Paper 1 H Law of Contract

Which of the following statements is true?

A) a contract without consideration may still be a valid contract

B) any contract for the sale of land not written in the English language and conveyed directly to the other party is not a valid contract

C) any contract for the sale of land with written evidence even though not conveyed directly to the other party is still a valid contract

D) the mode of acceptance for the sale of land must be communicated but need not be conveyed

B

A legally binding contract is formed when

A) seller issued the OTP and collected 1% option money

B) buyer paid 4% exercising fee and exercised the OTP

C) seller signed the OTP without receiving the option money

D) OTP is handed to the buyer’s lawyer

B

_____ is not a remedy court will prescribed for breach of estate agency contract?

(i) Injunction

(ii) restitution

(iii) damages

(iv) specific performance

A) (i)

B) (ii) & (iv)

C) (iv)

D) (i) & (iv)

D

The tenant has an agreement to lease the landlord’s condominium. The landlord’s property is now affected by the Land Acquisition Act. The agreement is discharged due to

A) act of god

B) government regulation

C) frustration

D) impossibility of performance

C

Contract law is based on

A) case law, common law

B) common law, equity

C) common law, statute law, equity

D) case law, statute law, legislation

C

Shop owner of unit number #03-33 in a mall puts an advertisement ‘Unit #03-33 shopping mall for sale to the highest bidder, 2000 sqf’. A offers $3000/sf. B later offers $3300/sf. Which of the following is true?

A) owner must sell to B the highest bidder

B) owner must sell to A as he presented his offer first

C) owner can choose whom he wants to sell it to

D) owner must follow his promise in his advertisement

C

Which of the following allows the buyer to rescind the contract?

A) reply from LTA that the land is affected by Road Line Plan

B) reply from building management that the project is going through en-bloc

C) reply from the lawyer that the sellers still have and outstanding loan

D) reply from the property tax department that the seller has not paid the property tax

A

An offer is terminated by

(i) giving a consideration

(ii) the death of the offerer

(iii) revocation before acceptance

(iv) non-fulfillment of the condition of offer

(v) a counter-offer

A) all but (i)

B) all but (ii)

C) all but (iii)

D) all but (iv)

A

S & P is not discharged if

A) buyer passed away

B) seller went bankrupt

C) property affected by earthquake

D) seller did not pay property tax

D

Which of the following is a pre-contract stage?

A) mortgagee issues the letter of offer

B) agent advertises the property

C) buyer exercises the OTP

D) seller issues an OTP

D

How is a real estate contract formed?

A) when the seller delivers a vacant possession

B) when the buyer attends the HDB resale first appointment

C) when the seller issues the OTP

D) when the buyer executes the S & P agreement

D

David grants Tom an OTP which will be due 3 days later. Tom pays David a deposit of $5,000 to buy the property at $500,000. David is approached by Ken who offers to buy at $550,000. What can David do?

A) David can grant another OTP to Ken subject to Tom’s approval

B) David can revoke the OTP and return the $5,000 to Tom

C) David can ignore Tom’s acceptance as Tom’s offer is lower than Ken

D) David can only grant OTP to Ken if Tom does not exercise his OTP in 3 days

D

There will be a binding contract under the following situation:

A) an agreement subject to the contract was signed

B) a counter-offer was given in response to the offer

C) seller has signed the OTP before receiving consideration

D) buyer has signed on the Acceptance Copy in the OTP and paid only $1

D

Which of the following is not an element of a contract?

A) offer

B) consideration

C) acceptance

D) signature

D

The term ‘misrepresentation’ refers to

A) a false statement of fact that influences a party to enter into a contract

B) an unintentional misstatement

C) a wrong view or opinion made by a party

D) an agent who is not representing his client

A

An illegal contract cannot be enforced. An example of an illegal contract is

A) contract pertaining to foreigners buying land in Singapore without approval

B) contract enabling a foreigner to lease land in Singapore for 5 years

C) letter of intent signed without ‘subject to contract’

D) a contract signed between parties to sell the property without fixtures

A

Which of the following allows the buyer to rescind the contract for the purchase of land?

A) subject to a lease to be granted in the future

B) subject to a survey done by a qualified surveyor

C) subject to satisfactory replies obtained from the relevant authorities

D) subject to the seller getting approval for all renovation works

C

An unsatisfactory reply from one of the authorities in a sale entitles the option holder to

A) sue the seller

B) annul the sale

C) seek compensation from the seller

D) continue with the option

B

An agent may use the phrase ‘subject to contract’ to

A) bind any buyer to a contract so that the buyer cannot back out from the OTP

B) subject the buyer to all terms and conditions in a contract

C) prevent the principal from inadvertently committing to a binding contract when corresponding with third parties

D) subject the principal to the contract so that he cannot disclaim the agency relationship

C

In order to succeed in proving a mistake made to vitiate a contract

A) the document signed must be significantly different from that which the signer believed it to be

B) the signer must have been negligent when he signed the document

C) the signer did not understand the contract

D) the signer has put in a disclaimer clause

A

The buyer, Celeste Ng, bought a property. Her name was spelt wrongly as ‘Celest Ng’ on the OTP

A) the OTP is discharged

B) the OTP is not discharged

C) the OTP is void

D) the OTP is not void

D

A contract is formed when

A) there is an unqualified acceptance of an offer

B) there is an acceptance subject to checking of further facts

C) there is an acceptance subject to a higher price

D) there is an acceptance subject to further agreement on the date of signing

A

A consideration for a sale of a property can be

A) a promise without monetary terms

B) in a form of a letter of offer

C) of some value

D) in a form of an OTP

C

The court presumes that in almost all commercial transactions, there is

A) no intention to create legal relations unless there is a written agreement

B) usually an intention to create legal relations

C) usually an intention to enter into a contract unless there is no agent present

D) no intention to create legal relations, unless there is an agent involved

B

In an OTP, the vendor and the purchaser may not

A) specify the circumstances upon which the contract can be rescinded

B) specify the completion date

C) specify whether or not the deposit is to be held as a stakeholder

D) specify a price that is different from the actual transacted price

D

If the vendor received and accepted a mode of acceptance different from what he prescribed,

A) the terms of the contract were overlooked

B) the terms of the contract were waived

C) the terms of the contract have been changed

D) the terms of the contract have been rejected

B

The deposit placed on a purchase of a real property is in effect a

A) penalty in case the purchaser changes his mind

B) safeguard for the vendor in case the purchaser changes his mind

C) token for the vendor to perform the contract

D) right of the vendor to have some assurance

C

Consideration in a real estate transaction

A) need not be adequate

B) need to be adequate

C) must be 1% of the purchase price

D) must be a significant amount in order to show sufficient commitment

A

The objective of awarding damages in a breach of contract is to

A) punish the party in default

B) force the party in default to perform the contract

C) put an injured party, so far as money can do, in the same position as if the contract were performed

D) prevent the party from making the same mistake again

C

Which if the following is not correct regarding the contract on the purchase of real property?

A) terms of the contract must be clearly expressed

B) a contract is not formed when acceptance of an offer is subject to conditions

C) the consideration in the contract need not be adequate

D) the consideration in the contract need not be monetary

D

The OTP that is signed by the seller

A) is an irrevocable offer that binds only the seller

B) allows the buyer to take back all money paid if he changes his mind before the end of the 14 days options period

C) allows the seller to compel the buyer to buy otherwise seller is able to sue the buyer for damages

D) allows the seller to return all deposits to the buyer if he receives a better offer during the 14 days option period

A

An agreement ‘subject to contract’ means

A) there is no binding contract until certain conditions are fulfilled

B) there is a binding contract even though certain conditions are not fulfilled

C) parties have entered into a contract while waiting for the paperwork to be done

D) parties will only enter into a contract when the legal paperwork is completed

A

Which of the following does not form part of a valid contract?

A) invitation to treat

B) acceptance

C) reasonable consideration

D) offer

A

Which of the following constitues a valid acceptance?

A) the buyer sends an SMS to the agent to say he will match the owner’s price of $10 million. He will pass the deposit cheque in 3 days’ time

B) the buyer gives the agent a cheque as a deposit but asks him to hold it until he confirms with his wife

C) the buyer offers a price of $8 million, hands the agent a cheque and says if he doesn’t hear from the agent in the next 3 days the offer is accepted

D) the acceptance copy was delivered to the seller’s lawyer with a banker’s guarantee within the option period

D

A court order that a party refrains from doing certain acts and if he fails to comply will face penalties or civil actions

A) specific performance

B) injunction

C) restrictive covenant

D) restitution

B

When OTP is signed

A) seller grants the buyer the ‘right to buy’ during the option period

B) buyer has to buy the property at the end of the option period

C) seller has to return the option fee if the buyer decides not to buy before the end of the option period

D) seller can refund option fee if he receives a higher offer

A

If the vendor rejected a mode of acceptance different from what he prescribed, the terms of the contract were

A) overlooked

B) not waived

C) changed

D) rejected

B

An offer needs to be communicated and conveyed. Which of the following is a valid offer?

A) the buyer sent an email to the salesperson to buy the shophouse at $10 million

B) the buyer calls the salesperson and offers $5 million for the factory

C) the owner tells the buyer that he will sell his house if she can increase her price to $10 million

D) tenant signed the letter of offer and passed it to his agent

C

Which of the following is not an invitation to treat?

A) Government’s Land Sales programme

B) the auctioneer’s call for bids during a property auction

C) an advertisement for a property launch

D) an agreement for a lease

D

An offer can be terminated through all the following ways except

A) rejection of the offer by the offeree

B) revocation of the offer after acceptance is made

C) counter-offer is given by the offeree

D) expiry of the option

B

Which of the following may be considered a misrepresentation?

A) an honest error

B) a wrong opinion

C) an advertisement showing an inaccurate artist’s impression

D) silence about some facts

A

Which is a common remedy for a breach of a real estate contract?

A) revocation

B) damages

C) injunction

D) specific performance

B

The breach of a _____ does not entitle the party to discharge a contract.

A) condition

B) term

C) warranty

D) covenant

C

Which is true of the OTP by private treaty?

A) the seller can return the option fee if he decides not to sell his property to the buyer

B) the seller can offer an OTP to another buyer if the next offer is higher

C) if the buyer does not complete the purchase, the option fee is forfeited

D) the buyer can get his option fee back if he decides not to buy before the expiry date of the OTP

C

What can the buyer do if he paid a higher price for a shopping centre because the seller misled him into believing that the basement car park could be converted to retail space?

A) buyer could renegotiate the selling price with seller although the contract has been executed

B) buyer could not rescind the contract with the seller but could ask for compensation

C) seller has misrepresented. Buyer could rescind the contract with the seller and claim for damages

D) there is nothing buyer can do for he buys property under the doctrine of caveat emptor. He should not depend on others to give him accurate information

C

The agent gave the buyer a copy of the floor plan that he got from the seller. But the floor plan turned out to be one for another unit. Which of the following may occur?

A) buyer cannot rescind the purchase if he has exercised the OTP

B) buyer can rescind the purchase even though he has exercised the OTP

C) buyer cannot rescind the purchase if consideration is given but can claim seller and agent for damages

D) there is nothing buyer can do for he buys property under the doctrine of caveat emptor. He should not depend on others to give him accurate information.

B

The buyer asked a question and the agent answered, ‘in my opinion, this project was developed by ABC Pte Ltd’. It turned out that this project was developed by XYZ Pte Ltd. Which of the following is true?

A) agent is not liable because this is just an opinion

B) agent is liable because he owes the buyer a duty of care

C) agent is not liable because the statement was not put in writing

D) agent is liable because this falls under the tort of vicarious liability

B

The seller needs to go overseas before the date of completion of sales & purchase and requested 2 weeks postponement.

A) the S&P purchase becomes void

B) the S&P purchase is discharged

C) the S&P purchase can still be completed by paying late completion interest

D) the S&P purchase can be completed provided both parties agree

C

In a recent case of property transaction, LTA replied that some 40% of the subject land was to be set aside for redevelopment or road construction, and was held unsatisfactory for the sale to go through. The case upheld the concept that:

A) the standard OTP is good enough as it provides that road reserves affecting the property shall be deemed satisfactory

B) the buyer is entitled to abort the transaction if what he bargained for turns out to be substantially different

C) caveat emptor prevails

D) caveat emptor maybe not apply in some cases

B

Jim had a piece of land and was looking for an interested buyer to develop it. Paul, an experienced property developer happened to know that and approached Jim. Jim told Paul, ‘from what i know, the land can be developed into 100 units of apartments’. Paul went ahead with the purchased. Subsequently, Paul checked with the authority and was told that it can only build at most 50 units of apartments. Paul was angry and decided to take action against Jim. Which of the following action can Paul take?

A) Paul can void and cancel the S&P agreement due to misrepresentation

B) Paul can sue Jim for liquidated damages

C) Paul cannot take any action against Jim for Jim’s statement is just an opinion therefore, Paul being an experienced investor should be away of it

D) Paul can complain to CEA on this matter

A

Tom writes to Jerry stating ‘I’m willing to rent your property for $5psf/month. If I dont hear from you by 1st September, I will consider you have accepted my offer.’ Jerry did not act nor reply by 1st September. What is the legal position?

A) Jerry has accepted Tom’s offer because he followed the condition of the offer i.e. No reply by the deadline is considered accepted

B) Jerry need not rent the property to Tom because acceptance must be communicated to be valid

C) Jerry is bound to rent the property to Tom if he has collected the deposit from Tom even though he did not reply to Tom

D) Jerry need not rent the property to Tom because Tenancy Agreement has not been signed

B

Ms Kitty, an ERS, represents the buyer. She advises the buyer to have the conveyancing money placed in her conveyancing account and with the Singapore Academy of Law. Is her advice correct?

A) no, she should advise her to put in either account, not both

B) no, she should ask her to put it in the conveyancing account only

C) no, she should ask her to put it with the Singapore Academy of Law only

D) yes, it is good for buyers to put the conveyancing money in more accounts to avoid fraud

C

The buyer bought a condominium on 1st June 2023 and the purchase is due to complete on 31st August 2023. On 31st August 2023, Management Corporation sent an invoice of $25,000 to every strata unit being the replacement cost of all elevators. This cost shall be paid by

A) buyer

B) seller

C) buyer and seller on an equal basis

D) MCST

B

In the OTP, the owner stated ‘sold with vacant possession’. He forgot about his legal tenant, can the tenant enforce his legal lease against the buyer?

A) yes

B) no

C) on payment of increased rent

D) by creating an easement

A

Law on real estate in Singapore comes from

A) written law and unwritten law

B) Torrens and Deeds system

C) equity, statue legislation and common law

D) equity, statute legislation and subsidiary legislation

C

Contract for sale of land cannot be formed

A) by deed

B) in writing

C) verbally

D) through registration

C

Which of the following clause is not necessary to be included in the OTP?

A) clause stating the consideration

B) clause stating the agreed price

C) clause stating the payment of a commission

D) clause stating that sale is subject to free of encumbrances

C

Offer is _____.

A) bilateral

B) unilateral

C) exchangeable

D) conclusive

B

Tom sold his property to Jerry. Jerry has a/an _____ interest int he property before the completion of the sale.

A) legal

B) equitable

C) future

D) reversion are

B

The buyer offered to buy the property with 14 days option period, but his agent wrote it as 3 days in the OTP. The seller signed, accepted the option money, and returned the OTP to the buyer’s agent. Which of the following is true?

A) buyer need not proceed with the purchase because there was a mistake made on the option period

B) buyer has given the seller a new offer with an option period of 3 days because the OTP was prepared by his agent

C) seller can sell the property to another prospective buyer during the option period because there is no valid contract with this buyer

D) seller is the one who made the mistake because he ought to read it before signing

B

The buyer issues a letter of offer to the seller with certain conditions to be fulfilled.

A) seller if accepts the offer, must accept all the conditions that come with it

B) seller can change some of the conditions when accepting the offer

C) seller can accept the offer and keep the acceptance to himself without delivering it to the buyer

D) seller can choose to accept the offer with new conditions attached

A

Buyer can deliver the acceptance by post if

A) the seller accepts such a mode of acceptance

B) the seller is not at home

C) the seller did not engage a lawyer

D) the seller is a foreigner and saying overseas

A

Contract for the sale of land can be formed by

A) correspondences via SMS

B) correspondences via emails

C) correspondences via phone calls

D) correspondences via social network

B

If S&P is aborted not due to either party’s fault, they

A) can claim damages from the state

B) have to bear their own expenses

C) will compensate each other for expenses incurred

D) can apply to the court for specific performance

B

Under the Law Society of Singapore’s Conditions of Sale 2020,

A) sellers are to remove all movable properties which are not included in the sale

B) buyers are to remove all movable properties which are not included in the purchase

C) agents must help to arrange for the removal of all movable properties which are not included in the sale

D) sellers are to leave all movable properties untouched if the property is sold with tenancy

A

Under the Law Society of Singapore’s Conditions of Sale 2020,

A) sellers sell the property including fair wear & tear

B) buyers can insist that sellers fix equipment and appliances that are broken before the completion of the sale

C) sellers are to bear all risks after the completion of the sale

D) buyers are to bear all costs before the completion of the sale

A

Under the Law Society of Singapore’s Conditions of Sale 2020,

A) seller is to warrant that there is no leakage problem

B) seller is to warrant that there is no en-bloc in the process

C) seller is to warrant that there is no more outstanding mortgage

D) seller is to warrant that he did not carry out any unauthorized works

D

Under the Law Society of Singapore’s Conditions of Sale 2020,

A) seller is to warrant that the property will not be acquired in the near future

B) seller is to warrant that the property is not an undervalue transfer or gift to him

C) seller is to warrant that there is no unforeseen situation occurred in the property before the completion of sale

D) seller is to warrant that that property is free from pests

B

Which of the following does not make the contract void?

A) OTP signed by a buyer who is 18 years old

B) OTP signed by Company’s bellboy

C) Tenancy Agreement signed by a 20-year-old undergrad

D) S&P agreement signed under duress

C

Which of the following makes the contract void?

A) HDB OTP signed by one who is mentally unsound

B) Agency Agreement signed by an illiterate

C) Licence Agreement signed in other languages except in English

D) Tenancy Agreement signed by more than 10 parties

A

Landlord and tenant have signed the tenancy agreement. A week later, landlord’s agent found a type mistake made in the tenancy agreement,

A) the agent could do the amendment without the parties’ consent

B) the agent could not do any amendment without the partie’s consent

C) the agent could not do any amendment unless it is with a lawyer’s consent

D) the agent could do the amendments if he was the one who drafted the contract

B

Error in the adjustment of strata area is limited to 3% for uncompleted projects. How is this illustrated under the Law?

(i) error less than 3% does not subject to breach of contract

(ii) error less than 3% is subjected to a breach of warranties

(iii) error of more than 3% is subjected to a breach of conditions

(iv) error of more than 3% is subjected to a breach of warranties

B

A tenant signed the tenancy agreement. After which the landlord promised to remove his table in the storeroom. The tenant moved in and realized the table was still in the storeroom. Could the tenant sue the landlord?

A) no, there is no consideration for the landlord’s promise. The tenant has agreed to to the tenancy before the promise to remove his table in the storeroom

B) no, landlord’s promise is a past consideration

C) yes, a verbal promise is still enforceable under implied covenant

D) yes, landlord has breached the condition of his promise to the tenant

A

In the OTP, the owner stated ‘sold with vacant possession’, he forgot about his equitable tenant, can the tenant enforce his equitable lease against the buyer?

A) yes

B) no

C) on payment of increased rent

D) by creating an assignment

B

On a sale of property, the seller vacated without removing the curtain railings attached. The buyer now insists that the seller remove them. Does the buyer have the right, and what the RES should have done to prevent such a dispute from arising?

A) yes, vacant possession includes removing everything. The RES need not do anything

B) yes, the railings should be removed with the curtains. The RES need not do anything

C) no, vacant possession does not include removing fixtures in the premises unless the RES prepares an inventory list, which is what he should do, specifying to such extent

D) no, what the buyer sees is what he gets

C

It is the duty of the seller’s agent or seller to notify potential buyers regarding _____ when asked, caveat emptor does not apply.

(i) patent defects

(ii) latent defects

(iii) defective title

(iv) outstanding mortgage

A) (i) & (ii)

B) (ii) & (iii)

C) (iii) & (iv)

D) none of them

B

With reference to The Law Society of Singapore’s Conditions of Sale 2020, the vendor shall be obliged to provide to purchaser for inspection, original documents of the affecting title of the Property or the copies of such documents not later than ____ before the scheduled completion date.

A) 1 week

B) 1 month

C) 14 days

D) 21 days

B

With reference to The Law Society of Singapore’s Conditions of Sale 2020, If the cheque or cashier’s order, or other negotiable instrument made pursuant to or under a contract is dishonored upon presentation, the vendor

(i) can treat the contract as repudiated by the purchaser and rescind the same forthwith

(ii) can affirm the contract and proceed in accordance with the terms and conditions thereof

A) (i)

B) (ii)

C) both

D) either

D

The air conditioning system to the property was working well when the buyer inspected the property before the purchase. But on completion of sale, one of the Aircon units broke down. With reference to The Law Society of Singapore’s Conditions of Sale 2020,

(i) seller has the obligation to repair any break-downs before delivering the property to the purchaser

(ii) seller is not responsible for any break-downs due to fair wear & tear unless otherwise agreed

(iii) seller is to deliver the property in the same state and condition as it was at the date of option or the date of contract whichever is earlier

A) (i) & (ii)

B) (ii) & (iii)

C) (i) & (iii)

D) (i) only

B

The buyer bought the property with tenancy. The completion of sale is on 21st June 2022. Which of the following is true with reference to The Law Society of Singapore’s Conditions of Sale 2020?

(i) buyer is entitled to rents and profits starting from 21st June 2022

(ii) seller is entitled to rents and profits till and including 21st June 2022

(iii) buyer is liable for all expenses, outgoings and levies from 21st June 2022

(iv) seller is liable for all expenses, outgoings and levies till and including 21st June 2022

A) (i) & (iii)

B) (ii) & (iv)

C) (i)

D) (ii)

B

Buyer bought a condominium on 1st June 2022 and the sales and purchase is due to complete on 31st August 2022. On 1st September 2022, Management Corporation passed a resolution that every strata unit is to contribute $35,000 for the replacement of all elevators. This updated fee shall be paid by

A) buyer

B) seller

C) buyer and seller equally

D) MCST

A

With reference to The Law Society of Singapore’s Conditions of Sale 2020, the vendor shall notify the purchaser, not later than _____ before the Schedule Completion Date, of the amount of the Seller’s Stamp Duty by submitting a certified copy of the form of declaration required by the Commissioner of Stamp Duties together with the certification of stamp duty (if applicable) paid by the vendor as evidence of payment.

A) 7 calendar days

B) 5 clear business days

C) 7 clear business days

D) 5 calendar days

B

With reference to The Law Society of Singapore’s Conditions of Sale 2020, if the sale is not completed on or before the Scheduled Completion Date and the delay in completion is due solely to the default of the purchaser, the purchaser must pay interest commencing on the day following the Schedule Completion Date, up to and including the Completion Date of the sale. Interest will be calculated based on

A) 8% pa on the purchase price

B) 8% pa on the purchase price less any deposit and any sum paid by purchaser to vendor

C) 10% pa on the purchase price

D) 10% pa on the purchase price less any deposit and any sum paid by purchaser to vendor

B

With reference to The Law Society of Singapore’s Conditions of Sale 2020, if the sale is not completed on or before the Scheduled Completion Date and the delay in completion is due solely to the default of the vendor, the vendor must pay interest commencing on the day following the Schedule Completion Date, up to and including the Completion Date of the sale. How could the vendor avoid paying the late completion interest to the purchaser?

(i) vendor could deliver the vacant possession of the property to the purchaser before the completion date, and if no rent is payable by the purchaser to the vendor, then the interest payable to the purchaser will be reduced by a sum equivalent to a notional rent calculated on the annual value of the property as assessed by IRAS under the Property Tax Act

(ii) any risk remains with the vendor before completion date. Thus, the purchaser could waive the late completion interest payable by vendor

A) (i)

B) (ii)

C) both

D) none

A

With reference to The Law Society of Singapore’s Conditions of Sale 2020, if the sale is not completed on or before the Scheduled Completion Date and the delay in completion is due solely to the default of the vendor, the vendor must pay interest commencing on the day following the Schedule Completion Date, up to and including the Completion Date of the sale. Interest will be calculated based on

A) 8% pa on the purchase price

B) 8% pa on the purchase price less any deposit and any sum paid by purchaser to vendor

C) 10% pa on the purchase price

D) 10% pa on the purchase price less any deposit and any sum paid by purchaser to vendor

A

Seller and buyer agreed on the sale price of $1 million. The OTP printed the sale price as $1.

A) the OTP is void

B) the OTP is voidable

C) the OTP is discharged

D) the OTP is enforceable

A