Subject: Sale of goods
Keywords: Latent defects; Measure of damages; Oil; Satisfactory quality
Summary: In this claim, Hamblen J awarded the FOB buyer of a cargo of gasoil substantial damages against the seller in respect of the losses it had suffered as a result of the cargo not being of satisfactory quality on delivery (as Field J had held, on the trial of certain preliminary issues, and the Court of Appeal had confirmed was required by s.14(2) of the Sale of Goods Act 1979 despite a term of the contract purporting to exclude any implied warranties) in that it was unstable on delivery and therefore could not be used for any of the normal purposes for which a gasoil would usually be used. Hamblen J rejected the suggestion that there could not be a breach of the s.14(2) implied term where the result of the instability would be (and here was, afterdelivery) the formation of sediment which was a matter covered by the contractual specs and was to be (and was in fact) covered in a certificate final as to quality showing that the cargo was on spec ondelivery: instability was a separate vice to sediment, was not covered by the specs and would not be identified by the tests for sediment.Hamblen J also accepted that the buyer's market losses should be assessed by reference to the earliest date at which it was reasonably able to sell the cargo after its arrival at the intended discharge port and that the best evidence of the sound and damaged market values as at that date were the prices at which the buyer bought replacement cargo and sold the unsound cargo.
Member of Chambers: Philip Edey acted for the Claimant (instructed by Holman Fenwick Willan LLP)