Case Update: Malayan Banking Bhd v Barclays Bank PLC [2019] SGHC(I) 04 – SICC holds implied contract for inter-bank payment based on SWIFT

Significance: The Singapore International Commercial Court (SICC), coram Jeremy Lionel Cooke IJ, held that Barclays Bank entered into an implied contract with Maybank to make the payment according to the payment instruction sent prior and was not entitled to subsequently refuse payment on alleged suspicion of fraudulent circumstances of the payment. The SICC also held that Barclays failed to prove a market practice which could be implied by custom or usage as a term of the implied contract.

Comment: It is rare for an implied contract to be found. And for legal principles to be clarified in application to the inter-bank SWIFT system.

Highlighted extracts on legal principles:

“20 … Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd [2011] 2 SLR 63 (“Rabobank”) where it was observed that an implied contract is no different in legal effect from an express contract but that the difference lies solely in the manner in which the consent of the parties is manifested. Such a contract can arise from communications between the parties and from conduct (see Rabobank at [46]). In the Rabobank decision, it was said that in a case where the court was faced with a claim that an agreement had been entered into by conduct, and the mechanism for offer and acceptance was conduct, rather than express written or oral agreement, it ought to scrutinise the evidence carefully to determine whether the existence of a contract, compliant with all the requirements of contract formation, had been proved on the balance of probabilities. “[A]ll the surrounding circumstances must be considered objectively to determine whether or not a contract may properly be implied. No assumptions should be made, since contracts are not to be ‘lightly implied’” (Rabobank at [50]). …

21 I was also referred to decisions of the English courts and in particular to that of the Court of Appeal in Baird Textile Holdings Ltd v Marks & Spencer plc [2002] 1 All ER (Comm) 737 where the court said that it was fatal to the implication of a contract that the conduct in question was explicable by reference to other facts. It was not enough for the conduct to be consistent with the alleged contract. For a court to imply a contract it had to be necessary to do so because the conduct was not explicable on any other basis …”

63 As to what amounts to a market practice which can give rise to a term of a contract, the authors of The Law of Contract in Singapore (Andrew Phang Boon Leong gen ed) (Academy Publishing, 2012) from para 06.078 onwards stated that the same rules and principles apply as in English law. A term can be implied from custom or usage where it is universal in the sense that it is generally accepted by those who habitually do business in the trade or market concerned and is so generally known that an outsider who makes reasonable enquiries could not fail to be made aware of it (see the Privy Council decision in Chan Cheng Kum v Wah Tat Bank Ltd [1971–1973] SLR(R) 28 (on appeal from the Federal Court of Malaysia) at [13]–[14]). The custom or usage should be certain, reasonable and not repugnant, in the sense of being inconsistent with the express or implied terms, or the nature of any contract or of any title document it affects. The authors went on to cite the decision of Ungoed Thomas J in Cunliffe-Owen v Teather & Greenwood [1967] 1 WLR 1421, where he stated at 1438–1439 that:

‘Usage’ may be admitted to explain the language used in a written contract or to add an implied incident to it, provided that if expressed in the written contract it would not make its terms or its tenor insensible or inconsistent …

‘Usage’ is apt to be used confusingly in the authorities, in two senses, (1) a practice, and (2) a practice which the court will recognise. ‘Usage’ as a practice which the court will recognise is a mixed question of fact and law. For the practice to amount to such a recognised usage, it must be certain, in the sense that the practice is clearly established; it must be notorious, in the sense that it is so well known, in the market in which it is alleged to exist, that those who conduct business in that market contract with the usage as an implied term; and it must be reasonable. The burden lies on those alleging ‘usage’ to establish it …

64 The authors of Chitty on Contracts vol 1 (H G Beale gen ed) (Sweet & Maxwell, 33rd Ed, 2018) said at para 14-033 that such a practice, if it is to represent a term of the contract, must be notorious, certain and reasonable and something more than a mere trade practice. It must be an invariable, certain and general usage or custom of a particular trade or place for it to represent a term by which the parties are bound. Such usages are incorporated on the presumption that the parties did not mean to express in writing the whole of the contract by which they intended to be bound, but a contract with reference to those known usages.

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