Notes of Commercial Law

Contracts (C3, pg 58) |Nature of contract |- Legal relationship consisting of the right and promises constituting an agreement between the parties that give each party a legal | | |duty to the other and also the right to seek for breach of those duties | | |- Consensus ad idem (meeting of minds); what the parties agree on must be clear and unambiguous and parties must be ad idem. | |Wellmix Organics (International) Pte Ltd v Lau Yu Man (2006) , | | |T2 Networks Pte Ltd v Nasioncom Sdn Bhd (2008) | |Types of Contracts | Oral contracts | | |Written contract provides evidence of the parties’ contractual obligations. | |Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd (2006) | | |Parol evidence rule = oral evidence not admissible to add to, vary, amend or contradict written contract s 93-94 Evidence Act (refer | | |to Terms) | | |Engelin Teh Practice LLC v Wee Soon Kim Anthony (2004) | . Offer (C3, pg 63) |As the expression to another of a willingness to be bound by stated terms. | |Invitation to treat (pg 64) | |An invitation to others to enter into a negotiation which may eventually lead to the making of an offer. | |An ad is view as invitations to treat. | |Auction without reservations (refer to Barry v Davis (2000) pg 5) |(Offer = Bids made by audience, Acceptance = Auctioneer indicates bids accepted) | |Display of Goods | |Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the court held that the display of goods with prices constitutes an | |invitation to treat. The offer is only made when a customer selects the item he wants and brings it to the cashier to pay for it. |Reaffirmed by Singapore High Court in Chwee Kin Keong & Others v Digilandmall com Pte Ltd (2004) | |Advertisements An ad is view as invitations to treat. | |Partridge v Crittenden (1968) | |Provision of Information | |Harvey v Facey (1893) – The court held that there was no contract because provision of information was not an offer .Stevenson, Jacques & Co v McLean | |(1880) – Seeking for more information is neither a rejection nor acceptance, it was merely an enquiry. | |*compare between offer and invitation to treat, must prove why choose one over the other | |Specific Offeree |An offer is an expression made by one party to another party. For an offer to be effective, the offer must be communicated to the | | |offeree. | Unilateral Contracts |A contract brought into existence by the act of one party in response to a conditional promise by another. Harvela Investments Ltd v | |(involving only one |Royal Trust Co of Canada (Cl) Ltd & Ors (1984)No exchange of promise, only 1 promise (made by offeror). | |side) |Offeree makes no promise, only performs conditions attached to offeror’s promise. Carlill v Carbolic Smoke Ball Co. (1892) – Where | |(pg 63) |advertisement contains a promise in return for an act, an offer is intended. (No general rule that an ad cannot be an offer. | |Bi-lateral Co ntracts |An agreement where one party makes a promise to the other party. | |(involving on 2 side |There are duties, rights and considerations on both parties. In other words, performance of the conditions is an acceptance of the | |or both) |offer and this acceptance should be notified. | Termination of Offer (Pg 75) (5 ways) |Withdrawal |Law: Offer can be withdrawn or revoked by the offeror at any time before it is accepted. (When an offer is withdrawn, the offer is said | | |to be revoked). Overseas Union Insurance Ltd v Turegum Insurance Co (2001) | | |Law: Withdrawal must be communicated to 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. | |Law: Revocation of offer can be communicated by a third party (as long as offeree obtains knowledge of the revocation) (must be a | | |reliable and trustworthy source) Dickinson v Dodds (1876) Law: Fresh Offer (Revocation can also occer if the offer is replaced by a | | |fresh offer) Ban Paribas v Citibank NA (1989) | | |Law: Offer is opened for a fixed period Routledge v Grant (1828) –Rationale is that an offeree cannot enforce an offeror’s 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 – essentially a promise, supported by consideration, to keep an offer open for a specific period of time within which | | |to decide whether or not to enter into the purchase of agreement. | | |Law: Unilateral Contracts Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has started to | | |act. – Dickson Trading(s) Pte Ltd v Transmarco Ltd (1989), obiter dictum, the offeror in a unilateral contract has an obligation not to | | |revoke the offer after the offeree has involved in the performance of the conditions. |Lapse of time |Acceptance after specific period which offeror states that his offer is open = Ineffective | | |If the offer is opened for a specified period, a purported acceptance after that period would not be effective since the offer had | | |lapsed. 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 (1992) | | |- however, if it is clear from the offeror’s conduct and other evidence that the terms of the supposedly lapsed offer continue to govern| | |their relationship after the specified period, then it is still valid and acceptable after the deadline. Panwell Pte Ltd & Anor v | | |Indian Bank (No2) (2002) | | |When no specified period of time is expressed, an offer would lapse after a reasonable 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 |Offer automatically terminated if condition not met | |Condition |An offer may terminate on the occurrence of a specified event if the offer is subjected to the condition that it will do. e. g. erminate| | |if goods are damaged before acceptance, subject to the approval of my lawyer Financings Ltd v Stimson (1962) | |Death |Dickinson v Dodds( if the man who makes an offer dies, the offer cannot be accepted after he is dead. Reynolds v Atherton (1921)( | | |Offeree dies before acceptance, this offer cease to be capable of acceptance. Bradbury v Morgan (1862)( the court held that the death of| | |an offeror did not terminate the offer unless the offeree had notice of the offeror’s death. | 2. Acceptance (C3, pg 67) |Indication by the offeree of his consent to the offer and his intention to form a contract based on the exact terms of the offer | |- Whatever its form, a communication constitutes acceptance only if it is an unconditional expression of assent to the terms of offer.Compaq Computer Asia| |Pte Ltd v Computer Interface(s) Pte Ltd (2004) | |- Conditional Acceptance is treated as no acceptance. Struttgart Auto Pte Ltd v Ng Shwu Yong (2005); | |- Accepts seller’s offer subject to a written contract drafted – Thmoas Plaza (Pte) Ltd v Liquidators of Yaohan Departmental Store Singapore Pte Ltd (in | |liquidation) (2001); | |- Agreenment shall not be final and binding agreement – Cendekia Candranegara Tjiang v Yin Kum Choy & Others (2002) | |Brogden v Metropolitan Railway Co. 1877) The Court held that the facts and actual conduct of the parties, established the existence of a contract, and | |there having a clear breach of it, Brogden must be held liable upon it. | |Law: Acceptance of unilateral contract is when all the terms o f the contract are fully performed Carlill v Carbolic Smoke Ball Co. (1892) | |Counter |Offeree introduces a new term or varies the terms of an offer (original offeror is free to accept or reject the â€Å"counter offer†) Hyde v Wrench | |Offer |(1840) – The court held that there was no contract because Hyde’s reply was a counter offer which extinguished the earlier offer.When the | | |response is an inquiry or a request of information, it should not be construed as an offer | |Knowledge|Law: Offeree cannot accept in ignorance of the law | |of Offer |offeree must be aware of the offer – Fitch v Snedaker (1868) and R v Clarke (1927) – As long as offeree has knowledge of offer, motive is | | |irrelevant. Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than the desire to accept | | |the offer.William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward, she ha d done so with knowledge of the reward| | |even though her motive for giving the information was her own remorse. | | |Cross-offer: Do not constitute to agreement/contract; lack of consensus / meeting of minds between parties at the time of making offer. – Tinn v | | |Hoffman & Co (1873) | |Communica|General Rule: Acceptance must be communicated (Acceptance must actually be received by the offeror) | |tion of |Acceptance effective when communicated/received by offeror. | |Acceptanc|If in writing, it must be physically received by the offeror, and if orally, heard by the offeror. Acceptance must be unconditional and absolute. |e |obiter dictum in Entores Ltd v Miles Far East Corporation (1955) and CS Bored Pile System Pte Ltd v Evan Lam &Co Pte Ltd (2006) | | |Powell v Lee (1908) Held that there was no authorized communication of intention to contract on part of the body hence no contract. | |Silence |Silence is only a form of acceptance if both parties agree to it. Silence o f the offeree would not constitute a valid acceptance | | |Felthouse v Bindley (1862)–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. | |Exemption case: Both parties agree that the offeree would have a positive obligation to communication only if he wished to reject the offer. | | |Albeit rare in practice, silence is properly be construed as acceptance – Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank AG (1993) and | | |Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004) – defendant’s conduct of paying the reduced rent showed that a contact exists. | |Instantan|Time of acceptance is the time at which the acceptance is communicated to the offeror | |eous |Ithe acceptance will take effect when and where it is received, acceptance must be absolute and unconditional Entores v Miles Far East Corp | Communica|(1955) | |tions |- if got designated info system; receipt when e-record entered the designated info system. Emails, Fax, Telex | | |- if got designated info system but sent elsewhere then is receipt upon retrieval. | | |- if no designated info system; receipt upon entering any info system of addressee. | |Exception|The Postal Rule (ONLY FOR LETTERS OF ACCEPTANCE! ) | |s |- Quenerduaine v Cole (1883) – telegram means speedy reply; not attracted by postal rule.Offeror will claim that it is only valid acceptance | | |when physically received. | | |- Agreement cannot be withdrawn once the post is sent out. Henthorn v Fraser (1892) | | |- Acceptance deemed 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 Guard ian Assurance CO Ltd (1932) | | |Waiver of Communication: facts show that the offeror has waived the need for communiation of acceptance; when offer made to whole world | | |(unilateral contract; anyone can accept) – Calill v Carbolic Smoke Ball. | | |( the doing of the act by the offeree may itself be constructed as acceptance, without requiring formal communication to the offeror. | | |Termination of acceptance: Once posted, an acceptance cannot be revoked. – Wenkheim v Arndt (1873) | 3. Consideration (C4, Pg 85) Two Main Rules on Consideration Must move from promisee but need not move to promisor.Tweedle v Atkinson (1861) Need not be adequate but must be sufficient. Chappell & Co Ltd v Nestle Co Ltd (1960) |Is what each party gives to the other as the agreed price for the other’s promise | |Detriment to one OR Benefit to another | |But it need not move to the promisor Malayan Banking Bhd v Lauw Wisanggeni – A third party who is a stranger to the contra ct may benefit from the contract | |although he may not enforce it. | |Need not be adequate but must be sufficient – Law will not interfere with parties contract so long as consideration is of â€Å"some value† in the eyes of the | |law. |In order for a promise to be enforceable in court, consideration must first be given (exchange of promises would be sufficient consideration)– Dunlop v | |Selfridge (1915) | |Past Consideration is |Refers to an act performed prior to and to that extent independent of, the promises being exchanged (act performed without the | |not valid |reciprocal promise in mind). | | |Past consideration is no consideration The court held that the promise was made after the transaction had already been concluded | | |and therefore past consideration.Roscorla v Thomas (1842) and Teo Song Kwang (alias Richard) v Gnau Lye Chan and Another (2006) | | |To become executed consideration: – Pao On v Lau Yiu Long (1980) and Sim Tony v Ah Ghee (t /a Phil Real Estate &Building Services) | | |(1995) | | |Act done at promisor’s request If the promisor has previously asked the other party to provide goods or services, then a promise | | |made after they are provided will be treated as binding. | | |Contract must otherwise be enforceable Done in biz context and it is clearly understood by both sides that it will be paid for then| | |valid.Re Caseys’s Patent v Casey (1892) held the request to Casey to manage the patent carried an implied promise to pay for that | | |service, hence it was enforceable. | |Consideration must move|The only person who can sue for breach of contract must be the party who has given consideration (promise) – Tweedle v Atkinson | |from the promisee |(1861) – the court held that Tweedle could not enforce the contract between the two fathers because firstly he is not a party of | | |the contract, and secondly, no consideration flowed from him. | | |Consideration need not move to the promisor; 3rd party can may benefit although may not enforce it. Malayan Banking Bhd v Lauw | | |Wisanggeni | |Sufficient, |- Law will not inquire to the fairness of consideration, as long as the parties agree to it willingly – Lam Hong Leong Aluminium | |Need not be Adequate; |Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) | |Adequacy of |- Law does not measure value (once the subject of exchange is recognized in law as suitable consideration, quantity is irrelevant) | |Consideration |- Swiss Singapore Overseas Enterprise Pte Ltd v Navalmar UK Ltd (No2) (2003) and Chappell & Co Ltd v Nestle Co Ltd (1960) –the | | |consideration included the wrappers even though they were of no value to Nestle. | | |Thomas v Thomas (1842) – The court held that the nominal rent was sufficient consideration but the husband’s wishes were | | |irrelevant; motive is not the same thing as consideration. |Sufficiency of |A promise not to enforce a Claim is Good Consideration Promise not to sue or enforce a valid claim or settlement of legal action = | |Consideration |sufficient consideration Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) and Alliance Bank| | |Ltd v Broom (1864) Normally, banks would not promise to enforce debt but is not done here. For not suing, considerations shown ( | | |binding agreement to provide security. | |Sufficient |Forbearance to sue |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). | | | |The same applies to a compromise of a legal action. The req. is that the legal action must be reasonable and| | | |not frivolous, that the claimant has an honest belief that in the chance of success of the claim and that | | | |the claimant h as not concealed from the other party any fact which, to the claimant’s knowledge, might | | | |affect its validity.Miles v New Zealand Alford Estate Co (1886) | | |Performance of |The Eurymedon (1975) – The Privy Council held that even though the defendant was already contractually bound| | |existing contractual |to a third party to do so, the defendant’s act of unloading the ship formed good consideration for the | | |duty to third party |contract with the plaintiff. This was also clarified in Pao On v Lau Yiu Long (1980) by the HOL. This was | | | |also accepted in the Singapore High Court in SSAB Oxelosund AB v Xendral Trading Pte Ltd (1992). | |Moral obligation & |Eastwood v Kenyon (1840) – The court rejected the plaintiff’s view and held that moral obligation is | | |motives |insufficient consideration for a fresh promise. | |Insufficient |Vague or insubstantial|White v Bluett (1853) – The court held that Bluett’s promise was no thing more than a promise â€Å"not to bore | | |consideration |his father†. As such it was too vague(fake) and was insufficient consideration for the alleged discharge by | | | |his father. | | |Performance of |Collins v Godefroy (1831) –Performance of an existing public duty is not valid consideration. | |existing public duty |Glassbrook Bros Ltd v Glamorgan City Council (1925)- If the court finds the promisee did something more that| | | |required by an existing public duty, then it may be sufficient. | | |Performance of |Stilk v Myrick (1809) – It was held that there was no consideration for the captain’s promise because the | | |existing contractual |remaining crew did what they were contractually required. Two sailors deserting were within the usual | | |duty |emergencies found in such a voyage. | | |However, if it is more than what is contractually required, that may constitute good consideration – Hartley| | | |v Ponsonby (1857) and William s v Roffey Bros (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 â€Å"practical benefits† from the plaintiff’s work. The benefit was that they would not be liable under| | | |the main contract for late completion. | | |Rule in Pinnel’s Case |Pinnel’s case is authority for the proposition that payment of a lesser sum without anything extra is not a | | | |good consideration. | | |- It would be good consideration provided with a gift (can be anything, even time) is given as the gift | | | |might be more beneficial than the money. -But if the person asks me pay lesser, then cannot sue. – If I | | | |accepted a smaller amount, after that I decided to sue again, CAN! Provided no gift! | | | |Pinnel’s Case (1602) – The part payment of a debt does not discharge the entire debt unless the part p ayment| | | |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 Pinnel’s Case – the HOL | | | |held that Beer’s promise not to take further action was not supported by consideration. She could claim the | | | |money. ( in Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (2001), District Court in Singapore | | | |endorsed the rule in Foakes v Beer and held favor in creditor. | | |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. Central London | | |Property Trust v High Trees House Ltd (1947) | | |Elements (Central London Property Trust v High Trees House Ltd (1947) and D&C Builders v Rees (1966)) | | |1)Parties must have existin g legal relationship 2)Clear and unequivocal promise which affects the legal relationship 3)Promisee | | |relied upon promise and altered his position 4)Inequitable for the promisor to go back on his promise. | |Promissory Estoppel |Cause of action | |(For no consideration) |When the promisor gives reasonable notice of his intention to revert to the original legal relationship, the original relationship | | |is restored. The effect of p. e. is to suspend promisor’s 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) | | |A defensive tool | | |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 ) Assoland Construction Pte Ltd v Malayan Credit Properties Pt e Ltd (1993) and Lai Yew | | |Tay Pte Ltd v Pilecon Engineering BHd (2002) | | | | 4. Intention to Create Legal Relations (Pg 17) |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. objective test† (objectively ascertained) | |Social and |General presumption = no legal intention | |Domestic |Balfour v Balfour (1919) and Jones v Padavatton (1969) – An agreement is not legally binding unless the parties intend that each will | |Agreements |accept the lefal consequences for its breach. Choo Tiong Hin v Choo Hock Swee (1959) – the plaintiff’s promises were not enforceable | | |because the lack of intention to create legal relations. De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd and Others | | |(2003) -Friend doing a favor even though secret profit or commission is earned. | |However in Merritt v Merritt (1970) and Wakeling v Ripley– The English Court of Appeal found the necessary intention and held that the | | |wife succeeded in her claim for breach of contract. | |Commercial |General presumption = Legal intention | |Agreements |- There is necessary intention to create legal relations. Edwards v Skyway Ltd (1964) – The court held that Skyways was legally bound. | | |Binding but unenforceable | | |Honour Clauses – When parties have expressly stated that their agreement is not to be legally binding. Rose &Frank Co v J R Crompton | | |&Bros Ltd (1925) | | |Exceptions (not legally binding): | | |Letter of Comfort (pg 17) ( may be binding depending on its terms | | |usually a document supplied by a 3rd party to a creditor indicating a concern to ensure that a debtor meets his obligations to the | | |creditor. | | |Kleinwort Benson Ltd v Malaysian Mining Corporation Berhad (1989) Court only found a moral not legal obligation. refer to pg 17) | | |Letter of Intent (LOI) (pg 17) | | |A de vice by which one indicates to another of his intention to enter into a contract with him | | |E. g. a main contractor is prearing a tender and he plans to subcontract some of the work. | Privity of Contract (Pg 105) |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.Management | |Corporation Strata Title Plan No 2297 v Seasons Park Ltd (2005) | |Exceptions (Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993) | |Agency relationship | |Assignment of choses in action – consent of 3 parties | |Letter of Credit | |Agreement |Intention to create legal relations |Consideration | |Is it an offer? Define offer |Is there any intention? |Is it revocation? Via broadcast? | |Was the offer effectively revoked? |Is the agreement legally bind (To place under legal|Is Consideration need to be sufficient but not | |Is it valid acceptance?Communicated |obligation by contract)? |adequate? | |Third party’s conversation? |Is the agreement reached in a business context? |Promissory Estoppel? Talk about the elements, sword| |Postal rude? |(eg. Family, friends) |or shield? | |Is there any provision of information? |Is it (social and domestic) or commercial |Is the consideration moved from promisee? | |Any counter offer? |agreement? | | |Is the offeree aware of offer with motive? | | | |Is the offer lapse? | | | | | | | | | | | | | | | | | | | | | | | | | | Notes of Commercial Law Contracts (C3, pg 58) |Nature of contract |- Legal relationship consisting of the right and promises constituting an agreement between the parties that give each party a legal | | |duty to the other and also the right to seek for breach of those duties | | |- Consensus ad idem (meeting of minds); what the parties agree on must be clear and unambiguous and parties must be ad idem. | |Wellmix Organics (International) Pte Ltd v Lau Yu Man (2006) , | | |T2 Networks Pte Ltd v Nasioncom Sdn Bhd (2008) | |Types of Contracts | Oral contracts | | |Written contract provides evidence of the parties’ contractual obligations. | |Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd (2006) | | |Parol evidence rule = oral evidence not admissible to add to, vary, amend or contradict written contract s 93-94 Evidence Act (refer | | |to Terms) | | |Engelin Teh Practice LLC v Wee Soon Kim Anthony (2004) | . Offer (C3, pg 63) |As the expression to another of a willingness to be bound by stated terms. | |Invitation to treat (pg 64) | |An invitation to others to enter into a negotiation which may eventually lead to the making of an offer. | |An ad is view as invitations to treat. | |Auction without reservations (refer to Barry v Davis (2000) pg 5) |(Offer = Bids made by audience, Acceptance = Auctioneer indicates bids accepted) | |Display of Goods | |Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the court held that the display of goods with prices constitutes an | |invitation to treat. The offer is only made when a customer selects the item he wants and brings it to the cashier to pay for it. |Reaffirmed by Singapore High Court in Chwee Kin Keong & Others v Digilandmall com Pte Ltd (2004) | |Advertisements An ad is view as invitations to treat. | |Partridge v Crittenden (1968) | |Provision of Information | |Harvey v Facey (1893) – The court held that there was no contract because provision of information was not an offer .Stevenson, Jacques & Co v McLean | |(1880) – Seeking for more information is neither a rejection nor acceptance, it was merely an enquiry. | |*compare between offer and invitation to treat, must prove why choose one over the other | |Specific Offeree |An offer is an expression made by one party to another party. For an offer to be effective, the offer must be communicated to the | | |offeree. | Unilateral Contracts |A contract brought into existence by the act of one party in response to a conditional promise by another. Harvela Investments Ltd v | |(involving only one |Royal Trust Co of Canada (Cl) Ltd & Ors (1984)No exchange of promise, only 1 promise (made by offeror). | |side) |Offeree makes no promise, only performs conditions attached to offeror’s promise. Carlill v Carbolic Smoke Ball Co. (1892) – Where | |(pg 63) |advertisement contains a promise in return for an act, an offer is intended. (No general rule that an ad cannot be an offer. | |Bi-lateral Co ntracts |An agreement where one party makes a promise to the other party. | |(involving on 2 side |There are duties, rights and considerations on both parties. In other words, performance of the conditions is an acceptance of the | |or both) |offer and this acceptance should be notified. | Termination of Offer (Pg 75) (5 ways) |Withdrawal |Law: Offer can be withdrawn or revoked by the offeror at any time before it is accepted. (When an offer is withdrawn, the offer is said | | |to be revoked). Overseas Union Insurance Ltd v Turegum Insurance Co (2001) | | |Law: Withdrawal must be communicated to 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. | |Law: Revocation of offer can be communicated by a third party (as long as offeree obtains knowledge of the revocation) (must be a | | |reliable and trustworthy source) Dickinson v Dodds (1876) Law: Fresh Offer (Revocation can also occer if the offer is replaced by a | | |fresh offer) Ban Paribas v Citibank NA (1989) | | |Law: Offer is opened for a fixed period Routledge v Grant (1828) –Rationale is that an offeree cannot enforce an offeror’s 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 – essentially a promise, supported by consideration, to keep an offer open for a specific period of time within which | | |to decide whether or not to enter into the purchase of agreement. | | |Law: Unilateral Contracts Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has started to | | |act. – Dickson Trading(s) Pte Ltd v Transmarco Ltd (1989), obiter dictum, the offeror in a unilateral contract has an obligation not to | | |revoke the offer after the offeree has involved in the performance of the conditions. |Lapse of time |Acceptance after specific period which offeror states that his offer is open = Ineffective | | |If the offer is opened for a specified period, a purported acceptance after that period would not be effective since the offer had | | |lapsed. 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 (1992) | | |- however, if it is clear from the offeror’s conduct and other evidence that the terms of the supposedly lapsed offer continue to govern| | |their relationship after the specified period, then it is still valid and acceptable after the deadline. Panwell Pte Ltd & Anor v | | |Indian Bank (No2) (2002) | | |When no specified period of time is expressed, an offer would lapse after a reasonable 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 |Offer automatically terminated if condition not met | |Condition |An offer may terminate on the occurrence of a specified event if the offer is subjected to the condition that it will do. e. g. erminate| | |if goods are damaged before acceptance, subject to the approval of my lawyer Financings Ltd v Stimson (1962) | |Death |Dickinson v Dodds( if the man who makes an offer dies, the offer cannot be accepted after he is dead. Reynolds v Atherton (1921)( | | |Offeree dies before acceptance, this offer cease to be capable of acceptance. Bradbury v Morgan (1862)( the court held that the death of| | |an offeror did not terminate the offer unless the offeree had notice of the offeror’s death. | 2. Acceptance (C3, pg 67) |Indication by the offeree of his consent to the offer and his intention to form a contract based on the exact terms of the offer | |- Whatever its form, a communication constitutes acceptance only if it is an unconditional expression of assent to the terms of offer.Compaq Computer Asia| |Pte Ltd v Computer Interface(s) Pte Ltd (2004) | |- Conditional Acceptance is treated as no acceptance. Struttgart Auto Pte Ltd v Ng Shwu Yong (2005); | |- Accepts seller’s offer subject to a written contract drafted – Thmoas Plaza (Pte) Ltd v Liquidators of Yaohan Departmental Store Singapore Pte Ltd (in | |liquidation) (2001); | |- Agreenment shall not be final and binding agreement – Cendekia Candranegara Tjiang v Yin Kum Choy & Others (2002) | |Brogden v Metropolitan Railway Co. 1877) The Court held that the facts and actual conduct of the parties, established the existence of a contract, and | |there having a clear breach of it, Brogden must be held liable upon it. | |Law: Acceptance of unilateral contract is when all the terms o f the contract are fully performed Carlill v Carbolic Smoke Ball Co. (1892) | |Counter |Offeree introduces a new term or varies the terms of an offer (original offeror is free to accept or reject the â€Å"counter offer†) Hyde v Wrench | |Offer |(1840) – The court held that there was no contract because Hyde’s reply was a counter offer which extinguished the earlier offer.When the | | |response is an inquiry or a request of information, it should not be construed as an offer | |Knowledge|Law: Offeree cannot accept in ignorance of the law | |of Offer |offeree must be aware of the offer – Fitch v Snedaker (1868) and R v Clarke (1927) – As long as offeree has knowledge of offer, motive is | | |irrelevant. Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than the desire to accept | | |the offer.William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward, she ha d done so with knowledge of the reward| | |even though her motive for giving the information was her own remorse. | | |Cross-offer: Do not constitute to agreement/contract; lack of consensus / meeting of minds between parties at the time of making offer. – Tinn v | | |Hoffman & Co (1873) | |Communica|General Rule: Acceptance must be communicated (Acceptance must actually be received by the offeror) | |tion of |Acceptance effective when communicated/received by offeror. | |Acceptanc|If in writing, it must be physically received by the offeror, and if orally, heard by the offeror. Acceptance must be unconditional and absolute. |e |obiter dictum in Entores Ltd v Miles Far East Corporation (1955) and CS Bored Pile System Pte Ltd v Evan Lam &Co Pte Ltd (2006) | | |Powell v Lee (1908) Held that there was no authorized communication of intention to contract on part of the body hence no contract. | |Silence |Silence is only a form of acceptance if both parties agree to it. Silence o f the offeree would not constitute a valid acceptance | | |Felthouse v Bindley (1862)–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. | |Exemption case: Both parties agree that the offeree would have a positive obligation to communication only if he wished to reject the offer. | | |Albeit rare in practice, silence is properly be construed as acceptance – Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank AG (1993) and | | |Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004) – defendant’s conduct of paying the reduced rent showed that a contact exists. | |Instantan|Time of acceptance is the time at which the acceptance is communicated to the offeror | |eous |Ithe acceptance will take effect when and where it is received, acceptance must be absolute and unconditional Entores v Miles Far East Corp | Communica|(1955) | |tions |- if got designated info system; receipt when e-record entered the designated info system. Emails, Fax, Telex | | |- if got designated info system but sent elsewhere then is receipt upon retrieval. | | |- if no designated info system; receipt upon entering any info system of addressee. | |Exception|The Postal Rule (ONLY FOR LETTERS OF ACCEPTANCE! ) | |s |- Quenerduaine v Cole (1883) – telegram means speedy reply; not attracted by postal rule.Offeror will claim that it is only valid acceptance | | |when physically received. | | |- Agreement cannot be withdrawn once the post is sent out. Henthorn v Fraser (1892) | | |- Acceptance deemed 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 Guard ian Assurance CO Ltd (1932) | | |Waiver of Communication: facts show that the offeror has waived the need for communiation of acceptance; when offer made to whole world | | |(unilateral contract; anyone can accept) – Calill v Carbolic Smoke Ball. | | |( the doing of the act by the offeree may itself be constructed as acceptance, without requiring formal communication to the offeror. | | |Termination of acceptance: Once posted, an acceptance cannot be revoked. – Wenkheim v Arndt (1873) | 3. Consideration (C4, Pg 85) Two Main Rules on Consideration Must move from promisee but need not move to promisor.Tweedle v Atkinson (1861) Need not be adequate but must be sufficient. Chappell & Co Ltd v Nestle Co Ltd (1960) |Is what each party gives to the other as the agreed price for the other’s promise | |Detriment to one OR Benefit to another | |But it need not move to the promisor Malayan Banking Bhd v Lauw Wisanggeni – A third party who is a stranger to the contra ct may benefit from the contract | |although he may not enforce it. | |Need not be adequate but must be sufficient – Law will not interfere with parties contract so long as consideration is of â€Å"some value† in the eyes of the | |law. |In order for a promise to be enforceable in court, consideration must first be given (exchange of promises would be sufficient consideration)– Dunlop v | |Selfridge (1915) | |Past Consideration is |Refers to an act performed prior to and to that extent independent of, the promises being exchanged (act performed without the | |not valid |reciprocal promise in mind). | | |Past consideration is no consideration The court held that the promise was made after the transaction had already been concluded | | |and therefore past consideration.Roscorla v Thomas (1842) and Teo Song Kwang (alias Richard) v Gnau Lye Chan and Another (2006) | | |To become executed consideration: – Pao On v Lau Yiu Long (1980) and Sim Tony v Ah Ghee (t /a Phil Real Estate &Building Services) | | |(1995) | | |Act done at promisor’s request If the promisor has previously asked the other party to provide goods or services, then a promise | | |made after they are provided will be treated as binding. | | |Contract must otherwise be enforceable Done in biz context and it is clearly understood by both sides that it will be paid for then| | |valid.Re Caseys’s Patent v Casey (1892) held the request to Casey to manage the patent carried an implied promise to pay for that | | |service, hence it was enforceable. | |Consideration must move|The only person who can sue for breach of contract must be the party who has given consideration (promise) – Tweedle v Atkinson | |from the promisee |(1861) – the court held that Tweedle could not enforce the contract between the two fathers because firstly he is not a party of | | |the contract, and secondly, no consideration flowed from him. | | |Consideration need not move to the promisor; 3rd party can may benefit although may not enforce it. Malayan Banking Bhd v Lauw | | |Wisanggeni | |Sufficient, |- Law will not inquire to the fairness of consideration, as long as the parties agree to it willingly – Lam Hong Leong Aluminium | |Need not be Adequate; |Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) | |Adequacy of |- Law does not measure value (once the subject of exchange is recognized in law as suitable consideration, quantity is irrelevant) | |Consideration |- Swiss Singapore Overseas Enterprise Pte Ltd v Navalmar UK Ltd (No2) (2003) and Chappell & Co Ltd v Nestle Co Ltd (1960) –the | | |consideration included the wrappers even though they were of no value to Nestle. | | |Thomas v Thomas (1842) – The court held that the nominal rent was sufficient consideration but the husband’s wishes were | | |irrelevant; motive is not the same thing as consideration. |Sufficiency of |A promise not to enforce a Claim is Good Consideration Promise not to sue or enforce a valid claim or settlement of legal action = | |Consideration |sufficient consideration Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Consruction Pte Ltd and Another (2003) and Alliance Bank| | |Ltd v Broom (1864) Normally, banks would not promise to enforce debt but is not done here. For not suing, considerations shown ( | | |binding agreement to provide security. | |Sufficient |Forbearance to sue |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). | | | |The same applies to a compromise of a legal action. The req. is that the legal action must be reasonable and| | | |not frivolous, that the claimant has an honest belief that in the chance of success of the claim and that | | | |the claimant h as not concealed from the other party any fact which, to the claimant’s knowledge, might | | | |affect its validity.Miles v New Zealand Alford Estate Co (1886) | | |Performance of |The Eurymedon (1975) – The Privy Council held that even though the defendant was already contractually bound| | |existing contractual |to a third party to do so, the defendant’s act of unloading the ship formed good consideration for the | | |duty to third party |contract with the plaintiff. This was also clarified in Pao On v Lau Yiu Long (1980) by the HOL. This was | | | |also accepted in the Singapore High Court in SSAB Oxelosund AB v Xendral Trading Pte Ltd (1992). | |Moral obligation & |Eastwood v Kenyon (1840) – The court rejected the plaintiff’s view and held that moral obligation is | | |motives |insufficient consideration for a fresh promise. | |Insufficient |Vague or insubstantial|White v Bluett (1853) – The court held that Bluett’s promise was no thing more than a promise â€Å"not to bore | | |consideration |his father†. As such it was too vague(fake) and was insufficient consideration for the alleged discharge by | | | |his father. | | |Performance of |Collins v Godefroy (1831) –Performance of an existing public duty is not valid consideration. | |existing public duty |Glassbrook Bros Ltd v Glamorgan City Council (1925)- If the court finds the promisee did something more that| | | |required by an existing public duty, then it may be sufficient. | | |Performance of |Stilk v Myrick (1809) – It was held that there was no consideration for the captain’s promise because the | | |existing contractual |remaining crew did what they were contractually required. Two sailors deserting were within the usual | | |duty |emergencies found in such a voyage. | | |However, if it is more than what is contractually required, that may constitute good consideration – Hartley| | | |v Ponsonby (1857) and William s v Roffey Bros (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 â€Å"practical benefits† from the plaintiff’s work. The benefit was that they would not be liable under| | | |the main contract for late completion. | | |Rule in Pinnel’s Case |Pinnel’s case is authority for the proposition that payment of a lesser sum without anything extra is not a | | | |good consideration. | | |- It would be good consideration provided with a gift (can be anything, even time) is given as the gift | | | |might be more beneficial than the money. -But if the person asks me pay lesser, then cannot sue. – If I | | | |accepted a smaller amount, after that I decided to sue again, CAN! Provided no gift! | | | |Pinnel’s Case (1602) – The part payment of a debt does not discharge the entire debt unless the part p ayment| | | |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 Pinnel’s Case – the HOL | | | |held that Beer’s promise not to take further action was not supported by consideration. She could claim the | | | |money. ( in Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (2001), District Court in Singapore | | | |endorsed the rule in Foakes v Beer and held favor in creditor. | | |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. Central London | | |Property Trust v High Trees House Ltd (1947) | | |Elements (Central London Property Trust v High Trees House Ltd (1947) and D&C Builders v Rees (1966)) | | |1)Parties must have existin g legal relationship 2)Clear and unequivocal promise which affects the legal relationship 3)Promisee | | |relied upon promise and altered his position 4)Inequitable for the promisor to go back on his promise. | |Promissory Estoppel |Cause of action | |(For no consideration) |When the promisor gives reasonable notice of his intention to revert to the original legal relationship, the original relationship | | |is restored. The effect of p. e. is to suspend promisor’s 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) | | |A defensive tool | | |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 ) Assoland Construction Pte Ltd v Malayan Credit Properties Pt e Ltd (1993) and Lai Yew | | |Tay Pte Ltd v Pilecon Engineering BHd (2002) | | | | 4. Intention to Create Legal Relations (Pg 17) |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. objective test† (objectively ascertained) | |Social and |General presumption = no legal intention | |Domestic |Balfour v Balfour (1919) and Jones v Padavatton (1969) – An agreement is not legally binding unless the parties intend that each will | |Agreements |accept the lefal consequences for its breach. Choo Tiong Hin v Choo Hock Swee (1959) – the plaintiff’s promises were not enforceable | | |because the lack of intention to create legal relations. De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd and Others | | |(2003) -Friend doing a favor even though secret profit or commission is earned. | |However in Merritt v Merritt (1970) and Wakeling v Ripley– The English Court of Appeal found the necessary intention and held that the | | |wife succeeded in her claim for breach of contract. | |Commercial |General presumption = Legal intention | |Agreements |- There is necessary intention to create legal relations. Edwards v Skyway Ltd (1964) – The court held that Skyways was legally bound. | | |Binding but unenforceable | | |Honour Clauses – When parties have expressly stated that their agreement is not to be legally binding. Rose &Frank Co v J R Crompton | | |&Bros Ltd (1925) | | |Exceptions (not legally binding): | | |Letter of Comfort (pg 17) ( may be binding depending on its terms | | |usually a document supplied by a 3rd party to a creditor indicating a concern to ensure that a debtor meets his obligations to the | | |creditor. | | |Kleinwort Benson Ltd v Malaysian Mining Corporation Berhad (1989) Court only found a moral not legal obligation. refer to pg 17) | | |Letter of Intent (LOI) (pg 17) | | |A de vice by which one indicates to another of his intention to enter into a contract with him | | |E. g. a main contractor is prearing a tender and he plans to subcontract some of the work. | Privity of Contract (Pg 105) |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.Management | |Corporation Strata Title Plan No 2297 v Seasons Park Ltd (2005) | |Exceptions (Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993) | |Agency relationship | |Assignment of choses in action – consent of 3 parties | |Letter of Credit | |Agreement |Intention to create legal relations |Consideration | |Is it an offer? Define offer |Is there any intention? |Is it revocation? Via broadcast? | |Was the offer effectively revoked? |Is the agreement legally bind (To place under legal|Is Consideration need to be sufficient but not | |Is it valid acceptance?Communicated |obligation by contract)? |adequate? | |Third party’s conversation? |Is the agreement reached in a business context? |Promissory Estoppel? Talk about the elements, sword| |Postal rude? |(eg. Family, friends) |or shield? | |Is there any provision of information? |Is it (social and domestic) or commercial |Is the consideration moved from promisee? | |Any counter offer? |agreement? | | |Is the offeree aware of offer with motive? | | | |Is the offer lapse? | | | | | | | | | | | | | | | | | | | | | | | | | |