• Context: The contract for stated that the cargo of cotton was to arrive in Liverpool on the ship “Peerless from Bombay”. The term “Peerless” was capable of applying equally to a cargo of cotton on two different ships, each called “Peerless” and each having sailed from Bombay, one in October and one in December. The court could not determine which ship the parties were referring to in the contract.
• Holding: There is mutual mistake.

• Context: Had one party intended the October shipment and the other the December shipment, the agreement necessary for a binding contract would have been absent.
• Holding: There is mutual mistake.

• First, the mistake must be shared by both parties and relate to facts or law before the contract was concluded.
• Secondly, the mistake must render the subject matter of the contract fundamentally different from the subject matter which the parties contracted on as constituting the basis of their contract.
• However, there must have been no allocation of risk to either party of the consequences occasioned by the mistake. The mistake concerned must also not be attributable to the fault of either party.

• Context: The Commission invited tenders for a wrecked tanker that was said to contain oil. McRae tendered and the Commission accepted. McRae embarked on costly salvage expedition. The Tanker turned out to not exist, and McRae sued for breach of contract. The Commission tried to argue that the contract was void for common mistake (as to the tanker’s existence).
• Holding: There was no common mistake, as the Commission had assumed the risk relating to existence of tanker; the court Inferred from the correspondence between the parties that the commission had promised that there was a tanker. -“Tenders are invited for the purchase of an OIL TANKER lying on JOURMAUND REEF, which is approximately 100 miles NORTH OF SAMARAI. THE VESSEL IS SAID TO CONTAIN OIL. OFFERS TO PURCHASE THE VESSEL AND ITS CONTENTS”.

• Context: Bell and Snelling were hired to be the chairman and vice-chairman of a subsidiary. They were let go due to corporate restructuring, but paid bonuses for their early termination. It then transpired that they breached their contracts (by moonlighting) while still employed by LBL. LBL then claimed against Bell and Snelling for the bonuses on the ground of mistake (that the parties did not know that the contracts were voidable for Bell and Snelling’s breach earlier).
• Holding: No money could be recovered. The mistake was not fundamental enough as to render the contract essentially different from what the parties had contemplated. A mistake as to the quality of the thing will only affect the validity of the contract if it makes the thing without the quality radically and essentially different from the thing it was believed to be.

• Context: TS agreed to provide salvage services for a vessel in serious difficulties in the Pacific Ocean. They were informed that The Great Peace was close to the vessel so they contacted the owners of The Great Peace to hire it for 5 days. Later, they found out that The Great Peace was not as close to the vessel in danger (it was 410 miles away rather than 35 miles). TS then tried to hire another nearer vessel and they tried to void the contract for The Great Peace.
• Holding: The mistake was not sufficient to vitiate the contract. Although the vessels were 410 miles apart and it would have taken 22 hours for the vessels to meet, this was not a time delay to result in a performance “essentially different from what the parties envisaged when the contract was concluded”. A common mistake arises only if the parties had agreed to something which was impossible to perform.

• Context: The plaintiff contracted to buy hare skins from the defendant. The defendant mistakenly sold at a price per pound when they had intended to sell the skin at a price per piece. The plaintiff was aware of the mistake. The defendant refused to deliver the goods and the plaintiff sued.
• Holding: There was a unilateral mistake by the defendant.

• First, one party has made a mistake
• Secondly, the mistake is a sufficiently important or fundamental mistake as to a term of the contract
• Thirdly, the non-mistaken party must have had actual knowledge of the mistake

What is a fundamental mistake?

• There is no doubt that the error in the present case as to the price is a fundamental one
  • An accidental omission of a key clause from a contract may constitute a fundamental mistake

What is actual knowledge?

• In order to enable the court to come to the conclusion that the non-mistaken party had actual knowledge of the mistake, the court would go through a process of reasoning where it may consider what a reasonable person, placed in the similar situation, would have known … Clearly, if the court finds that the non-mistaken party is guilty of wilful blindness, it will be in line with logic and reason to hold that that party had actual knowledge

• First, one party has made a mistake
• Secondly, the mistake is a sufficiently important or fundamental mistake as to a term of the contract
• Thirdly, the non-mistaken party must have had actual OR constructive knowledge of the mistake
• Fourthly, the non-mistaken party must have had engaged in sharp practice or unconscionable conduct

What is constructive knowledge?

• where the non-mistaken party did not have actual knowledge of the error but ought to have known about the other party’s mistake

What is impropriety?

• Mere negligence is not impropriety
  • The conduct of deliberately not bringing the suspicion of a possible mistake to the attention of the mistaken party could constitute such impropriety
  • Facts of the case - The second appellant had made extensive search over the Internet and found that other websites were offering the same printer at about $3000. He had admitted doubting the price on the respondent’s website and even wondered if he was only buying parts. He was shutting his eyes to the truth and snapping up a bargain even when he doubted its correctness. - The 4^th appellant was concerned with the very low price of $66 since colour laser printers were among the most expensive in the world. He searched Internet and found that they usually sold for US $2000. He tried to seek confirmation with the respondent via telephone but nobody picked up. - He suspected that there was a mistake; the reasonable thing to do was to wait until the morning to ascertain the truth of the offer before ordering. He proceeded to make purchases as if he was scared that his belief that there was a mistake would be confirmed. The act of verification confirmed that he had harboured doubts about the correctness of the price.

• Context: A rogue represented himself to a car dealer as “Mr Durlabh Patel”. The rogue produced a genuine driving license (which the rogue had unlawfully procured), which the car dealer then faxed to Shogan Finance. Shogun Finance conducted a credit check on Mr Durlabh Patel, and subsequently entered into a car hire-purchase agreement with the rogue. The rogue then sold the car to Mr Hudson (who was unaware that the vehicle belonged to Shogun Finance and was subject to a hire-purchase agreement) before absconding. Shogan Finance then brought an action against Mr Hudson seeking the return of the car.
• Holding (Majority): There was a unilateral mistake as to identity. This was a non-interpraesentes situation; the car hire-purchase agreement was concluded between Shogan Finance and the rogue, and NOT between the car dealer and the rogue. There was thus no presumption that Shogan Finance intended to contract with the rogue. Objectively, Shogan Finance intended to transact with Mr Durlabh Patel, and not the rogue. This was clear from the terms of the written car hire-purchase agreement (which listed Mr Durlabh Patel as a party), and the fact that Shogan Finance had carried out a credit check on Mr Durlabh Patel.

Important Obiter (although this is a non-interpraesentes case, this obiter is so important that it can be applied to interpraesentes cases)

• Lord Nicholls (dissenting): “it is not easy to think of practical circumstances where, once in point, the presumption will be displaced”
• Lord Millett (dissenting): “But there is surely nothing to be said for resorting to a rebuttable presumption in order to resolve a question of fact which is incapable of being determined by evidence. If there is no test by which the question can be answered on the evidence, there is none by which the Court can determine whether the presumption has been rebutted”
• Lord Phillips (majority): there is “a strong presumption that each intends to contract with the other” in inter praesentes cases
• Lord Walker (majority): “If the principle is no more than a presumption, it is a strong presumption, and exceptions to it would be rare”

• “Traditionally, the doctrine is only of significance in contexts where a mistakenly signed document has been relied on by unsuspecting third parties. A classic example would be where A misleads B to sign a document, which A then uses to obtain an advantage from C. In a suit between B and C, the question would arise as to whether B may disown his signature on the ground of non est factum”

• The doctrine was designed to protect ‘those who are permanently or temporarily unable, through no fault of their own, to have without explanation any real understanding of the purport of a particular document. This was a narrow class of persons who are typically unable to read owing to blindness or illiteracy and who therefore had to trust someone to tell them what they were signing'

• First, there must be a radical difference between what was signed and what was thought to have been signed - Secondly, the party seeking to rely upon the doctrine must prove that he took care in signing the document, that is, he must not have been negligent.

• Context: A vendor of a farm in New Zealand, which had not been used for sheep farming before, told a prospective purchaser that, in his judgement, the land could carry 2,000 sheep. When the purchaser discovered that it could not, he sought to set aside the contract for misrepresentation.
• Holding: There was no misrepresentation because the vendor’s statement was not a false statement of fact but a statement of opinion which he honestly held.

• Context: Mardon wanted to lease a filling station from Esso which was still being constructed, the plans of which were significantly altered to satisfy the local authorities. Esso’s experienced representatives assured Mardon that this change would not affect the petrol sales, which would reach 200,000 gallons per year. In fact, despite Mardon’s best efforts, it achieved only 78,000 gallons per year. Mardon claimed against Esso for misrepresentation. The issue was whether the statement was opinion or fact.
• Holding: The opinion here was making implied representation on certain facts.
• Holding: In Bisset, the land in question had never been used as a sheep farm and both parties were equally able to form opinions as to its carrying capacity. Here, Esso had much more experience and expertise at their disposal and were much more able to make a forecast.
  • If such a person makes a forecast — intending that the other should act on it and he does act on it — it can be interpreted as a warranty that the forecast is sound and reliable in this sense that they made it with reasonable skill and care.

• Context: Directors of a company invited the public to subscribe for debentures (bonds) stating that the money raised would be used to expand the business. In fact, the real purpose in raising the money was to pay off company debts.
• Holding: The directors were guilty of misrepresentation because they misrepresented their actual intention. A misrepresentation as to the state of a man’s mind is, therefore, a misstatement of fact.

• Context: A true statement was made that a financial product carried an “AAA” rating. The court held that it contained an implied representation that the product was of low risk.
• Holding: The test is whether a reasonable person in the position of the representee would have understood that an implied representation was made.

• Context: When a person sits down at a restaurant he impliedly represents that he has the ability to pay for the meal. A nod of the head might signify agreement, just as a shake of the head will show disapproval.
• Holding: Test is whether the statement is** intended to induce the other party to believe in a certain state of facts**. If yes, the gesture or conduct can amount to a representation.

• Context: APS agreed to sponsor the Spice Girls concert tour in return for promotional work carried out by the group. After the contract was signed, one of the members, Ms Geri Halliwell, left the group. It was found out that she had informed the other members of her intention to leave before the contract was signed.
• Holding: The nature of the promotional materials sent by Spice Girls Ltd was a misrepresentation that all five members of the group would participate. A contracting party may keep silent, but once he makes a statement, it must be full and frank, and not a half-truth or untruth.

• Context: The defendant contracted to sell a public house to Mr Bowmer. He had knowingly made a false misrepresentation to Bowmer regarding the profits earned on the property. Bowmer could not complete the purchase. Bowmer then informed the plaintiff of the representations made by the defendant . The defendant then contracted with the plaintiff directly for the sale of the house. During the negotiations between the plaintiff and defendant , nothing was said about the original representations.
• Holding: There was misrepresentation as the defendant did not correct the prior representation. The defendant’s knowledge was crucial in this case as he knew that his representation to Mr Bowmer was passed on to the plaintiff by Mr Bowmer.

• Context: To conceal the fact that the bottom of the ship was worm-eaten, the seller removed the ship from a dry dock and kept her afloat until the sale was over.
• Holding: “… it appears here that means were taken fraudulently to conceal defect in the ship’s bottom”. Active attempt to conceal defects will be taken as a representation that the defect does not exist.

• Context: A doctor was seeking to sell his practice. He told a prospective purchaser that the practice’s income was £2,000 per annum. This was true at the time, but because the doctor fell sick, the practice declined considerably over the next few months, so that by the time it was actually sold, its value had reduced significantly, and takings were averaging only £5 per week.
• Holding: The failure to notify the purchaser of the fact that the earlier statement was no longer true amounted to a misrepresentation.

• Context: The prospectus of a company in which the representee had bought shares in contained a false statement that Mr Grieve was a director of the company. The representee had no knowledge who Mr Grieve was.
• Holding: The representee was not entitled to damages. The representee gave evidence that he had never heard of Mr Grieve before. That proved that the representee was not induced to take the shares by this deceit.

1. There must have been a false representation of fact
2. The representation was made with the intention that it should be acted on by the representee

• Whether the representor intended to induce the representee to act on the representation must be determined subjectively -Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (2013)

1. The representee acted upon the false statement
   • If the false statement does not influence or lead the representee to change his behaviour in reliance of the misrepresentation, there is no inducement -Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (2013)
2. The representee suffered damage by so doing
3. The representation was wilfully made with the knowledge that it was false, or at least made in the absence of any genuine belief that it was true

• Dishonesty must be determined subjectively (from the perspective of the representor) - Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (2013)
• If the representor honestly believed in what he or she was representing, there can be no fraudulent misrepresentation

• The exertion of illegitimate pressure - Such pressure amounting to the compulsion of the victim’s will - Causal link between the pressure and the conclusion of the contract
• The more illegitimate the pressure, the lower the causal threshold

• Context: The plaintiff pawned a plate to the defendant for £20. Three years later the defendant refused to allow the plaintiff to redeem the plate unless the plaintiff paid the defendant interest of £10. The plaintiff tendered £4, but the defendant refused. The plaintiff eventually paid £10 to get his plate back.
• Holding: The plaintiff was entitled to recover the extra money paid up. There was illegitimate pressure in the form of a threat to deprive property lawfully belonging to the plaintiff.

• Holding (Lord Hoffmann): “Generally speaking, the threat of any form of unlawful action will be regarded as illegitimate. On the other hand, if the threat is lawful, it is not necessarily legitimate.”

• Context: The plaintiff was a small Singapore company without significant record or assets. The plaintiff agreed to sell steel products to defendant who would then on-sell them. The plaintiff had to secure a ship for the shipment of the products to Korea, but due to its inexperience, was unable to secure a vessel at the rate agreed on. It found another ship at a much higher rate and told the defendant that “unless the defendant shared the increased costs, the plaintiff was prepared to terminate the contract”. The defendant agreed since it had to meet the deadline set by its customers.
• Holding: There was no economic duress. A threat to breach a contract, absent bad faith, should not be an illegitimate threat, although sometimes they can be presumed to be unconscionable. On the facts, the spirit and cooperative nature of the venture and the plaintiff’s inexperience resulted in the underestimation of the shipping cost. The plaintiff was not seeking to exploit the situation to increase his profits.
  • The absence of bad faith was clearly a factor; the plaintiff was merely informing the other party that it was unable to perform the contract rather than attempting to exploit the other party

• Context: The plaintiff and defendant were doctors and business partners. They had set up several clinics together and held equal shares. The defendant suspected that the plaintiff was having an affair with staff. The plaintiff denied it but the defendant later found evidence of it. The defendant gave the plaintiff 3 options, and threatened to wind up the company if the defendant did not comply:
  • The defendant buys out the plaintiff’s half share in the clinics and the plaintiff  takes over some of the clinics’ liabilities - The plaintiff buys out the defendant’s half share in the clinics - The business would be wound up by the courts; evidence of the defendant’s affair would be tendered to the court as evidence
• Context: The plaintiff accepted the first option, but later sought to invalidate the agreement for economic duress
• Holding: The pressure was illegitimate. The defendant was entitled to take all legal steps to terminate their business relationship and to minimise the loss he would suffer, but he could not take advantage of the situation and unfairly profit from it.
  • The defendant did not have to ask the court to wind up the companies. Both parties could have done so on a voluntary basis; there would be no need to tender evidence of the affair to court as evidence. Thus, the defendant was abusing the legal process.
  • The defendant was also seeking to buy over the plaintiff’s share of the business at an undervalue of 25% of its market value. It was also unreasonable to seek the plaintiff to take over a significant portion of the liabilities.
  • The defendant confronted the plaintiff in a way that was designed to unnerve the plaintiff. The only option that would not have resulted in the evidence of the affair being publicised was the sale of the plaintiff’s shares at a price that was manifestly disadvantageous to him.

• Holding: “We are not yet in Utopia and so there remains a distinct and discernible difference between what is ‘illegitimate’ and what is ‘unconscionable’ and it is worth remembering that what is unconscionable is not necessarily illegitimate.”
• Courts must be mindful of finding illegitimate pressure just because terms are lawful but “manifestly disadvantageous”. To do so would lead to uncertainty in commercial contracts and the bargaining process , and comes too close to rewriting disadvantageous contracts. - Manifest disadvantage may be an indicator, but courts ought to ground the illegitimacy of the pressure on other factors such as evidence of bad faith/exploitation of the party

• General Rule: Relevant factors for determining that there was coercion of will include
  • Whether the person did or did not protest
  • Whether he had an alternative open to him such as an adequate legal remedy
  • Whether he was independently advised
  • Whether after entering the contract he took steps to avoid it.
  • Note: The main factor appears to be whether the alleged victim had a reasonable alternative course open to him -The Law of Contract in Singapore (2012)

• Holding
  • The plaintiff did not protest, but gave the defendant alternatives (which were flatly rejected). The plaintiff  indicated that he was unhappy with the demands and his eventual acceptance was bowing to the demands rather than willing agreement.
  • The defendant gave the plaintiff no real practical alternative. The defendant told the plaintiff that he was not in a position to negotiate.
  • There was implicit pressure for the plaintiff to make up his mind immediately (there was no time for the plaintiff to seek advice). That the plaintiff did not ask for time indicated that his consent was vitiated and his will overborne. He thought he had no choice but to agree.
  • The plaintiff brought the current suit in a bit to avoid the contract that was concluded under coercion of will

• Is there legitimate proprietary interest to be protected?
• Is the clause reasonable both as between the parties and in the interests of the public

• nature of the employment: whether the employee habitually handles confidential information
• nature of the information itself: information concerned must be a trade secret or material which is of such a highly confidential nature as to require the same protection as a trade secret
• Whether the employer impressed on the employee the confidentially of the information: no just merely telling the employee, the employer’s attitude towards the information has to be considered as well
• Whether the relevant information can be easily isolated from other information which the employee is free to disclose

• Holding: A customer list was a trade secret and a legitimate proprietary interest to be protected. The company conducted its business mainly through mail and online orders. The customer list was updated through tracking their spending patterns; it was highly sensitive commercial information which the sales manager was tasked to safeguard.

• Extent of the former employee’s knowledge of and influence over the customers insofar - Extent of “institutional hold” (extend that business thrives on customer loyalty rather than personal relationships) and “customer inconvenience” (willingness of customer to inconvenience himself by moving away from the employer) - Frequency of former employee’s contact with the customers - Place where the former employee makes such contact - Seniority of the former employee - Nature of the former employee’s relationship with the customers

• Holding: The restrictive covenant was void. It was against public policy since to prevent the defendant from operating as a fumigator in Singapore would give the plaintiffs a virtual monopoly of the business.
  • There were only two persons who were licensed in Singapore to fumigate with the methyl bromide, and they are the Manager of the plaintiffs and the defendant. There were only two firms in Singapore doing fumigation, the plaintiffs and the defendant’s firm, Fumigation & Pest Control Co Ltd.

• The unenforceable provision must be capable of being removed without adding to or modifying the wording of what remains with the remainder continuing to make grammatical sense
• The remaining contractual terms must continue to be supported by adequate consideration
• The severance must not change the fundamental character of the contract between the parties

• The defendant had the capacity to influence the plaintiff - The influence was exercised - Its exercise was undue - Its exercise brought about the transaction
• Note: bullying or importunity may impair a person’s free will and thus constitute undue influence

• Context: A son gave a bank a promissory note upon which he had forged his father’s signature. The bank told the father that they could prosecute his son. The father was asked, and agreed, to enter into a mortgage to pay off the debts of his son. He then sought to set the mortgage aside.
• Holding: The father could set aside the mortgage, which had been “extorted from the father by undue pressure”.
  • Do note that duress was not pleaded, and economic duress was not yet developed at the time

• That there was a relationship of trust and confidence between him and the defendant - That the relationship was such that it could be presumed that the defendant abused the plaintiff’s trust and confidence in influencing the plaintiff to enter into the impugned transaction - That the transaction was one that calls for an explanation

• Context: S was a customer of AmEx. She executed a charge over all her money to secure her son-in-law’s liabilities to the bank. Later, her son-in-law was unable to pay for those liabilities and the bank deducted a sum of money from S’s account. She sued the bank and tried to set aside the charge on the grounds of undue influence by her son-in-law over her.
• Holding: There was no undue influence. S failed to show that she had such a degree of trust and confidence in her son-in-law so as to allow him to be in a position of ascendancy over her. She did not blindly follow his advice and made independent financial decisions based on her analysis of the risk and return. The evidence showed that she was a resourceful and business-minded person. She was fully aware of the consequences of granting the charge to the bank and had exercised it according to her free will.
  • In particular, she was a family-orientated person and close to her daughter. That provided the impetus to help her son in law.

• “if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act, the burden is upon the donee to support the gift … It would be absurd for the law to presume that every gift by a child to a parent, or every transaction between a client and his solicitor or between a patient and his doctor, was brought about by undue influence unless the contrary is affirmatively proved. The law would be out of touch with everyday life if the presumption were to apply to every Christmas or birthday gift by a child to a parent”

• Proof that the alleged victim received advice from a third party before entering into the impugned transaction is one of the matters a court takes into account. The weight, or importance, to be attached to such advice depends on all the circumstances. Proof of external advice alone does not show that the transaction was free of UI. Crucially, a person may understand fully the implications of a proposed transaction and yet still be acting under the undue influence of another

• Context: Madam Pang was in poor health. 2 of her sons were appointed to manage her estate. Yap acted as the bank’s lawyer when Madam Pang executed a mortgage over her property to guarantee certain loans taken by her son. Her son defaulted, and the bank sought to sell the property.
• Holding: Madam Pang’s son was always present when Mother met with Yap; Yap knew or should have known that there might have been undue influence. Yap should have met privately with Madam Pang, explained the risks and liabilities she would be exposed to in a manner that Madam Pang could have understood (with a translator if need be), and advise her that she had the right not to proceed with the transaction.