Compaq v Computer Interface: Contract Formation & Certainty of Terms Dispute
In Compaq Computer Asia Pte Ltd v Computer Interface (S) Pte Ltd, the Singapore Court of Appeal addressed whether a letter of award from Compaq to CIS constituted a binding contract for field services. The court, with Chao Hick Tin JA delivering the judgment, reversed the trial judge's decision, holding that the letter of award, which was 'subject to final terms and conditions being agreed,' did not create a binding contract. The court found that essential terms were not finalized and the 'subject to' clause indicated that the award was conditional upon further agreement.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Singapore Court of Appeal addressed whether a letter of award constituted a binding contract, focusing on the certainty of terms and the impact of 'subject to final terms' clause.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Compaq Computer Asia Pte Ltd | Appellant | Corporation | Appeal allowed | Won | |
| Computer Interface (S) Pte Ltd | Respondent | Corporation | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Justice of Appeal | Yes |
| Judith Prakash | Judge | No |
| Yong Pung How | Chief Justice | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Philip Tay | Rajah and Tann |
| Harpal Singh | Harpal Mahtani Partnership |
4. Facts
- Reuters Singapore outsourced field services and invited bids.
- Compaq and CIS submitted bids; Compaq's was lower.
- Reuters Singapore wanted assurance of service continuity.
- Compaq and CIS signed a memorandum of understanding.
- Compaq issued a letter of award to CIS, 'subject to final terms'.
- CIS commenced providing services based on the letter of award.
- A formal written agreement was never finalized.
5. Formal Citations
- Compaq Computer Asia Pte Ltd v Computer Interface (S) Pte Ltd, CA 130/2003, [2004] SGCA 23
6. Timeline
| Date | Event |
|---|---|
| Reuters Singapore outsourced field services. | |
| Reuters Singapore notified CIS of competitive bidding for field services. | |
| Reuters Singapore issued a conditional letter of intent to Compaq. | |
| Compaq and CIS signed a memorandum of understanding. | |
| Meeting held between Reuters Singapore, Compaq, and CIS. | |
| Compaq issued a letter of award to CIS. | |
| CIS commenced providing field services to Reuters Singapore. | |
| Formal contract signed between Reuters Singapore and Compaq. | |
| Compaq emailed a draft agreement to CIS. | |
| Compaq emailed a revised draft to CIS. | |
| Compaq informed CIS it would be doing some installation work itself. | |
| CIS refused to reduce its prices for services. | |
| Compaq proposed changes to the operational model. | |
| CIS rejected Compaq's new model and threatened legal action. | |
| Compaq terminated the arrangement with CIS. | |
| Judgment reserved. |
7. Legal Issues
- Formation of Contract
- Outcome: The court held that the letter of award did not constitute a binding contract due to the 'subject to final terms and conditions being agreed' clause.
- Category: Substantive
- Sub-Issues:
- Certainty of terms
- Condition precedent
- Related Cases:
- [1999] 3 SLR 1
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
11. Industries
- Technology
- Information Technology
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd | N/A | Yes | [1970] AC 583 | N/A | Cited regarding the principle that subsequent conduct should not be considered in construing a document, although the court can look at the factual matrix. |
| Reardon Smith Line Ltd v Yngvar Hansen-Tangen | N/A | Yes | [1976] 1 WLR 989 | N/A | Cited regarding the principle that subsequent conduct should not be considered in construing a document, although the court can look at the factual matrix. |
| Sweet & Maxwell Ltd v Universal News Services Ltd | N/A | Yes | [1964] 2 QB 699 | N/A | Cited to show that where parties have acted upon the faith of a written document, the court would be inclined to assume that the document embodies a firm contract, unless there is contrary intention. |
| Alpenstow Ltd v Regalian Properties plc | N/A | Yes | [1985] 2 All ER 545 | N/A | Cited to illustrate that the expression 'subject to contract' does not always prevent a binding contract if the context indicates otherwise. |
| Aircharter World Pte Ltd v Kontena Nasional Bhd | N/A | Yes | [1999] 3 SLR 1 | N/A | Cited for the principle that a binding contract requires a 'final and unqualified expression of assent' to contract. |
| Lockett v Norman-Wright | N/A | Yes | [1925] Ch 56 | N/A | Cited as a stronger case where the expression 'subject to suitable agreement being arranged between your solicitors and mine' was held to be a condition precedent to any concluded bargain. |
| British Steel Corp v Cleveland Bridge and Engineering Co Ltd | N/A | Yes | [1984] 1 All ER 504 | N/A | Cited to show that there is nothing exceptional about work being done pending the finalisation of a written contract. |
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
- Letter of Award
- Field Services
- Memorandum of Understanding
- Subject to Contract
- Final Terms and Conditions
- Back-to-Back Agreement
15.2 Keywords
- Contract Formation
- Letter of Award
- Certainty of Terms
- Singapore
- Court of Appeal
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Formation of contract | 90 |
| Contract Law | 80 |
| Breach of Contract | 75 |
| Interpretation of contractual terms | 65 |
16. Subjects
- Contract Law
- Commercial Law