Introduction:

The Court of Appeal held in Nambu PVD Pte Ltd v UBTS Pte Ltd and another appeal [2021] SGCA 98 that documents unintended by the parties to affect their transactional relationship cannot give rise to a course of dealing from which contractual terms may be incorporated. Thus, standard terms and conditions referenced in invoices and delivery orders which were not meant to have contractual effect were not incorporated into the contract between parties.

Brief facts of case:

In Nambu PVD Pte Ltd v UBTS Pte Ltd [2021] SGCA 98 (Nambu v UBTS), Nambu PVD Pte Ltd (Nambu) and UBTS Pte Ltd (UBTS) entered into a contract (the Contract) for UBTS to transport a Prefabricated Vertical Drain machine (the Machine). UBTS' vehicle caught fire during the course of the carriage, and the Machine was damaged as a result. Nambu made a claim against UBTS for fire damage to the Machine. UBTS argued that its own standard terms and conditions (UTBS T&Cs) or the Singapore Logistics Association’s standard terms and conditions (SLA T&Cs) were incorporated into the Contract, and that its liability for negligence was limited. The High Court judge held that the fire was caused by UBTS’s negligence and that UBTS could not rely on UTBS T&Cs or the SLA T&Cs to limit its liability, since the terms were not incorporated into the Contract.

Nambu then appealed in respect of the quantum of damages and costs awarded to it while UBTS appealed in relation to the finding that the SLA T&Cs were not incorporated into the Contract. In the appeal, UBTS argued that the SLA T&Cs were incorporated into the Contract by virtue of reasonable notice or previous course of dealing on the basis of invoices and delivery orders that had been issued by UBTS for past contracts, and which contained express references to the SLA T&Cs.

In this article, Starboard will be focusing on Court of Appeal’s analysis of whether the SLA T&Cs were incorporated into the Contract between UBTS and Nambu by virtue of either reasonable notice or a previous cause of dealing.

The Court of Appeal’s Decision:

In rejecting UBTS’s arguments that the standard terms were incorporated by reasonable notice, the Court of Appeal noted that the invoices and delivery orders were always issued by Nambu to UBTS after a contract between Nambu and UBTS had been orally concluded (i.e. notice of the purported terms was only given after the Contract was entered into).

In this regard, the Court of Appeal noted two scenarios where timing may not be crucial.

First, where there has been a previous course of dealing between the contracting parties. In such circumstances, the court would be prepared to incorporate a term into a contract despite the fact that it was not otherwise incorporated (for example, by way of signature or reasonable notice) because the contracting parties had consistently contracted with reference to that term on previous occasions in the past.

The second scenario would be where the contracting parties intended to supplement an otherwise bare agreement with more detailed terms subsequently. However, the further documentation must have contractual effect in that it must have been objectively intended to supplement the contract.

The Court of Appeal emphasized an important general point that terms sought to be incorporated into a contract must have the requisite contractual force. Generally, if it can be proven that the document containing the particular term is intended merely as a receipt and not as a contractual document as such, that term will not be incorporated. In the current case, the Court of Appeal agreed with the High Court’s judge finding that the invoices and delivery orders issued were not meant to have contractual effect. On that basis, as a matter of both principle and authority, it was difficult to rationalise how non-contractual documents could ever amount to a course of dealing sufficient to justify the incorporation of the SLA T&Cs. The Court of Appeal therefore dismissed UBTS’s appeal and held that a reference to the SLA T&Cs in non-contractual documents such as the invoices and Delivery Orders would have no contractual force.

In the course of so deciding, the Court of Appeal referred to its previous decision in Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte Ltd [2018] 2 SLR 1271 (Vinmar) where a course of dealing was found to have been effective in incorporating an exclusive jurisdiction clause. Unlike the present case, the Court of Appeal noted that in Vinmar, the exclusive jurisdiction clause was an express term of the previous contracts between parties, and thus formed a course of dealing between the parties that had contractual effect (see Starboard’s previous update here).

Starboard’s observations:

The Court of Appeal’s decision in Nambu v UBTS provides several helpful clarifications with regard to the law on the incorporation of terms. Starboard observes that the case of Nambu v UBTS serves as an important reminder to businesses that any standard terms & conditions that they intend to rely on should be expressly referred to at the time the contract is formed. Depending on the specific facts and circumstances of each case, parties may be able to rely on a previous course of dealings, trade practices or supplementary documentation to incorporate terms that govern the parties’ rights and liabilities into the contract. As a matter of prudence, parties should expressly include all salient terms into their contracts and seek professional legal advice where necessary to ensure that the relevant terms of contract are properly incorporated.

Dentons Rodyk represented Vinmar the successful applicant in Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte Ltd [2018] 2 SLR 1271 (see Starboard’s previous update here).