Law of contract Lesson

What is a Contract?

What is a Contract?1. A contract is a voluntary agreement between two or more parties that is enforceable by law.a. Sets the rights and duties (obligation) of contract parties.b. General contract need not be written to be valid• Formed verbally or by conduct• No specific form or formalities2. Formation of a contract generally requires 4 legal elements :a) Offerb) Acceptancec) Consideration andd) Intention to create legal relations3. Contract must be Certainty and Completeness • 3Ps à Parties, Price, Property

Offer

st 1 Element of Contract - Offer 1. Offer is an expression of willingness (“ proposal” )2. Made by offeror to offeree à perform a promise• Example 1:Seller ( offeror ) to Buyer ( offeree )“ Would you like to buy my house at $1,000,000 ?”• Example 2Buyer( offeror ) to Seller ( offeree )“I would buy this land at $1000 psf.”3. Offer is usually made in• Writing• Verbally• By conduct .4. An Effective Offer must be communicated to offeree.• Offeror sends offer letter on Monday and it reached offeree on Wednesday• Offer is made on Wednesday .

Invitation to Treat

Invitation to Treat 5. Invitation to Treat is NOT an offer ! Example 1 - Display of goods with price tags

Invitation to Treat

Invitation to Treat Example 3 – Tender NoticeExample 2 - Auction Example 5 - Advertisement

Termination of Offer

Termination of Offer A. Withdrawal of Offer (Revocation of Offer)General Rule1. Offer can be withdrawn at any time prior to it has been accepted2. Withdrawal of offer must be communicated to offeree à Valid3. Withdrawal of offer can be made by a third party not necessary must be made by offeror.Example 1* Communication of revocation can be delivered by salesperson.Example 2* Withdrawal of offer is made by offeror’s relative to offeree.4. Offeree had knowledge of revocation (withdrawal) of offer.5. If an offer is open for a fixed period , offeror can withdraw offer without legal liability Example 3 à Routledge v GrantImportant Note: There is no obligation to keep an offer open for any particular time except through Option to Purchase.Such offer must be supported by a consideration .

Termination of Offer

Termination of Offer B. Withdrawal of Offer à Replaced or Substituted by Fresh Offer• Fresh offer must stipulate that it supersedes earlier offerExample 4A letter states previous offer is replaced by a fresh offer.C. Lapse of Time• An offer is made with a deadline for acceptance and expires after deadline.• If there is no deadline, Court presumes offer lapse after reasonable time .D. Failure of a Condition• Offer made subject to condition ; the condition is not met , offer automatically terminatesE. Death of Offeror / Offeree• Offeror/Offeree may not know the other party is dead and offer is terminatedF. Rejection and Counter Offer• Rejection must be made in writing, verbally or by conduct.• must be communicated à cannot revived offer.• Counter Offer à Rejection• Accepts an offer with new conditions à Counter Offer

Slide 7 — Termination B–F: fresh offer, lapse, condition, death, rejection/counter-offer.

Acceptance

nd 2 Element of Contract - Acceptance 1. An acceptance is an expression of approval to the offer proposed by the offeror2. Acceptance must be unconditional and unqualified• acceptance must be on the same terms as the offer• No new conditions attached3. If acceptance is conditional, this will amount to counter-offer.Note: 4. Acceptance must be communicated and conveyed to offeror1. Silence will not amount to anacceptance5. Acceptance must be made2. Once acceptance has been• Writingcommunicated to an offeror, it• Verballycannot be withdrawn !• By Conduct6. General Communication Rules of Acceptancea) Prescribe AcceptanceExample 1Seller grants Option to Purchase. To accept the offer, buyer must exercise the OTP’s acceptancecopy and handover to seller or seller’s solicitor.b) Postal Rule of Acceptance (an exception to communication rule)Example 2Offeree accepts offer and send by post to Offeror.• Acceptance is effective as soon as the letter is posted.• It does not matter whether letter reaches offeror.

A buyer emails “I accept your offer of $800,000” but adds “and I want the curtains included.” What is the legal effect?

Acceptance must be unconditional and on the same terms. Adding a condition makes it a counter-offer.

Consideration

rd 3 Element of Contract - Consideration1. Consideration (“benefits”) is:1.1 - Something legally of value givenExample 1: Something of value given in exchange for a promise.Andy places a deposit to developer in exchange for the promise of selling a coffeeshop at $10million1.2 - Promised by one party in exchange for something Promised by the other partyExample 2: A promise exchanged for another promise. (Executory Consideration)st Apple store promises to sell 1 batch of iPhone 15 to James. In return, James promises to buyabove market rate at $3000 when the phone is ready for delivery.2. In business, consideration is usually referred to money but is not restricted to money3. Consideration must be sufficient but need not be adequate• The law is not concerned about whether bargain is fair or correct• $1 consideration is good enough to enforce a contract.4. Past consideration is no consideration

Example – Past Consideration

Example – Past ConsiderationJanice and Jonathan were university classmates. Jonathan introduced Janice a condominium near a MRTstation and brought her to a show flat gallery. Janice was satisfied with the sample units and bought theproperty. After Janice signed the contract with a developer through salesperson Jonathan, in a show ofgratitude supporting old classmates, Jonathan promises to give Janice $5,000 furniture voucher forpurchasing the condominium. Jonathan’s motivation for making this promise is the past benefit. Janicecannot rely on these promises.Case Study (Past Consideration) - Tony Sim v Lim Ah Ghee (1994) 3 SLR 1 and (1995) 2 SLR 401. Tony Sim, a civil servant at material time, introduced the owner of some Goldhill properties to Lim, asalesperson who was fronting for two other salespersons Wong & Kang.Wong & Kang found a buyer who paid $93 million for the Goldhill properties, and Lim was paid$465,388 as commission. Sim sued Lim for quarter share of commission, claiming that the introductionof owner entitled him to the shareJudgment:On the facts, Sim had initially considered the help he rendered to Wong & Kang & Lim as gratuitous(unjustified). He wanted the share only after the introduction was made. The introduction was pastconsideration .

After the sale is completed, the salesperson promises to give the buyer a $5,000 furniture voucher in gratitude. She later declines. Can the buyer enforce it?

The purchase happened before the promise, so the consideration is past — past consideration is no consideration.

Intention to Create Legal Relations

th 4 Element of Contract - Intention to Create Legal Relations1. Once an offer has been accepted, there is an agreement, but not necessarily a contract .The element that converts any agreement into a contract is " intention to create legal relations ".2. Offer + Acceptance = Agreement only !Agreement + Intention + Consideration = ContractMeeting of Minds3. A meeting of the minds is an agreement between parties where each party is aware of thecommitments being made by each individual.It is a phrase in contract law used to describe the intentions of the parties forming the contract.4. Contractual intention necessary for enforceable contract.5. Business and Commercial AgreementFor any commercial transactions, State Court of Singapore will make presumption that there isalways existing such intention6. Social and Domestic Agreement à No presumption of intention to be legally boundExampleHusband promised to pay his wife $2,000 per month for duration of his overseas posting is not abinding.

Subject to Contract

Subject to Contract1. "Subject to contract" clauses are indicating that an agreement is incomplete until the terms of aformal contract have been settled2. An incomplete agreement is an unenforceable contract3. Agreements made ‘ subject to contract ’ and is not to be legally bound until the execution of aformal documentExample 1 – Purchase under construction unit from Developer• OTP subject to signing of S&PExample 2 – Tenant makes an offer• Letter of Intent (LOI) subject to signing of Tenancy Agreement

Terms

TermsExpress Implied Conditions1. Important Terms of Contract 1. Statute1. Written 2. Breach entitles innocentparty to treat contract 2. Court2. Verbal repudiated3. Sue for damages 3. Fact3. Mixture(byVerbal &conduct of WarrantiesWrittena person)1. Less important Terms of Contract2. Breach entitles innocent party to claim fordamages

Status of a contract

Status of a contractA contract is made when all the elements are presentContract = Offer + Acceptance + Intention + Consideration.Whether that contract is enforceable depends on its status(whether the courts will give effect to it / parties can sue on it)1. Valid Contract• An agreement that satisfies all the requirements at law.To be a Valid contract , the following are relevant:i. Parties MUST have capacity andii. NO other vitiating factors must be presentIf condition (i) and (ii) are satisfied, the contract is enforceable.à Courts will give effect to the contract / parties can sue on it.OfferCapacity NoAcceptanceEnforceable of VitiatingConsiderationParties FactorsIntention

Status of a contract

Status of a contract2. Void Contract• The contract is treated it never existed at law because of a serious flawExample 1Contract entered into by a foreign person for purchase a restricted property without government’sapproval. Refer to the Residential Property Act.3. Voidable Contract• It is treated as a valid contract at law and may be either affirmed or rejected at the option of onecontract party.Example 2Purchaser signing an Option To Purchase contract, he/she can void by not exercising the option.4. Unenforceable contract • A valid and legally binding contract that cannot be enforced because certain formalities may nothave been complied.Example 310 years ago, Ben borrowed money from Larry and both signed IOU (contract). Larry cannot recoverdebt from Ben after 6 years from when the debt is overdue because of the Limitation Act. Thecontract is unenforceable unless Ben makes a new promise to pay or actually pays part of the debt.

Slide 15 — Void, voidable, unenforceable.

A foreigner signs an OTP for a landed property without the required approval. What is the status of that contract?

Acquiring restricted property without approval is null and void; the contract is treated as never existing.

Terminology of “Ending” a Contract

Terminology of “Ending” a ContractRevocation• This term is used in the context of offer and acceptance.• To revoke an offer or an acceptance means to withdraw the offer or the acceptance.Rescission• This refers to the act of ending a contract such that it is ab initio (void from the start).• The contract is treated as if it never existed.• This term is confined in usage to cases of fraud, mistake or misrepresentation.Repudiation• This refers to the expression, by words or conduct, of a party’s intention to not perform hisobligations under a promise.• The innocent party can either accept the repudiatory breach, in which case the contract is discharged,or affirm the contract in which case the contract remains on foot.Renunciation• This refers to a voluntary act by a party to give up his/her rights and obligations under a contract

Vitiating (invalidate or to make ineffective) Factors

Vitiating (invalidate or to make ineffective) Factors 1. Vitiating Factors are facts or circumstances which negate the contract2. If vitiating factors are present, contract is either Void or VoidableStatus of Contract Vitiating FactorsIllegality VoidIncapacity Minor Unilateral Mistake All Mistakes except( void/voidable ) Unilateral Mistake Vitiating Factors Reminder Notes:Duress 1. A void contract has nolegal effect in law andUndue Influences treated not existencefrom the beginning Voidable2. A voidable contract is a Misrepresentationvalid contract but could be made void by one orIncapacityboth partiesDrunkard + Mentally Incapable

Illegality

IllegalityContracts Prohibited by Law1. Contracts illegal at common law2. Contracts rendered illegal by statute3. Contracts involved in any of the following is illegal• To commit a crime or tort• To promote sexual immorality• Promote corruption in public life• Evade revenueExample 1Unlicensed Estate Agent signed a commission contract with a clientExample 2Foreigners signed an OTP for purchase of landed property without LDAU approval.Example 3HDB OTP signed by foreigners who are not SPRs to buy HDB resale flats.Example 4Property transactions involving cash back.

Mistake

Mistake1. A mistake is an erroneous belief in contract2. Enter contract on an assumption which later discover is falseMistake Common Mistake Mutual Mistake Unilateral Mistake Non-Est Factum A written contract is Parties are in agreement Parties are not really Only one partygenuinely not in but make same false in agreement right has contracted onaccordance with a assumption in forming a from the start, as the basis of a falseparties’ intentions contract, so their they make different assumption.contract is based on a assumptions insituation which is false. forming the contract.

Mistake – Non Est Factum

Mistake – Non Est Factum1. It is applied to written and sign contract.2. A contract that was signed was fundamentally different from the document that contract partybelieved it to be.Or3. Signature on the contract was signed by mistake without knowledge of its meaning(does not apply to failure to read a contract before signing it)4. To claim Non Est Factum, the contract party must show• Not negligent• Document must significantly be different from one intended to be signed

Mistake

Mistake Example 1 – Common MistakeJohn and Harry agreed for the sale and purchase of a New Zealand property in Singapore. Both did notknow that property completely destroy by earthquake at the time the contract was made. This contractwill be void.Example 2 – Mutual MistakeSharon owns a landed property and a condominium in Sentosa. Serene was interested to buy 1 of theproperty. Sharon offered the condominium property at $10 million to Serene and Serene accepted theoffer with the impression of buying a landed property in Sentosa. Such contract will be void.Example 3 – Unilateral MistakeChwee Kin Keong vs. Digilandmall. HP printers offered by Digilandmall at $3854 but made an error onthe price at $66. Chwee Kin Keong placed large orders and Digilandmall refused to sell. Court rule infavour of Digilandmall.Example 4 – Non Est FactumIlliterate old lady can claim back title to property she mistakenly conveyed to her son who misled her.Example 5 – Non Est Factum – Case Lloyds Bank v Waterhouse (1990)A father who could not read or write signed an agreement as guarantor for his son, thinking that it wasfor the purchase of a farm. In fact, it was also an agreement to be responsible for all of the son’sprevious debts. It was established that the father would not have signed the agreement if he hadknown the true nature of it, and he had taken steps to ask the bank for information. The plea of nonest factum was upheld by the Court of Appeal on this occasion.

Duress

Duressn Actual or threatened physical violence to oneself or family membersn Unlawful pressure + lack of free will = duressn Physical duress – threats of physical violence e.g. threat to life or limbsn Economic duress – use of unlawful economic pressure to compel a party to a contract to agree todemands which they would not have otherwise.Undue Influencesn involves one person taking advantage of a position of power over another personn unable to freely exercise free willn Inducement (subtle pressure)Note:n Not wrong to influence someone into contractn Only wrong when influence becomes excessive with unfair pressure on party to enter into contract1) Actual Undue Influencesn Victim must show that the pressure put on him by the wrong doer negated his free will and inducedhim into signing the contract.2) Presumed Undue Influences• Lawyer and client n Parent and child• Religious Leader and disciplen Teacher and studentn Doctor and patient

Statements = Terms of Contract ?

Statements = Terms of Contract ?StatementsNegotiation Terms Representations1. A statement made during contractual negotiationsand incorporated in contract is known as TermsNot Part of Contract 2. Unlikely everything spoken or written treated asContractterms, some may be Representations3. A statement made during contractual negotiations and induce another party to enter into a contractà Representations

Terms vs Representations

Terms vs RepresentationsCase Study: Chan Chor Tng and others v HUDC [1980] SGHC 27 This case was about 17 owners suing HUDC which build AmbervilleNote: HUDC was owned by Housing & Development Board and the Urban Redevelopment AuthorityPlaintiffs were attracted by statement in the brochure “development offers residents a panoramic viewof the sea and the neighbouring islands”Defendant built Block 4 consisted a 13 storey tower instead Townhousewhich blocked plaintiffs’ units at Block 2Outcome1. Sale brochure stated “ panoramic view of the sea ”• it was not an implied term 2. But a representation à unblock sea view• defendant continue to build a block.3. There was no breach of contract (terms)to buyers but an innocentmisrepresentation existed.

Misrepresentation

MisrepresentationSince Representation is not part of contract, can a Contract Party liable for any statement made ?Statement Representation No Liability ?Pre-Contract StatementsPuff Representations Terms An exaggerated True False ContractsstatementNo Legal No Legal Case MisrepresentationConsequenceLaw Suit

Misrepresentation

MisrepresentationElements of Misrepresentation are:MisrepresentationRepresentor to InducementRepresentee FalseStatement Relianceof FactElement 1 – Statement made by Representor to Representee 1. A misrepresentation is a false statement of a material fact2. Made by Representor which affects Representee's decision in agreeing to a contract3. Representor make a pre-contract statement to Representee which subsequently found untrue.4. Statement must be made by one contract party to victim to enter the contractà A representation made by a third party is immaterial .

Misrepresentation

MisrepresentationElement 2 – False Statement of Fact (Present or Past Existing Fact)1. False Statement of Fact à Not a Statement of Opinion (Statement of Belief)Example 1“You will love this house” is a ___________________Example 2“This is the best bungalow in Singapore” is a ___________________Example 3Fred is a farmer trying to sell his farm to George who wants it for rearing sheep. Fred tells Georgethat in his opinion, the farm will be able to support about 2000 sheep. George knows that Fred'sfarm has never been used to rear sheep. If the statement turns out to be false, George cannot sueFred because the statement is only one of opinion.2. Expert’s Opinion is not exemptedExample 4Real Estate Salesperson gives his opinion on possible tenure of a unknown propertyHow do you tell an opinion or fact ?Example 5A seller saying that his property is worth $1,500,000 is ___________________Example 6A seller saying that he had paid $1,500,000 for his property is ___________________

Slide 27 — False statement of fact vs opinion.

Element 2 – False Statement of Fact (Present or Past Existing Fact)

Element 2 – False Statement of Fact (Present or Past Existing Fact)Was it a misrepresentation ?

Misrepresentation

MisrepresentationElement 3 – Inducement• The statement is material (significantly important) and induce the victim to enter contractElement 4 – Reliance• The victim must show that he relied on the misstatement and was induced into the contract by it.Example 7A salesperson made a statement to a buyer that he should buy this Grangeford Apartment unitbecause it was formerly owned by Jackie Chan. In actual fact, Jackie Chan did not own this unit.Eventually, buyer bought the property for the reason the property was $500,000 below market price.Buyer cannot claim misrepresentation because he was not induced by that statement.

Slide 29 — Element 3 inducement; element 4 reliance.

An agent falsely says a unit was owned by Jackie Chan, but the buyer admits he bought it only because the price was 20% below market. Can he claim misrepresentation?

Inducement fails — the statement must materially induce the contract; here the price did.

Types of Misrepresentation

3 Types of MisrepresentationMisrepresentationFraudulent Negligence InnocentErrorLack ofwithout DishonestyCarefault1. Knowingly (statement is false) 1. Person makes false statement 1. No intention to liedue to own carelessness2. Knowingly without belief in 2. A good reason toits truth (reckless disregards) 2. Without taking reasonable belief that thecare to check statement is true3. Recklessly careless whether itbe true or false.

Remedies for Misrepresentation

Remedies for MisrepresentationFraudulent Misrepresentation Negligence Misrepresentation Innocent Misrepresentation1. Rescission and 1. Rescission and 1. Rescission and2. Damages 2. Misrepresentation Act 2. Misrepresentation ActRescind the contract and Rescind the contract andclaim damages awarded claim damages awardedfor negligent for innocentmisrepresentation misrepresentationRefer to s 2(1) Misrepresentation Act s 2(2) Misrepresentation ActPanatron Pte Ltd v Lee CheowLee [2001] SGCA 49Notes:Please refer to lesson slides appendix for more Case Studies and Examples of Misrepresentation

Capacity to Hold Property (Recap From Lesson 3 & 4)

Capacity to Hold Property (Recap From Lesson 3 & 4) 1. Individual• Age of Majority is 21 years old• Civil Law Act à 18 years old allow to sign tenancy agreement (not more than 3 years duration)2. Business Entity: Sole Proprietor, Partnership, Private Limited Companies etc3. Society, Clubs or Association with more than 10 personsIncapacity1. Minor is defined less than 18 years old à Minor entering any Real Estate Contract is void2. Mentally ill ( voidable )3. Drunk ( voidable )

Slide 32 — Capacity to hold property (recap).

Remedies

RemediesEquity Common Law RepudiationSpecific Performance(Termination)InjunctionDamagesRescission Restitution Liquidated Unliquidated

Vitiating Factors vs Discharge of Contracts

Vitiating Factors vs Discharge of ContractsRemediesVitiating Void /1. DamagesFactors Voidable2. Injunction3. Specific Performance4. Restitution MisrepresentationMistakeIllegalityDuressUndue InfluencesIncapacity

Vitiating Factors vs Discharge of Contracts

Vitiating Factors vs Discharge of ContractsRemedies1. DamagesTermination Discharge 2. Rescission3. Restitution4. Rectification ** PerformanceFrustration – Act of God or Force Majeure ClauseBreachAgreement

Slide 35 — Vitiating v discharge: termination remedies.

A. Remedies - Damages

A. Remedies - Damages1. Monetary compensation is awarded to injured party• Breach of Contract2. Objective of awarding damages was• Compensate for the damage suffered3. Any loss claimed must be proven4. Injured party cannot claim more than the actual loss sustainedTypes of Damages1. Liquidated damages• Damages that have been pre-agreed to by parties2. Unliquidated damages • Damages that have not been pre-agreed to by parties• Determine by court.

B. Remedies – Specific Performance

B. Remedies – Specific Performance1. Court Order requiring a contract party to perform duty under a contract2. Usually in cases where monetary compensation is inappropriateCase Study 1 - Coastland Properties Pte Ltd v Lin Geok ChooCoastland Properties Pte Ltd (the ‘seller’) were the owners of an apartment (the ‘property’) which theycontracted to sell to Ms Lin Geok Choo (the ‘buyer’) for S$650,000 on terms set out in an optionagreement. The property was then mortgaged to OCBC Bank (‘the bank’).The seller failed to complete the sale and the buyer sued for specific performance. The seller acceptedthat they were in breach of contract and were agreeable to paying damages to be assessed butresisted the claim for specific performanceThe Decision Of The CourtThe Court in delivering its judgment declined to grant an order for specific performance as it was notsatisfied that such a grant would be right and fair to all the parties concerned, including the bank.In this case, the selling price of the property was below the redemption amount owing to the bank.Completion could not take place unless someone agreed to pay the bank the difference. From theevidence before the Court, the seller was unable to pay the difference and the buyer was not preparedto do so.

Slide 37 — B. Specific performance; Coastland case.

B. Remedies – Specific Performance

B. Remedies – Specific PerformanceCase Study 2 - Ku Yu Sang v Tay Joo Sing (1993) 3 SLR 938 Tay & his brother were joint owners of B1-124 Lucky Plaza. Tay warranted that he had the authority ofhis brother to sell the unit when this was not the case. (breach of warranty of authority à refer tolater lesson on Law of Agency)There was a contract concluded to sell the unit to Ku for $470,000. The High Court ordered Tay totransfer his half share (Specific Performance) to Ku for $235,000Court of Appeal reversed the High Court’s decision and ordered that damages be paid to the purchaserinstead. It refused to order specific performance as it noted practical difficulties Ku would face as jointowner with Tay’s brother who owned the other half share.C. Remedies – Injunction1. Court Order compel contract party to stop specific act• failed to honour his promises not to do something in the contract2. To abide by a negative term in a contract.ExampleFood stall owner breached an agreement with coffeeshop owner not to sell food with drinks.Coffeeshop applied injunction court order not to sell drinks

D. Remedies – Rescission

D. Remedies – Rescission1. In contract law, rescission has been defined as the unmaking of a contract between parties2. When a contract is voidable due to a vitiating factor for e.g. misrepresentation,The innocent party is given the choice i. to rescind (end) the contract and claim damages for lossii. affirm (carry on) with the contractE. Remedies – RestitutionThe law of restitution is a legal doctrine that deals with• the restoration of something, typically money or property, to its rightful owner or• to provide compensation for unjust enrichment.It is based on the principle of restoring the parties to their pre-contractual statusF. Remedies – RectificationRectification is a remedy whereby a court orders a change and correct a mistake in a written documentto reflect what it ought to have said in the first place.

Slide 39 — D. rescission; E. restitution; F. rectification.

Real Estate Contract

Real Estate ContractS6(d) of Civil Law ActAny contract for the sale or other disposition of immovable property or any interest in such property– must be evidenced in writingS87 of Land Title ActLease term is expressly exceeding 7 years must be registeredConveyancing & Law of Property ActContracts for sale of land and leases of 7 years and more must be made by deed.Examples of Real Estate Contracts:a) Option to Purchase (OTP)b) Sales & Purchase Agreement (S&P)c) Lease / Tenancy Agreement (TA)d) Collective Sales Agreemente) Prescribe Estate Agency Agreements à CEA

Option to Purchase

Option to Purchase1. Grant by Property Owner à Purchaser2. Irrevocable rights granted by property owners3. Option Fee = maximum $1000 à HDB resale flat= 1% (usually) à Private Residential, Commercial or Industrial Properties4. Accepting the OTP, purchaser exercised the OTP by signing at acceptance portion and paysOption Exercise Fees = maximum $4000 à HDB resale flat= 4% (Private Residential) or 9% (Commercial or Industrial Properties)5. Option Period = 14 days (usually) à All resale properties except= 21 days HDB resale flats & Uncompleted Units from Developers6. Purchaser has the option not to continue7. Conditional Contract (Purchaser)8. If the option expires without being exercised, the seller is entitled to forfeit the option money andsell the property to another buyer.9. Terms and Conditions à Law Society’s Conditions of Sales, 2020

A buyer pays an option fee but never exercises the OTP before it expires. What happens to the option money?

If the option expires unexercised, the seller is entitled to forfeit the option money and resell.

OPTION TO PURCHASE

OPTION TO PURCHASE1. To exercise this Option, the Purchaser shall sign at the portion of this Option marked “ACCEPTANCE COPY”, and deliver thisOption duly signed to the Vendor’s solicitors, at, Singapore_ ,(Attention: ), and make payment of Singapore Dollars($ ), which together with the Option Money shall constitute the “Deposit” for thepurchase.□ *The said payment of $_ shall be in favour of the “Singapore Academy of Law” by**cheque/telegraphic transfer to [ Singapore Academy of Law’s designated account] excluding bankcharges and deductions. The Singapore Academy of Law shall hold the said payment as stakeholder pendingcompletion in accordance with the Singapore Academy of Law (Conveyancing Money) Rules 2011 andinstructions referred to therein.□ *The said payment of $_ shall be in favour of [ (name of) Vendor’s solicitors’ law practice - CVY ] by**cheque/telegraphic transfer to [ bank name & account no: ] excluding bank charges and deductions, to beheld by the Vendor’s solicitors as stakeholders pending completion.* Delete if not applicable. If both not applicable i.e. money to be paid to the Vendor, to delete both.** Delete option that is not applicable.Compliance with statutory rules, law and the Law Society of Singapore’s Conditions of Sale 2020.2. This sale and purchase is subject to the Law Society of Singapore’s Conditions of Sale 2020 (the “Conditions”) in so far as theConditions are not contrary to or in conflict with the following:(a) Conveyancing and Law of Property (Conveyancing) Rules 2011 as promulgated under the Conveyancing and Law ofProperty Act (Cap. 61) (“Conveyancing Rules”); and(b) Singapore Academy of Law (Conveyancing Money) Rules 2011 as promulgated under the Singapore Academy of Law Act(Cap. 294A) (“SAL (Conveyancing Money) Rules”) (if applicable).3. Where the terms and conditions of this Agreement are in conflict with the Conditions, the former shall prevail. Where the termsand conditions of this Agreement are in conflict with the Conveyancing Rules and/or the SAL (Conveyancing Money) Rules, theConveyancing Rules and the SAL (Conveyancing Money) Rules shall prevail.

Sales & Purchase Agreement

Sales & Purchase Agreement1. A legal binding contract2. Consideration = Deposit3. Irrevocable rights and obligation for seller and purchaser4. Breach of Contract à Legal Remedies5. Commonly used on purchasing under constructions properties from license developers(Discussed in later lesson). Standardize format à Prescribe Contract set by authorityExamplea) Condominiumb) Executive Condominium6. Terms and Conditions à Law Society’s Conditions of Sales, 2020

SALE & PURCHASE AGREEMENT

SALE & PURCHASE AGREEMENT1. The Purchaser having paid the sum of Singapore Dollars($ ) (the “Deposit”) to:□ *the Singapore Academy of Law by **cheque/telegraphic transfer to [ Singapore Academy of Law’s designated account:] excluding bank charges and deductions,such Deposit to be held by the Singapore Academy of Law as stakeholders pending completion herein inaccordance with the Singapore Academy of Law (Conveyancing Money) Rules 2011 and instructions referred to therein,the Vendor agrees to sell to the Purchaser the Property at the Sale Price subject to the terms and conditionshereinafter stated.□ * [(name of) Vendor’s solicitors law practice – CVY ] by **cheque /telegraphic transfer to the [ bank name & accountno ] excluding bank charges and deductions, such Deposit to be held by the Vendor’s solicitors as stakeholders pendingcompletion herein, the Vendor agrees to sell to the Purchaser the Property at the Sale Price subject to the terms andconditions hereinafter stated.□ *the Vendor, the Vendor agrees to sell to the Purchaser the Property at the Sale Price subject to the terms and conditionshereinafter stated.* Delete if not applicable.** Delete option that is not applicable.Compliance with statutory rules, law and the Law Society of Singapore’s Conditions of Sale 2020.2. This sale and purchase is subject to the Law Society of Singapore’s Conditions of Sale 2020 (the “Conditions”) in so far as theConditions are not contrary to or in conflict with the following:(a) Conveyancing and Law of Property (Conveyancing) Rules 2011 as promulgated under the Conveyancing and Law ofProperty Act (Cap. 61) (“Conveyancing Rules”); and(b) Singapore Academy of Law (Conveyancing Money) Rules 2011 as promulgated under the Singapore Academy of Law Act(Cap. 294A) (“SAL (Conveyancing Money) Rules”) (if applicable).3. Where the terms and conditions of this Agreement are in conflict with the Conditions, the former shall prevail. Where the termsand conditions of this Agreement are in conflict with the Conveyancing Rules and/or the SAL (Conveyancing Money) Rules, theConveyancing Rules and the SAL (Conveyancing Money) Rules shall prevail.

Law Society’s Condition of Sales, 2020

Law Society’s Condition of Sales, 20201. A set of terms & conditions crafted to facilitate the sale & purchase of real estate.2. Rights & Obligations of the seller & purchaser3. Not compulsory but most agreements – HDB & JTC flats and Housing Developers propertieshave reference to them4. There are 17 conditionsConditions of Sales, 2020Condition 1 – Definitions and InterpretationCondition 2 – Payment to Conveyance AccountCondition 3 – Documents of Title• Purchaser has rights to inspect the title deed• Shown the document not later than one (1) month before the Scheduled Completion DateCondition 4 – Dishonoured Payment• Vendor has rights:i. To treat contract repudiated by Purchaser and rescind it ORii. To affirm the contract in accordance with the terms and condition

Slide 45 — Conditions of Sale 2020; Conditions 1–4.

Conditions of Sales, 2020

Conditions of Sales, 2020Condition 5 – State and Condition of Property to be Delivered5.1 Vendor must deliver the Property in the same state and condition as it was at the date of theoption or the date of the contract5.2 A sale with vacant possession, Vendor must remove all movable property upon completionCondition 6 – Outgoings, Rents and Profits until Completion6.1 Vendor entitled for rent, profits, expenses and levies* before completion date6.2 Purchaser entitled for rent, profits, expenses and levies* after completion date*MCST fees, repair, improvement, upgrading etc.Where the Purchaser fails to complete, the Vendor may choosei. Late completion interest under Condition 9.1 ORii. Retain rents and other profits while accounting for all outgoings, expenses and levies up toand including the Completion Date.Condition 7 – Tax7.1 Property Tax7.2 GST7.3 Withholding Tax7.4 Seller’s Stamp Duty7.5 Buyer’s Stamp Duty

Conditions of Sales, 2020

Conditions of Sales, 2020Condition 8 – State of Property as to Repair, etcSubject to Conditions 5 and 10, the Purchaser is deemed to have notice of the actual state andcondition of the Property as regards access, repair, light, air, drainage and in all other respects.Condition 9 – Late Completion Interest9.1 Purchaser Delays and Pays InterestPurchaser must pay interest (as liquidated damages) commencing on the day following the ScheduledCompletion Date, up to and including the Completion Date of the sale. Interest will be calculated onthe purchase price (less any deposit and any sum paid to account) at 8% per annum9.2 Vendor Delays and Pays InterestVendor must pay interest (as liquidated damages) commencing on the day following the ScheduledCompletion Date up to and including the Completion Date. Interest will be calculated on the purchaseprice at 8% per annum .9.3 If the Vendor has delivered vacant possession of the Property to the Purchaser before theCompletion Date, and if no rent is payable by the Purchaser to the Vendor, then the interest payable tothe Purchaser will be reduced by a sum equivalent to a notional rent calculated on the annual value ofthe Property as assessed by the Inland Revenue Authority of Singapore under the Property Tax Act (Cap254).

Conditions of Sales, 2020

Conditions of Sales, 2020Condition 10 – Vendor’s Representation and Warranties10.1 Vendor represents & warrants to the Purchaser à No unauthorised additions or alterations tothe Property.10.2 Vendor represents and warrants to the Purchaser that if the Property had been the subject ofany transaction at an undervalue (including a gift):a) 3 years (or such longer period as the relevant time, as the case may be, referred to in section226 or 363 of the Insolvency, Restructuring and Dissolution Act 2018) has passed since thedate of such transaction, unless paragraph (b) below shall apply; orb) 5 years has passed since the date of such transaction, where any of the events as set out insection 525 or 526 of the Insolvency, Restructuring and Dissolution Act 2018 shall apply.Condition 11 – Misdescription of Property11.1. The Vendor believes (and the Purchaser accepts) that the property is correctly described as toquantity and otherwise.11.2. The Property is sold subject to:(a) all quit and other rents and outgoings; and(b) all incidents of tenure, rights of way, and other rights and easements affecting theproperty.11.3. If any error, misstatement or omission which is not material or does not considerably affect thevalue of the Property is discovered in the Contract, neither party will be entitled to annul the sale orclaim any compensation .

Conditions of Sales, 2020

Conditions of Sales, 2020Condition 12 – Demands of Local or Statutory AuthoritiesCondition 13 – Passing of RiskRisk remains with the Vendor and shall pass to the Purchaser upon Completion or upon the Purchasertaking possession of the Property whichever is earlier.Condition 14 – ConveyanceCondition 15 - Notice to Complete (main points only)15.2 A Notice to Complete means a notice in writing requiring Completion in accordance.15.7 Upon service of an effective Notice to Complete, parties must complete the transaction withintwenty-one (21) days after the day of service of the notice.15.8 Notwithstanding Condition 15.7, both parties still retain any intermediate right of rescission.15.9 If the Purchaser does not comply with the terms of any effective Notice to Completei. on the expiry of the Notice to Complete, Purchaser must immediately return all title deedsand documents in his possession that belong to the Vendorii. Purchaser must at his own expense procure the cancellation of any entry relating to theContract in any registeriii. Vendor may forfeit and keep any deposit paid by the Purchaser and resell the property

Conditions of Sales, 2020

Conditions of Sales, 2020Condition 15 - Notice to Complete (main points only)15.11 If the Vendor does not comply with the terms of an effective Notice to Complete, then thePurchaser may choose eithera) to enforce against the Vendor such rights and remedies as may be available to thePurchaser at law or in equity without any other notice under the Contract;orb) to give a written notice to the Vendor to repay immediately to the Purchaser anydeposit and any money paid on account of the purchase price.This is without prejudice to the Purchaser’s rights to damages15.12 Upon the Vendor complying with the notice in Condition 15.11(b), the Purchasera) will no longer be entitled to any right to specific performance of the contract;b) must return immediately all title deeds and documents in his possession that belong tothe Vendor; andc) must procure the cancellation of any entry relating to the Contract in any register at theVendor’s expense.

Slide 50 — Condition 15.11–15.12: vendor default.

Conditions of Sales, 2020

Conditions of Sales, 2020Condition 16 - MediationVendor and Purchaser shall consider resolving the dispute or difference relating to the Contractthrough mediation prior arbitration or court proceedingsCondition 17 - Special ConditionsShould there be a conflict between any “special conditions” stipulated in a contract and the Conditionsof Sale, the former shall prevail.

Appendix

AppendixCase Study and Examples of Misrepresentation

Fraudulent Misrepresentation

Fraudulent Misrepresentation 1. Fraudulent Misrepresentation is a false representation (with the intention to deceive) that is made:a. Knowingly (statement is false) orb. Knowingly without belief in its truth (reckless disregards) orc. recklessly, careless whether it be true or false.In such a case, the representor would have committed deceit act and the victim is permitted to recoverfor all losses incurred as a consequence of the fraudulent misrepresentation, even for losses which mightnot have been reasonably foreseeable.Important Notes:All examples are presumed that victims had relied on the information provided to them to make a contractExample 1 - Fraudulent Misrepresentation - Knowing statement is falseJames knew existing spalling concrete issues within an old bungalow. He persuaded Jack to buy this houseand claims about non existence of such issue. Jack relied on his statement and purchase the bungalowthrough a contract.

Fraudulent Misrepresentation

Fraudulent Misrepresentation Example 2 - Fraudulent Misrepresentation - Knowing without belief in its truthA buyer asked seller's solicitor if there were any restrictive covenants on the land and the solicitor said hedid not know of any. He had not bothered to read the documents to make that statement . The court heldthat even though the statement was literally true it was a misrepresentation. There were restrictivecovenants and the contract could be rescinded.Example 3 - Fraudulent Misrepresentation - Reckless and careless whether it be true or falseSharon (buyer) was searching for a condominium unit made from previous construction methodology anddoes not believe in buildings made of prefabricated technology. Serene (salesperson), helped Sharon tosource for a condo unit and Sharon managed to view many condo units through Serene.She was particularly interested in one of the condo units, Sharon questioned Serene about this buildingconstruction technology. Eager to close this deal, Serene suggested to Sharon to buy the condo unit andinformed her that its construction was not by prefabricated technology which she had determined throughher experience in the industry by looking at the age and structure of the building. Based on thesalesperson’s statement, Sharon bought the property.Example 4 - “half-truth” or “partial truth,” which means a party tells the truth but conceals or omits some material facts.Kelvin tells Ali that there is a freehold bungalow house for sale at 50% below market rate. He knew thisland will be acquired by government in few months time but he withheld this information . Ali used INLISto check that the tenure is correctly stated. However, he was anxious that someone would compete withhim for the property, thus, he purchased it immediately.

Negligent Misrepresentation

Negligent Misrepresentation2. Negligent misrepresentation A person makes a false statement to the contract party due to his/her own carelessness withouttaking reasonable care to check.Example 5 – Negligent Misrepresentation - CarelessA real estate broker tries to sell a house to a buyer, who stresses his need for peace and quiet. Thebroker promises that the house is very quiet. In reality, the house next door is undergoing a very noisyreconstruction. Although the broker did not know this, her promise that the house was quiet was madewithout her having any reason to believe that that was the case. She simply assumed it. This would bea negligent misrepresentationExample 6 - RBC Properties Pte Ltd v Defu Furniture Pte LtdIn 2011, Defu Furniture Pte Ltd and RBC Properties Pte Ltd entered into a 5-year lease agreement forpremises which RBC had represented. The State Lease only permitted the entire development to be usedfor B1 light industrial purposes and provides that other use required the approval of the SLA and may besubject to payment of a differential premium. Defu entered into the lease agreement on the faith ofRBC’s representation that no further approvals were necessary and commenced fitting out works shortlythereafter. Upon near-completion of fitting out works, SLA indicated that the premises could not be usedas a furniture showroom unless a substantial differential premium was paid under the terms of the StateLease. Upon RBC’s insistence that Defu pay the differential premium, Defu rescinded the leaseagreement and commenced a suit against RBC in the High Court on RBC’s negligent misrepresentationthat the premises were approved for use as a showroom and won damages

Innocent Misrepresentation

Innocent Misrepresentation 3. Innocent misrepresentation – a person makes a false statement to the contract party without anyintention to lie while having a good reason to belief that the statement is true and with reasonablebasis. But the statement is still false and the party had entered the contract.Example 6Mary, a property agent tells her client that the house was newly renovated with marble flooring. Shewas not aware that the house was renovated for 5 years already and the floor tiles are made ofgranite.