Bunge S.A. v Kruse
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ROSKILL,LORD JUSTICE LAWTON |
| Judgment Date | 03 November 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J1103-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 November 1976 |
[1976] EWCA Civ J1103-2
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice Queen's Bench Division Commercial List
The Master of the Rolls
(Lord Denning)
Lord Justice Roskill and
Lord Justice Lawton
In the Matter of the Arbitration Act 1950
And
In the Matter of an Arbitration
MR.A LLOYD, Q.C. and MR. A. HALDGARTEN(instructed by Messrs. William A, Crump & Son, Solicitors, London) appeared on behalf of the Appellants (Buyers/Plaintiffs).
MR. D. JOHNSON (instructed by Messrs Richards, Butler & Co., Solicitors, London) appeared on behalf of the Respondent (Sellers/Defendants).
THE MASTJBK OF THE ROLLS: This is the fourth case in this court which arises out of the convulsions in the grain trade in the year 1973. The farmers in the Middle West of the United States grow large quantities of soya beans. They are exported to Europe and elsewhere. They are the subject of contracts of sale, both before transit and during transit between the shippers and buyers and re-sales down a long string to the receivers in Europe.
In 1973 there were two convulsions. In April and May there was a great flood on the Mississippi river. It caused long delays in the shipping of the soya bean meal and its transport down river. Those delays had a big impact on prices. The other convulsion was - and this is what concerns us in the present case - that the United States authorities, on the 27th June, 1973, placed an embargo on the export of soya bean meal from United States' ports except for such quantities as were then in lighter or on board ship. That embargo was lifted to some extent on the 2nd July, 1973 when shippers were allowed by licence to export 40 per cent of their then existing contracts.
Those convulsions led to big variations in price. So much so that the price rose in 1973 from about 260 dollars in March to 635 dollars a kilo or metric tonne on the 10th July. The price fell thereafter so that by the 18th July it was 475 dollars.
Those changes in the market caused much trouble with all the contracts of sale which had been arranged. Sellers could not perform their contracts. Buyers claimed damages for non-performance. Many provisions of the standard form of contract (The Grain and Feed Trade Association Contract Form 100) were called into play and used as arguments on the one side and the other. Hundreds of arbitrations were started. Some cases weresettled, others went on. Four have reached this court. This is the latest of the four.
This present case does not affect any other case. The question is whether or not there was a settlement of the buyer's claim. An accord and satisfaction, as the lawyers call it, so that the buyers cannot afterwards proceed to claim damages by arbitration or in any other way.
The contract of sale was made in August 1972 between the seller, P. Kruse of Hamburg, and the buyers, Bunge of Antwerp in Belgium (a firm which has world-wide connections). Under it Mr. Kruse sold 6,000 metric tons of soya bean meal to Bunge S.A. at $123.65 per metric ton c.i.f. Bremen. Deliveries were to be between April and September, 1973 at the rate of 1,000 metric tons a month, split every month into two portions, one of 300 tons and the other of 700 tons.
The sellers had no soya bean meal on hand to perform this contract. It was not part of a string contract at all. It was not a back-to-back contract, as the commercial men say. In order to fulfil the contract, the seller would have to buy in soya bean meal from someone before the delivery dates, either before shipment, or after shipment whilst on board ship.
It appears that the seller made no deliveries of any instalments either in April or May 1973. Nor did he make the first instalment of 300 tons in June 1973. In consequence the buyers were entitled to damages for non-delivery. These were settled by exchanging debit notes under a "circle arrangement" common in the trade by which the seller re-purchased the same goods from the buyers. All those deliveries have been settled by arrangement between the parties.
The only shipment with which we are concerned is the second shipment due to be made by the 30th June, 1973 for 700 tons.The latest date for the shipment of that parcel was the 30th June; but under the contract (incorporating G-.A.F.T.A. form 100) the shipper had to give a notice of appropriation within 10 consecutive days after shipment. So the latest date for the notice of appropriation would be the 10th July, 1373.
In the present case the embargo on shipment was absolute on and from the 27th June, 1973, but it was lifted on the 2nd July, 1973 so as to permit 40 per cent to be shipped of existing contracts. It was quite clear therefore that the sellers could not perform their contract for the 700 tons to be shipped by the 30th June, 1973. They had no back-to-back contract, and they had not bought in enough to fulfil the contract at all. So they could not make any delivery.
The parties looked up Form No. 100 of the Grain and Peed Trade Association. The seller in a telex relied on clause 21, which was the clause which dealt with the "prohibition" on export. He relied on that clause as an excuse for his non-delivery or non-shipment of the goods. To which the buyers on the 5th July, 1973 replied: "well; prove your case", relying on the last sentence of clause 21, which read: "If required, Sellers must produce proof to justify their claim for cancellation". The last sentence of the buyers' telex ran: "Awaiting your proofs in justification of your action". The seller never sent any proofs forward and made no reply to that request.
Three weeks passed. The buyers then on the 26th July, 1973 sent a further telex to the seller. I must read it because it is one of the communications making up the suggested accord and satisfaction: "For the June portion 700 tons. As in the meantime we did not hear anything from you we consider you as being in default and propose a settlement price of U.S. $650 -we ask for your agreement with regards to this price until27-7-73". If may pause there, it is quite cleat from that telex that the buyers were invoicing clause 26 as to "Default". They were claiming that the seller was in default in respect of the whole 700 tons, and they proposed a settlement price of £650. That $650 bears a close relation to the price which was the market price on the last day for notice of appropriation, the 10th July, 1973. On that date, according to the facts found in the case, the price was $645 U.S. per l,000 kilos c.i.f. Bremen. It is quite clear that the buyers were proposing that damages should be assessed for the sellers' default, and assessed at the price of $650, which was the top price - indeed just above the top price; $5 above the top price - recorded for the 10th July, which was the highest price of call throughout the fluctuations in the market. On the very next day, the 11th July, it dropped to $595. So here the buyers were saying: "We propose the top price of $650 as the damages in default in respect of the whole 700 tons". That is as I read that telex.
Now comes the crucial telex in reply. The seller replied on the next day, the 27th July: "Circa 700 Ts Your telex we agree with your proposal of US$65O - per tonne. We await your debiting on basis of 40 per cent so for 280 tonnes. Please pass on to buyers". I will comment on the true interpretation of that a little later, but now I will just finish the story.
That telex was sent on the 27th July, 1973. A fortnight later, on the 10th August, 1975, the buyers sent forward a debit note for 280 tons. This debit note, which we have before us, is headed "280 tons U.S. soya meal shipment June" and sets out:-
280 tons at 125,65 $ contract price US$. 34.622,-
280 tons at 650,- $ settling price US$. 182.000,-
Difference - US$ 147.378,-
So the debit note was sent by the buyers debiting thesellers with $147,378 in respect of those 280 tons.
Within a fortnight, on the 23rd August, that sum was paid by the seller to the buyers. The seller took the view that that was a settlement of the whole matter. He received a debit note, He paid it promptly. He thought it was the end of the matter.
About three weeks later, on the 14th September, 1973, the buyers alleged that there had been no settlement. They claimed arbitration. They sent a telex claiming arbitration for the balance of 420 tons and demanded the appointment of an arbitrator. They also proposed a settling price for the 420 tons of $650.
So the matter went to arbitration. The two arbitrators disagreed, but the umpire dealt with it quite quickly. On 1st March, 1974 he said that there was a settlement, and that the buyers' claim for the extra 420 tons failed.
There was an appeal under the rules of the association -the G.A.F.T.A. rules of appeal - to five members of the 'trade. Those five members of the trade (having a lawyer to advise them and having counsel before them) confirmed the decision of the umpire. They held that there had been a settlement and that the buyers could not claim for the 420 tons - it had all been settled by the payment in respect of the 280 tons. They gave their award and they all signed it on the 24th April, 1975.
They made their award in the form of a special case for the decision of the court. It came before the commercial judge, Mr. Justice Kerr. He held too in agreement with the umpire and the trade board of appeal that there had been an accord and satisfaction, and it could not be re-opened. Now there is an appeal to this court.
The question turns on the true interpretation of the telexes which I have read. The buyers say that the payment which was made was only a payment in respect of what wasvirtually an undisputed...
To continue reading
Request your trial
- Andre & Cie. S.A. v Tradax Export S.A.
-
Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA
...[1975] 2 Lloyd's Rep. 118, Tradax v. Andre [1976] 1 Lloyd's Rep. 416, Finagrain v. Kruse [1976] 2 Lloyd's Rep. 508, Bunge v. Kruse [1977] 1 Lloyd's Rep. 492 and others). Many others are pending and will be affected by the decision in the present appeal. 2 The contracts in the present, and p......
-
Anstalt Nybro v Hong Kong Resort Co Ltd
...K. Bokhary (Woo, Kwan, Lee & Lo) for Respondent. (1) 1971 1 W.L.R. 1381, 1383. (2) 1972 2 W.L.R. 1175. (3) 1976 1 W.L.R. 989. (4) 1977 1 Lloyd's Rep. 492. (5) 1977 2 Lloyd's Rep. 614. (6) 1972 2 Lloyd's Rep. 197 at 209. (7) 1972 1 Ch. 53. (1) 1971 1 W.L.R. 1381. (8) 1914 A.C. 71. (9) (1874)......
-
Anstalt Nybro v Hong Kong Resort Co Ltd
...K. Bokhary (Woo, Kwan, Lee & Lo) for Respondent. (1) 1971 1 W.L.R. 1381, 1383. (2) 1972 2 W.L.R. 1175. (3) 1976 1 W.L.R. 989. (4) 1977 1 Lloyd's Rep. 492. (5) 1977 2 Lloyd's Rep. 614. (6) 1972 2 Lloyd's Rep. 197 at 209. (7) 1972 1 Ch. 53. (1) 1971 1 W.L.R. 1381. (8) 1914 A.C. 71. (9) (1874)......