Business Law Week 3

Four pillars of contract

Offer + acceptance = agreement
Consideration + intention = enforcement

Definition and importance of consideration

Consideration can be viewed as the price or compensation for the promise given by one party to the other.
 Must first be given for contract to be legally enforceable
 Something which is given in exchange for another thing.
o Doesn’t have to be done yet. The consideration can be a deal that promisee will do something in the
future.
 E.g. selling book for $30. $30 is the consideration

Formal definition
It is an act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought,
and the promise thus given for value is enforceable.
 Person who makes or performs the promise is the promisor and the person whom it is made or performed is the
promisee
 In a typical contract, there will be at least two promises
o E.g. A promise to sell the book B is 1 promise, B promise to give $30 to A is another promise
o AKA 2 promisors and 2 promisees
o Depends on which promise is considered, if A (promisor) break promise to B (promisee), B can sue A for
breach of promise but only if B has given consideration in exchange for that promise
 The consideration given by the promisee must be requested by the promisor

Benefit-detriment analysis; reciprocity

Why consideration is essential for all contracts

Exception: deeds
Consideration is essential for all contracts, except those which are under seal (i.e. a deed)
 I.e. deed are enforceable even without consideration
 FYI: To make a written document a deed, at the signature there state “Signed, Sealed and delivered”

Types of consideration
3 types of considerations
(Define and differentiate between the different types of consideration)
Executory consideration
 Consideration yet to be performed (e.g. Promises of future action)
 Executory consideration is sufficient consideration
 Contract consist of promised obligations which are intended to be performed in the future

Executed consideration
 Consideration performed
 Executed consideration is sufficient consideration
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  E.g. A offered to sell and handed book over to B and at that time B agrees to buy it and promises to pay next
week. A’s consideration is executed and B’s consideration is executory

Past consideration
 Refers to act performed prior to and independent to promises being exchanged
o (how can you say that something you did in the past is done for the promise you don’t know about)
 Past consideration is insufficient consideration. Not sufficient to make a promise enforceable.
o Case: Roscorla v Thomas (1842)
 Thomas promised Roscorla that the horse was sound and free from vice AFTER Roscorla had
bought the horse for a certain price.
 NOTE: Executed consideration – act was performed in exchange for another promise given VS
Past consideration – act was performed without the reciprocal promise in mind
E.g. A gratuitously gave book to B, then B promises to give A $30, this is past consideration

Exception: Past consideration is sufficient consideration if the following conditions are met: Pao On’s 3 requirement
 Case: Pao On v Lau Yiu Long (1980)
o The 3 conditions are trying to outline a particular situation: even though the act was done before they
have expressively articulated the promise. Both parties somewhat understood that the act is too be
done for the promise.
1. Act is done at promisor’s request
2. Parties understood that act would be remunerated by payment or conferment of some other benefit
 Any reasonable party would contemplate the act to be remunerated upon request of additional work,
even when not explicitly stated
3. Payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance
AKA Contract must otherwise be enforceable
 This had to do specially for Pao On’s case only because the promise legality was questionable.
 So the more important conditions are 1 and 2

 E.g. You asked a stranger to shine your shoe. The person shined your shoe, he did it anticipating the
remuneration of being paid.
 FYI Case: Rainforest Trading Ltd v State Bank of India Singapore (2012)

Principles or rules on consideration

(Understand and apply the rules on consideration)
(Identify the different examples and explain when they apply)
(Understand the relevant case law, including possible conflicts)
2 main rules on consideration
1. Consideration must move from the promisee but it need not move back to the promisor
2. Consideration must be sufficient but need not be adequate

Consideration must move from the promisee but it need not move back to the promisor
For a promisee to enforce the promise, he must show that consideration has moved from him
 E.g. A contracted with B’s father (C) who paid $30 to A. C tells A to give book to B. If A fail to give book, C can
enforce the contract because consideration has moved from him. B cannot enforce the contract because no
consideration has moved from B.
 Case: Tweddle v Atkinson (1861)

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 o Both fathers of a married couple entered into a contract to pay a specified sum to the husband, but the
fathers later died. The husband sued one of the father’s executors for the money due to him.
o Result: Tweddle could not enforce the contract between the two fathers. Firstly, he is not a party to the
contract. Secondly, there is no consideration moving from the husband. The law viewed the fathers’
promises as gratuitous promises from Tweddle’s perspective

Consideration does not have to move to the promisor

 In other words, although the promisee must provide consideration, the consideration need not benefit the
promisor
o E.g. Consideration provided by A – the book – did not move to C, but to B – a third party benefiting from
the contract
 Case: Malayan Banking Bhd v Lauw Wisanggeni (2003)
o See below for full info
o Lauw also argued that the business contact benefitted from his undertaking to the bank and Lauw
himself did not receive any benefit. Court rejected this argument.

Consideration must be sufficient but need not be adequate

The law will not interfere with the parties’ bargain
 E.g. if A agrees to sell the book to B for 1 cent, the law will still recognise and enforce the contract

Unlike certain civil law systems, the common law will not inquire as to the fairness of the consideration, as long as the
parties agree to it willingly. Quantity is irrelevant.
 Case: Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Construction Pte Ltd and Another (2003)
 Case: Swiss Singapore Overseas Enterprise Pte Ltd v Navalmar UK Ltd (No 2) (2003)

 However, in some cases, a grossly inadequate consideration may lead the court to conclude that a party to the
arrangement either did not understand what he was doing or was the victim of some imposition.
o In such situation, the agreement may be set aside on the ground of duress or undue influence
o Case: Kuek Siew Chew v Kuek Siang Wei and another (2015)

Sufficient consideration / good consideration / valuable consideration

All considerations must be of some value in the eyes of the law. This makes the consideration “sufficient”
Types:
 Good or valuable consideration, Money, goods or services

 Forbearance to sue
o The benefit of avoiding a lawsuit
o 2 requirements:
 The legal claim must be reasonable and not frivolous
 The claimant has an honest belief I the chance of success of the claim, and that the claimant has
not concealed from the other party any fact which, to the claimant’s knowledge, might affect its
validity
 Case: Abdul Jalil Bin Ahmad Bin Talib and Others v A Formation Construction Pte. Ltd.
(2006)
o The claimant need not have a valid claim, the forbearance to sue on a doubtful or invalid claim can
constitute sufficient consideration
 Case: Lim Beng Cheng v Lim Ngee Sing (2016)
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 o Case: Malayan Banking Bhd v Lauw Wisanggeni (2003)
 Lauw signed an undertaking with Malayan Banking to help a business contact who owed money
to the bank. The undertaking states that if the business’ shares fall below a certain price, Lauw
would pay the difference. The shares fell below that stated price. Lauw refused to pay the
difference saying that the undertaking was not enforceable because the bank did not furnish
any consideration for it.
 Result: The bank provided sufficient consideration by not suing the business and giving it more
time to repay its outstanding debts. Lauw’s promise is enforceable and he is liable to pay.

 Performance of existing duty to third party

o Case: The Eurymedon (1975)
 The defendant stevedores were already contractually bound to unload goods from the ship, The
Eurymedon. The plaintiff shipping company made a separate offer to pay the defendant if they
would unload the plaintiff’s goods from the ship.
 Held: Even though the defendant was already contractually bound to a third party to do so, the
defendant’s act of unloading still formed good consideration for the contract with the plaintiff.
The plaintiff’s promise to pay is good consideration and is enforceable.

Insufficient consideration
 Moral obligation; vague promises; love or affection
o Case: Eastwood v Kenyon (1840)
 Eastwood is guardian of Sarah Sutcliffe and incurred expenses on her behalf. Sarah married
Kenyon and Kenyon also promised to repay Eastwood for the expenses. Kenyon failed to do so
 Result: Eastwood did not provide fresh consideration for Kenyon’s promise. It was argued that
Kenyon was under a moral obligation to pay Eastwood but this was rejected.
o Case: Thomas v Thomas (1842)
 Mrs Thomas was promised by Mr Thomas before his death that she should continue to use his
house. The defendant, who was the executor of Mr Thomas’ estate, allowed Mrs Thomas to use
the house in return for a nominal rent of $1 and “in consideration of” Mr Thomas’ expressed
desire before he died
 Result: $1 was sufficient consideration but the husband’s wishes were irrelevant
o Case: Kuek Siew Chew v Kuek Siang Wei and another (2015)

 Vague or insubstantial consideration

o Case: White v Bluett (1853)
 White, Bluett’s father’s executor, sued Bluett. Bluett argued that his father had agree to
discharge Bluett based on a promissory note he issued to his father before the father’s death.
However, all the note said was Bluett saying to cease complaining that he was overlooked in
favour of his brothers.

 Performance of existing public duty

o Promisee is already under a public duty to perform an act and the same act is the purported
consideration
o Case: Collins v Godefroy (1831)
o Case: Estate of Lee Rui Feng Dominique Sarron, deceased v Najib Hanuk bin Muhammad Jalal and others
(2016)

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  Enlistment by a full-time national serviceman is insufficient consideration

o Exception
 Promisee did something more than the required by an existing public duty
 Case: Glassbrook Bros Ltd v Glamorgan City Council (1925)
o The manager sought additional policemen to protect the mine during a strike.
The police concluded that a mobile force was adequate, but the manager
insisted a stationary force. The police agreed to provide a stationary force for a
fee, but the manager refused to pay.
o Result: The police went beyond their public duty to provide a stationary force.
Hence it is good consideration and a contract exists. The manager is liable to pay
the sum.

 Performance of existing contractual duty owed to promisor

o Case: Stilk v Myrick (1809)
 Stilk was a seaman on a ship. During voyage, 2 sailors deserted. Captain promised the crew that
the wages of the deserting sailors would be divided among them if they worked to bring the ship
home even though shorthanded.
 Result: There was no consideration for the captain’s promise because the remaining crew did
what they were contractually required to do. 2 sailors deserting was within the usual
emergencies found in such a voyage
o Exception:
 Promisee does more than what was required under contract
 Case: Hartley v Posonby (1857)
o The number of sailors who deserted was so large that the ship became
unseaworthy. Hartly was required to do much more than what he was expected
to do originally.
o Exception:
 In certain circumstances, discharging an existing duty owed to the promisor may constitute good
consideration for a fresh promise
 Case: Williams v Roffey Bros and Nicholls (Contractors) Ltd. (1991)
o Roffey Bros subcontracted carpentry work to Williams for a fee. Williams
completed part of the work and was partially paid. Williams ran into difficulties
and could not complete on time. Roffey Bros was anxious that the delay would
make them liable under the main contract for late completion, hence Roffey
Bros promised to pay an additional sum for each flat completed. Williams
completed the work on time but Roffey Bros refused to pay the additional sum.
o Result: As long as the extra payment was not given under duress or fraud, the
fresh promise was enforceable because Roffey Bros obtained “practical
benefits” from William’s work. The benefit was that they would not be liable
under the main contract for late completion.

o This somewhat open up the floodgates for many cases. After all, most contracts
would have consequences when the promisor cannot fulfill his contract. Some
more the promisee is somewhat the one who created the danger for promisor.

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 o Must look at the context of this case, in this period of time, the construction
industry was very bad. The subcontractors were always being bullied by the
main contractors, so the court bent over backwards to help the subcontractor.
o In order to prevent people from applying this exception literally, the court
added “not given under duress or fraud” to avoid situations where the promisee
does things so slowly on purpose.
o In Sg, there is a case where this was applied so therefore this exception now
applies in Singapore.
 Case: Chwee Kin Keong v Digilandmall.com Pte Ltd

 Partial fulfillment of contractual obligation (Part payment of existing debt)

o E.g. B owe A $30 for the book. The fact that B paid $10 to A on the due date does not discharge her
obligations under the contract. B still owes A $20. This is even so if A, at the time of payment, assured B
that $10 is in full satisfaction of the entire debt.
o Case: Pinnel’s case (1602)
 Pinnel sued Cole for a debt of £8.50 due on Nov 11. Cole argued that, at Pinnel’s request, he had
paid £5.11 to Pinnel on Oct 1, which Pinnel accepted in full satisfaction of the debt.
 Result: Pinnel succeeded in his claim. But the court made it clear that Pinnel would have failed in
his claim because Cole had, at Pinnel’s request, paid the part payment earlier than the date the
debt was due and this was accepted by Pinnel in full discharge of the debt.

In other words, part payment of a debt does not discharge the entire debt unless the part
payment was made at the request of the creditor and the payment was made earlier, at a
different place, or in conjunction with some other valuable consideration.

o Case: Foakes v Beer (1884) (Reaffirms Pinnel’s case)

 Mrs Beer was awarded a judgement of £2,090 against Dr Foakes. They agreed that the sum
would be paid by Foakes in a $500 first payment and subsequent instalments of £150 every 6
months until the balance was paid off. Beer agreed that she would take no further action on the
judgement. After the entire judgement was paid, it turned out that there was accumulated
interest amounting to £360. Beer claimed the interest.
 Result: The House of Lords reaffirmed the rule in Pinnel’s Case and held that Beer’s promise not
to take further action was not supported by consideration. She could claim the £360.

o People argue that the rule appears inconsistent with the principle that the law does not look at the
adequacy of consideration. Also, the rule seems to allow a creditor to go back on his word simply by
omitting consideration for the settlements he accepts.

Possible conflict between Stilk v Myrick and Williams v Roffey

 English Court of Appeal in Williams v Roffey did not overrule Stilk v Myrick.
 The outcome is that the strict requirement of consideration in Stilk v Myrick is effectively diluted by Williams v
Roffey
 This dilution of the doctrine of consideration has been acknowledged in Singapore
o Case: Chwee Kin Keong v Digilandmall.com Pte Ltd

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  “The modern approach in contract law requires very little to find the existence of
consideration… The marrow of contractual relationships should be the parties’ intention to
create a legal relationship”
o Case: Gay Choon Ing v Loh Sze Ti Terence Peter and Another Appeal (2009)
 The Singapore Court of Appeal acknowledged there are “problems of theoretical coherence”
with the doctrine of consideration – such as exceptions created by promissory estoppel, but
stated that maintaining a diluted doctrine of consideration is the most practical solution until
thorough reform of the doctrine is undertaken
o The approach for courts in Singapore is to still require consideration to uphold contracts but to be more
ready to find the existence of consideration

Promissory estoppel
One way in which the general requirement of consideration and the rule in Pinnel’s Case can be softened in their
application is through this somewhat controversial doctrine

I owe you something. You come to me and say that no don’t need, you don’t owe me anymore. I altered my position to I
don’t owe you. You come back to me and say that I owe you. The court will say that no, it is unfair to me for you to go
back on your promise.

Promissory estoppel
 When established, promisee may have valid defense against a promisor’s claim even though no consideration
has been given by the promisee. (i.e. Promisor estopped from enforcing his strict legal right / breaking his
promise)
o This is an exception to the general rule of considerations being necessary for a promise.
o Very narrow use only.
 Promissory estoppel cannot be used for executed contracts
 Explained in an obiter dictum:
o Case: Central London Property Trust v High Trees House Ltd. (1947)
 1937: defendant obtained from plaintiff 99-year lease of a new block of flats. Rent was £2,500
per year and agreement was under seal. High Tree sub-leased flats to others
 1940: because of war, High Tree could not find sub-tenants. Both parties agreed to reduce the
rent to £1,250 per year. Agreement was in writing but not under seal
 1945: Flats fully leased by sub-tenants, High Tree was still paying reduced rent.
 Plaintiff claimed that the full rent was payable for the last 2 quarters of 1945 and the future
 Result: Plaintiff won on the basis that 1940 agreement was intended to be a temporary one due
to the exigencies of the war
 BUT note the obiter dictum:
 If plaintiff wished to claim full rent for 1940-1945, they would have failed as they would
be estopped by the plaintiff’s 1940 promise not to enforce its full legal rights, even
though that promise lacked consideration

o Subsequent promise made that are lacking consideration is enforceable

o Promisor will be estopped from breaking his promise

o The principle stated in the High Trees case does not create new causes of action where none existed
before. It only prevents a party from insisting upon his strict legal rights, when it would be unjust to
allow him to enforce them.
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Key elements required to establish promissory estoppel
1. Parties must have an existing legal relationship
2. Promise must be clear, unequivocal and certain, and intended to affect the existing legal relationship
3. Promisee relied upon the promise and altered his position
4. Overall, it must be inequitable (unfair) for the promisor to be allowed to go back on his promise

Nature of promissory estoppel

1. Suspensive (the usual effect)
 Suspends promisor’s rights temporary
 Original legal relationship is suspended for duration of promise
 Revert back when promisor gives reasonable notice of intention to revert
 Case: Tool Metal Manufacturing Co. Ltd. v Tungsten Electric Co. Ltd. (1955)
2. Extinctive
 Totally extinguishes promisor’s rights under the original agreement
 The promise could become final and irrevocable if the promisee cannot resume his original position

Shield Not Sword

 It can only be raised as a defense against a claim made by a plaintiff.
 Cannot be used to commence a suit
 Case: Combe v Combe (1951)
o After a divorce, a husband promised to pay his wife £100 each year as allowance. Relying on this
promise, she chose not to obtain a formal court order for maintenance. The husband failed to pay, and
the wife sued.
o Held: Promissory Estoppel can only be “used as a shield and not a sword”. The husband’s promise has no
consideration and is unenforceable in court

Equitable principle???
Conflict between common law and equity???

Intention to create legal relations

(Define and understand the significance of intention to create legal relations)
(Understand and apply the rebuttable presumptions)

For a contract to be legally enforceable, there must be intention to create legal relations.
 If this intention is absent, then the promise may not create any binding obligation at all
 (At the time of creating the contract, did the two parties have the intention where if either one of them were to
breach the contract, legal actions would be taken against him/her.)

 If absent, contract is not enforceable even with consideration

o E.g. Two parties agree to take a walk together – should not have legal consequences
 In determining whether parties have the intention to create legal relations, the law applies an objective test
(intention is objectively ascertained)
o Court considers whether a reasonable person viewing all the circumstances of the case would consider
that the party at issue intended his promise to have legal consequences

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Cases where intention to create legal relations is an issue usually grouped under 2 categories (rebuttable presumption)
1. Social and Domestic Agreements
 Agreements is made between friends or between family members
 General presumption that such agreements lack the necessary intention to form a contract
 Case: Balfour v Balfour (1919)
 Defendant Mr Balfour stationed in Ceylon. He promised to give his wife £30 per month as
allowance while they lived apart. Wife sued him when he failed to pay.
 Result: English Court of Appeal held that the claim failed because the parties did not intend the
promise to be legally enforceable.

 Exception – provide evidence

 Intention can be shown (e.g. recording)
 Case: Merritt v Merritt (1970)
 Couple discussed marriage separation in a car. Wife refused to leave the car
until husband had recorded the following agreement in writing and signed it –
agreement required husband to transfer property into wife’s sole ownership.
Husband failed to do so
 Result: English Court of Appeal found the necessary intention and held that the
wife succeeded in her claim for breach of contract

2. Commercial Agreement
 General presumption that there is the necessary intention to create legal relations.
 This stems from the desire of the law to give efficacy to agreements made in a commercial context
 Case: Georgi Velichkov Barbudev v Eurocom Cable Management Bulgaria Eood & Ors (2012)
 Case: Pender Development Pte Ltd v Chesney Real Estate Group (2009)
 Case: Foo Jong Long Dennis v Ang Yee Lim Lawrence and another (2016)

 Exception – provide evidence

1.Honour Clauses
 Parties inserted an “honour clause” which expressly states that their agreement is not to
be legally binding
 Case: Rose & Frank Co. V J R Crompton & Bros Ltd. (1925)
 Plaintiff was defendant’s agent selling the defendant’s tissues for carbonizing
papers. Their agreement included a clause described as an “Honourable Pledge
Clause”
 Result: English Court of Appeal held that the agreement was not legally binding
because the clause clearly and expressly stated their intention that it would not
give rise to legal relations.

2.Documents whose contents, although giving the impression of evidencing a binding

agreement, may fall short to a contract (wording and circumstances in which it was created are
important too)
1. Letters of comfort
 Written by one party usually intended to vouch for the financial soundness or
probity of another related party who wishes to enter into a contract with a third
party
 It acts as an additional assurance for the third party
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  Case: Kleinwort Benson Ltd. v Malaysian Mining Corporation Berhad (1989)
 Defendant’s parent company MMC, issued a letter of comfort to
plaintiff in connection with a loan facility of up to £10 million provided
to MMC Metals Ltd, a wholly-owned subsidiary of MMC.
 The letter of comfort stated that it was MMC’s policy to ensure that
MMC Metals Ltd was “at all times in position to meet its liabilities”
 Result: English Court of Appeal held that the letter of comfort did not
amount to a contractual promise by MMC to guarantee the loan
payment owed by MMC Metals Ltd.
2. Letters of intent
 It records the intention of the parties, usually in connection with a proposed
commercial project.
3. Memoranda of Understanding
 Document which records the understanding of the parties on a proposed
commercial project.

3.FYI: Surrounding circumstances around a presumed legal relations in commercial contexts may
militate against the intention to create legal relations
 E.g. a party’s acquiescence to the agreement may reflect a bowing to commercial
pressure, not an intention to create legal relations.
 Case: Max-Sun Trading Ltd and another v Tang Mun Kit and another (2016)

Capacity to Contract – Minors and Intoxicated Persons

(Differentiate between Necessities and Necessaries)
Who is a Minor
 A person who have not reached the age of majority. At law, the age of majority defines the stage which a person
reaches adulthood and is considered legally responsible for his actions.
 General rule is that contracts are not enforceable on minors.
 Singapore: Common law age is 21 years
o But for most contracts nowadays it’s 18 years old
 The law is concerned to protect minors from entering into contracts as they may not fully appreciate the
consequences of their actions.
On the other hand, the law must also ensure that the other party does not suffer unnecessary hardship if he has
contracted fairly with the minor
 Laws developed
o Found in common law
o Complemented by provisions in the Minors’ Contracts Act (MCA) and the Sale of Goods Act (SGA)

Rules on minors’ contracts best shown in cases involving a contract where one is a minor and the other has full capacity
Such contracts fall under 1 of 3 possible categories:
Valid Minors Contracts – Necessaries & Employment contracts
Valid contracts bind both the minor and the other party. It is fully enforceable.
Two groups of contracts make up valid contracts
 In both cases, the contract on the whole must benefit the minor or it will not be binding

1. Beneficial contracts for necessaries

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What is necessaries
 Necessaries refers to those goods and services which the law deems reasonably required by a minor in his
particular station in life.
 Section 3 Sale of Goods Act defined it:
o (2) Where necessaries are sold and delivered to a minor … he must pay a reasonable price for them
(This means that it is possible for reasonable price to not be the contracted price for the goods)
 This means that it only applies for executed contracts. The goods or services have been supplied
by the other party.

o (3) “Necessaries” means goods suitable to the condition in life of the minor or other person concerned
and to his actual requirements at the time of the sale and delivery

 This means that not all necessities (food, cloths etc.) are in fact necessaries.
o Case: Nash v Inman (1908)
 Nash sought to recover £122 for some clothes delivered to a minor.
 Result: Nash failed to prove that the clothes were necessaries since the minor already had an
ample supply of clothes. Hence the contract is unenforceable.

 This case shows that if the necessaries are goods, the other party must have performed his
obligations before the contract is binding on the minor.

 Necessaries need not be confined to necessities.

Necessaries may include luxurious items of utility if they are considered appropriate for the minor in his position
o Case: Peters v Fleming (1840)
 Issue was whether an undergrad that was the eldest son of a wealthy Member of Parliament
had to pay for gold jewelry that he had bought.
 Result: The gold items could constitute necessaries in the minor’s position. Hence the contract is
enforceable.

 If the necessaries are service, then the contract is binding regardless on whether the other party has performed
his obligation.
o Case: Roberts v Gray (1913)

Minor undertakes a loan for necessaries

 A person who lends money to a minor is generally unable to enforce the contract and recover the money from
the minor
 Exception: Minor use the money to purchase necessaries
o Case: Marlow v Pitfield (1719)
o In practice, no financial institution would lend money to a minor simply on the assurance that the loan
can easily be misapplied to other uses.
o Would only lend money only if the minor can supply a guarantor who will guarantee the loan.
s 2 Minors’ Contract Act – such a guarantee is enforceable even if the underlying loan agreement is
unenforceable (i.e. loan was not for necessaries).

2. Beneficial Contracts for Employment

A contract of service involving a minor will be binding upon the minor if the contract is, on the whole, beneficial to him.
This is to allow minor to earn a livelihood.
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E.g. of minor’s employment contract which was not beneficial to the minor
 Case: De Francesco v Barnum (1890)
o A 14-year-old girl entered in a deed of apprenticeship with De Francesco to learn stage dancing. The
contract stated that the girl cannot marry and would not accept other engagements without her
approval. Yet she was under no obligation to provide the girl with engagements and her pay was totally
unsatisfactory
o Result: The terms were not beneficial to the girl and hence the deed is unenforceable.

Not just employment contracts, other contracts through which a minor could make a living are also allowed. Such
contracts will be binding even if there are certain aspects which are not advantageous to the minor. Important thing is
that overall, the contract must benefit him.
 Case: Chaplin v Leslie Frewin (Publishers) Ltd. (1966)
o A minor agreed to have his biography written by ghost writers and earning royalties in return. The book
turned out to show him as a ‘depraved creature’.
o Result: The contract helped the minor to start out as an author and earn money. Hence the contract is
beneficial to him as a whole and the minor is bound by the contract.

Voidable Minors Contracts – Minor has choice to opt out

 Found in a relatively small number of cases
 The contract is valid and binding upon the other party, but the minor is entitled to repudiate the contract
without any liability, which is limited to his time of infancy or within a reasonable period after he attains age of
majority.
 Usually occurs when a minor acquires an interest in a subject matter where the minor faces recurring future
obligations
o E.g. Minors’ contract for a lease, partnership and purchase of shares in a company
 Case: Davies v Benyon-Harris (1931)
o A minor entered into a lease for a flat. 3 years later after he attained majority, the landlord sued him for
unpaid rent.
o Result: The lease was voidable and is binding unless he repudiated the lease within a reasonable time
after attaining majority.

Other (Ratifiable) Minors Contracts

If a minor’s contract does not fall within the class of valid or voidable contracts then, by a process of elimination, it falls
within this third class.
Such a contract would neither be valid nor enforceable against the minor unless he ratifies it after he attains majority.
However, the contract still binds the other party.

FYI Exception:
 If the minor has already performed his obligations in the contract, the minor is unable to return to his original
position unless there is a total failure of consideration by the other party.
 Case: Valentini v Canali (1889)
o A minor contracted to lease a house from Canali for £102. He paid £68 and occupied the house for a few
months. He later claimed the contract was not binding and sought to recover the £68.
o Result: The minor already had the benefit of the house, hence he cannot recover the money.

Partial remedy with the Minor Contracts Act to aid the other party
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s3(1) Minor Contracts Act
For voidable or ratifiable contract which is unenforceable on a minor, should a minor have improperly obtained property
as a result of the contract being unenforceable or repudiated, the minor has to return it. If the minor refueses to pay for
any property acquired by him, then the other party can at least recover the property from the minor.

Mentally unsound and intoxicated person

The law also protects these people.
A contract with such a person is valid but many be unenforceable against him if it can be shown that, at the time the
contract was made:
 He was incapable of understanding the nature of the contract; and
 The other party knew or ought to have known of his incapacity
o Case: Che Som bte Yip & Ors v Maha Pte Ltd & Ors (1989)

s3(2) SGA also applies to mentally unsound and intoxicated persons. Where they have obtained goods which are
necessaries, they must pay a reasonable price for the goods.

Extra: Meaning of words

Privity - a relation between two parties that is recognized by law, such as that of blood, lease, or service.
Privity of contract - the relation between the parties in a contract which entitles them to sue each other but prevents a
third party from doing so.
Stevedore - a person employed at a dock to load and unload ships.
Wont – one’s customary behaviour / (of a person) in the habit of doing something; accustomed.
Estoppel - the principle which prevents a person from asserting something contrary to what is implied by a previous
action or statement of that person or by a previous pertinent judicial determination.
Preclude - prevent from happening; make impossible.
Inequitable – unfair; unjust
Exigency – an urgent need or demand
Acquiesce – accept something reluctantly but without protest
Militate - (of a fact or circumstance) be a powerful or conclusive factor in preventing.
Ratify - sign or give formal consent to (a treaty, contract, or agreement), making it officially valid.
Consignment - a batch of goods destined for or delivered to someone.
Unsolicited - not asked for; given or done voluntarily.
Renege - go back on a promise, undertaking, or contract.

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