Breach of Contract

  1. What is a ‘Breach of Contract’?
  2. 1.1) According to the Singapore Court of Appeal in Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2014] 3 SLR 857; [2014] SGCA 35 (at [58]), there are 4 ways to amount to a breach of contract by the other party that allows the innocent party to be discharged from the contract:

      58     A useful summary of the applicable legal principles with respect to when an innocent party can elect to treat itself as discharged from the contract may be found in Man Financial ([42] supra at [153]–[158]), as follows:

        153    As stated in RDC Concrete, there are four situations which entitle the innocent party (here, the appellant) to elect to treat the contract as discharged as a result of the other party’s (here, the respondent’s) breach.

        154    The first (‘Situation 1’) is where the contractual term in question clearly and unambiguously states that, should an event or certain events occur, the innocent party would be entitled to terminate the contract (see RDC Concrete at [91]).

        155    The second (‘Situation 2’) is where the party in breach of contract (‘the guilty party’), by its words or conduct, simply renounces the contract inasmuch as it clearly conveys to the innocent party that it will not perform its contractual obligations at all (see RDC Concrete at [93]).

        156    The third (‘Situation 3(a)’) is where the term breached (here, Clause C.1) is a condition of the contract. Under what has been termed the ‘condition-warranty approach’, the innocent party is entitled to terminate the contract if the term which is breached is a condition (as opposed to a warranty): see RDC Concrete at [97]. The focus here, unlike that in the next situation discussed below, is not so much on the (actual) consequences of the breach, but, rather, on the nature of the term breached.

        157    The fourth (‘Situation 3(b)’) is where the breach of a term deprives the innocent party of substantially the whole benefit which it was intended to obtain from the contract (see RDC Concrete at [99]). (This approach is also commonly termed the ‘Hongkong Firapproach’ after the leading English Court of Appeal decision of Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; see especially id at 70.) The focus here, unlike that in Situation 3(a), is not so much on the nature of the term breached, but, rather, on the nature and consequences of the breach.

        158    Because of the different perspectives adopted in Situation 3(a) and Situation 3(b), respectively (as briefly noted above), which differences might, depending on the precise factual matrix, yield different results when applied to the fact situation, this court in RDC Concrete concluded that, as between both the aforementioned situations, the approach in Situation 3(a) should be applied first, as follows (id at [112]):

          If the term is a condition, then the innocent party would be entitled to terminate the contract. However, if the term is a warranty (instead of a condition), then the court should nevertheless proceed to apply the approach in Situation 3(b) (viz, the Hongkong Fir approach). … [Court of Appeal’s emphasis in RDC Concrete]

        [Court of Appeal’s emphasis in Man Financial, unless otherwise indicated]

  3. Are there different degrees/level for “breach of contract”?
  4. 2.1 No, based on the Singapore Court of Appeal in Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2014] 3 SLR 857; [2014] SGCA 35 (at [58]), there are no different degrees/level but just different types of breach.

  5. Is breaching a contract considered a crime? Why?
  6. 3.1 This is a commercial matter and you will have to sue the other party in court based on the terms of your agreement. The remedy you get is damages or simply monetary compensation or even specific performance where you demand the other side to perform its part of the bargain.

    3.2 In a crime, the party in breach will be punished under the law with punishments such as fine, caning, and/or imprisonment pursuant to statutory provisions such as the Penal Code.

  7. What are the areas of concern before signing a contract?
  8. 4.1 Usually look for 3 things: –

      4.1.1 Understand the terms you are signing. Do not sign if you do not understand;

      4.1.2 The details in the agreement are what you are agreeing to; and

      4.1.3 Do not be forced to sign it.

  9. What are your rights as a worker? (Singapore context)
  10. 5.1 You have to review the terms of your contract at the outset, especially if you are an independent contractor or part-time worker; and

    5.2 If you are a permanent employee, you can check with the Ministry of Manpower as well as the Employment Act.

  11. Where can one go to resolve a ‘Breach of Contract’ dispute?
  12. 6.1 You can go for Mediation, such as Singapore Mediation Centre, Law Society Mediation Scheme;

    6.2 If all else fails, you can make a claim at the courts, i.e. the State Courts of the High Court.

  13. What about foreign workers? (Singapore context)
  14. 7.1 If you are a permanent employee, you can check with the Ministry of Manpower as well as the Employment of Foreign Manpower Act.

    7.2 Things to note under the Employment of Foreign Manpower Act:

    Prohibition of employment of foreign employee without work pass

    5.—(1) No person shall employ a foreign employee unless the foreign employee has a valid work pass.

    (2) No foreign employee shall be in the employment of an employer without a valid work pass.

    (3) No person shall employ a foreign employee otherwise than in accordance with the conditions of the foreign employee’s work pass.

    (4) In any proceedings for an offence under subsection (1), it shall not be a defence for a defendant to prove that he did not know that the employee was a foreigner unless the defendant further proves that he had exercised due diligence to ascertain the nationality of the employee.

    (5) For the purpose of subsection (4), a defendant shall not be deemed to have exercised due diligence unless he had checked the passport, document of identity or other travel document of the employee.

    (6) Any person who contravenes subsection (1) shall be guilty of an offence and shall —
    (a) be liable on conviction to a fine of not less than $5,000 and not more than $30,000 or to imprisonment for a term not exceeding 12 months or to both; and
    (b) on a second or subsequent conviction —
    (i) in the case of an individual, be punished with a fine of not less than $10,000 and not more than $30,000 and with imprisonment for a term of not less than one month and not more than 12 months; or
    (ii) in any other case, be punished with a fine of not less than $20,000 and not more than $60,000.

  15. What is the penalty for breaching of contract?
  16. 8.1 You can demand for compensation or a specific performance of the contract.

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