RES exam question on Contract & Agency Law: contractual terms
In the law of contract, which of the following statements about contractual terms are CORRECT? (i) A condition is a major term; breach entitles the innocent party to terminate the contract and claim damages (ii) In a Singapore private sale, time for payment of the balance purchase price is automatically of the essence without any express provision (iii) A warranty is a minor term; breach entitles the innocent party to damages only, not termination (iv) An innominate term is classified by reference to the actual consequences of the breach rather than by prior categorisation
- A(i), (ii) and (iii) only
- B(i), (iii) and (iv) only
- C(ii) and (iv) only
- D(ii), (iii) and (iv) only
Show answer & explanation
Answer
B. (i), (iii) and (iv) only
Explanation
Statements (i), (iii), and (iv) are all correct statements of contract law: a condition is a fundamental term (breach = right to terminate + damages); a warranty is a minor term (breach = damages only); an innominate/intermediate term is assessed by the nature and consequences of the breach to determine remedy. Under the Law Society Conditions of Sale, completion must be on the agreed date but time only becomes of the essence after a formal Notice to Complete (NTC) is served. The innocent party must serve a NTC giving 21 days before they can treat non-completion as a repudiation.
Why the other options are wrong
- Statement (ii) is INCORRECT: time is NOT automatically of the essence in a sale of property simply by being specified in the contract.
Study the concept behind this question: Remedies for Breach of a Property Contract
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