Singapore Court of Appeal (“CA“) decision in Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 2 is groundbreaking for its analysis of contract formation through a deterministic algorithm code. Case summary here.
The majority of the CA (Jonathan Mance IJ dissenting) decided on the following key points:
When analysing mistake for contract vitiation, if a contract was formed through deterministic algorithms (i.e. it always produces the same output given the same input), it is the programmer’s state of knowledge that is relevant and to be attributed to the parties: at [98].
The inquiry should be whether, when programming the algorithm, the programmer was doing so with actual or constructive knowledge of the fact that the relevant offer would only ever be accepted by a party operating under a mistake and whether the programmer was acting to take advantage of such a mistake: at [103].
The relevant time frame within which the knowledge of a programmer or the person running the algorithm should be assessed is from the point of programming up to the point that the relevant contract was formed: at [99].
The CA held it was not necessary to decide whether cryptocurrency, specifically BTC, was a species of property that was capable of being held on trust. No express trust arose over the BTC in B2C2’s account as there was no certainty of intention to create a trust. The mere fact that Quoine’s assets were segregated from its customers’ could not in and of itself lead to that conclusion. On the facts, the manner in which the BTC was stored militated against the finding of a trust: at [144] and [145].
The CA did comment in obiter dicta that “[t]here may be much to commend the view that cryptocurrencies should be capable of assimilation into the general concepts of property. There are, however, difficult questions as to the type of property that is involved”: at [144].
