1. CONTRACT LAW - ENGLISH LAW PERSPECTIVE
Sung-Hwan Choi, Of Counsel
Norton Rose Fulbright (Asia) LLP, Singapore

2. CONTENTS Formation of a Contract Promissory Estoppel
Rights of Third Parties
Terms, Warranties and Innominate Terms
Misrepresentation
Discharge of Contract
Remedies for Breach of Contract

3. Formation of a Contract
Offer
Acceptance
Consideration
Certainty of terms
Intention to Create Legal Relations

4. Formation: Offer Treitel in The Law of Contract
“an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed”
Contrast with an “invitation to treat” (ie not an offer)
one party may indicate that they would like the other party to make an offer
See Fisher v Bell [1961] 1 QB 394

5. Formation: Acceptance
Offer must be accepted to constitute an agreement
2 requirements:
the assent must coincide exactly with the terms of the offer and
the assent must be communicated

6. Certainty of Terms
Terms of a contract must be certain to be legally enforceable
Scammell v Ouston [1941] 1 All ER 14
"In order to constitute a valid contract, the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty. It is plain that, unless this can be done, it will be impossible to hold that the contracting parties had the same intention."

7. Formation: Intention to Create Legal Relations
English law, in order that an agreement is legally binding between the parties, there must be an intention to be legally bound.
Difference between domestic and commercial agreements:
Balfour v Balfour – presumption that there is no intention to be legally bound
Commercial – presumption that there is intention to be legally bound, unless agreement expressly provides otherwise

8. Formation: Consideration
Traditional view in Currie v Misa (1875) LR 10 Exch 153
“A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other”
Ie – the price paid for the right to enforce the contractual obligation

9. Formation: Consideration
Consideration need not be adequate, but must be sufficient
Nestle v Chappell
Past consideration
Ie consideration that each party gives to each other must be contemporaneous
Roscorla v Thomas
Consideration must move from the promisee
Ie consideration must not be provided from a 3rd party  but note the Contracts (Rights of Third Parties) Act 1999

10. Rights of 3rd Parties
Generally - rule of “privity of contract” under which a person can only enforce a contract if he is a party to it
The position is modified by Contracts (Rights of Third Parties) Act 1999

11. Rights of 3rd Parties
Section 1(1): Subject to the provisions of this Act, a person who is not a party to a contact (a “third party”) may in his own right enforce a term of the contract if-
(a) the contract expressly provides that he may; or
(b) subject to subsection (2) below, the term purports to confer a benefit on him.
Section1(2): Subsection 1(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party

12. Promissory Estoppel Equitable doctrine Lord Denning in Combe v Combe
"where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported by consideration".

13. Terms of a Contract
3 types of terms: Conditions, Warranties and Innominate Terms
Vary in terms of how important the terms are and the remedies arising from breach of such terms

14. Terms: Conditions vs Warranties
If a condition is breached, the remedies are (i) damages for any loss suffered and (ii) the injured party may end its obligations under the contract
If a warranty is breached, the only remedy is damages for any loss suffered
See Wickman Machine Tool Sales Ltd. v L. Schuler A.G.

15. Terms: Innominate Terms
Somewhere in between conditions and warranties  remedy available for breach of innominate terms depends on seriousness of the breach
Generally:
If breach is serious, the injured party may treat their obligations under the contract as at an end and may claim damages
If breach is minor, the injured party may only claim damages
See Hong Kong Fir Shipping v Kawasaki Kisen Kaisha

16. Exemption Clauses and Unfair Terms in Consumer Contracts
Exemption clauses take two main forms:
Exclusion clauses, which seek to absolve a party for some or all liability arising from breach of a contract
See Houghton v Trafalgar Insurance
Limitation clauses, which accept liability for a breach, but then limit the amount of damages payable to a certain sum.

17. Misrepresentation Definition:
Misrepresentation consists of a false statement of fact made by one party to the other, before or at the time of making the contract, which is one of the causes which induces the contract
Misrepresentation may be fraudulent, negligent or innocent

18. Misrepresentation Governed by the Misrepresentation Act 1967 Remedies:
Rescission – equitable remedy and subject to the usual equitable bars
Damages – s 2(2) Misrepresentation Act 1967, the court has the discretion to award damages in lieu of rescission (usually if rescission will cause undue hardship)

19. Misrepresentation Overview
Fraudulent
Rescission
Damages
Negligent misrepresentation under statute
Negligent misrepresentation at common law
Innocent
Damages – discretionary under s2(2) Misrepresentation Act

20. Discharge of Contract
Where a contract is fully discharged, the parties will be freed of their obligations
4 ways to discharge a contract:
Performance – Both parties completely perform their obligations under the contract
Agreement – Both parties agree to treat the contract as discharged
Breach
Frustration

21. Discharge: Breach
Generally, all types of breaches would entitle the injured party to sue for damages
But only 2 types of breaches would permit the discharge of a contract:
Repudiation of the contract
Breach is of a major/fundamental nature

22. Breach: Repudiation
Express or implied, arising from words or conduct which indicate that one party is not going to perform the obligations under the contract
If repudiation takes place before the date due for performance of the contract, it is an anticipatory breach 
NB that the victim of an anticipatory breach may wait for the due date for performance, and then sue if no performance is forthcoming OR the victim may sue at once, treating the contract as discharged by the anticipatory breach (see Hochster v De la Tour)

23. Breach: Major/fundamental nature
As a general rule, where one of the parties is in breach of a major term of the contract (a condition), or in breach of an innominate term where the effects are serious, the innocent party can treat such behaviour as entitling him to treat himself as discharged from the contract

24. Discharge: Effect of Breach
If injured party has the right to treat the contract as discharged, he has 2 options, either:
Elect to affirm the contract (keeping the contract alive)
Accept the breach and consider himself discharged  operates prospectively and not retrospectively

25. Discharge: Frustration
Note “force majeure” clauses  if none is present in the contract, courts will consider the rules of frustration (ie rules of subsequent impossibility)
Some examples:
Denny, Mott & Dickinson v James Fraser – supervening illegality
Robinson v Davison – illness
Limitation: A mere bad bargain/economic hardship is not frustration (see Davis Contractors v Fareham UDC)
Effect of Frustration: brings contract to an end

26. Discharge: Frustration
Also note Law Reform (Frustrated Contracts) Act 1943
Section 1 (2) provides that all sums paid shall be recoverable, and all sums due cease to be due.
Section 1 (3) provides that where any party has obtained a valuable benefit, by reason of anything done by the other party in or for the performance of the contract, the court has a discretion to award a sum which is just in all the circumstances of the case, not exceeding the value of the valuable benefit.

27. Remedies for Breach of Contract
Damages
Equitable remedies such as an order of specific performance or an injunction

28. Remedies: Damages
General basis for calculation: to put the innocent party in the position he would have been in had the contract been performed
Damages will usually be assessed as at the time of the breach.
To recover damages for a loss, not only must the breach cause the loss, but the loss must not be too REMOTE
Hadley v Baxendale
Qualification to recovery of damages: Injured party must take reasonable steps to mitigate the loss

29. Remedies: Equity Specific performance Injunction
Beswick v Beswick - specific performance would only be awarded where damages were not a ‘just or appropriate’ remedy
Injunction
Remedy enables a court to prevent a party to a contract committing a breach of that contract

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