Chapter 10 - Terms, Chapter 11 - Exemption Clauses

Question 1

What are 3 pre-contractual statements?

Answer 1

1) Terms
2) Representation
3) Puffs

Question 2

What is the definition of Puffs?

Answer 2

An exaggeration. The law regards such claims as legally insignificant.

Question 3

What is the definition of Representation?

Answer 3

A statement made to induce another party to enter into a contract but is not intended to be part of the contract.

If statement is false, the person who relied on it CANNOT sue for breach of contract BUT can sue for misrepresentation.

Question 4

What is the definition of Terms?

Answer 4

A part of the contract. If the term is not met, the person can sue for breach of contract.

Question 5

What are 5 factors of distinguishing Representation from Term?

Answer 5

1) Representation: Reason/ Opportunity to verify
2) Representation: Oral Statements & Written Contracts, those not written in the contracts

Terms are binding obligations.
3) Importance of the Statement
4) Timing of statements, closer to contract + likelier to be a term
5) Special Skill and Knowledge

Question 6

What is the Parol Evidence Rule? (Singapore Evidence Act) (ONLY APPLY WHEN THERE IS A WRITTEN CONTRACT)

Answer 6

The Parol Evidence Rule only applies to a written contract.

Question 7

What is Section 93 of the Evidence Act?

Answer 7

The terms of the written contract may only be proved by the document itself.

Question 8

What is Section 94 of the Evidence Act?

Answer 8

You cannot rely on other documents to add, subtract, vary, contradict what is in the contract.

Question 9

What is the 3-step test for the application of S 94(f)?

Answer 9

In order for the evidence to be admitted, it must pass the 3-step test of Zurich Insurance (SG) Pte ltd v B-Gold Interior Design & Construction Pte Ltd
1) Evidence is relevant
2) Evidence is reasonably available
3) Evidence relates to clear or obvious context

Question 10

What are 3 ways for Incorporation of Terms?

Answer 10

1) Signature
2) Reasonable Notice
3) Type of document

Question 11

What is the 2 exceptions of a Signature?

Answer 11

1) Non est factum. First there must be a radical difference between what the party signed and what he thought he signed. Second, The party must show he had taken care in signing the document (reading does not suffice)

2) Misrepresentation. When the written terms have been represented to mean something different.

Question 12

What are 4 considerations to give sufficient notice of incorporation/ if there is actual knowledge?

Answer 12

1) Type of document
2) Time of notice
3) Adequacy of Notice
4) Effect of Clause, if there is an unusual clause, they must take special steps to draw attention to it.

Question 13

What is the 3-step test for Implied Terms In Fact?

Answer 13

1) Ascertain how the gap in the contract arises. True Gap
2) Business Efficacy
3) Officious Bystander

Question 14

What are the 3 types of terms?

Answer 14

1) Condition
2) Warranty
3) Innominate: Not named/ classified

Question 15

What are the 3/4 situations for terms?

Answer 15

Situation 1: Contract clearly & unambiguously states that, in the event of a certain event or events occurring, the innocent party will be entitled to terminate the contract.

Situation 2: Where a party renounces by word/ conduct that he will not perform its contractual obligations at all, the innocent party will be entitled to terminate the contract.

Situation 3(a): The term was so important that the breech is intended for termination.

Situation 3(b): The breech deprived the innocent party of substantially the whole benefit which he was intended to obtain in the contract, the innocent party will be entitled to terminate the contract.

Question 16

For situation 3(a) & 3(b) what are the approaches?

Answer 16

3(a): Condition-Warranty approach
3(b): Hong Kong Fir approach

Question 17

What are the 3 types of exemption clauses?

Answer 17

1) Exclude liability completely
2) Limit the liability
3) Pass liability to a 3rd party

Question 18

What is the “Negligence Liability”? Hint: There are 3 rules.

Answer 18

Cite Canada Steamship Lines Ltd

1) Must explicitly use the word “negligent”, “negligence” or a synonym.

2) If 1st rule not satisfied, the words must be wide enough to cover negligence on the party relying on exemption clause

3) If 2nd rule not satisfied, the exemption clause must cover some kind of liability other than negligence.

Question 19

What is the applicability for Unfair Contract Terms Act?

Answer 19

Section 1: If the Exemption Clause excludes contractual or tortious(wrongful) business liability.

Question 20

What are the 2 steps to check if UCTA allows Exemption Clause to operate for Exclusion of Liability for Negligence?

Answer 20

Exclusion of liability for negligence

Section 2(1): If there is negligence resulting in injury or death, Exemption Clause is NOT allowed.

Section 2(2): - If there is negligence resulting in other loss or damage, Exemption Clause is ALLOWED IF REASONABLE.

Question 21

What are the 3 steps to check if UCTA allows Exemption Clause to operate for Exclusion of Contractual Liability?

Answer 21

Exclusion of contractual liability

Section 3(1): Applies where one deals as consumer
Section 3(2): As against that party, cannot-
(a) exclude or restrict any liability of his in respect of the
breach
OR
(b) claim to be entitled —
(i) to render a contractual performance substantially different from that which was reasonably expected of him, OR
(ii) to render no performance at all

except the contract term satisfies the requirement of reasonableness.

If the contract is with a consumer or parties use a standard form contract, Exemption Clause is ALLOWED IF REASONABLE.

Question 22

What is used to test the “Requirement of Reasonableness”?

Answer 22

The Second Schedule gives guidelines on what is reasonable.

Question 23

What are the 3 guidelines in the Second Schedule?

Answer 23

1) Bargaining Power
2) Whether party had opportunity to enter into similar contract with another person without having to accept a similar term.
3) Whether the customer knew or ought to have known the existence and extent of the term.