Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd

Judgment Date25 September 2013
Docket NumberSuit No 325 of 2012
Date25 September 2013
CourtHigh Court (Singapore)
Rudhra Minerals Pte Ltd
MRI Trading Pte Ltd (formerly known as CWT Integrated Services Pte Ltd)

[2013] SGHC 187

Andrew Ang J

Suit No 325 of 2012

High Court

Contract—Formation—Certainty of terms—Whether contract certain and complete—Whether failure to agree on unsettled terms rendering contract void for uncertainty—Whether parties agreed on unsettled terms

Contract—Intention to create legal relations—Buyer in negotiations to purchase coal from seller—Buyer accepting document entitled ‘Full Corporate Offer’ from seller—Document ‘subject to further terms and conditions to be mutually agreed’ and stating load port surveyor ‘to be mutually decided’—Seller subsequently sending draft contract to buyer—Buyer requesting for rejection limits and amending draft contract—Whether parties bound only upon execution of formal written contract—Whether parties intending to be bound despite unsettled terms

Equity—Estoppel—Estoppel by representation—Estoppel by convention or common assumption—Whether seller estopped from denying existence of contract—Whether permissible for buyer to rely on estoppel as cause of action

The plaintiff entered into negotiations to purchase coal from the defendant at a coal conference in Indonesia. During the conference, the plaintiff requested that the defendant check whether its coal supplier would be agreeable to changing the load port surveyor and the defendant agreed to do so. Shortly after the conference, the defendant sent to the plaintiff a ‘Full Corporate Offer’ (‘FCO’), which stated that the defendant was ‘ready, willing and able to offer for sale STEAM COAL in accordance with the terms and conditions set out as follows’. The FCO also stated that it was ‘subject to further terms and conditions to be mutually agreed’ and that the surveyor was ‘ [t] o be mutually decided’.

The plaintiff replied to acknowledge receipt of the FCO and to ‘confirm purchase’ of the coal. Subsequently, the defendant sent a draft contract to the plaintiff, asking the plaintiff to ‘sign and revert’. However, the plaintiff replied that the draft contract did not reflect its request to change the load port surveyor and also requested for rejection limits for the coal. The plaintiff then sent back an amended draft contract for the defendant to review. The defendant did not reply until the plaintiff sent an e-mail asking for the signed contract, to which the defendant replied that it was facing ‘quality issues’ with its supplier and could not make further shipments in the meantime. Eventually, the defendant declined to carry out the sale of the coal to the plaintiff on the ground that there was no binding legal contract between the parties.

The plaintiff sued the defendant for damages, arguing that there was a binding contract between the parties and alternatively that the defendant was estopped from denying the existence of such a contract.

Held, dismissing the claim:

(1) The parties intended to enter into a binding contract through the plaintiff's acceptance of the FCO. In the present context, the phrase ‘subject to further terms and conditions to be mutually agreed’ did not have the same meaning as ‘subject to contract’ but referenced the fact that there was existing agreement on the terms and conditions stated in the FCO, to which further terms and conditions could be added by mutual agreement: at [24] and [25] .

(2) Parties might intend to be bound even though there were some terms yet to be agreed. It was for the parties to decide whether they wished to be bound and, if so, by what terms: at [27] .

(3) The fact that the load port surveyor was ‘ [t] o be mutually decided’ as stated in the FCO did not detract from the parties' intention to be bound. It was unlikely that either party considered the consequences of failing to agree on the load port surveyor as they had already agreed that the defendant would request its supplier to change the load port surveyor to either one of the plaintiff's two preferred surveyors: at [28] .

(4) As for rejection levels, parties could not have intended to defer legal relations until the issue of rejection levels had been agreed upon because this point had surfaced only after the plaintiff accepted the FCO: at [30] .

(5) Since the parties intended to be bound by the Plaintiff's acceptance of the FCO despite there being unsettled terms, the question then was whether they had reached agreement on these unsettled terms. If they had not, the existing contract would not be invalidated unless the failure to reach agreement on such terms rendered the contract unworkable or void for uncertainty: at [32] .

(6) The choice of load port surveyor was a term without which the contract could not be enforced. There was no evidence that the results of analysis by any professional, independent and established surveyor would be largely similar or equally satisfactory: at [35] .

(7) On the evidence, it was unlikely that parties had agreed on a default load port surveyor if the plaintiff's request to change the load port surveyor could not be accommodated. Thus, as the choice of load port surveyor was essential to the contract but not agreed upon, the contract was void for uncertainty or incompleteness: at [37] to [40] .

[Observation: The plaintiff's alternative argument was based on estoppel by representation and estoppel by convention. Estoppel by convention was not a discrete category of estoppel, but in each case would be an instance of proprietary estoppel, promissory estoppel or estoppel by representation of fact. Here, it was not clear which of these three categories the alleged estoppel by convention fell into. Nevertheless, the plaintiff should have pleaded promissory estoppel instead of estoppel by representation of fact because it was really seeking to prevent the defendant from going back on an alleged promise as to its future conduct: at [42] to [44] .

Even if the plaintiff had pleaded a promissory estoppel, this would have failed for want of certainty. The requirement of certainty applied to the doctrine of promissory estoppel as much as it did to contract law: at [45] and [46] .

Whether estoppel could be used to found a cause of action in Singapore was still unresolved. In this case, the concern was that if the doctrine of estoppel was extended to confer new rights in the absence of a pre-existing legal relationship, this might become a way for parties to subvert the established rules of contract formation: at [52] .]

Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 (refd)

Baird Textiles Holdings Ltd v Marks & Spencer plc [2002] 1 All ER (Comm) 737 (folld)

Baulkham Hills Private Hospital Pty Ltd v GRSecurities Pty Ltd (1986) 40 NSWLR 622 (refd)

Bellamy v Debenham (1890) 45 Ch D 481 (refd)

Cendekia Candranegara 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 [1998] 1 SLR (R) 950; [1998] 3 SLR 281 (folld)

Gay Choon Ing v Loh Sze Ti Terence Peter [2009] 2 SLR (R) 332; [2009] 2 SLR 332 (refd)

Haden Young Ltd v Laing O'Rourke Midlands Ltd [2008] EWHC 1016 (TCC) (refd)

Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 (folld)

Hussey v Horne-Payne (1879) 4 App Cas 311 (distd)

Jewellery Industries (S) Pte Ltd v Sintat Rent-a-Car Pte Ltd [1993] 1 SLR (R) 744; [1993] 2 SLR 623 (refd)

Masters v Cameron [1954] 91 CLR 353 (refd)

Norwest Holdings Pte Ltd v Newport Mining Ltd [2011] 4 SLR 617 (folld)

OCBC Capital Investment Asia Ltd v Wong Hua Choon [2012] 2 SLR 311 (refd)

OCBC Capital Investment Asia Ltd v Wong Hua Choon [2012] 4 SLR 1206 (folld)

OMG Holdings Pte Ltd v Pos Ad Sdn Bhd [2012] 4 SLR 201 (refd)

Pagnan Sp A v Feed Products Ltd [1987] 2 Lloyd's Rep 601 (folld)

Perry v Suffields Ltd [1916] 2 Ch 187 (folld)

Rainbow Spring, The [2003] 3 SLR (R) 362; [2003] 3 SLR 362 (refd)

Sea-Land Service Inc v Cheong Fook Chee Vincent [1994] 3 SLR (R) 250; [1994] 3 SLR 631 (refd)

Siegfried Adalbert Unruh v Hans-Joerg Seeberger [2007] HKCFA 10 (refd)

Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 (refd)

Tee Soon Kay v AG [2007] 3 SLR (R) 133; [2007] 3 SLR 133 (refd)

Tribune Investment Trust Inc v Soosan Trading Co Ltd [2000] 2 SLR (R) 407; [2000] 3 SLR 405 (folld)

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (refd)

Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741 (folld)

Tan Poh Ling Wendy and Tony Tan Soon Yong (Stamford Law Corporation) for the plaintiff

Tan Chai Ming Mark and Melissa Marie Tan Shu Ling (Asia Practice LLP) for the defendant.

Judgment reserved.

Andrew Ang J

1 The question in this case is deceptively simple: was there a binding contract between the parties?

2 The plaintiff (‘Plaintiff’) is Rudhra Minerals Pte Ltd (‘Rudhra Singapore’). The defendant (‘Defendant’) is MRI Trading Pte Ltd, formerly known as CWT Integrated Services Pte Ltd (‘MRI’). Both parties are private limited companies incorporated in Singapore and in the business of trading coal and other commodities. In mid-2011, there were negotiations for the Plaintiff to purchase coal from the Defendant. However, the transaction never materialised and the Plaintiff sued the Defendant for damages, arguing that the Defendant was in repudiatory breach of an alleged agreement made between the parties.

The facts

3 The following paragraphs set out the main facts relevant to the present dispute. For ease of reference, a chronology of events has also been summarised in a table in the annexure below.

The Coal Trans meetings

4 The parties' relationship began in or about the end of May 2011 at the 17th Annual Coal Trans Conference in Bali, Indonesia, an annual...

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3 books & journal articles
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