Toptip Holding v Mercuria Energy Trading: Voyage Charterparties & Contract Formation Dispute

In Toptip Holding Pte Ltd v Mercuria Energy Trading Pte Ltd, the High Court of Singapore addressed a dispute over the formation of a voyage charterparty. Toptip Holding, the plaintiff, claimed Mercuria Energy Trading, the defendant, breached a binding agreement to transport iron ore pellets from Brazil to China. Mercuria denied a binding contract existed, citing a 'subject review' clause. Justice Steven Chong ruled in favor of Mercuria, finding that the 'subject review' clause precluded the formation of a binding contract on October 14, 2014. The court dismissed Toptip's claim and awarded costs to Mercuria.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Plaintiff's claim dismissed with costs.

1.3 Case Type

Admiralty

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Voyage charterparties dispute over contract formation. The court found no binding agreement due to a 'subject review' clause.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
TOPTIP HOLDING PTE LTDPlaintiffCorporationClaim DismissedLost
MERCURIA ENERGY TRADING PTE LTDDefendantCorporationJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Steven ChongJudgeYes

4. Counsels

4. Facts

  1. Plaintiff entered into a sale contract to purchase iron ore pellets.
  2. Plaintiff sent an email enquiry to a ship chartering broker.
  3. Defendant replied with the Mecuria Bid, including a 'subject review' clause.
  4. Plaintiff confirmed acceptance of the Mecuria Bid.
  5. Defendant nominated The Pan Gold, but Samarco objected.
  6. Defendant rejected the draft charterparty citing the 'subject review' clause.
  7. Plaintiff secured a substitute charterparty at a higher freight rate.

5. Formal Citations

  1. Toptip Holding Pte Ltd v Mercuria Energy Trading Pte Ltd, Suit No 1312 of 2014, [2016] SGHC 173

6. Timeline

DateEvent
Plaintiff entered into a f.o.b. sale contract for iron ore pellets from Samarco Mineraco S.A.
Plaintiff sent an email enquiry to Mr. Shu Changhong for chartering a vessel.
Defendant replied with the Mecuria Bid.
Defendant provided the Australian Cargo CP to Mr. Shu.
Plaintiff sent instructions from Brazilian health authorities to Mr. Shu.
Defendant nominated The Pan Gold for the shipment.
Shippers objected to The Pan Gold.
Defendant asked for Samarco’s contact details.
Mr. Shu sent an email regarding an amendment to the dispute resolution clause.
Plaintiff forwarded a message from Samarco stating The Pan Gold was 'OK'.
Defendant rejected the draft charterparty.
Plaintiff sent a notice to the defendant purporting to accept the repudiatory breach.
Plaintiff secured a substitute charterparty with RGL Shipping Pte Ltd.
Trial began
Judgment reserved.
Judgment issued.

7. Legal Issues

  1. Formation of Contract
    • Outcome: The court held that no binding contract was concluded due to the 'subject review' clause.
    • Category: Substantive
    • Sub-Issues:
      • Subject to Review Clause
      • Condition Precedent
      • Condition Subsequent
      • Waiver of Rights
    • Related Cases:
      • [2010] 1 WLR 753
      • [2003] 3 SLR(R) 362
      • [2011] 4 SLR 617
      • [2012] 4 SLR 1206
      • [1988] 2 Lloyd’s Rep 583
      • [2013] 2 Lloyd's Rep 320
  2. Breach of Contract
    • Outcome: The court found no breach of contract because no contract was formed.
    • Category: Substantive
    • Sub-Issues:
      • Repudiatory Breach
      • Good Faith
      • Reasonable Exercise of Rights
    • Related Cases:
      • [1985] 1 Lloyd's Rep 378
      • [2012] 4 SLR 738
  3. Uncertainty of Contract
    • Outcome: The court did not need to rule on this issue, but indicated that it would have rejected the argument that the contract was void for uncertainty.
    • Category: Substantive
    • Sub-Issues:
      • Incomplete Terms
      • Vagueness

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Admiralty
  • Shipping
  • Charterparties

11. Industries

  • Commodities Trading
  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production)N/AYes[2010] 1 WLR 753N/ACited for the principle that a contract may be formed even if certain terms have not been finalised if the parties intended to be bound.
The “Rainbow Spring”Singapore High CourtYes[2003] 3 SLR(R) 362SingaporeCited for the principle that a contract may be formed even if certain terms of economic or other significance to the parties have not been finalised.
Norwest Holdings Pte Ltd (in liquidation) v Newport Mining Ltd and another appealSingapore Court of AppealYes[2011] 4 SLR 617SingaporeCited for general principles on the impact of 'subject to contract' clauses.
OCBC Capital Investment Asia Ltd v Wong Hua ChoonSingapore Court of AppealYes[2012] 4 SLR 1206SingaporeCited for principles on when parties might be found to have reached a binding contract notwithstanding the presence of a 'subject to contract' clause.
Ground & Sharp Precision Engineering Pte Ltd v Midview Realty Pte LtdSingapore High CourtYes[2008] SGHC 160SingaporeCited for the meaning of 'subject to contract'.
Thomson Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte LtdSingapore High CourtYes[2001] 3 SLR 437SingaporeCited for the meaning of 'subject to contract'.
United Artists Singapore Theatres Pte Ltd v Parkway Properties Pte LtdSingapore High CourtYes[2003] 1 SLR(R) 791SingaporeCited for the meaning of 'subject to contract'.
Parkway Properties Pte Ltd v United Artists Singapore Theatres Pte LtdSingapore Court of AppealYes[2003] 2 SLR(R) 103SingaporeCited as affirming the High Court decision in United Artists.
Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd (formerly known as CWT Integrated Services Pte Ltd)Singapore High CourtYes[2013] 4 SLR 1023SingaporeCited for the principle that the critical inquiry is to determine from the objective evidence whether the parties intended to be immediately bound.
Star Steamship Society v Beogradska Plovidba (The “Junior K”)N/ANo[1988] 2 Lloyd’s Rep 583N/ACited for the principle that 'subject to details' clauses generally negative any intention to be legally bound unless and until full details are agreed.
Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd (The “Pacific Champ")English High CourtNo[2013] 2 Lloyd's Rep 320EnglandCited as a case where the court held that a binding contract was concluded despite the presence of a 'subject' clause, but distinguished on the facts.
Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The “Kanchenjunga”)N/AYes[1990] 1 Lloyd’s Rep 391N/ACited for the principle that a condition can only be lifted or waived by clear and unequivocal words or conduct.
Samos Shipping Enterprises Ltd v Eckhardt and Co KG (The “Nissos Samos”)N/ANo[1985] 1 Lloyd's Rep 378N/ACited for obiter dicta suggesting that parties are only entitled to resile from a contract with a 'subject to details' clause if in good faith they are not satisfied with the details.
HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte LtdSingapore High CourtYes[2012] 4 SLR 738SingaporeCited for the principle that there generally must be a clear and express agreement for a duty to negotiate in good faith to be imposed.
Jet Holding Ltd and others v Cooper Cameron (Singapore) Pte Ltd and another and other appealsSingapore Court of AppealYes[2006] 3 SLR(R) 769SingaporeCited for the distinction between terms implied 'in law' and terms implied 'in fact'.

13. Applicable Rules

Rule Name
O 18 r 8(1)(c) of the Rules of Court

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Voyage Charterparty
  • Subject Review Clause
  • Charterer
  • Disponent Owner
  • Laycan
  • Freight Rate
  • Pro Forma Charterparty
  • Logical Amendment
  • Repudiatory Breach
  • Australian Cargo CP
  • Mecuria Bid
  • The Pan Gold

15.2 Keywords

  • Charterparty
  • Contract Formation
  • Shipping
  • Admiralty
  • Subject to Review
  • Breach of Contract
  • Singapore

17. Areas of Law

16. Subjects

  • Contract Law
  • Shipping Law
  • Admiralty Law
  • Charterparties