Collateral Contract Overview
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Questions and Answers

In the case of Tan Swee Hoe v Ali Hussain Brothers, what was the primary legal issue regarding the occupancy of the premises?

  • Whether the notice to quit was valid despite the oral agreement. (correct)
  • Whether R could stay indefinitely without a written contract.
  • Whether a written tenancy agreement overrides an oral agreement. (correct)
  • Whether the payment of tea money established tenancy rights.

    • What was the ruling in Tan Chong and Sons Motor Co v Alan McKnight regarding the car's compliance with regulations?

  • The buyer must provide evidence of damages to claim a warranty.
  • The salesman’s statement about compliance must be upheld over the written conditions. (correct)
  • The written agreement provided no warranties, so the statement was irrelevant.
  • The buyer was not entitled to any remedies for the salesman’s incorrect statement.

    • In Industrial & Agricultural Distribution Sdn Bhd v Golden Sands Construction Sdn Bhd, what did D rely on to return the excavators?

  • An implied warranty based on industry standards.
  • An oral collateral warranty stating the excavators could be returned without penalty. (correct)
  • A written warranty specifying return conditions.
  • A verbal agreement with no formal backing.

    • What limitation exists regarding collateral contracts in relation to main contracts?

    <p>Collateral contracts cannot negate the main contract’s terms. (D)</p> Signup and view all the answers

    What role does a warranty play in the context of contracts discussed?

    <p>A warranty may serve as a statement of fact within a contract. (C)</p> Signup and view all the answers

    What does the Parol Evidence Rule primarily aim to protect?

    <p>The integrity of written contracts (B)</p> Signup and view all the answers

    Under which section can an oral agreement that constitutes a condition precedent be admitted?

    <p>S.92(c) (B)</p> Signup and view all the answers

    Which of the following is NOT an exception to the Parol Evidence Rule?

    <p>Oral contracts without conditions (C)</p> Signup and view all the answers

    What is a characteristic of a collateral contract?

    <p>It can exist independently from the main contract. (A)</p> Signup and view all the answers

    Which section allows any fact that would invalidate a document to be proved?

    <p>S.92(a) (A)</p> Signup and view all the answers

    A collateral contract is defined as what?

    <p>A separate oral agreement related to a main written agreement (B)</p> Signup and view all the answers

    What are the elements required to establish the presence of a collateral contract?

    <p>A statement made with intention to be acted upon and reliance on it. (D)</p> Signup and view all the answers

    What does S.92(b) state regarding separate oral agreements?

    <p>They are admissible if not inconsistent with the written contract. (D)</p> Signup and view all the answers

    Which statement best describes the term 'warranty' in the context of collateral contracts?

    <p>It may serve as a legally binding guarantee linked to the main contract. (B)</p> Signup and view all the answers

    In the event of conflicting terms, which has precedence?

    <p>The collateral contract takes precedence over the written contract. (C)</p> Signup and view all the answers

    Which of the following is a reason that the Parol Evidence Rule was established?

    <p>To prevent the modification of written contracts by oral testimony (A)</p> Signup and view all the answers

    What does the parol evidence rule state in relation to collateral contracts?

    <p>Collateral contracts are exceptions to the parol evidence rule. (C)</p> Signup and view all the answers

    In the context of the Parol Evidence Rule, what does 'want of consideration' refer to?

    <p>The deficiency in something of value exchanged (C)</p> Signup and view all the answers

    Which of the following describes how a collateral contract affects a main contract?

    <p>It can exist alongside the main contract without destroying it. (B)</p> Signup and view all the answers

    Why might oral terms be considered valid despite the Parol Evidence Rule?

    <p>They are part of a collateral contract. (C)</p> Signup and view all the answers

    What is an important factor for a statement to be valid as a collateral contract?

    <p>The speaker must intend for the statement to be relied upon. (B)</p> Signup and view all the answers

    Which of the following scenarios would most likely result in the creation of a collateral contract?

    <p>One party promises additional benefits contingent upon signing the main contract. (B)</p> Signup and view all the answers

    What condition must be met for a party to withdraw a promise under promissory estoppel?

    <p>The promisor must give reasonable notice. (C)</p> Signup and view all the answers

    Which of the following statements about promissory estoppel is true?

    <p>It prevents temporary enforcement of a contract under certain conditions. (D)</p> Signup and view all the answers

    In the case of Chuan Hong Petrol Station Pte Ltd v Shell Singapore Pte Ltd, what was established regarding the parol evidence rule?

    <p>It operates alongside the doctrine of promissory estoppel. (A)</p> Signup and view all the answers

    What is one prerequisite for the application of promissory estoppel?

    <p>The parties must be in an existing contractual relationship. (B)</p> Signup and view all the answers

    What does the doctrine of promissory estoppel primarily focus on?

    <p>Preventing a party from taking advantage of another's reliance on a promise. (C)</p> Signup and view all the answers

    Which of the following is NOT a condition required for enforcing a promise under promissory estoppel?

    <p>The promise must be communicated verbally. (A)</p> Signup and view all the answers

    What is the main effect of the parol evidence rule?

    <p>It acknowledges the importance of written contracts over verbal agreements. (A)</p> Signup and view all the answers

    How does the doctrine of promissory estoppel differ from the parol evidence rule?

    <p>Promissory estoppel aims to enforce promises made, while the parol evidence rule focuses on written contracts. (B)</p> Signup and view all the answers

    Study Notes

    Collateral Contract

    • A collateral contract is a separate contract existing alongside a main contract.
    • It's a supplementary agreement, created when one party agrees to a condition to induce the other party to enter a contract.
    • This intention to be bound must be demonstrable.
    • A collateral contract is separate from the main agreement, but is often linked to it.

    Elements of a Collateral Contract

    • It's an oral contract.

    • It exists alongside (side-by-side), although it is independent of, the main contract.

    • If the terms of the two contracts contradict each other, the collateral contract takes precedence but cannot invalidate the main agreement.

    • An exception to the parole evidence rule, where oral statements are considered.

    • A third party can still create a collateral contract.

    • A statement with intent to be relied on and that induces the contract signing constitutes a collateral contract.

    • The statement must function as a warranty.

    Establishing a Collateral Contract

    • The defendant made a statement with the intent for it to be relied on;
    • The statement induced the signing of the contract;
    • The statement operates as a warranty.

    Warranty as a Collateral Contract

    • A warranty is one meaning of warranty; it's a guarantee of the legally binding quality of the subsidiary main contract.
    • Another meaning of warranty is as an unimportant term of a contract—a clause or condition.

    Contradiction/Overrides

    • A pre-contractual statement made by one party can supersede or contradict the terms of the main written contract.
    • This can override the printed stipulations of a contract.
    • An overruling statement overrides the printed or written terms of a contract.

    Parol Evidence Rule

    • Section 91 and 92 of the Evidence Act 1950 prohibits the oral amendment of a written contract.
    • The rule prevents the addition or subtraction of terms from a written contract.
    • It protects the integrity of written contracts.
    • Section 91 states that when the terms of a contract are set out in a document by agreement, no outside evidence can verify those terms.
    • Section 92 states that no oral statements can be admitted as evidence in a contractual dispute to contradict, alter, or add to an existing agreement.

    Exceptions to the Parol Evidence Rule

    • Collateral contract
    • Promissory estoppel

    Collateral Contract (Exceptions to the Parol Evidence Rule)

    • The collateral contract is a separate agreement that stands alongside the main written contract.

    Promissory Estoppel

    • Promissory estoppel occurs when one party in a pre-existing contractual relationship makes a promise or statement to the other party, and that other party relies upon this as modification to the original contract.
    • It is to prevent a party from going back on the premise.
    • Conditions include:
      • Parties are in a pre-existing contractual relationship;
      • A promise or statement is made that alters the original contract terms;
      • One party relies on the promise, changing their position;
      • The promisor should give reasonable notice that the promise is to be revoked.

    Evidence Act Exceptions

    • Specific factors such as fraud, illegality, lack of capacity, or errors in creation of the contract can invalidate a written agreement.
    • A separate oral agreement, silent on the matter in the contract and not contradictory to the written terms, can still be valid.
    • A separate oral agreement that acts as a condition precedent to any contractual obligation is still valid.

    Case Studies of Collateral Contract

    • Tan Swee Hoe v Ali Hussain Brothers: A party relied on an oral side-agreement, despite the main written contract not mentioning it.
    • Tan Chong & Sons Motor Co v Alan McKnight: A car salesman's oral statement about car compliance overrode the printed contract's disclaimer of warranty.
    • Industrial & Agricultural Distribution Sdn Bhd v Golden Sands Construction Sdn Bhd: A party returned unsuitable excavators relying on an oral assurance.

    Summary of Collateral Contract

    • A collateral contract is separate from but linked to the main contract.
    • It has specific elements, including the intent and reliance on statements.
    • It's an exception to the parole evidence rule, allowing oral promises to override written stipulations.
    • Cases illustrate the practical applications of collateral contracts in various scenarios.

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    Related Documents

    Collateral Contract & Parol Evidence Rule PDF

    Description

    This quiz covers the essentials of collateral contracts, including their nature and legal significance. It explores the elements that constitute a collateral contract and how they relate to main contracts. Understanding these concepts is crucial for interpreting contract law effectively.

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