Contracts in Singapore
Around the world, there are varying requirements for the validity of a contract. Under Singapore Law, parties must be of legal age and sound mind prior to entering into a contract.
There must also be the satisfaction of these three conditions to make an agreement legally binding between parties:
1. An offer is made by one party. This must signify a promise to be accountable for the offer, and bound to the party that accepts it. However, an offer may be withdrawn before it is accepted, in which case the counterparty loses the right to accept it.
2. The counterparty accepts the offer. The acceptance must not have any conditions, otherwise, it will be considered a counter-offer. It may be expressed or implied through the counterparty’s conduct. Parties may now enter into contracts via electronic offers and acceptances, thanks to the Electronic Transactions Act.
3. There is an exchange or consideration. The parties must provide something capable of pecuniary estimation to each other, otherwise, it would amount to a gift. The value exchanged may not necessarily be equal to render the contract valid.
In the event of a contractual breach, Singapore Law provides the following legal remedies to the aggrieved party:
1. Damage Compensation
There are two kinds of damages that the aggrieved party may be compensated for. The first kind is contract damages resulting from a court order requiring the party in breach to compensate the aggrieved party for the financial losses suffered arising from the contract breach. The second kind is liquidated damages which are specified in the contract terms. The court will order the party in breach to compensate the aggrieved party based on their agreement.
2. Specific Performance
In certain instances, damages may not be enough to compensate the aggrieved party which would require the court to order specific performance. The party in breach must then perform their obligations as agreed upon under the contract.
As opposed to specific performance, an injunction may also be ordered by the court to prohibit or stop the party in breach from performing a certain act.