Nguyen Ai Nhi A0112072Y Christiana Gunawan A0172427E Kat Li Heng A0124532R Pang Hangzhi A0162544H Tan Jue Ni A0157640E
Tutorial 6 1. Chee Ter Bak wants to sell his furniture business to Soo Yu. He represents to Soo Yu that he has checked with HDB and that his checks show that a new HDB town is coming up within 1 kilometre of the furniture business within the next two years. Because of this, he says, business will double. He asks Soo Yu to check with HDB to veri verify fy his his clai claim. m. Soo Soo Yu deci decide des s to bu buy y the the busi usiness ness,, partl artly y beca becau use of clo closene seness ss of his his home to Chee Ter Bak’s shop and partly because of Chee Ter Bak’s representations about the new HDB estate. As it turns out, no HDB estate is planned for the vicinity anywhere in the near future and Chee Ter Bak had actually told a blatant lie and had never checked with HDB. When he finds out the truth a month later, Soo Yu wants to rescind the contract and get back his money. (a) Can he do so? The issue in this context is whether or not there is misrepresentation by Chee Ter Bak. Ther There e is misr misrep epre rese sent ntat atio ion n and and this this misr misrep epre rese sent ntat atio ion n is a frau fraudu dule lent nt one. one. Chee Chee Ter Ter Bak Bak did did not not beli believ eve e in the the trut truth h of the the stat statem emen ent. t. Thou Though gh this this misr misrep epre rese sent ntat atio ion n was was not not the the sole sole reas reason on that that ind induced ced the the form format atio ion n of the contra tract, Soo Yu can can stil stilll sue for misre isrep prese resen ntatio tion, res rescin cind the cont contra ract ct and and get get back back his his mone money y (Edg (Edgin ingt gton on v Fitz Fitzma maur uric ice e (188 (1885) 5)). ). To resc rescin ind d the the cont contra ract ct,, Soo Soo Yu must make it clear to Chee Ter Bak that he no longer wishes to be bound by the contract. In addition to rescission or where rescission is not possible, Soo Yu may be able to sue for damages if he has suffered some losses. Although Soo Yu was given an opportunity opportunity to verify the truth but he did not do so, he can still sue sue for mis misrep represe resen ntatio tion. (Pan Panatron ron v Lee Cheow Lee). The cou court held tha that it was no defence that a prudent man would have taken steps to verify the truth. Ther There e will will not not be any any excl exclus usio ion n of liab liabil ilit ity y for for misr misrep epre rese sent ntat atio ion. n. Purs Pursua uant nt to the the Firs Firstt Sche Schedu dule le to the Unfair Contract Terms Act, sections 2 and 3 of the Act will not apply to any contracts relating to the transfer on interest of land. (b) What if he delays for 3 years after he finds out the truth (because he feels business might still improve due to other reasons) and then decides to take action? The issue in this context is whether or not there is affirmation of the contract or whether a reas reason onab able le time time has has laps lapsed ed sinc since e the the misr misrep epre rese sent ntat atio ion. n. Ther There e is affi affirm rmat atio ion n as Soo Soo Yu is full fully y aware of the facts yet decides nonetheless, by words or actions keep the contract alive. To determine if a reasonable time has lapsed, it depends on the facts of each case. In this context, a three-year lapse was unreasonable (Leaf v International Galleries (1950)). Hence, Soo Yu is likely to lose his right to rescind the contract.
(c) From a business/practical perspective, what should Soo Yu have done, before buying over the furniture business? He should have taken the opportunity to check with HDB to verify Chee Ter Bak’s claim, or seek for legal advice on this issue.
3. Inner Sense Pte Ltd gets Crafty Pte Ltd to renovate its shop. The cost is $200000. But half way through the renovations, Crafty Pte Ltd asks for more to finish the job. Inner Sense refuses but after Crafty refuses to budge, Inner Sense agrees to pay the new amount by signing a deed under seal. Now that the renovations are complete, Inner Sense Ltd has paid $200000 but is refusing to pay the excess? Is it obliged to do so? The issue in this context is whether or not there is economic duress imposed by Crafty Pte Ltd on Inner Sense Pte Ltd. Although there was a variation in the contract by deed under seal, Inner Sense Ltd is not obliged to pay the excess as there was economic duress imposed on Inner Sense Pte Ltd by Crafty Pte Ltd. The factors in determining whether the pressure exerted was illegitimate, including whether the innocent party had an alternative course open to him or was left with no choice but to agree to the terms, whether the innocent party agreed to the terms under protest and whether the innocent party received independent legal advice. Whether or not Crafty Pte Ltd was exploiting the situation could also be a relevant factor (Sharon Global Solutions Pte Ltd v LG International (Singapore) Pte Ltd (2001)). In this context, Inner Sense Pte Ltd is likely to be left with an alternative course. Changing a renovator halfway through the renovations is very difficult and is likely to incur more cost and time than paying Crafty Pte Ltd more. There was protest made by Inner Sense Pte Ltd before agreement. From the facts given, there was no reason for Crafty Pte Ltd to increase the price. Hence, there was likely to be exploitation. Assuming Inner Sense Pte Ltd did not receive any independent legal advice, there is likely to be economic duress imposed on Inner Sense Pte Ltd (Atlas Express Ltd v Kafco Ltd (1989)). In the event it is established that there is economic duress, the contract will not be enforceable and Inner Sense Pte Ltd is not to pay the excess. 5. A Singapore company enters into a contract to sell goods to an Indonesian company. The Indonesian company requests that the Singapore company misstate the amount of goods sent and the value of the goods sent, so that the Indonesian company can pay less customs duties. The Singapore company agrees and does so. The Indonesian company pays part of the price before shipment. However, once the goods arrive in Indonesia, though everything is order, the Indonesian company does not pay the balance. The contact is governed by Singapore law. Advise the Singapore company. The issue in this context is illegality. The contract between the Singapore company and the Indonesian company is illegal by statute, under Section 128 of the Customs Act. Illegality may also be imposed on this contract by case law as this contract was to commit a crime, tort or fraud (Ting Siew May v Boon Lay Choo (2014)). Hence, the contract is invalid and the Singapore company cannot demand the Indonesian company to pay the balance.
While there may be exceptions for illegal contracts, from the facts given, the Singapore company is unlikely to be able to demand the Indonesian company to pay the balance. The contract has been executed, the Singapore company is equally at fault for trying to evade the custom duty and it is unlikely for the Singapore company to make claim entirely independent of the illegal contract. Duress?
6. Generally only parties to the contract can sue and be sued. However, in the following cases, are X and Y parties to the contract: (a) Z is an “authorized agent” for P type of cars in Singapore. The manufacturer is Y in Germany. X goes to Z and buys a P car. Is there a contract between X and Y? There will not be a contract between X and Y if it is established by court that Z is not an agent of Y but an independent contractor of Y. Whether a person acts as an agent or independent contractor would depend on the circumstances and the intention of the parties. From the facts given, Z is likely to be an independent contractor of Y. However, there will be a contract between X and Y if it is established by court that Z is an agent of Y. An agent is someone who acts on behalf of the principal and creates legal consequences between the principal and the third party. From the facts given, it seems that Z is the agent of Y, the principal and X is the third party. In such a situation where Z enters into a contract with X on behalf of Y, the contract is between X and Y and not Z and X. (b) Z sells hand phones and is the authorized agent for Y, a mobile phone service provider. X goes to Z shop and buys a phone and signs up to receive mobile phone service from Y. Is there a contract between X and Y? There will be a contract between X and Y if it is established by court that Z is an agent of Y. An agent is someone who acts on behalf of the principal and creates legal consequences between the principal and the third party. From the facts given, it seems that Z is the agent of Y, the principal and X is the third party. In such a situation where Z enters into a contract with X on behalf of Y, the contract is between X and Y and not Z and X. (c) Z is a maid agency. Y is a maid. X goes to the maid agency and chooses Y. Is there a contract between X and Y? There will be a contract between X and Y if it is established by court that Z is an agent of Y. An agent is someone who acts on behalf of the principal and creates legal consequences between the principal and the third party. From the facts given, it seems that Z is the agent of Y, the principal and X is the third party. In such a situation where Z enters into a contract with X on behalf of Y, the contract is between X and Y and not Z and X. (d) Z is a modeling agency. Y is a model. X goes to Z to get models to perform for an event. The models include Y. Is there a contract between X and Y? There will be a contract between X and Y if it is established by court that Z is an agent of Y. An agent is someone who acts on behalf of the principal and creates legal consequences between
the principal and the third party. From the facts given, it seems that Z is the agent of Y, the principal and X is the third party. In such a situation where Z enters into a contract with X on behalf of Y, the contract is between X and Y and not Z and X.
