Singapore: Court of Appeal Clarifies Application of Unilateral Mistake in Algorithmic Trading

The Singapore Court of Appeal has, by a majority, upheld the finding of the Singapore International Commercial Court (“SICC”) that a cryptocurrency exchange platform operator was liable for breach of contract when it unilaterally reversed completed trades in Bitcoin and Ethereum.

Importantly, the Court of Appeal, in considering how, under the doctrine of unilateral mistake, the requirement of knowledge of the mistake is to be assessed where the contract is concluded entirely by algorithm, confirmed that the non-mistaken party would be treated as having sufficient knowledge if the algorithm’s programmer had actual or constructive knowledge that an offer automatically made by the algorithm would only ever be accepted by a party operating under a mistake, and if the programmer had acted to take advantage of that mistake. The Court of Appeal also held that, in determining whether there was unilateral mistake, the relevant time frame within which the knowledge of the programmer running the algorithm should be assessed was the from the point of programming up to the point that the relevant contract was formed. This deviates somewhat from the SICC’s decision which took into account the programmer’s state of mind only at the time of writing the software. See: Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 02).

This update takes a look at the Court of Appeal’s decision.

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