Discharge: dismiss
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Use RDC approach if condition-warranty and Hongkong Fir approaches do not work.
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If any unusual factors present to limit the effectiveness of contract. Collateral contracts
(contract implied by court and runs parallel with main contract) can defeat E.C.
Evans v Merzario Ltd (E.C neutralized due to collateral contract, so cannot rely)
Clause cannot contravene the Unfair Contract Terms Act (UCTA) unreasonable
clauses will be invalid no matter what.
S11(5) UCTA: burden of proving reasonableness falls upon party seeking to rely on
E.C.
S2(1) UCTA: Liability for death or personal injury cannot be excluded
S2(2) UCTA: Liability for other loss or damage, financial loss or property damage, can
be excluded if clause reasonable.
Misrepresentation (Unusual factors) can seek protection for misrepresentation only if E.C is
reasonable.
Must consider factors in Second Schedule of UCTA:
Bargaining position of parties. If party relying on E.C has strong bargaining power, more
likely to be unreasonable.
If customer received inducement to accept E.C, likely to be reasonable.
If business gets insurance for liability, E.C likely to be reasonable.
Compliance with clauses conditions must be practicable.
If customer knew of E.C, likely to be reasonable.
Goods manufactured to customers specifications cause damage, clause is reasonable.
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Fraudulent Misrepresentation false statement made with intention to deceive. Tort of deceit.
Burden lies on innocent party to prove dishonesty on representors part if not, not fraudulent.
Innocent party can rescind12 and claim damages.
Derry v Peek (no fraudulent)
*Negligent Misrepresentation did not intend to deceive but did not believe statement to be true.
S2(1) MA13: award damages, S2(2) MA: court can order damages instead of rescission.
S2(1): Burden lies on representor to prove that he has reasonable grounds to believe and did
believe the statement to be true.
Howard Marine (negligent misrepresentation, representor has no reasonable grounds to prove is
not)
Innocent Misrepresentation false statement without fraud and fault. Can rescind or claim
damages, or indemnity.
Rescission MUST be communicated to guilty party. Is unavailable when:
Lapse of reasonable time
Leaf v International Galleries (right to rescind lost, reasonable amount of time lapsed)
Parties cannot be restored to original position before contract, restitutio in integrum
impossible
Court uses its discretion to award damages in lieu of rescission
S2(2) MA
Affirmation made expressly or impliedly after discovery of misrepresentation
2. Illegality gaming & wagering, contrary to public policy, contrary to statute, restraint of
trade.
Gaming and wagering generally void by statute. S5 Civil Law Act
Contrary to public policy Void, contravene with public policy. (committing crime, promoting
sexual immorality, benefits foreign enemy/country)
Contrary to statute statutes prohibit certain contracts (illegal at inception), void.
Re Mahmoud and Ispahani (illegal at inception)
*Or penalize certain conduct without rendering the entire contract void (illegal in performance)
St John Shipping Corporation v Joseph Rank Ltd (illegal as performed, method of carrying
out contracts obligations is illegal)
Restraint of trade (ROT) agreements which business/person agrees to refrain from undertaking
certain types of trade/employment, prevent/minimize competition. General rule is void. Unless
fulfill 3 criteria:
Protect legitimate interest of the covenantee14. Usually goodwill, trade secrets/contracts.
Stratech Systems Ltd (ROT invalid, unable to show legitimate interest)
Reasonable scope in terms of time period, geographical scope, subject matter. Too long,
void.
*Blue Pencil Rule If clause unreasonable, court can amend by deleting but no addition
of words.
Goldsoll v Goldman (use Blue Pencil Rule sever other parts of clause, allow it to be
valid)
*If clause fulfills above 2, then is prima facie reasonable.
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If not, use RDC Concrete: contract says can discharge, renunciation, breach of condition,
substantially deprive innocent party of whole benefit.
Repudiatory anticipatory breach non-performance substantially deprives innocent party of
whole benefit.
Hochster v De La Tour (substantially deprive, repudiation)
Mersey Steel v Naylor Benson (non-performance is not repudiation)
Affirmation after anticipatory breach to continue with contract but only allowed if:
Innocent party show legitimate financial interest
Innocent party does not need cooperation of guilty party to perform contract
White & Carter v McGregor (can affirm, dont need guilty party)
4. Frustration supervening event occurs which neither party responsible for, causing radical
change in circumstances. No damages payable since no breach.
Davis Contractors v Fareham (no frustration, no radical change in circumstances)
Frustrated contracts occur:
Destruction of subject matter
Taylor v Caldwell (discharged by frustration)
Non-occurrence of event
Krell v Henry (contract frustrated)
Herne Bay Steamboat v Hutton (contract not frustrated)
Outbreak of war, hostilities
Tsakiroglou (no frustration)
Personal Incapacity
Poussard v Spiers (frustration due to illness)
Limiting factors:
Foreseeability more foreseeable, more unlikely to be frustrated.
Force Majeure Clause (FMC) clause expressly provides for occurrence of events but
party relying on FMC must take all reasonable steps to mitigate results.
Holcim v Precise Development (contract frustrated, took all reasonable steps to
mitigate)
Self-induced frustration
Maritime National Fish v Ocean Trawlers (self-induced so no frustration)
Effects of Frustration automatically discharges contract. Effective at point in time when
frustrating event occurs, require no communication.
Frustrated Contracts Act (FCA):
All future obligations cease.
S2(2) money paid prior is recoverable.
S2(2) money payable ceases to be payable.
S2(2) expenses incurred prior recoverable.
S2(3) benefits (not money) conferred prior can be compensated with amount court
considers just.
Contract: Remedies
1. Common law: Damages
2. Equitable: Specific Performance
3. Equitable: Injunction
4. Quantum Meruit claim as much as injured party has earned
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1. Common law: Damages monetary compensation. General rule that injured party always
have right to claim damages even if cannot terminate contract. Damages intended to place
injured party in same position if contract performed properly.
4 aspects to establish when deciding to apply damages:
Causation cause of loss must be dominantly due to breach. But-for test. Ensure that
loss can be recoverable.
Remoteness Hadley v Baxendale with 2 limbs; 1st limb covers normal damages that
arise naturally, 2nd limb covers unusual loss, actual knowledge is needed to be effective.
Knowledge of the usual practices of P
The Heron II (can claim damages under 1st limb)
Knowledge of likely loss suffered by P: imputed knowledge under 1st limb, actual under
2nd limb.
Victoria Laundry v Newman Industries (can claim for loss of profits under 1st limb,
but not for loss of lucrative profits by special order, no actual knowledge, 2nd limb)
Knowledge of Ps likely loss is a real possibility
Mitigation cannot recover loss that P could have avoided. Must take all reasonable
steps to mitigate loss. If take mitigation steps but increase losses instead, can recover
additional loss: Melachrino v Nicholl & Knight.
Assessment assessing damages. General rule is to put injured party in position that he
would be in if contract performed.
Expectation/Reliance loss can only claim either one unless calculate as net figure
exclusive of expenses. Expectation loss is loss of profits. Reliance loss is wasted
expenditure incurred by injured party.
Anglia Television Ltd v Reed (claim reliance loss because cannot calculate expectation
loss)
*Non-percuniary loss: hurt feelings, anxiety. No damages awarded usually.
Addis v Gramaphone (non-percuniary loss not awarded)
Jarvis v Swan Tours Ltd (exception where disappointment awarded with damages,
contracts aim to provide enjoyment but did not)
Farley v Skinner (exception)
Ruxley Electronics v Forsyth (exception)
Liquated damages vs. Penalties inclusion of clause specifying amount of damages.
Liquidated damages clause generally enforceable but if amounts to penalty, not
enforceable.
MUST follow guidelines from Dunlop v New Garage:
i. Liquidated damages extravagant, likely to be penalty.
ii. Single lump sum payment penalty.
If penalty, amount stipulated higher than actual loss, obtain damages for actual loss
suffered. If amount less than actual loss, can sue on clause recover no more than amount
stipulated or sue for breach and recover damages full.
2. Equitable: Specific Performance party seeking equitable remedies must come with clean
hands. Order of court requiring party to perform obligations as specified in contract, especially
subject matter is unique and damages not adequate remedy. Enforces positive obligations,
supposed to do something to compensate.
3. Equitable: Injunction court order requiring party to abide by negative covenant in contract.
Enforces negative restriction. Can be temporary or permanent.
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A: agent
P: principal
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T: third party
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P must exist.
Kelner v Baxer (P not in existence, cannot ratify so no contract)
P must ratify within reasonable time
Neighbour principle
Donoghue v Steveson (did not take reasonable care to avoid acts which would be likely
to injure neighbour)
If proximity established, prima facie DOC exists.
Policy considerations. If impose DOC, detrimental to public interest or result in opening
of floodgates, then would negate the prima facie DOC.
2. Breach of duty when standard of care (SOC) not met, then breach.
Factors determining SOC:
Level of skill. level of skill, SOC.
Wells v Cooper (D not liable, met SOC)
Likelihood of injury. likelihood of injury, SOC.
Bolton v Stone (SOC met, no breach)
Seriousness of injury. serious injury, SOC.
Paris v Stepney (SOC not met, breach)
Cost of avoiding risk. cost, risk, take precaution. cost, risk, take precaution.
Latimer v AEC Ltd (take precaution, no breach)
Res Ipsa Loquitur breach so self-evident, the fact that event occurred itself is a breach. Used by
P20.
Scott v London (falling object)
3. Resulting damage plaintiff must show he suffered damage from breach.
Causation: But-for test must be fulfilled
Barnett v Chelsea (but-for test not satisfied, no resulting damage from act of negligence)
Break-in-the-chain
Mckew v Holland
Remoteness: reasonable foreseeability test whether a reasonable man would have foreseen
that kind of damage to injured party.
Wagon Mound (damage not reasonably foreseeable)
If damage suffered by P more severe than reasonably be foreseen, D still liable under egg-shell
skull rule.
Smith v Leech Brain & Co. (egg-shell-skull rule)
Defences for D must first establish the DOC, breach, resulting damage:
Volenti Non Fit Injuria: argue that P consented to risks involved. Complete defence.
Contributory Negligence: S3(1) CNPIA21, where Ps injury party contributed by Ps own
fault. Court apportion liability between parties, partial defence.
Tan Hun Hoe v Harte Denis Mathew
Disclaimer: can negate DOC but to be effective must fulfill UCTA.
Psychiatric Harm from secondary victims. Still need to consider Spandeck test. Must be
recognizable psychiatric harm not claims for grief/sorrow.
Need to fulfill all 3 conditions:
Circumstantial proximity: P have close ties of love and affection with victim (spouses,
parent-child).
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P: plaintiff
CNPIA: Contributory Negligence and Personal Injuries Act
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Physical proximity: time and space. P witnessed accident itself or the aftermath.
Causal proximity: P witnessed accident with own sight and hearing.
McLoughlin v OBrien
Pang Koi fa v Lim Djoe Phing
Ngiam Kong Seng v Lim Chiew Hock (no FF, no legal proximity, cannot recover damages)
Defamation statement published which tends to lower persons reputation. Can be written
(libel) or oral (slander).
Passing off person seeks to pass-off goods as those of another, riding on reputation of an
established company.
*Vicarious Liability (when there is employer-employee relationship) employer vicariously
liable for torts committed by employee if employee acting within scope of authority.
Koh Get Kee v Low Beng Hui (liable)
Samin v Government of Malaysia (not liable)
Answering questions
1. Identify the issue of the question.
2. State the relevant laws.
3. Apply the laws in the context of the question. (just throw everything)
4. Raise any alternatives
5. Come to a logical conclusion.
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