Chapter 7: Offer and Acceptance

Contract
Terminology
“valid” contract is an agreement that satisfies all legal requirements.
Oral, by conduct Written
“void” contract is treated by law as nullity, never existed at all.
A contract is a legally binding agreement.
“unenforceable” contract is one that is valid and legally binding but cannot
Purpose: confident binding of exchanges
be enforced, eg, because of a provision of law. 4 Requirements for formation of Contract
Requirements of a valid contract includes offer, acceptance,
consideration and intention to create legal relations.

Offer Acceptance Consideration Intention to create legal relations

Expression of willingness by the offeror to
Offer must be communicated. enter into an agreement with the offeree. 3
Chapter 8
elements are (1) contains terms of exchange,
(2) indication of willingness to be bound, (3) to Performance is acceptance, so there’s
be bound upon acceptance by offeree Unilateral no need to communicate acceptance.
General Receipt Rule:
Carlill v Carbolic Smoke Ball
Acceptance must
Company
be communicated.
Bilateral Unilateral (through written, spoken Silence Cannot have acceptance by silence.
word or by conduct) Unless parties agree silence would be
Exchange for a promise Make to a grp or the world. prescribed mode of acceptance.
between 2 parties. Promise exchange for an act Unconditional Cross offer Felthouse v Bindley
Carlill v Carbolic Smoke Ball Company agreement to all (no acceptance by silence)
terms of the offer. Re Selectmore Ltd
No meeting of minds (acceptance by silence)
Invitation To Treat
Inviting recipient to make an offer or enter into Postal Acceptance Rule
negotiations, no intention to be bound yet. Acceptance takes place at time when letter of acceptance is posted.
Acceptance of Offer
-Advertisements (language has to be looked 2 conditions : Adans v Lindsell
into to determine if it is offer or ITT ) Exceptions - Postal acceptance must be expressly or impliedly authorized.
R1:adv reader may want to negiotiate further - Letter of acceptance must be properly stamped and addressed.
R2:seller may have limited no. of good
Same for inter adv ->customers are making offer. Ignorance of Offer
Exception: Carlil v Carbolic Smoke Ball Co Termination of Offer Cannot accept an offer of which he has no knowledge. R v Clarke
Motive of person is does not matter as long as he has knowledge of offer
- Display of goods for sale
Pharmaceutical Society of Great Britain v Boots Cash Chemists [1953]
R1:customers would not be unfairly bound once taken goods
Withdrawal Counter Offer Lapse of Time Failure of Condition Death
from shelves and would be able to change his mind
R2:shop might misquote price Must be communicated to Rejection of original offer Specified in contract If offeree knows of offeror’s death 
R3:goods might be out of stock the offeror before acceptance. Note: Counter offer(intro new (express time limit) or terminate
Can be express or
Communicated can be by tem) is not equal to request for reasonable time implied condition
- Auction sales If offeree do not know  offer stays
3rd party. Dickinson v Dodds for info (clarify what offer is)
Calls for bid – ITT unless for personal service
Bids by present – Offer WITHDRAWAL OF UNILATERAL CONTRACT
Fall of Hammer: Acceptance, however auction adv is not Offeror must take reasonable step to bring attention to withdrawal.
offer but “without reserve” means will sell to higher bidder If performance has begun:
no matter how long the bid is. (1) 2 Offer Approach – expressed offer can be withdraw before acceptance, implied offer not to withdraw the express offer if offeree has
begun performance with reasonable time. Daulia Ltd v Four Millbank Nominees Ltd
- Tenders (2) Compensation Approach – withdrawal before full performance of contract, subjected to compensate suitable sum for his trouble.
Chapter 8: Consideration and Intention to
Create Legal Relation Contract

Something of value in the eyes

Offer Acceptance
Chapter 7
“Benefit-Detriment”
Promisee confers a benefit on
the promisor in return for the
promisor’s promise.
Or
Incurs a detriment in return for
promisor’s promise.
Chappell & Co Ltd v Nestle Co
Ltd
Promissory Estoppel
Prevents a person from going back to his promise even if it is
not supported by consideration.
Central London Property Trust v High Tress House Ltd
4 (+1) Elements
Have existing legal relationship
Clear & Unequivocal promise
Consideration of the law given in exchange Intention to create legal relations
for another’s promise.
Social & Domestic Commercial
Agreements Agreements
Exchange Value
Presumption that parties Presumption that parties
do not intend to create a intend to create a legally
Consideration must be
legally enforceable enforceable agreement.
sufficient; need not be
Consideration Consideration Consideration adequate. agreement. Can be rebutted if there is
must be requested must not be of must move from Chappell & Co Ltd v Balfour v Balfour a honor clause that says
by promisor past promisee Nestle Co Ltd Can be rebutted if there that agreement is not a
formal and legal
Benefit conferred or Past consideration is Only the person who is clear evidence.
agreement.
detriment suffered must no consideration. furnish the consideration Merritt v Merritt
by the promisee must can enforce the promise.
be requested by the
Exception
promisor. Sufficient Insufficient
Combe v Combe Pao On v
Lau Yiu Long - Nominal value - Intangibles and Moral Obligations
- Forbearance to sue - Existing public duty
Act was done at
- Going beyond existing public duty
promisor’s request
(Glasbrook Bros v Glamorgan County
Council [1925])
Parties understood that the - Existing contractual duty owned to 3rd
act will be compensated party
- Going beyond existing contractual duty
Such payment would be
enforceable if it had been Existing Contractual Duty Owned to Promisor
promised in advance In Return for a Promise for More

Reliance on the promise and altered Insufficient: Stilk v Myrick

his position Traditional view is that such promise is generally not sufficient consideration.
Exceptions when promise is sufficient: Williams v Roffery Bros & Nicholls
Inequitable for promisor to go back - Give effect to commercial reality
on his promise - Promisor obtains “Practical Benefits”
It is not fair for the promisor to go back on In Return for a Promise for Less
Doctrine invoked as a shield, his works because the promisee has relied
not a sword on the promise and suffered a detriment. Pinnel’s Case: Part payment of a debt on the due date is not a good discharge of the
debt even on the creditor’s assurance/promise that it is, unless supported by
Periodic Payments consideration. (Refer to Promissory Estoppel)
Suspensive or Extinctive - not possible to recover former payments
- future payment is suspended, and may be revived upon reasonable notice
- justify by fact that promises were given in response to acute & temporary circumstances
- intend to be binding to while extenuating circumstances last
One-Off Payments
- creditor accepts a lesser sum in satisfaction of a larger debt
- ultimately depends on whether the creditor’s intention is to forgive the debt or merely allow
more time for repayment
 Chapter 10 & 11: Terms of Contract and Request to Verify  asked to get independent verification (representation)

Exemption Clause Importance of Statement  parties would not enter into contract without it
(greater emphasis suggests a term)
5 Guidelines to
Distinguishing Terms from Timing of Statement  statement made closer to contract, more likely to be a term
Pre-Contractual Representations Written statements  if agreement is put into writing, more likely to be term
Statements (Parol Evidence Rule)
Special Skill & Knowledge  statements made by a person who has special
knowledge, more likely to be term
Puffs Representations Terms
(Pg 264) Section 93 & 94 of Evidence Act: When parties have reduced contract to
Sales talk, no Statement that induce another party Mutual Promises: What Parol Evidence Rule writing, either party may not attempt to show by extrinsic evidence that the terms in
legal effect to enter into contract parties agree to form part of written contract must be changed, added to or contradicted.
contract Except:
Normal
exaggeration •S94(a): vitiating factors eg misrep,mistake etc
& •94(b): conditions precedent b4 k comes into existence
grandstanding •94(f): extrinsic evidence to aid in interpretation of written terms
True The existence of any separate oral agreement (as a warranty), as to any matter
that is part of False
contract Collateral Contract on which a document is silent and which is not inconsistent with its terms, may
negotiation, be proved; whether or not this provision applies, the court shall have regard to
Sue for
ex. Best beer the degree of formality of the document.
misrepresentation
in the world.
Express Implied
Can be either oral
Usage / Custom Statue Court
or written. Community has accepted Sales of Goods Act, etc
custom which binds parties
even if ignorant.
2 Approaches Condition Innominate Term Warranty Implied by Fact Implied by Law
Custom must be a usage Depends on parties’
to Differentiate Essential Term Contains features of sufficiently uniform and Objective test: Is it
subjective intention
Conditions (Important) essential & minor terms BREACH Minor Term accepted by relevant reasonable to imply such a
objectively ascertained.
& Warranties BREACH BREACH community.
term?
2 Test:
Implied to promote certainty
Condition – Warranty Approach Did Breach deprive the innocent party of substantially Sue for damages - Officious-Bystander Test
& give effect to important
- Determine if term is C or not by the whole benefit under the contract? only. - Business Efficiency Test
social policies.
discerning intention of parties Bettini v Gye
- Factors to decide: (inject terms that will Terms of employment, etc
terminate Sue for Yes No
(1) language of clause promote business Malik v Bank of Credit &
the damages Serious Minor
(2) nature & context efficiency) Commerce International SA
contract only. Consequence Consequences
(3) prior case precedent Sect 2 is for death and injury.(it is Moorcock
& sue for Poussard
4) term implied by statue for damages)
damages v Spires Step 1: Does UTCA apply?
Exemption Clause
Sect 3 is for breach of contract (not UCTA apply to contracts and torts with business liability.
If reveals that term is not C, move
Incorporation for negligence)
on to Hong Kong Fir approach. Step 2: Which Section to Apply?
Hong Kong Fir Approach By Signature  General rule that person signing the Construction UCTA apply to contracts and torts where there is business
UCTA (P309)
- Focus on nature and contract is bound by everything in the contract. (P294)Contra Proferentem Rule  If EC is liability. Only to unfair exemption clause, not all unfair
consequences of breach Exceptions: terms in contract
ambiguous, it will be construed narrowly/
- Hence, conclude that the term is a •Doctrine of non est factum strictly against the person seeking to rely upon Negligence Liability Contractual Liability
innominate term  consider •Misrepresentation to nature of signed document it to exclude his liability.
- - Contract with consumer or use of
circumstances whether the breach • Collateral contract may sometimes override written Death or personal injury  EC
has deprived innocent party of contract Cases of Negligence Liability not allowed. S2(1)
standard form contract 
substantially entire benefit of By Notice  Type of document, time of notice, - Other damages  EC subject to EC subject to Test of
contract. adequacy of notice, and effect of clause (P295) Test of Reasonableness S2(2) Reasonableness S3(1)(2)
By Previous Dealings  Hollier v Rambler Motors Ltd
(P301) Step 3: Apply Test of Reasonableness
Chapter 10 & 11: Terms of Contract and
Exemption Clause Chapter 3: Legal Processes and
Instituitions
Application of Unfair Contract Terms Act (UCTA) Doctrine of Judicial Precedent (Stare Decisis)
Purpose:
Step 3: Applying the Test of Reasonableness • Uniformity and consistency of decision

There are 2 test of reasonableness under Section 11 of the UCTA: • not to judge’s fancy
• for certainty
S 11(1): “In relation to a contract term, the requirement of reasonableness…is that the term • in respect for court hierarchy
shall have been a fair and reasonable one…having regard to the circumstances which were, Terminology
or ought reasonably to have been, known to or in the contemplation of the parties when the Ratio decidendi: the reason for the decision, ex, the
contract was made.” principle that ‘a man who commits a criminal act cannot
profit from the criminal act” is the ratio decidendi for the
S 11(2) refers to the Second Schedule which sets out Guidelines for Application of the decision of the judge to disallow recovery by X.

Reasonableness Test (for contracts falling under sections 6 & 7 e.g. sale of goods contracts)
Obiter dictum: made by the way, not directly applied to
arrive at the outcome in a case.
The Second Schedule lists the following as matters that may be relevant:
It would be more
(a) The strength of the bargaining positions of the parties relative to each other, taking into
reasonable for customer to
account (among other things) alternative means by which the customer’s requirements could have accept the EC if he is
have been meet; induced to it (given a
benefit to accept the EC).
(b) Whether the customer received an inducement to agree to the term, or in accepting it had
an opportunity of entering into a similar contract with other persons, but without having to
Applies to conditional EC.
accept a similar term; What this means is whether
(c) Whether the customer knew or ought reasonably to have known of the existence and the the conditional EC is
reasonable at the time the
extent of the term (having regard, among other things, to any custom of the trade and any contract was made.
previous course of dealing between parties);
(d) Where the term excludes or restricts any relevant liability if some condition is not complied If the customer places a
with, whether it was reasonable at the time of the contract to expect that compliance with special order, it would be
that condition would be practical; more reasonable for the
customer to accept the EC
(e) Whether the goods were manufactured, processed or adapted to the special order of the because of the additional
customer. “risk” involved in fulfilling
the special order.
 Chapter 14 and 15: Illegality (Restraint of Trade) and Duress
Legitimate Interest
of business
Employment k –
Trade secrets/contacts &
maintenance of stable workforce adequacy of consideration
Herbert Morris Limited v Saxelby
Sale of Business k - Goodwill
Nordenfelt v Maxim Nordenfelt
Guns & Ammunition Company
Ltd
Entire Clause
Illegality
Restraint of Trade
General Rule states that Restraint of
Trade is prima facie void, unless:
Thomas Cowan & Co Ltd v Orme
Reasonable in duration, Not against
area and scope Public Interest
Taking into consideration the •Freedom to trade
bargaining position and
•does not stifle healthy
competition,
Mason v Provident Clothing
& Supply Company Ltd •availability of rare skill and
knowledge
Purpose: to save a contract
which would otherwise be
Severance illegal or contrary to public
policy, by excising or cutting
away the illegal portion.
“Blue Pencil Test”
Run through and strike out
objectionable words, as long
as it does not alter the
meaning or mutilate the
covenant
Goldsoll v Goldman
Vitiating Factors
Contract becomes voidable if a party enters into contract under
Duress illegitimate threat to harm his economic interest
Economic Duress
Overborne Will Theory
Traditional Approach
Whether the victim is under such
extreme pressure or coercion that he
cannot be said to be exercising his own
free will.
3 factors has to be
satisfied
Sufficient Pressure
Pao On v Lau Yiu Long
(1980) (P375)
Factors:
- Protest
- Realistic alternatives,
such as adequate legal
remedy
- Independently adviced
- Steps taken to avoid
Another steps added by
other case
-Response of victim;
victim must prove that he
had acted reasonably in
taking the other party’s
threat seriously
Misrepresentation Refer to Chapter 13
Undue Influence Refer to Chapter 14
To Property To Person
2 Tests for Economic Barton v Armstrong
Duress
Illegitimate Pressure
1. Illegitimate threat /
pressure
2. Causation: that illegitimate
pressure is the significant
cause inducing victim to
enter iinto k
Pressure affect the voluntariness of victim’s consent
OR Illegitimate Causation
Illegitimate – all threats to “But For” test
break a contract
Whether the illegitimate
threat is the significant
cause inducing the victim
Nature of Threat
to enter into the contract.
- Unlawful act  illegitimate
unless it is not acted in bad Huyton SA v Peter Cremer
faith (SharoncGlobal Solutions GmbH & Co
Pte Ltd v LG International
Sinagepore Pte Ltd (2001))
- Lawful act  illegitimate if
applied illegitimately
(blackmail)
Nature of Demand
- exploitative (bad faith) or
acting in good faith
 Chapter 14 & 15: Vitiating Factors (I),
Undue Influence & Unconscionability
Vitiating Factors (II)

Illegality Duress Undue Influence Unconscionability Misrepresentation

Unconscientious use of
Vitiating Factors (I) one’s power/authority over
another to acquire a
benefit or achieve a
purpose.
3 Requirements
- if plaintiff is poor & ignorant
- sale was considerable undervalue
- vendor had independent advice

Nature of Relation Undue Influence by 3rd Party

Special Relation?
Yes No
Agency Notice
Transaction is Influential position
“manifestly No Bank entrust the Bank knows of the UI
disadvantageous” Yes guilty party as its (actual or constructive)
and agent.
“calls for No Influence
explanation” exercised Constructive Notice of UI
Royal Bank of No
wrongfully?
Scotland v Etridge
Yes
Yes
Put on inquiry Reasonable Steps
Induced contract?
Presumed undue No
Husband/Wife: - Request to obtain
influence Yes Whenever Bank independent advice.
knows that one
Class 1: Valid - Explain reason for
spouse has offered to
Undue Influence lawyer’s involvement
stand as surety for the
(voidable) ie. So that the
Rebutted by debts of the other.
creditor may obtain
seeking Others: and rely on written
independent Whenever Banks confirmation from the
legal advice? Special Relation knows that the
relationship of 2 legal advisor that the
Yes No
parties are non- guarantor has been
Class 2A – presumes commercial properly advise.
No Undue Class 2: relationships to be of trust and
Influence Undue Influence confidence. - Explain that these
(voidable) steps are for the
(e.g. parent/child, protection of creditor.
guardian/ward, doc/patient,
lawyer/client,
trustee/beneficiary, religious
advisor/disciple)
Class 2B – must be proven
(e.g. husband/wife,
employer/employee,
agent/principal, siblings)
 Chapter 13 and 14: Undue Influence and Misrepresentation
False statement
of Fact Burden of proof: Burden of proof:
representee representor
Statement of past or present,
Refer to Chapter 15 Illegality by conduct, etc

Vitiating Factors Misrepresentation One contracting Types of

Refer to Chapter 14 Duress party to another Misrepresentation

Induce actual party Fraudulent Negligence Innocent

Contract becomes voidable where there is
wrongful influence by one party over another
Undue Influence Infection into contract Made statement: Made statement:Made statement:
Creditor's rights Knowing it is untrue Without care Honestly
when there is
Actual Undue Influence
Objective Subjective Not believing it to be No reasonable With reason to
Class 1 Presumed Class 2 undue influence by
Undue Influence Debtor on Surety true grounds to believe it to be
Plaintiff prove that: Materiality test - Actual true
Recklessly, not believe it to be
- Wrongdoer in position of influence Rationale: prevent abuse of Contract can be inducement
Will a reasonable caring if it is true or true (s 2(1) MA)
(domination) trust and confidence placed by rescinded by victim by misrep?
in the shoes of not
- Influence was exercised wrongfully one person on another of undue influence Hadley Byre
the representee
- Influence induced contract even if Creditor man be induced
was innocent to enter contract?
Remedy: innocent party may rescind
Class 2A (as if contract never exist) or affirm contract

Presumed relationship
automatically(“relationship
Relation of Trust Manifestly court may order damages instead of recession for
& Confidence Disadvantageous Agency Notice negligence and innocent misrepresentation.
of trust and confidence”
(Misrepresentation Act S2(2))
does not need to be Transaction “calls for
proved): Creditor has Notice of the
explanation” if it is so
entrusted the guilty wrongdoing + + +
Parent-child large as not to be
party of undue Damages Damages Indemnity
Guardian-ward reasonably accounted for
influence as its
Trustee-beneficiary on the ground of
agent
Doctor-patient friendship, relationship, (reimbursed any expenses
Lawyer-client charity, or other ordinary as a result of the contract)
Director-company motives on which ordinary Limitations
Religious advisor-disciple men act Actual Construction Contract is affirmed – can’t change mind
Royal Bank of Scotland
plc v Etridge Lapse of reasonable time without giving notice to
rescind
Class 2B Inquiry Reasonable
and
Restoration to original position impossible. Eg, wine
Husband-Wife: Reasonable steps: consumed.
Prove relationship of Trust Rebutting whenever bank
- request guarantor to obtain legal 3 Party rights arose. Eg, sold goods to 3 Party Court
rd rd
and Confidence(actual proof Presumption knows one spouse ordered damages instead of rescission
required): advice
offered to stand
Show how P acted freely and independently in - explain reason for lawyer’s
Agent-principle surety for debts of Exemption Clause
entering into contract: involvement (creditor can obtain
Husband-wife other
- Seek independent advice from competent and written confirmation that Exemption clause may exclude liability for misrep.
Employer-employee honest advisor with knowledge of all relevant Other: guarantor is properly advice
Siblings S 3 of Misrep Act states clause is not enforceable unless it
circumstances Whenever bank - explain steps are for protection
passes test of reasonableness in UCTA
- Advisor must advice Plaintiff as though acting knows relationship is of creditor
solely in the interest of the Plaintiff non-commercial Subject to normal rule of construction for exemption clause
 Chapter 16: Agreement, Performance, and Breach Terminology
“contingent” dependant on
“repudiatory breach” refusal to perform a contractual obligation

Frustration
Terms of contract
E.g.. Term for termination by Agreement Discharge Refer to Chapter 17
employment by notice
Breach
Others Non-Repudiatory
Subsequent/
New Agreement Actual Anticipatory Renunciation
Performance
Must be supported by No performance Repudiatory
consideration for release or defective Intention not to
perform obligation Impossibility
performance
when time to due in future
All obligations must be fully
General Rule Performance perform arrive
and precisely performed
must be exact
& precise Warranty Innominate Condition
4 Exceptions

Non-Repudiatory Repudiatory Election

De Minimis Rule Severable Obligations Partial Performance Substantial Contract continues and
Very hard to invoke,
Accepted Performance sue for damages for
Obligations separate &
will not be invoked for independent (based on breach
Quatum meruit If obligation is NOT
differences in intention of parties). payment on entire, and party in
measurement. Entitled to payment for contractual basis – breach has substantially Discharge Affirm
Difference in obligation performed. expressed in contract performed, he can claim
performance is that payment in return payment less cost to Contract ends and sue for Contract
microscopic, then it for performance will be rectify but is still liable to damages for breach continues, treated
will be ignored and made in proportion to damages as no breach
treated like no breach amt of work done. Or
Cutter and Powell
at all Sale of Goods Act
30(1)
Quatum meruit Fixed Sum No Cooperation Legitimate Interest
payment on
restitutionary basis – Claiming for a fixed sum Innocent party do not Must have Legitimate Interest
only if party voluntarily opposed to unliquidated need corporation of to affirm
accepts partial work damages party in breach to
White & Carter
continue the contract
If damages are sufficient
compensation, not allowed to
S3 states that rents, annuities, dividends and other affirm the contract which wil
periodical payment that are accrued on daily basis are result in greater detriment to the
Apportionment Act defaulting party
claimable base on periods
MP-Bilt Pte Ltd v Oey Widarto
Restitutionary Basis (Law of Unjust Enrichment)
Able to claim in relation to partial performance, if the party
has received benefit had option of freely accepting or Quantum Meruit
rejecting the benefit
 Chapter 17: Frustration

Agreement

Refer to Chapter 16 Performance Discharge

Frustration occurs when a supervening event, due to

Breach Frustration no fault of the parties, render the contract entered into
radically different from that which the parties originally
undertook.

Destruction of
Frustration due to
subject matter party own conduct or
General Force Majeure Clause
Classification the conduct of those
Impossibility for whom he is
Death / Incapacity Expressed term in contract that negates
frustration due to “acts of God”, expressing the responsible for
legal consequences of such an event
Government
acquisition, etc
Unavailability Requirement: Particularly clear words to be used
Negligence
Failure of Source Self Induced Frustration Frustration if negligence is not deliberately
of Supply induced
Illegality Limiting Factors
Grossly negligence (chances of breach is
Method of high) or mere carelessness (chances of
Performance Foreseeability breach is low)
Alternate method can be used, so long as Joseph Constantine v Imperial Smelting
contract is not fundamentally different Event which is highly foreseeable
cannot be frustrated

Extreme cases as men

Impracticability, Choice of Contract
of business are taken
to cognisant of the increased costs There is no frustration if party can choose
Radical Change Effects
risks and vicissitudes between contracts
in the business envrt,
such as rises and falls
in prices. Aspects Common Law Frustrated Contracts Act
Delay, unavailability
Future obligations Released Released

Accrued Remain Released

Frustration obligations
of Purpose
Sums paid Not recoverable Recoverable [Section 2(2)]
Occurs when purpose of entering into contract is Sums payable Remain payable No longer payable
radically changed. Must have “special qualification”
that only the Promisor can provide. Failure of purpose Benefits / Not applicable Recoverable
of one party does not bring about frustration. Expenses
Krell v Henry
 Chapter 18: Remedies for Breach of Contract
Limitation Act S6:
Plaintiff must commence
legal action within 6
Right of Claim
years from time contract
is breached / tort
committed.
Reasons: evidences
destroyed or tampered
with, pple die
Can be postponed if
Plaintiff was ignorant
about breach of
contract.
Test
Construction of Clause:
Terms and words used are
not conclusive
Amount is extravagant
compared with the loss
from breach
Payment is larger than
obligation to payment
Lump sum payment
Even if loss from breach is
difficult to predict, it can
still be liquidated
damages.
Dunlop Pneumatic Tyre v
New Garage
Hard to penalty clause if 2
parties act at arm’s length
Philips Hong Kong Ltd v
AG of Hong Kong
Naturally arising damages
Based on imputed
knowledge or actual
knowledge of Defendant
Remedies
Common Law
Remedies
Liquidated
Damages
If remedies have been pre-
agreed by both parties, the
court will order sum to be
paid in compensation as
liquidated damages,
provided it is a genuine pre-
estimate of the loss, not as
a form of penalty.
Expectation
Difference
Cost of Cure
in Value
1. Causation in fact
“But for” Test
Was the breach an effective
cause of the loss?
First Limb
contemplated by parties when
Based on actual knowledge of
Restitutionary To reverse any “unjust enrichment” gained
by D at expense of P
Remedies
Discretionary Awarded when there is total failure of
Remedies consideration, or failure for a benefit in
Equitable kind (quantum valebant or quantum meruit)
Remedies
Specific
Injunction
Performance
Damages not adequate Prohibitory – refrain and cease doing an
Unliquidated remedy act in breach of contract (restraint of trade)
Damages
Not involving personal service Mandatory – correct an act which should
not have done (demolish a wall in breach
Not need constant
of contract)
supervision
Not cause severe hardship
Quantification
of Loss
Reliance Other Non-Pecuniary
Can be claimed in addition to Such as Indemnity or Emotional distress, hurt,
Expectation Loss when there is no Consequential embarrassment, disappointment,
double counting or as an alternative Loss inconvenience are not recoverable
to Expectation Loss
Reason: Open floodgate to
Ruxley Electronics and
Anglia Television Ltd v Reed everyone as it is natural for victim
Construction Ltd v Forsyth
to suffer emotional distress.
4 Steps Exceptions
Jarvis v Swan Tours (1973)
2. Causation at law –ski trip – allowed if contract
3. Assessment 4. Mitigation is to provide pleasure and
Remoteness enjoyment
Duty to take reasonable steps to minimize
Hadley v Baxendale loss
Intent: Put innocent party in Farley v Skinner – sufficient
Post Heron II If not, cannot claim sum that could be avoided
a position as though the if it is a major part of the
contract has been properly Exception : (Bankes LJ, Limited v Saunders contract
Second Limb performed (1919))
-P is unable to financially afford mitigation Perry v Sidney Philips –
Losses reasonably distress arises from physical
costs
-- P is not required to mitigate as it will put its discomfort and
k is made
commercial reputation or gd public rln at inconvenience
stake
Defendant only -- P is not required to mitigate as it involves
 Chapter 6: Negligence Terminology “But-For” test
“novus actus interveniens” new intervening act Causation
Spandeck Engineering (S) Pte Ltd v DSTA (2007) “Material
Concept of novus Contribution” test
actus interveniens
Singapore’s Stand Causation of
Duty of Care Negligence Balance of probabilities of cause
- if NAI breaks chain
Prelim. Req.: Damage/Loss of causation, D’s
(Not necessary for breach to be the
sole or dominant cause of
Treshold level of breach would not be
loss/damage)
regarded as cause
Factual Proximity Breach of DOC
Public Policy of P’s loss/damage TV Media v De Cruz Andrea
Foreseeability
If factual Whether it will result in
foreseeability imposing liability ‘in an Fail to Reach Standard of Care Reasonable
and proximity is indeterminate amount for Remoteness
NORMALLY, the P has to Foreseeability
established, a an indeterminate time to Expected of Him
prove that the D has been Relates to the type of
prima face duty an indeterminate class of negligent, i.e breached the
NEED TO REFER TO of care exists. persons’ Mitigation damage or injury which is
As physical damage is duty of care expected of foreseeable.
ANALOGOUS CASES him!
foreseeable in (eg such - D only liable to P in relation to
Nervous Shock & car accidents), it is not Res Ipsa Loquitur losses suffered that are not
“Eggshell skull rule”
Physical Damage/Injury & necessary for P to show readily avoidable by P (P156) - Defendant must
Consequential Economic Loss
that psychiatric injury is “Let facts speak for themselves” take victim as he finds
Consequential Economic Loss - P cannot unreasonably inflate
also foreseeable in order him. If victim’s pre-
Shift the burden of prove (of losses & seek to recover such
1) Donoghue v Stevenson (1932) Psychiatric Illness to recover for psychiatric losses from D existing weakness / hyper-
breach) from plaintiff to defendant sensitivity causes him to
2) TV Media v De Cruz Andrea Heidi injuries (P142) - It is D’s burden to show P
to prove that he is not negligent. suffer greater injury,
(2004) ought to have taken reasonable
Primary Victim Secondary Victim 1) Defendant must have been in Defendant is liable to full
Pure Economic Loss due to steps to mitigate
control of the situation or thing extent of injury.
Negligent Misstatements Page v Smith (1996) McCloughlin v O’Brien (1983) which resulted in the accident; and
1) Hedley Byrne v Heller (1964) 3 Requirements: Defense
Duty is imposed as 2) The cause of accident must be
DOC arises where there is a “special long as some form 1. Class of Persons – close unknown
relationship” taking into account the of personal injury relationship (parent/child and
following factors: was foreseeable husband/wife) Illegality Complete Defense Partial Defense Limitation Period
 skill & expertise of maker of statement; flowing from the 2. Proximity – of secondary
negligent act P‘s wrong must
 whether maker knows or ought to have victims to the accident time an
be sufficiently Voluntary Assumption of S3(1) of Limitation Act
known that other person will rely on the space Risk “Volenti non fit Contributory
statement; and connected to S 6 (a) – epiration of 6years from the date on which
3. Means – by which the shock his damage, the injuria” Negligence and
cause of action iaccrued
fact that the P isCannot complain if victim Personal Injuries
 whether maker of statement voluntarily
was caused (actual sight,
assumed responsibility for statement. Act S 24A- with respect to personal injuries
hearing, immediate aftermath) involved in consent to the risk
2) Caparo Industries Ltd some Victims bears i.expiration of 3 years from date on which cause of
v Dickman (1990) wrongdoing is However s2(2) UCTA portion of loss action accrued
not sufficient states, D cannot exclude
Applied the 3-stage test based on share of
or restrict his liability for ii.Expiration of 3 ears from the earliest date on which P
Pure Economic Loss due to responsibility for
 Foreseeability: whether harm is Objective Test negligence in causing
damage.
has knowledge required for brining an action for
forseeable Negligent Acts or Omissions personal injury or death. damages in respect of relevant injury.
 Proximity: whether close relationship
exists bet parties: it exist if: 1) The Ocean Front (1996)
- D knew/ought to have known purpose for D’s Level of Skill Likelihood of Harm Seriousness of Harm Cost of Avoiding Risk
2) The Eastern Lagoon II (1999)
which statement/advice was required; Level of Skill   Seriousness  Cost &  risk  Incurring
3) PT Bumi (2004)
Likelihood   Std
- - that it will be communicated to advisee’ cost is necessary!
Std of care! of care!   Std of
- - that advisee is likely to act upon it for that Cases applied the 2-stage process to determine
purpose without independent inquiry; whether a duty of care should arise: (for medical, bolam care!  Cost but  Risk  May not
(Bolton v Stone(1951) have to incur the high cost
- - It was so acted upon to advisee’s test)
 Is there a sufficient degree of proximity in the
How high the Standard of Care (Paris v Stepney
detriment; & relationship bet P & D?  Cost &  Risk  May still
- - it was reasonable for advisee to so rely. should be is determined by Borough Council
 If so, is there any material consideration or (1951) have to incur the cost
policy which precludes such a duty from arising?
considering these factors
 Whether fair, just and reasonable?