Contract Law

Formation of contract
Offer
-

+ Acceptance:
Was the initial offer valid?
Was the acceptance of that offer valid?
Is the communication of the offer or acceptance through electronic
means?
- Was there any attempt to revoke the offer?

Consideration:
- Is there good consideration provided?
- Can you use promissory estoppel if there is no good consideration?
Intention to create legal relations:
- Is there an intention to create legal relations?
Miscellaneous issues:
- Unilateral contracts
- Invitation to treat
- Privity of contracts (to 3rd party)
Terms
What kind of (pre-contractual) statement was made?
Terms:
- Were there any implied terms?
- What type of terms are I looking at?
- What happens when a term is breached?
Exemption Clauses
- How to deal with exemption clauses?
- Is the exemption clause incorporated?
- Does the exemption clause cover the loss/damage in question?
- Are there any unusual factors limiting the exemption clause?
- Does the exemption clause contravene the UCTA?
Vitiating factors
Incapacity:
- Is incapacity applicable in the question?
Illegality:
- Is illegality applicable in the question?
- How to deal with contracts that are contrary to statute?
- How to deal with restraint of trade clauses?
Misrepresentation:
- How to show misrepresentation?

What remedies can be claimed?

When is rescission not available?

Mistake:
- Is mistake applicable in the question?
Discharge
Performance:
- Is the contract discharged by performance?
Breach:
- Is the contract discharged by breach?
Agreement
- Is the contract discharged by agreement?
Frustration
- Is the contract discharged by frustration?
- What remedies do I get under the FCA if the contract is discharged by
frustration?
Remedies
Common law damages:
- How to calculate damages?
- How to determine causation?
- How to determine remoteness?
- How to determine mitigation?
- How to determine assessment?
- What if its a non-pecuniary loss?
- What to do with liquidated damages clauses (LDC)?
Equitable remedies
- How to deal with equitable remedies?

Formation of contract
4 key elements offer, acceptance, consideration, intention to create legal
relations. If one of them is missing, no contract
Majority of contracts are bilateral (between specific parties). However, other
forms include unilateral contracts and invitation to treat
To see which type, determine who the offer was made to. If no specific party, see
miscellaneous issues.

Was the initial offer valid?

An offer is an expression made by the offeror to the offeree communicating the
offerors willingness to perform a promise (pg 57)
1) Was the offer successfully communicated? Oral, written or conduct? If yes,
contract likely.
2) Is the so-called offer actually a provision of information? (pg 61)
Is it in response to a query? If yes, see below. If no, offer.
Is there an intention by the party making the statement for it to have
binding effect? If yes, offer. If no, provision of information.
o Case to cite: Harvey v Facey [1893]

Was the acceptance to that offer valid?

An acceptance must be final and unconditional (pg 62)
Acceptance is valid even when the offeree is ignorant of the offer in the first
place. (pg 62)
Case to cite: Gibbons v Proctor [1891]
However, this case has been criticised and the opposite approach were taken in
the respective USA and Australia cases.
Case to cite: Fitch v Snedaker [1868], R v Clarke [1927]
1) Does the acceptance come with any conditions? If yes, no contract.
2) Is the acceptance successfully communicated? Oral, written or conduct? If
yes, contract likely. If no, see below.
General rule is that acceptance must be received by the offeror
(Receipt rule)
o Case to cite: Entores Ltd v Miles Far East Corporation [1955]
3) Are there any exceptions present, where communication is not necessary?
(pg 63) If yes, contract likely.
Is there any waiver of communication of acceptance?
Did both parties agree that silence constituted acceptance?
Does the postal acceptance rule apply in this case?
The postal acceptance rule is the case where acceptance is deemed to be
effective as soon as the letter is posted, regardless if the letter reaches the
offeror (pg 65)
o

For letters only

o
o

Both parties agree to the rule

Did the parties always conduct business through the post?

Is the communication of the offer or acceptance through

electronic means?
Everything using an information system is considered electronic means. So, even
if the advertisement is posted on Facebook or an online version of Straits Times,
it still counts as electronic means. S(2) ETA
S14 of ETA states that An offer of goods and services via the internet is
considered as an invitation of treat unless the offeror makes it clear he intends to
be bound by it (pg 66)
Stature to cite: s14 of ETA
Valid contract via electronic means when web advertisements use loose
language that turns it into a unilateral contract
Case to cite: Chwee Kin Keong v Digilandmall.com Pte Ltd [2004]
S13 has nothing to do with offer and acceptance at all, so dont bother with it
-

Receipt rule still applies for electronic communications

Was there any attempt to revoke the offer?

Valid acceptance CANNOT be revoked
Five ways of revoking offer. Can only be revoked prior to acceptance.
1) Was the offer withdrawn? (pg 69)
Was the revocation successfully communicated to the offeree? If yes,
revoking valid.
o Case to cite: Byrne v Van Tienhoven [1880]
Doesnt matter who communicates the revocation, so long
as the offeree has knowledge of it.
Case to cite: Dickinson v Dodds [1876]
Is there a replacement of an offer? (pg 70) If yes, revoking of old offer
valid provided that:
o The fresh offer supersedes the earlier offer
Case to cite: Banque v Citibank NA [1989]
2) Was there a rejection or counter-offer? (pg 72)
Was the rejection/counter-offer communicated to the offerer? If yes,
revoking valid.
Counter-offers count as rejection of initial offer since acceptance must
be final and unconditional
o Case to cite: Hyde v Wrench [1840]
3) Was the offer open for a specific time period? (Lapse of time) (pg 73)
Has the offer been lapsed? If so, offer revoked
o If offer is lapsed, but there is evidence to show that the terms of
the supposedly lapsed offer continue to govern relationship
between offeror and offeree after the specified period, then offer
still valid.

Case to cite: Panwell Pte Ltd & Anor v Indian Bank (No 2)
[2002]
Has a reasonable time already passed? If yes, offer revoked even if no
period specified
Case to cite: Ramsgate Victoria Hotel Co v Montefiore [1866]

4) Is there a failure in condition? (pg 73) (Overlap with terms section)

Are there any conditions set in the offer? Can be expressed or implied.
Are all of these conditions met? If no, offer revoked
o Case to cite: Financings Ltd v Stimson [1962]
5) Did the offeror or offeree die? (pg 74)
If offeror dies, offer revoked provided that offeree received notice of his
death
o Case to cite: Bradbury v Morgan [1862]
If offeree dies before accepting offer, offer revoked
o Case to cite: Reynolds v Atherton [1921]

Is there good consideration provided?

Consideration is deemed as an act or forbearance of one party, or the promise
thereof, is the price for which the promise of the other is bought, and the
promise thus given for value is enforceable. (pg 78)
Benefit to the promisor
Detriment to the promisee
Three types of consideration, 2 of which are valid consideration
Must fit executory or executed consideration before you look at the 2 main rules
of good consideration
Acceptable consideration (pg 79) (Generally no need to dwell on)
Executory consideration consideration that is yet to be performed. Involves a
promise to perform an act in the future.
Executed consideration consideration that has been performed. Involves an act
or forbearance which has been fulfilled
Not acceptable consideration (pg 80) (Need to explain)
Past consideration an act performed prior to, and to that extent, independent of
the promises being exchanged.
So long as it has been performed, its either past or executed
consideration
Case to cite: Pao On v Lau Yiu Long [1980] (pg 81)
o Is the act done at promisors request?
o Did both parties come to an understanding that the act is to be
remunerated?
o Is the contract otherwise enforceable? (Eg offer/acceptance valid
etc)

If all three fulfilled, it is executed consideration. If not, by default, it would be

past consideration.
Two main rules of valid consideration (pg 82)
1) Did the consideration move from the promisee? If yes, contract likely
General rule is that promisee must show the above point UNLESS the
criteria of privity is fulfilled
Case to cite: Tweddle v Atkinson [1861]
No need for consideration to move to promisor
2) Is the consideration sufficient? If yes, contract likely
Does the consideration have some value in the eyes of the law?
o Goods, services, money, property (duh)
o Forbearance to sue
Case to cite: Alliance Bank Ltd v Broom [1864]
o Performance of existing contractual duty to 3rd party
Case to cite: The Eurymedon [1975]
The law doesnt care about adequacy ie fairness of the contract so long
as both parties agree to it
Bad considerations
1) Is the consideration a moral obligation? (pg 86)
Case to cite: Eastwood v Kenyon [1840]
2) Is the consideration too vague or insubstantial in nature? (pg 86)
Case to cite: White v Bluett [1953]
3) Is the promisee already under an existing public duty (pg 87)
Case to cite: Collins v Godefroy [1831]
o Good consideration may be present if it can be shown that the
promisee has done more than what is required of him.
Case to cite: Glassbrook Bros Ltd v Glamorgan City
Council [1925]
4) Is the promisee under an existing duty to the promisor to perform the act?
(pg 88)
Case to cite: Stilk v Myrick [1809]
o Good consideration may be present if it can be shown that the
promisee has done more than what is required of him under the
contract.
Case to cite: Hartley v Ponsonby [1857]
o Good consideration may also be present if it can be shown that
the promisor received additional practical benefits from the
successful discharge of duty
Case to cite: William v Roffey Bros and Nichollas
(Contractors) Ltd (1991)

Can you use promissory estoppel if there is no

good consideration?
Must discuss rule in Pinnels case before mentioning promissory estoppel
Rule in Pinnels Case (1602) (pg 89)

 Part payment of a debt does not discharge the entire debt unless the
part payment was made at the request of the creditor and the payment
was made earlier, in a different place or in a different mode.
When promissory estoppel is established, a promisee may have a valid defence
against a promisors claim even though no consideration was given by the
promisee. (pg 91)
Case to cite: Central London Property Trust v High Trees House Ltd (1947)
1) Did the parties have an existing legal relationship?
2) Was the promise made clear, unequivocal and certain, and intended to
affect the existing legal relationship?
3) Can it be shown that the promisee relied upon the promise and altered his
position
4) Is it inequitable for the promisor to be allowed to go back on his promise?
Two points to take note for promissory estoppel
1) Promissory estoppel seeks to suspend the promisors rights temporarily,
unless it can be shown that there is no way to return the parties to the
prior position
Case to cite: Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd
[1955]
2) Shield, not sword Promissory estoppel can only be raised when sued by
a plaintiff
Case to cite: Combe v Combe [1951]

Is there an intention to create legal relations?

Intention to create legal relations refer to if the parties are willing to be legally
bound by their words and actions. (pg 93)
1) Would a reasonable person viewing all the circumstances of the case
consider that the promisor intended his promise to have legal
consequences?
In other words, would a reasonable man view you as being ready to sue
the other party for breach, and also be ready to be sued by the other
party if you breach?
Generally absent in social and domestic agreements unless it fulfils the test
mentioned above.
Generally present in commercial agreements. (Dont waste time discussing
unless question states otherwise)

Miscellaneous issues
Unilateral Contracts (pg 58)
Case to cite: Carlill v Carbolic Smoke Ball Co [1982]
A contract brought into existence by the act of one party in response to a
conditional promise of another

 Is the offer made to the whole world to accept?

Is the conditional promise clear and unambiguous?
Is the act that must be performed also clear and unambiguous?
Unilateral contract if yes to all 3.
Valid contract via electronic means when web advertisements use loose
language that turns it into a unilateral contract
Case to cite: Chwee Kin Keong v Digilandmall.com Pte Ltd [2004]
Acceptance
Acceptance is valid even when the offeree is ignorant of the offer in the first
place. (pg 62)
Case to cite: Gibbons v Proctor [1891]
However, this case has been criticised and the opposite approach were taken in
the respective USA and Australia cases.
Case to cite: Fitch v Snedaker [1868], R v Clarke [1927]
Waiver of communication normally present in unilateral contracts and
performance of the act required could amount to acceptance
Revoking an unilateral contract
If an offeree within a reasonable time from the making of the offer begins to
perform his obligations, the offeror cannot revoke his offer.
Case to cite: Dickson Trading (S) Pte Ltd v Transmarco Ltd [1989]

Invitations to treat (pg 59)

Case/Stature to cite: Patridge v Crittenden [1968] for advertisement, s14 of ETA
for web advertisements
An invitation to commence negotiations
Lack of intention for both parties to be bound, as too few information is
present
Generally all advertisements, display of goods and price
Acceptance of invitations of treat does not lead to a contract

Privity of contracts (pg 98)

General rule is that only parties in a contract may enforce or be bound by the
terms of the contract. (Super rare, unlikely to come out)
Exceptions
Agency issues (See agency section)
Pursuant to the Contracts (Rights of Third Parties) Act
o Did the contract state expressly that he may? S2(1)(a) CRTA
o Does the contract purport to confer a benefit to him? S2(1)(b)
and s2(2) CRTA

Is the third party expressly identified in the contract by name, as

a member of a class, or as answering a particular description?
S2(3) CRTA

If all 3 fulfilled, 3rd party is able to enforce any term of a contract to which he is
not a party
Exemption Clauses
The general rule is that 3rd parties cannot rely on exemption clauses.
Exceptions
Agency issues (See agency section)
Pursuant to the Contracts (Rights of Third Parties) Act
o Did the contract state expressly that he may? S2(1)(a) CRTA
o Does the contract purport to confer a benefit to him? S2(1)(b)
and s2(2) CRTA
o Is the third party expressly identified in the contract by name, as
a member of a class, or as answering a particular description?
S2(3) CRTA

Terms
What kind of (pre-contractual) statement was
made?
Three types of possible statements puffs, terms and representations
Puffs are statements that have no legal effect whatsoever (easiest to spot) (pg
105)
Representations are statements made before or at the time a contract is formed
concerning some matter relating to the contract
Terms are statements which form part of the contract.
1) Was the statement made vague or exaggerated? If yes, puff. If no, see
below
Terms vs Representations (pg 107)
Terms and representations are often difficult to tell apart.
First step is to apply basic test ie apply basic test before the guidelines
Basic test is look at the intention of the parties
1) Is there evidence that one or both contracting parties intended that there
be contractual liability in respect to the statement? If yes, term. If no,
representation
Case to cite: Tan Chin Seng & Others v Raffles Town Club [2002]
2) What can I use to help discern the intention of the parties? 5 guidelines
When was the statement made? If it is closer to contract, LIKELY term
o Case to cite: Routledge v Mckay [1954]
Was there great emphasis in the statement made? If yes, LIKELY term
o Case to cite: Bannerman v White [1861]
Does the maker of the statement have more knowledge regarding the
matter in the statement? If yes, LIKELY term
o Case to cite: Dick Bentley Productions Ltd v Harold Smith
(Motors) Ltd
Was there any attempt by the maker of the statement to invite the
other party to verify the statement? If it yes, LIKELY representation
o Case to cite: Ecay v Godfrey [1947]
Was the statement put into writing? If yes, LIKELY term

Were there any implied terms?

Express terms are terms that have been expressly agreed between the parties.
Implied terms are terms which has not been expressly agreed by the parties but
is nevertheless implied into the contract. (pg 109)
Implied terms cannot override express terms.
Case to cite: Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] (pg 112)
Steps to consider:

Ascertain how the gap in the contract arose. Was it because the parties did not
contemplate the gap?
Is it necessary in the business or commercial sense to imply the term in order to
give the contract efficacy?
Is the specific term to be implied so obvious that both parties would have
responded But, of course?
1) Are there any long usage or custom applicable? (Generally inapplicable for
Singapores context)
2) Can you successfully apply the business efficiency test?
Will the courts supply a term which it considers as having been
intended by the parties, so as to ensure their contract will proceed
along normal business lines?
o Case to cite: The Moorcock [1889]
3) Can you successfully apply the officious bystander test?
Terms that are so obvious that it goes without saying.
o Case to cite: Shirlaw v Southern Foundries [1926]
4) Are there any statutes that imply the term?

What type of terms are I looking at?

Three main types of terms conditions, warranties and innominate terms
Conditions are terms which are important, essential or fundamental to the
contract (pg 112)
Warranties are the less important terms and constitute secondary obligations
Default test: Did the parties intend the term to be a condition or a warranty?
Judge would look at

All the circumstances surrounding the contract

The parties of the contract
The subject matter of the contract
The importance of the term in question etc.

Innominate terms are terms that cannot be classified under conditions or

warranty after applying default test. (pg 113)
If the intention really cannot be discerned, apply innominate term test to see if it
falls under condition or warranty. Need to convince that the facts are really
inconclusive before applying this test.
Case to cite: Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962]
(pg 113)
As a result of the breach, was the innocent party deprived of
substantially the whole benefit that he was intended to get from the
contract? If yes, term. If no, warranty
o Look at proportion of remaining benefit and compare with initial
benefit.

What happens when a term is breached?

Condition breached (Doesnt matter the consequences of the breach) (pg 112)
Can repudiate contract (See discharge)
o Discharge/Repudiation: contract still valid up to the point of
breach
Claim damages (See remedies)
Warranty breached
Claim damages only UNLESS
Case to cite: RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd & Another
Appeal (2007) (pg 174)
Apply Hong Kong Fir test mentioned above to see if innocent party is
deprived of substantially the whole benefit.
If yes, can repudiate contract and claim damages even if term is a
warranty

How to deal with exemption clauses?

Exemption clauses are terms in a contract which seeks to limit the liability of the
party relying on the clause. (pg 115)
Another similar type of clause is the limitation of liability of clause, which is less
severe.
For ECs with respect to 3rd parties, see privity of contracts
Whether a particular exemption clause is reasonable or not depends on the facts
of a particular case. A clause which is reasonable in one context may be
unreasonable in another. Context is extremely important, so must discuss
context when dealing with ECs.
4 factors that must be discussed (in order from left to right):
Validity of Exemption Clause

Incorporation

Construction

Unusual factors

UCTA

Is the exemption clause incorporated?

Incorporated by 2 ways signature or notice. (pg 116)
1) Was there a signed written contract? If yes, incorporated immediately
The law doesnt care if the signee read the EC
Case to cite: LEstrange v Graucob [1934]
2) Was reasonable sufficient notice given for the exemption clause?
Where was the notice affixed? Was it in a place where a reasonable
man would have expected to find contractual terms?

o Case to cite: Chapelton v Barry Urban District Council [1940]

Was the notice given before or after the contract was made?
o Case to cite: Olley v Marlborough Court Ltd (1949)
Was there reasonably steps taken to bring the notice to the attention of
the injured party?
o Case to cite: Thorton v Shoe Lane Parking Ltd [1971]
o Even if the party resisting the EC is unable to understand the
clause, so long as reasonable notice is given, it would be
sufficient UNLESS it can be shown that the party relying on the
EC knew of the disability
o Case to cite: Thompson v London Midland Scottish Railway Co
[1930] (for first half), Geier v Kujawa, Weston & Warne Bros
(Transport) Ltd [1970] (for second half)
3) Was there any previous dealings between the parties that included an EC,
and any indication that the parties would be bound by the EC in the
current contract?
So long as one of the 3 points listed above is fulfilled, EC is incorporated.

Does the exemption clause cover the

loss/damage in question?
2 rules to look at Contra Proferentem Rule and Main Purpose Rule
The Contra Proferentem Rule states that when there is any ambiguity in
interpreting the clause, the construction to be adopted is the one which is least
favourable to the person relying on the EC. (pg 120)
The Main Purpose rule states that there is a general presumption that the parties
do not intend an exemption clause to defeat or be repugnant to the main
purpose of the contract. (pg 120)
1) Does the EC cover the damage/loss in question?
Look at the context of the question and the clause.
2) Is the EC against the main purpose of a contract? If yes, see below. If no,
apply Contra Proferentem rule.
3) Is the EC clear and unambiguous? If yes, EC valid. If no, EC not valid
Case to cite: Photo Production Ltd v Securicor Transport Ltd [1980]

Are there any unusual factors limiting the

exemption clause?
Unusual factors are factors that affect the interpretation of the clause and
changes what the EC is supposed to do. (Very rarely will this ever appear)
1) Are there any collateral contracts present that will defeat the EC?
Was there an oral contract prior to the signed contract?
Can it be shown that oral exchanges are critical and important to the
parties entering the contracts? (Exemption of Parol Evidence Rule
which states that everything that was said is deemed to be in a
contract)

Does the exemption clause contravene the UCTA?

The UCTA requires the EC to be reasonable
Applicable to both ECs and disclaimers (See Tort) s1(3) UCTA
Primary focus of UCTA deals with protecting parties, especially consumers, who
undertake business transactions.
1) Does the EC attempt to limit liability for death or personal injury? If yes,
EC invalid s2(1) UCTA
Only other loss or damage, such as financial loss or property damage,
can be excluded provided the clause is reasonable s2(2) UCTA
2) Is the EC reasonable? (pg 125) S11(1) UCTA
Consider all circumstances which were known to the parties ie parties
know the thing in dispute
Consider all circumstances which ought reasonably to have been
known to ie the parties may not have known, but they should have
known
Consider all circumstances which were in the contemplation of the
parties when the contract was made ie did the parties even consider
this?
o What could have happened? Did you understand what you
signed? What have you agreed to allow the other party to get
away with when signing the contract?
In actual practice, courts may decide to use Second Schedule of UCTA as
guidelines to determine reasonableness (pg 126)
What are the bargaining position of the parties?
Did the customer receive an inducement to accept the exemption
clause?
Did the customer know of the exemption clause?
Is compliance of the EC practical?
When the goods ordered specially?
DO NOT APPLY SECOND SCHEDULE OF UCTA WITHOUT DISCUSSING S11(1) UCTA,
AS THE SCENARIOS FOR EXCULSIVE USE OF SECOND SCHEDULE IS BEYOND OUR
SYALLABUS!!!!!

Vitiating factors
Vitiating factors are factors which prevent a contract from being enforceable
4 main types:

Vitiating Factors

Incapacity

Illegality

Misrepresentation

Mistake

Is incapacity applicable in the question?

Incapacity refers to the lack of capacity which may characterise a contracting
party.

1) Is the contracting party of unsound mind or intoxicated? If yes, contract

unenforceable
Was the person in question incapable of understanding the nature of
the contracts
Did the other party know or ought to have known of his incapacity?

2) Is the contracting party a minor? If yes, see below.

Minors (pg 133)
Minors are persons who have not reached the age of maturity (21 years old in
Singapore common law)
Certain commercial contracts relating to starting and conducting business
activities do not require the minor to be above 21 years of age. They only need
to be above 18 years of age.
Contracts with minors fall under 3 categories Valid, voidable or ratifiable
Valid contracts are contracts that will bind both the minor and the other party.
Does the contract benefit the minor? If yes, should be valid contract
o Examples are beneficial contracts for necessaries and beneficial
contracts of employment.
Necessaries are items that are considered appropriate for the minor in
this position?
o Case to cite: Peters v Fleming [1840]
Main rule for beneficial contracts are that on the whole, the contract
must be beneficial to him.
o Case to cite: Chaplin v Leslie Frewin (Publishers) Ltd [1966]
Has the minor performed his obligations? If yes, minor cannot recover
any money paid unless there is total failure of consideration by the
other party.

Voidable contracts are contracts that binds the other party but the minor can
repudiate it anytime during its infancy or within a reasonable period after he
attains majority.
Is there a recurring future obligation for the minor? If yes, should be
voidable contract
o Examples are minors contracts for a lease, partnership and
purchases of shares in a company.
Case to cite: Davies v Benyon-Harries [1931]
Ratifiable contracts are contracts that does not bind the minor unless he ratifies
it after he attains majority. Ratifiable contracts still bind the other party.
Does it fall into the first two categories? If not, by default it is a
ratifiable contract.

Is illegality applicable in the question?

Illegal contracts are generally void, with exceptions for contracts contrary to
statute and contracts in restraint of trade. (pg 140) (Super rare other than
contrary for stature, unlikely to come out)
1) Does the contract involve gaming or wagering? If yes, void. S5 Civil Law
Act
Exception for official gambling facilities such as Singapore Pools and
the Integrated Resorts
2) Does the contract contravene some aspect of public policy? If yes, void
Is it a contract to commit a crime, a tort or a fraud on a third party?
Does it promote sexual immorality?
Does the contract benefit foreign enemies or undermine relationships
with a friendly nation?
Does it negatively affect the administration of justice?
Does it seek to oust the jurisdiction of the courts? Etc
3) Does the contract contravene any statutes? See below
4) Does the contract include any restraint of trade clause? See below

How to deal with contracts that are contrary to

statute?
1) Look at what is the intent of the stature. (pg 143)
Does it seek to stop the activity all together, or merely regulate the
activity?
If it seeks to stop the activity and make the activity illegal to be
performed, contract is illegal and void
o Case to cite: Re Mahmound and Ispahani [1921]
If it merely seeks to regulate the activity, contract would not be void. Ie
performance of an unlawful act in an otherwise lawful contract would
not render the contract void.
o Case to cite: St John Shipping Corporation v Joseph Rank Ltd
[1957]
2) If the stature does not void the contract, determine who the defaulting and
innocent party is.

 The innocent party may be able to claim damages from the defaulting
party.

How to deal with restraint of trade clauses?

Restraint of trade contracts are agreements under which a business or person
agrees to refrain from undertaking certain types of trade of employment (pg 144)
(Super rare, unlikely to come out)
General rule is that restraint of trade agreements are void
Case to cite: Asiawerks Global Investment Group Pte Ltd v Ismail bin Syed Ahmad
[2004]
There are cases where restraint of trade clauses are valid:
1) Does the RT clause protect the proprietary or negotiate interest of
coventee?
Legitimate interest must be non-monetary. For instance, goodwill or
trade secrets.
2) Is the scope of the RT clause reasonable in terms of its period,
geographical scope and subject matter?
Does it go no further than what is necessary to protect the interest
concerned?
Case to cite: Man Financial (S) Pte Ltd v Wong Bark Chuan David [2008]
3) Is the RT clause not contrary to public interest?
Case to cite: Asia Polyurethane Mfg Pte Ltd v Woon Sow Liong [1990]
4) Can the clause be saved by severing the invalid parts of the clause? If
Are the promises severable in nature?
Is it possible to ever the void part by deleting the offending words or
clause without adding, substituting, re-arranging or redrafting the
contract?
o Apply Blue Pencil Test
Does it change the basic nature of the contract?
If yes to first 3, or no to one or more in the first 3, but yes to 4, then RT clause
valid

How to show misrepresentation?

Determine firstly that statement made is a representation by applying the
intention test (See terms)
A misrepresentation is a false statement of fact designed to be inducing and the
representee relied on the inducing statement and altered his position to enter
the contract. (pg 151)
The critical thing is first they have to ensure that they have to meet the elements
of misrepresentation before deciding if its fraudulent, negligent or innocent
1) Can you prove that its a false statement of fact made? (statement of
fact a statement that can be verified)
Case to cite: Edgington v Fitzmaurice [1885]
2) Can you show the inducing statement which part is inducing?

3) Can you show expressed proof of reliance of the inducing

staement? (mere thought or reaction does not suffice)

What remedies can be claimed?

First determine which category the misrepresentation falls under
Three categories:

Misrepresentation

Fraudulent

Negligent

Innocent

Misrepresentor can seek protection from EC if clause reasonable. s3

Misrepresentation Act
Fraudulent misrepresentation (Tort of deceit)
Fraudulent misrepresentations arises when the false statement is made by the
representor knowing that it is false. (pg 155)
1) Can it be shown that there is dishonesty on the part of the representor? If
yes, fraudulent. If no, negligent. (see below)
Extremely high degree of proof required
Case to cite: Derry v Peek [1889]
2) What remedies are available?
Rescission of contract contract is void ab initio, meaning that the
contract is treated as it never existed. (See below)
Damages (See remedies)
Negligent misrepresentation
Negligent misrepresentation arises when the false statement is made by the
representor without due care. (pg 156) (Most misrepresentation falls under this
category)
No intent of dishonesty can be proven
Stature to cite: s2(1) Misrepresentation Act
1) What remedies are available?
Rescission of contract contract is void ab initio, meaning that the
contract is treated as it never existed. OR damages in lieu
o Can you rescind the contract? (See next section)
o The judge takes away the innocent partys rights to rescind and
awards damages instead. If rescission is too harsh a remedy to
the representor, damages in lieu would be awarded. (See below)
o Stature to cite: s2(2) Misrepresentation Act
Damages, if rescission is awarded (See remedies)
Innocent misrepresentation

Innocent misrepresentation arises when the representor made the false

statement without fraud and without fault. (pg 157)
Burden of proof lies with the representor to show either (a) the
statement is true or (b) he had reasonable grounds to believe the
statement is true
Stature to cite: s2(1) Misrepresentation Act
1) What remedies are available?
Rescission of contract contract is void ab initio, meaning that the
contract is treated as it never existed. OR damages in lieu
o Can you rescind the contract? (See next section)
o The judge takes away the innocent partys rights to rescind and
awards damages instead. If rescission is too harsh a remedy to
the representor, damages in lieu would be awarded. (See below)
o Stature to cite: s2(2) Misrepresentation Act
Indemnity (Super rare, unlikely to come out)
o The cost to correct the position of the subject in the contract so
that the contract can go forward
o Case to cite: Whittington v Seal-Hayne [1900]

When is rescission not available?

4 possible scenarios (pg 158) (Appears to be quite common, especially point 3)

1)

Was the contract expressly or impliedly affirmed by the representee

after he discovered the misrepresentation?
The right to rescission is not lost easily. The representee must have
communicated his choice to the other party in clear and unequivocal
terms
Case to cite: Jurong Town Corp v Wishing Star Ltd (No 2)
2) Has a reasonable amount of time been lapsed since the discovery of the
misrepresentation?
3) Is it possible to restore the parties to the original position before the
contract? If no, rescission unlikely
Restitutio in integrum impossible
4) Is the court exercising its discretion pursuant to s2(2) Misrepresentation
Act to award damages in lieu of rescission?
Must be exercised in accordance with established principles

Is mistake applicable in the question?

Therere generally 4 types of mistakes for cases where contracts have been
vitiated by mistake. (Super rare, shouldnt come out in finals) (pg 160)
1) Common mistake
Occurs when both parties make the same fundamental mistake of fact
Case to cite: Couturier v Hastie [1852]
2) Mutual mistake
Occurs when parties misunderstand each other and are at crosspurposes
Both parties are not aware of each others mistake

 Case to cite: Wellmix Organics (International) Pte Ltd v Lau Yu Man

[2006]
3) Unilateral mistake
Occurs when one party is mistaken
The other party knows or ought to have known the first partys mistake
Case to cite: Chwee Kin Keong & Others v Digilandmall.com Pte Ltd
[2005]
4) Non est factum (This is not my deed)
Occurs when a person signs a document that is fundamentally different
in character from that which he contemplated
Case to cite: Lee Siew Chun v Sourgrapes Packaging Products Trading
Pte Ltd [1993]
Other vitiating factors include duress (pg 162), undue influence (pg 163) as well
as unconscionability (pg 164).

Discharge
Discharge refers to the termination of a contract
4 main ways:

Discharge of Contract

Performance

Breach

Agreements

Frustration

Is the contract discharged by performance?

The general rule is that if a contract is to be discharged by performance, the
parties must perform their obligations fully and precisely. (Precise Performance
Rule) (pg 170)
Case to cite: Cutter v Powell [1795]
1) Is the contract performed fully and precisely? If yes, discharged by
performance
2) Does one of the 5 exceptions apply in this case? If yes, discharged by
performance
De Minimis Rule Is the deviation in performance microscopic in
nature?
o Full payment must be made
o Case to cite: Arcos Ltd v E A Ronaasen & Son [1933]
Divisible contracts Are the obligations independent of each other in
the contract?
o Payment will be based on parts completed
o Chronological reliance of tasks not an issue
Substantial performance Has the party done enough work to deserve
full contract price?
o Does not mean performing majority of the task. Whole task must
be completed.
o Promisor can then get contract price less cost to rectify error
Prevented performance Was there an expressed act by the other
party to stop the promisor from finishing his obligations?
o Act cannot be implied
o Payment based on quantum meruit basis (As much as he had
earned based on market value of goods and services)
o Case to cite: Planche v Colburn [1831]
Acceptance of partial performance Did the promisee voluntarily
accept the partial performance of the promisor?
o Payment based on quantum meruit basis (As much as he had
earned based on market value of goods and services)

Is the contract discharged by breach?

2 types of breach Actual and anticipatory (pg 173)
An actual breach arises when the time of performance for the obligation has
arrived and the promisor failed to perform it.
An anticipatory breach occurs when the time of performance to occur has not yet
arrived, but the promisor, by word or conduct, has clearly expressed his intention
not to perform the obligation.
The breach must be repudiatory for the contract to be discharged (pg 175)
For actual breach,
1) Does it fulfil any one of the 3 scenarios mentioned in RDC Concrete? If yes,
repudiatory breach.
Breach of a condition
Breach of an innominate term that passes the Hong Kong Fir test
Breach of a warranty that passes the Hong Kong Fir test
Hong Kong Fir test Was the innocent party deprived of substantially the whole
benefit as a result of the breach?
2) Does the innocent party elect to affirm or terminate the contract?
Actual breach does not require legitimate interest (see below) to affirm
Either way, innocent party still can claim damages (See remedies)
For anticipatory breach,
1) Does the threatened non-action deprive the other party of substantially
the whole benefit the contract was intended to bestow on him? If yes,
repudiatory breach.
Case to cite: RDC Concrete Situation 2
2) Does the innocent party elect to affirm or terminate the contract?
Anticipatory breach MUST have legitimate interest to affirm
o Case to cite: White & Carter v McGregor [1962]
o Legitimate interest are interests by the party that cannot be
compensated by monetary means
o For instance, protecting reputation, prevent future loss of
business
Either way, innocent party still can claim damages (See remedies)

Is the contract discharged by agreement?

What is effected by agreement may be undone by agreement (pg 181) (Super
rare, unlikely to appear)
1) Existing agreement
Is there a term in the contract that will discharge it upon the
occurrence of a stipulated event or at the expiration of a certain
period?
2) Subsequent agreement
Mutual release

Both parties execute a mutual release that discharges each

party from all obligations in the contract
Unilateral release
o The party who have performed all his obligations opt to
discharge the other party from performing his yet-to-perform
obligations
Accord and satisfaction
o Using fresh consideration to purchase the release of the old
contract
Variation
o If the contract is altered by a subsequent agreement supported
by fresh consideration, then old contract may be discharged
depending on alteration.
Waiver
o When one party voluntarily grants the other party an indulgence
not to perform an obligation under the contract, contract
discharged by agreement
o

Is the contract discharged by frustration?

To determine if frustration applies (pg 183)
1) Is there a supervening event? - something occurring unexpectedly
2) Was the event not the fault of either parties?
3) Was there a radical change in circumstances opposed to what was
originally contemplated?
If yes to all 3, frustration established.
Examples of frustrated contracts
1) Destruction of subject matter
Case to cite: Taylor v Caldwell [1863]
2) Non-occurrence of event
Would the contract still have been entered had the event not occurred?
If yes, no frustration.
Case to cite: Herne Bay Steamboat v Hutton [1903] (if yes to above
question), Krell v Henry [1903] (if no to above question)
3) Government interference
Was the government action or ruling preventing the performance
expected? If yes, no frustration
Case to cite: Oakwell Engineering Ltd v Energy Power Systems Ltd
[2003] (if yes to above question), Metropolitan Water Board v Dick, Kerr
& Co. [1918] (if no to above question)
4) Personal Incapacity
Is there a contract for personal services?
Does the incapacity affect the performance by the individual in a
fundamental way?
Case to cite: Poussard v Spiers & Pond [1876]
Is the person to perform the services dead?
Factors limiting frustration
1) Was the event foreseeable?

 Foreseeability is no bar to frustration

Is the harm still foreseeable after all reasonable measures have been
taken to prevent the foreseeable harm? If yes, frustration
2) Are there any Force Majuere clauses? (Quite rare) If yes, frustration cannot
be held if clause is valid
Works like an exemption clause to limit liability
3) Was the frustration self-induced? If yes, no frustration
Was it due to the voluntary action or lack of action of one of the
parties?
Case to cite: Maritime National Fish v Ocean Trawlers [1935]

What remedies do I get under the FCA if the

contract is discharged by frustration?
Frustration is effective immediately and requires no communications.
Frustrated Contracts Act (FCA) will apply to all cases in our syllabus (pg 187)
Under FCA,
1)
2)
3)
4)

All future obligations ceases: Fibrosa Case [1943]

Money payable ceases to be payable: s2(2) FCA
Money paid prior can be recovered: s2(2) FCA
Expenses incurred by party for the purpose of conducting the contract
prior can be recovered: s2(3) FCA
5) Benefits conferred (other than money) can be compensated: s2(4) FCA
Take the case between Timothy and SBD. Timothy has paid $5,000 for 5 years of
blood storage, and will pay another $5,000 at the end. The contract was
frustrated in year 4
Under FCA,
1) SBD no longer has to store Timothys blood
2) The $5,000 he has to pay in the end ceases to be payable
3) Timothy can reclaim the $5,000 paid initially
***** However, take note that according to FCA Section 2(3), the party to whom
the sums were so paid or payable (In this case, Timothy is paying SBD, so SBD
would be the party in question) incurred expenses (Eg, electrical bills etc) in
storing Timothys blood, SBD may be allowed to recover part or whole of the
expenses.
IE, Timothy is unlikely to get back the full $5,000 initially paid.
Furthermore, SBD has conferred a benefit to Timothy for storing his blood for 4
years. This benefit would allow SBD to claim back an amount considered just to
make up for this benefit conferred.

Remedies
Two main types: damages under common law remedies and specific performance
and injunction under equitable remedies (pg 195)

How to calculate damages?

Damages refers to the monetary compensation payable by the defaulting party
to the injured party when a breach occurs. The intention would them be to place
the plaintiff, in monetary terms, in the same position as he would be in if the
contract had been performed properly.
Damages are meant to be compensatory and not punitive. Ie its not meant to
punish the defaulting party. It is meant to restore the party to the same position
as though the contract has been performed properly
All non-monetary losses not recoverable unless it fulfils criteria for exceptions.
(See below)
4 main factors in determining damages. Determine in order:

Aspects of Damages

Causation

Remoteness

Mitigation

Assessment

How to determine causation?

Causation means that the breach must have caused the loss suffered by the
plaintiff. (pg 197)
1) Did the breach cause the loss?
Does it pass the but-for test?
o But for (if not for) the <breach>, the plaintiff would not have
suffered <loss>

How to determine remoteness?

Remoteness in law purpose is to prevent limitless causation ie limit how much
is recoverable.
1) Is the damage proximate and not remote? (pg 198)
Case to cite: Hadley v Baxendale [1854]
Does it fall within the first limb or second limb? If not, damage is too remote.
First limb deals with normal loss and are considered as arising naturally
Recovery of losses within the scope of contract

 Eg. If the contract is to purchase goods, then first limb will only be
applicable with regards to this particular purchase of goods
Second limb deals with abnormal loss. 3 scenarios:
The injured party told the other party that he would suffer this loss. The
other party now has actual knowledge of the loss
The other party did contemplate that the injured party will suffer this
loss due to his breach
The other party did not contemplate that the injured party will suffer
this loss due to his breach, but he should have contemplated that the
injured party will suffer this loss.

How to determine mitigation?

Mitigation refers to the fact that a plaintiff cannot recover losses which he could
have avoided. (pg 202)
If the plaintiff failed to mitigate his losses, the amount of damages recoverable
will be reduced by the amount that he would have saved if he had mitigated his
loss.
1) Is mitigation possible? If yes, see below. If no, move on to assessment.
2) Was the steps taken to mitigate the loss reasonable?
Case to cite: British Westinghouse Electric & Manufacturing Co Ltd v
Underground Electric Railways Co of London [1912]
If the reasonable mitigation led to more losses, the losses can be
reclaimed
Case to cite: Melachrino v Nickoll & Knight [1920]
Burden of proof on defendant to show that mitigation is not reasonable
o If mitigation not reasonable, damages recoverable would be
reduced by the amount if mitigation was made reasonably

How to determine assessment?

The general principle of assessment is that the injured party is to be placed in
the same financial position he would be in if the contract has been performed
properly. (pg 205)
Case to cite: Trigen Industries Ltd v Sinko Technologies Pte Ltd & Another.
1) Is the loss an expectation loss or reliance loss?
Expectation loss is the amount the injured party would have expected to gain
had the contract been performed properly. (Loss in profits)
Reliance loss is the expenses incurred by the injured party who, relying upon the
contract, prepares to perform his obligations and incurs expenses which are
rendered wasted because of the breach. (Wasted expenditure)
Can only claim expectation loss or reliance loss, unless expectation loss is
calculated on a net basis (less expenses basis). Both must be calculable.

What if its a non-pecuniary loss?

Default position not recoverable. (pg 209)

If non-pecuniary loss is identified, skip the 4 steps mentioned above and just
state that it generally cannot be recovered
Exceptions: (If yes for either, can claim)
1) Did the plaintiff suffer substantial physical inconvenience?
Case to cite: Bailey v Bullock [1950]
2) Was the main purpose of the contract to provide enjoyment or security?
Case to cite: Jarvis v Swan Tours Ltd [1973]

What to do with liquidated damages clauses

(LDC)?
LDCs are clauses that specify the amount of damages to be paid by the
defaulting party to the injured party if such a breach occurs. (Super rare, unlikely
to come out) (pg 211)
1) Is the LDC a genuine pre-estimate of loss or a penalty?
Genuine pre-estimates of loss are enforceable and will be the amount
paid regardless of actual loss
Penalties are generally unenforceable unless it is lower than actual
loss.
2) To determine the above point, apply Dunlop Pneumatic Tyre Co Ltd v New
Garage & Motor Co Ltd [1915]
Is the liquidated damages extravagant and unconscionable in
comparison with the greatest conceivable loss? If yes, likely penalty.
Is there a single lump sum payable on the occurrence of one or more
breaches, of which some are serious and others trifling? If yes, likely
penalty.
Exact description of clause as LDC or penalty relevant, but not
conclusive

How to deal with equitable remedies?

Remedies would only be considered when monetary compensation in the form of
damages are inadequate. (Super rare, unlikely to come out) (pg 213)
Even if it is available, it is not a matter of right. It is still up to the judge.
To ask for remedies, you must have clean hands ie the idea is you cannot ask
the judge to use the remedies in your favour if you yourself have been acting
inequitably
2 main types, specific performance and injunction
Specific performance (pg 214)
It is an order of court requiring a party to perform his obligations as specified in
the contract.
Usually for contracts involving land, rare or unique items etc.

Injunction (pg 215)

It is an order of court requiring a party to abide by a negative covenant in a
contract. (Agreement not to do something).
1) Prohibitory injunction => Preventive. Seeks to restrain a person from
conduct which he has agreed not to do.
2) Mandatory injunction => Restorative. Compels action to restore a breach
of covenant which has already occurred.
*Different from specific performance which is ordered to enforce a positive
obligation which has yet to be performed.