Question 1

Fukugen Pte Ltd ("Fukugen") is a construction company that specialises in the restoration of old landed houses. Their website states that they are an environmentally friendly company that uses eco-friendly materials from sustainable sources in their restoration work.

Abby has recently inherited an old Peranakan-style terrace house from her deceased grandaunt. She contacted a few construction companies for quotations to restore the terrace house based on its original Peranakan-style design. Fukugen's architect proposed a design which matched Abby's budget and her desire to be environmentally conscious in carrying out the works.

On 1st September of last year, Abby signed a contract with Fukugen to restore the terrace house for $1.5 million. Ten percent (10%) of the contract sum was paid at the signing of the contract, with instalments of the remaining amount to be due and payable upon completion of various stages of construction, and the last instalment to be paid on the completion date of 1st December two years later.

Under a section in the contract which is labelled "Important Warranties", Clause 30 states as follows:

30. For the carpentry works, Fukugen shall use only either reclaimed wood or new wood obtained from sources which have been certified by the Forest Stewardship Council ("FSC").

Where a wood source is described as being "FSC-certified", it means that the wood has been harvested from forests in an environmentally and socially responsible manner. The FSC certification was important to Abby, because of her desire to be environmentally conscious.

Upon the signing of the contract, Fukugen proceeded to start work on restoring the house. However, a few months later, due to a private dispute between Fukugen and their original wood supplier, Fukugen faced a shortage of wood (which is FSC-certified). In order to save on the effort of finding another FSC-certified wood supplier and the higher costs associated with it, Fukugen decided to use an alternative source of new wood which was not FSC-certified, but which was otherwise of the same quality as the FSC-certified wood in all other aspects. With this issue resolved, Fukugen managed to continue their work without further disruption.

Around this time, Abby went to inspect the works on her house and found out that the wood used was not FSC-certified. At this stage, the house is not yet completed but Abby wishes to terminate the contract with Fukugen.

Examine Clause 30 and explain whether it should be treated as a condition, warranty or innominate term using the traditional approach to the classification of terms. Describe the modern Singapore approach in RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd & Another Appeal (2007) and apply it to this scenario to conclude whether Abby is entitled to terminate the contract on the basis that Fukugen did not use wood that is FSC-certified.