Please enable JavaScript.

Coggle requires JavaScript to display documents.

Week 4 & 5: Contract -- Terms, How to decide whether a term is a…

- - - - Puffs
        
        no legal effect
        
        statements which are vague because of imprecision or exaggeration
        
        eg. "best restaurant in town"
      - Representations
        
        statement made about a contract before or at the time a contract is formed
        
        not part of contract
        
        no breach of contract BUT can initiate action for MISREPRESENTATION
        
        Representations cannot in law be elevated to terms of contract whether expressed or implied, orally or written.
      - Terms
        
        statements that are part of a contract
        
        made before a contract is formed
  - - - Five Guidelines to Distinguish Intention
        
        The Time Statement Was Made
        
        If statement was made closer to the time the contract was finally concluded, it is more likely to be a term.
        
        long interval = unimportant and tentative
        
        Routledge v McKay (1954)
        
        Maker's Special Knowledge
        
        Maker has greater knowledge concerning the statement, it is more likely the statement is a term.
        
        the other party will be dependent upon the maker of the statement for its accuracy.
        
        Oscar Chess Ltd v Williams (1957)
        
        Dick Bentley Productions v Harold Smith Motors (1965)
        
        Maker's Emphasis
        
        The greater the emphasis, the more likely the statement is a term
        
        suggests importance
        
        Bannerman v White (1861)
        
        Invitation to Verify Statement
        
        If the maker of the statement invited other party to verify the statement made, the statement is not a term.
        
        If the maker of the statement dissuades the other party from verifying the truth of the statement made, the statement is likely to be a term.
        
        Ecay v Godfrey (1947)
        
        Written Statement
        
        If the statement is reduced (from oral) into writing, it is more likely to become a term of contract.
        
        Non-written statements are presumed not to form part of the contract
  - - - terms have been expressly agreed between parties
        
        made orally or writing
    - - Implied by Court
        
        Custom & Usage
        
        implied into a contract because such contracts are subject to unwritten terms such as context and surroundings
        
        a long-term trade usage, customs of locality, the features of a market are all contextual implication relevant to the terms
        
        party will be bound by the usage in that trade if the usage is well-known, accepted by the relevant community, certain, reasonable, uniform and legal.
        In the case of Singapore, due to rapid globalization and industrialization, SG does not have a significant local custom that can apply this
        
        Hutton v Warren (1836)
        
        Bernard Desker Gary & Others v Thwaites Racing Pte Ltd & Another (2003)
        
        Implied by Fact
        
        Officious Bystander Test: Implement "Business Efficacy"
        
        courts imply a term into a contract to ensure business efficacy
        
        court will imply a term which it considers obvious or having been intended by the parties
        
        court will determine the intention of the parties gathered from the "express words of the contract and the facts and circumstances surrounding it"
        
        Officious Bystander
        
        if the parties had been asked by an officious bystander whether they would have included the term to be implied as an express term, both testily answer "Oh, of course!"
        
        meaning, the implied term is SO OBVIOUS that it goes without saying & even a bystander can spot
        
        Sembcorp Marine Ltd v PPL Holdings Pte Ltd (2013)
        
        Implied by Law
        
        terms implied set a precedent--same term will also be implied in all other contracts of the same type
        
        not dependent on facts of the case;
        
        Default terms = terms that apply unless expressly overriden by contracting parties
      - Implied by Statute
        
        Statutory Provisions: Sale of Goods Act that protects interests of buyers of goods
        
        no intentions is assumed
        
        on the grounds of public policy only
      - terms have only been implied but not agreed upon.
        
        both parties are unaware of implied terms.
        
        terms cannot be implied if it challenges expressed terms
        
        terms that are clear must be given their natural meaning--cannot be re-written
- - - - important, essential and fundamental to the contract
        
        breach of condition gives injured party the option to affirm the contract or discharging the contract
        
        breach of condition = injured party can claim damages regardless
      - Breach of condition ALWAYS allows the innocent party to terminate the contract
    - - less important terms and constitute secondary obligations
        
        breach of warranty does not give injured party option to discharge the contract
        
        contract remains and only can claim damages but not termination
    - - too difficult/complicated to classify as a condition or warranty
        
        remedy for breach depend on the consequences (trivial or serious)
        
        focus is on the actual consequence of the breach and not whether it is condition or warranty
        
        serious consequence = deprive the innocent party of substantially the whole benefit intended to receive
        
        serious consequence = discharge contract + damages
        
        trivial consequence = damage only
        
        Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd (1962)
  - - - RDC Concrete Pte Ltd v Sato Kogyo Pte Ltd & Another Appeal (2007)
      - deciding if an innocent party should be entitled to a right of termination of contract for a breach of a term that was not intended by contracting parties to be a condition
        
        to give effect to the intentions of the contracting parties
        
        Only after the intention is considered, consequences of the breach should also be examined even if the term breached is only a warranty
        
        if the breach deprives the innocent party of substantially the whole benefit, the innocent party would be entitled to terminate the contract notwithstanding that it only constitutes a warranty
- - - - Exemption: exclude the liability completely
        
        Limitation: limits the liability to a certain amount etc.
        
        Indemnity: passes liability to a third party
  - - - Incorporation
        
        exemption clauses appears as a term in a written contract
        
        clause can be incorporated into a contract at the time or prior to the contract by:
        
        By Signature
        
        By Notice
        
        By a previous course of dealing
        
        Incorporation by Notice
        
        when there is no written contract or unsigned contract
        
        gave reasonably sufficient notice of the exemption clause to the injured party
        
        Sufficiency of Notice is paramount to validity
        
        What makes a notice reasonably sufficient?
        
        Type of Document (Where Notice Affixed)
        
        Time of Notice (When)
        
        Adequacy of Notice
        
        Effect of the Clause
        
        Previous Dealings
        
        Where the Notice Affixed
        
        the type of document is a reasonable person would expect to find contextual term
        
        2 more items...
        
        Incorporation by Signature
        
        bound by everything contained in the contract whether it was read or not
        
        given that there is no fraud or misrepresentation
        
        L'Estrange v Graucob (1934)
        
        Exceptions to Incorporation by Signature
        
        "It was not my deed"
        
        misrepresentation
        
        express warranty
      - Construction
        
        Once exemption clause is Incorporated into a contract, the clause must be interpreted (construed)
        
        interpreted to determine whether the breach is covered in the exemption
        
        ascertain whether the contracting parties intended the exception clause to cover the events that have actually happened
        
        scope of protection depends on how broadly the clause is interpreted
        
        What limits the scope and applicability of exemption clauses?
        
        Contra Proferentem Rule
        
        Negligence Liability
        
        Main purpose Rule (Fundamental Breach)
        
        Contra Proferentem Rule
        
        If there is ambiguity or doubt in interpreting the clause, exemption clauses is interpreted in the manner LEAST favourable to the person who inserted them into the contract
        
        serves to protect weaker parties from inequality of bargaining poweer
        
        Houghton v Trafalgar Insurance Co (1954)
        
        Middleton v Wiggin (1996)
        
        Tay Eng Chuan v Ace Insurance Ltd (2008)
        
        Negligence Liability
        
        show that clear words in the clause fully cover the facts that h ave occurred.
        
        the clause must clearly cover negligence
        
        UCTA deals with negligence liability
        
        Hollier v Rambler Motors (1972)
        
        White v John Warrick & Co Ltd (1953)
        
        Fundamental Breach
        
        exemption clauses cannot defeat the main purpose of the contract
        
        no exemption clause can protect the seller if it destroys the whole basis of the contract
        
        Rule of law or rule of interpretation
        
        Rule of law = whenever fundamental breach occurs, the exemption clause is automatically defeated.
        
        Rule of interpretation = if exemption is clear and unambiguous, EC can be effective even in the case of fundamental breach especially if both parties are of equal bargaining power.
        
        1 more item...
      - EC & Third Party
        
        Third parties are allowed to rely on an exemption clause in a contract he is not privy to (bill of lading)
        
        especially in shipping
      - Unfair Contract Terms Act
        
        show that exemption clause satisfies the requirement for reasonableness
        
        if clause does not comply with UCTA, the party cannot be excluded even if the clause have been well incorporated and well constructed
        
        Personal Injuries and Other losses Caused by Negligence
        
        Liability for death or personal injury resulting from negligence cannot be excluded or restricted at all
        
        Liability for other loss or damage such as financial loss/property damage can be excluded if reasonable
        
        :red_flag: UCTA applies to both contract and tort
        
        the burden of proving reasonableness falls upon the party seeking to rely on the exemption clause.
        :red_flag: Majority of UCTA provisions deal with exemption clauses in cases of business liability or in consumer transactions.
        
        primary focus is protecting consumers in business transactions
        
        misrepresentation will apply even in non-consumer and non-business liability situations
        
        :bulb: Meaning of Reasonableness.
        
        :warning: In the Second Schedule of the UCTA, the court must consider:
        
        The Bargaining position of the parties
        
        Whether the customer received an inducement to accept the exemption clause
        
        Whether the customer knew of the exemption clause
        
        Whether compliance with the exemption clause is practicable: whether doing the right thing is possible
        
        Whether the goods were ordered specially: any defect might be due to the customer's own specifications
        
        Courts are not limited to these factors when determining the question of reasonableness
        
        1 more item...
        
        Elis Tjoa v United Overseas Bank (2003)
        
        Kenwell & Co Pte Ltd v Southern Ocean Shipbuilding Co Pte Ltd (1999)
        
        Consumer Transactions
        
        if the transaction is a consumer transaction, the exemption clause must be reasonable in order for the party relying on it to be exempted.
        
        consumer rights also enshrined in 12-15 Sale of Goods Act and exemption clause cannot exclude liability under SGA
        
        Non-consumer transactions
        
        In non-consumer transactions, the exemption clause must still be reasonable for clause to be valid.
        
        may not be protected by Sale of Goods contracts under s 6 UCTA
        
        Photo Production v Securior
        
        Misrepresentation
        
        Misrepresentation Act: If liability arises from a misrepresentation, the misrepresentator can only seek protect behind an exemption clause if the clause is reasonable. If misrepresented, no exemption granted unless reasonable.
        
        applies to both business and non-business liability
      - Unusual Factors
        
        An oral undertaking made before or when a written contract has been signed may overshadow the written terms, neutralizing the exemption clause.
        
        Oral undertaking creates a Collateral Contract
        
        Collateral Contract is a contract implied by court and runs parallel with the main contract.
        
        collateral contract can be used to add or to vary the terms of the main contract
        as an exception to the parol evidence rule.
        
        Evans & Son Ltd v Andrea Merzario Ltd (1976)