Contract Law

• Author: ANDREW PHANG LLB (NUS), LLM, SJD (Harv), Advocate & Solicitor (Singapore), Professor of Law, Singapore Management University
• Published date: 01 December 2000
• Date: 01 December 2000

Introduction

Because of its very fundamental nature, the law of contract permeates virtually all areas of the law (on occasion, it might be mentioned, even the criminal sphere). Any attempt, therefore, to capture (as it were) all the contract law decisions even within a particular year (which is the brief here) constitutes a more than major task. Hence, I will focus on the reported decisions as well as on what I estimate are the cases more likely to be of interest to practitioners, academics and students. I should add that the present task also entails, by its very nature, the possibility of occasional artificiality and, in order to minimise this possiblity, I will endeavour, notwithstanding constraints of space, to place each decision mentioned in a minimum context, wherever possible. The reader, however, is encouraged to consult the more comprehensive books (see eg, Phang, Cheshire, Fifoot and Furmston”s Law of Contract - Second Singapore and Malaysian Edition (1998) (hereafter “Phang”); Phang (General Editor), Halsbury”s Laws of Singapore, Vol 7 - Contract (2000) and Furmston (General Editor). Butterworths Common Law Series - The Law of Contract (1999)) as well as essays (see eg, Phang, “Vitiating Factors in Contract Law - The Interaction of Theory and Practice”(1998) 10 SAcLJ 1 and. by the same author. “Trends in the core areas of Singapore Law between 1990 and 1995 - Contract” in Review of Judicial and Legal Reforms in Singapore Between 1990 and 1995 (1996), at pp 250—317 as well as “Contract Law at Century”s End: Some Personal Reflections” (2000) 8 Asia Pacific Law Rev 1 and “Developments in Singapore Law, 1996—2000: The Law of Contract” (forthcoming, 2001)).

Before proceeding to the survey proper, it should be pointed out 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 interpretation of the relevant facts, as was the situation in Kalki Jewellery (suing as a firm) v Mani Samikkannu[2000] 2 SLR 179 and Mees Pierson NV v Pacific (S) Pte Ltd[2000] 4 SLR 393, or where the primary issue lies in another area of the law, for instance, revenue law, as was the situation in Pinetree Resort Pte Ltd v Comptroller of Income Tax[2000] 2 SLR 43). Hence, areas that might have conceivably been considered but which are somewhat beyond the mainstream of these general principles will not be considered (save where the cases concerned do in fact also deal with issues within the mainstream itself). These include such areas as the conflict of laws (see eg, The Jian He[2000] 1 SLR 8; Baiduri Bank Bhd v Dong Sui Hung[2000] 4 SLR 212; and

Yue Xiu Enterprises (Holdings) v PT Hutan Domas Raya [2000] 4 SLR 522); the law of agency (see eg, Tat Lee Securities Pte Ltd v Tsang Tsang Kwong[2000] 1 SLR 1 and Tribune Investment Trust Inc v Soosan Trading Co Ltd[2000] 3 SLR 405, also considered infra, under “The Objective Approach”, “Offer and Acceptance” and “Mistake”; as well as Ch”ng Choon Eng v Phaik Keow Lucien Gladys[2000] 1 SLR 257; Capital Realty Pte Ltd v Chip Thye Enterprises (Pte) Ltd[2000] 4 SLR 548; Hongkong and Shanghai Banking Coporation Ltd v Jurong Engineering Ltd[2000] 2 SLR 54 (also considered, infra, under “The Objective Approach” and “Intention to Create Legal Relations”); and Bayerische Landesbank Girozentrale v Teh Li Li[2000] 4 SLR 602 (also considered, infra, under “Illegality”)); arbitration (see eg, Tan Chiang Brother”s Marble (S) Pte Ltd v Anderson Land Pte Ltd (Lum Chang Building Contractors Pte Ltd, third party)[2000] 1 SLR 510; Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd[2000] 1 SLR 749; SA Shee & Co (Pte) Ltd v Kaki Bukit Industrial Park Pte Ltd[2000] 2 SLR 12; Hong HUM Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd[2000] 2 SLR 609; and L & M Concrete Specialists Pte Ltd v United Eng Contractors Pte Ltd[2000] 4 SLR 441 (which, however, did consider the incorporation of an arbitration clause by analogy with the incorporation of exception clauses)); building contracts (see eg, Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd[2000] 1 SLR 495; China Construction (South Pacific) Development Co Ltd v Leisure Park (Singapore) Pte Ltd[2000] 1 SLR 622 and All-Trade Construction Pte Ltd v Lo Geok Kwee[2000] 4 SLR 204; and on building contracts generally see supra, pp 35—55); the issue of the award of interest (see eg, Chuang Uming (Pte) Ltd v Setron Ltd[2000] 1 SLR 166 (though this case also concerned a building contract and is, in addition, discussed briefly with respect to other aspects, infra, under “Damages and Related Issues”)); the law of restitution (see eg, Ching Mun Fong (executrix of the estate of Tan Geok Tee, deceased) v Liu Cho Chit[2000] 1 SLR 517 at 526 (where the leading English House of Lords decision of Kleinwort Benson v Lincoln City Council[1998] 4 All ER 513 is referred to; cf also the Singapore High Court decision of Ching Mun Fong (executrix of the estate of Tan Geok Tee, deceased) v Liu Cho Chit[2000] 4 SLR 610, which is also referred to infra, under “Damages and Related Issues”) as well as the Singapore Court of Appeal decision of Lee Siong Kee v Beng Tiong Trading, Import and Export (1988) Pte Ltd[2000] 4 SLR 559 (dealing, inter alia, with quantum meruit; and see infra, under “Implied Terms”, “Discharge by Breach and Waiver” and “Damages and Related Issues”); though it should be noted that brief attention is paid below to the issue relating to the possible award of restitutionary damages for breach of contract); the law relating to the sale of goods (see eg, Tan Siah Poh v Orient Consumer Credit Pte Ltd (Fullhouten Credit Pte Ltd & Anor, third parties)[2000] 2 SLR 215); and the law of bailment (see eg, Seino Merchants Singapore Pte Ltd v Porcupine Pte Ltd[2000] 1 SLR 99 (which also dealt with the issue of appeals against decisions of Small Claims Tribunals)).

Formation of contract

The objective approach

Although the proposition to the effect that the courts will utilise an objective test in the ascertainment of contractual intention is a well-known one, it is an important proposition - as is evident from the constant reference to it in both the local as well as overseas contexts. In the year under review, for example, the proposition was emphasised in the Singapore Court of Appeal decisions of Lim Bio Hiong Roger v City Developments Ltd[2000] 1 SLR 289 at 296 (also discussed infra, under the topic of “Misrepresentation”) and Tribune Investment Trust Inc v Soosan Trading Co Ltd[2000] 3 SLR 405 at 422—423 (also referred to supra, in the “Introduction” and discussed in the next Section, entitled “Offer and Acceptance”, as well as infra, under “Mistake”) as well as the Singapore High Court decisions of Hongkong and Shanghai Banking Coporation Ltd v Jurong Engineering Ltd[2000] 2 SLR 54 at 83 and Tan Kong Kar v Bonsel Development Pte Ltd[2000] 2 SLR 823 at 828 (reversed [2000] 4 SLR 18, but not on this point). It may also be noted that in the Singapore Court of Appeal decision of Pan-United Shipyard Pte Ltd v India International Insurance Pte Ltd[2000] 4 SLR 303, the court held that “insurance policies are to be construed according to the principles of construction applicable to commercial contracts generally” (see 311). And for general principles of interpretation in the context of admission of the “factual matrix”, see the Singapore High Court decision of Canadian Imperial Investment Pte Ltd v Pacific Century Regional Developments Limited[2000] 4 SLR 645 at 650 (also referred to infra, under “Discharge by Breach and Waiver” and “Damages and Related Issues”).

Offer and acceptance

On a general level, a few decisions might first be usefully noted.

A few general principles were recently enunciated by the Singapore Court of Appeal in Tribune Investment Trust Inc v Soosan Trading Co Ltd[2000] 3 SLR 405 (which was in fact briefly mentioned in the preceding Section (entitled “The Objective Approach”) as well as in the “Introduction”, supra, and is discussed infra, under “Mistake”). First, the court emphasised a basic proposition that is, however, of immense practical import both here and generally (in the latter instance with regard, for example, to findings of fact insofar as economic duress is concerned: see Visvasam v Sathasivam[1980] 1 MLJ 266), viz, the great reluctance with which an appellate court would overturn findings of fact of the trial court; in the words of Yong Pung How CJ, who delivered the judgment of the court (in the context of the ascertainment of whether the defendants had knowledge of the contract between the plaintiffs and a third party in an allegation of inducing a breach of contract: see at 416; see also at 419):

“The law relating to the treatment of findings of fact by an appellate court is clear and beyond doubt. For the sake of brevity, it suffices to say that an appellate court, not having heard the evidence first-hand, and not having had the opportunity of observing the witnesses on the stand, should be slow to overturn findings of fact made by the trial judge. Such a course should only be taken in cases where the findings reached were clearly beyond the weight of the objective evidence before the court or were plainly wrong.”

Secondly, Yong CJ helpfully stated the general principles relating to formation of contract as follows, which (as with the preceding statement of principle) evinces a practical approach that is so indispensable to the resolution of legal issues (see at 422—423):

“The principles of law relating to the formation of contracts are clear. Indeed the task of inferring an assent and of extracting the precise moment, if at all there was one, at which a meeting of the minds between the parties may be said to have been reached is one of obvious difficulty, particularly in a case where there has been protracted negotiations and a considerable exchange of written correspondence between the parties. Nevertheless...