Cenargo Ltd v Izar Construcciones Navales SA [2002] EWCA Civ 524 (26 March 2002)

Cenargo Ltd v Izar Construcciones Navales SA [2002] EWCA Civ 524 (26 March 2002)

The contract required the provision of 146 slots each of 13 metres in length, not 146 slots capable of accommodating 13-metre trailers plus clearance. Minor defects or design issues that could be remedied at modest cost did not constitute a breach of the trailer carrying capacity provision triggering liquidated damages. Even if there was a breach, the liquidated damages clause was not intended to cover minor losses from such defects.

Citation
[2002] EWCA Civ 524
Parties
Appellant/respondent (buyers): Cenargo Limited; Respondent/appellant (builders): Izar Construcciones Navales SA (formerly Empresa Nacional Bazan de Construcciones Navales Militares SA)
Jurisdiction
England and Wales
Judgment Date
26 March 2002
Procedural Posture
Commercial Contract Dispute (shipbuilding) / Appeal From High Court (queen's Bench Division, Commercial Court) to Court of Appeal
Outcome
Buyers' appeal dismissed; builders' appeal allowed.
Legal Topics
Construction of Contract Terms, Liquidated Damages, Breach of Contract, Shipbuilding Contracts, Penalty Clauses
Commercial Law Contract Law Maritime Law Construction of Contract Terms Liquidated Damages Breach of Contract Shipbuilding Contracts Penalty Clauses

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Parties

Cenargo Limited

Appellant/respondent (buyers)

Izar Construcciones Navales SA (formerly Empresa Nacional Bazan de Construcciones Navales Militares SA)

Respondent/appellant (builders)

Procedural Posture

Commercial Contract Dispute (shipbuilding) / Appeal From High Court (queen's Bench Division, Commercial Court) to Court of Appeal

Legal Issues

  1. 1 Proper construction of contractual terms relating to trailer carrying capacity
  2. 2 Whether there was a breach of the trailer carrying capacity provision
  3. 3 Whether any breach gave rise to a right to recover liquidated damages

Ratio Decidendi

The contract required the provision of 146 slots each of 13 metres in length, not 146 slots capable of accommodating 13-metre trailers plus clearance. Minor defects or design issues that could be remedied at modest cost did not constitute a breach of the trailer carrying capacity provision triggering liquidated damages. Even if there was a breach, the liquidated damages clause was not intended to cover minor losses from such defects.

Court Disposition

Buyers' appeal dismissed; builders' appeal allowed.

Orders

  • Judgment for $450,000 liquidated damages against builders set aside.
  • Counsel to lodge an agreed minute of order dealing with all consequential matters.