Businesslaw Workbook 2019 Sit Bhb1008

Hospitality Business Law 1
A WORD OF ADVICE
You may find this hard to believe if. But Business Law is a very
interesting subject. Otherwise, why do you think that Hollywood is
making lots of movies on Law and Law series? The thing is if you
want to maximize your understanding of this module, you need to
make a commitment to yourself to attend classes regularly and listen
to the lecturer [who is quite a guy really] and participate actively in
the many discussion that the lecturer will try to engage you in.
Remember, nobody put a gun to your head to attend this program. So
it is really up to you on how you want to make this module –
interesting or boring. It is fact that human being have a very short
concentration span and this is why you sometimes feel sleepy in class.
But if you engage actively in class discussions and take notes of what
the lecturer is saying you will notice that your brain gets stimulated
and you can actually remember all that you need for your
examination. Therefore when the lecturer ask you to copy down some
information please do so. We live is an age of technological
innovation but the truth is sometimes the traditional methods are the
best. When you take down notes with your hand you actually are
stimulating some parts of your brain which will help you remember
things better. So welcome to my program and I hope that you will
enjoy it because I am certainly am going to enjoy myself teaching
you.

CONTENTS
1. A word of advice Page 2
2. Areas to focus in Business Law Page 4
3. Segment One – Legal System Page 5
4. Things you need to know about the Legal System Page 6
5. What is Law Page 12
6. Classification of Law Page 13
7. Singapore Court Structure Page 19
8. Separation of Power Page 24
9. How the Government pass the Law Page 25
10. Entrepreneurial forms of conducting business Page 27
11. Sole Proprietorship Page 28
12. General Partnership Page 31
13. Limited Liability Company Page 37
14. Nature of Corporation Page 40
15. Segment Three – Elements of Contract Page 42
16. Agreement vs Contract Page 47
17. Types of Contract Page 49
18. Understanding Contract Page 52
19. Definition of Offer Page 57
20. Invitation to Treat Page 60
21. Areas of Invitation to Treat Page 62
22. Termination of Offer Page 73
23. Rules of Acceptance Page 79
24. Intention to Create Legal Relations Page 82
25. Definition of Consideration Page 85
26. Rules of Consideration Page 87
27. Capacity to Contract Page 98
28. Introduction to Terms of Contract Page 101
29. Nature of Terms Page 105
30. Exemption Clauses Page 107

CONTENTS
31. Rules of Misrepresentation Page 110
32. Types of Misrepresentation Page 113
33. Discharge of Contract Page 115
34. Remedies in Contract Page 124
35. Segment Four – Law of Tort Page 126
36. Negligence Page 128
37. General Defences in Law of Tort Page 137
38. Vicarious Liability Page 139
39. Segment Five – Law of Agency Page 142
40. Formation of Agency Page 144
41. Authority of Agent Page 149
42. Duties of Agent Page 151
43. Termination of Agency Page 152

To Start the Ball Rolling…
Why must you study Law?

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What does Business Law do?

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How is Business Law related and important for Hospitality

Management?
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What kind of industrial application is there for mastering Business Law

for Hospitality Management?
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What should I do to benefit from this programme?

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QUICK DISCUSSION 1
You were walking home and a big guy came and punch you in the face. You
ran and called the police. When the police arrived they arrested the guy and he
was charged with assault and appeared in court. The judge after hearing both
sides decided to fine the guy $1000 for assaulting you. You were sitting there
in the court room and wondering whether this is justice as you certainly are not
going to get the $1000. Ask yourself why is it that you are not getting the
money?
Boy friend tells girlfriend: “Darling will you marry me?” Girlfriend says OK.
Later Boyfriend change his mind and married the girlfriend’s sister – Can the
girlfriend sue the boyfriend?
You went to a five star restaurant and ordered a plate of chicken rice. As you
were eating half way you felt something crunching in your mouth. You spit
out and it was a half-eaten lizard. The tail portion of the lizard was missing.
What can you do about this?
[Answer next page]

Q: Why does the law society prohibit sex between lawyers and their clients?

Areas to Focus in Business Law
BUSINESS
LAW

I promise to go through this workbook conscientiously and listen to
all instructions given by my lecturer. I believe that I am capable of
doing well in this subject and will work effectively towards passing
my examination with good grade. I know that there will be times that
I will be tired and feel distracted and during these times I will remind
myself that very soon all this going to be over. I must pay attention
and if I don’t understand I will ask my lecturer for help.
I hereby declare that I will work towards completing this module

successfully:
___________________________________
Signature / Date
somebody forced you too.

not interested in this module and you are doing this because
PS: Please do not sign this document if you feel that you are

Segment one: The Legal System
REMEMBER
Business Law is really fun to

learn.
This now – is the point of no

return. Are you ready?
What is The Legal System?
Every country has a legal system. The legal system can be equated
to a water bottle. The water is the Law and the water bottle is the
legal system. Without the water bottle it would be difficult to
contain the water. Likewise, without the legal system the law
would be difficult to enforce. Different countries have different
version of the legal system. Some have created the legal system
based on the dominant religion of the region like in the Middle East
where some countries who are pre-dominantly Muslim may choose
to follow the Sharia Law. Others like the United Kingdom,
Australia, and the United States follow what is called the Common
Law system. This system is based on laws that the judges decide in
court based on their observation of what is justice and the laws
passed by the government of the country. Other countries like in
continental Europe, follow what is called the Roman system or also
know as Civil System. This is based on a code of conduct that
everyone in that society agrees to follow. Countries like Singapore
and Malaysia follow what is known as a mixed system which as the
word suggest is a combination of some of the other systems
mentioned above.
A study of law would require you to have a rudimentary

understanding of the legal system and what it entails. There are a
few things that you need to know. They are: [turn to next page and
listen to the lecturer, who will explain this]
page bottom]
Q: What is the difference between a tick and a lawyer? [Answer next

Things you need to know about the Legal System
LEGAL SYSTEM
A tick falls off of you when you die.

The Nature and Meaning of Law
Practically every aspect of your life is govern by Law. When we ride on the
MRT a legal transaction is entered into with the Mass Rapid Transport
Corporation; when we commence work, our working conditions are governed
by legal rules; when a road accident occurs, compensations for victims is
regulated by legal rules. In fact, there are very few activities, which are not in
some way regulated by the law.
From your understanding of what Law is – write down a definition.
Law is
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Lecturer’s definition
A: To prevent clients from being billed twice for essentially the same service.

Function of Law [five things you need to know about the pathetic
Human race
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
A: Retired.

Classification of Law
LEGAL RULES
Q: How many lawyers does it take to change a light bulb?

Civil Law v Criminal Law
Most business laws are found within civil law.
However, it is useful to know a bit of criminal
law as some type of unfair or unlawful business
conduct are criminal offences. If a person
commits any of these unlawful acts, the penalty
is a criminal conviction which may include a
jail term – a serious thing indeed. In contrast,
the liability for breaching civil laws usually
involves the payment of financial
compensation to the injured party. Thus when
a wrong is committed, the criminal law
punishes whereas the civil law compensates.
What happens when criminal law conflicts with civil law?
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A: Six. One to change the bulb and five to write the environmental impact statement.

Sources of Law
As a metaphor, the water in the bottle represents the law. The water bottle
represents the legal system. Without the bottle it would be difficult to
contain the water. Likewise without a legal system it would be difficult to
enforce the law.
If you look at the water bottle you can sometimes see that the manufacturer
gives information as to where the source of water comes from. The
mineral water we drink is produced in different countries in the world and
they have slightly different mineral contents. However the one similarity
is that they are all drinkable. Using this analogy the law also comes from
different sources. The three main sources that you need to know are:
1. _________________________________________
a. _____________________________________
b. _____________________________________
2. _________________________________________
a. _____________________________________
b. _____________________________________
c. _____________________________________
d. _____________________________________
3. ____________________________ [you just need to know this and we are

not going to cover this in detail.]
Q: Why are lawyers like nuclear weapons? Answer next page.

Customs, Case laws and Stare Decisis
1. Briefly describe how customs becomes Law?

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2. What are case laws?

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When they land, they screw up everything forever.

A: If one side has one, the other side has to get one. Once launched, they cannot be recalled.

Words to describe the persons going to court
The person suing is called:
The person being sued is called:
Cases are recorded as follows:
The person appealing against a

court decision is called:
The person responding to the

appeal is called:
When they land, they screw up everything forever.

A: If one side has one, the other side has to get one. Once launched, they cannot be recalled.

Doctrine of Binding Precedent
What does STARE DECISIS means?
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Do judges have to follow previous court decisions always?
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Is Binding Precedent important in Singapore

Legal system?
In Singapore, case law is very important
because of the doctrine of binding precedent.
This doctrine states that where a decision is
made by one court, judges in subsequent cases
in certain circumstances must follow that
decision.

Activity : Why do judges follow binding precedent?
The doctrine of binding precedent means that the decisions made by the
higher court are binding on lower courts and sometimes the same court is
bound by its own previous decision when the material facts are the same.
Judges follow binding precedent as it gives the law a sense of uniformity. By
following this rather ancient but useful concept judges can ensure that they
achieve ____________________ and ___________________ in the law that
is being decided.
If judges were to base their decision on their personal opinion and the mood
that they are in, it will create dissonance and injustice. Think about it, if I am
the judge and today I am in a foul mood. A person comes to court being
accused of stealing a pen from a shop. In my foul mood I sentence him to 10
years imprisonment. Obviously what he did was wrong, but to sentence him
to jail for 10 years! That mean that the punishment does not match the crime.
Q: What do lawyers use for birth control? Answer next page.

SINGAPORE COURT STRUCTURE
Highest court in Singapore. Decision

made here is binding on all lower courts
Decision made here is binding

on the State Courts. Bound by
decision of Court of Appeal.
Does not have to follow its own
previous decision unless to
maintain consistency in the
decision
Decision made is not

binding on higher court
and does not have to
follow its own previous
decision. There are
different branches of
this court.
A: Their personalities

Activity: Check out the Internet to find out other State
Courts in Singapore?

STATE COURTS & THEIR
These courts have power to
FUNCTIONS
hear both civil and criminal
cases. These courts deal
with civil cases involving
claims of more than
$60000 but less than
$250000
These courts also have

power to hear both civil
and criminal cases.
These courts deal with
civil cases which do
not exceed $60 000.
Hears petition for

divorce, custody,
adoptions,
maintenance,
protection order against
spousal violence and
related matters
This court deals with

criminal offences
committed by person
under 16 years of age.

Act of Parliament
What are legislations?

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LEGISLATION passed by Parliament is

written law and last forever unless it is
replaced by another Act of Parliament.
As an Act of Parliament is more certain
and written as compared to Common
Law – it is more important than
Common Law.
When there is a conflict between an Act
of Parliament and common law the Act
of Parliament will prevail.
A: Stick his bill up his @$%.

25 Hospitality Business Law
Q: What's the difference between a lawyer and a rooster?
Parliament
Singapore
Who are these guys and what can you do if you have a nut
like this running the country?
is to cluck defiance
the morning, its primal urge
When a rooster wakes up in

Q: Have you heard about the lawyers' word processor?
SEPARATION OF POWER
How Government Pass the Law?
Bill
Basics of the Bill is discussed and voted upon. At

least ½ the House must agree for it to be passed.
The Bill is discussed in greater detail and

put to vote. More than ½ the house must
agree to go to the next stage.
A committee is formed to discuss on the

merits of the Bill. Usually this is done for
controversial Bills
The Bill progress to the Report Stage. Sometimes it

will go strait to the 3rd reading
Minor changes may be made and put to

vote. More than ½ agree will go to the
next stage
A: No matter what font you select, everything come out in fine print
SEGMENT TWO
The Law of Tort is almost entirely based on case law,

although there is legislation which affects certain aspects of
tort law. Accordingly, with some exceptions, Singapore tort
law relies on and largely follows English case law.
A Person who
commits a Tort
is’ called a
‘tortfeasor

One day, there was this lawyer who had just bought a new car, and he was eager to show it off to his
colleagues, when all of a sudden an eighteen wheeler came out of nowhere and took of the driver's side door
with him standing right there. "NOOO!" he screamed, because he knew that no matter how good a mechanic
tried to fix it, it never would be the same. Finally, a cop came by, and the lawyer ran up to him yelling. "MY
JAGUAR DOOR WAS JUST RUINED BY SOME FOOLISH DRIVER!!!" he exclaimed. "Your a lawyer
aren't you?" asked the policeman. "Yes, I am, but what does this have to do with my car?!?!" the lawyer
asked. "HA! Your lawyers are always so materialistic. All you care about is your possessions. I bet you
didn't even notice that your left arm is missing did you?" the cop said. The lawyer looked down at his side
and exclaimed "MY ROLEX!"
called Donaghue v Stevenson.
were established in a famous case
elements. These four elements
party will have to prove four
However to do this the injured
party can bring a cause of action.
or injury to another, the injured
by his negligence causes damage
relating to Negligence. If a person
important aspect is the Law
Law of Tort and the most
tort. There are different aspects of
civil law specifically in the law of
Simon for causing him hurt under
law. However, Randy can also sue
prosecute Simon under criminal
Randy can get the police to
Simon punches Randy in the face,
Law this means a ‘civil wrong’. If
‘wrong’. In the context of English
The word ‘tort’ means in French
What is the Law of Tort?
3333
CASE NO ________________
DONAGHUE V STEVENSON (1932)
Mrs D and her friend went shopping and after which decided to have a drink. D’s
friend bought for D and herself a bottle of ginger beer. D drank from the bottle and
half way through poured the remainder drink into a glass where she saw a
decomposing snail coming out the bottle. She felt sick and wanted to sue.
She could not sue in contract
because she did not buy the
ginger beer. She sued in tort.
The House of Lords held that
the manufacturer of the ginger
beer was liable in negligence.
Lord Atkin referred to the parable of the Good Samaritan in St

Luke’s Gospel and thereafter enunciated his famous ‘Neighbour
Test’
“The rule that you are to love your neighbour becomes

in law, you must not injure your neighbour…You must
take reasonable care to avoid acts or omissions which
you can reasonably foresee would be likely to injure
your neighbour. Who then in law is my neighbour?
The answer seems to be - persons who are so closely
and directly affected by my act that I ought reasonably
to have them in contemplation as being so affected
when I am directing my mind to the acts or omissions
which are called in question.”

PRINCIPLE ESTABLISHED IN
DONAGHUE V STEVENSON
If not reasonably foreseeable that

the P is harmed by the action or
inaction, then there is no duty of
care.
Foreseeability may be viewed as the
ability to see beforehand the likely
effects of a certain action or
inaction. The test is objective. Can
a person in the D’s shoes be
reasonably expected to foresee that
Negligence his action or inaction will harm the
plaintiff?
The basic test:
‘…the omission to do
something which a reasonable
man…would do; or doing
something which a prudent and
reasonable man would not do.’
Blyth v Birmingham
Waterworks (1856)
Level of Skill
As a general rule, the level of skill required is that of the reasonable man in the
shoes of the defendant. If the defendant is a doctor, then the standard of care
expected is that which a reasonably competent doctor will exercise; if the
defendant is a pediatrician, then the standard of care expected is that of a
reasonably competent pediatrician. It follows that if a defendant follows the
accepted practice in his profession, there is a strong likelihood that he has met the
standard of care expected of him.
Case No: ________ BOLTON V STONE (1951)

The plaintiff was struck by a cricket ball while standing on the street outside
her house. Her house was located near a cricket field operated by a cricket
club represented by the defendant. Normally, batsmen on the field did not hit
the cricket ball so hard that the ball would reach her house. Evidence showed
that such good batting was rare- it occurred six times in the past 30 years. The
House of Lords, held that, although there was a duty of care owed to the
Plaintiff, the duty was not breached. The chances of such accidents were too
small for the cricket club to take steps to prevent them.
Generally if the likelihood of injury to the plaintiff is high, then the court will
require a higher standard of care upon the defendant. Correspondingly, if the
likelihood of the injury occuring is low or negligible, the standard of care is
lower.
touching." "No, we came to make sure he was dead."

towards him and says, "We're all clients." "And you ALL came to pay your respects? How
turns to the people around him. "Why are you all at this man's funeral?" A man turns
A man is at his lawyer's funeral and and is surprised by the turnout for this one man. He

Seriousness of Injury
Usually, the more serious the likely injury, the higher the standard of care
required of the D. Thus, not only the likelihood of injury is taken into account,
but also the type of injury which is likely to be suffered by the P.
Case No: ________ Paris v Stepney Borough Council (1951)

The P, who had only one good eye, was employed by the D. The D failed to
provide goggles to the P for his work. While working, the P injured his one
good eye and sued his employer. The HL held that the failure to provide
goggles may be overlooked in the case of other employees who has two good
eyes. However, the failure to provide goggles for the P was a breach of duty
because the P only had one good eye.
Case No:________ Daborn v Bath Tramway Motor (1946)

During the last war in England a number of ambulances on the road had
been imported from USA with left hand drive. Evidently the resources were
not available to convert them to right hand drive. As electrical indicators did
not then exist it was impossible for drivers of these vehicles to indicate that
they were turning right. On one such occasion an accident ensured and the
driver was sued for negligent driving.
who?'" "But why?" asks the man. "I'm a divorce lawyer," the man replies.
what he is doing. The man says "I'm sending out 1,000 Valentine cards signed, 'Guess
His curiosity getting the better of him, he goes up to the balding man and asks him
them.
all over them. He then takes out a perfume bottle and starts spraying scent all over
the counter methodically placing "Love" stamps on bright pink envelopes with hearts
A guy walks into a post office one day to see a middle-aged, balding man standing at

CAUSATION in the Law of Negligence
Just as in the law of contract, the damage suffered by the P who is making his
claim in negligence must have resulted from the breach of duty by the D. In
other words, causation must be established. A common test used to
determine causation is the ‘but-for test’. According to this test, if the P
would not have suffered damage but for a certain event, then that event
is a cause of the damage.
Case No: _______ Barnett v Chelsea & Kensington Hospital (1969)

The P’s husband, a night watchman, was poisoned with what turned out to be
arsenic. He was taken to the hospital casualty department but the hospital
doctor was negligent and failed to examine him. The doctor told the nurse,
by phone, to send the husband home. The husband died at home five hours
later. The P sued the hospital. The court held that there was a duty of care
owed by the hospital to the husband and this duty was breached. However,
the doctor’s negligence did not cause the husband’s death because, even if
the correct medical treatment has been given, death would have taken place
anyway.
wanted a heart that hadn't been used."

the patient why he had chosen the lawyer's heart. "It was easy," explained the patient, "I
"I'll take the lawyer's heart," said the patient. After a successful transplant, the doctor asked
attorney who died after practicing law for 30 years. Which do you want?"
never drank or smoked and who died flying his private jet. And, the third donor is an
who died in an automobile accident. The second donor is a middle-aged businessman who
doctor said, "We have three possible donors. The first donor is a young, healthy athlete
An elderly patient needed a heart transplant and discussed his options with his doctor. The

What is Remoteness of Damage?
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Example
Owing to his negligence, the contract cleaner of Suredie Hotel spilt some
chemical on the floor near the entrance. Sally, Jane and Peter were tourist
from South Africa entered and were unaware that the floor was slippery
owing to the chemical spill. All three slipped and fell. All three suffered from
broken bones and had to be hospitalised. After, one month, Peter developed a
rash on his skin. Test from the hospital showed that this was due to a severe
skin allergy cause by the chemical contact. This kind of allergy only affected
one in 100 000 people. It so happened that Peter was the unfortunate one. In
this case, Suredie Hotel will be liable for the broken bones suffered by all
three but the Hotel may not be liable for the skin rash if it is held to be remote
and therefore unforeseeable.

Case No: ____________ Wagon Mound
The defendant were charterers of a ship, were careless when loading fuel oil
into a ship at the plaintiffs wharf and split a large quantity of it on to the water.
The oil spread to another part of the plaintiff’s wharf where welding was taking
place. Welding sparks ignited the oil and the wharf was burnt. The court held
that although it was foreseeable that the oil may foul the wharf, it was
unforeseeable that the oil would catch fire and burn the wharf. Damages were
therefore not awarded for damage caused by the fire as the damage was too
remote.
What is the impact of the Wagon Mound decision?

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Lucifer: Oh yeah? Where do you think you'll get a lawyer.

St. Peter: Then I'll sue you.
Lucifer: Yes, but I won't move it an inch.
Saint Peter: Your fence is a little bit on my side.
following was their dialogue:
One day Saint Peter and Lucifer were having a problem with their boundaries. The

GENERAL DEFENCES IN LAW OF TORT
1. ______________________________________
2. ______________________________________
3. ______________________________________
4. ______________________________________
5. ______________________________________
Example of Contributory Negligence

Sambo was crossing the road when the ‘Red Man’ signal was still
on and Rambo was driving his bus at 70 kph when the speed limit
was only 40 kph. Rambo crashed his car into Sambo severely
injuring him. In this case Rambo was negligent and can be sued by
Sambo. But it could also be said that Sambo was contributorily
negligent as well. In such a case, Sambo’s claim will probably be
reduced.
case solely on its merits."

handed it to Leon ... "Now then, I'm returning $5,000, and we're going to decide this
gave me $10,000." The judge reached into his pocket and pulled out a check. He
uncomfortably. "You, attorney Leon, gave me $15,000. And you, attorney Campos,
have been presented, by both of you, with a bribe." Both lawyers squirmed
Taking his seat in his chambers, the judge faced the opposing lawyers. "So," he said, "I

Quick Discussion:
1.Mike Tyson challenged any person to
enter the boxing ring with him and if the
person is able to withstand a boxing match
for three rounds, Mike Tyson will give $1
million to that person. Spike took up the
challenge and after the second round –
Spike’s mother could not recognise him
anymore. Can Spike sue Mike Tyson?
2. As the boat was sinking, John the

boat captain took everyone’s luggage
and threw it overboard. This included
Peter’s priceless Ming vase collection
valued at $1 000 000. Can Peter sue
John for doing this?
3. After Sam bought a house and

decided to move in – he realised
that the land next door to his was
to be used to built an Airport. The
noise from the airport so distracts
him that he could not sleep and
every time an airplane flew over –
it rattles everything in the house.
4. {think of your own example for a defence in Statutory Authority?}

What is Vicarious Liability?
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Example:
Ah Seng is a bus driver employed by Suredie Bus Services. He was
repeatedly told by his boss not to race his bus whilst driving on the
road. Ah Seng disobeyed this instruction and raced his bus whenever
he gets a chance. This time round he caused an accident and injured
several people. The injured parties can sue Suredie Bus Services as
they are the employer of Ah Seng and therefore are vicariously liable
for any damages or injuries sustained by the other parties.
Why is Vicarious Liability Important?

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Is the employer always responsible for every wrongful act
of the employee?
The employer is only responsible to those wrongful act that the

employee does ______________________________________
The employer is not responsible when the employee does
something which is considered to be a frolic of his own. That is it
was done without furthering the employer’s business.
SITUATION
Valentino was a driver working for Mabel Florist. His boss told him to
make some delivery using the company van. Mabel told Valentino to
deliver a bouquet of flowers to one of her customers in Woodlands. She
told Valentino to drive carefully and to come back immediately after the
delivery. Valentino delivered the flowers and as it was a hot day decided
to go to his house in Bedok for a quick shower and a cold bottle of beer.
On the way to his house, he was racing the van and caused an accident
injuring the pedestrian badly. In this case will his employer be liable for
this act of Valentino?
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There are two kinds of lawyers, those who know the law and those who know the judge

Is the employer still responsible if he tells the
employee not to do a certain wrongful act and the
employee still persist in doing it?
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Stewart was a petrol kiosk attendant. He was repeatedly told

by his boss, Sunny, not to smoke whilst he was filling up
petrol for his customers. On many occasion Stewart
disobeyed this express instruction and continued to smoke
whilst filling up the petrol tank. Sunny sometimes reprimand
him and sometimes look the other way. On one occasion, as
Stewart was filling up the petrol tank of a car, he accidentally
dropped the lighted cigarette which fell onto the ground. The
ground had some spilled petrol on it and this caught fire. In
the process the whole kiosk was burnt together with a few cars
in it. In this situation, Sunny is liable and responsible
vicariously for the tort of Stewart as he did not effectively
enforce the no smoking rule and was not consistent in his
reprimand of Stewart.
Hear about the lady lawyer that dropped her briefs and became a solicitor

46
INTRODUCTION
When the word “contract” is mentioned, there is a
tendency for many people to see this as some form of
formal written document. When asked how often they
enter into a contract, many would say only
occasionally, as when they purchase a car, a house or
enter into a loan agreement with the bank. In other
words, ‘contract’ is associated with a narrow range of
activity involving lawyers, documents and agreements
concerning things of substantial value.
DEFINITION OF A CONTRACT
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It's called, Sosumi.

lawyers?
Did you hear about the new sushi bar that caters exclusively to

Discussion
John promise his wife a diamond ring for her birthday.
Does this amount to a contract?
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Does it make a difference if

John were to write a note to
his wife that he will give her
a diamond ring and this note
was handed to her by
someone close.
Who cares?
What happens to a lawyer who jumps out of a plane at 35,000 feet without a parachute?

QUICK DISCUSSION
Jacky was driving his Ferrari and feeling very thirsty. He stopped at a coffee
shop and jumped out his car shouting – “A bottle of beer! A bottle of beer.
Any person who gives me a bottle of beer will get my Ferrari.”
Nicky who was sitting in the coffee shop seeping his tea, jumped from his
seat, bought a bottle of beer and gave it to Jacky. Jacky grabbed the bottle
from him and gulp down the beer in one long swig. Wiping his lips, he
thanked Nicky. Nicky told him “ never mind the thanks, but give me your car
keys”. Jacky was surprised and said “ Hey man! I was just joking, you don’t
expect me to give you my Ferrari for this bottle of beer?” Nicky said that he
will sue and there were witnesses who actually heard what Jacky said. Advice
Nicky.
Nothing. There are some things a pig won't do.

What happens when you cross a pig with a lawyer?

Quick Discussion
Peter a taxi driver agrees to take John to Yishun. Does this amounts to
a contract?
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Andy, who is John’s friend promise to give him a lift in his car after
class. On reaching John’s destination, Andy ask John to pay him for the
journey. Must John pay? (Assume that Andy asked JOHN $10 for the
journey!)
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REMEMBER
They threatened to release one every hour until their demands where met.
Did you hear about the terrorists who took a whole courtroom full of lawyers hostage?

AGREEMENT VS CONTRACT
The Latin phrase ______________________ (consensus as

to the same thing) describes this concept of agreement. The essence of the
phrase is that the parties to contract must have
“_______________________”.
Practice writing a good legal essay:
All contracts are agreement but not all agreements are contract. Discuss?
They had pictures of lawyers on them ... and people couldn't figure out which side to spit on.
Did you hear that the Post Office just recalled their latest stamps?

DISCUSSION
Mao asked Deng whether he wanted to go for a movie. Deng
agreed and Mao told him to meet him at the cinema to watch
‘The Last Emperor”. Mao bought the tickets for himself and
Deng and waited for Deng to come. However, after waiting
for almost two hours and the movie having started Deng did
not appear. Can Mao sue Deng?
Yo! Deng boy!

Would you like to
go for a movie?
Sure thing bro! You

buy the tickets and I’ll
see you at the cinema.
Law-suits.
What type of apparel is the most popular with lawyers?

TYPES OF CONTRACT
There are two types of contract. They are:

1. ____________________________________
Specialty contracts are contracts which the law
requires to be inwriting and must be signed,

sealed and delivered. Another name for such
a contract is ‘deed’.
2. ______________________________________
Contracts which are not deeds are known as simple
contracts. They may be oral,
written, or partly
oral and partly written in nature, or
even implied from conduct.
The bucket.
What's the difference between a lawyer and a bucket of dirt?

TYPES OF CONTRACT

REMEMBER!
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How would you distinguish a contract of service from a contract for
services?
In a contract of service – the person is employed by another to perform a specific

task or series of task for a confirmed remuneration. The person so employed –
called the employee agrees to perform what he or she has contractually agreed to
do for the employer. The employer is liable in tort for any negligence or wrongful
act committed by the employee in the cause of the employer’s business. Whereas
in a contract for services – the person contracted is deemed to be an independent
contractor. As such the person employing him is only bound to pay a professional
fee for the job done. Example getting a contractor to build a swimming pool. The
employer has no control over the person building the pool apart from just telling
him his requirements. Sometimes it is not quite easy to make the distinction.
Usually one has to see what is the extent of control the employer has over the
person contracted to do a certain task. The more control the employer has on the
person, there is a chance that he is having a contract of services.
The pronunciation.
What's the difference between a lawyer and a liar?

Where can you find a good lawyer?
The nearest cemetery.
Understanding Contract
FORMATION: what is the agreement?
In order to understand contract, imagine a contract as a
human body. If you look at a dead body and a live one, you
will notice that they might look alike externally. However
the difference is that one is still alive and the other was ‘ex-
living’. Likewise if you want to understand a contract, you
need to understand that there are certain features of the
contract that you have for the agreement to be valid. These
can be remembered by the acronym: O.A.I.C.C. These
stands for:
O - _____________________________
A - _____________________________
I - ______________________________
C - _____________________________
C - _____________________________
Sue.
What did the lawyer name his daughter?

TERMS: What is within the agreement?
Even if you have all the elements to form a contract it
might still fail as there are things inside the contract that
does not work. It’s like you feeling sick and that is because
something inside your body is not working properly. The
terms of contract entails the following:
E - _______________________________
I - ________________________________
I - ________________________________
You also need to understand the following aspects in

contract law:
E - ________________________________
C -________________________________
W -_______________________________
They're both extinct.

What do dinosaurs and decent lawyers have in common?

DEFECTS in the agreement?
Just as we fall ill the contract sometimes will develop
certain defects that might affect its performance. Here you
need to identify the defects and see whether this can be
resolved or not. The kind of defects that a contract might
develop includes:
M __________________________________
F___________________________
I___________________________
N__________________________
M__________________________________
C__________________________
M_________________________
U_________________________
N_________________________
D___________________________________
U___________________________________
I____________________________________
C ___________________________________
It takes 300,000 of them to make one human being.
What do lawyers and sperm have in common?

How the contract is DISCHARGED?
A contract seldom last forever. After sometimes there is
a need to discharge the contract. Discharge of the
contract can be done in the following manner:
P - __________________________________
A - __________________________________
B - __________________________________
F - __________________________________
REMEDIES available in a contract!

Just when you are sick the doctor might give you some
remedies in the form of medication, when a contract is
‘sick’ there are remedies available as well. The remedies
can be in the following form:
V - _________________________________
V - _________________________________
Q - _________________________________
S - _________________________________
I - _________________________________
Another lawyer.
What do you get when you cross a lawyer with a demon from hell?

Definition of an Offer
If a person, by his statement, indicates

definitely his willingness to be bound by
an agreement with the recipient of his
statement and the recipient accepts the
terms set out in the statement, this person
is an offeror and his statement is an offer.
Consequently, the recipient is the offeree.

By making an offer, the offeror is prepared
to act on his terms if the offeree accepts
them ______________________________.
REMEMBER:
The person making the Offer is called the: _______________
The person Accepting the Offer is called the: _____________

OFFER
TWO TYPES

Consider:
“I will give $1000 to any person who
swims across from Singapore to
Johor.” What kind of offer is this?
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“I offer my laptop for $1000 to any member of this class.” What

kind of offer is this?
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INVITATION TO TREAT
An offer must be distinguished from an invitation to treat. In an
invitation to treat, one person invites another to make an offer.
The reason for this is perhaps to see what is the best price that
can be offered. Example, let us say that I have a laptop that I
want to sell. My laptop is one year old and I will be quite happy
if someone gives me $1000 for it. However there is a possibility
that there may be someone out there who might be prepared to
pay $2000 for my laptop. So instead of I offering my laptop of
$1000 I might say that I am interested to sell my laptop and that I
will consider the best price that the other party got to offer. This
way I might get a higher value.
There are several situations where the courts by default consider

to be invitation to treat. These situation can be easily
remembered by the acronym: _____________________________
CONSIDER:
I am interested in selling my computer for $1000/- are you

interested to buy? Is this an Offer or not?
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CONSIDER:
I will sell my Grand Piano for $10 000 to the first person
who come and see me on the 1st Sunday morning of the
month at exactly 6 am. Is this an offer?
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How would you define invitation to treat?
Invitation to treat is a situation whereby one

party ‘invites’ another party to make an offer
for the sale of goods or supply of services.
Usually in an invitation to treat there is an
intention of further bargaining and that what
price that may be quoted is subjected to
negotiation. Examples of situations amounting
to invitation to treat includes, display of goods
in shop, some kinds of advertisements, tenders,
auctions and company prospectus and
negotiation for the sale of properties and or
land.

Areas of Invitation to treat
D.A.C.T.A.N
Invitation
to
Treat

QUESTION:
When is an advertisement amounting to an offer?

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ADVERTISEMENT

CASE No: __________
Carlill v Carbolic Smoke Ball Co (1892)
The defendant advertised their product, the Carbolic Smoke Ball as a
preventive medication against influenza. The advertisement stated
that the D will pay &100 to any person who contracted influenza after
having used the product according to its dosage. The advertisement
also stated that &1000 had been deposited in a bank ‘to show their
sincerity”. Carlill on the basis of this advertisement, bought the
smoke balls and took them as prescribed. She still caught influenza
and sued for the &100. The court held that the advertisement in this
case constituted an offer to the whole world.

Case No: ______
Partridge v Crittenden (1968)
P paid for an advertisement in the “Classified Ads” section in a
magazine called Cage & Aviary Birds. The advertisement stated:
‘Bramblefinch cocks and hens, 25 shillings each” The authorities
successfully prosecuted him for selling live wild birds contrary to the
prevailing legislation. On appeal, it was held that there was ‘no offer
for sales’ and that, therefore, the relevant legislation was not
contravened. The advertisement was held to be only an invitation to
treat.
“I think that when one is dealing with
advertisements and circulars, unless they indeed
come from manufacturers, there is business sense
in their being construed as invitation to treat and
not offers for sales.”
Writing a good essay. Try this…

How would you be able to differentiate an
advertisement as either being an offer or an
invitation to treat?
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What do you think?
Is the following advertisement an offer or an invitation to
treat?
REWARD __________________________
__________________________
$500 __________________________
__________________________
LOST DOG __________________________
__________________________
Answer to the name __________________________
Leonardo __________________________
__________________________
If found please return to __________________________
Celine at __________________________
No 1. Titanic Drive
________________________________
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________________________________
________________________________ PIANO FOR SALE
________________________________
________________________________ Asking $5000/-
________________________________ Negotiable. Best price secures
________________________________ deal.
________________________________
______________________ Please call:
Jack: 6555 4444

CAR FOR SALE
VALUED AT
$60 000
Interested please call
Peter 65556677
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LAPTOP FOR SALE

500 GB HARDISK, Duo Core Processor,
4 GB RAM – only 1 year old with
warranty.
$900/- not negotiable
Call: 6555 77 66
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QUESTION:
John saw a Teddy Bear on the shop shelf with a

price tag which stated $10 only. He was excited
as the price was cheap and took the Teddy Bear
to the counter to purchase. At the counter, the
cashier refused to sell him the Teddy Bear for
$10 – stating that there has been a mistake with
the price and it actually cost $100. John was
disappointed and as he was leaving the shop he
saw the cashier selling the Teddy Bear to a
Japanese tourist for $5/-. Advise John as to
whether he could sue the shop?
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How to write a Problem-based question in Business Law?
The Six Pointers:
1. ______________________________________________
2. ______________________________________________
3. ______________________________________________
4. ______________________________________________
5. ______________________________________________
6. ______________________________________________

Case No: ___________
Pharmaceutical Society v Boots Cash Chemist (1952)
Boots operated self-service chemist shops. A customer would choose the
articles he wished to buy, place them in a basket and bring them to the
payment counter where a registered pharmacist could remove the drugs from
the customer’s bag. The issue before the court was whether Boots has
contravened a statute which prohibited the sale of any poisons “unless the
sale is effected under the supervision of a registered pharmacist”. This
depended on when the sale took place. The court held that the display of
goods with prices constituted an invitation to treat and the sale took place at
the counter in the presence of the pharmacist.
Legal Principle:
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QUESTION:
Why is Display of Goods in Shop only amounting to Invitation
to Treat?
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COMPANY PROSPECTUS
Company Prospectus gives information of the financial
stability of the company and invites the potential investor to
buy shares in the company by offering the IPO (Initial Public
Offering). Although the word ‘offer’ is used – this only
amounts to an invitation to treat as the person subscribing for
the share is making an offer to buy which can either be
accepted or rejected by the company. The reason for this that
in company law only certain people are able to buy shares and
there are other legal procedures that has to be adhered to.
AUCTIONS AND TENDERS

The same principle applies to auctions and tenders. In an auction,
the auctioneer will usually display to the audience the item to be
auctioned – anything from jewellery and works of art to land and
buildings. The auctioneer will then invite bids. This is viewed as
an invitation to treat. Bids made by the audience are considered
offers. The sales ins completed only when the auctioneer
indicates his acceptance, usually by the fall of his hammer.
A tender, like a bid at an auction, is also considered as an offer.
Tenders are usually sought when a party wishes to obtain
competitive quotes for the supply of goods or services. The
advertisement which invites tenders is treated as an invitation to
treat. Each person who submits a tender is an offeror. Although
the party advertising for tenders (the invitor) usually accepts the
highest or lowest tender as the case may be.

Provision for Information
In some instances, a communication may not be an offer but a mere
response to a request for information. Whether this is so in a
particular situation always depends on the facts in that case.
CASE NO: ______ HARVEY v FACEY (1893)

The following telegraphic communication took place
regarding a piece of property called Bumper Hall Pen:
H: “Will you sell us Bumper Hall Pen? Telegraph lowest price.”

F: “Lowest price for Bumper Hall Pen, &900.”
H: “We agree to buy Bumper Hall Pen for &900 asked by you. Please send us
your title deeds.”
There was no further communication. On appeal from the Supreme Court of
Jamaica, the Privy Council held that there was no contract because the second
telegraph merely amounted to a provision of information and was not an offer.
Legal Principle:

NEGOTIATION FOR SALES OF LAND
Negotiation for Sales of Land only amounts to an invitation to
treat and not an offer. This is because, Sales of Land is a specialty
contract and it has to be signed, sealed and delivered. As such
there are many other factors that has to be considered before the
land is transferred.
Bungalow for Sale

First person to give me $1 million
secures the deal. Not negotiable
Call
Al Capone 555 7777

TERMINATION OF AN OFFER
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Ways in which an Offer is terminated
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• __________________

Question to consider:
Seng told his friend Beng: “I will offer you my
Rolex watch for $5000/-.” Beng said that he is
not interested. Later that day, Beng came to
Seng and said: “I change my mind – I will accept
the Rolex watch for the price you ask $5000/-”.
Seng told Beng that now he will only sell the
watch for $7000/-. Advice Beng.
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Seng told his friend Beng: “I will offer you my Rolex watch
for $5000/-.” Beng said that he will accept the watch for
$4000/-. Seng told Beng that the price is too low. Later,
Beng came to Seng and told him that he will buy the watch
for $5000/- as was originally asked by Seng. Seng refuses to
sell and said he will only consider any offer of more than
$7000/- for the watch. Advice Beng.
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QUESTION TO CONSIDER:
James offered his Smartphone to any of his
classmates for the price of $200/-. Jane accepted
the Smartphone for the price asked and James told
her that he will give the Smartphone to her the
following day after he has transferred his data.
Afterwards, when Jane left the class, Sam came to
James and said that he will buy the Smartphone
from him for $500/- if James were to give it to him
immediately. James gave the Smartphone to Sam
and took the $500. Jane came to collect the
Smartphone the following day and heard that it
was sold to Sam. Advice Jane as to her legal
rights in this case.
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Discussion Question:
You called up Pizza Hut and ordered a pizza
to be delivered to your house. In this
situation, who is the offeror, and who is the
offeree. What is the offer?
Offeror is: __________________________

Offeree is: __________________________
Offer is: ____________________________
You are standing at the taxi-stand waiting for a taxi. When

the taxi came you told the taxi driver to take you to
Woodlands. On the way to Woodlands, your friend calls
you on the mobile phone and tells you to meet her at Bedok.
You tell the taxi driver that you now want him to bring you
to Bedok. The taxi driver refuses telling you that the deal
was to bring you to Woodlands. He also said that after
bringing you to Woodlands he will then bring you to Bedok.
Advice the idiotic taxi driver.
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QUESTION:
What are the rules of Acceptance?
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CASE NO: _________
Entores Ltd v Miles Far East Corporation (1955)
A Dutch company in Amsterdam sent a telex to London accepting
a counter-offer sent by the English company in London. The
court had to decide where the contract was made. The court held
that in this case, the contract is made when the communication is
actually received. Here, the contract was made in London when
the telex was received.
“Suppose, for instance, that I shout an offer to a man across a
river or a courtyard but do not hear his reply because it is
drowned by an aircraft flying overhead. There is no contract at
that moment. If he wishes to make a contract, he must wait till
the aircraft is gone and then shout back his acceptance so that I
can hear what he says. Not until I have his answer am I bound.”
Denning LJ
Legal Principle:

DISCUSSION 1:
Heracles offered to sell his car to
Odysseus for $50 000/-. Odysseus said
to Heracles:
“I will accept your car for $50,000/- if
you give the car a new coat of paint and
install for me a new car alarm system.”
Heracles refuse to do this and Odysseus
says that he will sue Heracles as he has
already accepted the offer of the car.
What do you think? DISCUSSION 2:
Emma called her friend Jane on her mobile
phone and said:
“ I will sell you my ‘Hello Kitty’ toy set for

$1000/-. If you accept this price please give me
a call later.”
Later that day, Jane called Emma on her mobile

phone and said that she will accept the offer of
the ‘Hello Kitty’ toy set. However, before
Emma heard this information from Jane, her
phone line was cut off as she has not paid her
bills for the last six months. Emma thought
that she heard from Jane that she was not
interested in the ‘Hello Kitty’ and decided to
sell the set to Rochester her friend. Advice
Jane?

RULES OF ACCEPTANCE
GENERAL RULE POSTAL RULE
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CASE NO: _______
ADAM V LINDSELL (1818)
On 2 Sep 1817,the D wool-dealers wrote to the P woolen manufactures
offering to sell some wool. Due to a delay, the offer letter reached the
P on 5th September. The D’s offer letter requested a reply “in course of
post.” That same evening, the P posted a letter of acceptance which
reached the D on 9th Sep. Meanwhile, on 8th Sep, the D, having heard
nothing from the P, sold the wool to someone else. The court held that
the acceptance was communicated and the contract formed as soon as
the P posted the acceptance letter on 5th Sep.
General Principle in the case of Adam v Linsell:

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Why is there a
need to have a
postal rule of
acceptance?
Note: application of postal rule

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INTENTION TO CREATE LEGAL RELATIONS
Presumption of court
Legal
No Legal
Relationship
Relationship Exist
unless

SOCIAL / DOMESTIC AGREEMENT CASES:
CASE NO: ________- BALFOUR V BALFOUR [1919]

Famous English contract law case that held that there is a rebuttable
presumption against an intention to create a legally enforceable
agreement when the agreement is domestic in nature.
Using contract-like terms, Mr. Balfour had agreed to give his wife
£30 a month as maintenance for while he was off living in Ceylon.
Once he had left, they separated and Mr. Balfour stopped payments.
Mrs. Balfour brought an action to enforce the payments.
At the Court of Appeal, the Court held that there was no enforceable
agreement as there was not enough evidence to suggest that they
were intending to be legally bound by the promise.
CASE NO: _____ -MERRITT V MERRITT (1970)

A married couple discussed their marriage
separation in a car. The wife refused to leave the
car until the husband had recorded the following
agreement in writing and signed it: “ in
consideration of the fact that you [the wife] will
pay all charges in connection with the
[matrimonial home]…until such time as the
mortgage repayment has been completed I will
agree to transfer the property into your sole
ownership”. The husband failed to transfer
ownership after the wife paid off the mortgage.
The English CA found the necessary intention and
held that the wife succeeded in her claim for
breach of contract.

COMMERCIAL AGREEMENT CASES:
CASE NO : ________ - Edwards v Skyways (1964)
The plaintiff pilot was made redundant by the defendant. He had been
informed by his pilots association that he would be given an ex gratia payment
(ie, a gift). The defendant failed to pay and the pilot sued. The defendant argued
that the use of the words "ex gratia" showed that there was no intention to
create legal relations.
It was held that this agreement related to business matters and was presumed to
be binding. The defendants had failed to rebut this presumption. The court also
stated that the words "ex gratia" or "without admission of liability" are used
simply to indicate that the party agreeing to pay does not admit any pre-
existing liability on his part; but he is certainly not seeking to preclude the legal
enforceability of the settlement itself by describing the payment as "ex gratia".
CASE NO: ________ - Rose v Crompton Bros (1925)
The defendants were paper manufacturers and entered into an agreement with
the plaintiffs whereby the plaintiffs were to act as sole agents for the sale of the
defendant's paper in the US. The written agreement contained a clause that it
was not entered into as a formal or legal agreement and would not be subject to
legal jurisdiction in the courts but was a record of the purpose and intention of
the parties to which they honourably pledged themselves, that it would be
carried through with mutual loyalty and friendly co-operation. The plaintiffs
placed orders for paper which were accepted by the defendants. Before the
orders were sent, the defendants terminated the agency agreement and refused
to send the paper.
It was held that the sole agency agreement was not binding owing to the
inclusion of the "honourable pledge clause". Regarding the orders which had
been placed and accepted, however, contracts had been created and the
defendants, in failing to execute them, were in breach of contract.

Activity:
Write down the legal principle in the following cases:
1. Balfour v Balfour:
2. Merritt v Merritt:
3. Edwards v Skyway:
4. Rose v Crompton:

DEFINITION OF CONSIDERATION
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CONSIDERATION

Writing a good Essay: Practice.
For each of the following write your answer with a definition

and an example to illustrate.
1. Executory Consideration
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2. Executed Consideration
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3.Past Consideration
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RULES OF CONSIDERATION
RULES
OF
CONSIDERATION

Writing a good Essay: Practice.
For each of the following write your answer with a definition

and an example to illustrate.
1. Consideration must be sufficient but need not be

adequate.
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2. Consideration must move from promisee but need not
move to the promisor.
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3. Illegal consideration is invalid.

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Question:
Rambo Tan a police officer was doing his
rounds when he saw an advertisement in
the newspaper. The advertisement a
reward to any person who finds the lost
dog. Rambo who was on duty at that
time found the dog and return to the
owner. The owner was happy however,
she refuse to pay Rambo the $500 reward
as she felt that as a police officer it was
his duty to find the dog. Rambo is now
seeking your advice?
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CASE NO: __________
GLASBROOK BROTHERS v GLAMORGAN COUNTY COUNCIL
(1925)
Facts
In the 1920s a vicious miner’s strike erupted in Wales. The mine owners
therefore asked the County Council who were responsible for the Police
Force to install a police garrison at the mine site for the duration of the
strike. This meant that police would have to be on duty 24 hours a day and
live on the site. The council initially refused this request but subsequently
agreed if the mine owners agreed to pay the costs involved. This they did but
later refused to pay the accounts rendered. The council therefore sued the
owners of the mine. In response the mine owners alleged that there was no
consideration for their promise to pay the costs involved since the council
and the police force had a public duty to maintain law and order and this was
all that they were doing.
Held: The police were giving greater assistance than they were obliged to do
under their public duty to maintain law and order. Thus consideration was
present and therefore the owners were obliged to pay the costs involved.
Legal Principle:

PART PAYMENT OF DEBT
What if a Debtor borrows money and is unable to pay back the money
to the Creditor?
Sometimes a debtor fails to pay his debts under one agreement
and may enter into another agreement with his creditor to
reduce the amount owed under the original contract. If the
debtor then pays the smaller sum, the question arises whether
the creditor could still sue the debtor to recover the balance.
The answer is…_____________.
CASE NO: _________________
D & C Builders v Rees (1966)
There was a contract for the provision of building services between the
parties under which the defendant owed the plaintiffs the sum of £482.
Eventually, under unfavourable business conditions affecting the
plaintiffs, the parties entered into another agreement whereby the
plaintiffs agreed to take only £300 as full settlement of the debt and
promised to forego the balance of £182. This was to help them tide over
the financial difficulty which they were facing. As consideration for that
promise, the defendant paid the £300.
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CASE NO: _______________
Foakes v Beer (1884) 9 App Cas 605,
Mrs Beer had obtained judgment for a debt against Dr Foakes, who
subsequently asked for time to pay. She agreed that she would take no further
action in the matter provided that Foakes paid £500 immediately and the rest
by half-yearly instalments of £150. Foakes duly kept to his side of the
agreement. Judgment debts, however, carry interest. The House of Lords held
that Mrs Beer was entitled to the £360 interest which had accrued. Foakes had
not "bought" her promise to take no further action on the judgment. He had not
provided any consideration.
Legal Principle:

CASE NO: ______________
PINNEL’S CASE (1602)
Pinnel sued Cole for a debt of £8, 10 Shillings which was due to be paid on
11 Nov 1600. Cole argued that, at Pinnel’s request, he had paid £5, 2
shillings, 6 pennies to Pinnel on 1 Oct which Pinnel accepted in full
satisfaction of the debt. The Court held that:
…payment of a lesser sum on the day in satisfaction of a greater [sum]
cannot be any satisfaction for the whole…But the gift or a horse, hawk or
robe, etc in satisfaction is good…[because it] might be more beneficial to the
plaintiff than the money... [Similarly,] the payment and acceptance of [a
part] before the day in satisfaction of the whole would be good satisfaction…
[etc]
The Rule in Pinnel’s case is:
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FOUR Exceptions to the rule in Pinnel’s case
If the creditor request a different performance
of the existing contractual duty the different
performance would be good consideration.
The creditor’s promise to accept a
smaller sum would be binding if
he ask the debtor to pay that
smaller amount in the following
Ways:
1. _____________________________________________________
2. _____________________________________________________
3. _____________________________________________________
4. _____________________________________________________

Question
Leslie borrowed $1000 from Jason to be paid back on 1st December 2016.
On 1st Dec 2016 – Leslie was unable to pay the full amount and only paid
$500 to Jason. Jason said that he will accept it as full payment and a week
later Jason asked Leslie to give him back the remainder $500. Leslie refuses
to do this as he claim that by Jason accepting $500 as full payment a week
earlier has discharged Leslie’s obligation to pay the remainder. Advice
Jason?
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Leslie borrowed $1000 from Jason to be paid back on 1st December 2016.
On 28th Nov 2016 – Leslie was approached by Jason and Jason told him that
he wanted Leslie to pay him back the $1000 he owed immediately. Leslie
says that he does not have sufficient money now as the payment was only
due on 1st Dec 2016. Jason said that he will accept $600 as full payment if
Leslie paid him immediately on the 28th Nov 2016. Leslie paid Jason the
$600 requested by him and a week later – Jason claimed from him the
remainder $400. Advice Leslie as to whether he needs to pay this amount
back to Jason?
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Example
Payment of a lesser sum with an additional token at the creditor’s
request is good consideration.
Tarzan owed Jane $5000 to be paid back on 1st Jan 2004. As he

was unable to pay the full amount – Jane told him that she will
accept $2000 plus his Swiss Army Knife as settlement in full.
Tarzan gave the $2000 and the Swiss Knife to Jane as agreed.
Jane later found out that the Swiss Army Knife only cost $200.
She wants to claim the remainder from Tarzan. Can she do this?
Payment of a lesser sum by a different method is good consideration

– must be at the creditor’s request.
Hercules owed Jupiter $1500 which he could not

pay back as he had lost his job. Jupiter told him
that in view of this he will forgo the money
Hercules owed him if Hercules were to work for
him as his private body guard for a period of one
month. Hercules did as he was told and this would
mean that he had effectively settled his debt with
Jupiter.
CASE NO: ________
Hirachand Punamchand v Temple [1911] 2 KB 330
A father paid a smaller sum to a money lender to pay his son's debts,
which the money lender accepted in full settlement. Later the money
lender sued for the balance. It was held that the part-payment was valid
consideration, and that to allow the moneylender's claim would be a
fraud on the father.

What is Promissory Estoppel?
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For PE to work the promisee must proviethe following factors:
a. There was a pre-existing contractual relationship between the promisor

and the promisee;
b. The promisor promised not to enforce some of his rights under the pre-
existing contractual relationship against the promisee and intended that
the promisee should rely on the promise.
c. The promisee relied on that promise;
d. The promisee changed his position unalterably as a result of his reliance so
that it would be unfair to allow the promisor to go back on his promise.
CASE NO: _______________
CENTRAL LONDON PROPERTIES V HIGH TREES HOUSE (1946)
In 1939, the Plaintiff landlord granted a lease of a block of flats to the
Defendant tenant for the annual rental of £2500 per year. Because of the war
condition, the landlord agreed to accept a lower rental of £1250 per year as the
tenant had difficulty sub-letting the flats. By the end of the war, all the flats
were full again and the landlord demanded full payment of £2500 per year
from the tenant. The landlord also wanted back payment for the years the
tenant paid the ½ rent.
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Question:
Why did the Plantiff landlord in the High Tree’s case accepted a
lower payment of rent?
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Could the plaintiff claim the remainder rent that the defendant did
not pay during the War – after the war was over?
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CAPACITY TO CONTRACT
The parties to the contract must have legal capacity to enter into it.
The general rule is that all natural person above the age of
majority and of sound mind have unlimited capacity to enter
into any lawful contract
Q: Can you contract with a bankrupt person?
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Q: Can a minor enter into a contract?
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DISCUSSION QUESTION:
Phyllis age 17 decided that she wanted to upgrade her education and
signed up for a Diploma Program with National Institute of Business
(NIB). The Diploma program cost $5000. This was to be paid on an
monthly instalment which worked out roughly to be $500 per month.
Phyllis signed an agreement with NIB to pay this sum accordingly.
After the second payment she did not pay the next few instalment
despite repeated request from NIB to do so. Advise NIB as to
whether they can bring an action against Phyllis.

Under what circumstances will it be possible to bring a legal action
against a minor who breached a contractual agreement?
The general rule is that a minor does not have an unlimited capacity to
enter into a contractual relationship. This means that there are some
contracts whereby the adult cannot sue the minor. This principle is
entrenched in law to give protection to the minor from unscrupulous
adults who might take advantage of the minor’s naivety. However, it is
also possible for the minor to take advantage of the adult because the law
offers them protection. Therefore the law will have to strike some form
of balance.
This being the case, there are some contracts which the courts hold to be
enforceable against the minor. These are contracts which are considered
to be useful to the minor – such as contract for training, education and
development. Also contracts for ‘necessaries’ are also considered to be
enforceable against a minor. ‘Necessaries’ are those goods or services
which the minor needs for his survival and exist day to day. As to what
constitutes necessaries depends on the minors’ status in society. (see
Nash v Inman and Peters v Flemings)

INTRODUCTION TO TERMS OF CONTRACT
Every contract, whether oral or written, contains terms. The terms of a

contract set out the rights and duties of the parties. These terms can be set
out expressly or are implied into the contract by facts, trade customs, or
law.
EXPRESS TERM
The express terms of a contract are those which the parties have specifically
discussed and agreed upon whether orally or in writing. If the contract is
in writing,the documents which embodies the contract will be regarded as
complete.
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Question:
How would you differentiate a term of a contract from a mere
representation?
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What happens when the oral term in a contract conflicts with the
written term of the contract?
An express term of contract can be made either orally, in written form or it

could be made half oral or half written. If the term of the contract is written
the courts will follow the written term. If it is oral, then the courts will have to
adduce evidence as to what were the intention of the parties.
If the terms are partly oral and partly written, then the courts will generally
follow the written terms especially if the oral term conflicts and adds new
condition to the written term. This is called the PAROL EVIDENCE RULE. This
is because between oral and written terms the written terms are more certain
and as such the courts will follow this.
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What are Implied Terms?
An implied term of a contract is one whereby
there is no need to make it clearly in the
contract. Example, when buying a cup of
coffee – it is implied that the coffee must be hot
– unless you request for a cold coffee. There
are three ways in which a contract can be
implied:

Important Sections of the Sales of Goods Act
Section 12: ____________________________

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Section 13: ____________________________
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Section 14(2): __________________________
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Section 14(3): __________________________
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Section 15: _____________________________
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NATURE OF TERMS
Whether expressed or implied, a term may take any one of the three
natures. It may be a condition or warranty or an innominate term.

CASE NO: ________ Poussard v Spiers (1876) 1 QBD 410
Poussard was engaged to appear in an operetta from the start of its London
run for three months. The plaintiff fell ill and the producers were forced to
engage a substitute. A week later Poussard recovered and offered to take
her place, but the defendants refused to take her back.
The court held that the defendant's refusal was justified and that they
were not liable in damages. What chiefly influenced the court was that
Poussard's illness was a serious one of uncertain duration and the
defendants could not put off the opening night until she recovered. The
obligation to perform from the first night was a condition of the contract.
Failure to carry out this term entitled the producers to repudiate
Poussard's contract.
CASE NO: ________ Bettini v Gye (1876) 1 QBD 183
Bettini, an opera singer, was engaged by Gye to appear in a season of

concerts. He undertook to be in London at least six days before the first
concert for the purpose of rehearsals. He arrived three days late because of
a temporary illness. He gave no advance notice and Gye refused to accept
his services.
It was held that the plaintiff had been engaged to perform for a 15-week
season and the failure to attend rehearsals could only affect a small part of
this period. The promise to appear for rehearsals was a less important term
of the contract. The defendant could claim compensation for a breach of
warranty but he could not repudiate Bettini's contract.

What is an Exclusion (Exemption) Clause?
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Example:

Activity:
As a group using a flip chart – construct an exclusion

clause seeking to limit and exclude any form of liability
in a hotel, restaurant or airline travel.
Questions you need to ask:
What are the important points that needs to be put in

an exclusion clause?
What should I protect my organization from?
How can I make the exclusion clause fair to all parties?

EXEMPTION CLAUSE
Can an exemption clause cover for personal injuries or death?

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CASE NO: ________ - OLLEY V MALBOROUGH COURT (1949)
Facts: The Olleys booked into a hotel and paid for a week in advance. When
they went to their room they saw a notice on the wall which read "the
proprietors will not hold themselves responsible for articles lost or stolen
unless given to the manageress for safe custody". Negligence of the hotel staff
resulted in furs being stolen from the Olley's room.
Issue: Did the exclusion clause exempt the hotel from liability?
Held: The exclusion clause was not part of the contract and the hotel was
liable. The contract was completed at the reception desk. Reasonable steps
must be taken to bring the clause to the attention of the customer before or at
the time the contract is made. Any subsequent notice of terms cannot be
incorporated in the contract without the other party's consent.
CASE NO: _________ L’STRANGE V GRAUCOB (1934)
This case (L'Estrange v Graucob Ltd [1934] 2 KB 394) demonstrates that one
cannot evade being bound by the terms of a Contract, even an Exclusion
clause on the basis that one did not read or understand the terms.
Mrs L'Estrange owned a cafe. She ordered a cigarette machine from the
manufacturers which, it turned out, never worked properly. Although an
implied contract term in the sale of goods is that the goods will be suitable for
the purpose intended, the contract -- which Mrs L'Estrange had signed -- did
state that the manufacturers disclaimed all liability regarding the malfunction
of the machine. It was held that Mrs L'Estrange could not claim damages on
the grounds that she ``did not see'' the clause in the contract. There was no
evidence of fraud or misrepresentation that might have mitigated this
judgement.

Void and Voidable Contract
Distinguish between a void and voidable contract?
A void contract means that the contract is invalid. This would require
the parties to this contract be put back to the original position.
Example, if Rambo bought a pen and it turn out that this pen cannot
write, he can return the pen and get his money back. This means the
contract for the purchase of the pen is null and void.
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Individual work:
Create your own example of a contract which is
void and one which is voidable?
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D: Non Est Factum
What happens if a person signs a document without reading it

first and realizes later that the document he signed is not what
he wanted to sign?
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As a general rule, a person who signs

a document is assumed to have read,
understood and agreed to its
contents. Exceptionally, a person
may e ale to plead non est
actum or it is not my deed.
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Hospitality Business Law

How does non est factum help a person relying on it?
If successful, non est factum will allow a person to get out of a contract
when he signs something that he does not know is a contract. Let us, say
that Sam, an illiterate person, is asked by Tom to sign as witness a
document which Tom tells him is an application for a credit card. If that
document is in actual fact a bank guarantee, Sam will be able to plead this
defence if he is sued on the bank guarantee. Sam must show however that
his signature was induced through fraud and that the document signed
was fundamentally different from that thought to be signed. Further, that
he did not act negligently. He could establish the last element for example,
by proving that he had asked an independent third party to explain the
meaning of the document to him before he signed it.
What if a visually impaired person were to sign a document

based on a translation done by a third party and
subsequently the visually impaired person realise that what was
translated and what he signed were different – can he claim non
est factum?
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Rules of Misrepresentation
MIS-
REPRESENTATION

Misrepresentation must be statement of fact
Mercedes Benz is the best car in the

world. – OPINION
My Mercedes Benz is 10 years old. -
FACT
Statement made must be false
The statement made must be untrue and it must have induced the party to
enter into a legal relationship. Example: I will sell you my car which is only
2 years old for $100 000. This statement is false if my car is 5 years old.
Arnold told Stallone that he will sell his computer which is only 6 months old and
has Pentium 4 intel processor. Stallone buys the computer from Arnold and realise
that the computer is more than 1 year old and has only Pentium 2. Can Stallone
sue Arnold?
One Party must misled the other party

Tarzan told Jim that he will sell his lorry for $20 000. Jim asked whether the
lorry was in good condition and Tarzan said that he had maintained it well
and it should be in a good condition. Jim told Tarzan that before he buys the
lorry he would like to check the lorry with another person to see whether it is
in good condition. After checking Jim buys the lorry and realise that it was
not really in a good condition as he did not check the lorry properly. Jim
wants to sue Tarzan. Can Jim sue?
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Silence does not amount to Misrepresentation unless in
some circumstances:
1. _____________________________________________________
2. _____________________________________________________
3. _____________________________________________________
4. _____________________________________________________
Discussion
Andy wants to buy insurance for himself and his family. He approach Jane an
insurance agent and Jane sold him a Life assurance scheme. Before Andy
signed the insurance agreement, he was asked whether he suffered from any
form of illness. Andy did not answer this question although Andy was aware
that he was diagnosed for Cancer and the doctor had told him that he has got
less than a year to live. Jane only came to know this after his insurance plan
was approved and Andy died of cancer. Can the insurance company cancel
Andy’s insurance plan?
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Types of misrepresentation
In each case the contract is voidable

Discussion
Sambo told Rambo that his car is only 5 years old and it is valued at $80
000. When Rambo asked whether there is anything wrong with the car,
Sambo said that it is the best in the market and if there was anything wrong
he will tell Rambo so. Based on this Rambo bought the car which turned
out to be 9 years old and is only worth $40 000. Also the car is not in good
working order. Advice Rambo.
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Discussion:
Wanton offered to sell Meepok his laptop computer for $1000. Meepok asked
Wanton whether there was anything wrong with the laptop. Wanton said that
it was a good buy for the price and that it was only 6 months old. Based on
this inducement, Meepok bought the laptop and later discovered that it was
more than 1 year old. Advice Meepok?
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After Meepok agreed to buy the laptop, Wanton told him that he will deliver
the laptop to his house the following day as he has to clear all his personal
data from the laptop. On his way home, Wanton was attacked by a poodle
and the laptop fell and the poodle pissed all over it, such the laptop began to
have some hardware problem. Wanton delivered the laptop the following day
but did not tell Meepok – what happened to it. Advice.
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DISCHARGE OF CONTRACT
Performance
The most common method of bringing a contract to an end is by
performance. Both parties perform their obligations according to
the terms of the contract.
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PRECISE PERFORMANCE
At one time, the general rule
was that if a contract is to be
discharged by performance,
the parties must perform their
obligations fully and
precisely. In its purest form,
the rule can be very strict, as
shown in the following two
cases:

CASE NO _______ CUTTER V POWELL (1795)
Powell contracted Cutter, a seaman, to pay him 30
guineas in consideration of Cutter working as a sailor
on a sea journey from Jamaica to Liverpool. The
money was to be paid at the end of the voyage.
Cutter died on the ship 19 days before it reached
Liverpool. Powell refused to pay the wages. Cutter’s
widow sued Powell for part of the money. The court
held that payment was conditional upon completion
of the voyage and, since Cutter did not complete the
voyage, payment – even part payment need not be
made.
CASE NO _______ SUMPTER V HEDGES (1898)
S agreed to construct a building on H’s land for 565

pounds. He failed to complete his obligations and H
had to complete the rest of the work. S sued for the
value of work he performed. The court held that S’s
claim failed because H did not have a clear choice of
accepting or rejecting the partially completed work.
As the partially completed work was on his land, he
had to accept it. If the facts were otherwise and he
did have a clear choice, and chose to accept the
partially completed work, then S could have
succeeded on the basis of acceptance of partial
performance.

What is a Divisible Contract?
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CASE NO ________ BOLTON V MAHADEVA
There was a contract to 1. Install a central heating system and 2. Supply a

bathroom suite. As the central heating system was defective there was no
obligation to pay for it. However, the supply of the bathroom suite was
severable and an appropriate sum had to be paid accordingly.
CASE NO ______ HOENIG V ISAACS (1952)
H, an interior decorator and designer, was engaged by

Isaacs to decorate a flat. The total fee was 750
pounds, including the cost of certain items of furniture.
Payment was to be made “net cash as the work
proceeds and the balance on completion”. Two
payments totalling 300 pounds were made in April.
By August, H said he had completed the contract and
requested payment for the balance of 450 pounds.
Isaacs complained regarding the work done but
nevertheless paid 100 pounds and occupied the flat. H
then sued for the balance of 350 pounds. It was held
that this was not an entire contract. Further, there was
substantial performance although the wardrobe door
and bookshelf were defective. The cost to rectify these
defects was 56 pounds and hence H was entitled to
receive 294 pounds.

Question:
Roger entered into an agreement to teach Sean Business Law for 10 lessons at
$100 per lesson. After the sixth lesson, Roger told Sean that he has other
obligations and is unable to continue teaching Sean. Sean feels that because
Roger has not completed his 10 lessons Sean does not have to pay him any
money. Roger feels that since he had already covered 6 lessons, he should be
paid for the six lessons. Advice the parties?
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What if Roger only conducted one lesson and decided that he does not want
to teach Sean any more? Can he claim for the one lesson?
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Question:
Andy a contractor agreed to put Marble flooring for Ben’s house
for $50 000. Andy managed to put up to ¾ of the house floor with
marble tiles and then he ran out of the marble. Since he completed
¾ of the house, He requested to be paid ¾ of the agreed amount.
Ben refuse to pay as he feels that Andy has not completed his
contractual obligation and therefore the contract is void. Andy
feels that this is unfair. Advice the parties?
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Where part-performance has been voluntarily accepted
If one party (but not substantially)

performs his obligation under the
contract but the other party, having a
choice to accept or reject the part-
performance, chooses to accept the
part-performance, the performing party
would be entitled to a reasonable sum
for the work done on a quantum meruit
basis.

What is meant by a Contract being discharged by ‘Agreement’?
One of the ways a Contract can be discharged is by ‘Agreement’. This usually
happens in a contract of employment. When a person is employed by a
company, he may be asked to sign a ‘contract of employment’. There may be a
clause in the employment contract which may stated that in the event the
employer or employee wishes to terminate the employment contract each party
must give the other a ‘one month notice’ or something similar to that effect.
This clause is basically a pre-emptive agreement of a discharge of a contract. It
is important to note that any agreement that is made prior to terminating a
contract must be fair and reasonable. This will be a matter of opinion and in
the event of a dispute the case may be resolved in a court of law.
What is meant by Discharge by Repudiation?
A contract can be discharged by repudiation or breach. Repudiation means that

one party who already agreed to the terms and conditions of a contract decides
not to honour the contract any more. Example: Brian entered into a contract to
tutor Hillary on Economics for 10 lessons for a gross sum of $1000. Hillary
pays Brian in advance and they were suppose to start the tutorial session next
week. However before the commencement of this tutorial, Brian had another
more lucrative contract and decided that he does not want to tutor Hillary. He
refunds the $1000 to Hillary and tells her that he is not interested to tutor her.
In another words he is ‘breaching’ his contractual agreement or ‘repudiating’ it.
Hillary may sue him for doing this.
the crowd. . ."

$75 on him at this time, but if you'd allow him a few minutes in
stood up and said "Thanks, my lord, however my client only has
judge said "Mr. Banks you are hereby fined $100." The lawyer
A pick pocket was up in court for a series of petty crimes. The

When is a contract considered to be Frustrated?
Generally speaking a contract will continue to exist until the
offeror and offeree have fulfilled their obligation. Sometimes, it
might not be possible to do this as there may be some unforeseen
circumstances that might make the contract impossible to
perform. If there is such a circumstance then the contract is
deemed to be frustrated. What the courts will be looking for is to
see whether the contract has become – illegal, impossible or
pointless to perform. If this be so – then the contract will be
considered to be frustrated.

1. Destruction of Subject Matter (pointless)
CASE NO __________________
TAYLOR V CALDWELL (1863)
The parties entered into a contract of lease for a music hall. The hall was
accidentally destroyed by fire prior to the day of performance. The court held
that the contract was discharged by frustration.
2. Non Occurrence of Event (Pointless)
CASE NO ____________________
KRELL V HENRY (1903)
K contracted with H to rent out a flat for 26 and 27 June 1902. The flat had a
splendid view of the coronation parade. H paid part of the rent, but he
coronation was postponed due to the illness of Edward VII. K sued for the
balance of the rent. Held by the court that the contract was frustrated
because the basis of the contract was the coronation procession and the view
afforded by the flat. Once the coronation was postponed, the purpose for
which the flat was rented vanished.
CASE NO ______________________
HERNE BAY STEAMBOAT V HUTTON (1903)
H chartered a boat from Herne Bay for 28 June 1902. H intended to take
paying passengers on the boat to view the coronation naval review and tour
the fleet. The coronation was postponed and the review was cancelled. Did
this frustrate the contract? According to the Court – this did not frustrate the
contract as a tour of the fleet was still possible although the naval review was
cancelled.
replied Tommy.
lawyer." "Honest?" asked Billy. "No, just the regular kind",
do for a living?" asked Billy. Tommy replied, "My Daddy's a
second. "My Daddy's an accountant. What does your Daddy
What's yours?" asked the first boy. "Tommy," replied the
overheard talking at the zoo one day. "My name is Billy.
Two small boys, not yet old enough to be in school, were 134
3. Government interference (Illegal)
CASE NO _________________
METROPOLITAN WATER BOARD V DICK, KERR & CO (1918)
DK contracted to construct a reservoir for the Water Board. During the course
of construction, the Minister of Munitions acting under statutory powers
available during WWI, halted the work. The court held that the contract was
discharged by frustration.
Although a contract can be frustrated for any of the above reasons, there can
be no frustration if the contract becomes difficult to perform. This was
illustrated in the case of:
CASE NO _____________________
TSAKIROGLOU V NOBLEE THORL (1962)
The case concerned a sale of groundnuts, c.i.f., from Port Sudan to Hamburg.
The parties envisaged shipping through the Suez Canal, but the canal was
closed after the contract was concluded. The contract was not frustrated as
the ship could go round via the Cape of Good Hope (there being no implied
term that carriage was to be via Suez). The greater cost of the freight, borne
by the c.i.f. seller, was not so great as to render this a fundamentally different
adventure.
CONSIDER:
Stanley offered his PDA to James for $200/-. James accepted the
PDA for the price asked and Stanley told him that he will deliver
the PDA to James the following day. That night, someone broke
into Stanley’s car and stole the PDA. James had already paid for
the PDA. Advice James?

REMEDIES IN CONTRACT
What are the different types of remedies available in
contract?
The types of remedies available in contract are:
• ________________________________________
• ________________________________________
• ________________________________________
• ________________________________________
• ________________________________________
QUESTION:
Sam asked Kenny, a contractor to put blue marble flooring for the
house. After one month, when the job was completed – Sam
realised that some of the marble tile became stained and started to
crack. Sam is upset with this – what can he do?
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________

Explain what “Injunction” means?
“Injunction” means prevention. In a contract this is a form of remedy.

If Peter works for Sally and subsequently Peter resigns from Sally’s
employment and decides to work for Mary who is Sally’s competitor,
Sally may bring an injunction against Peter from doing this. Another
example: if a student copies notes from the lecturer and subsequently
prints it and puts the materials online in the website, the lecturer can
get a court injunction against the student to remove the materials as
they are the intellectual properties of the lecturer. Further the lecturer
can sue the student for plagiarizing his work which can go into
thousands of dollars if the lecturer wins the case. The student can also
be barred from completing the course.
Writing Good Essays. Your turn:

Define what is restitutionary and discretionary damages and give
examples to illustrate?

SEGMENT FOUR

Introduction
An agent is a person who, through another
conferred upon him by his principal, is
empowered to establish legal relations on his
principal’s behalf with a third party.
What is an Agency agreement?

This is when one party called the principal engages another to assist him in
some form of work on a commission basis. Example – a housing agent may
assist a person to either buy or sell a house.
Nature of Agency
The legal concept of agency is reflected in the
Latin maxim:
Qui facit per alium facit per se
This means:
He who acts through another is deemed to act in person
The Singapore business sector In a typical case where the agent is

abounds with persons who are authorised to contract with the third
‘agents’ of one kind or another. party on behalf of his principal, the
There are sole agents, sales agents, resulting contract binds the principal
manufacturer’s agents, not to and the third party but does not bind
mention real estate agents, insurance the agent.
agents and a host of brokers. As far
as business is concerned, the basic
idea underlying the concept of
agency is that of a go-between or
middleman.

FORMATION
1. ___________________________________
2. ___________________________________
3. ___________________________________
4. ___________________________________
5. ___________________________________
AGENCY RELATIONSHIP
CONTRACT
Liability of Agent
At law, the general rule is that an agent is not liable to his principal or the
third party as long as he acts within the scope of authority given to him by
his principal. Any liability flowing from his act flows to the principal who
authorised the act. In this respect, he is nothing more than an authorised
representative of the principal. Liability falls upon the agent personally
only if he acts outside the scope of authority given to him.

EXPRESS AGENCY IMPLIED AGENCY
The most effective way of An agency relationship can also

formulating an agency be formed by an Implied
agreement is to expressly create agreement. Example: Palmer
it. This is when one party tells his group of friends that he
called the ‘Principal’ engages has a Grand Piano that he wants
the services of another called to sell. Palmer said that if any of
the ‘Agent’ to transact a his friends were to introduce
business with the ‘Third Party’. anyone they know who may be
Example: Renee ask Jack to interested to buy a Grand Piano
help her look for a house which they should introduce that
she intends to buy. Renee tells person to Palmer and if the
Jack that she will give him a transaction is successful, Palmer
2% commission on the will give that friend 10% of the
successful purchase of the purchase price. Larry one of
house. Jack introduces Renee Palmer’s friend knows of
to Tony who has a client name another guy Ethan who is
Bill who has a house he wants interested in a Grand Piano.
to sell. In this situation, Jack is Larry introduces Ethan to
the express agent of Renee and Palmer and after some
Tony is the agent for Bill. bargaining Ethan agreed to buy
When eventually Bill meets the Piano for $10000. After the
Renee and they decide to transaction Palmer gives $1000
transact the sales of the house to Larry being the 10%
the contract is between Renee commission for the successful
and Bill. Jack and Tony will sales of the Grand Piano. In this
collect their commission and case Larry has acted as an Agent
they will be out of the by Implication.
transaction.

What is Agency by Necessity?
Agency of necessity is formed by operation of law

(automatically). The principal may be bound to a contract
made on his behalf without authority and which he refuses to
ratify. There need to be present 3 conditions…
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
Case No:____ The Great Northern Railway Co. v. Swaffield

The plaintiff railway company had transported a horse to a station
on behalf of the defendant . When the horse arrived there was
nobody to collect it, so the plaintiff sent it to a stable. A number of
months later the plaintiff paid the stabling charges and then sought
to recover what it had paid from the defendant. The plaintiff's
claim succeeded even though this involved the extension of the
doctrine of agency of necessity to include carriers of goods by
land. There was an agency of necessity because the plaintiff was
found to have had no choice but to arrange for the proper care of
the horse.
Old lawyers never die, they just lose their appeal

What is Ratification?
This means ‘to make good what has already been done.
Example: I ask you to buy me a cup of coffee.
Instead you bought me a cup of tea. I can either
reject the tea or I can accept it as if I wanted the
tea from the beginning.
Question to Consider:
Rocky is a collector of painting by famous artists. His agent, Rambo travels the
world to get hold of any famous painting from auction houses for Rocky’s
collection. Rocky had told Rambo that he has the authority to purchase any
paintings of Jean Jacque David within a budget of $20 million. Rocky takes
frequent trips to various parts of the world and on this occasion he went to Brazil
Amazon region to study the flora and fauna of that area. Whilst he was away,
Rambo came across in Brussel a painting of David called the Death of Socrates.
This painting was highly sought after by many collectors and Rambo knew too
that Rocky was wanting it very much. The bid for this painting started at $10
million and roused all the way to $31 million. Rambo bid for the painting and
secured it at the price of $32.6 million. This exceeded his budget which Rocky
gave him. Advice Rambo?
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________

What is Agency by estoppel?
In order to understand agency by estoppel, consider the following

example:
Bobo was working as a secretary to Saibo. One of her job
requirement is to ensure that the office is well stocked with various
stationeries and other office paraphernalia. Whenever, there is a
shortage of any office stationeries, Bobo orders these from Koko
who supplies office stationeries. The arrangement made was such
that Bobo will call Koko and order the relevant things and Koko
will deliver and later invoice the company which will be paid by
Saibo. Recently, Saibo realised that too much stationeries were
being order and told Bobo not to order anymore without Saibo
expressed consent. Bobo, did not bother to follow this order from
her boss and continued to order from Koko. When the invoice
came to Saibo, he refused to pay Koko stating that he had
terminated Bobo’s authority to order stationeries from Koko and as
such Koko should not have delivered the stationeries to the
company. He asked Koko to take back his stock. Koko wants to sue
Saibo. Can he?

Authorities of Agent

Example of actual authority
Peter wants to buy a house. He appoints John to help him find a
house. He tells John that he is prepared to pay up to $500000 for a
house. Peter is called the ‘principal’ and John is the ‘agent’ in this
situation.If John finds a house for Peter for $500 000 – then John
has acted on his actual authority.
Example of Ostensible authority

If John finds a house for Peter which is $600 000 (which is more
than what Peter was looking for) and John buys the house for Peter
without checking with Peter first as to whether he wants the house –
then John is acting upon what is called ‘apparent or ostensible
authority’.
In this case Peter can either accept the house by ratification or he
can reject the house as he did not want to spend that much money
on the house.
Case No: _______Watteau v. Fenwick (1862)

Plaintiff, Watteau, sold goods to a pub manager, Humble, under the
belief that Humble was actually the pub owner. Plaintiff learned
that Defendant, Fenwick, was the actual owner and sought to
collect from Defendant for the unpaid balance of goods purchased
by Humble.
An undisclosed principal can be held liable for the actions of an

agent who is acting with an authority that is reasonable for a person
in the agent’s position regardless of whether the agent has the
actual authority to do so
Duties of the Agent includes:
1. ____________________________________
2. ____________________________________
3. ____________________________________
4. ____________________________________
Writing good essays: Practice makes perfect.
For each of the above think of an example to illustrate.

TERMINATION OF
AGENCY

WORDS I NEED TO KNOW FOR BUSINESS LAW
1. _____________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
2. _________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
3. ___________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
4. ______________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
WORDS I NEED TO KNOW FOR BUSINESS LAW
5. ____________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
6. _________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
7. ___________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
8. ______________________________________________
Definition:
____________________________________________________________________________
____________________________________________________________________________
Example:
____________________________________________________________________________
____________________________________________________________________________
Cases I must know if I want to pass Business Law and give
some meaning to all this.
1. ______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
2. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
3. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
4. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
5. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

6. ____________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
7. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
8. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
9. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
10. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

11. ____________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
12. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
13. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
14. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
15. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

16. ____________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
17. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
18. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
19. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
20. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

21. ____________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
22. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
23. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
24. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
25. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

26. ____________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
27. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
28. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
29. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
30. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

31. ____________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
32. _________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
33. _______________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
34. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________
35. ________________________________________________
Legal Principle:
__________________________________________________________
__________________________________________________________

I finally finished
it! Life’s Good
Baby! I wish I
never have to
this again.
www.lateralsc.com
daniel.lateralsolutions@gmail.com

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Hospitality Business Law 1

Hospitality Business Law 2

Hospitality Business Law 3

Hospitality Business Law 4

Why must you study Law?

What does Business Law do?

How is Business Law related and important for Hospitality

What kind of industrial application is there for mastering Business Law

What should I do to benefit from this programme?

Hospitality Business Law 5

[Answer next page]

Hospitality Business Law 6

Hospitality Business Law 7

I hereby declare that I will work towards completing this module

somebody forced you too.

Hospitality Business Law 8

Business Law is really fun to

This now – is the point of no

A study of law would require you to have a rudimentary

Hospitality Business Law 10

A tick falls off of you when you die.

Hospitality Business Law 11

Hospitality Business Law 12

Hospitality Business Law 13

Q: How many lawyers does it take to change a light bulb?

Hospitality Business Law 14

What happens when criminal law conflicts with civil law?

Hospitality Business Law 15

3. ____________________________ [you just need to know this and we are

Q: Why are lawyers like nuclear weapons? Answer next page.

Hospitality Business Law 16

1. Briefly describe how customs becomes Law?

2. What are case laws?

When they land, they screw up everything forever.

Hospitality Business Law 17

The person suing is called:

The person being sued is called:

Cases are recorded as follows:

The person appealing against a

The person responding to the

When they land, they screw up everything forever.

Hospitality Business Law 18

Do judges have to follow previous court decisions always?

Is Binding Precedent important in Singapore

Hospitality Business Law 19

Q: What do lawyers use for birth control? Answer next page.

Hospitality Business Law 20

Highest court in Singapore. Decision

Decision made here is binding

Decision made is not

Hospitality Business Law 21

Hospitality Business Law 22

These courts also have

Hears petition for

This court deals with

Hospitality Business Law 23

What are legislations?

LEGISLATION passed by Parliament is

A: Stick his bill up his @$%.

Hospitality Business Law 24

Hospitality Business Law 26

Basics of the Bill is discussed and voted upon. At

The Bill is discussed in greater detail and