6) the contract cannot unlawful (if you accepted money and agreed to drive someone to rob a bank, there is no contract)
Watch out for the words "subject to contract". These words appear very often in sale & purchase of land and tenancies. When "subject to contract" appear, it does not matter that you have paid money/deposit, taken the house key, it is likely that there is no contract until a contract is signed.
You can see a sample of a simple contract below
Yong Ah Kow (Nric No. 1234567K) agrees to sell a Sanyo washing machine serial number SBY 7695-59W to Lim Ah Boh (Nric No. 2345678L) for six hundred dollars ($6,00). The washing machine shall be collected by Lim Ah Boh at 23 Jalan Kuching Singapore in exchange for a cashier's order for $600 at 3 pm on 5 April 2000.
Dated 17 March 2000
You can see a sample of a more complicated contract below.
It illustrates the various clauses used in a contract.
CONTRACT
THIS CONTACT is made on the 7th day of January 2000.
BETWEEN:
(1) (name of company) ('A') whose registered office is at (address); and
(2) (name of company) ('B') whose registered office is at (address) .
WHEREAS
(1) A and B are desirous of incorporating a company in Singapore (to be named) ('Company') limited by shares with an authorised capital of $ divided into (number) ordinary shares of $1 each.
(2) The parties intend that the Company shall be used as their joint venture vehicle to carry on the business of importing, stocking and selling hardware products.
(3) Accordingly the parties have agreed to subscribe for shares in the Company and to enter into certain commitments to regulate their rights in relation to the Company in the manner appearing below.
IT IS AGREED as follows:
1. Interpretation
1.1 In this agreement unless the context otherwise requires:
'Board' means the board of directors of the Company or the directors present at a duly convened meeting of the directors at which a quorum is present.
1.2 The headings are inserted for convenience only and shall not affect the construction of this agreement.
2. Constitution and share subscription
2.1 Within 30 days of this agreement:
2.1.1 A shall procure that ___________ and _______________ shall (subject to their consenting to act) be appointed as directors of the Company.
2.1.2 B shall procure that ___________ and _______________ shall (subject to their consenting to act) be appointed as directors of the Company.
2.2 Within __________ days,
2.2.1 A shall subscribe in cash at par for ____________________ ordinary shares of $1 each in the Company.
2.2.2 B shall subscribe in cash at par for ____________________ ordinary shares of $1 each in the Company.
3. Business of the Company
3 The business of the Company shall unless and until the parties otherwise agree be confined to importing, stocking and selling hardware products.
4. Finance and management of the Company
4.1 The finance for the business of the Company shall be provided initially by the cash subscriptions for the shares referred to in clause 2 and subsequently by loans from A and B on such terms as they may agree with the Board and/or by loans from the Company's bankers.
4.2 A shall be responsible for all matters relating to the financial management, technical know-how and day-to-day operations of the Company.
5. Accounting matters and dividend policy
5.1 The parties shall procure that:
5.1.1 the Company shall at all times maintain accurate and complete accounting and other financial records in accordance with the requirements of all applicable laws and generally accepted accounting principles;
5.1.2 monthly management accounts containing such information as either party shall reasonably require shall be prepared and despatched by the Company to the parties within 30 days of the end of the month in question;
5.1.3 each party and its respective authorised representatives shall be allowed access at all reasonable times to examine the books and records of the Company.
5.2 The parties shall procure that the Company shall prepare an annual business plan ("Business Plan") which shall include the following:
5.2.1 an estimate of the working capital requirements of the Company incorporated within a cashflow statement together with an indication of the amount (if any) which it is considered prudent to retain out of previous Financial Year's distributable profits to meet such working capital requirements;
5.2.2 a projected profit an loss account;
5.2.3 an operating budget (including estimated capital expenditure requirements);
5.2.4 a review of the projected business;
5.2.5 a summary of business objectives.
5.3 The first Business Plan in respect of the Financial Year ending shall be prepared within 30 days of the date of this agreement. Business Plans in respect of subsequent Financial Years shall be submitted for approval by the Board not later than 60 days before the commencement of the Financial Year in question.
5.4 Subject to circumstances prevailing at the relevant time including in particular the working capital requirements of the Company it is the intention of the parties that the Company shall distribute its profits by way of dividend in respect of each Financial Year provided the same will not contravene any law or regulation.
6. Promotion of Company's business
6.1 Each of the parties to this agreement covenants to use its best endeavours to promote and develop the business of the Company.
6.2 Each of the parties to this Agreement covenants that for as long as it is a party to this agreement and for a period of 24 months thereafter it shall not and shall procure that no company owned or controlled by it shall be engaged concerned or interested either directly or indirectly and whether on its own behalf or on behalf of or in association with others or in any capacity whatever in carrying on business or in activities which are in competition with the Company or any subsidiary of the Company anywhere in Singapore or Malaysia.
6.3 Each of the parties to this Agreement covenants that for as long as it is a party to this agreement and for a period of 24 months thereafter it shall not and shall procure that no company owned or controlled by it and no person on its or their behalf shall canvass solicit the custom of or endeavour to entice away from the Company any person firm or company which has been an employee, a customer of or in the habit of dealing with the Company or any subsidiary of the Company.
6.4 The restrictions contained herein are considered reasonable by the parties but in the event that any such restriction shall be found to be unenforceable but would be valid if some part or parts of it were deleted or the period or area of application reduced such restriction shall apply with such modification as may be necessary to make it valid and effective.
7. Confidentiality
7.1 Each of the parties to this agreement shall at all times use its best endeavours to keep confidential (and to procure that its respective employees and agents shall keep confidential) any confidential information which it or they may acquire in relation to the Company and its subsidiaries and shall not use or disclose such information except with the consent of every other party to this agreement or as required by law.
7.2 The parties to this agreement shall procure that the Company and its subsidiaries shall use all reasonable endeavours to ensure that the officers employees and agents of each of them observe a similar obligation of confidence in favour of the parties to this agreement.
7.3 The obligation of each of the parties contained in this clause shall cease to apply to any information coming into the public domain otherwise than by breach by any such party of its said obligations Provided that nothing contained in this clause shall prevent any party from disclosing any information to the extent required in or in connection with legal proceedings arising out of this agreement or any matter relating to or in connection with the Company.
8. Tax matters
8.1 The central management and control of the Company shall be exercised in Singapore and the parties shall use their respective best endeavours to ensure that the Company is treated by all relevant authorities as being resident for taxation purposes in Singapore
9. Share transfers
9.1 Save as otherwise expressly provided in this agreement, neither party shall be entitled during the term of this agreement to sell transfer charge incumber grant options over or otherwise dispose of any of the shares or any beneficial interest in any of the shares in the Company now owned or to be acquired after the date of this agreement either pursuant to this agreement or by virtue of its shareholding in the Company.
10. Deadlock resolution
10.1 For the purposes of this clause deadlock shall be deemed to have occurred if:
10.1.1 a matter relating to or affecting the Company has been raised at and/or considered by a meeting of the Board and no resolution has been passed by such meeting by reason of an equality of votes for and against any resolution proposed and either party has subsequently notified the other within 28 days after such Board meeting that the matter has not been resolved; or
10.1.2 a quorum is not present at two successive Board meetings or proposed Board meetings;
10.2 In the event of deadlock:
10.2.1 either party ('Server') shall be entitled within 60 days of such event serve a notice ('Deadlock Resolution Notice') on the other party ('Recipient') offering ('Offer') to sell all (but not some only) of its shares in the Company at a price per share specified by it ('Specified Price') and offering to purchase all (but not some only) of the Recipient's shares in the Company at a price per share equal to the Specified Price. Once given a Deadlock Resolution Notice cannot be withdrawn without the written consent of the Recipient;
10.2.2 within 30 days of service of a Deadlock Resolution Notice the Recipient shall send a notice ('Acceptance Notice') to the Server to accept the Offer to purchase Server's shares or sell its shares to the Server at the Specified Price;
10.2.3 in the event that the Recipient has not served an Acceptance Notice within the period stipulated in sub-clause 10.2.2 above, the parties hereby agree that the Recipient shall be deemed to have agreed on the day following the said 30 days ('Deemed Acceptance') to sell to the Server all (but not some only) of the Recipient's shares in the Company at the Specified Price;
10.2.4 upon service of Acceptance Notice or Deemed Acceptance, the parties shall become respectively bound to buy or sell the shares and completion of any such sale and purchase shall take place at the registered office of the Company at 10.00 am on the tenth business day after the date of the service of Acceptance Notice or Deemed Acceptance or such other time and/or place as the parties may agree;
10.2.5 the parties hereby agree that after three years from the date of this Agreement, the period of 30 days in sub-clauses 10.2.2 and 10.2.3 shall be replaced by 90 days.
11. Unissued share capital
11.1 Any shares for the time being unissued shall before they are issued be offered to the party holding ordinary shares in proportion to their existing holdings. Such offer shall be made by notice specifying the number of shares offered and limited to a time within which the offer, if not accepted, will be deemed to be declined and after the expiration of such time or confirmation of non acceptance, the directors my dispose of the same in such manner as they think most beneficial to the Company.
12. Transfer and disposal of shares
12.1 Any party ('Offerer) who intends to transfer or otherwise dispose of its shares in the Company or any interest in such shares shall, before so doing, offer in writing to sell the shares at a specified price ('Offer Price') to the other party ('Offeree').
12.2 Such offer shall be deemed to be an offer made the Offeree and/or its nominees. In the absence of an acceptance within 14 days of the said offer by the Offeree or by a third party nominated by the Offeree, the offer shall lapse and the Offerer may sell its shares at a price not lower than the Offer Price to a third party but such sale to the third party has to be effected and completed within 60 days after the said 14 days.
12.3 If the sale is not effected and completed within the said 60 days and the same party wishes to sell its shares, it shall make a new offer to the other party herein and repeat the procedure set out in this clause.
13. Termination
13.1 This agreement shall continue in full force and effect until terminated in accordance with the provisions herein.
13.2 Either of the parties to this agreement shall be entitled to terminate this agreement immediately by notice in writing to the other party but not after 90 days of the event in question first coming to the attention of the party entitled to give the notice if any of the events set out below shall occur. The said events are:
13.2.1 if the other party shall commit any breach of any of its obligations under this agreement and shall fail to remedy such breach (if capable of remedy within 30 days after being given notice by the first party so to do;
13.2.2 if the other party shall go into liquidation whether compulsory or voluntary except for the purposes of a bona fide reconstruction or amalgamation with the consent of the first party (such consent not to be unreasonably withheld) or if the other party shall have an administrator appointed or if a receiver or manager shall be appointed over any part of the assets or undertaking of the other party; or
13.2.3 if there shall be any change in the control of the other party.
13.3 This agreement shall terminate if at any time as a result of a transfer of shares made in accordance with this agreement either party holds no shares in the capital of the Company but without prejudice to any rights which either party may have against the other party arising prior to such termination.
13.4 This agreement shall terminate immediately if an effective resolution is passed to wind up the Company or if a liquidator is appointed but without prejudice to any rights either party may have against the other arising prior to such termination.
14. Consequences of termination notice
14.1 if either party shall serve a valid notice of termination ('Termination') under this agreement that party ('Terminator') shall be entitled by that notice to require the other party ('Terminatee') either to purchase all (but not some only) of the shares in the Company of the Terminator or to sell to the Terminator all (but not some only) of the shares of the Terminatee in the Company in the following manner:
14.1.1 the Terminator shall be entitled within 14 days of Termination serve a notice ('Termination Resolution Notice') on the Terminatee offering ('Termination Offer') to sell all (but not some only) of its shares in the Company at a price per share specified by it ('Stated Price') and offering to purchase all (but not some only) of the Terminatee's shares in the Company at a price per share equal to the Stated Price. Once given a Termination Resolution Notice cannot be withdrawn without the written consent of the Terminatee;
14.1.2 within 30 days of service of a Termination Resolution Notice the Terminatee shall send a notice ('Termination Acceptance Notice') to the Terminator to accept the Offer to purchase Terminator's shares or sell its shares to the Terminator at the Stated Price;
14.1.3 in the event that the Terminatee has not served an Termination Acceptance Notice within the period stipulated in sub-clause 14.1.2 above, the parties hereby agree that the Terminatee shall be deemed to have agreed on the day following the said 30 days ('Termination Deemed Acceptance') to sell to the Terminator all (but not some only) of the Terminatee's shares in the Company at the Stated Price;of
14.1.4 upon service of Termination Acceptance Notice or Termination Deemed Acceptance, the parties shall become respectively bound to buy or sell the shares and completion of any such sale and purchase shall take place at the registered office of the Company at 10.00 am on the tenth business day after the date of the service of Termination Acceptance Notice or Termination Deemed Acceptance or such other time and/or place as the parties may agree;
14.1.5 the parties hereby agree that after three years from the date of this Agreement, the period of 30 days in sub-clauses 14.1.2 and 14.1.3 shall be replaced by 90 days.
14.2 Upon exercise of any such right by the Terminator, the Terminator and the Terminatee shall become bound respectively to sell or purchase on the terms set out below. If in a valid termination notice no such power of sale or purchase is exercised by the terminator the parties shall procure that the Company shall be immediately wound up
14.3 The purchase price of the shares to be bought and sold pursuant to the clause herein shall be their fair value as agreed between the parties or in default of agreement within 15 days after service of notice such sum as shall be certified by the auditors for the time being of the Company to be the fair value of such shares on the date the notice was served.
14.4 The parties shall exercise all voting and other rights available to them to ensure the implementation of the preceding provisions of this clause.
15. Supremacy and general covenants
15.1 If any provisions of the memorandum or articles of association of the Company at any time conflict with any of the provisions of this agreement the provisions of this agreement shall prevail and the parties shall whenever necessary exercise all voting and other rights and powers available to them to procure the amendment of the memorandum and/or articles of association to the extent necessary to permit the Company and its affairs to be carried out as provided in this agreement.
15.2 This agreement shall be binding upon the parties to this agreement and their respective successors and permitted assigns.
15.3 No exercise or failure to exercise or delay in exercising any right power or remedy vested in any party under or pursuant to his agreement shall constitute a waiver by that party of that or any other right power or remedy.
15.4 Nothing in this agreement shall be deemed to constitute a partnership between the parties nor constitute any party the agent of the other party or otherwise entitle any party to have authority to bind the other party for any purpose
15.5 Each party shall bear its own costs of or in connection with the preparation and execution of this agreement.
15.6 Neither party shall be entitled to make or permit or authorise the making of any press release or other public statement or disclosure concerning this agreement or any of the transaction contemplated now or in the future in relation to this agreement or the Company without the prior written consent of the other party except as required by the law and the government authorities.
15.7 This agreement together with all agreements and documents executed contemporaneously with it or referred to in it constitutes the entire agreement between the parties in relation to its subject matter and supersedes all prior agreements and understandings whether oral or written with respect to such subject matter and no variation of this agreement shall be effective unless reduced to writing and signed by each party or its authorised representatives.
15.8 In the event that any term condition or provision of this agreement is held to be a violation of any applicable law statute or regulation the same shall be deemed to be deleted from this agreement and shall be of no force and effect and this agreement shall remain in full force and effect as if such term condition or provision had not originally been contained in this agreement.
15.9 Notwithstanding the above in the event of any such deletion the parties shall negotiate in good faith in order to agree the terms of a mutually acceptable and satisfactory alternative provision in place of the provision so deleted.
15.10 Time shall be of the essence for the purposes of any provision of this agreement.
16. Notices
16.1 Any notice to be give by any party to this agreement shall be in writing and shall be deemed duly served if delivered personally or sent by facsimile or by prepaid registered post to the address or facsimile number set out below:
(names and addresses)
or at such other address or facsimile number as the party have notified in writing to the other party.
16.2 Any notice sent by facsimile shall be deemed served when despatched and any notice served by prepaid registered post shall be deemed served 48 hours after posting.
17. Law and jurisdiction
17.1 This agreement shall be governed by and construed in accordance with the laws of Singapore and the parties hereby agree to submit to the jurisdiction of the Singapore Courts.
IN WITNESS WHEREOF this agreement has been entered into the day and year first abovewritten.
Signed by _____________)
for and on behalf of ____)
________________Pte Ltd )
in the presence of
Signed by ____________ )
for and on behalf of____ )
________________Pte Ltd )
in the presence of
All information for general knowledge only
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