CONTRACT ELEMENTS WHICH FORM A CONTRACT

Offer (Pg 55)

Specific An offer is an expression made by one party to another party. For an offer to be effective, the offer
Offeree must be communicated to the offeree.
Unilateral In a unilateral contract, the offeror may not know the offerees identity immediately. Carlill v
Contracts Carbolic Smoke Ball Co. (1892) Although the offer is made to the world, the contract is made is
that limited portion of the public who came forward to perform the condition on the faith of the
advertisement..
Invitation to Generally, an advertisement does not constitute an offer. At law an invitation to treat is an invitation
Treat to commence negotiations. It is an offer to make an offer. Accordingly, acceptance of an invitation to
treat does not constitute an offer. Patridge v Crittenden (1968).

Display of goods and prices in a shop is usually considered to be an invitation to treat also.
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the
court held that the display of goods with prices constituted an invitation to treat and the sale took
place at the counter in the presence of the pharmacist.
Provision of A mere response to a request for information does not constitute an offer. Harvey v Facey (1893)
Information The court held that there was no contract because provision of information was not an offer.

Acceptance (Pg 65)

An acceptance must be made in writing, orally or by conduct. Whatever its form, communication constitutes an
acceptance only if it is an unconditional expression of assent to the terms of the contract. Conditional Acceptance is
treated as no acceptance.
Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than
AcceptanceCommN of of OfferKnowledge

the desire to accept the offer. William v Carwardine (1833) the court held that the plaintiff was entitled to a
reward because when giving the information sought by the police, she had done so with knowledge of the
reward even though her motive for giving the information was her own remorse.

Cross Offers Tinn v Hoffman & Co (1873) the court held that cross offer did not make a contract. The
reasoning appears to imply that the lack of consensus or meeting of minds between the parties at the time of
making the offers.

For an acceptance to be effective, it must be communicated to the offeror. If in writing, it must be physically
received by the offeree, and if orally, heard by the offeree. obiter dictum in Entores Ltd v Miles Far East
Corporation (1955)

Waiver
The may arise in the case where the offer is made to the whole world. In such a situation, the contract may
be accepted by anyone, creating a unilateral contract. Carlill v Carbolic Smoke Ball Co. (1892)

Silence
For this to be effective, both parties must agree to it. Felthouse v Bindley (1862) It was held that there
was no contract between the two parties. The plaintiff had no right to impose a condition that a sale contract
would come into existence if the defendant remained silent. In a case where the parties agree that the
offeree would have a positive obligation to communicate only if he wishes to reject the offer, is rare.
Exceptions

Southern Ocean Shipbuilding Co Ltd v Deutsche Bank AG (1993)

The Postal Rule

The acceptance is deemed to have been effect effective as soon as the letter is posted regardless as to
when it reaches the offeror or whether it reaches him at all. Adams v Lindsell (1818) the court held that
the acceptance was communicated and the contract was formed as soon as the plaintiff posted the
acceptance letter. Lee Seng Heng v Guardian Assurance Co Ltd (1932)

It should only be applied when parties have agreed that acceptance should be sent by post. An offer sent by
telegram should not presumptuously assumed that an acceptance by post is acceptable. (Quenerduaine v
Cole (1883)) The postal rule can be avoided when parties expressly provide for it then acceptance should be
received physically.
 Instantaneous Communications
- by phone general rule apply
- by internet / telex
- s11 ETA states that an offer or acceptance can be sent electronically in the form of an electronic
record.
- s13(1), s13(2) ETA states that generally an electronic record is deemed sent by originator himself,
someone authorized by him or by an information system programmed by or on behalf of the
Exceptions

originator to operate automatically.

- s14 ETA states that there are provisions for a party to require an acknowledgement of receipt to
ensure messages have been received properly.
Account designated by addressee?
No s15(2b) receipt occurs at the time the electronic record enters the information system of the
addressee.
Yes s15(2a)
Is it sent to the designated account?
Yes receipt occurs and acceptance communicated
No receipt occurs when electronic record is retrieved by addressee.

Termination of Offer and Acceptance (Pg 72)

The general rule is that an offer can be withdrawn at any time prior to acceptance. When an
offer is withdrawn, the offer is said to be revoked. A revocation of an offer must be communicated to
the offeree. Revocation is only effective when the offeree receives notice of the revocation Byrne v
Van Tienhoven (1880) It was held that the revocation was not effective until it was received by the
plaintiff. Since the offer was accepted prior to the revocation, there was a valid contract.

A reliable third party can also communicate a valid revocation. Dickinson v Dodds (1876) The
English Court of Appeal that Dodds had validly withdrawn his offer to Dickinson even though this
was done through a third party.

Fresh Offer
A fresh order supercedes the earlier offer Banque Paribus v Citiback NA (1989) The Singapore
High Court held that the first offer which had not been accepted was withdrawn successfully.
Withdrawal
If offer is opened for a fixed period?
Routledge v Grant (1828) It was held that it was permissible for Grant to withdraw his offer during
the six weeks period despite the implied assurance that the offer would remain open during this
period. The rationale is that an offeree cannot enforce an offerors promise to keep his offer open
unless there is separate contract supported by consideration to do so, such contracts are called
options. Tay Joo Sing v Ku Yu Sang

Unilateral Contracts?
In Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has
started to act. In Dickinson Trading (S) Pte Ltd v Transmarco Ltd, obiter dictum the offeror in a
unilateral contract has an obligation not to revoke the offer after the offeree has embarked on the
performance of the conditions.
An offer can also be terminated when an offeree rejects then offer. Rejection may be made in writing,
orally or by conduct. Once communicated, a rejection extinguishes the offer and the offer cannot be
revived.
Rejection
A counter offer is construed as rejecting the initial offer. Thus, anything less than a unconditional
and counter
acceptance may be viewed as a counter offer which rejects the original offer. Hyde v Wrench
offer
(1840) The court held that there was no contract because Hydes reply was a counter offer, which
extinguish the earlier offer. When the response is an inquiry or a request of information, it should not
be construed as an offer. The Masters Stelios; Monvia Motorship Corporation v Keppel
Shipyard (Pte) Ltd ) (1983)
If the offer is opened for a specified period, a purported acceptance after that period would be
effective since the offer had lapsed. In certain circumstance, the court may imply that the offeror has
specified the period of offer even if he has not done so expressly. Wee Ah Lian v Teo Siak Weng
Lapse of
(1992) When no specified period of time is expressed, an offer would lapse after a reasonable
time
amount of time, (depending on the facts of the case). Ramsgate Victoria Hotel Co v Montefiore
(1866) the court held that Montefiore could refuse to take up the shares because his offer had
lapsed after a reasonable time.
Failure of An offer may be made conditional such that the if the condition is not met, the offer is automatically
Condition terminated. Financings Ltd v Stimson (1962) The English Court of Appeal held that Stimson was
not bound to the contract because there was an implied condition that at the time of acceptance by
 the plaintiff, the car would be in substantially the same state as when the offer was made by
Stimson. The condition was broken and therefore the offer was no longer available for acceptance.
Dickinson v Dodds if a man makes an offer does, the offer cannot be accepted after he is dead.
Bradbury v Morgan (1862) the court held that the death of an offeror did not terminate the offer
Death unless the offeree had notice of the offerors death.
Reynolds v Atherton (1921) Offeree dies before acceptance, this offer cease to be capable of
acceptance.
Termination
of Acceptance cannot be revoked. Wenkhiem v Arndt (1873)
Acceptance

Consideration (Pg 80)

Consideration, as defined by Sir Frederick Pollock in Dunlop v Selfridge (1915) 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. The state of mind of the parties, especially the one performing the act is critical.
Executory Executory consideration refers to consideration, which is yet to be performed.
Consideration
Executed Executed consideration refers to consideration, which has been performed. In other words,
Consideration executed consideration involves an act or forbearance, which has been fulfilled.
Past Consideration refers to an act performed prior to and to that extent independent of, the
promises being exchanged. Past consideration is no consideration. Roscorla v Thomas (1842)
The court held that the promise was made after the transaction had already been concluded and
therefore past consideration. Followed in Sim Tony v Lim Ah Ghee (1995) past consideration
is no consideration.

In Pao On v Lau Yiu Long (1980) an act before the giving of a promise to make a payment or
to confer some other benefit can sometimes be consideration for the promise. The act must have
Past
been done at the promisors request, the parties must have understood that the act was to be
Consideration
remunerated further by a payment or the conferment of some other benefit, and payment, or the
conferment of a benefit, must have been legally enforceable had it been promised in advance.

(Exceptions for Past Consideration)

Past Consideration becomes Executed Consideration
- Act done at promisors request
- Parties understood act is to be remunerated
- Contract must otherwise be enforceable
Two Main Rules on Consideration
1. Must move from promisee but need not move to promisor. Tweedle v Atkinson (1861) the court held that
Tweedle could not enforce the contract between the two fathers because he is not a party, and secondly, no
consideration flowed from him.
2. Need not be adequate but must be sufficient. Chappell & Co Ltd v Nestle Co Ltd (1960) The HOL held
that the consideration included the wrappers even though they were of no value to Nestle.
Goods,
Services,
Money and
Property
A promise to forbear from suing or enforcing a valid claim can constitute
sufficient or valuable consideration. Alliance Bank Ltd v Broom (1864). K-Rex
Finance Ltd v Cheng Chih Cheng (1993) The court spoke the words of
Cockburn CJ in Callisher v Bischoffsheim (1870).

Forbearance The same applies to a compromise of a legal action. The req. is that the legal
to sue action must be reasonable and not frivolous, that the claimant has an honest
Sufficient
belief that in the chance of success of the claim and that the claimant has not
concealed from the other party any fact which, to the claimants knowledge,
might affect its validity. Miles v New Zealand Alford Estate Co (1886)

The Eurymedon (1975) The Privy Council held that even though the
Performance
defendant was already contractually bound to a third party to do so, the
of existing
defendants act of unloading the ship formed good consideration for the contract
contractual
with the plaintiff. This was also clarified in Pao On v Lau Yiu Long (1980) by
duty to third
the HOL. This was also accepted in the Singapore High Court in SSAB
party
Oxelosund AB v Xendral Trading Pte Ltd (1992).
 Eastwood v Kenyon (1840) The court rejected the plaintiffs view and held
Moral that moral obligation is insufficient consideration for a fresh promise. Thomas v
obligation & Thomas (1842) The court held that the nominal rent was sufficient
motives consideration by t the husbands wishes were irrelevant; motives is not the
same thing as consideration.
Vague or White v Bluett (1853) The court held that Bluetts promise was nothing more
insubstantial than a promise not to bore his father. As such it was too vague and was
consideration insufficient consideration for the alleged discharge by his father.
Collins v Godefroy (1831) the words of Lord Tenterden if it be a duty
imposed by law upon a party regularly subpoenaed to attend from time to time
to give his evidence, then a promise to give him remuneration for loss of time
Performance
incurred in such attendance is a promise without consideration.
of existing
public duty
If the court finds the promisee did something more that required by an existing
public duty, then it may be sufficient. Glassbrook Bros Ltd v Glamorgan
City Council (1925)
Insufficient Stilk v Myrick (1809) It was held that there was no consideration for the
captains promise because the remaining crew did what they were contractually
required. Two sailors deserting was within the usual emergencies found in such
a voyage.
Performance
of existing
However, if it is more than what is contractually required, that may constitute
contractual
good consideration Williams v Roffey Bros and Nicholls (Contractors) Ltd
duty
(1991) The English Court of Appeal held that as long as the extra payment
was not given under duress or fraud, the oral promise was enforceable because
the defendant obtained practical benefits from the plaintiffs work. The benefit
was that they would not be liable under the main contract for late completion.
Pinnels Case (1602) The 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, at a
different place, or in conjunction with some other valuable consideration.

Foakes v Beer (1884) affirmed Pinnels Case the HOL held that Beers promise not to take
further action was not supported by consideration. She could claim the money.
Promissory Estoppel is an equitable doctrine whose origin may be traced to Lord Cairns in
Hughes v Metropolitan Railway Co (1877). When p.e. is established, the court may enforce a
promise despite the fact that there was no consideration.

4 Elements (Central London Property Trust v High Trees House Ltd (1947), + D&C
Builders v Rees (1966))
- Parties must have existing legal relationship
- Clear and unequivocal promise which affects the legal relationship
- Promisee relied upon promise and altered his position
Promissory
- Inequitable for the promisor to go back on his promise.
Estoppel
Suspensive or Extinctive
(For no
When the promisor gives reasonable notice of his intention to revert to the original legal
consideration)
relationship, the original relationship is restored. The effect of p.e. is to suspend promisors rights
temporarily. Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd (1995)

However, the promise could become final and irrevocable if the promisee cannot resume his
position. Ajayi v R T Briscoe (Nigeria) Ltd (1964)
Shield not sword
This means that it can only be raised as a shield and not a sword, i.e. a defense against a claim
and not to commence a suit. Combe v Combe (1951) (people sue you then can use - P )
Assoland Construction Pte Ltd v Malayan Credit Properties Pte Ltd (1993)
Intention to Create Legal Relations (Pg 95)
The test is whether a reasonable person viewing all the circumstances of the case would consider that the promisor
intended his promise to have legal consequences.
There is a general presumption that such agreements lack the necessary intention to form a
contract. (Balfour v Balfour (1919)) The English Court of Appeal held that the claim failed
because the parties did not intend the promise to be legally binding. In Choo Tiong Hin v Choo
Social and
Hock Swee (1959) the plaintiffs promises were not enforceable because the lack of intention to
Domestic
create legal relations.
Agreements
However in Merritt v Merritt (1970) The English Court of Appeal found the necessary intention
and held that the wife succeeded in her claim for breach of contract.
There is a general presumption that there is necessary intention to create legal relations. Edwards v
Skyway Ltd (1964) The court held that Skyways was legally bound.

Honour Clauses
- when parties have expressly stated that their agreement is not to be legally binding (Rose &
Commercial
Frank Co v J R Cromption & Bros Ltd (1925))
Agreements
Letter of Comfort, intent and MOUs are all not legally binding.
(Hong Kong and Shanghai Banking Corp Ltd v Jurong Engineering & Others (2000) Letter of
awareness held not binding. Kleinwort Benson Ltd v Malaysian Mining Corporation Berhad
(1989) Court only found a moral not legal obligation.

Privity of Contract (Pg 99)

The general rule is that no one., other than a person who is a party to the contract may be entitled to enforce or be
bound by the terms of the contract. Price v Easton (1833) court held that Price could not succeed, as he was
not a party to the contract between the debtor and the Easton.

Exceptions (Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993)
- Agency relationship
- Assignment of choses in action
- Letter of Credit