CA-2024-002194 - [2025] EWCA Civ 1210

Mr Lewis also submitted that the construction adopted by the Judge made for a commercially unbalanced agreement. The question only arises in a rising market, in which case if Buyers cancel, it is, on the Judge’s construction, negligent Sellers who will benefit from the rise in the market rather than innocent Buyers. That would mean that in a rising market Buyers would be foolish to cancel even if Sellers’ negligence were clear. The Judge indeed said (Judgment at [57]) that it was inherently unlikely that Buyers would cancel on a rising market unless Sellers were in repudiatory or renunciatory breach when loss of bargain damages would be available anyway.

But I agree with Mr Lewis that Buyers who, as in the present case, are faced with Sellers who have twice failed to meet the delivery deadline might well lose patience and wish to call the contract off rather than wait and see whether Sellers will finally perform. Clause 14(A) gives them the right to do that. But if they cannot then recover for loss of bargain even in a case where they can show Sellers’ negligence, the Clause 14 rights will be of little utility to Buyers. This would provide a perverse incentive to Sellers to delay completing in a rising market in the hope that Buyers would lose patience and cancel, leaving Sellers with a more valuable ship. That does not seem a very sensible result.

Moreover that can be contrasted with the position of Sellers facing non-performing Buyers. They can not only call the contract off under Clause 13 but recover damages for loss of bargain.

In those circumstances I think Mr Lewis is right that his interpretation does make for a more commercially balanced outcome, and that this too affords some support for his case.