Complete Business Law Mindmap

7/23/2019 Complete Business Law Mindmap

1/11

Contract

A contract is a legally binding agreement.

Purpose: confident binding of exchanges

Requirements of a valid contract includes offer, acceptance,

consideration andintention to create legal relations.

Oral, by conduct Written

Requirements for formation of !ontract

!hapter ": Offer and Acceptance

#erminology

validcontract is an agreement that satis fies all legal requirements.

void contract is treated by la$ as nullity, never existed at all.

unenforceable contract is one that is valid and legally binding but cannot

be enforced, eg, because of a provision of la$.

%ntention to create legal relations!onsideration

!hapter &

Offer

Offer must be communicated.

'nilateral(ilateral

)xpression of $illingness by the offeror to

enter into an agreement $ith the offeree. *

elements are +- contains terms of exchange,

+- indication of $illingness to be bound, +*- to

be bound upon acceptance by offeree

)xchange for a promise

bet$een parties.

/a0e to a grp or the $orld.

Promise exchange for an act

Carlill v Carbolic Smoke Ball Company

%nviting recipient to ma0e an offer or enter into

negotiations, no intention to be bound yet.

1Advertisements +language has to be loo0ed

into to determine if it i s offer or %## -

R:adv reader may $ant to negiotiate further

R:seller may have limited no. of good

2ame for inter adv 13customers are ma0ing offer.

)xception: !arlil v !arbolic 2mo0e (all !o

1 4isplay of goods for sale

Pharmaceutical 2ociety of 5reat (ritain v (oots !ash !hemists 678*9

R:customers $ould not be unfairly bound once ta0en goods

from shelves and $ould be able to change his mind

R:shop might misquote price

R*:goods might be out of stoc0

1 Auction sales

!alls for bid %##

(ids by present Offer

;all of means $ill sell to higher bidder

no matter ho$ long the bid is.

1 #enders

%nvitation #o #reat

W%#


2/11

Contract

!hapter &: !onsideration and %ntention to

!reate ?egal Relation

%ntention to create legal relations

!hapter "

Offer

Acceptance

Presumption that partiesintend to create a legally

enforceable agreement.

!an be rebutted if there is

a honor clause that says

that agreement is not a

formal and legal

agreement.

!ommercial

Agreements

2ocial D 4omestic

Agreements

Presumption that partiesdo not intend to create a

legally enforceableagreement.

Balfour v Balfour

!an be rebutted if there

is clear evidence.

Merritt v Merritt

!onsideration2omething of value in the eyes

of the la$ given in exchange

for anotherBs promise.

Ealue)xchange=(enefit14etriment>

Promissory )stoppel

!onsideration must be

sufficientF need not be

adequate.

Cappell # Co Ltd v

Nestle Co Ltd

2ufficient %nsufficient

1@ominal value

1;orbearance to sue

15oing beyond existing public duty

+5lasbroo0 (ros v 5lamorgan !ounty

!ouncil 6789-

1)xisting contractual duty o$ned to * rd

party

15oing beyond existing contractual duty

1%ntangibles and /oral Obligations

1)xisting public duty

)xisting !ontractual 4uty O$ned to Promisor

%n Return for a Promise for /ore

%nsufficient: Stilk v Myrick

#raditional vie$ is that such promise is generally not sufficient consideration.

)xceptions $hen promise is sufficient: $illiams v !offery Bros # Nicolls

1 5ive effect to commercial reality

1 Promisor obtains =Practical (enefits>

%n Return for a Promise for ?ess

%innel&s Case: Part payment of a debt on the due date is not a good discharge of the

debt even on the creditorBs assuranceGpromise that it i s, unless supported by

consideration. +Refer to Promissory )stoppel-

!onsideration

must move from

promisee

!onsideration

must not be of

past

!onsideration

must be requested

by promisor

Only the person $ho

furnish the consideration

can enforce the promise.

Past consideration is

no consideration.

%ao On v

Lau 'iu Long

)xception

Act $as done at

promisorBs request

Parties understood that the

act $ill be compensated

2uch payment $ould be

enforceable if it had been

promised in advance

(enefit conferred or

detriment suffered must

by the promisee must

be requested by the

promisor.

Combe v Combe

Promisee confers a benefit on

the promisor in return for the

promisorBs promise.

Or

%ncurs a detriment in return for

promisorBs promise.

Cappell # Co Ltd v Nestle Co

Ltd

+H- )lements

2uspensive or )xtinctive

Prevents a person from going bac0 to his promise even if it is

not supported by consideration.

Central London %roperty (rust v )ig (ress )ouse Ltd


3/11

2ales tal0, no

legal effect

@ormal

exaggeration

D

grandstanding

that is part of

contract

negotiation,

ex. (est beer

in the $orld.

Pre-Contractual

Statements

!hapter I D : #erms of !ontract and

)xemption !lause

Exemption Clause

Representations #ermsPuffs

;alse

2ue for

misrepresentation

8 5uidelines to

4istinguishing #erms from

Representations

2tatement that induce another party

to enter into contract

/utual Promises: What

parties agree to form part of

contract

#rue

Parol )vidence Rule

Request to Eerify as0ed to get independent verification +representation-

%mportance of 2tatement parties $ould not enter into contract $ithout it+greater emphasis suggests a term-

#iming of 2tatement statement made closer to contract, more li0ely to be a term

Written statementsif agreement is put into $riting, more li0ely to be term+Parol )vidence Rule-

2pecial 20ill D Jno$ledge statements made by a person $ho has special0no$ledge, more li0ely to be term

+Pg K- 2ection 7* D 7 of )vidence Act: W hen parties have reduced contract to$riting, either party may not attempt to sho$ by extrinsic evidence that the terms in

$ritten contract must be changed, added to or contradicted.

)xcept:L27+a-: vitiating factors eg misrep,mista0e etcL7+b-: conditions precedent b 0 comes into existenceL7+f-: extrinsic evidence to aid in interpretation of $ritten terms

!ollateral !ontract#he existence of any separate oral agreement +as a $arranty-, as to any matter

on $hich a document is silent and $hich is not inconsistent $ith its terms, may

be provedF $hether or not this provision applies, the court shall have regard to

the degree of formality of the document.

%mplied

!an be either oral

or $ritten.

)xpress

!ondition Warranty%nnominate #erm

'sage G !ustom !ourt2tatue

2ales of 5oods Act, etc!ommunity has accepted

custom $hich binds parties

even if ignorant.

!ustom must be a usage

sufficiently uniform and

accepted by relevant

community.

%mplied by ;act %mplied by ?a$

Obective test: %s it

reasonable to imply such a

termM

%mplied to promote certainty

D give effect to important

social policies.

#erms of employment, etc

Malik v Bank of Credit #

Commerce *nternational S"

4epends on partiesB

subective intention

obectively ascertained.

#est:

1 Officious1(ystander #est

1 (usiness )fficiency #est

+inect terms that $ill

promote business

efficiency- Moorcock

)ssential #erm

+%mportant- /inor #erm

Approaches

to 4ifferentiate

!onditions

D Warranties

!ondition Warranty Approach

1 4etermine if term is ! or not bydiscerning intention of parties

1 ;actors to decide:

+- language of clause

+- nature D context+*- prior case precedent

- term implied by statue

%f reveals that term is not !, move

on to


4/11

Application o% Un%air Contract Terms Act 'UCTA(

Step 3: Appling the !est of "easonableness

#here are test of reasonableness under 2ection of the '!#A:

2 +-: =%n relation to a contract term, the requirement of reasonablenessis that the termshall have been a fair and reasonable oneaving regard to te circumstances$hich $ere,or ought reasonably to have been, kno-n to or in te contemplationof the parties -en te

contract -as made.>

2 +- refers to the 2econd 2chedule $hich sets out 5uidelines for Application of the

Reasonableness #est +for contracts falling under sections K D " e.g. sale of goods contracts-

#he 2econd 2chedule lists the follo$ing as matters that may be relevant:

+a- #he strength of the bargaining positions of the parties relative to each other, ta0ing intoaccount +among other things- alternative means by $hich the customerBs requirements could

have been meetF

+b- Whether the customer received an inducement to agree to the term, or in accepting it had

an opportunity of entering into a similar contract $ith other persons, but $ithout having to

accept a similar termF

+c- Whether the customer 0ne$ or ought reasonably to have 0no$n of the existence and the

extent of the term +having regard, among other things, to any custom of the trade and any

previous course of dealing bet$een parties-F

+d- Where the term excludes or restricts any relevant liability if some condition is not complied

$ith, $hether it $as reasonable at the time of the contract to expect that compliance $ith

that condition $ould be practicalF

+e- Whether the goods $ere manufactured, processed or adapted to the special order of the

customer.

*t -ould be more

reasonable for customer to

ave accept te .C if e is

induced to it /given a

benefit to accept te .C01

"pplies to conditional .C1

$at tis means is -eter

te conditional .C is

reasonable at te time tecontract -as made1

*f te customer places a

special order, it -ould be

more reasonable for te

customer to accept te .C

because of te additional

2risk3 involved in fulfilling

te special order1

!hapter I D : #erms of !ontract and

)xemption !lause !hapter *: ?egal Processes and

%nstituitions

4octrine of udicial Precedent +2tare 4ecisis-

Purpose:

L'niformity and consistency of decision

Lnot to udgeBs fancy

Lfor certainty

Lin respect for court hierarchy

#erminology

Ratio decidendi: the reason for the decision, ex, theprinciple that Qa man $ho commits a criminal act cannot

profit from the criminal act> is the ratio decidendi for the

decision of the udge to disallo$ recovery by .

Obiter dictum: made by the $ay, not directly applied to

arrive at the outcome in a case.


5/11

!hapter and 8: %llegality +Restraint of #rade- and 4uress

)itiatin! *actors

/isrepresentation Refer to !hapter *

%llegality

4uress

Restraint of #rade

5eneral Rule states that Restraint of

#rade is prima facie void, unless:

(omas Co-an # Co Ltd v Orme

?egitimate %nterest

of business@ot against

Public %nterest

#a0ing into consideration the

bargaining position and

adequacy of consideration

Mason v %rovident Cloting

# Supply Company Ltd

L;reedom to trade

Ldoes not stifle healthy

competition,

Lavailability of rare s0ill and

0no$ledge

2everance

)ntire !lause =(lue Pencil #est>

Run through and stri0e out

obectionable $ords, as long

as it does not alter the

meaning or mutilate the

covenant+oldsoll v +oldman

#o Person#o Property)conomic 4uress

Barton v "rmstrong

!ontract becomes voidable if a party enters into contract under

illegitimate threat to harm his economic interest

Overborne Will #heory %llegitimate Pressure

. %llegitimate threat G

pressure

. !ausation: that illegitimate

pressure is the significant

cause inducing victim to

enter iinto 0

Pressure affect the voluntariness of victimBs consent

2ufficient Pressure %llegitimate !ausation

=(ut ;or> test

Whether the illegitimatethreat is the significant

cause inducing the victim

to enter into the contract.

)uyton S" v %eter Cremer

+mb) # Co

Reasonable in duration,

area and scope

'ndue %nfluence Refer to !hapter

Pao On v ?au Niu ?ong

+7&I- +P*"8-

;actors:

1Protest

1 Realistic alternatives,

such as adequate legal

remedy

1 %ndependently adviced1 2teps ta0en to avoid

Another steps added by

other case

1Response of victimF

victim must prove that he

had acted reasonably inta0ing the other partyBs

threat seriously

%llegitimate all threats to

brea0 a contract

@ature of #hreat

1 'nla$ful act illegitimateunless it is not acted in bad

faith +2haronc5lobal 2olutions

Pte ?td v ?5 %nternational

2inagepore Pte ?td +II--

1 ?a$ful actillegitimate ifapplied illegitimately

+blac0mail-

@ature of 4emand

1 exploitative +bad faith- or

acting in good faith

#raditional Approach

Whether the victim is under such

extreme pressure or coercion that he

cannot be said to be exercising his o$n

free $ill.

)mployment 0

#rade secretsGcontacts D

maintenance of stable $or0force

)erbert Morris Limited v Sa4elby

2ale of (usiness 0 1 5ood$ill

Nordenfelt v Ma4im Nordenfelt

+uns # "mmunition Company

Ltd

Purpose: to save a contract

$hich $ould other$ise be

illegal or contrary to public

policy, by excising or cutting

a$ay the illegal portion.

#ests for )conomic

4uress

OR

* factors has to be

satisfied


6/11

)itiatin! *actors '++(

!hapter D 8: Eitiating ;actors +%-,

5ndue *nfluence # 5nconscionability

'ndue %nfluence 'nconscionability /isrepresentation

)itiatin! *actors '+(

4uress%llegality

'nconscientious use ofoneBs po$erGauthority over

another to acquire a

benefit or achieve a

purpose.

2pecial RelationM

@ature of Relation

%nfluence

exercised

$rongfullyM

Nes @o

Nes

Nes

!lass :

'ndue %nfluence

+voidable-

Nes

Ealid

@o

@o

@o

%nfluential position

%nduced contractM

#ransaction is

=manifestly

disadvantageous>

and

=calls for

explanation>

!oyal Bank ofScotland v .tridge

@o

Presumed undue

influence

Rebutted by

see0ing

independent

legal adviceM

Nes

Nes @o

@o 'ndue

%nfluence

!lass :

'ndue %nfluence

+voidable-

2pecial Relation

!lass A presumes

relationships to be of trust and

confidence.

+e.g. parentGchild,

guardianG$ard, docGpatient,

la$yerGclient,

trusteeGbeneficiary, religious

advisorGdisciple-

!lass ( must be proven

+e.g. husbandG$ife,

employerGemployee,agentGprincipal, siblings-

Agency @otice

'ndue %nfluence by *rdParty

(an0 entrust the

guilty party as its

agent.

(an0 0no$s of the '%

+actual or constructive-

!onstructive @otice of '%

Put on inquiry Reasonable 2teps


7/11

!hapter * and : 'ndue %nfluence and /isrepresentation

)itiatin! *actors

%llegality

4uress

/isrepresentation

'ndue %nfluence!ontract becomes voidable $here there is

$rongful influence by one party over another

Refer to !hapter 8

Refer to !hapter

!lass !lass

!lass A

!lass (

Actual 'ndue %nfluence

Plaintiff prove that:

1 Wrongdoer in position of influence

+domination-

1 %nfluence $as exercised $rongfully

1 %nfluence induced contract

Presumed

'ndue %nfluence

Rationale: prevent abuse of

trust and confidence placed by

one person on another

Presumed relationship

automatically+=relationship

of trust and confidence>

does not need to be

proved-:

Parent1child

5uardian1$ard

#rustee1beneficiary

4octor1patient

?a$yer1client

4irector1company

Religious advisor1disciple

Relation of #rust

D !onfidence

/anifestly

4isadvantageous

Prove relationship of #rust

and !onfidence+actual proof

required-:

Agent1principle

if it is so

large as not to be

reasonably accounted for

on the ground of

friendship, relationship,

charity, or other ordinary

motives on $hich ordinary

men act

!oyal Bank of Scotland

plc v .tridge

Rebutting

Presumption

2ho$ ho$ P acted freely and independently in

entering into contract:

1 2ee0 independent advice from competent and

honest advisor $ith 0no$ledge of all relevant

circumstances

1 Advisor must advice Plaintiff as though actingsolely in the interest of the Plaintiff

%nfection

!reditorSs rights

$hen there is

undue influence by

4ebtor on 2urety

!ontract can be

rescinded by victim

of undue influenceeven if !reditor

$as innocent

@otice

!reditor has

entrusted the guilty

party of undue

influence as its

agent

@otice of the

$rongdoing

Actual !onstruction

%nquiry Reasonableand


8/11

!hapter K: Agreement, Performance, and (reach

Dischar!eAgreement

(reach

Performance

;rustration#erms of contract

2ubsequentG

@e$ Agreement

).g.. #erm for termination by

employment by notice

/ust be supported by

consideration for release

5eneral Rule

)xceptions

All obligations must be fully

and precisely performed

4e /inimis Rule 2everable Obligations Partial Performance

Accepted

2ubstantial

PerformanceEery hard to invo0e,$ill not be invo0ed for

differences in

measurement.

4ifference in

performance is

microscopic, then it

$ill be ignored and

treated li0e no breach

at all

Obligations separate D

independent +based on

intention of parties-.

)ntitled to payment for

obligation performed.

Tuatum meruit

payment on

contractual basis

expressed in contract

that payment in return

for performance $ill be

made in proportion to

amt of $or0 done. Or

2ale of 5oods Act

*I+-

Tuatum meruit

payment on

restitutionary basis only if party voluntarily

accepts partial $or0

%f obligation is @O#

entire, and party in

breach has substantially

performed, he can claim

payment less cost to

rectify but is still liable to

damages

Cutter and %o-ell

Apportionment Act

2* states that rents, annuities, dividends and other

periodical payment that are accrued on daily basis are

claimable base on periods

Tuantum /eruit

Restitutionary (asis +?a$ of 'nust )nrichment-

Able to claim in relation to partial performance, if the party

has received benefit had option of freely accepting or

reecting the benefit

Actual Anticipatory

!onditionWarranty %nnominate

Renunciation

%mpossibility

Repudiatory

@on1Repudiatory

4ischarge

Refer to !hapter "

Others

Affirm

Repudiatory@on1Repudiatory )lection

!ontract continues and

sue for damages forbreach

!ontract ends and sue for

damages for breach

?egitimate %nterest;ixed 2um @o !ooperation

!laiming for a fixed sumopposed to unliquidated

damages

%nnocent party do notneed corporation of

party in breach to

continue the contract

/ust have ?egitimate %nterestto affirm

$ite # Carter

%f damages are sufficient

compensation, not allo$ed to

affirm the contract $hich $il

result in greater detriment to the

defaulting party

M%6Bilt %te Ltd v Oey $idarto

!ontract

continues, treated

as no breach

Performance

must be exact

, precise

#erminology

contingent dependant on

repudiator breach refusal to perform a contractual obligation

@o performance

or defective

performance

$hen time to

perform arrive

%ntention not to

perform obligation

due in future


9/11

!hapter ": ;rustration

Dischar!e

Agreement

Performance

(reach ;rustration

Refer to !hapter K

?imiting ;actors

;orce /aeure !lause

;oreseeability

2elf %nduced ;rustration

)xpressed term in contract that negates

frustration due to =acts of 5od>, expressing the

legal consequences of such an event

Requirement: Particularly clear $ords to be used

;rustration

of Purpose

Occurs $hen purpose of entering into contract is

radically changed. /ust have =special qualification>

that only the Promisor can provide. ;ailure of purpose

of one party does not bring about frustration.

7rell v )enry

!lassification

@egligence

!hoice of !ontract

;rustration if negligence is not deliberately

induced

5rossly negligence +chances of breach is

high- or mere carelessness +chances of

breach is lo$-

8osep Constantine v *mperial Smelting

#here is no frustration if party can choose

bet$een contracts

)vent $hich is highly foreseeable

cannot be frustrated

;rustration occurs $hen a supervening event, due to

no faultof the parties, render the contract entered into

radically differentfrom that $hich the parties originally

undertoo0.

5eneral

%mpossibility

%llegality

Radical !hange

4estruction of

subect matter

4eath G %ncapacity

'navailability

;ailure of 2ource

of 2upply

/ethod of

Performance

5overnment

acquisition, etc

Alternate method can be used, so long as

contract is not fundamentally different

%mpracticability,

increased costs

)xtreme cases as men

of business are ta0en

to cognisant of the

ris0s and vicissitudesin the business envrt,

such as rises and falls

in prices.

)ffects

Aspects !ommon ?a$ ;rustrated !ontracts Act

;uture obligations Released Released

Accruedobligations

Remain Released

2ums paid @ot recoverable Recoverable 62ection +-9

2ums payable Remain payable @o longer payable

(enefits G)xpenses

@ot applicable Recoverable

4elay, unavailability

;rustration due to

party o$n conduct or

the conduct of those

for $hom he is

responsible for


10/11

!hapter &: Remedies for (reach of !ontract

&emeiesRight of !laim

!ommon ?a$

Remedies

)quitable

Remedies

Restitutionary

Remedies

?imitation Act 2K:

Plaintiff must commence

legal action $ithin K

years from time contract

is breached G tort

committed.

Reasons: evidences

destroyed or tampered

$ith, pple die

!an be postponed if

Plaintiff $as ignorant

about breach of

contract.

?iquidated

4amages

'nliquidated

4amages

%f remedies have been pre1

agreed by both parties, the

court $ill order sum to be

paid in compensation as

liquidated damages,

provided it is a genuine pre1

estimate of the loss, not asa form of penalty.

#est

!onstruction of !lause:

#erms and $ords used are

not conclusive

Amount is extravagant

compared $ith the loss

from breach

Payment is larger than

obligation to payment

?ump sum payment

)ven if loss from breach is

difficult to predict, it can

still be liquidated

damages.

Dunlop %neumatic (yre v

Ne- +arage


11/11

!hapter K: @egligence

e!li!ence4uty of !are

(reach of 4O!

!ausation of

4amageG?oss

Remoteness

/itigation

!ausation

Proximity Public Policy

Primary Eictim 2econdary Eictim

Psychiatric %llness

4uty is imposed aslong as some form

of personal inury

$as foreseeable

flo$ing from the

negligent act

McClouglin v O&Brien /9:>

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