ALLIANCE CONCRETE SINGAPORE PTE LTD V COMFORT RESOURCES PTE LTD

[2009] SGCA 34, Court of Appeal, Singapore, Andrew Phang Boon Leong JA, Chao Hick Tin JA, V K Rajah JA, 28 July 2009

Contract - Both parties in breach of contract - Effect of previous breaches - Effect of subsisting breach - Wrongful termination - Damages

The parties had concluded a contract for the supply of sand for producing concrete. In the proceedings, Comfort claimed loss of profits alleging that Alliance had ordered less than the minimum quantity and had prematurely terminated the contract by its breach in failing to pay for some deliveries. Alliance claimed damages for losses incurred, alleging that the respondent had repudiated the contract. Comfort was awarded judgment and the claim of Alliance was dismissed. Alliance appealed. The Court of Appeal allowed the appeal. It was common ground that there had been mutual breaches of contract by both parties. Both parties had hoped that their behaviour would induce the other to terminate the contract. The question was whether either party had the right to terminate the contract. The fact that both parties had committed breaches before one of them elected to treat the contract as repudiated made no difference. If A was entitled to treat B as having wrongfully repudiated the contract between them and did so, then it did not avail B to point to A's past breaches of contract. A breach by A would only assist B if it was still continuing when A purported to treat B as having repudiated the contract; and if the effect of A's subsisting breach was such as to preclude A from claiming that B had committed a repudiatory breach. B would have to show that A, being in breach of an obligation in the nature of a condition precedent, was therefore not entitled to rely on B's breach as a repudiation. As a result, the respondent was not entitled to terminate the contract based on the non-payments by the appellant, nor based on the under-ordering of sand. However, while the appellant was entitled to damages for the respondent's wrongful termination of the contract, the respondent was in turn entitled to damages for the appellant's under-ordering of sand.