British Gas Trading Limited v Shell Gas Trading Ltd and Esso Exploration & Productions UK Ltd  EWCA Civ 2349. Judgment of English Court of Appeal, 4 December 2020.
Take or pay provisions in long-term agreements for the sale of natural gas (including LNG) are ubiquitous. Such provisions oblige buyers to either accept delivery of a set volume of gas per period (usually a year), or to pay some minimum amount if delivery is not accepted. A buyers’ annual take or pay quantity is frequently set by reference to the sellers’ obligation to maintain
a certain capacity to deliver gas.
In British Gas Trading Limited v Shell Gas Trading Ltd and Esso Exploration & Productions UK Ltd  the Court of Appeal held that although the sellers under a long-term contract for the sale of natural gas were in breach of their capacity obligation, that breach caused the buyers no loss. Caveat emptor, it seems, applies as much to quantity disputes arising under take or pay provisions as it does to quality disputes.
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