In the recent decision of Bintai Kindenko Pte Ltd v Samsung C&T Corp  SGCA 39, the CA upheld a contractual exclusion clause that excluded the right of a subcontractor to rely on the unconscionability exception to prevent the main contractor from calling on the performance guarantee.
The respondent main contractor was appointed by the Employer for a project to upgrade the Suntec City Convention Center. The appellant was then appointed as the project’s M&E subcontractor under a Letter of Acceptance dated 3 December 2012 (“LOA”). Pursuant to the LOA, the subcontractor provided a banker’s guarantee (“BG”), which was payable on demand in writing.
Disputes arose as to whether the subcontractor was liable for delays in its work between March 2014 and December 2015. On 27 January 2016, the main contractor rejected all of the subcontractor’s requests for extension of time and computed the delays in the subcontract works. However, it did not raise any claim for liquidated damages in the Payment Responses it served between February 2017 and May 2017.
In July 2017 shortly after the subcontractor commenced an adjudication application for the release of the first half of retention monies amounting to about $2.1m, the main contractor informed the subcontractor that it was issuing a delay certificate and claimed that it was entitled to recover liquidated damages. Even then, the main contractor only called on the performance bond on 28 August 2017 which was the same day the subcontractor filed an Originating Summons in court for leave to enforce the Adjudication Determination it had by then obtained in its favor.
The subcontractor then took out an ex parte application and obtained an interim injunction restraining the main contractor from calling on the BG. Subsequently, the main contractor applied for the discharge of the interim injunction, and the HC granted the application and discharged the interim injunction. Dissatisfied with the HC’s decision, the subcontractor appealed against the discharge of the interim injunction.
In dismissing the appeal, the CA held, inter alia, that:
This case is therefore a timely reminder that the Court will enforce terms expressly incorporated by reference even if they were never read or made available to the counterparty. Parties to a contract should therefore be mindful of reviewing a counterparty’s document expressly incorporated by reference into a contract as its terms may modify the scope of the agreement or a party’s rights or obligations under the main contract or contain exclusion clauses excluding or limiting liability.
Disclaimer: This update is provided to you for general information and should not be relied upon as legal advice.