Contract Law

Contract Law

1. TERMS

   • Types of Terms
     • Express
       • Exceptions
         • Written agreements are questionable
         • Separate oral agreements
         • collateral contract (subsidiary contracts)
     • Implied
       • courts
         • Business Efficacy Test
         • Officious Bystander Test
           • BOTH need to be satisfied
         • Court of Appeal
           • 3 step process
       • statue
       • customs
   • Classification of Terms
     • Condition
       • destroys the root of the contract
     • Warranty
       • subsidiary to condition
     • Innominate Term
       • Innominate term test
         • Does the breach deprive the injured party of substantially the whole contract?
           • YES
             • Breach of condition
           • No
             • Breach of warranty
   • Exemption Clauses
     • Validity
       • forms part of the contract
       • properly constructed
         • unclear - contra proferentem rule
       • no unusual factors e.g. misrepresentation
       • does not violate UCTA
         • exclusion of breach of condition is valid
         • S2(1) X death and personal liability due to negligence
         • S2(2) & 3 liability for breach of contract cannot be excluded unless the term satifies the test of reasonableness
           • test for reasonableness
             • bargaining strength of parties at the time the contract was made
               • equal
                 • reasonable
             • Other factors
               • customer was induced to agree to EC
               • customer knew or ought to know the EC
               • compliance is praticable
               • goods were specially ordered?
               • reliance on EC could reasonably be expected to have taken up insurance to cover its liability
     • Incorporation
       • signed document
       • reasonable notice
         • contemporaneity
           • before or at the time the contract is made
         • sufficiency
           • steps taken to make sure party was notified
       • previous course of dealing

2. VITIATING FACTORS

   • Misrepresentation
     • misled party must show representatin is a false statement of verifiable fact
       • unkept promise/statement not actionable
         • Exception - existing fact not future intention
       • statement of opinion non actionable
         • Exception - person is expert
       • fact not vague (e.g. sales talk) thus non-actionable
       • representee has no duty to verify the statement
     • silience is not a representation
       • exceptions half truths
       • changes in circumtances not informed
     • inducement
       • exception - party did not rely on statement
       • exception - false statement not sole inducement
     • Other exceptions
       • fiduciary relationship
       • contracts of utmost good faith
     • Types of Misrep
       • fradulent
         • recessions + damages
           • bars of recession
             • lapse of time
             • party misled affirms contract
             • restitutio in integrum impossible
             • 3P involved
             • act inconsistent with ownership
             • courts takes away right
       • negligent
         • recessions (or damages in lieu) + damages
       • innocent
         • recession (or damages in lieu by court) + indemnity
   • Illegality
     • Common law
     • statutory illegality
       • entire contract
       • only in performance
     • RoT
       • enforceable restraints
         • protect some legitimate or proprietary interest of the promisee
         • restraint must be reasonable
       • Blue pencil test to remove void PART of contract
   • Incapacity
     • contracts with minors are not binding (S35 of Civil Law Act)
       • Exceptions
         • Valid contracts (binding)
           • contracts for necessaries (suitable at time of purchase)
           • beneficial towards minors
         • voidable contracts (binding unless minor opts out)
         • ratifiable contract (not binding unless minor ratifies)
           • ratifies after attaining majority
           • minor can/not recover amount he paid for goods he used/consumed

3. Discharge of Contract

   • Performance
     • precise and exact performance
     • Exceptions (Breach of contract)
       • de minimis rule
       • acceptance of partial performance
       • prevented performance
         • innocent party entitled to claim on quantum meruit basis
       • divisible contract
       • substantial performance
         • amount payable = contract price - cost of rectification
   • Agreement (under provision of existing contract)
   • Repudiatory Breach (innocent party to terminate contract)
     • RDC Concrete v Sato Kogyo 2007
       • when the contract clearly says so
       • when the guilty party renounces the contract
       • when the term breached is a condition
       • HK Fir - the innocent party is deprived of substantially the whole benefit of the intent of the contract
   • Frustration
     • happens due to an unexpected event beyond the control of the parties which makes further performance either illegal, impossible or radically different from what was originally envisaged by the parties
       • Limitations
       • Common Law
         • Illegality
         • Death and personal incapacity
         • impossibility unless alternative is possible
         • outbreak of war, hostilities
         • radical changes in circumstances
         • non-occurrence of an event central to the contract
         • govt interference/acquisition
         • supervening illegality