Sub-Issue: Did Offeree Accept offer from Offeror?

2. Acceptance = Gay Choon Ing

Final and unqualified expression of assent to the terms of the offer = Intention to be bound – Objectively ascertained Bilateral = Accept

*Must be communicated to the offeror* Unilateral = Complete performance

Communication of Acceptance = General Rule Exceptions:

 Must be brought to the notice of Offeror 1. Postal Acceptance Rule = Point of communication = point of dispatch
 Acceptance through conduct o Benefit offeree = easier proof
 Mere Mental assent, cannot = ascertain communication Requirements = Postal acceptance expressly or impliedly authorized
 Instantaneous communication = point of receipt, where contract formed = Letter of acceptance properly addressed and stamped
 There can be a Waive of Acceptance = no universal rule, look at intentions of parties 2. Battle of Forms = Last shot doctrine, Butler Machine Tool
o Which one was accepted, last one is contract
3. No acceptance in Silence = no communication
-Electronic Transaction Act- 4. Offeree ignorant to Offer at point of “acceptance”
5. Cross offers = no contract
S13(1) = Time of Dispatch = PAR

a) Time when it leaves communication system under the control of the originator = has
left the originator
b) (in my webpage) if electronic communication has not left info system under control
of originator, time when electronic communication received = 2 conditions first
a. Info available of webpage, addressee knows and able to access

S13(2) = General, Time of Receipt

 Capable of being retrieved by addressee at electronic address designated by

addressee = Does addressee tell me where to send it, there is acceptance in the email

S13(3) = Time of Receipt

 At electronic address has not been designated by addressee,

o Capable of being retrieved by addressee at that address
o And knows that it has been sent there
Sub-Issue: Was there intention to create relation?

Intention To Create Relation (ICLR) = Law draws certain presumption depending on circumstances

1. Social and Domestic Context

Presumption = No intention

Balfour v Balfour

Presumption can be rebutted = Merritt v Merritt

2. Business and Commercial Context

Presumption = Have Intention to be legally bound

Rose & Frank

Rebuttal Presumption – can be displaced to clear statements to contrary

Chua Kim Leng

Sub-issue: Whether is it a term or a representation?

Pre-Contract Statements –
Distinguish Between Term v Representation:
Statements:
 Intention of Parties = (PER/Writing/E.A)
 Puff = not statement of fact, exaggeration  Special Skill and Knowledge = *Oscar Chess*
 Representation = statement of past or existing fact to induce representee to enter  Importance of Statement = *Bannerman*
into contract = sue for misrepresentation  Request of verify = *Ecay v Godfrey*
 Term = Promise for which promise assumes contractual obligations  Timing of statement = *Routledge v Mckay*
 Oral or Written
Promise? Yes = Term No = Not Term

Sub-Issue: What remedies Innocent party entitles to?

Rules: Condition-Warranty followed by Hong Kong Fir

1. Is term a condition? YES = Rights to Terminate Contract NO = Minor, Move to step 2

2. Is term an ‘expressly intended warranty’? YES = No rights to terminate NO = Impliedly intended warranty
Move to step 3 as ascertaining intention of parties failed, now need to see if consequence of breach is srs
3. Are consequences of breach sufficiently serious to warrant right to terminate contract? YES or NO

Possible for breach of warranty lead to right to terminate contract

Remedies:

Damages = Breach entitles innocent party damages

Right to terminate contract = if the breach is a condition or term which goes to the root of the
contract and where party in breach has repudiated the contract
Sub-Issue: Is the exemption clause in contract operative? Clauses: Exclusion Clause, Limitation Clause, Pass on Liability (Indemnity Clause)

1. Incorporation (court see if failed in incorporation)  By Reasonable Notice

 By Signature = Bound by signature, doesn’t matter if have not read or understood the o Type of Document = document no need signature?
contract *L’Estrange* o Time of notice = after contract formed = no-no
o EXCEPTIONS o Adequacy of Notice = is it clear enough
 Non-Est Factum = Not my deed, More than just carelessness o Effect of clause = how important is it, more important then
 Misrepresentation as to existence court requires greater notice
 Express Warranty = Overwrites E.C *Anti-Corrosion*

 By Prior Course of Dealing

After Clause is Incorporated
o Where there is been consistent and sufficient regular
2. Construction – interpret its meaning previous course of dealing
 MUST BE SUPER REGULAR
Rule: 2 Approaches
 Servicing is not considered regular
1. Contra proferentum used in construction o Will the clause be incorporated from previous trade?
a. In case of ambiguity in meaning of clause (Brought forward?)
1st Stage: Determine existence of ambiguity = no ambiguity, don’t work
2nd Stage: Identify the proferens – tempted to phrase it broadly
If both parties draft contract = no proferens
2. Rules in cases of negligence liability
a. Exclusion must be clear
Guidelines:
 If clause specific and clear, must give effect to the clause
 Not so clear, court as if can cover meaning of negligence
 If words wide enough to cover negligence, can it refer to something else other than
negligence = interpret something else

3. Statutory Limitation: UCTA = Is it an exemption in the first place? 2. Applicability to breach of contract

2 approaches = rendering inoperative or allow it to operate if can pass the reasonableness test. S3(1) = Deals as consumer OR standard terms of business

1. Negligence liability
a. S2(1) = Cannot exclude liability for death or personal injury = E.C Inoperative
b. BUT = S2(2) = May exclude liability other than for death or personal injury if
pass reasonableness test
S3(2) = Cannot rely when himself in breach or no performance or one
substantially different UNLESS = contract term satisfies reasonableness
Commercial party NOT Consumer but Company can
Sub-Issue: Did Representor mispresented to representee? Vitiating Factors: Factor Present = vitiates contract, renders it unenforceable by one or both parties, present
at time of formation of contract

Rules To Identify Misrepresentation ALL 4 ELEMENTS:

Misrepresentation:
Statement must:
 False representation of past or existing fact to materially
induce representee into entering contract in reliance of it 1. Be Statement of Fact (past or existing)
 Before Contract not like Breach of contract which is after 2. Be False
 Makes contract = VOIDABLE NOT void 3. Be Addressed to representee
4. Induce Contract and be relied on by party misled

Statements that are or are not Misrepresentation: Misrepresentation By Conduct: Most obvious = spoken or
written
Puff = Not Misrepresentation, not statement of Fact
 Express Statement include implied representation
Opinions = Not Misrepresentation BUT = maker had access to relevant facts and had no reasonable
 Implied representation by conduct = a wink, smile, nod
grounds for holding such opinion (*Esso*)
shake of the head
Intention = Not Misrepresentation, Statement of intention or future event not statement of past/existing  Silence = General Rule Not Misrepresentation
fact BUT = making statement, representor had no such intention *Edgington* (a state of a man’s mind is a o EXCEPTIONS:
misstatement of fact)  Misleading half-truth: misrepresentation =
silent about the half-truth *Dimmock*
Statement of law = Not Misrepresentation BUT = representor did not hold that opinion or belief of the law
 Knows statement its false but representor
doesn’t correct it or say anything
Misrepresentation: Material Inducement  Precontract change in circumstances
Statement must: makes previous truthful statement
misleading = silence in what I NOW know
 Be material: sufficient i.e would have influenced reasonable person AND  Law imposes duty of disclosure = Insurance
 Did induce contract i.e representee did rely on it contract
Need not sole inducing cause:
Representee no need investigate and ascertain whether
 Sufficient if played a real and substantive part and operated on representee’s mind *Edgington* representation true/false – as long as reliance proven
 Inducement must result actual (subjective) reliance by representee enter into contract
 Misrepresentation harmless if pf did not allow it to affect judgement BUT = relied on own independent verification or information
and not rely on misrepresentation – no misrep

BUT = Inducement not by oral representation but by own

assumption – no misrep
Misrepresentation Act – S(1) M.A recognizes misrep can also be breach of contract

Advantages of M.A:  Same pre-contract statement may be incorporated as a term but

still an actionable misrep (if meets requirements)
 Presumption of F.M, onus on df to prove otherwise
 If so remedies available for both breach and misrep, Rules for
 No effect of exclusion clauses unless meet UCTA requirements
measuring damages different for breach and misrep BUT double-
 No need for special r/s
recovery not allowed for same loss
BUT = S(1) No contract No M.A and S2(2) Contract cannot be rescinded, no award of damages

Misrepresentation: Recission – Reverse out the contract, voidable

 Avail to all 3 types of Misrepresentation

 Decision to rescind need to be communicated to other party
 BARS TO AFFIRMATION: Limits
o Affirmation by innocent party = affirmed
o Lapse of reasonable time – for N.M and I.M not F.M
o No longer possible to restore both parties to pre-contract position (substantially not precisely)
o Third Party acquired rights in subject matter

If contract validly rescinded, back to base

 Ste contract aside from the beginning (ab initio) – contract treated as if never existed – Both parties return payments and other benefits conferred from contract
 C.f termination for breach – contract termination for future only = payments make don’t have to return

Misrepresentation: Exclusion Liability = cannot exclude fraudulent but can N.M and I.M

 Contract clause exclude liability for misrepresentation must be reasonable S3 M.A

 Non-Reliance Clause preventing representee alleging misrepresentation:
o Estopeel by Representation – 1. Write clause/terms no representation
2. Write that clause, for the other party relying on that clause
3. Did rely on clause
 Vitiating Factors: Factor Present = vitiates contract, renders it unenforceable by one or both parties, present
Sub-Issue: Whether contract voidable
at time of formation of contract

Duress but only focus on ECONOMIC DURESS: A enters into contract with B result of B’s coercion = contract may be set aside by A on ground of duress

Commercial pressure not Duress, Duress = exceptional case, Inequality in bargaining power = well accepted, Not the case for E.D = between parties unequal bargaining strength

E.D succeed where: party used superior bargain position a way that is illegitimate

Rationale for E.D: 2 Theories

1. Overborne will theory = lost your will

2. Illegitimate Pressure = Pressure applied illegitimate = legitimacy of threat or pressure

Illegitimate Pressure = Distinction between Mere Commercial Pressure (legitimate) and E.D Legal Effect = Procedural problem = way the pressure
(illegitimate) 3 Elements to Show:
 If victim establishes E.D argument,
1. Pressure amounting to compulsion = more that sufficient pressure? o Contract VOIDBALE not void
 Factors in Pao Onn Whether:  Right to rescind contract BUT right to rescind contract can
o Victim protested be last for various reasons
o Had any alternative course Evidence whether
o Received independent legal advice there is compulsion
o Took steps to avoid
2. Illegitimacy of the pressure exerted
 2 Aspects: R v A-G
o Nature of pressure (threat) = illegitimate? OR
o Nature of demand = illegitimate? If bona fide
 Threatened action unlawful = illegitimate pressure BUT not necessarily
criminal: unlawful may include – breach of contract, tort but breach of contract
tend to be treated differently
 Threatened action lawful = might still be illegitimate pressure BUT contracts
very rarely be set aside for duress when only lawful means or pressure used
o Lawful commercial pressure never mistaken for duress capable of
avoiding contract = very tough to show E.C becuz C.P not unlawful
3. Causation = Pressure therefore, enter into contract
 Did pressure cause victim enter new/modified contract?
 What if illegitimate pressure one of a number of factors that induced contract?
= ‘But for test” – but for the pressure would I have entered into contract?
 Burden of proof = causation – party claiming duress
Unconscionability: where idea of strong take advantage of weak See if can E.D or U.I first then alternative is Unconscionability = courts are careful

Not right strong allowed to push weak to the wall

FOCUS = behavior of stronger party- did something unconscionable

Unsatisfactory conduct tainted by bad faith – lack of bona fide

-Requirements-

 Victim have serious disadvantage – poverty, ignorance

o Transaction considered undervalue
o Lack of independent advice *Cresswell*
 Weakness exploited by other in morally culpable way
 Transaction – overreaching and oppressive = hard and burdensome

Victim have serious disadvantage – df exploit victim into bad contract = morally
wrong

 Df must show that transaction is fair, just and reasonable

 Df exploited victim’s infirmity – Burden of proof shift to Df to show
transaction fair, just and reasonable. – No need to be at undervalue or pf
did not have independent advice

B.S Mount Sophia Pte Ltd v Jion-Aim Pte Ltd

Discharge of contract: contract is brought to an end Sub-Issue: Can contract breaker claim _______ Methods of Discharge:

Breach ( Actual or Anticipatory) – occurs after contract is formed: one party not doing 2. Types of Breach – Repudiatory or Non-Repudiatory
what was promised to other party
1. Repudiatory Breach – give rise to right to terminate and damages
1. Lawful excuses for Breach a. Breach of a condition or breach of innominate term with
a. By Agreement serious consequence – Situation 3 of RDC
b. By Contractual provision for termination b. Repudiation breach – outright refusal to perform – Situation
c. By Frustration 2 of RDC
d. As a result of interdependent (if you don’t do your part, I don’t need to do my c. Making performance impossible
part)/ independent (same contract but independent) promises 2. Non-Repudiatory Breach – cannot terminate
 Your obligation give money first IF give car first – interdependent a. Breach of warranty or innominate term where consequence
 My failure to maintain is breach Not connected to my failure to pay not serious – can only sue for damages
breach – independent

3. Remedies for Breach: remedies available depend on the
relative importance of terms
 Repudiatory – Damages and can elect to terminate
 Non repudiatory – only sue for damages
4. Election to Terminate of Affirm
In relation to that
 Right of Election Repudiatory Breach – does not auto terminate contract breach, not to any
 Innocent party must affirm or terminate = irrevocable once made choice further breach

5. Effect of Termination OR affirmation of contract 5. Effect of Termination OR affirmation of contract

A. Termination: innocent party elects to accept breach and B. Affirmation

terminate contract
1. Both parties released from future obligation
i. Contract breaker’s future obligation –
pay damage for breach
ii. However, terms intended to survive
termination remain
2. Both parties remain liable to perform all
unperformed obligations – accrued
before/upon termination – but there may be
subject to innocent part’s right to damages for
breach
1. Innocent party must know
i. of the facts given rise to his right to terminate
ii. Communicate his choice clear and unequivocal terms to other party
2. Election can be ‘express’ or implied (through conduct)
i. Implied where – innocent party acts in a way consistent only with a
decision to keep contract alive OR exercises rights only available to
him if contract had been affirmed
3. Effect of Affirmation – cannot terminate alrdy
i. Contract remains on foot – continues on
ii. Both parties bound to perform all obligations in contract
iii. Dagames payable if actual breach – sue for damages, if anticipatory
breach – no damages payable

Remedies for Breach of Contract Type of Remedies: Common Law Remedies
Unliquidated Damages – ULD = Court determines damages payable
Principle for award of damages:
Contract measures: place innocent party so far as money can do, same
position he would be in as if contract was properly performed *Robinson* =
Forward looking – court give benefit of bargain
Tort measures: Place parties in original position as if contract was never
entered into – looking back = try to bring you back before tort
Requirements:
2. Causation – did breach actually cause the loss? = Breach must cause the
loss suffered by pf *Monarch Steamship Co. Limited v Karlshamns
Oljefabriker*
a. Loss suffered direct result of breach = No break in chain of
causation – no intervention from external source
*Out of the Box Pte Ltd* = Interpretation of a contract should not be
conflated with questions of remoteness
Different heads of loss might seem same type or nature and yet emerge on
proper analysis being different. Would be simplistic and unhelpful argue
given head of loss was not too remote simply because could semantically be
packaged within broader category of loss was foreseeable = contemplation
- Don’t argue given head
- Don’t define loss so broadly that covers all contemplation – very
absurd
- Reframe = don’t make it so broad = not realistic
Damages: General
 Primary remedy, contract breached, party in breach require to pay
damages to injured party
 Put you in a position as if contract was performed = benefit of the
bargain
 As of right = auto if requirements are met, Not Punitive
1. Test of Remoteness – Once causation established, innocent party entitled to losses
caused by breach but, is the loss to remote to allow recovery? (Imaginary Line = falls
beyond it too remote)
a. Hadley v Baxendale (1854): Test of Hadley v Baxendale 2 Limb (either)
1st Limb: Damage fairly and reasonably be considered arising naturally according to
usual course of business – Basic knowledge imputed to Df, depends on who you are
Robertson Quay: Everyone must as reasonable people, taken to know damage
flowed “naturally” from breach, the first limb of Hadley did no violence to original
bargain between contracting parties = Lost Naturally arising
Imputed Knowledge = Every reasonable person know and take to know of damage
flowing “naturally” for particular breach
2nd Limb: Damage reasonably supposed to have been in contemplation of both
parties at the time contract made. – have specific knowledge of particular risk of
loss
IN COMTEMPLATION: The Heron II: Lord Reid treated “contemplation as requiring
higher degree of probability of loss than “foreseeability” than a tort = Much
narrower
Robertson Quay: Not naturally arising = unjust and unfair to impute to them
knowledge. However, Actual Knowledge did not make express provision in contract,
must be take to have ageed should such damage occur, contract breaker would be
liable for such damage
Actual Knowledge: wouldn’t naturally know it but actually aware of it = liable for
damage
Determine particular damage too remote = must see type or kind of damage is
foreseeable – contemplation e.g loss of profit
Type of Remedies: Common Law Remedies
Liquidated Damages: Terms to the contract
= pre-estimated amount of damages –
already predefined the loss
Action for a Fixed Sum =
straightforward – Enforcement of
Debt, no 4 rules = Not Damages
Type of Remedies: Equitable Remedies = purely @ court’s discretion unless show
damages not adequate – money not enough
Awarded unless rules of equity – in Judge’s discretion not as of right, court only grant
these remedies if think just to do so

 Have a clause e.g Breach, pay an
amount – clause state amount to
be paid for breach
 QN: is the clause operative?
Distinguish between L.D vs Penalty
1. L.D: genuine pre-estimate of loss
2. IN Contrast: Penalty = sum stipulated
in terrorem = to force party to comply
– estimate, clause specified payment
to terrorize you
Guideline in *Dunlop Preumatic Tyre
company*
Likely penalty if:
1. Amt extravagant and
unconscionable compare with
greatest conceivable loss
and/or
2. A single lump sum payable on
occurrence of one or more
breaches some of which are
serious and other trifling
 Action to claim some of 1. Specific Performance: court will force you to perform contract
money due under a. Order to compel party in breach perform contractual obligations
contract i. Granted only where damages will not provide adequate relief
 Action in debt – to *Beswick*
enforce contract = must b. Generally not granted: If do so would cause severe hardship to df or in
prove sum become due contracts personal svs (involuntary servitude) or requiring constant
 Not an action for supervision of court
damages – not to
compensate for loss – no
need prove loss 2. Injunction: related to S.P but not same thing
 Court compel party refrain from doing specified act (don’t need to be in
contract)
 Stop you or make you do something
 Prohibitory Injunctions = stop e.g for the time being, cannot sell during
court hearing
 Mandatory injuctions
 Interim/interlocutory = temporary, to preserve status quo till litigation
decided
 Final injunction = permanent order
Contd’ from Frustration

Limitation on application of Doctrine:

1. No self-induced Frustration – must be no fault of both

parties *Maritime*
2. Not for foreseeable events – if parties ought to foreseen
alleged frustrating event, have assumed risk of this event
happening. More foreseeable event, less chance doctrine
apply *Glahe*
3. Presence of force majeure clause = contract specifically
addresses consequences of unexpected events, court
likely apply clause rather doctrine of frustration

Effects of Frustration @ common law: Effects of Frustration under Frustrated Contracts Act:

 Contract auto terminated by operation of law
 Parties released from future obligations *Fibrsoa*
 But payment made/accrued before frustration were
unaffected (in general) – cannot recover what has been
paid
 Payments made before frustration = recoverable S2(2) FCA
 Obligation to make payment accrued before frustration ceases: S2(2)
 Allowance for expenses incurred by payee: if party whom sums are paid (or
payable) incurred expenses in performing before frustration, court may, if
just, allow recover amount of those expenses S2(3) proviso FCA = incurred
some cost can recover some payment
 Non-monetary benefit obtained before frustration: S2(4) FCA – can ask for
some value
o Act allows court award ‘just’ compensation for non-monetary
benefits conferred before frustration = Not same as cost to provide
benefit BUT amount cannot be more than value of ‘valuable benefit’
Duty of Care = Donoghue v Stevenson: “neighbor principle” -we have neighbors, behave and act in a way not to harm

a. Rule= lover your neighbor, must not injure them, take reasonable care to avoid commission or omission reasonably foreseeable likely to injure neighbor
b. Lord Atkin, Law: neighbor is anybody can foresee my commission or omission can harm

Use *Caparo* Language:

1. Foreseeability
2. Proximity
3. Just and reasonable

Rules to follow: *Spandeck Engineering (S) Pte Ltd v Defnece science &
Technology Agency* 2 Stage Test
(0) Factual Foreseeability – is it actually foreseeable that my action or
omission will cause harm people including pf? (any kind of harm)
(3) Proximity – closeness of r/s between the parties
a. Physical proximity – where are you, where am i?
b. Circumstantial proximity – who are you, who am i?
c. Casual proximity – what did you do what did I do?
Supported by twin criteria
3. Assumption of responsibility = Physical, circumstantial
4. Df’s control of situation = Do you rely on me, Pf’s reliance and
vulnerability and Df’s knowledge of the risk of harm
0 and 1 Established Prima Facie D.O.C arose
(4) Policy consideration – whether or not to negate prima facie duty
a. Allows court avoid finding liability even if prima facie
established EXAMPLES:
i. Floodgates arguments – too many litigation
ii. Inimical Statue – harmful to scheme of a statue
iii. Interfere contract agreements
iv. Leading to undesirably defensive behavior from
df
(D) Negligent Misstatements causing economic loss – normally harm: pure economic
loss = duty element arises from “special r/s” – equates to proximity in misstatement
context
*Hadley v Bryne*
1. Assumption of responsibility and reliance
Law imply D.O.C – when party seeking info from party possessed with special skill
trusts him to exercise due care, party knew or ought to have know that reliance was
placed on his skills
2. Purpose of and reliance on advice
Before D.O.C arises, seems court requires – adviser know or ought to know advisee
likely to rely upon advise and generally reasonable to do so *Caparo*
3. Paid or Free advice: Paid = might rely more, Free = might not
Payment info or advice, very good evidence being relied on and that informer or
adviser knows
Advice Free = need to exercise greater care distinguishing between social or
professional r/s between those which are contractual character and those which are
not – is adviser getting reward in some indirect form?

2 Stage test develops by analogy with prior cases = make references from
finding type of losses
 Defenses: defending DF
Arose from failure of D.O.C 3. Resulting Damage
 Even if liability prima facie established:
1. Factual Causation = ‘But for test’ – But for the fact that you did
not do this, I suffered harm
a. If Pf would not have suffered damage but for certain
event, then that event is cause of damage – more than
one cause, court has to decide extent to which cause
contributed to damage
b. Material Contributory to damage – more than one
cause of loss, did I materially contribute, if didn’t cannot
claim
2. Legal Causation – was the claim of causation broken by Novus
Actus Intervenines = after I did something, did something else
happen, did that break chain of causation
a. If go N.I.A (new intervening act) – not legal causation,
break chain of factual causation.
b. Only will work if independent act: not from my original
action/consequence, if it is cannot
3. Remoteness – reasonably foreseeability test = much broader
a. Much easier to pass than in contract breach
b. Reasonable foreseeability (of the damage) test: *Wagon
Mound*
i. Reasonable Facility kinf od loss i.e not necessary
to foresee exact damage
ii. Eggshell Skull Rule: Take my victim as I find him,
doesn’t matter if don’t know
4. Mitigation – Innocent party must take reasonable steps to
mitigate loss
a. Df’s burden to show Pf ought to have taken reasonable
steps to prevent or reduce Pf’s loss. Loss claimable by Pf
would be reduced accordingly if don’t mitigate
Measurement – not contract so no benefit of bargain
Bring him back to position before tort – Aim of damages in
tort = put pf as far back money can in position would have been in if
tort never happened
o Ex turpi cause – illegality = illegal act, no action found in wicked act
 Has a limited application – fact that pf involved in wrongdoing does not
itself provide good defense to df = must be illegal
o Volenti Non Fit Injuria (voluntary assumption of risk)
 Voluntary assume risk, know the risk, cannot sue = Full defense
 Pf myst have appreciated the extent of risk (of Df’s negligence) and
accepted it = complete defense
o Exemption Liability – person can exempt (or limt) from negligence liabity if pass
UCTA E.C
o Contributory Negligence = Partial Defence
 Pf partially resulted in their injury too
 S 3 Contributory Negligence and Personal Injuries Act
 S3(1) – where person suffers damage result partly own fault and
party fault of any other peron/s, damages recoverable will be
reduced = court thinks just and equitable having regard to
claimant’s share of responsibility for damage – prorate damage
 S3(2) – subsection (1) shall not operate to defeat any defense
arising under contract
 S3(3) – any contract or written law providing for limitation of
liability applicable to the claim, amount of dmgs recoverable by
claimant under subsection (1) shall not exceed max limit so
applicable
o Vicarious Liability = contract OF svc – employee FOR – independent contractor
 Employee negligent, employer vicariously liable BUT must be employee
 Employer vicariously liable for acts and omissions of employees acting in
course of employement
Vitiating Factors: Factor Present = vitiates contract, renders it unenforceable by one or both parties, present
at time of formation of contract

Capacity – other party don’t have enough capacity to enter into contract. If entered into contract w/o capacity – contract tainted. Lack of capacity affects enforceability and makes
contract void or voidable.

Situations where capacity is questionable: Remedies against Minor:

1. Minors = S35(1) Civil Law Act = purposes of contracting, minor under age of 18  C.L and EQ remedies
a. But Note S35(4) CLA – 18 to 21 minor still treated as into for certain  S3(1) Minors Contract Act – empowers court order restitution against the
contracts e.g sales of land minor if just and equitable to do so
b. General Rule – Contracts entered by minor not enforceable against him  S2 M.C.A – Guarantee for loans to a minor – A guarantee given in respect of
(Provided the obligations are executory) minor’s contract, not enforceable on minor but enforceable on guarantor
c. EXCEPTIONS – enforcebale
1. Beneficial to Minors = enforceable, Contracts for necessary goods
or for benefit of minor 2. Mental Incapacity – Mental patients, Those under influence of drink = drunk
1. Must be necessaries @ law and Contract entered by person of unsound mind is valid UNLESS: Two Requirements
2. Minor in fact need of them *Nash v Inman* *Che Som Bte*
a. S3(3) SOGA necessaries means – good suitable to
condtion in life of minore… concerned and to his 1. Person go in not knowing what he is doing AND
actual requirements @ time of sale and delivery 2. Other party knew or ought reasonably to have known disability
b. Contract of employments, education = beneficial to Notes: S3(2) SOGA – persons incapacitated mentally or by drunkenness required to
minor *Clements* pay reasonable price for necessaries supplied
2. Voidable by a minor – contract is valid, minor can make a choice
1. Contracts for 3. Corporation – person acts ultra vires e.g janitor signs sales contract
a. Lease or purchase of land
b. Purchase shares in co. Doctrine of Ultra Vires : S25 Companies Act = protect 3rd party, even if ultra vires, does
c. Partnership agreements not mean contract void – court decide fair or not
d. Marriage settlements
Solution – sue ultra vires guy, co. still have to pay
2. Upon reaching reasonable time of age, can choose to void
it, before that, still valid Amendment to law – S23 CA = no longer need to specify object of company
3. Minor can repudiate contract before attaining or within
Pre-incorporation contract: S41 CA – rectify the contract = need to do things before
reasonable time of attaining, majority *Edwards*
company formed – acting illegal
3. Ratified by minor – void not valid but @ mature age can rectify,
contracts that don’t fall under above exceptions naturally void
BUT Binding and enforceable against minor if he ratifies them
upon attaining age of majority
Agency: r/s where agent conferred power to alter the legal position of principal on their behalf Principal authorizes Agent to deal with 3rd party but resulting contract is still
with Principal and 3rd Party

Type of Agency: classified according to authority conferred to them Effect of Agency –

1. Special Agent = authorizes particular contract only  Disclosed Agency – big co., agent act within scope of authority:
2. General Agent = contract of a certain class Principal bound
3. Universal Agent = normally link to personal things = all matters  Undisclosed – didn’t tell who the principal
If consumer breach = principal problem BUR credit problem, credit agent added responsibility o Contract may be enforced on grounds of commercia;
convenience *Siu Yin Kwan*
 Duties of Agent – Fiduciary
Creation of Agency: o Duty to avoid conflict of interest
1. By Agreement = I authorize you, through contract, Essential factor – consent o Not to make secret profits
a. Actual Authority = authorized o Not to delegate
i. Expressly authorized  Got some rights for agents:
ii. Impliedly authorized – implied to do what is necessary o Right to remuneration
 To do all things necessary for proper execution of his duties o Indemnity
 Express authority have implied authority – do things incidental or necessary o The right of Lien on principal’s property
 Particular trade = do all things ordinarily done in that trade  Agents typically not liable to 3rd party
2. W/O Agreement = no authority, rouge agents = what circumstances is it enforceable o BUT: Situations where agent attract personal liability,
a. Apparent Authority – form of Estoppel agent agrees to be liable, trade usage, Non-existent
b. Is there an agency when rouge? principal, undisclosed principal and breach of warranty
i. Yes if Ostensible Authority (Authority agent appears to have but does not) of authority
Requirements: Termination of Agency:
1) A representation by Principal
2) Reliance by 3rd Party  By act of parties = agency contract stipulate when agency will
3) Alteration of position of 3rd party terminate, also be terminated in following ways
o Full performance
Agency of Necessity – emergency situations = requires to act expeditiously protect property or interests
o Upon Breach amounting to repudiation
Requirements:
o Principal revoking agent’s authority
1) Unable to obtain instructions in time  Can end it by law:
2) Must have acted reasonably and in good faith o Where either principal or agent become bankrupt, is
3) Must have been necessity or urgency compelled agent act as he did dissolved or dies – frustrating events
3. By Ratification – may not have authority yet still doing it, Once co. form, will rectify contract. Agent o Agency created particular subject matter in mind,
w/o authority cannot bind principal but principal may choose to adopt or rectify, act subsequently destructions terminate agency through frustration
Requirements: o Agent or principal become mentally incompetent
a. Principal must exist at time of act
b. Re pre-incorporation contracts of a company S41 C.A
c. Ratification done within fixed or reasonable time