SG Commercial Law

Question 1

Aspects of Contract Law:
Consideration -
Gay Choon Ing v Loh Sze Terence Peter [2009] 2 SLR(R) 332

Answer 1

Requirement of consideration signifies some legally recognised return that is given in exchange for an enforceable promise.

Question 2

Aspects of Contract Law:
Consideration -
Chwee Kin Keong v Digilandmall.com

Answer 2

HC held that the modern approach of contract law requires very little to find the existence of consideration.

Question 3

Aspects of Contract Law:
Implication of Terms -
Overview

Answer 3

1. Business efficacy test: The Moorcock
2. Officious bystander test (i.e. whether parties would go “oh of course” to the terms): Shirlaw v Southern Foundries
3. Implication of terms is merely a facet of interpretation of terms: AG of Belize v Belize Telecom Ltd (not good law in Singapore)

Question 4

Aspects of Contract Law:
Implication of Terms -
Rejection of Belize 1 in MFM Restaurants v Fish and Co [2010] SGCA 36

Answer 4

CA disagreed with Lord Hoffman in Belize. Broad test based on interpretation is far too uncertain, and cannot be sufficiently applied in the practical sphere.

Implied terms in fact to be defined by traditional tests.

Question 5

Aspects of Contract Law:
Implication of Terms -
Rejection of Belize 2 in Foo Jong Peng v Phua Kiah Mai [2012] 4 SLR 1267

Answer 5

Rejected the Belize test in favour of the business efficacy and officious bystander test.

Although the Belize test was helpful in emphasising the importance of the general concept of interpretation and the need for objective evidence, the test should be rejected in so far as it suggested that the traditional “business efficacy” and “officious bystander” tests were not central to the law relating to implied terms in SG.

Question 6

Aspects of Contract Law:
Implication of Terms -
Past test in Forefront Medical Technology (Pte) Ltd v Modern-Pak Private Ltd [2006] 1 SLR(R) 927

Answer 6

1. Rs b/w Business Efficacy test and Officious Bystander test are complementary.
   a. ‘Officious bystander’ test: the practical mode in which the ‘business efficacy’ test is implemented.
2. Per Andrew Phang: Business efficacy is a general statement of principle which serves as the guideline; officious bystander gives the mode of effecting that principle.
3. Aimless to ask if a term is obvious to the party as it should be obvious that it gives business efficacy to the contract.

Question 7

Aspects of Contract Law:
Implication of Terms -
Current test in Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193

Answer 7

1. Provided 3 step process to guide implication of terms in fact:
   (1) Court has to ascertain the nature of the gap in the contract; it is only in such a situation that a gap is a “true” gap and a term can be implied.

(2) If there is a gap, court needs to consider whether it is necessary in the business or commercial sense to imply a term in order to give the contract efficacy. General application.
(3) Court to consider whether it is obvious, pursuant to the officious bystander test, to imply this particular term.

Question 8

Aspects of Contract Law:
Implication of Terms -
Current test in Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 -
(1) Gap of Contract

Answer 8

1. Only when parties did not contemplate the gap can a term be implied.
2. Some wrong gaps are suggested:
   (a) where parties contemplated the issue but did not make provision for it, Courts will consider if the parties intended to leave the term out after contemplation.

(b) where parties contemplated the issue, but wrongly thought that the express terms had addressed the issue, Courts thought rectification would be the proper course of action.

3. Difficulties: ID of a gap raises difficulties in reality.
   a. Distinction between true and false gaps, while doctrinally attractive, may not be easy to apply in practice.
   b. Ultimately rests on the difference between actual and presumed intention, a notoriously fine distinction. Subsequent cases post-Sembcorp Marine have largely ignored the first step, showing difficulties in application.
4. Goh Yihan: Argues that the first step presupposes that there is already a gap since the enquiry is about the nature rather than the existence of such a gap. Existence of a gap is dealt with by the second step of the enquiry. Therefore, it may be more logical to place the second step ahead of the first step.

Question 9

Aspects of Contract Law:
Implication of Terms -
Current test in Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 -
(2) Necessity of implying term into contract

Answer 9

1. Normative guideline: Law draws implication from what must obviously have been parties’ intention, with the object of giving efficacy to the transaction based on parties’ presumed intention.
   a. Business efficacy seen as minimum std, and test is to see if such a term should be implied in the first place.
   b. Bowen LJ in The Moorcock: “A minimum of efficacy should be secured for the transaction, as both parties must have intended it to bear”.

Question 10

Aspects of Contract Law:
Implication of Terms -
Current test in Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 -
(3) Obvious pursuant to officious bystander test

Answer 10

1. Test: Whether the contracting parties, having regard to the need for business efficacy, would have responded positively to the suggestion of the term to be implied.
   a. Allows court to define the terms which can be said to reflect the parties’ presumed intention in relation to the gap.
   b. This is coupled with the business efficacy test in Step 2 to identify a gap that exists which can make the contract efficacious.
2. Step 3 allows ID of an exact term to be implied to plug that gap.

Question 11

Aspects of Contract Law:

Implied terms of good faith?

Answer 11

1. Do not exist in SG (per Ng Giap Hon v Westcomb Securities Pte Ltd [2009] 3 SLR(R) 518). Cannot exist by law, and will not imply such a term in all contracts, since it is uncertain what good faith entails.
2. HSBC Institutional Trust Services (SG) Ltd (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte Ltd [2012] 4 SLR 738: Confirmed Ng Giap Hon. No general implied duty of good faith derived from the common law.
3. The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] SGCA 21: CA saw the intrinsic rs b/w a term of cooperation and a term of good faith, and rejected for such a term to be implied. As such a term was uncertain, it would cause ambiguity if implied. Implied duty to cooperate in law remains to be decided on another day.

Question 12

Aspects of Contract Law:
Interpretation of terms -
Background

Answer 12

1. “Interpretation”: Process of uncovering meaning in and seeking to understand text where there is some doubt or room for difference of opinion (per Zurich Insurance). For contractual interpretation, contract itself provides the starting point, and courts should pay attention to the text of the contract, and the text of contract should denote what the contract really means.
2. Sembcorp Marine: Interpretation is a process of ascertaining the meanings and expressions of a contract.

Question 13

Aspects of Contract Law:
Interpretation of terms -
Distinction between Construction and Interpretation (per Sembcorp Marine)

Answer 13

1. “Construction”: Composite process that seeks to ascertain parties’ intentions, both actual and presumed, arising from the contract as a whole without necessarily being confined to the specific words used.
2. “Interpretation”: Just one part of construction; “process of ascertaining the meaning of expressions in a contract.
   a. Cannot stray too far from the contractual language used, i.e. cannot be an ‘interpretation of a non-existing expression’.

b. Suggests that ambiguity or absurdity is necessary before the court will assign a different (albeit equally possible) meaning to that language (as per Goh Yihan in 2013).

Question 14

Aspects of Contract Law:
Interpretation of terms -
Distinction between “interpretation” and “contradicting, varying, adding to or subtracting from” contractual term

Answer 14

1. “Interpretation”: If just used for interpretation, extrinsic evidence almost always admissible.
2. “Contradicting, varying, adding to or subtracting from”: Extrinsic evidence generally inadmissible. See ss 93 – 102 EA.
3. Zurich Insurance: Interpretation is where the courts still pay fidelity to parties’ objective intentions. If court substitutes or re-writes intention, then it would be a case of contradicting, varying, adding to, or subtracting from contractual terms.
4. Pender Development v Chesney Real Estate Group [2009]: Unless the court thinks that parties’ intention is incorrectly expressed in the contract, the better way would be rectification instead of interpretation.

Question 15

Aspects of Contract Law:
Interpretation of terms -
Relevance of EA

Answer 15

1. EA tells us what is admissible.
2. Under Zurich Insurance test, 2 questions to be asked:
   (1) What is the extrinsic evidence admissible?; and
   (2) Carrying out the task of interpretation in the contextual approach.
3. Some pragmatic concerns in Sembcorp Marine: The admissibility of extrinsic evidence can lead to uncertainty and increase the time and cost of legal proceedings.

Question 16

Aspects of Contract Law:
Interpretation of terms -
Summary?

Answer 16

1. Interpretation is about ascertaining parties’ intentions from contractual text; the context that SG courts draw from is narrower than other jurisdictions, this is because of EA. The EA strains the evidence that is admissible (ss 94-96).
2. Contractual text cannot be understood in isolation, context must be taken into account; sometimes this includes not only objective intentions, but also subjective intentions can be used to interpret the contract. [CIFG v Ong, Soup Restaurant]
3. Contextual approach, while not dealt with by EA, is indirectly affected by it.
4. Contextual approach is affected by certain antiquated concepts in the EA, such as the necessity of ambiguity.
5. Contextual approach cannot be applied without restraint due to pragmatic concerns about cost, time and certainty. [Yap Son On at [43])

Question 17

Aspects of Contract Law:
Interpretation of terms -
General Principles -
Structure for interpretation of terms

Answer 17

1. Extrinsic evidence admissible (Zurich + Sembcorp).

2. Carrying out task of interpretation in contextual approach.

Question 18

Aspects of Contract Law:
Interpretation of terms -
General Principles -
CIFG Special Assets Capital I Ltd v Ong Puay Koon [2017] SGCA 70

Answer 18

1. Starting point: Look to the text that parties have used. At the same time, permissible to have regard to the relevant context as long as the relevant contextual points are clear, obvious and known to the parties.
2. [19] Places Court in “the best possible position to ascertain the parties’ objective intentions by interpreting the expressions used by [them] in their proper context.”
3. [19] In general, the meaning ascribed to the terms of the contract must be one which the expressions used by the parties can reasonably bear.
4. Plain meaning and context:
   a. CA emphasised the interaction between both text and context in every case. What might at first glance appear to be plain and unambiguous text may not in fact be so, once the court has examined the relevant context.
5. Where text is ambiguous, the relevant context will become impt in ascertaining parties’ objective intention in the circumstances.

Question 19

Aspects of Contract Law:
Interpretation of terms -
General Principles -
Y.E.S. FnB Grp Pte Ltd v Soup Restaurant SG Pte Ltd [2015] SGCA 55

Answer 19

[35] “Contractual interpretation is (often at least) hard work, centering on a meticulous and nuanced (yet practically-oriented) analysis of the relevant text and context”.

Question 20

Aspects of Contract Law:
Interpretation of terms -
General Principles -
Yap Son On v Ding Pei Zhen [2017] 1 SLR 219

Answer 20

1. [31] Interpretation under contextual approach means that the “meaning imputed by the court [must] be one which ‘the words are reasonably adequate to convey’”.
2. [42]-[44] While the court is entitled to depart from the plain and ordinary meaning of the expression used, there is a limit to what the court can legitimately do in the name of interpretation. Courts should not vary the express terms of the agreement.

Question 21

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
HSBC v Lucky Realty [2015]

Answer 21

In order to use extrinsic evidence as an aid to construing the terms of a contract, the evidence must be admissible in accordance with the law of evidence, and must satisfy the Zurich Insurance requirements, bearing in mind the Sembcorp Marine restraints.

Question 22

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
4 requirements in civ pro in PD and Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 at [73]

(+ Tripartite Req for admissible evidence under Zurich Insurance)

Answer 22

To determine weight of evidence:
1. Parties who contend that factual matrix/extrinsic evidence is relevant to contract construction must plead with specificity each fact of the factual matrix/extrinsic evidence that they wish to rely on in support of their construction of the contract;

2. Factual circumstances in which the factual evidence was known to all the relevant parties must also be pleaded with sufficient particularity;
3. Parties should in their pleadings specify the effect which such facts will have on their contended construction; and
4. Parties’ obligation to disclose evidence would be limited by the extent to which the evidence is relevant to the facts pleaded in sub-paragraphs 1 and 2.

Question 23

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
Tripartite Req for admissible evidence under Zurich Insurance

(+ 4 requirements in civ pro in PD and Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 at [73])

Answer 23

Evidence must be:
1. Relevant, i.e. “it would affect the way in which the language of the document would have been understood by a reasonable man”;

2. Reasonably available to all the contracting parties; and
3. Relates to a clear or obvious context.

Question 24

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
Attributes of Documents

Answer 24

1. If uniform or std form, unlikely that courts will depart from the words.
2. Prior negotiations and subsequent conduct not allowed in SG to interpret contracts. BUT Goh Yihan: Courts are divided on whether prior negotiations are admissible as evidence.
   a. HSBC v Lucky Realty [2015]: Pre-negotiations inadmissible when only relevance is to show the subjective intentions of the parties. [111]: But when there is latent ambiguity, evidence of pre-contractual negotiation showing subjective intention is admissible.
   b. Zurich Insurance: Where extrinsic evidence is in the form of prior negotiations and subsequent conduct, there should be no absolute or rigid prohibition. Suggests that principle of objectively ascertaining contractual intentions remains paramount. Extrinsic evidence must always go towards proof of what parties objectively and ultimately agreed upon.
   c. Xia Zhengyan v Geng Changqing [2015] 3 SLR 732: Open question as to admission of prior negotiations. To accept prior negotiations, must fulfil Zurich requirements. Difficult to satisfy in practice for negos and subsequent conduct.

Question 25

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
If there is evidence supporting parties’ absurd intention, must still give effect to contract.

Answer 25

Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd [2015] 5 SLR 1187:

[44] Courts cannot be seen to rewrite the intentions of the parties.

[48] If there are 2 results, courts will have discretion to give preference to the more commercial acceptable one.

Question 26

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
3 possible outcomes from application of Sembcorp Marine + Zurich Insurance requirements

Answer 26

1. No ambiguity:
   a. Extrinsic evidence not admissible and plain meaning of contract words will govern: s96 EA.
   b. Contextual approach used to determine that there is no ambiguity in the first place. (e.g. Yap Son On - Goldrooster in Germany)
   c. Using extrinsic evidence to establish ambiguity (MORE ACCEPTED) vs. using such evidence to establish different meaning apart from plain meaning.
2. Patent ambiguity (i.e. contract is total nonsense):
   a. S 95 EA provides that extrinsic evidence not admissible.
   b. Courts will not re-write a nonsensical contract if that is the parties’ intentions (contract likely to be unenforceable).
   c. Contextual approach still applied: extrinsic evidence admissible to ascertain whether the language on the contract is ambiguous or defective.
3. Latent ambiguity:
   a. Prima facie, contract is clear but becomes ambiguous when one considers extrinsic evidence. E.g. Plantation in Penang.
   b. Extrinsic evidence is admissible on 2 levels for latent ambiguity:
   (1) To ascertain ambiguity; and
   (2) If ambiguity is latent, then extrinsic evidence may be given to show an alternative meaning other than the plain meaning.
   c. This is because if ambiguities arise from extrinsic fact, extrinsic evidence is admissible to explain away the ambiguity.

Question 27

Aspects of Contract Law:
Interpretation of terms -
Admissible Evidence -
Interpretive approach of the courts

Answer 27

1. Extrinsic evidence admissible to provide context to assess the presence or absence of ambiguity. If context makes plain language of the contract ambiguous or absurd, Court is entitled to interpret the contractual term in qn differently from its plain language.
2. Courts have said that this approach is (a) objective; and (b) contextual, where canons of interpretation will still apply.
   a. Objective principle: Concerned with what a reasonable man, with relevant bg knowledge in mind, would have understood the contractual language to mean.
   b. Contextual approach: Requires consideration of relevant bg facts as revealed by extrinsic evidence subject to the rules of admissibility under the EA.
3. Commercially sensible interpretation preferred: YES v Soup Restaurant, [48]: Where there are 2 possible interpretations of a clause, the court should adopt the interpretation that is more consistent with the business common sense.

Question 28

Aspects of Contract Law:
Interpretation of terms -
Extrinsic evidence inadmissible to vary, add to or subtract from terms of contract

Answer 28

1. Parol evidence rule (seen in s93 and s94 EA).
   a. No extrinsic evidence is admissible to contradict, vary, add to or subtract from its terms.
   b. Prevent people providing oral testimony to vary the written contract.
2. S 93 EA (proof by documentary evidence): If a contract has been reduced to a document, that document must be produced as proof, being the best evidence of the agreement reached between the parties.
3. S 94 EA: Only admissible to prove agreement by way of exception

Question 29

Aspects of Contract Law:
Non-absolute obligation clauses -
General

Answer 29

Party only promises to use certain amount of effort to attain outcome (i.e. reasonable efforts).

Contrasted with strict liability in contract law where the outcome is the ultimate goal.

Question 30

Aspects of Contract Law:
Non-absolute obligation clauses -
KS Energy Services Ltd v BR Energy (M) Sdn Bhd [2014] 2 SLR 905

Answer 30

Charter of oil rig. KSE found a third party to build rig, KSE promised BRE to build a rig for them. Third party could not finish rig; KSE could not deliver rig. BRE terminated jv, sued KSE for failing to use all reasonable endeavours to procure the oil rig.

Held: KSE did not breach reasonable endeavours clause (which required KSE to act as a prudent and determined company acting in the interests of BRE).

CA distinguished between all reasonable endeavours to procure a third party’s performance, and the obligation to do the same oneself. If the obligation is a promise to do everything possible to persuade a third party to deliver, you can only do so much, as third party is outside of KSE’s control.

On the facts, KSE was persistent to comply third party to perform. It would be unreasonable to expect KSE to deploy permanent onsite personnel. Contrasted with an obligation on oneself, which courts are not as likely to discharge.

Question 31

Aspects of Contract Law:
Non-absolute obligation clauses -
Guidelines

Answer 31

1. Little or no relevant difference b/w std imposed by an “all reasonable endeavours” and “best endeavours” clause, they mean the same thing to Court;
2. Simple “reasonable endeavours” clauses are different, obligor only has to act reasonably, and not the best effort; and
3. Whether such non-absolute obligations clause is discharged, is wholly dependent on the facts of the case.

** Context dependent: Obligor would have not exhausted all reasonable endeavours if the obligor might have discovered other reasonable steps that could have been taken if it had consulted the obligee.

Question 32

Aspects of Contract Law:
Breach of contract -
3 Situations where Breach can lead to Termination

[RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413, SGCA]

Answer 32

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413, SGCA, [91]-[101]:
1. Express termination clause in contract has been satisfied.

2. Repudiation: D shows unwillingness and inability to complete the contract. Arises once there is inability to perform contract.
   3a. Condition/warranty approach: If term is so important as to be a condition, this will give rise to right to terminate, but if warranty then there is no right to terminate;

3b. Hong Kong Fir approach: if term is a warranty, Court has discretion to terminate where Breach of Contract is sufficiently serious. Note that 3a applies before 3b.
a. Court to consider if term is condition or warranty. If court determines term is a condition, then contract can be terminated, (3b) will not apply.
b. Under UK principles, if term is warranty, then (3b) does not apply, but no right to terminate. However, CA in RDC held that even if the term is decided to be a warranty, courts can still look to (3b) to determine if the breach is sufficiently serious such as to entitle other party right to terminate contract.
c. Thus warranties are not really warranties, but rather always intermediate terms.

Question 33

Aspects of Contract Law:
Breach of contract -
Court will respect if parties expressly and clearly ID terms as warranties.

[Sports Connection Pte Ltd v Deuter Sports GmbH [2009] 3 SLR(R) 883]

Answer 33

Sports Connection Pte Ltd v Deuter Sports GmbH [2009] 3 SLR(R) 883:

[48] Parties have to expressly and clearly state this not only clearly but also in no uncertain terms – i.e., parties expressly state that any breach of the term, no matter how serious and regardless of the consequences of the breach, would never entitle the innocent party to terminate the contract.

Question 34

Aspects of Contract Law:
Breach of contract -
Insolvency can be taken as an anticipatory breach of contract.

[The “STX Mumbai” [2015] 5 SLR 1]

Answer 34

1. Although insolvency did not, in and of itself, amount to an anticipatory breach of contract, it was implicit in this very proposition that, depending on the precise facts at hand, an insolvency which occurred in a particular factual matrix might amount to an anticipatory breach of contract.
2. CA provided 2 justifications for anticipatory breach to executed contracts:
   a. Redefines the implied promise: If D already made known to P that he cannot fulfil contract, contract cannot be completed.

b. D’s indication of a clear intention that it would not perform its obligation under the contract could be construed as a waiver of its right to be held strictly to the bargain (leading to a breach of contract).

Question 35

Aspects of Contract Law:
Breach of contract -
Framework

[RDC Concrete v Sato Kogyo;
Sports Connection v Deuter Sports]

Answer 35

1. Is term a condition or warranty?
   a. Condition: right to terminate for breach, however minor.
   b. Warranty: move to step 2.
2. If term is not a condition, is it an expressly intended warranty?
   a. Express: no right to terminate.
   b. Implied: move to step 3
3. Are the consequences sufficiently serious to warrant right to terminate?

Question 36

Aspects of Contract Law:
Breach of contract -
What is Condition?

Answer 36

Sports Connection v Deuter Sports, [33]: Condition is where consequences of the breach are so serious as to deprive the innocent party of substantially the
whole benefit that it was intended that the innocent party should have.

Man Financial v Wong Bark Chuan David [2008] 1 SLR 663, [161]-[173]: Non-exhaustive factors for ID’ing Conditions -
1. Statutorily, Condition = S 11(2) Sale of Goods Act (“depends…on the construction of the contract”)

2. Term expressly stated as a Condition.
3. Term was held as a Condition in prior precedent (though not preferred; CA is allowed to depart from even its own prior decisions).
4. Considering importance of certainty and predictability in mercantile transactions.

Question 37

Aspects of Contract Law:
Breach of contract -
What is Warranty?

Answer 37

Sports Connection v Deuter Sports, [48]: Breach of the term, no matter how serious and regardless of the consequences of the breach, would never entitle the innocent party to terminate the contract.

Question 38

Aspects of Contract Law:
Vitiating Factors -
Mistake (as to ID or term) -
Overview

Answer 38

1. If one or both parties enter into a contract under a misapprehension of its basis, or of an impt aspect of the transaction, contract may be completely void OR voidable. For the latter, contract is valid until rescinded or set aside by mistaken party.
2. Unilateral mistake renders a contract void at common law only if the mistake was of a fundamental nature, and the non-mistaken party has actual knowledge of the other’s error. Where actual knowledge has not been established, the contract may still be set aside in equity, but only if the non-mistaken party’s conduct can be said to involve an element of impropriety.

Question 39

Aspects of Contract Law:
Vitiating Factors -
Mistake (as to ID or term) -
Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 SLR(R) 50

Answer 39

Held: Doctrine of unilateral mistake exists both at common law and in equity.

CA clearly prepared to recognise an equitable doctrine of mistake, presumably influenced by the need for equity to mitigate the rigours of common law.

Bearing in mind the need to do justice not only b/w immediate contracting parties but also innocent third parties, CA held that a system which embraces both common law and equity principles would be better than having an exclusively common law principle.

Question 40

Aspects of Contract Law:
Vitiating Factors -
Mistake (as to ID or term) -
Olivine Capital Pte Ltd and another v Chia Chin Yan [2014] 2 SLR 1371

Answer 40

1. Where the case falls within the common law doctrine of unilateral mistake, there is, in effect, no contract. No room for equity to intervene.
2. But where no common law doctrine of unilateral mistake and Court finds constructive knowledge in non-mistaken party, Court would, in equity, be entitled to intervene and grant relief when it’s unconscionable for non-mistaken party to insist that the contract be performed.
3. On the facts, the conduct of deliberately not bringing the suspicion of a possible mistake to the attention of the mistaken party could constitute such impropriety.

Question 41

Aspects of Contract Law:
Vitiating Factors -
Frustration -
Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2014] 3 SLR 857

Answer 41

A. Imposition of the sand export ban by the Indonesian government had discharged the contract between the parties by frustration.

B. However, Court emphasised that since frustration is an exception to the norm of sanctity of contract, it should be applied strictly, and the precise facts of the case would become of first importance.

C. To invoke frustration, the test is the Radical Change in Obligation test:
1. Must have a break in ID b/w the contract as provided for and contemplated, and its performance in the new circumstances. Courts will consider whether it is unjust and unfair to hold the parties to their contract where external events have rendered further performance radically or fundamentally different from originally contemplated.

2. Requires multi-factorial approach. Courts may consider contract terms, its matrix or context, the parties’ knowledge and expectations, nature of the supervening event and parties’ reasonable and objective ascertainable calculations as to the possibilities of future performance in the new circumstances. Mere incidence of expense or delay or onerousness is insufficient.

Question 42

Aspects of Contract Law:
Vitiating Factors -
Illegality -
Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) [2018] 1 SLR 363

Answer 42

2 stages on analysing effects of illegality on contracts:

1. Ascertain if contract is either expressly or impliedly prohibited by statute or public policy (determine whether common law or statutory illegality).
   a. If so prohibited, no recovery pursuant to prohibited contract.
   b. If not illegal per se (but entered into for unlawful purposes or commission of unlawful act), then contract must be determined by principle of proportionality (factors provided in Ting Siew May). Courts have discretion on this.
2. Even if contract is void and unenforceable, courts can consider if possible to recover payments or benefits that have passed to D under the invalid contract. Can be premised on grounds of:
   a. parties are not in pari delicto (C less blameworthy than D);
   b. locus poenitantiae (timely repudiation); or
   c. where there is independent cause of action (i.e. tort, trusts or unjust enrichment).

Question 43

Aspects of Contract Law:
Vitiating Factors -
Illegality -
Ting Siew May v Boon Lay Choo [2014] 3 SLR 609 -
Facts

Answer 43

House loan granted by bank to R through an in-principle approval capped at loan to value ratio of 80% on 12 July 2012.

5 Oct 2012: MAS reduced LTV ratio to 60% (buyers have to put out more capital).

10 Oct 2012: R orally agreed to purchase property from A, accepted 2 days later.

13 Oct 2012: Parties signed option and backdated the contract 1 day to avoid the MAS notice. A did not want to be involved in the illegality and tried to back out. R sued for Breach of Contract to try and enforce the contract, but this failed since R was relying on an illegality to enforce the contract.

Question 44

Aspects of Contract Law:
Vitiating Factors -
Illegality -
Ting Siew May v Boon Lay Choo [2014] 3 SLR 609 -
Common Law Illegality

Answer 44

1. ID and define illegality.
   a. Contracts to commit crime, tort, or fraud (did not apply here since the bar to proving fraud is quite high).
   b. Contract entered into with the object of committing an illegal act.
   This category applied as the contract was not illegal. The illegality was the loan. The wrong was to circumvent the MAS Notice.
2. Apply principle of proportionality: Relevant factors in determining proportionality:
   a. Whether allowing the claim would undermine the purpose of the prohibiting rule;
   b. Nature and gravity of the illegality;
   c. Remoteness or centrality of the illegality to the contract;
   d. Parties’ object intent and conduct; and
   e. Consequences of denying the claim.

On the facts, found that proportionate response would be to avoid contract or decline to enforce contract.

a. R was trying to avoid clear governing policies by using a false date stated in the Option for a purpose which they knew was prohibited.
b. If they allowed parties to go on with the contract, this would be allowing R to undermine the rule.

Question 45

Aspects of Contract Law:
Vitiating Factors -
Illegality -
Ting Siew May v Boon Lay Choo [2014] 3 SLR 609 -
Statutory Illegality

Answer 45

Given the broad proportionality test, courts should not be so readily invoke statutory illegality.

Where a statute applies, they have to give regard to statutory intention.

Question 46

Aspects of Contract Law:
Vitiating Factors -
Misrepresentation -
S 2(1) Misrepresentation Act

Answer 46

1. Misrepresentation made to A by B fraudulently.
2. As a result, A suffered loss.
3. B shall be liable for damages, even if the misrepresentation was not made fraudulently.
4. B not liable if he proves reasonable ground to believe and did believe the misrep until it was discovered the facts represented weren’t true.

Question 47

Aspects of Contract Law:
Vitiating Factors -
Misrepresentation -
RBC Properties Pte Ltd v Defu Furniture Pte Ltd [2015] 1 SLR 997

Answer 47

CA discussed r/s between s2(1) MA and common law misrepresentation. While both co-exist, they are different.

A. S 2(1) Misrepresentation Act: Undoubtedly statutory in nature. Co-exists with tort of negligent misrepresentation at common law as first established in Hedley Byrne. Clearly enacted to perform the same function – to furnish a remedy in damages where none had hitherto (apart from fraud or deceit) existed.

B. Simultaneously different from the tort of negligent misrepresentation at common law:
1. In tort, burden of proof on P; but for MA, burden is on D to prove that he reasonably believed the misrep made.

2. MA more attractive for P as elements of claim easier to establish. BUT application more restricted as only available b/w contracting parties.

Question 48

Aspects of Contract Law:
Vitiating Factors -
Misrepresentation -
2-step Defence of Reasonable Belief (S 2(1) MA)

Answer 48

2 steps:
1. Court must objectively ascertain that the representor’s subjective belief was made true; and

2. Having established that the representor’s subjective belief was true, Court must assess objectively if representor had reasonable grounds for such belief.

Question 49

Aspects of Contract Law:
Vitiating Factors -
Misrepresentation -
4 Points on Defence of Reasonable Belief (S 2(1) MA)

Answer 49

1. Representor cannot claim to be wilfully blind;
2. Representor can only rely on grounds that were present in his mind at the time of the representation;
3. Operative timeframe is from the time of misrepresentation to the time contract was entered into; and
4. Assessment of reasonable belief is continuing one, if representor has new info, his reasonable belief may then be defeated.

Question 50

Aspects of Contract Law:
Vitiating Factors -
Misrepresentation -
Remedies

Answer 50

1. General Rule: Measure of damages should be awarded under the negligent measure, which is constrained by foreseeability, as opposed to the fraudulent measure. (Obiter)
2. Remedies for innocent misrep (S 2(2) MA):
   A. Rescission with indemnity:
   If reasonable belief test in s2(1) MA satisfied, representee is entitled to both rescind the contract and claim an indemnity. While representee is placed in the same position before the contract was entered into in all aspects, it is only for those obligations created by the contract entered into as a result of the misrep (essence of indemnity).

B. Damages in lieu of rescission:
Court’s discretion to award dmgs in lieu of rescission under s2(2) and (3) MA must be exercised in acc with established principles.
Can include whether rescission is a disprop harsh remedy on representor, in the event that the rep was relatively slight or unimportant. In such a case, dmgs might be the more appropriate remedy.

Question 51

Aspects of Contract Law:
Vitiating Factors -
Remedies -
Remoteness of damages

Answer 51

Test of remoteness under Hadley v Baxindale test,
SG position under PPG Industries (Singapore) v Compact Metal Industries [2006], CA:
1. Breaching party is liable for all losses that contracting parties should have foreseen; but

2. is not liable for any losses that breaching party could not have foreseen on the info available to him.

Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623 affirmed rule in Hadley.

Question 52

Aspects of Contract Law:
Vitiating Factors -
Remedies -
Remoteness of damages -
MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd [2011] 1 SLR 150

Answer 52

Rejected Lord Hoffman’s assumption of responsibility in The Achilleas.

[Lord Hoffmann held that contractual losses might be too remote (and hence irrecoverable) if D did not assume responsibility for them, even if those losses were, within the reasonable contemplation of the parties, not unlikely to occur as a result of breach.]

Question 53

Aspects of Contract Law:
Vitiating Factors -
Remedies -
Remoteness of damages -
Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363

Answer 53

A produced new drink, focused on marketing. When A sub-contracted manufacturing of drink to R via a simple agreement for a low amt, nothing to tell R that A had spent a lot on publicity. When drinks manufactured, qlty was bad and brand was ruined. A sued R for advertising costs.

Held (CA): Costs were too remote. Not claimable. Fact specific: Extravagant advertising exposed A to unusually huge risks; contract price disprop small, thus R couldn’t have known of A’s huge risks.

Guidelines:
1. What are the specific dmgs claimed?

2. Relevant facts to whether these dmgs would have reasonably been contemplated by parties, had they considered this at the time of the contract?
3. Facts, pleaded and proved, either to have been known or taken to have been known by D at the time of contract?
4. Circumstances in which D became aware of the facts?
5. In light of D’s knowledge and the circumstances in which that knowledge arose, would the dmgs have been considered by a reasonable person in D’s shoes at the time of contract to be foreseeable as a not unlikely consequence that he should be liable for?

This seems to suggest that the Hadley test is expanded – knowledge of D can be scrutinised.

Question 54

Aspects of Contract Law:
Vitiating Factors -
Remedies -
Purpose -
PH Hydraulics & Engineering Pte Ltd v Airtrust (Hong Kong) Ltd and another appeal [2017] 2 SLR 129

Answer 54

Starting point: Well-accepted proposition that, “the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance”.

Punitive dmgs cannot be claimed under SG law save for very limited exceptions – given that breach of contract can occur in many situations, Courts will not close off possibility that punitive damages can never be claimed for breach of contract.

Question 55

Aspects of Contract Law:
Vitiating Factors -
Remedies -
Alvin Nicholas Nathan v Raffles Assets (Singapore) Pte Ltd [2016] SGCA 18

Answer 55

1. Damages awarded for breach of contract sought to place the innocent party in the position he would have been in if the contract had been performed.
2. While such damages were ordinarily assessed in terms of expectation loss, permissible to award reliance losses instead where the innocent party had incurred costs and expenses which had gone to waste because of the act of the breaching party.
3. Expectation and reliance losses were alternative claims and could not be awarded together as that would lead to over-compensation.
4. However, note that C also has duty to mitigate losses.