Measure of Damages Recoverable for Anticipatory Repudiatory Breach of Sale Contract

Glencore Energy UK Ltd v Transworld Oil Ltd [2010] EWHC 141 (Comm)

Background facts

G was the buyer and T the seller under a contract dated 6 March 2008 on fob terms for the sale of a cargo of Nigerian Ukpotiki crude oil. Under the contract, the delivery period was "during 25-29 March 2008". The laycan was subsequently narrowed to 26 to 28 March 2008.

The pricing provision in the contract stated that the price would be determined by the "average of five (5) consecutive quotations as published in Platts Crude oil marketwire for the mean of dated Brent" within a period around the narrowed laycan. The pricing provision further stated that the exact five day quotation period was in the buyer's option and was to be declared latest one working day prior to the first of the chosen days. Dated Brent is the price benchmark for crude oil in such transactions. In this case, the contract also provided for payment of a premium above the dated Brent price.

On 26 March 2008, G declared 27 March to 2 April 2008 as the pricing period for the relevant lifting. However, due to security concerns arising out of the kidnapping of the crew of one of the tugs that was due to assist the vessel to berth, the cargo was not loaded at Ukpotiki during the contractual period. On 3 April, T e-mailed G stating that it would not be possible to receive the vessel back at the terminal to offload the cargo within a reasonable time and that all parties involved were advised "to take whatever steps they deem appropriate in the circumstances".

On 8 April, there was a telephone conversation between the parties, which was followed by an e-mail on 9 April from G confirming inter alia "our commitment to load the cargo at the soonest possible time for all parties concerned at the agreed contractual pricing and our declaration dated 27th March 2008 remains unchanged". Discussions continued thereafter to fix a new loading period. G had hedged its market exposure in respect of this transaction and continued to maintain its hedges.

T subsequently proposed a lifting period between 20 – 30 June and sent an e-mail making a number of changes to the 6 March contract. These included the addition of a new clause headed "entire agreement" which stated that the parties' obligations under the 6 March contract were extinguished and replaced by their obligations under the new agreement. The new contract also contained a price clause requiring a new pricing declaration instead of the pricing period...