Gardner Smith (SE Asia) Pte Ltd v Jee Woo Trading Pte Ltd

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 31 March 1998
• Neutral Citation: [1998] SGHC 94
• Docket Number: Suit No 1041 of 1996
• Date: 31 March 1998
• Year: 1998
• Published date: 19 September 2003
• Plaintiff Counsel: Harpal Singh and B Mahtani (Harpal, Wong & M Seow)
• Citation: [1998] SGHC 94
• Defendant Counsel: Cheong Aik Chye (Judy Loke & Cheong)
• Court: High Court (Singapore)
• Subject Matter: Contractual terms,Sale of goods,Construction,Principles of construction,Whether court entitled to find no contract concluded even though neither party pleaded point,Payment terms,Whether any contract concluded by reason of failure to agree on payment terms,Whether court able to construe meaning of 'workable',Commercial Transactions,Whether parties had agreed on payment terms,Meaning of 'workable' letter of credit in sale contract,Contract

Judgment:

WARREN LH KHOO J

Cur Adv Vult

The plaintiffs and defendants purported to enter into a contract for the sale of 500 metric tons of copra at the price of $435 per metric ton C & F Chittagong liner terms. To ease reading, I shall refer to the purported contract simply as the contract. Neither party has admitted it, but ambiguity characterised their relationship from start to finish. Eventually, the transaction came to grief over whether the letter of credit established by the buyers (the plaintiffs) were `workable`, and the failure of the sellers to provide a performance bond required by the contract.

2.For a start, it is not certain whether the stipulation of a `workable l/c` was part of the contract. The contract is said to have been entered into by an exchange of telexes on 1 and 2 November 1995. While the buyers` telex of 1 November and their `Purchase Confirmation` dated 2 November required that payment was to be `by irrevocable, unrestricted letter of credit at sight`, the sellers` telex of 1 November required the buyers to establish an `irrevocable, unrestricted, workable letter of credit acceptable to sellers` and their fax of 2 November headed `Sales Contract` required the buyers to establish `irrevocable, unrestricted workable l/c`. So, the buyers` terms did not contain the word `workable`, but the sellers` did.

3.There is no evidence as to which of the two documents, the buyers` `Purchase Confirmation` or the sellers` `Sales Contract`, was the later document issued. To add to the confusion and ambiguity, the buyers` statement of claim alleges (I do not know if one can say, quite unexpectedly) that the contract provided for a `workable` letter of credit. However, this is a phrase from the sellers` `Sales Contract`; it does not appear in the buyers` own `Purchase Confirmation`. The statement of claim then confuses the position even further by alleging that the contract provided that the sellers should inform the purchasers at least 20 days in advance of the intended vessel loading date. This is a clause found in the buyers` `Purchase Confirmation`, but not in the sellers` `Sales Contract`. The buyers appear to have simply married the two documents, an impossible situation as the two documents could hardly have been issued at the same time.

4.It bears noting that neither the `Sales Contract` nor the `Purchase Confirmation`, although signed by the party issuing it, was not signed by the other party.

5.Therefore although their own `Purchase Confirmation` did not refer to `workable l/c`, the buyers are content to go on the basis that the contract provided for it.

6.Against this rather unpromising background, the parties attempted to implement the contract they thought they had entered into. The buyers applied for a letter of credit from the American Express Bank. They extended to the sellers a copy of their application and the sellers requested certain amendments, to which the buyers agreed. The letter of credit as thus amended was established and sent to the sellers. The sellers requested further amendments, and these were accepted by the buyers, who then requested the bank to amend the letter of credit accordingly. This was done on 14 December 1995. However, on 15 December, the sellers again requested amendments. These were the amendments that caused the breakdown of the transaction, and I should set them out. First, the letter of credit as issued provided that the bill of lading should be made out `to the order of the American Express bank`. But the sellers, who had not raised any question about this up to this point, now wanted the bill of lading to be made out `to shippers` order and blank endorsed`. Secondly, the sellers wanted the addition of words to allow `charterparty bill of lading` to be tendered. The amendments to the letter of credit and the difficulty in the matter of providing the performance bond became so protracted that the shipping dates had to be postponed.

7.The reason why the sellers required these amendments was because their own suppliers in Vanuatu required them. But the purchasers refused to agree. In regard to the first amendment proposed,...