Tutorial 5

1.

Naeve Soh, a diploma holder enters into an employment contract with a company as an accounting
assistant. The working hours are 8am to 9pm daily except for Sundays and Public Holidays. The pay is
$2600 per month. The market rate for a similar job is $3700 and employees in similar jobs in other
companies work generally only from 8 am to 6 pm. After working for two months Naeve Soh feels all
this is very unfair and wants to challenge it.
(a) Assuming there is no statute prohibiting this (which is indeed the case), can she challenge it?
No, Naeve Soh cannot challenge it. The conditions of a salary of $2600 per month and working
hours of 8am to 9pm except for Sundays and Public Holidays is considered to be an express term
in the employment contract agreed upon by Naeve when she entered the contract. Express terms
generally need not be fair and exceptions are only considered if the clause is against a Statutory
Provision, is against public policy, or is subject to some judicial control.
However, in Naeves case, there is no statute prohibiting the unfair terms expressed in the contract
and the contract made is not in any form of disagreement with public policy. Hence, even though
the conditions of the contract are considered unfair, the contract is considered to be perfectly
binding since both parties have agreed to them. Furthermore, as long as there is consideration, it
does not need to be equal for a contract to be valid. As such, the courts will not intervene to strike
down a clause as being unfair or unreasonable without any conditions mentioned above.
However, this is on the possible assumption that the company has been treating Naeve Soh fairly
as an employee and has lawfully abided to the terms of her contract. If Naeve Soh suffers from an
injury as a result of her job, she may choose to challenge the contract to ensure that she is able to
attain her deserved among of liquidated damages compensation, which is subject to judicial
control of the courts.
(b) Can she say that it is an implied term that a reasonable pay should be paid?
No, she cannot claim that a reasonable pay is an implied term. Terms a generally implied through
statutes, long-standing and well-established customs, as well as through the court. In this case, Soh
cannot imply that $2600 per month is an unreasonable pay, since there is no statute or law in
Singapore stating that a minimum wage must be given. Furthermore, there is no custom in the
company that states that every employee must be paid a reasonable pay; the term reasonable is
also extremely subjective. Therefore, there is no reason for the court to accept the fact that there is
an implied term that a reasonable pay should be paid.
This can be made under the assumption that the company, again, treats Soh fairly in the
workplace, and does not force her to do more than her job scope. If that were the case, and Soh
were able to prove it to the court, the court may be able to proceed with specific tests to imply a
term that it would be fair that a more reasonable pay should be paid to Soh.

2.

Sure Byte Ltd produces custom-made software for Z Ltd which is a large public company. After
the software is delivered and installed, Z Ltd informs Sure Byte Pte Ltd that it should not only
provide initial training but should also have a helpdesk based in Z Ltd, given the complexity of
the software and the importance of the software to Z Ltd. Sure Byte Ltd states that is has given a
manual and provided initial training to Z Ltds staff and that should suffice and that should Z
Ltd want a helpdesk stationed there, they should pay separately for it. Can Z Ltd sue Sure Byte
Pte Ltd for breach of contract in not running a helpdesk at its premises? From a business/legal
perspective what could have been done to make the position more clear? In this regard, if Z Ltd
had not informed their lawyers about this need, would the lawyers have definitely known about
it? Thus what should Z Ltd have done?

Z Ltd is likely to be able to sue Sure Byte Ltd for a breach of contract in not running a helpdesk at its
premises. Although it is suggested that such a service of running a helpdesk is not written in the
contract as an express term, Z Ltd can still sue Sure Byte Ltd under the implied terms of the contract.
Custom
If the custom in the software industry is that a helpdesk should be provided when custom-made
software is produced and sold to the company, then there is an implied term in the contract the Sure
Byte Ltd has to provide Z Ltd with initial training and a helpdesk based in Z Ltd. One such example
can be seen in Sagar v Reidehalgh (1931), where the court ruled that the defendants act of deducting
the plaintiffs wages was lawful due to the customs in the industry that pay will be deducted for work
performed without reasonable care and skill in the managements eyes.
Statutes
Z Ltd can also sue Sure Byte Ltd under the implied terms of a statute. For instance, under Section 9 (2)
of the Supply of Goods Act, it is stated that there is an implied condition that the goods supplied under
the contract are of satisfactory quality. It is further stated in the Section 9 (2A) that goods are of
satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory,
taking account of any description of the goods and all other relevant circumstances. If Z Ltd can
clearly convince the court that without the helpdesk service provided the service is of unsatisfactory
quality; they can sue Sure Byte Ltd on grounds that an implied term has been violated and breached.
Courts
The court may also be able to imply terms into the contract based on 2 specific tests: (a) considering
the intention of both parties, is the term to be implied so obvious it goes without saying at (b) is it
necessary to imply the term in order to give the contract business efficacy/effect. Again, if Z Ltd can
adequately convince the court that the helpdesk service is an implied term, Z Ltd will be able to
successfully sue Sure Byte Ltd.
From a business/legal perspective, the best way to avoid implied terms is to express them in the
contract. If Z Ltd wanted Sure Byte Ltd to provide helpdesk service based in Z Ltd, they should state it
clearly as an expressed term in the contract in order to avoid any future disputes. Should Sure Byte Ltd
accept and sign the contract in that case, they would be legally bound by the express terms of the
contract to provide that service, having already accepted the contract offered by Z Ltd. Provided Z
Ltds lawyers are very well-read in the field of custom-made software products, they would not have
the knowledge of the services that Z Ltd need along with the software purchase. Therefore, Z Ltd
should inform their lawyer about the requirements, and ensure that it is clearly stated in the contract
offer to Sure Byte Ltd. In addition, Z Ltd can also include a variation clause into the contract if they
have not done so, in order to allow for changes to be made to the contract.
3.

Safe Mode Pte Ltd enters into a contract with Dilit Pte Ltd under which the latter is to supply 100
computers at Safe Mode Pte Ltd. The delivery date is specified as the 1 st of August. Dilit Pte Ltd comes
to deliver the computers two days after that date. Can Safe Mode Pte Ltd reject the computers? From a
business/legal perspective, could Safe Mode Pte Ltd have done anything to make the position more
clear?
The act of rejecting the computers is a termination of the contract due to a breach. In this case, the
contract has been breached since the Dilit Pte Ltd failed to deliver the 100 computers agreed to Safe
Mode Pte Ltd on time.
It would depend on the importance of the time of delivery. For instance, if Dilit Pte Ltds failure to
deliver on time resulted in a breach in another contract of Safe Mode Pte Ltd, such as for a multimillion dollar project, Safe Mode Pte Ltd can justify their termination of the contract as the breach in
contract by Dilit Pte Ltd has resulted in a major material consequence since it caused Safe Mode Pte
Ltd to breach a multi-million dollar contract. Under such assumptions, Safe Mode Pte Ltd can choose
to reject the computers and terminate the contract. This is clear in an example like the case of Sports

Connection Private Limited v Deuter Sports (2009), whereby the time of performance in the
commercial contract is vital.
Based on such an assumption, Safe Mode Pte Ltd can terminate the contract regardless of consequence
if the breach involved a condition rather than a warranty. A condition is a term that is viewed as
very important or fundamental, whereas a warranty is a trivial term that is unimportant. The court will
have to determine if a term is a condition or warranty by ascertaining the intention of the parties at the
time of making the contract. For instance, in The Mihalis Angelos (1971), the court held that the term
expected ready to load on a particular date was a condition.
Regardless of the type of term breached, if consequences of the breach are such as to deprive the
innocent party of substantially the whole benefit, which it was intended that the innocent party should
obtain from the contract, the innocent party can terminate the contract. This is seen in the case of
HongKong Fir Shipping Co v Kawasaki Kaisen Kaisha (1962). Safe Mode Pte Ltd will be able
terminate the contract regardless of condition or warranty, if the delay of delivery of the 100 computers
completely defeats the purpose of the companys purchase since they were required on a strict
deadline.
Definitely, from a business/legal perspective, Safe Mode Pte Ltd could have made things clearer in the
contract by emphasizing the importance of the time of delivery. Also, they could clearly express a
termination clause in the terms reserving the right to terminate the clause should the delivery of goods
be delayed.
4.

Pee Tee drives up to a multistory car park operated by ADVENTURE Mall. After driving up, she
presses for a ticket and a ticket is issued. The ticket states that the management is not responsible
for any loss or theft of the car or for loss or theft of items inside a car or for injury to customers
or passengers, arising out of the car parks negligence or other breach. As Pee Tee returns from
her shopping another customer carelessly runs over Pee Tees foot with a trolley. Shortly after
that while limping to her car, an overhead metal pipe drops on her head and injures her. To her
further dismay she notices that some valuables from her car have been stolen. Answer the
following questions:
(a) Has the mall breached an express or implied term in the contract?
The mall has breached the implied term that it has to ensure the safety of customers or passengers,
as well as any loss or theft of items in the vehicle within the car park premises.
(b) Assuming it has, is the exemption clause effective in excusing it from liability?
According to section 2(1) of the Unfair Contract Terms Act, a person cannot exclude or restrict
liability for negligence in relation to personal injury or death. Injury, as such, cannot be part of an
exclusion clause. Therefore, ADVENTURE Mall will be liable for Pee Tees injury resulting from
the overhead metal pipe that drops on her head and the exemption clause will not be effective in
excusing it from liability.
Furthermore, the exemption clause was introduced only after the contract had been made. In this
case, Pee Tees act of pressing for a ticket is considered as her offer, while the issuance of the
parking ticket signifies acceptance, hence a contract has been made. The exemption clause was
only provided to Pee Tee after the parking ticket had been issued, therefore it would generally not
be valid if an exclusion or limitation clause was introduced after the contract has been made.
Hence, ADVENTURE Mall is still liable to the implied terms of the contract
(c) Would your answer to (b) be different if there was also a notice at the entrance excluding
liability in similar terms?

Yes. My answer to (b) would be different if there was a notice at the entrance excluding liability in
similar terms. If there were a notice at the entrance, there would be reasonable notice provided to
the customer. Assuming that the notice at the entrance is printed in a visible font size and situated
at a strategic location that clearly allows Pee Tee to see it before entering the car park,
ADVENTURE Mall would have, firstly, included the clause as part of the contract terms (since
the contract has not been made no offer by Pee Tee at the point of time), and secondly, provided
reasonable notice to Pee Tee about the exemption clause. Hence, ADVENTURE Mall will not be
liable for the thefts of valuables in her car.
However, based on section 2(1) of the Unfair Contract Terms Act, personal injury or death of a
person cannot be included in an exclusion clause. As such, ADVENTURE Mall would still be
liable, nonetheless, of the injury that Pee Tee sustained within the premises of the car park.
5.

Fawn has a pet food shop in Clementi selling pet food. It is a small shop and patronized by
persons in the neighbourhood. As she is thinking of immigrating, she sells her business (including
stock in trade and goodwill) for $200000 to Animal Farm Pte Ltd which is aggressively moving
into many HDB neighbourhoods. There is a clause in the contract which states that Fawn will not
for a period of 5 years after the sale, set up a business relating to any aspect of the pets industry,
such as pet foods, pet accessories or pet grooming, in Singapore. After 3 months, Fawn changes
her mind, and wants to set up a pet shop in Ghim Moh. Advise her whether she can do so.
Assuming the express clause is invalid, is there nonetheless an implied term that she should not
compete?
Based on the restraint of trade clause in the contract, Fawn cannot set up a pet shop after 3 months,
especially since she is setting up a shop in Singapore. The contract is valid as there is an offer from
Animal Farm Pte Ltd, acceptance from Fawn, and consideration involved since Fawn gets $200 000 in
exchange for the transfer of ownership of her business to Animal Farm Pte Ltd. As such, having
accepted the contract, the restraint of trade clause in the contract is valid. Therefore, if Fawn choose to
set up a pet shop, she will be directly in breach of the clause, with prohibits her from setting up a
business relating to any aspect of the pets industry, such as pet foods, pet accessories or pet grooming,
in Singapore for 5 years.
However, Fawn can still consider the reasonableness of the restraint of trade clause. Animal Farm Pte
Ltd would require a legitimate reason in order to impose the non-compete clause. Assuming that the
pet food, pet accessories or pet grooming industry has a competitive nature, Animal Farm Pte Ltd
would have a legitimate reason to prevent Fawn from starting another company with the knowledge he
has, and possibly gain an advantage.
On the other hand however, the time period of 5 years after the sale may be too long, and Fawn, should
she wish to, can choose to challenge that. In addition, although Fawns business only sold pet food in
Clementi, the clause prevents her from starting a business not only in pet foods, but in pet accessories
and pet grooming. The scope of restraint here may be inappropriate. As seen in the case of British
Reinforced Concrete Engineering Co Ltd v Schelff (1921), the seller sold a business relating to loop
road reinforcements, and in the contract of sale, there was a clause, which restricted the seller from
setting up a business relating to road reinforcements. The court held that this was wider than
necessary, as the business sold only related to loop road reinforcements and not other types of road
reinforcements.
Assuming the express clause is invalid, there is unlikely to be any implied term that she should not
compete. Firstly, restraint of trade clauses are considered to be against public policy, and hence should
it not be valid, it would not be legally binding at all. In the interest of trade and capitalism, the
government would encourage more competition, instead of anti-competitive sentiments. Therefore, the
court is likely to turn down any claims of implied terms by Animal Farm Pte Ltd should their express
clause be invalid.

6.

Mr Lai Onn Lee is a landlord and has several commercial properties. In relation to one of the
properties, he enters into a written contract with a tenant Mr Fib Tan to rent it out to him. The contract
provides that the rental is $5000. However, both parties agree that Mr Fib Tan would pay $3500 more
as that is the market rate. Mr Lai wanted the extra $3500 not to be reflected in the agreement because
he was undergoing a divorce and he did not want his wife to find out the exact amount of rental.
However, Mr Fib Tan then defaults on paying the $3500 and only pays $5000. The lease is for 2 years.
Can Mr Lai sue Mr Fib Tan for the extra amount? (Read the parol evidence rule in the textbook). What
is the implication of this rule on a business?
It is unlikely that Mr Lai can sue Mr Fib Tan for the extra amount. Based on the Parol Evidence Rule
codified in the Evidence Act, once an agreement has been reduced to writing, generally evidence
cannot be raised to contradict, vary, add to or subtract from the written agreement. As the written
amount in the contract is $5000, the oral agreement of the extra $3500 payment may not be valid since
the agreement of $5000 had already been reduced to writing. Hence, the court will recognize the $5000
agreement written in the contract, but not the orally agreed $3500 payment.
A similar case in point would be Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design &
Construction Pte Ltd (2008). In this case, it was held that extrinsic evidence was not admissible to add
to, vary or contract a term in the insurance policy in question. In the case of Hawrish v Bank of
Montreal (1969), the court also held that oral evidence could not be admitted to vary or contradict the
express terms of the contract.
However, if Mr Lai can prove that Mr Fib Tan is fraudulent in his failure to pay the extra $3500, he
may be able to sue Mr Fib Tan under fraud. Mr Lai can also sue Mr Fib Tan if he can prove that the
terms in the written contract has been misrepresented, he can bring in oral evidence to substantiate his
claim and hence sue Mr Fib Tan for the extra amount.
The implication of the Parol Evidence Rule is that businesses should always make sure that while
drafting the contract, everything is written into the contract, and that no agreement was orally made
without any records penned down. In the event that the contract needs to be varied, it should also be
drafted and written, to ensure that the court recognizes it.

7.

Search web sites for legal/contractual terms. Can you find an example of the following:
(a) a restraint of trade clause,

A restraint of trade clause:

11. NON-COMPETITION
(a) All of the parties herein shall for so long as he/she remains a Shareholder [and] for a period of three
(3) years after he/she shall cease to be a Shareholder of the [Appellant], whether by himself/herself and/or
jointly or together with any other person(s) and/or body (ies), whether on his/her own account and/or as
agent, employee and/or servant, in any capacity whatsoever, directly or indirectly, be prohibited from: (i) being engaged and/or interested in any trade and/or business carried on within Singapore which is
similar to or in competition and/or conflict (whether directly or indirectly) with the Business of the
[Appellant] and/or the practice of Aesthetic Medicine;
(ii) employ, solicit and/or entice away and/or endeavour to employ, solicit and/or entice away any
person(s) who is employed by the [Appellant], and/or induce or seek to induce any such person(s) to leave
his/her employment with the [Appellant] for any reasons whatsoever;
(iii) solicit the custom of any person and/or body who is a customer of the [Appellant] and/or divert or
seek to divert any customer of the [Appellant] away from it; and/or

(iv) cause and/or permit any person directly or indirectly under his/her control to do any of the foregoing
acts or things.
(b) In the event that [Dr Gerard Tan], [Dr Tan], [Dr Yang], [Dr Liew], [Dr Lim] and/or [Dr Wong] shall
for any reasons breach the terms of this Non-Competition clause, he/she shall be liable to pay to the
[Appellant] the sum of S$700,000.00 by way of liquidated damages. It is hereby agreed that the payment of
the said liquidated damages shall thereafter exempt the defaulter from the operation of this Clause herein.
(c) In the event that [the Respondent] shall for any reasons breach the terms of this Non-Competition
clause, he shall be liable to pay to the [Appellant] the sum of S$1,000,000.00 to the [Appellant] by way of
liquidated damages. It is hereby agreed that the payment of the said liquidated damages shall thereafter
exempt the defaulter from the operation of this Clause herein.
(b) an exemption/exclusion/limitation clause and
A typical trustee exemption clause, No Trustee shall be liable for any loss or damage which may happen to
the Trust Fund at any time or from any cause whatsoever unless such loss or damage shall be caused by his
own actual fraud. - http://www.lawcom.gov.uk/docs/cp171sum.pdf
(c) a clause which clearly allows the innocent party to terminate the contract if the other party
commits certain very specific breaches?
Note: such exercises are important to understand and appreciate that what you are studying is not
something just theoretical but arises in real life.