STRACO LEISURE PTE. LTD. v SUMITOMO (SHI) CYCLO DRIVE ASIA PACIFIC PTE. LTD.

Facts

Straco Leisure Pte Ltd owns and operates the Singapore Flyer, a giant observation wheel driven by 24 drive wheels on drive shafts. Sumitomo (SHI) Cyclo Drive Asia Pacific Pte Ltd did ad hoc repair work on the wheel under a routine: Sumitomo issued a quotation, Straco a purchase order, and Sumitomo then an order acknowledgement, a delivery order and a tax invoice. Those last three documents bore the line "All business is undertaken in accordance with our terms and conditions"; the quotations instead set out short express terms. Sumitomo's 2016 standard terms included clause 17, limiting its liability to the price of the equipment.

In 2017 Sumitomo reconditioned four worn drive shafts by welding collars onto them, each documented under the routine. In August 2017 it also collared the DW3 Lower drive shaft through a sub-contractor, with no documents for that work. On 25 January 2018 the DW3 Lower drive wheel broke from its shaft, and the wheel was ordered to suspend operations. Straco sued in Originating Claim No 383 of 2023, alleging that the DW3 Lower work was unauthorised and caused the breakdown, and claiming special damages in excess of $380,000 and lost profit said to exceed $9 million. Two preliminary issues were ordered to be tried first.

Issues

1. Whether the reconditioning works on the DW3 Lower drive shaft were within the contracted scope and done with Straco's knowledge and authorisation.
2. Whether Sumitomo's standard terms, including the clause 17 liability cap, were incorporated into the contract for those works by a prior course of dealing.

Holding

S Mohan J, who had ordered the two issues to be tried first, decided them partly in each side's favour. On the authority issue, he found that the DW3 Lower works were within the contracted scope and done with Straco's knowledge and authorisation. On the incorporation issue, he held that Sumitomo's standard terms, including clause 17, were not incorporated into the August 2017 contract and did not apply to Straco's claim. Costs were left for a separate hearing.

Reasoning

On authority, the judge gave little weight to Sumitomo's alleged work instructions and unverified photographs. But the documents for the first four shafts described the work as repairing the shaft for worn bearing seating, one of them as machining a sleeve and welding, and Straco's maintenance manager signed three of the delivery orders and amended a table recording the work. He rejected the manager's evidence that he expected a slip-on sleeve and later only chroming. A revised quotation and a goodwill letter from the sub-contractor showed that Sumitomo obtained a waiver of its cost, which made sense only if Straco had asked for a discount. It was unlikely that Sumitomo would do the work free of charge without Straco's knowledge.

On incorporation, there was no signature or notice for the undocumented August 2017 contract, so the question was course of dealing under Vinmar Overseas, which sets a high threshold. Following Nambu, the term relied on must have had contractual force in the earlier dealings. The quotations, which said they made an offer and were valid for 30 days, were offers accepted by the matching purchase orders, so the later documents carrying the incorporation line came after the contracts were formed and had no contractual effect. Only one of the four earlier shaft contracts, where the purchase order came after the quotation expired, might have included the line, and one instance could not establish a consistent course of dealing. Sumitomo had not shown that the line was consistently contractual in other ad hoc work either.

In any event the line did not identify which terms it meant. No terms were ever sent, Straco first saw them in March 2018, and it could reasonably read the line as referring to the quotation's own terms, so it was too uncertain to incorporate anything. Straco's pleading that the terms of engagement were in all the documents was not a binding concession on this point.

From the judgment