Repudiatory Breach ' Insistence On Performance Of Obligations Outside The Contract

• Published date: 09 March 2023
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Real Estate and Construction, Contracts and Commercial Law, Trials & Appeals & Compensation, Construction & Planning
• Law Firm: Chancery Law Corporation
• Author: Mr Tian Luh Tan and Xian Ying Tan

A party can terminate a contract pursuant to an agreed contractual mechanism. However, you can also do so by accepting the other party's repudiatory breach. So, what amounts to a repudiatory breach? Will it amount to a repudiatory breach if you insist the other party complies with conditions that are not part of the contract? The recent case of Sunrise Industries (India) Ltd v. PT. OKI Pulp & Paper Mills & Anor [2023] SGHC 3 ("Sunrise v OKI") addresses this.

Brief facts. In Sunrise v OKI, the plaintiff, Sunrise Industries (India) Ltd ("Sunrise") was engaged by the first defendant, PT. OKI Pulp & Paper Mills ("OKI") to supply and install pipes, fittings and manholes for a pump mill owned by OKI in Indonesia. This was done via two separate contracts: a supply contract for Sunrise to supply OKI with various goods (the "Supply Contract"), and a separate contract (the "Installation Contract") for Sunrise to install those goods in the mill.

Sunrise was required to, and did obtain, a bank guarantee from the second defendant, Dena Bank Limited ("Dena Bank"), a public bank in India.

Disputes arose from the performance of the contracts, leading to OKI invoking the bank guarantee and causing Sunrise to bring the suit.

Facts - Repudiatory breach. For the purposes of this blog, we focus on the Parties' arguments on repudiatory breach for the Installation Contract. However, there are other disputes, and we highlight that the Court had found (earlier in the judgment) that Sunrise had breached the Installation Contract.

Returning to the issue of repudiatory breach, OKI argued that it was entitled to terminate the Installation Contract as, among others, Sunrise had "refused to perform its installation work and insisted on imposing additional conditions that had not been agreed, which constituted a repudiatory breach" ([103] Sunrise v OKI).

While cases are always fact specific, this scenario can be of general relevance.

Consider the following scenario: suppose that the contractor tells the employer that unless the employer pays the contractor for works which have not been carried out (and which are not contractually due to be paid), the contractor will stop work.

This hypothetical may potentially be characterized as one where the contractor has refused to carry out its works and insisted on imposing additional conditions that had not been agreed.

Repudiatory breach - the law. The law in this regard is well established and has been helpfully set out by the Court in Sunrise...