Introduction to Business Law in Singapore: Instructors Manual

Suggested Answers
Chapter 1
1.

Law and business are intertwined, various aspects of business have legal implications,

basic knowledge of the law can help to prevent problems from arising and help solve some
simple problems that may have arisen, basic knowledge will help to understand any legal advice
obtained and protect ones accrued interests.
2.

Legislation, case law or common law and international conventions to which Singapore is

a signatory.
3.

Criminal proceedings are concerned with forbidding certain types of wrongful conduct

and punishing those who perpetrate it, while civil proceeding are concerned with regulating
private rights and obligations between individuals. See Table 1.1.
4.

a.

Criminal proceedings by the state for breaking into the locker, stealing the hand
phone (theft) and dishonestly disposing of the hand phone. Civil proceedings by
the owner of the locker (e.g. the school) for damage to the locker. Civil
proceedings by Joe for damages for loss of the hand phone.

b.

Criminal proceedings by the state for driving under the influence of alcohol,
negligent or dangerous driving resulting in collision with the cyclist, failing to stop
and render assistance to the cyclist after the collision. Civil proceedings by the
cyclist for damages for injuries suffered and consequential loss of income and
other monetary compensation and damage (cost of repairs) to the cycle.

c.

K Pte Ltd may commence civil proceedings against the rose supplier if time was
of the essence (important term) in the contract. The rose supplier may
commence civil proceedings against K Pte Ltd for payment or damages if time
was not of the essence in the contract. John may commence civil proceedings for
refund of the amount he paid for the bouquet but will not be able to recover
anything for his broken engagement.

5.

Negotiations, litigation, mediation, arbitration and bringing the matter to the Small Claims
Tribunal and other tribunals.

6.

a.

Jane may file a claim in the Magistrates Court which can hear claims of up to
$60,000. As this is not a contractual claim the Small Claims Tribunal will not hear
this claim.

b.

Simon can file an appeal to the High Court which has both original and appellate
jurisdictions.

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c.

Jack can initiate negotiations to settle the matter out of court. If his former partner
agrees they can refer the matter for mediation at the Singapore Mediation
Centre.

d.

If the contract contained an arbitration clause or both parties agree, the matter
can be referred to arbitration by an expert or panel of arbitrators familiar with
tanker construction. If there is no arbitration clause and the other party does not
agree to arbitration the matter may have to proceed in court. Expert witnesses
may be called to explain to the court the technical matters and if the matter is
very complex the court may appoint an expert to advise the court.

7.

Bankruptcy, writ of seizure and sale, garnishee order and appointment of receiver.

8.

Restriction on travel outside Singapore and his passport may be impounded. He cannot
obtain credit for more than $500 without disclosing that he is a bankrupt. A portion of his
income has to be paid to the Official Assignee for repayment to his creditors. He will also
not be able to take part in the management of a company or business.
He may not be able to practise certain professions such as a solicitor or accountant and
he cannot be a Member of Parliament.
He can get out of this situation if the bankruptcy is annulled when debts are paid. The
court may discharge the bankruptcy either absolutely or conditionally. The Official
Assignee may grant a Certificate of Discharge after a lapse of three years and if the debt
is less than $500,000. This is discretionary.

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Suggested Answers

Chapter 2
1.

Offer, acceptance, consideration and intention to create legal relations.

2.

In (a) to (e), (g & h), all four elements of contract are satisfied, so there is an enforceable
contract. In (f) there is no offer. In (i) there is no consideration. In (j) there is presumed to
be no intention to create legal relations.

3.

The advertisement for tender is an invitation to treat. The bidder sends in its tender and
that constitutes an offer. This offer was revoked before the company accepted the offer.
Therefore, Apce Ltd cannot take any action against Lions Pte Ltd.

4.

The quotes are offers. The request for discount amounts to a counter offer and that
amounts to a revocation of the original offer. So Herox Ltd need not supply.

5.

The menu is an invitation to treat. The customer makes the offer when he places the
order with the waiter. The restaurant need not accept that offer and can make a new
counter offer at increased price.

6.

The offer was received on the 8th of March. Revocation was received on 14th of March. If
the Postal rule applies, acceptance took place upon sending the letter on the 9th of
March (Adams v Lindsell). Since there is acceptance before revocation, there is a valid
contract and therefore Sam must take up the booking. E-mail correspondence:
acceptance before revocation, therefore there is a valid contract.

7.

There are two offers one to sell the MP-3 player and the other to keep that offer open
for five days. For the second offer, even if accepted, there is no consideration so there is
no enforceable contract (Routledge v Grant). James could have protected himself by
giving consideration/payment/deposit.

8.

There is no fresh consideration for the variation. Contract was not under seal or deed.
Williams v Roffey does not apply as this kind of conduct borders on fraud/dishonesty
Promissory Estoppel would not be available. It would not be inequitable for Lim & Sons to
go back on their promise to pay the higher price. In any event the doctrine cannot be
used as a sword. So the variation is ineffective.

9.

There is no fresh consideration for the variation. Contract is not under seal or deed.
Williams v Roffey Employer has received no practical benefit. Promissory Estoppel
not really inequitable for employer to go back on his word (as employee has not really
suffered any detriment) in any case, doctrine cannot be used as a sword. Bonus is not
payable.

10.

Tan must consent to the transfer or assignment of the contract as it involves liabilities.
Usually it is also expressly stated in the contract that consent is required. If consent is
obtained there can be transfer or assignment of liabilities. Sub-contracting or sub-sub-

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contracting too is possible. To protect him the contract should expressly prohibit subcontracting.

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Suggested Answers

Chapter 3
1. Generally, contractual terms are upheld even if unfair. So Lim is bound by the terms of the
contract he has entered into. He can always resign. If his salary is not paid, there is a
breach of condition and Lim can terminate the contract for breach.
2. Is there a term in the contract that JVK should not copy? If not, can such a term be implied?
Is it so obvious it goes without saying? Is it necessary to imply it in order to give the
contract business efficacy? Not clear, so to avoid doubts the publishing company should
have had an express clause in its contract dealing with plagiarism.
3. Can a term be implied that food would arrive within a reasonable time? Breach of an
innominate term with serious consequences so can terminate contract for breach i.e.
can leave without liability to pay.
4.

a.

A term may be implied that an employee must obey the employer's lawful orders.
Here there is a breach of an innominate term without serious consequences. So
Y Company cannot terminate the contract. Y Company can claim any losses it
has suffered.

b.

A term may be implied that the employee cannot run a business in competition
with his employer or make secret profits. There is a breach of condition, so the
employer can terminate the employment and sue for damages. The employer
can ask for an account of profits made.

5.

Did the parties know that the computers were for immediate resale or normal office use,
etc? Was time of the essence in this contract? To avoid problems, if a term is important it
should expressly refer to its importance in the contract.

6. Has there been a breach of contract by the car park management? Unlikely with regard to the
injury to the foot caused by another user. For the injury caused by the pipe, has there
been failure to take reasonable care? Can such a term be implied? Assuming there is a
breach, is the exclusion clause valid? Exclusion clauses are part of the contract
(Thornton v Shoelane). If the clause forms part of the contract, it may be invalid under s.
2 UCTA. For the valuables: is the clause reasonable under s. 2(2)/3 UCTA? If the notice
was at the entrance the exclusion clause will be part of the contract. But the rest of the
answer would still be the same. If Jill was illiterate or unable to read English the answer
will not be different as the car park would have done what is reasonably expected of
them.
7. The possible claim is for breach of an implied term of contract, i.e. failure to take reasonable
care. Assuming this term has been breached consider if the exclusion clause is valid.
Consider Section 2(2)/3 of UCTA is the clause reasonable? The answer would depend
on factors such as bargaining strengths of the parties; given an inducement to agree to a

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lower figure (though much would also depend on the reasonableness of the figures
involved), etc.

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Suggested Answers

Chapter 4
1. The reason for requiring a licence is probably to protect the public so the contract here is
unenforceable. The Money Lender's Act expressly provides that, if the lender is
unlicensed the sums lent or interest cannot be recovered. Contracts which promote the
commission of a crime are unenforceable illegality. So Jamie cannot get payment on
the sale of pirated CDs either.
2. The contract contains a restraint of trade clause. This is a sale of a business so it may be
presumed that Zenna had a legitimate interest to be protected. However, the clause must
also be reasonable in terms of time, area and scope of limitation. Here probably the
length and scope of the clause is too wide. So the clause may be unenforceable.
3. The employment contract contains a restraint of trade clause. Did the employer have a
legitimate interest to be protected? Does Jing have access to trade secrets/confidential
information? Assuming he does, is the clause reasonable in terms of time, area and
scope of restraint? Area and scope might be too wide so the clause is not enforceable.
The clause is severable from the rest of the contract, so the rest of the contract remains
intact and Jing can sue for his unpaid salary.
4.

a.

The contract is completed and Billy had use of the phone, so contract is
enforceable and Billy cannot get out of it (Valentini v Canali).

b.

If he has not paid, then consider if it is necessary given Billys station in life. If
such a phone is not a necessary then the shopkeeper cannot sue, but Billy must
return the phone.

c.

Consider if the suit was a necessary at the time the contract was made (Nash v
Inman). If it was, Billy must pay a reasonable price for it.

d.
5.

A minor can always enforce a contract against the other party if there is a breach.

The representation was clearly fraudulent misrepresentation (Derry v Peek). The fact that
Dr Ng was given an opportunity to verify Dr Lees claim does not make a difference
(Redgrave v Hurd). The misrepresentation need not be the only factor inducing the
formation of the contract (Edgington v Fitzmaurice). Therefore Dr Ng can rescind the
contract. If he delays for two years he may have lost the right to rescind the contract but
he can recover damages.

6.

a.

There is solicitor and client relationship. Undue influence presumed but can this
be rebutted because Simon is an ex-client? Unlikely. Simon cannot plead mistake
either as he clearly knew what price he was selling at.

b.

The document was fundamentally different from what Abigail thought she was
signing. Was she negligent in not checking out the contents before signing?

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Mistake may be made out. There may also be undue influence (Inche Noriah v
Shaik Allie bin Omar).
7.

Usually you are bound by what you sign. There was no mistake as to what document Ah
Meng signed. The delivery order is only prima facie proof that 30 items were delivered to
the warehouse. Ah Meng or Tay could still establish that only 28 items were delivered by
adducing other evidence, e.g. that someone saw two of the items falling off the lorry on
the way to the warehouse or that Ching & Cos supplier only supplied Ching with 28
items.

8.

If duress can be made out (Atlas Express Ltd v Kafco Ltd) Henry & Co need not pay the
new price.

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Suggested Answers

Chapter 5
1. Clearly there has not been complete performance. TT Trans Ltd is not entitled to payment
(Cutter v Powell). If the goods were merely delivered to the wrong address in Shanghai,
there probably has been substantial performance (Hoenig v Isaacs) and TT Trans Ltd
may be entitled to reasonable payment after deduction of any loss and expense suffered
by Harjeet because of their negligence.
2. Although there has been no complete performance, the printers performance has been
prevented by Jack (Planche v Colburn). The printer can claim on a quantum meruit basis.
3. No, the contract is validly terminated by mutual agreement. There is an offer to cancel and
acceptance of the cancellation. There is consideration as both parties are released from
their outstanding obligations and, as this is a business transaction, intention to create
legal relations may be implied.
4. Failure of supplier to supply does not frustrate contract unless the other party knows that the
goods can come only from that supplier, which is unlikely in the present case. The failure
of the purpose of the contract does not generally frustrate the contract. So James and
Nick, the buyers in their respective contracts, must still go ahead with the contract.
5. Cost increases/labour shortages generally do not amount to frustration (Tsakiroglou v
Noblee) so Charlie cannot be excused.
6. Here the frustration may be self-induced Super Servant Two. It is unlikely that Ting can
plead frustration successfully and will be liable to Ritchie for breach of contract.
7. As the contract states that the goods are to be shipped from Port J and that has become
impossible, frustration may set in and the contract comes to an end. As the force majeure
clause clearly provides that the contract time would be extended in the event of strikes,
the contract does not come to an end and parties must still go ahead with the contract.
8. The contract is frustrated by the death of Lim. Under the Frustrated Contracts Act monies
payable need not be paid and deposit paid is recoverable by Tan Pte Ltd, but the court
has a discretion and so may ask Tan Pte Ltd to compensate Lims estate for the value of
services performed by Lim prior to his death.

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Chapter 6
1.

Jenn can claim hospitalisation expenses which are reasonably foreseeable. The loss on
the modelling assignment may be too remote as Goose Tours may not be aware that she
had such an assignment.

2.

A claim for compensation for the heart attack would not be sustainable as the alleged
damages would be too remote. Since market price is the same, Hui has suffered no real
loss and would only be entitled to nominal damages.

3.

As the amount of damages has been pre-agreed, this amounts to a liquidated damages
clause. Therefore, the building owner can only claim $2,000 and not $10,000.

4.

Zinnia would be able to claim damages for the couple of days she could not have got an
alternative machine as she has a duty to mitigate damages. Beyond that she is not
entitled to any further damages. No damages are recoverable for the mental distress.

5.

If the market prices remain the same and if there is no other loss, the dealer would only
be entitled to nominal damages. The deposit, as it is not extravagant and since the
contract states it will be forfeited, may be forfeited. If seller is in breach the buyer can get
back the deposit and sue for other losses he has suffered.

6.

Ben would be entitled to damages equivalent to the 10% increase in purchase price. He
could opt to claim specific performance of the contract. All actions based in contract must
be brought within six years of the breach. Further, in relation to specific performance,
there must not be an undue delay in making the claim or else it may not be available.

7.

Yes. An injunction will give Z the right to stop X from sub-letting the property.

8.

These are contracts for personal services. The remedy of specific performance is not
granted in contracts of personal services. Yen cannot insist that Jim work for him.

9.

William can make a claim for fraudulent misrepresentation. If he only discovered the
fraud in 2005 even with reasonable diligence, the six years time limitation begins to run
from 2005. Thus the action is not time barred under the Limitation Act.

10.

Y Productions would be able to claim the expenses of $50,000, the loss of profits of
$200,000 and any other expenses including any refunds payable to the ticket buyers.

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Suggested Answers

Chapter 7
1.

Ming can sue Yan for breach of section 12(1) of the Sale of Goods Act, for breach of the
implied condition that the seller had the right to sell the goods and can claim return of the
purchase price paid.

2.

Handbag: Is there a breach of section 13 SGA, i.e. the implied term that the goods will
correspond with the description? If so, B can repudiate the contract and claim a refund of
the price paid. Electric Rice Cooker: section 14(2)(3) SGA warranty as to satisfactory
quality, does not apply because X is not selling in the course of business. So the general
rule, caveat emptor, applies and B has no remedies.

3.

Designer

outfit:

Possible

breach

of

section

14(2).

Consider

the

price/minor

defects/appearance and finish. Exclusion clause as this is a consumer sale the clause
may be ineffective. The delay of a month would be too late and the goods would be
deemed to have been accepted Bernstein v Pamson Motors (Golden Green)
Ltd/section 35 SGA. Tai Tsai cannot reject the outfit. Colour/size: goods still satisfactory,
so no breach and thus no remedy. Blouse was of satisfactory quality, so no breach and
thus no remedy. The lack of labelling may indicate that the goods are not of satisfactory
quality.
4.

No breach of section 14(3), implied term as to satisfactory quality, because it is not

reasonable to rely on the young salesgirl.

5.

Yes, X can reject the pens as all the goods supplied must be of satisfactory quality. If X
were a company, section 15A will apply as it would be a non-consumer sale. If the breach
was slight, it will be treated as a breach of warranty and X may not be able to return all
the pens, but would be entitled to damages.

6.

There is a breach of section 14(2), so Tim is entitled to have his money back. Since it is a
consumer sale, the exclusion clause (three days) is not effective, so Tim can still get his
money back. If goods are not defective the clause is valid and Tim would not be able to
get his money back.

7.

Assuming the intention of the parties cannot be ascertained, property in the goods would
pass according to section 18 of SGA. Here the goods are unascertained so section 18(5)
applies. At the time of the accident the goods are unconditionally appropriated. Hence,
property and risk have passed to the buyer section 20 SGA. However, as the accident
occurred because of negligence of the seller's driver, the seller has to bear the risk and
the buyer does not have to pay.

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8.

If the shop is robbed the buyer must pay for the goods as the risk is with him. If the buyer
is made a bankrupt X can take back the jewels as the contract states that property would
still be with the seller until payment is made reservation of title clause.

9.

The buyer can either reject the whole lot, or accept the whole lot at the contract rate or
accept the contracted amount. Delivery of 101 bags is a trivial breach, section 15A will
apply. If the buyer becomes bankrupt this is a sale of unascertained goods, section
18(5) property would have passed to the buyer. The seller cannot take back the goods.
Y would have a personal right to sue X for the price, but this may not be useful in the light
of X's financial position.

10.

Against the shop: breach of section 14(2)/(3) so theres a right to repudiate the contract
and reject the goods. No rights in contract against the manufacturer unless the
manufacturer has given a guarantee / warranty.

11.

Z would have to bear the loss because risk is with him. He could have bought insurance
to protect himself.

12.

Z will get good title by virtue of section 25 of SGA if he bought in good faith and without
notice of the defect in title. If the goods are stolen Z will not get good title because the
thief does not have good title and none of the exceptions apply.

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Suggested Answers

Chapter 8
1.

a.

Mark is a sub-contractor and not an employee.

b.

Although the assignment is project-based, Mark is an employee.

c.

Mark is an employee, although he has no fixed salary Kuroeka Enterprises Pte

Ltd.
2.

An employee must obey the reasonable instructions of the employer. Failure to do so

amounts to a fundamental breach and the employee may be summarily dismissed.
Manning the reception desk could fall within the ambit of ensuring the smooth running of
the office and thus James may be in breach (Sim v Rotherham Council).

3.

An employee owes his employer a duty of care or duty not to be negligent. Tim was
negligent. He will be liable for the banks loss (Janata Bank v Ahmad). The bank can also
summarily dismiss Tim.

4. An employee owes a duty of good faith and fidelity to his employer. This requires him not to
take on outside work if the employers interests are affected. Compare Hivac Ltd v Park
Royal Scientific Instruments Ltd and Plastics Ltd v Froggatt. Meng may not be in breach
of his duty as no great harm is inflicted on the employer.
5. Generally an employee may not work for a competitor or set up business in competition even
where there is no restraint clause. However, if he is not holding a senior position or if the
information he has access to is not highly confidential, then he may be free to do so.
What is highly confidential depends on the facts (Medivac international Management Pte
Ltd v John Walter Moore). If Lim is a relatively junior employee and the information he
has access to is easily available in the market, the employer may not be able to enforce
the restraint provision.
6. a. As Jinny is a domestic worker there is no obligation on the employers part to make CPF
contributions.
b.

As he is a shift worker the employer may substitute a continuous period of 30

hours as a rest day.

c.

As the contract is silent, the provisions of the Employment Act apply. The
maximum number of annual leave is 14 days. The employer is obliged to give
Mark 14 days.

d.

Every female employee is entitled to paid maternity leave under the Employment
Act and under the Children Development Co-Savings Act for a total period of 12
weeks. Failure to grant such leave is an offence.

e.

The retirement age is 62. To force an employee to retire early is an offence s

4(3) Retirement Age Act.

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7. As Anthony has employed persons in manual labour for the purposes of making jewellery
which he sells and thus makes a gain, the backroom is a factory and Anthony must
comply with the Factories Act s 6(1) Factories Act.
8. Although it is his lunch time, the injury occurred in the course of employment and he is
entitled to compensation under the Workmans Compensation Act. He can also claim
damages under the common law if he can show that either his employers or some other
partys negligence caused the accident.

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Suggested Answers

Chapter 9
1.

The company would be bound by the actions of the managing director as he would have
actual/implied authority to act for the company. As for non-executive director and the
employee (accounts executive) there is no such implied authority and the company is
only bound if it has given the non-executive director express authority or the company
has ratified the contract or has made some representation that the non-executive director
or employee has such authority. Past dealings honoured by the company may amount to
such representation.

2.

Although Joan had no actual authority she had ostensible/apparent authority by virtue of
her position as the manager. Thus YY Ltd is bound by the contracts made by Joan in the
usual course of business and thus has to pay for the cigarettes.

3.

Travel agents issue tickets in the name of the customer and the ticket forms the evidence
of a contract between the customer and the airline. The travel agent earns a commission
on the sale of the ticket. Thus the travel agent is truly the agent of the airline who is the
principal and the customer is the third party who through the agent enters into the
contract with the airline. So there is a direct contract between Raja and Singapore
Airlines. There is also another contract between the customer and the agent to buy a
plane ticket for travel on Singapore Airlines.

4.

The stockbroker is an agent. There is failure by the agent to follow instructions which
results in loss to the principal (Jimmy). The agent also failed to exercise due care and
skill. The agent is liable for the principals loss.

5.

Simon is an agent. An agent cannot delegate his duties unless the principal has
expressly or impliedly agreed to the delegation of duty. The duty delegated was not of a
purely administrative nature and the exceptions apply. So Mark need not pay the bill
John McCann & Pow (1975).

6.

Lim is a partner in the firm and is therefore an agent of the firm. He must carry out his
duties in good faith. He is duty bound to disclose to the firm the true price he paid. Failure
to do so is in breach of his fiduciary duties. Making a secret profit for himself is in conflict
of interests. He is liable to the firm for the profits he has made.

7.

If the contract with the auctioneer does not prohibit Kien from otherwise disposing of the
painting, it would not be in breach of the contract for Kien to sell it to Jane. Unless the
contract provides otherwise, the auctioneer cannot sue for loss of chance to earn a
commission either. But auctioneer can sue for indemnity in respect of expenses incurred.

8.

The agent has made a fraudulent misrepresentation. As he is Mrs Tans agent, she is
liable for his acts. The buyer can set aside the contract and claim damages (if any). Mrs
Tan can in turn sue the agent and recover the loss she has suffered.

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9.

Yuppie Property Consultants has breached its fiduciary duties by gaining an advantage in
the course of its duties. They are liable to account to James for the profit they made in
this transaction.

10.

Assuming the stationer does not know that Gill has resigned, the employers could be
liable because of ostensible/apparent authority, unless the employers informed the
stationer that Gill is no longer authorised to act on their behalf. The stationer may also
claim the amount due from Gill. The position of Ah Leng is different. There have been no
previous dealings and no representation has been made that Gill may make orders on
their behalf. The company need not pay Ah Lengs bill. Ah Leng can only claim from Gill.
Gill could be liable for breach of warranty of authority.

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Suggested Answers

Chapter 10
1. The best way to enforce the debts would depend on various circumstances e.g. how quickly
the creditor wants to be paid, how much is owed, how much assets the debtor has, what
type of assets the debtor has, the costs of each type of proceeding, etc. Assuming
bankruptcy proceedings are undertaken (they can be as more than $10,000 is owed) the
goods in the provision shop, the car, the watch and the monies in the bank account can
be seized. The HDB flat and amounts in CPF are generally exempted. If it was the
partnership, the creditors may sue the firm and go after the assets of the firm; if that
proves to be insufficient, they may enforce the judgement against Thomas or Samuel or
both Thomas and Samuel. So the answer could be the same. If it was a company, only
the assets of the company can be seized, that is, goods in the provision shop. If after all
their efforts, creditors have not been paid, they would have to bear the loss.
2. The carelessness of Sim is actionable in tort. A partner is liable for the torts of other partners
done in the normal course of business (s. 10 PA). Thus all partners and the partnership
are bound for any loss resulting from the carelessness of Sim. Ordering goods: a partner
is an agent of the firm in respect of acts done in the usual course of business (s. 5 PA).
Thus the partners and the partnership are bound to pay for the goods ordered. Running
his own business is in breach of his fiduciary duties and thus he must account for profits
(Bentley v Craven). Since it may be difficult to continue being partners in such
circumstances, Tan can apply to court to dissolve the partnership even if Sim does not
want to s. 35 PA. If the partnership agreement provides for termination by notice Tan
should give notice to terminate.
3.

a.

Sole proprietor the goods belong to him so he is entitled to take them.

b.

Partnership the goods are partnership property to be used for partnership

purposes. If the goods are used for own purposes there could be liability, e.g: if
used to make profits, the partner is accountable for the profits.

c.

Company property belongs to company, so if you remove company property

other than as allowed under company law, there is offence of theft and also civil
liability for the value of the goods and loss of profits to the company.

4.

Usually if a loss occurs to the company, the companys directors must institute an action
in the name of the company. However, there are some exceptions such as in the case of
fraud. Pursuant to s216A CA the court may allow a member to sue in the name of the
company to recover monies due to the company.

5.

Although the shareholders/directors have substantial assets the creditors cannot go after
those personal assets (Saloman v Saloman). However, there are exceptions (s.340 (1)

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CA) which will enable creditors to bring action against Pang and Teo and seize their
personal assets to satisfy the debt.
6.

As not much capital is required and not much risk is involved, a partnership might be the
appropriate organisation as it is cheaper to run. If the business prospers and there is a
need for more capital and the risks are greater they may consider either a limited liability
partnership or company. For the advantages and disadvantages refer to Table 10.1.

7.

a.

If you carry on any activity for gain, you must register a business. However, some
of the factors to consider if you are carrying on business as a private tutor are
permanent place of business, amount of income, amount of time spent on it,
amount of capital investment, frequency of transactions. If you are only giving
tuition two to four hours a week it is unlikely that you are running a business and
thus need not register.

b.

Fish farm is exempted from registration.

c.

Private School: must get clearance from Ministry of Education and other licences
depending on the type of school and the persons you wish to employ, etc.

d.

Foreigner: yes, you can register even if you are not based here, but there must
be a local manager/director or if you are based here and you have an
Employment Pass.

e.

Fan club: must register a society with the Registry of Societies, but not with
ACRA.

f.

Yes inn keepers licence.

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Suggested Answers

Chapter 11
1. Art. 73 CA provides that the directors are to manage the company. Thus they have the right to
appoint a personnel manager. Shareholders generally cannot make management
decisions. However, they can remove directors or change the articles of association if
they can command the requisite majority at a general meeting but are unlikely to exercise
such rights unless it becomes necessary to do so. The directors need not comply with the
resolution to dismiss Tan. As regards the appointment of the production manager, again
this is a management decision and is within the purview of the directors. However, in
exercising management decisions directors must not breach their duties. Here there is a
conflict of interest (157 CA). The directors face possible civil and criminal liabilities.
2. Failure to submit returns is a criminal offence. If they are convicted of three or more offences
in five years, s155 CA will be triggered off and they will be disqualified. Aarons
bankruptcy creates an automatic disqualification, s148 CA. As far as Benny is concerned,
as the winding up was not due to his default he will not be disqualified, s149 CA. Benny
can continue to act as a director of ABC Pte Ltd. He can sit on the board of another
company so long as there is no conflict of interest. If the other company carries on the
same type of business he should get shareholder approval. As for Charlies conviction
under s. 157, if it involves fraud or if he is sentenced to three months imprisonment or
more, there is automatic disqualification. If the offence relates to the management of a
company he may be disqualified, s149 CA. Benny and Charlie can run partnerships as
there is no similar ground of disqualification, but they must get shareholder approval if the
partnership is involved in a competing business.
3. Ong has breached s156 CA. This breach results in a criminal offence. Ong has also breached
s157 CA and he would have to return any profits made by him. Case law duties, i.e.
conflict of interest, is also breached and he would have to return any profits made by him.
The giving of the guarantee breaches s162 CA. None of the exceptions apply. Breach
results in a criminal offence. Chew has committed insider trading and has beached s218
SFA and s157(2) CA. There are civil and criminal consequences.
4. Other documents include notice of resolution, notice of increase of members, notice of
increase in share capital, consent form to act as director, consent form to act as secretary
etc.

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Introduction to Business Law in Singapore: Instructors Manual

Chapter 12
1.

a.

True. This is one of the two grounds where a company may be wound up
voluntarily.

b.

False. The company may only be voluntarily wound up if it is able to pay its debts
in full. The directors must make a declaration that the company is able to pay its
debts in full.

c.

False. The persons who can present such petitions are the company, a creditor, a
contributory and the Minister of Finance.

d.

True. These are two of the grounds under s 254(1) CA for winding up.

e.

True pursuant to s 254(1) CA

f.

True pursuant to s 216(2)f CA

g.

False. The petitioner must show that the company is unable to pay its debts. The
petitioner can rely on two presumptions under s 254(2) (b) CA and s 254(2) (a)
CA.

2.

h.

True - Re Yenidje Tobacco Ltd

i.

True - pursuant to s 255(2) CA

The bailiff is correct. No execution may be issued against the company without leave of
court, s 334 CA. The idea is to preserve all assets of the company for a fair distribution to
creditors.

3.

Under s 329 delivery of goods etc. just before the commencement of winding up may be
set aside as there is undue preference to the creditor. The creditor may have to account
to the liquidator for the proceeds of sale. Where property has been bought by the
company within two years before commencement of winding up at an overvalue, the
liquidator is entitled to recover the cash difference.

4.

Under s 330 CA, a floating charge created within six months before the commencement
of winding up shall, unless it is proved that the company immediately after creation of the
charge was solvent, be invalid except as to cash advanced and interest at 5% per annum
thereon.

5.

The order of priority is as follows:

i.

ii.

iii.

iv.

v.

vi.

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6.

The basic aim of judicial management is to rehabilitate the company. A receiver has no
such intention and merely seeks to recover what is owed to the secured creditors who
appointed him.

7.

Under s 227A CA the company or creditor can petition for judicial management if

The company is or will be unable to pay its debts, and

There is a reasonable probability of rehabilitating the company or preserving all or

part of its business as a going concern, or otherwise the interests of the creditors
would be better served than by resorting to winding up.

In this case judicial management could result in rehabilitating the company as the amount
due on the large project may be collected and most of the debts settled.

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Introduction to Business Law in Singapore: Instructors Manual

Chapter 13
1. That Earnest & Anderson owed a duty of care to the banks is unlikely to be established
following Caparo v Dickman. Thus the banks may not have any claim against the
auditors.
2. Duty of care is unlikely to be established (Spartan Steel & Alloys Ltd v Martin & Co). The
extension created in RSP Architects v Ocean Front will not apply. So there is unlikely to
be liability on the part of the contractor vis a vis the chemical factories.
3. Duty of care to the other road users i.e. the cyclist, breach of duty (speeding and being tipsy)
and causation are likely to be established. So Jack is liable in negligence. Defence of
contributory negligence is available as Ah Seng is also partially to blame for the collision.
Court will apportion liability and Ah Seng will recover damages in proportion to Jacks
liability. The defendant has to take the plaintiff as he finds him. Thus Jack may have to
pay substantially more damages to Ah Seng if Ah Seng can show substantial loss of
earnings.
4. The supermarket owes a duty of care to its customers to ensure that the premises are safe for
them to shop. Breach of duty and causation are established. So there would be liability in
negligence. As regards damages, the defendant must take the plaintiff as he finds him
and thus they would have to compensate for the severe fracture and the complications.
The inability to take part in the beauty pageant is too speculative and remote. If they had
cleaned up and promptly put up a sign then there would be no liability in negligence as
the supermarket would have done what was reasonable and hence there would be no
breach of duty.
5. The bank owes a duty of care to its customers to guard their valuables. There was breach as
the bank did not pick up the fact that the signatures look different or notice the strong
foreign accent. Causation is established. So Vivian can sue Jenny for negligence and the
bank is vicariously liable for the Jennys negligence.
6. The doctor owes a duty of care to the patient. There is a breach depending on whether it was
reasonable to expect that the doctor should have anticipated that Zaint would suffer from
the complications. The test is whether another doctor with similar skills would have done
so. If so, the estate can sue the doctor and also the hospital for negligence on the
grounds that they are vicariously liable for the acts of their employee done in the course
of employment. It is questionable if the consent signed in Zaints sedated state is good
consent.
7. Duty of care, breach (no proper protection provided) and causation is established. So the
employer is liable for negligence. Can also sue in contract for breach of implied term of
failing to take reasonable care. Defence of consent is unlikely to apply. It is possible to

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sue for breach of implied term of contract of employment i.e. to take reasonable care for
the employees safety. May not be able to make a claim under the Workmen's
Compensation Act as a domestic worker is not a workman under the Act.
8. The stockbroker owes a duty of care to his client. If Simon had reasonable grounds for giving
that advice and honestly believed the advice was true then there is no breach of the duty.
Markets are unpredictable. So it is difficult to sue in practice unless the facts clearly point
to negligence.
9. Duty of care is clear. There is breach of the duty (wooden bar drops off - failure to carry out
reasonable/routine inspections) and there is causation. Negligence is established.
Exclusion Clause ineffective pursuant to the UCTA.
10.

a.

The tort was not committed in the course of the employees employment.
Therefore the employer is not vicariously liable.

b.

The act was committed in the course of the employees employment. Therefore
the employer is vicariously liable.

c.

The act was committed in the course of the employees employment. Therefore
the employer is vicariously liable.

11.

There is passing off. Yaos Drinks will be able to get damages and/or an injunction to halt
passing off.

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Introduction to Business Law in Singapore: Instructors Manual

Chapter 14
1.

If the invention is new and the other two factors in section 14 of Patents Act are satisfied
Glaxi Ltd can patent it. Inventions made in the course of employment belong to the
employer unless the employment contract provides otherwise. Dr Yeah cannot apply for a
patent as his invention is no longer new. But he can use it for experimental purposes,
section 66(2).

2.

a. not distinctive, although it shows geographical origin

b.

distinctive

c.

not distinctive - descriptive of quality

d.

distinctive

e.

possible infringement of existing trade mark, so possibly cannot be registered

f.

distinctive

Second part:
a.

Similar mark identical business there is likely to be confusion and thus

infringement. May get damages, injunction to restrain infringement.

b.

Identical mark but different type of goods s 8(3) confusion/connection with

proprietor /likely to cause loss?

If she had not registered the trade name for (a) of the second part she still could sue for
passing off. Other distinctive marks that may be registered include logos.
3.

Mossade faces civil/criminal liabilities for infringement. Oolala faces civil/criminal liabilities
for infringement in respect of the tune; also in respect of the lyrics if they are word-forword translations. Klass Nil faces civil liabilities for the broadcast. Charlie will have a
defence of private use. Einstin faces civil liabilities. Remedies: damages, injunctions to
prevent infringement.

4.

Parallel imports are allowed in Singapore. So ABC Ltd has no remedy.

5.

Xxtra Ltd would be in breach of the copyright of the magazine/the company whose
products are being advertised. If the photo is taken at a public function, there is no
infringement of copyright. But it may be defamatory in certain circumstances. If the model
came to the shop there is no breach of copyright and since its true that she visited the
shop it is not defamatory.

6.

a.

Breach of copyright unless express/implied licence/consent, depends on the

facts

b.

Breach of copyright

c.

Breach of copyright unless express/implied licence/consent - depends on the

facts.

d.

No breach of copyright

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Suggested Answers

e.

No breach of copyright; unlikely to amount to performing work in public

f.

Breach of copyright because likely to amount to performing work in public.

g.

Licence to use it but no licence to make copies, so breach of copyright

h.

You are not copying so no breach of copyright; no criminal liability either

i.

Live performances does not extend to sporting events

j.

Live performance extends to plays, but defence of using it for

private/domestic

purpose is available
7.

Copyright protects the form of expression and not the idea itself. Thus copying an idea is
not a breach of copyright.

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Introduction to Business Law in Singapore: Instructors Manual

Chapter 15
1.

An overdraft represents current account financing. Unlike loans, in an overdraft interest is

payable only on the amount overdrawn and not on the entire credit facility.

2.

There is no maximum rate of interest chargeable. Generally compound interest is not

chargeable unless there is an express or implied agreement to allow the bank to charge
compound interest. However, if such compound interest or default interest is exorbitant or
unconscionable, compared to the greatest loss that can result, it will be unenforceable
(Hong Leong Finance v Tan Gin Huay).

3.

The mortgage acts only as security for the loan. The bank can sell the property or appoint
a receiver to receive income arising from it. If Simon receives funds from his father-in-law
he can request for discharge of the mortgage upon payment of the outstanding amounts.

4.

There are two types of charges a company can create. They are fixed charges and
floating charges. A fixed charge attaches to specific assets, for example if the company
wants to create a charge on a piece of land or a patent the charge is a fixed charge. The
floating charge attaches to a class of assets present and future, the exact components of
which will in the ordinary course of business change form time to time. A charge over the
stock-in-trade of the company would be a floating charge. Until some future step is taken
by the chargee the company can carry on business as far as it concerns the particular
class of assets (Re Yorkshire Woolcombers Association). Creditors usually prefer fixed
charges.

5.

The company can also create charges over choses in action which are rights that are
enforceable in court. Examples of such rights are book debts, insurance policies, shares,
patents, copyright and trademarks. These rights can be used as collateral for financing.

6.

The company pledged the goods to a financier in return for funds. A pledge can be
created over moveable as well as immoveable goods. There is no transfer of title, but
merely transfer of possession of the goods from the company to the financier. The
transfer of possession need not be actual transfer and can even be constructive. For
example, they could hand to the financier the keys to the warehouse and possession
would have passed to the financier, or they could hand over the bill of lading relating to
the goods. The financier has the right to keep the goods until he is repaid and has the
power of sale if the borrower defaults in payment.

7.

The repairer has a lien over the car for the value of the repairs carried out. A lien is
another form of security. Like a pledge there is no transfer of title but only possession.
The lien only attaches when he has possession of the car. This is a possessory lien. The
lien terminates if the repairer releases the car to Jason. That is why he is refusing to let

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Suggested Answers

Jason drive the car away. He can hold the car until he is paid. A lien holder does not have
the automatic right to sell the item but he may get a court order to do so.
8.

A guarantee is another form of security. It is usually a promise to answer the debt of

another person. Generally the guarantor is liable to pay the debt if the principal debtor is
liable. At the time Granny signed the guarantee she most likely did not understand what
she was signing. This bank ought to have known in getting her to sign the guarantee
Michael was acting as agent for the bank. The bank is deemed to know what Michael
knew of Grannys condition. Therefore it is unlikely that the bank can enforce the
guarantee against Granny. The nephew was a minor at the time he signed the guarantee.
This too the bank ought to have known as Michael again acted as agent for the bank in
obtaining the nephews signature on the guarantee. As the nephew is a minor it has to be
considered if the contract was in any way beneficial to him. As it is clearly not so, the
bank would not be able to enforce the guarantee against the nephew either.

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