Paper 1 Lesson 4: Law of Contract Flashcards
What are the 5 different courts?
Sorted by claim amount
- Small Claims Tribunals
(Not exceeding $20,000 - must be within 2 years from the date of incident) - Magistrate Courts
(not exceeding $60,000) - District Court
(not exceeding $250,000) - High Court
(Claims above $250,000) - Court of Appeal
(appeals of civil & criminal cases from the high court)
What is a contract?
A contract is a binding agreement enforceable by law. (verbal/writing/conduct)
[Based on common law]
What are some examples of Property contracts?
- Option to Purchase (OTP)
- Sales and Purchase Agreement (S&P)
- Lease/tenancy agreement
- Exclusive Agency Agreement
- Commission Agreement
What makes a valid contract?
To make a valid contract, it must have the following elements:
- Intention to create legal relations
- Offer
- Acceptance
- Consideration
What are the additional elements on top of the essential elements to make a Real Estate Contract? [3 P]
- Property Address
- Parties Names
- Price Agreed.
How is an “intention to create legal relations” proven?
Court will assume that intention to create legal relation exist when parties sign on a business/commercial agreement.
What constitutes as an “Offer” in a contract?
- There must be an Offerer and an Offeree.
- Offer must be communicated and conveyed (it is not a valid offer if it is not conveyed).
*NOTE: Invitation to treat IS NOT AN OFFER (e.g. auction/advertisements etc).
How is an Offer terminated?
- Revocation: offeror can revoke the offer before acceptance if there is no consideration.
- Lapse of time: offer expires after deadline.
- Offer subject to condition: offer lapse if the conditions that coe with the offer are not satisfied.
- Death: offer is terminated upon offeror death.
- Rejection: upon rejection. when offeror makes a counter-offer, the first offer is also terminated.
What are the conditions to fulfil “Acceptance” in contract?
- Acceptance must be communicated and conveyed.
- Acceptance must have same terms as offer. (if conditional. it becomes a counter-offer)
- Within option period, buyer must exercise and sign on acceptance copy.
- Signed acceptance copy must be delivered to seller before the expiry of option (mode of acceptance).
*NOTE: Mode of acceptance to be stated in OTP (by hand or by post).
- If by post, “postal rule of acceptance” applies - acceptance is deemed complete as soon as letter of acceptance is posted, whether it reaches seller on time or at all.
What is a “Consideration” in contract?
Consideration is something of value given in return for a promise.
In real estate, consideration = money.
What are the conditions for a “Consideration”?
- Must be sufficient - sth the law can recognise. (cannot be $0)
- Need not be adequate - can be $1.
- Must move from the promise (e.g. must be from buyer to seller)
- If ppty is transferred by gift with no monetary consideration, such contract is called gratuitous contract and must be done in writing, signed, sealed and delivered to be valid.
- Past consideration is no consideration (not legally binding).
e.g. the act is done before the promise of consideration is made
In a transaction the offeror is the ________, while the offeree is the ________.
buyer, seller.
An OTP is an offer from _______ to ________.
seller, buyer.
What is a stakeholder clause?
It means to allow someone to hold the money for the meantime before completion of sale.
e.g. the exercise fee to be held with either seller’s lawfirm / Singapore academy of law while pending for completion of sale.
If there is no stakeholder clause, money will be released to seller immediately.
What is a “Caveat Emptor”?
Caveat emptor means that seller is not required under law to provide a disclosure to buyers even when asked by buyers or his own agent.
*buyer is responsible for checking for any defects before the purchase. Buyer shall not hold seller liable for any defects found after the purchase.
the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.
What are the essentials of a Real Estate Contract?
- For the sale of immovable property, it must be in writing.
- Conveyance of any estate/interest in land, including mortgage, must be made by way of deed in English.
- Can be written on paper OR electronic form.
Contracts can be deemed as legally binding even if they are not signed, under what circumstances?
If they fulfil the basic elements required for the formation of contract:
OFFER,
ACCEPTANCE,
CONSIDERATION AND
INTENTION TO CREATE LEGAL RELATION.
To avoid a legally binding contract between 2 parties via non formal communication, what phrase should be included in the content?
“Subject to contract”
What is “Privity of Contract”?
It is the relation between the parties in a contract that entitles them to sue each other but prevents a third party from doing so.
What is “Privity of Estate”?
It means that 3rd parties whose names are not in the contract but has interest on the property could also enforce the terms of the contract.
E.g. most commonly seen in a landlord-tenant relationship where both parties have “privity of estate” due to their shared interest in the leased property; it allows them to enforce certain rights and obligations related to the land against each other, even if they weren’t the original parties to the contract.
What is the difference between the term “Valid’ and ‘Enforceable”?
Valid means the contract is recognised under common law. (completes with the 4 essential elements and 3Ps to form a real estate contract).
Enforceable means the written documents can be presented in Court.
(Only written documents that are stamped as required by the Stamp Duties Act, are enforceable).
A contract can be VALID but not enforceable.
What are “terms” in contract?
Terms are details of contract that set out rights and obligations of the parties involved.
They are statements that are usually part of the contract.
What are “representation” in contract?
Representations are statements which induce contract but are not treated as part of it.
E.g. Salesperson says “there is going to be an MRT station next to this block” < this is a representation as it is not stated in the contract.
What does “Void” and “Voidable” means in contract?
Void: Law does not recognise.
Voidable: Party decides whether to void it.
