Past Examination Question (40 marks)

K Ltd is a multinational company occupying three entire floors of AW

Building. It holds many corporate functions in-house for its clients. In the
past it used to hire a different caterer for each occasion, but it soon found
this process to be a great hassle. As such K Ltd decides to look for one
caterer to supply meals for all its in-house functions. Mr Tan, a senior
manager of K Ltd who is in charge of this matter, happens to walk across a
catering business (R Ltd) in Level 2 of the same building. The advertisement
pasted on the glass door of R Ltd states that they offer the best food at the
cheapest rates. Mr Tan walks in and the sales person in the shop, Mr Ng
shows him various menus. At the same time, Mr Ng tells Mr Tan that R Ltd is
the main caterer for PS Ltd, which is a very well-known company. After some
thought, Mr Tan decides to sign a contract with R Ltd on behalf of K Ltd for a
period of 1 year, for various reasons including the fact that both companies
are located in the same building and he has tasted their food before and it
tasted good. After the contract is entered into, R Ltd supplies food on two
occasions. On both occasions, the food is alright, but not particularly tasty.
On one of those occasions, R Ltd also forgets to provide enough cups (the
short fall was about 20 cups). On the third occasion, the food arrives late by
1.5 hours. The clients of K Ltd are kept waiting. Some just leave. In the
meantime, K Ltd sends a staff rushing to buy some snacks at a cost of $200.
Further some of the clients who stayed back to eat the food provided by R
Ltd suffer food poisoning. R Ltds explanation is that they did not have
sufficient staff on that particular day as they had 44 other functions. They
also promise this will never happen again. There is a clause in the contract
between K Ltd and R Ltd which states R Ltd assumes no responsibility
whatsoever for late deliveries or missed deliveries or for any consequences
arising therefrom if it is due to reasons totally beyond their control. Advise K
Ltd as to its rights against R Ltd. In particular K Ltd wants to know whether it
can terminate the contract and sue for the losses suffered.

Student Sample A
There are two things K Ltd wants to do:
(a) Terminate the contract and
(b)Sue for damages
(a) Termination
Misrepresentation
One way in which K Ltd can terminate the contract is to plead
misrepresentation. In this regard, the statement, R Ltd serves the best food
at the cheapest rates is likely to be a mere puff or sales talk and hence
it is unlikely to amount to a misrepresentation as a reasonable person would
not have taken it seriously. Further, in relation to word cheapest, there is
nothing on the facts to suggest that R Ltd does not indeed offer the cheapest
rates. As for the R Ltd being the main caterer for PS Ltd, we do not know
whether this is true or false. Assuming it is false, this can amount to a
misrepresentation assuming K Ltd relied on it (Smith v Chadwick). If it is
proved that K Ltd never relied on it, but instead relied on other facts (such as
R Ltd being in the same building), then K Ltd cannot sue for
misrepresentation. On the other hand, if K Ltd relied on it, but it was not the
sole factor, that does not matter (Edgington v Fitzmaurice). If a
misrepresentation is established, K Ltd can rescind the contract. However,
they have to do so fast. If there is a reasonable lapse of time, they may lose
their right to rescind (Leaf v International Galleries).
Fundamental Breach
Another way in which K Ltd might get out of the contract is if they can
establish that R Ltd committed some fundamental breach. There are several
possibilities in this connection.
The first relates to the food not being particularly tasty. Under section
14(2) of the Sale of Goods Act, goods sold must be of satisfactory quality.
Whether the goods sold are of satisfactory quality depends on many factors
such as the price and description. Assuming it is indeed the cheapest

caterer, it might be difficult to argue that the food has to taste extremely
good. Moreover, taste is highly subjective and here after all we are told the
food tastes alright. Hence too it may be difficult to establish a breach. This
can also be contrasted with National Foods Ltd v Pars Ram Brothers (Pte) Ltd
where the court held there was a breach. On the facts, the seller sold ginger
slices which were heavily contaminated with mould and very dirty. The facts
of our case are clearly very different.
However, when one considers the food poisoning, that seems closer to the
facts of National Foods Ltd v Pars Ram Brothers (Pte) Ltd and there is likely to
be a breach. In relation to the food poisoning, there could also be a breach of
section 14(3) as the food is not reasonably fit for the implied purpose for
which it was bought (ie: eating). A breach of the Sale of Goods Act would
entitle K Ltd to repudiate the contract. That aside, even without reference to
the Sale of Goods Act, it might be an implied term of the contract that the
food supplied should be reasonably safe to eat as it is obvious and necessary
(Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd). This implied
term is likely to have been breached in a fundamental manner and hence too
K Ltd can terminate the contract.
As for the shortfall of 20 cups, while this may amount to a breach of the
contract, it is unlikely to be fundamental in nature and hence this would not
in itself allow K Ltd to terminate the contract.
As for the food arriving late, given the circumstances it is likely to be obvious
to both parties that catered food should arrive on time for the function. This
is also likely to be a condition of the contract. However, the question might
arise whether the force majeure clause in the contract excuses R Ltd. The
force majeure clause excuse R Ltd for late or missed deliveries that are
totally beyond their control. On the facts, since the delay appears to be
due to R Ltds decision to overstretch, it is unlikely to be totally beyond their
control. In addition, it is unlikely R Ltd can raise frustration due to the same
reasons (Davis Contractors Ltd v Fareham UDC). It is more likely to be selfinduced. Thus it is likely that K Ltd can terminate the contract on the ground
of the food arriving late as well.
Contractual Provision for Earlier Termination
Aside from all this, there is yet another way in which the contract may be
terminated. It is possible that the contract between K Ltd and R Ltd has an
earlier termination clause which allows K Ltd to terminate the contract before

the expiry of one year without reason. If so, then too K Ltd can terminate to
contract.
(b) Damages
On the whole, K Ltd has strong grounds for terminating the contract.
However, in addition to termination, K Ltd wants to sue for damages. In this
regard, the extra $200 incurred, is likely to be consequential loss which is not
too remote (Hadley v Baxendale) and hence K Ltd can sue for it.
If the clients sue K Ltd for the food poisoning and K Ltd pays them, K Ltd may
in turn be able to sue R Ltd for that. Such damages arise naturally following
the breach (food poisoning) and are not too remote (Hadley v Baxendale). If
it is proved that food went bad due to the delay, the clause in the contract
excusing R Ltd from the consequences of the delay, appears to operate as an
exclusion clause. Even then under section 2(1) of the Unfair Contract Terms
Act, liability for personal injury cannot be excluded.
However, K Ltd cannot sue punitive damages as such damages are generally
not recognized in Singapore. As for damages for distress or disappointment
though they generally cannot be claimed (Haron bin Mundir v Singapore
Amateur Athletic Association), where one of the main purposes of the
contract is to provide pleasure or peace of mind, it may be possible to do so
(Farley v Skinner). On the facts, since the main purpose of ordering the food
is not just for sustenance but to provide pleasure to the clients, K Ltd may
possibly be able to claim some compensation in respect of this.
Conclusion
On the whole, K Ltd is likely to have a strong case against R Ltd, but if the
damages are not substantial it might not be worth bringing a court action.

Student Sample B
K Ltd gets R Ltd to be a caterer. R Ltd not only delivers the food late but also
delivers food which causes food poisoning. K Ltd would now like to sue for
damages and get out the contract. There is a clearly a contract between the
parties. Probably K Ltd made an offer to R Ltd and R Ltd accepted that offer.
There is also consideration for the contract. K Ltd provided the money and R
Ltd supplied the food. In addition, there is intention to create legal relations
as this takes place in a commercial context. K Ltd can raise
misrepresentation. A misrepresentation can be defined as a false statement
of fact which induces the formation of the contract. It must also be proved
that the plaintiff relied on the misrepresentation. However, here the best
food at the cheapest rate is likely to be mere sales talk and so K Ltd cannot
sue for misrepresentation. Silence also does not amount to a
misrepresentation generally. Thus K Ltd cannot raise misrepresentation. The
contract also has a force majeure clause. Parties may wish to have such a
clause, as through such a cause they can widen (or narrow down) what
amounts to frustration in law. Thus for instance, though price increases,
labour shortages or inability of the supplier to supply would generally not
amount to frustration, parties can, though the force majeure clause, agree
that such matters may discharge the contract. Here the clause is unlikely to
be valid. K Ltd also cannot raise frustration as frustration is self-induced. R
Ltd also delivered 20 cups less. This is likely not to be a fundamental breach.
Thus K ltd cannot terminate the contract. As for food poisoning that is likely
to be a fundamental breach and hence K Ltd can terminate the contract. The
food arriving late by 1.5 hours is also likely to be a fundamental breach. Thus
all in all they can terminate and sue for damages. They can sue for damages
for the food poisoning. They can also sue for the cost of the extra snacks
they had to buy. The clients may also be able to sue R Ltd in negligence. R

Ltd is likely to owe the clients a duty of care. This duty of care is likely to be
breached. R Ltd may also face criminal liability for the food poisoning. This is
against public interest and safety. K Ltd would also like to sue for distress and
disappointment since one of the main purposes of the contract is to provide
pleasure. In Farley v Skinner the claimant was interested in buying a property
which was near an airport. He wanted to know whether the property was
affected by the aircraft noise and so he engaged a surveyor for that purpose.
The surveyor reported that the property was not affected by noise. Thus the
claimant purchased the property and later found the property was affected
by noise. The claimant bought an action for loss of peace of mind and the
court awarded damages of 10000 pounds.