Macquarie Bank v. Graceland Industry: Commodity Swap, Mistake & Fiduciary Duty
In a suit before the Singapore International Commercial Court, Macquarie Bank Limited sued Graceland Industry Pte Ltd for US$1.2 million, alleging breach of an over-the-counter commodity swap agreement. Graceland counterclaimed against Macquarie and Stephen Becher Wolfe, arguing unilateral and mutual mistake, breach of fiduciary duties, and fraudulent misrepresentation. The court found in favor of Macquarie, holding that a binding agreement existed and Graceland's defenses were without merit. The counterclaim was dismissed.
1. Case Overview
1.1 Court
SINGAPORE INTERNATIONAL COMMERCIAL COURT OF THE REPUBLIC OF SINGAPORE1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Macquarie Bank sues Graceland Industry for breach of a commodity swap agreement. Graceland counterclaims, alleging mistake, misrepresentation, and breach of fiduciary duty. Judgment for Macquarie.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| MACQUARIE BANK LIMITED | Plaintiff, Defendant | Corporation | Judgment for Plaintiff | Won | |
| GRACELAND INDUSTRY PTE LTD | Defendant, Plaintiff | Corporation | Claim Dismissed | Lost | |
| STEPHEN BECHER WOLFE | Defendant | Individual | Claim Dismissed | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Henry Bernard Eder | Sir Henry Bernard Eder IJ | Yes |
4. Counsels
4. Facts
- Macquarie and Graceland entered into an over-the-counter commodity swap agreement for 30,000 metric tonnes of nitrogen fertiliser (urea).
- The agreement was documented in a Long Form Confirmation incorporating the 2002 ISDA Master Agreement.
- Graceland repudiated the transaction, leading Macquarie to terminate it and claim US$1.2 million as the Close-out Amount.
- Graceland argued it was mistaken about the nature of the transaction and that Macquarie acted as its agent or fiduciary.
- Graceland alleged fraudulent misrepresentations and non-disclosures by Macquarie and Mr. Wolfe.
- The court found that Graceland understood the transaction was a swap with Macquarie as a counterparty.
- The court determined that Graceland's defenses of mistake, breach of fiduciary duty, and misrepresentation were without merit.
5. Formal Citations
- Macquarie Bank Ltd v Graceland Industry Pte Ltd, Suit No 5 of 2017, [2018] SGHC(I) 05
6. Timeline
| Date | Event |
|---|---|
| Presentation on the use of derivatives conducted by Mr. Wolfe for Graceland. | |
| Emails exchanged regarding a possible DAP forward. | |
| Mr. Wolfe had a meeting with Mr. Liu, Ms. Lai and Ms. Zhang in Guizhou, China. | |
| Mr. Liu replied to Mr. Wolfe's email. | |
| Macquarie sent a formal letter to Graceland designating 8 July 2014 as the Early Termination Date. | |
| Mr. Liu left Graceland. | |
| Proceedings commenced by Writ of Summons. | |
| Hearing commenced. | |
| Hearing continued. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that Graceland breached the contract by failing to execute the Long Form Confirmation and ISDA agreement.
- Category: Substantive
- Unilateral Mistake
- Outcome: The court rejected Graceland's defense of unilateral mistake, finding that Graceland was not mistaken as to the nature or terms of the transaction.
- Category: Substantive
- Mutual Mistake
- Outcome: The court rejected Graceland's defense of mutual mistake, finding no evidence that the parties were at cross-purposes as to the subject matter of the contract.
- Category: Substantive
- Breach of Fiduciary Duty
- Outcome: The court rejected Graceland's claim that Macquarie and Wolfe owed a fiduciary duty, finding that the parties were acting as counterparties in an arm's length transaction.
- Category: Substantive
- Fraudulent Misrepresentation
- Outcome: The court rejected Graceland's claim of fraudulent misrepresentation, finding that Wolfe did not make any of the alleged misrepresentations.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Fraudulent Misrepresentation
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Litigation
- Banking Law
- Financial Derivatives
11. Industries
- Banking
- Finance
- Commodities Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Statoil ASA v Louis Dreyfus Energy Services LP | N/A | Yes | [2008] 1 All ER (Comm) 1035 | N/A | Cited for the legal principle regarding unilateral mistake in contract law. |
| Thornbridge Ltd v Barclays Bank Plc | N/A | Yes | [2015] EWHC 3430 (QB) | N/A | Cited regarding advisory relationships and consequential duties of care. |
| JP Morgan Chase Bank v Springwell Navigation Corporation | N/A | Yes | [2008] EWHC 1186 (Comm) | N/A | Cited regarding advisory relationships and consequential duties of care. |
| L’Estrange v F Graucob Ltd | N/A | Yes | [1934] 2 KB 394 | N/A | Cited for the rule that a party who signs a document is ordinarily bound by its terms. |
| Investors Compensation Scheme Ltd v West Bromwich Building Society | N/A | Yes | [1998] 1 WLR 896 | N/A | Cited regarding the consideration of background in interpreting contractual terms. |
| Credit Suisse Financial Products v Société Generale d’Enterprises | N/A | Yes | [1997] CLC 168 | N/A | Cited regarding the incorporation of terms by reference. |
| 7E Communications Ltd v Vertex Antennentechnik GmbH | N/A | Yes | [2007] 1 WLR 2175 | N/A | Cited regarding the incorporation of terms by reference. |
| Calyon v Wytwornia Sprzetu Komunikacynego PZL Swidnik SA | N/A | Yes | [2009] 2 All ER (Comm) 603 | N/A | Cited regarding the incorporation of terms by reference. |
| Raffles v Wichelhause | N/A | Yes | (1864) 2 H & C 906 | N/A | Cited regarding mutual mistake where parties are at cross-purposes. |
| Tamplin v James | N/A | Yes | (1880) 15 Ch D 215 | N/A | Cited regarding mutual mistake where parties are at cross-purposes. |
| Bristol and West Building Society v Mothew | N/A | Yes | [1997] 2 WLR 436 | N/A | Cited regarding the duties of a fiduciary. |
| Cassa di Risparmio della Repubblica di San Marino SpA v Barclays Bank Ltd | N/A | Yes | [2011] EWHC (Comm) 484 | N/A | Cited regarding fraudulent misrepresentation. |
| Davies v London Provincial Marine Insurance Co. | N/A | Yes | (1878) 8 Ch D 469 | N/A | Cited regarding fraudulent misrepresentation. |
| With v O’Flanagan | N/A | Yes | [1936] 1 Ch 575 | N/A | Cited regarding fraudulent misrepresentation. |
| Lehman Brothers International (Europe) (In Administration) v Lehman Brothers Finance SA | N/A | Yes | [2012] EWHC 1072 (Ch) | N/A | Cited regarding the determination of the Close-out Amount. |
| Lehman Brothers International (Europe) (In Administration) v Lehman Brothers Finance SA | N/A | Yes | [2014] 2 BCLC 451 | N/A | Cited regarding the determination of the Close-out Amount. |
| Lomas v JFB Firth Rixson | N/A | Yes | [2011] 2 BCLC 120 | N/A | Cited regarding the determination of the Close-out Amount. |
| BNP Paribas v Wockhardt EU Operations (Swiss) AG | N/A | Yes | [2009] EWHC 3116 (Comm) | N/A | Cited regarding the determination of the Close-out Amount. |
| Shanghai Electric Group Co Ltd v PT Merak Energi Indonesia and another | N/A | Yes | [2010] 2 SLR 329 | Singapore | Cited regarding the equitable remedy of rescission for unilateral mistake under Singapore law. |
| Chwee Kin Keong and others v Digilandmall.com Pte Ltd | N/A | Yes | [2005] 1 SLR(R) 502 | Singapore | Cited regarding the equitable remedy of rescission for unilateral mistake under Singapore law. |
| Standard Chartered Bank v Ceylon Petroleum Corporation | N/A | Yes | [2011] EWHC 1785 (Comm) | N/A | Cited regarding relationship-defining clauses. |
| Property Alliance Group Limited v The Royal Bank of Scotland Plc | N/A | Yes | [2016] EWHC 3342 (Ch) | N/A | Cited regarding relationship-defining clauses. |
| Flex-E-Vouchers Ltd v The Royal Bank of Scotland Plc | N/A | Yes | [2016] EWHC 2604 (QB) | N/A | Cited regarding relationship-defining clauses. |
| Sears v Minco | N/A | Yes | [2016] EWHC 433 (Ch) | N/A | Cited regarding relationship-defining clauses. |
| Prime Sight v Lavarello | N/A | Yes | [2014] 2 WLR 84 | N/A | Cited regarding relationship-defining clauses. |
| JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry and others and related appeals | N/A | Yes | [1990] 2 AC 418 | N/A | Cited regarding relationship-defining clauses. |
| Shogun Finance Ltd v Hudson | N/A | Yes | [2004] 1 AC 919 | N/A | Cited regarding relationship-defining clauses. |
| Susilawati v American Express Bank Ltd | N/A | Yes | [2008] 1 SLR(R) 237 | Singapore | Cited regarding relationship-defining clauses. |
| Nitine Jantilal v BNP Paribas Wealth Management | N/A | Yes | [2012] SGHC 28 | Singapore | Cited regarding relationship-defining clauses. |
| Anglo Group Plc v Winter Brown & Co. Ltd | N/A | Yes | [2000] EWHC (TCC) 127 | N/A | Cited regarding substance over form in agency relationships. |
| Brandeis (Brokers) Ltd v Black and others | N/A | Yes | [2001] 2 All ER (Comm) 980 | N/A | Cited regarding substance over form in agency relationships. |
| UBS AG (London Branch) and another v Kommunale Wasserwerke Leipzig GmbH | N/A | Yes | [2014] EWHC (Comm) 3615 | N/A | Cited regarding substance over form in agency relationships. |
| Phillips Products Ltd v Hyland | N/A | Yes | [1987] 1 WLR 659 | N/A | Cited regarding onerous and unusual contract terms under UCTA. |
| Smith v Eric S Bush | N/A | Yes | [1990] AC 831 | N/A | Cited regarding onerous and unusual contract terms under UCTA. |
| Springwell Navigation Corp v JP Morgan Chase Bank | N/A | Yes | [2010] EWCA Civ 1221 | N/A | Cited regarding onerous and unusual contract terms under UCTA. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Misrepresentation Act 1967 (c 7) (UK) | United Kingdom |
| Unfair Contracts Terms Act 1977 (c 50) (UK) | United Kingdom |
15. Key Terms and Keywords
15.1 Key Terms
- Commodity Swap
- Over-the-Counter (OTC)
- ISDA Master Agreement
- Long Form Confirmation (LFC)
- Close-out Amount
- Repudiation
- Unilateral Mistake
- Mutual Mistake
- Fiduciary Duty
- Fraudulent Misrepresentation
- Early Termination Date
15.2 Keywords
- Commodity Swap
- Derivatives
- Contract Law
- Fiduciary Duty
- Misrepresentation
- Singapore International Commercial Court
- Macquarie Bank
- Graceland Industry
- Urea
- Fertilizer
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Contract Law | 90 |
| Misrepresentation | 70 |
| Fiduciary Duties | 60 |
| Commercial Law | 50 |
| Estoppel | 30 |
16. Subjects
- Contract Law
- Financial Derivatives
- Commodities Trading
- International Trade
- Banking