Late Delivery Of Petroleum Product And Determination Of Market Value For Purpose Of Assessment Of Damages

Galaxy Energy International Limited v. Murco Petroleum Limited (MV Seacrown) [2013] EWHC 3720

This was a dispute relating to the sale and purchase of a cargo of low sulphur fuel oil, where the Buyers claimed damages from the Sellers for breach of contract in delivering the fuel oil late. The Sellers denied that there had been late delivery of the cargo, arguing that the parties had agreed an extension of the delivery period. They also disputed the Buyers' basis for calculating their damages.

The Court upheld the Buyers' claim for breach of contract and awarded them damages for late delivery of the fuel oil. In determining the market value of the oil for the purposes of assessing damages, the Court relied on Platt's prices for a spread of dates around the date of the Sellers' breach rather than on the single Platt's price for the day on which the breach occurred. In the Court's view, this would more accurately reflect the market value of the fuel oil at the date of breach.

The background facts

On 3 and 4 January 2012, Murco's broker negotiated the basic terms of the sale over the phone with a trader from Galaxy. The cargo was to be 35,000 MTs of low sulphur fuel on FOB Milford Haven terms to "be delivered... in one lot ... during period 15/17 January 2012" and was to be "as previous deal". When Murco circulated an email recap later on 4 January, however, it contained somewhat different terms to those negotiated on the phone, including an amendment to the delivery provision that added the following sentence "Plus such extension to that period as is required by the seller to effect or complete delivery". This additional delivery wording had been repeatedly rejected by Galaxy in their previous dealings with Murco, who regularly sought to introduce it into deals.

Galaxy responded that it would revert with its comments, considered the amendments internally and, on 11 January, proposed some deletions from the email recap, including the deletion of the additional wording introduced into the delivery provision.

The vessel was nominated for the lifting by Galaxy on 6 January and accepted on 9 January. The vessel arrived at Milford Haven on 13 January 2012 and tendered NOR, but could not berth until 20 January 2012. In the meantime, Galaxy had put Murco on notice that they would hold Murco responsible for any costs and consequences resulting from the delay, including any claim by the end receivers. In the event, the vessel completed loading on 21...