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Nominating vessels in Linda Jacques

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contracts of sale Linda.jacques@LA-law.com
023 8082 7416

In Ramburs Inc v Agrifert SA, the High Court was requested to deal with an appeal from the GAFTA board
regarding a sale contract dispute for the sale of maize.

Ramburs Inc (“the Sellers”) contracted to sell maize to Agrifert SA (“the Buyers”) on a free on board basis with
delivery between 15 and 31 March 2013. The contract required the Buyers to give the Sellers 10 days’ pre-advice
information which was to include the vessel’s name and the estimated time of arrival. The contract incorporated
GAFTA form 49.

The GAFTA form included a term which stated “the Buyers shall serve not less than… consecutive days’ notice of
the name and probable readiness date of the vessel and the estimated tonnage required… Buyers have the right
to substitute the nominated vessel, but in any event the original delivery period and any extension shall not be
affected thereby.”

The Buyers originally nominated the vessel “Puffinto” on 20 March and stated the eta to be 26 to 27 March. The
Buyers then nominated a different vessel on 26 March, the “Sea Way”. They gave an eta of 28 March for delivery.

The Sellers rejected delivery of both vessels, indicating that if the “Sea Way” could not be delivered until 28
March (which was in any event unlikely), this would not leave enough time for the Sellers to load their cargo
which needed to be loaded by 12:00pm on 31 March. The Sellers terminated the contract citing the Buyers’
repudiatory breach of the nomination clause.

The Buyers commenced arbitration against the Sellers for their loss which amounted to approximately
USD800,000.

The first tier GAFTA tribunal found in favour of the Sellers and adjudged that the Buyers’ nomination of the
second vessel was not valid.

The Buyers appealed to the GAFTA Board and the Board allowed their appeal on the basis that as nomination
was delayed and given fewer than 10 days before the estimated delivery date, this allowed the Sellers to load 10
days after receiving the message.

Page 1 Nominating vessels in contracts of sale

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 The Sellers appealed to the High Court alleging that the nomination of the “Sea Way” was invalid and that they
were entitled to terminate the contract because the Buyers had defaulted on their nomination obligations and
this was a repudiatory breach.

The Buyers appealed to the High Court. The Court observed that it is a buyer’s duty to name the vessel and give
instruction to the seller to enable the seller to send and arrange the goods to be shipped. The Court also
observed that, subject to the contract, it is usual for the buyer to have the right to nominate an alternative
vessel provided that details were provided with due advance notice and was in keeping with the other provisions
of the contract.

The contract wording stated that “the original delivery period and any extension shall not be affected by the
buyer exercising their right”. This was the protection for the Sellers in the event that the Buyers substituted the
vessel and delivery date without proper notice. The Buyers sought to argue that there was no need for the
Sellers to be protected by the Buyer having to provide further pre-notice communications.

The Court rejected the Buyers’ arguments and dismissed their appeal. Although the Sellers were bound to have
the goods ready for loading in the delivery period, the nomination of the vessel was still of concern to them for
numerous reasons, including, for example, should they wish to organise and arrange a safe berth. The Court held
that the nomination of the “Sea Way” was not made in accordance with the contract provisions and was
therefore invalid.

Page 2 Nominating vessels in contracts of sale

Tel: 0344 967 0793 | Email: info@LA-Law.com | www.lesteraldridge.com

Lester Aldridge LLP is authorised and regulated by the Solicitors Regulation Authority. It is a limited liability partnership registered in
England and Wales under number OC321318. Managing Partner: Matthew Barrow. Compliance Officer for Legal Practice: Karen Thompson
(Partner) - See more on the Lester Aldridge Privacy Policy at www.lesteraldridge.co.uk © 2019 Lester Aldridge