Freedom of choice of applicable law is generally upheld if legal and not against public policy. If there is no express choice, the courts will look at whether a choice was implied, failing which the courts will then determine the law with the “closest and most real connection” to the contract to be the proper law of the contract.

There is no general requirement for a commercial contract to be in writing. Subject to exceptions, commercial contracts may be entered into orally or in writing, and may be express or inferred from conduct.

Exceptions include certain statutes, eg, the Civil Law Act 1909 (CLA), that require certain types of contracts to be in writing, eg, guarantees, dispositions of interests in immovable property.

Under the Electronic Transactions Act 2010 (ETA), electronic records and signatures are legally effective except for excluded matters (eg, wills, powers of attorney, dispositions of immovable property).

The following are some key Singapore statutes affecting commercial contracts:

• Sale of Goods Act 1979 (SOGA);
• Unfair Contract Terms Act 1977 (UCTA);
• Misrepresentation Act 1967;
• Contracts (Rights of Third Parties) Act 2001;
• Frustrated Contracts Act 1959 (FCA);
• Consumer Protection (Fair Trading) Act 2003 (CPFTA)
• Bills of Sale Act 1886;
• CLA; and
• ETA.

Other Singapore statutes that also contain provisions which impact on commercial contracts include the Limitation Act 1959, Evidence Act 1893, Companies Act 1967, Insolvency, Restructuring and Dissolution Act 2018, Personal Data Protection Act 2012 (PDPA) and Competition Act 2004.

The United Nations Convention on Contracts for the International Sale of Goods (CISG) forms part of Singapore domestic law under the Sale of Goods (United Nations Convention) Act 1995 (SGUNCA).

Under SGUNCA, CISG applies to the sale of goods between parties with places of business in different CISG contracting states. The provisions of CISG prevail over any other law in force in Singapore to the extent of any inconsistency.

SOGA applies to a contract of sale of goods, which is defined as a contract, whether absolute or conditional, by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.

Both CISG and SOGA may be excluded by contract. Under CISG, parties may exclude the application of CISG or derogate from or vary the effect of any of its provisions. Similarly, SOGA provides that subject to UCTA, a right, duty or liability under a contract of sale of goods which arises by implication of law may be negatived or varied by express agreement, or by the course of dealing between the parties, or by such usage as binds both parties to the contract.

Apart from the scope of application (set out above), broadly, some key differences between SOGA and CISG in their application to contracts of sale of goods would be as follows:

• Common law vs civil law: SOGA preserves the application of common law to contracts of sale of goods, save to the extent that they are inconsistent with its provisions. CISG’s principles, on the other hand, contain elements from both civil law and common law traditions; eg, CISG states in article 7 that in interpreting CISG, regard is to be had to, among other things, the observance of good faith in international trade. This is not a common law principle.
• Consumer transactions: SOGA applies to consumer as well as non-consumer sales. CISG excludes in article 2 sales of goods bought for personal, family or household use (unless the seller neither knew nor ought to have known that the goods were bought for such use).
• Formation: In general, SOGA follows common law contract formation rules. CISG, on the other hand, sets out a different offer and acceptance framework within its own rules, and does not require consideration.
• Implied terms: SOGA implies certain conditions (eg, as to title, description, quality). CISG applies the concept of conformity rather than UK-style implied terms.
• Property: SOGA deals with the transfer of property under the contract. CISG in article 4 makes clear that CISG is not concerned with the effect the contract may have on the property in the goods sold; in general, CISG governs only the formation of the contract of sale and the rights and obligations of the seller and buyer arising thereunder.
• Risk: SOGA generally ties the passing of risk to the passing of property, unless otherwise agreed. CISG contains its own rules relating to the passing of risk.
• Remedies: CISG and SOGA have contrasting approaches. SOGA applies a UK-style condition vs warranty dichotomy impacting available remedies of rejection vs damages. CISG has its own unified remedies framework without the condition/warranty distinction; it allows avoidance for fundamental breach, price reduction, specific performance (subject to forum law) and damages. Notice and opportunity to cure are central concepts.

There are no specific statutes or mandatory rules regulating franchise contracts in Singapore.

Apart from SOGA and SGUNCA, set out below is a non-exhaustive list of statutes whose provisions and subsidiary legislation impact contracts in the following specific areas:

• Hire Purchase Act 1969, CPFTA: hire purchase, consumer contracts including consumer credit;
• Employment Act 1968: employment contracts;
• Land Titles Act 1993, Conveyancing and Law of Property Act 1886: real property transactions;
• Supply of Goods Act 1982: contracts for transfer of the property in goods (other than by way of sale, hire purchase or security or made by deed without consideration)
• Securities and Futures Act 2001 (SFA), Financial Advisers Act 2001, Payment Services Act 2019, notices and guidelines issued by the Monetary Authority of Singapore (MAS): contracts relating to provision of financial services including advisory and payments;
• Moneylenders Act 2008: moneylending transactions;
• Partnership Act 1890, Limited Liability Partnerships Act 2005: partnership contracts and limited liability partnership contracts; and
• Bills of Exchange 1949: bills of exchange, promissory notes.

(Please note that there are also specific sectoral statutes, eg, those regulating marine insurance, carriage/shipping and aviation, which have not been included in the list above.)

UCTA and the Misrepresentation Act 1967 impose mandatory reasonableness controls on exclusions/limitations in several contexts.

PDPA and its subsidiary legislation regulate the collection, use and disclosure of personal data and related data privacy matters.

The Competition Act 2004 prohibits anti-competitive agreements and the abuse of a dominant position, both of which may be manifested in provisions in a commercial contract.

While there have been no especially notable trends in Singapore concerning commercial contracts over the past 12 months, the following are some notable recent court decisions and developments:

• In the area of arbitration agreements, the Singapore Court of Appeal in Anupam Mittal v Westbridge Ventures II [2023] SGCA 1 applied the three-stage test in BCY v BCZ to determine the proper law of an arbitration agreement. The Singapore courts’ approach is distinct from the UK Supreme Court’s approach in the landmark case of Enka v Chubb. The Anupan Mittal case is also noteworthy for clarifying the law applicable to arbitrability at the pre-award stage. The court cited its own judgment in Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373 that the essential criterion of non-arbitrability is whether the subject matter of the dispute is of such a nature as to make it contrary to public policy for that dispute to be resolved by arbitration, and held that the public policy in question is both the public policy of the law that governs the arbitration agreement as well as the public policy of Singapore as the seat of the arbitration.
• On general contractual interpretation, the General Division of the High Court in Bhoomatidevi d/o Kishinchand Chugani Mrs Kavita Gope Mirwani v Nantakumar s/o V Ramachandra and another [2023] SGHC 37 followed the approach in Zurich Insurance (Singapore) Pte Ltd v B Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 (“Zurich Insurance”) and Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd) [2015] 5 SLR 1187 in the interpretation of the contract in question, taking a contextual approach in interpreting the contract while reiterating that the text of the contract should always be the first port of call and that context cannot be used to rewrite the contract text. The judgment discussed, among other things, the limits of relying on extrinsic evidence of subsequent conduct of the parties in ascertaining whether a contract has been formed and in aiding contractual interpretation; while there is no bar per se against the use of such evidence, any such use must be undertaken in a circumspect manner such that the text of the contract remains paramount.
• The ETA was amended in 2021 to adopt with modifications the UNCITRAL Model Law on Electronic Transferable Records adopted by the United Nations Commission on International Trade Law (UNCITRAL) to enable the creation and use of electronic transferable records, ie, electronic versions of transferable instructions or documents such as bills of lading and bills of exchange, which are used extensively in international trade.
• In the area of penalty clauses, the Singapore Court of Appeal in Denka Advantech Pte Ltd and another v Seraya Energy Pte Ltd and another [2020] SGCA 119 (“Denka Advantech”) made clear that Singapore has not adopted the UK Supreme Court Cavendish Square Holding “legitimate interest” reformulation; the approach in Dunlop Pneumatic Tyre Co, Ltd v New Garage and Motor Co, Ltd [1915] AC 79 (“Dunlop Pneumatic Tyre”) as applied by the Singapore courts continues.

Singapore courts apply a three-stage test to determine the governing law of a contract:

• Stage 1 (express choice): If there is an express choice of governing law, this will generally be upheld by Singapore courts if the choice is bona fide, legal and not contrary to Singapore public policy.
• Stage 2 (implied choice): If there is no express choice of governing law, Singapore courts will look at whether the intention of the parties as to the governing law can be inferred from the circumstances.
• Stage 3 (law of closest and most real connection): If there is neither an express nor implied choice of governing law, the Singapore courts will determine the system of law with the “closest and most real connection” to the contract as the putative proper law of the contract.

Stages 2 and 3 lie closely together on a spectrum, and courts may omit stage 2 if, eg, the distinction is artificial.

Implied choice may be inferred from circumstances such as the language or terminology used in the contract, the form of the transaction document, the place of residence or business of the parties, the currency of the contract and the commercial purpose of the transaction.

The law with the closest and most real connection is an objective test, assessed by the courts considering all relevant circumstances, including the place of contracting, the place of performance, the place of residence or business of the parties, and the nature and subject matter of the contract.

Regarding arbitration agreements, the three-stage test as highlighted above also applies to the arbitration agreement specifically (see 1.5 Significant Court Decisions or Legal Developments). The law of the seat has significant weight as the law with the closest connection to the arbitration agreement absent any other indication.

Mandatory Singapore law and/or Singapore public policy may apply regardless of a chosen foreign governing law in some cases, including the following:

• UCTA anti-avoidance: UCTA applies notwithstanding a contract term purporting to apply a foreign governing law where the term appears to be wholly or mainly for the purpose of evading the application of UCTA or where one of the parties dealt as a consumer while habitually resident in Singapore and where the essential steps necessary for making the contract were taken there.
• Misrepresentation Act 1967: Exclusion of liability for misrepresentation must satisfy the reasonableness requirement in UCTA.
• CPFTA: Consumer protections cannot be contracted out of, subject to the territorial requirements under the CPFTA being met; eg, Section 3 provides that Part 2 on Unfair Practices does not apply unless the supplier or consumer is resident in Singapore or the offer or acceptance relating to the consumer transaction is made in or sent from Singapore.
• Other statutes: Other statutes such as the Moneylenders Act 2008, Employment Act 1968, PDPA, Competition Act 2004, Stamp Duties Act 1929 and Land Titles Act 1993 contain local mandatory regimes or policies which may constrain or override contractual arrangements.
• Illegality/public policy: Contracts offending local illegality or public policy may not be enforced: Ochroid Trading Limited and Ole Prytz Rasmussen v Chua Siok Lui and Sim Eng Tong [2018] SCGA 5 (“Ochroid Trading”) sets out the law in detail. The Foreign Limitation Periods Act 2012 expressly provides that a limitation period under foreign law which would otherwise apply shall not be upheld to the extent that its application conflicts with public policy (Section 4).

Whether one party or both parties are local, the parties can choose a foreign jurisdiction under the contract, including an exclusive choice of court clause, subject to the limitations in 2.2 Overriding Local Laws.

The Choice of Court Agreements Act 2016, which implements the Hague Convention on Choice of Court Agreements, provides that for exclusive choice of court agreements (whether designating Singapore or another contracting state’s court), Singapore courts must generally stay or dismiss proceedings in favour of the chosen court. The Act sets out certain limited exceptions; eg, it does not apply to exclusive choice of court agreements in an employment contract, collective agreements or where one party is an individual consumer; it also empowers Singapore courts not to stay or dismiss proceedings where it would lead to manifest injustice or be contrary to Singapore public policy.

Non-exclusive and asymmetric clauses are enforceable under common law principles; the UK Spiliada (Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460) forum non conveniens test applies (Shanghai Turbo Enterprises Ltd v Liu Ming [2019] SGCA 11).

Parties may agree to arbitration whether or not they are Singapore parties. In general, Singapore law is strongly pro-arbitration. See 1.5 Significant Court Decisions or Legal Developments on arbitration agreements; generally speaking, properly drafted arbitration agreements that are not contrary to law or public policy will be enforced by the Singapore courts.

The International Arbitration Act 1994 (IAA) applies to international arbitrations; the Arbitration Act 2001 (AA) applies to domestic arbitrations, ie, those where the place of arbitration is in Singapore which are not covered by the IAA.

The IAA makes provision for the conduct of international commercial arbitrations based on the UNCITRAL Model Law on International Commercial Arbitration and to give effect to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).

While a complaint could technically be filed with Singapore courts, a party to the agreement could apply for a stay of proceedings and the courts will stay the proceedings unless it is satisfied that the arbitration agreement is null and void, inoperative or not capable of being performed (Section 6 IAA, which is based on New York Convention Article II(3)).

Singapore courts will also recognise and enforce foreign awards, subject to limited, well-defined exceptions, in line with the New York Convention (Articles II(3) and V(2) are given effect via the IAA).

The AA similarly provides for stay and set-aside on similar UNCITRAL Model Law-type grounds.

In terms of overriding mandatory local laws:

• Certain limited disputes are non-arbitrable as a matter of public policy (eg, winding-up orders). The IAA and AA have confirmed arbitrability for intellectual property (IP) rights-related disputes. There is no separate category for distributor protection rights. Singapore does not have a general “distributor protection” or “commercial agency” statute comparable to those in some jurisdictions. Consequently, there is no automatic application of special mandatory distributor rights simply because a party is Singaporean. Such disputes are ordinarily arbitrable and decided in the same manner as any other dispute.
• Mandatory Singapore laws may still apply as substantive law in arbitration when applicable (see 2.2 Overriding Local Laws), but do not generally displace the tribunal’s jurisdiction. If a Singapore statute expressly applies regardless of contract terms or governing law, a Singapore court or tribunal seated in Singapore will give effect to it.

Generally speaking, apart from the exceptions referred to in 1.2 Form, it is possible to conclude an effective contract under Singapore law by any mode that objectively shows offer, acceptance, consideration, and intention to create legal relations. Valid formation can be oral or in writing (including electronically under the ETA), by exchange of emails/letters, by click-wrap/shrink-wrap agreement, by acceptance by conduct, or by deeds (for contracts without consideration or where a deed is preferred), etc.

There is no standalone doctrine of culpa in contrahendo or its equivalent. Instead, pre-contract liability is addressed via existing causes of action both under common law and statute, such as:

• misrepresentation (under common law and the Misrepresentation Act 1967);
• negligent misstatement;
• deceit;
• undue influence/unconscionability (in limited cases);
• breach of confidentiality and misuse of information;
• estoppel (proprietary estoppel as a cause of action; promissory estoppel as a shield); and
• contract devices such as enforceable “good faith”/endeavours clauses.

Remedies could include rescission, damages and/or equitable relief.

There is no general duty to negotiate in good faith unless there is an express contractual clause and it is sufficiently certain; courts are reluctant to imply such a duty into ordinary commercial negotiations.

In Singapore, a party’s standard terms can become part of a commercial contract by express agreement/signature, reasonable notice before or at formation (including incorporation by reference), or a proven prior course of dealing (a term can be brought in through a consistent prior course of dealing if, at the time of contracting, each party as a reasonable person would infer that the term formed part of their contracts; the courts will look at the facts and circumstances such as the number, recency, similarity and consistency of prior deals, and will generally apply a “high threshold”). The timing of the notice (reasonable notice given before or at the time of contracting (applicable to, eg, tickets, invoices, websites with clear hyperlinks)) and whether the terms previously had contractual force would be key factors. Singapore courts have held that there is no scope of application of the “red hand” rule (ie, onerous or unusual clauses (eg, wide exclusions, short time-bars) require heightened notice) where there is a signed document with a clear incorporating clause.

As referred to in 3.3 Standard Terms and Conditions, Singapore law gives effect to a party’s standard terms only if they are incorporated into the contract by a recognised method at or before formation (unless the parties objectively agreed on later supplementation). Certain exclusions/limitations are subject to statutory controls (eg, UCTA, which imposes a reasonableness test to exclusion/limitation clauses where a party deals on the other’s written standard terms of business).

In the interpretation of contractual terms, courts apply the contextual method per Zurich Insurance and focus on the ordinary meaning in context. The application of the contra proferentem rule is limited to cases where there remains genuine ambiguity after applying the ordinary contextual approach. In that case, it works as a tie-breaker to resolve the ambiguity against the party that drafted and/or relies on it.

Even if standard terms are incorporated, Singapore courts may refuse to enforce specific clauses, eg, if they fail UCTA’s reasonableness test. Section 3 of UCTA applies between contracting parties where one party “deals as consumer” or contracts on the other’s written standard terms of business. It subjects terms that (i) exclude or restrict liability for breach, or (ii) permit substantially different/no performance, to the statutory “reasonableness” test. Also see 3.4 Application of Local Law on Standard Terms on the contra proferentem rule.

Additionally, the CPFTA prohibits unfair practices in consumer transactions; the CPFTA cannot be contracted out of.

Singapore courts apply usual offer-and-acceptance to the exchanged forms and decide which document was the final and unqualified acceptance on which performance proceeded. Often that yields a “last shot” result, but only if, on the facts, the last document was truly a counter-offer that was accepted by conduct. Specific negotiated terms or a later, more specific contract can trump boilerplate in standard terms. Contextual approach will apply to the interpretation of the contract.

The above may not be the case for contracts for sale of goods under CISG, which has its own contract formation rules (see 1.3 Application of Local Legislation to Commercial Contracts).

As mentioned in 1.2 Form and elaborated on in 3.1 Necessary Form, for most commercial contracts in Singapore, there is no requirement for a wet-ink “original” or a notarial deed; only in specific cases when a statute prescribes formality. Contracts may be oral, written or electronic. Subject to limited exclusions (eg, wills, powers of attorney, dispositions of immovable property), electronic signatures (including DocuSign-type methods) are expressly recognised under the ETA, provided the method identifies the signer and indicates intent, and is reliable or proven in fact. There is generally no notarial deed requirement, though certain specific categories of documents are typically or commonly executed by deed, eg, powers of attorney. Certain land dealings, eg, dispositions of real property interests under the Conveyancing and Law of Property Act 1886 and Land Titles Act 1993, may be required under seal to follow specific statutory and Singapore Land Authority electronic lodgement formalities. Similarly, certain sectoral statutes (eg, the Merchant Shipping Act 1995) may require prescribed forms under seal for certain documents, eg, bills of sale for transfer of ship ownership. Deeds may also be used where consideration may be lacking; eg, deed polls, releases or variations without consideration are typically executed by deed.

Generally speaking, apart from specific exceptions, no official registration of commercial contracts is necessary. Exceptions include:

• Company charges are registrable under Section 131 of the Companies Act 1967 with the Accounting and Corporate Regulatory Authority Singapore (ACRA) within the prescribed timeline, failing which the security could be void against liquidators and creditors.
• Land/real estate-related transactions such as transfers, leases and mortgages under the Land Titles Act 1993 require registration to be effective to pass the estate or interest in land.
• Under the Trade Marks Act 1998 and subsidiary legislation, prescribed particulars of specified “registrable transactions” such as an assignment or grant of licence or security interest relating to a registered trade should be entered into the register in order to be effective against third parties acquiring conflicting interests in ignorance of the transaction.
• Under the Stamp Duties Act 1929, instruments subject to stamp duty must be stamped on a timely basis; the effect of non-stamping is to render the instrument inadmissible in evidence.
• Sectoral statutes on aircraft and ships contain registration regimes.

There should be offer, acceptance, consideration (except when executed under seal/by deed), and intention to create legal relations. Additional factors include certainty of terms, capacity and authority on the part of the parties to enter into the contract and proper execution by them, the contract not offending legality or public policy, and applicable statutory formalities such as stamping and registration procedures being complied with. Please refer to 3.1 Necessary Form to 3.8 Official Registration for more information.

B2B and B2C contracts are both subject to general contract law (both common law and regimes such as UCTA and the Misrepresentation Act 1967) as well as statutes such SOGA (unless excluded by contract) and PDPA (please see 1.3 Application of Local Legislation to Commercial Contracts and 1.4 Mandatory Rules for Specific Contracts for more extensive lists of applicable statutes, and 3.7 Signatures and Notarial Deeds and 3.8 Official Registration on formalities and registration).

In general, B2C contracts are additionally subject to consumer-specific controls (eg, CPFTA, UCTA provisions that apply to consumers) which B2B contracts are not subject to, in addition to general contract law.

B2C contracts are not covered by SGUNCA/CISG to the extent that they relate to sales of goods bought for personal, family or household use (unless the seller neither knew nor ought to have known that the goods were bought for such use (see 1.3 Application of Local Legislation to Commercial Contracts)).

UCTA regulates more stringently in a consumer context. There are also sectoral consumer regulations (eg, travel, prepayment packages) and MAS e-payment guidelines (for covered providers). See 4.2 Consumer Protection Rights for a summary of CPFTA consumer protections.

CPFTA rights include:

• remedies for unfair practices such as misleading or deceptive statements or actions, false claims or taking unfair advantage by suppliers); and
• “lemon law”-type remedies for non-conforming goods such as repair or replacement, price reduction or rescission.

In addition, the Consumer Association of Singapore (CASE), the Singapore Tourism Board (STB) and the Competition and Consumer Commission of Singapore all may seek court injunctions against suppliers who engage in unfair practices. Prior thereto, CASE and STB may engage the supplier to sign a voluntary compliance agreement to stop the practice and compensate consumers.

Regulations under the CPFTA prescribe mandatory disclosures, opt-out practices and cooling off/cancellation mechanics, among others.

Small Claims Tribunals set up under the Small Claims Tribunals Act 1984 provide efficient recourse for many consumer disputes.

In a consumer context, UCTA subjects terms excluding or restricting liability and indemnities to the reasonableness test, and prohibits the exclusion of certain terms under SOGA and the Hire Purchase Act 1969.

Individuals have protections under PDPA in relation to their personal data, including the right to consent to its collection, use or disclosure, limitation of the purpose and extent of its use by an organisation, right of access to and correction of personal data, and data breach notification obligations imposed on organisations.

The above is additional to protections under general contract and tort law (both common law and regimes such as the Misrepresentation Act 1967 and UCTA, eg, usual remedies for misrepresentation or breach of contract) and specific statutes.

The response below focuses on the concept of civil liability in Singapore that is broadly relevant to commercial contracts. It does not address criminal liability, nor does it address equitable liability such as breach of fiduciary duty or equitable estoppel which may arise in narrow fact scenarios.

For both contract and tort, the key building blocks of liability under Singapore law are legal responsibility (in tort, a duty of care arising under general law, and in contract, contractual terms creating legal obligations); breach (of the duty of care or other tortious duty or of an express or implied term of contract); causation (factual and legal); and loss qualified by remoteness and foreseeability, subject to the innocent party’s duty to mitigate its loss, and also subject to any defences (such as valid contractual limitation or exclusion clauses) and statutory limitation.

Singapore law recognises that a single act or omission can give rise to both contractual and tortious liability – known as concurrent liability.

For contractual liability, damages by default aim to put the innocent party in the position as if the contract had been performed (“expectation loss”). In exceptional cases, eg, if it is impossible to prove expectation loss, reliance loss may be awarded instead, ie, damages to compensate the claimant for wasted expenditure. Double recovery is not permitted.

For tortious liability, damages aim to put the innocent party in the position before the tort.

The measure of damages recoverable under contract and tort can be materially different. The innocent party can choose to sue in contract, in tort or both, but cannot recover twice for the same loss. Contributory fault or contributory negligence can affect the measure of tortious damages claimable, and in cases of concurrent liability, may also impact the amount of contractual damages as well.

Torts commonly seen in the context of commercial contracts include negligence (negligent conduct causing loss), negligent misstatement (giving false or misleading information relied upon by the innocent party), deceit/fraudulent misrepresentation (knowingly false statements inducing a contract) and economic torts (eg, conspiracy or inducing breach of contract).

In some cases, tort can be excluded by contract, eg, if parties’ rights and remedies are found by the court to have been comprehensively defined in the contract.

Punitive or exemplary damages are not awarded for breach of contract.

In tort, exemplary damages may be awarded, but only in limited exceptional situations warranted by the defendant’s conduct, eg, in some cases of intentional torts such as fraud or defamation or where there has been egregious misconduct of the defendant involving conscious wrongdoing.

See 5.1 Concept of Liability, which explains the measure of damages in each case. The primary purpose of damages in both cases is compensation, not punishment.

There is no single “maximum liability” cap on damages, whether in aggregate or based on specific damage categories, though there are statutory limits or caps in specific cases; eg, provisions for civil liability for market misconduct under the SFA provide for compensation up to a defined maximum recoverable amount, and actions under the Trade Marks Act 1998 for trademark infringement involving the use of a counterfeit mark entitle the claimant to statutory damages up to a maximum sum. Liability is limited by legal doctrines (eg, causation, remoteness and foreseeability, mitigation) and contractual allocation of risk (eg, limitation or exclusion clauses, subject to UCTA reasonableness).

Damages potentially claimable include direct, indirect and consequential losses. Loss of profit may be recoverable if it is established with reasonable certainty, caused by the breach, and is foreseeable and not too remote. The quantum claimable is based on the specific facts and evidence.

Commercial contracts typically include limitation of liability clauses which impact the damages claimable, eg, capping damages to a fixed amount or excluding consequential or indirect loss. These would be enforceable subject to UCTA reasonableness.

To be clear, while it is not termed “strict liability” as such, contractual liability is generally strict in the sense that the mere failure to perform a contractual obligation is sufficient without having to prove intent, negligence or fault. What is key is whether the contractual obligation was fulfilled, not whether the breaching party intended to cause or was negligent in causing the breach.

For completeness, liability without fault or strict liability exists in Singapore in both civil and criminal/regulatory contexts.

Strict or near-strict regimes may arise under statute or common law. Some key contexts in which they arise are as follows:

• IP (eg, trade mark or copyright) infringement;
• product liability (under the CPFTA and common law). Singapore does not have an EU-style product liability statute. Product claims typically rely on contract (eg, breach of implied SOGA warranties) or tort (including Rylands v Fletcher-type liability);
• vicarious liability; ie, employers are strictly liable for wrongful acts of their employees committed in the course of employment, even if the employer was not at fault;
• breach of statutory duty (if the statute imposes absolute obligation); and
• breach of trust/fiduciary duties, which can be strict for accounting of unauthorised gains.

Criminal or regulatory statutes also contain numerous strict liability offences or breaches, eg, in the areas of environmental protection, workplace safety, food safety and public health, road traffic, data protection, financial regulation, to name a few. In most of these, proof of intent or negligence is not required, though the offending party may be able to avail itself of statutory defences.

Singapore law generally allows parties the freedom to contract and to allocate risk as they deem fit. It follows that a clearly drafted contractual limitation of liability is generally enforceable under Singapore law, provided that it does not offend statutory controls (primarily, UCTA reasonableness) and public policy (eg, exclusion of liability for fraud).

Under UCTA, an exemption of liability clause for negligence or breach of contract and indemnity clauses in respect of liability that may be incurred for negligence or breach of contract must satisfy the requirement of reasonableness.

UCTA generally applies more stringently in cases where one party deals as consumer or on the other’s written standard terms of business; eg, Section 3, which imposes the reasonableness requirement on exclusion or restriction of liability clauses for breach of contract, only applies when this is the case. Also see 3.4 Application of Local Law on Standard Terms on the application of the contra proferentem rule to standard terms; even if valid under UCTA, exclusion and limitation clauses are construed strictly and ambiguities interpreted contra proferentem against the drafter. It follows that it makes a material difference whether the respective clause is a standard term or is individually negotiated. Singapore courts would tend to uphold such clauses more willingly if they were individually negotiated clauses between sophisticated parties or commercial entities of equal bargaining power.

There is no free-standing common law force majeure concept under Singapore law. Force majeure operates only if the contract provides expressly for it. If the contract is silent, relief only arises under the doctrine of frustration under common law and under the FCA.

The common law frustration principle holds that a contract is frustrated when, after it was made, an event occurs without the fault of either party that makes performance impossible or renders it radically different from what the parties originally agreed. If frustration can be established, the contract is automatically discharged and both parties released from further performance obligations.

It is insufficient to establish frustration if the event merely increases costs, delays performance or makes it less profitable. The event must also be truly outside the parties’ control. To establish frustration successfully, parties should be prepared to demonstrate that they made diligent efforts to perform notwithstanding the event (eg, pursuing substitutes, practicable rerouting, reasonable contingency measures, etc).

Once frustration is established, the FCA provides for the adjustment of the losses and benefits between the parties, subject to the court’s discretion (apart from limited cases, eg, charterparties, which are excluded under the FCA).

Notably, if a force majeure clause is contained in the contract, it can exclude or modify the application of the frustration doctrine and tailor the relief.

It is fairly standard practice in Singapore commercial contracts (particularly in the areas of construction, energy and infrastructure, supply or manufacturing agreements, shipping, trade and logistics) to include a force majeure clause or relief from performance clause. The clause would:

• define the events (eg, acts of God, government actions, epidemics, supply chain disruptions, etc) (as well as any events which parties agree to specifically exclude from the application of the clause); and
• specify notice and mitigation requirements, and consequences on the contract such as suspension, extension and/or termination.

Absence of such a clause does not bar relief under frustration, but the threshold for frustration is higher and narrower. Please also see 6.1 Concept of Force Majeure.

There is no general doctrine akin to civil law hardship or the doctrine of imprévision (allowing for renegotiation of the contract in the event of fault-free unforeseeable change in circumstances resulting in excessive burden for one party) under Singapore law. Singapore courts will not rewrite a bad bargain for mere hardship or economic change. Parties are expected to allocate risk expressly through their negotiations, eg, through price-adjustment, indexation and/or material adverse change clauses. Relief can be obtained only if force majeure (within the language of the force majeure clause in the contract) or frustration can be established. Also see 6.1 Concept of Force Majeure and 6.2 Force Majeure Clauses.

The inclusion of a hardship clause is not standard practice in all commercial contracts given that such a clause would add uncertainty and lack of finality to the parties’ bargain, though such a clause is more commonly included in long-term supply/offtake, construction/infrastructure, energy/commodities and logistics contracts, with an international element, and where exposure to price volatility and risk is significant. The language of the clause and its scope are likely to vary with individual cases and depend on the parties’ bargaining positions and commercial expectations. The hardship clause may provide for notice, renegotiation, expert determination, price review or adjustment mechanics, price indexation, suspension and/or termination in the event of “hardship”, which the clause should define. It may also be limited to a good faith consultation obligation, which would have limited substantive effect. In the absence of such a clause, there is no statutory or common law right to renegotiate. A force majeure or termination clause in the contract could be relied on, or a specific price-adjustment trigger clause, rather than a general hardship provision.

As a preliminary general overview, Singapore law differentiates between conditions and warranties. The Singapore Court of Appeal case of RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another [2007] SGCA 39 sets out the situations entitling an innocent party to terminate the contract at common law. These include: if there is an express termination right, if the party in breach renounces the contract, if a condition (as opposed to a warranty) is breached, and (following the approach under the seminal English Court of Appeal decision of Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26) if a breach has been committed, the consequences of which will deprive the innocent party of substantially the whole benefit which it was intended it should obtain from the contract.

Additional to the right of termination, other potential remedies for breach of contract include the following:

• Damages (see 5.1 Concept of Liability for a summary of the measure of damages).
• Debt claims.
• Liquidated damages: These are enforceable if they are not penal. To determine whether the clause is a penalty or not, as mentioned in the Denka Advantech case discussed in 1.5 Significant Court Decisions or Legal Developments, the applicable test in Singapore remains the statement of principles set out in the Dunlop Pneumatic Tyre case. The penalty rule applies only in the context of a breach of contract, and turns on whether the contractual provision concerned provided a genuine pre-estimate of the likely loss at the time of contracting.
• Specific performance and injunction (both of which are equitable and discretionary).
• If there has been misrepresentation leading to the entry into the contract, subject to qualifications, the contract may be voidable under common law, and the wronged party may be able to rescind the contract, in addition to claiming damages. Remedies for misrepresentation are laid out in the Misrepresentation Act 1967.
• In the context of unlawful contracts, restitutionary recovery may be available (subject to the limits set out in Ochroid Trading).
• Interest: In addition, the claimant could be entitled to pre- and post-judgment interest at prescribed or contractual rates.
• In the case of a sale of goods contract where the buyer is a consumer, additional “lemon law” type remedies under the CPFTA apply.

As regards the main conditions and warranties relating to non-fulfilment and late fulfilment, we deal with each of these in turn below.

In practical terms, properly drafted commercial contracts will contain express clauses setting out the conditions and warranties relating to non-fulfilment and late fulfilment that have been agreed by the parties. These would generally be enforced according to their express wording, subject to UCTA and any extenuating circumstances, eg, misrepresentation inducing entry into the contract.

In terms of non-fulfilment, in the context of sale of goods (which would be most commonly engaged), the key statute is SOGA, which, as explained in 1.3 Application of Local Legislation to Commercial Contracts, applies to contracts for sale of goods, and whose provisions, subject to UCTA, can be excluded by contract. (To avoid complicating the issue, this article does not cover non-fulfilment in the context of CISG; a summary of the differences between the SOGA and CISG approaches can be found in 1.3 Application of Local Legislation to Commercial Contracts.)

SOGA differentiates between conditions and warranties. SOGA-implied conditions relate to title, correspondence with description/sample, and satisfactory quality (subject to exceptions). There are some differences in the treatment of non-consumer vs consumer sales under SOGA.

In the context of certain other types of contracts, there may also be implied terms under common law; eg, there is an implied term in law that a skilled person will exercise reasonable skill and care in rendering services under a contract.

In terms of late fulfilment (again, in the context of sale of goods), under Singapore law, stipulations as to time (other than time of payment) in sale of goods contracts are generally of the essence unless a contrary intention appears from the terms of the contract. The court will consider the terms of the contract and the surrounding circumstances to determine whether time is of the essence. Accordingly, late delivery can be a breach of condition entitling termination for the affected delivery, subject to the contract’s terms and context.

As stated in 5.4 Contractual Limitation on Liability, Singapore law generally allows parties the freedom to contract and parties generally can agree any warranty and remedy terms and framework as they wish, subject to statutory controls (eg, UCTA) and public policy.

Thus, parties may:

• exclude/limit SOGA-implied terms subject to statutory controls (eg, UCTA, CPFTA) and provided it does not violate public policy;
• agree exclusive remedy clauses and limit consequential loss; and
• include liquidated damages (ensuring that the provisions are not penal).

Exclusions and limitations should be in clear, unambiguous language as they are strictly construed and contra proferentem will apply if they are ambiguously worded.