Introduction:
Contract law in Singapore is clearly based on the England’s common law of contract, because of this rules developed by Singapore Court closely resembled to the rules developed by English Common law. However, when there was no authority in Singapore specifically for this point, then it will be assumed that position in the first look does not seem different that was in England. After the independence in 1965, parliament of Singapore does not make any attempt to codify law of contract in Singapore. In Singapore, maximum part of the law of contract remains in the form of judge made rules.
In various situations, these rules made by judges are have been modified by particular statutes, and number of these statutes are English in origin. However, 13 commercial statutes of English have been incorporated as part of the statutes of the Republic of Singapore by section 4 of the Application of English Law Act (Cap 7A, 1993 Rev Ed). It must be noted that these statutes are listed in part II of the First Schedule of this Act. There are some other statues also which are based on the English statutes, for example the Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed). There are some other areas also in which development of statutes are based on the non-English models, for example Consumer Protection (Fair Trading) Act (Cap 52A, 2004 Rev Ed).
In contract there is an agreement entered between two or more parties, and the terms of the contract affect the right and obligations between the parties. However, these rights and obligation are enforced by the law. Whether parties to the contract are reached the agreement or whether there is meeting of minds is considered from the terma and circunstances of the contract. (SingaporeLaw.sg, 2017).
Issue:
Whether Bernard has right to sue the Alan for the purpose of getting text book with the original notes and whether there is enforceable contract between the parties?
Whether silence is considered as an acceptance between Alan and Damien, and Damien has right to sue the Alan?
Whether there is agreement between the Charlene and Alan, and Alan is bound to give textbook to the Charlene?
Rule:
Generally, contract is considered as an agreement which is created through offer and acceptance between two or more parties who is competent by nature, and exchange consideration for the purpose of creating legal obligations (Startup, n.d.).
According to Professor McKendrick, contract is a document which is legal in nature and contains legal binding agreement which is enforceable by law. In other words, the main aim of the contract is to create an agreement between the parties which is legally binding on the parties. Therefore, agreement can be of any type (Law Teacher, 2017).
Generally, contract covered number of areas such as transfer of goods and commodities, sale of properties, terms related to employment, marriage, insurance, leases, checks, agreements related to security, licenses for software, franchisee agreements, promissory notes, agreement related to shareholders, etc..
It must be noted that it is not possible to form contract without these elements which are stated below:
Offer- offer is considered as a promise and other expression of willingness by the offeror to be bound on some particular terms on the basis of acceptance which is not qualified related to these terms by the offeree. Whether any specific statement creates an offer is completely depends on the intention of the person who made the offer. In other words, offeror must make the offer with the intention to be bound. In case, person is just soliciting the offer or make request for particular information without the intention to be bound then it is considered as invitation to treat (Yihan, Woan, & Ho, 2014)
As per the objective test it is considered that statement made by person is making an offer in case such statement induce other reasonable person to believe that offeror has intention to be bound by the acceptance of the alleged offer even in case offeror has no such intention.
It must be noted that offer can be terminated at any time before its acceptance, but withdrawal of the offer must be communicated to the offeree either through offeror or through any other reliable resource. Rejection of offer is considered as a termination of offer and it also includes making of counter offer or amendment n original terms of offer. However, in case particular time is given for accepting the offer then after the lapse of reasonable time offer is considered as terminated.
Acceptance- acceptance is the statement made by offeree through which offeree accepts the offer by unconditional and unqualified assent to the terms of the contract, and this assent can be given by words and conduct. It must be noted that in some exceptional cases silence is also considered as an acceptance.
It is a general rule that acceptance made by the offeree must be communicated to the offeror, but there is an exception which states that acceptance can be given by post also and this method of communication is authorized either expressly or impliedly. This acceptance is known as postal acceptance rule, and as per this rule acceptance is given at that time when letter is posted by the offeree and no matter whether such letter is received by offeror or not.
Consideration- it must be noted that promise stated in the agreement is not enforceable by law unless such promise is supported by consideration or it is recorded in written document which is executed as deed. Consideration is considered as something which has some value as per the law, and consideration must be requested by the party who makes the promise and provided by party who receives it in exchange of promise which offeree is seeking to enforce. Therefore, it is considered as something through which promisor received some benefit or some kind of detriment to the promise. This benefit/detriment can also include any counter promise or any completed act.
In consideration idea of reciprocity plays important role which states the requirement for consideration and also states that there must be some casual relation between the consideration and the promise. Therefore, consideration cannot consider something which has already done before the promise was made between the parties. Any act performed the making of firm promise can be considered as good consideration in case it is considered as an understanding that it would become part of a binding exchange.
Intention to create legal relations- it must be noted that in case contractual intention is not present then agreement even if supported by consideration cannot be enforced. Whether parties to the contract intended to create relations which are legally binding on them and this question is determined through an objective assessment of the relevant facts.
In case, agreement is of commercial nature then court usually assumed that parties intended to create legal relations between them. However, in some cases this presumption is not applicable when parties to the contract declare the contrary intention. Generally, it is done by using the honour clauses, letters of intent, and memorandum of understanding or other similar devices. It must be noted that ultimate conclusion related to this is completely depends on the objective assessment of the language used by the parties and on the attended facts, but not on the label attached to the document.
However, in case of social or domestic relation the parties to the contract are not intended to create legal relations between them because of which there is no legal relation between the parties.
Professor Atiyah challenged various general principles of the contract law, and in his research he stated various principles as per which contract law is built remain to be general only by default. These rules are superseded by detailed ad hoc rules which lack principles. Atiyah further stated that there is no such thing like typical contract and all. He also stated the importance of classical model of contract and stated that some other types of contract are also there. Some classical models of contract are most discrete, two party, commercial, executor form of exchange of information (Law Teacher, n.d.).
Application:
In the present case, Alan is college student and decided to sell his text book named as Introduction to Business Law in Singapore, and for this purpose he posted on Facebook the offer to sell the book with original noted for $200 on 1st November 2015. He also stated in offer that interested party must pay by 5th November 2015.
In case of Bernard, he posted counter offer on Alan Facebook wall on 2nd November 2015 that he wants to purchase the book at $150 and on 3rd November Alan replied to Bernard’s that he only sells at $200.on same night Bernard decided to purchase the book for $200 and put $200.00 cash in an envelope and posted to Alan in the morning of 4 Nov 2015 and Alan received on the cash on 5th November 2015.
In this Bernard made the counter offer of $150 which actually terminates the original offer made by Alan and Alan also refuse the offer for $ 150. This can be understand through case law Harvey v Facey [1893] AC 552 in which Privy Council stated that there was no contract between the parties because Facey did not give any direct answer to the first question as to whether they would sell the bumper and lowest price stated was considered as request of information and not an offer. Therefore, there was no evidence of an intention that mail posted by Facey was an offer made by Facey.
In the present case, Bernard sends $200 to Alan by Post and after that informed it to Alan and as per the postal rule acceptance is given at that time when letter is posted by the offeree and no matter whether such letter is received by offeror or not. This can be understood through case law Adams v Lindsell (1818) 106 ER 250, and in this case Court stated that there is an agreement between the parties which came into existence when letter is posted between the parties.
However, in this acceptance is there but there is no offer made by Alan and original offer is terminated by the Bernard. Therefore, there is no agreement between the parties.
In case of Charleen, parties are not intended to create legal relations because there is domestic relation between them as charleen is Alan’s elder sister. In case law Jones v Padavatton [1969] 1 WLR 328, Court of Appeal stated that there was domestic agreement between the parties and parties did not intend to legally binding with the agreement. In this case, Alan is not capable because he is distracted by the Football game and he did not have capacity to enter into contract. Therefore, there is no agreement between the parties.
In case of Damien, Alan does not accept the offer by words or conduct and silently receives the money. As per the general rule silence does not consider the acceptance and this can be understand through case law Felthouse v Bindley [1862] EWHC CP J35, in this case Court of Common Pleas stated that silence cannot be considered as an acceptance. There is no contract between the parties.
Conclusion:
In the present case Bernard cannot enforce any contract against the Alan because there is no agreement between the parties.
Charlene cannot enforce contract against the Alan because intention to create legal relations are not there and Charlene cannot sue Alan on this basis.
Damien cannot enforce the contract against the Alan because silence cannot be considered as an acceptance.
Therefore, all three plaintiffs are not able to enforce the contract against the Alan because there is no valid contract between the parties, and Alan can sell the textbook to anyone he wish to.
Alternative Dispute Resolution methods:
Liberalization in financial industry of Singapore results in the growth of ADR sector, and Singapore also made great efforts for the purpose of establishing themselves as the dispute resolution epicentres. Alternate Dispute Resolution are considered as alternative methods which are independent, objective, and impartial in which third parties give the disputed parties solution for the purpose of concluding the agreement by bringing them together and communicating with each other (SMG, 2017).
ADR have considered as an option which provides cost and time efficiency as compared to proceedings of judicial nature initiated before state Courts and also for averting the disadvantages. ADR provides simple and faster resolution related to the disputes and does impair the dispute with the judicial proceedings. The main difference between the proceedings before the Court and ADR are stated below:
- ADR is more cost and time efficient as compared to judicial proceedings.
- Ruling of Judicial proceedings is binding on the parties but Ruling of ADR is not binding on the parties.
- Generally, Procedure in ADR is not limited as per the number and type, and Countries are free to choose their ADR methods as per the social and economic circumstances but in case of judicial proceedings it is not applicable (SingaporeLaw.sg, 2017).
There are various methods of ADR and some of these methods are stated below:
Arbitration: Arbitration is considered as process in which parties to the dispute are agree to resolve the dispute by bringing the matter to the third party which is neutral with both the parties, and that third party is known as arbitrator who will make the decision which is binding in nature on the basis of the merits of the case. In other words party must obey the decision of the arbitrator. In Singapore, law society provides low-cost arbitration services through the Law Society Arbitration Scheme (LSAS).
Meditation- this method is considered as a process in which a neutral third party known as mediator facilitates and also provides guidance to the parties of dispute for the purpose of negotiating the mutually acceptable settlement related to their dispute. However, in this method mediator did not determine which party is at fault in the dispute. Instead of that he helps the parties for finding the solution related to their issues and did not force any decision on the parties. This service is provided to the State Courts Centre for Dispute Resolution (SCCDR) and the Singapore Mediation Centre (State Courts, 2017).
References:
Adams v Lindsell (1818) 106 ER 250.
Felthouse v Bindley [1862] EWHC CP J35.
Harvey v Facey [1893] AC 552.
Jones v Padavatton [1969] 1 WLR 328.
Law Teacher, Analysing The Doctrine Of Consideration In Law. Retrieved on 30th June 2017 from: https://www.lawteacher.net/free-law-essays/contract-law/analysing-the-doctrine-of-consideration-in-law-contract-law-essay.php.
Law Teacher. Why Contracts Should Create Obligations. Retrieved on 30th June 2017 from: https://www.lawteacher.net/free-law-essays/contract-law/why-contracts-should-create-obligations-contract-law-essay.php.
SingaporeLaw.sg, (2017). Alternative Dispute Resolution in Singapore. Retrieved on 30th June 2017 from: https://www.singaporelaw.sg/sglaw/arbitration-adr/arbitration-adr-in-singapore.
SingaporeLaw.sg, (2017). The Law of Contract. Retrieved on 30th June 2017 from: https://www.singaporelaw.sg/sglaw/laws-of-singapore/commercial-law/chapter-8.
SMG, (2017). Managing Business Conflict. Retrieved on 30th June 2017 from: https://www.mediation.com.sg/.
Startup. Contract Law in Singapore. Retrieved on 30th June 2017 from: https://www.startupdecisions.com.sg/singapore/business-laws/contract-law/.
State Courts, (2017). Overview of Alternative Dispute Resolution. Retrieved on 30th June 2017 from: https://www.statecourts.gov.sg/Mediation_ADR/Pages/Overview-of-Alternative-Dispute-Resolution.aspx.
Yihan, G. Woan, P. L. & Ho, C. T. (2014). Contract Law. Retrieved on 30th June 2017 from: https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=3631&context=sol_research.
