Addax Energy SA v Petro Trade Inc

A course of dealing may incorporate standard contractual terms where the parties have used the same or substantially similar document consistently, the terms were reasonably brought to the other party’s attention, and the parties’ conduct objectively indicates that the document governed their transactions. Absolute consistency is unnecessary; the question is whether the dealing was sufficiently consistent and unequivocal in its commercial context.

An agreement is not necessarily void for uncertainty because one price element is to be mutually agreed for each delivery. Where the parties intended to contract, partly performed the agreement, and established a mechanism and practice for determining that element, the agreement may be enforceable.

Addax Energy SA claimed unpaid sums from Petro Trade Inc for petroleum products supplied to Liberia under a 2016 gasoil contract and an alleged two-year term agreement for gasoil and mogas.

Petro Trade had initially challenged the jurisdiction of the English courts. Cockerill J dismissed that challenge in [2022] EWHC 237 (Comm), finding a plausible evidential basis for the term agreement and its jurisdiction clause. Petro Trade then ceased participating in the proceedings.

At trial, the issues were whether the written terms formed part of the gasoil contract, whether a binding term agreement had been concluded orally in January 2018 and recorded in writing in November 2018, whether the price mechanism was sufficiently certain, and whether Petro Trade remained liable for products released from storage.

1. Judgment for Addax. Petro Trade was liable for US$2,744,174.93, interest and costs. The court rejected the pleaded defences.

2. The written terms of the 2016 gasoil contract were incorporated. The parties had traded for several years using a consistent procedure: oral agreement of variable terms, a recap email and, in most cases, a standard spot contract. The spot contracts repeatedly contained the English law and jurisdiction clause, payment provisions, and provisions transferring risk on delivery. Petro Trade usually acknowledged or accepted them and sometimes negotiated individual terms.

3. The relevant inquiry was factual and commercial. A course of dealing need not be extensive or absolutely consistent. It must be sufficiently consistent and unequivocal, and reasonable notice of the terms must have been given. The repeated provision of the spot contracts before performance, their substantial uniformity, and the parties’ conduct established incorporation.

4. Risk under the gasoil contract passed when the product passed the flange connection at the discharge port. The contractual allocation of risk meant that Petro Trade bore responsibility for subsequent storage, regardless of whether title remained with Addax pending payment. The arguments based on the Sale of Goods Act 1979, including sections 7 and 50, frustration, estoppel and alleged liability for ACE’s conduct therefore failed.

5. The term agreement was binding. The parties agreed orally in January 2018 that it would operate for 2018 and 2019, cover gasoil and mogas, and provide for agreed quantities. The written document sent in November 2018 recorded that agreement. Petro Trade’s requests for the document, its failure to challenge it, and the cessation of recap emails and spot contracts supported that conclusion.

6. The price term was sufficiently certain. The agreement specified the relevant Platts index and provided for a premium to be mutually agreed for each delivery. That mechanism reflected the parties’ established practice and did not make the agreement an unenforceable agreement to agree. The court also applied the principle that it should be reluctant to hold an agreement void for uncertainty where the parties intended to contract and had partly performed it.

7. The products forming the subject of the invoices had been delivered, released and remained at Petro Trade’s risk. The unsupported allegations of removal or theft were contradicted by authenticated stock reports and Petro Trade’s own written confirmation of responsibility. Payment was therefore due under the contractual release mechanism.

The judgment itself records an earlier jurisdictional decision by the High Court:

• High Court (Commercial Court): Cockerill J dismissed Petro Trade’s jurisdiction challenge in [2022] EWHC 237 (Comm).
• High Court (Circuit Commercial Court): Addax’s substantive claim succeeded. Judgment was entered for the principal sum, interest and costs.