LFS - Some Past Year Question

Commercial Law - Past year papers

Individual Bankruptcy & Company Insolvency


Individual Bankruptcy

see www.ipto.gov.sg

• 1. What is bankruptcy?
  Bankruptcy is a process by which a borrower of money is declared by the High Court to be unable to repay the loan and recovery of the loan is conducted in an orderly manner. The High Court usually appoints the Official Assignee to administer the bankruptcy estate which includes the selling of assets, registration of creditors' claims and paying dividends to a bankrupt’s creditors.
• 2. Who is the Official Assignee?
  The Official Assignee is a public servant and an officer of the Court. In the vast majority of cases, the High Court will appoint the Official Assignee as the trustee and receiver of the estate once a Bankruptcy Order is made. The Official Assignee will administer all your affairs in bankruptcy. Alternatively, the Court may appoint a private trustee in place of the Official Assignee if your creditors so request.
• 3. What is the Official Assignee's role?
  The Official Assignee's role is two-fold; to realise as much assets as possible for distribution to creditors and to assist you in obtaining a discharge from bankruptcy. As an administrator of the bankruptcy estate, the Official Assignee also has the duty to investigate your conduct while you remain in bankruptcy. The duties of the Official Assignee include resolving creditors' claims through a legal process, payment of dividends and applying to the High Court for your discharge from bankruptcy. In situations where there are disputes between you and your creditors regarding the amount of a debt or the amount of payment of the debt, the Official Assignee will act as mediator to assist in reaching a mutually acceptable proposal.
• 4. Why should I avoid bankruptcy?
  You should avoid bankruptcy for these reasons:
  
  

  • Social stigma on being declared a bankrupt;
  • Your assets become vested in the Official Assignee and divisible among your creditors;
  • A statutory requirement to file your Statements of Affairs and Income and Expenditure statements, and thorough investigations by the Official Assignee into your financial affairs;
  • Monthly payments to your bankruptcy estate for the benefit of the creditors;
  • Disclosure of bankruptcy if you intend to obtain credit of more than S$500 from others;
  • Restriction on overseas travel; and
  • Inability to manage a business or act as director of companies without approval of the Court or the Official Assignee.
• 5. How do I become a bankrupt?
  You can become a bankrupt on the actions of your creditor. If you are unable to pay your debts of at least S$10,000, the Court may declare you a bankrupt upon the petition of a creditor. Before filing a bankruptcy petition, a creditor would issue a notice known as a Statutory Demand, demanding payment from you. If the payment is not met within the time stated in the Statutory Demand, the creditor will file a petition in the Court and a hearing date will be given. If payment is not made by the hearing date, the Court may proceed to make a Bankruptcy Order and declare you bankrupt.
  
  Do not ignore your creditors' letters of demand and Statutory Demands, or Writs of Summons from the Court. This will only compel your creditors to commence bankruptcy proceedings against you. You can be made a bankrupt even if you refuse to respond to your creditors or accept legal documents presented upon you.
• 6. What alternatives are there to bankruptcy?
  The Official Assignee is a public servant and an officer of the Court.
  
  

  • Private Arrangement
  • Voluntary Arrangement
  • Court Dispute Resolution
  • Debt Repayment Scheme

Company Winding Up

• What is liquidation or winding-up?
  Overview
  Liquidation or winding-up is a process where the assets of a company are seized and realised, the resulting proceeds are applied in discharging all its debts and liabilities, and any balance is then distributed among the members of the company according to their rights and interests, or otherwise dealt with as the constitution of the company directs.
  
  The general purpose of winding-up a company can be one or both of the following:
  
  

  • to ensure a just distribution of the company's assets among creditors and contributories
  • to terminate the company's existence by its eventual dissolution.

  
  
  Just distribution of assets

  ---

  The company's assets and affairs pass into the hands of an independent liquidator whose powers, duties and functions are regulated by the Companies Act. The liquidator will investigate into the company's affairs and the conduct of the company's officers, and make the appropriate recovery from them. All business is ceased.
  
  The rights of unsecured creditors against the company's assets are virtually "frozen" upon the commencement of the winding-up. Thus, a further deterioration of the company's financial position and proliferation of its liabilities is averted;
  
  Unsecured creditors are paid on a pari passu basis, i.e. they are paid out of the company's assets equally. Any balance is then distributed among the contributories of the company.
  
  
  Reasons for termination of company's existence

  ---

  
  

  • Company has ceased business activities
  • Management deadlock
  • Oppression - shareholders dispute under Section 216 of the Companies Act (Cap 50)
  • Corporate or financial restructuring of the group to which the company belongs
  • Minimise tax liabilities or maximise tax advantages for the group to which the company belongs
  • Breach of statutory provisions, including offences committed
  • Company acting outside its scope of activities
• 2. What are the various types of winding-up?
  Members' voluntary winding-up
  The members of the company may pass a resolution that the company be wound up and that a liquidator be appointed. This mode of winding-up is adopted where the company is able to pay its debts in full within 12 months after the announcement of winding-up. Winding-up n commences at the time of passing of the resolution.
  
  Creditors' voluntary winding-up
  If the company is not able to meet its liabilities, the company can convene a meeting of its creditors to consider its proposal for a voluntary winding-up of the company. If a resolution is passed in favour of the winding-up, the company will appoint a liquidator, subject to any preference the creditors may have as to the choice of liquidators.
  
  Compulsory winding-up
  Under Section 253 of the Companies Act (Cap 50), the company itself, creditors, contributories, liquidator, judicial manager or the Minister may present a petition to the High Court for the winding-up of the company.
  
  Circumstances where a company may be wound up by the Court include:
  
  

  • when the company is unable to pay its debts
    The company is deemed unable to pay its debts under Section 254(2)(a) of the Companies Act if a company's creditor, who is owed more than S$10,000, has served a demand for the sum owing at the registered office of the company, and the company has not paid this sum for three weeks thereafter.
  • when the Court is of the opinion that it is just and equitable that the company be wound up Section 254(1) of the Companies Act states all the grounds under which the Court may liquidate a company:

  
  The petitioner has to pay a deposit for the winding-up application to the Official Receiver, and the Court may appoint the Official Receiver or an approved company auditor to act as the liquidator of the company. The winding-up commences at the date of the presentation of the winding-up petition.

Investment Law - Structures for Investements

Investments Structures


Thus topic requires students to appreciate the various structures for holding their investments and the reasons ie. the advantages and disadvantages of the various structures. With this, students will understand that there are more than one way to hold an investment and the investor will be able to choose from these structures to one that best suites his objective.

Some of the structures are :-

Personal Name
Sole Proprietorship
Partnership
Limited Liability Partnership (LLP)
Company
Foreign Offshore Companies
(http://en.wikipedia.org/wiki/Offshore_company)
Trust


Some of the factors to consider in each of the structure:-

Cost of Registration
Image
Tax
Registration process
Confidentiality
Liability
Succession
Raising Capital.


Some of the following website offer a good comparison:-

Private Limited Company

The technical term for a private limited liability company in Singapore is Private Company Limited by Shares. Most of us just call it private limited company. Most of the small to mid-size companies in Singapore are incorporated as private limited companies. A private limited company's name in Singapore normally ends with Private Limited or Pte Ltd.

A private limited company is the most advanced, flexible, and scalable type of business incorporation in Singapore. It's also the most preferred type of Singapore business entity for serious entrepreneurs (as opposed to sole proprietorship or limited liability partnership). Detailed information about setting up a private limited company can be found in Singapore Company Registration guide.

Advantages

1. Separate Legal Entity : A private limited company has its own legal identity, separate from its shareholders and its directors. It can acquire assets, go into debt, enter into contracts, sue or be sued in its own name.
2. Limited Liability: The liability of the members to contribute to the debts of the company is limited to the amount that they each agreed to contribute as capital to the company.
3. Perpetual Succession: The company's existence does not depend on the continued membership of any of its members. Ease of transfer of shares or changes in shareholders, ensures that company continues to exist even in the event of death, resignation or insolvency of shareholders or directors.
4. Ease of raising capital: You can raise capital for expansion or other purposes, by bringing in new shareholders or issuing more shares to existing shareholders. Investors are more likely to purchase shares in a company where there usually is a separation between personal and business assets. Also, most banks prefer to lend money to limited companies.
5. Credible Image: As an incorporated business entity, it commands a better image than a sole proprietorship or a partnership firm, and investors will be more willing to become part of the company as it demonstrates a vision to grow and expand. As a Pte Ltd company, your business will be taken more seriously by your potential clients, suppliers, bankers, and other professionals you will be dealing with.
6. Easier transfer of Ownership: Ownership of a company may be transferred, either wholly or partially, without disrupting operations or the need for complex legal documentation. This can be done through the selling of all or part of its total shares, or through the issue of new shares to additional investors.
7. Tax Benefits and Incentives: The effective Singapore income tax rate for companies for profits up to SGD 300,000 is below 9% and capped at 18% for profits above SGD 300,000. Furthermore, there is no capital gains tax. Singapore follows a single-tier tax policy which means once the income has been taxed at the corporate level, dividends can be distributed to shareholders tax free.

Disadvantages

1. More complex to incorporate and maintain than sole proprietorship or LLP.
2. Private limited companies must follow certain ongoing compliance requirements.
3. Closing a company is more complex than other forms of business
   

Singapore Incorporation: Sole Proprietorship

Sole proprietorship is the simplest but the riskiest type of business form in Singapore. From a legal perspective, sole proprietorship is not a separate incorporated entity and therefore the owner and the business are one and the same. The owner personally owns all assets and liabilities of the business. There is no protection of personal assets from business risks and liabilities. As the sole proprietor of a business, you have unlimited liability, meaning that if your business can't pay all its liabilities, the creditors to whom your business owes money can come after your personal assets. Many entrepreneurs are usually unaware of this enormous financial risk. If the business is sued or can't pay its bills, the owner is personally responsible for the business's liabilities. We consider this a serious drawback and hence do not recommend sole proprietorship to inspiring entrepreneurs.

A sole proprietorship can only be owned by one person, usually the individual who has day-to-day responsibility for running the business. All profits of this business structure in Singapore are taxed at the personal income level.

Registering a sole proprietorship business in Singapore takes little effort and details can be found at Sole Proprietorship Registration guide.

Sole Proprietorship Advantages

1. Ease of setting up: It is the easiest and least expensive business structure to set up.
2. Owner Control: As a sole proprietor you are in complete control of all the business affairs including decision making.
3. No profit sharing: You accrue all income generated by the business.
4. Ease of termination: Terminating a sole proprietorship is easier, less time consuming and less expensive than other business entities.
5. Least compliance requirements: You are free of the obligation of filing returns annually and only need to renew your membership every year.

Sole Proprietorship Disadvantages

1. No separate legal entity: You are inseparable from your business. This makes you financially and legally responsible for all debts and legal actions against the business.
2. Unlimited liability: Creditors may sue you for debts incurred and can also obtain a court order to claim against your personal assets, including your property.
3. No corporate tax benefits or incentives: Taxes are determined at your personal income tax rate and you do not enjoy special tax benefits that are available to a private limited company.
4. Limited capital: Capital is limited to your personal finances and the profits generated by the business. Thus, business expansion is limited and difficult.
5. No perpetual succession: The business lives and dies with you as you and the business are one and the same thing.
6. Low public perception: This entity is the least preferred for serious businesses as nobody would be willing to lend you large sums of money. It is also difficult to attract high-caliber employees, or senior level executives who usually look for a more advanced form of business structure such as a private limited company.
7. Sale/transfer of all or part of the business: You can transfer the business only by the sale of business assets.
   

Limited Liability Partnership (LLP)

Among the three types of partnership business entities, LLP is the most recent and most advanced business incorporation structure. It combines the features of partnerships and companies. LLP was introduced in Singapore in 2005 through enactment of Limited Liability Partnership Act. Registering an LLP gives owners the flexibility of operating as a partnership while enjoying many of the benefits that come with a corporate body like a private limited company.

LLP is primarily meant for carrying a profession (accountants, law firms, architects, etc.) where two or more professionals would like to build a joint practice in a common field. The owners must enter into very detailed agreements about how the profits and management responsibilities are divided. It can get very complicated and generally requires the services of a lawyer to draw up the agreement. Partners in a limited liability partnership are usually responsible for cultivating their clients based on the partner's specific area of focus.

A LLP must have at least two partners at all times. An LLP is not suited for a business that carries a trade. For more details on LLP including how to incorporate, refer to Singapore LLP Registration Guide.

LLP Advantages

1. Separate Legal Identity: An LLP has a separate legal identity and can own property, enter into contracts, sue or be sued in its own name.
2. Limited personal liability: The partners of the LLP will not be held personally liable for any business debts incurred by the LLP or the wrongful acts of another partner. A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission.
3. Perpetual succession: Any changes in the LLP (e.g. resignation or death of partners) do not affect its existence, rights or liabilities.
4. Ease of compliance: Compliance requirements are more complex than sole proprietorship but simpler than a private limited company.

LLP Disadvantages

1. Requires a minimum of 2 partners at all times.
2. Individual partners can commit the partnership to formal business agreements without the consent of the other partners.
3. LLPs lack the ease of ownership transfer and investment that a company structure provides.
4. No corporate tax benefits: Tax exemptions available to private limited companies are not available to LLPs. LLP is treated as tax transparent which means an LLP is not taxed as an entity. Instead each partner is taxed on their share of the

Source : http://www.guidemesingapore.com/company-setup/singapore-business-setup-entity-types.htm

Semester 2 - Commercial Law - Welcome

Hey PPL,

Sorry for the delay and I hope you all had a swell time preparing for the test. Remember that the test is only 20% and is a good simulation of the real 80% stuff you will get at the end. Keep practising.

We have now completed Formation of Contract which covered the following topics:-

Agreements
Consideration
Intention

The issues there help us determine if there was a valid contract. These are all covered in Chapters 3 - 4

I saw an interesting wikipedia outlook on Formation - particularly Consideration.

http://en.wikipedia.org/wiki/Contract

Consideration and estoppel


Consideration is known as 'the price of a promise' and is a requirement for contracts under common law. The idea behind consideration is that both parties to a contract must bring something to the bargain. A party seeking to enforce a contract must show that it conferred some benefit or suffered some detriment (though it might be trivial, see below) that is recognized by law. For example, money is often recognized as consideration, but in some cases money will not suffice as consideration (for example, when one party agrees to make partial payment of a debt in exchange for being released from the full amount).[17]

Some common-law and civil-law systems[18] do not require consideration, and some commentators consider it unnecessary—the requirement of intent by both parties to create legal relations by both parties performs the same function under contract. The reason that both exist in common law jurisdictions is thought by leading scholars to be the result of the combining by 19th century judges of two distinct threads: first the consideration requirement was at the heart of the action of assumpsit, which had grown up in the Middle Ages and remained the normal action for breach of a simple contract in England & Wales until 1884, when the old forms of action were abolished; secondly, the notion of agreement between two or more parties as being the essential legal and moral foundation of contract in all legal systems, promoted by the 18th century French writer Pothier in his Traite des Obligations, much read (especially after translation into English in 1805) by English judges and jurists. The latter chimed well with the fashionable will theories of the time, especially John Stuart Mill's influential ideas on free will, and got grafted on to the traditional common law requirement for consideration to ground an action in assumpsit.[19]

Although several rules govern consideration, the following are the principal rules.

Consideration must be "sufficient" (i.e., recognizable by the law), but need not be "adequate" (i.e., the consideration need not be a fair and reasonable exchange for the benefit of the promise). For instance, agreeing to sell a car for a penny may constitute a binding contract.[20]
Consideration must not be from the past. For instance, in Eastwood v. Kenyon,[21] the guardian of a young girl obtained a loan to educate the girl and to improve her marriage prospects. After her marriage, her husband promised to pay off the loan. It was held that the guardian could not enforce the promise because taking out the loan to raise and educate the girl was past consideration—it was completed before the husband promised to repay it.
Consideration must move from the promisee. For instance, it is good consideration for person A to pay person C in return for services rendered by person B. If there are joint promisees, then consideration need only to move from one of the promisees.
The promise to do something one is already contractually obliged to do is not, traditionally, regarded as good consideration. The classic instance is Stilk v. Myrick[22], in which a captain's promise to divide the wages of two deserters among the remaining crew if they would sail home from the Baltic short-handed, was found unenforceable on the grounds that the crew were already contracted to sail the ship through all perils of the sea. (The case has been much criticized on grounds that the ship was in port at the time of the promise.) A very specific example is the "rule in Pinnel's Case"[23], brought into the modern law of consideration by the House of Lords in Foakes v. Beer[24]. This rule is to the effect that a smaller sum of money cannot be good consideration for the release of a larger debt, though if the smaller sum is accompanied by something non-monetary in addition, for instance "a horse, a hawk or a robe", or payment is to be made early or in some special place or way, then there will be good consideration for the promise to discharge the debt. This rule has suffered some inroads recently. In Williams v. Roffey Bros & Nicholls (Contractors) Ltd[25] the English Court of Appeal held that a promise by a joiner to complete the contracted work on time, where this was falling behind, was good consideration for the contractor's promise to pay extra money. The reasoning adopted was that the strict rule of Stilk v. Myrick was no longer necessary, as English law now recognized a doctrine of economic duress to vitiate promises obtained when the promisor was "over a barrel" for financial reasons. Therefore, where the promise to pay extra could be seen as conferring a practical benefit on the promisor, that could be good consideration for a variation of the terms. The rule in Pinnel's Case has also been effectively sidestepped in England by the Court of Appeal in the case of Collier v. P & MJ Wright (Holdings) Ltd[26] which held that a promise to accept less in discharge of a pure debt (as opposed to, say, accepting reduced rent, which has long been recognized) could give rise to a promissory estoppel.[27]
The promise must not be to do something one is already obliged by the general law to do - e.g., to give refrain from crime or to give evidence in court: Collins v. Godefroy.[28]
However, a promise from A to do something for B if B will perform a contractual obligation B owes to C, will be enforceable - B is suffering a legal detriment by making his performance of his contract with A effectively enforceable by C as well as by A.[29]
Civil law systems take the approach that an exchange of promises, or a concurrence of wills alone, rather than an exchange in valuable rights is the correct basis. So if you promised to give me a book, and I accepted your offer without giving anything in return, I would have a legal right to the book and you could not change your mind about giving me it as a gift. However, in common law systems the concept of culpa in contrahendo, a form of 'estoppel', is increasingly used to create obligations during pre-contractual negotiations.[30] Estoppel is an equitable doctrine that provides for the creation of legal obligations if a party has given another an assurance [disambiguation needed] and the other has relied on the assurance to his detriment. A number of commentators have suggested that consideration be abandoned, and estoppel be used to replace it as a basis for contracts.[31] However, legislation, rather than judicial development, has been touted as the only way to remove this entrenched common law doctrine. Lord Justice Denning famously stated that "The doctrine of consideration is too firmly fixed to be overthrown by a side-wind."[32]



The balance part of Contract are :-

Terms
Vitiating factors
Discharge
Remedies

Semester 2 Investment Laws - Welcome!!

Hi Everyone,

It was good to see all of you there last week and looking forward to this evening. The assignments ought to be up soon and I will certainly brief you on this.

I found some interesting sites on MIS:-

This is a very informative Australian site:

http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Managed%20investment%20schemes

http://www.fido.gov.au/fido/fido.nsf/byheadline/Investing+in+managed+investment+schemes?opendocument


And our every "dependable" wikipedia -
http://en.wikipedia.org/wiki/Collective_investment_scheme

Here is a cut and past from my Sem 1 posting in March 2010 -

In Lecture 5 - we introduced to you a kind of financial product known as Managed Investments Schemes. (MIS) In Singapore we refer to these schemes as the Collective Investment Schemes. These schemes allow a collective effort by groups of people to pool their resources to professional and trusted entities to managed their resources to achieve financial gains. An example would be Unit Trust. Unit Trust has been extremely robust in the Singapore Financial markets offering investors a huge array of products from Tech Stocks to Property Stocks to REITS.

MIS or CIS however has a potential risk in that it depends largely on the fundamental principle of "trust". In this sense the investor trusts their monies with a central entity to manage their monies for them. If this central entity (known as the Responsible Entity) is not trustworthy, the investors may be at risk. So rather than leaving it to market forces to determine this, the laws have taken to regulating this segment.

You will therefore be required to think about -

1) What is a trust and why and how has the common law dealt with this issues;

2) What is a MIS - how is it defined and why is it defined like this;

3) Who is the Responsible Entity - what qualities does her posses and why?

4) What are the registration requirements and why do you think these are required.

5) What is the MIS is not registered?


Its really about regulating MIS. MIS is important - we need it and at the same time we need to regulate it. Do you think however that our laws have done enough or too much in their regulating efforts?


All up to you now.

SK

ALL Students

Hey Guys & Gals,

I hope you are all having fun. Take it easy and enjoy the journey. Hopefully you do this only once in your lifetime - taking law exams:)


I have tried to answer as many of your queries as I can. You have this long weekend take stock of all you have done. They key is structuring your answers and having the law in the way of cases or legislation and discuss them before applying the same.

Stay calm and go give the exams your best shot.

I met one of you at Sunset Bar last Saturday - hope that is a sign of confidence :)

ALL the best!!!!

SK

Commercia Law Q1 & 2

Attempted answer by a student

Commercial Law JUST 1023 Final Examination Semester 1, 2007


Question 1

(a) Peter, a 14 year old school boy with athletic ability, entered into a contract with Stanley, a highly respected soccer coach. Under the contract Peter is expected to attend many exhibition games and in return he receives good payment. Peter however now wishes to avoid this arrangement.

Required:
Advise Peter as to his relevant legal position. (5 marks)

Attempt Solution:
The issue in this case lies in whether is there a valid and enforceable contract between Peter and Stanley. Minors’ contracts generally are classified into three distinct classes: (1) Void Contracts; (2) Voidable Contracts; and (3) Ratifiable Contracts. Here, the contract in relevance appears to be one of a beneficial contract of employment. Thus, it falls under the category of valid contracts.

Such a contract can be repudiated if the terms are seen as unreasonable and not beneficial to the minor: Francesco V Barnum. Relating to the facts of this case, Peter is required to attend many exhibition games of which he is entitled to good remuneration. Thus, it appears to be a fair and reasonable contract for Peter. Unless there had been some other possibilities of unreasonable terms of employment faced by Peter, which are not stated in this case, Peter has to continue with this agreement to avoid any potential legal action taken by Stanley.


(b) Franny took a taxi to the airport. The taxi was driven by Ismail. On the way to the airport Ismail exceeded the speed limit in contravention of road safety legislation. Franny, as a consequence, refuses to pay the fare.

Required:
Advise Franny. (5 marks)

Attempt Solution:
Whether Franny is able to avoid the fare payment would have to depend on the possibility of raising illegality as a vitiating factor. Here, Franny has a legitimate and enforceable contract of service with Ismail. The only problem lies in the fact that Ismail had committed an illegal act of speeding while performing his contractual obligation towards Franny. The law states that the unlawful performance of an otherwise lawful contract does not necessarily render the entire contract void.

Following the case in St John Shipping Corporation V Joseph Rank Ltd, Franny cannot rely on this illegal act of speeding to refuse payment to Ismail. The contractual rights and obligations between Franny and Ismail remains unaffected.


© Sam, a financial secretary for a large food processing company, rented expensive cars over a 2-month period for his own personal use and recreation. In the company account books, Sam claimed to be hiring them for the use by the company. Sam has since left the company. Soon after however the company was asked to pay for the rental of the cars. The company claimed however that it was not liable to pay since Sam had no authority to enter into such a contract.

Required:
Advise the company. (6 marks)

Attempt Solution:
The critical question is whether the company is liable for Sam’s indiscriminate act. On the facts of the case, it appears that Sam has no authority to rent expensive cars for the company at all. Thus, we examine if Sam had displayed some degree of ostensible authority, in renting the cars, to the car rental company. As the financial secretary of a large company, it can be seen to be very normal for an employee of his position to rent expensive cars on behalf of the company for corporate usage. Thus, it would not be surprising for the car rental company to be ignorant of the fact that the rentals were made without actual authority.

Following the case of First Energy (UK) Ltd V Hungarian International Bank Ltd, the general principle is that if the company has expressly authorized the agent to make representations on its behalf, then any representation made by the agent that he himself has authority to do an act is a good representation for the purpose of conferring apparent authority on the agent to do that act, even if he had been expressly prohibited to do so. Accordingly, a potentially enforceable contract arises between the Sam’s company and the car rental company. Sam’s company can, however, sue Sam for breach of duty to follow instructions, since it is clear that Sam had contravened an express term of his employment contract to maintain personal integrity and honesty towards his employer.


(d) Tom, a senior manager for Ajax car engineering company, has entered into an employment contract. One of the terms of the contract stated that he was not allowed to work for any other similar company after he left Ajax anywhere within Singapore for four years. Three years after he left, Tom commenced working for Andax, a boating engineering company.

Required:
Advise Ajax of their legal position to enforce the term. (6 marks)



Attempt Solution:
This case appears to be of a restraint of trade clause in an employment contract. The key issue here is whether Ajax can enforce the clause against Tom for joining another company, Andax. Generally, a restraint of trade clause can be held to be effective if it can satisfy three requirements: (1) Convenantee must have legitimate interest to protect; (2) Clause must be reasonable in terms of duration, scope and subject matter; and (3) Must not be contrary to public interest.

Specifically, the clause in question only prohibits Tom from working in a competing company after he leaves Ajax. Although the time restraint period of four years can be seen to be unreasonable, it is not the key issue of this case. The key fact to note is Tom did not seek fresh employment with a competing rival company nor a company that has similar business interests as Ajax. Since Ajax cannot satisfy any of the preceding three requirements, it cannot enforce the restraint of trade clause against Tom.


(e) John, a car salesman, sold Sandy a car for $100,000 some months ago. As part of his sales talk, he told Sandy that the car had a large engine. Sandy recently discovered that the car had only a very small engine (making the car far less valuable).

Required:
Advise Sandy as to her legal rights. (6 marks)

Attempt Solution:
The area of concern in this case is whether John has subjected Sandy to misrepresentation of facts, in her car purchase contract. For a statement to be considered as a misrepresentation, it must be a false statement that is relied upon by the representee and induced the contract. Here, John had made a false statement of fact regarding the car engine to Sandy who later, was induced into the purchase contract. It is clear that John had the intention to be dishonest in his sales talk when we consider the fact that he is supposed to be knowledgeable in the area of cars. Following the case of Derry V Peek, Sandy has a high chance of being able to rescind the contract and seek damages equivalent to the purchase sum of $100,000.


Question 2

Antonia recently decided to sell her Maserati sports car. She placed an advertisement in the newspaper on 1 November describing the car as very fast and new and “offering the car for sale” for $4,500. Tania, responding to the advertisement, rang Antonia and said she wanted to pay approximately the market value, namely, $3,500. Antonia said she actually wanted approximately $4,000 and would give Tania a week to make up her mind.

The next day (2 November) Antonia received a call from her friend Catherine. After some negotiation Catherine paid $5,000 in exchange for the car.

On 3 November Tania sent Antonia a letter accepting to buy the car for $4,000. The letter arrived (and was read by Antonia) on 6 November. That evening, Antonia telephoned Tania and said that she unfortunately has already sold the car and that Tania should buy another identical car that Antonia has for sale. Antonia failed to tell Tania that this car was older, very slow and not a Maserati but a Toyota. Tania agrees and when she took delivery is unhappy and complains.

Required:
Is there any concluded contract between the parties? Fully explain. (12 marks)

Attempt Solution:
The focus point of this case is whether an enforceable contract for the sale of the Toyota car exists. The preceding facts underlying this case – events surrounding and leading up to the sale of the Maserati sports car – imposes no concern on the second agreement to purchase the Toyota car which also the purported ‘identical car’ mentioned by Antonia prior to the agreement. This is true since Tania had not protested against the sale of the Maserati sports car in any way and had in actual fact, voluntarily accepted this fact without question.

Here, Antonia had offered to Tania that she had an identical Maserati sports car for sale. However, this was in fact not the case since the subject car was actually not a Maserati sports car at all. Under the statutory provisions of SGA s13(1), there is an implied condition where if the contract involves the sale of goods by description, the goods delivered will match the description given by the seller. Antonia has thus breached this implied condition of the contract. Following the case of Varley V Whipp, Tania will have the legal right to reject the delivery of the Toyota car and be entitled to recover money paid for it. Accordingly, there will be no valid and enforceable contract between Antonia and Tania.


Question 3

(a) In January 2004, Vince rented an office from his mother-in-law Jane for $20,000 per year and signed a five-year lease.

After the birth of his second child in January 2005, Vince approached Jane and explained that he would be unable to afford the rent unless she agreed to decrease his liability to $10,000 per year. He explained that if Jane was unwilling to do this, he would have to move to Australia where a friend has offered a better deal. Jane agreed to the rent reduction.

Earlier this year, in January 2007, Vince separated from his wife Michelle (Jane’s daughter) and Jane is now demanding $20,000 in back rent for the past two years. Jane has commenced legal proceedings for breach of contract.

Required:
Fully advise Vince. (10 marks)

Attempt Solution:
Whether Vince is able to avoid liability for the back rent of $20,000 would have to depend on whether he can successfully establish promissory estoppel as a defence. We note that for this case, Vince had entered into a written lease with Jane, even though they shared a domestic relationship. Thus, it is clear both parties had the intention to maintain a legal relationship under the agreement.

Secondly, Jane had also explicitly agreed to Tom’s request for a reduction in rent after the birth of his second child. This agreement, considering the facts surrounding the case, appears to be one that is intended to affect the existing legal relationship between Tom and Jane (after all the rent is the key subject of concern under the agreement).

Thirdly, we see that on the reliance of Jane’s promise, Tom altered his position and proceeded with paying reduced rent for the subsequent two years until January 2007.

Finally, it appears obvious that if Jane were to be allowed to claim the back rent of $20,000, it would be inequitable towards Tom. Following the case of Central London Property Trust V High Trees Houses Ltd, Tom is able to raise the doctrine of promissory estoppel as a defence against Jane’s claim. It is possible to do so since the four elements required to establish promissory estoppel exist. One important area to note is, however, the effect of promissory estoppel is to suspend Jane’s rights temporarily in this case. Jane is still entitled to receive full rent (after the purported period of financial difficulty experience by Tom has ceased) should Tom choose to continue with the lease agreement with Jane into the future indefinitely.



(b) Singapore’s legal system has been described as being one created from various local and foreign sources and influences.

Required:
Referring to examples, explain this statement. (10 marks)

Attempt Solution:
The Singapore legal system has roots dating back to the British colonial period where English law began its inception in 1826. Common law tradition prevailed during that period and still plays a significant role in present day Singapore. For example, judges, in delivering court judgments under the notion of common law, follow outcomes of preceding English cases as a guide. But Singapore courts have declared themselves not to be bound by horizontal stare decisis. Further, with the enactment of the Application of English Law Act (AELA) in Singapore in 1993, an English statute can apply to cases in Singapore if it is specifically provided for in the AELA or another written law. This way, we can see that the Singapore legal system has origins and continuous influence from the English common law and statutory law systems until today.

The current trend observed is that, this English influence has decreased especially as the Singapore legislature, judiciary and legal profession mature. Though rooted in English law tradition, Singapore is likely to develop legal rules and processes that will be suitable for a cosmopolitan nation with a unique blend of east and west. Thus, an autochthonous legal system can be said to be emerging. As a reference example, the Singapore Parliament enacted the Electronic Transactions Act (ETA) in 1998, in an attempt to facilitate and define the legal rules applicable in electronic commercial transactions locally. The Singapore legal system, in summarizing, can thus be described as one created from a fusion of local and foreign sources and influences.



Question 4

One year ago, Melinda, an Australian citizen, decided to come to Singapore and start a chiropractic business. She is interested in buying a new carpet for her business but on this occasion decides to buy a carpet for her home. Melinda is unfamiliar with Singapore law. Melinda suffers from a very rare breathing-sensitive condition and is worried about purchasing a product that could cause a return of her problem. Melinda approaches the Exotica Carpet Store and asks the salesman to view carpets. Melinda explains that the carpet should be of very short pile type to avoid people tripping over. Melinda also explains her condition to the salesman and he showed her a carpet manufactured by Tehran Ltd. The salesman states: “This carpet is ideal for your needs”. A label on the carpet states: “This product is guaranteed by the manufacturer to be free from any chemical additives”. Also, a representative of Tehran Ltd has assured Melinda of the chemical-free nature of all its carpet products.

Melinda went to the counter to finalise the sale and near the cash register was a small sign that stated: “No exchanges or refunds. No statutory conditions and warranties apply to contracts entered into with Exotica Carpet Stores”. Melinda paid $1,000.

Melinda then took the carpet home and set it down in her bedroom. After one month, the carpet shed its fibres. Recently, Melinda woke up in the middle of the night coughing up blood. Tests revealed that during the manufacturing process, the carpet had been mistakenly treated with toxic chemicals. These chemicals caused Melinda’s sickness. Generally, the carpet was of poor quality, despite its high cost. Melinda had to be hospitalized for one month and she lost many customers from her chiropractic business. It was also revealed that had Melinda not been lazy and instead slept with her special air filter-inhaler on, she would not have become as seriously ill.

Required:
Melinda knows nothing of local law and comes to you for help. Therefore fully advise Melinda of all her possible separate legal rights and remedies against both Exotica Carpet Stores and Tehran Ltd. Your answer should consider any relevant common law and/or statutory principles and considerations. (20 marks)

Attempt Solution:
The key question in this case lies in whether Melinda is able to initiate legal claims against both Exotica Carpet Stores and Tehran Ltd for her suffering and thus, subsequent losses.

Legal Rights and Remedies Against Exotica Carpet Stores:

Firstly, there is the issue of whether Exotica Carpet Stores had incurred a breach of contract under SGA s14(3), in selling the subject carpet to Melinda. Here, prior to the purchase (as a consumer), Melinda had specifically made known to the salesman her breathing-sensitive condition. Thus, it can be perceived that Exotica Carpet Stores had breached the express condition of fitness for purpose. Following the case of Gema Metal Ceilings (Far East) Pte Ltd V Iwatani Techno Construction (M) Sdn Bhd, Exotica Carpet Stores is liable even if it can prove that all reasonable steps had been taken to avoid breaching this condition.

Secondly, there is the issue of the validity of the liability exclusion clause in the store. The law states that liability exclusion clauses covering SGA s14(3) cannot be enforced in a consumer transaction: UCTA s6(2). Here, Melinda is dealing as a consumer who had purchased the carpet for domestic usage.

Lastly, it was a fact that the carpet was of poor quality and started shedding its fibres only after a short period of one month, despite its high cost of $1,000. Under the statutory requirements of SGA s14(2), there is an implied condition to provide goods which are of satisfactory quality imposed upon the seller. This condition encompasses aspects of quality such as durability. Here, Exotica Carpet Stores had failed to satisfy this condition by selling a poor quality carpet to Melinda.

On balance, it appears likely that Melinda can sue Exotica Carpet Stores for breaching SGA s14(2) and s14(3) and claim damages equivalent to the price of the carpet ($1,000)

Legal Rights and Remedies Against Tehran Ltd:

Firstly, we examine the possibility of contingent liability on Tehran Ltd. At law, there are three ways where a buyer can circumvent the rule of privity of contract to claim against a manufacturer for defective goods: (1) where a manufacturer’s warranty or guarantee to replace or a defective product exists; or (2) the manufacturer has made express undertakings concerning the product to the buyer; or (3) through the common law tort of negligence. In this instance, a Tehran Ltd representative had assured Melinda that its products were chemical-free. It was through the strength of this representation that Melinda decided to purchase the carpet.

Secondly, the key question is whether Tehran Ltd owes a duty of care to Melinda, in selling its supposedly chemical-free carpet. Here, despite the fact that toxic chemicals are harmful to human beings, Tehran Ltd failed to take reasonable care as a manufacturer to avoid acts or omissions that it could reasonably foresee would cause injury or harm to its product users. Following the neighbour principle in Donoghue V Stevenson, it can be shown that Tehran Ltd owes Melinda a duty of care.

Thirdly, we determine if this duty of care had been breached. As a manufacturer of carpets with firm undertakings that its products are chemical-free, Tehran Ltd has breached this duty of care by allowing a toxic chemical-treated carpet to be sold to Melinda.

Lastly, we see if Melinda is able to show that she suffered harm as a result of Tehran Ltd’s breach of duty. Here, it is obvious that Melinda would not have suffered such harm but for Tehran Ltd’s negligence. The next question that follows immediately after establishing causation would be whether it was reasonable foreseeable that Melinda would suffer from such a kind of harm. In foreseeing the damage, the law states that it is not necessary to foresee the exact harm actually suffered by a plaintiff as a result of the defendant’s breach. It is sufficient if the type or kind of harm is reasonably foreseeable. Here, Tehran Ltd ought to know or understood the potential consequences of toxic chemicals-tainted products affecting consumers. Applying the case of Bradford V Robinson Rentals Ltd, liability can be pinned upon Tehran Ltd.

On a scale of probability, having established tortious liability for negligence on Tehran Ltd, it is likely that Melinda will be able to pursue common law damages, both general and special, for her suffering. General damages will cover her pain and suffering while special damages will cover her loss of earnings and actual medical costs.

One important issue to note is, however, Tehran Ltd might raise the partial defence of contributory negligence against Melinda. After all, it was noted that Melinda did failed to exercise caution on her part by sleeping with her special air-filter which, could have mitigated her harm. If Tehran Ltd is able to convince the court on this point of argument, it might be able to avoid some degree of liability of which, the quantum will be a matter of reasoning to be decided by the court.

Commercial Law - Past year papers

QUESTION 1
(a) Tom, an RMIT final year engineering student, comes each morning to his lectures by
tram. On one particular trip, Tom decides to sit on a particular seat but as he roughly
rests his weight on the seat, the whole seat suddenly collapses, injuring his back. Tom is
taken to hospital and requires spinal surgery. Tom’s injuries become worse due to a
hereditary bone disease. While recovering in hospital, Tom becomes grossly
overweight due to the prolonged inactivity and as a result develops diabetes, a serious
digestive disease.
As a result, Tom has lost his part-time job. After investigation by the tramway
authority, it is discovered that one of the tramway’s maintenance workers, Bill, who
was responsible for periodically repairing the tram’s seats, had failed to replace a
particular bolt to the broken seat. This would have prevented Tom’s injuries. However,
Bill states that it is common practice in his job that such bolts are only routinely
replaced on all tram seats once every two months. Indeed the tramway’s management
states that it would be too expensive to replace all such bolts more frequently. To do so
would cause ticket prices to increase.
REQUIRED:
Fully advise Tom of his common law rights available in negligence against any party.
(15 marks)

(b) Alfred has for many years worked on his parent’s farm as a partner in the family
business. Alfred is an experienced house builder but decided to give up his successful
business to help his elderly parents on the farm for no payment. Several months ago,
Alfred decided to marry and was keen to return to his business to better provide for his
family. Knowing this, Alfred’s parents promised him that if he continues to work on the
farm they will divide-off and give to him part of the farm property so that he could
build his own home. In reliance on this promise, Alfred continued to work on the farm
and obtained a large bank loan to pay for the construction of his new home. The parents
had promised they were arranging with their lawyer to execute a contract to evidence
this transfer of the property. However after many months and with the house almost
completed, no formal contract was yet entered into. Unknown to Alfred, the parents
were reluctant to proceed with this arrangement. They wanted to give the entire farm to
their daughter, Maria. The parents told their lawyer to “go slow with the preparation of
the contract”. Alfred has recently spoken to his parent’s lawyer and was told that his
parents now refuse to sign any contract and want him to leave the farm immediately.
REQUIRED:
Fully advise Alfred as to any relevant common law rights and remedies he may have
against his parents.
(10 marks)
(15 + 10 = 25 marks)


QUESTION 2
Jen goes to ITAL Pty Ltd, a carpet shop. Jen meets Stan, an experienced salesman, and
explains that she wishes to carpet her house with a good quality and durable product. In fact
Jen stresses that, being both asthmatic, she and her son Larry are sensitive and allergic to
synthetic carpet which also contain chemicals and therefore must have carpet that is chemicalfree
and made only from wool. Stan reassures Jen that all his carpets are “environmentally
friendly and safe”.
Stan suggests that she buys an expensive top quality carpet described on a shop brochure as
‘WOOLEX-safe and tough’. This carpet is imported from the manufacturer in Sweden by a
Melbourne based company, OSLO Imports Pty Ltd. Stan shows Jen a sample of the carpet
and Jen is satisfied with the carpet’s appearance. A contract is signed and a term is included
that excludes any conditions and warranties implied by statute. The purchase price is $23,000.
This amount includes the service installation costs. Stan shows Jen a large shipment of the
carpet in a rolled-up bundle, however due to the packaging, it is not possible to properly
inspect the carpet. OSLO Imports Pty Ltd also guarantees that this carpet is safe, durable and
environmentally friendly.
After installation Jen is unhappy as the edges of the carpet are not well cut to shape nor
securely attached to the floor. Furthermore, the carpet looks far different to what she thought.
Jen and Larry begin to suffer from their asthma. Larry is in need of medical care due to the
inhalation of dangerous fumes from the carpet. Chemical analysis of the carpet reveals that it
contains a poisonous chemical and is composed mainly of rayon, a synthetic material. A
single attempt to wash out the chemicals by normal, steam cleaning has failed and the carpet
is now damaged.
REQUIRED:
Fully advise Jen and Larry of all their relevant statutory rights

QUESTION 3
Last week Phil, a collector of rare and unique musical instruments, advertised in the local
community newspaper the sale of several musical instruments. Included were three trombones
for $300 each and four saxophones for $400 each.
As well, Phil asked his young son Ben to prepare multiple copies of a handout sheet outlining
the same information and to deliver these to all the letter-boxes in the community. Phil agreed
to pay Ben $20 for this work.
On the 1 May, responding to the advertisement, Brett offered Phil $250 for one of the
trombones. Phil asked for $280. Brett said he would think about it. Phil agreed to leave this
offer open for 10 days.
On the 2 May, after reading the letterbox handout, Sarah called Phil accepting to buy one of
the saxophones for $400. Phil explains to Sarah that he no longer wishes to sell his
saxophones.
Phil has now decided not to sell his trombone collection.
Phil also refuses to pay his son, Ben the $20.
REQUIRED:
Applying any relevant case law principle, discuss and fully advise whether Phil has any
contract with any party.
(10 marks)


QUESTION 4

(a) Charlie, a 15 year old school student, has recently entered into a contract with Howard,
a well known football trainer. Howard believes that Charlie has great potential to be a
highly successful player and wants to use his services. Howard and Charlie enter a
contract whereby Howard will offer him playing engagements, training and advice as
well as supplying Charlie with expensive football equipment. Charlie now decides that
he does not wish to be obligated under any part of this arrangement.
REQUIRED:
Fully advise Charlie as to his relevant common law position.
(8 marks)


(b) Roberta is about to be employed by Max, the owner of the Golden Castle Chinese
Restaurant Pty Ltd. Roberta is a recent cooking graduate and Max knows that Roberta
would be grateful for an opportunity to gain experience as a Chinese chef. Max prides
himself that his restaurant serves his grandmother’s prized “Beijing Duck Supreme”
soup. This recipe is a guarded family secret. Max wishes to include terms in the
employment contract with Roberta to permit him to fully restrain her future use of any
skills, information etc obtained during her employment with Golden Castles.
REQUIRED:
Fully advise Max as to what extent the common law would permit him to include such
a restriction in this contract.
(10 marks)


(c) Andy, a young and inexperienced importer of shoes has contracted with Mike’s
exclusive delivery service company to deliver Andy’s shoes to stores in Melbourne.
Andy and Mike had agreed earlier that the delivery charge would be $200 per tonne
shipment. Andy’s business had financial difficulties at the beginning, however with
time, his store customers have increased and his profits seem to be slightly improving.
Mike was fully aware of Andy’s difficult financial situation. Mike also knew that Andy
had several very large delivery orders with six stores and was heavily in debt. Recently,
Mike sent a series of emails threatening to refuse to deliver, unless Andy pays him $800
per tonne. Feeling pressured due to difficulties arranging an alternative deliverer and
realizing he cannot afford to lose these six large orders, Andy reluctantly and unhappily
signs a new contract with Mike for $800.
REQUIRED:
Fully advise Andy as to all possible legal ways available to permit him to avoid this
new contract.
(12 marks)
(8 + 10 + 12 = 30 marks)

Law of Investement

These are some past year papers:-

Question 1

Explain the concept of indefeasible title in property law. Refer to relevant legislation and case law.

You may discuss either Australian law OR Singaporean law.

10 marks

Question 2

Tessia is a widow in her 70s. Tessia owns two houses and also has a deposit of $200,000, which she recovered recently from recent legal action. She has three adult children.

Her eldest child, Adam, is married and in comfortable circumstances with two children aged 8 and 10, both studying in private schools. Adam is employed as a property developer.

Her second child, Betty, is not married and does not have a regular income. She has had an ongoing gambling addiction since Pokie machines were introduced in Victoria, and she has always been irresponsible with money.

Her third child, Charles, is mentally impaired. He is a not employed and lives in a mental health facility.

Required:

You are employed as a financial advisor specialising in estate planning. Tessia has approached you for advices on the following issues:

a) Tessia wishes to provide for her children in the event of her death. What are the requisite formalities of a legal will?

b) Tessia is worried that if she dies without a will, all of her estate will go to the government. Is this correct? Explain.

c) Tessia has heard about testamentary trusts. She is not sure what they are, and wants to know if they would be suitable for her circumstances?

You may either discuss Australian law OR Singaporean law.

7+7+6= 20 MARKS

Question 3

(a) What are the main legal differences between administration and liquidation?

(b) Gunho pty ltd was wound-up in insolvency on January 15^th 2009 by one

of its unsecured creditors. A liquidator was appointed. Gunho has numerous unsecured creditors and insufficient assets to repay most of its debts.

The liquidator has discovered the following facts:

(i) In September 2008, Gunho paid David, the brother of its director Steven, the sum of $5,000 being fees for accounting services rendered by David in August 2008;

(ii) In October 2008, Gunho transferred a company car worth $80,000 to its director Steven who paid $30,000 for it .

REQUIRED:

Advise the liquidator about the legal status of these transactions.

You may either discuss Australian law OR Singaporean law.

8+6+6=20 MARKS

Question 4

58% of investors who complained about Lehman-linked products to be compensated
By Nicholas Fang/Valarie Tan/May Wong, Channel NewsAsia | Posted: 16 January 2009 1836 hrs

SINGAPORE: Over half of investors who complained about their investments in products linked to the collapsed Lehman Brothers will get some or all of their money back.

According to the Monetary Authority of Singapore (MAS), those who will be compensated had bought Lehman Minibonds, DBS High Notes 5 and Merrill Lynch Jubilee Series 3 products.

For several weekends last year, hundreds of affected investors gathered at the Speakers' Corner at Hong Lim Park to share their experience about the failed financial products.

About 5,400 of them complained to authorities about their investments in those products. Of these, 94 per cent have been addressed. The rest are still being investigated.

One quarter of the some 5,100 investors will get all their money back. A third will get only some of their investment back.

MAS said banks and institutions will take a few weeks to personally inform all investors individually about their cases.

Some 8,000 retail investors in Singapore had bought Lehman Minibonds worth S$375 million. About 350 investors had put S$23 million into the Merrill Lynch Jubilee Series 3 notes, while 1,400 investors had subscribed to S$103 million worth of DBS High Notes 5.

If individuals are still not happy about the compensation they receive, MAS said they can still turn to the Financial Industry Disputes Resolution Centre (FIDReC) for further mediation.

As of January 9, FIDReC has received 210 complaints - 40 were for DBS High Notes 5, 129 for Lehman Minibonds, 28 for Merrill Lynch Jubilee Series 3 and five for Morgan Stanley Pinnacle Series 9 and 10 Notes.

FIDReC said the majority of these are in the investigation and mediation stages.

Of the some 530 investors who bought Lehman Minibonds through stockbroking firms, only 3 per cent will be compensated.

"We will file our case to FIDReC first and hopefully FIDReC would be professional to do something about it," said a Lehman Minibonds investor. "If it doesn't work, we will definitely consider class action."

For cancer survivor "Rachel" (not her real name), who invested S$20,000 through Hong Leong Finance, she said: "I shall see how much is the percentage (of compensation) first. After that, I'll decide (what to do)."

MAS said investors will lose their compensation offer from the financial institutions if they go to FIDReC.

MP for Ang Mo Kio GRC, Inderjit Singh, said: "I would advise customers to think carefully before they reject. There were people who did not know what they were buying. And for such people, I hope banks will treat them fairly. But for those who are in the know and they lost their investment, I think they too want to accept.

"The processes that MAS has in place to control these things and also how these products are released are generally robust and perhaps in the execution is where we may have seen some problems.

"So, we maybe want to look at how the banks and the financial institutions are executing some of the rules that have been put in place, rather than to make drastic changes to the rules, because if you want to be a financial centre and attract other institutions to look at operations here, we cannot over control the environment.

"I personally think there has not been a significant problem in the rules, but how the rules were implemented and executed on the ground.

"One of the ways banks could change is to separate bank deposits areas from (places) where investment products were sold. This is something I would like to see the banks do, as what has happened was simply because many people in this case had thought the minibonds were an extension of deposits."

Mr Inderjit Singh will raise questions on the issue when Parliament sits on Monday.

MAS said it is not able to comment further as it is still investigating the selling practices and policies of banks and financial institutions. But it said a review on current regulations is underway and it would seek feedback from the public by the middle of March 2009.

- CNA/ir

REQUIRED:

Lehman Brothers issued minibonds - high risk investment products marketed as safe bonds. Discuss the legal issues arising from this news article. Explain the role of MAS and Fidrec in this case.

20 MARKS

Law of Investments - Revision

For an open book exam - it is important in the preparation that you have all the materials properly structured. From my own experience I have always found it useful to have a list of all the principles or rules that I need to understand. I had to use card in my days because the exams were not open book and we had to cram one year of materials into a single exams - which can be quite tedious. But that had also taught me to organize my subject better.

What I think you should do is to list down all the principles that you should know. I will do this and let me know if I had left out anything:-

Lectures 1

Common Law

Legislation

Role of MAS & ACIS in regulating the financial market

Why regulate?

Lectures 2

Licensing Regime & Control of Licensees

Regulation of Financial Products

Regulation of Financial Services

Lectures 3

Suitability Rule

Know your Product

Disclosure – what is enough?

Financial Service Guide

Statement of Advise

Product Disclosure Statements

Liabilities for Breaches

Lectures 4

Common Law protection

Statutory Protection

Code of Conduct

Dispute Resolution

Remedies

Lectures 5

What is a Trust

Definition of a Managed Investment Scheme

Registration requirements

Scheme Constitution

Responsible Entity

Compliance Scheme

Effect of non registration


Lectures 6

Difference between a Debt & Equity

Nature of a Debt

Debentures - what are they

Regulations on the issue of Debentures

Charges - Fix & Floating

Priorities of Charges

Negative Pledge Lending

Guarantees

Third Party Guarantees



Lectures 7

Torrens System of Land Registration - what is it?

Indefeasible Title

Mortgage

Joint Tenancy v Tenant in Common

Strata Titles

Body Corporate - who they are and their function

Off Plan Purchases


Lectures 8

Shares - what are they?

The Corporate Veil

Disclosure requirements in issuing shares - prospectus

Dividend

Role of Directors

Duties of Directors

Rights of shareholders at General Meetings

Corporate Governance

Minority Protection


Lectures 9

Intestate Succession

Wills - formalities

Who must you make provision for in a will?

Effect of Divorce and Marriage to a Will

Power of Attorney

Enduring Power of Attorney

What are matrimonial assets

Division of matrimonial assets on a divorce

Pre Nuptial Agreements


Lectures 10

Sole Proprietors

Partnership

Limited Liability Partnerships

Companies

Trust

CPF

..........................

Ease of Registration

Tax

Cost of Registration

Control

Succession

Secrecy

Compliance


Lectures 11

Definition of Insolvency

Bankruptcy

Official Assignee - who are they

Duties of Bankrupts

Bankrupts Disabilities

Getting out of Bankruptcy

Assets protected from Bankruptcy

Role of an Administrator

Role of a Receiver

Role of a Liquidator

Insolvent Transactions - what are they?

Priorities of Creditors

------------------------------------------

Once you have a list of the things you need to know - the next is to have short write ups on them. It is important to have the relevant authorities (cases or sections of legislations)in your explanation and understanding of these topics.

Good Luck

Answering Commercial Law questions

Now that your exams are closing i n - answering the exam question is your next hurdle. You need to remember that the examiners do not set out to fail you - on the contrary - they want to pass you. The main object of exams is to see if you could use the rules we have learn to address issues that are raised in the question. By demonstrating that you can, you would have proven that you understood the rule and able to use it in a given situation.

The exam will consist of a series of questions and each question would have a series of issues which you must address using the rules/laws you have learn.


Lets take a close look at a simple question:-

-------------------------------------------------------

Semester 2 2008 Q5(a)

Maggie wrote a series of letters to her brother Jason who resided in the UK. Maggie invites Jason to move to Singapore and live with her "rent free for the rest of your life". Jason quits his studies, sells his car and busy a ticket to Singapore. After several months, following a dispute, Maggie orders Jason to move out. Jason has to rent an apartment which he cannot afford.

REQUIRED:-

Advise Jason using common law principles, whether he has any contractual rights against Maggie.

(5 Marks)

----------------------------------------------------------------

Your exam will have a total of 80 marks and you will have 180 minutes to attempt all questions. So using simple maths, each mark will allow you to spend 2.25min. A 5 mark question will allow you to spend no more than 5 x 2.25min = 11.25min. The question is then - what can you write in 11min plus?

Answer:

For Jason to enforce Maggie's promise, it is necessary that he establishes a legally binding agreement with her. There are however 2 potential problems posed in this question.

The first is whether between Maggie and Jason - whether there was ever an intention to create a legal relationship. Without such an intention, the law will not enforce the promise. According to the case of Balfour v Balfour in cases of social or domestic agreement, the law presumes that parties never intended to create a legal relationship. This presumption however can be rebutted. The determination is by asking the reasonable person and taking all the circumstances of the case - whether an intention exist. (Chwee Chin Keong v Digiland Mall.com Pte Ltd) Of course where there is commercial benefits, the courts have been ready to assume that even if the agreement was domestic or social, that there is an intention to contract - Tan Hin Leong v Lee Teck Im

In this case, whilst it appears that Jason had left the UK to live with her sister in Singapore,w e are not told of the real reason. If the sister had some commercial value in having Jason live with her such as if she was sick and needed assistance or if Jason had special skills which she would have profited from commercially, then the presumption may be rebutted. The test is to take in all the circumstances of the case.

In conclusion, we would need to have more facts to help us understand whether the presumption can be rebutted.

The second issue is if it was true that Jason had come to look after Maggie, then would that be sufficient consideration in itself. According to Eastwood v Kenyon the performance of a purely moral responsibility is not sufficient consideration. It may be possible that Jason had the moral responsibility of looking after his sister and doing just that may be insufficient consideration.

------------------------------------------------------------------------------

Note : the task is to determine the legal issue and relevant legal rules. Fining a definite factual conclusion such as whether there is or there is not an agreement is not the main objective because in many of the question there may simply be insufficient facts to help us. We must however offer these suggestions to the examiner.

I will try and provide more examples later on.

Good Luck.

SK