The recent English High Court judgment in Galtrade Limited v BP Oil International Limited has brought a very interesting analysis arising out of a quality dispute regarding the delivery of an off-spec cargo of fuel oil.
The goods were rejected by the Buyers on the ground that they were materially a different cargo and were in breach of the agreed quality.
The Sellers’s case was that, whilst Sellers accept that the sulphur content in Parcel 3 was beyond the guaranteed specification, the excess was not “drastically different“, describing the position instead as “marginally off – spec“.
According to Sellers’ evidence and based on his experience of trading these and other cargoes over many years, “this affected the value of the cargo by about USD 10.50/mt, this including also any “extremely small discount” that would reflect the issues on vanadium and P-value which were subsequently to emerge”.
The judge found against the Buyers and held that the specifications of the quality clause did not amount to a condition of the sales contract but to an innominate term, and that the deviation from the agreed specifications was not such as to entitle the Buyers to reject the cargo.
The analysis of the judge Mr. Adrian Beltrami QC in his judgment offers an interesting example of why traders should make very clear in their sales contract whether the agreed specs are to be treated as conditions or not.
To get a copy of the judgment click here.