L03: L.A.C. Visual Map

BUSINESS LAW

Copyright ©Thum Cheng Cheong 20211

BUSINESS LAW1) SINGAPORE LEGAL SYSTEM PART 1

2) SINGAPORE LEGAL SYSTEM PART 2

3) CONTRACT: OFFER & ACCEPTANCE

4) CONTRACT: CONSIDERATION & INTENTION TO CREATE LEGAL RELATIONS

5) CONTRACT: TERMS & EXEMPTION CLAUSE

6) CONTRACT: VITIATING FACTORS. INCAPACITY & MISREPRESENTATION


(1) Singapore Legal System Part 1


❑Nature &

Function of

Business Law

❑ Define what law is

❑ common law & civil law

systems

❑ Criminal v

civil law

❑ Statutes v

Case law

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R _ GHTSR _ M _ D _ _ $

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C_MP_N$_T_ _ NLaw: definition

LEGAL MIND

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Statutes vsCase law

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CIVIL LAW SYSTEM

COMMON LAW SYSTEM

C _ D _ S

3a 3b

Criminal law vsCivil law

B_ND_NGPR_C_D_NT

P_RS_ _ S _ V_

P_RS_ _ S _ V_

Copyright © Thum Cheng Cheong, 2021

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(A) LAW

1) Set of rules

2) Community regulates its affairs i.e.

business / commercial transactions

3) Resolve disputes when arise (judiciary /

out-of-court via Alternative dispute

resolutions)

4) Enforceable by authority i.e. government

(executive)

(B1) COMMON LAW SYSTEMS (B2) CIVIL LAW SYSTEMS

1) Main source of law under the common law

system is “case law”

2) a product of medieval England and are

found in USA, Canada, Australia, New

Zealand as well as in Asia i.e. Singapore,

Hong Kong, Malaysia, Philippines, India

and South Africa.

3) Judges refer to past cases recorded in law

reports and use the principles to decide

new cases to promote consistency and

fairness based on the principle of binding

precedent or “stare decisis”.

1) Laws are systematically “codified” into

Codes.

2) found in European continental countries

i.e. France, Germany, Italy, Spain and also

in Asia i.e. Japan, Korea, Indonesia and

Thailand.

3) the civil codes govern the rights and

obligations of persons with the criminal

codes prohibiting certain actions as

criminal offences and commercial codes

governing business transactions. These

codes contain general principles of law and

cover the spectrum of human activities. Copyright © 2021 by Thum Cheng Cheong

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(C) COMMON LAW SYSTEMS

1) Rules of common law are essentially judge-made

law.

2) The judges in a case always look back at previous

cases called precedent involving similar facts to

discover the relevant legal principles to be applied

to their case and reach a decision or judgment

accordingly.

3) Past cases decided by superior courts are binding

and authoritative for future cases decided by lower

courts in the same hierarchy of courts. This doctrine

is called doctrine of binding precedent or stare

decisis which means “to stand by a decision”.

4) Prior decisions made by the court at the same level

are not binding but may be followed as “persuasive”

authority.

5) Prior decisions of a court in another hierarchy are

not binding on the court but may be of persuasive

authority.

Copyright © 2021 by Thum Cheng Cheong

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(D1) CRIMINAL LAW (D2) CIVIL LAW

1) Deals with certain acts that are harmful to

society

2) Examples are murder, theft and serious

traffic offences

3) The main objective is punishment of the

offender by way of fine, imprisonment,

caning or death penalty.

1) Covers all laws which are not criminal law.

2) Encompasses family law, contract law and

generally all aspects of business law.

3) The purpose is to compensate the innocent

or injured person.

4) Some acts have legal consequences in both criminal law and civil law.

5) Example in the case of a reckless car driver who may be:

6) prosecuted the authorities under criminal

law and punishment.

6) sued by the pedestrian for compensation

under civil law


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(2) Singapore Legal System Part 1

❑ Sources of Singapore law

❑ System of government

❑ Constitution of Singapore

❑ Alternative Dispute Resolutions

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WRITTEN LAW =ST_T_T_

Sources of LAW

CASE LAWS =C _ MM _ NL _ W

L _ G _ SL_T_R_

J_D_C_ _ RY

A _____________D _____________R _____________

❑ M_D_ _ T _ _ N

❑ _ RB_TR_T_ _ N

COURTS

SUPREME❑ Court of _ PP_ _ L❑ H_GH Court

_ X _ C_ T_ V_STATE❑ D_STR_CT Court $ __________❑ M_G_STR_T_ Court $ ________

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2a Supreme law

2b System of government


(A1) STATUTES (A2) CASE LAW

1) Statutes are written laws which are

enacted by the legislature.

2) The Singapore Constitution is the supreme

law of the land which lays down the

Singapore system of government. Any

written law or case law which is

inconsistent with the Constitution is

considered void.

3) Decisions by judges and the effect may be

reversed by Parliament when they pass

statutes.

1) Case laws are court decisions and the

principle of binding precedent or “stare

decisis” is a very important doctrine

adopted by the judiciary.

2) New laws are sometimes “created” by

judges in a piecemeal basis when they

reach a decision or judgment.

3) Decisions by judges may be reversed by

Parliament … passing statutes.

4) Some aspects of English legislation and case law apply to Singapore by virtue of its

“reception” under the Application of English Law Act.

5) These formed part of the Singapore law.


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(A1) STATUTES (A2) CASE LAW6) Statutes or written laws are enacted by

Parliament which is a speedy way to

update law in order to cope with rapid

changes in the business world.

7) The main legislations are called Acts of

Parliament.

8) Details are dealt with through “subsidiary

legislation” which are rules made by the

Executive e.g. the Minister and published

under a formal procedure.

9) Examples of statutes are Sale of Goods Act

and Road Traffic Act which protects the

public.

10) The authorities enforce the provisions of

statutes e.g. the use of Personal Mobility

Devices in HDB void decks or on the road.

11) Enforcement of statutes is based on

interpretation of the statutory provisions.

6. Private individuals bring matters to court for

decision and resolution on civil matters.

7. Court cases are decided based on the

doctrine of binding precedents whereby the

judge looks back to see how previous cases

(precedent) involving substantially similar

facts were dealt with.


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(B) SINGAPORE’S SYSTEM OF GOVERNMENT

consists of three “arms” under the Constitution:

(B1) LEGISLATURE (B2) EXECUTIVE (B3) JUCIDIARY

1) Primary law-making body

comprising of the President

and Parliament.

1) comprises the President,

the Prime Minister and his

Cabinet.

2) implements the statutes

and executes the

decisions of the

government together with

the Civil Service.

1) comprises the President,

Chief Justice, Justices of

the Supreme Court and all

judicial officers of the

State Courts.

2) responsible for

administration of justice.

3) Structure of courts: 2

levels namely the

Supreme Court on the

high level and the State

Courts on the lower level

❑ (NOTE: Refer to lecture

notes for court hierarchy.)


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(C1) JUCIDIARY (C2) ALTERNATIVE DISPUTE RESOLUTION

1) Parties suing each other in

court is referred to as civil

litigation.

2) Litigation is a formal and

expensive process and the

cases are heard in open

court

1) 2 main forms of dispute resolutions namely mediation and

arbitration

2) a faster, cheaper, informal, non-confrontational

alternatives to civil litigation.

3) preserves confidentiality and disputing parties may select

their mediator or arbitrator.

4) Mediation: appoint a mediator to settle the matter

amicably in Singapore.

5) Arbitration: appoint an expert arbitrator to decide on the

dispute and the award which is enforceable

internationally.

❑ (NOTE: Refer to lecture notes on mediation & arbitration).

3) Proceedings in Small Claims

Tribunal are heard before a

“Referee” with limited

jurisdiction dealing with

consumer cases of up to

$20,000 or $30,000 if both

parties agree in writing.


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(3) CONTRACT: OFFER & ACCEPTANCE

❑ Elements of a legally

binding contract❑ Principles of

acceptance in

contract

❑ Principles of offer in

contract

❑ Contract

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CONTRACT

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FACTS:❑ WHO❑ WHAT❑ WHEN❑ WHERE❑ HOW

❑ OFFER❑ I.T.T

❑ ACCEPTANCE

?

❑ General rule❑ Exception Advertisements

E.T.A.

Reward?

Case Laws

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Definition of contract

✓ an agreement giving rise to

✓ rights and obligations which are

✓ recognised and enforceable by law

✓ must be a “meeting of minds” / consensus ad

idem.

✓ 4 elements of a contract: offer, acceptance,

consideration and intention to create legal

relations

Definition of invitation to treat

❑ An invitation to

o commence negotiations

o someone to make an offer

The following are examples of invitation to treat

o advertisements: [Partridge v Crittenden]

o display of goods in shops: [Pharmaceutical

Society v Boots]


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(1) Definition of OFFER.

➢ An indication by one person (“offeror”)

➢ To another (“offeree”)

➢ Of the offeror’s willingness to enter into a

contract on

➢ Certain terms

➢ As soon as it is accepted by the offeree

❑ Offer may be communicated

o Conduct.

o Orally,

o Writing,

o Electronic Transactions Act, Sections

11 & 12. Must be received. Inbox.

Capable of being retrieved (read?)

❑ Made to:

o specific person,

o group of persons,

o world at large. Unilateral contract [Carlill v

Carbolic Smoke Ball Co.]

❑ Termination

o Revocation / withdrawal by

offeror before acceptance and

effective upon offeree receiving

notice [Byrne v Van Tienhoven]

o Rejection by offeree outright or

a counter-offer [Hyde v Wrench]

o Lapse of specified / reasonable

time

o Death of offeror / offeree

REWARD


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(2) Definition of ACCEPTANCE.

➢ Expression of assent / concurrence

➢ To terms of the offer

➢ Unqualified and unconditional assent of

offer (otherwise a counter-offer)

x No acceptance if assent of offer is

Qualified and Conditional, this

amounts to a counter-offer (An OFFER)

❑ General rule. Acceptance must be

communicated and received by offeror.

❑ Offer may be communicated

o Conduct.

o Orally,

o Writing,

o Electronic Transactions Act, Sections

11 & 12. Common law rules of

communication of offer and

acceptance applies.

o Case law: Entores Ltd v Miles Corp.

❑ Silence: general rule is that silence does not

fulfil communication requirement of

acceptance [Felthouse v Bindley]

Exceptions to the Receipt Rule.

o Postal rule of acceptance conditions.

[Adams v Lindsell]

i. Parties must have assented to its

use

ii. Reasonable in the circumstances

to use the post

iii. Letter must be properly

addressed and adequately

stamped

o Waiver of communication. [Carlill v

Carbolic Smoke Ball Co]

o Silence: Offeror agreed in advance with

offeree that silence amounts to

acceptance.


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(4) CONTRACT: CONSIDERATION & INTENTION

❑ Rules on

consideration

❑ Requirement for

intention to

create legal

relationship

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✓ Presumption x Rebuttal with evidence

✓ Rebuttal with evidence

× Presumption

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CONTRACT❑ OFFER❑ ACCEPTANCE

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FACTS:❑ WHO❑ WHAT❑ WHEN❑ WHERE❑ HOW

❑ Con$ideration

?

3 RULES

✓ Sufficient

Adequate

Visual Map

✓ Moved

SUE

X $ =G _ FT

PAST ……………………..PRESENT

X

❑ Intention to create legal relations

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Commercial

Social & Domestic

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(A) Definition of CONSIDERATION

➢ Something given, promises or done by

one party

➢ In exchange for

➢ A promise by another

➢ “price” or compensation paid for a

promise / act.

➢ Bargain

❑ 3 rules:

1) Must be sufficient, need not be adequate

/ equal in value to other party’s promise

/ act unless fraud / duress. [Thomas v

Thomas],

* DO MORE than legally obliged to do

[Glasbrook v Glamorgan]

2) Move from promisee (given

consideration i.e. paid price) to enforce

the promise (seller’s promise to deliver

the goods).

NO consideration

➢ No exchange

➢ Of promises

➢ No “price” or Compensation

➢ A gift: no bargain

INVALID consideration:

➢ Fraud / duress in exchanging promises /

price.

➢ *Already legally bound. [Stilk v Myrick]

3) Must not be PAST. Act performed before

promise is given is not valid

consideration. Negotiate before doing

more than legally obliged.


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(B) Definition of INTENTION TO CREATE LEGAL

RELATIONS

o Intention to create legal relations must be

present based on objective assessment of

the agreement.

NO intention to create legal relations in this

cases:

❑ Commercial agreements.

o Presumption that intention is present.

Examples: Guarantees. o Rebuttal with evidence

i.e. Letter of Comfort [Kleinwort Benson v

Malaysian Mining Corp],

❑ Social and domestic agreements.

o Rebuttal by evidence of written

agreement and separation that there is

intention to create legal relations [Merritt

v Merritt]

o Presumption that social and domestic

agreements there is NO intention to

create legal relations / lack intention.

[Balfour v Balfour]


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2a

2b

3a 3b

I.C.U.U.


(5) CONTRACT: TERMS & EXEMPTION CLAUSES

❑ Terms of contract

❑ Condition,

Warranties &

Innominate terms

❑ Exemption

Clauses

❑ Express &

Implied Terms

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L.A.C. Visual Map: Topics 03 & 04 Topic 05


L _ W

CONTRACT❑ OFFER

❑ ACCEPTANCE

❑ CONSIDERATION

❑ INTENTION TO CREATE LEGAL RELATIONS

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?**C _ S_ L _ W

ITT❑ NEGOTIATION❑ STATEMENTS

TERMS

❑ PROMISE(S)

❑ PROMISE(S)

❑ EXCHANGE

EXPRESS TERMS

IMPLIED TERMS❑ C❑ S❑ C

CATEGORIES

CLASSIFICATION

❑ C_ND_T_ _ N❑ Discharge❑ Damage$

❑ _NN_M_N_T _ TERM

❑ RDC

❑ W_rr _ nty❑ Damage$

EXEMPTIONCLAUSES

❑ INCORPORATION

❑ CONSTRUCTION

❑ UNUSUAL FACTORS

❑ UCTA: Neutralisation

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(A) Definition of TERMS:

Promise & undertaking given by one contracting party to another.

Categories:

o Express terms.

Explicitly agreed.

“Parol evidence rule”: contradictory oral evidence

not admitted if contract in writing.

o Implied terms. Terms understood to apply into contract

• Courts. [The Moorcock]

• Statute. eg. Sale of Goods Act.

• Custom or trade usage. [British Crane Hire v Ipswich

Plant]

(B) Classification:

1) o CONDITIONS. Poussard v Spiers

➢ Important term.

➢ Breach:

o Discharge obligations and

o claim damages.

2) o WARRANTIES. Bettini v Gye

➢ Less important.

➢ Breach: claim damages.

3) o Innominate terms. Depends on seriousness of breach.

Singapore approach in RDC Concrete PL v Sato Kogyo (S)

PL & Another

A. Contract clearly provides events in which party entitled

to terminate the contract.

B. No provision to terminate if breach:

o Innocent party entitled to terminate where party

renounces all obligations

o Condition / warranty approach depending on

intentions of parties.

o Hongkong Fir’s approach: innocent party entitled to

terminate where consequences of breach are serious. Copyright © 2021 by Thum Cheng Cheong

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Definition of exemption clauses.

Term in the contract that excludes [“Exclusion / exception clauses”] or limit liability of party in breach.

Guidelines on validity of exemption clauses.

VALID INVALID

(i) Incorporation. “Part of” contract.

a. Signature. [L’Estrange v Graucob]

b. Notice. Before contract formed. [Olley

v Marlborough].

(i) b. Ticket not regarded as a contractual document

but merely a receipt [Chapelton v Barry UDC]

(ii) Construction. Wordings of clause is CLEAR. (ii) Wordings of clause is NOT CLEAR: contra

proferentum against party who drafted the

exemption clause.

(iii) Unusual factors. No evidence of any

misrepresentation.

(iii) Misrepresentation about scope and extent of

exemption clause makes it invalid. [Curtis v Chemical

Cleaning]

(iv) Neutralization by UCTA.

• Section 2(2). Clause excludes liability for other

loss / damage (not death or personal injury) due

to negligence valid if it is fair and reasonable to

exclude

• Section 2(1). Protect consumers. Clause invalid if it

excludes liability for death or personal injury.


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C2


(6) CONTRACT: VITIATING FACTORS

❑ Effect of vitiating factors

❑ Incapacity❑ Misrepresentation

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❑ Definition of Vitiating Factor

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INCAPCITY to contract❑ MINOR: 18

RULEx Contract VOIDx Cannot be sued

EXCEPTION❑ Contract VALID❑ Minor bound by contract

(a) Contracts for NECESSARIES❑ Minor’s station in life &

requirements❑ Peters v Flemings× Nash v Inman

(b) Beneficial contracts❑ Minor’s health, education &

welfare❑ Chaplin v Leslie Frewin Publishers

× Terms unreasonable, not beneficial, contract unenforceable

× De Francesco v Barnum

(c) Voidable Contracts❑ Minor repudiate contract before attaining majority

i.e. lease, partnerships

(d) Ratifiable Contracts❑ Contract not binding unless minor ratifies soon after

attaining majority i.e. Good that are not necessaries.

M.C.A.

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❑ Definition of Vitiating Factor

?

MISREPRESENTATION: 3 elements ❑ FALSE statement of FACT

BARS to RESCISSION❑ Contract affirmed❑ Reasonable time elapsed❑ Third party interest

❑ INDUCED into contract❑ RELIANCE on statement

MISREPRESENTATION: types ❑ FRAUDULENT. Know statement is

untrue❑ NEGLIGENT. Made statement with

due care (carelessly)❑ INNOCENT. No fraud / fault

CONTRACT is VOIDABLE❑ Innocent party may RESCIND

contract❑ Claim DAMAGES

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Definition of vitiating factor.

1) Factor which makes a contract invalid.

2) Void. Nullity from very start (void ab initio).

Remedy: Restitution.

3) Voidable. Innocent party avoids / rescinds

contract.

4) Incapacity, misrepresentation, duress & undue

influence, mistake, illegality.

5) Restitution: property is given back to original

owner and money returned to buyer.

6) Voidable contract valid so long as innocent

party does not rescind it.


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(B) Capacity to contract.

1) Party to a contract must have capacity to contract.

Rule on Minor. Contract void regards minor.

1) Most situations: age of majority is 18 i.e. has the

capacity to contract

2) Age of majority is 21 in

1) Contract for sale, purchase, mortgage, … of

land.

2) Contract for lease of land for more than 3

years.

3) Contract whereby minor’s beneficial interest

under a trust is sold ….

3) Minor: can sue but cannot be sued by adult i.e.

contract is void as regards the minor.

Exceptions. Minor bound by contract.

4. Contracts for necessaries. Minor’s

station in life and requirements.

o Peters v Fleming: Yes. Minor to

pay

o Nash v Inman: No. Minor not

liable to pay

5. Beneficial contracts for minor’s health,

education and welfare.

o Chaplin v Leslie Frewin

Publishers: Yes, beneficial,

minor earn money.

o De Francesco v Barnum: Not

beneficial, terms unreasonable

& not beneficial to minor.

Contract unenforceable

against minor. (NOTE: identify

and analyse such terms)

6. Voidable contracts. Minor entitled to

repudiate contract before reaching 18 or

soon after attaining majority. Examples:

Lease, partnership, purchase of shares.

7. Ratifiable contracts. Any other type of

contracts.


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(A) Misrepresentation.

(i) DEFINITION.

➢ Representation. Statement made during negotiations which

induces another party to enter into the contract.

➢ Misrepresentation. Definition:

1) False statement of fact. Not opinion or intention.

2) Induced into contract. Material representation.

3) Reliance on statement.

(ii) TYPES of misrepresentations

a. Fraudulent. Made knowingly or reckless whether true

or not. [Pantron v Lee Cheow Lee]

b. Negligent. Made without due care. [Howard Marine v

Ogden]

c. Innocent. Made without fraud and without fault.

Claim indemnity.

(iii) EFFECT of misrepresentation

i. Contract is voidable. Innocent party entitled to

rescind contract.

ii. Claim damages for fraudulent and negligent

misrepresentations.

(iv) Bars to rescission. Contract affirmed,

reasonable time elapsed, third party

interest,..


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Reinventing the way we teach and learn


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L03: L.A.C. Visual Map