Court Construes 'Notices' Provision In GAFTA 64 Contract

Soufflet Negoce SA v. Fedcominvest Europe SARL [2014] EWHC 2405 (Comm)

The decision in this case provides helpful guidance on the construction of the "Notices" provision in GAFTA 64 (General Contract for grain in bulk FOB terms). The Court upheld the GAFTA Board of Appeal award which found that the provision in the contract, whereby any notice received after 1600 hours on a business day would be deemed to have been received the following day, applied only in the case of resales and repurchases (which was not the case here). The commercial reality was that, in those cases, it is particularly important that notices up or down the chain are served without delay because intermediary sellers or buyers in the chain may otherwise be prejudiced if the notice is not received in time to be passed on.

The background facts

Pursuant to a sale contract dated 4 October 2010, which incorporated GAFTA 64, the Sellers agreed to sell a quantity of French feed barley to the Buyers on FOB terms. The relevant terms of GAFTA 64 for the purposes of the parties' dispute were as follows:

"6. PERIOD OF DELIVERY

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In case of re-sales all notices shall be passed on without delay, where possible, by telephone and confirmed on the same day in accordance with the Notices Clause.

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8. EXTENSION OF DELIVERY

The contract period of delivery shall be extended by an additional period of not more than 21 consecutive days, provided that Buyers serve notice claiming extension not later than the next business day following the last day of the delivery period. ...

19. NOTICES

All notices required to be served on the parties pursuant to this contract shall be communicated rapidly in legible form. Methods of rapid communication for the purposes of this clause are defined and mutually recognised as: - either telex, or letter if delivered by hand on the date of writing, or telefax, or E-mail, or other electronic means, always subject to the proviso that if receipt of any notice is contested, the burden of proof of transmission shall be on the sender who shall, in the case of a dispute, establish, to the satisfaction of the arbitrator(s) or board of appeal appointed pursuant to the Arbitration Clause, that the notice was actually transmitted to the addressee. In case of resales/repurchases all notices shall be served without delay by sellers on their respective buyers or vice versa, and any notice received after 1600 hours on a business day shall be deemed to have been received on...