IBM v UNIG: Breach of Contract & E-Marketplace System Dispute

IBM Singapore Pte Ltd sued UNIG Pte Ltd in the High Court of Singapore on 29 March 2003, for payments due under a Lease Agreement and a Services Agreement related to an e-marketplace system called CXHub. UNIG counterclaimed for return of monies paid, loss of profits, and other damages, alleging IBM repudiated the agreements by failing to provide the features and functions promised. The court found in favor of IBM, holding that UNIG failed to prove IBM breached the agreements and dismissing UNIG's counterclaim.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for IBM; UNIG's counterclaim dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

IBM sues UNIG for unpaid payments under a Lease and Services Agreement. UNIG counterclaims for losses due to alleged breaches and repudiation.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
IBM Singapore Pte LtdPlaintiff, DefendantCorporationJudgment for PlaintiffWon
UNIG Pte LtdDefendant, PlaintiffCorporationCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Tay Yong KwangJudgeYes

4. Counsels

Counsel NameOrganization
Thio Shen YiTSMP Law Corporation
Chia Su AnneTSMP Law Corporation
Bernadine SeetTSMP Law Corporation
Ho Chien MienAllen & Gledhill
K Shanmugam SCAllen & Gledhill
Jessie TanAllen & Gledhill

4. Facts

  1. UNIG conceptualized an e-marketplace system called CXHub for the construction industry.
  2. UNIG engaged IBM to supply, customize, and install its Websphere Commerce Suite Marketplace Edition (WCS MPE).
  3. The Lease Agreement concerned the provision of hardware and software to UNIG.
  4. The Services Agreement concerned the provision of services by IBM for the installation, customisation and implementation of the WCS MPE software.
  5. UNIG alleged IBM breached the agreements by not providing features and functions spelt out in the RFP and/or the Response to RFP.
  6. The signed agreements contained 'entire agreement' clauses.
  7. IBM withdrew WCS MPE version 4.2 due to lack of global demand.

5. Formal Citations

  1. IBM Singapore Pte Ltd v UNIG Pte Ltd, Suit 77 and 79/2002, [2003] SGHC 71

6. Timeline

DateEvent
CXHub was conceived.
I-Sprint reported on vendors.
UNIG sent out its Request for Proposal.
Consultant assessed vendors in the United States.
IBM sent its Response to RFP to UNIG.
Discussions took place between UNIG, I-Sprint and IBM.
I-Sprint requested IBM to confirm/commit to several matters in writing.
IBM responded to I-Sprint's request.
UNIG’s consultant issued its Final Report.
Phase 0 took place.
Joint Venture and Shareholders’ Agreement dated for the Construction Exchange Pte Ltd.
Phase 0 took place.
Lease Agreement dated.
Services Agreement dated.
Implementation period of the project began.
Last two milestones were achieved.
IBM was obliged to deliver a solution satisfying all the requirements in the RFP and the Response to RFP.
Last two milestones were achieved.
Complaint about print report capability arose.
UNIG requested the release of its Banker’s Guarantee and IBM consented to that.
UNIG defaulted on the payment schedule.
UNIG discovered that the WCS MPE had been deferred or suspended from IBM’s product roadmap.
UNIG demanded that IBM submit a plan on the rectification of the various breaches.
IBM withdrew from the CXHub project.
Invoices for unpaid amount of $1.545 million were issued.
Invoices for variation works of $28,940.94 were issued.
UNIG accepted the repudiatory breach.
IBM’s solicitors put UNIG on notice to pay the outstanding amounts due under the Lease Agreement.
IBM repossessed some of its hardware.
IBM terminated the Lease Agreement due to UNIG’s repudiatory breach.
Both parties launched their respective actions against each other.
IBM eventually withdrew WCS MPE version 4.2.
Decision Date

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that IBM was not guilty of breaches of contract and certainly not guilty of such repudiatory breach as would have entitled UNIG to terminate the agreements.
    • Category: Substantive
    • Sub-Issues:
      • Failure to provide features and functions as specified in RFP
      • Failure to deliver a comprehensive e-marketplace platform
      • Repudiatory breach of agreements
  2. Interpretation of Contractual Terms
    • Outcome: The court held that the contractual relationship between the parties was circumscribed by the signed agreements and by those alone, due to the 'entire agreement' clauses.
    • Category: Substantive
    • Sub-Issues:
      • Entire agreement clause
      • Exclusion of liability for consequential damages

8. Remedies Sought

  1. Payments due under Lease Agreement
  2. Payments due under Services Agreement
  3. Return of monies paid
  4. Loss of profits
  5. Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Technology Contracts

11. Industries

  • Information Technology
  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Anglo Group Plc v Winther Browne & Co LtdN/AYes[2000] ITCLR 559N/ACited for the principle that not every bug or error in software would amount to a repudiatory breach of contract.
National Skin Centre (Singapore) Pte Ltd v Eutech Cybernetics Pte LtdN/AYes[2002] 1 SLR 241SingaporeCited regarding the requirement to give notice requiring completion of works within a reasonable time when time is not of the essence.
Chua Chay Lee & Others v Premier Properties Pte LtdN/AYes[2000] 4 SLR 177SingaporeCited regarding the principle that the delay alleged must be such as to frustrate the contract where no notice was given.
Hong Leong Finance Ltd v Tan Gin Huay & AnorN/AYes[1999] 2 SLR 153SingaporeCited regarding the doctrine of penalties being directed at inequality of bargaining power between apparently willing contracting parties.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • E-marketplace
  • CXHub
  • Websphere Commerce Suite Marketplace Edition
  • WCS MPE
  • Request for Proposal
  • RFP
  • Response to RFP
  • Statement of Works
  • Entire agreement clause
  • Parametric search
  • Reverse auction
  • Multi-language support

15.2 Keywords

  • contract
  • e-marketplace
  • software
  • IBM
  • UNIG
  • construction
  • breach of contract

17. Areas of Law

Area NameRelevance Score
Contract Law90
Warranties70
Breach of Contract60
Formation of contract50

16. Subjects

  • Contract Dispute
  • E-commerce
  • Software Implementation