China Coal v Avra: Contract Formation Dispute over Coal Sale Agreement

In China Coal Solution (Singapore) Pte Ltd v Avra Commodities Pte Ltd, the Court of Appeal of Singapore heard an appeal regarding the formation of a contract for the sale of coal. The High Court had found that a contract existed based on four emails exchanged in March 2017. The Court of Appeal reversed this decision, holding that the parties did not intend to create legal relations based on those emails alone, and that no binding contract came into existence because a formal contract was never executed. The court allowed the appeal and awarded costs to the appellant.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case involving China Coal and Avra over a disputed coal sale agreement. The court found no binding contract existed due to lack of formal execution.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
China Coal Solution (Singapore) Pte LtdAppellant, DefendantCorporationAppeal AllowedWon
Avra Commodities Pte LtdRespondent, PlaintiffCorporationAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudge of AppealYes
Chao Hick TinSenior JudgeNo
Woo Bih LiJudgeNo

4. Counsels

Counsel NameOrganization
Tan Wee KongJLex LLC
Poh Ying Ying JoannaJLex LLC
Tan Boon Yong ThomasHaridass Ho & Partners
Nurulhuda Atiqah Binte SawalHaridass Ho & Partners
Hoon Yi ShyuanHaridass Ho & Partners

4. Facts

  1. China Coal and Avra are Singapore companies involved in trading commodities.
  2. The dispute arose from attempts to enter into a transaction involving three shipments of Indonesian steam coal.
  3. Avra claimed China Coal agreed to buy the coal based on four emails exchanged in March 2017.
  4. Avra sent China Coal a draft contract with standard terms, including a 'subject-to-signature' clause.
  5. China Coal proposed amendments to the draft contract, which Avra mostly rejected.
  6. China Coal did not execute the final draft of the contract.
  7. The parties had transacted with each other on three previous occasions.

5. Formal Citations

  1. China Coal Solution (Singapore) Pte Ltd v Avra Commodities Pte Ltd, Civil Appeal No 83 of 2019, [2020] SGCA 81

6. Timeline

DateEvent
Avra agreed to sell China Coal a cargo of 45,000mt of coal pursuant to an exchange of e-mails.
Avra sold China Coal a cargo of 55,000mt of coal under a formal contract.
Avra sold China Coal a cargo of 55,000mt of coal under a formal contract.
Avra and China Coal exchanged four e-mails regarding the sale and purchase of coal.
Avra sent China Coal a draft contract entitled “FOB Coal Sale Agreement”.
China Coal replied to propose amendments to the Draft Contract.
Avra executed the final draft of the Draft Contract and sent it to China Coal.
Avra sent a reminder to China Coal to execute the final draft.
Avra sent a “without prejudice” e-mail seeking confirmation from China Coal that it would perform its obligation to purchase the Cargo.
China Coal e-mailed Avra stating they hoped to carry out only one cargo and cancel other two cargoes.
Parties met to attempt to settle their differences but could not agree.
China Coal indicated its position that it did not breach any contract because no contract came into force by virtue of cl 26.
Avra’s lawyers wrote to China Coal purporting to formally terminate the contract.
Avra filed the suit against China Coal claiming damages for breach of contract.
Judgment reserved.
Judgment delivered.

7. Legal Issues

  1. Formation of Contract
    • Outcome: The court held that no binding contract was formed due to the lack of intention to create legal relations based on the initial emails and the absence of a signed formal contract.
    • Category: Substantive
    • Sub-Issues:
      • Intention to create legal relations
      • Completeness of terms
      • Effect of entire agreement clause
    • Related Cases:
      • [2015] 1 SLR 521
      • [1987] 2 Lloyd’s Rep 601
  2. Certainty and Completeness of Contract Terms
    • Outcome: The court found that the lack of a surveyor term initially did not invalidate the contract because the parties eventually agreed on it.
    • Category: Substantive
    • Sub-Issues:
      • Agreement on essential terms
      • Role of surveyor clause
    • Related Cases:
      • [2013] 4 SLR 1023

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Commodities Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
R1 International Pte Ltd v Lonstroff AGCourt of AppealYes[2015] 1 SLR 521SingaporeDistinguished from the present case; the court in R1 International found a contract existed despite the lack of a countersigned copy, whereas in this case, the court found the wording of cl 26 made it clear that parties intended to be bound only if the formal contract document was signed or a vessel was nominated.
Global Asset Capital Inc and another v Aabar Block SARL and othersN/AYes[2017] 4 WLR 163N/ACited for the principle that the inquiry into the formation of a contract is an objective one.
Pagnan SpA v Feed Products LtdN/AYes[1987] 2 Lloyd’s Rep 601N/ACited for the principles regarding intention to be bound and the effect of further terms to be agreed upon.
Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd (formerly known as CWT Integrated Services Pte Ltd)N/AYes[2013] 4 SLR 1023SingaporeCited regarding the surveyor clause as an essential term of the contract and the certainty and completeness requirements.

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

  • Coal Sale Agreement
  • First Four E-mails
  • Draft Contract
  • Entire Agreement Clause
  • Subject-to-signature proviso
  • Vessel Nomination
  • Surveyor Clause
  • Laycan

15.2 Keywords

  • contract formation
  • coal sale
  • entire agreement clause
  • intention to create legal relations
  • Singapore Court of Appeal

17. Areas of Law

Area NameRelevance Score
Contract Law95
Breach of Contract80
Performance of Contract60

16. Subjects

  • Contract Law
  • Commercial Law
  • Sale of Goods