M & J Marine Engineering Services Company Ltd v Shipshore Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Field |
| Judgment Date | 31 July 2009 |
| Neutral Citation | [2009] EWHC 2031 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2008 Folio 1206 |
| Date | 31 July 2009 |
[2009] EWHC 2031 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
LONDON MERCANTILE COURT
Mr Justice Field
Case No: 2008 Folio 1206
Paul Toms (instructed by DRG Solicitors LLP) for the Claimant
Joshua Munro (instructed by RFB Solicitors) for the Defendant
Hearing dates: 15 th & 16 th June 2009
The Claimant (“M&J”) is an engineering company carrying on business in South Korea. The Defendant (“SS”) is a company carrying on business in England.
The principal matter before the court is SS's counterclaim by which it sues for breach of a contract to supply 1032 machined wheel rollers. I shall deal with this claim before dealing with M&J's claim against SS
The issues are: (i) did the parties enter into a binding contract for the sale of 1032 wheel rollers; (ii) if so (a failure to deliver being admitted), what are SS's recoverable damages.
Was there a binding contract for the supply by M&J to SS of 1032 machined wheel rollers?
In January 2007, SS was asked to quote by Arab Shipbuilding and Repair Yard Co (“Asry”) for the supply of 960 machined wheel rollers manufactured to a particular specification to be installed in a slipway in Bahrain. Acting as a principal, but in fact as a middle man, SS passed on the request to M&J as if it were its own. This was done in a fax on SS's letterhead dated 10 January 2007 which invited M&J to quote for 960 wheel rollers C&F Bahrain Sea Port. A detailed specification was given and M&J were asked to: (a) specify the casting offered – centrifugal or sand; (b) confirm the ability to provide a third party inspection certificate; (c) indicate the additional cost, if any, of inspection and certification; and (d) indicate the delivery time schedule for the whole quantities. The same day, M&J sent SS a fax quoting a price of US$175.00 per unit for 960 centrifugal casting and final machine wheel rollers, plus US$3,800 sea freight charge (Busan to Bahrain). At the top of the fax appeared the following:
1. Delivery Time 60 Working day
2. Payment Term
3. Shipment Ex Works, Unpackaged
4. Packing and Freight Charge Excluded
5. Validity of Quotation 30 days from today
Following a request from Asry for further information, on 19 February 2007 SS faxed M&J setting out the following requirements: (i) to provide a sample for SS's approval once order had been placed with M&J; (ii) a copy of Certificate of 3.1 B and confirmation of the type of casting for SS's evaluation and approval; (iii) confirmation of the delivery time; and (iv) the extension of the validity of M&J's offer until end of March 2007.
On 21 February 2007, M&J sent SS an email which read in material part:
Pls be noted the following as per your question.
1 Yes, We will provide you with the shipping sample before dispatch once order has been placed to us.
2 For the certificate of DIN50049 3 1.B
We are able to submit your required certificate before delivery. Meanwhile it would be highly appreciated if you advise us the detailed specification for DIN50049 3.1B. Of course the certificate can be identified before preceding the order from our side. But we'd like to double check with your kind cooperation.
For the type of casting.
We realise that the type of casting is FCD 600 (ductile casting) according to the given material specification, S.G. Iron 600 from you. Pls confirm if it is right or not.
3 It's possible to shorten the delivery time less than 60 days. We are giving the priority to your order.
4. We are willing to extend the validity of our offer till the end of March 2007.
The following day (22 February 2007), SS emailed M&J:
The end user is proposing 20% payment with order and after acceptance of your sample B/CE payment 30 days upon receipt of goods in Bahrain.
Please let us know if accepted.
On 26 February 2007 M&J replied:
Concerning your proposal, we discussed it with the supplier on your behalf. And the following is what they are kindly requesting.
40% payment with the order [ie M&J's order placed with their supplier] and balance payment 30 days upon issuance of the original bill.
I hope it could be agreeable and then it would be highly appreciated if you send us the sample for mass production. Pls. advise.
The next day, SS informed M&J that they had passed M&J's request to “the end user” and requested M&J to ask their supplier for a discount.
On 22 March 2007, Asry informed SS of a number of further requirements and on the same day, these were passed on to M&J by SS as follows:
Please find attached the end-user's latest feed-back. We need your acceptance revised offer. When we supply you with detailed drawing, you will despatch two samples for final approval of order…
1. LR or ABS to be appointed as Third Party for inspection, approval and certification of the full process i.e. confirmation of material specification, casting, hardening, machining and treatment.
2. Test piece to be provide for each Bach or Heat Number for testing and certification of material by the appointed third party. Material certificate to cover microstructure examination, chemical composition, mechanical properties and U.T. examination.
3. Centrifugal Casing process is to be considered, and hardening by induction or nitriding process is recommended.
4. Special care to be taken for machining of the bearing and seal housing. ASRY shall provide one set of bearing and seals as a sample for ensuring machining tolerance are as per the design drawing.
5. ASRY has the right to reject any unit if found defective or not complying with the tender specification, even if the same has been approved by the appointed Third Party.
6. Two sample wheels are required to be Air Freighted for testing before proceeding with casting of the remaining quantity that will have to be shipped on Bach delivery basis within the total quoted delivery.
7. Please also not (sic) that the quantity increased from 960 units to 1032 units, your revised offer with maximum possible Discount.
On 23 March 2007, M&J replied:
Thank you for fax message today.
We duly received it and took a close look on the attachment your end users sent.
Hereby we confirm we can meet the all of and each condition mentioned.
Concerning discount (7 article), I reported to the management and they willing to give you 4% discount in case the qty is increased to 1032 unit from previous 960 unit. As far as I am concerned, the confuse arising from our request sample prior to production after submitting our offer was took into their consideration.
Again I am pleased to confirm we have no problem to meet the condition on attached. And looking forward to hearing your instruction further.
On 10 April 2007 SS sent M&J the following faxed order
ORDER No. 270241
WE ARE PLEASED TO ORDER:
Sea Freight Charges to Bahrain 3.800.00
TOTAL CFR BAHRAIN SEA PORT USD 177,176 TEST PIECE TO BE PROVIDED FOR EACH BACH (Sic) OR HEAT NUMBER FOR TESTING AND CERTIFICATION OF MATERIAL BY THE APPOINTED THIRD PARTY, MATERIAL CERTIFICATE TO COVER MICROSTRUCTURE EXAMINATION, CHEMICAL COMPOSITION, MECHANICAL PROPERTIES AND U.T. EXAMINATION.
CENTRIFUGAL CASTING PROCESS IS TO BE CONSIDERED, AND HARDENING BY INDUCTION OR NITRIDING PROCESS IS RECOMMENDED.
SPECIAL CARE TO BE TAKEN FOR MACHINING OF THE BEARING AND SEAL HOUSING. ASRY SHALL PROVIDE ONE SET OF BEARING AND SEALS AS A SAMPLE FOR ENSURING MACHINING TOLERANCE ARE AS PER THE DESIGN DRAWING.
(PLEASE PROVIDE 2 SETS SAMPLE FOR
OUR APPROVAL)
| Sr No. | Item Code | Description | Unit | Quantity | Unit |
| 1 | M137018299 | CENTRIFUGAL CASTING AND FINAL MACHINING OF WHEEL ROLLERS IN SG IRON GRADE 600, AS PER SUPPLIED SPECIFICATION DRAWING. OD 410xID 150x210 MM LENGTH. WITH LR OR ABS CERT. EQUIVALENT TO DIN 50049 3.1B NOTE: LR OR ABS TO BE APPOINTED AS THIRD APRTY FOR INSPECTION APPROVAL AND CERTIFICATION OF FULL PROCESS i.e. CONFIRMATION OF MATERIALS SPECIFICATION, CASTING, HARDENING, MACHINING AND TREATMENT | UN | 1032 | 175.00 LESS 4% |
On 13 th April 2007, SS sent M&J an email concerned both with another quite separate enquiry (271971) and with the above order (270241). In respect of the latter, SS stated “When samples are approved we will t/transfer 40% as agreed.” In their reply, M&J accepted that they had requested a prepayment of only 40% of the price for the wheel rollers.
On 24 April 2007, SS sent M&J two samples of the ball bearings to be used in the manufacture of the wheel rollers asking for their return after completion of the job. They also informed M&J “The final drawing will follow.”
The next day, M&J emailed SS stating that they were waiting for the drawing to make the shipping sample and were informed by SS that they themselves were waiting for the drawing.
Then on 22 May 2007, SS sent M&J the drawing and requested: “now please supply us with two samples.”
M&J sent the samples on 18 July 2007 and a week later, following a request from SS to advise the schedule of delivery for the balance of the order, emailed:
We are awaiting for your sample approval before proceeding the order. Once the order is confirmed, of course we are going to commit ourself to meet the agreed delivery date previousely (sic). Would you please advise the sample status if possible…..
Then having been asked by SS on 30 July 2007 to provide the test certificate for the two samples, M&J told SS by email that the initial price they had offered was just for a wheel with wire rope and that the price would now be $480 per unit.
SS tried unsuccessfully to pass this price increase on to Asry, who had in any event failed to approve the samples because their chemical composition of the prototype was not correct. SS also tried to find a way with M&J of...
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