BSP1004 Business Law Exams Notes
BSP1004 Business Law Exams Notes BSP1004
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This 39 page Study Guide was uploaded by moonlightkitty on Wednesday October 14, 2015. The Study Guide belongs to BSP1004 at National University of Singapore taught by in Spring 2015. Since its upload, it has received 307 views. For similar materials see Business Law in Business at National University of Singapore.
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Date Created: 10/14/15
Introduction to Biz Law Civil Matter This is an issue that affect the private rights and obligations of two parties Mediation For Relatively cheaper faster amicable option compared to both arbitration and litigation Privacy Against However mediation may not be final As S Pte Ltd is also renovating another premise of T Ltd s subsidiary there is a continuing relationship which means it in the interest of both parties to settle this issue amicably Even though mediation at the Primary Dispute Resolution Centre edr is free the mediator is usually a judge of the Subordinate Courts which have no technical expertise or field experience in the matter However in the Singapore Mediation Centre the mediator appointed is not a judge and is usually a professional who is experience and knowledgable in the industry of the disputed case Therefore some people may view decisions made by Singapore Mediation Centre as a fairer decision and agree on it than the decision made by the Judge in the Primary Dispute Resolution Centre Arbitration For May be cheaper than litigation relatively faster more informal too Both parties will be able to choose the arbitrator who may have more technical knowledge and experience in the industry than a judge There is also enforceability both domestically and internationally and finality in the final judgement which is binding Against However it is highly unlikely that they will agree to go for arbitration unless both parties have pre agreed in their contact as it might be viewed as more costly or less favorable than litigation Due to their continuing relationship though Arbitration is the best way to resolve this dispute Litigation gt25000 high court lt25000 Subordinate court For There is finality in the judgement and does not require the consent of the other party Against Howver litigation costs are expensive and the disputed amount should be large enough to justify the cost of litigation Take time and litigation is acrimonious Parties with continuing business relationship should not engage in litigation as it leads to a win lose situation There is no privacy and not possible to choose the judge More importantly there may be problems enforcing a court judgemnet in other countries as the judgement is only enforceable in common wealth countries or in other countries with which Singapore has a bilateral treaty If both parties have pre agreed in their contract to go for arbitration it will be a better option than liti ation in this case as similar to liti ation arbitration has finali and it is international enforceable Or sue them in their country In the case of Overcharging of Legal Fees To prevent such disputes from arising a black and white contract should be signed so that both parties clearly understand what they are doing for one another and how much will the law firm and how the law firm charges Once that is settled upon it is up to the law firm to provide evidence to justify the cost to the businesses through documentation of work done man hours put in transport claims etc OR go to law society and the senior lawyers would access if the fees are reasonable Bankruptcy A bankruptcy petition may be presented by the creditors against Nor Luc where there is an inability to pay debts the debt size is more than 10000 and Nor Luc is domiciled in Singapore or having property in Singapore His assets such as his car rolex watch money in the bank account and luxury assets in his house will be seized and distributed among his creditors Alternatively it is also possible for the debtor to enter into a voluntary arrangement with the creditors with their approval 19 of text book Debt repayment for debts less than 100000 What companies can do to prevent debts default Trade Credit Insurance Scheme Trade credit insurance can help to protect companies from the harmful effects of buyer insolvency or slow payment due to bankruptcy natural disasters civil unrests and other exposures With trade credit insurance in place companies can extend more credit to creditworthy customers while reducing the risk of non payment thereby promoting safe sales expansion Favorable bank financing can also be more easily obtained by assigning the insured accounts receivable as collateral Secured Loans A secured loan is a type of loan available to people with securable assets Usually these assets take the form of property such as a home or car Hence the debt will be secured against a collateral This means that if the debtor defaults the creditor has the right to claim the asset Background Checks To minimize the risks of extending credit the creditors could first do a background check on the borrower by checking his credit score company information etc This provides valuable information on whether the borrower will be able to repay the loan Business Organisation and Company Law Sole Proprietorship The sole proprietor is personally liable for the business debts and his personal assets can be seized to satisfy business debts Partnership If Nor Luc had the actual implied Section 5 or apparent authority in the ordinary course of business and in the process incurred debts in the name of the partnerships then Luc Kee can be liable too Implied Authority Section 5 of the partnership act provides that every partner is an agent of the firm and the other partners and any act done by him in the usual way of business will bind the partnership and the other partners unless he had no authority to do the act in question and the person with whom he was dealing knows of that or does not believe him to be a partner In addition to contractual liability there could be tortious liability Section 10 of the partnership act provides that any wrongful act or omission done by the partner in the ordinary course of business of the firm binds the firm The partnership and all partners can be made accountable for the negligence of one partner in the ordinary course of business Section 17 of the Civil Law states that whether the action relates to tort contract or debt the claimant who has not been paid or fully paid may bring a subsequent action against other partners who were not initially sued Should Luc Kee have the capability to repay the debt creditors may wish to go after him Luc Kee would then have to claim a portion of the amount from Nor Luc Alternatively they may also wish to sue the partnership instead if they are unable to assess if either partner is capable of repaying the debt Company Creditors would have to sue the company as it is a separate legal entity Both Nor Luc and Luc Kee will not be personally liable for the company debts Only company assets can be seized in this case Unless the creditors are able to prove that the company is founded with the intention to defraud creditors or for any fraudulent purposes or that the debts are incurred irresponsibly in this case Nor Luc or Luc Kee can be personally liable for the debt Section 3401 and section 3393 Limited Lgbilitv Partners hip Creditors would have to sue the LLP as it is a separate legal entity Individual parties are not personally liable for the LLP s debt Howver LLP may not be in as good a position as company in raising finance as company has greater capital that assures the creditors Limited Partners hip A general partner would be personally liable for all the debts and obligations of the limited partnership For the limited partner his liability would be limited to the amount of agreed contribution unless he takes part in the management of the limited partnership in such case he would lose his immunity and would become liable Company Law Members amp Directors Disquali cation a b c d Section 148 Bankruptcy Disqualification is automatic Section 148 1 provides that every person who being an undischarged bankrupt whether he was adjudged bankrupt by a Singapore Court or a foreign court having jurisdiction in bankruptcy shall not act as a director of or directly or indirectly takes part in or is concerned in the management of any corporation This disqualification is automatic Unless the person has the leave of the Court or the written permission of the Official Assignee he shall be liable on conviction to a fine not exceeding 10000 or to imprisonment for a term not exceeding 2 years or to both Extra Cannot set up business whether SP P LP or LLP Section 149 Insolvency Disqualification is not automatic Under section 1491 of the Companies Act Rain may or may not be disqualified from being a director The circumstances must be that the director was a director of a company which became insolvent while he was a director or within three years of him ceasing to be one and the director s conduct was such as to make him unfit to be a director If the Minister of Finance or official receiver make an application to court asking for a disqualification order the director s conduct would be the determinant to his disqualification Matters like whether the director breached his fiduciary or other duties whether the director misapplied any money and whether the director s conduct contributed to the company s insolvency If the court is satisfied that the conditions are satisfied a disqualification order for up to five years may be imposed Extra SP P LP do not come under the jurisdiction of the Companies Act Hence he cannot be a director for C0 and LLP Section 1541 Offence Fraud Dishonesty Disqualification is automatic Section 1542 Offence management of company section 157 or 339 Disqualification not automatic If the offence isa technical one and not serious the court may decide not to disqualify him Section 155 Failure to file documents Disqualification is automatic e Article of Association Article 72 of Table A Director Duties imposed by Case Law a Duty to avoid con ict of interest b 0 Furs Ltd v Tomkies 1935 Third party offered Tomkies a payment and as a result offered to pay the company a smaller sum for the sale Candian Aero Service Ltd v O Malley 1973 Defendants were acting on behalf of a company in negotiations relating to a certain project subsequently resigned and set up own company to get the project IMPORTANT Industrial Development Consultants Ltd v Cooley 1972 Even if the company does not suffer a loss but there is a con ict and the director makes a profit he may be made accountable for that profit Duty to act for proper purpose Howard Smith Ltd v Ampol Petroleum Ltd 1974 Directors issued new share to stop a takeover bid that they considered was not in the best interests of the company Punt v Symons 82 Co Ltd 1903 Directors issued new shares for the purpose of having sufficient voting power to amend the articles of association Duty to act in best interests of company Re W 82 M Roith Ltd 1967 R was main shareholder and director used his power to mae a provision enabling his wife to draw a pension on his death Not in best interest of company Con ict of interest not in best interest of company d Chew Kong Huat v Ricwil Singapore Pte Ltd 2001 Two directors of Ricwil transferred some contracts entered into by Ricwil to another company in which they had an interest in Purely not in best interest of company no con ict of interest Walker v Wimborne 1975 Directors of one company made an interestfree loan to another company in the group without taking any security in return Duty to act with due care skill and diligence Jurong Readymix Concrete Pte Ltd v Kaki Bukit Industrial Park Pte Ltd 2000 Director got his company to give a guarantee which was not really necessary without fully understanding the background without consulting the other directors and without getting legal advice Re Barrings plc 1 999 Proper delegation but failure to supervise Director Duties imposed by Company Act a b Section 156 Material interest in a transaction Criminal Liability Yeo Geok Seng v Public Prosecutor 2000 Yeo was the director of a company MFED and the company was awarded a contract But he got another company in which he was a director to do the actual construction without disclosing this to the board of MFED Section 1571 Act honestly and use reasonable diligence in discharge of duties Similar to Case Law Section 1572 No leaking improper use of information Section 1573 Liable for losses and return profits earned Criminal amp Civil Liability 0 Lim Weng Kee v PP 2002 Director of pawnship released pawn items before the cheque presented for repayment of loans was cleared He was convicted and fined held liable for losses suffered by company Section 1621 Company shall not make loan or provide gurantee security in respect of a loan to a director Section 1626 Term director include his family Section 1623 Directors who authorise any transaction in breach of section 162 would be liable for any losses suffered by the company Section 1624 Guilty of an offence NOTE There are exceptions to section 162 d Section 163 Loan guarantee or security given to another company in which the director has a material interest 20 or more of equity shares Section 169 Any emoluments given to directors fees and allowances have to be approved by members Director Duties imposed by Securities and Future Act a b c d E39 Section 218 Refer to tb page 278 Section 219 Even persons not connected to a corporation or persons who receive price sensitive information from persons not connected to the corporation come under a similar prohibition Section 221 Contravention of Section 218 or 219 Criminal Liability Public Prosecutor v Koh Soe Khoon 2006 Managing director had confidential price sensitive information relating to higher net proft and divident rates of company He nought more of company s shares before information was made public Insider trading Section 234 Person who contravened section 218 or 219 could face civil liability to a person who has contemporaneously with the contravention subscribed for purchased or sold securities and who has suffered a loss Section 197 False trading or market rigging Section 198 Market manipulation Section 199 making false or misleading statements pertaining to securites is prohibited Public Prosecutor v Wang Ziyi Able 2008 Online posting of false information that a particular company was raided by the commercial Affairs Departments without caring whether the information was true or false and which information could have likely induced persons to sell their shares in that company Contract Law Essentials of a Contract 4 Elements of a Contract a Offer b Carlill v Carbolic Smoke Ball Co 1982 Unilateral Contract Company placed advertisements stating they would pay 100 to anyone who caught u after using company s smoke ball Company had made an offer to the whole world and offer had been accepted by Mrs Carlill Termination of Offer 1 Revocation This is an issue on revocation of offer Revocation of the offer by offeror has to be communicated to the offeree Byrne v Van Tienhoven 1880 Defendants made offer but posted a letter revoking the offer on 8th letter reached plaintiffs on 20th Plaintiff accepted the offer on 1 1th There was acceptance and contract Offeree need not receive the notice of revocation directly from offeror himself Dickinson v Dodds 1876 Defendant gave plaintiff an offer to sell his house and offer was open until Fri On Thur defendant sold the house to someone else and another person informed the plaintiff of the sale Even if offer open till a certain time offeror can revoke prior to it Dickinson v Dodds 1876 Routledge v Grant 1828 Defendant offered to sell his house to the plaintiff and offered to keep offer open for 6 weeks it was held he could revoke prior to that Reason Presence of 2 offers Another offer is to keep that earlier offer open for a stated period of time However he has not given consideration for it and hence that contract would not be enforeceable 2 Lapse of time Ramsgate Victoria Hotel Co v Montefiore 1866 Court held that defendant s offer was terminated by he lapse of time and hence there was no binding contract 3 Rejection Counteroffer Hyde v Wrench 1840 Counteroffer has the effect of rejecting original offer Wrench offered to sell his farm at 1000 Hyde asked if he would take 950 instead Court held that Hyde s counteroffer destroyed Wrench s original offer to sell the farm at 1000 Wrench was not bound to sell farm to Hyde Acceptance In order to be effective acceptance must be on the same terms as the offer 1 Silence of offeree cannot be treated as acceptance Felthouse v Bindley 1862 Plaintiff offered to buy his nephew s horse and stated If I hear no more about him I consider the horse mine Court held the offeror cannot impose silence on the offeree and so there was no contract c 2 Offeror can waive the requirement of communication of acceptnce by offeree Carlill v Carbolic Smoke Ball Co 1892 3 General Rule Acceptance is effective only when received Entores Ltd v Miles Far East Corporation 1955 Odd results Postal Rule Acceptance is effective when letter is posted Adams v Lindsell 1818 It must be noted that postal rule does not apply to offers or revocation of offers which generally are effective only when received 4 Agreement as to essential terms Scammell v Ouston 1941 Parties had not agreed to essential terms court held there was no binding contract Consideration Doing or agreeing to do something in return for the other party s promise 1 Consideration need not be adequate Chappel amp Co v Nestle Co Ltd 1960 Court held that three used wrappers of chocolate bars could constitue consideration 2 Consideration cannot be past Re McArdle 1 951 Court held that at the time the renovations were done they were not done with the expectation of getting something in return the subsequent promise to pay was past consideration and not enforceable NOTE Pau On v Lau Yin Long 1980 When one party does something at another party s request and both parties envisage payment all along consideration is not past 3 Consideration must move from promisee 4 Consideration need not move to promisor 5 Consideration cannot be insuffient Performing existing public duty Collins v Godfroy 1831 Under legal duty to give evidence in court he was in effect promising nothing extra there was insufficient consideration Exception If he does more than expected of his public duty Glasbrok Brothers v Glamorgan County Council 1 925 Performing existing contractual duty to same party Stilk v Myrick Captain promised crew extra wages as the ship was slightly shorthanded Court held there was no consideration for the promise as the crew was already contractually bound to meet such normal emergencies of the job Exception If he does more than what he is contractually obliged to do Hartley v Ponsonby 1857 Shortage of labour in ship was so great as to make the journey very dangerous Performing existing contractual duty to third party Pao On v La Yiu Long 1980 d Intention to create legal relations De Cruz Andrea Heidi v Guangzhou Yuzhitang Health Products Co Ltd 2003 Court held that as the fellow actor was just doing her a favour and as they were very close friends there was no intention to create legal relations Variation of Contract For the variation to be valid there must be a price variation clause stated in the contract Otherwise there must be mutual agreement for all parties either a Fresh consideration b Deed Under Seal c Williams V Roffrey Exception or D Promissory Estoppel must be present If terms for pay variation of up to 10 was clearly stipulated when the contract was drafted it is still considered a lawful variation and no breach of contract is committed a Fresh Consideration For a fresh consideration clause to be present both parties must get something in return b Seal or deed With a deed under seal any changes made to the contract have to be accepted by the employee as stipulated by the law If that is the circumstance the employees have no choice but to accept the change c William v Roffey Exception Williams v Roffey Bros and Nicholls Contractors Ltd 1 991 As they had proposed the change without dishonesty nor fraud and the employees avoids disbenefits by retaining their employment prospects this exception may then be enforced and thus the contract change will be validated Sharon Global Solutions Pte Ltd v LG International Singapore Pte Ltd d Promissory estoppel Central London Property Trust Ltd v High Trees House Ltd 1 947 Thus Air Terbulan may then be able to protect itself against potential legal damages from its employees by using Promissory Estoppel as a shield thus validiating its own contract changes Parties to the Contract Privity of Contract only parties to the contract may sue and be sued on the contract Beswick v Beswick 1967 Court disallowed the wifethird party to sue in her personal capacity Contract Law Terms of a Contract Express Terms For express terms to be valid generally they must be intoduced or referred to before or at the time the contract is made If the terms are introduced or referred to after this point they may not be binding on the parties unless such terms amount to a lawful variation of the original contract or unless such terms can nonetheless be implied into the contract Generally does not matter whether terms are fair or reasonable unless a clause against a statutory provision b clause against public policy c clause is sibject to some judicial control Otherwise courts will not intervene to strike down a clause as being unfair or reasonable Parol Evidence Rule Once an agreement has been reduced to writing generally oral evidence cannot be raised to contradict vary add to or subtract from the written agreement assuming no misrepresentation fraud or mistake Hawrish v Bank of Montreal 1969 Court held that oral evidence could not be admitted to vary or contradict the express terms of the contract Zurich Insurance Singapore Pte Ltd v BGold Interior Design amp Construction Pte Ltd 2008 Court held that extrinsic evidence was not admissible to add to vary contradict a term in the insurance polocy in question NOTE Exceptions Misrepresentation fraud mistake Exklusiv Auto Services Pte Ltd v Chan Yong Chua Eric 1996 Misrepresentation Sales representative told customer that if he cancelled the order he would only lose his deposit but written agreement stated otherwise Implied Terms The issue here relates to implied terms Terms may be implied by custom statute or by the courts a Custom Sagar v Ridahalgh Cotton industry Refer to tb page 58 b Statute c Courts For terms impled by fact 2 conditions must be satisfied 1 Prima facie and 2 Business Efficacy Officious bystander test However it must be pointed out that courts will not imply terms by fact or law which are contrary to the express terms of the contract Wong Lai Keen v Allgreen Properties Ltd 2009 Courts will not lightly imply terms especially where the parties have negotiated at arms length Termination of contract based on breach of express implied terms a Contract may clearly state that in the event of a certain breach innocent party can terminate the contract Fu Yuan Foodstuff Manufacturer Pte Ltd v Methodist Welfare Services 2009 Contract stated that it could be terminated without notice where the caterer did not comply with Singapore laws and regulations b Breach of condition sue for damages amp terminate contract Breach of warranty sue for damages only c Consequences of breach are such as to deprive the innocent party of substantially the whole benefit which it was intended that the innocent party should obtain Validity of exclusion limitation clauses a When was the clause introduced Must be introduced or referred to at the time the contract is formed and not subsequently Olley v Marlborough Court Ltd 1949 Ciuple arrived at hotel and paid in advance Room has an exclusion caluse excluding liability for lost or stolen goods Court held that the exclusion clause was not valid as it was introduced after the contract had been formed Thornton v Shoe Lane Parking Ltd 1 971 Contract was formed when the customer put money into the slot machine of the automatic car park The ticket issued subseque was not binding NOTE Exception Clause might be valid if there has been a consistent course of previous dealings between the parties in which the clause has been used Spurling v Bradshaw 1 956 Court held that even thought the exclusion in this case was ineffective as it was introduced after the contract because similar documents containing exclusion clauses were used in previous occasions defendant was bound by them b Is there reasonable notice of the clause 1 Visibility Interfoto Picture Library Ltd v Stilletto Visual Programmes Ltd 1989 Court held that plaintiffs could not rely on the particular clause because it was highly unusaul and adequate notice of it had not been given NOTE Signed contract If the contract party signs the contractual document then generally in the absence of fraud or misrepresentation even if there is no adequate notice of the exclusion or limitation clause the party who signed it is bound by it 2 Place where it is found Chapelton v Barry UDC Court held that the exclusion clause contained in the ticket in question was not binding as no reasonable person in the circumstances would expect to find contractual terms on a ticket 3 Indirect Reference Thompson v London Midland amp Scottish Railway 1 930 Press Automation Technology Pte Ltd v Translink Exhibition Forwarding Pte Ltd 2003 Limitation clause referred to the Singapore Freight Forwarder s Association Standard Trading Conditions 4 Language Thompson v London Midland amp Scottish Railway 1 930 Court held that the fact that the plaintiff was illiterate did not affect the validity of exclusion clause Unfair Contract Terms Act Section 21 provides that a person cannot exclude or restrict liability for negligence in relation to personal injury or death Section 22 provides that he cannot also exclude or restrict liability for negligence in relation to other losses such as property damage unless the clause satisfies the requiremnt of reasonableness Futher as section 1 11 provides reasonableness must be judged at the time the contract was made and not at the time the breach occurred Section 1 15 provides that the person who is alleging that the clause is reasonable has the burden of proving it to be such Test of Reasonableness a The bargaining strength of the parties Metro Pte Ltd v Wormald Security SEA Pte Ltd 1981 Both parties were commercial organisation with equality of bargaining power Clause is more likely to be reasonable b Whether the innocent party knows or ought to know about the exemption clause If the clause is common or used oftern in trade or there was previous cause of dealings clause is more likely to be reasonable c Insurance If the party trying to exclude liability could have taken out insurance more easily to cover the loss as compared to the other party the clause is less likely to be reasonable Third parties can use exclusionlimitation clause New Zealand Shipping Co Ltd v AM Satterthwaite amp Co Ltd 1 975 Third party would be able to make use of an exclusion limitation clause even though he was not party to the contract Restraint of Trade Clause The starting point is that all such restraints are unenforceable unless they are reasonable in the circumstances To be upheld the restraints must be reasonable as between the parties themselves and With regard to public interest Man Financial S Pte Ltd v Wong Bark Chuan David 2008 Between Parties a Restraint on employees 1 MUST have a legitimate reason for the restraint Trade secrets are legitimate Lansing Linde Ltd v Kerr 1 991 2 Reasonable in terms of time area and scope of restraint Commercial Plastics Ltd v Vincent 1 964 Buckman Laboratories Asia Pte Ltd v Lee Wei Hoong 1 999 Time 5 years restraint clause may be unreasonable More than enough time to set up and establish themselves 6 months may be more reasonable b Restraint on sale of business 1 Must have a legitimate interest to be protected 2 Reasonable in terms of time area and scope of restraint Public Interest For all such restraints to be upheld they must not be against public interest Thomas Cowan v Orme 1 961 not in public interest to have a monopoly Contract Law Factors Vitiating a Contract Incapacity Minors The issue relates to minority and whether A1 has the right to enforce a contract against a minor Under Singapore Law a minor is a person who is below the age of 18 General Rule Contracts entered into by such persons are not binding against them Exceptions a 1 2 b Necessary goods or services If the contract results in the provision of necessary goods or services the contract would be enforceable against the minor The term necessary pertains to whether the minor has a reasonable need for the goods or services given his station in life and considering his requirements at the time of sale and delivery Nash v Inman 1908 Goods Tailor brought action against a minor for cost of clothes Court held that it was not a neccessity as he already had an ample supply of clothes hence contract not enforceable Perters v Fleming 1840 Goods Minor purchased a gold watch chain As he was from an aristocratic family and his father was a Member of Parliament the court held that it was possible for the goods sold to be necessaries Roberts v Gray 1 91 3 Services Education or medical services Minor entered into a contract with Roberts a leading billiard player to learn from him Later the minor repudiated the contract The court treated the contract as a contract for the provision of necessaries and held it was enforceable against the minor Chapple v Cooper 1844 Services If the services supplied are considered necessaries the minor would have to pay a reasonable price for them NOTE 2 important matters If minor has already performed his side of the obligations the contract is enforceable Valentini v Canali 1889 When an infant has paid for something and has consumd or used it it is contrary to natural justice that he should recover back the money which he has paid Under Section 3 of the Minors Contracts Act if the contract is unenforceable against the minor but the minor has received some property pursuant to the contract the court has the discretion to ask the minor to return the property or any other property representing it to the other party to the contract Beneficial contracts of employment Are enforceable against the minor De Francesco v Barnum 1890 employment was not bene cial 0 Contract was for 7 years and provided that she could not marry or accept outside engagements without the consent of de francesco De Francesco was not obliged to provide her with engagements and further the pay was unsatisfactory Contract was not beneficial hence not enforceable Voidable contracts Certain contract under which the minor acquires an interest in a subject matter that exposes him to continuing or recurring obligations Valid of the minor unless he repudiates or termintates them during his infancy or at a reasonable time after he attains majority Davies v BeynonHarris 1 931 The minor entered into a lease of a at The landlord sued him for unpaid rent and the court upheld it as the minor has not repudiated the contract Incapacity Intoxicated and mentally unsound persons Che Som bte Yip v Maha Pte Ltd 1989 Third plaintiff was mentally unsound executed a mortgage in favour of the bank the court held that in the circumstances the bank ought to have known of his disability and so the mortgage was set aside Illegality No damages no pro t Illegal by Statute a b 0 Section 14 of Moneylenders Act 2008 Section 5 of Civil Law Act Gambling Section 35 of Competition Act provides that agreements between undertakings decisions by associations of undertakings or concerted practices which have as their object or effect the prevention restriction or distortion of competition within Singapore are prohibited unless they are exempt in accordance with the provisions of this Part Implied Licence Smith v Mawhood 1845 Tobacconist failed to take out a licence Court held that purpose of the licensing was merely to raise revenue and so the contract was not illegal Cope v Rowlands 1836 Broker had to be licensed Court held that the purpose of requiring brokers to be licensed was to protect the public and hence the court held that the contract was implicitly illegal under the statute Illegal by Case Law a b Contract to commit a crime or tort Contract prejudicial to the administration of justice Effect of Illegality No damages no profits to be accounted Exceptions a b 0 Parties are not both equally at fault innoncent party may be able to recover money paid or property transferred Tokyo Investment Pte Ltd v Tan Chor Thing 1 993 One party to an executory contract fully repents before performance able to recover damages Make a claim entirely independent of illegal contract Amar Singh v Kulubya 1 964 Contract against public policv Restraint on employees sale of business to sell only a particular product on services Misrepre ent tion The issue here relates to whether there is misrepresentation Misrepresentation is a representation that is not true To be actionable 1 representation that has turned out to be false has to be a statement of existing fact or past event 2 Misrepresentation must have induced the formation of contract Statement of Opinion not a statement of fact or past event no misrepresentation Bisset v Wilkinson 1927 Court held that maker was just giving his opinion and not stating a positive fact EXCEPTION Maker did not believe in the truth of the opinion Smith v Land and House Property Corporation 1884 Statement of future Intention not a statement of fact or past event no misrepresentation EXCEPTION Maker did not actually believe in the statement of future intention Edgington v Fitzmaurice 1885 Silence Keeping quiet does not amount to a misrepresentation Keates v Lord Cadogan 1851 EXCEPTIONS Silence amount to misrepresentation a If a half truth is offered Dimmock v Hallett 1866 Vendor make the purchase sound like a good investment by saying that the land was tenanted but did not disclose tenant had given notice to quit b If maker realises the statement is not true before the contract is made With v O Flanagan 1936 c In contract where there is a fiduciary duty Inducement Misrepresentation must have induced the formation of contract However misrepresentation need not be the sole factor that induces the formation of the contract Edgington v Fitzmaurice 1885 Plaintiff was induced to enter into a contract because of a false statement as well as his erroneous belief However if it can be proved that there was no reliance on the false statement given by the maker there would be no inducement Smith v Chadwick 1884 Plaintiff admitted in cross examination that he was in no way in uenced by it Attwood v Small 1838 If person relying on the information is given an opportunity to verify the truth of the statement but he does not make use of that opportunity it would appear that does not deprive him of his right to sue for misrepresentation Redgrave v Hurd 1881 Types of misrepresentation a Frauduent b Negligent c Innocent Rescission Terminating the contract and returning the parties to the position they were before the contract Criteria a Affirmation of contract b Lapse of reasonable time Leaf v International Galleries 1950 c Restitutio in integrum impossible Physically impossible to go back to original position d Third party rights involved Duress 1 Was the innocent party left with no choice 2 Did the innocent party agree under protest 3 Was there lack of good faith on the part of the party exercising the pressure Atlas Express Ltd v Kafco Ltd 1989 No other alternative sources of transport Agreed to increase rate after objecting to it If innocent party affirms the contract he may lose his right to rescind the contract North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd 1979 Undue In uence Consent has been obtained by unacceptable means Inche Noriah v Shaik Allie bin Omar 1929 Plaintiff totally dependent on nephew Nephew somehow managed to get her to transfer her properties to him Note The party alleging undue in uence has to prove it Susilawati v American Express Bank Ltd 2008 No undue in uence Mistake 1 Mistake must be shared by both parties for it not to be enforceable However unilateral mistake may suffice provided the other party is aware of the mistake Hartog v Colin amp Shields 1939 Chwee Kin Keong v Digilandmallcom Pte Ltd 2005 Court held that appellants knew or ought to have known of the mistake and hence the responsdents were held not liable 2 Mistake must relate to something fundamental IMPORTANT Signed Documents or non est factum General rule when a person signs a document he is bound by what he signs unless he can establish a document which is signed is fundamentally different from what he thought he was signing b he was not negligent in not reading what he signed Saunders v Anglia Building Society 1 971 Court held that it could not be done as document she thought she was signing and the document she actually signed was not fundamentally different Goh Jong Cheng v MB Melwani 1991 Document she thought she was signing was totally different from what she actually signed and she could not have read the document court held that the transaction could be set aside on grounds of mistake Contract Law Termination of a Contract A contract once formed can come to an end in one of four ways a b c d Performance Agreement Repudiatory or Fundamental Breach Frustration Performance It must be noted even if the contract is completed if it turns out that there is some breach the innocent party has the right to bring an action for breach of contract If a party to the contract has not competely performed his obligations under the contract he cannot seek any payment from the other party unless there is substantial performance divisible contracts prevented performance acceptance of partial performance or Apportionment Act Cutter v Powell 1975 Cutter died while working on a sea journey Cutter s widow sued Powell for wages Court held that as payment was conditional on the voyage being completed and since the voyage was not completed the payment was not due Ocean Projects Inc v Ultatech Pte Ltd 1 994 Defendants were engaged to transport the goods from Houston to Dumai by ship They loaded the goods from Houston but due to some reason unloaded them in Singapore without going to Dumai Court held that defendants were not entitled to any payment for shipping the goods from Houston to Singapore EXCEPTIONS a b c d Substantial Performance If there is no complete performance but there is substantial performance the party performing may nonetheless be able to claim the contract price less the cost of making good any omissions or defects in execution Hoenig v Isaacs 1952 However if the obligation under the contract is an entire one even if there is substantial performance it may not be possible to make a claim Divisible Contracts Prevented Performance If one party has begun performing his obligations but has been prevented by the other from continuing the party who has performed part of the contract may nonetheless be entitled to payment on a quantum meruit basis Planche v Colbum 1831 Acceptance of partial performance If one party has not completetly performed his obligations and the other party by words or actions intimates that he accepts the incomplete performance the party who has not completely performed the contract may nonetheless be able to claim on a quantum meruit basis HOWEVER no acceptance if the other party to the contract has no choice but to accept the incomplete performance Sumpter v Hedges 1898 Sumpter was engaged by Hedges to construct a structure on Hedges s land Sumpter failed to complete job but sued for value of work done The court held that he need not be paid as Hedges had no choice but to accept the partially completed structure e Apportionment Act Section 3 of the Apportionment Act provides that rents annuities dividends and other periodical payments in the nature of income shall be considered as accruing from day to day and shall be apportionable in respect of time accordingly Agreement Original contract can provide that the contract would automatically come to an end after the happening of a particular event May also be implied in the original agreement itself that the parties have a right to terminate the contract without having to give any reason Parties may subsequently agree to terminate the contract It is like making a new agreement and so all the elements of contract must be present IMP39I If the new agreement to terminate is not under seal or deed there is a need for consideration If one party has completely performed his obligations and the other has not and then the parties agree to terminate the contract there would be a problem with consideration New agreement may be invalid unless the new agreement is under seal or deed or it is possible to invoke the doctrine of promissory estoppel or apply the principles laid down in Williams v Roffrey Variation of contract Repudiatog or fundamental breach Repudiation occurs when one party by words or action intimates to the other that he no longer intends to be bound by the contract actual or anticipatory In anticipatory breach the innocent party may institute an action immediately if he so wishes and does not have to wait for the commencement date of the contract Hochester v De La Tour 1853 Defendant agreed to engage plaintiff as a courier on a tour which was to commence on 1St June 1 1th May the defendant informed the plaintiff his services was no longer required Plaintiff instituted an action agaisnst the defendant before 1st June Fundamental breach occurs when one party without expressly or implicitly repudiating the contract commits a fundamental breach of the contract such as a breach of condition Note If there is a repudiatory or fundamental breach it is not compulsory for the innocent party to terminate the contract He can either terminate or decide to keep the contract alive and affirm it If the innocent party decides to keep the contract alive then it is kept alive with all the ensuing consequences Avery v Bowden 1855 The court held that though there was a repudiatory breach by the defendants the plaintiff by his conduct had kept the contract alive and subsequently that contract was frustrated and so the defendants were not liable Frustration Frustration is the occurrence of an unexpected event by third parties beyond the control of the parties after making but before completion of the contract which makes further performance of the contract either illegal impossible or radically different from what was originally envisaged by the parties a b Illegality Fribrosa Spolka Ackcyina v Fairbairn Lawson Combe Barbour Ltd 1 943 Contract od sale of machinery to be shipped to Gdynia Port was subsequenty occupied by enemies during Second World War Against public interest to have commercial links with an enemy in times of war court held that contract was frustrated Denny Mott amp Dickinson v James B Fraser amp Co Ltd 1944 Contract for sale of timber was frustrated by a wartime prohibition against dealing in those types of good Impossibility 1 Subject matter of contract destroyed before completion of contract Taylor v Caldwell 1863 Plaintiff hired from defendant a music hall for series of concert After making of contract and before the date of the first performance hall was destroyed by fire It was held that contract was discharged by frustration and hence the defendant was not liable for the losses incurred by the plaintiff 2 Person who is to provide the services is unable to do so as a result of death or personal incapacity Condor v The Barron Knights Ltd 1 966 Drummer who was required to perform on seven nights in a week fell ill so that he was only able to perform for a maximum of 4 nights 3 Contract states that it must be fulfiled in a particular manner and that becomes impossible Nicholl amp Knight v Ashton Edrige amp Co 1901 Goods were to be shipped in a particular ship in Jan Ship went aground and so it was impossible to ship the goods in that ship in January However if the method stated in the contract is not exclusive or mandatory or if the contract does not state any method and there are alternative methods contract may not be frustrated Tsakiroglou amp Co Ltd v Noblee and Thorl GmbH 1962 Contract for the sale of groundnuts to be shipped to Hamburg After contract was made Suez Canal was closed Alternative was to ship through Cape of Good Hope Court held that the contract to ship was not frustrated as there was still an alternative route available Similary seller is only to get goods from a particular source and that source fails contract may be frustrated However if the source is not mandatory or if the contract does not mention any source contract may not be frustrated Blackburn Bobbin Co Ltd v TW Allen Ltd 1918 c Radically different from what was originally envisaged If contract can only be performed in a way that is radically different from what was orginally envisaged by the parties that may result in frustration If a contract is entered into for a particular purpose and that purpose is no longer available if both parties understand that purpose to be the very basis of the contract there might be frustration Krell v Henry 1903 If one party entered into the contract for a particular purpose and that purpose is no longer attainable the contract will not be frustrated Labour shortages or price increases does not make contract radically different Tsakiroglou amp Co Ltd v Noblee and Thorl GmbH 1962 Though it cost nearly double the amount of money to make shipment through Cape of Good Hope court held that did not frustrate the contract Davis Contractors Ltd v Fareham UDC 1956 Contract was not frustrated by labour shortages and increase in costs Glahe International Expo AG v ACS Computer Pte Ltd 1 999 New import duties and an unfavourable exchange rate which made the contract less profitable did not frustrate the contract IMP39I If the cost increases are so extreme as to be astronomical then there could be frustration Foreseeability If the parties foresaw a particular event or could have reasonably foreseen that a particular event would occur and nonetheless decided to go ahead with the contract there will not frustration of contract Glahe International Expo v ACS Computer Pte Ltd 1 999 Self induced frustration If the frustrating event has been brought about because of the conduct of one of the parties frustration would be self induced and hence frustration cannot be sucessfully raised Maritime National Fish Ltd v Ocean Trawlers Ltd 1935 Court held that it was the appellants own action of assigning the licences to their other vessels instead of to the vessel chartered from the respondents that caused the impossibility and so frustration was self induced J Lauritzen AS v Wijsmuller BV The Super Servant Two 1990 Force Majeure Force Majeure clause relieves people of liability should unexpected event occur Under a force majeure clause it is possible for parties to provide that the contract is suspended for a state period of time instead of being immediately discharged Payments Section 22 of the Frustrated Contracts Act any sum paid before the frustrating event can be recovered and any sum payable after the frustrating event need not be paid However if one party incurred an expense for the purpose of performing the contract before the discharge or the other party obtained a value or benefit from the performance of the contract before the discharge of the contract section23 the court has the discretion to make an adjustment Contract Law Remedies for Breach of a Contract a Damages b Specific Performance 0 Injunctions Unliquidated Damages Unliquidated damages refer to damages that have not been pre agreed to by the parties in the contract and thus damages awarded or determined by the court To claim unliquidated damages it generally must be proved that some loss has been suffered If it cannot be proved that a loss has been suffered then the plaintiff would only be entitled to nominal damages a Aim of Unliquidated Damages To put plaintiff in the position he would be if contract had been properly performed General rule Can only claim the losses suffered by plaintiff not the profits made by defendant Teacher v Calder 1889 Court held that when a financier broke a contract to invest in a timber business and instead invested in a distellery plaintiff could only recover the losses he suffered and not the profits the financier made from investing in distillery Exception If the parties are in a fiduciary relationship there can be a duty to account for profits Attorney General v Blake 2001 Former employee of UK Secret Intelligence Service who had signed an undertaking not to divulge any official information gained as a result of his employment Subsequently he published an autobiography which contained some such information b Expectation or reliance loss Expectation loss refers to what the plaintiff would have expected to get if the contract had been properly performed such as loss of profits Losses may be claimed even though its speculative so long the plaintiff can prove that he had a chance of obtaining it he can sue for the loss of that chance The more the plaintiff manages to prove that he was likely to have attained the more he is likely to be able to claim Chaplin v Hicks 1 91 1 Actress entered into a contract with Hicks under which Hicks would interview Chaplin Hicks breached the agreement and did not interview Chaplin Reliance Loss Wasted expenditure incurred by the plaintiff prior to the breach Anglia Television Ltd v Reed 1972 Defendant broke contract to take a leading part in the plaintiffs television play The plaintiffs who had then to abandon the play sued him for wasted expenditure Note that both expectation loss and reliance loss can be claim if there is no over compensation or doube compensation When the expectation loss is calculated on a net basis 0 Incidental loss or consequential loss d Punitive damages 6 Punitive damages are damages that are inted to punish the defendant for his conduct Damages for injured feelings Losses due to distress disappointment loss of reputation or injury to feelings cannot be claimed Haron bin Mundir v Singapore Amateur Athletic Association 1 992 Exceptions If the very purpose of the contract were to provide pleasure relaxation or peace of mind Jarvis v Swan Tours Ltd 1973 It would suffice if providing pleasure relaxation or peace of mind was a major or important aspect of the contract Farley v Skinner 2002 Limitations on right to claim unliquidated damages Remoteness If the damages are considered too remote they cannot be claimed Defendant cannot be answered for every conceivable loss that has ensued Test for remoteness Hadley v Baxendale 1854 1 Damages would not be too remote if they arose naturally Damages would be considered to have arisen naturally if in the usual course of things such damages would have been incurred 2 If the losses did not arise normally it would be exceptional loss Exceptional loss can be claimed provided it was within the contemplation of the parties at the time of the contract Hadley v Baxendale 1854 Court held that the loss was not a natural or usual loss as in that particular industry it was not common for mills to remain idle as mills would usually have spare shafts Victoria Laundry Windsor Ltd v Newman Industries Ltd 1 949 Defendants sold a boiler to the plaintiffs knowing that they needed it for immediate use in their laundry business Boiler was delivered some five months late Court held that normal loss was exceptional loss and as it was not within the contemplation of the parties at the time of the contract it could not be claimed Mitigation The party claiming damages must have taken reasonable stes to minimise his loss A business should always mitigate first to minimize losses because you may not be guaranteed that you will win the legal case which may take a long time and alot of money Burden of proof is on the party in breach to establish that the party claiming damages failed to mitigate Brace v Calder 1895 Plaintiff was dismissed by his employers but offered immediate re engagement on the sames terms and conditions as before He refused the offer and instead sue to recover the salary he would have received Court held that plaintiff should have mitigated his loss by accepting the employer s reasonable offer of re employment Holciim Singapore Pte Ltd v Kwang Yong Construction Pte Ltd 2009 Plaintiff could not supply concrete to the defendant because indonesia suddenly introduced a sand ban but the defendant not the plaintiff could have got alternative sand supplies from the governement stockpiles as it was a public project No mitigation Causation If the plaintiffs loss has not been caused by the defendant s breach then it clearly cannot be claimed Liquidated Damages Liquidated damages are damages that have been pre agreed to by the parties in the contract By pre agreeing to damages once a breach has occurred a quick claim can be made without having to go to court Basic rule If the sum stated in the contract can be considered to be a genuine pre estimate of the loss it will be binding on the parties If the sum is not a genuine pre estimate and has been introduced to threaten the other party into performance it would be considered a penalty and would be generally unenforceable Genuine pre estimate Whether the sum is extravagant or unconscionable compared to the greatest loss that can possible ow from the breach Whether a single sum is payable regardless of extent of breach Dunlap Pneumatic Tyre Co Ltd v New Garage amp Motor Co Ltd 1915 Genuine pre estimate Ford Motor Co v Armstrong 1 91 5 For any of the breaches they agreed to pay 250 The court held that considering the amount of money and the fact that a single sum was payable regardless of the extent of breach the clause was not a genuine pre estimate Note Once a clause is declared to be a genuine pre estimate by the court only what is stated in the clause can be recovered and not the actual loss Cellulose Acetate Silk Co Ltd v Widnes Foundry Ltd 1 933 Actual loss was 6000 Court held that as the clause was a genuine pre estimate Silk Co was only entitled to 20 per week or 600 in total as agreed If it is a penalty and it is greater than the actual loss then only the actual loss can be claimed Deposits ad Part Payments 1 Person who made the payment breached the contract a b 2 Deposit required as a guarantee for performance it will generally be forfeited unless contract states otherwise or unless the amount of deposit is excessive Innocent party who suffers damages over and above the amount of deposit may make a claim for those damages Triangle Auto Pte Ltd v Zheng Zi Construction Pte Ltd 2001 Part payment or advanced payment Refundable unless contract states otherwise But innocent party can still sue the party in breach for damages suffered Lee Chee Wei v Tan Hor Peow Victor 2007 Instalment was held as a part payment Person who collects the payment breached the contract Innocent party who has made the payment may be able to sue him for the breach and claim for damages and the damages he has suffered include the deposit or part payment paid Specifc Performance An order of court requiring the party in breach to perform the contractual obligations However it is not as of right and it is a discretionary remedy a Damages are adequate If damages are adequate courts may not grand an order for specific performance Lee Chee Wei v Tan Hor Peow Victor 2007 b Mutuality c Supervision An order of specific performance would not be granted if the continuous or proper performance of the contract would require constant supervision by the courts d Contracts of personal service Not be granted in contracts of personal service Injunctions Injuction is a court order forcing a party to the contract to observe a negative covenant Warner Brothers Pictures Inc v Nelson 1 93 7 Restitution Based on law of restitution concerned With unjust enrichment Limitation of Actions Limitation Act General Rule Section 6 provides or Contractual actions the claim has to be made Within six years from the date the course of action accrued In the case of fraud or mistake siX years begins from the date the plaintiff discovers the fraud or mistake or could have discovered them With reasonable diligence Section 29 If there is an unreasonable delay in seeking remedies possibility that they may not be granted Doctrine of laches Tay Joo Sing v Ku Yu Sang 1994 Law of Sale of Goods Section 13 Provides that where there is a contract for the sale of goods by description it is an implied term that the goods will correspond with the description If goods were ordered by merely looking at a catalogue or an advertisement that might be a contract for the sale of goods by description Section 133 states that a sale of goods does not cease to be a sale by description just because the goods are exposed for sale inspection and selected by the buyer Beale v Taylor 1967 Plaintiff inspected the car before he bought it later discovered that the vehicle consisted of a rear half of a1961 Herald which had been welded to the front half of an earlier model Court held that even though the plaintiff had inspected the care it could nonetheless be a contract of sale by description Buyer must have relied on the description Harlington amp Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd 1 991 Court held that section 13 was not breached as the buyer of the painting did not rely on the seller s description rather he relied on his own judgment If Section 12 were breached the buyer would have to right to repudiate the contract reject the goods and sue for damages Section 14 Only applied when the seller is selling in the course of business a Section 142 Section 142 states that when the seller is selling in the course of business it is an implied term that goods supplied under the contract will be of satisfactory quality Section 142A states that goods would be deemed to be satisfactory if a reasonable person would regard the goods as satisfactory considering the description price and all other relevant circumstances Natonals Foods Ltd v Pars Ram Brothers Pte Ltd 2007 Ginger slices which were heavily contaminated with mould had high moisture levels high ash content and were very dirty and full of dust Note Small defects render the good unsatisfactory Rogers v Parish Scarborough Ltd 1 987 Brand new car which turned out to be faulty and there were some defects in the body work Section142B 1 Appearance and Finish 2 Freedom from minor defects 3 Safety 4 Durability Section 142 also extends to packaging Geddling v Marsh 1920 Bottle of mineral water exploded though nothing was wrong with the water Where many goods are purchased all the goods must be of satisfactory quality Jackson v Rotax Motor and Cycle Co 1910 Large quantity of horns Court held that all the goods supplied must pass the test under section 142 and hence the buyer was entitled to reject the whole lot Exception Section 142C 1 Defects were drawn to the buyer s attention before contract was made 2 Buyer examined the goods before the contract and that examination ought to have revealed the defects Note Buyer is under no duty to examine the goods But if he does the question is whether someone else carrying out a similar examination would have discovered the defect b Section 143 0 Seller is selling in the course of business buyer expressly or by implication makes known to the seller any particular purpose for which the goods are being bought there is an implied term that the goods must be reasonably fit for purpose Grant v Australian Knitting Mills Ltd 1 936 Buyer bought a pair of underpants and developed a rash that turned into dermatitis Court held there was a breach of 142 and 143 as purpose was implied National Foods Ltd v Pars Ram Brothers Pte Ltd If buyer wants the goods for a particular purpose that is not obvious he should make it known to the seller Griffits v Peter Conway Ltd 1 939 Buyer bought a coat had abnormally sensitive skin and developed dermatitis upon wearing the coat Court held that 143 was not breached as buyer did not expressly inform buyer Section 143 does not apply if the buyer does not rely or if it is unreasonable for the buyer to rely on the seller s skill and judgment Section 15 Contract of sale by sample it is implied that the bulk will correspond with the sample in quality Ceramic Brickworkds S Pte Ltd v Asia Tech Construction amp Engineering Pte Ltd 1 996 Loss of right to reject Section 35 Buyer deemed to have accepted goods if he does any act in relation to the goods which is inconsistent with the ownership of the seller or if he intimated to the seller that he has so accepted the goods or if he keeps the goods for more than a reasonable period of time without informing the seller that he has rejected them Section 15A non consumer sales if the breach of 13 14 15 is so slight that it would be unreasonable for the buyer to reject the goods then he cannot do so and can only sue for damages Note wrongful use negligence use does not breach 142 Excluding liability imposed by Sale of Goods Act Section 62 provides that in consumer sales any attempt to exclude liability for breach of 13 14 15 would be invalid However Section 63 provides that in non consumer sales liability for breach of Section 13 14 15 may be excluded if it is reasonable IMPI Darwish M K F Al Gobaishi v House of Hung Pte Ltd If it is under sale of goods act non consumer sales court has power to overide this clause if there is a breach in 131415 Liability of Manufacturer and others 1 2 Retailer would be able to sue manufacturer Britestone Pte Ltd v Smith amp Associates Far East Ltd 2007 Consumer may directly sue manufactuer a There is guarantee or warranty b Physical injury or death as a result of negligence Bring in manufacturer owes consumers a duty of care Donoghue v Stevenson 1932 Page 300 c there is collateral or indirect contract Note Consumer sue retailer for personal injury loss Godley v Perry 1 960 Law of Agency Agent Principal Relationship An agent is a person Who typicallys acts on behalf of another Duties of the agent 1 2 3 4 5 Duty to follow instructions Agent is obliged to act in accordance With the instructions given by the principal Turpin v Bilton 1843 Betram Armstrong amp Co v Godfray 1830 Exceptions Impossible or illegal to carry out Duty to act With due care and skill Keppel v Wheeler 1927 Duty to account Delegation of duty Duty not to delegate unless it does not involve confidential matters or it is common in the industry to delegate or if the principal at the beginning of the agency relationship is aware that the agent is going to delegate Fiduciary duties Duty to not place himself in a position of con ict of interest no secret profits Principal Third Party Relationship Principal is only bound in situations Where the agent has 1 Actual or 2 Apparent authority Agent Third Party Relationship Breach of warranty of authority Law of Torts Tort of Negligence Does not have to be a contract between the parties but 4 factors must be established This is an issue on the liability in negligence of Always Accurate to the banks Negligence refers to carelessness In order to be liable under the tort of negligence it must be proved that 1 The defendant owed the plaintiff a duty of care 2 the defendant breached that duty of care 3 the defendant s breach caused the plaintiffs loss and 4 that loss is not too remote If any one element is missing there will be no liability in negligence a b c d a Duty of Care Defendant breach duty of care Causation Remoteness of loss Duty of care Plaintiff has the duty to establish that defendant owes him a duty of care Neighbour s principle Must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour Donoghue v Stevenson 1932 A bought a bottle of ginger beer from a retailer for her friend Her friend drank it only to discover the remains of a decomposed snail at the bottom of bottle Friend could not sue retailer Thus she sought to sue the manufacturer of giner beer Court held that the manufacturer owe dher a duty of care Test for duty of care Two Stage Test Whether factually speaking it was reasonably foreseeable that the defendant s action or omission could cause damage to the plaintiff a b Close and proximate relationship between the parties Baurhill v Young 1943 Young was negligently riding a motorcycle and collided into a car He was fatally injured Baurhill was at the scene saw the blood remaining from the crash Later on she gave birth to a stillborn child claimed that she had suffered nervous shock stress and loss due to Young Court held that they did not had a close and proximate relationship hence young do not owed a duty of care to Baurhill Policy considerations which negate the finding of a duty of care Marc Rich amp Co v Bishop Rock Marine Co Ltd 1996 Marine classification societies were non profit organisations that act in public interest oto promote the welfare of people and property at sea Faced with possibility of litigation such societies could just refuse to carry out urgent or problematic inspections and that would not be in the interest of the public Hill v Chief Constable of West Yorkshire 1989 In this case there is only 1 victim hence there is no public policy consideration Negligent mistatements 1 Liability can arise over a negligent misstatement depending 2 a whether it was given over social occasion or formal one b whether it was given gratuitously or for the payment of a fee c whether it was given by a professional or by a person who held himself out as having knowledge or skill or a person who voluntarily assumed responsibility d whether the person making the statement knew there would be reliance e whether there was actual reliance on the statement Hedley Byrne amp Co Ltd v Heller amp Partners Ltd 1 964 Plaintiffs got their bankers to get a reference about Easipower s credit worthiness from Easipower s bankers who were the defendants Defendant gave favourable references and plaintiffs relied on the references Easipower then went into liquidation It was possible for liability to arise over negligent mistatement but defendants had a clause excluding their liabilty prior to unfair contract act Exception Possbility of unlimited liability Caparo Industries plc v Dickman 1 990 Defendants audited account of a company known as Fidelity Caparo bought shares in Fidelity and sucessfully launch a takeover bid However there was an error in the accounts in that it showed a huge profit when in fact there was a loss Court held that even though it was foreseeable there was not a sufficient degree of proximity between the parties and so there was no duty of care Unlimited liability if the accountants were held to have owed a duty of care to all investors and shareholders Conditions for sufficient degree of proximity before liability for a negligent mistatement a Defendant must know the purpose for which the advice is required b Defendant must know that the advice wiill be communicated to the plaintiff either specifically or as a member of an ascertainable class c Defendant must know that the plaintiff is likely to rely on the information d Plaintiff must have relied on the information to his detriment Smith v Eric S Bush 1989 Surveyors defendant enegaged by the mortagees to do a survey of plaintiffs house All conditions above fulfiled there was a close and proximite relationship There is only 1 victim hence there is no public policy consideration Pure economic loss Issue Economic loss that ows from a negligent mistatement not accompanied by physical injury or property damage Spartan Steel amp Alloys Ltd v Martin amp Co Contractors Ltd 1973 Defendants negligently cut off the power supply leading to the plaintiffs steelworks As a result certain materials in the plaintiffs furnace solidifed and became unusable for the intended purpose Court held that plaintiffs could sue for loss of those materials and for the loss of profits that would have been made if those materials had not solidified Court however do not allowed plaitntiffs to sue for loss of profit arising from the inability to place four more batches of materials in the furnace If pure economic loss not accompanied by physical injury or property damage was allowed that could lead to unlimited liability However in Singapore Even if there is no physical injury or property damage there can be duty of care in respect of pure economic loss provided there is very close proximity between the parties and it is not a case of unlimited liability RSP Architects Planners amp Engineers v Ocean Front Pte Ltd 1 996 b Breach of duty Blyth v Birminham Waterworks 1856 omission to do something which a reasonable man would do or doing something which a prudent and reasonable man would not do BOLAM Test What another person with a similar skill or knowledge would have done in the circumstantces Phillips v William Whitely Ltd 1939 The standard to be applied was that of another reasonable jeweller and not that of a reasonable surgeon In determining what a reasonable person would or would not have done the court might have to embark on a balance act weighing and balancing many factors such as 1 likelihood of danger and the severity of the danger if it results 2 cost of averting the danger 1 Likelihood of danager and severit of danger Bolton v Stone 1951 Likelihood of injury was so slight the court held that the defendants had not breached the duty of care Paris v Stepney Borough Council 1951 Defendants employed the plaintiff who had lost one eye As a result of this work with defendants he lost the use of the other eye Since there was a serious risk to the plaintiff the defendants ought to have provided him with goggles and since they did not they were held to have breached their duty of care 2 balanced with cost of averting the danger Latimer v AEC Ltd 1 953 Defendants factory was ooded and the defendants spread sawdust to prevent employees from slipping Nonetheless plaintiff employee fell and injured himself Since there was nothing else the defendants could have done short of closing the factory which would have been too costly and considering the fact that the risk of injury was slight the court held that the defendants had not breached their duty of care Important Res Ipsa Loquitur Can be raised if the thing causing the damage or accident was under the control of the defendant and the damage or accident is one that does not ordinarily occur unless there is negligence on the part of the defendant Unless defendant manages to show that there could be some other reasonable explanation for the accident besides his negligence or unless the defendant manages to show he had taken all reasonable care Scott v London and St Katherin Docks Co 1865 Plaintiff was in defendant s warehouse when siX bags of sugar that were being moved by means of a crane fell on hm Ward v Tesco Stores Ltd 1 976 Plaintiff was injured when she slipped on some yoghurt that was spilt on the oor in the supermarket c Causation Defendant s breach has caused the plaintiffs loss Barnett v Chelsea and Kensington Hospital Management Committee 1969 Plaintiffs husband came to the defendant s hospital complaining of vomiting He was told to go home and consult his own doctor later which amounted to breach of duty on the party of defendant Later that day the plaintiffs husband died or arsenic posioning It was established that even if the hospital had given him treatment the chances of being able to save his life were very slim Causation was not established However there may be liability if there is a new intervening act which breaks the chain of causation d Remoteness Test for determining whether the loss is too remote is generally whether the loss is reasonably foreseeable Wagon Mound 1 1961 Damages were not reasonably foreseeable Man Mohan Singh v Zurich Insurance 2008 Plaintiffs had lost their only children due to the negligent driving of the defendant court held that the defendant was not liable for cost of fertility treatment undertaken by the couple to have other children as that among other things was not reasonably foreseeable and hence too remote Egg skull or thin skull rule Deefenedant has to take the plaintiff as he finds him Smith v Leech Brain amp Co 1962 Defences to action in negligence a Contributory negligence If plaintiff also contributed to the loss the damages he can claim from the defendant mau be reduced pursuant to section 31 of the Contributory Negligence and Personal Injuries Act Sayers v Harlow UDC 1 958 b 0 Planassure PAC v Gaelic Inns Pte Ltd 2007 Though auditors were held liable to the company for negligence in not detect a fraud committed by manager company was also held to be contributory negligent in not detecting the fraud and damages were reduced by 50 per cent Voluntary assumption of risk Morris v Murray 1991 Plaintiff agreed to the defendant s proposal to take him on a plane ride even though the defendant was very drunk Exclusion of liability By clause Clause must be judged under the Unfair Contract Terms Act VERY IMPORTANT But if it is about manufacturer then talk about law of tort first Donoghue V Stevenson In the alternative Miss A can also sue the manufactuer under the Sale of Goods Act Breach of Section 142 or 143 Conclusion Victim can only recover one set of damages general or special despite case brought up based on 2 tort of negligence and sale of goods act Tort of Passing off 3 conditions to be established as stated in Reckitt amp Coleman Products v Borden Inc 1990 a Goodwill or reputation attached to business b Misrepresentation by the defendant that the goods or services offered by him are the same as those offered by the plaintiff c He has suffered or is likely to suffer loss a Goodwill CDL Hotels International Ltd v Pontiac Marina Pte Ltd b Misrepresentation defendant tries to use plaintiffs name logo trademark White Hudson amp Co Ltd v Asian Organisation Ltd 1964 However if plaintiffs business name is merely descriptive of his products and the defendant takes steps to distinguish his products unlikely to be misrepresentation Lifestyle 1 99 Pte Ltd v S1 99 Ltd 2000 Nippon Paint Singapore Co Pte ltd v ICI Paint Singapore Pte Ltd c Loss CDL Hotels International Ltd v Pontiac Marina Pte Ltd Note If passing off is established injunction may be obtained Damages or account for profit may also be obtained Tort of Vicarious Liability 2 conditions must be satisfied before an employer can be made liable 1 Employee must be legally at fault 2 The actions that give rise to legal liability on the part of the employee must have taken place in the course of his employment Lister v Hesley Hall Ltd 2001 Test To see if there is a close connection between nature of the employment and the employee s wrongdoing Koh Get Kee v Low Beng Hui 1987 Off duty police accidentally shot a friend Employer was held liable Samin v Government of Malaysia Employer were not vicariously liable If an employer is held vicariously liable he has a right in turn to institute an action against his employee to get an indemnity or reimbursement He may also be able to terminate the contract of employment However employers engaging independent contractor is not vicariously liable
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