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Sales contract & C/P are separate documents

In Gunvor v Crugas [2018] a sales contract was concluded for sale of gasoline CIF Hoeeidah. It required the buyer to pay “demurrage as per C/P” to the seller. Seller sourced vessels from another entity under a contract of affreightment (COA) on Asbatankvoy form. Due to problems at the discharge port large sums of demurrage accrued and naturally the seller turned towards the buyer, who refused.

Buyer refused on three primary grounds:

(a) demurrage claim was time barred by reason of time bar provisions in COA;

(b) seller had to prove that demurrage rate was in line with market rate; and

(c) seller first had to prove that it had paid these sums to the shipowner before turning towards the buyer

As for point ‘a’, the court had little hesitation in holding that general terms of incorporation in a sales contract were not enough to bring in the time bar provision from the C/P.

Regarding ‘b’, it was held there is no justification to imply such a requirement. In any case expert evidence suggested that demurrage rates were consistent with the market.

As for ‘c’, wording in sales contract suggested that entitlement to demurrage was not an indemnity but free standing thus obliging the buyers to pay the requisite amounts to the seller irrespective of whether seller had paid such to ship owners.

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