CL-2024-000457, 000458, 000459 - [2025] EWHC 1803 (Comm)

For the seller, Mr Debattista put forward several rival interpretations of s.49(2). The first formulation in his skeleton argument was that the true question under s.49(2) was “what the contract said about payment and delivery: did it provide for payment of the price independently of what it said about delivery? The central issue is what the contract said about payment and delivery rather than what happened on the ground in terms of delivery: did the contract make the Buyer’s obligation to pay the price dependent on what it said about delivery?”

I did not find that easily comprehensible, and Mr Debattista’s oral argument did not leave me clear as to what he meant by the notion of a contract that makes the buyer’s obligation to pay the price dependent on or independent of “what it said about delivery”. It was not in dispute, since it was also Mr Nolan KC’s submission, that s.49(2) calls for an examination of the (meaning and effect of) the terms of the contract, so that the question raised by the sub-section is not whether delivery had or had not occurred in fact. It was therefore likewise not in dispute, in principle, that where property has not passed (so that s.49(1) does not apply), depending on the facts of any given case s.49(2) might justify or not, as the case may be, a seller’s claim for the price, whether the goods had been delivered but not sold (as in Tradax v Goldschmidt) or had been neither delivered nor sold (as in most of the prior authorities). (If they have not been delivered, then in principle the point identified in paragraph 68 above might arise, but that does not concern the meaning of ‘irrespective of delivery’ and does not arise in this case since it was not raised in the arbitrations.)

In a subsequent paragraph of his skeleton argument, Mr Debattista submitted that the price here was payable ‘irrespective of delivery’ within s.49(2) because “there is nothing at all in the payment clause … which in any way makes the Buyer’s obligation to pay dependent on the point of delivery agreed in the contract”. This followed a submission that delivery in the present case occurred by and upon shipment, so the argument seemed to be that the obligation to pay did not depend on shipment. But that was a bad argument. Payment was against presentation of documents that required there to have been a shipment. That does not undermine the agreed position that what matters is the meaning and effect of the contract terms. The point is not that as a matter of fact, shipment took place prior to the presentation of the documents that created the obligation to pay the price. It is that the contract provided, as the condition for the payment of the price, the presentation of documents that required shipment to have occurred (i.e. delivery, according to Mr Debattista’s argument). In short, the obligation to pay the price was conditional upon the prior performance of the obligation to deliver the goods, on the seller’s own case as to the content of that delivery obligation.

That second argument by Mr Debattista fails in any event because of paragraph 50 above, which in turn is why Stein Forbes and Muller Maclean were decided as they were. The contract provided for the price to be payable ‘cash against documents’ and, on a true analysis, the documentary delivery that would oblige the buyer to pay the price was (the completion of) the seller’s delivery obligation in respect of the goods. The specified latest date for payment in the amended payment clause did not remove that conditionality of the payment obligation. It remained an obligation to pay (only) ‘cash against documents’.

In oral argument in the light of Readie Construction, and as a final formulation of the seller’s position, Mr Debattista submitted instead that ‘irrespective of delivery’ meant “other than the contractual date for delivery”. For (as I would now capture the argument) he submitted that on a true reading of s.49(2) as a whole, “a day certain irrespective of delivery” means a definite date, prior to action brought, other than the contractual date for delivery. I consider there is no support for that in the language of the sub-section or the authorities reviewed in Appendix B to this judgment, aside perhaps from the unpersuasive view expressed in Mitsubishi Corp v Kyen Resources.

Finally, before turning to Readie Construction and CE Energy, Mr Debattista advanced an alternative argument that on the buyer’s construction of s.49(2), the sub-section applied because the amended payment clause was only agreed after shipment and the sending by email of scanned copies of the shipping documents. He submitted (and I have agreed) that the amended payment clause specified a fixed date by which payment had to be made, a ‘day certain’ even on the buyer’s case. He submitted, then, that since “delivery had already occurred when the “day certain” was agreed …, … consequently that “day certain” was clearly agreed “irrespective of delivery”.”

In my view, that misunderstands and therefore misapplies the buyer’s orthodox reading of s.49(2). The price was still a price payable in respect of, and on condition of, the performance by the seller of its obligation to deliver, ‘cash against documents’. If the condition was satisfied, in fact, when the price clause was agreed, that does not affect the conditional nature of the price obligation created. If the buyer is correct, as I would say it is unless Readie Construction or CE Energy should lead me to a different view, that s.49(2) is defeated by such conditionality of the obligation, then it was defeated in this case.