Gill & Duffus SA v Rionda Futures Ltd - QBD (Com Ct) (Clarke J) - 14 February 1994

Contract for sale of goods - Demurrage - Whether notice of readiness validly tendered - Liability of guarantor for buyers’ default

The defendants had guaranteed the performance of the obligations of the buyers under a contract for the sale of sugar to them by the plaintiffs. The contract of sale was dated 8 May 1986 and was for the sale of 11,400 metric tons of Cuban sugar which had been shipped on board the vessel Opal Islands under ‘April 1986 bills of lading’. The contract of sale provided that demurrage at discharge port was “for buyer’s account. Demurrage as per C/P”. Demurrage was to be settled as incurred by buyers every 15 days. The contract also provided that any dispute should be referred to the Refined Sugar Association. The plaintiffs claimed demurrage from the buyers under the terms of the contract, and that claim was referred to arbitration. They subsequently obtained an arbitration award against the buyers which remained unsatisfied. They accordingly claimed damages from the defendants under the guarantee. It was common ground that the plaintiffs could not simply rely upon the arbitration award, but had to prove the amount of the buyers’ liability under the contract of sale.