CTI Group Inc v Transclear SA

CTI Group Inc v Transclear SA

The tribunal erred in law in finding that the contracts were frustrated or subject to an implied term discharging the parties upon supplier refusal. The risk of supplier failure was on the sellers, who made an unqualified promise to supply, and no implied term could override this allocation of risk.

Parties
Claimant/buyers: CTI Group Inc; Defendant/sellers: Transclear SA
Jurisdiction
England and Wales
Judgment Date
14 September 2007
Procedural Posture
Arbitration Appeal / Judgment on Appeal From Arbitral Award
Outcome
Buyers' appeal allowed; tribunal's findings set aside
Legal Topics
Frustration of Contract, Implied Terms, Sale of Goods, Risk Allocation in Supply Contracts
Contract Law Commercial Law Frustration of Contract Implied Terms Sale of Goods Risk Allocation in Supply Contracts

Case Brief

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Parties

CTI Group Inc

Claimant/buyers

Transclear SA

Defendant/sellers

Procedural Posture

Arbitration Appeal / Judgment on Appeal From Arbitral Award

Legal Issues

  1. 1 Whether the contracts were frustrated by supplier refusal due to third-party intervention
  2. 2 Whether there was an implied term discharging the parties if suppliers refused to supply due to intended use or destination

Ratio Decidendi

The tribunal erred in law in finding that the contracts were frustrated or subject to an implied term discharging the parties upon supplier refusal. The risk of supplier failure was on the sellers, who made an unqualified promise to supply, and no implied term could override this allocation of risk.

Court Disposition

Buyers' appeal allowed; tribunal's findings set aside

Orders

  • Tribunal's findings of frustration and implied term set aside
  • Court to hear submissions on consequential orders, including referral of damages issues to the tribunal