Podcast
Questions and Answers
In the context of collateral contracts, which statement is true regarding oral agreements?
In the context of collateral contracts, which statement is true regarding oral agreements?
What was the main finding in the case of Tan Chong and Sons Motor Co v Alan McKnight regarding warranties?
What was the main finding in the case of Tan Chong and Sons Motor Co v Alan McKnight regarding warranties?
Which scenario illustrates the application of an exception to the parol evidence rule?
Which scenario illustrates the application of an exception to the parol evidence rule?
What was the key issue in the case of D returning excavators to P after claiming they were unsuitable?
What was the key issue in the case of D returning excavators to P after claiming they were unsuitable?
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What is the significance of having a warranty in a contract?
What is the significance of having a warranty in a contract?
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What is the function of the doctrine of promissory estoppel?
What is the function of the doctrine of promissory estoppel?
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Which condition is NOT required for promissory estoppel to be applicable?
Which condition is NOT required for promissory estoppel to be applicable?
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In the context of collateral contracts, what does parol evidence allow?
In the context of collateral contracts, what does parol evidence allow?
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Which of the following best describes collateral contracts?
Which of the following best describes collateral contracts?
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What does the Parol Evidence Rule primarily restrict?
What does the Parol Evidence Rule primarily restrict?
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Which of the following is not a condition for establishing promissory estoppel?
Which of the following is not a condition for establishing promissory estoppel?
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Which aspect does NOT fall under the purview of the Parol Evidence Rule?
Which aspect does NOT fall under the purview of the Parol Evidence Rule?
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How does the evidence act of 1950 relate to oral agreements?
How does the evidence act of 1950 relate to oral agreements?
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What is the primary purpose of the Parol Evidence Rule?
What is the primary purpose of the Parol Evidence Rule?
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Which of the following is NOT an exception to the Parol Evidence Rule?
Which of the following is NOT an exception to the Parol Evidence Rule?
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Under Section 92(b) of the Evidence Act, which type of oral agreement can be admitted?
Under Section 92(b) of the Evidence Act, which type of oral agreement can be admitted?
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What is a collateral contract?
What is a collateral contract?
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Which of the following statements about promissory estoppel is true?
Which of the following statements about promissory estoppel is true?
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Which factor can invalidate a written document according to Section 92(a)?
Which factor can invalidate a written document according to Section 92(a)?
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Section 91 of the Evidence Act states that no evidence shall be given to prove the terms of a contract except for what?
Section 91 of the Evidence Act states that no evidence shall be given to prove the terms of a contract except for what?
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What does the Parol Evidence Rule primarily aim to prevent?
What does the Parol Evidence Rule primarily aim to prevent?
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In the context of the Parol Evidence Rule, what is meant by 'condition precedent' as per Section 92(c)?
In the context of the Parol Evidence Rule, what is meant by 'condition precedent' as per Section 92(c)?
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Study Notes
Collateral Contract Overview
- A collateral contract is a separate contract made alongside a main contract.
- It's a promise made during negotiations, and if the intention to be bound is clear, it can create a contractual obligation.
- This separate contract is subsidiary to the main contract.
- It can be created in situations where one party refuses to enter the main contract unless the other party agrees to a separate promise.
Elements of a Collateral Contract
- It's an oral contract.
- It exists alongside the main contract.
- It's independent of the main contract.
- If the terms contradict, the collateral contract has precedence over the written contract, but it cannot nullify the essential elements of the main contract.
- It's an exception to the parole evidence rule.
Establishing a Collateral Contract
- The promisor (defendant) made a statement with the intention it would be relied upon.
- That statement induced the other party to enter the main contract.
- The statement is a warranty (a promise of fact).
Types of Warranties Defined
- A warranty as a collateral guarantee forms a separate legally binding promise.
- A warranty as an insignificant contract term is a promise of fact within the primary contract.
Case Examples (Illustrative)
- Kluang Wood Products Sdn Bhd & Anor v Hong Leong Finance Berhad and Anor [1999]: This case demonstrates how to establish a collateral contract.
- Tan Chong & Sons Motor Co Sdn Bhd v Alan McKnight: Highlights a situation where a statement made by a salesperson overrides the specific condition clause in the main contract.
- Tan Swee Hoe v Ali Hussain Brothers: Emphasizes the "side-by-side" existence of an oral agreement alongside a written contract. Oral agreement creates a separate collateral contract, not contradicting the written contract conditions.
- Industrial & Agricultural Distribution Sdn Bhd v Golden Sands Construction Sdn Bhd [1993]: Illustrates a case where an oral collateral warranty allowed one party to return an unsatisfactory product.
Parol Evidence Rule
- Section 91 and 92 of the Evidence Act 1950 prohibit introducing oral evidence that contradicts, adds to, or subtracts from a written contract.
- This rule protects the integrity of written agreements.
Exceptions to the Parol Evidence Rule
- Collateral Contract: This is a primary exception to the rule.
- Sections 92(a) - (c) of the Evidence Act 1950: Exceptions to the rule involving issues such as fraud, incapacity, or mistake.
- Promissory Estoppel: A doctrine preventing a party from going back on a promise, even if not legally binding, if the other party relied on that promise to their detriment.
Distinguishing Collateral Contracts and Promissory Estoppel
- A collateral contract establishes a separate contractual agreement alongside a main contract.
- Promissory estoppel stops a party from enforcing the main contract if the original promise is relied upon, thus preventing detriment. It doesn't create a new contract.
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Description
This quiz explores the concept and elements of collateral contracts in legal negotiations. Understanding how these subsidiary agreements relate to main contracts will enhance your comprehension of contractual obligations. Test your knowledge on their establishment and legal significance.
