Essay On Contract Formation And Sale Of Goods Act In Singapore." (70 Characters)

Essential Elements of Contract Formation

Describe about the Commercial Law. 

A contract is regarded as something more than a mere agreement that exists between two or more people. For the formation of a contract there has to be the existence of several elements that are considered essential elements of formation of contract (Aubert & Rivard, 2016). The primary elements of a contract are offer and acceptance, legal capacity, consideration and the intention of the parties to enter into legal relation.

In the given case, it is given that Alan went to a store of liquor and demanded for Russian Vodka. The storekeeper Ben told Alan that the bottle of vodka that is in the hand of Alan fulfills the criterion of Russian vodka. In accordance to that assurance, Alan made the purchase of 3 bottles of vodka and got the receipt from Ben that made the statement that proclaimed that the products that are sold are not refundable and the seller is not responsible for the safety of the product (Calfa & Grossmann, 2015). 

• Legal Capacity: In accordance to law of the contract, not all people are eligible to enter into the contract. The parties that have the capacity to enter into a contract must be of legal age that is eighteen years and not a minor. The parties must not have a mental illness at the time of entering the contract. The prisoners and the bankrupts cannot enter into a contract. In the given case, it is evident that Alan and Ben has the legal capacity that is required for entering into a contract.
• Offer: In accordance to the laws of contract, there has to be a valid offer by one party of the contract known as the offerer. In the given case, there has been invitation to offer or treat on the part of Alan when wanted to buy Russian vodka. The offer was made by Ben after receiving the invitation to treat from Alan. In the case of Smith v Hughes (1871) LR 6 QB 597, the Court held that for determining the valid offer and acceptance there has to be the “objectivity test” of the contract.
• Acceptance: In accordance to the rules of contract, the proper acceptance has to be delivered by the acceptor to the offeror. In the given case, Alan accepted the offer made by Ben to buy three bottles of Russian Vodka at an agreed price (Crump, 2013). In the case of Harvey v Facey [1893] A.C. 552, the Court held that the different price stipulations by any seller should be considered as invitation to offer or treat.
• Consideration: It is most important element of contract. The amount to money or the services to be paid by any party for the services that are rendered by the other party is termed as consideration. In the given case, the amount paid by Alan for three bottles of Russian vodka is the consideration of the contract.
• Intention to form legal relation: In the given case, buying and selling depicts the intention of entering into legal relation (Durkheim, 2014).

Hence, from the above discussion, it can be said that in the given case there is a contract between Alan and Ben and all the elements of contract is present.

The transactions between seller and buyer where any seller agrees to transfer or sell rights in certain goods and services to any buyer in the return of consideration are subject to certain rules and regulations. The said transaction in Singapore is governed by the rules and regulations made under the Sales of Goods Act. Thus, the said Act governs all the transactions and contracts which take place in Singapore for sale of goods and services. The Sale of Goods Act in Singapore imposes many obligations on both the seller and the buyer. The buyer in particular, under the said Act, is protected from many automatic warranties against the seller under every contract of sale in Singapore. Part 1 of the Sales of Goods Act in Singapore includes many warranties which protect the buyer from fraudulent and illegal practices and conduct of the sellers (Bridge, 2012).  The section 11 of the Sales of Goods Act states when a condition can be treated as a warranty by the buyer. Thus, under the said section when a condition is to be fulfilled by a seller and he fails to do the same, it is at the discretion of the buyer to either waive the breach of said condition or to elect and consider the said breach of condition as breach of warranty. Thus, in the said case, Alan purchased the vodka from Ben on the condition that the vodka should be of Russian origin. The said condition was not fulfilled which makes Ben breached section 11 of the Sales of Goods Act and allows Alan to elect to treat the said breach as breach of warranty. Additionally, section 13 of the Sales of Goods Act talks about sale by description and states when there is a sale of goods by description, there exists an implied warranty that the goods will match to the said description. Thus, in the said case, as Ben sold the vodka bottles to Alan describing them to be of Russian origin, the said section made it an implied warranty for the vodka bottles to correspond to the said description. Thus, Ben breached section 13 of the Sales of Goods Act. Additionally, section 14 of the Sales of Goods Act states implied warranty about quality and fitness. Thus, under the said section there is an implied term and warranty about the goods sold that the goods sold are of acceptable quality. Thus, in the said case, as Ben sold illicit drinks to Alan which caused him and his friends diarrhea after consumption, thus, Ben violated section 14 of the Sales of Goods Act by selling goods which are not of acceptable quality and fitness (Schwenzer, Hachem & Kee,  2012).

Sale of Goods Act in Singapore

In National Foods Ltd v Pars Ram Brothers Ltd [2006] 4 SLR 640; [2006] SGHC 173 a Pakistani company contracted to sell spices to a Singapore incorporated company.  The said contracted stated that the Pakistani company needs to furnish documents for the authenticity of the spices and about its quality. As the spices did ot meant the set standards, the Pakistani company was sued under section 13 and 14 of the Sales of Goods Act in Singapore and ordered to compensate the Singapore company for breach of warranties under the said Act (ISMAIL, 2011). 

Thus, in the said case, Ben breached section 11, 13 and 14 of the Sales of Goods Act in Singapore.

The receipt that was given by Ben to Alan contained the message that the goods that are sold from the shop are not refundable and the seller cannot be held liable for the safety of the products that are sold. 

In the scenario that is given, the printed receipt plays an important part. There is invitation to offer by Alan where he urges to make the purchase of Russian Vodka from Ben. Thereafter, Ben made the offer to Alan which Alan accepted. The problem emerged when the vodka purchased caused food poisoning and diarrhea of the three close friends of Alan. Subsequent to that, the bottles of vodka were also found to be illicit drinks.

Here lies the importance of the receipt that was generated by Ben to Alan. The receipt shall not be regarded as the contract. The contract between Alan and Ben is implied and not expressed. The contract lies in their dealing (Appleman et al., 2015). Alan enters into the dealing for the purchase of original Russian Vodka and not for the drinks that are illicit. Hence, there is non-performance or breach of contract. There is also fraud involved on the part of Ben.

The words that were printed on the receipt meant that the goods that were sold could not be refunded. The receipt also meant that the seller that is Ben could not be held responsible for the safety of the products that were once sold from the shop. In accordance to the rules of contract, the terms that are contained in a contract should be certain and not vague. Although the receipt is not the contract but its terms are important. The terms of the receipt are vague because there is no such term mentioned in it that would deal with the case in case the goods sold by the seller turns defective (Chandler, 2015). It is an implied term in the dealings between a seller and buyer that if any goods sold by a seller turns defective, then such a seller is bound to make the refund of the money to the buyer. Moreover, the act of Ben is also illegal. It is because in accordance to the consumer laws, the buyer is always entitled to get proper goods that are of the merchandise quality. No customer is entitled to receive any faulty product or goods (Furmston et al., 2012).

Liabilities of the Seller

There was a case named ACCC v MOI International of 2013, where the MOI International was an oil company and made the claim that their oil contains 100% olive. In the researches that were conducted pointed out that the oil of the company had an amount of 7% olive and 93% canola. The Court while delivering the decision asserted a fine of $20,400 (Schwartz & Scott 2016). The said case is similar to the case of Alan and Ben. It is because Ben made the claim that the bottles sold by him to Alan are contained of original Russian Vodka. However, in original terms, those bottles contained illicit drinks and not original Russian Vodka.

The case study that is given depicts that the friends of Alan suffered from ill health and diarrhea after drinking the drinks that are delivered by Ben. The basic issue that is involved is whether Ben is liable for the suffering of the friends of Alan. The other issue that is involved in the case study is that whether there lays any option for friends of Alan to claim against Ben. 

The rule of proximate cause, foresee ability and negligence applies. The term proximate cause in law refers and means an event that is related sufficiently to any injury that is recognizable of being the cause of the said injury (Barker et al.,2012). In the case of Summers v Tice, it was held by the court that when there are two parties who acts negligently and that act of negligence causes the injury or the damage of any outside party or third party, then the burden of proof lies on those negligent parties to prove that they did not act negligently. In the case study that is provided, the proximate cause of the suffering of the friends of Alan was drinking the drinks that were illicit and supplied by Ben. Hence, Ben could be held liable for this cause (Fordham, 2013).

The term foreseeable means a concept that is used in torts to make the limitation of liability of any party from that carries the risk of harm that is foreseeable. In simpler terms it would mean that any person who is reasonable would be able to make the prediction and expectation of the ill results of such actions. Under the law of negligence, the responsibility of acting in a reasonable manner for avoiding risks that are foreseeable of any injury that is physical may extend to any person. In the contract law, the usage of foreseeable concept is done for limiting the award of damages that are either special or consequential to such parties that can be termed as the consequences that are predictable of the contract breach. In the case of Sheehan v SRA (NSW), it was held by the court that if the act of any person is foreseeable to the injury of any person then such party can be held liable in the legal terms (Stickley, 2013).

The next principle is the principle of negligence that can be made applicable in the case study that is given. The term negligence refers to the breach of the duty of taking care for which there is some kind loss either physical or monetary, is sustained to any other party (Stuhmcke & Stewart, 2014). In the cases of negligence there has to be the plaintiff has to make the proof that there is the duty on the part of the duty to take the reasonable care and the defendant made the breach of such duty, for which he suffered loss. In the case study, there is negligence on the part of Ben as he supplied illicit drinks that caused the diarrhea of the friends of Alan. Hence, the claim would be by those friends against Ben.  

Reference List

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ISMAIL, R. (2011). Food and consumer protection: A study on food legislation of selected countries. Asian Law Institute, Singapore.

Schwartz, A., & Scott, R. E. (2016). The Common Law of Contract and the Default Rule Project. Virginia Law Review, Forthcoming.

Schwenzer, I., Hachem, P., & Kee, C. (2012). Global sales and contract law. Oxford University Press.

Stickley, A. P. (2013). Australian Torts Law. LexisNexis Butterworths.       

Stuhmcke, A., & Stewart, P. (2014). Lacunae and litigants: A study of negligence cases in the high court of Australia in the first decade of the 21st century and beyond. Melbourne University Law Review, 38(1).