PT Surya Citra Multimedia v Brightpoint Singapore Pte Ltd.  SGHC 245
The Claimant, Surya Citra Multimedia, a sub-distributor, contracted with the Defendant, Brightpoint, a wholesaler and distributor, under a sub-distribution agreement (the “Contract”) for the distribution of BlackBerry mobile phones (the “Devices”) in Indonesia.
The claim arose under a contractual price protection clause (“PPC”) designed to protect the Claimant, as the sub-distributor who routinely placed purchase orders for the Devices, from any reduction in the retail price dictated from time-to-time by BlackBerry. The Claimant argued that, in breach of the PPC, the Defendant failed to provide the total financial shortfall suffered by the Claimant following a reduction in the retail price of the Devices.
In a counterclaim, the Defendant alleged that the Claimant had failed to collect some consignments it had ordered via purchase orders. In mitigation, the Defendant sold the uncollected Devices to third parties but there was a shortfall between the sales price achieved from the third party buyers and the contractual price under the purchase orders.
The Claimant contented that they were not obliged to pick-up the Devices as the Defendant had failed to deliver them by the delivery dates set out in the purchase orders, time being of the essence in relation to delivery. The Defendant presented evidence that the dates in the purchase orders were tentative and subject to change.
The phrase ‘time is of the essence’ means that there is a time stipulation in a contract, most commonly in relation to delivery and the time for payment. Such a stipulation would be a condition of the contract, which would have to be strictly complied with. A breach of the condition would entitle the innocent party to terminate the contract, and, in addition, bring an action for damages.
The Singapore High Court dismissed the Claimant’s claim in full and but allowed the Defendant’s counterclaim in part.
The Singapore High Court has provided a useful and concise reminder of when a time stipulation clause in a mercantile contract will be considered to be a condition.
The take-away from PT Surya Citra Multimedia is that if Members want to ensure that ‘time is of the essence’ in their mercantile or commercial contracts, then clear wording to that effect should be included in the contracts. In a contract for the carriage of goods, where the Member is the Carrier, Members are strongly recommended to resist any express terms that make a delivery date ‘time of the essence’. In allowing time of delivery to become an express condition, where there isn’t an applicable exception clause in the Hague / Hague-Visby Rules to avoid or minimise the Carrier’s liability, a carrier would leave himself exposed to terminations of contracts and liabilities for delay claims.
Members are reminded that delay claims are not covered under standard P&I Club cover.