Soufflet Negoce v Bunge SA

Under an FOB sale contract incorporating GAFTA No. 49, a vessel is presented in readiness to load when it has arrived, is moored at a suitable berth, and no legal or physical restriction prevents the seller from complying with the buyer’s loading instructions.

Readiness under the sale contract is not equivalent to the readiness required for a shipowner to serve a valid notice of readiness under a charterparty. The seller must load where loading is practical and lawful, even if the seller considers the vessel unsuitable to receive the cargo. The seller’s obligation to complete loading after the contractual delivery period arises where the vessel was presented on that basis and loading had commenced, or could have commenced, within the period.

This was an appeal from an award of the GAFTA Board of Appeal dated 24 February 2009, concerning an FOB sale of feed barley for delivery at the buyers’ call within a specified period.

The buyers nominated a vessel which gave notice of readiness on the final day of the delivery period. The sellers disputed whether the vessel’s holds were sufficiently clean and refused to load after the delivery period. The buyers treated that refusal as repudiatory and claimed damages.

The central issue was whether “presented at the loading port in readiness to load” in clause 6 of GAFTA contract form No. 49 required the vessel to be ready in all respects so that a valid notice of readiness could be served, or merely required it to be physically and legally capable of being loaded.

1. Appeal dismissed. The court upheld the GAFTA Board of Appeal’s conclusion that the buyers were required to present a vessel for loading, rather than a vessel ready in every respect for a valid charterparty notice of readiness.
2. The ordinary indicia of the FOB contract were material. Risk passed to the buyers on delivery; delivery arose on the buyers’ call; the call was effective if it was possible and lawful for the sellers to comply; delivery occurred as the cargo passed the ship’s rail; and thereafter the sellers had no interest in the cargo.
3. Clause 6 made completion after the delivery period conditional on the vessel having been presented at the loading port in readiness to load within that period. “Presented” required that the vessel had arrived, was moored at a suitable berth, and was subject to no legal or physical restriction preventing the sellers from obeying the buyers’ orders.
4. There was no basis for reading “readiness” as equivalent to the readiness required for a shipowner to serve a valid notice of readiness. The absence of an express requirement for the buyers to give such a notice, and the separate provision in clause 7 for loading according to the custom of the port, supported that construction.
5. The sellers could not refuse to obey a valid call merely because they considered the vessel unfit to receive the cargo. Possible implications for demurrage or despatch, or speculative concerns about claused bills of lading or third-party claims, did not prejudice the sellers’ contractual position.
6. The court accepted that the buyers could not call for the cargo while simultaneously requiring work to be carried out before loading began. The relevant requirement remained practical and lawful capability to load.

• GAFTA Board of Appeal: Award dated 24 February 2009. The Board concluded that the vessel only had to be presented for loading and that it was physically and legally possible for the sellers to load.
• High Court (Commercial Court): Permission to appeal was granted by Beatson J on 16 June 2009. The appeal was dismissed.