Tan Soh Huat Pte Ltd (“TSH”) was a Major Supplier of Dried Shitake Mushrooms: Business Law Report, KU, Singapore

Assignment Requirements:

Tan Soh Huat Pte Ltd (“TSH”) was a major supplier of dried shitake mushrooms to Chinese restaurants in hotels in Singapore. On 2 Mar 2020, it entered into a contract to buy 200 kilograms of premium grade dried shitake mushrooms from Shanghai Green Food Co Ltd (“SGFC”) for delivery on 30 Apr 2020. The contract was governed by the laws of Singapore. Under the terms of the contract dated 2 Mar 2020, TSH had paid a deposit of $20,000.00 to SGFC.

The contract also contained the following terms:

12.1 Neither the Seller nor the Buyer shall be held liable for failure or delay in the performance of its obligations under this Contract if such performance is delayed or hindered by the occurrence of an unforeseeable act or event which is beyond the reasonable control of either party (“Force Majeure Events”).

12.2 Acts or events constituting Force Majeure Events shall include, but not limited to Act of God, government intervention, directives, or policies.

12.3 The party affected by a Force Majeure Event shall notify the other as soon as reasonably practicable after the commencement of a Force Majeure Event.

On 24 Mar 2020, the Government of Singapore imposed a ban on social gatherings of more than 10 people outside work and school commencing on 27 Mar 2020. Mass events and conferences, as well as wedding banquets, had to be canceled or deferred. Further, on 3 Apr 2020, the Government of Singapore announced that it would be implementing an elevated set of safe distancing measures, as a circuit breaker to pre-empt the trend of increasing local transmission of COVID-19.

As a result, with effect from 7 April 2020, all restaurants, hawker centers, coffee shops, food courts, and other food and beverage outlets would remain open only for takeaway or delivery. As soon as the news broke out on 24 Mar 2020, TSH was informed by many Chinese restaurants that they would be either canceling or reducing their orders for dried shitake mushrooms.

This was because the restaurants anticipated that their business would drop sharply since the large scale dinners could not be held. Given the turn of events, TSH would like to discharge its contract with SGFC and recover the deposit paid. They had sought your advice on whether they could do so.

Discuss the LEGAL PRINCIPLES concerning the above case study, APPLY the legal principles, and CONCLUDE on whether TSH could discharge their contract with SGFC and recover the deposit paid.