Formation of Contracts
Outline of this prewrite:
1. Offer/ Invitation to treat
2. Acceptance
3. Consideration
4. Promissory estoppel
5. Intention to create legal relations
6. Certainty of contract
7. Completeness of contract
According to the definitions set out in Gay Choon Ing, the following elements of a legally binding contract are fulfilled
Offer
First, X made an offer to <insert offer> for Y on the standard / agreed upon terms of the contract
Acceptance
Next, Y accepted X’s offer by <insert conduct showing clear communication of intention to be bound (eg. Signing on
contract)>
Intention to create
Since the parties were contracting each other in a commercial setting, they are presumed to have intended to create
legal relations
legal relations.
Consideration
Consideration was furnished for X’s promise to <insert promise> by incurring a detriment / conferring a benefit to Y in the
form of <insert benefit/ detriment>.
Certainty and
All material terms such as <insert material term> are sufficiently set out such that the contract can be said to be
completeness
sufficiently certain and complete to be legally enforceable.
1. Offer / Invitation to treat (ITT)
The first issue is whether a contract was indeed formed. The specific elements of the contract will first be discussed.
Offer
Invitation to treat
X’s <insert actions> likely constitutes an offer to Y. Gay Choon Ing v
Loh Sze Ti Terence Peter defines an offer: “an offer, capable of being
converted into an agreement by acceptance, must consist of a
definite promise to be bound provided that certain specified terms
are accepted”.
<insert invitation> constitutes an invitation to treat, and not an offer.
As set out in Gay Choon Ing v Loh Sze Ti Terence Peter, an invitation to
treat is merely an attempt to induce or invite offers, rather than being
an offer itself. The fundamental distinction from an offer is the lack of
intention of the promisor to be legally bound.
In the present case, the certainty and unequivocal nature of X’s
<insert actions> satisfies the above conditions, and is consistent with
the objective principles of contract law. Indeed, an objective
reasonable person in Y’s position would be led to believe that X’s
<insert actions> constituted an offer.
This is likely the case with <insert invitation>. The invitation does not
contain any explicit limitations to <time frame/stock
availability/discretion>. There is uncertainty surrounding these issues,
and this points to the lack of intention of X to be bound to every
single customer who responds to his invitation. Hence, X’s <insert
invitation> is likely to constitute an invitation to treat, and not an
offer.
Conduct showing an intention to be bound
X’s <insert conduct> shows an intention to be bound. Conduct can
show an intention to be bound and hence constitute an offer. In
Datec Electronic Holdings Ltd v United Parcels Service Ltd, it was held
that a contract may be made expressly or by conduct. This is adopted
by Singapore courts, seen in Ong Chay Tong & Sons (Pte) Ltd v Ong
Hoo Eng, where it was held that the appellant’s conduct of proffering
the minutes evidencing the Second Resolution to the respondent for
his signature constitutes a valid offer to vary [the condition
concerned].
Promisee Objectivity
Advertisements
X’s <insert actions> likely constitutes an offer to Y. This is despite X’s
subjective intention for his actions not to constitute an offer. This
position is consistent with the promisee-objectivity principle laid out
in Smith v Hughes. The court held that the parties’ intentions must be
ascertained objectively, from the perspective of a reasonable man in
the promisee’s position. In this regard, the promisor’s subjective
intention is irrelevant.
Similarly, X’s subjective intention for his <insert actions> not to
constitute an offer, should be regarded as irrelevant. X’s intentions
should be ascertained objectively in order to protect the reasonable
expectations of Y. The certainty and unequivocal nature of X’s <insert
actions> would lead an objective reasonable person in Y’s position to
believe that X was indeed making an offer.
Revocation of offer
The <offer made by X> can be effectively revoked any time prior to
acceptance by Y, provided that it was communicated to Y. In
Dickinson v Dodds, it was held that there was an effective
communication of the revocation of the offer by a third party to the
offeree, and there was no binding contract between the parties
because there was no complete acceptance by the offeree prior to
the revocation.
This is similar to the present situation. X communicated the
revocation of his offer to Y, before there was a complete acceptance
of X’s offer by Y. Thus, X is able to effectively revoke his offer.
Revocation of offer in unilateral contracts
In the case of unilateral contracts, Singapore adopts the two-offer
approach. There is an express (and main) offer which can be revoked
The advertisement put up by X will likely constitute an invitation to
treat, as opposed to an offer. In Carlil v Carbolic Smoke Ball Co, the
court held that an advertisement must have a clear and explicit
intention to be bound, to be considered an offer. This was evidenced
by the defendants depositing money in a bank, showing that the
promise of a reward was not mere “puff”.
In the present case, the advertisement was simply to inform readers
of <content of advertisement>, attempting to attract <offerors> to
the <business>. This is thus likely an invitation to treat, as there is no
clear and explicit intention to be bound, seen through <actions>.
Priced goods on display
The priced <insert goods> on display constituted an invitation to
treat, as opposed to an offer. In Pharmaceutical Society of GB v Boots
Cash Chemists, the court held that an offer is made by bringing the
goods to the counter to effect payment, and not by the display of
goods. This is to prevent customers from being unfairly bound by
merely picking up an item, and to protect shopkeepers’ interests by
preventing them from getting into legal trouble for running out of
stock.
This is similar to the present situation. Thus, X’s mere display of
<insert goods> constitutes an invitation to treat, and not an offer.
Priced goods online
X’s proposal to sell <insert goods> online is a mere invitation to treat,
and not an offer. This position has been provided for under s 14 of
at any time before acceptance, and an implied offer not to revoke the
first offer once the offeree has begun his performance within a
reasonable time. In Dickson Trading (S) Pte Ltd v Transmarco Ltd, this
approach was adopted.
the Electronic Transactions Act (ETA). Section 14 provides that
proposals to conclude contracts through electronic communications
not addressed to specific parties are considered “invitations to make
offers”, unless it clearly states an intention to be bound in the event
of acceptance.
In the present case, X’s <main offer made by X> constitutes an
express offer, and an implied offer not to revoke the first offer once Y
has begun his performance within a reasonable time. Thus, since Y
has begun performance within a reasonable time, X is unable to
revoke the offer.
There is no clear indication of such intention in the present case.
Moreover, the proposal does not contain any explicit limitation on
the availability of stock. It therefore could not have been the
intention of X to be bound to every single customer who submits a
response. Hence, X’s proposal is likely to constitute a mere invitation
to treat.
Termination of offer by lapse of time
Tenders
Where the offer itself contains an express term as to when the offer
will lapse, the offer will be revoked if there is no valid acceptance and
the stipulated time has passed. However, if the offeror conducts
himself in a manner that makes it clear to the offeree that he is
extending the deadline, the offer will still be open for acceptance.
This was held in Panwell Pte Ltd v Indian Bank.
It was held in UOL Development (Novena) Pte Ltd v Commissioner of
Stamp Duties (“UOL Development”) that it is trite law that an
invitation to tend is, without more, an invitation to treat and not an
offer. In UOL Development, the registered proprietors decided to sell
all 53 properties on the basis of an en bloc sale by tender.
Similarly, although the offer made by X contains <insert express term
stating when the offer lapses>, the offer is still open for acceptance
because X’s <insert actions of X> clearly shows to Y that he is
extending the deadline for acceptance of his offer. Thus, acceptance
by Y would still result in a binding contract between the parties.
The offeror is entitled to terminate his offer even before the time
stipulated has yet to pass. This is because the promise not to
Similarly, in (facts of hypo). Therefore, (context of hypo)’s tender was
merely an invitation to treat.
terminate is unsupported by consideration and therefore not binding,
as held in Routledge v Grant.
Similarly, X is entitled to terminate his offer to Y before <insert
express term stating the deadline for acceptance>.
Failure of a condition subject to which offer was made
An offer will perforce also terminate if it was made subject to the
occurrence of a certain condition, and such a condition does not in
fact occur. The offer is incapable of being accepted. In Financings Ltd
v Stimson, it was held that there was no concluded contract between
the parties, as the plaintiff was not in a position to accept the offer
because the condition on which it was made had not been fulfilled.
Similarly, Y is not in a position to accept X’s offer because <condition
that the offer was made upon> did not occur. Thus there is no
concluded contract between X and Y.
Offer contains no express term as to lapsing of offer
The courts held that the offer will lapse after a reasonable period of
time has elapsed should the offer not contain an express stipulation
of the lapse of time.
In the present case, since there is no express term as to when the
offer made by X will lapse, the offer will lapse after a reasonable
period of time has elapsed and Y will be unable to accept X’s offer
thereafter.
2. Acceptance
Basic acceptance
Counter-offer
Y likely accepted the offer made by X. As defined in Gay Choon Ing, an
acceptance is “a final and unqualified expression of assent on the part
of the offeree to the terms of an offer”. There are two conditions that
have to be fulfilled in order for an acceptance to be valid – (1) an
intention to be bound, and (2) communication of the acceptance to
the offeror.
It is evident that Y does not agree with the original contractual term
relating to <insert issue of disagreement>. This express disagreement
would thus constitute a counter-offer on his part, by modifying the
terms to be <insert new term> instead of <insert old term>. The
effect of this counter-offer is to destroy the original offer and
simultaneously constitute a new offer which can then be either
accepted or rejected by the original offeror (X).
The present case fulfils both conditions, and is consistent with
objective principles in contract law. Y’s <insert actions> effectively
communicated his unequivocal assent to the terms set out in X’s offer
and thus would constitute a valid acceptance.
Electronic acceptance
Y’s automated electronic receipt constitutes valid acceptance. Section
15 of the ETA makes explicit reference to such situations involving
automated message systems. It provides that such forms of
communication shall not be denied validity or enforceability solely on
the ground that no natural person reviewed or intervened in the
message. Indeed, so long as the automated message fulfils the
standard requirements of acceptance, it can lead to a legally binding
contract.
In the present case, Y’s automated electronic receipt does fulfil the
two conditions for valid acceptance – intention to be bound, and
communication to the offeror, as defined in Gay Choon Ing. The
No acceptance in ignorance of offer
It is likely that Y’s actions will not constitute valid acceptance, because
of his ignorance of the offer. In R v Clarke, the court held that the
plaintiff had been ignorant of the offer at the time of his
“acceptance”, which was when he gave the required information. He
therefore did not act in reliance upon the offer, and his actions did
not constitute valid acceptance.
Similarly, Y was ignorant of the existence of the offer. He therefore
could not have acted in reliance upon the offer and his <insert
actions> would not constitute valid acceptance.
receipt’s unequivocal assent to the terms of X’s offer was evident
with the phrase <insert phrase eg. Thank you for contracting with…>.
Furthermore, the receipt was tangibly communicated to X via <insert
platform, eg. Email, phone>, and this is consistent with the objective
principles of contract law. An objective reasonable person in X’s
position would have interpreted Y’s automated receipt as a valid
acceptance.
Instantaneous communication of acceptance
In Chwee Kin Keong v Digilandmall.com Pte Ltd, the court held that
the general receipt rule applies to instantaneous communications of
acceptance, as opposed to the postal acceptance rule. This is because
unlike a posting, e-mail communication takes place in a relatively
short time-frame. The recipient rule is therefore more convenient and
relevant in the context of both instantaneous or near instantaneous
communications.
Similarly, since X’s <insert electronic communication of acceptance of
offer> constitutes an electronic instantaneous acceptance
communicated to Y, the general receipt rule applies. A binding
contract is only formed at the point where Y receives this electronic
acceptance communicated by X.
Acceptance by conduct
No acceptance by silence
It is likely that Y’s actions will constitute valid acceptance. In Foo Jong
Long Dennis v Ang Yee Lim Lawrence, the court held that whether a
contract existed was a question of fact that is context-dependent.
Conduct can evince acceptance. This view was also shared by the
court in Midlink Development Pte Ltd v The Stansfield Group Pte Ltd,
Y’s silence in the present case cannot constitute acceptance. The
main authority for acceptance by silence is the case of Felthouse v
Bindley, which brings up three main arguments against allowing
acceptance by silence. Firstly, silence is ambiguous and would thus be
equivocal at best. Second, that acceptance must be communicated
which held that the conduct of the parties, objectively ascertained,
supported the existence of a contract.
Here, Y’s <insert actions> (as required of him by the contract) is likely
to be viewed as an acceptance by conduct. The subjective intention of
Y is not relevant in this assessment, as X would have reasonably
viewed Y’s actions as acceptance. This approach is consistent with
objective principles of contract law.
Battle of the forms
The contract is likely to be concluded on X’s terms, in line with the
“last shot” doctrine endorsed by the Court of Appeal in Gay Choon Ing
from Butler Machine Tool Co Ltd v Ex-Cell-O Corporation. In such
cases involving incompatible forms, the court would give effect to the
form “last fired”. The party who presents his terms last without
provoking objection from the recipient who acts on the contract
succeeds in binding the recipient to his terms.
In the present case, Y’s <insert actions> would be taken as an
acceptance to the terms last proffered by X in <insert form>. The
contract would therefore likely be concluded on X’s terms.
and does not fulfil tangible and objective qualities of acceptance.
Lastly, that offerees should not be unfairly burdened with having to
signal their non-acceptance.
These three arguments proposed by Felthouse are apt in the present
case, and the general rule that there can be no acceptance by silence
should be upheld.
Postal acceptance rule
Here, P accepted the offer for <insert sale>, at the point he posted
the letter of acceptance – even if the letter of acceptance were to be
lost in post, never reaching D. In 1L30G Pte Ltd v EQ Insurance Co Ltd,
it was held that acceptance is deemed to take place at the point of
posting instead of the time of receipt. This rule operates as an
exception to the general requirement that acceptance must be
communicated to the offeror.
Since postal acceptance is expressly authorized in the offer which
<insert express authorization>, and P had posted the letter properly
stamped and addressed, acceptance would have taken place at the
point of posting.
Having established the presence of offer and acceptance, I will now move on to explore if the agreement ought to be converted into a likely
binding contract by establishing consideration, intention to create legal relations, and certainty/completeness of the contract.
3. Consideration
Basic consideration
Past consideration  no consideration
There is likely sufficient consideration in the contract between X and
Y. As defined in Currie v Misa, consideration may consist in either
“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.” This benefit-detriment conception of
consideration is endorsed by Singapore courts, seen in Gay Choon
Ing.
X’s consideration of <insert consideration> for Y’s
promise/undertaking to <insert promise> is not good consideration,
since it is past. The main authority for past consideration is Eastwood
v Kenyon, where the court held that an act done prior to and
independently of a promise cannot be regarded as valid consideration
for the promise, since it is not done in exchange for the promise.
In relation to X’s promise/undertaking to <insert X’s promise>, Y had
furnished good and sufficient consideration in the form of a
<benefit/detriment> by <insert consideration, eg. Payment>.
In relation to Y’s promise/undertaking to <insert Y’s promise>, X had
similarly furnished good and sufficient consideration in the form of a
<benefit/detriment> by <insert consideration, eg. Payment>
Past consideration – Pao On exception
While X’s action was in the past, it is still likely to be considered good
consideration. The local courts have endorsed the approach taken in
Pao On v Lau Yiu Long, which laid out the three elements that must
be satisfied by a claimant who wishes to invoke this exception, in
order for past consideration to be considered as good consideration:
a. The act was done at the promisor’s request
b. The parties must have understood that the claimant would be
remunerated
c. The eventual promise is one which would have been
enforceable if it had been made at the time of the act
In the present case, X’s <insert consideration> was provided long
before Y had promised to <insert promise>. Thus, X’s act was done
prior to and independently of Y’s promise and cannot constitute good
consideration.
Consideration must be requested by the promisor
X’s consideration of <insert consideration> is not sufficient
consideration for Y’s promise to <insert promise>, as <insert
consideration> was not requested by Y. In Combe v Combe, the court
held that consideration must be requested by the promisor in order
to be good consideration. This is endorsed in local courts, as seen in
Gay Choon Ing (Court of Appeal).
In the present case, X chose to <confer a benefit/ incur a detriment>
on his own accord. This action was not requested by Y and therefore
cannot constitute good consideration.
In the present case, all three elements are satisfied.
1. Y had asked X to perform <insert task>.
2. It was clearly understood by both parties that X would be
rewarded with <insert reward, eg. Money> for the completion
of the task.
3. This eventual promise of <insert reward> would have been
enforceable if it had been made at the time of the act.
As such, it is likely that the Pao On exception applies in the present
case. X’s <insert act> can thus constitute good consideration for Y’s
<insert promise>.
Performance of a public duty  generally not sufficient consideration
The performance of a public duty by the promisee is generally not
sufficient consideration. An act obliged by law is neither a benefit to
the promisee nor a detriment to the promisor. However, where the
act or conduct in question exceeds the requirement of the legal duty,
such act or conduct may constitute good consideration. In Glasbrook
Brothers Ltd v Glamorgan County Council, the court held that the
police authority provided consideration as they had done more than
what was legally required of them by providing a stationary force
instead of a mobile force which would have been sufficient.
Similarly, X’s <insert public duty actions> constitute good
consideration since X has done more than what would otherwise be
his legal obligation to Y.
Moral obligation
X’s <insert moral obligation> cannot constitute sufficient
consideration for Y’s promise to <insert promise>. In White v Bluett,
the court held that a son’s promise to stop complaining was merely a
moral obligation to his father, and was no consideration for his
father’s promise.
Similarly, X’s <insert act> was merely what he was morally obliged to
do and thus cannot constitute sufficient consideration.
However, if the promisee suffers a detriment by furnishing the
promise, it constitutes good consideration for the promise. In Hamer
v Sid Way, the promise made by the uncle was enforceable as the
nephew had suffered a detriment in giving up his lawful freedom to
drink, smoke, etc. by furnishing the promise. This hence constituted
good consideration.
More for the same: Practical Benefit present
Y’s practical benefit of <timely completion/ obviating a disbenefit>
will be sufficient consideration for Y’s promise to <insert promise, eg.
Pay more>. In Williams v Roffey Brothers, D sub-contracted P to do
carpentry works. P finished 9 flats but was at risk of not completing
the rest due to financial difficulties. D recognized this and promised to
pay P extra for timely completion. P completed 8 more flats and D
refused to pay. The court ruled in P’s favour, holding that the practical
benefit of timely completion of promised work was sufficient
consideration provided by P for him to enforce D’s promise to pay
more.
Similarly, X confers a practical benefit on Y in the form of <insert
practical benefit> which is likely to constitute sufficient consideration.
Y will therefore be bound to his promise of <insert promise>.
Examples of practical benefits:
1. X’s continued performance
2. Y’s avoidance of paying a penalty to employer
3. Y’s avoidance of having to look for another sub-contractor
This is in contrast with Stilk v Myrick, where the promise to pay more
was unenforceable since the sailors were already obligated to return
the ship to London, and there was no consideration given by the
sailors in return for the captain’s promise to pay more.
X’s <insert detriment suffered by furnishing the promise> constituted
good consideration for the promise made by Y since X had suffered a
detriment by furnishing the promise. Thus, there is good
consideration for Y’s promise.
Less for the same: Practical Benefit absent
Y’s promise to receive less is unlikely to be enforceable, as there was
no consideration furnished by X. In Foakes v Beer, D owed P money
and it was agreed in writing that if D paid in installments timely, P
would not claim the interest of the debt. When D finished paying, P
sued for the interest. The House of Lords ruled in favour of P, and it
was held that prompt partial payment was not a legal benefit that
could have been conferred on P by D, and thus was not sufficient
consideration.
Similarly, X’s timely partial payment did not confer a legal benefit on
Y, and likely is not sufficient consideration to enforce X’s promise to
receive less.
However, there may be an argument for the court to recognize the
factual benefit conferred onto Y as a legal benefit. The decision of
Foakes v Beer was made based on policy considerations in a time
when contract law had gaps to be plugged and was still being
formulated. Today, the policy considerations can be sufficiently
addressed by undue influence doctrines to protect creditors.
Furthermore, a court in a later decision of Re Selectmove Ltd
expressed that they were sympathetic to the appellants but regarded
itself to be bound by Foakes v Beer and ruled against their favour.
There is a strong case for the law to move forward as it has in
situations of promises to pay more and regard factual benefits in
Consideration must move from promisee – joint promisee
situations of promises to receive less to constitute sufficient
consideration.
Consideration required for agreements to vary an existing contract
While Z did not furnish consideration for Y’s promise to <insert
promise>, he can nonetheless enforce Y’s promise on the basis of the
‘joint promisee doctrine’. This was introduced in Coulls v Bagots,
where the court agreed upon the doctrine which stipulates that
where contracting parties are joint promisees (already privy to the
contract), one of the joint promisees can provide consideration on
behalf of the other joint promisees.
X has to furnish consideration for Y’s promise to vary <insert main
contract>. In Ma Hongjin v SCP Holdings Pte Ltd, it was held that fresh
consideration was required for a variation of an existing contract
between two parties. The judge found that the supplemental
agreement was not supported by consideration in the form of a
factual or practical benefit to the respondent, and was an attempt to
reopen a concluded bargain and improve the appellant’s position.
In the present case, while Z did not personally provide any
consideration, he is nevertheless and joint promisee and can still
maintain an action under the contract.
Forbearances
X’s <insert forbearance to sue> can constitute sufficient
consideration. Indeed, in the SGHC case of Real Estate Consortium v
East Coast Properties, the court rejected an argument that a party
refraining from enforcing his legal rights could not constitute
consideration.
In the present case, X’s refraining from suing Y for <insert reason> can
similarly constitute sufficient consideration.
Pre-existing contractual duty to third parties
X’s action is likely to constitute sufficient consideration for Y’s <insert
promise/undertaking>. This is despite it being a contractual duty X
already owed to Z in a separate contract. This position is supported by
the SGCA in Gay Choon Ing.
Indeed, by accepting the second promise on top of the original
contractual obligations, X opens himself up to two possible actions for
breach of contract. This is a legal detriment occurred by him, and will
constitute sufficient consideration.
4. Promissory Estoppel
Doctrine of promissory estoppel
Used as a shield, not a sword
Promissory estoppel is an equitable doctrine which prevents a person
who has promised not to enforce his strict legal rights from going
back on his promise when it is inequitable to do so. Where this
doctrine applies, a promise may be enforced even if it is not
supported by consideration. In Hughes v Metropolitan Railway Co, the
landlord was unable to forfeit the lease on account of the tenant’s
failure to repair on the expiry of six months from the date of the
original notice, as it could be reasonably inferred from his conduct in
entering the negotiations that the notice period would not run while
the negotiations continued, and would only continue to run after the
negotiations ended.
Elements of promissory estoppel
While X did act in detrimental reliance on Y’s promise to <insert
promise>, X cannot use the doctrine of promissory estoppel as a
cause of action in itself. The leading English precedent for this
restriction is the case of Combe v Combe, which restricted the use of
promissory estoppel to that of a shield and not a sword.
While consideration was not furnished for Y’s promise to <insert
promise>, Y would still be estopped from going back on his promise.
The argument is premised on the doctrine of promissory estoppel.
The elements of promissory estoppel, as set out by SGCA in Abdul Jalil
v A Formation Construction, will each be discussed in turn.
While Y would be estopped from going back on his promise to <insert
promise> on the basis of promissory estoppel, this would not be a
permanent forfeiture of his strict legal rights to <insert rights>. As
stated by the SGCA in Gay Choon Ing, the doctrine has a merely
suspensory effect, with the representor being able to resume his or
her strict legal rights on reasonable notice being given to the
representee.
1. Clear and unequivocal promise
First, it must be clear that the promisor offered an
unequivocal representation to not enforce his strict legal
rights. It must also be shown that the promisor intended the
promise to be relied upon, or knew that it would be relied
upon by the promisee. The present case fulfils this element,
Therefore, X cannot create a new cause of action on Y where none
existed before. At the very most, he can prevent Y from insisting upon
his strict legal rights to <insert rights>, contingent upon the fulfilment
of the elements set out in Abdul Jalil v A Formation Construction.
Suspensory, not extinctive
In the present case, Y indeed gave reasonable notice to X by <insert
reasonable notice>. He can therefore resume his strict legal rights to
<insert rights>.
when Y promised to <insert promise>, and <conduct showing
that he intended for the promise to be relied upon>.
2. Reliance
Second, the promisee must have relied on the promise. Such
reliance is evidenced by the promisee’s change of position on
the faith of the promise, that is, by doing or omitting to do
something which he would otherwise not have done or
omitted to do. Here, X did indeed rely on the promise by
<doing/ omitting to do something> which he otherwise would
not have done.
3. Detriment
Third, there must be some sort of inequitability that results,
should the promisor be allowed to go back on his promise.
The most tangible evidence of inequitability is detrimental
reliance on the promise. The SGCA in Lam Chi Kin David v
Deutsche Bank AG applied the doctrine of promissory
estoppel, holding that the appellant had suffered detriment by
obtaining a very substantial credit line from the respondent
thereby giving business to him. Furthermore, the appellant
provided collateral which he had to transfer from his accounts
with other banks.
In the present case, X clearly suffered a detriment by
<incurring expenditure of money/time or incurring a liability>.
The fulfilment of all three elements would allow for the
application of this doctrine, thereby estopping Y from going
back on his promise to <insert promise>.
OR
4. Inequitability
Third, there must be some sort of inequitability that results,
should the promisor be allowed to go back on his promise.
While the position on the requirement of detriment in
Singapore is not entirely clear, there appears to be more
support for a broad notion of detriment not limited to the
actual incurrence of expense or liability. This was enunciated
in the High Court decision of Lam Chi Kin David v Deutsche
Bank, which provided for a broader sense of detriment
including a change in position or a deprivation of a benefit.
While the SGCA subsequently disagreed with the application
of the principles to the facts, the court agreed with the
exposition of the law.
In the present case, X <changed his position OR was deprived
of a benefit>. Should Y’s assurance be withdrawn, X would
suffer a real detriment of <insert real detriment>. It is
therefore inequitable for the promisor to be allowed to go
back on his promise.
The fulfilment of all three elements would allow for the
application of promissory estoppel, thereby estopping Y from
going back on his promise to <insert promise>.
5. Intention to create legal relations
Commercial setting – intention present
Social setting – intention absent
The parties in the present case likely intended to create legal
relations. As the parties were engaging each other in a commercial
setting, there is a presumption that there was an intention to create
legal relations. This position is supported by the SGHC in Chua Kim
Leng v Philips Securities Pte Ltd, which states: “In matters of
commerce, there is a rebuttable presumption that the parties
intended to create legal relations”, and that “absent any rebuttals the
parties must be taken to have intended to enter into a contract.”
The parties in the present case likely did not intend legal
consequences to follow from their agreement. The agreement
entered into by the parties was made in the context of a social setting
between <friends/family> who have known each other for a
considerable period of time. In such a situation, either party could not
possibly have intended for legal consequences to follow from their
agreements. Therefore, the presumption that parties did not intend
for legal relations in their agreement should hold.
In the present case, the presumption is not displaced by any express
declaration by the parties, and neither are there any cogent rebuttals
to the presumption. It would therefore be fair to say that the parties
intended to create legal relations.
Social setting but there is intention
While the contract was concluded in a social setting, there is however
still an intention to create legal relations on both sides. While the
presumption in social arrangements is indeed that parties do not
intend legal consequences to follow, it is nonetheless a rebuttable
presumption. As the SGHC puts it in De Cruz Andrea Heidi v
Guangzhou Yuzhitang Health Products, “this is not to say that oral
contracts can never be made in social settings.”
Indeed, while both parties were <friends/relatives>, the sole basis of
their relationship does not preclude a finding of a binding contract.
The fact that the agreement was made in the context of <insert
commercial nature>, shows that the arrangement was not inspired by
a mere sense of <filial piety/friendly helpfulness>. Instead, the
agreement was a serious business proposition intended to create
legal relations.
6. Certainty of terms
Contract is certain and complete
Contract contains uncertain material terms
The contract in the present case is sufficiently certain and complete,
and would be enforceable. It is indeed axiomatic that for there to be a
concluded contract, all the material terms of the contract have to be
upon (Gay Choon Ing).
In relation to certainty, <insert term> is a material term too
vague/uncertain to render the contract enforceable. In such cases,
the courts will be slow to rewrite a contract for the parties. This
position is supported by the SGHC in T2 Networks v Nasioncon, where
the court held that a settlement agreement failed because the
payment scheduled therein, which the judge regarded as vital to the
agreement, was not certain.
In relation to <insert contract>, all essential matters such as <insert
price, course of dealing, etc.>, usually found in contracts relating to
<insert category of contract>, have been agreed upon. Further, no
latent ambiguity in the material terms exists when applied to the
factual matrix at hand. Having the requisite certainty and
completeness, <insert contract> is likely to be enforceable.
In the present case, <insert term> is similarly vital to the agreement.
From the term alone, it would not be possible to ascertain <insert
contentious point, eg. Price/proportion>. Certainty surrounding <the
price/proportion/dates> is indeed vital to the agreement. These are
not merely minor terms that X would have been content for Y to work
out in their discretion. The agreement therefore cannot be legally
binding due to the lack of certainty in the terms.
Contract contains uncertain terms (but term is not vital to agreement) Agreement to negotiate in good faith
While the contract does contain uncertain terms, these term(s) are
not vital to the agreement and would not render the contract
unenforceable. The courts do not expect the drafting of all
commercial documents to be absolutely airtight. Such expectations
would inevitably strike down legitimate bargains entered into by
parties who might not be sensitized to the requirement of legal
certainty. This position is supported by the SGHC decision in Gardner
Smith v Jee Woo Trading, which mentioned that “[t]he court should
In Walford v Miles (“Walford”), it was held that parties with no prior
contractual relations have no duty to negotiate in good faith. In
Walford, it was held that a “Lock-in” agreement for parties involved
to lock themselves into negotiations is not recognised because they
are after all, stranger in an adversarial setting where both parties are
entitled to lead with self-interest. Therefore, it would be impossible
to apply “good faith” in this situation, as it is uncertain what this
means. Similarly, in the case at hand, the concept of “good faith” will
not apply as _ has no obligation to be locked into the negotiations, as
endeavour to give effect to an agreement rather than to strike it
down.”
Indeed, the present case in dealing with <insert type of agreement>
should not be overly obsessed with the uncertainty of <insert term>
which would not vitally impact the certainty of the overall contract.
The agreement can still come into existence and be enforceable even
though there are some minor terms to be worked out. The court
would therefore likely “endeavour to give effect” to the agreement.
Furthermore, the uncertainty surrounding <insert term> can be
remedied with the use of contextual interpretation which will be
further elaborated on below. The agreement is therefore still
enforceable despite the presence of uncertain terms.
Contract providing for method of ascertainment
A contract is not uncertain even though there is a term to be
determined in the future, provided that the contract itself provides
for the means for ascertainment of that term.
In Sudbrook Trading Estate v Eggleton (“Sudbrook”), the court stated
that a contract is still workable even if there are uncertain terms, so
long as the contract provides a method of ascertainment. Since the
parties in Sudbrook never insisted on a particular mechanism, the
courts can replace a failed mechanism with a workable one to achieve
the same result, which in this case is “a fair and reasonable” price by
the application of objective standards.
_ and ___ are strangers. Accordingly, it is uncertain what “good faith”
in this context means, thus voiding the contract due to its
uncertainty.
On the other hand, the “Lock-out” agreement would have been
enforceable if not for the unspecified duration, which would render it
too uncertain to be enforced. The case of Pitt v PHH Asset
Management rectifies the uncertainty of the “Lock-out” agreement
by specifying a definite duration of 14 days. Thus, the court held that
this is enforceable. Turning to the facts, a duration of ___ was also
specified in the case at hand. Therefore, it is enforceable.
7. Completeness of contract
Contract complete (non-essential terms absent)
Contract is incomplete (essential terms absent)
While the contract is silent on some issues, these were not a
requirement for substantial or essential agreement, and the contract
would still be sufficiently complete for it to be legally binding. In the
SGHC case of Norwest Holdings Pte Ltd v Newport Mining Ltd, it was
held that a contract may be regarded as having been formed even
though it has not been worked out in meticulous detail, so long as
substantial or essential agreement has been reached.
The absence of <insert matter> would make the contract too
incomplete to be regarded as legally binding. In the SGHC case of
Norwest Holdings v Newport Mining, it was held that an agreement
will not be regarded as a binding contract if essential matters, without
which the contract is too incomplete to be workable, remain to be
agreed upon.
Indeed, the issues of <insert issues> that the contract was silent on
are not essential to the agreement. The absence of terms on these
issues would therefore not vitally impact the certainty of the overall
contract. This agreement can still come into existence and be
enforceable even though there are some minor terms to be worked
out.
“Subject to contract” (not given effect to)
Despite the presence of a ‘subject to contract’ clause, the court is
likely to hold that a valid and binding contract has been concluded.
This position is supported by SGCA in the case of Norwest Holdings
Pte Ltd (in liquidation) v Newport Mining Pte Ltd, where the court
held that the better view of the phrase is that the question whether
there is a binding contract between the parties should be determined
by considering all the circumstances, not just the inclusion of the
stock phrase.
This is precisely the case here, as <insert matter> is indeed a
fundamental issue necessary for the <sale/contract> to be complete
and therefore enforceable. The silence of the contract on the issue of
<insert matter> makes the agreement unworkable or void for
incompleteness.
“Subject to contract” (given effect to)
The <insert agreement> was ‘subject to contract’, and therefore not
binding. The SGHC case of Thomson Plaza v Liquidators of Yaohan
Department Store held that agreements containing ‘subject to
contract’ clauses are presumed to not be binding. The court held this
to be so “even if the parties are in agreement as to all the terms”.
This position is further supported by the fact that essential terms such
as <essential terms> have yet to be settled. This strongly the indicates
the lack of intention of the parties to be legally bound. Thus, in the
In the present case, everything necessary to be concluded between
the parties has been concluded. The mere inclusion of the phrase
‘subject to contract’ does not unravel the entire agreement. They
merely indicate that X required more details of <insert
product/arrangement>, and not that it had to be accepted or the
agreement would be called off. In considering the totality of the
applicable circumstances, the contract is therefore still likely to be
enforceable in light of its certainty and completeness.
Curing incompleteness and uncertainty – Recourse to previous course
of dealing
When essential terms are still left to be agreed on between the
parties, previous transactions between the parties can be used to
remedy the gaps. This approach is approved in Singapore courts,
where the case of Grossner Jens v Raffles sought to remedy the fact
that crucial terms such as the scope of the services to be rendered by
Gross Jens and remuneration were not agreed by the parties through
previous court of dealings. However, due to the lack of successful
deals between them, they could not cure the incompleteness of the
contract. As such, the contract was deemed to be void due to
incompleteness.
(Can be used)
In the present case, <insert essential term> has been left unagreed on
between X and Y. To remedy this gap, the previous transactions
between the parties can be used, as there were sufficient successful
deals between them. This could cure the incompleteness of the
current contract <insert current contract>, and the contract would be
complete and thus enforceable.
present case, the prima facie meaning of the ‘subject to contract’
clause should be given effect to.
Letters of intent
Letters of intent generally do not have legal effect because they are
generally vague or equivocal. In GYC Financial Planning Pte Ltd v
Prudential Assurance Co Singapore (Pte) Ltd, it was held that the final
position on interpreting the letter of intent concerned to ascertain
whether a binding contract had been concluded depends on the facts
of the case at hand.
Similarly, <insert letter of intent> in this case will unlikely have legal
effect as it is vague.
(cannot be used)
In the present case, <insert essential term> has been left unagreed on
between X and Y. To remedy this gap, the previous transactions
between the parties can be used. However there were insufficient
successful deals between them. Due to the lack of sufficient
successful deals between the parties, the incompleteness of the
current contract <insert current contract> is unable to be cured with
the past dealings between the parties, and the contract would be still
not be complete and thus unenforceable.
The Electronic Transactions Act (ETA)
11 – Formation and validity of contracts
(1) For the avoidance of doubt, it is declared that in the context of the formation of contracts, an offer and the acceptance of an offer may
be expressed by means of electronic communications.
(2) Where an electronic communication is used in the formation of a contract, that contract shall not be denied validity or enforceability
solely on the ground that an electronic communication was used for that purpose.
12 – Effectiveness between parties
As between the originator and the addressee of an electronic communication, a declaration of intent or other statement shall not be denied
legal effect, validity or enforceability solely on the ground that it is in the form of an electronic communication.
13 – Time and place of despatch and receipt
(1) The time of despatch of an electronic communication is –
(a) The time when it leaves an information system under the control of the originator or of the party who sent it on behalf of the
originator; or
(b) If the electronic communication has not left an information system under the control of the originator or of the party who sent it
on behalf of the originator, the time when the electronic communication is received.
(2) The time of receipt of an electronic communication is the time when the electronic communication becomes capable of being
retrieved by the addressee at an electronic address designated by the addressee.
(3) The time of receipt of an electronic communication at an electronic address that has not been designated by the addressee is the
retrieved by the addressee at that address and the addressee becomes aware that the electronic communication has been sent to that
address.
(4) For the purposes of subsections (2) and (3), an electronic communication is presumed to be capable of being retrieved by the
CONTRACT FORMED
Reduced to writing
Partly-written, partly-oral contract
In light of the fulfilment of all the elements mentioned above, a
legally-binding contract is thus formed. This contract is likely reduced
to a written document in the form of <insert document>, as it
contains most of the material terms, subsequently signed off by P
and/or D.
In light of the fulfilment of all the elements mentioned above, a
legally-binding contract is therefore formed. This contract is likely
part-oral and part-written, given that some terms were negotiated
orally, and the others written.
Therefore, the Parol Evidence rule applies, as provided for in ss 93
and 94 of the Evidence Act.
The written component of the contract consists of <insert written
components>, which is further supplemented by oral components in
the form of <insert oral components>.
Therefore, the contract will not be subject to the Parol Evidence rule,
and the terms outside the written contract may be proven by parol
evidence.