Climax Manufacturing Co Ltd v Colles Paragon Converters (S) Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeJudith Prakash J
Judgment Date23 September 1998
Neutral Citation[1998] SGHC 315
Citation[1998] SGHC 315
Defendant CounselPhilip Lam (Foo & Liew)
Date23 September 1998
Docket NumberSuit No 199 of 1997
Published date19 September 2003
Plaintiff CounselKhor Wee Siong (Khor Thiam Beng & Partners)

The question involved in this appeal is whether an agreement which the parties hereto entered into on 8 January 1996 is a valid and legally binding document or, as the plaintiffs term it, an `illusory agreement`. This is a question of construction and has come before the court on an application made by the plaintiffs pursuant to O 14 r 12.

Background

The defendants are manufacturers of repositional adhesive memo pads. Their product is, apparently, equivalent to the `POST IT` memo pads produced by 3M. The difference is that the defendants` pads are pre-printed and the combined printing, cutting, and stacking system designed and developed by the defendants can produce these pre-printed pads at a cost comparable to the blank pads marketed by 3M. The heart of the defendants` system lies in the machine they have designed to do the job.

In 1995, the defendants were seeking a business partner to help them penetrate the Hong Kong and China markets. They were given the name of Climax Paper Converters Ltd (`Climax Paper`), a company operating in Hong Kong, by the Singapore Trade Development Board. In October 1995, the defendants followed up this lead by writing to Climax Paper and telling the latter that they were looking for distributors in Hong Kong. They stated they were keen on marketing, as a turnkey project, the technical know-how required to convert and print on special repositional adhesive paper. This would involve selling the machine developed for this process and the know-how to convert and market the product.

The plaintiffs, a company related to Climax Paper, found the defendants` proposition interesting. On 24 November 1995 their Chief Executive Officer, one Mr Fung Kin Yuen Kenneth, visited the defendants at their factory in Singapore and was given a 20-minute demonstration of one of the defendants` machines. Mr Fung appeared to be satisfied with his inspection of the machine and the demonstration and the parties decided to go ahead with the project. Subsequently, they signed a memorandum of understanding in which they expressed the desire of the plaintiffs to acquire the technology and production know-how in respect of the conversion of repositional adhesive raw materials which the defendants owned and the intention of the parties to enter into a joint venture agreement for such purpose.

On 30 November 1995 the defendants sent the plaintiffs an agreement, which they had pre-signed, for execution by the plaintiffs. The plaintiffs were not happy with the terms of the agreement and, on 15 December 1995, they wrote to the defendants giving their detailed comments on its various clauses. One of these comments was that they wished the defendants to amend the agreement by adding the `name, specification, machine number and photo for the Machine`. The `Machine` in question was described in cl 2.2 as `one (1) unit 2-colour Web Offset Printing Machine dedicated to the printing of Repositional Adhesive Memo Pads`.

The defendants proceeded to redraft the agreement. They did not, however, add all the particulars which the plaintiffs had requested in relation to the Machine. Their position, as communicated by their letter of 26 December 1995 to the plaintiffs, was that as the Machine was specific for the use of printing on the repositional adhesive memo pads, the name, model type etc had no significance in the agreement. Their letter read:

This machine is specific for the use of printing on the Repositional Adhesive Memo Pads. The name, model type etc have no significance in this Agreement. We will however provide you a [SERIAL NUMBER] for your machine.

The machine is designed for the printing of Repositional Adhesive Memo Pads. We will give ample opportunity for the Distributor`s operator to work on the machine. We have already given [Mr Fung] an opportunity to view the actual production of re-positional adhesive memo pads. It is because of [Mr Fung`s] viewing and physical sighting of the machine that we are now in this position in finalising this Agreement.



On 8 January 1996, the defendants` Chief Executive Officer, Mr Goh Kiat Chye, accompanied by a colleague, went to Hong Kong to meet Mr Fung. They took with them the amended agreement for execution. The agreement was signed that day after Mr Fung had made some hand-written amendments to it. This case arose from one of these amendments.

The clause in question is cl 2.2. In the agreement as originally typed by the defendants it reads:

Supply of raw material plus one (1) unit 2-Colour Web Offset Printing Machine dedicated to the printing of Re-positional Adhesive Memo Pads (the Machine) The specifications of the Machine is (sic) attached hereto.



The sentence `the specifications of the Machine is attached hereto` had not appeared in the document sent to the plaintiffs in November 1995 but had been added after the defendants had received the plaintiffs` comments in December as had been the schedule with the specifications. This amendment was not, however, sufficient for the plaintiffs and in the document that was signed the additional words `to be agreed by both parties` have been hand-written at the end of that sentence and this amendment has been initialled by both parties.

The plaintiffs` position is that they were very concerned about the completeness of the specifications of the Machine and that there was a lot of information that they as purchasers would require before buying the Machine. In...

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25 cases
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    ...Chan Clinic Pte Ltd (1993) 2 SLR 417, and a High Court decision in Climax Manufacturing Co. Ltd v Colles Paragon Converters (S) Pte Ltd (2000) 1 SLR 245 and submitted that the MOU under reference was a contract that was certain in scope, meaning and application as was held in the cases 27 I......
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    ...Tjiang v Yin Kum Choy [2002] 2 SLR (R) 283; [2002] 4 SLR 48 (refd) Climax Manufacturing Co Ltd v Colles Paragon Converters (S) Pte Ltd [1998] 3 SLR (R) 540; [2000] 1 SLR 245 (folld) Foley v Classique Coaches Ltd [1934] 2 KB 1 (folld) Gardner Smith (SE Asia) Pte Ltd v Jee Woo Trading Pte Ltd......
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    ...Klerk-Elias Liza v KT Chan Clinic Pte Ltd [1993] 2 SLR 417 (CA) and Climax Manufacturing Co Ltd v Colles Paragon Converters (S) Pte Ltd [2000] 1 SLR 245. 47 In Klerk-Elias Liza the facts as appear in the headnotes of the report are as 48 The respondents owned premises (‘the premises’) which......
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2 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2000, December 2000
    • 1 December 2000
    ...to be valid and enforceable.’ In the Singapore High Court decision of Climax Manufacturing Co Ltd v Colles Paragon Converters (S) Pte Ltd[2000] 1 SLR 245, Judith Prakash J held that whilst she did observe in an earlier case (see Jewellery Industries (S) Pte Ltd v Sintat Rent-a-Car Pte Ltd[1......
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2012, December 2012
    • 1 December 2012
    ...just referred to. For example, in the High Court decision of Climax Manufacturing Co Ltd v Colles Paragon Converters (S) Pte Ltd[1998] 3 SLR(R) 540, Judith Prakash J said (at [32]) that she had ‘no quarrel with the holding in Walford v Miles’. Woo Bih Li J in Sundercan Ltd v Salzman Anthony......

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