Naughty G Pte Ltd v Fortune Marketing Pte Ltd: Oral Contract Dispute over Distributorship Agreement
In Naughty G Pte Ltd v Fortune Marketing Pte Ltd, the High Court of Singapore addressed a dispute arising from an oral agreement between Naughty G Pte Ltd (Plaintiff), a supplement drink company, and Fortune Marketing Pte Ltd (Defendant), a food and beverage importer/exporter. The Plaintiff claimed the Defendant breached the agreement and owed a net amount of $141,386.02, while the Defendant counterclaimed that the Plaintiff owed $291,032.28. The court, presided over by Justice Chan Seng Onn, found in favor of the Plaintiff, determining that the agreement was a distributorship, not a sale of business, and that the Defendant had breached the agreement. The court awarded the Plaintiff $125,561.23, with further assessment of damages by the Registrar.
1. Case Overview
1.1 Court
High Court of Singapore1.2 Outcome
Judgment for the Plaintiff for $125,561.23; interlocutory judgment granted for other claims with damages to be assessed.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case involving Naughty G Pte Ltd and Fortune Marketing Pte Ltd concerning breaches and termination of an oral distributorship agreement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Naughty G Pte Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won | Deborah Barker, Hewage Ushan Premaratne, Shalini d/o Mogan |
| Fortune Marketing Pte Ltd | Defendant | Corporation | Judgment against Defendant | Lost | Nedumaran Muthukrishnan |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Deborah Barker | KhattarWong LLP |
| Hewage Ushan Premaratne | KhattarWong LLP |
| Shalini d/o Mogan | KhattarWong LLP |
| Nedumaran Muthukrishnan | M Nedumaran & Co |
4. Facts
- Plaintiff and Defendant entered into an oral agreement on 1 February 2013.
- The agreement involved the Defendant taking over the Plaintiff's stock and accounts with retailers.
- The Defendant agreed to pay the Plaintiff a handover price of $420,621.24 in installments.
- The Defendant refused to pay the remaining installments, claiming the Plaintiff owed them money.
- The Plaintiff removed the Defendant from Ruby Warehouse on 30 April 2013.
- The Plaintiff purported to terminate the agreement on 5 June 2013.
- The Defendant set up accounts with NTUC and Dairy Farm in April/May 2013.
5. Formal Citations
- Naughty G Pte Ltd v Fortune Marketing Pte Ltd, Suit No 478 of 2014, [2018] SGHC 190
6. Timeline
| Date | Event |
|---|---|
| Ramu and Abraham discussed a potential business relationship. | |
| Plaintiff and Defendant entered into an oral agreement. | |
| Defendant paid Plaintiff $200,000 as first installment. | |
| Parties completed a stock take of inventory at Ruby Warehouse. | |
| Defendant took over operation of Ruby Warehouse. | |
| Defendant refused to pay the third installment. | |
| Plaintiff sent an email to the defendant with a draft written contract. | |
| Plaintiff removed the defendant from Ruby Warehouse. | |
| Defendant set up accounts with NTUC and Dairy Farm. | |
| Defendant transferred the relevant SKUs. | |
| Plaintiff terminated the Agreement. | |
| Defendant's solicitors sent the Kalamohan Letter. | |
| Plaintiff filed a suit. | |
| Trial began. | |
| Trial continued. | |
| Trial continued. | |
| Trial continued. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the Defendant breached the agreement by failing to pay, failing to bear promotional costs, failing to pay for incoming stock, and failing to set up retailer accounts in a timely manner.
- Category: Substantive
- Sub-Issues:
- Failure to pay
- Failure to maintain stock levels
- Failure to set up retailer accounts in a timely manner
- Termination of Contract
- Outcome: The court found that the Plaintiff validly terminated the agreement on 5 June 2013, pursuant to the terms of the contract.
- Category: Substantive
- Sub-Issues:
- Wrongful termination
- Proper notice of termination
- Admissibility of Evidence
- Outcome: The court rejected the Plaintiff's arguments for admitting Abraham's affidavit of evidence-in-chief due to insufficient evidence of impracticability of his attendance and questionable reasons for his absence.
- Category: Procedural
- Sub-Issues:
- Admissibility of affidavit evidence
- Section 32 of the Evidence Act
- Order 38 Rule 2(1) of the Rules of Court
- Related Cases:
- [2014] 4 SLR 795
- [2015] 4 SLR 325
- [2015] 2 SLR 686
- Interpretation of Contract
- Outcome: The court interpreted the agreement as a distributorship, found that the Defendant was obligated to bear promotional charges, and found that there was no obligation to clear short-term expiry stock or ensure merchantable products.
- Category: Substantive
- Sub-Issues:
- Nature of agreement (distributorship vs. sale of business)
- Obligation to bear promotional charges
- Obligation to clear short-term expiry stock
- Obligation to ensure merchantable products
- Related Cases:
- [2006] 1 SLR (R) 927
- [2015] SGHC 78
- [2015] 5 SLR 1187
- [2011] 1 WLR 2900
- Quantum Meruit
- Outcome: The court found that the Plaintiff was entitled to a quantum meruit claim for the Defendant's use of warehouse space and vehicles, with the precise sum to be assessed subsequently.
- Category: Substantive
- Sub-Issues:
- Reasonable rent for warehouse space
- Reasonable rent and expenses for vehicle use
8. Remedies Sought
- Monetary Damages
- Return of SKUs
9. Cause of Actions
- Breach of Contract
- Quantum Meruit
10. Practice Areas
- Commercial Litigation
- Contract Disputes
11. Industries
- Food and Beverage
- Wholesale Trade
- Retail
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Wan Lai Ting v Kea Kah Lim | High Court | Yes | [2014] 4 SLR 795 | Singapore | Cited to support the position that Section 32 of the Evidence Act applies to affidavits of evidence-in-chief. |
| Cheo Yeoh & Associates LLC and another v AEL and others | Court of Appeal | Yes | [2015] 4 SLR 325 | Singapore | Cited to confirm that Section 32 of the Evidence Act applies to affidavits of evidence-in-chief. |
| Gimpex Ltd v Unity Holdings Business Ltd and others and another appeal | Court of Appeal | Yes | [2015] 2 SLR 686 | Singapore | Cited to examine the requirements of Section 32(1)(j)(iii) of the Evidence Act, specifically regarding the impracticability of securing a witness's attendance. |
| Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd | High Court | Yes | [2006] 1 SLR (R) 927 | Singapore | Cited for the principle that a holistic approach considering both documentary evidence and witness testimony is to be undertaken in ascertaining the terms of a contract. |
| ARS v ART and another | High Court | Yes | [2015] SGHC 78 | Singapore | Cited for the guiding principles on determining the existence of an oral agreement, including considering documentary evidence and contemporaneous conduct. |
| Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd) | Court of Appeal | Yes | [2015] 5 SLR 1187 | Singapore | Cited for the principle that if there are two possible interpretations of a term, the court is entitled to adopt the interpretation that is more consistent with business common sense. |
| Rainy Sky SA v Kookmin Bank | UK Supreme Court | Yes | [2011] 1 WLR 2900 | United Kingdom | Cited for the principle that if there are two possible interpretations of a term, the court is entitled to adopt the interpretation that is more consistent with business common sense. |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited for the requirements for the implication of terms in fact. |
| V Nithia (co-administratrix of the estate of Ponnusamy Sivapakiam, deceased) v Buthmanaban s/o Vaithilingam and another | Court of Appeal | Yes | [2015] 5 SLR 1422 | Singapore | Cited for the general rule that parties are bound by their pleadings and the court is precluded from deciding on a matter that parties have decided not to put into issue. |
| Max Master Holdings Ltd and others v Taufik Surya Dharma and others and another suit | High Court | Yes | [2016] SGHC 147 | Singapore | Cited for the principle that where a contract does not specify the time for performance by a party that has undertaken to carry out such performance, an obligation to perform within a reasonable time is implied in law. |
| RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal | Court of Appeal | Yes | [2007] 4 SLR (R) 413 | Singapore | Cited for setting out the different situations under which an innocent party to a contract may elect to terminate the contract. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Evidence Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Distributorship Agreement
- Oral Agreement
- Stock Keeping Units (SKUs)
- Promotional Charges
- Instalment Scheme
- Ruby Warehouse
- Termination
- Quantum Meruit
15.2 Keywords
- Distributorship
- Oral Agreement
- Breach of Contract
- Termination
- Singapore
- High Court
- Evidence Act
- Rules of Court
16. Subjects
- Contract Law
- Commercial Disputes
- Evidence
- Agency
17. Areas of Law
- Contract Law
- Evidence Law
- Agency Law
- Commercial Law