Article

Note: In order to purchase twenty metric tons of selenium, Leva International Trading Co. and Bowlstar Ltd. (Buyers) contracted with Concord Enterprises (Broker). At the request of the original supplier Concret Orgachem (Supplier), Buyers applied for two LCs to be issued by Bank of China in favor of Supplier. Although there was some delay in obtaining the Second Buyer's LC, it was issued and no objection was raised at the time of the delay. Supplier, however, objected to the LC terms because the first LC was not transferable and required that it be amended to name Alfa Aesar Johnson Matthey Management GMBH & Cokg, Zeppelinstr 7 (Ultimate Supplier), as beneficiary in addition to other changes. Obtaining these amendments caused some further delay.

When there was no delivery, Buyers complained and Supplier indicated that the Ultimate Supplier had increased the price due to market conditions. Supplier also stated for the first time that the non-delivery and any loss was caused by Buyers' delays in obtaining LCs and amendments.

Buyers, who had yet to receive any selenium, sued Broker for breach of contract. The High Court of the Hong Kong Special Administrative Region, To, J. found in favor of Buyers.

As a defense, Broker claimed that it was merely an agent of Supplier. The court ruled that it had acted as a principal or a sub-seller because it had incurred personal liability when it issued two sales confirmations rather than arranging for Supplier to issue them.

The judgment awarded to Buyers totaled EUEUR 120,000 with interest. A counterclaim for damages resulting from Buyers' delay in obtaining the LC was dismissed because the Supplier made no complaint about the delay and after the request for amendments there was nothing to suggest the LCs were not provided in a reasonable time.

[JEB/tjb]

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