Todd Trading Pte Ltd v Aglow Far East Trading Pte Ltd

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 11 March 1997
• Neutral Citation: [1997] SGHC 52
• Citation: [1997] SGHC 52
• Defendant Counsel: Winston Wong and Chan Mun Bin (ST Kay & Co)
• Published date: 19 September 2003
• Plaintiff Counsel: Zaheer K Merchant and Vijai Parwani (Madhavan Louis & Partners)
• Date: 11 March 1997
• Docket Number: Suit No 1520 of 1993
• Court: High Court (Singapore)
• Subject Matter: s 50 Whether payment of compensation to suppliers within contemplation of parties Sale of Goods Act (Cap 393, 1994 Ed),Whether loss of profit foreseeable as the probable consequence of a breach,Sellers unable to purchase goods which they intended to sell,Contract,Intention of parties,Objective test whether defendants intended to incur liability,Disclosure by agent,Applicability of s 50 of Sale of Goods Act (Cap 393, 1994 Ed),Agency,Failure of buyers to furnish letter of credit,Loss of profits,Liability of 'agent',Damages,Whether disclosure of principal released agent from liability,Remedies

Judgment:

KAN TING CHIU J

In this action the plaintiffs claimed damages from the defendants arising out of an aborted contract for the sale of 30,000 metric tonnes of Vietnamese rice to the defendants. The plaintiffs claimed damages for loss of expected profits from the contract and for loss suffered in compensating their own supplier for cancelling their contract to buy the rice for delivery to the defendants.

2.A range of defences was pleaded. They fall into three broad classes. Firstly, it was that there was no contract between the parties. Secondly, there was no consideration to support the contract because no letter of credit and insurance cover note were forwarded to the plaintiffs by the principal buyer. Thirdly, the defendants were acting as agents for a disclosed principal buyer, Heriot Exports (Pty) Ltd (Heriot). They were not maintained with equal vigour or conviction, and the closing submissions were focused on the agency issue.

3.The documents connected to the transaction were produced at the trial. The first is a quotation dated 11 February 1993 from Sinamex Trading Pte Ltd (Sinamex) to the plaintiffs offering to sell 30,000 metric tonnes of rice at US$215 per metric tonne. The plaintiffs in turn offered the rice to the defendants at US$220 per metric tonne.

4.On 12 February, the defendants wrote to Kestrel Financial Services SA (Kestrel) referring to the plaintiffs` offer of 11 February, adding that `Todd Trading Pte Limited is a very reliable and major company in Singapore in the commodities trade.` They informed Kestrel that `in our opinion, the offered price is a little high. However, please obtain Heriot Exports (Pty) Limited counter bid price` and that `the subject transaction would be beyond our company`s financial ability to handle. We would be happy for Heriot to deal directly with Todd Trading Pte Ltd and earn a small commission.` These are the first references to Heriot in the documents produced in evidence in the trial, but the letter was not copied to the plaintiffs.

5.On 17 February the defendants wrote to the plaintiffs saying ` our principal is prepared to accept at US$209.50/MT` (emphasis added) without suggesting that the plaintiffs deal directly with the unnamed principal. In response the plaintiffs replied on the same day starting with `We thank you for your fax message ... today. We confirm having sold to you the following ...` (emphasis added). They set out the conditions for the sale, inter alia, that a letter of credit for the full purchase price was to be established within three working days of business confirmation. It was also stated that the letter of credit was to be transferrable, but that this term was deleted by the defendants. Another term provided that `Any over-price (above US$209.50 MT) to be for buyer`s account and to be reimbursed to an offshore bank account designated by Aglow Far East Trading Pte Ltd immediately upon completion of each negotiation of documents with bank.` The defendants confirmed the terms of the sale by placing its stamp and signature on the letter without qualification and returning it to the plaintiffs on 19 February.

6.On the same day that they sent out the confirmation of sale to the defendants, the plaintiffs also confirmed their purchase from Sinamex at US$205 per metric tonne, payment also to be by letter of credit. The plaintiffs did not disclose their negotiations or contract with Sinamex to the defendants until after the sale to them was aborted.

7.On 18 February, the defendants sent to Kestrel a copy of the plaintiffs` offer of 17 February, adding that `we confirm our acceptance of US$0.50 per metric tonne as our commission for the over price margin which will be established by way of L/C from Heriot Exports (Pty) Ltd directly to Todd Trading Pte Limited.` This letter was copied to Heriot but not to the plaintiffs.

8.On the same day the defendants informed the plaintiffs that a letter of credit for US$6,510,000 (at US$217 per metric tonne) would be established on or before 22 February and that they have been advised by their principal that the remittance for such amount of the credit and the purchase price has to be remitted to a specific account. The principal was not named, and the defendants added that `all communications and correspondence other than those initiated by the banks should be channelled through us.`

9.No letter of credit was established by 22 February. On 2 March the defendants informed the plaintiffs that `the confirmed irrevocable letter of credit is expected to be issued in your favour by our principal at any moment.`

10.On 8 and 10 March, the defendants faxed to the plaintiffs portions of two messages that they received from their principal. The principal was not named by the defendants and all references of its identity were removed from the copies of the messages.

11.When the letter of credit was still not issued on 12 March the defendants wrote to the plaintiffs saying `the establishment of the letter of credit is not within our control. As requested, we will try our best to get our principal to expedite on the L/C.`

12.On 15 March the defendants wrote to Heriot saying `As we have committed ourselves with the Vietnamese government on your behalf , we are very concern (sic) for the fact that after almost one month later, we have not received your advice on the establishment of your letter of credit.` (Emphasis added). This letter was not copied to the plaintiffs. This letter is noteworthy in that it showed that the defendants were aware that they could commit themselves contractually on behalf of Heriot. Nevertheless they did not indicate that they were contracting on behalf of Heriot when they confirmed the contract.

13.On 5 April, the defendants sent to the plaintiffs a copy of Heriot`s letter of 2 April to CTT Castle Trade and Trade Finance (Castle) in which Heriot said that it expected to receive the letter of credit from Castle, which would then be sent to the defendants. This was the first occasion on record of the defendants informing the plaintiffs of Heriot.

14.On 8 April the plaintiffs informed the defendants that the Vietnamese seller was pressing for the letter of credit and was concerned over the long storage and interest accruing in holding the rice. The defendants in turn wrote to Heriot on 14 April seeking a commitment on the letter of credit, saying `We have to notify our Vietnamese parties accordingly.` This letter was copied to Castle and the plaintiffs.

15.On 16 April the defendants wrote to Heriot registering their disappointment. The defendants complained that `we cannot accept your non performance on your commitment as a situation which is beyond your control` and warned Heriot that `by Monday, 19 April 1993, we have to give the Vietnamese government a final decision on the subject matter and we shall hold you responsible for any claims for damages from the Vietnamese government as a result of your breach in the subject matter.` No explanation was given why the defendants represented themselves to be dealing with Vietnamese parties, or the Vietnamese government. A reasonable inference is that they did not want Heriot to know about the plaintiffs, just as they kept Heriot`s identity from the plaintiffs at the initial stages of the dealings.

16.On 17 April the defendants informed the plaintiffs that the transaction was cancelled and that the plaintiffs were to advise the Vietnamese party to submit its claim for transmission to Heriot. This letter indicated that the defendants accepted that another party besides the plaintiffs was involved in the transaction.

17.The plaintiffs accepted the repudiation of the contract and informed Sinamex that they were unable to tender the letter of credit under their contract and on 23 April they gave notice to the defendants that `our seller in Vietnam` had made a claim for US$6 per metric tonne for non-fulfilment of the contract and that the plaintiffs were passing the claim to the defendants for payment. In reply the defendants advised the plaintiffs on 23 April that they will submit the claim to Heriot. At the same time the defendants notified Heriot when they received the claim, they would institute a claim against Heriot for loss of business opportunities and legal costs.

18.By 13 May Sinamex and the plaintiffs agreed to cancel the contract between them, or in their words, wash it out with the plaintiffs paying Sinamex US$5,000.

19.Each party called one witness at the trial. The plaintiffs` witness was Mr Eddie Heng who dealt with the defendants` witness, Mr Anthony Khoo Yee Tong. In his affidavit of evidence in chief Mr Heng deposed that when the defendants confirmed the purchase of the rice of the plaintiffs, the plaintiffs made a back-to-back purchase of the rice from Sinamex for which the plaintiffs paid compensation of US$5,000 to Sinamex when the purchase fell through. Mr Heng emphasised that at all times the defendants purchased as a principal in their own right.

20.Under cross-examination he said that to him the defendants` reference to `our principal` in their letter of 17 February meant that the defendants had sold the rice to their principal and that the plaintiffs were prepared to accept payment by a transferrable letter of credit issued by the defendants` principal. He explained that the term relating to the reimbursement of the over-price would apply if the defendants tendered a letter of credit for a higher sum than the contract price, the excess or over-price would be reimbursed to any account designated by the defendants. Mr Heng also explained that the Vietnamese seller mentioned in the plaintiffs` letter of 8 April referred to Sinamex which has an office in Vietnam.

21.When no letter of credit was tendered by the defendants, the plaintiffs had no other buyer for the rice and the defendants did not help them to find another buyer. The plaintiffs tried to get an extension of time to purchase...