LED Linear (Asia) Pte Ltd v Krislite Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Lee Meng SJ
• Judgment Date: 30 June 2017
• Neutral Citation: [2017] SGHC 150
• Court: High Court (Singapore)
• Docket Number: Suit No 1043 of 2014
• Year: 2017
• Published date: 06 July 2017
• Hearing Date: 13 June 2016,07 June 2016,08 June 2016,12 June 2016,11 June 2016,16 August 2016,06 June 2016,09 June 2016,10 June 2016
• Plaintiff Counsel: Lim Tat and Subir Singh Grewal (Aequitas Law LLP)
• Defendant Counsel: John Chung and Kok Zihao (Kelvin Chia Partnership)
• Subject Matter: Contract,Breach,Commercial Transactions,Sale of Goods,Sale of Goods Act
• Citation: [2017] SGHC 150

Tan Lee Meng SJ: Introduction

The plaintiff, LED Linear (Asia) Pte Ltd (“LED Linear”), sells light emiting diode (“LED”) lighting and accessories manufactured by its German parent company, LED Linear GmbH (“LED Germany”). The defendant, Krislite Pte Ltd (“Krislite”), is a provider of electrical lighting equipment. The dispute between the parties relates to a contract (the “contract”) between LED Linear and Krislite for the supply of light fittings for installation in a building project known as the “South Beach Mixed Development” (the “Project”).

Facts

In 2012, Krislite was interested in supplying the LED lighting required for the Project, which comprises two high-rise towers, the North and South Towers, and a canopy connecting both towers. LED lighting was required for the external facade of the canopy (the “Canopy lighting”) as well as the North and South Towers (the “Tower lighting”).

The main contractor for the Project was Hyundai Engineering & Construction Co Ltd (“Hyundai”). The Project’s lead consultant/architect was Aedas Pte Ltd, whose specialist façade consultant was Mr Philip Kwang (“Mr Kwang”). The specialist lighting consultant for the Project was Mr Bruce Schneider (“Mr Schneider”) from Light Cibles Pte Ltd. All these consultants will be collectively referred to as “the consultants”.

Krislite calls a tender

In October 2012, Krislite called a tender for the supply of the Canopy lighting and the Tower lighting to enable it to bid for the sub-contract for the supply of LED lighting for the Project.

The required LED lighting consisted of an encapsulated LED lighting strip (“LED strip”) together with a male connector cable at one end and a female connector cable at the other end (“the connectors”). The LED strips came in various lengths and could be joined to one another using the connectors. This allowed a customer the flexibility of joining various LED strips together to form a seamless strip of lighting of the desired length.

On 20 December 2012, LED Linear submitted a quotation to Krislite, setting out the prices for two different types of LED lightings, namely, the Vario LED Flex Venus TV IP67 at 6W/m and Vario LED Flex Venus TV IP67 at 10W/m. The difference between the 6W/m Lightings and the 10W/m lightings lay in their wattage and power consumption.

On 27 March 2013, LED Linear submitted a revised quotation to Krislite for the supply of the required lightings at reduced prices.

Acceptance of Krislite’s offer to supply LED lighting for the Project

On 30 March 2013, the Project’s main contractor, Hyundai, confirmed its acceptance of Krislite’s offer to supply the Canopy lighting and the Tower lighting. Krislite asked LED Linear to submit a sample board with specified LED lighting for mock-up purposes at a meeting with the main contractor and its consultants.

LED Linear required a binding letter of intent before supplying samples

LED Linear was prepared to supply the sample board only if it received a Letter of Intent (“LOI”) from Krislite to purchase the LED lights from it for the Project. The first LOI furnished by Krislite was rejected by LED Linear as it stated that it was not binding on the parties.

On 17 April 2013, Krislite forwarded to LED Linear a fresh LOI which omitted the provision in the earlier LOI that it was not binding. Krislite confirmed in this LOI that it intended to utilise LED Linear’s lighting products for the Project and it was agreed in the LOI that its validity was subject to “official sample approval from the Client & Consultants”.

The LOI specified that the LED lighting strips and connectors were to be IP67 compliant. “IP” refers to ingress protection and the IP67 rating concerns the ability of the LED strips and connectors to resist the ingress of dust and water. It was envisaged that the LED lighting required for the Project would be manufactured by LED Linear’s parent company, LED Germany.

The samples supplied by LED Linear to Krislite had no visible gaps between the connectors for the lights and there was an aluminium backing slip for the LED printed circuit board.

After inspecting the relevant samples, the Project lighting consultant, Mr Schneider, accepted the lighting samples submission by LED Linear in December 2013.

Contract between Krislite and LED Linear for the supply of lighting

According to Krislite, it was on the basis of the lighting samples furnished by LED Linear that it entered into the contract to purchase the Canopy lighting and the Tower lighting from LED Linear.

Apart from the revised LOI, which was signed by both parties, the parties did not sign any other document to record their agreement on the sale and purchase of the LED lighting required by Krislite for the Project. The parties could not agree on when the contract was concluded but it was common ground that under the contract, the agreed payment terms for the Canopy lighting and the Tower lighting called for the payment of 50% of the purchase price before delivery of the goods. The balance of 50% of the purchase price was payable by way of a Letter of Credit (“L/C”).

Krislite’s Purchase Orders for the Canopy lighting and Tower lighting

On 25 February 2014, Krislite issued two Purchase Orders (“POs”) for the Canopy lighting. Krislite paid the 50% down-payment of $181,247.13 for the Canopy lighting on 6 March 2014. The two POs for the Canopy lighting were endorsed and returned to Krislite more than two months later on 22 May 2014.

On 9 May 2014, Krislite paid LED Linear the 50% down-payment for the Tower lighting, which amounted to $408,734.71. Subsequently, it issued a PO for the said lighting on 4 June 2014.

On 1 July 2014, Krislite applied for an irrevocable L/C for the Canopy lighting. LED Linear was named as the beneficiary for the sum of $181,247.13.

Under the L/C for the Canopy lighting, delivery orders signed by Krislite acknowledging that the goods have been received in good order and condition must be presented to obtain payment. The said L/C was valid until 12 September 2014.

Delivery of the Canopy lighting and problems with these lights

In July 2014, the Canopy lighting was delivered to Krislite. It is common ground that 5.49% of them or 41 out of 746 lighting strips had illumination problems. Furthermore, Krislite was very concerned that around 85% of the connectors had a visible 1.5mm to 2.5mm gap between the connectors as compared to the samples that had been furnished, which only had a gap of less than 1.5mm. Krislite feared that the wider gaps might allow the ingress of water and that the connectors were non-IP67 compliant.

LED Linear offered to replace the 41 LED lights with illumination problems. However, Krislite wanted all the lighting strips to be replaced. LED Linear maintained that it was not obliged to replace 746 lighting strips when only 41 of them had illumination defects.

As for the allegedly defective connectors, LED Linear took the position after receiving assurances from LED Germany and the manufacturers of the connectors, ESCHA Bauelemente GmbH (“Escha GmbH”), that the connectors were IP67 compliant despite the wider gaps.

Hyundai ordered Krislite to test the Canopy lighting for IP67 compliance

After Krislite highlighted its concerns about the connectors to the main contractor, Hyundai, and the consultants, it was instructed by Hyundai to have the Canopy lighting tested for IP67 compliance in a Singapore laboratory.

Krislite asked LED Linear to undertake this task at the latter’s own expense. As the contract did not require the Canopy lighting to be tested in a Singapore laboratory, LED Linear, which insisted that the said lighting was IP67 complaint, refused to pay for the cost of the proposed test.

Krislite refused to sign delivery orders to enable LED Linear to be paid

Krislite refused to test the lights at its own expense. As LED Linear refused to pay for the cost of testing of the Canopy lighting for IP67 compliance in a local laboratory, Krislite refused to sign the delivery orders for the Canopy lighting, which stated that the goods were received in good order and condition.

Without the signed delivery orders, LED Linear was unable to claim the balance of the purchase price of the Canopy lighting under the L/C.

As the L/C for the Canopy lighting was due to expire soon, LED Linear’s then Regional Business Development Manager, Mr Emeric Duteil (“Mr Duteil”), emailed Krislite on 31 July 2014 that he would stop all further deliveries of LED lights unless LED Linear received the signed delivery orders for the Canopy lights by 1 August 2014.

On 14 August 2014, LED Linear informed Krislite that the latter’s failure to sign the delivery orders for the Canopy lights was a breach of contract and it demanded the payment of the balance of the purchase price for the Canopy lighting, which amounted to $181,247.13.

On 16 August 2014, Krislite’s senior project manager, Mr Vincent Quek Gek Sin (“Mr Quek”), emailed Mr Duteil that “the LED lights that [LED Linear] supplied are defective and have been rejected by the Consultants/Employers”. He added that Krislite had every right to reject all the lights supplied thus far and would not be signing the delivery orders.

LED Linear’s variation of the payment terms for the Tower lighting

On 26 August 2014, LED Linear upped the pressure on Krislite to return the signed delivery orders for the Canopy lighting when Mr Duteil emailed Mr Quek to say that the Tower lighting, which was ready in the German factory, would only be delivered after the balance of the amount due for the Canopy lighting had been paid and upon full payment of the remaining 50% of the Tower lighting by telegraphic transfer.

The new requirement of full payment for the Tower lighting before delivery was a variation of the agreed mode of payment, which called for a L/C for the balance of the 50% of the purchase price in the same way that the...