Apex Energy v Wanxiang Resources: Breach of Contract & Damages for Light Cycle Oil

Apex Energy International Pte Ltd ("Apex") sued Wanxiang Resources (Singapore) Pte Ltd ("Wanxiang") in the High Court of Singapore for breach of contract. Apex claimed that Wanxiang refused to proceed with an agreement for the sale and purchase of a cargo of Light Cycle Oil ("LCO"). The court, presided over by Hoo Sheau Peng J, found that a contract existed between the parties based on email and text message exchanges. The court ruled in favor of Apex, finding that Wanxiang breached the contract and was liable for damages. The court considered whether Apex took reasonable steps to mitigate its loss.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Apex Energy sued Wanxiang Resources for breach of contract over a Light Cycle Oil cargo. The court found Wanxiang liable and awarded damages to Apex.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Apex Energy International Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Wanxiang Resources (Singapore) Pte LtdDefendantCorporationDamages AwardedLost

3. Judges

Judge NameTitleDelivered Judgment
Hoo Sheau PengJudgeYes

4. Counsels

Counsel NameOrganization
Sarbjit Singh ChopraSelvam LLC
Luis Inaki Duhart GonzalezSelvam LLC
Lee Wen Rong GabrielSelvam LLC
Brinden AnandakumarFullerton Law Chambers LLC
Eng Zixuan EdmundFullerton Law Chambers LLC
James TanFullerton Law Chambers LLC
Danica GanFullerton Law Chambers LLC

4. Facts

  1. Apex and Wanxiang are Singapore-incorporated companies engaged in oil trading.
  2. Park and Shin, traders for Apex and Wanxiang respectively, communicated via emails and text messages.
  3. Apex received an S-Oil invitation to tender for LCO cargoes for December 2017 delivery.
  4. Apex forwarded the S-Oil tender to Shin, inviting Wanxiang to tender.
  5. Wanxiang submitted a 'firm bid' for two LCO cargoes with delivery dates in December 2017.
  6. Park and Shin exchanged text messages, agreeing on a price for the second LCO cargo.
  7. Wanxiang later denied the existence of a contract for the second LCO cargo.
  8. Apex entered into an alternative sale with Youngor after Wanxiang's denial.
  9. Apex entered into a hedging arrangement to limit potential losses due to price fluctuations.

5. Formal Citations

  1. Apex Energy International Pte Ltd v Wanxiang Resources (Singapore) Pte Ltd, Suit No 178 of 2018, [2020] SGHC 138

6. Timeline

DateEvent
Park and Shin engaged in text messages about Apex participating in an anticipated tender by S-Oil Corporation.
Apex received the S-Oil invitation to tender for cargoes for delivery in December 2017.
Shin sent Park an email containing Wanxiang’s “firm bid” for the LCO Cargoes.
Park and Shin exchanged text messages agreeing to a deal for the Second LCO Cargo.
Park sent Shin a “Deal Recap” by email.
Park sent nine text messages requesting for a formal confirmation of the Deal Recap.
Park sent one text message requesting for a formal confirmation of the Deal Recap.
Shin asked Park for his position on the modification of two terms relating to the laycan and the delivery deadline in the Firm Bid.
Park responded to Shin to say that Apex was agreeable to modifications.
Xu sent an email to Park, formally denying that Apex and Wanxiang had ever entered into any contract.
Xu replied by email, stating that Wanxiang maintained “the same position in respect of the matter”.
Apex reached an agreement with Shanghai Rui Run Petrochemistry Pte Ltd for the Second LCO Cargo.
Shanghai Rui Run confirmed the deal recap.
Shanghai Rui Run nominated the counterparty for the contract to be Ningbo Youngor International Trade and Transportation Co Ltd.
The formal contract was entered into between Apex and Youngor.
Apex entered into a gasoil hedging arrangement with the Intercontinental Exchange.
Apex commenced proceedings against Wanxiang.
Trial began.
Trial concluded.
Judgment reserved.
Judgment issued.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that Wanxiang breached the contract by expressly denying its existence.
    • Category: Substantive
    • Sub-Issues:
      • Renunciation of contract
      • Failure to perform obligations
  2. Formation of Contract
    • Outcome: The court found that a contract was formed through email and text message exchanges, specifically the 'Deal Done' messages.
    • Category: Substantive
    • Sub-Issues:
      • Offer
      • Acceptance
      • Counter-offer
      • Intention to create legal relations
  3. Mitigation of Damages
    • Outcome: The court found that Apex took reasonable steps to mitigate its loss through the alternative sale and hedging arrangement.
    • Category: Substantive
    • Sub-Issues:
      • Reasonableness of mitigation steps
      • Alternative sale
      • Hedging arrangement

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Commodities Trading

11. Industries

  • Oil and Gas
  • Commodities Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
R1 International Pte Ltd v Lonstroff AGHigh CourtYes[2015] 1 SLR 521SingaporeCited for the objective approach to determine whether a contract has been formed.
Simpson Marine (SEA) Pte Ltd v Jiacipto JiaravanonHigh CourtYes[2019] 1 SLR 696SingaporeCited for the principle that the court may take the parties’ conduct before and subsequent to the formation of the contract into account.
G-Fuel Pte Ltd v Gulf Petrochem Pte LtdHigh CourtYes[2016] SGHC 62SingaporeCited for the principle that the parties’ failure to issue a “deal recap” which accurately reflects all the terms of the binding agreement, and a fortiori, the failure of the confirming party ie, Wanxiang to do so, did not stand in the way of the formation of a binding agreement between them.
Mena Energy DMCC v Hascol Petroleum Ltd (2017)High Court of JusticeYes(2017) [2017] EWHC 262 (Comm)England and WalesCited for the principle that the fact that the Deal Recap was not a fully accurate record of the agreement meant that it should have been corrected with regards demurrage.
The “Asia Star”Court of AppealYes[2010] 2 SLR 1154SingaporeCited for the three basic rules relating to mitigation.
Gunac Enterprises (Pte) Ltd v Utraco Pte LtdHigh CourtYes[1994] 3 SLR(R) 889SingaporeCited for the principle that damages for breach of contract are awarded to put the innocent party in as good a position as if the contract had been performed.
Bunge SA v Nidera BV (formerly Nidera Handelscompagnie BV)UK Supreme CourtYes[2015] Bus LR 987, [2015] UKSC 43United KingdomCited for the principle that where there is an available market for the goods, the market price is determined as at the contractual date of delivery, unless the buyer should have mitigated by going into the market and entering into a substitute contract at some earlier stage.
Tan Soo Leng David v Lim Thian Chai Charles and anotherHigh CourtYes[1998] 1 SLR(R) 880SingaporeCited for the principle that it is not open to a party in breach of contract to be astute in criticizing the adequacy of mitigating steps taken by the innocent party.
Sintalow Hardware Pte Ltd v OSK Engineering Pte LtdHigh CourtYes[2019] SGHC 286SingaporeCited for the principle that it is not open to a party in breach of contract to be astute in criticizing the adequacy of mitigating steps taken by the innocent party.
China Resources Purchasing Co Ltd v Yue Xiu Enterprises (S) Pte Ltd and anotherCourt of AppealYes[1996] 1 SLR(R) 397SingaporeCited for the principle that the standard of reasonableness to be applied to the decision of the innocent buyer is not a high one.
S Pacific Resources Ltd v Tomolugen Holdings LtdHigh CourtYes[2016] 3 SLR 1049SingaporeCited for the principle that the variation of the contract must be supported by fresh consideration.
Ma Hongjin v SCP Holdings Pte Ltd and anotherHigh CourtYes[2019] SGHC 277SingaporeCited for the principle that the variation of the contract must be supported by fresh consideration.
Fiscal Consultants Pte Ltd v Asia Commercial Finance LtdHigh CourtYes[1981-1982] SLR(R) 149SingaporeCited for the principle that for a variation to an existing contract to be effective, it must possess the characteristics of a valid contract.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte LtdCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for the principle that renunciation of contract entitles the innocent party to terminate the contract and claim for damages.
TTMI Sarl v Statoil ASA (“The Sibohelle”)High Court of JusticeYes[2011] EWHC 1150 (Comm); [2011] 2 Lloyd’s Rep 220England and WalesCited for the principle that it is common for charterparties to be concluded by an exchange of emails or faxes, with the terms being recapitulated in a fixture recap, and they can be concluded orally and recapitulated.
British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways Company of London, LimitedHouse of LordsYes[1912] AC 673United KingdomCited for the three basic rules relating to mitigation.
Rapiscan Asia Pte Ltd v Global Container Freight Pte LtdHigh CourtYes[2002] 1 SLR(R) 701SingaporeCited for the principle that a claimant can recover expenses reasonably incurred in the course of taking mitigation measures.
Garnac Grain Co Inc v HMF Faure & Fairclough LtdHouse of LordsYes[1968] AC 1130United KingdomCited for the principle that where there is an available market for the goods, the market price is determined as at the contractual date of delivery, unless the buyer should have mitigated by going into the market and entering into a substitute contract at some earlier stage.
Tai Hing Cotton Mill Ltd v Kamsing Knitting FactoryPrivy CouncilYes[1979] AC 91United KingdomCited for the principle that where there is an available market for the goods, the market price is determined as at the contractual date of delivery, unless the buyer should have mitigated by going into the market and entering into a substitute contract at some earlier stage.
Koch Marine Inc v d’Amica Societa di Navigazione (The Elena d’Amico)High Court of JusticeYes[1980] 1 Lloyd’s 75England and WalesCited for the principle that where there is a renunciation and an available market, the relevant market price for the purposes of assessing damages will generally be determined not by the prima facie measure but by the principles of mitigation.
Banco de Portugal v Waterlow & Sons LtdHouse of LordsYes[1932] AC 452United KingdomCited for the principle that the standard of reasonableness to be applied to the decision of the innocent buyer is not a high one.
Payzu Ltd v SaundersCourt of AppealYes[1919] 2 KB 581England and WalesCited for the principle that it is a question of fact, depending on the circumstances of the particular case, whether the plaintiff acted reasonably.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Sale of Goods Act (Cap 393, 1999 Rev Ed) s 50Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Light Cycle Oil
  • LCO
  • S-Oil
  • MOPS GO 500p
  • Indexed Price
  • Firm Bid
  • Deal Recap
  • Alternative Sale
  • Hedging Arrangement
  • Demurrage
  • Laycan

15.2 Keywords

  • contract
  • breach
  • damages
  • oil
  • trading
  • mitigation
  • LCO
  • Singapore
  • Apex Energy
  • Wanxiang Resources

17. Areas of Law

Area NameRelevance Score
Contract Law90
Breach of Contract90
Formation of contract80
Mitigation of damage80
Contractual Remedies70
Measure of Damages70
Performance of Contract60

16. Subjects

  • Contract Law
  • Commercial Law
  • Oil Trading
  • Breach of Contract
  • Damages
  • Mitigation