Notes of Commercial Law
Contracts (C3, pg 58)
Nature of contract – Legal relationship consisting of the right and promises constituting an agreement between the parties that give each party a legal duty to the other and also the right to seek for breach of those duties. Consensus ad idem (meeting of minds); what the parties agree on must be clear and unambiguous and parties must be ad idem. Well, mix Organics (International). Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd (1952) the court held that the display of goods with prices constitutes an invitation to treat. The offer is only made when a customer selects the item he wants and brings it to the cashier to pay for it. Reaffirmed by Singapore High Court in Chwee Kin Keong & Others v Digilandmall com Pte Ltd (2004). Advertisements An ad is view as invitations to treat. Partridge v Crittenden (1968).
Provision of Information
Harvey v Facey (1893) – The court held that there was no contract because the provision of information was not an offer. Stevenson, Jacques & Co v McLean (1880) – Seeking for more information is neither a rejection nor acceptance, it was merely an inquiry. Compare between offer and invitation to treat, must prove why to choose one over the other.
An offer is an expression made by one party to another party. For an offer to be effective, the offer must be communicated to the offeree.
A contract brought into existence by the act of one party in response to a conditional promise by another. Harvey Investments Ltd v (involving only one. No exchange of promise, only 1 promise (made by offeror). The offeree makes no promise, only performs conditions attached to offeror’s promise. Carlill v Carbolic Smoke Ball Co. (1892) – Where advertisement contains a promise in return for an act, an offer is intended. (No general rule that an ad cannot be an offer.)
An agreement where one party makes a promise to the other party. There are duties, rights, and considerations for both parties. In other words, the performance of the conditions is an acceptance of the | |or both) |offer and this acceptance should be notified. Termination of Offer (Pg 75) (5 ways).
Law: Offer can be withdrawn or revoked by the offeror at any time before it is accepted. (When an offer is withdrawn, the offer is said to be revoked). Overseas Union Insurance Ltd v Turegum Insurance Co (2001).
Law: Withdrawal must be communicated to offeree (Revocation is only effective when the offeree receives notice of the revocation) Byrne v Van Tienhoven (1880) – It was held that the revocation was not effective until it was received by the plaintiff. Since the offer was accepted prior to the revocation, there was a valid contract.
Law: Revocation of offer can be communicated by a third party (as long as the offeree obtains knowledge of the revocation) (must be a reliable and trustworthy source) Dickinson v Dodds (1876).
Law: Fresh Offer (Revocation can also occur if the offer is replaced by a fresh offer) Ban Paribas v Citibank NA (1989)
Law: Offer is opened for a fixed period Routledge v Grant (1828) –Rationale is that an offeree cannot enforce an offeror’s promise to keep his offer open unless there is a separate contract supported by consideration to do so, such contracts are called options – Tay Joo. Sing v Ku Yu Sang – essentially a promise, supported by consideration, to keep an offer open for a specific period of time within which to decide whether or not to enter into the purchase of agreement.
Law: Unilateral Contracts Abbot v Lance (1860), it was held that the offeror cannot withdraw his offer once the offeree has started to act. – Dickson Trading(s) Pte Ltd v Transmarco Ltd (1989), obiter dictum, the offeror in a unilateral contract has an obligation not to revoke the offer after the offeree has involved in the performance of the conditions.
Lapse of time
Acceptance after a specific period in which the offeror states that his offer is open = Ineffective. If the offer is opened for a specified period, a purported acceptance after that period would not be effective since the offer had lapsed. the court may imply that the offeror has specified the period of offer even if he has not done so expressly. Wee Ah Lian v Teo Siak Weng (1992)- however, if it is clear from the offeror’s conduct and other evidence that the terms of the supposedly lapsed offer continue to govern their relationship after the specified period, then it is still valid and acceptable after the deadline. Penwell Pte Ltd & Anor v Indian Bank. When no specified period of time is expressed, an offer would lapse after a reasonable amount of time, (depending on the facts of the case).
Ramsgate Victoria Hotel Co v Montefiore (1866) – the court held that Montefiore could refuse to take up the shares because his offer had lapsed after a reasonable time. Failure of Offer automatically terminated if the condition did not meet.
An offer may terminate on the occurrence of a specified event if the offer is subjected to the condition that it will do. e. g. terminate if goods are damaged before acceptance, subject to the approval of my lawyer.
Financings Ltd v Stimson (1962). Dickinson v Dodds if the man who makes an offer dies, the offer cannot be accepted after he is dead. Reynolds v Atherton (1921). (Offeree dies before acceptance, this offer ceases to be capable of acceptance. Bradbury v Morgan the court held that the death of an offeror did not terminate the offer unless the offeree had notice of the offeror’s death. Indication by the offeree of his consent to the offer and his intention to form a contract based on the exact terms of the offer. Whatever its form, a communication constitutes acceptance only if it is an unconditional expression of assent to the terms of the offer.
Compaq Computer Asia
Pte Ltd v Computer Interface(s) Pte Ltd (2004) – Conditional Acceptance is treated as no acceptance. Stuttgart Auto Pte Ltd v Ng Shwu Yong (2005) – Accepts seller’s offer subject to a written contract drafted. Thomas Plaza (Pte) Ltd v Liquidators of Yaohan Departmental Store Singapore Pte Ltd (in liquidation) (2001). – The agreement shall not be a final and binding agreement – Cendekia Candranegara Tjiang v Yin Kum Choy & Others (2002). The Court held that the facts and actual conduct of the parties, established the existence of a contract, and there has a clear breach of it, Brogden must be held liable upon it.
Law: Acceptance of unilateral contract is when all the terms of the contract are fully performed Carlill v Carbolic Smoke Ball Co. (1892)
Offeree introduces a new term or varies the terms of an offer (original offeror is free to accept or reject the “counteroffer”) Hyde v Wrench. Offer (1840) – The court held that there was no contract because Hyde’s reply was a counteroffer which extinguished the earlier offer. When the response is an inquiry or a request for information, it should not be construed as an offer.
Law: Offeree cannot accept in ignorance of the law of Offer. Must be aware of the offer – Fitch v Snedaker (1868) and R v Clarke (1927) – As long as the offeree has knowledge of the offer, the motive is irrelevant. Once the offeree is aware of the offer, it does not matter that he was prompted to act for reasons other than the desire to accept the offer. William v Carwardine (1833) – the court held that the plaintiff was entitled to a reward, she had done so with knowledge of the reward even though her motive for giving the information was her own remorse.
Cross-offer: Do not constitute agreement/contract; lack of consensus/meeting of minds between parties at the time of making an offer.
Exemption case: Both parties agree that the offeree would have a positive obligation to communicate only if he wished to reject the offer. Albeit rare in practice, silence is properly be construed as acceptance – Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank AG (1993) and Midlink Development Pte Ltd v The Stansfield Group Pte Ltd (2004) – defendant’s conduct of paying the reduced rent showed that contact exists.
The time of acceptance is the time at which the acceptance is communicated to the offeror. The acceptance will take effect when and where it is received, acceptance must be absolute and unconditional Entores v Miles Far East Corp Communica(1955) tions – if got designated info system; receipt when e-record entered the designated info system. Emails, Fax, Telex – if got designated info system but sent elsewhere then is receipt upon retrieval. If no designated info system; receipt upon entering any info system of addressee. The offeror will claim that it is only valid acceptance when physically received. The agreement cannot be withdrawn once the post is sent out. Henthorn v Fraser (1892) – Acceptance deemed effective as soon as the letter is posted regardless as to when it reaches the offeror or whether it reaches him at all. Adams v Lindsell (1818) – the court held that the acceptance was communicated and the contract was formed as soon as the plaintiff posted the acceptance letter. Lee Seng Heng v Guardian Assurance Co Ltd (1932).
Waiver of Communication: facts show that the offeror has waived the need for communication of acceptance; when an offer made to the whole world (unilateral contract; anyone can accept) – Carlill v Carbolic Smoke Ball. (the doing of the act by the offeree may itself be constructed as acceptance, without requiring formal communication to the offeror.)
Termination of acceptance: Once posted, acceptance cannot be revoked. – Weinheim v Arndt (1873) | 3. Consideration (C4, Pg 85) Two Main Rules on Consideration Must move from promisee but need not move to the promisor. K-Rex Finance Ltd v Cheng Chih Cheng (1993) – The court spoke the words of Cockburn CJ in Callisher v Bischoffsheim (1870). The same applies to a compromise of legal action. The req. is that the legal action must be reasonable and not frivolous, that the claimant has an honest belief that in the chance of success of the claim and that the claimant has not concealed from the other party any fact which, to the claimant’s knowledge, might affect its validity. Foakes v Beer (1884) affirmed Pinnel’s Case – the HOL held that Beer’s promise not to take further action was not supported by consideration. She could claim the money. ( in Euro-Asia Realty Pte Ltd v Mayfair Investment Pte Ltd (2001), District Court in Singapore endorsed the rule in Foakes v Beer and held favor in the creditor. Promissory Estoppel is an equitable doctrine whose origin may be traced to Lord Cairns in Hughes v Metropolitan Railway Co (1877). When p. e. is established, the court may enforce a promise despite the fact that there was no consideration.
Parties must have an existing legal relationship
A clear and unequivocal promise which affects the legal relationship
Promisee relied upon the promise and altered his position
Inequitable for the promisor to go back on his promise.
Corporation Strata Title Plan No 2297 v Seasons Park Ltd (2005). Exceptions (Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd (1993).