[1997] SGHC 52

In the High Court of the Republic of Singapore

[1997] SGHC 52

Suit 1520/1993

Between

Todd Trading Pte Ltd

… Plaintiff

And

Aglow Far East Trading Pte Ltd

… Defendant

grounds of decision

Agency — Disclosure by agent; Contract — Remedies — Damages

This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher’s duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports.

Todd Trading Pte Ltd v Aglow Far East Trading Pte Ltd

[1997] SGHC 52

Suit 1520/1993
Kan Ting Chiu J
11 March 1997

1 KAN TING CHIU J

6 our principal is prepared to accept at US$209.50/MT` (emphasis added) without suggesting that the plaintiffs deal directly with the unnamed principal. In response the plaintiffs replied on the same day starting with `We thank you for your fax message ... today. We confirm having sold to you the following ...` (emphasis added). They set out the conditions for the sale, inter alia, that a letter of credit for the full purchase price was to be established within three working days of business confirmation. It was also stated that the letter of credit was to be transferrable, but that this term was deleted by the defendants. Another term provided that `Any over-price (above US$209.50 MT) to be for buyer`s account and to be reimbursed to an offshore bank account designated by Aglow Far East Trading Pte Ltd immediately upon completion of each negotiation of documents with bank.` The defendants confirmed the terms of the sale by placing its stamp and signature on the letter without qualification and returning it to the plaintiffs on 19 February.

13 we have committed ourselves with the Vietnamese government on your behalf , we are very concern (sic) for the fact that after almost one month later, we have not received your advice on the establishment of your letter of credit.` (Emphasis added). This letter was not copied to the plaintiffs. This letter is noteworthy in that it showed that the defendants were aware that they could commit themselves contractually on behalf of Heriot. Nevertheless they did not indicate that they were contracting on behalf of Heriot when they confirmed the contract.

It is quite conceivable that the plaintiff knew our principals like Kestrel and Heriot at the very beginning of the transaction. In our correspondence we just addressed them as `principal`.

Q: With regard to the 30,000 tons of rice is it your position that you entered into a contract with the plaintiff as agent? A: My position is that I did not enter into any contract with the plaintiff and that I was negotiating or arranging with the plaintiff to make the sale with my principal. Q: You executed the document AD40 [the letter of 17 February] as an agent? A: That was not as an agent. Q: You didn`t sign it as a principal or an agent? A: That is correct. Q: What did you sign it as? A: I signed it as someone working with the plaintiff to sell the rice to my principal.

Q: Did you enter into this agreement as the buyer? A: No. Q: Were you an agent acting on behalf of a disclosed principal? A: Yes. Q: Who is disclosed principal? A: Kestrel Financial Services. Q: Who did you tell that to? A: Eddie Heng. Q: When did you tell that to him? A: From the very beginning.

36 Bowstead & Reynolds on Agency (16th Ed) will show.

37 Bowstead & Reynolds states that:

The question whether the agent is to be deemed to have contracted personally, in the case of a contract in writing other than a deed, bill of exchange, promissory note or cheque, depends upon the intention of the parties as a whole, the construction of which is a matter of law.

39 (b). The mere fact that the agent is described as an agent, director, secretary, manager, broker, etc, whether by words connected with or forming part of the signature, or in the body of the contract, and whether the principal is named or not, raises no presumption that the agent did not intend to contract personally; but here again an intention to contract as agent only may be gathered from the whole document and surrounding circumstances.

40 (c). But if the agent adds words to his signature, indicating that he signs as an agent, or for or on behalf or on account of a principal, he is deemed not to have contracted personally, unless it is plain from other portions of the document that, notwithstanding such qualified signature, he intended to bind himself. This is so even though he does not name his principal. But this proposition should be read subject to art 102(2) regarding the liability of agents under trade custom.

42 Parker v Winlow (1857) 7 E & B 942; 119 ER 1497 the defendant signed a charterparty as `GW Winlow, agent for E Winlow & Son` without qualification. In answer to a claim for demurrage, the defendant contended that it was not a contracting party, and that the action should have been brought against E Winlow & Son. This failed. Lord Campbell CJ found that `He makes the contract, using apt words to shew that he contracts; and the only ground suggested for rebutting his personal liability is that he is agent for another but he may well contract and pledge his liability, though he is agent for another.`

43 Teheran-Europe Co Ltd v ST Belton (Tractors) Ltd [1968] 2 QB 543 a company, Richards Marketing Ltd, contracted to buy machines from the defendants. In the course of the negotiations with the seller, the company had referred `our clients` which were the plaintiffs. After the sale took place the plaintiffs sued the seller who contended that the plaintiffs as undisclosed or unnamed principals were not entitled to sue. The Court of Appeal rejected that. Lord Denning also considered Richards Marketing Ltd`s position and said that `Richards Marketing Ltd could, I think, sue and be sued on the contract in theirown name. They signed the contract in their own name without qualification. They did not add the words `as agents for` or `for and on behalf of` or any of the phrases which exclude personal liability`. I agree entirely and respectfully. The disclosure of a party`s status as an agent does not ipso facto relieve it from liability from a contract unless the contracting parties intended that when they contract. The disclosure is not evidence of the intention; there must be more. If there is no more, as in the two cases mentioned and in the present case, liability is not avoided.

45 Bowstead & Reynolds , there was no evidence that the parties as a whole intended that the defendants should not incur liability as buyer under the contract. As Brandon J had noted in The Swan; Bridges & Salmon Ltd v The Swan (Owners) [1968] 1 Lloyd`s Rep 5 when referring to the article at p 12, `The intention for which the court looks is the objective intention of both parties, based on what two reasonable businessmen making a contract of that nature, in those circumstances, in those terms and in those surrounding circumstances, must be taken to have intended.` Applying art 101 and the rules to the present situation, the defendants are liable on the contract.

(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against him for damages for non-acceptance. (2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer`s breach of contract. (3) Where there is an available market for the goods in question, the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been accepted or (if no time was fixed for acceptance) at the time of the refusal to accept.

48 Thompson (WL) Ld v Robinson (Gunmakers) Ld [1955] 1 Ch 177 at pp 187-188, `sub-s (3) provides only a prima facie rule, and if on investigation of the facts one finds that it is unjust to apply that rule, in the light of the general principles mentioned above, then it is not to be applied.`

49 Trans Trust SPRL v Danubian Trading Co Ltd [1952] 2 QB 297, the rule was not applied when a buyer failed to furnish a letter of credit for steel that it contracted to buy. The seller was awarded damages representing the lost profits on the contract. Denning LJ explained at p 304 that:

This is another case concerned with the modern practice whereby a buyer agrees to provide a banker`s confirmed credit in favour of the seller. This credit is an irrevocable promise by a banker to pay money to the seller in return for the shipping documents. One reason for this practice is because the seller wishes to be assured in advance not only that the buyer is in earnest but also that he, the seller, will in fact obtain his money when he delivers the goods. Another reason is because the seller often has expenses to pay in connexion with the goods and he wishes to use the credit so as to pay those expenses. He may, for instance, be himself a merchant, who is buying the goods from the growers or the manufacturers, and has to pay for them before he can obtain delivery, and his own bank will only grant him facilities for the purpose if he has the backing of a letter of credit. The ability of the seller to carry out the transaction is, therefore, dependent on the buyer providing the letter of credit, and for this reason the seller stipulates that the credit should be provided at a specified time well in advance of the time for delivery of the goods.

A banker`s confirmed credit is a different thing from payment. It is an assurance in advance that the seller will be paid. It is even more than that. It is a chose in action which is of immediate benefit to the seller. It is irrevocable by the banker, and it is often expressly made transferable by the seller. The seller may be relying on it to obtain the goods himself. If it is not provided, the seller may be prevented from obtaining the goods at all. The damages he will then suffer will not in fact be nominal. Even if the market price of the goods has risen, he will not be able to take advantage of the rise because he will not have any goods to resell. His loss will be the profit which he would have made if the credit had been provided. Is he entitled to recover that loss? I think he is, if he can show that such a loss was at the time of the contract foreseeable by the buyer as the probable consequence of a breach.

51 Bulsing Ltd v Joon Seng & Co [1972] 2 MLJ 43 ; [1969-1971] SLR 565. The facts in that case were quite similar to that in the present case. The plaintiff and the defendant agreed that the plaintiffshould sell to the defendant, and the defendant should buy from the plaintiff, 50,000 metric tons of urea at US$69 per metric ton. It was a condition of the contract that payment should be made by way of letters of credit opened in favour of the plaintiff on various specified dates. The defendant failed to open the letters of credit on the due dates. In order to fulfil the contract with the defendant, the plaintiff entered into a contract to purchase 50,000 metric tons of urea at US$66 per metric ton from Chimimport of Bulgaria. When the plaintiff failed to establish the necessary letter of credit, Chimimport claimed damages for non-fulfilment of the contract and finally settled for agreed damages of US$33,000, being 1% of the amount of the contract. Under the penalty clause, the plaintiff had to pay 2% of the total amount of the contract to Chimimport.

In my opinion the general rule in the case of breach of contract is that the plaintiff, by way of damages, is entitled to be put in the same position as he would have been in if the contract had been completed. Subsections (2) and (3) of s 50 give the measure of general damages and the measure of damages laid down in sub-s (3) is not to be applied in cases where it is not appropriate to achieve the result required by sub-s (2), for example in the case where the plaintiff is a dealer in the particular goods sold. In such a case, what ensues from the breach in the usual course of things is that the plaintiff loses the profit that he would have made had the sale to that particular buyer been completed and he is entitled to be recompensated for that loss. It is no answer to say that he has sold, or may readily sell the goods to another person, for even if he has been successful the fact remains that he has profited from one sale instead of two.

57 Bulsing a similar claim was made where FA Chua J held at p 45:

I am also of the view that the plaintiff is entitled to recover from the defendant the damages which the plaintiff had to pay to Chimimport. The defendant knew that the plaintiff was not the manufacturer of the urea and that the plaintiff had to purchase it from Bulgaria. It must have been in the contemplation of the parties that in the event of a breach of the contract the plaintiff would have to pay damages to the supplier in Bulgaria.

59 Bulsing too there was little said of the quantification of the sum Bulsing paid to its Bulgarian supplier. All that was known was that there was a penalty clause providing damages at 2% of the contract sum, and that the parties settled for US$33,000 after negotiations. FA Chua J allowed the claim on the basis that such a payment was within the contemplation of the parties. That is a sufficient basis for the plaintiffs to claim and recover the US$5,000 from the defendants.

Kan Ting Chiu J

Zaheer K Merchant and Vijai Parwani (Madhavan Louis & Partners) for the plaintiffs
Winston Wong and Chan Mun Bin (ST Kay & Co) for the defendants