This post concerns the Singapore High Court’s recent decision in Law Beng Chong Gary v The Wellness Group Pte Ltd [2017] (published on Singapore Law Watch here) (the “Judgment“) concerning principles of contractual construction.

Justice Hoo Sheau Peng reiterated the principles applicable to contractual interpretation at [18] of the Judgment, holding as follows:-

As this application turned on a proper construction of the Termination Agreement, I start my analysis by briefly setting out the relevant legal principles. Construction is the process of ascertaining the intentions of the parties as expressed in the contract. An objective approach must be taken. What must be sought is the meaning that the contract conveys to a reasonable person having the background knowledge that would have been reasonably available to him: Ang Tin Yong v Ang Boon Chye and another [2012] 1 SLR 447 (“Ang Tin Yong”) at [11]. Two other principles of construction are pertinent: first, that regard must be had to the commercial purpose of the transaction; and second, that a construction which leads to unreasonable results is to be avoided unless it is required by clear words and there is no other tenable construction (see Ang Tin Yong at [10]).”

On the facts of the case, the defendant had alleged that a discharge and termination letter he had signed in connection with an earlier employment agreement was ineffective, such that his rights under the old employment agreement continued to subsist. The plaintiff’s case was that the discharge and termination letter effectively terminated the old agreement, and the parties’ rights and obligations were governed by the new employment agreement entered into subsequent to the discharge and termination agreement.

The Singapore High Court agreed with the defendant, holding that the conditions relating to the discharge and termination had been fulfilled, effectively bringing the old employment agreement to an end.

The case serves as a useful reminder to practitioners as to the principles of contractual construction applied by the Singapore Courts, and an insight to the public at large as to how contracts are “construed” – or read – by a Court.

23 October 2017

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