Pacific Ocean Engineering v Tractors Singapore: Breach of Contract & Implied Terms

In Pacific Ocean Engineering & Trading Pte Ltd v Tractors Singapore Limited, the Singapore Court of Appeal heard an appeal regarding a dispute over ten contracts for the sale of shipbuilding equipment. Tractors Singapore claimed Pacific Ocean Engineering breached implied terms by failing to advise on delivery dates and nominate a port of destination. Pacific Ocean Engineering counterclaimed for wrongful termination. The High Court found in favor of Tractors Singapore. The Court of Appeal dismissed the appeal, upholding the High Court's decision.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case involving Pacific Ocean Engineering and Tractors Singapore over breach of contract and implied terms.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Pacific Ocean Engineering & Trading Pte LtdAppellant, DefendantCorporationAppeal DismissedLost
Tractors Singapore LimitedRespondent, PlaintiffCorporationJudgment for RespondentWon

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Quentin LohJudge of the Appellate DivisionYes
Chao Hick TinSenior JudgeNo

4. Counsels

Counsel NameOrganization
Lee Eng BengRajah & Tann Singapore LLP
Sim Jek Sok DisaRajah & Tann Singapore LLP
Shaun OuRajah & Tann Singapore LLP
Ho Qi Rui DanielRajah & Tann Singapore LLP
Oen Weng Yew TimothyDrew & Napier LLC
Rakesh Gopal KirpalaniDrew & Napier LLC

4. Facts

  1. Pacific Ocean Engineering and Tractors Singapore entered into ten contracts for shipbuilding equipment between 2012 and 2016.
  2. Tractors Singapore claimed Pacific Ocean Engineering breached implied terms by not advising on delivery dates and ports.
  3. Pacific Ocean Engineering counterclaimed for wrongful termination of the contracts.
  4. The contracts included a standard procedure with quotations, purchase orders, and conditions of sale.
  5. Delivery dates were often indicated as 'TBA by POET' (to be advised by Pacific Ocean Engineering).
  6. Pacific Ocean Engineering failed to nominate ports of destination in a timely manner.
  7. Tractors Singapore terminated the contracts due to Pacific Ocean Engineering's inaction.

5. Formal Citations

  1. Pacific Ocean Engineering & Trading Pte Ltd v Tractors Singapore Limited, Civil Appeal No 67 of 2020, [2021] SGCA 31

6. Timeline

DateEvent
Parties entered into ten contracts for the sale of shipbuilding equipment.
Parties entered into ten contracts for the sale of shipbuilding equipment.
Tentative performance date for POs 8874 and 8875.
Tentative performance date for POs 8874 and 8875.
Parties agreed to extend delivery dates for seven contracts to the end of 2016 or January 2017.
Project list outlining revised delivery dates circulated via email.
Parties met and agreed that delivery for POs 9968 and 9969 would take place in May 2017 and July 2017.
Tractors Singapore discharged the Contracts by way of written notice.
Tractors Singapore commenced Suit 283/2018.
Hearing date.
Judgment reserved.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the appellant breached the implied terms of the contract and the respondent was entitled to terminate the contract.
    • Category: Substantive
    • Sub-Issues:
      • Failure to advise on delivery date
      • Failure to nominate port of destination
      • Wrongful termination
  2. Implied Terms
    • Outcome: The court found that the implied terms were necessary for the business efficacy of the contracts.
    • Category: Substantive
    • Sub-Issues:
      • Business efficacy
      • Reasonable period
    • Related Cases:
      • [2013] 4 SLR 193
  3. Contractual Interpretation
    • Outcome: The court interpreted the termination clause broadly, allowing the respondent to terminate the contract for any breach.
    • Category: Substantive
    • Sub-Issues:
      • Interpretation of termination clause
      • Conditions of Sale
    • Related Cases:
      • [2017] 1 SLR 219
      • [2015] 5 SLR 1187
  4. Mitigation of Damages
    • Outcome: The court found that the appellant failed to prove the existence of an available market and the respondent had reasonably mitigated its loss.
    • Category: Substantive
    • Sub-Issues:
      • Available market
      • Residual value

8. Remedies Sought

  1. Monetary Damages
  2. Declaratory Relief

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Construction
  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tractors Singapore Ltd v Pacific Ocean Engineering & Trading Pte LtdHigh CourtYes[2020] SGHC 60SingaporeThe current appeal seeks to set aside the Judge’s decision in this case.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the general principles on contractual implication.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and anotherCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for the principle that Term 2 was a condition of those contracts.
Yap Son On v Ding Pei ZhenCourt of AppealYes[2017] 1 SLR 219SingaporeCited for the law on the interpretation of contractual terms.
Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte LtdCourt of AppealYes[2015] 5 SLR 1187SingaporeCited for the principle that the written agreement remains of first importance in contractual interpretation.
JTrust Asia Pte Ltd v Group Lease Holdings Pte Ltd and othersCourt of AppealYes[2020] 2 SLR 1256SingaporeCited for the principle that it is far too late for the appellant to attempt to rectify this by an amendment of its pleadings on appeal.
JWR Pte Ltd v Edmond Pereira Law Corp and anotherCourt of AppealYes[2020] 2 SLR 744SingaporeCited for the principle that where a new argument involves issues of fact, it is almost inevitable that the failure to raise the point earlier will result in relevant evidence not being fully ventilated.
Bulkhaul Ltd v Rhodia Oranique Fine LtdEnglish Court of AppealYes[2008] EWCA Civ 1452England and WalesCited regarding inferring the existence of an available market from sufficient evidence.

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

  • Implied Terms
  • Conditions of Sale
  • Repudiatory Breach
  • Mitigation of Loss
  • Delivery Date
  • Port of Destination
  • Purchase Order
  • Termination Clause

15.2 Keywords

  • contract
  • breach
  • implied terms
  • singapore
  • court of appeal
  • pacific ocean engineering
  • tractors singapore

17. Areas of Law

Area NameRelevance Score
Breach of Contract95
Contract Law95
Contractual Interpretation85
Damages80
Implied Terms80
Performance of Contract75
Wrongful Termination of Contract70
Mitigation of damage70
Shipbuilding Disputes60

16. Subjects

  • Contract Law
  • Commercial Dispute
  • Sale of Goods