Contract law

Question 2
Green Corridor Café (“GCC”) is a café which takes pride in providing vegetarian cuisine
using ingredients which come from sustainable sources and are grown using environmentally
friendly processes. GCC has gained a reputation with its slogan “Green Footprint, Organic
Living!”. The owner of the café, Arnold, aims to engage local suppliers in Singapore and
promote cooking with organic ingredients that are sourced with the least carbon footprint (i.e.
using as little fuel-based transport as possible).
Arnold contacted a local farmer, Ah Seng, in Singapore to source for organically grown
vegetables. Arnold inspected Ah Seng’s farm in Lim Chu Kang, Singapore and was pleased
to see that Ah Seng had many types of produce which would be suitable for GCC’s cuisine.
They agreed that Ah Seng would supply GCC with certain specified types and amounts of
vegetables on a weekly basis for 12 months, and a contract was prepared accordingly.
Clause 12 of the contract between GCC and Ah Seng states as follows:
“It shall be a warranty of this Contract that the vegetables supplied would be
sourced from Singapore and grown using organic processes.”
Arnold did not know the legal significance of the word “warranty”, but he signed the contract
anyway because he saw the words “sourced from Singapore” and “grown using organic
processes”, which were very important to him.
In the third month of the contractual period, Arnold found out that some of the vegetables
were not grown in Singapore. Instead, they were sourced from nearby organic farms in Johor
Bahru, Malaysia. When Arnold asked Ah Seng about this, Ah Seng replied that, “Johor is
very close to Singapore! They are virtually the same!”
In the fourth month of the contractual period, Arnold found that some of the vegetables that
were supplied by Ah Seng’s farm in Lim Chu Kang contained some pesticide, although these
were not harmful with regard to human consumption. Arnold is unhappy about this, partly
because he is worried that his customers might think he is a hypocrite because of GCC’s
slogan. He therefore wishes to terminate the contract with Ah Seng.
Separately, Arnold entered into a new contract with Soy Soy Pte. Ltd. (“SSPL”), a
manufacturer and supplier of soy-based imitation meat, for SSPL to supply soy-based burger
patties to GCC. In the contract with SSPL, Clause 15 states as follows:
“During the period of the contract and for two (2) years after the termination of
the contract, Green Corridor Café shall not manufacture, sell or distribute any
soy-based food products in Singapore or anywhere else in the world.”
A few months later, Arnold started thinking about creating and selling his own soy-based
chicken burgers in GCC, and started consulting other industry suppliers on his ideas. SSPL
heard about this and wants to enforce Clause 15 of the contract against GCC.

(a) Distinguish implied terms from express terms by explaining the differences between
the two categories of terms. You should support your answer by providing two (2)
examples under each category, based on the contract between GCC and Ah Seng.
(10 marks)

(c) Identify the main legal issue that arises from terms like Clause 15 in the contract
between GCC and SSPL. Explain whether SSPL is able to enforce Clause 15 against
GCC, if GCC decides to start selling its own soy-based chicken burgers.
(20 marks)