Misrepresentation (pg 159)

 Misrepresentation is generally a tort and fraudulent misrepresentation is historically rooted in the tort
of deceit
Elements of Misrepresentation (pg 160)
 A misrepresentation is a false statement of fact made by one party (representor) to another
(representee) which induces and is relied upon by the representee to alter his position. ( use definition
to analyze)
 Not all false statement representations amount to misrepresentation, it must be
o a false statement
o Is it made by one contracting party to the other
o which is relied upon by the representee and induced into contract – Koh Keow Neo & Others
v Chee Johnny & Others (2004)
False Misrepresentation – False Statement of Fact (pg 162)
 Operative statement must be one of past or existing fact
 It cannot be a mere statement of opinion or a statement of some likely future event(intention)
 However , a statement of intention as to future action could be a false statement of fact if at the time of
making the statement of intention, the representor did not in fact hold that intention – Tan Chin Seng
& Others v Raffles Town Club Pte Ltd (No 2) (2003)
 Edgington v Fitzmaurice (1885) – Information in the prospectus is different from the real intention.
Stated intention was not actually held because company raised money for liabilities instead of
improvements.
 Tipper Corp Pte Ltd v JTC Corporation (2007) – Plaintiff had not asserted that the defendant had no
intention of keeping its word when the alleged representation was made.
 Statement of opinion usually cannot form the basis of a misrepresentation unless the representor had
access to the relevant facts and had no reasonable ground for holding such an opinion.
 Bisset v Wilkinson (1927) – The property could not hold that many sheep but that claim was a
statement of opinion and did not amount to misrepresentation.
 Singapore, Amarjeet Singh KC in the High Court case Tai Kim San v Lim Cher Kia made a careful
distinction between a misrepresentation of fact and an expression of opinion
o Where an opinion is expressed, it must be expressed upon reasonable grounds and made
honestly
o Where opinion is stated as if it is a positive fact, it can constitute a misrepresentation
o Where facts are not equally known to both sides, then a statement of opinion by the one who
knows the facts best involves very often a statement of a material fact for he impliedly states
that he knows facts which justify his opinion
 General rule is that silence in itself does not amount to misrepresentation
o In Keates v Lord Cadogan (1851), the court held that Lord Cadogan had no duty to disclose
the state of his house, therefore, no misrepresentation.
 Silence may amount to misrepresentation is three situations
o Dimmock v Hallett (1866)
What is stated becomes a half-truth by what is left unsaid. i.e. Saying the place is fully let but
did not say the tenants had given notice to quit. This constitutes misrepresentation.
Trans-World (Aluminium) Ltd v Cornelder China (Singapore) (2003) – Misrepresentation of
statements comes from a willful suppression of material and important facts thereby rendering
the statement untrue
o A change of circumstance arose which rendered a previously truthful statement misleading –
With v O’Flanagan (1936)
o The law imposes a duty is upon one party to disclose facts to the other party. i.e. Insurance
contracts.
False Misrepresentation – Inducement (pg 164)
 For a false statement to be a misrepresentation, the statement must induce the representee to enter into
the contract
 As long as it is one of the inducing causes; it is immaterial that it is not the sole inducing cause –
Edgington v Fitzmaurice (1885)
 2 tests to show inducment
o Materality Test (Objective Test)
o Actual inducement test (Subjective Test)
 Materality Test(objective test)
 o Would a reasonable man would have been influenced by it to enter into the contract.

 Actual Inducement Test – (Subjective test MUST be satisfied)

 Representee must have relied on the representation
Scenarios where there is no inducement
o Not aware of the representation
o Aware of representation but knew it was unture or did not believe it to be true
o Not influenced by it, as where he would have enterted into the contract even if he had known
the true facts.
 Panatron Pte Ltd v Lee Cheow Lee & Another
o Court held that misrepresentation need not be the sole inducement…so long as they had
played a real and substantial part and operated in the representees’ minds, no matter how
strong or how many were the other matters which played their part in inducing them to act
 Overseas Chinese Banking Corp Ltd v Infocommcentre Pte Ltd (2005)
o False statement was made to representee but he was not induced by the statement to enter into
contract and therefore there is no misrepresentation
 Tai Kim San v Lim Cher Kia (1884) – The Singapore High Court held that plaintiffs had not been
induced by any representations to sell their shares to the defendant. Hence false statement is not a
misrepresentation.
 A mere opportunity of a chance to investigate the truth of the statement made by the representor does
not deprive the other party to rely on the misrepresentation.
 Jurong Town Corp v Wishing Star Ltd (No 2) (2005)
o A person who has made a false representation cannot escape its consequences just because the
innocent party has made his own inquiry or due diligence, unless the innocent party has come
to learn of the misrepresentation before entering into the contract or does not rely on the
misrepresentation when entering into the contract
 Redgrave v Hurd (1881)
o Mere fact that the representee had an opportunity to investigate and ascertain whether a
representation is true or false was not sufficient to deprive him of his right to rely on
misrepresentation
o No fraud or negligence on the part of Redgrave, the misrepresentation was thus an innocent
one and contract was rescinded
o However, theres an academic argument that there is certain negligence on part of the
representee and thus, if the representation was negligent/innocent, it may reduce the claim of
the representee. (Peekay)
Categories of Misrepresentation – Fraudulent Misrepresentation (pg 165)
 The representor knowing that is false makes the false statement. It is also known as the tort of deceit. –
Lim Geok Hian v Lim Guan Chin (1994)
 Burden of proof is on the representee to show that the representor has been fradulent

 Singapore High Court held that whenever fraud or deceit is alleged, a high degree of proof is required
on he who asserts – Vellasamy Lakshimi v Muthusamy Sippiah David (2003)
 Court requires a degree of probability which is commensurate with the gravity of the imputation –
Tans- World (Aluminum) Ltd v Cornelder China (Singapore) Pte Ltd (2003) and Samwoh
Resources Pte Ltd v Lee Ah Poh (2003)\
 Derry v Peek (1889)
o House of Lords held that for fraudulent misrepresentation to arise, the false representation
must be made knowingly, or without belief in its truth, or recklessly, careless whether it be
true or false. Since none was present, no fraudulent misrep.
 Panatron Pte Ltd v Lee Cheow Lee & Another (2001)
o Trial judge came to the conclusion that Phua did make the alleged misrepresentations to the
respondents and that Phua knew that these representations were false
o False statements in turn induced the respondents to subscribe for the shares in Panatron
Categories of Misrepresentation – Negligent Misrepresentation (pg 166)
 Arises when the false statement is made by the representor without due care and have no reasonable
grounds for believing it to be true.
 s2 (1) Misrepresentation Act – representee need to prove inducement and loss suffered. After which
representor to prove that he had reasonable grounds to believe that it was true.
  This makes the representor liable even without fraudulent intent unless he can prove he has reasonable
grounds to believe the statement to be true.
 Burden of proof shifts to representor
 Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd (1978)
o The manager was still liable as a reasonable manager would have checked the shipping
documents and not relied on the Loyds Register.
o Negligent misrepresentation pursuant to s 2 MA is statute based and arises in the context of a
contract
 Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) (irrelevant for now due to 3rd party- is tort of
negligence and not negliegent mis rep)
o Common law tort and does require the existence of a contract
o Discussed also in Trans-World (Aluminium) Ltd v Cornelder China (Singapore) Pte Ltd
(2003)
o Representee to prove that representor owed a duty of care and breached that duty of care by
making the false statement which induced the contract and as a result, representee suffered a
loss.
Categories of Misrepresentation – Innocent Misrepresentation (pg 167)
 A false statement made in the absence of fraud and fault
 Representor made the false statement believing and having reasonable grounds to believe in its truth –
Redgrave v Hurd
Remedies for Misrepresentation (pg 168)
 Rescission is when a contract is terminated by the representee because of misrepresentation
o Rescission is available in all three types of misrepresentation
o Available even if false statement has become a term of the contract – s 1 Misrepresentation
Act
o Representee expresses his intention not to be bound by the contract
 Once a representee chooses to rescind the contract, it becomes void ab initio – meaning that the
contract is treated as if it never existed
 Representee must give notice of rescission to the other party
 Once rescinded, rescission is final and contract cannot be revived
 Rescission is not available when
o Contract is affirmed expressly or impliedly by the representee after he discovered the
misrepresentation( when u continue without rescinding the contract-pen analogy)
 Singapore of Appeal in Jurong Town Corp v Wishing Star Ltd (No 2) (2005)
clarified that the right of rescission is not lost easily
 Representee must have communicated his choice to the other party in clear and
unequivocal terms and he would not be bound by a qualified or conditional decision
 Representee would not lose his right automatically to rescind merely by calling on
the representor to reconsider his position and recognize his obligations
o Reasonable amount of time had lapsed since the discovery of the misrepresentation
o Parties cannot be restored to their original position before the contract (restitutio in integrum
impossible)
o Court exercises its discretion pursuant to s 2(2) Misrepresentation Act to award damages in
lieu of rescission
o Court will take into account the losses that the representor will incur if recission is allowed
and then compare both losses and make a decision
o 3P RIGHTS arose
 Damages is the monetary compensation ordered by the court requiring the defaulting party to pay
money to the injured party
 Damages are awarded to compensate the representee for all the losses which was caused by his
reliance on the fradulent misrepresentation.

o Common law allows damages for fraudulent misrepresentation

o S 2(1) Misrepresentation Act allows the court to award damages for negligent
misrepresentation
o S 2(2) Misrepresentation Act grants to the court a discretion to order damages in lieu of
rescission for both negligent and innocent misrepresentation
  Vita Health Laboratories Pte Ltd and Others v Pang Seng Meng (2004) – Rajah JC declined to award
damages in lieu of rescission under this provision as the plaintiffs had not shown how this head of
damages ought to be assessed
 Complexities arise in the calculation of the quantum because of the interplay of contractual and
tortuous principles as well as the unusual wording of the statutory provision
 Indemnity is an obligation whereby one person (the indemnifier) is held responsible for the liability or
loss of another person (the indemnifiee)
 An indemnity is used to help restore the injured party to his status quo ante (the position he was in
beforehand- same as recision)
 S 3 Misrepresentation Act stipulates that an exemption clause which attempts to exclude or restrict
liability arising from a misrepresentation will not be enforceable unless it meets the reasonableness test
expressed in s 11(1) UCTA- don’t need to apply ucta 1(3) and 3
 Under 2(3), it says that for negligent misrep, court will look at the first set of damages and will not give
damages again for that which you already have.

Remedies for different categories of Misrepresentation (pg 169)

Fraudulent Recission + Damages
Negligent Recission (or damages in lieu) + Damages
Innocent Recission (or damages in lieu) + Indemnity

Mistake (pg 170)

 Contracts are robust creatures and they do not fall to just any mistake
 Only mistakes which lie at the root of the contract would have that effect
 At common law, mistake vitiates a contract such that it becomes void ab initio.
 However in equity, mistake does not necessarily lead to void ab initio.
 4 types of mistakes
o Common mistake
o Mutual mistake
o Unilateral mistake
o Non est factum
 Common Mistakes occur when both parties to the contract make the same fundamental mistake of fact
o Each knows the intention of the other and accepts it but is mistaken about some underlying
fact – Couturier v Hastie (1852)
 Mutual Mistakes occurs when the parties misunderstand each other and are at cross purposes –
Wellmix Organics (International) Pte Ltd v Lau Yu Man (2006)
o Both parties are not aware of each other’s mistake
o Mutual mistakes overlaps with law of contract as there is a lack of coincidence between offer
and acceptance
 Unilateral Mistake occurs when only one party is mistaken, the other party knows or ought to have
known the first party’s mistake
o Test is an objective one based on what a reasonable person would have known in similar
circumstances – Ho Seng Lee Construction Pte Ltd v Nian Chuan Construction Pte Ltd
(2001)
o Chwee Kin Keong & Others v Digilandmall.com Pte Ltd (2005)
 Non Est Factum (it is not my deed)
o Arises when a person signs a document that is fundamentally different in character from that
which he contemplated
o Lee Siew Chun v Sourgrapes Packaging Products Pte Ltd (1993)
 To avoid contact on basis of non est factum, plaintiff must show
o The document signed is radically different or totally different in character or substance from
that which he intended to sign
o Had not been careless in signing the document
o He took such care as a person in his position ought to have taken

Other Vitiating Factors (pg 172)

Economic Duress
 Exerting some amount of pressure to persuade or induce a party to enter into a contract is sometimes
necessary and probably acceptable.
 For there to be economic duress there has to be three elements present:
o The illegitimate pressure was applied to him/her;
o That the illegimate pressure coerced his/her will so as to vitiate her consent AND
o There is a casual link between the pressure applied and the victim’s agreement to the variation
of the contract.

Economic Duress

Pressure
Sufficient of Coerce Illegitimate Caused the impuged act

Factors Nature of threat

 Protest
 Alternative Nature of demand
independent advice
 Prompt action to
avoid modification
 Response of victim

2 theories : Illegtimate pressure theory - Was the contract entered into under pressure that was illegitimate as
opposed to mere commercial pressure
Overborne Will theory – Was the will of the party overborne by the pressure applied on him so as to vitiate his
consent?
Sufficient to Coerce (pg 428)

Pao on v Lau Yiu Long (1980) guidelines

 Whether the person alleged to have been coerced did or did not protest;
 Whether, at the time he was allegedly coerced into making the contract, he did or did not have an
alternative course open to him such as an adequate legal remedy
 Whether he was independently advised; and
 Whether after entering the contract, he took steps to avoid it.

The Alev (1989)- victim must prove that he or she had acted reasonably in taking the other party’s threat
seriously.

Illegitimacy

Was a threat made to breach the contract? (Nature of Pressure)

 Generally, when the threat is of any form of unlawful action, ie crimes, tort, breach of contract it usually
amounts to illegitimate pressure
 Lee Kuan Yew v Chee Soon Juan (2003)- Threat to enforace one’s legal rights do not amount to
illegitimacy.
 Mention of inability to fufil original contract if variation was not made usually do not to illegitimate
pressure.

If threat was made was it to support an unreasonable demand? (Nature of demand)

 Was demand made in good or bad faith?

 CTN Cash Carry Ltd v Gallaher Ltd (1994) – a threat to breach a contract, made with an absence of bad
faith (stolen smokies), should not amount to an illegitimate threat. Steyn LJ dicta : Extending the categories
of duress to a “lawful act duress” will have far reaching implications and may result in uncertain
bargaining, in the commercial context.
 Sharon Global Solutions Pte Ltd v LG International (Singapore) Pte Ltd – the plaintiff decleration that it
would not perform unless the defendant shared the additional freight should be regarded as a legtimate
notice of its inability of perform rather than an illegitimate threat

Caused the impulged act (pg 432)

For Physical Duress
 As long as pressure was a reason – need not be predominant or clinchin reason
 Burden of proof is on the party making threat to show that there is no casual link

For Duress to property and economic duress

Huyton SA v Peter Cremer GmbH & Co (1999) – The minimum test of subjective causation in economic
duress is the “but for” test.
 Pressure must be decisive or clinching for the victim agreeing to variation at all or on the terms in which the
variation was made.
 Burden of proof is on the victim

Effect of economic duress

 Agreement for variation is rendered voidable NOT void
 Variation agreement is considered valid until the victim take steps to avoid it
 If the victim words or conduct shows that the victim has affirmed the variation agreement, he/she losses the
right to avoid the agreement
North ocean shipping co. ltd. v. Hyundaiconstruction co. ltd and another (1979) – owners of the Atlantic
Baron, free from duress took no action to void the contract after the important telex , which is a sign of
affrimation.

Undue Influence (pg 174)

 Equitable doctrine
 The unconscientious use of one’s power or authority over another to obtain a benefit or achieve a
purpose by exerting improper pressure
 2 types of cases of undue influence
o Undue influence must be actually proven – Mookka Pillai Rajagopal v Kushvinder Singh
Chopra (1996)
o By virtue of the relationship between the parties, law presumes that undue influence is present
and the burden of proof is then on the party complained of having exercised undue influence
 To establish undue influence in the first type, person who raise complain must establish the following
o That the other person had the capacity to influence the complainant
o Influence was exercised
o Exercise was undue
o Its exercise brought about the transaction
 Lim Geok Hian v Lim Guan Chin (1994)
o Context of a brother-sister relationship does not auto fall within the second case
o Based on first case, complainant failed to establish all four elements and therefore no undue
influence on part of brother.
o Affirmed by Pelican Engineering Pte Ltd v Lim Wee Chuan (2001)(Husband-wife), Tan
Teck Khong & Another v Tan Pian Meng (2002) (Mother-son)
 To establish second type, complainant needs to show both
o There was a relationship of trust and confidence between him and the wrongdoer,
o The relationship was such that it could fairly be presumed that the wrongdoer abused the trust
and confidence in procuring the complainant to enter into the impugned transaction.
o Susilawati v American Express Bank Ltd (2008)
Unconscionable Bargain (pg 174)
 Suggests that any agreement which is manifestly inequitable and constitutes an unconscionable bargain
should be set aside
 Lim Geok Hian v Lim Guan Chin (1994)
 o Thean JA held that the concept of inequality of bargaining power is insufficient in itself and in
the absence of unconscionable conduct, to justify the setting aside of a contract
 Unconscionability can be an exception under Singapore Law and does in fact constitute a vitiating
factor for contracts involving performance of bonds
o Fong Whye Koon v Chan Ah Thong (1996)
o GHL Pte Ltd v Unitrack Building Constrcution Pte Ltd (1999)
o Eltraco International Pte Ltd v CGH Development Pte Ltd (2000)
o Anwar Siraj v Teo Hee Lai Building Construction Pte Ltd