Article

Note: Cereal Investments Co. (Buyer) purchased a quantity of sugar from ED & F Man Sugar Ltd. (Seller) under a Free on Board (FOB) Stowed contract. The contract provided, "One vessel only presenting October 2006 shipment at Buyer's Option, with 10-days pre-advise of vessel arrival." The contract also incorporated the Refined Sugar Association (RSA) Rules and was subject to the laws of England. RSA Rule 7 allowed the loading of goods to continue after the end of the delivery period.

To pay, Buyer (Applicant) caused an LC to be opened in favor of Seller (Beneficiary). The LC required the presentation of a bill of lading dated no later than October 2006. Seller objected to the LC terms, arguing that the latest date of shipment should extend to November since loading would start in October and most likely be completed in November. Unable to resolve dispute, Buyer/Applicant terminated the contract, asserting that Seller/ Beneficiary was in default.

Buyer/Applicant then sued Seller/Beneficiary for damages. An RSA panel ruled that the LC was not in accordance with the terms of the underlying contract and dismissed Buyer's claims. On appeal, the Queen's Bench Division of the Commercial Court, Walker, J., affirmed.

The panel and the Queen's Bench Division ruled in favor of the Seller because the LC's fixed end date and the loading period's undetermined end date were mismatched. Buyer/Applicant argued that the term "presenting" in the contract implied a fixed shipping deadline for October 2006 at Buyer's option. However, the Judge interpreted the term "presenting" to refer to when a vessel "presents" itself at the port of loading, suggesting nothing about a loading deadline. The Judge emphasized that in contracts for the sale of goods, parties may be required to make "reasonable estimate of the time needed for a particular purpose." Thus, the Judge concluded that Buyer should have had an LC opened for a term that conformed to the reasonable time period required for loading.

[JEB/as]

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