Conclusions and Recommendations3
Possible Actions: S Troupe v Muzika Company4
What is a contract?5
Main Legal Issues5
Area of Law5
Offer and Acceptance9
Intention to create legal relations16
Terms of contract16
Possible Actions: Soon v Taxi Driver23
Area of law24
Possible Actions: Siraj/ S Troupe v The Clanned27
Area of law27
Possible Actions: Shaqil Khan v Bakar/Em n Em Recording Company29
Area of law29
Possible Action: Bakar v Shaqil33
Formation of contract33
Breach of Contract33
We act for Shaqil, Siraj, Soon and Mr. Sunny Buno, under the company of ‘S Troupe’ who seeks to know their rights and obligation under contract law. The issues to be addressed here are categorized by case and legal issues. Employment Law, Agency Law, Criminal Law, Tort Law or Copyright Law have not been considered in this legal opinion.
Having considered the legal issues involved in relation to each party involved with our clients the following findings have been reached.
S Troupe v Muzika
Soon v Taxi Driver
Shaqil v Bakar
Siraj v The Clanned
Bakar v Shaqil
Conclusions and Recommendations:For S Troupe V Musika, we found that there was an agreement made between both parties. However, when we consider both party’s side of the consideration, we found that S Troupe’s consideration was less than adequate and that Muzika had not given full consideration. In this case, both S Troupe and Muzika would be liable for the breaches and the Courts will have to determine the seriousness of the breaches for the apportionment of the refunds. However, Muzika cannot sue S Troupe for the breach as the exemption clause they were relying on was only introduced after the contract was formed. S Troupe would also only be able to claim damages from Muzika if Muzika was found to have not taken reasonable precaution to prevent the accident from happening.
For Soon v Taxi Driver, we decided to focus more on illegality than misrepresentation despite both being present in the case. We found that Soon’s situation falls under the exception of induced fraud and therefore, he is able to recover his loss.
For Siraj v The Clanned, we found that the contract Siraj entered is binding but due to the terms of the contract being harsh on him, the contract is void.
For Shaqil v Bakar, we found that both undue influence and fraudulent misrepresentation was present in the case. Bakar however, can repudiate the contract as Shaqil had breached the terms of the contract.
For Bakar v Shaqil, we found that Shaqil has breached the term of condition and Bakar can repudiate the contract and sue for damages if loss proven.
Possible Actions: S Troupe V Muzika CompanyRelevant facts:
In January 2017, Muzika sent the following SMS:
Question if S Troupe could do dance drama in early May 2017
“Will check dates. What are your rates and what mode of payment acceptable?”.
S Troupe replied with:
“$15,000 for 2 nites. Deposit $5,000 by banker’s draft to be made 1 month before date of performance. Balance by banker’s draft on the second nite of performance”.
Wah! Rates so high! Old friends – $10,000 ok? Concert hall available for “5th & 6th May” – need to do early booking”
S Troupe replied this saying that they would let Muzika know soon.
Muzika then mailed, stating that:
“Troupe must come 2 nites before performance for rehearsal – will help technicians to see your gig first before doing light ; sound rigging”
No follow up with Muzika.
On the 26th of April, Muzika received the deposit of $5,000 in banker’s draft.
S Troupe called Muzika, asking if they are alright with paying $15,000.
Muzika replied that the lower price was due to uncertainties in the global arena and ticket sales being slow.
S Troupe replied with “ok lah – $10,000 can do”.
S Troupe arrived only on the morning of performance (5th May).
On the same day (5th May), S Troupe signed the booking form containing the following terms:
That all terms set by Muzika regarding rehearsals and performances will be abided by.
That Muzika Company will not be held liable for any loss or damage to property,
Or any injury caused to any of S Troupe’s performers or members during rehearsals/course of performance
On the 2nd night of the performance (6th May), one of the lights set up by Muzika came loose and came crashing down on stage.
It damaged one of the Troupe’s musical equipment that costs $2,000.
Furthermore, Soon got minor lacerations from splinters from the crash and went into shock.
Audience demanded refund.
Muzika paid S Troupe $1,000 of the balance in cash but are retaining the $4,000 as cost of the funds.
What is a contract?
A contract is an agreement between 2 or more persons for a specific purpose, to give certain rights to parties to the agreement and to undertake to certain obligation under the agreement, with the intention to create a legally binding consensus which is enforceable by law with the intention to be legally bound.
The elements required for a contract are Offer, Acceptance, Intention to create legal relations and Consideration. In order for a contract to occur, there must be meeting of minds. Both parties must have consensus at mind. In other words, if each part has a different perspective of what the offer really is, there is no agreement and hence because of the lack of consensus there is no contract.
Is there an agreement made?
Is there a contract?
Can Muzika be held liable for Personal Injury and Property damage?
Does S Troupe have to bear the cost of the refunds?
Was there an offer made or an invitation to treat during the first correspondence when Muzika first asked S Troupe on whether they were available to do a dance drama?
Was there a supply of information when both parties discussed dates and prices?
For an agreement to be made, there must be acceptance and offer.
A person is said to make an offer when he indicates to another his willingness to enter into a contract on the terms which he sets out in the offer.
There must be a clear indication that the offeror intends to be bound by those terms if they are accepted by the offeree
A bilateral offer arises where one party promises to do something in return for a promise made by the offeree.
An offer may be oral, in writing, a mixture of oral and writing or implied by conduct.
Situations that are not offers:
Declaration of Intent
A declaration of intent is a statement expressing an intention to do something and is an offer capable of being accepted.
Supply of information
A supply of information could be a response to a query of a statement made of selling prices given in reply to a request.
Harvey v Facey
There is no offer made when defendant is only stating the lowest price in response to a query and therefore there is no contract.
Invitation to treat
An invitation to treat is an invitation to others to enter into negotiations which may lead to the making of an offer.
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd
The display of goods was an invitation to treat.
The customer made the offer when the article was put in the basket.
lhe defendants remained free to accept or reject this offer at the cash desk.
If they did accept, it took place at the cash desk in the presence of a registered pharmacist.
Therefore, there was no breach of the Act.
Carlill v Carbolic Smokeball Co. (To be considered an offer)
The terms were definitely and clearly communicated
Intention of offeror to be bound was clear ($ in the bank)
Offer accepted unilaterally when customer bought product and used it according to terms of the offer
Intention of customer was clear
Consideration was provided by the customer
Fisher v Bell
In this case, the defendant shopkeeper was prosecuted for offering flick knives for sale.
It was held that the display of goods in a shop window is not an offer for sale but merely an invitation to treat.
Termination of Offer
An offer may be terminated in one of 4 ways:
Revocation of offer
Although an offer can be revoked at any time before it is accepted, the revocation must be communicated to the offeree, meaning that the offeree must know of the revocation.
Byrne v Van Tienhoven
In this case, Person A sends a letter with an offer to sell goods to B, but later rights another letter revoking the earlier offer.
B did not know of the revocation, but immediately sends his acceptance, and received the letter of revocation too late.
The revocation was ineffective as the letter was only received after offer was accepted.
Rejection by offeree
Rejection of an offer takes place when the offeree communicates his rejection of the offer to the offeror or when the offeree makes a counter offer.
This counter offer is a new offer which modifies the original terms of the offeror’s offer. Once the counter offer is rejected by the offeror, the offeree cannot revive the original offer.
Hyde v Wrench
In this case, W offered to sell a farm to H. However, H made a counter offer. When H tried to revive the offer W made, W refused, resulting in H suing W for breach of contract. It was held that W was not in breach as no contract had been formed.
Lapse of time
A lapse of time occurs where the offer has not been accepted within the prescribed time. When there is no set time limit, an offer can lapse after a ‘reasonable’ time.
Ramsgate Victoria Hotel v Montefiore
On June 8, M had written to RVH with an offer to buy shares and paid the deposit. After some time, on Nov 23, RVH asked for balance of the share price. When m refused the shares, RVH sued for balance of money.
It was held that M was not liable to pay due to the lapse of reasonable time.
Death of Offeror/Offeree
An offer lapses when the offeror or offeree dies before acceptance.
Usually, death after acceptance does not affect the contract unless the personal services of the deceased are crucial to the contract.
Was there an offer made or an invitation to treat when Muzika first sent S Troupe an SMS on whether S Troupe can do a dance drama?
To be considered an offer, the offeror must indicate his willingness to enter into a contract on the terms set out in the offer and his intention to be legally binding by them after the acceptance.
An invitation to treat is an invitation to others to enter into negotiations which may lead to the making of an offer. In our case, Muzika Company did not set out any clear terms in their first correspondence, they also did not indicate any clear willingness to enter into a contract. In fact, Muzika had simply sent an SMS asking if they were available for the dance drama on the given dates.
With reference to the case Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd, the court had held that the display of goods was an invitation to treat and not an offer as the defendants remained free to accept or reject any offer made to them.
Similarly, Muzika’s question to S Troupe was simply a ‘display’ of available dates, implying that it was an invitation and not an intentional offer.
With reference to the case of Carlil v Carbolic, the principles of the named case were that what separates an offer from an invitation to treat was the clear definition and communication of terms as well as the intention of the offeror to be bound.
Based on the facts, the terms had not been clearly defined, and were still being negotiated by both parties. Muzika had even commented on the high rates, showing that at that point in time, Muzika had no intention to be bound.
As a result, there was no bilateral offer made and Muzika had only gave an invitation to treat.
Was there a supply of information when S Troupe and Muzika discussed dates and prices?
To be considered a supply of information rather an offer, the reply must be a response to a query or simply a statement of selling prices in reply to a request.
Applying the case of Harvey v Facey, the defendant had given Harvey the lowest price in which he would sell a product in response to his query. The court held that there was no contract as there was no offer to sell the property but was simply responding to a query.
Based on the facts in our case, there is an obvious supply of information when S troupe found the dates “2nd and 3rd May’ unsuitable and requested for ‘5th and 6th May instead’, with Muzika replying that they would check the dates.
Furthermore, Muzika had requested for rates and mode of payment, and S troupe in turn replied with information indicating the price as well as payment methods.
As both parties were only responding to each other’s queries, and had not settled on any terms, they were only supplying information to each other.
1.2 Offer and Acceptance
Was there an agreement made between the parties?
Acceptance is the unconditional consent by the offeree to all the terms of the offer.
An acceptance may be oral, in writing or indicated by conduct.
The general rules on acceptance are that
The acceptance must be absolute and unconditional
The acceptance must conform to the prescribed method
If the offeror has prescribed a particular method, it must be followed. However, if there is no indication of any particular methods of acceptance, acceptance can be in any mode deemed reasonable in the trade.
The acceptance must be communicated
Silence cannot be considered acceptance.
Felthouse v Bindley
In this case, Felthouse wrote to his nephew stating that if he does not receive a reply from his nephew, he will consider the horse sold to him at the price of 30 pounds. The nephew did not reply but sold his horse to a 3rd party 2 weeks later.
There was no contract here as the nephew’s silence cannot be taken as acceptance.
The Exceptions to the General Rules on Acceptance
Acceptance by post (The Postal Rule)
The Postal Rule states that acceptance by letter or telegram once the letter is posted, even if it arrives late or does not arrive.
Household Fire Insurance Co v Grant
In this case, Grant applied for shares in a company but never received the acceptance letter. When the company went into liquidation, Grant was instructed to pay for the shares.
It was held that as the contract to buy shares was formed the date the acceptance letter was posted, Grant is contractually bound to pay for his shares.
An exception to the postal rule is the fact that in all other types of communication including telephone, telex and fax, the Postal Rule cannot be applied, and acceptance of the offer must be actually communicated to the offeror.
Entores Ltd v Miles Far East Corporation
In this case, the plaintiff offered to sell goods to the defendant in Amsterdam and the acceptance was communicated via telex in London. When the defendant breached the contract, the plaintiff sought to establish the fact that the contract was formed in London and not Amsterdam as that was where the acceptance had been received.
It was held that as for instantaneous communications, a contract is considered formed once an acceptance is received, the contract was formed in London.
Waiver of communication
This means that if an offeror expressly or impliedly waives the need for communication, acceptance does not need to be communicated.
Was there an offer made by Muzika during the first correspondence?
Was there an acceptance of offer by S Troupe to Muzika’s offer?
Was the acceptance absolute and unconditional?
Did the acceptance conform to the prescribed method?
Was the acceptance communicated?
Was there a counteroffer?
Another invitation to treat by S Troupe?
Was there an offer made by Muzika?
Based on the facts of the case, Muzika had replied S Troupe, stating that they had a concert hall available for them on the 5th and 6th May, making them an offer of $10,000 for two nights’ performance that was clearly communicated through email. This is the first offer made by Muzika.
Was there acceptance by S Troupe?
There was no acceptance by S Troupe. S Troupe had replied Muzika saying that they “Will let you know soon”. This is not considered an acceptance as it was neither unconditional or absolute.
Was there a counteroffer?
The counter offer by Muzika was made in ‘Troupe must come 2 nites before performance for rehearsal – will help technicians to see your gig first before doing light ; sound rigging”. This counteroffer modified the original terms of the first offer, and the terms of S troupe needing to come 2 nights before the performance was added into the terms of the offer.
Was there acceptance of the counteroffer?
S Troupe sent the SMS “No Probs” in reply to Muzika’s counter offer. This acceptance was absolute and unconditional. This is because S Troupe completely accepted the modified terms and did not attempt to modify it.
As Muzika did not mention any specific mode of acceptance required from S Troupe, this acceptance was indicated through a reasonable mode of acceptance. This is because both parties have been communicating with each other through the use of both SMS and Emails, which are considered simultaneous forms of communication. As a result, an SMS would be a reasonable mode of acceptance in such a trade.
This acceptance has been communicated. Although there was no clear acknowledgement of the receiving of such an acceptance due to the fact that there was no follow up made by Muzika, the sending of consideration on the 26th of April indicates that Muzika had acknowledged the acceptance.
Another attempt of counter offer by S Troupe?
S Troupe called Muzika to ask if they were ok with paying $15,000. This was an attempt at a counteroffer as S Troupe tried to modify the original terms of the contract between it and Muzika by changing Muzika’s consideration from $10,000 to $15,000.
In response, Muzika mentioned that there were uncertainties in the global arena, and that ticket sales were slow. This implies that Muzika did not wish to accept the counter offer nor resume negotiations on the terms of the agreement. As a result, the previous agreement of $10,000 as consideration is still intact as both parties agree to that amount.
An alternative view would be that the SMS sent by Muzika was meant only for the term ” Troupe must come 2 nites before performance for rehearsal – will help technicians to see your gig first before doing light ; sound rigging”. However, this is not likely as the agreement would then be only for one term, and would make the consideration given by Muzika on the 26th of April the actual offer instead, which would still make it valid as the elements of a contract need not be followed in order as long as the agreement was mutual.
In the end, we reached the conclusion that as Muzika had not made any communication to S Troupe other than the sending of consideration, the agreement was most likely perceived by both parties to have happened when S Troupe replied Muzika with the SMS “No probs”.
There was an agreement made between both parties when S Troupe replied Muzika’s counteroffer with the SMS “No probs”.
Is the contract legally binding?
Did both parties fulfil their side of the consideration?
Consideration is some benefit or profit accruing to one party or some detriment or loss suffered or undertaken by the other.
Every agreement involves making a promise to either do something or not do something and this promise is only legally binding if it made in return for another promise or act.
As a result, the party making the promise must gain some benefit for the promise while the party receiving the promise must receive some detriment.
For a contract to be legally binding, there must be consideration provided.
An important exception to this is a deed or contract made under seal. Such contracts are very formal and are clearly and carefully worded to be legally binding. Furthermore, the parties must sign before a third-party witness who are usually lawyers.
For these contracts, no consideration is required for the contract to be legally binding.
Rules of consideration:
Consideration must be real
The consideration given must have value, regardless how small, and cannot be acts of love and affection or acts done out of a moral or social duty.
Consideration need not be accurate
This means that parties are free to decide on the terms of their contract and as long as some value is given, it does not matter whether the value is proportionate to the thing given in return.
Consideration must move from the promisee (Privity of Contract)
Privity of contract means that only a party to a contract can sue or be sued on that contract and no third party can derive any benefit or incur any liability on a contract which he is not a party to.
This means that the person to whom the promise is made must furnish the consideration. This is because if a person has not given any consideration, the promise cannot be enforced.
Price v Easton
In this case, X owed some money to Price. As a result, Price worked out a scheme where X would work for Easton and Easton would pay price. However, Easton did not pay Price although X had done the work as agreed. As a result, Price sued Easton.
Consideration must be legal
Consideration must not be past
A promise cannot be made in exchange for an act that had already taken place in the past as there would be no value in the consideration for the promise.
Did S Troupe fulfil their side of the consideration?
S Troupe’s side of the consideration was that they would come two nights before the performance on the 5th and 6th of May so that they may instruct the technicians on the lighting. However, S Troupe arrived on the morning of the performance instead of 2 nights before as stated in the agreement.
Although S Troupe performed without incident on the 5th of May, on the 6th a light came loose and came crashing down on the stage. This resulted in Soon suffering from lacerations.
In answer to Rule 1, the consideration by S Troupe was real and has value. As the contract is supported by consideration, it is legally binding. Furthermore, the exception of deed or contract made under seal does not apply here.
In answer to Rule 2, although consideration need not be accurate, it must have sufficient value as dictated by the terms of contract. In the case of Thomas v Thomas, it is held the plaintiff’s promise of paying $1 per year and the care of repairs is sufficient value in return for the defendant allowing her to live in her husband’s house for the rest of her life as agreed, despite the lack of adequacy of the consideration. In our case, S Troupe’s consideration was real and has value, however, the consideration is insufficient when S Troupe arrived on the morning of the performance instead of 2 nights before as stated in the agreement. Although S Troupe performed without incident on the 5th of May, on the 6th a light came loose and came crashing down on the stage. This resulted in Soon suffering from lacerations. Even though S Troupe has performed what is seemingly a sufficient level of consideration, having performed on the 5th and 6th of May as agreed, the delay resulted in the damage of musical equipment as well as minor lacerations by Soon. Furthermore, the audience demanded a refund of tickets, resulting in further monetary loss. The performance given by S Troupe was not on par. This is evidenced from “Soon was still shaken and it showed’, implying that there was actual reduction in quality of the performance. We believe that in order for S Troupe’s consideration to be sufficient, they would need to arrive 2 nights before the performance and to have done a better-quality performance than what was done on the 2nd night.
As a result, although S Troupe’s consideration was real and has value, it is insufficient.
In answer to Rule 3, as consideration has moved from the promisee to the promisor, and no third party derived any benefit or incur any liability on the contract between S Troupe and Muzika, Rule 3 is fulfilled.
In answer to Rule 4, the contract between S Troupe and Muzika was not illegal in any way and Rule 4 is thus fulfilled.
In answer to Rule 5, consideration must be given in return for the promise or act of the other party, anything done, given or promised for any other reason cannot be considered consideration. As a result, if one party has completed performance before the other offered consideration, it is unlikely that the earlier performance was done in return for that consideration and would be considered past. In our case, S Troupe’s consideration had been given in return for Muzika’s promise and was therefore not past. Rule 5 is thus fulfilled.
Did Muzika fulfil their side of the consideration?
In answer to Rule 1 and 2, the consideration given by Muzika was real and has value. The consideration was seemingly adequate as it was given via banker’s draft and was a deposit of $5,000 as stated in the terms of payment. One of the terms mentioned by S Troupe was that the deposit was to be made one month before the date of performance, which is the 5th and 6th of May. However, the deposit was given on the 26th of April instead. Furthermore, the consideration given on the 2nd night of the performance was inadequate as out of the $5,000 that was to be paid to S Troupe, only $1,000 was actually paid while the rest was withheld and used for refunds. Also, sufficient value of consideration in this case would be that Muzika had taken reasonable steps to ensure the safety of the S Troupe performers. As it is unclear if Muzika’s technicians had been negligent in setting up the lights, this cannot be discussed further.
In answer to Rule 3, as no third party derived any benefit or incur any liability on the contract between S Troupe and Muzika, Rule 3 is fulfilled.
In answer to Rule 4, the contract between S Troupe and Muzika was not illegal in any way and Rule 4 is thus fulfilled.
In answer to Rule 5, in our case, Muzika’s consideration had been given in return for S Troupe’s promise and was therefore not past. Rule 5 is thus fulfilled. Note that this would not be true if acceptance had only occurred when Sunny had accepted the agreement when he mentioned “ok lah – $10,000 can do”. In this situation, Sunny would only have made the promise after $5,000 had been paid which would have made the payment past.
However, as we only consider this an alternative and hypothetical view and do not agree with it, the consideration is still considered not past.
Looking at S Troupe’s side of the consideration, S Troupe has only partially fulfilled Rule 2 as the performance given and delay made their consideration less than adequate. However, the rest of the rules have been fulfilled.
Looking at Muzika’s side of the consideration, Muzika has not fulfilled Rule 2 as there was a delay in payment and full consideration was not given. However, ignoring the alternative view, all other rules have been fulfilled.
1.4 Intention to create legal relations
For a contract to be enforceable, it must show that both parties had intended the contract to be legally binding to them. The court will follow it if it was express in the contract itself.
However, if there is none, the court would have to reply on few presumptions to decide.
In a commercial and business agreement, the court presumes that both parties would want their contracts to be legally binding. This can be rebutted if the parties to the business agreement expressly indicate that the contract was to be binding “in honour” only, which would make the contract unenforceable.
In a domestic and social agreements, the court presumes that the parties do not intend for their agreement to have legal effect. This can be rebutted if the parties expressly indicate that they want to have a legally binding contract.
As there is no evidence showing that the contract was a domestic and social agreement which is not intended to have legal effect, the contract signed between S Troupe and Muzika was a commercial agreement. As a result, the court can presume that both parties intended to be bound at the time the contracts were made. Furthermore, there is no evidence that agreements made was to be expressly made to be “in honour” only. There is also no reason that both parties had any other intention than the contract to be legally binding.
1.5 Terms of contract
What are terms?
How can terms be expressed?
What is the difference between terms and representation?
How to determine terms and representation?
How are terms and representation treated in the event of breach?
What is the Parol Evidence Rule?
Terms are the rights and obligations of the parties involved in a contract. The terms can be express in words written, orally or both. They can also be implied by conduct, statute or courts.
Terms can be express or implied. Express terms are actually observable clearly through speech, conduct or words. Implied terms are not as clear but is understood.
Implied terms are needed to give business efficacy to the conduct. Courts will imply term when the term implied is obvious and parties should have it in mind when making the contract.
In the case of “The Moorcock”, the court implied through fact that when both parties agreed to allow plaintiff’s ship to berth their ship in defendant’s dock the assumption reasonably intended by both parties is the defendant would take reasonable steps to protect it from any damages.
Section 12 and Section 14 of Sale of Goods Act 1979 are examples of terms implied by statute.
In order to give business efficacy to a contract, trade or professional customs, conduct of parties, course of dealing between the parties are considered implied term implied by facts.
Representation are statements (oral/written) made before contract whereas terms are statements (oral/written) which become part of the contract.
To determine the statement made as a part of the contract, the reasonable man test is used.
The Parol Evidence Rule. Generally, the court will not admit oral evidence that adds, varies or contradicts terms of written contract. Sometimes, court will find a collateral contract based on oral statements that are added on to the contract.
Guidelines used by courts is that a statement is more likely to be a term if made at time of contract rather than at early stage.
Statements put into writings are more likely to be term. In the same way, if a statement by party who entered contract is seen as important to the offeree is also likely to be a term. If maker has special knowledge/skill, it is more likely a term. Cases such as Oscar Chess v Williams & Dick Bentley v Harold Smith (Motors) applied the guidelines.
A breach of term is equivalent to the breach of contract allowing repudiation of damages.
However, there is no remedy for breach of representation unless the representation is an untrue statement material to the contract. Untrue statement here means misrepresentation allowing rescission & or damages.
A term is considered a condition/warranty if
Parties expressly state that the term is a condition that goes to the root of the contract. So, it is necessary to specify the breach will allow innocent party to repudiate/end the contract.
If not stated, the court will not treat it as condition if breach is not serious.
A term is likely to be considered a warranty if unspecified and the breach was not serious enough.
In the event of breach of a condition/warranty
For breach of condition, innocent party can repudiate the contract and can only sue for damages if can prove loss.
For breach of warranty, the innocent party cannot repudiate the contract and can only sue for damages if can prove
Innominate terms are terms that are difficult to be categorised by terms as a condition/warranty.
The courts will determine if a term is a condition or warranty depending on the seriousness of the breach and then apply the suitable and reasonable remedies. If the innominate term is breached, the courts will have to ask a question before deciding on the remedy. ” Has the innocent party been deprived of substantially what it was intended he should get under the contract?
In the case of Hong Kong Fir Shipping v KKK, the courts held that it is difficult to classify whether it is a condition or a warranty. The defendant cannot repudiate because the breach did not substantially deprive the defendant of benefit of contract. The effect of the breach is the important part of the case.
The express terms of the contract between Sunny and Muzika were as follows :i. $10,000 for 2 nites. Deposit $5,000 by banker’s draft to be made 1 month before date of performance.ii. Balance ($5,000) by banker’s draft on the second nite of performance.iii. Performance to be on 5th and 6th May.iv. Need to do early bookingv. “Need to come 2 nights before performance for rehearsal, which will help the technicians to see your gig first before doing light & sound rigging”.
The courts are most likely to imply some term are to be implied to give business efficacy to the contract. Given that S Troupe is performing on the 5th and 6th May, the implied terms is that as a professional music band, they should be responsible for taking reasonable steps to ensure that the performance they present would be the best performance they could offer. This term should be understood by both parties. As a party is being given consideration (payment), it is understood by both parties that S Troupe should present their best performance.
The courts are likely to imply through professional customs to the contracts that the following few terms are required. The implied term for “Need to come 2 nights before performance for rehearsal” should be a professional customs. It should be reasonable to require a reasonable time to prepare the necessary works for the performance. The court will have to decide whether 2 days as a duration is a norm or exception to give a good performance. This terms should be understood by the both parties. It should be obvious that S Troupe, the performing band and Muzika, the concert organiser needs duration for rehearsing which is much needed. The implied term ” ….which will help the technicians to see your gig first before doing light & sound rigging” is that given Muzika’s technicians are responsible for setting up the lights and sounds. It is implied that the technicians are expected to secure the lights are working properly and take reasonable precaution to prevent accidents from occuring.
There was no implied meaning for the express term “need to do early booking”. It should be noted that while Muzika is likely to try to argue in court that the term implies that the booking form needs to be signed, it is unlikely to stand because in order for an implied term to be valid, the terms must be obvious can both parties understood the terms when entering to the contract.w It is not obvious what it would imply. Neither is it clear if it was in mind when forming the contract.
These following terms have been in breached :”$10,000 for 2 nites. Deposit $5,000 by banker’s draft to be made 1month before date of performance.”
“Balance ($5,000) by banker’s draft on the second nite of performance.”
S Troupe received the banker’s draft from Muzika for deposit of $5000 on 26th April. According to the agreed terms in the contract, the $5000 should be made 1 month before the performance 5th and 6th , which is on 5th April. A breach of warranty occured. The main purpose of S Troupe is to receive performance fees from Muzika for their performance. As long as the performance fees is received in full, S troupe cannot end the contract and can only sue for damages incurred during the delay receiving the $5000 deposit.
A breach of condition occurred when Muzika paid $1000 in cash and withheld the remaining $4000 as cost of refunds, this is especially so as the contract between S Troupe and Muzika relies on consideration being given to S Troupe.
The first breach occurred when Muzika paid $1000 in cash instead of by banker’s draft as stated in the terms. However, this is a breach of a term of warranty as the main objective of S Troupe was to receive payment for their performance. As a result, as long as payment has been received, S Troupe cannot treat the contract as having been ended. S Troupe can only sue for damages linking to losses arising from having received the payment in cash instead of banker’s draft.
The second breach occurred when Muzika only paid $1000 instead of the $5,000 which had been agreed on. This is a breach of condition as the contract between S Troupe and Muzika profoundly relies on S Troupe receiving payment for their performance. As a result, S Troupe can either repudiate the contract and sue for damages or reject the breach and insist on performance and claim back the remaining $4000 owed by Muzika to S Troupe. In our case, it is more appropriate to insist on performance and claim the $4,000 owed.
“Need to come 2 nights before performance for rehearsal, which will help the technicians to see your gig first before doing light & sound rigging”.
S Troupe arrived for the performance on the morning of 5th May. According to terms agreed, they were supposed to arrive 2 nights before the performance on 3rd May. This is a innominate terms as it is neither a condition or warranty but rather something in between them. In the case of Hong Kong Fir v KKK, in the event of such where it is difficult to determine whether it is a condition or warranty, the court will determine by the effects of how serious the breach was. In the case here, S Troupe only arrived on the day of the performance, the technicians did not have sufficient time to set up the lights properly and as a result the lighting fell on the stage.S Troupe not coming early is considered a breach of condition that may contribute to the fall of the lightings and caused disruption to the performance that was the root of the contract after all. Muzika can choose to repudiate the contract and sue for damages include the refunds. The courts will have to decide the apportionment of blame between Muzika and S Troupe.
“Need to come 2 nights before performance for rehearsal,…”
The implied term was breached. This is a breach of innominate term even if the performances often has the same environmental factors demands that it is reasonable to require to give a good performance. Here, the term is unclear to how this term has affected the performance. This breach of innominate term is that of a warranty as the effect of breach on the performance of the contract is minimal only. Muzika can sue S Troupe for damages arising from the breach. But is unlikely to succeed as the falling lights appear to be the more significant reason for any damages that occurred.
The case of Mihalis Angelos is similar to this case. In that case, it is held that predictability is important in law and that time is a major factor. In our case, Muzika repeatedly stating that there is a need to ” come 2 nights before performance for rehearsal, which will help the technicians to see your gig first before doing light & sound rigging” shows that time is also an important factor in our case.
Both Muzika and Sunny are liable for the breaches. The courts has to determine the seriousness of breaches for the apportionment of the refunds.
1.6 Exclusion Clause
Can Muzika be held liable for personal injury and property damage?
What are the exemption clauses in this case?
Has the exemption clause been made part of the contract itself?
What happens if the exemption clause is not part of the contract itself?
Can the exemption clause be made void under Unfair Contract Terms Act?
How to apply the Unfair Contract Terms Act?
What are the guidelines for the reasonableness test?
Can the Contra Proferentum rule be applied?
An exemption clause is a type of contractual term which is inserted into contracts for the purpose of excluding or limiting the liability of the party who breaches the contract.
There are 3 ways to challenge an exemption clause :Has the exemption clause been made part of the contract itself?
If an exemption clause is contained in a document which is signed by the innocent party, the general rule is that he is bound by all the terms in that document, including the exemption clause.
In the case of Chapelton v Barry ADC the court held that a document given to the innocent party after the contract has been agreed on and concluded cannot be relied on.The exemption clause did not form the contract between the plaintiff and defendant.
Unfair Contract terms Act (UCTA)
This act is to impose further limits on the extent to which civil liability for breach of contract, or for negligence or for breach of duty can be avoided by means of contract terms and otherwise.
Exemption clause made part of the contract can be void under this act thus cannot be relied on anymore.
Application of the Contra Proferentum Rule
This rule can be applied when the words in the exemption clause are not clear and are have more than one interpretation , the courts will choose the interpretation which is less advantage to the party relying on the exemption clause.
In the case of Photo Production Ltd v Securcior Transport LTD, the wording of the exemption clause in the contract was clear and unambiguous, there is a possibility that the breach of condition by the defendant could be exempted.
In the event of S Troupe attempting to claim damages, Muzika is likely to resort to the booking form signed by S troupe to exempt themselves from any damages suffered by S Troupe. The terms listed in the booking form is as shown “We agree that the Muzika Company will not be liable for any loss or damage to our property or any injury howsoever caused to any of our performers or members during rehearsals or in the course of our performance.”
Challenging the exemption clause
The exemption clause should be made part of the contract. In the situation here, the contract was formed the moment S Troupe said “No probs”, adding an exemption clause in the contract after this point in the present instance through getting S Troupe to sign the bookings form is not valid. The term “need to book early” is unlikely to hold up in court even if Muzika was to raise this as the court applies an objective test when considering and interpreting the meaning of these terms. What is significant in this determination is how a reasonable person would understand those terms. In this instance, this would suggest that “need to book early” would be interpreted by a reasonable person that a reply to whether they could commit to the performance was needed as soon as reasonably possible after communication of the offer was made. In the case of Chapelton v Barry UDC, the court held that a document given to the innocent party after the contract has been concluded cannot be relied on.
Application of Unfair Contract Terms Act
Section 2(1) states that any exemption clause that excludes liability for death or personal injury due to negligence is void. In the situation here, the injuries suffered by Soon (physical or emotional) cannot be exempted. If the court upheld this judgement, Muzika would be liable for any damage incurred from the injuries.
Section 2(2) states that in the case of other loss or damage, a person cannot so exclude or restrict liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness. The question here is whether Muzika had taken reasonable precaution steps to avoid the accident from happening. Depending on the judgment of the court, S Troupe is able or unable to claim for the damages suffered to their instruments.
Section 11 rules out the requirement of reasonableness for Unfair Contract Term Act. The law states that the terms shall have been fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably have been , known to or in the contemplation of the parties when the contract was made.
Second Schedule of Unfair Contract Terms Act states the guidelines for application of reasonableness test to which (d) is relevant to our case here, “where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable.” In our case here, Muzika has the duty to take reasonable precautions steps to prevent the accident from happening.
Application of Contra Proferentum Rule
The wording of the term is clear that Muzika Company can be exempted from any damages including loss and damages to the property of S Troupe. There is no ambiguity that favors S Troupe. S Troupe might not be able to claim for damages to their instrument under this rule.
Muzika cannot sue S Troupe for the breach because the exemption clause was only introduced after the contract was formed. S Troupe can only claim for damages suffered to their instrument if Muzika had not taken reasonable precautions to prevent the accident from happening.
Possible Actions : Soon V Taxi Driver
On their (S Troupe) way home after the show, the taxi driver noticed that Soon was shaken and offered to purchase some ‘Miracle Tablets XX’ for $500 to calm him down.
He agreed to bring the tablets to their room later at night
However, he did not show up. S Troupe tracked him down through his taxi company.
Soon later found out from a medical clinic that the drug were prohibited and therefore doesn’t want them
S Troupe wants their money back from the taxi driver.
The taxi company refuse to help them and the taxi driver did not show intention to return them the money
Area of Law:
Vitiating Factors (Illegality)
Is there misrepresentation?
Is the sales of prohibited drug illegal?
Nature of contract
What will happen if the sales of drug is illegal?
What are the exceptions for illegality?
Which exception is applicable for this case?
Can Soon ask for a refund?
Whether Soon’s knowledge of the drug was illegal is relevant
There are 2 ways in which a contract can be forbidden by law:
It is illegal to have such a contract in the first place making it void ‘ab initio’
Performance makes contract illegal
Contract is only illegal in the way it was performed
To determine whether a contract is void ab initio or illegal in the way it was performed, we must consider the purpose of the statute, whether it is to invalidate the contract or penalise the offending party.
A contract may be illegal by common or statutory law.
Contracts illegal at common law
The law does not allow such contracts as they offend public policy or are injurious to society
Six categories of contracts which are void at common law
To commit a crime or tortThis means that to object of the contract is to commit a crime or tort and therefore one party of the contract cannot sue another for non-payment if contract is breached.
To promote sexual immorality
This means that the purpose of the contract is related to sexual/immoral acts.
Pearce v BrooksIn this case the plaintiff contracted to hire a carriage to a prostitute for the purpose of her trade but did not receive payment. It was then held that Plaintiff cannot recover rent from the prostitute.
Prejudicial to public security
This means that contracts with enemy countries are not enforceable.
Prejudicial to administration of justice
This refers to contracts which oust the jurisdiction of the courts such as bribery and illegal negotiations.
Promote corruption in public life
This refers to the bribing of government officials such as car park attendants or customs officers.
This refers to contracts which defraud tax authorities or evade revenue provisions.
Contract illegal at statutory law
Are contracts expressly prohibited
Mahmoud v IsaphaniIn this case the statute prohibited sale of linseed oil without license, plaintiff had license and agreed to sell the oil to the defendant. Defendant had no license but told the plaintiff that he had license to buy and re-sell. The defendant later refused to accept oil and the plaintiff sued. The court held that P cannot enforce the contract because the defendant does not have a license to buy or re-sell
Consequences of illegal contracts
In an illegal contract, no action can be brought by either party as the Court will not assist in an action based in an illegal contract even if the party is innocent.
As a result, ‘losses lie where they fall’ and money/property cannot be recovered.
Actions not based on illegal contracts
Party induced by fraud
Two categories of illegal contracts are
Contracts in restraint of trade
Misuse of Drugs Act
S. 5 – (1) Except as authorised by this Act, it shall be an offence for a person, on his own behalf or on behalf of any other person, whether or not that other person is in Singapore –
To traffic in a controlled drug
To offer to traffic in a controlled drug; or
To do or offer to do any act preparatory to or for the purpose of trafficking in a controlled drug
With reference to the case Mahmoud v Ispahani, we have have we have concluded that in Soon’s case, the contract between him and the taxi driver is considered illegal by the statutory law as the sale of prohibited drugs is illegal under Section 5 of the Misuse of Drugs Act. Hence, the contract is void ‘ab initio’ due to the fact that the creation of this contract is prohibited. The subject matter, the prohibited drug, is illegal in this case. Under the legal maxim, no action can be brought by a party to an illegal contract. Hence, losses lie where they fall, meaning that money and property involved in the contract cannot be recovered, unless the exception apply.
There are 3 types of exceptions, actions not based on illegal contract, party induced by fraud and party withdraws before performance of illegal contract. For this case, Soon is more likely to be applicable for the exceptions of party induced by fraud. Under the exception of party induced by fraud, an innocent party induced by fraud can recover property. In this case, the false statement that the taxi driver would purchase the drug to help calm Soon down was made knowingly by the taxi driver to Soon. This statement is false simply by the fact that it is a prohibited drug and it is illegal for him to even purchase it, not mentioning how he would resell it to Soon. As it was a friendly gesture by the taxi driver, Soon would have thought that the ‘Miracle Tablets XX’ is legal medicine in the country without much thought. After hearing his statement, Soon decided to purchase the prohibited ‘Miracle Tablets XX’ drug. Soon was induced by fraud as he did not know the tablets were prohibited drugs and that he did not know that the Taxi driver had no means in purchasing ‘Miracle Tablets XX’ for him legally when he paid for it. Therefore, Soon is able to rely on the exceptions to recover the $500 he paid to the taxi driver. Soon’s knowledge on the legality of the drug is an important factor. If Soon had known that the ‘Miracle Tablets XX’ is an illegal drug beforehand, the exception of induced by fraud will not be applicable. If this were to happen, Soon would not be able to claim his $500 back from the taxi driver.
Representations are statements made during the negotiations. Misrepresentation is present when the representations made are false.
During the negotiation between the Taxi Driver and Soon, it was not clear whether Soon made a statement deceiving Soon that the drug was legal in the country. What was mentioned was simply “he Soon offered to get him some ‘Miracle Tablets XX’ to calm his nerves”. Therefore, it is uncertain whether the “statement” contributing to the misrepresentation is present. Soon purchased the ‘Miracle Tablets XX’ based on his assumption that it was legal.
If the Taxi driver did make the false statement and it did contribute to the decision of Soon to purchase ‘Miracle Tablets XX’, he would be liable for misrepresentation.
However, as this event concerns more on ‘Miracle Tablets XX’, which is an illegal drug, we would focus more on illegality instead of misrepresentation.
Soon’s situation falls under the exception of induced by fraud and therefore, he can recover his $500 from the taxi driver.Possible Actions : Siraj/S Troupe v The ClannedRelevant facts:
Siraj , 17 years old boy, member of S Troupe
Previously signed on to be the drummer for two years for ‘The Clanned’, a fusion jazz group.
He couldn’t handle the unreasonable demands. He had performances every night and long hours of practice in the day. He wasn’t allowed to take any leave. He became ill.
By leaving only 8 months into the contract, Siraj had breach the term of the contract that was crucial to the performance of the contract.
Area of law:
What is the contracting age?
What is the status of contract made by minors?
Are there any exceptions applicable?
Under Section 35 (1) of the Civil Law Act , the contracting age is 18 years old. The law states that the contract entered by a minor below 18 years old are not binding on the minor. Hence, the contracts is generally considered void and unenforceable.
There are 2 exceptions to the general rule that contracts made by minors are void and unenforceable are :Contract for Necessaries
Beneficial Contracts of Service
These contracts under the exceptions are valid and enforceable. The contract will be binding on the minor.
Employment Act (Cap 91)
12.– (1) Notwithstanding anything in any other written law, a person below the age of 21 years shall, subject to the provisions of this Act, be competent to enter into a contract of service.
(2) No contracts of service as an employee shall be enforceable against a person below the age of 21 years and no damages or indemnity shall be recoverable from that person in respect of the contract of service unless it is for his benefit.
Francesco v Barnum
The minor who was the apprentice of Francesco entered into a contract with him. The training hours were long and was not allowed to take any leave. The court held that the minor was not bound by the contact as the terms were harsh and burdensome. Hence, the contract was considered void and null.
Siraj was a minor, 17 years old when he entered the contract with The Clanned. Siraj is incapable of entering into a contract as he is below the age of 18. The general rule for contracts made by persons below the age of 18 years are void and unenforceable. However, as the contract entered by Siraj is a beneficial contracts of service, the contract is binding on Siraj. Furthermore, under section 12(1) and 12(2) of the Employment Act, he is competent enough to enter a contract of service. The Clanned can enforce the contract on Siraj. However, the terms of the contract were harsh and onerous on Siraj. Hence, the contract is not binding because the terms are too harsh on a minor, Siraj.
It is said that the contract Siraj entered is binding as it is considered a beneficial contract of service. However, due to the fact that the terms in the contracts being harsh and onerous on him, the contract is void. The Clanned cannot enforce the contract.
Possible Actions : Shaqil Khan v Bakar/Em n Em Recording company
Bakar is Shaqil’s old music teacher
Bakar set up the “Em n Em Recording Company” which did recordings for Shaqil
Bakar owns a set of antique stringed instruments hand made in Bali by his music teacher
Bakar also stated that he had assisted with the making of the instruments.
Shaqil asked if he could buy the stringed instruments and Bakar agreed on condition that Shaqil also buys over the rights of “No Strings Attached”
An letter was sent regarding the rights of the song ‘No strings attached’
Shaqil Khan allegedly signed contractual agreement
Contractual agreement regarding rights of the song (music and lyrics) for SGD$150,000
Shaqil Khan is to forward SGD$150,000 by way of a bankers draft in their clients favourThe sum has to be forwarded within 14 days of receiving the letter
Legal proceedings will be carried out if Shaqil does not comply
Shaqil found out that the instruments were not “handmade” and wants to return them to Bakar
Area of law:
Vitiating factor; undue influence why presume is subtle pressure?
Which category of undue influence does it fall under? Actual or presumed?
Was there subtle pressure/ pressure put on Shaqil?
Does the relationship between Bakar and Shaqil qualify as special relationship?
There are 3 types of vitiating factor: operative mistake, duress and undue influence
For operative mistake, this is not applicable in this case as this issue does not fulfill any of the criteria.
Duress is when there is actual or threatened hysical violence to one. The conditions that have to be satisfied are unlawful pressure and lack of free will. There is no evidence of either of these condition in this case because there was no physical threat initiated.
Undue influence is when one person, in his dominant position/ authority uses subtle pressure to induce a person of a weaker position to enter a contract. To satisfy that one was undue influence, there must be inducement where a person of dominant position induce another person to enter the contract.
Two major category:
Actual: Party alleging must prove that he/she entered the contract under pressure
Presumed: The pressure is presumed. However, it is only applicable in the following situations; parent-child, teacher-student, doctor-patient, lawyer-client, religious leader-disciple
Case applicable for undue influence:
Lloyds Bank v Bundy 1975 QB 326This case involved a bank and a father and son. The father and son has been using the same bank for many years and have relied on the bank for advice. The bank manager allowed the son to run an overdraft which exceeded security amount. The father was charged $11,000 pounds as well as made to give guarantee. They relied on the advice from the manager to enter the contract to draw an overdraft. Since they have been going to the same bank for a long time, the court ruled that their relationship was enough for undue influence to be present.
Since the issue does not satisfy the conditions for operative mistake or duress, Shaqil will not be able to sue Bakar on those grounds. Whereas for undue influence, there is a special relationship between Shaqil and Bakar which is teacher-student relationship. This is so as Shaqil saw Bakar as his “guru”. As for the type of influence, it would be considered presumed influence as there is a special relationship between the parties.
However, if Bakar rebuts the presumed influence then the court will look at actual influence. Shaqil was pressured to enter the contract if not his career as an artist was at stake and the recording company threatened him to enter the contract. Therefore, he had no choice. Actual influence can be satisfied as well in this case.
If established, the contract would be voidable and the Shaqil can choose to affirm or rescind the contract. If Shaqil chooses to rescind (restitutio in integrum), it is only possible if there are no bars to rescission.
The bars to rescission are: affirmation, lapse of time, subject matter of contract destroyed and restitutio not possible. None of the bars are applicable.
Was the fact that the instruments were handmade an untrue statement of fact made by Bakar to Shaqil?
Did Shaqil rely on that statement and get induced to enter into the contract because of that statement?
Did Bakar know about the truth of the instruments up to the point of making the contract with Shaqil.
Elements of Misrepresentation:
statement made must be of fact
defendant made statement to contract
plaintiff was induced to enter the contract
plaintiff suffered loss by relying on defendant’s statement.
Types of Misrepresentations:
Made knowingly or without belief in its truth
Made recklessly, carelessly whether it is true or false
Common law does not recognise it
Statement made innocently but a reasonable man would have checked the accuracy of it
False statement but maker honestly believes in its truth
The “reasonable man test” will be used when determining whether the statement made by Bakar would induce Shaqil to enter the contract.
Derry v Peek (1889) 5 T.L.R. 625
Under this case, Lord Herschell defined fraudulent misrepresentation as a statement which is made either:
knowing it to be false,
without belief in its truth, or
recklessly, careless as to whether it be true or false.
The contract becomes voidable.
“Was the fact that the instruments were handmade an untrue statement of fact made by Bakar to Shaqil?”
Bakar knew that the instruments were not handmade but yet told Shaqil that they were. Bakar had stated that the instruments were handmade by his music teacher in Bali and that he had helped his teacher hand make the instruments. However, Shaqil later found out that the instruments were not hand-made and thus Bakar made an untrue statement of fact.
Did Shaqil rely on that statement and get induced to enter into the contract because of that statement?
“Would a reasonable man of business be influenced by the statement to enter into the contract?”
Yes, Shaqil was mainly interested in the fact that the instruments were handmade in Bali. This can be seen by the fact that he wanted to return the instruments to Bakar after finding out that they were not handmade. If Shaqil had liked the instruments on it’s own, regardless of whether it was handmade or not, he would hold onto to the instruments and not asked to return the instrument.
According to the Derry v Peek case, as long as the representation was made knowingly, without belief on its truth or recklessly, careless whether it is true of false, it is fraudulent misrepresentation.
Hence, since Bakar made the statement that the instruments were handmade by his teacher and that he assisted in the process of hand making the instruments despite knowing that the instruments were indeed not handmade, he is said to have made fraudulent misrepresentation.
For fraudulent misrepresentation, Shaqil can decide to affirm, refuse to perform and raise defence of misrepresentation or rescind the contract. If Shaqil decides to rescind the contract, the Court must be able to put him back to the original position. (“Restitutio in intergrum”). This is only possible if there are no bars to rescission. He can also claim for damages for the loss he suffered such as the money he spent on the instruments
For undue influence, both category can be fulfilled. However, Shaqil is more likely to succeed in proving presumed influence. Although Bakar was not Shaqil’s teacher anymore, Shaqil still looks up to Bakar and sees him as a mentor. Therefore, the relationship is established. Bakar used his position as the owner of the song to threaten him. With that, it falls under presumed influence and Shaqil is likely to succeed in his action.
For misrepresentation, since Bakar knowingly made the statement that he had assisted in the process of hand making the instrument, it falls under fraudulent and Shaqil is likely to succeed in his action.
Possible Action: Bakar v Shaqil
5.1 Formation of contract
There was an agreement formed between Bakar and Shaqil where Shaqil is to pay Bakar $150,000 for the rights of the song “No Strings attached.” where Shaqil would also be allowed to purchase a set of antique string instruments.
The offer was made by Bakar to Shaqil and Shaqil accepted this offer.
The contract between Bakar and Shaqil was a Commercial and Business agreement and therefore the presumption is that both parties intend to be bound. There is also consideration promised when Shaqil agreed to the terms of the agreement, where he would pay Bakar $150,000 for the rights of the song and to be able to buy the instruments.
5.2 Breach of Contract
What is the type of breach?
How was the contract discharged?
What are the available remedies?
Types of breach
In an actual breach, the innocent party has the right to repudiate or affirm and sue for damages if there are losses incurred.
In an anticipatory breach, one party refuses to perform even before the time of performance.
If there is an anticipatory breach, the innocent party can either
Accept breach and sue for damages OR
Reject the breach and ask for specific performance
A breach is made when a term of the contract is not complied. By refusing to pay Bakar the $150,000 for the rights of the song as agreed, the contract has been discharged by breach. The breach was a breach of condition as the payment of consideration makes the contract legally binding and is therefore of utmost importance to the contract. As seen in the letter, the payment of $150,000 is due in 14 days time from the date the letter was sent. When Shaqil refused to make payment within the 14 days, this makes the breach a anticipatory breach. As it is a breach of condition, Bakar can repudiate the contract and have it discharged. He can only sue for damages if he can prove loss.
Remedies available depends on the type of term that has been breached. For breach of condition, innocent party can repudiate the contract and can only sue for damages if can prove loss. For breach of warranty, the innocent party cannot repudiate the contract and can only sue for damages if can prove loss.
However, the contract to the rights of “No Strings Attached” is voidable as long as one vitiating factor is present and if the contract is voidable then Shaqil would not have to pay Bakar the $150,000.
Shaqil has breached the term of condition and Bakar can repudiate the contract and sue for damages if loss proven.
Harvey v Facey 1893 AC 552 23
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd 1953 1 Q.B 401
Carlil v Carbolic Smokeball Co. 1893 1 Q.B. 256
Fisher v Bell 1961 1 QB 394
Byrne v Van Tienhoven 1810 5 CPD 344
Hyde v Wrench (1840) 3 Beav 334
Ramsgate Victoria Hotel v Montefiore 1866 LR 1 Exch 109
Felthouse v Bindley 1862 CB 869
Household Fire Insurance Co v Grant (1879) 4 Ex D 216
Entores Ltd v Miles Far East Corporation 1955 2 QB 327; 1955 2 All ER 493; 1955 3 WLR 48, CA
Thomas v Thomas 1842 2 QB 851
The Moorcock (1889) 14 PD 64
Hong Kong Fir Shipping v KKK 1962 2 QB 26
Mihalis Angelos 1970 3 AER 125
Chapelton v Barry UDC 1940 1 KB 532; 1940 1 All ER 356, CA
Photo Production Ltd v Securcior Transport LTD 1980 AC 257
Pearce v Brooks 1866
Mahmoud v Isaphani 1921 2 KB 716
Francesco v Barnum (1890)
Llyods Bank v Bundy 1975 QB 326
Derry v Peek (1889) 5 T.L.R. 625