Law of Contract Cheat Sheet for RES Exam Revision

For a contract to be legally binding in Singapore, four essential elements must be present:

1. Offer - A clear, definite proposal communicated to the offeree
2. Acceptance - Unqualified agreement to all terms of the offer
3. Consideration - Something of value exchanged between parties (need not be adequate, but must be sufficient)
4. Intention to create legal relations - Presumed in commercial contexts, not in domestic/social arrangements

Key rule to memorize: Consideration must move from the promisee but need not move to the promisor. Past consideration is generally not valid unless it falls under exceptions (e.g., prior request, understood payment would follow, legally enforceable if promised). For RES exam purposes, remember that gratuitous promises are not enforceable without consideration, and consideration must be sufficient (legally recognizable) but need not be adequate (equal in value).

Invitation to Treat (not an offer):

• Goods displayed in shop windows or on shelves
• Advertisements (generally)
• Auction announcements (the bid is the offer)
• Tender invitations
• Price quotations and catalogues

Actual Offers:

• Specific proposal to a person or group
• Unilateral contract offers (e.g., reward advertisements)
• Vending machines and automated transactions

Termination of offers occurs when:

• Rejection by offeree (including counter-offers)
• Revocation by offeror (must be communicated before acceptance)
• Lapse of time (specified period expires or reasonable time passes)
• Death of either party before acceptance
• Failure of precondition

Critical exam point: A counter-offer destroys the original offer - it cannot be later accepted. A mere inquiry or request for information does not constitute rejection.

General Rule: Acceptance must be communicated to the offeror to be effective.

Postal Rule Exception: Acceptance by post is effective when posted (not when received), provided:

• Post is a contemplated method of acceptance
• Letter is properly addressed and stamped
• Actually posted

Electronic communications: Effective when it enters the recipient's information system (not when read).

Key principles for RES exam:

• Acceptance must be unqualified and mirror the offer terms
• Silence cannot constitute acceptance
• Acceptance must be by authorized method (if specified)
• Revocation of offer must be communicated before acceptance
• Unilateral contracts: acceptance by full performance (no need to communicate intention)

Battle of forms: Last document sent before performance usually prevails. Remember: acceptance creates a binding contract immediately under normal circumstances.

Core principles:

• Must be sufficient but need not be adequate (courts don't assess fairness)
• Must not be past (unless exceptions apply)
• Must move from promisee (but can move to third party)
• Performing existing duties is generally not valid consideration

Past consideration exceptions (all three must apply):

1. Act done at promisor's prior request
2. Parties understood payment would be made
3. Promise would have been legally enforceable if made in advance

Existing duty exceptions where consideration IS valid:

• Duty owed to third party (not to promisor)
• Performance exceeds existing duty
• Practical benefit conferred (modern approach)

Part payment of debt: Generally not valid discharge of full debt (Pinnel's Case) unless:

• Payment at earlier date
• Payment at different location
• Payment by different means
• Third party makes payment (promissory estoppel may apply)

Minors (under 21 in Singapore):

• Contracts for necessaries are binding (food, clothing, education, essential services)
• Beneficial contracts of service are binding
• Other contracts are voidable at minor's option
• Cannot ratify until reaching majority

Mental incapacity and intoxication:

• Contract is voidable if:
  1. Person unable to understand nature of transaction, AND
  2. Other party knew of the incapacity
• Must pay reasonable price for necessaries supplied

Companies:

• Must act within constitutional powers
• Ultra vires doctrine applies (acts beyond powers are void)

Bankrupts:

• Cannot obtain credit of S$1,000 or more without disclosing bankruptcy status
• Existing contracts generally continue

For RES exam: Focus on minors and necessaries - most testable area. Remember the S$1,000 threshold for bankrupts.

Classification hierarchy:

Conditions (fundamental terms):

• Breach gives right to terminate contract + claim damages
• Goes to the root of the contract
• Examples: delivery date in time-sensitive contracts, description of goods

Warranties (minor terms):

• Breach gives right to damages only (no termination)
• Subsidiary to main purpose
• Examples: minor quality defects, ancillary services

Innominate/Intermediate terms:

• Classification depends on consequences of breach
• Serious breach = treated as condition
• Minor breach = treated as warranty

Express vs Implied terms:

• Express: Actually stated (oral or written)
• Implied by statute: Sale of Goods Act (merchantable quality, fitness for purpose)
• Implied by custom: Trade practices and previous dealings
• Implied by courts: Business efficacy test, officious bystander test

Exam tip: Courts determine classification by examining intention at contract formation, not breach consequences (except innominate terms).

Definition: False statement of existing fact (not opinion, future intention, or law) that induces contract formation.

Three types:

1. Fraudulent misrepresentation:

• Made knowingly, without belief in truth, or recklessly
• Remedies: Rescission + damages in tort (deceit)

2. Negligent misrepresentation:

• Made carelessly without reasonable grounds
• Remedies: Rescission + damages (under Misrepresentation Act)

3. Innocent misrepresentation:

• Made with reasonable belief in truth
• Remedy: Rescission (damages at court's discretion)

Bars to rescission (contract stands):

• Affirmation of contract after discovering misrepresentation
• Lapse of time (unreasonable delay)
• Impossibility of restitution (cannot restore parties to original position)
• Third party rights acquired in good faith

Critical distinction: Misrepresentation makes contract voidable (not void). Silence is generally not misrepresentation unless fiduciary relationship or half-truths exist.

Types of breach:

• Actual breach: Failure to perform at due time
• Anticipatory breach: Renunciation before performance due (innocent party can sue immediately or wait)

Remedies available:

1. Damages (primary remedy):

• Expectation loss: Put claimant in position as if contract performed
• Reliance loss: Restore pre-contract position
• Must be reasonably foreseeable (Hadley v Baxendale test)
• Duty to mitigate losses
• Remoteness: losses must not be too remote

2. Specific performance:

• Equitable remedy (discretionary)
• Granted when damages inadequate (unique goods, land)
• Not available for personal service contracts

3. Injunction:

• Restrains breach of negative obligation
• Cannot indirectly enforce personal services

4. Quantum meruit:

• Reasonable payment for work done
• Available when contract prevented from completion

Liquidated damages vs penalty: Liquidated damages (genuine pre-estimate) are enforceable; penalties are not.

1. Performance:

• Must be complete and precise (entire obligations rule)
• Exceptions: substantial performance (pay less defects), divisible contracts, prevention by other party
• Time is not of essence unless: expressly stated, nature of contract requires it, reasonable notice given

2. Agreement:

• Bilateral discharge: Both parties have obligations remaining (mutual consideration)
• Unilateral discharge: One party performed (requires fresh consideration or deed)
• Variation, waiver, or rescission by agreement

3. Frustration (contract becomes impossible/illegal):

• Not applicable if: self-induced, foreseeable, alternative method available, merely more difficult/expensive
• Effects: contract automatically terminated, losses lie where they fall (subject to Law Reform (Frustrated Contracts) Act)

4. Breach:

• Breach of condition or serious breach of innominate term
• Innocent party elects to terminate or affirm
• Anticipatory breach allows immediate termination

RES exam focus: Know when frustration does NOT apply - most testable aspect.

Memorize these distinctions:

• Offer ≠ Invitation to treat: Shop displays are invitations, not offers
• Counter-offer ≠ Inquiry: Counter-offer destroys original; inquiry doesn't
• Sufficient ≠ Adequate: Consideration must be sufficient (legally recognizable) not adequate (equal value)
• Void ≠ Voidable: Void = never existed; Voidable = exists until rescinded
• Condition ≠ Warranty: Condition breach allows termination; warranty doesn't
• Fraudulent ≠ Negligent: Fraudulent requires knowledge/recklessness; negligent requires carelessness

Key thresholds:

• Passing score: 75% (60/80 questions)
• Bankrupt credit disclosure: S$1,000+
• Age of majority: 21 years

Most tested areas: Contract formation (offer/acceptance), consideration rules, misrepresentation types, breach remedies. The Prepare app offers 111 practice questions specifically on Law of Contract across all these topics, helping you identify knowledge gaps and master these critical distinctions before exam day.