ERG Raffinerie Mediterranee SPA v Chevron USA Inc (t/a Chevron Texaco Global Trading)

ERG Raffinerie Mediterranee SPA v Chevron USA Inc (t/a Chevron Texaco Global Trading)

Where an FOB contract includes a laycan provision allowing the buyer to present a vessel at any time up to the end of the delivery period, the obligation to deliver within that period is not a condition of the contract. Failure to load within laytime entitles the buyer only to demurrage, not to terminate the contract, unless a frustrating time has elapsed.

Parties
Claimant/respondent (seller): ERG Raffinerie Mediterranee Spa; Defendant/appellant (buyer): Chevron USA Inc (trading as Chevron Texaco Global Trading)
Jurisdiction
England and Wales
Judgment Date
22 May 2007
Procedural Posture
Civil Appeal (commercial) / Appeal From High Court (commercial Court) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
FOB Contracts, Laycan Provisions, Repudiatory Breach, Demurrage, Time of the Essence, Charterparty Law
Commercial Law Contract Law Shipping Law FOB Contracts Laycan Provisions Repudiatory Breach Demurrage Time of the Essence +1 more

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Parties

ERG Raffinerie Mediterranee Spa

Claimant/respondent (seller)

Chevron USA Inc (trading as Chevron Texaco Global Trading)

Defendant/appellant (buyer)

Procedural Posture

Civil Appeal (commercial) / Appeal From High Court (commercial Court) to Court of Appeal

Legal Issues

  1. 1 Whether the delivery period in an FOB contract narrowed by a laycan provision is a condition entitling the buyer to terminate for late loading
  2. 2 Whether failure to load within laytime constitutes a repudiatory breach or is limited to demurrage

Ratio Decidendi

Where an FOB contract includes a laycan provision allowing the buyer to present a vessel at any time up to the end of the delivery period, the obligation to deliver within that period is not a condition of the contract. Failure to load within laytime entitles the buyer only to demurrage, not to terminate the contract, unless a frustrating time has elapsed.

Court Disposition

Appeal dismissed

Orders

  • Buyers not entitled to terminate contract for failure to load within laytime; remedy limited to demurrage as provided in the contract.
  • Sellers entitled to damages for unlawful termination by buyers.