Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
Judgment Date17 January 2006
Docket NumberSuit No 630 of 2004
Date17 January 2006

[2006] SGHC 3

High Court

Andrew Phang Boon Leong J

Suit No 630 of 2004

Forefront Medical Technology (Pte) Ltd
Plaintiff
and
Modern-Pak Pte Ltd
Defendant

Lee Tau Chye (Lee Brothers) for the plaintiff

Timothy Tan Thye Hoe and Juanita Low Hsiu-Min (AsiaLegal LLC) for the defendant.

Bank of America National Trust and Savings Association v Herman Iskandar [1998] 1 SLR (R) 848; [1998] 2 SLR 265 (refd)

Batshita International (Pte) Ltd v Lim Eng Hock Peter [1996] 3 SLR (R) 563; [1997] 1 SLR 241 (refd)

Chai Chung Ching Chester v Diversey (Far East) Pte Ltd [1991] 1 SLR (R) 757; [1991] SLR 769 (refd)

Chua Soong Kow & Anak-Anak Sdn Bhd v Syarikat Soon Heng (sued as a firm) [1984] 1 CLJ 364 (refd)

Concord Trust v Law Debenture Trust Corpn plc [2005] 1 WLR 1591 (refd)

Crossley v Faithful & Gould Holdings Ltd [2004] 4 All ER 447 (refd)

Diversey (Far East) Pte Ltd v Chai Chung Ching Chester [1992] 3 SLR (R) 412; [1993] 1 SLR 535 (refd)

Gardner v Coutts & Company [1968] 1 WLR 173 (refd)

Hiap Hong & Co Pte Ltd v Hong Huat Development Co (Pte) Ltd [2001] 1 SLR (R) 458; [2001] 2 SLR 458 (refd)

John Roberts Architects Limited v Parkcare Homes (No 2) Limited [2005] EWHC 1637 (TCC) (refd)

Lemon Grass Pte Ltd v Peranakan Place Complex Pte Ltd [2002] 2 SLR (R) 50; [2002] 4 SLR 439 (refd)

Lim Eng Hock Peter v Batshita International (Pte) Ltd [1996] 2 SLR (R) 292; [1996] 2 SLR 741 (refd)

Loh Siok Wah v American International Assurance Co Ltd [1998] 2 SLR (R) 245; [1999] 1 SLR 281 (refd)

Malik v Bank of Credit and Commerce International SA [1998] AC 20 (refd)

Miller Freeman Exhibitions Pte Ltd v Singapore Industrial Automation Association [2000] 3 SLR (R) 177; [2000] 4 SLR 137 (refd)

Moorcock, The (1889) 14 PD 64 (folld)

National Bank of Greece SA v Pinios Shipping Co No 1 [1990] 1 AC 637 (refd)

Reigate v Union Manufacturing Company (Ramsbottom), Limited and Elton Copdyeing Company, Limited [1918] 1 KB 592 (refd)

Romar Positioning Equipment Pte Ltd v Merriwa Nominees Pty Ltd [2004] 4 SLR (R) 574; [2004] 4 SLR 574 (refd)

Sababumi (Sandakan) Sdn Bhd v Datuk Yap Pak Leong [1998] 3 MLJ 151 (refd)

Scally v Southern Health and Social Services Board [1992] 1 AC 294 (refd)

Shell UK Ltd v Lostock Garage Ltd [1976] 1 WLR 1187 (refd)

Shirlaw v Southern Foundries (1926) Limited [1939] 2 KB 206 (folld)

South Caribbean Trading Ltd v Trafigura Beheer BV [2005] 1 Lloyd's Rep 128 (refd)

Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701 (refd)

Tan Chin Seng v Raffles Town Club Pte Ltd [2003] 3 SLR (R) 307; [2003] 3 SLR 307 (refd)

Telestop Pte Ltd v Telecom Equipment Pte Ltd [2004] SGHC 267 (refd)

Contract–Contractual terms–Express terms–Construction of terms of contract –Whether express condition that defendant to obtain materials from a particular party–Contract–Contractual terms–Express terms–Whether express term of contract that defendant discharged its contractual obligations with regard to the suitability of material by provision of relevant certificates of analysis from a particular party–Contract–Contractual terms–Implied terms–Whether it was an implied term of contract that defendant discharged its contractual obligations with regard to suitability of material by provision of relevant certificates of analysis from a particular party

The plaintiff (“Forefront”) manufactured medical devices for surgical procedures. The medical devices were packed into clamshells produced by the defendant (“Modern-Pak”). The material that was thermoformed by Modern-Pak into the clamshells was supplied by May Polyester Films Sdn Bhd (“May”). Forefront brought the action against Modern-Pak alleging that the clamshells were made of substandard material, and claimed consequential loss and damages. Modern-Pak argued that it was a condition of the contract that it obtained its material for the production of the clamshells from May only, and that it would be considered to have discharged its contractual obligations with regard to the suitability of the material by providing the relevant Certificates of Analysis (“COAs”) from May.

Held, dismissing the claim:

(1) The law relating to implied terms in contracts is governed by the 'officious bystander' and the 'business efficacy' tests. The two tests are complementary - the “officious bystander” test is the practical mode by which the “business efficacy” test is implemented. Both general logic and precedent support this view. However, these tests relate to the possible implication of a particular term to particular contracts. Thus, the implication of a term (s) in a particular contract creates no precedent for future cases: at [28] to [41].

(2) The available evidence indicated that the contract between the parties had stipulated that Modern-Pak could only procure the necessary material for the manufacture of the clamshells from May: at [50] to [63].

(3) It was in fact an express condition of the contract that Modern-Pak would be considered to have discharged its contractual obligations with regard to suitability of the material by the provision of relevant COAs from May: at [66] to [75].

(4) Even if it was not an express condition of the contract that Modern-Pak would be considered to have discharged its contractual obligations with regard to suitability of the material by the provision of relevant COAs from May, it was nevertheless clear that there was an implied condition to like effect. Modern-Pak must have entered into the contract with Forefront on the understanding that in so far as the requisite quality of the material utilised was concerned, the COAs from the actual materials supplier (May) would suffice. Such an implied term was necessary to give business efficacy to the contract: at [76] to [78].

[Observation: Modern-Pak would have had an equally strong case if it had argued that it was an implied condition of the contract that it (Modern-Pak) procure the material from May and nobody else: at [64].]

Andrew Phang Boon Leong J

Introduction

1 The legal issues in the present case are straightforward. They stem from an equally straightforward factual matrix, which is as follows.

2 The plaintiff, manufacturers of medical devices for surgical procedures, contracted with the defendant who was to, and in fact did, produce clamshells pursuant to three purchase orders placed by the plaintiff and based on the defendant's quotation of 5 May 2003.

3 The plaintiff's medical devices, manufactured to the order of the plaintiff's customer, were packed into the defendant's clamshells which were then placed in individual blister packs. These were, in turn, placed in individual product boxes which were then placed in shipping boxes. The boxes were then sent for gas sterilisation before onward shipment abroad for distribution.

4 The plaintiff brought the present action against the defendant, alleging that the clamshells were made of substandard material. The plaintiff's customer had alleged that there were cracks in a significant number of the clamshells and the clamshells were ultimately sent back to Singapore for reworking, repackaging and re-sterilisation. The plaintiff now claims, as a result, $408,573.07 as well as consequential loss and damages.

5 Although the defendant was the supplier of the clamshells, the supplier of the material that was thermoformed by the defendant into the clamshells concerned was May Polyester Films Sdn Bhd (“May”).

6 It is important at this juncture to note that the only contractual terms in issue in the present proceedings are those relating to the defendant's obligations with regard to the material from which the clamshells were made.

7 It is also important to note that there was no single document which contained all the terms of the contract. In the circumstances, it was necessary for the present court to consider all relevant documents as well as testimony in order to ascertain the terms of the contract. To put it simply, a holistic approach was necessary in the circumstances.

The legal issues

8 The legal issues that arose for decision in the present case are as follows.

9 The first two issues centred on what the precise terms of the contract were. As already mentioned, there was no single document. There is a more general lesson here, which I shall return to at the end of this judgment. To return to the present proceedings, the first issue was whether or not it was a condition of the contract that the defendant obtain its material for the production of the clamshells from May only. The defendant argues that his was in fact a condition of the contract, whereas the plaintiff argues otherwise.

10 The second issue was whether or not it was an express or in the alternative an implied condition of the contract that the defendant would be considered to have discharged its contractual obligations with regard to the suitability of the material by the provision of the relevant Certificates of Analysis (“COAs”) from May.

11 It is important to point out that if the defendant prevailed with respect to both these issues, that would be the end of the matter inasmuch as the case would necessarily be decided in the defendant's favour. However, if the defendant was successful on the first issue but not the second, the remaining issues (to be considered shortly) would still need to be decided. On the other hand, if the defendant was successful on the second issue, that, too, would be the end of the matter. Indeed, it could not be denied that the defendant did in fact provide the relevant COAs from May.

12 If the defendant was unsuccessful with regard to the first two issues, the two further issues would arise for decision.

13 The third issue was whether or not the clamshells were in fact made from defective material. If they were not, then the defendant would clearly not be in breach of its contract with the plaintiff.

14 Even if the plaintiff was successful with respect to the issues...

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