The sellers sold to the buyers 13,000 -14,000 tonnes of Kenyan white crystal sugar fob stowed Mombasa, subject to the rules of the Refined Sugar Association including that the sellers were to obtain an export licence and that failure to obtain such a licence was not to be a ground of force majeure. The sellers expected to deliver sugar purchased under a nearly matching contract with the Kenyan Government which was the only source of supply. The Kenyan Government failed to honour this contract claiming it was not binding for lack of authority and the buyers instituted arbitration proceedings for non-delivery.
Held: Parker J upheld the arbitrators’ award that the contract had not been frustrated. He said: ‘There was, here, no change in the law and nothing of the nature of a failure or destruction of the subject matter. At all times an export licence was required and the risk of being unable to obtain one was upon the sellers. No doubt they would certainly have been provided with one by the government had it decided to proceed with K G Ex 10. No doubt also the government would not have provided one having decided not to proceed but that circumstance does not affect the matter. In essence no more has happened than that (1) the sellers’ supplier which was the sole supplier did not wish to supply partly for financial reasons and partly to preserve the build up of stocks and (2) that, having been advised that the contract was not binding, the supplier refused to perform. If the Attorney-General’s advice was correct the sellers failed to make a proper supply contract. If it was incorrect then they will have an action on upon the supply contract. ‘
Judges:
Parker J
Citations:
[1983] 2 Lloyds Rep 579
Cited by:
Cited – CTI Group Inc v Transclear Sa Comc 14-Sep-2007
The parties had contracted for the sale of concrete. The buyers appealed findings by an arbitrator that the contracts were both frustrated for the inability of the seller to complete after the intervention of a company with an effective monopoly, . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 01 May 2022; Ref: scu.259369