A Letter of Offer does not constitute a binding contract if there is no consensus ad idem on essential terms, particularly when significant changes are requested by one party.

JUDGMENT

(Enclosure 11)

Arziah Mohamed Apandi JC:

Introduction

[1] A business pursuit to establish a Petron petrol station turned sour when the dealer walked out from the transaction to establish new ties with its rival. Much discussion, work, and effort were poured into the situation, which led only to an ending of dismay. Frustrated, Petron filed an action against the dealer for breach of contract.

[2] What was intended by Defendant was different from Plaintiff, and yet parties entered into an agreement on Plaintiff's intention.

[3] With differing intentions, whether parties had a binding contract of the Letter of Offer. The crux of this action is thus whether a contracting party, Defendant, can withdraw from its obligations to terminate the contract, which it had voluntarily agreed to undertake.

[4] The issues to be tried are:

(1) Whether the Letter of Offer is a binding contract between Plaintiff and Defendant, and if so, binding, whether it is tenable and/or sustainable in law.

(2) Whether the Defendant can terminate the Letter of Offer.

(3) If there is a contract that legally binds Plaintiff and Defendant:

(i) If Defendant is found to have breached, how much are the appropriate damages (including for loss of expected profit) for Plaintiff?

(4) If there is no legally binding contract:

(i) whether Plaintiff has any cause (s) of action against Defendant as pleaded; and

(ii) whether Plaintiff is entitled to any relief (equity or otherwise).

[5] Plaintiff witnesses were PW1, Plaintiff's Technical Support Lead who corresponded the most with the Defendant, PW2 Plaintiffs Service Station Design and Construction Manager and PW3, Plaintiff's Acquisition Specialist. Only 1 Defendant witness, namely SD1, the Defendant's sole director. The documentary evidence consisted of the following salient documents: Letter of Offer, Power of Attorney, Letter of undertaking, WhatsApp chats, Non-disclosure agreement, Lease Agreement, correspondence with rivals, and the rival agreement.

Background Facts

[6] Sometime around 2018, Plaintiffs representatives (PW1 and PW2) and SD1 discussed Defendant's chance to construct and then operate a Petron-branded petrol station ("Petron Station") on the land held under Hakmilik GM570, Lot 1375, Tempat Batu 1 ¾ Jalan Bangi, Mukim Semenyih, Daerah Hulu Langat ("Land").

[7] Plaintiff gave Defendant three options, with a recommendation to consider either Option 2 or Option 3. Option 2 entails the Plaintiff installing and operating three of its assets, including the POS/BOS Radiant System, signage, and Multi-Product Dispensers ("MPD"), with additional margins on top of the fixed margin allocated by the Government at 3.0 cents or lower for Motor Gasoline ("MOGAS") and a margin of 2.0 cents lower for Automotive Diesel Oil ("ADO").

[8] In Option 3, Plaintiff installs and operates 5 of Plaintiff's assets ie. POS/BOS Radiant System; signages; Multi Product Dispensers ("MPD"), underground tanks; and fuel piping with additional margins on top of the fixed margin allocated by the Government lower from Option 2 and margin of 1.6 cents lower for ADO. Reasonably, Option 3 is more commercially viable for Defendant.

[9] On assurance that Defendant's request for Option 3 would be discussed further by Plaintiff, in the meantime, Defendant selected the assistance package Option 2, wherein Plaintiff would supply and maintain the assets of a) POS/BOS Radiant System, b) Signage, and c) Multi-Product Dispensers.

[10] The Letter of Offer dated 7 January 2019 ("LOO") was signed by the Defendant on 15 January 2019, and the confidentiality and non-disclosure agreement ("CNDA") was signed on 8 August 2019.

[11] The LOO's commercial terms include Plaintiff agreeing to consider appointing Defendant to operate the Petron Station on a "Dealer Owned Dealer Operated' ("DODO") basis. The LOO provides for the construction of the Petron Station and core commercial terms governing the parties' relationship once the Petron Station becomes operational:

a) That Defendant wi