- March 26, 2014
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
An international trading relationship that ‘got off to a bad start’ continued in the same vein with disputes over money, the arrest of a vessel at an Iranian port and, after much contractual wrangling, a High Court ruling which did not fully satisfy either party.
Company A had agreed by two contracts to sell and ship consignments of oil to company B. The latter had made an advance payment of $3.2 million; however, the contracts came to nothing because the cargo could not be sourced. Company B asked for its money back but company A replied that it was having ‘problems with immediate cash’.
Following negotiations, company B agreed that, rather than seeking the immediate return of its money, it would accept a 20 per cent deduction on the price of future cargos. A further contract was entered into whereby company A agreed to sell 5,000 metric tonnes of gasoil to company B. However, the vessel laden with the gasoil was subsequently arrested at an Iranian port and its cargo seized.
Following a three-day hearing, the Court found that, on a correct reading of the contract, company A had been entitled to terminate the same by reason of company B’s failure to pay for the seized cargo. In those circumstances, company A was entitled to recover various losses from company B, totalling more than $330,000.
However, the Court ruled that company B had retained its right to claim restitution of the money that it had advanced under the original contracts. After giving company A credit for sums that had already been accounted for, the Court entered judgment on company B’s counterclaim for almost $2.5 million.