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Nguyen Ai Nhi A0112072Y

Christiana Gunawan A0172427E


Kat Li Heng A0124532R
Pang Hangzhi A0162544H
Tan Jue Ni A0157640E

Tutorial 6
1. Chee Ter Bak wants to sell his furniture business to Soo Yu. He represents to Soo
Yu that he has checked with HDB and that his checks show that a new HDB town is
coming up within 1 kilometre of the furniture business within the next two years.
Because of this, he says, business will double. He asks Soo Yu to check with HDB to
verify his claim. Soo Yu decides to buy the business, partly because of closeness of his
home to Chee Ter Baks shop and partly because of Chee Ter Baks representations
about the new HDB estate. As it turns out, no HDB estate is planned for the vicinity
anywhere in the near future and Chee Ter Bak had actually told a blatant lie and had
never checked with HDB. When he finds out the truth a month later, Soo Yu wants to
rescind the contract and get back his money.
(a) Can he do so?
The issue in this context is whether or not there is misrepresentation by Chee Ter Bak.
There is misrepresentation and this misrepresentation is a fraudulent one. Chee Ter Bak did not
believe in the truth of the statement. Though this misrepresentation was not the sole reason that
induced the formation of the contract, Soo Yu can still sue for misrepresentation, rescind the
contract and get back his money (Edgington v Fitzmaurice (1885)). To rescind the contract, Soo
Yu must make it clear to Chee Ter Bak that he no longer wishes to be bound by the contract. In
addition to rescission or where rescission is not possible, Soo Yu may be able to sue for
damages if he has suffered some losses.
Although Soo Yu was given an opportunity to verify the truth but he did not do so, he can still
sue for misrepresentation. (Panatron v Lee Cheow Lee). The court held that it was no defence
that a prudent man would have taken steps to verify the truth.
There will not be any exclusion of liability for misrepresentation. Pursuant to the First Schedule
to the Unfair Contract Terms Act, sections 2 and 3 of the Act will not apply to any contracts
relating to the transfer on interest of land.

(b) What if he delays for 3 years after he finds out the truth (because he feels business
might still improve due to other reasons) and then decides to take action?
The issue in this context is whether or not there is affirmation of the contract or whether a
reasonable time has lapsed since the misrepresentation. There is affirmation as Soo Yu is fully
aware of the facts yet decides nonetheless, by words or actions keep the contract alive.
To determine if a reasonable time has lapsed, it depends on the facts of each case. In this
context, a three-year lapse was unreasonable (Leaf v International Galleries (1950)).
Hence, Soo Yu is likely to lose his right to rescind the contract.
(c) From a business/practical perspective, what should Soo Yu have done, before
buying over the furniture business?
He should have taken the opportunity to check with HDB to verify Chee Ter Baks claim, or seek
for legal advice on this issue.

3. Inner Sense Pte Ltd gets Crafty Pte Ltd to renovate its shop. The cost is $200000.
But half way through the renovations, Crafty Pte Ltd asks for more to finish the job. Inner
Sense refuses but after Crafty refuses to budge, Inner Sense agrees to pay the new
amount by signing a deed under seal. Now that the renovations are complete, Inner
Sense Ltd has paid $200000 but is refusing to pay the excess? Is it obliged to do so?
The issue in this context is whether or not there is economic duress imposed by Crafty Pte Ltd
on Inner Sense Pte Ltd.
Although there was a variation in the contract by deed under seal, Inner Sense Ltd is not
obliged to pay the excess as there was economic duress imposed on Inner Sense Pte Ltd by
Crafty Pte Ltd. The factors in determining whether the pressure exerted was illegitimate,
including whether the innocent party had an alternative course open to him or was left with no
choice but to agree to the terms, whether the innocent party agreed to the terms under protest
and whether the innocent party received independent legal advice. Whether or not Crafty Pte
Ltd was exploiting the situation could also be a relevant factor (Sharon Global Solutions Pte Ltd
v LG International (Singapore) Pte Ltd (2001)).
In this context, Inner Sense Pte Ltd is likely to be left with an alternative course. Changing a
renovator halfway through the renovations is very difficult and is likely to incur more cost and
time than paying Crafty Pte Ltd more. There was protest made by Inner Sense Pte Ltd before
agreement. From the facts given, there was no reason for Crafty Pte Ltd to increase the price.
Hence, there was likely to be exploitation. Assuming Inner Sense Pte Ltd did not receive any
independent legal advice, there is likely to be economic duress imposed on Inner Sense Pte Ltd
(Atlas Express Ltd v Kafco Ltd (1989)). In the event it is established that there is economic
duress, the contract will not be enforceable and Inner Sense Pte Ltd is not to pay the excess.

5. A Singapore company enters into a contract to sell goods to an Indonesian company.


The Indonesian company requests that the Singapore company misstate the amount of
goods sent and the value of the goods sent, so that the Indonesian company can pay
less customs duties. The Singapore company agrees and does so. The Indonesian
company pays part of the price before shipment. However, once the goods arrive in
Indonesia, though everything is order, the Indonesian company does not pay the
balance. The contact is governed by Singapore law. Advise the Singapore company.
The issue in this context is illegality. The contract between the Singapore company and the
Indonesian company is illegal by statute, under Section 128 of the Customs Act. Illegality may
also be imposed on this contract by case law as this contract was to commit a crime, tort or
fraud (Ting Siew May v Boon Lay Choo (2014)). Hence, the contract is invalid and the
Singapore company cannot demand the Indonesian company to pay the balance.
While there may be exceptions for illegal contracts, from the facts given, the Singapore
company is unlikely to be able to demand the Indonesian company to pay the balance. The
contract has been executed, the Singapore company is equally at fault for trying to evade the
custom duty and it is unlikely for the Singapore company to make claim entirely independent of
the illegal contract.
Duress?

6. Generally only parties to the contract can sue and be sued. However, in the
following cases, are X and Y parties to the contract:
(a) Z is an authorized agent for P type of cars in Singapore. The manufacturer is Y in
Germany. X goes to Z and buys a P car. Is there a contract between X and Y?
There will not be a contract between X and Y if it is established by court that Z is not an agent of
Y but an independent contractor of Y. Whether a person acts as an agent or independent
contractor would depend on the circumstances and the intention of the parties. From the facts
given, Z is likely to be an independent contractor of Y.
However, there will be a contract between X and Y if it is established by court that Z is an agent
of Y. An agent is someone who acts on behalf of the principal and creates legal consequences
between the principal and the third party. From the facts given, it seems that Z is the agent of Y,
the principal and X is the third party. In such a situation where Z enters into a contract with X on
behalf of Y, the contract is between X and Y and not Z and X.

(b) Z sells hand phones and is the authorized agent for Y, a mobile phone service
provider. X goes to Z shop and buys a phone and signs up to receive mobile phone
service from Y. Is there a contract between X and Y?
There will be a contract between X and Y if it is established by court that Z is an agent of Y. An
agent is someone who acts on behalf of the principal and creates legal consequences between
the principal and the third party. From the facts given, it seems that Z is the agent of Y, the
principal and X is the third party. In such a situation where Z enters into a contract with X on
behalf of Y, the contract is between X and Y and not Z and X.

(c) Z is a maid agency. Y is a maid. X goes to the maid agency and chooses Y. Is there a
contract between X and Y?
There will be a contract between X and Y if it is established by court that Z is an agent of Y. An
agent is someone who acts on behalf of the principal and creates legal consequences between
the principal and the third party. From the facts given, it seems that Z is the agent of Y, the
principal and X is the third party. In such a situation where Z enters into a contract with X on
behalf of Y, the contract is between X and Y and not Z and X.

(d) Z is a modeling agency. Y is a model. X goes to Z to get models to perform for an


event. The models include Y. Is there a contract between X and Y?
There will be a contract between X and Y if it is established by court that Z is an agent of Y. An
agent is someone who acts on behalf of the principal and creates legal consequences between
the principal and the third party. From the facts given, it seems that Z is the agent of Y, the
principal and X is the third party. In such a situation where Z enters into a contract with X on
behalf of Y, the contract is between X and Y and not Z and X.