Chapt 4: Content of a contract (Terms)

Question 1

3 Classification of a statement:

Answer 1

1. Puff –> Exaggerated statement.
   e.g. Best chicken rice in the world.
   Based on Dimmock V Hallet, It has no legal effect.
2. Representation –> oral/written made before/at the time contract formed. It is a statement relate to the contract and induce other party to enter contract. Not part of the contract. If it’s untrue, contract is not breach however, it can be sue under misrepresentation.

Term –> It can be oral or written. It is part of the contract. If untrue can sue for breach of contract.

Question 2

Difference between Representation and Terms

Answer 2

Based on Tan chin Seng V Raffles town club, it states that to differentiate of it is Rep or Term by using the objective test.

What’s the objective test?
Whether there is an intention to have contractual liability?
If yes, Terms.
If no, Rep.

But if it is not clear whether there is intent to have contractual liability there are guidelines for that.

Question 3

5 guidelines on differentiating Terms and Rep:

Answer 3

1. Timing when statement is make
   (If it’s made closer to contract was made = Likely to be the term)
2. Maker’s emphasis/Importance of statement.
   (Greater the Emphasis = likely to be term)
3. Maker’s Special Knowledge
   (If have more knowledge/more skill as compare to other party = Likely to be term)
4. Invitation to verify truth
   (If yes, Likely to be rep & If no, likely to be term)
5. Oral statement is reduced into writing.
   (Likely to be Term, Bear in mind the parol evidence rule)

Question 4

What is Parol Evidence rule?

Answer 4

This only applies when if the contract is wholly in writing and is intended by both parties to represent the entire agreement between them.

S93 of the evidence act: states that Extrinsic Evidence such as Parol evidence is not permissible. Except for the document itself. If the contract is wholly in writing.

S94 of evidence act:
The parol evidence rules itself with exceptions to it.

S94(a): evidence relating to vitiating factors eg fraud or mistake or misrepresentation.

S94(b): Separate oral agreements that cover the areas that are not covered in the written contract as long as it is consistent.

Question 5

2 Types of Term:

Answer 5

Express Term and Implied term

Question 6

What is an express term?

Answer 6

It is a term that is stated or expressly agreed by both parties.

Can be written or Oral.

For it to be valid, the term must be introduced before or at the time the contract is made.

General Rule: If you signed it, you bounded by it, even though you nv read the terms in the contract.

Question 7

What is an Implied term?

Answer 7

It is not stated or not specifically expressed between parties.

It is implied into a contract through 3 ways:

1. By custom and usage.
2. By court in law or in Fact
3. By statute

Question 8

It is implied into a contract through 3 ways:
1. By custom and usage.
Explain.

Answer 8

Based on Hutton v Warren,
When it’s a term that has been a custom and long usage in that industry.
A term that is well-esthablished and reasonable in that industry.

Question 9

It is implied into a contract through 3 ways:
2. By court in fact
Explain.

Answer 9

1. In fact:
   It is based on the circumstances of the case, based on the presumed intention of the parties.

It is specific to the case, and cannot contradict to express the term.

Based on Sembcorp Marine V PPL holdings Pte Ltd,
There is 3 step process for implied term by court in fact:
1. Whether Gaps arose as parties did not contemplate the gap?
2. Business Efficacy test(Moorcock): Without this term, can your business still run?
3. Officious Bystander Test:
Whereby if a bystander ask the parties, if this term is needed for their business, the parties reply “Of course”.

Question 10

It is implied into a contract through 3 ways:
2. By court in law
Explain.

Answer 10

It is based on the consideration of fairness and policy.

This will apply to all future contracts within the class unless overridden by express term in contract.

Question 11

It is implied into a contract through 3 ways:
3. By statute
Explain.

Answer 11

Implied by statute. Such as the sales of good acts.

Question 12

3 Classifications of terms and the remedies to each

Before RDC case

Answer 12

1. Condition –> Root of the contract, something very important, breach of this = Can terminate contract (Can decide not to and affirm contract) and Claim damages.
2. Warranty –> Less important to the contract, not fatal to performance of the contract.
   Breach of this = Only can claim damages, cannot terminate the contract.
3. Innominate terms
   It is not warranty or condition.
   Breach of this can either lead to trivial or serious consequences.

Depends on whether the breach would deprive the innocent party of the whole benefit which the party are supposed to obtain.

Question 13

After RDC Concrete v Sato kogyo Case, how to classify the Terms and determine the remedies:

Answer 13

Based on RDC concrete V Sato Kogyo, it states that there is no automatic rights to terminate the rights.

In 2 situations one can terminate the contract.
1. Contract specifically provide the right to terminate.

2. Contract does not provide the right to terminate.
   a) If guilty party renounces all obligations under the contract, the Innocent party is allowed to terminate the contract.

b) Then you go through the condition-warranty approach.
If it is a condition, can terminate and claim damages.
If its a warranty Move onto Hong kong fir shipping co ltd V Kawasaki Kisen Kaisha Ltd approach.

c) Hong kong Fir shipping co ltd V Kawasaki kisei kaisha ltd approach,
If a breach of the term leads to trival consequences = Claim damages only
If breach of term leads to serious consequences = Rights to terminate and claim damages.

d) Exception to hong kong fir approach, based on sports connection v Deuter sports, If contract clearly and unambiguously states that breach of clause does not give the innocent party the rights to terminate contract.