BSP1702

Role of Law in Business

⤷ Ensure that businesses act in an ethical manner (as far as possible)
* business and ethics are NOT the same → what is legal can be unethical and what is ethical can
be illegal
⤷ Business people should know business law to avoid legal problems and better protect themselves
(also save costs from lawyers) since law is involved in many parts of business (eg licensing, rent,
patents, etc)
SG Laws
⤷ 2 types: legislation(statute law) and case/common law
○ Legislation: passed by Parliament (bodies that have authority)
judge cannot change the provisions of the statutes
○ Case/common law: when 2 people litigate and the court delivers its judgement, judgment
becomes a case;
if same cases appear again, judgement generally follows earlier decision if earlier
decision was made by a higher court of the same hierarchy (higher level of court in the
same country) (doctrine of precedent) ⇒ ensures consistency, predictability and fairness
for similar cases, judge can choose to adopt earlier reasoning
gives judge a lot of discretion
⤷ Unique to countries that follow the “common law” system
Other countries follow the “civil law” system → not much room for judges to make law
⤷ Both statute and case law can grow and change over time
○ Have a prospective, not retrospective effect (cannot affect past cases or actions)
⤷ Can have mixture of legislation and case law in 1 legal dispute
○ Eg. judge decides whether terms of legislation are satisfied, whether defendant actually
carried out the crime, etc
Criminal and Civil Law
 ⤷ Criminal proceedings
○ Concerned with forbidding wrongful conduct and punishing those that do it
○ To protect the society
○ Public prosecutor and defendant
○ Punishment is jail sentence or fine (fine is to the state)
⤷ Civil proceedings
○ Concerned with regulating private rights and obligations between parties
○ Plaintiff (person who sues) and defendant
○ Defendant (if found guilty) have to pay damages to plaintiff
⤷ Business is more concerned with civil than criminal law
⤷ Both civil and criminal law may be involved in the same case
○ Civil and criminal not connected (not heard by the same court or at the same time)

Methods of resolving civil disputes / alternative dispute resolution (ADR)

1. Litigation
⤷ Refers to having a trial in a court of law
⤷ Three levels of courts in SG
○ State Courts (include Magistrate’s and District; for claims with value below certain
amounts) < High Court (value of claim above $250,000; hears appeals from lower level
courts and tribunals; single judge) < Court of Appeal (only for appeals from the High
Court; three judges)
⤷ Some countries have a jury but in SG, no jury, only judge(s)
⤷ Time limit to bring civil claim to court (6 years for breach of contract or tort action; 3 years for
personal injury), short time limits for appeal
⤷ Advantages
○ Finality → once court made a decision, parties must abide by decision (unless appeal)
○ Don’t need consent of other party
⤷ Disadvantages
○ High costs (court fees + legal fees)
○ Long time
 ○ Create win-lose situation → difficult to maintain business relationship, a lot of bitterness
○ No privacy/confidentiality → affect reputation of business
○ Cannot choose the judge (may prefer technical expertise in a certain field)
○ May have difficulties with enforcement, especially if defendant does not have assets in
SG
2. Mediation
⤷ Formalised negotiation, carried out with trained mediator
⤷ Small and large disputes, local and international
⤷ **Aimed at amicably reaching a settlement (can find mutually acceptable solution)
⤷ Both parties have to agree to submit dispute to mediation
⤷ Parties decide course of action, not mediator (mediator does not pass binding judgement)
⤷ SG Mediation Centre
○ Non-profit organisation funded by the government
⤷ Centre for Dispute Resolution at State Courts
○ Initiated by courts (sometimes automatically offered, sometimes have to apply)
⤷ Advantages
○ Relatively cheap
○ Relatively fast
○ Privacy
○ Creates win-win situation, parties have complete control over outcome
○ Wider range of solutions compared to litigation
⤷ Disadvantages
○ Lack of finality (mediator cannot pass binding judgement) → may have to try another
ADR
○ Less international enforceability than arbitration (but still have some)
3. Arbitration
⤷ **Parties choose arbitrator(s) to help resolve the dispute
⤷ Arbitrator has to be neutral and impartial
⤷ Small and large, local and international disputes
⤷ Arbitration process very similar to litigation process, but less formal (don’t need to be in court)
⤷ Singapore International Arbitration Centre (have other venues for arbitration in SG too)
○ Non-profit organisation
⤷ Common for lawyers to be involved
⤷ Also win-lose (like litigation)
⤷ Advantages
○ Privacy/confidentiality
○ Finality, binding agreement
○ Can choose arbitrator with technical expertise in a certain field (important to dispute)
○ *Relatively fast (but may be longer than mediation)
○ Access to arbitrator (easy to organise meeting with arbitrator), less formalities
○ *Can be cheaper than litigation
○ International enforceability
⤷ Disadvantages
○ Limited grounds for appeal against an arbitral award
 ○ Both parties must agree to arbitration
4. Small Claims Tribunal
⤷ For claims where it is too costly to resolve through litigation (damages are lesser than legal fees)
⤷ Only hears certain types of small claims: contracts of sale of goods and the provision of services;
damage to property (other than involving motor vehicle); contracts for lease of residential
premises that do not exceed 2 years
⤷ Claim brought within 2 years from action, claim for up to $20,000 (but if both parties agree, can
also up to $30,000)
⤷ No lawyers allowed (called tribunal, not court)
⤷ B2B, B2C and C2B can bring a claim
⤷ Consent of other party not needed
⤷ Fast, inexpensive
5. Employment Claims Tribunal
⤷ Hear some types of contractual and statutory employment related disputes
⤷ Monetary limit of $20,000/$30,000 (depending on whether union is involved)
⤷ Must go through mediation process first
⤷ No lawyers
⤷ Fast, inexpensive
Contract Law
⤷ Defined as an agreement enforceable in law
⤷ Satisfy OACL
○ Offer
○ Acceptance
○ Consideration
○ Intention to create legal relations
Offer
⤷ Terms of offer must expressly or impliedly indicate that it is to be binding on the offeror as soon
as accepted
⤷ Different from invitation to treat
○ Invitation to treat is an offer to negotiate/receive offers, NO indication to be binding if
accepted
○ Request for information
○ Display of goods
■ Customer makes the offer when they go to the cashier to pay, acceptance by the
cashier
■ Rule made so that customer can change their mind
■ If there is a mistake in the price for the goods, possible for cashier to refuse offer
at that price and quote a new price (make a new offer)
○ Advertisements
■ Unreasonable to expect advertiser to always have sufficient stocks
(advertiser cannot be sued for breach of contract if item unavailable)
■ Advertiser can withdraw advertised items without breaching contract
■ BUT some cases advertisements may be offers, especially for unilateral contracts
● If advertisements require an action to be done before offering something
(eg can get free gift if they collect something)
● Should state that offer lasts as long as stocks last
○ Company prospectus
■ Issue a prospectus to raise capital by selling shares to public
■ Company not promising that all applications will be approved/granted
■ Potential investors make offer by applying for shares
○ Auctions
■ Offer when bidder places a bid, acceptance when auctioneer selects highest bid
○ Call for tenders
■ Offer made when tender is placed
■ Unless corporation expressly binds itself to accept highest/lower tender
○ Quotations
■ Whether offer or invitation to treat is dependent on whether essential matters
have been addressed (basically the details eg date)
■ Depends on terms of quotation
⤷ Termination
○ Revocation
■ Revoke before acceptance
 ■ Must be communicated to offeree (person that could be accepting)
● Effective when received
■ Can be communicated by offeror or someone else (as long as offerees clearly
know offer has been withdrawn)
■ Validity of communication is dependent on whether a reasonable person would
have considered statement to be accurate
■ Can revoke offer early even if time period was specified because there are 2
offers - one for the actual offer and another to keep the first offer open for a
stated period of time - but for second offer, offeree has not given consideration so
contract not enforceable
Eg if selling a house and offer to keep offer open until a certain time, can revoke
offer before that time
Can make second offer enforceable by providing compensation (eg money)
Eg seller of house give buyer an option under which seller agree to keep offer
open for some time in return for a sum of money
■ For unilateral contracts, offeror cannot revoke offer once offeree has started
performing the act
○ Lapse of time
■ Set time limit for offer
■ If no express time stated, offer is likely to lapse after a reasonable amount of time
(amount depends on each case)
■ Good to set date/time for certainty
○ Offer subject to condition
■ Set a condition for the offer (if not met, offer is terminated)
○ Death
○ Rejection
■ Offeree rejects the offer (includes making counter-offers), cannot subsequently
insist on accepting offer (no longer binding)
Acceptance
⤷ Must accept on the SAME terms as offer (if new terms or conditions introduced, is counter-offer)
⤷ Must communicate acceptance
○ Reasonable mode of communication should be chosen (if not stated)
○ Cannot treat silence as acceptance (except if agreed on)
○ Offeror can waive requirement of communication (ie offeror will still be bound even if
offeree did not communicate acceptance)
○ Communication effective when sent or received? → can specify in contract; general rule
is effective only when received
■ Exception is postal rule (if state that mode of communication is by post) →
effective when letter is sent (if not otherwise stated in contract)
■ For e-mails or online acceptances, not yet clear whether postal or receipt rule
applies - not sure when receipt occurs → if message sent to designated email
address, receipt when message is capable of being read; if not sent to designated
email address, receipt when message is capable of being read and addressee
know message is sent to what address (actual reading of message not needed)
 ○ Must agree on essential terms (eg price), terms must address impt details
■ As long as essential terms are clear in some way, have valid contract
Offer + Acceptance = Agreement
Consideration
⤷ Except if contract is by seal or deed (formal document by solicitors)
⤷ Exchange of promises that have some economic value (both parties need to give something)
⤷ Types of contracts
○ Bilateral: both parties make promises
○ Unilateral: only 1 party makes a promise
Eg offer of reward (promise reward but no one is promising to carry out the action)
⤷ If bilateral contract, can sue other party even if never provide consideration yet (consideration is
‘executory’ - yet to be performed)
⤷ Promise can be to not do something also
⤷ Promises do not need to be of equal value (no case for inadequate consideration)
⤷ Consideration cannot be past → not valid contract if something is promised in return for a past
action (if nothing was expected previously for that action and then something was offered
afterwards, not valid)
⤷ Consideration must move from the promisee (parties involved in the contract are people who
gave up something)
⤷ Consideration need not move to the promisor (can benefit someone outside the contract, parties
involved in the contract don’t need to benefit from the promises)
⤷ Insufficient consideration (different from inadequate consideration)
○ Performing existing public duty: already obliged to perform that task so not promising
anything extra → cannot form valid contract by promising to do that task
■ Exception if one party does more than expected of them under public duty
○ Performing existing contractual duty to same party: cannot demand more for performing
the same obligation if under previous contract for that obligation
■ Exception if party does more than contractually obliged
○ Performing existing contractual duty to third party is SUFFICIENT consideration
because subjecting themself to additionally liability (more parties can sue)

Intention to create legal relations

⤷ If parties would have wanted to start legal proceedings if something went wrong
⤷ Domestic situations, generally presumed that there is no intention
⤷ Commercial situations, usually presume that there is intention
 ⤷ Exceptions for commercial situations
○ Stated that agreement is ‘binding in honour only’
○ Letter of comfort
○ Letter of intent
○ Letter of awareness
Not all contracts have to be in writing but some contracts must be (eg hire purchases, >7 years,
guarantees)
Variation of contract (FYI)
⤷ Contract must clearly allow for variation and variation will generally be binding (but if variation
clause is very wide or general, unreasonable changes will not be allowed)
⤷ If variation not clearly allowed, like making new contract - both parties must agree (offer and
acceptance), make consideration and have legal intentions relating to change (professor say don’t
need?)
⤷ For consideration, can have
○ Fresh consideration: both parties get something in return
○ Seal or deed
○ Williams vs Roffey exception
■ If A has a contract with B to do something for B in return for payment but B has
reason to doubt whether A can finish the bargain before obligation is completed
■ B promises A extra payment in return for A fulfilling contractual obligations on
time
■ B gets a benefit/avoids disbenefit from that
■ No fraud involved
○ Promissory estoppel
■ Contracting party made an unambiguous/unequivocal promise or representation
(eg to change a term/not insist on legal rights), other party has relied on that
promise and court thinks it is very unfair for the party making the promise to go
back on his promise → party can be stopped from going back on promise, court
can uphold changes even with no fresh consideration
■ Can be used as defence but not as a cause to sue in general in SG
Parties in contract (FYI)
⤷ Generally parties involved in offering, acceptance and consideration but have some exceptions
⤷ Contracts (Rights of Third Parties) Act (if third party expressly named)
⤷ Assignment (transfer rights) and novation (transfer liabilities)
⤷ Agency (agent acts on behalf of parties)
Contract Terms
Statements
⤷ Made in the course of negotiations
⤷ Puffs: not taken seriously, not intended to be binding (eg product is the best)
⤷ Representation: not contract terms but induce formation of the contract (if statement is false, can
fall under misrepresentation)
⤷ Terms of the contract: statements made intended to be contract terms

Express Terms
⤷ Can be oral or written
⤷ To be valid, must be introduced or referred to before/at the time contract is made (point of
agreement) unless lawful variation or can be implied
⤷ Express terms are unlimited unless invalid due to statute law or against public policy
○ Does not matter whether terms are fair or reasonable as long as all parties have agreed
(exceptional cases eg liquidated damages clauses)
⤷ Interpretation
○ If a term is ambiguous, term will be interpreted narrowly
○ Interpret according to the context it appears in
○ Eg Tiger Airways v Swissport Singapore (2008)
⤷ Parol evidence rule
○ If express terms are in writing, parties cannot raise evidence to show that they orally
agreed to something else
○ Eg Hawrish v Bank of Montreal (1969), Zurich Insurance v B-Gold Interior
○ Exception: if one party had misrepresented what the written terms expressly stated (said
the term was something when the term was different)
■ Eg Exklusiv Auto Services v Chan Yong Chua Eric
○ Other exceptions: fraud, mistake
Implied terms
⤷ Implied by custom, statute or courts
⤷ Custom
○ Context of particular trade/industry with long-standing, well-established and reasonable
custom
○ But difficult to prove long-standing and well-established customs
⤷ Statute
○ Eg. Sale of Goods Act (later on)
⤷ Courts
○ 2 categories: terms implied by fact + terms implied by law (fact considered first)
○ Terms implied by fact: implied to fill in gaps, based on presumed intention of parties
■ Officious bystander test (eg Shirlaw v Southern Foundaries): something so
obvious that it does not need to written (if bystander suggested the parties put in
down in writing, they would be like ‘duh’)
■ Business efficacy test: term implied must be objectively necessary to give
contract business efficacy (business can operate)
 ■ Both tests have to be satisfied to imply terms by fact, but test are
complimentary/related (basically term must be obvious and necessary for
business efficacy) (eg. country club member cannot steal from club)
○ Terms implied by law: once a term has been implied, sets precedent for all future cases of
the same type
■ Since sets precedent, courts should be more careful to imply terms on this basis
○ BUT courts will not imply terms that are contrary to express terms of contract (express
terms hold priority)

Classification of terms
⤷ Terms can be classified as conditions, warranties or innominate terms
- Condition: vital term going to root of contract → can terminate contract and claim damages
- Warranty: not vital, subsidiary to main purpose → cannot terminate contract, only claim
damages
*To classify as condition or warranty, depends on intention of parties and past cases
*Severity of consequences do not matter for conditions and warranties (ie can terminate contract
if have breach of condition even if consequence was not severe)
- Innominate terms: cannot clearly classify as conditions or warranties, importance depends on
severity of consequences → whether can terminate contract or not depends on consequences
⤷ For terms that are very important, should clearly state in contract that it is a condition

Exclusion or limitation clauses / exemption clause

⤷ Exclude total liability or limit liability of party in breach
⤷ Have rules pertaining to such clauses to prevent abuse (check whether clause is valid)
○ Is the clause part of the contract? (Incorporation)
■ Clause needs to be introduced or referred to before or at point contract is formed
(clause must be made known to both parties before agreement)
Eg Olley v Marlborough Court, Thornton v Shoe Lane Parking
■ Also valid if have consistent course of previous dealings between the 2 parties in
which the clause has been used
Eg Spurling v Bradshaw
○ Is there reasonable notice of the clause?
■ Visibility: must be reasonably visible (eg size of print); if clause is unusual, must
take more steps to bring it to other party’s attention; if have written contract with
signature, visibility does not matter (bound by all the terms in contract)
■ Place where clause is found: clause must be contained in document where parties
can reasonably expect to find contract terms
■ Indirect reference (find the clause in a separate place/document): as long as have
reasonable notice; case-by-case basis
■ Language: does not matter if other party cannot read the clause (illiterate or does
not know the language)
○ Does clause cover the breach? (Interpretation)
■ Must clearly cover the breach (state the type of breaches/conditions clearly)
■ Make sure clause covers all potential risks and liability
 ○ Is clause valid under Unfair Contract Terms Act?
■ Person cannot exclude or restrict liability for negligence in relation to personal
injury or death (Section 2)
■ Person cannot exclude/restrict liability for negligence in relation to other losses
unless clause is reasonable (Section 2)
■ For consumer contracts (one of the parties not a business), exemption clause must
be reasonable to be valid (reasonableness judged at the time contract was made,
NOT at the time breach occurred) (Section 3)
■ Person alleging clause is reasonable has to burden to prove it
■ Reasonableness depends on a few factors, some of which are
- Bargaining strength of parties
● Reasonable if have equal bargaining strengths (eg both businesses)
- Whether customer received inducement to agree to term
● Did customer have option to increase liability of seller? (eg by paying
more)
- whether customer knows/ought to know about exemption clause (common
clause, previous course of dealings, etc)
- compliance with some condition
● Business only liable if satisfy some condition, check if condition is
reasonably practical
- Insurance
● More reasonable for party with exemption clause to take out insurance
than other party? → clause will not be reasonable
■ Does not apply to contracts of insurance, relating to creation/transfer on interest
in land, creation/transfer of right/interest in patents, trade marks or other IP,
creation/transfer of securities
■ Section 3 does not apply to international supply contracts
⤷ Third party (not involved in contract) can also make use of exemption clause if certain conditions
are satisfied (eg supplier, manufacturer)

Sale of Goods Act (SOGA)

⤷ Goods: does not involve land, shares, services
⤷ Sale: must exchange good for money (exclude renting)
Implied terms under SOGA
⤷ (12) Condition that seller has the right to sell when property/ownership is to pass to the buyer (ie.
after sale, buyer is rightful owner of good) (condition as to title)
⤷ (12) Warranty that goods will be free from any charges or encumbrances not made known to
buyer (freedom from encumbrances) → free from claim by lawful parties
⤷ (12) Warranty that buyer must enjoy quiet possession of goods → buyer can do whatever he
wants with the goods w/o any lawful interference from third party/unlawful interference by seller
⤷ (13) Condition that goods will correspond with description
○ Does not cease to be a sale by description just because goods are exposed for sale and
selected by buyer (buyer saw the actual good before buying)
○ Must show that buyer relied on description (and not own judgement)
 ⤷ (14) Condition that goods must be of satisfactory quality → reasonably satisfactory considering
price, description, etc
○ Must be business seller (not applicable for private sellers)
○ Factors to check if satisfactory: fit for all common purposes, appearance and finish, free
from minor defects, safety, durability, packaging
○ Exemption: defects drawn to buyer’s attention before contract; buyer examined goods
before contract and examination ought to have revealed defects
⤷ (14) Condition that goods must be fit for purpose that buyer expressly made known/implied to
seller (ie buyer told seller they wanted the good for this purpose, good must fit that purpose)
○ Must be business seller
○ Exemption: buyer did not make purpose known to seller; unreasonable to rely on seller
(seller not qualified to satisfy purpose)
⤷ (15) Condition that in contract of sale by sample, bulk goods will correspond with sample
Loss of right to reject (repudiate contract)
⤷ Buyer accepted goods
○ Keeps goods for more than a reasonable period of time w/o rejecting goods
○ Dealt with goods as if owner (eg consumed goods)
○ NOT deemed to accept goods just because sold to sub-buyer/asked seller to repair goods
⤷ In non-consumer sales (b-to-b), breach of condition in section 13-15 is so slight that it is
unreasonable to reject goods
Exemption clause under SOGA
⤷ Cannot exclude liability for breach of section 12
⤷ Cannot exclude liability for breach of section 13-15 in consumer sales
Liability of manufacturer and others
⤷ If have breach of SOGA, retailer (seller) can sue manufacturer
⤷ In some cases, consumer can directly deal with manufacturer
○ when there is guarantee or warranty;
○ when consumer suffered certain types of losses due to negligence of manufacturer;
○ When there is collateral or indirect contract between them
Vitiating factors
Restraint of trade clauses
⤷ One party seeks to restrict the other party to the contract in terms of what the other party can do
later on with his business/profession eg.
○ Contract of employment: prevent employee from working for competitor or setting up
their own business after leaving current employment
○ Contract of sale of business: purchaser seeks to prevent vendor from setting up similar
business in competition to the one sold
○ Contract of sale: force purchaser to sell only vendor’s products and not those of
competitors
○ Contract of services: force the service provider to service contracting party only and not
competitors
⤷ All restraint clauses are void/unenforceable unless reasonable - between parties and with regard to
public interest (employer bears burden of proving the clause is reasonable)
Reasonability of restraint clauses
⤷ Reasonable between parties (contract of employment)
○ Clause protects employers’ legitimate interest (eg protect trade secrets)
■ Lansing Linde v Kerr
○ Scope, area and duration of restraint must be reasonable (what is reasonable depends on
facts of the case; case-by-case basis) - the wider it is, the less likely to be reasonable
■ Commercial Plastics v Vincent - restraint was too wide because no geographical
limitation and extended to all businesses in calendering field even though his
employment was only in relation to calendering for adhesive tapes
■ Buckman Laboratories v Lee Wei Hoong - scope was too wide because covered
all industries employer was operating in though Lee only worked in 1 industry
(pulp & paper) + covered too many countries
■ Smile Inc v Lui Andrew Stewart - unreasonable because had no time limit
⤷ Reasonable between parties (contract of sale of business)
○ Clause protects buyers’ legitimate interest (eg legitimate to expect seller would not set up
a business in competition to the one sold)
○ Scope, area and duration or restraint must be reasonable
■ British Reinforced Concrete Engineering v Schelff - business sold was related to
loop road reinforcements but restraint clause prevented business relating to road
reinforcements (too wide)
■ CLAAS Medical Centre v Ng Boon Ching - 3 year restraint was reasonable based
on the facts
⤷ Not against public interest
○ Must not prevent employee from using personal skills and experience even though this
results in competition with employer - is clause to protect employer or prevent
competition? (if prevent too much competition, may be against public interest)
■ Thomas Cowan v Orme - defendant not allowed to set up similar business (pest
extermination) after leaving employment but against public interest because at
the time, plaintiffs were the only fumigators in SG (had a monopoly)
 ○ Under the Competition Act, anti-competitive agreements or concerted practices which
prevent, restrict or distort competition in SG or, the abuse of dominant position in the
market by undertakings, are prohibited (eg price fixing, acquisitions)
■ Competition Act only governs agreements between undertakings and employees
are not considered as being an undertaking
Effect of invalid restraints
⤷ If restraint is invalid, generally cannot be enforced
⤷ But if restraint is unreasonably wide, the court may be able to delete the unreasonable parts to
make the restraint reasonable and enforceable
○ Cannot add or alter words of the clause (can only take out words) - limit the power of the
courts because if not, party wanting to enforce restraint has little incentive to draft
something reasonable (because can alter if sued) and other party would not know whether
it is valid or not (short of litigation)
⤷ Rest of contract still valid if restraint can be severed from rest of contract - not related to major
part of contract (often the case for contracts of employment)
○ Can expressly state in contract that if 1 part is unenforceable, it will not affect validity of
rest of contract

Misrepresentation
⤷ Untrue/false statement of existing fact or past event (not opinion or puff)
○ Exception: can be proved that the maker of the opinion did not actually believe in the
truth of the opinion / can be established that a reasonable man having the maker’s
knowledge could not have honestly held such an opinion
■ Smith v Land and House Property Corpn - vendor knew that tenant was bad at
giving rent but gave buyer the opinion that the tenant is very desirable
○ Exception: statements of future intention generally cannot give rise to misrepresentation
except if it can be established that the maker did not actually believe in the statement
■ Edgington v Fitzmaurice - company stated loan (from public) was to be used for
improving new buildings but actually intended to meet existing liabilities
⤷ Made by 1 contracting party to another
⤷ Made before contract is concluded (made to induce party into contract)
⤷ Statement induces other party to enter into contract
○ Misrepresentation need not be the sole factor that induces contract
○ Exception: can prove that there was no reliance on the false statement (false statement did
not induce the other party into contract, although there was a false statement)
■ Attwood v Small - buyer hired professionals to verify truth of vendor’s
statements who reported statements to be true (turned out to be false)
○ If person relying on information is given an opportunity to verify truth of statement but
does not verify, still can sue for misrepresentation
■ Redgrave v Hurd
Silence
⤷ Omitting facts/keeping quiet does not amount to a misrepresentation → business must make
inquiries and find out all necessary information
 ○ Keates v Lord Cadogan - seller did not disclose that house was in poor condition, court
held that seller did not have an obligation to make the disclosure
⤷ Exception: if a half-truth is offered
○ If what maker stated is true but on considering undisclosed facts on the whole, statement
gives a misleading picture, silence may amount to misrepresentation (only give half the
truth)
■ Dimmock v Hallett - vendor of a land stated that land was tenanted but did not
disclose that tenant had given notice to quit
⤷ Exception: if maker realises statement is not true before contract is made
○ If maker makes a statement during negotiations that they believe is true, but before
contract is made, came to realise that statement is not true, they are duty bound to make
this known to the other party (cannot keep quiet about the statement not being true)
■ With v O’Flanagan - defendant told buyer that medical practice was worth a
certain amount a year (true at that time but situation changed by the time
agreement for sale was actually made - practice became nearly worthless);
defendant knew but did not disclose to buyer → ruled as misrepresentation
⤷ Exception: in contracts of uberrimae fidei
○ Contracts where there is a general duty of good faith on parties (eg contract of insurance)
○ Issue will turn upon whether non-disclosure relates to a material fact, NOT whether loss
was connected to non-disclosure
⤷ Exception: in contracts where there is a fiduciary duty
○ Contracts where one party may owe the other fiduciary duties / placed in a position of
trust
Types of misrepresentation
⤷ Fraudulent: maker knew it was false / was recklessly careless whether statement was true or false
○ Can rescind and claim damages
○ Panatron v Lee Cheow Lee - stated company was profitable even though he knew it was
not
⤷ Negligent: statement made without having reasonable grounds for its belief
○ Can rescind and claim damages (but court can disallow rescission)
○ Lower degree of blameworthiness compared to fraudulent
○ Howard Marine & Dredging v A Ogden & Sons - Ogden chartered 2 barges from
Howard, manager of Howard made statements regarding capacity of barges but checked
with the Lloyd’s register and not the shipping documents
⤷ Innocent: there are reasonable grounds for its belief
○ Can only rescind (but court can disallow rescission and grant damages instead)
Cannot rescind if:
⤷ Affirmed the contract
○ Representee, with full knowledge of facts, decides to stay in contract
■ Straits Colonies v SMRT Alpha
⤷ Lapse of reasonable time / unreasonable delay in rescinding contract
○ Leaf v International Galleries
⤷ Restitutio in integrum impossible - property cannot be returned
 ○ Not possible to return the parties to the original position before the contract (eg good is
consumed or sold)
⤷ Third party rights involved
Exclusion clause for liability
⤷ Misrepresentation Act section 3 - only valid if reasonable
⤷ Can indirectly exclude by having an entire agreement clause (written agreement represents the
entire agreement between the parties and there are no representations that have not been reflected
in the written agreement) - must also be reasonable

Duress
⤷ Physical and economic (threats against economic interest)
⤷ Was there a choice (alternative)? Did innocent party agree under protest? Did innocent party
receive independent legal advice? Is party alleged to have exercised duress exploiting the
situation / acting in bad faith?
⤷ Can rescind contract, unless unreasonable time passed
⤷ If under duress, should raise objections/protest (preferably in writing) and take steps to avoid
contract or changes as soon as possible
Discharging a contract
4 ways - performance, agreement, breach or frustration

Performance
⤷ Both parties fulfil their contractual obligations
(even if contract is completed, can still sue for breach eg. if in sale of goods contract, seller
delivers goods but goods are not of good quality, can still sue for breach)
⤷ If a party has not completely performed obligations (other than for microscopic deviations),
cannot seek any payment from the other party
○ Cutter v Powell; Ocean Projects v Ultatech

⤷ Exception: substantial performance

○ No complete performance but there is substantial performance (most of the work has
been done), performing party may be able to claim the contract price minus cost of
making good omissions/defects in execution
○ Substantial performance depends on the case, compare cost of completing work to
contract price (if small ratio, likely considered substantial)
○ Hoenig v Isaaccs
○ But if obligation is an entire one (ie only 1 deliverable, eg 1 good), substantial
performance may not apply
⤷ Exception: divisible contracts
○ Contracts that are divisible into stages
○ After each stage is completed, performing party entitled to a payment (progress
payments)
○ Eg construction contracts, employment contracts
○ May be better for businesses because have better protection
⤷ Exception: prevented performance
○ One party began performing obligations but prevented by other party from continuing,
performing party entitled to payment on a quantum meruit basis (payment based on value
of services rendered)
○ Planche v Colburn
⤷ Exception: acceptance of partial performance
○ One party never completely perform obligations but the other party accepts the
incomplete performance, can claim on a quantum meruit basis
○ No acceptance if other party has no choice but to accept incomplete performance
■ Sumpter v Hedges
⤷ Exception: apportionment act
○ Rents, annuities, dividends and other periodical payments (eg salary) can be claimed even
if the full period is not fulfilled (eg if only able to work for 20 days, can claim 20 days
salary even though salary given on a monthly basis)
Agreement
⤷ Earlier termination agreed in original contract (contract includes termination clauses)
○ Original contract expressly provide that contract will automatically come to an end after
something happens / one or either party can terminate contract any time by giving a
certain amount of notice without having to give any reason (eg employee or employer can
give 1 month’s notice to terminate employment contract)
○ Can also be implied (eg in contracts of employment, but need to give reasonable notice)
⤷ Subsequent agreement to terminate earlier
○ Both parties mutually agree to terminate contract earlier even if have no termination
clause
○ Same as making a new agreement - need to have all elements of contract (offer,
agreement, consideration, legal intention)
○ Need to have consideration
■ If both parties have outstanding obligations, consideration is for each party to be
released from their obligation
■ If only one party completely performed, need to have something else as
consideration (if not agreement to terminate may be invalid)
○ Better to include termination clause to avoid problems
○ **Different from recission (for vitiating factors) in that terminating contract does not
affect anything before date of termination (everything prior is valid) but for rescission,
everything from the point of contract is invalid and the remedy is to undo all that was
done before date of recission (also applies for discharging by breach)

Breach (repudiation)
⤷ Contract must state that it can be terminated for that particular breach (regardless of whether
breach leads to losses)
○ Fu Yuan v Methodist Welfare Services
⤷ Can terminate if party in breach renounces contract by clearly conveying that he will not perform
contractual obligations at all (can be actual - date of performance due or anticipatory - date of
performance yet to be due)
○ For anticipatory breach, innocent party may institute action immediately (don’t need to
wait for commencement date of contract)
■ Hochester v De La Tour
⤷ Breaches condition (condition/warranty approach)
⤷ Innominate term approach - consequences of breach are very serious (also applies if warranty was
breached)
○ Aero-Gate v Engen Marine Engineering
⤷ For 3rd and 4th factor, innocent party may not be sure if term breached is condition or warranty,
or whether consequences are serious enough - should expressly state in contract which terms are
conditions
⤷ Even with a breach, innocent party can choose not to terminate contract but must accept all the
ensuing consequences
⤷ Even if contract is terminated, some contract terms may still be applicable (eg choice of law,
dispute resolution, payment of liquidated damages)
Frustration
⤷ Happening of unexpected event beyond the control of the parties, after making of the contract, but
before the completion of the contract, which makes further performance of the contract either
illegal, impossible or radically different from what was originally expected (also strikes at
purpose of contract)
⤷ Parties will be released from their obligations
⤷ Illegality
○ If there are changes in law making the performance of the contract illegal
○ Fibrosa Spolka Ackcyjna v Fairbairn; Denny, Mott & Dickinson v James B. Fraser
⤷ Impossibility
○ Destruction of subject matter (eg property burning down)
■ Taylor v Caldwell
○ In personal service, there is death or illness of performing party (unable to perform)
■ Condor v The Barron Knights
○ If contract states that it must be fulfilled in a particular manner and that becomes
impossible (no alternative available because contract only specified one method)
■ Nicholl & Knight v Ashton Edridge
● Contract provided that goods were to be shipped in a particular ship in
January but that ship went aground
○ If both parties wanted goods to be obtained from a particular source and source fails
without the fault of either party
○ So, business has to be very clear and specific about defining obligations (eg so contract
can be terminated by frustration instead of business having to fulfil obligations but
through a higher cost method)
⤷ Radically different
○ Purpose of contract is no longer attainable (both parties must have that purpose)
■ Krell v Henry
● Defendant hired a flat to view coronation of Edward VII but coronation
was cancelled - court found coronation to be very basis of the contract
⤷ Not valid for labour shortages or price increases (not considered frustration)
⤷ Foreseeability
○ Doctrine of frustration cannot apply if parties foresaw / could have reasonably foreseen
that a particular event would occur and nonetheless decided to go ahead with the contract
■ Glahe International Expo v ACS Computer
○ Because parties know the risk and still decided to undertake obligations
⤷ Self-induced frustration
○ Doctrine of frustration not valid if event was due to the conduct of one of the parties
 ■ Maritime National Fish v Ocean Trawlers; J Lauritzen AS v Wijsmuller BV

⤷ Force majeure
○ Clause that relieves parties of liability should some unexpected event occur, alternative to
doctrine of frustration (frustration will not apply if have force majeure clause)
○ By having this clause, can widen or narrow down what amounts to frustration in law
(terminate on their own terms)
■ Eg. clause can state price increases or labour shortages will cause contract to
terminate, which would not be valid under frustration
○ Possible for parties to suspend contract for a stated period of time instead of immediately
discharging contract if an unexpected event occurs - can bring more certainty to business
affairs (have a specified suspension period)
○ Presumption that clause is to be restricted to events that arise without the fault of either
party (cannot be self-induced) - different from exemption clause
⤷ Statutory effects
○ Contract is terminated
○ Under Frustrated Contracts Act, any sum paid before frustrating event can be recovered
(minus expenses incurred / value gained from performance before discharge) and any
sum payable need not be paid
○ For contracts not covered under the act (eg contracts of insurance, contracts for carriage
of goods by sea), general rule that any money paid cannot be recovered and money
payable remains payable, unless there is a total failure of consideration

Remedies for breach of contract

⤷ Damages (most common)
⤷ Specific performances
⤷ Injunctions
⤷ Specific performance and injunctions are discretionary remedies - up to the court to decide
whether to award

Damages
⤷ To compensate for losses
Unliquidated damages (have to go to court)
⤷ Loss must be proved
○ If cannot prove loss / no losses suffered due to breach, can only get nominal damages
(nominal sum given, usually quite little)
■ Exception: can sue for losses faced by third party due to breach
⤷ Aim: to put plaintiff in the position he would be if the contract had been properly performed
○ So, generally only losses suffered by plaintiff can be claimed, not profits made by
defendant by breaching contract
■ Teacher v Calder
■ Exception: parties are in a fiduciary relationship
⤷ Types of losses recoverable
○ Expectation loss: what the plaintiff would have expected to get if contract had been
properly performed (eg loss of profits)
■ For speculative losses, must prove that plaintiff had a real and substantial chance
of obtaining it
○ Reliance loss: wasted expenditure incurred by plaintiff prior to the breach
■ Anglia Television v Reed
Can claim both expectation and reliance loss if it does not result in overcompensation or
double compensation (loss of net profits)
○ Incidental/consequential loss: loss suffered as a consequence of breach (eg seller having
to pay damages to buyer due to manufacturer supplying defective goods)
○ Damages for injured feelings (non-financial losses)
■ Generally cannot claim compensation for injury to feelings because difficult to
quantify
■ Exception: if purpose of contract were to provide pleasure, relaxation or peace of
mind (eg vacation package) - does not need to be sole purpose, enough if major
or important aspect of contract
■ Exception: loss of amenities
○ Generally cannot claim punitive damages (damages intended to punish defendant for his
conduct) because difficult to quantify
⤷ Limitations on right to claim damages
○ Remoteness - if damages are too remote (loss is too indirect from breach), cannot be
claimed (have limit on defendant’s liability) / loss is a foreseeable result of breach
■ Damages would not be too remote if they arose naturally (incurred in usual
course of things, would have normally incurred)
■ Exceptional loss (losses that normally would not have been incurred) can be
claimed if it was within the contemplation of both parties at the time of contract
(special facts/circumstances known to both parties before contract formed)
⇒ need to highlight potential losses at the beginning
○ Mitigation - party claiming damages must have taken reasonable steps to minimise his
loss (burden of proof that no reasonable steps taken is on party in breach)
○ Causation - prove that loss is due to breach
Liquidated damages
⤷ Liquidated damages clause in contract - if a certain breach were to occur, have to pay a certain
amount of damages (don’t have to go to court)
⤷ Common especially for delay in performance (eg for every day of delay, have to pay a certain
amount / for every day late in paying loan, have to pay a certain amount)
⤷ Rule that sum stated in contract must be a genuine pre-estimate of the loss, NOT penalty (purpose
is to threaten other party to perform)
○ Sum should not be in excess of greatest anticipated loss (extravagant)
○ Sum should vary depending on extent of breach
⤷ If have clause, can only claim what is stated in the clause and not the actual loss (even if actual
loss is larger) ⇒ liquidated damages clause may not be the best option, and if have clause, must
carefully consider what the amount is

Specific performance
⤷ An order of the court requiring the party in breach to perform the contractual obligations
⤷ Consider: if damages are adequate
○ Only grant specific performance if damages are not an adequate remedy
○ Eg. sale of rare goods / antiques → cannot get a similar good; sale of land/houses → no 2
pieces of land/houses are the same, cannot get similar land/house
⤷ Consider: mutuality
○ Remedy of specific performance must be available to both parties
⤷ Consider: supervision
○ Order not granted if the continuous or proper performance of contract would require
constant supervision by the courts (ie performance carried out over a long period)
⤷ Consider: contracts of personal service (eg getting a portrait painted)
○ Order generally not granted in contracts of personal service

Injunctions
⤷ More common than specific performance
⤷ Court order to restrain/prohibit party from breaching the contract (instead of forcing party to do
something, force party not to do something)
⤷ Eg. valid restraint of trade clauses, injunction granted to prevent employee from working for
competitor / seller from setting up business

Cannot get remedies if

⤷ There is great delay (general rule that claim has to be made within 6 years of breach)
⤷ There is unreasonable delay in seeking specific performance and injunctions
Summary
Business structures
Types of business organisations
Unincorporated (not separate legal entity)
Also called firms (not for inc)
⤷ Sole trader/sole proprietorships
⤷ Partnerships / general partnerships
⤷ Limited partnerships (LP)
Incorporated (separate legal entity)
⤷ Companies/corporations
⤷ Limited liability partnerships (LLP)
Other
⤷ Joint Venture (JV)

Registration
⤷ Person and person’s business name must be registered under the Business Names Registration Act
(section 5)
⤷ Exceptions: company, LLP and LP (register under other statutes)
⤷ Exception: For sole proprietor and partnership, if owner/partners carries on a business with their
own individual name (as it appears on their IC or passport), no need for registration (for
partnerships, must have all their individual names)
Effect of non-registration
⤷ Would amount to an offence
⤷ Rights under or arising out of any contract cannot be enforced by person, unless court otherwise
orders (but other party to contract can enforce)

Sole proprietorship
⤷ Carried out by 1 person (no partners or company structure)
⤷ Owner can be 1 person or 1 company
⤷ NOT a separate legal entity (business and owner is the same legal entity)
○ Owner is liable for whatever debts incurred by the business → if business has insufficient
assets to pay for debts, owner’s personal assets may be seized to satisfy debts
○ Rights of business belong to the sole proprietor → owner takes all profits from business
⤷ Dissolution
○ Can be dissolved voluntarily or involuntarily
○ Voluntarily → owner gives notice to Accounting and Corporate Regulatory Authority
(ACRA) that they are ceasing operations (easy to dissolve)
○ Involuntarily → if owner dies or becomes bankrupt (if becomes bankrupt, all assets
including business assets will be sold and proceeds distributed to creditors; if dies, assets
will pass in accordance to the will)
 ⤷ Advantages
○ Easy and cheap to set up, run and dissolve
○ Owner gets full management control
○ No need to disclose profits to the public
⤷ Disadvantages
○ Total liability (not protected from business debts) → risk is quite high

General partnership
⤷ Partnership Act governs partnerships
⤷ Partnership defined as a relation that subsists between persons carrying on business in common
with a view of profit
○ Persons includes companies and people and LLP; business includes every trade,
occupation and profession
○ Important to determine whether there is a partnership (different rights and obligations
would apply depending on whether there is a partnership)
■ Not automatically a partnership if 2 people jointly own a property
■ Not partnership if sharing gross returns
⤷ Don’t need to have written agreement to have a partnership (agreement can be oral)
⤷ 2-20 partners (if more than 20 partners, need to be incorporated)
○ Exception: professionals (eg accountants, lawyers)
⤷ Also known as a firm
Relationship between partners and outsiders
Partner’s liability for the actions of other partners
⤷ Partner of a firm can have actual, implied or apparent authority to enter into contracts
○ Actual: partner has been expressly conferred with by other partners ⇒ decisions
(expressly authorised) made by 1 partner will bind the partnership and all the partners
○ Implied: authority that a partner would usually have (automatically have as a partner of
the business) ⇒ any act done by a partner in the usual way of business will bind the
partnership and the other partners, partnership and all partners (even if not playing an
active role in management of the firm) can be made accountable for a debt incurred by a
partner acting in the usual way of business
■ Usual way of business → sell and buy goods related to firm, employ employees
or agents, receive money owed to the firm
○ Apparent: firm represents to another person that the partner in question has the authority
to do certain acts and that other person relies on that representation ⇒ still bound by that
partner’s actions even if that partner does not actually have that authority
⇒ actions of 1 partner usually binds the partnership and all other partners as well (contractual
 liability)
⤷ Firm or other partners can also be exposed to tortious liability when a partner commits other types
of wrongs, such as being negligent or misappropriating property
○ Any wrongful act or omission done by the partner in the ordinary course of business of
the firm binds the firm
⤷ Sleeping partners (partners not actively involved in management) will be treated the same as
normal partners with regard to liability
Suing and being sued
⤷ Partnership is NOT a separate legal entity
⤷ Liability of partners in relation to torts is joint and several → once a partner is sued, claimant can
still sue the other partners if claim remains unsatisfied or not fully satisfied
○ Also applies for contract or debt
⤷ If 1 partner is sued and that partner personally pays the creditor of the firm, that partner can claim
a contribution from the other partners
⤷ Rather than suing individual partners, an action can be brought in the name of the firm (easier)
and firm can also sue in its own name (even though not separate legal entity)
⤷ Personal property of individual partners can be seized to satisfy partnership debts (unlimited
liability)
Incoming and outgoing partners
⤷ Partnership agreement can have a provision allowing a partner to retire or leave by giving notice
⤷ Partner who is retiring or leaving will still be liable for debts incurred before departure (can get
consent of other partners and creditors involved to release them from their liabilities)
⤷ Unless contract provides otherwise, new partner may only be appointed if there is unanimous
consent of all partners; new partner not liable for previous debts unless otherwise agreed
⤷ For third parties, when there is a change in partners, third party is generally entitled to assume
that all apparent members of the old firm are still members of the new firm until they have notice
of the change (only a problem if third party knew the old partners)
Relationship between partners
⤷ Governed by agreement between the parties, if no agreement then follow default provisions
⤷ Default statutory provisions
Property
○ Property belonging to the partnership cannot be used for individual needs unconnected to
the business
○ Increase in value of partnership property will benefit all partners
○ All property originally brought into the partnership and all property acquired on account
of the firm or for the purposes of the business is deemed partnership property
○ If 1 partner misappropriates partnership property, the other partners can sue them under
the tort of conversion
○ Should expressly define what is partnership property (eg goodwill, related rights, trade
marks)
Profits and losses
○ Profits and losses shared equally (regardless of how much capital each partner
contributed)
 Indemnity
○ Firm must indemnify every partner in respect of payments made or liabilities incurred by
them in the course of the business
Management
○ Every partner has the right to take part in the management of the firm (regardless of
capital contributed)
○ Ordinary matters may be decided by the majority of partners but consent of all partners
needed to change the nature of the business
Remuneration
○ Every partner is not entitled to any remuneration for their services (because their earnings
will be the profits of the business, and not a regular salary)
Expulsion
○ No majority of members can expel a partner
○ Possible to apply to court to dissolve the partnership to remove unwanted partners
Utmost good faith
○ Between partners, there is a relationship of utmost good faith (fiduciary duty)
○ A partner who, w/o consent of the other partners, competes with the partnership by
carrying on business of the same nature, is accountable for the profits made by him
○ A partner has to account for any benefit derived by him w/o the consent of the other
partners from any transaction concerning the partnership
○ If breached, have to return any profits made or benefits derived
Not separate legal entity
⤷ Unlimited liability for debts
⤷ Partnership cannot buy land in its own name (need to buy it in the name of 1 or more partners)
Dissolution
⤷ Non-judicial
○ Will terminate at the end of (agreed) fixed term / fulfilled particular purpose
○ Any partner giving notice to the other of their intention to dissolve the partnership (can
have a provision disallowing this)
○ Dissolved when a partner dies or becomes bankrupt (unless provision otherwise)
⤷ Judicial
○ If there is a difference of opinion amongst partners, can dissolve partnership with the aid
of the court
○ When a partner is permanently incapable of performing their part of the contract
○ When 1 partner is guilty of conduct which is prejudicial to the carrying on of the
partnership business (does sth that harms the business)
○ When 1 partner wilfully or persistently commits a breach of the agreement
○ When it is established that the business can only be carried on at a loss
○ When it is just and reasonable to do so in the circumstances
⤷ Distribution of assets on dissolution
○ Surplus (after paying off creditors) will be distributed to the partners
○ Pay off debts and liabilities → partner who made a loan to partnership → partner who
made a capital contribution to the partnership → surplus distributed in the same way as
profits
Evaluation
⤷ Wise to have written agreement (especially if don’t want to follow Partnership Act)

Company
⤷ Companies Act applied
Separate legal entity
⤷ Company is separate from owners
Property
⤷ Company can own property in its own name
⤷ Property of the company belongs to the company and not the members → if a member/director
takes company property illegally, could amount to offence of theft
⤷ Personal debt of members cannot be paid by company’s assets
**Liability for company debts
⤷ Company debts belong to the company and NOT to the member ⇒ members’ personal assets
cannot be seized to settle the debts of the company
⤷ Thus, far less risk than sole proprietorship or partnership
⤷ Exceptions (to prevent abuse)
○ When a company is being wound up or sued and it appears that the business of the
company is carried on with the intention of fraud, knowing parties will be personally
liable for the debts and liabilities of the company
○ When a company is being wound up or sued and debts and liabilities have been incurred
without reasonably expecting them to be paid back in full, knowing parties will be
personally liable
Suing and being sued
⤷ Cannot commence an action against the members of the company, can only institute action
against the company
⤷ Sue in the name of the company, not the members
⤷ Exceptions (to prevent abuse)
○ If the majority committed fraud on the company and use their power to prevent the
company from suing them, minority can sue them on behalf of the company
 ○ Court can allow a member to commence an action on behalf of the company if in the
company’s interest
Perpetual succession
⤷ Company has perpetual succession until it is liquidated ⇒ even if members/directors die or
become bankrupt, company continues
Types of companies
⤷ Company limited by shares (limited ‘Ltd’)
○ Liability of members limited to the value of their shares (only stand to lose the amount
they invested in the company in the form of shares if shares are fully paid for)
○ If shares not fully paid for, member can be called upon to do so if company has gone into
liquidation
⤷ Company limited by guarantee
○ Liability of members limited to the amount guaranteed (usually very small)
○ Tend to be charitable or non-profit organisations
○ All companies limited by guarantee are public
⤷ Unlimited
○ Liability of members is unlimited
○ Not common in practice, not set up by choice
○ In certain professions such as engineering and architecture, if the paid up capital is below
a certain amount, such companies have to be “unlimited”
Private vs public companies (limited by shares/guarantee)
⤷ Private (Pte Ltd)
○ Right to transfer shares limited (eg. shares must be offered to existing members before
outsiders) - companies’ constitution restricts the right to transfer shares
○ Number of members cannot be more than 50
⤷ Public (Ltd)
○ Does not fulfil either or both of the conditions for private companies
⤷ Public companies don’t have to be listed in the stock exchange but listing is useful to make shares
easily marketable and more attractive to investors
○ To get listed, have stringent conditions
⤷ Public companies generally subject to more regulation
⤷ Good idea to set up a private company first then convert to public company later on, then list
shares
⤷ Private companies can be exempt or non-exempt & small or non-small
○ Exempt: less than 20 members and all the issued share capital are held by natural persons
(ie not other companies)
■ Have several privileges (some sections don’t apply to exempt companies)
○ Small: private company that meets 2 out of 3 criteria, which are revenue =< $10 million,
value of total assets =<$10 million and number of employees =< 50
Branches vs subsidiaries (for foreign companies setting up company in SG)
⤷ Branch is not separate legal entity from overseas parent but subsidiary is
Evaluation
⤷ More expensive and complicated to set up and dissolve, more formalities
⤷ Limited liability, higher borrowing power, more avenues to get money

Limited liability partnership (LLP)

⤷ Combines features of partnership and company
⤷ LLP Act applies (partnership law and Partnership Act do not apply)
Similarities with a partnership
⤷ Every partner is considered to be the agent of the LLP (can act on behalf of the LLP)
⤷ Relationship between partners same as for partnership (governed by agreement between the
parties, if don’t have agreement then follow default statutory provisions)
⤷ Default provisions under LLP Act same as for Partnership Act
Similarities with a company
⤷ LLP is a separate legal entity from partners ⇒ limited liability of partners
⤷ Has perpetual succession
⤷ Can sue and be sued in its own name
⤷ Subject to some reporting requirements, such as annual declaration of solvency, but not as
extensive as for company
Registration
⤷ Must have LLP as part of its name (in full or acronym)
⤷ Have at least 2 partners
⤷ Have at least 1 manager who is a natural person (not a company), at least 18 years old, has full
legal capacity and either Singaporean or PR (no need to be a partner but can be)
⤷ Cannot be manager if
○ Undischarged bankrupt without permission of the court
 ○ Manager of another insolvent LLP
○ Convicted of fraud or dishonesty punishable with imprisonment of 3 months or more
⤷ Taxed like a partnership
Evaluation
⤷ Flexibility of partnership with limited liability
⤷ Costs, formality and complexity between that of partnership and company
⤷ Not as able to raise finance as a company

Limited partnership (LP)

⤷ Limited Partnership Act applied
Registration
⤷ Must have 1 or more general partners and 1 or more limited partners
○ General partners: liable for all debts and obligations of LP
○ Limited partner: not liable beyond amount of their agreed contribution, cannot take part
in the management of the LP and does not have the power to bind the LP (if take part in
management, will lose limited liability, liable for all debts LP incurred while they take
part in the management)
■ Certain matters (safe harbour activities) that limited partner can do: voting for
dissolution; advising on business affairs; reviewing, advising or approving affairs
or accounts; enforcing limited partners rights under the Partnership agreement;
calling or attending meetings; voting on proposed transaction
⤷ Need to include LP (in full or acronym) in name
Comparison with a partnership
⤷ Generally similar to partnership other than the presence of limited partners
⤷ Not separate legal entity
⤷ Partnership Act will apply (unless contradicts LP Act)
⤷ Same dissolution as partnerships
Evaluation
⤷ Ideal for investors who do not want high risk and don’t mind lack of management control
⤷ Venture capital firms

Joint Ventures
⤷ 2 parties come together for a particular venture or purpose
⤷ Parties can set up a company, LLP, LP or partnership to carry out activities of the venture
⤷ Also possible for parties to enter into a purely contractual relationship (most common)
⤷ Whether only contract or have partnership depends on whether met definition of partnership
⤷ Governed by different acts depending on the relationship between the parties
https://www.guidemesingapore.com/business-guides/incorporation/other-business-entity-types/llc-commo
nly-known-as-private-limited-company-vs-llp-vs-sole-proprietorship
Business organisations and management
Members
⤷ Must have a register of members (sections 190(1)/196A)
⤷ First members, known as subscribers, must be named in the company’s constitution
⤷ Subsequent persons whose names appear in the registers become members
⤷ Member does not necessarily refer to a shareholder
○ Eg. for company limited by guarantee, have no shareholders but can have members
○ For company limited by shares, member refers to shareholders whose names appear on
the register
⤷ Law confers rights and imposes liabilities only on the member and not the shareholder
Number of members
⤷ Each company must have at least 1 member (section 20A)
⤷ No maximum number of members (but if more than 50 members, cannot be private company)
Members and management (directors)
⤷ Members cannot tell directors what to do / no right to manage the company (section 157A of
Companies Act, directors have the power to manage the company) → general meeting of
shareholders cannot interfere with exercise of directors’ powers
○ Automatic Self-Cleansing Filter v Cunningham
⤷ But may embark on certain courses of action if members are unhappy over management decisions
○ Members generally have the ability to remove directors by ordinary resolution (need to
get the requisite number of votes)
○ Members theoretically have the option of altering the constitution of the company, if they
get enough votes, to confer particular powers on themselves (but rarely done in practice)
○ Member can sell their stake in the company
⤷ Companies Act does and the constitution of the company may provide that members must
approve certain decisions (typically relate to situations where members’ interests could be
adversely affected)
○ Under Companies Act, approval of members is necessary when company wants to issue
shares (section 161), dispose of the whole or a substantial part of its undertakings or
property (section 160), or if the constitution of the company is to be amended (section 26)
Members’ rights (by the Companies Act)
⤷ Right to enforce the constitution of the company (section 39)
○ Company’s constitution represents a contract between the members and the company and
between the members themselves ⇒ members can enforce the terms of the constitution
against the company and vice versa, and also against other members
○ Company’s constitution would usually provide that when the company is dissolved, any
assets remaining after meeting all liabilities would be distributed to the members
○ Constitution usually would not provide that dividends must be declared, even if there are
available profits → member usually have no right to demand dividends (only get
dividends if they are declared)
⤷ Right to amend the constitution of the company
○ Constitutions can be amended by a special resolution (section 26)
○ Special resolution → resolution has to be passed with at least 75% majority (subject t o
section 26A - allows companies to declare certain provisions in the company’s
constitutions to be ‘entrenched’, which means they cannot be altered at all or may be
altered only if some further conditions are satisfied)
⤷ Right to attend meetings and vote
○ 2 types of meetings: annual general meeting (AGM) and extraordinary general meeting
(EGM)
○ AGM must be held once every calendar year (section 175(1)) - failing to hold an AGM is
an offence under section 175(4)
■ Section 175A allows private companies to dispense with the need to have AGM
in certain circumstances (eg where all the members agree to dispense or if the
requisite financial statements have been sent to the members)
○ At the AGM
■ Members have the opportunity to query the directors on the performance of the
company and other issues
■ Financial statements and balance sheet must be laid before the members
■ Appointment of auditors must be done at the AGM (section 205(2)), same for
directors (section 149B)
■ Constitution typically provide that appointment and remuneration of directors
determine, and members must approve declared dividends at the AGM
○ At EGM
■ Resolution may also be passed
■ Constitution would usually provide that the directors can convene such meetings
■ Provisions in the Companies Act (sections 176 and 177) and could be provisions
in the constitution allowing members in certain circumstances to call for EGMs
■ For private or unlisted public companies, can pass a resolution by written means
instead of holding EGMs
○ When meeting is called, notice of it has to be given to the members
■ Amount of notice generally vary with the type of resolution sought to be passed:
special resolution need at least 21-day notice for public company and 14 days for
private companies; ordinary resolution need at least 14 days
■ But have provisions allowing for a shorter notice in certain circumstances
 ■ Notice can be sent electronically
■ Has to set out the text of the resolution → members can decide whether to attend
● Hup Seng v Chin Yin/Lim Kok Wah v Lim Boh Yong
○ Members can choose whether or not to attend
○ Can send a proxy to vote on their behalf (fill up a proxy form)
○ Requires a quorum or minimum number of members to be present for a meeting to
proceed (number provided in the constitution, failing which minimum is 2)
○ Requisite amount of votes to pass a resolution
■ Special resolution: 75% majority
■ Ordinary resolution: 50%
○ For a company with share capital, voting can be poll in which number of shares would be
important (directors are usually the majority shareholder)
○ In determining whether there is a sufficient majority, only the number of votes received is
relevant (position of those not voting is not taken into account)
⤷ Right to information
○ Member can inspect various registers held by the company
○ Company’s financial statements have to be sent to members prior to AGM
○ Members have a right to inspect the minutes of general meetings
○ To allow members to assess whether the company is being run in a proper fashion
⤷ Right to be treated fairly
○ Section 216 of the Companies Act, gives members a right to apply to court if the affairs
of the company are being run oppressively or in disregard of the members’ interest
■ Action by minority shareholders for oppression, disregard, unfair discrimination
or prejudice
○ Particularly useful to minority shareholders because they cannot pass resolutions
○ Cannot be a mere disagreement, must have some element of unfairness
■ Ng Sing King v PSA/Tan Eck Hong v Maxz Universal
■ Re HR Hammer/Scottish Co-operative v Meyer/Leong Chee Kin v Ideal Design
○ Court has wide discretion as to what it can do (eg. order a buyout, prohibit the act in
question, force the company to be wound up or allow an action to be brought on behalf of
the company)
Liabilities of members
⤷ Member has a liability to pay their shares (if they are shareholders)

Directors
⤷ Every company shall have at least 1 director who ordinarily resides in Singapore (section 145(1))
⤷ No limit to the number of directors (but constitution can have a provision on that)
⤷ Board of directors headed by a chairman if more than 1 director
⤷ A person who is not officially appointed as a director (eg shadow or de facto director) is still
considered a director by law → director is a person whose directions or instructions the officers
of the company are accustomed to act, and alternate/substitute directors\
⤷ Executive vs non-executive directors - executive directors tend to day-to-day operations and work
full-time, non-executive directors do not (provide general advice, business experience)
⤷ No distinction between the different categories of directors
Qualifications
⤷ Director must be a natural person who is at least 18 years of age and has full legal capacity
(section 145(2)) → cannot be a company)
⤷ No requirement of experience or education (but constitution can have provisions on that)
Disqualification
⤷ Once appointed, director can be disqualified on various grounds (more than partnerships of LPs)
○ Because company’s liability is limited, need protection for creditors
⤷ Section 148: Undischarged bankrupt cannot be a director or indirectly manage company
(automatic disqualification)
○ Yap Guat Beng v Public Prosecutor
○ Disqualification can be lifted by court of official assignee
⤷ Section 149: Disqualification order (by court) for ‘unfitness to act’ for up to 5 years (not
automatic)
○ Director was a director of a company that became insolvent while they were a director, or
within 3 years of them ceasing to be one + director’s conduct made them unfit to be one
⤷ Section 154(1): A person convicted of fraud/dishonesty (imprisonment of 3 months or more) or
an offence under Part XII of the Securities and Futures Act, automatic disqualified for 5 years
⤷ Section 154(2): Person committed any offence in Singapore in connection with the formation or
management of the company, may be disqualified for up to 5 years
⤷ Section 155: requires various documents and notices to be filed with the Registry of Companies
→ able to keep track of companies, allow people to get reliable and updated information about
companies to assess the risk involved
○ A person who is persistently in default in meeting the relevant requirement (3 or more
offences) will be automatically disqualified for 5 years
⤷ Company’s constitution: may provide for circumstances in which the director can be disqualified
Appointment and removal
⤷ Company may appoint/remove a director by ordinary resolution unless provided otherwise
⤷ Directors can resign on their own account, except if this leaves the company with no director who
is ordinarily resident in Singapore
Directors and management
⤷ Directors have the power to manage the company (section 157A)
⤷ Board of directors is treated as an agent and is authorised to act on behalf of the company, can
delegate duties to individual directors or employees who then become agents
○ Their actions bind the company (if have actual, implied or apparent authority)
Directors’ duties
⤷ Directors subject to more duties than partners (limited liability)
⤷ Duties come from statutes and case law
⤷ Not possible for the company or constitution to state that the director will be absolved from any
negligence or breach of duty
Duties imposed by case law
⤷ Duty to avoid conflict of interests
○ Director owes fiduciary duties (good faith) to the company → should not place themself
in a position where his company duties and personal interests conflict
■ Furs Ltd v Tomkies → Tomkies sold part of company’s business to a third party
but received a payment for it, causing the third party to pay a lower price
■ Yong Kheng Leong v Panweld Trading → director paid wife a salary
■ Canadian Aero Service v O’Malley
○ But if disclosed to the members and approved by them, director will not be liable
⤷ Duty to act for proper purpose
○ Directors’ powers have to be used for proper purposes
■ Howard Smith v Ampol Petroleum / Punt v Symons & Co
⤷ Duty to act in the best interests of the company
○ Another aspect of fiduciary duties
○ Include interests of members and employees (section 159) and creditors when the
company is in financial distress (Dynasty Line v Sukamoto Sia)
■ Re W & M Roith Ltd / Chew Kong Huat v Ricwil / Walker v Wimborne
○ Director may have to account for profits made, return property obtained or pay damages
○ Any act done in breach of duties may be declared invalid
○ Contract with third party in breach of duties may be set aside, if the third party knows or
ought to have known of that breach
■ Aberdeen Railway v Blaikie Brothers
⤷ Duty to act with due care, skill and diligence
○ If duty is breached and company suffers losses, director may be liable for losses
■ Re Railway & General Light Improvement Co / Jurong ReadyMix v Kaki Bukit
Industrial Park
○ If delegate their duties to someone whom a reasonable person would not have delegated /
proper delegation but director fails to supervise, also liable
■ Re Barrings plc / Vita Health Laboratories v Pang Seng Meng
○ If director does not attend board meetings, generally will not be responsible for the acts
or omissions of co-directors
Duties imposed by the Companies Act (statutory duties)
⤷ Section 156: when a company enters into a transaction, if director has a direct or indirect interest
in the transaction, must declare the nature of their interest at the meeting of directors / written
notice
○ Interest means material interest, includes interest of their family
○ Breach of section 156 results in the commission of an offence
■ Yeo Geok Seng v Public Prosecutor
 ⤷ Section 157: director must act honestly and use reasonable diligence in the discharge of duties
○ Best interests of company, avoid conflicts of interest, use powers for proper purposes
○ Reasonable diligence - due care, skill and diligence
○ 157(2), an officer of a company (includes director) should not make improper use of any
information acquired by virtue of his office to gain an advantage for himself or any other
person or to cause loss to the company
○ If breached, director has to return profits made or be liable for losses suffered and will be
guilty of an offence → can be fined and have to pay damages
⤷ Section 162: company make loans or guarantees to director and their family
○ Also includes another company in which the director has a material interest (20% or more
of the total voting power) (section 163)
○ If breached, will be liable for losses and will be guilty of an offence
○ Exceptions: Reimbursement of expenses, housing loan scheme for employees
⤷ Section 168: any compensation for loss of office of the director has to be approved by members
○ Exceptions: payment made to director as consideration for agreeing to be a director, does
not have to be approved (likelihood of abuse is slim)
⤷ Section 169: any emoluments given to directors (eg fees and allowances) have to be approved by
members
○ Exception: payment received as an employee
Duties by Securities and Futures Act (prohibition of insider trading)
⤷ Liabilities to the state (section 218): prevent connected person from taking unfair advantage of
information that is not generally available (confidential information)
○ Information must be price-sensitive (have material effect)
○ Connected person knows or ought to know that the information is confidential and
price-sensitive
○ Should not
■ purchase or sell / procure another person to purchase or sell any securities/shares
■ Directly or indirectly communicate the information to another person that would
likely purchase or sell the securities
○ Connected person includes officers (directors, secretaries and employees)
○ Eg. sell shares after knowing that the company is facing a financial crisis BEFORE public
knows
○ If an unconnected person got price-sensitive information from a connected person, that
unconnected person also falls under the Securities and Futures Act (also liable)
○ If breached, guilty of an offence and liable to a fine not exceeding $250 000 or
imprisonment not exceeding 7 years or both
■ Public Prosecutor v Koh Soe Khoon
○ Alternatively, can bring a civil claim for person who breached (balance of probabilities is
enough, less stringent than criminal offence - beyond reasonable doubt)
■ Civil penalty shall not exceed 3 times the profits gained/losses avoided, or an
amount equal to $50 000 for individuals and $100 000 for corporations
(whichever is greater)
■ Lew Chee Fai Kevin v MAS
⤷ Civil liability
○ Person who breached section 218 can face civil liability to a person who suffered a loss
due to breach (have maximum recoverable amount and restricted to profits gained/losses
avoided)

⤷ Other prohibitions
○ Prohibits other unfair practices such as false trading or market rigging (section 197) or
market manipulation (section 198)
■ Public Prosecutor v Wang Ziyi Able
Business Torts
Tort
⤷ Category of civil wrongs that give rise to civil remedies (civil wrongs separated into breach of
contract and torts)
⤷ Commission of a tort may also result in criminal liabilities (but not important for this module)

Types of torts (focused on in this module)

⤷ Tort of negligence
⤷ Tort of passing off
⤷ Tort of vicarious liability
⤷ Tort of breach of confidence

Other torts
⤷ Tort of defamation, battery and assault, nuisance, trespass, deceit, conversion (theft), etc

Tort of negligence
⤷ Perhaps the most important tort in the business context
⤷ To be liable under tort of negligence, must prove that
○ Defendant owed the plaintiff a duty of care
○ Defendant breached that duty of care
○ Defendant’s breach caused the plaintiff’s loss, and
○ That loss is not too remote
(all 4 must be satisfied)
⤷ Did not always exist, created by case law by the case Donoghue v Stevenson (1932)

Duty of care
⤷ Donoghue v Stevenson (1932)
○ A bought a bottle of ginger beer for a friend from a retailer that had a decomposed snail
at the bottom
○ The friend could not sue the retailer as they had no contract
○ Sought to sue to manufacturer of the ginger beer and court held that manufacturer owed
her a duty of care

○ ‘Neighbour principle’
⤷ In Singapore, use the two-stage test to determine if there is a duty of care
○ Settled by the case Spandeck Engineering v DSTA (2007)
○ Before embarking on test, need to first satisfy whether factually speaking, it was
foreseeable that the defendant’s actions or omissions could cause damage to the plaintiff
(would almost always be satisfied) → then use the test to determine if legally there is
duty of care
○ 1. There is a close and proximate relationship between the parties
○ 2. If so, whether nonetheless there are policy considerations which negate the finding of a
duty of care
⤷ Tests are control mechanisms to control scope of duty of care
⤷ Tests are not ‘precise’ so can overlap (eg. may not have a close and proximate relationship
because this will not be in public interest)
⤷ Close and proximate relationship
○ Whether there is a close and direct relationship so that one party ought to have had the
other in contemplation when carrying out any acts or omissions (eg manufacturer and
consumer, driver and pedestrian)
○ Not confined to physical or geographical proximity
○ NTUC Foodfare v SIA Engineering
■ Direct relationship between driver and NTUC but not between driver and
suppliers
⤷ Public policy considerations
○ Marc Rich v Bishop Rock
■ Surveyor from a marine classification society certified vessel that developed a
crack to be fit for voyage after certain repairs were made but shortly after, the
vessel sank and cargo was lost
■ Owners of cargo sued the society but court deemed that it was not just and
reasonable to impose a duty of care because marine classification societies were
non-profit and act in public interest
■ If had duty of care, these societies may refuse to carry out inspections
○ Hill v Chief Constable of West Yorkshire
■ No duty of care for police not apprehending an offender, which resulted in the
deceased being murdered
■ Because police would embark on ‘defensive policing’ and this was not in the
interest of the public
⤷ Plaintiff must establish that defendant owes him a duty of care (burden of proof)
○ Well-established areas where duty of care is easy to prove (but not all circumstances)
■ Professionals (eg. lawyers, accountants, architects) owe a duty of care to clients
in relation to their professional work
■ Carriers or transporters owe a duty of care to the people they carry and owners
of the goods they transport
■ Owners of premises → visitors
■ Employers → employees
■ Etc
○ Well-established areas where there is generally no duty of care
■ Ordinary bystander has no duty of care to help if they see another person or
property being put in danger
⤷ Negligent misstatements
○ Not clear whether there is duty of care
○ Hedley Byrne v Heller
■ Plaintiffs relied on defendants’ favourable references to continue business
dealings but these references were wrong, causing plaintiffs to incur huge losses
■ Court acknowledged that it was possible for liability to arise over a negligent
misstatement (but had an exclusion clause that excluded liability in this case)
 ⤷ Issue of unlimited liability in deciding whether the tests are passed
○ If allowing for duty of care means that the defendant can be sued by countless numbers of
people, likely will not pass the test because will result in actions that will not be in the
public interest (eg. withhold information/analysis or only provide to a small group of
people)
○ Caparo Industries v Dickman
■ Defendants audited accounts of a company called Fidelity and plaintiff bought
shares in Fidelity and successfully launched a takeover bid
■ But there was an error in the accounts (showed huge profit but actually had loss)
■ Even though it was foreseeable, court held that there was not a sufficient degree
of proximity → no duty of care
■ Policy considerations were that if the accountants were held to have owed a duty
of care to all investors and shareholders, would expose them to unlimited liability
○ Smith v Eric S Bush
■ Surveyors (defendants) engaged by mortgagees to survey the plaintiff’s house but
plaintiff paid for surveyors’ services
■ Defendants knew that plaintiff was likely to rely on the report
■ Plaintiff relied on the report and suffered a loss
■ Since not a case of unlimited liability and had close & direct relationship → duty
of care
⤷ Relationship with other concepts
○ No need to have contract between the parties to sue in negligence
○ If have contract, can sue for breach and for tort (but only get 1 set of damages)
○ Negligent misstatements are similar to negligent misrepresentation but no need to have
contract

Breach of duty
⤷ Blyth v Birmingham Waterworks
○ This case established that breaching duty meant the omission to do something a
reasonable man would do or doing something that a reasonable man would not do
⤷ So even if have duty of care and did not fulfil that duty, if it was reasonable to have not fulfilled
the duty, would not be considered breach
○ Eg. if a driver knocks into a person due to poor visibility and the person’s actions (such as
running onto the road)
⤷ If the defendant professes to have a particular skill or knowledge, then the question becomes what
another person with a similar level of skill or knowledge would have done in the circumstances
⤷ If the person is not professing to have a high level of skill or knowledge, then the standard
expected is that of a person in a similar position
○ Phillips v William Whiteley: jeweller pierced the ears of the plaintiff, the standard was
that of another reasonable jeweller and not of a surgeon
⤷ Court might have to weigh the likelihood of danger and the severity of the danger if it results,
with the cost of averting the danger (eg. taking preventive measures)
○ Tesa Tape v Wing Seng / BNJ v SMRT
○ Bolton v Stone
■ Cricket ball that came from the defendants’ ground hit the plaintiff who was
standing on an adjoining highway
■ Court held that duty of care was owed but not breached because there was
considerable distance between ground and highway
■ Also had existing high fence and ground was sloped → likelihood of injury was
very low
○ Paris v Stepney Borough Council
■ Defendants employed the plaintiff who had lost one eye
■ As a result of the work, plaintiff lost the use of the other eye
■ Risk of injury to normal employees was not so great as to warrant goggles but
special case for the plaintiff who only had 1 eye (had serious risk) → defendants
ought to have provided him with goggles
○ Latimer v AEC
■ Defendants’ factory was flooded and they spread sawdust to prevent employees
from slipping
■ Nonetheless, plaintiff (employee) still fell and got injured
■ Since there was nothing else the defendants could have done, short of closing the
factory (too costly), & risk of injury was slight (no one else slipped) → no breach
⤷ Proving breach - res ipsa loquitur (the facts speaks for itself)
○ If applicable, may lighten the plaintiff’s burden to prove that defendant was negligent
○ Concept of res ipsa loquitur may be raised if
■ The defendant was in control of the situation or thing that resulted in the accident
■ The accident would not have happened in the ordinary course of things if proper
care had been taken, and
■ The cause of the accident is unknown
○ Grace Electrical Engineering v Te Deum Engineering
⤷ If plaintiff manages to successfully invoke res ipsa loquitur, court would infer negligence, unless
defendant can show that could be some other reasonable explanation for the accident besides
negligence or showed that they had taken all reasonable care (burden is now on the defendant)
⤷ Scott v London and St Katherine Docks
○ Plaintiff was passing the doorway of the defendant’s warehouse when 6 bags of sugar
being moved by a crane fell on him
○ Warehouse was under control of defendant + such accidents do not normally occur unless
there was negligence → court found in favour of the plaintiff
⤷ Ward v Tesco
○ Plaintiff slipped on yogurt that was spilt on the floor of the supermarket
○ Supermarket was under the control of the defendant + such accidents do not normally
occur unless there was negligence → managed to raise res ipsa loquitur
○ Defendant then did not manage to show that the accident was not due to lack of care on
their part → held that negligence had been established
Causation
⤷ Establish that the defendant’s breach caused the plaintiff’s loss
⤷ Typically start with the ‘but for’ test (if breach of duty of care had not occurred, would the
plaintiff not have suffered the loss?)
⤷ Barnett v Chelsea and Kensington Hospital Management Committee
○ Plaintiff’s husband came to defendants’ hospital complaining of vomiting and was told to
go home and consult his own doctor later → breach of duty
○ Later that day, husband died of arsenic poisoning
○ Established that even if the hospital had given him treatment, chances of survival were
very slim → causation was not established
⤷ Even if it passes the ‘but for’ test, still may not be liability
○ For example, if there is a new intervening act which breaks the chain of causation (eg
where damaged caused by defendant is exacerbated by some unreasonable action by the
plaintiff), the ‘but for’ test may not be determinative
○ JSI Shipping v Teo Foong Wong
○ Mckew v Holland and Hannens and Cubitts
■ Plaintiff (employee) injured his leg at work due to negligence of employers
■ Few days later, he tried to descend a flight of steep steps unaided and suffered
further injury
■ Court held that employer’s initial negligence did not cause the plaintiff’s
subsequent injury (it was caused by plaintiff’s own unreasonable behaviour)
⤷ If the behaviour of the plaintiff was reasonable in the circumstances, chain of causation may not
be broken
○ TV Media v De Cruz Andrea Heidi
■ Plaintiff consumers Sim 10 pills and suffered liver damage
■ Defendants argued that since plaintiff did not immediately see a doctor after
experiencing unusual symptoms, chain of causation was broken
■ Court rejected the argument since what plaintiff did was not unreasonable in the
circumstances

Remoteness of damage
⤷ Plaintiff may not be able to claim for all ensuing losses
⤷ Test for determining whether loss is too remote is generally whether the loss is reasonably
foreseeable
⤷ Wagon Mound 1
○ Defendants carelessly discharged oil from their ship
○ Wind and tide carried the oil to the plaintiffs’ wharf (200 yards away)
○ Plaintiffs, after consultation, thought it was safe to carry on with welding works
○ 2 days later, there was a big explosion due to the welding works and oil discharge and
wharf was damaged
○ Court held that damages were not reasonably foreseeable because generally could not be
foreseen that oil on water would ignite
 ⤷ Man Mohan Singh v Zurich Insurance
○ Plaintiffs had lost their only children due to the negligent driving of the defendant
○ Court held that the defendant was not liable for the cost of fertility treatment undertaken
by the couple to have other children (because not reasonably foreseeable)
⤷ Usually what has to be foreseen is the kind of harm, not the extent of harm
○ Bradford v Robinson Rentals
■ Defendant (employers) carelessly exposed the plaintiff (employee) to extreme
cold during his duties and plaintiff suffered frostbite as a result
■ What was foreseeable was something such as a chill
■ But defendants were held liable for the frostbite, as it was just a more severe
manifestation of a type of harm that was foreseeable
⤷ Rule in relation to damages that the defendant has to take the plaintiff as he finds him (‘thin-skull’
rule)
○ If X knocks down C who dies because he has a ‘thin-skull’, X would be liable for the
death even if a normal person would have died
○ Smith v Leech Brain
■ Plaintiff had a predisposition to cancer
■ Defendants’ negligence triggered off cancer, and plaintiff died
■ Court held that defendants were liable as they had to take the plaintiff in the
condition he was
○ If plaintiff suffers economic loss in the form of loss of income, how much the defendant
would have to pay would depend on how much the plaintiff was earning or could have
earned

Defences for a defendant sued in negligence

⤷ Contributory negligence
⤷ Voluntary assumption of risk
⤷ Exclusion of liability

Contributory negligence
⤷ If the plaintiff also contributed to the loss, the damages they can claim may be reduced (section
3(1) of the Contributory Negligence and Personal Injuries Act)
⤷ Only need to establish that the plaintiff contributed to the loss as a result of fault on his part
⤷ Does not have to be established that the plaintiff owes and breached a duty of care
⤷ Sayers v Harlow UDC
○ Plaintiff found herself locked in a public toilet
○ When trying to climb over the door, she stepped on a toilet roll which rotated, causing her
to fall and injure herself
○ Court held that the defendants were liable for the defective lock but the plaintiff
contributed to her injury → damages reduced by 25%
⤷ Planassure PAC v Gaelic Inns
○ Auditors were held liable to the company for negligence in not detecting a fraud
○ Company also held to be contributorily negligent in not detecting the fraud → damages
reduced by 50%
 ⤷ Rohini v HSR
○ Appellant was defrauded by an estate agent who was an undischarged bankrupt
○ Court held that estate agency was negligent for not having proper processes in place
○ But since appellant was very careless in issuing blank cheques, damaged reduced by 70%

Voluntary assumption of risk

⤷ If a plaintiff voluntarily assumes the risk that a tort may be committed against them, the defendant
may use this as a defence
⤷ Morris v Murray
○ Plaintiff agreed to the defendant’s proposal to take him on a plane ride even though the
defendant was very drunk
○ There was an accident and the plaintiff was injured
○ Court held that plaintiff had voluntarily assumed risk so defendant was not liable
⤷ But if no true voluntary assumption of risk, unlikely for this defence to apply
⤷ Smith v Baker & Sons
○ Plaintiff (employee), who was involved in rock cutting, was injured when a stone from a
crate being carried by a crane fell on him
○ Court held that there was no true voluntary assumption of risk
⤷ If defence applies, it is a complete defence in that defendant is completely absolved of liability
(unlike contributory negligence)
⤷ Not a common defence

Exclusion of liability
⤷ Even if there is no contract, may try to exclude liability using a clause or notice
⤷ Eg. for public playgrounds, common to find exclusion clauses for injury
⤷ Validity depends on Unfair Contract Terms Act
⤷ Though excluding liability for death or personal injury due to negligence is not valid, this is
commonly done → other party may take greater precaution, lowering the chances of injury or
death
⤷ Such a clause may also seek to highlight the inherent risks involved in a particular venture (eg
surgery) since not highlighting these risk could amount to negligence

Business takeaway for tort of negligence

⤷ Practically any type of business can be liable in negligence
⤷ Important for businesses to consider how possibly they can be sued in negligence and take
appropriate measures to mitigate against the risk
⤷ Eg. proper maintaining of equipment of facilities, providing proper training and supervision,
having proper practices and policies in place, incorporating appropriate contractual clauses,
taking out general business liability insurance
Tort of passing off
⤷ Seeks to protect against certain types of unfair competition
⤷ Similar kind of protection available under the Trade Marks Act (but since Trade Marks Act is not
always applicable, tort of passing off is still important)
⤷ To establish tort of passing off, plaintiff must generally establish the following 3 conditions (from
the Reckitt v Borden / Novelty v Amanresorts cases)
○ There is goodwill or reputation attached to their business
○ There is a misrepresentation by the defendant that the goods or services offered by them
are the same as those offered by the plaintiff, and
○ Plaintiff has suffered or is likely to suffer loss
⤷ Goodwill or reputation
○ Goodwill is often acquired by being in business for some time
○ But in some circumstances, it is possible to acquire goodwill even before actual trading
commences
■ CDL Hotels v Pontiac Marina: had goodwill because of the large-scale
advertising that was carried out even though developments had not started actual
operations
⤷ Misrepresentation
○ Can come in various forms
○ Eg. if defendant tries to use the plaintiff’s name, logo, trade mark or get up
○ White Hudson v Asian Organisation (1964)
■ Plaintiffs manufactured cough sweets wrapped in red paper (called “Hacks”)
■ Defendants also started manufacturing similar cough sweets wrapped in red
paper (called “Pecto”)
■ Proved that majority of buyers in SG could not read English then, so asked for
red paper cough sweets → even though different names, passing off established
○ But if plaintiff’s business name is merely descriptive of the products sold and defendant
takes steps to distinguish their products from the plaintiff’s, unlikely to be
misrepresentation
○ Lifestyle 1.99 v S$1.99
■ Court held that since the words 1.99 was merely descriptive of the plaintiff’s
products + defendants tried to distinguish by adding “lifestyle” and using a
different logo and colour scheme → no misrepresentation
○ Nippon Paint v ICI Paint
■ Plaintiff’s use of the term “3 in 1” was merely descriptive, so defendants could
use the same term to describe their paints
⤷ Suffered loss
○ CDL v Pontiac
■ Found possibility of damaging Pontiac’s goodwill
○ Sarika Connoisseur v Ferrero SPA
○ Actual loss need not be proved (just possibility of loss)
 ⤷ If passing off is established
○ May obtain an injunction
○ May get an order of delivery up of the infringing copies
○ Damages or account for profits made may be obtained
⤷ Business takeaway for tort of passing off
○ Come up with unique and distinguishing features for one’s business (don’t copy)
○ Seek permission from other business to use certain features
○ Better to register a trademark instead of relying on the tort of passing off where possible

Tort of vicarious liability

⤷ One person may be made answerable for the actions of another
⤷ Most commonly applied in the employment context
⤷ An employer can be made liable for the actions of the employee if 2 conditions are satisfied
○ Employee has committed a legal wrong
○ The wrong takes place in the course of employment
■ Test for this is to see if there is a close connection between the nature of
employment and the employee’s wrongdoing + it is fair and just to hold the
employer liable (established in Lister v Hesley case)
⤷ Koh Get Kee v Low Beng Hui
○ An off-duty police officer who was in uniform and armed went on a drinking spree with
his friend → accidentally shot the friend
○ Court held that the employers were liable as the act was done in the course of
employment because it is in the interest of the police force and the public that officers are
armed even when off-duty so that they can meet any emergencies
⤷ Samin v Government of Malaysia
○ Employee driver took the company vehicle to stop over at his house for lunch
○ When returning to work after lunch, an accident occurred
○ Court held that employers were not vicariously liable as act was not done in the course of
employment
⤷ If employer is held vicariously liable, employer has a right in turn to institute an action against the
employee to get an indemnity or reimbursement
⤷ Employer can also terminate the contract of employment, depending on the circumstances
⤷ But generally, unlike employers and employees, a person who engages an independent contractor
to do some work is NOT liable for their actions done in the course of work
○ Ng Huat Seng v Munum Mohammad Madni
○ Because unlike employees, much more difficult to exercise control and supervision over
independent contractors
⤷ Very common tort
⤷ Business takeaway for tort of vicarious liability
○ Mitigate risk by taking various measures eg. selecting employees carefully, providing
proper instructions and training, exercising sufficient control and supervision
⤷ Business may be liable to a third party on more than one ground eg. can be vicariously liable and
at the same time, breached duty of care (first is secondary liability and latter is primary) → but
only one set of damages can be recovered
Tort of breach of confidence
⤷ If
○ A person receives information which has a necessary quality of confidence about it and
○ The information is communicated in circumstances importing an obligation of confidence
on the part of the defendant and
○ The defendant makes unauthorised use of it or discloses it without the consent of the
plaintiff

⤷ QB Net v Earnson Management

○ Plaintiff traded as “QB House” in SG (offered ten-minute haircuts)
○ Defendant started operating ten-minute haircut salons in SG as “EC House”
○ No breach of confidence because information was not confidential and was known to the
public at large
⤷ Aside from tort of breach of confidence, if have contract, can have express clause that one or both
parties are to observe confidentiality
⤷ Can also sign a separate non-disclosure agreement
⤷ Common remedies include injunctions and/or damages
⤷ Business takeaway for tort of breach of confidence
○ Business should consider ways of mitigating against the risk even before the problem
arises, such as by having express confidentiality clauses, marking out information as
being confidential, restricting access or not disclosing confidential information in its
entirety, where possible

Personal data protection

⤷ Personal Data Protection Act governs confidential information that relates to personal data
⤷ Under the act, personal data refers to data that can be used to identify an individual (section 2)
⤷ Generally, personal data cannot be collected, used or disclosed without the consent or deemed
consent of the individual (section 13)
⤷ There are situations where consent or deemed consent is not required
○ If data is publically available or if the data is collected for evaluative purposes (eg.
deciding whether or not to offer employment)
⤷ Act also imposes obligations to properly protect the data that is collected (section 24) and to cease
to retain it when it is no longer necessary (section 25)
⤷ Act only creates liability on the part of the organisation and not individuals acting in their
personal or domestic capacity or acting as employees (section 4)
⤷ Employer could be vicariously liable for the actions of an employee (section 53)
⤷ Business takeaway for personal data protection
○ Business should have appropriate terms allowing it to collect, use or disclose data,
implement proper processes and provide adequate training and supervision
Blue vs Ashley - Offer, Acceptance, Consideration, Legal intentions
Case facts
Plaintiff: Blue (Investment banker)
Defendant: Ashley (Founder of Sport Direct)

Ashley told Blue if Blue can increase price of stocks to $8 per share, Ashley will give Blue $15 million
(taken as a joke, no follow up)

After stocks rose to above $8 a share, Blue asked for the $15 million

Defendant paid plaintiff $1m as a bonus, leading plaintiff to assume that defendant actually took the $15m
seriously

Issue: Was there a legally binding contract between the parties?

Answer legal issue

Offer:
No valid offer because too vague
No definition of what plaintiff was required to do to reach target share price or measurement of
utility/effect of work of plaintiff
No time period for share price to remain above $8
→ did not show intention to make offer
Nature and tone of conversation did not imply a serious contractual offer (had alcohol, people were
laughing)
Lack of commercial sense → no commercial sense for defendant to offer plaintiff a high bonus, had not
offered anyone at Sport Direct such a high bonus before
Defendant understood value of money, did not make sense for him to offer this as a serious offer

→ Offer must be definite and specific, and show offeror’s intention to be legally bound

Incongruity with plaintiff’s role (no experience in increasing share price)→ obvious that offer was made
in jest

NO valid offer

Acceptance:
Plaintiff only brought up offer a year later (time lapse) after share prices started to rise
No written record (despite someone else advising otherwise)
→ Plaintiff did not take offer seriously at first, so no acceptance even if there was an offer made

Consideration:
Had exchange of consideration
Plaintiff must have done some work to raise stock price to $8 (but difficult to define because not sure
whether work led to increase in stock price)
Legal intention:
Social setting, alcohol involved
No evidence that defendant has ever negotiated/made contracts in this setting → concluded that no
intention for legal relations
Original purpose of meeting was not for negotiation of contracts, just to build up friendly relationships

Difficulty of proving a case with oral accounts (make sure to have written records, even if just email or
message)

Have concrete evidence to back up oral agreements (to provide credibility, can also have voice recording)
Should avoid oral agreements in the first place
Upon receiving oral offer, offeree should confirm acceptance and confirm offer ASAP
Should have proper documentation

Cons of litigation:
Expensive court and legal fees (especially because involved high sum of money)
Lack of privacy - may ruin reputation of Sport Direct due to Ashley’s drinking habits
Win-lose outcome - soured relationships

Benefits:
Unlikely that parties would have come to an agreement (so mediation would not have worked)
Have possibility of appeal
Usually arbitration and mediation is included in a clause in the contract (if have dispute, will go to
mediation/arbitration) → not valid in this case

Make it easy for other party to accept (tear-off slip) - is it ethical?

Good idea to get other party to accept your terms and conditions (rather than accepting their terms and
conditions) because more likely that other party will not read through all terms and conditions and offeror
is more familiar with T&C and T&C likely slanted in offeror’s favour
And also, if make a lot of counter offers, have to spend more time and money (cause have to consult
lawyer)

Can close deals in a social setting (if entertaining the other party) but need to follow up ASAP (eg the
next day)

*Can make oral contract but not recommended because very difficult
Huationg Contractor v Yishun
Plaintiff entrusted defendant with truck but truck caught on fire (nothing wrong with the road)
Breach of bailment contract (defendant had no ownership of truck so had to take care of the truck)
Defendant sought no breach and exemption clause

No written document of contract, services agreement (no discussion of exemption clause)

Main term discussed was price

Limitation and exemption clauses on reverse side of defendant’s work orders (not referred to or shown
during discussions)

Causation issue:
Prove that fire was not defendant’s fault
Implied term that defendant will take reasonable care of the truck

Accident theory: (plaintiff)

Defendant accidentally engaged parking brake (blamed negligence of defendant)
Riding theory: (plaintiff)
Blamed it on driver being inexperienced and nervous
Pressure leak theory: (defendant)
Air pressure fell (fault of truck), could not have been detected or known prior (not the fault of anyone)

Incorporation, interpretation (cover breach?) and unfair contracts term act (only damage to truck)

Ruling:
Defendant had not been negligent (accepted pressure theory)
But liability clauses not incorporated properly
Did not have to rely on liability clause because not negligent in the first place

Causation issue:
Accident theory did not hold because difficult to accidentally engage brakes + will be notified if brakes
are accidentally engaged
Driver is an experienced driver (operated heavy vehicles for defendant for 1.5 years)
Will have skid marks and car will stop if brakes applied
Assumption that brakes partially engaged also wrong (checked the system)

Riding theory:
Truck designed to handle weight of 2 trucks
Truck at 60km/h but no steep incline or bends so no reason to ride brakes
No reason to break frequently and hard (to generate heat that can cause fire would require much
acceleration and braking which would not aid in towing operations)
If true, all 4 wheels would catch fire at the same time (only 1 wheel caught on fire)
⇒ riding theory does not hold
Pressure leak theory:
Most consistent with information available
Small amount of air leak would not be noticed at pre-journey checks (too small to be detected)

⇒ not due to negligence of defendant, out of their control

Incorporation issue:
During meeting, no mention of liability clauses → no agreement by both parties ⇒ no express
incorporation
Purpose of work orders is not to establish terms of the contract
No references made to the terms during the verbal services agreement, unilaterally issued by defendant to
plaintiff (no clear acceptance)

Plaintiff claimed he had never seen work orders throughout entire business relationship, reverse side of
work orders → no reasonable notice

Although in all previous work orders and plaintiff had not protested, silence does not mean agreement, no
clear indication that plaintiff had agreed to liability clauses in previous dealings

Recipient of work orders are plaintiff’s employees → no authority to negotiate/contract on behalf of

plaintiff

Legal significance:
Should bring exemption clauses to other party’s attention

Business significance:
Important to include exemption clauses and be aware of how to include exemption clauses
Clearly communicate exemption clauses

Litigation not the best dispute resolution method

Should use mediation - incident due to mere misfortune
Arbitration not as good as mediation → seeks to pin blame on 1 party, but can be used if mediation fails

Contracts should be in written form and should be comprehensive (include all necessary details)
Should clearly express dispute resolution method in the contract
Exemption clauses should be incorporated into the contract appropriately (make sure they will be valid)

Recipient does not need to explicitly agree to inclusion of exemption clause (just need reasonable notice)
if no written contract
If written contract that needs signature, don’t need reasonable notice (assume parties read through all
terms) ‘I have read and agreed to the above’

Gro Capital Ease

En Frozen vs Singmah Steel
Facts of the case:
Singmah agreed to carry out installation of refrigerators for En Frozen
Disagreements on first encounter → En Frozen said that it approached Singmah when they succeeded in
bidding on 10 Dec 2010 but Singmah said that En Frozen only approached in Jan 2011

Plaintiff: En Frozen (Lee)

Defendant: Singmah Steel (Ooi)

Lee said that he wanted to check depth but Ooi said there was nothing said about depth
Contradiction in Ooi’s testimony about getting the electrical load of 126amps
Lee went with proposal B and decided to follow Ooi’s suggestion to have 4 separate compressors instead
of just 1 compressor
Lee said that Ooi said that there would be a lead time of 4-6 weeks but Ooi said that she said it would take
at least 8 weeks

It was discovered that the electrical requirements of the Fukushima refrigerators far exceeded the
electrical capacity of the shop
Showcase freezers were shallower than expected
Installation would not be completed in time for the proposed opening date
Refrigerators could not fit

Legal Issues:
1. Breach of express terms
2. Breach of SOGA
3. Misrepresentation

Breach of express terms:

Late delivery of refrigerators by over 2 weeks → installation could not be completed on time so shop
opening was delayed by 9 days
Breach of SOGA (implied terms):
Breached sale by description, satisfactory quality, fit for purpose
Description - Lee told Ooi that he wanted depth of refrigerators to be similar to Carrier freezers but
dimensions were not similar
Satisfactory quality - compressors under-poewred, could not store meat
Fit for purpose - fridge could not fit comfortably in the shop, Lee felt that it was defendant’s duty to
measure to make sure that fridges could fit
Misrepresentation

Defendant claimed that there was no breach of express terms and no misrepresentation (even if there was,
it was innocent)

Court judgement:
Ruled in favour of En Frozen
Awarded $8100 of damages
- Loss of profit of 9 days
- Cost of knocking down toilet wall
- Cost of hiring qualified person
- Etc

Defendant stated that first order items would be delivered and installed within 4-6 weeks of date of
signing but failed to inform plaintiff when they were unable to do so → breached express terms

Misrepresentation
No agreement on depth of freezers
Sent plaintiff diagrams containing the specific dimensions of freezers and plaintiff raised no disputes →
no misrepresentation

Fit for purpose

Purpose made very clear to Singmah that fridge was supposed to be displayed in the shop and defendant
knew that fridge would not fit in the shop → breached fitness for purpose
Chiller’s temperature range not suitable for storing meat but plaintiff only knew that chillers were
supposed to store milk (did not know it was supposed to store meat)
Temperature ranges also stated to plaintiff → no breach
But freezers could not reach stated temperatures (whereas chillers could)
This was because compressors installed by Singmah were under-powered → breach of satisfactory quality
Defendant’s responsibility to check whether there was sufficient electrical capacity but they made wrong
representations

Evaluation of case:
Weaknesses in the case study
A lot of inaccuracies and miscalculations on plaintiff’s part (eg. claimed losses from 2 June but only
supposed to open on 30 June)
Claims only filed 2.5 years after good had been delivered to the store → could have been seen as an
acceptance of goods

Could record all terms of agreement in a singular written contract for clarity
- Agreements were made orally and thus both parties disagreed on the events
Should be specific and avoid ambiguity
Should file any claims within a reasonable time period
Parties are to have clear and consistent communication about their demands to avoid having multiple
versions of the same events (can help by having a written agreement)

The defendants were not fully paid for the refrigerators at the point of the case and the 2.5 year delay in
filing claim constituted acceptance → cannot reject goods, have to pay the rest of the money
Tiger Airways vs Swissport
Plaintiff: Tiger Airways
Defendant: Swissport (Ground handling service provider that worked at Changi)

Facts of the case:

Swissport had ground handling services at Changi Airport from 2006 until 2011 under the contract
License of Swissport was authorized before contract was formed and terminated in 2009

In the contract, stated that if license was terminated, have to inform plaintiff immediately and either party
could terminate
But the defendant effectively terminated own license so does the clause still apply?

Plaintiff argued that defendant not entitled to terminate because clause did not apply if license was
voluntarily terminated
Defendant argued that situation did fall under the clause

Judgement: accepted plaintiff’s interpretation, defendant had to pay damages for breach of contract

Legal principles:
Usage of extrinsic evidence

Defendant’s argument was that clause was an exit clause

Rejected because plain and ordinary language of the clause did not indicate that it was an exit clause
No extrinsic evidence that both companies meant for that clause to be an exit clause
Both companies were new companies → does not provide evidence for an exit clause

Other clauses also refuted this argument

- Probation period under clause 9.1 would be redundant if unilateral termination was allowed
- Clause 9.2 which states other situations that the agreement could be terminated (eg force majeure
clause) would be unneeded

Defendant’s argument that voluntary termination of license could void the contract would mean that
defendant could terminate license if it did not want to stay in the contract → inconsistent with business
purpose of contract that was for a long business relationship

Plaintiff’s argument that there were high costs and complexity was right
Argument that commercial aim of agreement was to acquire long-term relationship was correct
(reasonable interpretation)

Case evaluation:
Utmost importance for both contracting parties to have a mutual, common understanding of the contract’s
objectives
Plaintiff wanted a long-term relationship but defendant wanted short-term relationship to have flexibility
Businesses should become more cautious and careful when coming up with contract terms and be careful
about the phrasing of the terms

Measures that can be taken:

Explicitly state terms and conditions in specific detail to avoid ambiguity (especially for terms that come
into play after formation of contract)
Have a face-to-face discussion before finalising the contract to clarify contract terms
Businesses should communicate business objectives clearly with lawyers (if lawyers are drafting up the
contract) so that the contract will fit to the business objectives
Businesses should read through all terms after contract is drafted to ensure that contract does fit their
objectives

ADR
Negotiation: fastest and cheapest → helpful because both companies were new
But high likelihood that dispute will not be resolved amicably (plaintiff suffered great losses due to
defendant’s actions due to high cost and complexity of ground handling services)

Mediation: more suitable for parties that were already in a long-standing relationship and have built trust
and cooperation (want to continue with the relationship)
No significant business relationship to protect → not necessary to have a win-win solution
No binding decision
Highly likely that mediation would fail (same reason as negotiation)

Arbitration: ensures privacy of businesses (since new, reputation was fragile)

Final, binding decision
Freedom to choose arbitrator
But both parties must agree to arbitration

Litigation was a suitable choice but arbitration could have been a better choice
Goodwill vs Hall Fire
Plaintiff: Goodwill
Defendant: Hall Fire

Defendant supplied a fire suppression system in Plaintiff’s factory under a one-off contract (no
maintenance obligations)
Fire broke out 10 years later but fire suppression system did not put out the fire ($6 million in damages)

Claim of breach is statute barred because more than 6 years since contract formed
Can only claim for negligence because time limit is 6 years from time of fire

Plaintiff was in a much better position to pay for insurance than defendant

Plaintiff wanted to claim damages but defendant argues that liability was excluded due to the exclusion
clause

Incorporation of exclusion clause:

Was exclusion clause unusual? Had reasonable notice?
Contract was of moderate sum compared to potential liability (about $7000)
Defendant offered to accept wider liability for higher cost for covering insurance → exclusion clause was
not unusual or onerous
Exclusion clause expressly referred to on the front of quotation
Reasonably and fairly brought to plaintiff’s attention

Reasonableness of exclusion clause (under UCTA)

No death or personal injury
Factors to determine reasonableness:
Both parties had equal bargaining power
Plaintiff had choice to contract with another supplier
Defendant had reiterated that they did not have liability if there was no insurance

Plaintiff claimed that exemption clause is unreasonable because its scope is too wide (but not justified for
unreasonability)
Avoiding core obligation with clause but parties had freedom to agree to terms of contract, did not agree
that hallfire was avoiding core obligation

Exclusion clause was not particularly unusual or onerous

Defendant had expressed willingness to provide insurance for an additional cost→ freedom of agreement
Contract was at a moderate price
Defendant did not assume liability for future events since plaintiff did not accept insurance

Evaluation (ADR)
Litigation was the best ADR method
High monetary value of damages involved
One-off contract → not interested in maintaining business relationship
No meaningful long-term relationship → no need for mediation
Had opportunity to appeal

Impact
Should not rely on arguing that exclusion clause is not reasonable
Exemption clause must be properly incorporated
In B2B contracts, exclusion clauses are likely to be upheld
Should review clauses prior to forming contract instead of trying to persuade court that the clause is
invalid

Key takeaways:
Widely drafted exclusion or limitation clauses will not be deemed unreasonable by the courts
Courts will likely uphold commercial contracts when both parties have equal bargaining power
Availability of insurance is a key factor which will often support the validity of an exemption clause
Strait Colonies v SMRT Alpha
Appellant: Strait Colonies
Respondent: SMRT Alpha

Had a 5 year contract for a lease in a mall

Letter of offer stated permission to use premises as a pub cum F&B
Appellant accepted offer in March but was rejected by URA to change from restaurant to restaurant cum
pub
In June appellant wanted reduction in rent due to rejection and signed agreement in August
Pub became operational in December

Appellant got revised permission to use premises as pub for 1 year by URA

The next Jan, appellant began to fall behind in payment of rent

Respondent wanted to increase rent and appellant objected but to no avail
In Sept, appellant ceased operations and left the premises

SMRT sued Strait for rent (for around $2.6 million) and won so Strait appealed to rescind the contract in
the Court of Appeal

Appellant wanted to rescind contract because respondent misrepresented use of the premises
There was misrepresentation but appellant could not rescind contract because affirmed contract by taking
possession of premises

Judgement and legal principles:

Operating hours - no representations made
Stated that it was appellant’s responsibility to apply for license from PLRD so appellant should be aware
of operating hours
Not possible for appellant to rely on representation by respondent on operating hours

Take-out - no representations made

Respondent did not inform appellant on limitations of whether food was allowed in sports facilities
Silence does not amount to misrepresentation
Appellant could not point to any evidence of any representation that appellant was allowed to have
take-out services to the users of the sports facilities

Affirmation - appellant affirmed the contract

Affirmed contract despite having full knowledge of the facts → unable to rescind contract
Insufficient evidence of protest

Appellant’s claim that affirmation was conditional was rejected because no documents in which the
appellant made such intention known (conditional on reduction of rent)

Appellant argued that it did not know it had the rights to rescind the contract
But judge found that it was not necessary for respondent to show that the appellant knew of its legal right
to rescind contract
And appellant was aware of right to rescind contract (through Whatsapp messages) and appellant was
being advised by a project manager and is a savvy businessman himself

Appeal dismissed by the court

Evaluation:
Misrepresentation is not entitled to a party who has the prior responsibility to be familiar with details
regarding that representation
Silence does not amount to misrepresentation (positive statement has to be made)
Right to rescind is invalid if there was affirmation of the contract (may characterise affirmation as signing
contract, not protesting and commencing operations)

How to avoid
Should make verifications and inquiries, should not make assumptions
Protest should always be documented
Parties should both reach an agreement before signing the contract

ADR methods
Mediation and arbitration over litigation
Arbitration more suitable because both parties felt strongly about the case → unlikely to reach an
agreement
Always safer to include ADR clause
No meaningful long-term business relationship → no point of mediation
See Eng Siong v Sassax and another (current director of the company)
Unfounded in law, as well as in fact
Need to know what amounts to minority oppression behaviour (examples of such behaviour and examples
that are not minority oppression)

Plaintiff: See Eng Siong Ronnie (former director)

Defendant: Sassax and another
Facts of the case:
See and Cheang had a good relationship → decided to start Sassax together
Incorporated Sassax based on an oral agreement (not a single written document)
Both See and Cheang were investors and directors (See had 40% of the share, Cheang had 60%)
See was supposed to manage the supply side, Cheang managed operations and finance
Cheang hired Poah Mei Mei on behest on See
Also found out that See owned several other companies and Poah Mei Mei worked for See’s other
companies for a very long time
Sassax entered a loan facility by TAPCL in 2017 (used for financing of payments to suppliers), Cheang
was given the sole mandate to operate it (allegation that Cheang forged See’s signature)
Sassax lost a judgement sum of $525000 in an appeal in Taiwan (allegation that Sassax never returned
this money)

A fire occurred and Mei Mei was the main one responsible (was responsible for the operations) and this
loss was not recoverable → soured relationships
Both See and Cheang acknowledged Mei Mei’s mistake
Proposal of winding up company via Whatsapp
Cheang decided to fire Mei Mei without letting See know
Cheang thought that See did not put enough effort into the company → decided to fire See
See decided to collect information and found out about suspicious transactions that Cheang made

Legal issues:
Plaintiff claims:
1. Defendant breached the oral investment agreement
2. See was oppressed
3. It is just and equitable for Sassax to be wounded up
Fiduciary duties of good faith → act in the best interest of the company

Breach of oral agreement

Because Cheang incorporated PTE without informing the plaintiff
Payment of monies by Sassax to Limited and other diversion of monies

Defendant claims:
1. See devoted his time to his other businesses
2. See barely contributed to Sassax
3. Denied diversion of funds
 4. Not precluded from owning and managing other companies in the same industry as Sassax as
plaintiff also has other similar companies

Oppressed by Sassax
Wrongful retention of judgement sum
Never seek his opinion in firing Mei Mei

Mei Mei employment was terminated as she was underperforming due to working at other companies
while receiving full-time pay from Sassax
Taiwan judgement fund as the appeal did not go through
No forgery because no personal guarantee was needed

Fair for Sassax to be wound up

Due to the reasons for the other claims

Legal solutions:
Breach of oral agreement:
No valid offer made to begin with, no acceptance and no legal intention → no contract formed
Plaintiff unable to provide any evidence to back up his claims (eg emails, messages)
⇒ no breach

Oppression as a minority shareholder:

Undisclosed incorporation of Sassax is not oppressive → no obligation to disclose, no evidence of
reduction in corporate opportunities
Also did not deny that he did not put enough effort in Sassax
Payments to Limited → defendant had no beneficial interest in Limited
Diversion of monies → defendant has no beneficial interest in diverting monies
TAPCL → no evidence that TAPCL facility was renewed
Termination of Mei Mei’s contract → no oral agreement to state ‘equal say in employee rights’,
termination of contract was in line with the employment contract as Mei Mei was underperforming, also
unfounded in law
⇒ no oppression

Fair to wind up Sassax:

Plaintiff claims that there was irretrievable breakdown in the parties’ relationship → not in the Companies
Act
Breakdown considered self-induced by plaintiff → neglected his duties
⇒ not just and equitable to wind up

Evaluation:
All 4 elements of contract formation must be present to have a valid contract
Director need not disclose information if it does not cause prejudice in transactions with their company
Cannot wind up if breakdown is self-induced (irretrievable breakdown must be caused by other party)
Takeaways:
Contracts should be written
Should seek other directors’ opinions before making decisions
Should restate business arrangement and what each party should expect from each other
Lay down rules governing business relationships

Mediation would not work → defendant and plaintiff are unlikely to want to continue relationship
(relationship has totally broken down)
Arbitration would not work → unlikely for both parties to agree as they have a bad relationship
⇒ litigation is the best method (also because plaintiff wanted to wind up the company and claim
damages)

Founded in law (there is a law that addresses it) and founded in fact (facts of the case support it)
Lim Seng Choon David
Plaintiff: Lim Seng Choon David
Defendant: Global Maritime Holdings Ltd and Global Maritime Consultancy Pte Ltd

Defendants are in the business of providing marine and offshore consultancy services
Plaintiff met with Hogg, director of both defendants
Plaintiff asked to retire early, had oral agreement
Plaintiff claims that an oral agreement was made with defendants (that gives him bonus, extra pay, etc)
But defendants deny the oral agreement, no binding agreement made at the meeting

Evidence shows that it was just negotiation, no binding agreement made

Legal issues:
2 claims -
Breach of director’s duty to act honestly
Breach to avoid conflicts of interest

Breach to act honestly:

Fiduciary duties of good faith (case law)
Section 157 of Companies Act

Plaintiff made overseas trips at the expense of the defendant despite having no business there (whether
expenses incurred were made in the best interest of the company)
Making other trips overseas and obtained reimbursement wrongfully
Defendant claimed that a bulk of overseas expenses were not supported by documents and receipts,
plaintiff also claimed reimbursement for a family vacation trip
Made claims for a pure gold bar and business card stand (plaintiff claimed that these were service awards)
Plaintiff made claims and reimbursement for personal expenses (eg servicing fees for AC at plaintiff’s
own home) → not business expenses
Made unnecessary payments to PropNex, a property agency (plaintiff increased the rent of the lease
unnecessarily, with commission paid to PropNex)
Authorised cheques to Ms Liu (company’s accountant?)
Issued cheques to plaintiff’s wife for cleaning services

Plaintiffs’ defence
Claimed he went overseas to solicit projects, claimed don’t have to seek approval to go overseas
Receipts unnecessary for certain purchases
Purchases checked and approved by Ms Liu
Claims informed and approved by director of 2nd defendant

Breach to avoid conflicts of interest:

Directors required to declare interest if there is a direct/indirect material interest
Do anything within own means to avoid conflicts of interest unless acknowledged by the board
Plaintiff entered lease agreements owned by plaintiff and his wife
Made 2 lease agreements (one owned by plaintiff and wife, one owned by plaintiff’s son)
Plaintiff was not listed as landlord during the transactions
Obvious conflict of interest (both direct and indirect)
Defendant claimed plaintiff did not provide disclosure of interest, plaintiff claimed he did disclose by
disclosing wife’s name in financial statements

Plaintiff purchased used furniture from wife

Defendant claimed never disclose interest, have conflict of interest
Plaintiff claimed had no interest in the transaction, thus no need to inform the board

Judgement:
Plaintiff found to breached act honestly + avoid conflict of interest → had to pay damages

Legal principles:
Hong Kong and China trips - expenses incurred was not in the company’s best interest because clearly
stated tht the plaintiff could not venture into China; no explanation from plaintiff as to how his visits were
in the company’s interest
Other overseas trips - various expenses incurred, court agrees that a bulk of claims not supported,
company policy was that claims below $15 did not have to be supported but most claims above $15, could
not explain how these trips or indiv claims would promote company’s interest
Gold products - plaintiff claimed that defendant commissioned these products but defendant denied
because it had cash flow problems at the time and would not have commissioned these products, only
recipients were plaintiff and his son → no benefit to company
Personal expenses - plaintiff claimed that these expenses were made known to the defendant, but does not
explain how this benefits the company
PropNex - court cannot see how termination of an existing lease and having a new lease of the same
property with a higher rent would be beneficial to the company, cannot explain why use of PropNex is
useful
Cheques to Ms Liu - authorised cheques to pay Ms Liu for cleaning the plaintiff’s properties
Cleaning services by wife - issued cheques with great ease and minimum concern

Leases entered - obvious conflict of release, question is whether there was disclosure → did not make full
disclosure
Purchase of used furniture - question of whether there is a conflict of interest → there is a conflict of
interest

Evaluation:
Legal and business significance -
Duties are to act honestly and declare interest

Weaknesses of the plaintiff:

Lack of written contract
Lack of testimonials from witnesses
Impact on future cases:
Importance of having written contract
Testimonials are essential
Could have prevented plaintiff’s actions if they were vetted prior to following through (more stringent
company policy)
Appointment of an independent director

Mediation not optimal → not willing to continue business relationship

Arbitration → unlikely for both parties to agree
Best choice is litigation

Plaintiff tried to sue defendants to get the extra pay and bonus
Ended up having to pay damages to defendant (because defendant made claims against plaintiff)
Munshi Mohammad Faiz v Interpro Construction and others
Plaintiff: Munshi
Defendant: Interpro

Incident happened during a construction project

K P Builder is the main contractor and hired Interpor Construction as a sub contractor
Plaintiff is employee of Interpro

Banksman system
Site supervisor had instructed the plaintiff to direct excavator operator to stop excavator
Supervisor instructed plaintiff to fetch a spade and on the way walked near the excavator
The excavator suddenly moved and knocked into the plaintiff

Initial ruling was that defendants found to be jointly and severally vicariously liable (100% liable) but
defendants appealed against this ruling

Proving negligence
4 requirements

Not contributorily negligent in moving close to the excavator → did not know the excavator was going to
move

Vicarious liability
Is it permissible by law to have dual vicarious liability (hold multiple defendants liable for negligence of a
single person) → yes

Site supervisor not negligent → could not have predicted that the excavator would move
Excavator operator was negligent → reasonably skilled excavator operator would not have moved it

Had vicarious liability

Lack of evidence that cordoning off the excavation work area would have prevented the incident →
defendants were not themselves negligent

Overall legal and business significance

Dual vicarious liability is permissible in SG (not expressly decided prior to this case, only recognised in
English and Canadian courts) → both general and temporary employer could be vicariously liable
Key factor is control especially in over how that employee is working

Measures
Should have detailed and holistic standard of procedures → rulebook which specifies exactly what to do
in which scenario
Have proper instructions and training for employees
Dispute resolution
Litigation is the best choice

Mediation
No need to maintain good relations → large availability of businesses in such operations so can find
another contractor
No binding judgement

Arbitration
Limited grounds for appeal (vicarious liability in this case was a very grey area)

Litigation
No need to obtain consent, finality, can have appeal