AB107 Business Law

Holcim (Singapore) Pte Ltd v Precise Development Pte Ltd

(a) Highlight the material facts of the decision

10 Nov ⋅ Appellant entered into Contract with the Respondent for the supply of
90,000 cubic meters of concrete at $65/cubic meter
23 Jan ⋅ Announcement of Sand Ban
26 Jan ⋅ Appellant informs Respondent Sand Ban caused materials shortage
⋅ Supply of concrete might cease, and advised on seeking alternatives
01 Feb ⋅ BCA announces that sand will be released to main contractors, such as the
Respondent, albeit at a higher price of $25/tonne
⋅ Appellant issued new quoted prices, 30% higher than before
02 Feb ⋅ Bibright ceased sand supply to Appellant on force majeure clause
05 Feb ⋅ Huat Shua ceased sand supply to Appellant on force majeure clause
⋅ Respondent insists Appellant was still obliged as BCA’s release of sand
means there is no disruption, within the meaning of Clause 3
06 Feb ⋅ Sand Ban came into effect
09 Feb ⋅ Appellant informs Respondent that it has no access to BCA’s sand
15 Feb ⋅ BCA announces that price of sand is now $60/tonne
26 Feb ⋅ Appellant informs Respondent that BCA now also controls the supply of
aggregates, another raw material, at $70/tonne
01 Mar ⋅ Appellant offers new quotation, of $185/cubic meter, if Respondent is
willing to sell sand and aggregate to the Appellant at $63/tonne and
$73/tonne respectively, $3 above the BCA price
19 Mar ⋅ A meeting was arranged but there was no new agreement
20 Mar ⋅ Respondent accepts prices of the 1 March Quotation
02 Apr ⋅ Appellant sent new quotation of concrete at $55/tonne, provided respondent
will provide sand and aggregate free of charge
26 Apr ⋅ Respondent wrote to Appellant demanding prices of 1 March quotation,
warning of possible legal actions.

Subsequently, the respondent sued for breach of contract. The two different decisions arrived
from the case are discussed below and the main issue is whether the Appellant can avail itself of
Clause 3 in order to defeat the Respondent’s claim against it for breach of contract.

Kenneth Sin -1-

 AB107 Business Law
Holcim (Singapore) Pte Ltd v Precise Development Pte Ltd

(c) Identify the reasoning adopted by the High Court in arriving at its decision

The High Court (HC) held that the Appellant was in breach of Contract when it failed to supply
RMC to the Respondent at the contracted price. This was showed through a summary (at 31 – 41)
of the Judgment that took place before the Appeal did.

Three defenses were brought up by the Appellant, of which, only the third one could marginally
be relied on if two conditions had been met (the other two defenses were rejected at 32 -35). The
third defense endeavored to rely on Clause 3 and the HC specified the two conditions which were
similar to the two sub-issues applied in the AC decision. These two conditions were that the
Appellant’s ability to supply concrete need be “disrupted” and that the events arose through
circumstances “beyond the control” of the Appellant.

HC held that only when an event occurred, making it difficult for the defendant to supply
concrete to the plaintiff would there be any “disruption”. More importantly, it insisted that this
“excluded a rise in the price of raw materials used by the defendant to produce concrete”, obiter
dicta Tennants case.

Hence, it follows that the price rise of raw materials (be it from BCA or alternative sources)
cannot amount to “disruption” and is immaterial to the issue of whether the supply of concrete
was disrupted by a shortage of sand (at 38).

In looking at the second condition of “beyond the control” of the Appellant, HC took the literal
reading of the words and “rendered the clause nugatory if the party relying on it did not make
reasonable efforts to ensure the contract was performed” (Para 14 -139, Chitty on Contracts).

HC referred to the Respondent’s letters dated 5 February (see part (a)) where the Respondent
stated in its letter that there is no disruption the supply of sand because it was available from
BCA’s stockpile. While, it was not explicitly mentioned that the Respondent was willing to help
the Appellant, the Judge interpreted that this statement demonstrated enough willingness to help
the Appellant procure sand. Given the above circumstances, the Defendant (Appellant) could not
then claim that the shortage of sand was an event beyond its control (Legal Update Dec 2009,
Drew & Napier LLC)

The failure to meet the two conditions led the HC to conclude that the Appellant was in breach of
the Contract.

Kenneth Sin -2-