Chapter 7: Offer and Acceptance

Contract
Terminology
valid contract is an agreement that satisfies all legal requirements.
void contract is treated by law as nullity, never existed at all.
unenforceable contract is one that is valid and legally binding but cannot
be enforced, eg, because of a provision of law.

Oral, by conduct

4 Requirements for formation of Contract

Offer
Offer must be communicated.

Exchange for a promise

between 2 parties.

Acceptance

Expression of willingness by the offeror to

enter into an agreement with the offeree. 3
elements are (1) contains terms of exchange,
(2) indication of willingness to be bound, (3) to
be bound upon acceptance by offeree

Bilateral

Written

Unilateral

A contract is a legally binding agreement.

Purpose: confident binding of exchanges
Requirements of a valid contract includes offer, acceptance,
consideration and intention to create legal relations.

Consideration

Intention to create legal relations

Chapter 8

General Receipt Rule:

Acceptance must
be communicated.
(through written, spoken
word or by conduct)

Make to a grp or the world.

Promise exchange for an act
Carlill v Carbolic Smoke Ball Company

Unconditional
agreement to all
terms of the offer.

Unilateral

Silence
Cross offer
No meeting of minds

Performance is acceptance, so theres

no need to communicate acceptance.
Carlill v Carbolic Smoke Ball
Company
Cannot have acceptance by silence.
Unless parties agree silence would be
prescribed mode of acceptance.
Felthouse v Bindley
(no acceptance by silence)
Re Selectmore Ltd
(acceptance by silence)

Invitation To Treat
Postal Acceptance Rule

Inviting recipient to make an offer or enter into

negotiations, no intention to be bound yet.
-Advertisements (language has to be looked
into to determine if it is offer or ITT )
R1:adv reader may want to negiotiate further
R2:seller may have limited no. of good
Same for inter adv ->customers are making offer.
Exception: Carlil v Carbolic Smoke Ball Co

Acceptance takes place at time when letter of acceptance is posted.

Acceptance of Offer
Exceptions

2 conditions : Adans v Lindsell

- Postal acceptance must be expressly or impliedly authorized.
- Letter of acceptance must be properly stamped and addressed.

Ignorance of Offer
Termination of Offer

Cannot accept an offer of which he has no knowledge. R v Clarke

Motive of person is does not matter as long as he has knowledge of offer

- Display of goods for sale

Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]
R1:customers would not be unfairly bound once taken goods
Withdrawal
Counter Offer
Lapse of Time
Failure of Condition
Death
from shelves and would be able to change his mind
R2:shop might misquote price
Must be communicated to
Rejection of original offer
Specified in contract
If offeree knows of offerors death
R3:goods might be out of stock
the offeror before acceptance. Note: Counter offer(intro new (express time limit) or
terminate
Can be express or
Communicated can be by
tem) is not equal to request
for reasonable time
implied condition
If offeree do not know offer stays
- Auction sales
3rd party. Dickinson v Dodds
for info (clarify what offer is)
unless for personal service
Calls for bid ITT
Bids by present Offer
WITHDRAWAL OF UNILATERAL CONTRACT
Fall of Hammer: Acceptance, however auction adv is not
Offeror must take reasonable step to bring attention to withdrawal.
offer but without reserve means will sell to higher bidder
If performance has begun:
no matter how long the bid is.
(1) 2 Offer Approach expressed offer can be withdraw before acceptance, implied offer not to withdraw the express offer if offeree has
begun performance with reasonable time. Daulia Ltd v Four Millbank Nominees Ltd
- Tenders
(2) Compensation Approach withdrawal before full performance of contract, subjected to compensate suitable sum for his trouble.

Chapter 8: Consideration and Intention to

Create Legal Relation
Offer

Contract

Acceptance

Consideration

Something of value in the eyes

of the law given in exchange
for anothers promise.

Chapter 7
Benefit-Detriment
Promisee confers a benefit on
the promisor in return for the
promisors promise.
Or
Incurs a detriment in return for
promisors promise.
Chappell & Co Ltd v Nestle Co
Ltd

Exchange

Consideration
must be requested
by promisor

Consideration
must not be of
past

Consideration
must move from
promisee

Benefit conferred or
Past consideration is
detriment suffered must no consideration.
by the promisee must
be requested by the
Exception
promisor.
Pao On v
Combe v Combe

Lau Yiu Long

Act was done at

promisors request
Parties understood that the
act will be compensated

4 (+1) Elements
Have existing legal relationship
Clear & Unequivocal promise

Such payment would be

enforceable if it had been
promised in advance

Commercial
Agreements

Presumption that parties

do not intend to create a
legally enforceable
agreement.
Balfour v Balfour

Presumption that parties

intend to create a legally
enforceable agreement.

Can be rebutted if there

is clear evidence.
Merritt v Merritt

Sufficient

Can be rebutted if there is

a honor clause that says
that agreement is not a
formal and legal
agreement.

Insufficient

- Nominal value

- Intangibles and Moral Obligations

- Forbearance to sue

- Existing public duty

- Going beyond existing public duty

(Glasbrook Bros v Glamorgan County
Council [1925])
- Existing contractual duty owned to 3rd
party
- Going beyond existing contractual duty

Existing Contractual Duty Owned to Promisor

In Return for a Promise for More

Exceptions when promise is sufficient: Williams v Roffery Bros & Nicholls

- Give effect to commercial reality
- Promisor obtains Practical Benefits

Inequitable for promisor to go back

on his promise

Suspensive or Extinctive

Social & Domestic

Agreements

Insufficient: Stilk v Myrick

Traditional view is that such promise is generally not sufficient consideration.

Reliance on the promise and altered

his position

Doctrine invoked as a shield,

not a sword

Consideration must be
sufficient; need not be
adequate.
Chappell & Co Ltd v
Nestle Co Ltd

Only the person who

furnish the consideration
can enforce the promise.

Promissory Estoppel
Prevents a person from going back to his promise even if it is
not supported by consideration.
Central London Property Trust v High Tress House Ltd

Value

Intention to create legal relations

It is not fair for the promisor to go back on

his works because the promisee has relied
on the promise and suffered a detriment.

In Return for a Promise for Less

Pinnels Case: Part payment of a debt on the due date is not a good discharge of the
debt even on the creditors assurance/promise that it is, unless supported by
consideration. (Refer to Promissory Estoppel)

Periodic Payments
- not possible to recover former payments
- future payment is suspended, and may be revived upon reasonable notice
- justify by fact that promises were given in response to acute & temporary circumstances
- intend to be binding to while extenuating circumstances last

One-Off Payments
- creditor accepts a lesser sum in satisfaction of a larger debt
- ultimately depends on whether the creditors intention is to forgive the debt or merely allow
more time for repayment

Chapter 10 & 11: Terms of Contract and

Exemption Clause

Request to Verify asked to get independent verification (representation)

5 Guidelines to
Distinguishing Terms from
Representations

Pre-Contractual
Statements

Representations

Puffs
Sales talk, no
legal effect
Normal
exaggeration
&
grandstanding
that is part of
contract
negotiation,
ex. Best beer
in the world.

True

Mutual Promises: What

parties agree to form part of
contract

False
Sue for
misrepresentation

Express

Condition Warranty Approach

- Determine if term is C or not by
discerning intention of parties
- Factors to decide:
(1) language of clause
(2) nature & context
(3) prior case precedent
4) term implied by statue

Written statements if agreement is put into writing, more likely to be term

(Parol Evidence Rule)

(Pg 264) Section 93 & 94 of Evidence Act: When parties have reduced contract to
writing, either party may not attempt to show by extrinsic evidence that the terms in
written contract must be changed, added to or contradicted.
Except:
S94(a): vitiating factors eg misrep,mistake etc
94(b): conditions precedent b4 k comes into existence
94(f): extrinsic evidence to aid in interpretation of written terms
The existence of any separate oral agreement (as a warranty), as to any matter
on which a document is silent and which is not inconsistent with its terms, may
Collateral Contract
be proved; whether or not this provision applies, the court shall have regard to
the degree of formality of the document.

Parol Evidence Rule

Implied
Usage / Custom

Can be either oral

or written.

2 Approaches
to Differentiate
Conditions
& Warranties

Timing of Statement statement made closer to contract, more likely to be a term

Special Skill & Knowledge statements made by a person who has special
knowledge, more likely to be term

Terms

Statement that induce another party

to enter into contract

Importance of Statement parties would not enter into contract without it

(greater emphasis suggests a term)

Condition

Innominate Term

Warranty

Community has accepted Sales of Goods Act, etc

custom which binds parties
even if ignorant.

Custom must be a usage

Essential Term
Contains features of
sufficiently uniform and
(Important)
essential & minor terms BREACH Minor Term
accepted by relevant
BREACH
BREACH community.
Did Breach deprive the innocent party of substantially
the whole benefit under the contract?

Statue

Sue for damages

only.
Bettini v Gye

Implied by Fact

Depends on parties
subjective intention
objectively ascertained.
2 Test:
- Officious-Bystander Test
- Business Efficiency Test

Court

Implied by Law
Objective test: Is it
reasonable to imply such a
term?
Implied to promote certainty
& give effect to important
social policies.

(inject terms that will

Terms of employment, etc
promote business
Malik v Bank of Credit &
efficiency)
Commerce International SA
Sect 2 is for death and injury.(it is Moorcock
for damages)
Step 1: Does UTCA apply?
Exemption Clause
Sect 3 is for breach of contract (not
UCTA apply to contracts and torts with business liability.
If reveals that term is not C, move
for negligence)
Incorporation
on to Hong Kong Fir approach.
Step 2: Which Section to Apply?
UCTA apply to contracts and torts where there is business
Construction
Hong Kong Fir Approach
By Signature General rule that person signing the
UCTA (P309)
liability. Only to unfair exemption clause, not all unfair
- Focus on nature and
contract is bound by everything in the contract. (P294)Contra Proferentem Rule If EC is
terms in contract
consequences of breach
Exceptions:
ambiguous, it will be construed narrowly/
- Hence, conclude that the term is a Doctrine of non est factum
strictly against the person seeking to rely upon Negligence Liability
Contractual Liability
innominate term consider
Misrepresentation to nature of signed document
it to exclude his liability.
- Contract with consumer or use of
Death
or
personal
injury

EC
circumstances whether the breach Collateral contract may sometimes override written
not allowed. S2(1)
Cases of Negligence Liability
has deprived innocent party of
contract
standard form contract
substantially entire benefit of
By Notice Type of document, time of notice,
- Other damages EC subject to
EC subject to Test of
contract.
adequacy of notice, and effect of clause (P295)
Test of Reasonableness S2(2)
Reasonableness S3(1)(2)
By Previous Dealings Hollier v Rambler Motors Ltd
(P301)
Step 3: Apply Test of Reasonableness
terminate
the
contract
& sue for
damages

Sue for
damages
only.
Poussard
v Spires

Yes
Serious
Consequence

No
Minor
Consequences

Chapter 10 & 11: Terms of Contract and

Exemption Clause

Chapter 3: Legal Processes and

Instituitions

Application of Unfair Contract Terms Act (UCTA)

Step 3: Applying the Test of Reasonableness
There are 2 test of reasonableness under Section 11 of the UCTA:
S 11(1): In relation to a contract term, the requirement of reasonablenessis that the term
shall have been a fair and reasonable onehaving regard to the circumstances which were,
or ought reasonably to have been, known to or in the contemplation of the parties when the
contract was made.
S 11(2) refers to the Second Schedule which sets out Guidelines for Application of the
Reasonableness Test (for contracts falling under sections 6 & 7 e.g. sale of goods contracts)

Doctrine of Judicial Precedent (Stare Decisis)

Purpose:
Uniformity and consistency of decision
not to judges fancy
for certainty
in respect for court hierarchy
Terminology
Ratio decidendi: the reason for the decision, ex, the
principle that a man who commits a criminal act cannot
profit from the criminal act is the ratio decidendi for the
decision of the judge to disallow recovery by X.

Obiter dictum: made by the way, not directly applied to

arrive at the outcome in a case.

The Second Schedule lists the following as matters that may be relevant:
(a)

The strength of the bargaining positions of the parties relative to each other, taking into
account (among other things) alternative means by which the customers requirements could
have been meet;

(b)

Whether the customer received an inducement to agree to the term, or in accepting it had
an opportunity of entering into a similar contract with other persons, but without having to
accept a similar term;

(c)

Whether the customer knew or ought reasonably to have known of the existence and the
extent of the term (having regard, among other things, to any custom of the trade and any
previous course of dealing between parties);

(d)

Where the term excludes or restricts any relevant liability if some condition is not complied
with, whether it was reasonable at the time of the contract to expect that compliance with
that condition would be practical;

(e)

Whether the goods were manufactured, processed or adapted to the special order of the
customer.

It would be more
reasonable for customer to
have accept the EC if he is
induced to it (given a
benefit to accept the EC).
Applies to conditional EC.
What this means is whether
the conditional EC is
reasonable at the time the
contract was made.
If the customer places a
special order, it would be
more reasonable for the
customer to accept the EC
because of the additional
risk involved in fulfilling
the special order.

Chapter 14 and 15: Illegality (Restraint of Trade) and Duress

Illegality

Misrepresentation

Refer to Chapter 13

Undue Influence

Refer to Chapter 14

Vitiating Factors

Duress

Contract becomes voidable if a party enters into contract under

illegitimate threat to harm his economic interest

Economic Duress

To Property
2 Tests for Economic
Duress

Restraint of Trade

Overborne Will Theory

General Rule states that Restraint of

Trade is prima facie void, unless:
Thomas Cowan & Co Ltd v Orme

Legitimate Interest
of business

Reasonable in duration,
area and scope

Employment k

Taking into consideration the

Trade secrets/contacts &
bargaining position and
maintenance of stable workforce adequacy of consideration
Herbert Morris Limited v Saxelby
Mason v Provident Clothing
Sale of Business k - Goodwill
& Supply Company Ltd
Nordenfelt v Maxim Nordenfelt
Guns & Ammunition Company
Ltd

Severance

Entire Clause

Not against
Public Interest

Barton v Armstrong

Illegitimate Pressure

Traditional Approach

1.

Whether the victim is under such

extreme pressure or coercion that he
cannot be said to be exercising his own
free will.

To Person

2.

3 factors has to be
satisfied

Illegitimate threat /
pressure

Causation: that illegitimate

pressure is the significant
cause inducing victim to
enter iinto k
Pressure affect the voluntariness of victims consent

Freedom to trade
does not stifle healthy
competition,
availability of rare skill and
knowledge

Purpose: to save a contract

which would otherwise be
illegal or contrary to public
policy, by excising or cutting
away the illegal portion.

Blue Pencil Test

Run through and strike out
objectionable words, as long
as it does not alter the
meaning or mutilate the
covenant
Goldsoll v Goldman

Sufficient Pressure
Pao On v Lau Yiu Long
(1980) (P375)
Factors:
- Protest
- Realistic alternatives,
such as adequate legal
remedy
- Independently adviced
- Steps taken to avoid
Another steps added by
other case
-Response of victim;
victim must prove that he
had acted reasonably in
taking the other partys
threat seriously

OR

Illegitimate
Illegitimate all threats to
break a contract

Nature of Threat
- Unlawful act illegitimate
unless it is not acted in bad
faith (SharoncGlobal Solutions
Pte Ltd v LG International
Sinagepore Pte Ltd (2001))
- Lawful act illegitimate if
applied illegitimately
(blackmail)
Nature of Demand
- exploitative (bad faith) or
acting in good faith

Causation
But For test
Whether the illegitimate
threat is the significant
cause inducing the victim
to enter into the contract.
Huyton SA v Peter Cremer
GmbH & Co

Chapter 14 & 15: Vitiating Factors (I),

Undue Influence & Unconscionability
Vitiating Factors (II)

Illegality

Duress

Undue Influence

Unconscionability

Unconscientious use of
ones power/authority over
another to acquire a
benefit or achieve a
purpose.

Vitiating Factors (I)

Nature of Relation

3 Requirements
- if plaintiff is poor & ignorant
- sale was considerable undervalue
- vendor had independent advice

Undue Influence by 3rd Party

Special Relation?
Yes

No

Transaction is
manifestly
disadvantageous
and
No
calls for
explanation
Royal Bank of
Scotland v Etridge

No

Yes

Influence
exercised
wrongfully?

No

Bank entrust the

guilty party as its
agent.

Notice
Bank knows of the UI
(actual or constructive)

Constructive Notice of UI

Yes

Yes

Put on inquiry

Induced contract?

Presumed undue
influence

No

Yes
Class 1:
Undue Influence
(voidable)

Rebutted by
seeking
independent
legal advice?
Yes

Agency

Influential position

Valid

Special Relation
No

Class 2A presumes
Class 2:
No Undue
relationships to be of trust and
Influence Undue Influence confidence.
(voidable)
(e.g. parent/child,
guardian/ward, doc/patient,
lawyer/client,
trustee/beneficiary, religious
advisor/disciple)
Class 2B must be proven
(e.g. husband/wife,
employer/employee,
agent/principal, siblings)

Reasonable Steps

- Request to obtain
Husband/Wife:
Whenever Bank
independent advice.
knows that one
- Explain reason for
spouse has offered to
lawyers involvement
stand as surety for the
ie. So that the
debts of the other.
creditor may obtain
Others:
and rely on written
Whenever Banks
confirmation from the
knows that the
relationship of 2
legal advisor that the
parties are nonguarantor has been
commercial
properly advise.
- Explain that these
steps are for the
protection of creditor.

Misrepresentation

Chapter 13 and 14: Undue Influence and Misrepresentation

False statement
of Fact
Refer to Chapter 15

Refer to Chapter 14

Statement of past or present,

by conduct, etc

Illegality
Misrepresentation

Undue Influence

Infection

One contracting
party to another

Duress

Contract becomes voidable where there is

wrongful influence by one party over another

Actual Undue Influence

Vitiating Factors

Class 1

Plaintiff prove that:

- Wrongdoer in position of influence
(domination)
- Influence was exercised wrongfully
- Influence induced contract

Presumed
Undue Influence

Induce actual party

into contract

Creditor's rights
when there is
undue influence by
Debtor on Surety

Class 2

Contract can be
rescinded by victim
of undue influence
even if Creditor
was innocent

Rationale: prevent abuse of

trust and confidence placed by
one person on another

Subjective

Materiality test Actual

inducement
Will a reasonable
by misrep?
in the shoes of
the representee
man be induced
to enter contract?

Parent-child
Guardian-ward
Trustee-beneficiary
Doctor-patient
Lawyer-client
Director-company
Religious advisor-disciple

Relation of Trust
& Confidence

Manifestly
Disadvantageous
Transaction calls for
explanation if it is so
large as not to be
reasonably accounted for
on the ground of
friendship, relationship,
charity, or other ordinary
motives on which ordinary
men act

Agency
Creditor has
entrusted the guilty
party of undue
influence as its
agent

Prove relationship of Trust

and Confidence(actual proof
required):

Inquiry

Agent-principle
Husband-wife
Employer-employee
Siblings

Rebutting
Presumption
Show how P acted freely and independently in
entering into contract:
- Seek independent advice from competent and
honest advisor with knowledge of all relevant
circumstances
- Advisor must advice Plaintiff as though acting
solely in the interest of the Plaintiff

Made statement:

Not believing it to be
true
Recklessly, not
caring if it is true or
not

Husband-Wife:
whenever bank
knows one spouse
offered to stand
surety for debts of
other
Other:
Whenever bank
knows relationship is
non-commercial

Negligence

Innocent

Made statement:Made statement:

Without care

Honestly

No reasonable With reason to

believe it to be
grounds to
true
believe it to be
true (s 2(1) MA)
Hadley Byre

Remedy: innocent party may rescind

(as if contract never exist) or affirm contract
court may order damages instead of recession for
negligence and innocent misrepresentation.
(Misrepresentation Act S2(2))

Notice
Notice of the
wrongdoing

Construction

Royal Bank of Scotland

plc v Etridge

Class 2B

Fraudulent

Damages

Damages

Indemnity

Limitations
Actual

Burden of proof:
representor

Types of
Misrepresentation

Knowing it is untrue

Objective

Class 2A
Presumed relationship
automatically(relationship
of trust and confidence
does not need to be
proved):

Burden of proof:
representee

and
Reasonable
Reasonable steps:

(reimbursed any expenses

as a result of the contract)

Contract is affirmed cant change mind

Lapse of reasonable time without giving notice to
rescind
Restoration to original position impossible. Eg, wine
consumed.

rd
rd
- request guarantor to obtain legal 3 Party rights arose. Eg, sold goods to 3 Party Court
ordered
damages
instead
of
rescission
advice
- explain reason for lawyers
Exemption Clause
involvement (creditor can obtain
Exemption clause may exclude liability for misrep.
written confirmation that
guarantor is properly advice
S 3 of Misrep Act states clause is not enforceable unless it
- explain steps are for protection
passes test of reasonableness in UCTA
of creditor
Subject to normal rule of construction for exemption clause

Chapter 16: Agreement, Performance, and Breach

Terminology
contingent dependant on
repudiatory breach refusal to perform a contractual obligation

Frustration

Terms of contract
E.g.. Term for termination by
employment by notice

Subsequent/
New Agreement
Must be supported by
consideration for release
All obligations must be fully
and precisely performed

Agreement

Discharge

Refer to Chapter 17

Breach
Actual

Performance

General Rule
4 Exceptions

Others

Performance
must be exact
& precise

Anticipatory

No performance
or defective
performance
when time to
perform arrive

Innominate

Non-Repudiatory
De Minimis Rule Severable Obligations Partial Performance
Accepted
Very hard to invoke,
Obligations separate &
will not be invoked for independent (based on
differences in
intention of parties).
measurement.
Entitled to payment for
obligation performed.
Difference in

performance is
microscopic, then it
will be ignored and
treated like no breach
at all

Substantial
Performance

Quatum meruit
If obligation is NOT
payment on
entire, and party in
contractual basis breach has substantially
expressed in contract performed, he can claim
that payment in return payment less cost to
for performance will be rectify but is still liable to
made in proportion to
damages
amt of work done. Or
Cutter and Powell
Sale of Goods Act
30(1)
Quatum meruit
payment on
restitutionary basis
only if party voluntarily
accepts partial work

S3 states that rents, annuities, dividends and other

periodical payment that are accrued on daily basis are
claimable base on periods

Apportionment Act

Renunciation

Intention not to
perform obligation
due in future

Warranty

Non-Repudiatory

Repudiatory
Impossibility

Condition

Repudiatory

Election

Discharge

Affirm

Contract continues and

sue for damages for
breach

Contract ends and sue for

damages for breach

Fixed Sum

No Cooperation

Claiming for a fixed sum

opposed to unliquidated
damages

Innocent party do not

need corporation of
party in breach to
continue the contract

Contract
continues, treated
as no breach

Legitimate Interest
Must have Legitimate Interest
to affirm
White & Carter
If damages are sufficient
compensation, not allowed to
affirm the contract which wil
result in greater detriment to the
defaulting party
MP-Bilt Pte Ltd v Oey Widarto

Restitutionary Basis (Law of Unjust Enrichment)

Able to claim in relation to partial performance, if the party
has received benefit had option of freely accepting or
rejecting the benefit

Quantum Meruit

Chapter 17: Frustration

Agreement

Refer to Chapter 16

Performance

Discharge

Breach

Frustration

Destruction of
subject matter
Death / Incapacity
Government
acquisition, etc

General
Impossibility

Classification

Self Induced Frustration

Illegality

Limiting Factors

Frustration if negligence is not deliberately

induced

Event which is highly foreseeable

cannot be frustrated

Joseph Constantine v Imperial Smelting

Choice of Contract
Radical Change

Delay, unavailability
Frustration
of Purpose

Occurs when purpose of entering into contract is

radically changed. Must have special qualification
that only the Promisor can provide. Failure of purpose
of one party does not bring about frustration.
Krell v Henry

Negligence

Grossly negligence (chances of breach is

high) or mere carelessness (chances of
breach is low)

Foreseeability

Alternate method can be used, so long as

contract is not fundamentally different

Impracticability,
increased costs

Force Majeure Clause

Requirement: Particularly clear words to be used

Method of
Performance

Extreme cases as men

of business are taken
to cognisant of the
risks and vicissitudes
in the business envrt,
such as rises and falls
in prices.

Frustration due to
party own conduct or
the conduct of those
for whom he is
responsible for

Expressed term in contract that negates

frustration due to acts of God, expressing the
legal consequences of such an event

Unavailability
Failure of Source
of Supply

Frustration occurs when a supervening event, due to

no fault of the parties, render the contract entered into
radically different from that which the parties originally
undertook.

There is no frustration if party can choose

between contracts

Effects
Aspects

Common Law

Frustrated Contracts Act

Future obligations

Released

Released

Accrued
obligations

Remain

Released

Sums paid

Not recoverable

Recoverable [Section 2(2)]

Sums payable

Remain payable

No longer payable

Benefits /
Expenses

Not applicable

Recoverable

Chapter 18: Remedies for Breach of Contract

Limitation Act S6:
Plaintiff must commence
legal action within 6
years from time contract
is breached / tort
committed.

Discretionary
Remedies

Remedies

Right of Claim

Common Law
Remedies

Reasons: evidences
destroyed or tampered
with, pple die
Can be postponed if
Plaintiff was ignorant
about breach of
contract.

Construction of Clause:
Terms and words used are
not conclusive
Amount is extravagant
compared with the loss
from breach

Unliquidated
Damages

Quantification
of Loss

Expectation

Lump sum payment

Difference
in Value

Even if loss from breach is

difficult to predict, it can
still be liquidated
damages.

Cost of Cure
Ruxley Electronics and
Construction Ltd v Forsyth

Dunlop Pneumatic Tyre v

New Garage

Injunction

Damages not adequate

remedy

Prohibitory refrain and cease doing an

act in breach of contract (restraint of trade)

Not involving personal service

Mandatory correct an act which should

not have done (demolish a wall in breach
of contract)

Not cause severe hardship

Reliance
Can be claimed in addition to
Expectation Loss when there is no
double counting or as an alternative
to Expectation Loss

Other

Non-Pecuniary

Such as Indemnity or
Consequential
Loss

Emotional distress, hurt,

embarrassment, disappointment,
inconvenience are not recoverable
Reason: Open floodgate to
everyone as it is natural for victim
to suffer emotional distress.

Anglia Television Ltd v Reed

4 Steps

Hard to penalty clause if 2

parties act at arms length
Philips Hong Kong Ltd v
AG of Hong Kong

Equitable
Remedies

Not need constant

supervision

If remedies have been preagreed by both parties, the

court will order sum to be
paid in compensation as
liquidated damages,
provided it is a genuine preestimate of the loss, not as
a form of penalty.

Payment is larger than

obligation to payment

Awarded when there is total failure of

consideration, or failure for a benefit in
kind (quantum valebant or quantum meruit)

Specific
Performance

Liquidated
Damages

Test

To reverse any unjust enrichment gained

by D at expense of P

Restitutionary
Remedies

1. Causation in fact
But for Test
Was the breach an effective
cause of the loss?

First Limb
Naturally arising damages
Based on imputed
knowledge or actual
knowledge of Defendant

2. Causation at law
Remoteness

3. Assessment

Hadley v Baxendale
Intent: Put innocent party in
Post Heron II
a position as though the
contract has been properly
Second Limb
performed
Losses reasonably
contemplated by parties when
k is made
Based on actual knowledge of
Defendant only

Exceptions
4. Mitigation

Jarvis v Swan Tours (1973)

ski trip allowed if contract
is to provide pleasure and
enjoyment

Duty to take reasonable steps to minimize

loss
Farley v Skinner sufficient
If not, cannot claim sum that could be avoided
if it is a major part of the
Exception : (Bankes LJ, Limited v Saunders
contract
(1919))
Perry v Sidney Philips
-P is unable to financially afford mitigation
distress arises from physical
costs
discomfort and
-- P is not required to mitigate as it will put its
inconvenience
commercial reputation or gd public rln at
stake
-- P is not required to mitigate as it involves

Chapter 6: Negligence

But-For test

Terminology

Causation

novus actus interveniens new intervening act

Spandeck Engineering (S) Pte Ltd v DSTA (2007)

Singapores Stand
Prelim. Req.:
Treshold level of
Factual
Foreseeability

Proximity

Duty of Care

Public Policy

Negligence

Causation of
Damage/Loss

Breach of DOC

Concept of novus
actus interveniens
- if NAI breaks chain
of causation, Ds
breach would not be
regarded as cause
of Ps loss/damage

Material
Contribution test
Balance of probabilities of cause
(Not necessary for breach to be the
sole or dominant cause of
loss/damage)

TV Media v De Cruz Andrea

If factual
Whether it will result in
foreseeability
Reasonable
imposing liability in an
Fail to Reach Standard of Care
Remoteness
and proximity is indeterminate amount for
Foreseeability
NORMALLY,
the
P
has
to
Expected of Him
established, a an indeterminate time to
prove that the D has been
Relates to the type of
prima face duty an indeterminate class of
negligent, i.e breached the
damage or injury which is
Mitigation
of care exists.
persons
NEED TO REFER TO
duty of care expected of
As physical damage is
foreseeable.
ANALOGOUS CASES
him!
foreseeable in (eg such
- D only liable to P in relation to
Eggshell skull rule
Res Ipsa Loquitur
Nervous Shock &
car accidents), it is not
losses suffered that are not
(P156) - Defendant must
readily
avoidable
by
P
necessary
for
P
to
show
Physical Damage/Injury &
Consequential Economic Loss
take victim as he finds
Let
facts
speak
for
themselves
that psychiatric injury is
- P cannot unreasonably inflate
Consequential Economic Loss
him. If victims prealso foreseeable in order
losses
&
seek
to
recover
such
Shift the burden of prove (of
existing weakness / hyperPsychiatric Illness
1) Donoghue v Stevenson (1932)
to recover for psychiatric
losses from D
breach) from plaintiff to defendant
sensitivity causes him to
injuries (P142)
2) TV Media v De Cruz Andrea Heidi
- It is Ds burden to show P
to prove that he is not negligent.
suffer greater injury,
(2004)
ought to have taken reasonable
Defendant is liable to full
Primary Victim
Secondary Victim
1)
Defendant
must
have
been
in
steps to mitigate
Pure Economic Loss due to
extent of injury.
control of the situation or thing
Page v Smith (1996) McCloughlin v OBrien (1983)
Negligent Misstatements
which resulted in the accident; and
Defense
3 Requirements:
1) Hedley Byrne v Heller (1964)
2) The cause of accident must be
Duty is imposed as
unknown
long as some form 1. Class of Persons close
DOC arises where there is a special
relationship taking into account the
of personal injury relationship (parent/child and
following factors:
husband/wife)
was foreseeable
Illegality
Complete Defense
Partial Defense
Limitation Period
flowing from the

skill & expertise of maker of statement;

2. Proximity of secondary
Ps wrong must
negligent act

victims to the accident time an

whether maker knows or ought to have
S3(1) of
Limitation Act
be sufficiently Voluntary Assumption of
known that other person will rely on the
space
Risk
Volenti
non
fit
Contributory
connected to
S 6 (a) epiration of 6years from the date on which
statement; and
injuria
Negligence and
3. Means by which the shock
his damage, the
cause of action iaccrued

whether maker of statement voluntarily

was caused (actual sight,
fact that the P isCannot complain if victim Personal Injuries
assumed responsibility for statement.
Act
S 24A- with respect to personal injuries
hearing, immediate aftermath)
involved in
consent to the risk
2) Caparo Industries Ltd
some
Victims bears i.expiration of 3 years from date on which cause of
v Dickman (1990)
wrongdoing is However s2(2) UCTA
portion of loss action accrued
states,
D
cannot
exclude
not sufficient
based on share of
Applied the 3-stage test
or restrict his liability for
ii.Expiration of 3 ears from the earliest date on which P
responsibility for
Pure Economic Loss due to

Foreseeability: whether harm is

Objective Test
negligence in causing
has knowledge required for brining an action for
damage.
forseeable
personal injury or death.
damages in respect of relevant injury.
Negligent Acts or Omissions

Proximity: whether close relationship

exists bet parties: it exist if:
- D knew/ought to have known purpose for

1) The Ocean Front (1996)

2) The Eastern Lagoon II (1999)

which statement/advice was required;
3) PT Bumi (2004)
- that it will be communicated to advisee
- that advisee is likely to act upon it for that Cases applied the 2-stage process to determine
purpose without independent inquiry;
whether a duty of care should arise:
- It was so acted upon to advisees
Is there a sufficient degree of proximity in the
detriment; &
relationship bet P & D?
- it was reasonable for advisee to so rely.

Whether fair, just and reasonable?

If so, is there any material consideration or

policy which precludes such a duty from arising?

Ds Level of Skill

Likelihood of Harm

Level of Skill
Std of care!

Likelihood Std
of care!

(for medical, bolam

test)

(Bolton v Stone(1951)

How high the Standard of Care

should be is determined by
considering these factors

Seriousness of Harm
Seriousness
Std of
care!
(Paris v Stepney
Borough Council
(1951)

Cost of Avoiding Risk

Cost & risk Incurring
cost is necessary!
Cost but Risk May not
have to incur the high cost
Cost & Risk May still
have to incur the cost