Contract Law

• Date: 01 December 2001
• Published date: 01 December 2001
• Author: ANDREW PHANG LLB (NUS), LLM, SJD (Harv), Advocate & Solicitor (Singapore), Professor of Law, Singapore Management University

Introduction

9.1 A point that can never be overemphasised is the fact that the law of contract permeates virtually all areas of the law of obligations. As expected, therefore, the number of Singapore cases that impact the law of contract has been enormous, notwithstanding the fact that only cases in one particular year are presently being considered. Given the constraints of space, I will focus, in the main, on general principles: particularly where they constitute a significant contribution to the general corpus of Singapore contract law and/or raise significant issues that still await clarification. Notwithstanding the fact that this essay is a review of Singapore contract cases, I will briefly touch on significant English (in particular, House of Lords) decisions where relevant, not least because English contract law constitutes the foundation, as it were, of Singapore contract law (and see generally Phang, Cheshire, Fifoot and Furmston”s Law of Contract — Second Singapore and Malaysian Edition (1998) (hereafter referred to as “Phang”) at Ch 1). It may also be apposite to mention, at this juncture, that (in addition to the work just mentioned), there are other comprehensive works that may be useful to the reader: these include (in the local context) Phang (General Editor), Halsbury”s Laws of Singapore, Vol 7 — Contract (2000) and, by the same author, “Developments in the Law of Contract” in Developments in Singapore Law between 1996 and 2000 (2001) at 299—385); and, in the English context, new editions of the following leading works may be usefully noted, as follows: MP Furmston, Cheshire, Fifoot and Furmston”s Law of Contract (14th Ed, 2001) and J Beatson, Anson”s Law of Contract (28th Ed, forthcoming, 2002).

9.2 As is customary, before proceeding to the survey proper, it should be noted (as has already mentioned in the preceding paragraph) that only Singapore decisions that have had an impact on the general principles of contract law will be considered (cf eg, cases that turn primarily on the interpretation of the relevant terms and/or facts, as was the situation, for instance in Wu Fu Ping v Ong Beng Seng[2001] 2 SLR 40; Hyundai Engineering & Construction Co Ltd v Sembawang Kimtrans (S) Pte Ltd[2001] 1 SLR 739 (which was, in any event, primarily a decision centring on arbitration: see also infra); Pacific Century Regional Development Ltd v Canadian Imperial Investment Pte Ltd[2001] 2 SLR 443; Yap Chwee Khim v American Home Assurance Co[2001] 2 SLR 421 (quaere the issue of illegality and public policy (which would come under the heading of

“Illegality”, infra); however, it should be noted that the court found that there was insufficient evidence to implicate the plaintiff in a conspiracy with her ex-husband to cause the death of the deceased in the context of the insurance claims in the instant case); as well as Management Corporation Strata Title Plan No 1933 v Liang Huat Aluminium Ltd[2001] 3 SLR 253 (emphasising the importance of the factual matrix and how that must be distinguished from actions during negotiation itself; this particular case is also interesting for the presence of a dissenting judgment, which is not all that common)). Decisions which are somewhat beyond the mainstream of these general principles will not be considered. Insofar as such decisions beyond the mainstream are concerned, the cases concern the more specialised areas of law and include those pertaining, for example, to administrative law (see eg, the very interesting Court of Appeal decision of Public Service Commission v Lai Swee Lin Linda[2001] 1 SLR 644, where the court held that the case concerned alleged breaches of contract, where the remedy therefore lay in private law and were not susceptible to judicial review; on administrative law generally, see supra, Chapter 1); agency (see eg, Banque Nationale de Paris v Hew Keong Chan Gary[2001] 1 SLR 300 and Re Sogo Department Stores (S) Pte Ltd[2001] 2 SLR 556, affirmed, Hinckley Singapore Trading Pte Ltd v Sogo Department Stores (S) Pte Ltd[2001] 4 SLR 154 (concerning agency in a trust context)); arbitration (see eg, Concordia Agritrading Pte Ltd v Cornelder Hoogewerff (Singapore) Pte Ltd[2001] 1 SLR 222; Tang Boon Jek Jeffrey v Tan Poh Leng Stanley[2001] 3 SLR 237, reversing Tan Poh Leng Stanley v Tang Boon Jek Jeffrey[2001] 1 SLR 624; Hyundai Engineering & Construction Co Ltd v Sembawang Kimtrans (S) Pte Ltd[2001] 1 SLR 739; and John Holland Pty Ltd v Toyo Engineering Corp (Japan)[2001] 2 SLR 262; and on arbitration generally, see supra, Chapter 3); the conflict of laws (see eg, PT Hutan Domas Raya v Yue Xiu Enterprises (Holdings) Limited[2001] 2 SLR 49; The Hung Vuong-2[2001] 3 SLR 146; Les Placements Germain Gauthier Inc v Hong Pian Tee[2001] 3 SLR 418; Datuk Hamzah bin Mohd Noor v Tunku Ibrahim Ismail Ibni Sultan Iskandar Al-Haj[2001] 4 SLR 396; and Overseas Union Insurance Ltd v Turegum Insurance Co[2001] 3 SLR 330 (see also infra, under “The Objective Approach” and “Offer and Acceptance”); and on conflict of laws cases generally, see supra, Chapter 8); company law (see eg, UOB Venture Investments Ltd v Tong Garden Holdings Pte Ltd[2001] 1 SLR 362 (which constitutes an interesting “intersection” of company law and contract) and Daewoo Singapore Pte Ltd v CEL Tractors Pte Ltd[2001] 4 SLR 35; and on company law generally, see supra, Chapter 7); building contracts (see eg, Graham Taylor Designs (S) Pte Ltd v Grande Studio East Pte Ltd[2001] 1 SLR 77 and Hiap Hong & Co Pte Ltd v Hong Huat Development Co (Pte) Ltd[2001] 2 SLR 458 (although this case is discussed in the context of “Implied Terms”, infra); and on building contract cases generally, see supra, Chapter 5); banking (see eg, Societe Generale v Statoil Asia Pacific Pte Ltd[2001] 1 SLR 266; Banque Nationale de Paris v Hew Keong Chan Gary[2001] 1 SLR 300;

Credit Agricole Indosuez v Banque Nationale de Paris [2001] 2 SLR 1; and Chew Pin Pin v AGF Insurance (Singapore) Pte Ltd[2001] 2 SLR 152 (it might also be noted, in passing, that although many cases dealing with liability under guarantees as well as performance bonds involve banking decisions, this is not always the case: see eg, Samwoh Asphalt Premix Pte Ltd v Sum Cheong Piling Pte Ltd[2001] 3 SLR 447); and on banking cases generally, see supra, Chapter 4); insurance (see eg, Yap Chwee Khim v American Home Assurance Co[2001] 2 SLR 421 (also referred to above) and Sitra Wood Products Pte Ltd v Royal & Sun Alliance Insurance (S) Pte Ltd[2001] 4 SLR 121 (a marine insurance decision); and on insurance cases generally, see infra, Chapter 15); shipping (see eg, The Virgo I ex Kapitan Voloshin[2001] 1 SLR 748; and on shipping law generally, see supra, paras 2.29 to 2.45); and the law of restitution (see eg, Credit Agricole Indosuez v Banque Nationale de Paris (No 2)[2001] 2 SLR 301 (which concerned the obligation to repay interest); Ching Mun Fong v Liu Cho Chit[2001] 3 SLR 10 (also discussed briefly under “Mistake” and “Limitation”, infra); Re PCChip Computer Manufacturer (S) Pte Ltd[2001] 3 SLR 296 (also discussed briefly under “Mistake”, infra); Sherridon Exim Pte Ltd v India International Insurance Pte Ltd (Suit 316/1998, HC, unreported judgment dated 15.5.2001; concerning an (unsuccessful) claim by the defendants for unjust enrichment and for money had and received to the plaintiff”s use, also discussed briefly under “Illegality”, infra); and the very interesting and significant decision of Management Corporation Strata Title No 473 v De Beers Jewellery Pte Ltd[2001] 4 SLR 90 (which is discussed in more detail infra, under “Mistake” and is also briefly discussed infra, under “Consideration”, “Intention to Create Legal Relations” and “Limitation of Actions”; see also the case itself at 118—119 with regard to the defence of change of position) this decision has since been affirmed by the Court of Appeal in [2002] 2 SLR 1). It should also be noted that all references to cases are, in the absence of any indication to the contrary, to Singapore cases.

9.3 Finally, it should be further noted that although the focus is on general principles, the context will, of course, be sketched in wherever relevant: particularly where it would enhance the reader”s understanding of the general principles that are being described and analysed.

Formation of contract

The objective approach

9.4 As was the case with the previous review (see (2000) SAL Ann Rev 95 at 97—98), we find, once again, the courts emphasising what has become a very well-established concept in the local contractual landscape — the objective test in the ascertainment of contractual intention. L P Thean JA, who delivered the judgment of the Court of Appeal in

Projection Pte Ltd v The Tai Ping Insurance Co Ltd [2001] 1 SLR 399, for example, expressed the view (at 405) that “[i]t is settled law that in determining whether the parties have reached agreement, the court applies the objective test” (this case is also considered under “Offer and Acceptance”, “Express Terms” and “Mistake”, infra). The objective approach was also emphasised by Judith Prakash J in the High Court decision of Overseas Union Insurance Ltd v Turegum Insurance Co[2001] 3 SLR 330 (see also supra, under “Introduction” and infra, under “Offer and Acceptance”), which the learned judge elaborated upon thus (at 340):

“This means that an apparent intention to be bound may suffice, that is to say, a party may be bound if his conduct is such as to induce a reasonable person to believe that he intends to be bound even though he actually has no such intention. If, however, the offeree is aware that the offeror did not have an intention to be bound then an acceptance by the offeree will not bind the offeror.”

9.5 In a related vein, the desirability of ensuring the integrity of freedom of contract was emphasised by G P Selvam J in the High Court decision of Thomson Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte Ltd[2001] 3...