Pin Ern contract rule list

Contents
Misrepresentation...........................................................................................................................................................3
Fraudulent................................................................................................................................................................... 3
Negligent..................................................................................................................................................................... 4
Innocent......................................................................................................................................................................4
Statutory.....................................................................................................................................................................4
Recission......................................................................................................................................................................4
Exclusion of liability.....................................................................................................................................................4
Mistake...........................................................................................................................................................................5
Common Mistake........................................................................................................................................................5
At common law.......................................................................................................................................................5
In equity..................................................................................................................................................................5
Mutual Mistake...........................................................................................................................................................5
Unilateral Mistake.......................................................................................................................................................6
Of Terms.................................................................................................................................................................. 6
Of Identity...............................................................................................................................................................6
Non Est Factum...........................................................................................................................................................6
Rectification................................................................................................................................................................ 7
Duress.............................................................................................................................................................................7
Physical Duress............................................................................................................................................................7
Economic Duress.........................................................................................................................................................7
Undue Influence..............................................................................................................................................................8
Class 1: Actual UI.........................................................................................................................................................8
Class 2: Presumed UI...................................................................................................................................................8
Class 2A: Irrebuttable Presumption of relationship of trust and confidence...........................................................8
Class 2B: Rebuttable Presumption...........................................................................................................................8
Doctrine of Infection...................................................................................................................................................8
Unconscionability............................................................................................................................................................9
Illegality...........................................................................................................................................................................9
Statutory Illegality.......................................................................................................................................................9
Common Law Illegality................................................................................................................................................9
Heads of PP to void at CL.........................................................................................................................................9
Principle of proportionality...................................................................................................................................10
Consequences of Illegality.........................................................................................................................................10
Contracts in Restraint of Trade..................................................................................................................................10
Doctrine of Severance...............................................................................................................................................10
Privity of Contract.........................................................................................................................................................11
Contracts (Right of Third Parties Act)........................................................................................................................11
 Other situations with 3rd parties................................................................................................................................11
Promises to exempt 3rd parties from liability.........................................................................................................11
Promises that impose a burden on the 3 rd party...................................................................................................11
Specific Performance.............................................................................................................................................11
3rd Party Recovery under the Broad and Narrow grounds.........................................................................................12
Broad ground........................................................................................................................................................12
Narrow ground......................................................................................................................................................12
Formalities and Incapacity with contracts.................................................................................................................13
Remedies....................................................................................................................................................................... 14
Damages that you claim for......................................................................................................................................14
Pecuniary losses....................................................................................................................................................14
Non-pecuniary loss................................................................................................................................................15
Limitations to recovery..............................................................................................................................................15
Time of assessment of damages............................................................................................................................15
Causation...............................................................................................................................................................16
Remoteness...........................................................................................................................................................16
Mitigation..............................................................................................................................................................16
Contributory Negligence.......................................................................................................................................16
Punitive damages......................................................................................................................................................16
Liquidated damages clauses v penalties....................................................................................................................17
Restitutionary damages.............................................................................................................................................17
Wrotham Park damages............................................................................................................................................17
Specific remedies......................................................................................................................................................17
Misrepresentation
Is different from just advertising puffing.

1. Identify the statement of past or present fact that was false. (two parts)

It cannot be a statement of opinion. If it is an opinion, you must look to the underlying implied statement of fact, eg.
that there are true facts underlying that opinion.

Smith v Land and House Property Corporation: Smith said that his tenant was “most desirable” when in fact, the
tenant was very terrible. Held that the statement of opinion of the tenant’s virtues could be of fact due to the
information asymmetry.

A statement of promise, a future promise, however, doesn’t count.

Tan Chin Seng v Raffles Town Club: RTC promised a premier club with first class facilities in their promotional
materials, in reality what manifested was a club with 19 000 founder members, with overcrowded facilities. It was
held that this was a future promise, that had to be sued under breach of contract instead.

You have to prove that it is false – this is purely factual. Eg. In Edgington v Fitzmaurice, F sold bons to get money to
pay off loans, but the company prospectus said it was for the company’s expansion. Thus, false.

Silence can also be a statement, depending on the circumstances. As in Broadley v Alacran, there needs to be a duty
to speak for pure silence, but generally, it would be assessed by reference to how a reasonable person in the
circumstances would view it.

2. Show that this statement induced the person to enter into the contract.

Redgrave v Hurd: Redgrave the solicitor advertised for a partner solicitor but lied about the value. Told Hurd that he
could check papers if he wanted to, Hurd did not choose to check. Reliance is enough, as there is no duty to check,
so Hurd could rescind.

Further, if you checked and failed to discover the false statement, it’s still okay. As stated in JTC v Wishing Star, there
is “no logic in penalising a party who has chosen to act carefully but failed, whether due to negligence or otherwise.”

This reliance is actually called the “logical end of inducement”, Anna Wee says that it is subjective from the
perspective of the representee.

Fraudulent
Is voidable at common law, but can also do it under equity.

In the cause of Anna Wee, it was said that “irrational or ill-founded belief is not fraud… The allegation of fraud is a
serious one” and thus, generally speaking, the graver the allegation, the higher the standard of proof incumbent on
the claimant. Thus it would be higher than the usual 50% BOP in civil cases.

What you must prove is the test in Derry v Peek, case of company that said in prospectus that it had permission to
use steam trains (they expected to get the permission) but they didn’t get it.

a) D knew that it was false, b) D did not believe in the statement, or c) D was reckless as to the truth.
Negligent
Is voidable in equity

This is actually contract’s version of tort of negligence for pre-contract.

The duty of care is key – as stated in the case of Hedley Byrne (negligent credit reference)

The auditors Heller were supposed to take reasonable care in preparing the credit reference, and Hedley relied on it.
There was a relationship of trust and confidence, a voluntary assumption of responsibility and reliance upon the
statement. But this was excluded by the “without responsibility” phrase.

Esso Petroleum v Mardon also demonstrates that a difference in level of experience, eg. the professionals who made
an estimate, though not precise, were in a position to do it better than the inexperienced Mardon. The parties were
“in the kind of relationship which is sufficient to give rise to a duty on the part of the plaintiffs.”

Innocent
Is voidable in equity, but no damages.

Whatever is non-fraudulent and non-negligent goes here.

Statutory
This is, in practice the best to use.

s 2(1) allows you to, after establishing that there was a misrep (statement of fact, false, reliance), AND there was
damage, claim for damages as if it were a fraudulent misrep.

The burden shifts to the other side to:

unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made
that the facts represented were true.

Under s 2(2), for non-fraud cases, the court might say that the contract is subsisting and award damages in lieu of
recission.

Recission
This is basically the erasing of the contract, and acting as if the contract was never formed.

However, because misrepresentation leads to voidable contracts, the bars to recission may apply.

1. Restitutio in integrum is impossible

2. Lapse of time
3. Innocent 3rd party rights have been involved
4. Contract was reaffirmed.
5. Under s 2(2) the court has decided that the impact of recission is disproportionate to the representor.

Exclusion of liability
You can exclude liability for misrepresentation by saying ‘did not rely on any statement to contract.’ etc.

As stated also in s 2(3) it just has to comply with UTCA’s s 11(1)’s reasonableness test.
Mistake
All misrepresentations are mistakes, but the opposite may not be true if there’s no inducement.

And actually, mistake arguments tend to be better to run because that the end of the day Mistake is void at common
law – so not impacted by the bars to recission.

Common Mistake
This is when both parties have made the same mistake.

At common law
It is void ab initio.

Great Peace Shipping v Tsavliris gives five requirements for a common mistake at common law: (Tsavliris offered to
help Great Peace thinking that the ships were close, but they were very far. The court said it was no impossible, so
the contract wasn’t void. Eg. failed iv? Seems silly to me.)

i) Common assumption at to the existence of a state of affairs

ii) No warranty by either party that the state of affairs exists
iii) The non-existence of the state of affairs is not attributable to the fault of either party
iv) The non-existence of the state of affairs renders the performance of the contract impossible
v) The start of affairs may be the existence or a vital attribute of the consideration to be provided or
circumstances which must subsist if performance of the contract is to be possible. [essential to the
identity of the contract]

Ho Seng Lee Construction v Nian Chuan Construction: Metal forms rentals were messy and uncountable, they did not
count at the beginning and leased without checking. Later tried to raise an issue with the number of forms as they
didn’t want to pay so much. Held could not rely on this mistake because the real question was if the subject matter
of the rental agreement was essentially different from what it was reasonably believed to be.

In equity
Voidable, bars apply, but more flexible remedies can be given.

Associated Japanese Bank says equity will give relief in cases where it fails at CL. Olivine Capital affirmed that there
remains a doctrine of common mistake in equity for Singapore, rejecting part of Great Peace Shipping.

Mutual Mistake
This is when both parties make different mistakes, and have been considered to be a problem of offer and
acceptance.

The case of the two Peerlesses – Raffles v Wichelhause, where in the buying of cotton, there were two vessels
named ‘The Peerless’ who departed on different dates, and the contract only said the name of the vessel. The
objective reasonable person could not tell which of the vessels was was, thus held that there was no consensus at
idem.

As said by the courts in Wellmix Organics, it is a lack of coincidence between offer and acceptance, thus no contract
has been formed.

Thus, the result of a mutual mistake is a non-existence of the contract, it is void ab initio.
Unilateral Mistake
This is when only on side makes a mistake. Usually, this means that the other side has taken advantage of the
mistake being made. In the case of a fraudulent misrepresentation type, one party may well have caused the other
party to make said mistake.

Of Terms
As stated in Hartog v Collin Shields (selling hare skins per pound vs per piece as normal) when the offeree knows that
the offeror does not intend the terms of the offer to be the natural meaning of the words, then they cannot be
bound, - when there has been a sufficiently important or fundamental mistake as to a term.

The court has to find that the other party had actual knowledge of the mistake in order to void a contract on the
ground of unilateral mistake:

If a court, upon weighing all the circumstances, thinks that the non-mistaken party is probably aware of the error
made by the mistaken party, it is entitled to find, as a fact, that the former party has actual knowledge of the error.
Following from that holding, the court should declare the contract so formed as void on the ground of unilateral
mistake. Digilandmall at [41].

In addition, Digilandmall also rejected Great Peace who said no unilateral mistake in equity. Instead, where there is
an additional element of impropriety, one can try for a unilateral mistake at equity where the common law claim
fails.

Of Identity
Is in a funny position where it wouldn’t be an express term in a contract usually, and seems more like a fact than a
term. Generally unilateral mistake of fact is not actually allowed. But it is debatable that ‘identity’ would be an
implied term for the contracts where a unilateral mistake of identity is allowed.

Because of this quirk, we also have the trio of cases that cannot be reconciled well beyond the
weakness/vulnerability of the old ladies who were allowed to have their contract void.

There is a soft presumption that when people transact face-to-face, they intend to contract with the physical person
before them. This comes from Lewis v Averay, where Lewis sold his car to the rouge who called himself “the famous
actor Richard Green”. Averay the 3rd party who got the car from the rouge, was able to resist Lewis’ claim in mistake
(since then it can only be voidable for fraud.)

However, in the case of Ingram v Little, the two old ladies had been reluctant to give cheque, and wanted cash from
the buyer until he convinced them with his name (and they found him in the address book). He was a rogue and they
were allowed to void their car sale.

On the other hand, if it is by correspondence, the presumption is the other way, you intend to contract with the
stated name. This was seen in the case of James Cundy v Lindsay, Lindsay was selling the cloths to a rogue who was
on the same street as the actual Blenkiron, using the name Blenkarn, Linsay was able to void contract and get them
back.

Ultimately, this is a question of fact that asks, what was the intention of the contracting parties, and to see if the
identity of the person in the contract was truly essential.

Non Est Factum

This works as a very narrow exception to the signature rule in L’Estrange v Graucob. Stated in the case of Mahidon
Nichiar, it only works when there is

a) a radical difference between what was signed and what was thought to be signed.
b) It is proved that the signor took care in signing the document (was not negligent.)

Rectification
Is an equitable remedy that parties would most likely ask the court for under the common mistake in equity. This
allows the contract to stand as if no mistake had been made.
Also, it may happen in situations where the contract was simply recorded wrongly on paper, of course, this is also a
situation of common mistake.

Law comes from Yap Son On v Ding Pei Zhen, where the court helps them to depart from the meaning of the written
contract.

Duress
Is a doctrine at common law for which contracts are voidable.

Two parts:

a) Pressure amounting to compulsion of will of the victim (factors from Pao On to see if consent was vitiated)
a. whether there was protest
b. presence of alternative course of action open to the coerced
c. independent advice
d. whether after entering the contract they took steps to avoid it
b) Illegitimacy of the pressure exerted
a. threat is abuse of legal process
b. demand is not made bona fide
c. demand is unreasonable
d. threat is unconscionable in light of all the circumstances

Physical Duress
Is usually quite clear cut allowing for contracts to be voidable, though the bars to recission apply. If the bars do apply
and you have an issue with restitutio, just go for Actual UI since the facts for physical duress would definitely get you
an actual UI out.

To persons:

Barton v Armstrong: Armstrong threatened to blow Barton’s head off if he didn’t buy out his shares. Court held that
for physical duress, it didn’t have to be the predominant reason, it just had to be a reason to enter into the contract.
Just a) Illegitimate means used, b) were a reason to contract, c) evidence is honest and accepted.
For duress to persons, the burden will change to the person who applied the duress to show that it did not affect the
decision in anyway, for them to escape. This is very difficult.

To property:
Occidental Worldwide v Skibs, the BOP remains with the person who is claiming. There is much overlap between this
and economic duress below.

Economic Duress
Tends to be a bit more difficult to argue since the court will have to draw a line between duress and legitimate
commercial advantage (E C Investment.)

The simpler cases in this category are blackmail cases, like Tam Tak Chuen v Khairul. Khairul blackmailed Tam with a
video of Tam having a sexual relationship with a clinic employee, in order to get Tam to sell his share of the medical
corporation.

In cases like Sharon Global v LG, (steel seller Sharon met a problem in shipping, found a more expensive vessel and
LG reluctantly agreed to pay. Later LG said it didn’t want to pay, duress) the court might find as it did, that Sharon
was not seeking to improve its financial position, and made the demand bona fide to complete its obligation, thus no
duress.

Undue Influence
Is a doctrine in equity for which contracts are voidable.
Allcard v Skinner: Allcard introduced to Skinner who was a Lady Superior of a religious order. In 3 days, decided to
make a will to bequeath everything to her. On the facts, found that there was UI, but it was time barred.

Ie. don’t forget the bars to recission even as you go through the parts.

The categorisations under Singapore law come from BOM v BOK. Case of the grieving husband and the wife who
took advantage of him to execute a deed that essentially stripped him of everything.

Class 1: Actual UI
Is where the claimant bears the burden of proving everything:

i) Capacity to influence
ii) Influence was exercised
iii) Was undue (eg. RBS v Etridge’s coercion, domination, victimisation and all insidious techniques of
persuasion; BOM v BOK’s importunity, badgering, hectoring, bullying)
iv) Exercise brought about the transaction.

Class 2: Presumed UI
Are the situations where in after the claimant shows somethings, the court is prepared to presume UI and shift the
burden to the defendant.

i) There is a relationship of trust and confidence

ii) This relationship is such that it could be presumed that the defendant abused the claimant’s trust and
confidence in influencing them to enter the transaction.
iii) The transaction is one that calls for explanation (Allcard v Skinner’s “so large as not to be reasonably
accounted for…)

Class 2A: Irrebuttable Presumption of relationship of trust and confidence

i) If you have a solicitor-client relationship, it is irrebuttable. Doctor-patient is probably another.
ii) The court is ready to presume this.
iii) Show that the transaction is on that calls for explanation

Now, rebuttable presumption of UI, burden on the defendant to show.

Class 2B: Rebuttable Presumption

i) If husband-wife, you have to prove that there is a relationship of trust and confidence.
ii) After you show trust and confidence, the court will presume this for you if (iii) passes
iii) Transaction is one that calls for explanation.

Rebuttable presumption of UI, burden on defendant to show.

Doctrine of Infection
Mainly with reference to cases of banks and homes that were used as collateral. Royal Bank of Scotland v Etridge on
the duty of a bank when making out loans.

1. Banks are always put on inquiry when a person who acts as surety does so in a non-commercial setting, eg.
wives for a husband’s business that they have not proprietary interest in.
2. In such scenarios, the bank must ensure that the person acting as surety has independent advice, separate
from the person for whom they are acting in favour of.
3. A solicitor must give the bank assurance of this.
4. If the bank knew/had notice (actual or imputed) that there was a victim of undue influence, then they are
infected and unable to claim under their contract. Or, if the husband acted as an agent of the bank, also.

Unconscionability
Has been noted to overlap with Class 1 Actual Undue Influence.
As stated in BOM v BOK, it is also an equitable doctrine for which contracts are voidable.

However, it is possible for something to be unconscionable without UI’s ‘relationship of trust and confidence’.

Prove:

1. Weakness on one side (poverty, ignorance, acute grief, lack of independent advice)
2. Exploitation, extortion, or advantage taken of that weakness – eg. the transaction being at an undervalue

Then defendant has the burden to rebut by proving that it is “fair, just, reasonable” to have made such a contract.

As stated in Alec Lobb v Total Oil, inequality of bargaining power is a relative concept, seems to imply that weakness
must be quite large.

E C Investment facts were such that the director had legal advice and advice from his CFO, thus could not be
ignorant. With the collapse of the Lehman Brothers, he needed someone to extend a loan and thus took the bad
bargain.

Illegality
Will make contracts void ab initio.

Statutory Illegality
Is when a type of contract is illegal by statute. This is not contract law – and the statute itself may sometimes even
specify what happens to the contract (jailing people, prevent restitution? Perhaps, perhaps.)

As stated in Ting Siew May, is can be an express or implied prohibition, but it must be the contract, not just the
action that is made illegal. Thus, it must be a “clear implication” or “necessary inference”. Ting Siew May was about a
change in MAS’ policy about loans – Boon backdated the loan for Ting so that they could avoid the new policy. This
was not illegal by statute because the policy order targeted banks and not people.

Common Law Illegality

For contracts that are not illegal per-se, the law recognises that often, there are still contracts that law would want
to strike down.

Heads of PP to void at CL
As stated in Ting Siew May:

1. Established heads from Ochroid:

a. contracts prejudicial to the administration of justice (including contracts to stifle a prosecution and
contracts savouring of maintenance or champerty);
b. contracts to oust the jurisdiction of the courts;
c. contracts to commit a crime, tort or fraud;
d. contracts prejudicial to public safety;
e. contracts prejudicial to the status of marriage (including marriage brokage contracts as well as
agreements by married persons to marry and agreements between spouses for future separation);
f. contracts promoting sexual immorality;
g. contracts that are liable to corrupt public life;
h. contracts restricting personal liberty
i. contracts to deceive public authorities;
2. Contracts entered into with the object of committing an illegal act.
a. Here the emphasis is on the intention of parties.

Principle of proportionality
For the Ting Siew May (2), the courts are concerned with producing a proportionate response to the illegality.

Whether or not to void the contract depends on:

(a) whether allowing the claim would undermine the purpose of the prohibiting rule;

(b) the nature and gravity of the illegality;

(c) the remoteness or centrality of the illegality to the contract;

(d) the object, intent, and conduct of the parties; and

(e) the consequences of denying the claim.

Basically, the worse the conduct and intent, the more likely it will be void.

Consequences of Illegality
Generally, there is no recovery pursuant to contract due to the ex turpi causa principle.

However, you can still try to recover the benefits under the illegal contract, ie. restitution.

After finding that the contract is made void, the second stage is to ask if restitutionary recovery might still be
possible.

There are three possible routes to try for: (Ochroid Trading)

a) parties are not in pari delicto (ie, where the plaintiff is less blameworthy than the defendant).
a. a “class protection statute” that was intended to protect the class of persons to whom the plaintiff
belonged
b. the plaintiff entered into the contract on the basis of fraud, duress or oppression
c. where the plaintiff entered into the illegal transaction as a result of a mistake as to the facts
constituting the illegality
b) the doctrine of repentance (or timely repudiation) / the locus poenitentiae doctrine
c) a claim in unjust enrichment
a. where it must be proven that granting recovery would not stultify the underlying doctrine.

Contracts in Restraint of Trade

Are a particular type of illegal at common law due to PP contract, that can be rendered void. It depends on whether
or not the restraint is reasonable in the circumstances.

a) reasonableness with reference to the parties’ interest (looking at the area and time of the restraint)
b) reasonableness relating to the public interest (looking at the impact of local circumstances of the restraint)
Chua J in Thomas Cowen (monopoly of fumigation by hydrogen cyanide and methyl bromide ended, allowed
prices of ship fumigation to drop)

Further, there must be come legitimate proprietary interest:

For sale of business – goodwill

For employment – trade secrets and trade connections

Doctrine of Severance
Operates to save the rest of the contract by removing the bad bits.

Man Financial’s blue pencil test: to be able to blue pencil through the offending words without altering the meaning
of the provision and without rendering it senseless.

Can cut out altogether an objectionable promise, leaving the rest of the contract valid and enforceable, as long as
they are not substantially the whole or main consideration.

Privity of Contract

Usually begins from the proposition in Tweddle v Atkinson that “only parties to the contract can sue and be sued on
it”.
Contracts (Right of Third Parties Act)
C3PA in Singapore allows for third parties to sue based on contracts that two others have made.

S 2: Where the contract expressely identifies the third party, by name, as a member of a class or as answering to a
particular description s 2(3), can enforce the contract if it expressly provides so, or purports to convey a benefit on
him, as long as it does not appear that the parties did not intend for a term to be enforceable (use of s 2(2) to rebut)

As stated in Claas Medical Centre, there is no requirement that benefitting the third party must be the predominant
purpose or intent behind the term. There is a presumption of right to enforcem – this can be rebutted by s 2(2).

Other situations with 3rd parties

Promises to exempt 3rd parties from liability
Lord Reid in The Eurymedon had 4 pre-conditions in the context of stevedores.

1. Bill of lading must be clear that the stevedore is intended to be protected by the provision which limit
liability
2. Bill of lading must make it clear that the carrier is contracting not only for himself, but as an agent for the
stevedore.
3. The carrier has authority to do so
4. There is no issue of consideration from the stevedore’s side.

Thus, in The Eurymedon, the stevedores who were negligent in unloading the drill were not liable.

Promises that impose a burden on the 3rd party

The Pioneer Container where a secondary bills of lading specified Taiwan as the legal jurisdiction and the original
cargo owner was held to be bound because they granted the carrier authority to subcontract on ‘any terms’.

Specific Performance
Beswick v Beswick – not allowed until later when the House of Lords said the Aunt was an administratrix of the
uncle’s estate. (Case where the nephew made a contract with uncle to hire him and pay annuity to aunt, argued that
aunt was 3rd party and could not sue. On facts, it seems like if she were not an administratrix she would not have
been able to sue.)

3rd Party Recovery under the Broad and Narrow grounds

Beyond use of the C3PA, as useful as it is, there are the two methods here that the Singapore courts have considered
when it comes to losses of the third party.

To this end, the English courts have formulated two exceptions, which we will refer to as “the narrow ground” and
“the broad ground” respectively, to the general rule that the plaintiff/promisee can only recover nominal damages
for a breach of contract where it has suffered no loss (for instance, where the substantial loss is suffered by the third
party who is the intended beneficiary of the contract).
Family Food Court provides the following law:

Broad ground
The broad ground permits the plaintiff/promisee to recover substantial damages for its own benefit on the basis that
it is recovering for its own loss. This is generally scoped as the plaintiff not getting what he bargained and paid for, a
shortfall in performance, albeit with respect to the benefit a third party was to get. Something like, the benefit they
would have derived from the third party’s benefit.

Of course, the performance interest must be a genuine one – the courts will apply an objective test of
reasonableness to the damages being claimed.

Further, the usual rules would apply (causation, remoteness, mitigation).

Since you’re claiming for your own loss, you wouldn’t have to pay the third party, and there doesn’t need to be any
legal blackhole – that’s not what the broad ground is thinking about. In fact, it looks like a funny sort of non-
pecuniary loss.

Narrow ground
The narrow ground allows the claimant to claim on behalf of the third party – therefore, the court will ensure that
they pay the third party when they win.

1. The narrow ground is only applicable in the context of a breach of contract; specifically, where the person
who suffers loss as a result of the breach of contract (ie, the third party) has no contractual remedy to
recover substantial damages against the defendant/promisor (this point is, in fact, implicit in our discussion
thus far above). It does not apply in every other (non-contractual) situation where a person sustains loss but
has no recourse against the person who caused it. Thus there is a legal black hole.
2. Second, an alternative cause of action in tort that may be available to the third party does not mean that the
“legal black hole” mentioned at [31] above is eradicated or filled up. A claim in tort (subject to all the usual
limitations and defences in tort) is not the same as a claim in contract, and, thus, the existence of an
alternative cause of action in tort does not render the narrow ground inapplicable.

Formalities and Incapacity with contracts

The Civil Law Act s 6 has some specifications that some kinds of contracts must be evidenced in writing.

Contracts which must be evidenced in writing

6. No action shall be brought against —

(a) any executor or administrator upon any special promise to answer damages out of his own estate;

(b) any defendant upon any special promise to answer for the debt, default or miscarriage of another person;
(c) any person upon any agreement made upon consideration of marriage;

(d) any person upon any contract for the sale or other disposition of immovable property, or any interest in such
property; or

(e) any person upon any agreement that is not to be performed within the space of one year from the making
thereof,

unless the promise or agreement upon which such action is brought, or some memorandum or note thereof, is in
writing and signed by the party to be charged therewith or some other person lawfully authorised by him.

Then the Minors Contract Act tells us that just because it was a minor doesn’t mean the contract is unenforceable. In
Singapore, the contracting age is 18, but if it is under, you can still sue for necessities such as food (though beer is
not a necessary item.)

Guarantees

2. Where —

(a) a guarantee is given in respect of an obligation of a party to a contract made after 9th April 1987; and

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

the guarantee shall not for that reason alone be unenforceable against the guarantor.

Restitution

3.—(1) Where —

(a) a person (the plaintiff) has after 9th April 1987 entered into a contract with another (the defendant); and

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

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

(2) Nothing in this section shall be taken to prejudice any other remedy available to the plaintiff.

Remedies

Damages that you claim for

Compensatory losses are what you get for breach of contract, non-compensatory damages have a few types but they
function to restore the claimant to a pre-breach situation. The point of contract law damages, however, is to ideally
place the claimant in a position as if the contract was performed perfectly. Each time, you should be conducting the
hypothetical thought experiment of, ‘if the ctt was performed, their position would be’.
Pecuniary losses
Are the kind that come already denoted in numbers. Two measures are common for this, but expectation loss is the
ideal scenario.

Reliance Loss
This refers to expenditures made in reliance on the contract, eg. if pursuant to the contract they have bought the
iron fengshui cat or the huge stone lions. You must ensure that in the counter factual, they would not have bought
this stuff.

As mentioned, reliance losses often are the second best alternative, and they only go part way to putting the
claimant towards a complete contract. This is because reliance losses often end up putting you as if the contract had
not been formed.

As stated in the case of Van Der Horst Engineering (affirming Anglia TV), pre-contractual expenditures incurred in
relation to the contract can also be claimed for. In that case the judge recognised that VDH incurred pre-contractural
expenditures to negotiate and prepare for a statement of accounts in order to facilitate due diligence checks of
Rotol, and that such expense were wasted when Rotol breached the contract.

Expectation Loss
This refers to the amount of gain expected had the contract been performed perfectly. It might be something like a
business deal (loss of profit), or a property that was supposed to be transferred, or shortfall in performance like a
quantity of undelivered goods.

Ruxley Electronics v Forsyth: Swimming pool that was 6ft 9 inches deep instead of 7ft 6 inches in the contract. Since
could still dive into the pool, held that he could claim for some loss of amenity but rebuilding cost, ie. expectation
loss to get his contracted pool was totally out of proportion to the loss he had suffered.

Similarly, Sonny Yap: House was built, but some rooms were smalled than planned. They were cramp, but still
liveable, so court said loss of amenity, the contract object was achieved to a substantial extent, it would
unreasonable to reconstruct the house.

If you’re the defendant and you don’t want to pay, usually you should try to prove that reliance loss> expectation
loss, ie. the claimant made a bad bargain.

Generally, you claim for expectation loss, or reliance loss and net-expectation to avoid the double counting issue. If
there is no such issue, then claim for both (since, eg. the damage comes from different parts?). The courts usually
are open to allowing claimants pick the measure.

Non-pecuniary loss
Are things which are more subjective and difficult to quantify.

Loss of chance
Cases have a problem of probability, where the money/ damage depends on the theoretical actions.

These actually arise from when expectation losses are not proven on a balance of probability. It’s fairly similar to
tort’s economic loss of chance.
Chaplin v Hicks is the classic example, the beauty contest and her loss of chance to have won the competition and be
scouted by the famous manager because her letter arrived late. Chaplin got 100 pounds substantial damages
because she had the contractual right to be considered.

Asia Hotel: Asia Hotel and Starwood had signed non-circumvention agreements regarding Lai Sun’s shares, but
Starwood breached this contract by helping Asia Hotel’s competitor. It could not be proven for certain that Asia
Hotel would have succeeding in acquiring Lai Sun, but for Starwood’s breach. However, the court held that
Starwood’s breach caused a loss of a real chance to buy the Lai Sun shares, which Asia Hotel would have taken on a
balance of probabilities and allowed recovery.

MCH v YG Group states the test in three parts: 1. The breach caused a loss of chance. 2. The claimant can prove on a
balance of probabilities that it would have availed itself of this chance had there been no breach. 3. The chance lost
was a real and substantial one.

Mental distress
A tricky kind of non-pecuniary loss that is even more difficult to quantify.

Farley v Skinner: Farley bought a house after getting Skinner to survey it for things including the level of noise. It was
very important to Farley that it was quiet but Skinner got him a house with a lot of aircraft noise. Held that damages
could be recovered for the loss of a pleasurable amenity which may be of no economic value, if they are of
importance to the client. Thus, need to show that the amenity formed an important part of the contract.

ACB v Thomson Medical (wrong fertilisation case): Generally, not claim can be brought in contract for reputational
damage or mental distress due to breach of contract. “an incident of commercial life which players in the game are
expected to meet with mental fortitude.”

General issue of quantification for non-pecuniary losses

The court will want the claimant to submit some possible yardsticks to determine the value of the pecuniary loss.
They can be the cost of cure, the shortfall in performance, diminution in value of property, etc. But basically you
have to submit something.

Limitations to recovery
There are various issues related whether or not, and how much you can recover.

Time of assessment of damages

Is generally restricted to the breach date. But the breach date rule is not absolute, looking at the case of Golden
Victory – contract was formed for later performance. An anticipatory breach was committed and accepted by the
other party. 14 months later, because of the Gulf War, had the contract been continuing, Golden Strait Corp would
have been about to end the contract due to the war according to the contract. It was held that assessment of
damages would be done at time of trial, essentially allowing GSC to reduce its damages payable by a lot. Professor
suggests that the better way to think about this is that conceptually, what was lost was the ‘7 years hire, with
qualification’ rather that a loss of ‘7 years hire’, thus, contractual term for an obligation overtime with possible early
termination would then be allowed to shift back the time of assessment of damages.

Swiss Singapore v Exim: Prakash J said, Post breach events in Golden Victory were considered because it was
overtime, with express provisions for extra early termination. Thus Swiss with a one-off payment could not shift back
their time.

Causation
Of the damage must be problem to have come from the breach. The But-fort test is a good starting point, but
eventually the court wants to think about common sense.

Sunny Metal: but-for test is sued. There is a problem with multiple sufficient causes, but in that case, use reverse
balance of probability, loss of chance or common sense.

ACB v Thomson Medical: Choice to keep a child does not break the chain of causation. Only something wholly
unreasonable would break. However, they said but-for negligence, cost of raising child would not be incurred, so
gave recovery.
Remoteness
Must prove that the loss is not too remote.

Has two types, as originated from the case of Hadley v Baxendale.

Limb 1: “Ordinary damage’ Contracting parties are taken to be reasonable people, even if there is no express term, it
is possible to impute knowledge of such damage and make the breacher liable. This would be for those “fairly and
reasonably considered to be arising naturally from the breach.”

Eg. in Out of the Box v Wanin – Wanin was a bad manufacturer, their terrible drinks caused Box’s 18 sports drink
business to flop. They were allowed to claim for advertising costs (local, not global, as local was reasonable), recall
costs, storage. These were held to be within reasonable contemplation.

Limb 2: ‘Extraordinary damage’ This could be any type of damage so long as it was “within contemplation at the time
of contracting” and the breacher had “sufficient knowledge”.

In Victoria Laundry, loss of a cleaning contract would have been limb one. They wanted to claim for the lucrative lost
contract with the Ministry of Supply, blaming Newman for the late delivery of a boiler – but it was held that since
that was a dyeing contract, there was no sufficient knowledge.

Mitigation
The rule of mitigation states that a claimant cannot claim for damages they could have mitigated.

Further, the court is highly sceptical of claimants who do nothing.

The Asia Star: The court was very critical of the Malaysian palm oil company who failed to mitigate when the owners
of Asia Star informed them that Asia Star would not be able to perform. They rejected Puma who was found for
them even thought it was just a small increase in price, further the price of palm oil was still rising. Not to mention,
they didn’t tell their oil suppliers anything either. So, couldn’t recover.

Contributory Negligence
Applies where there is a concurrent claim in tort that is independent of the claim in contract.

This would lead to an apportionment of the loss, stated in Jet Holding.

Punitive damages
Is said to be an uncertain concept in contract law which harms commercial stability but has been left open, PH
Hydraulics v Airtrust. Generally, you should try for it under tort law if you want it.

In the same vein, AG v Blake damages as stated in the case of Turf Club Auto are punitive, thus unlikely to be
recognised in Singapore.

Liquidated damages clauses v penalties

The test endorsed in Denka Advantech was the test in Dunlop, declining the test in Cavendish.

Leiman Ricardo:

Presumption of penalty when there is a single lump sum payable on the occurrence of one or more of all of several
events, some serious and others causing trifling damage.

Dunlop test:

1. Primary or Secondary obligation

(of primary obligations are those that parties undertake to perform in their contracts, whose breach gives rise to
secondary obligations on the part of the defaulting party to remedy the breach.)

Guided by:

(a) the overall context in which the bargain in the clause was struck;

(b) any reasons why the parties agreed to include the clause in the contract; and

(c) whether the clause was entered into and contemplated as part of the parties’ primary obligations under the
contract in order to secure some independent commercial purpose or end, or whether it was, in the round, to hold
the affected party in terrorem in order thereby to secure his compliance with his primary obligations.

If it is a secondary obligation, engages the penalty rule:

2. Genuine pre-estimate of loss or extravagant and unconscionable in comparison to the greatest loss that
could conceivably be proved to have followed from the breach.

If it is a penalty, cannot be enforced.

Restitutionary damages
For us, the extra situation where this applies would probably only be in total failure of consideration cases. Ie. there
is no exchange made at all on one side -> then you can get back whatever you’ve paid.

But Prof said this is a specific remedy so…

Wrotham Park damages

In Singapore law, as stated in Turf Club Auto, are compensatory damages.

Three steps:

(a) First, as a threshold requirement, the court must be satisfied that orthodox compensatory damages (measured by
reference to the plaintiff’s expectation or reliance loss) and specific relief are unavailable.

(b) Second, it must, as a general rule, be established that there has been (in substance, and not merely in form) a
breach of a negative covenant.

In this regard, the court should be careful to ensure that the obligation breached is in substance a negative covenant,
and not merely a positive obligation that has been “dressed up” as a negative covenant in form. (It must be a
promise to not do something, eg. don’t build a house. Versus don’t be careless.)

(c) Third, and finally, the case must not be one where it would be irrational or totally unrealistic to expect the parties
to bargain for the release of the relevant covenant, even on a hypothetical basis. In other words, it must be possible
for the court to construct a hypothetical bargain between the parties in a rational and sensible manner.

Specific remedies
Like an action for a fixed sum when it comes to a debt (3-2 judgement. Why, still?)

White & Carter v McGregor – Automatic claim in debt given for the unwanted advertising contract. Held no need to
accept the breach, thus when the continued the advertisement, could claim the debt. Not subject to mitigation rule.