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2022 MarsdenLR 902
COURT OF APPEAL PUTRAJAYA
HEWLETT-PACKARD (M) SDN BHD & ANOR – Appellant
Versus
AGIH TINTA SDN BHD – Respondent
[Civil Appeal No: W-02(NCVC)(W)-2554-12-2018]
There is no implied duty of good faith in non-exclusive commercial contracts unless specified, hence termination was valid due to the respondent's failure to meet eligibility requirements.
Headnote:(A) Breach of Contract – Good Faith – The court considered the contractual framework between HP and its MVC Resellers, ruling that obligations of good faith were not implied in the context of a non-exclusive reseller contract, asserting a lack of necessary terms for such implication. (Paras 66-84)
(B)
Contractual Interpretation – The interpretation of the eligibility requirements indicated that to remain as an MVC Reseller, a reseller must also be a HP Partner; the failure of the respondent to uphold these requirements led to the termination of its status. (Paras 36-45)
Facts of the case:
The respondent, an MVC Reseller, argued its termination was wrongful after Sunlight ceased as HP Partner. The court explored agreements and affiliations underpinning the relationship between the parties.
Findings of Court:
The court held that the termination was valid as the respondent did not fulfill eligibility requirements due to Sunlight's termination.
Issues
: The core issue was whether good faith could be implied in the contract and whether the respondent's affiliation with Sunlight conferred a valid MVC Reseller status.
Ratio Decidendi:
The court concluded good faith obligations do not exist in non-exclusive contracts while reinforcing the necessity of clear contractual ties for continued relationship.
Result:
Appeal allowed, and the HCJ's decision was set aside.
JUDGMENT
Introduction
[1] The respondent/plaintiff had filed a claim against the appellants/ defendants for the breach, wrongful repudiation and/or termination of an agreement. The High Court Judge (HCJ) allowed its claim and awarded damages accordingly.
[2] The appellants appealed which was allowed by this Court. We now give our reasons as follows.
Parties
[3] The appellants are part of the Hewlett-Packard (HP) Group of Companies. As part of a separation exercise undertaken by the HP Company sometime in 2015, there was a split of the personal computer (PC) and printer business from the enterprise products and services business. This separation was implemented globally, including in Malaysia. The 1st appellant separated its business into two, resulting in the incorporation of the 2nd appellant. The 1st appellant undertook the enterprise products and services business and the 2nd appellant undertook the PC and printing businesses.
[4] The respondent was and is in the business of amongst others, selling and supplying all types of office stationaries and IT consumables including printers, toners, inks and computer printer services.
[5] Although not a party to the civil suit, another company needs to be mentioned here. This company is Sunlight Universal Corporation Sdn Bhd (Sunlight) and one Sam Soh is its director and shareholder. It is part of the appellants' case that the respondent is affiliated with Sunlight.
Background Facts
[6] In Asia, HP runs a program known as Most Valuable Customer (MVC) Program. The HP regional team in Singapore (HP Region) is in charge of managing and issuing all policies and directions pertaining to the MVC Program to the respective country office for implementation.
[7] Under the MVC Program, selected resellers are appointed as MVC Resellers whereas a participating end user is identified as MVC. Generally, MVC Resellers will bid for tenders to supply HP toners and inks (HP Products) to the MVC. The respondent was one such MVC Reseller since about 2001/2002.
[8] There were two types of pricing support to eligible MVC Resellers, namely Big Deal Discount (BDD) and default 5% Fixed Local Currency Pricing (FLCP). In the context of the respondent, the pricing support was as follows:
(a) Under BDD:
(i) The respondent would inform the 1st appellant of its intention to tender for a contract with a potential MVC. The 1st appellant had the sole discretion to determine a fixed pricing discount for the HP Products to be supplied in the tender.
(ii) The respondent would then determine the sale price for the HP Products to be offered in the tender.
(iii) Upon winning the tender award, all MVC Resellers must purchase the HP Products from identified HP authorized distributors at the full purchase price and then sell the relevant HP Products to the MVC.
(iv) In the present case, all of the respondent's purchases of HP Products were made through Sunlight.
(v) The discount on the HP Products sold would then be reimbursed by the 1st appellant to the respondent by way of rebates (MVC Rebates), subject to submission of invoices by the respondent and approval thereof by the 1st appellant.
(b) Under FLCP:
In the event that the purchase price of the HP Products increases during the period of the agreement between a MVC Reseller and an end user, the 1st appellant would pay the MVC Reseller a price difference reimbursement.
[9] Sunlight became a HP partner by HP Partner Contract No: W7850 (Contract W7850) entered into with the 1st appellant dated 27 July 2010 (HP Partner).
[10] On 18 June 2012, pursuant to HP Partner Agreement Amendment-Add Affiliate between Sunlight and the 1st appellant (Addendum), the respondent was added as an affiliate.
[11] Sometime in 2011/2012, HP Region introduced a new policy, which according to the appellants, all MVC Resellers were required to be a HP Partner as one of the conditions to be appointed as MVC Reseller. The MVC Reseller could either enter into a HP partner contract or be an affiliate throug
