Computer Supermarkets (S) Pte Ltd v Goh Chin Soon Ricky and Others

• Jurisdiction: Singapore
• Judgment Date: 06 December 1996
• Date: 06 December 1996
• Docket Number: Suit No 2055 of 1991
• Court: High Court (Singapore)

Computer Supermarkets (S) Pte Ltd

Plaintiff

and

Goh Chin Soon Ricky and others

Defendant

[1996] SGHC 283

Lai Siu Chiu J

Suit No 2055 of 1991

High Court

Commercial Transactions–Sale of Goods–Supply of computer system to nightclub–Computer system found unsatisfactory–Supplier suing for price of delivery and installation–Whether computer system supplied on trial basis or outright sale–Whether contractual obligations arose–Whether parties intended condition precedent to contract of sale–Whether computer system unfit for purpose–Whether right to reject existed–Whether rejection made within reasonable time–Whether there was obligation to return computer system–Sections 15, 18, 36 Sale of Goods Act (Cap 393, 1994 Rev Ed)

The first defendant, Goh Chin Soon Ricky (“Goh”), was the honorary chairman of two nightclubs, namely the third defendant, Cash Box Piano Lounge KTV Pte Ltd (“Cash Box”) and Regent Night Club (“Regent”). Regent's sole-proprietor was Wong Seng Kwee (“Wong”, the fourth defendant). A dispute arose whether the plaintiff, Computer Supermarkets (S) Pte Ltd (“CS”) had supplied computer systems to Cash Box and Regent for the purposes of their business on a “trial basis”, and if that were the case, whether they had been supplied on a “subject to contract” basis; on the basis of a condition precedent of full installation and suitability of use; or on a “sale or return” or “approval” basis.

The negotiations had been carried out between Goh and Lek Kee Meng (“Lek”), CS's managing director, Goh made it clear to Lek that he was acting as agent for both Cash Box and Regent and undertook no personal liability for any deal. The system was installed in Regent in August 1990. The second system was not fully installed in Cash Box; only the wiring was done. Goh claimed that the system was found unsatisfactory for use in nightclubs. Regent dispensed with the system and reverted to taking orders manually. When requested to dismantle the systems. CS refused and sought more time to make adjustments. Goh and the nightclubs dismantled the systems themselves but did not return them to CS. CS sued for the sum of $156,380, being the price for delivery and installation of the systems.

Held, dismissing the plaintiff's claim:

(1) The system was new and untested in Singapore in 1990. It was highly unlikely that any business establishment would agree to buy such a system. It made no commercial sense to take the risk with such an expensive system before testing its capability and suitability for use in nightclubs. CS agreed to supply its computer system on a trial basis because it wanted to promote this system for use in nightclubs in Singapore. If this were an outright sale, CS would have sought a deposit before agreeing to deliver the systems: at [11] to [14].

(2) Goh received no price quotation and no purchase price had been agreed upon. Accepting Goh's testimony that the legal relationship between the parties was “subject to contract”, no contractual obligations arose since no formal contract had been drafted and signed: at [18] and [19].

(3) Even if the parties intended a condition precedent to the contract of sale, in that the systems had to be fully installed and found to be suitable for use in nightclubs, there could be no contract because the condition precedent itself was so uncertain that any agreement made would be void for uncertainty. Even were it otherwise, CS had also failed that it had satisfied such condition precedent: at [25] and [37].

(4) If the parties had intended a “sale or return” agreement, the ultimatum or final notice to reject had been made within a reasonable time, within s 18 r 4 of the Sale of Goods Act (Cap 393) (“SGA”). The ultimatum to reject was subject to a qualification that the defects be rectified. CS's failure to rectify the faults within a reasonable time triggered the rejection and time taken up for repairs in the interim period should not count towards the computation of a reasonable time. On the facts, by asking for time to make repairs, CS had impliedly agreed to extend the time for rejection: at [41] and [42].

(5) On the assumption that an outright sale had been agreed, the defendants had exercised their right to reject the goods as being unfit for their purpose under s 15 of the SGA: at [47].

(6) Following which, Goh and the nightclubs had fulfilled their obligation under s 36 of the SGA to convey to CS their intention to reject. They were under no obligation to return the systems: at [51].

(7) CS's case was without merit. If it did not collect the remainder of the computer systems in the nightclubs' possession, the latter were at liberty to dispose of the systems as they deemed fit: at [53].

Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220 (refd)

Berry v Star Brush Co (1915) 31 TLR 603 (folld)

Beverly v Lincoln Gas Light & Coke Co (1837) 6 Ad & E 829; 112 ER 318 (folld)

Eccles v Bryant and Pollock [1948] Ch 93 (folld)

Lee-Parker v Izzet (No 2) [1972] 1 WLR 775; [1972] 2 All ER 800 (refd)

McLean v Weir, Goff and Royal Inland Hospital (1977) 5 WWR 609 (refd)

Munton v Greater London Council [1976] 1 WLR 649; [1976] 2 All ER 815 (folld)

Sale of Goods Act (Cap 393, 1994 Rev Ed)ss 14, 18r 4, 35, 36, 59

Sale of Goods Act1979 (c 54) (UK) s 35

Sahul Hameed (Hameed & Co) for the plaintiff

Thomas Tan (Haridass Ho & Partners) for the first, third and fourth defendants.

Judgment reserved.

Lai Siu Chiu J

The background

1 The plaintiff is a company dealing in computer hardware and software as well as computer accessories. The third defendant (“Cash Box”) is a nightclub. The fourth defendant (“Wong”) is the sole proprietor of another nightclub called Regent Night Club (“Regent”). The first defendant (“Goh”) is the honorary chairman of both Cash Box and Regent.

2 Sometime in May 1990, the plaintiff's managing director, one Steven Lek Kee Meng (“Lek”) met Goh. The plaintiff alleged that Goh, after learning from Lek that he is in the computer line, instructed him to install a computer system at Cash Box and Regent which should have the capability of taking multiple orders for drinks, selection of songs and booking of hostesses.

3 Goh, however, claimed that it was in fact Lek who had approached him and said that he (Lek) had new computer technology which could enhance the business efficiency of Cash Box and Regent. Lek claimed to have a new computer system which was able to shorten the time taken for placing orders for food and beverages, selection of songs and booking of hostesses through a remote control hand-held terminal. This new technology would therefore obviate the need to take orders manually which had all along been the practice in Cash Box and Regent. The system could also print out bills and receipts of the customers and provide a daily summary of all transactions, hence saving time and manpower. Lek thus recommended that this new computer system be installed at the premises of Cash Box and Regent on a trial basis. If the systems proved suitable for use, then they could be purchased. Otherwise, the plaintiff would dismantle and remove them. Goh agreed to try out the new system.

4 Goh further claimed that, at all times, he made it clear to Lek that he was only acting as an agent for the two nightclubs. His position as chairman enabled him to assist in the negotiations. But, he was not to be taken as undertaking personal liability for any deal.

5 Pursuant to their discussion, Lek flew to Japan on 30 May 1990 and met up with one Mr Homma who specialises in computer software and hardware design. Lek claimed that Mr Homma recommended a system called the Infrared Rays Network System (“the system”) to meet the requirements of Goh for the nightclubs. This system came with hand-held terminals, receivers, control terminal, host personal computer and printers. The hand-held terminal is the size of a handphone which is to be operated by a waiter. When the waiter keys in the items ordered by the customer, the data will be captured by the receiver that is linked to the printer at the bar counter through the control terminal and computer. Upon receiving the data on printed chits, the bartender can then prepare the relevant drink orders for the customers.

6 Lek returned from Japan and claimed to have produced a quotation dated 6 June 1990 to Goh who told him to go ahead. Goh denied receiving this quotation until 1991 when it was enclosed in a letter the plaintiff wrote to him. In early July 1990, Lek said that he met Goh at the latter's office in Regent. At that meeting, Lek alleged that Goh orally accepted the quotation. Goh also agreed to provide a price list of all the items sold in the two nightclubs so as to enable Mr Homma to develop the software programme. It was further agreed that both the software and hardware for the system should be fully installed and operational by the end of September 1990. Goh, however, said that when he initially asked Lek about the price of the system, the latter had told him that it was very affordable. Lek had apparently told him that it was only after installation that he could quote an exact price because...