The Supreme Court Decision In OW Bunkers – When A Sale Of Goods Is Not A Sale Of Goods

The brief facts were that one OW entity had contracted to supply a vessel with bunkers but the actual physical supply had been sub-contracted to a Rosneft entity. The contract between Rosneft and OW gave OW 30 day credit terms and included a retention of title clause ("ROT"), i.e. a clause which said that title in the bunkers would stay with Rosneft until payment was received from OW.

OW entered liquidation and did not pay Rosneft even though the bunkers had been supplied to the vessel which proceeded to burn them. As it was concerned about having to pay twice, the vessel sought a declaration that it did not have to pay OW.

A key question the Supreme Court considered was whether a bunker supply contract on credit terms was a contract for the sale of goods pursuant to the Sale of Goods Act 1979.

The Court ruled that it was not a sale of goods. Instead the Court found that it was a unique agreement pursuant to which the purchaser bought the right to consume the bunkers prior to payment.

Practically, this meant that the ROT was meaningless and OW, as contractual supplier to the vessel, was entitled...

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