Paper 1 · Contract & Agency Law
Remedies for Breach of a Property Contract
Must-know for the exam
- The Option to Purchase, Sale & Purchase agreement and tenancy agreement are all contracts, so the same menu of remedies applies when one side breaks them.
- Damages are the default remedy, putting the innocent party where performance would have left them, limited by remoteness (Hadley v Baxendale), mitigation and causation.
- A pre-agreed sum is enforceable as liquidated damages only if it is a genuine pre-estimate of loss; a sum designed to punish is an unenforceable penalty.
- Specific performance is discretionary, granted only when damages are inadequate, and is readily available for sale-of-land contracts because every piece of land is legally unique.
- Specific performance is refused for personal-service contracts, for a claimant who has not performed their own side, or where it would cause undue hardship.
- Rescission responds to a vitiating factor (misrepresentation, mistake, duress) and unwinds the contract from the start, restoring the parties to their pre-contract position.
- Termination follows a repudiatory breach or breach of a condition, ends only future obligations, and preserves accrued rights plus the claim for damages.
- On a private resale OTP the option fee (commonly around 1%) is forfeited if not exercised; on exercise the deposit commonly rises to around 5%
The Option to Purchase, the Sale & Purchase agreement and the tenancy agreement are all contracts. When one side breaks a contract, the law offers a menu of remedies — and the exam tests whether you can match the right remedy to the situation.
Damages — the default remedy
Money to put the innocent party in the position they would have been in had the contract been performed (their 'expectation' loss). Three limits shape what is actually recoverable:
- Remoteness — you can only recover losses that arise naturally or were reasonably foreseeable (the rule in Hadley v Baxendale).
- Mitigation — the innocent party must take reasonable steps to reduce their loss; they can't sit back and let it grow.
- Causation — the breach must have actually caused the loss claimed.
Liquidated damages vs a penalty
The parties can pre-agree a sum payable on breach. It is enforceable as liquidated damages if it is a genuine pre-estimate of the likely loss. If it is really there to punish the defaulter, it is an unenforceable penalty and the innocent party is left to prove actual loss.
Every lesson. Every question. One pass.
3 more sections of this lesson are part of Premium.
- Every section of every lesson
- All 2,600+ practice questions
- Full timed Paper 1 & 2 mocks
- A worked explanation on every question
- The AI tutor, for any concept you're stuck on
- Your full mistake bank and weak-area review
From ≈$14.98/mo on the 6-month pass
Ready to test yourself?
Practise exam-style questions on Contract & Agency Law — with instant answers and explanations.
Practise Contract & Agency Law questions →Exam-style questions on this topic
- RES exam question on Contract & Agency Law: Naomi has an oral agreement to buy land
- RES exam question on Contract & Agency Law: contractual terms
- RES exam question on Contract & Agency Law: Two months before the agreed completion date, the seller of a condominium writes to…
- RES exam question on Contract & Agency Law: Section 6(d) of the Civil Law Act requires contracts for the sale or other disposition…
- RES exam question on Contract & Agency Law: he lodge, and what can the seller do about it
Common questions
- Why is specific performance common for property but rare for goods?
- Because each piece of land is treated as legally unique, damages are often an inadequate substitute for the actual property. Courts are therefore far more willing to order specific performance of a sale of land than of ordinary goods, which can usually be bought elsewhere.
- If a buyer backs out after paying the deposit, can the seller keep it?
- Generally yes — a deposit is an earnest for performance and can be forfeited on the buyer's default, provided it is not so large as to be an unconscionable penalty. The seller may also claim damages for further loss, subject to the duty to mitigate.
Keep learning
Related exam guides
Explore more
Get each day's lesson free — one RES topic + the trap, every day on Telegram.
Join @resprepsg →Study material aligned to the public CEA syllabus. Not financial or legal advice — verify current figures with the relevant authority (IRAS, HDB, CEA, MAS).