Parfums Rochas SA v Davidson Singapore: Wrongful Termination of Distribution Agreement and Damages
In Parfums Rochas SA and Others v Davidson Singapore Pte Ltd and Another, the Singapore Court of Appeal heard an appeal regarding the wrongful termination of a distribution agreement. Parfums Rochas SA, along with other companies in the Wella AG group, appointed Davidson Singapore Pte Ltd as their distributor. The appellants terminated the agreement, leading Davidson Singapore to sue for damages. The Court of Appeal held that the termination was wrongful and awarded damages to Davidson Singapore, but adjusted the terms regarding the repurchase of unsold stock and advertising expenses. The court allowed the appeal in part.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal allowed in part.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal held Parfums Rochas SA wrongfully terminated its distribution agreement with Davidson Singapore, awarding damages for lost profits.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Parfums Rochas SA | Appellant | Corporation | Appeal allowed in part | Partial | Harpreet Singh Nehal |
| Davidson Singapore Pte Ltd | Respondent | Corporation | Judgment for Respondent | Won | Darshan Singh Purain, Harpal Singh Bajaj |
| Another | Appellant | Corporation | Appeal allowed in part | Partial | Harpreet Singh Nehal |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Justice of Appeal | No |
| Tan Lee Meng | Judge | No |
| L P Thean | Justice of Appeal | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Harpreet Singh Nehal | Drew & Napier |
| Darshan Singh Purain | Darshan & Teo |
| Harpal Singh Bajaj | Darshan & Teo |
4. Facts
- First appellants appointed first respondents as distributor in Singapore on 1 July 1993.
- In 1995, the Wella group decided to appoint a common distributor in Singapore and Malaysia.
- Agreement reached to appoint respondents as exclusive Wella fragrances distributor for Singapore and Malaysia.
- Respondents were required to spend an additional S$300,000 for marketing over 36 months.
- Problems arose due to respondents' slow payments.
- A settlement agreement was reached on 13 July 1997 regarding outstanding amounts.
- Appellants sent termination notices on 8 October 1997, effective 31 December 1997.
5. Formal Citations
- Parfums Rochas SA and Others v Davidson Singapore Pte Ltd and Another, CA 142/1999, [2000] SGCA 11
6. Timeline
| Date | Event |
|---|---|
| Distribution agreement signed | |
| Agreement reached for common distributor | |
| First respondents' arrears totalled around FF2.152m | |
| Around FF1.89m was still outstanding | |
| Settlement agreement reached | |
| Second respondents had settled the bulk of the amount owed to the third appellants | |
| Termination notices sent | |
| Letter stating no further products would be delivered sent | |
| Warehouse sale commenced | |
| Warehouse sale ended | |
| Another notice of termination issued | |
| Proceedings initiated by the first respondents | |
| First respondents placed under receivership | |
| Appellants commenced suit against the first respondents | |
| Judgment Date |
7. Legal Issues
- Wrongful Termination of Contract
- Outcome: The court held that the appellants wrongfully terminated the distribution agreement.
- Category: Substantive
- Sub-Issues:
- Affirmation of contract
- Fresh breach of contract
- Damages for Breach of Contract
- Outcome: The court awarded damages for loss of profits but ordered an assessment of shortfall in extra marketing expenses.
- Category: Substantive
- Sub-Issues:
- Proof of profit margin
- Quantification of damages
- Deduction of shortfall in advertising expenditure
- Repurchase of Unsold Stock
- Outcome: The court set aside the trial judge's order and ordered repurchase of unsold stock in accordance with the Rochas agreement.
- Category: Substantive
- Sub-Issues:
- Implied term
- Extent of distributors' obligation
8. Remedies Sought
- Damages for Loss of Profits
- Repurchase of Unsold Stock
9. Cause of Actions
- Breach of Contract
- Wrongful Termination
10. Practice Areas
- Commercial Litigation
11. Industries
- Cosmetics
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Ratcliffe v Evans | Queen's Bench | Yes | [1892] 2 QB 524 | England and Wales | Cited for the principle that the degree of certainty and particularity required in proving damages depends on the circumstances and the nature of the acts causing the damage. |
| Tai Hing Cotton Mill Ltd v Kamsing Knitting Factory | Privy Council | Yes | [1979] AC 91 | United Kingdom | Cited for the principle that the court will assess damages as best as it can on the available evidence when the plaintiff has suffered substantial loss but the evidence does not enable it to be precisely quantified. |
| Commonwealth of Australia v Amann Aviation Pty Ltd | High Court of Australia | Yes | [1991] 174 CLR 64 | Australia | Cited for the principle that the measure of damages ensures that the parties to the contract are kept to the benefits and the burdens of the contract they have made. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Distribution Agreement
- Settlement Agreement
- Termination Notice
- Extra Marketing Expenses
- Automatic Renewal
- Warehouse Sale
- Net Profit Margin
- Unsold Stock
- Landed Cost
- Affirmation
15.2 Keywords
- wrongful termination
- distribution agreement
- damages
- Parfums Rochas
- Davidson Singapore
- Singapore
- contract law
16. Subjects
- Contract Law
- Distribution Agreements
- Commercial Disputes
17. Areas of Law
- Contract Law
- Distribution Agreement
- Commercial Law