 3 conditions must be present:
o Representation was made by the principal to the third party
o The third party relied on the principal’s representation
o The third party altered his position (by contracting with agent) resulting from the
reliance
- Eg: The agent makes a name card that has a title which is misleading to his authority, and the
principal came to know about it. If the principal pointed out the error in the title, he has by words
cancelled the representation. If the principal was aware of the error yet did not do anything, he
has by conduct affirmed the representation
- Exception: if the third party knows of the agent’s lack of authority, the third party cannot argue
ostensible authority
- Exception 2: If the contract was procured under a bribe, it is against policy and the law would
not argue ostensible authority in favor of the third party
Operation of Law
- Eg: agency of necessity
 - To encourage one person to render aid another in a situation of emergency, especially where
immediate communication with the principal is required but impossible
- Eg: shipmaster who finds that his cargo is unexpectedly perishing, is empowered to dispose of Couturier v Hastie (1852)
his cargo at the nearest port at the best available price without express authority of the owner of
the cargo
- Without modern communication technology, however, the scope of situations where agencies of
necessity may arise is probably greatly reduced
- Operation of law can also arise where a wife cohabits with her husband. In such situations, the
wide is presumed to have her husband’s authority to use and pledge his credits for items which
are necessaries  But does not apply in Singapore
Breach of Warranty of Authorities
- If the agent did not have any actual authority, the principal refused to ratify the contract and the
third party cannot argue ostensible authority, the third party can instead sue the agent for breach
of warranty of authority
- Note: 3rd party cannot sue the agent on the contract ie to make the agent buy the cabinet and
receive the money
Principal-Agent Relationship
1. Duties of Agent
2. Rights of Agent
Duties of Agent
- The legal effect of the breach of duty
o Principal has the option to affirm or discharge the agency contract
o Principal is entitled to damages
Duty to Follow Instructions
- If the agent fails to follow his principal’s instructions, it constitutes a breach of their agency
contract
- The legal effect of the breach of duty:
o Principal has the option to affirm or discharge the agency contract
o Principal is entitled to damages
o Exception: if the agent acts within his ostensible authority and within legal proceedings, Abdul Jalil bin Ahmad bin Talib and Others v A Formation
it would not lead to a breach of their agency contract in the eyes of the law Construction Pte Ltd (2007)

Duty to Use Care and Skill

- The standard of care required is that which a reasonable person would expect from an agent in
that field of activity
- If the agent fails to discharge his duties with the reasonable care and skill, it constitutes a breach
of their agency contract
- The legal effect of the breach of duty:
o Principal has the option to affirm or discharge the agency contract
o Principal is entitled to damages
Duty to Avoid Conflicts of Interests
- The agent has a fiduciary relationship with his principal
- If the agent puts himself in a position where his interests conflict with the principal’s interests, it
constitutes a breach of their agency contract
- The legal effect of the breach of duty:
o Principal has the option to affirm or discharge the agency contract
o Principal is entitled to damages
- Exception: if the agent has fully disclosed the conflict of interests to his principal and obtained
the principal’s consent, he would be entitled to do so

Must not Accept a Bribe or make Secret Profits

- If the agent makes any form of secret profits or accepts any bribes, the principal can claim them
from the agent, even if the principal suffered no damage

Duty not to Delegate

- If the agent delegates his responsibility to others, it constitutes a breach of their agency contract
- The legal effect of the breach of duty:
o Principal has the option to affirm or discharge the agency contract
o Principal is entitled to damages

Duty to Keep Separate Accounts

- If the agent fails to keep proper separate accounts for the principal as a professional agent, it
constitutes a breach of their agency contract
- The legal effect of the breach of duty:
o Principal has the option to affirm or discharge the agency contract
o Principal is entitled to damages
New Estate Agents Bill 2010
- Highlights of this new Bill include:
o The Council for Estate Agencies, a new statutory board is set up
o New rules to regulate the real estate agency industry
o An estate agent cannot act for both the buyer and seller in the same transaction

Rights of Agent
Right to Remuneration
- The agent has the right to claim his pay as long as he has fulfilled his duties under the agency
agreement

Right to Indemnity
- The agent has the right to claim from his principal all liabilities and disbursements lawfully
 incurred from performing his duty
- However, the agent loses this right if the disbursement arises from activities beyond the scope of
his authority
Termination of Agency
- The agency agreement is terminated when:
o Both the agent and principal have performed the agency agreement fully
o There is repudiatory breach of the agency agreement (The injured party can choose to
affirm or discharge the agency agreement)
o The principal revokes the agent’s authority
o Either party is bankrupt, dissolved or dead
o Frustration is present
o Either party becomes mentally incapable
Rights between Agent and Principal
Agent’s Duties
- Duty to account, follow instructions
- Duty to use reasonable care and skill
- Duty to not make secret profits or take a bribe
- Duty to avoid conflict of interests
- Duty not to delegate his job to another

Agent’s Rights
- Right to remuneration (expenses if reasonable)
- Right to indemnity
- Right to lien

Principal-Third Party Relationship

General Rule
- Principal bound to third party as long as agent had AA, OA or principal chooses to ratify agent’s
act
- Rule may apply even if
o Agent commits fraud on principal OR
o Principal is undisclosed (for cases of AA only)
Exceptions
- Principal not bound to third party if principal was undisclosed and:
o Agent had OA or agent’s act was ratified
o Agent contracts as principal
o Agent’s identity is critical to the contract
o Upon principal being disclosed, third party elects to bind agent
Agent-Third Party Relationship
General Rule
- Agent not liable to third party as long as:
o Agent had AA
o Agent had OA
o Principal ratified the agent’s act
Exceptions
- Agent may be liable to third party if
o Agent agrees to be bound
o Custom or trade usage says so
o Agents signs a negotiable instrument
o Principal was non-existent
o There is BOWA
o Principal was undisclosed
Week 11: Torts
Tort of Negligence
- One can sue the other under the Law of Tort when the former suffers injuries due to the breach
of duty caused by the latter
- As a tort is a civil wrong and not a criminal wrong, the Law of Tort seeks to only provide
compensation for the injured party, and to punish the tortfeasor
- To determine whether the injured party can sue under the tort of negligence, 3 points must be
established:
o There is a duty of care
o There is a breach of that duty
o Damages resulting from the breach
Duty of Care
- To determine whether there is a duty of care between the parties, apply the Spandeck Test
Preliminary: Factual Foreseeability
- If it is reasonably foreseeable that D’s carelessness would cause P to suffer injury/damage, there
is factual foreseeability

First Stage: Proximity

- There is proximity when there is (either one)
o Physical proximity
o Legal proximity
 Example: between manufacturer and consumer, teacher and student
o Casual proximity
 Example: if A leaves a bomb in B’s house and it explodes, there is a casual
proximity between A and B when B is injured from the effects of A’s action
- Upon passing the first stage, there is a prima facie duty of care between the parties

Second Stage: Proximity

- If there are any policy consideration that negate the prima facie duty of care, then there is no
duty of care
- The “Floodgates” argument from Ultramares Corp v Touche (1931)
o If the liability stretches in an indeterminate amount for an indeterminate time to an
indeterminate class, there will be a situation where the “floodgates” are opened and the
Court will negate the prima facie duty of care
Breach of Duty
- If the defendant fails to meet the “standard of care” expected from him, he would have breached
that duty of care
o There are several factors that can be taken into account in determining the standard of
care: (only mention where applicable)
Level of Skill Wells v Cooper (1958)
- The lower the level of skill required, the lower the standard of care owing and the more likely - A DIY householder fitted a new door so insecurely that
the breach of the duty when P pulled the handle, he lost his balance, fell and
was injured.
- The householder was required to show a standard of
care of a reasonably competent carpenter and not a
professional carpenter. As D met the standard of a
reasonably competent carpenter, he did not breach that
duty of care
Seriousness of Injury Paris v Stepney Borough Council (1951)
- The greater the risk of injury, the higher the standard of care owing and the more likely the - An employee has vision in one eye only, yet the
breach of duty employer failed to provide him with safety goggles. The
employee injured his good eye in the course of work
- The employer owed the employee a higher standard of
care to the one-eyed employee than a normal employee.
As such, the employer breached the high standard of
care required
Latimer v AEC Ltd (1953)
Cost of Avoiding the Harm - An only film was formed on the floor of D’s factory
- If the defendant took reasonable steps to eliminate the harm, he would have sufficiently provided when a heavy rainstorm occurred. D used all of his
the standard of care required. As such, he would have breached that standard of care sawdust to clean the oil but to minimal effect. However,
P slipped on the oily surface and the barrel he was
holding crushed his left ankle
- D took reasonable steps to minimize the risk. He would
not have breached the standard of care even though he
did not totally eliminate the risk
Bolton v Stone (1951)
The Likelihood of Harm - D was player cricket, the cricket ball flew out of the
- The more likely the harm, the higher the standard of care required and the more likely the breach field across the high fence and onto the street. P was
of that duty struck in the head by that ball. D claimed that only 6-10
balls had escaped the filed in the past 30 years and is an
unforeseeable risk.
- D owned P a duty of care but the likelihood of the harm
is so low that a reasonable man would not have taken
further precautions. Hence there is no breach of the duty
of care
Scott v London & St Katherine’s Docks (1865)
Doctrine of Res Ipsa Loquitor - 6 bags of sugar fell from a crane and injured P
- The doctrine can be used by P to show that D had breached the duty of care - D has control over the crane and the accident would not
- General Rule: D is presumed not negligent unless proven otherwise. P bears the burden to have happened but for D’s negligence. Hence Res Ipsa
convince the judge that D is negligent is applied and D is presumed negligent unless he can
 - Exception: By using the doctrine of Res Ipsa Loquitor, the burden is shifted to the D instead. D prove otherwise.
will be presumed negligent, he would have breached the duty of care.
- Conditions:
o D has the control and management of the “thing” that causes the injury
o The accident would not normally happen but for the negligence
- If both conditions hold, the doctrine can be applied to reverse the burden of proof. If D cannot
prove himself not negligent, he would have breached the duty of care
Resulting damage
- Under the third point, P must establish that he had suffered damages resulting from the breach
- To do so, P must show:
o There is causation in fact
o That the damage is not too remote
Causation Barnet v Chelsea & Kensington Hospital (1969)
- By using the “But-for” test, if the plaintiff would not have suffered a loss but for the breach of - Which is an arsenic poisoning case
duty, there is causation in fact - The hospital owed P a duty of care and it was breached.
- The loss must have been caused by the breach However, P would have died from poisoning even if
there is no breach of duty. Hence the death was not
caused by the hospital’s delay.

- If there is any novus actus interveniens, a new intervening act that breaks the chain of causation - 6 bags of sugar fell from a crane and injured P. D owed
started by D, then there is no causation by law P a duty of care, D had breached that duty and there is
- The new intervening act must be the one cause that is the most blatant and unreasonable. causation in fact. However, the sugar fell as the
contracted maintenance personnel failed to do the
maintenance on time. The failure to provide
maintenance is a new intervening act that would negate
the causation in fact
Remoteness
- Only losses that are reasonably foreseeable are recoverable in law The Wagon Mound case
- The “eggshell skull” rule: As long as D can reasonably foresee the type of injury, D will be Smith v Leech Brain (1962)
liable for the full extent, even if he cannot foresee the full extent of the injure - P had a pre-malignant cancer on his lips. D negligently
allowed P to be injured in the course of his work. The
injury triggered his cancer and P died as a result.
- It is reasonably foreseeable that P would be injured if he
had no cancer. Even if P’s physical weakness
exacerbated his injury, D has to accept P as D finds him
Defences to Tort of Negligence
- Volenti Non Fit Injuria
- Contributory Negligence
- Disclaimer
Volenti Non Fit Injuria
 - If the plaintiff has full knowledge and appreciation of the risk and consents to the risk which led
to the tort, the defendant can raise the defence of volenti non fit injuria
o If passed, the defendant is not liable for the injury
o Examples include engaging in an aggressive contact body sport. The plaintiff has
impliedly accepted the risks associated with the sport when he participates

Contributory Negligence
- Under s3(1) of the Contributory Negligence and Personal Injuries Act, if D can show that P’s
injury was the result of P’s own fault as well, the damages recovered can be reduced to the
amount the Court thinks is equitable due to D’s fault.
o Contributory negligence is a partial defence
Disclaimer
- Disclaimers are used to limit or exclude liability in the tort of negligence
- Like ECs, the disclaimer must be reasonable under the UCTA in order to be effective
Psychiatric Harm
Grief, Sorrow, Suffering
- If the plaintiff suffers no recognizable psychiatric condition but merely grief or sorrow, he would
not be able to claim any damages under the tort of negligence
- Claims for grief or sorrow are generally not recoverable

Primary Victim
- If the plaintiff is the one who personally suffers psychiatric harm as a result of immediate fear of
injury to himself, he is said to be a primary victim
- Eg: you almost got knocked down by a car and you suffered a nervous shock as a result
- To determine whether the plaintiff can claim damages under negligent misstatement, the plaintiff
must show:
o There is a duty of care (as per usual)
o There is a breach of that duty
o Damages resulting from the breach

Secondary Victim
- If the plaintiff is the one who suffers psychiatric harm as a result of injury to others, he is said to
be a secondary victim
- Eg: you saw someone knocked down by a car and you suffered a nervous shock as a result
- To determine whether the plaintiff can claim damages under negligent misstatement, the plaintiff
must show:
o There is a duty of care (as per usual)
o There is a breach of that duty
 o Damages resulting from the breach
- In determining whether there is a legal proximity, we must consider all 3 elements stated in
McLoughlin v O’Brian (1983) (if all 3 are true, there is legal proximity)
o There is a close tie of love and affection with the primary victim
o There is a close proximity in time and place to the scene of the accident
o Means by which the shock was caused-aural and visual perception
Negligent Misstatement
- To determine whether the plaintiff can claim damages under negligent misstatement, the plaintiff
must show:
o There is duty of care
o There is a breach of that duty
o Damages resulting from the breach
Duty of Care
- To determine whether there is a “special relationship” between the parties, apply the Spandeck
Test

Preliminary Factual Foreseeability

- If it is reasonably foreseeable that D’s negligent misstatement would cause P to suffer
injury/damage, there us factual foreseeability

First Stage: Proximity

- There is legal proximity only when:
o Advisor possesses special skill or knowledge
o Advisor knows or ought to know the advisee would rely on the advice for the purpose
for which the advisor intended
o Reasonable for advisee to rely on the advice
o Advisee suffers financial loss in reliance of the advice
- Upon passing the first stage, there is a prima facie duty of care between the parties

Second Stage: Policy

- If there are any policy considerations that negate the prima facie duty of care, then there is no
duty of care
- The “floodgates” argument from Ultramares Corp v Touche (1931): if the liability stretches in an
indeterminate amount for an indeterminate time to an indeterminate class, there will be a
situation where the “floodgates” are opened and the Court will negate the prima facie duty of
care
Breach of Duty
- If the defendant fails to meet the “standard of care” expected from him, he would have breached
that duty of care
o If the defendant is a professional advisor, the standard of care used here is that of a
 reasonably competent fellow professional in the same field Lanphier v Phipos (1838)
Resulting Damage
- Under the third point, P must establish that he had suffered losses resulting from the
misstatement
- To do so, P must show:
o There is causation in fact
o That the damage is not too remote
Negligent Misrepresentation
Negligent Misstatement Negligent Misrepresentation
Requires proximity No proximity required
Contract not required Must induce a contract
Remedy: damages Remedy: rescission & damages
Other Torts
- Vicarious Liability
- Passing off
- Defamation
- Inducing Breach of Contract
Vicarious Liability
- An employer is vicariously liable for the tortious acts of his employee provided the wrongful
acts are in the course of employment
Passing off
- When someone falsely promotes his product as having the same origin or quality as the product
of another, the person is passing-off his goods as those of the other
Defamation
- When someone publishes a statement which lowers another person’s reputation in the eyes of
rightful thinking members of the public, he is said to have committed defamation

Inducing Breach of Contract

- When someone induces another person to breach his contract with a third party, he is said to
have induced the breach of contract