Hamad M. Aldrees & Partners v Rotex Europe Ltd

Contractual performance representations concerning industrial machinery are construed in their commercial and factual context. A throughput representation may be qualified by the feedstock used in testing and by the product specification stated in the quotation. Standard terms supplied to a contracting party are not incorporated merely because they were provided: the contract must contain words or conduct incorporating them, and the reference must identify terms actually available at the stated location. A reference to attached terms is ordinarily insufficient where no terms are attached and the supplier has been inconsistent. A claimant must prove that the alleged breach caused the loss claimed. Where the evidence supports only narrower losses, the court may award them if they fall within the pleaded case, were explored at trial, and their admission causes no procedural unfairness.

The claimant purchased five mineral-separating machines from the defendant for processing silica sand. It alleged misrepresentation and breach of contract concerning throughput, screening efficiency and product quality. The defendant relied on standard terms containing a wide exclusion of liability and counterclaimed for the unpaid final 10 per cent of the price.

The court determined when the contract was formed, whether the standard terms were incorporated, the scope of the performance obligations, whether the machines caused the claimed continuing loss of profits, and whether the defendant had achieved satisfactory commissioning.

1. Contract formation. The contract was not concluded at the June 2010 meeting or during the subsequent telephone discussions. The claimant’s purchase order of 13 June was not an acceptance because it contained materially different payment terms. The revised quotation was met by a further purchase order containing conflicting warranty terms. The contract was concluded when the defendant proceeded to manufacture and supply the machines without protest.
2. Incorporation of standard terms. The defendant had supplied its terms on two occasions, which provided reasonable notice. That was necessary but insufficient. There also had to be words or conduct incorporating the terms into the contract. The operative quotation stated “see attached general terms and conditions of sale”, but no terms were attached. In the circumstances, a reasonable businessman could conclude only that incorporation was possible, not definite. The terms were therefore not incorporated.
3. Performance obligations. The defendant represented and warranted that four machines could process 200 tonnes per hour at 94.4 per cent efficiency, implicitly giving each machine a 50-tonnes-per-hour capacity. The obligation was qualified by the absence of significant variation in the feedstock and by the original requirement that 98 per cent of the product fall between 500 and 106 microns. No 66.6-tonnes-per-hour obligation was established.
4. Breach and loss. The machines were supplied with incorrect bottom meshes and were not capable of satisfactory commissioning without modification. However, the claimant failed to prove that the machines caused the continuing loss of profits claimed. The evidence supported narrower losses from unavoidable commissioning delays and the loss of in-specification product to oversize and fines before November 2014. Those losses had been explored at trial and could fairly be awarded within the pleaded case.
5. Counterclaim. The defendant failed to prove satisfactory commissioning. The unpaid final 10 per cent of the price was therefore not recoverable. The claimant was awarded SAR 3,716,769 in damages, excluding interest; its broader loss-of-profit claim failed and the counterclaim was dismissed.