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LGST 101 Business Law week 3 notes

by: Catherine Notetaker

LGST 101 Business Law week 3 notes LGST 101

Marketplace > Singapore Management University > Law and Legal Studies > LGST 101 > LGST 101 Business Law week 3 notes
Catherine Notetaker

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About this Document

This template on terms of contract that can be used in the open book exam. It includes all the relevant cases that can be applied in different scenarios and is written in a structure suitable for a...
Business Law
Devathas Satianathan
Class Notes
business law, LGST 101
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This 11 page Class Notes was uploaded by Catherine Notetaker on Saturday February 27, 2016. The Class Notes belongs to LGST 101 at Singapore Management University taught by Devathas Satianathan in Spring 2016. Since its upload, it has received 202 views. For similar materials see Business Law in Law and Legal Studies at Singapore Management University.


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Date Created: 02/27/16
TERMS OF CONTRACT General Issue Description Statute/Case Description Rule/Excepti on Issue 1: Is the statement a puff, representation or a term? Puf Pufs are imprecise statements that tend to be exaggerated. This can be supported by the Koh Wee Meng v Trans Eurokars (2014) case where the court held that the description of the car “whisper-quiet interior” and “magic carpet ride” was a mere puf. If not puff: In this case, the statement is not a puf because details such as _______ are given. Representatio Representations are statements n which have induced the recipient to enter into the contract. Since the representee was influenced by the statement to enter into a contract, it can be considered a representation. Term The first test is “Qualification, Ecay v Godfey [1947] which refers to whether or not there was an invitation for self- Facts: During sale of boat, verification”. In this case, there seller told buyer that there was no invitation to verify the truth were no defects but asked of the statement made by the him to inspect it himself. representator, which means it is Buyer did not. most likely a term of the contract. Court: Statement on no This can be supported by the Ecay defect was a representation v Godfey (1947) case. only and not a term. The second test is “whether it is Bannerman v White [1861] emphasised as important” (or if the quality of the good is important Facts: Buyer asked seller for example in the trade of gems) If whether the hops for sale it appears to the court that the had been treated with statement is so important that the sulphur. Buyer emphasized representee would not have entered that he would not even into the contract, it is a term. This bother to ask the price if it can be supported by the had. Seller assured buyer Bannerman v White (1861) case. that it had not which turned out the false. Court: Assurance of hops being freed from sulphur was a term. The third test is “the timing of the Routledge v McKay [1954] statement”. The closer the statement made to the time the Facts: Seller of motorcycle contract is entered, the more likely consulted registration book it is a term. This is supported by the and told buyer the Routledge v Mckay (1954) case motorcycle was a 1942 where the statement of the year of model. Turned out to be a the model was a representation and 1930 model. Contract not a term. In this case, the time signed one week later. interval between the point the Court: The statement of the statement was made and the point year of model was a of purchase is [short/long]. Hence, representation and not a there is a possibility of the term. statement being a [term/representation]. The fourth test is “special skill or Oscar Chess Ltd v Williams knowledge”. If the person [1957] receiving the statement is about the same or superior to the person Facts: Lay seller told the making the statement, it is more buyers, a hire-purchase firm, likely to be a representation, as that the car model was supported by the Oscar Chess Ltd v 1939. This turned out to be Williams (1957) case. In this case, false as someone had the representor does not have fraudulently altered the [more expertise/less expertise] than registration book. the representee because Court: Seller was not a car ___________. Thus, the statement is dealer and not in a position [more likely/less likely] to be a to make a warranty (term) representation. about the model year. Buyers had the technical knowledge to protect themselves. Issue 2: Does the Parol Evidence Rule apply? General Rule The Parol Evidence Rule, incorporated into the Singapore Law through the Singapore Evidence Act (1997) states that when a contract has been put into writing, either party may not bring in extrinsic evidence to show that certain terms need to be changed, added to or contradicted. Exception: In Evans v Andrea Merzario (1976), Exemption by Lord Denning said that “When a Collateral person gives a promise or an Contract assurance to another, intending that he should act on it by entering into a contract, and he does act on it by entering into the contract, we hold that it is binding.” In other words, when the representor gave the representee the assurance that the _______, with the intention that the representee should act on it and ______, and the representee did act on it and _______, the collateral contract between the representor and representee is binding, and runs parallel to the main contract. Exception: If a party can prove that the Exemption by contract was a result of Misrepresentat misrepresentation, then it may be a ion case to override the Parol Evidence Rule. Exception: The Parol Evidence Rule might not Pym v Campbell [1856] Exemption be applicable if there is extrinsic Court: Extrinsic evidence under evidence to show the contract has allowed to show that Common Law not come into existence or is no obligation in a written longer in operation. This can be agreement to buy shares in supported by the Pym v Campbell an invention was conditional (1856) case. upon the invention receiving Similarly, in this case, _________. third-party approval. Exception: A party can show by extrinsic Exemption by evidence that a mistake in a written mistake contract and prove proof what the contract should have read instead of its disputed term as shown in the case Joscelyne v Nissen (1970), where a daughter’s undertaking to pay utility bills, although not included in the written contract, was held enforceable. Similarly, in this case, ____________. Therefore, _________ should be held enforceable due to a _______ mistake made. Issue 3: What type of term is it? Condition Where the term goes to the root of Poussard v Spiers [1876] the contract and deals with an  Pf engaged to sing from obligation or statement of fact, the 28 Nov to 03 Dec absence of which would have  23 Nov: Pf fell ill persuaded the innocent party not to  Df hired a substitute for enter into the contract in the first complete engagement place, the term in question will be  4 Dec: Pf presented treated as a condition. This can be herself and df refused to supported by the Poussard v Spiers hire her Determining (1876) case. Court: Pf failure to appear on whether it was the first night was breach of a condition: By statute: Sales of goods act. contract S 12 (1) – implied condition as to title S 12 (5) – implied warranty that goods sold are free from any charge or encumbrances, and that the buyer will enjoy quiet possession S 13 – implied condition that goods must correspond with description S 14 – implied condition as to quality or fitness By parties: If the intentions of the parties show that they want the term to be a condition, the courts should give efect to it “… any term or terms of contract, which, fairly read, have the efect indicated, are sufficient”, as stated in the case Bunge Corp NY Tradax Export SA (1981) By court: If neither statute nor the parties have classified a term as a condition or a warranty, the courts will have to decide on the classification itself As stated in the case Bentsen v Taylor, Sons & Co (1893), the court stated that it has to look at the contract in light of the surrounding circumstances, and decide whether the intention of the parties will best be carried out by treating the promise as a warranty or a condition. Warranty If the term relates to a matter, the Bettini v Gye [1876] non-performance of which will not  Pf agreed to sing from 30 impair the substance of the bargain Mar expected by the innocent party, the  Pf fell ill and arrived on term will be regarded as a warranty. England only on 28 Mar This can be supported by the Bettini  Df rejected pf’s services v Gye (1876) case. and treated the contract as terminated If determined to be a warranty, the Court: Df has breached the Hong Kong Fir Approach should be contract. The rehearsals used. were not conditions but ancillary to the main purpose of the contract, which is the actual performance Innominate A new “hybrid” approach was Term developed under the Hong Kong Fir Shipping v Kawasaki (1962) case. It is possible for a term to be neither a condition nor a warranty and it depends on the nature and consequences of the breach. If the breach substantially deprives the innocent party of the whole benefit under the contract, then the breach would entitle the innocent party to terminate the contract. Otherwise, damages would be awarded. In the case Sports Connections Ptd Ltd v Deuter Sports GmbH (2009), the court held that the drop in sales did not deprive Deuter of substantial benefit and hence it was Deuter was not entitled to terminate the contract. Issue 4: Is it an implied term? If so, what type? Terms implied It must be so obvious as not to Shirlaw v Southern by fact – create any disagreement. If there Foundaries [1926] Officious are diferent possible answers, then Court: Court will imply a Bystander Test the term will not be implied. This term is it is satisfied that the can be supported by the Shirlaw v parties, if they had been Southern Foundaries (1926) case. asked by an officious bystander whether they would have included such a term as an express term, would say “Yes, of course.” Terms implied The term implied must be The Moorcock [1889] by fact – necessary to give business efficacy Facts: Df jetty owners Business to the contract. No term will be contracted to have the Pf’s Efficacy Test implied if the contract is efective boat dock at their jetty. Both without it. This can be supported by parties knew that at low tide, The Moorcock (1889) case. the boat would lie on the river bed. During low tide, the boat settled on hard ground and was damaged. Court: Implied term that the place was safe for the ship to rest without damage. This is to give business efficacy to the transaction that must have been intended by both parties. Terms implied Standard terms will be implied by William Morton v Muir by law law which are necessary and Brothers [1907] reasonable for a particular type of Court: If the condition is contract. This can be seen from such that every reasonable what Lord McLaren said in William man would want it for his Morton v Mui Brothers (1907) case. protection and no reasonable man on the other Other examples include the side would refuse it, then it Liverpool City Council v Irwin (1977) should be taken for granted and the Lister v Romford Ice & Cold in all contracts of that class. Storage (1957) cases. Liverpool City Council v Irwin In Cheah Phang Hock v Luzhou Bio- [1977] Chem Technology Ptd Ltd, it was Court: Court would imply a held that a general obligation of term that a landlord is under mutual trust and confidence was obligation to take reasonable necessary for the continuation of care of the common areas. the employment relationship unless otherwise stated Lister v Romford Ice & Cold Storage [1957] Court: Court would imply a term that an employee had to provide faithful service to employer and would have to indemnify his employer if the employee caused loss to the employer in the course of his employment. Terms implied Parties in a particular trade will be Hutton v Warren [1836] by custom bound by the customs of that trade Court: If it can be shown that if it is well-known, certain, doing business in a reasonable and legal (even if one particular community had a party is unaware of such customs). generally accepted custom This can be supported by the and anyone inquiring would Hutton v Warren (1836) case. be told about the custom, then the custom would bind the parties even if both were ignorant if its existence. Terms implied One example would be the Unfair Unfair Contract Terms Act – by statute Contract Terms Act. Implied terms: Section 12(1) - Implied term that the seller has the right to sell the goods Section 12(2) – Implied term that the goods are free from charges or encumbrances in favour of third parties Section 14(2) – Implied term that the goods are of satisfactory quality. Express terms An exclusion clause that forms part L’Estrange v Graucob (1934) by Signature of a signed contract is bound by the Facts: buyer signed a parties who signed the contract, contract to purchase a regardless of whether the contract machine which stated that has been read. This is concluded by any warranties for fitness of the case L’Estrange v Graucob machine were expressly (1934) excluded by agreement Ms L’Estrange signed. Held: Exclusion clause formed oart of the contract and even if it has not been read, since the contract is signed, all terms and clauses are efective. Express terms A term must be brought to the requiring notice of the other party before the reasonable contract is concluded. Factors notice include: Chapelton v Urban District Type of document: A term is not Council (1940). part of a contract if it is contained Facts: Chapelton hired 2 in an unsigned document where a deck chairs from the reasonable person would not be defendant at a beach. There expected to find contractual terms. was a notice near the stack of chairs that requested the This is clearly represented in the customers to obtain the case Chapelton v Urban District tickets from the attendant Council (1940). Similarly in this and retain them for case, the term was incorporated in inspection. C obtained the _________, which is not a contractual ticket without reading it. He document and no reasonable sat on the chair and it person would expect to find the collapsed. He sued. contractual terms written on it. Held: The ticket was not a terms since it is not a contractual document. Moreover, no reasonable person would expect to find a contractual term on the back of a ticket. In most cases, the ticket is received after the hirer sits on the Time of giving notice: The notice chair. must be given before or at the time of the contract – if given after the Olley v Marlborough Court contract was made, it is inefective. Hotel Ltd (1949) Plaintifs booked a hotel This is supported by the case Olley room. On arrival to their v Marlborough Court Hotel Ltd room, displayed on the (1949). In this case, since _________ which shows that the notice was bedroom door was a notice given only after the contract was exempting the defendants concluded, it cannot form part of from loss or damages to the contract. valuables unless handed to the management for safe keeping. A fur coat was stolen due to hotel’s negligence. Held: Since the exemption Adequacy of notice: Person clause was only drawn to the relying on clause must show that he attention of the plaintifs took reasonable steps to bring the after the contract was made, clause to the attention of the other it does not form part of the party – it must be sufficiently contract. conspicuous and legible, but there is no need to show that the injured Thompson v London, Midland party had notice of it. and Scottish Railway Co (1930) Sufficient notice given: Facts: Plaintif was illiterate Backing up this rule is the case and asked her niece to Thompson v London, Midland and purchase a train ticket for Scottish Railway Co (1930). Here, it her. On the ticket stated that was held that since sufficient notice the ticket was issued subject was given about the clause, it to conditions set out in the formed part of the contract, defendant’s timetable. whether or not it was read. Thompson sufered an injury and sued. Insufficient notice given: Held: reasonable sufficient In Jet Holdings Ltd v Cooper notice has been given. The Cameron (Singapore) Ptd Ltd ticket was a common form of (2005), where the exemption clause contractual document in this that the defendants wanted to reply case and hence the clause on was referred to in the notes of formed part of the contract. the sales quotation. It was held that there was inadequate notice as the standard clauses involved should have been fairly and reasonably brought to the plaintif’s notice, more so when the terms and conditions were not printed on the reverse of the quotation. Effect of clause: Onerous or unusual terms must be brought to the particular attention of the other party. If they are not highlighted in some way, they may be said not to have been brought to their reasonable notice. As supported in the case Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989), the unreasonable charges late returns of the transparency was not enforced because the plaintifs did not do what was necessary in bringing this term to the attention of the defendants. Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989) Incorporation A term can be incorporated based by previous on previous course of dealings course of between parties, even though it can dealings be shown that the clause may not have been read or noticed by the party. Sufficient number of dealings: In J Spurling Ltd v Bradshaw (1956), it was held that although the exemption clause was not brought to reasonable notice, the defendants knew from the numerous dealings that the landing account contained conditions. Hollier v Rambler Motors (AMC) Ltd (1972) Insufficient number of dealings: The plaintif repaired cars in In Hollier v Rambler Motors (AMC) the defendant’s garage 3 or Ltd (1972), the court held that there 4 times in the past 5 years. was insufficient course of dealings On 2 of the occasions, he for the exemption clause to be had signed but not read the incorporated into the oral contract containing the agreement. exemption clause. On the latest occasion there was an oral agreement and the car was damaged by fire caused by defendant’s negligence. The defendants argued that the exemption clause was incorporated in the oral agreement. Held: There were insufficient dealings for the exemption clause to be incorporated into the oral agreement.


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