CHOIL TRADING SA V SAHARA ENERGY RESOURCES LTD

[2010] EWHC 374 (Comm), Queen's Bench Division, Commercial Court, The Hon Mr Justice Christopher Clarke, 26 February 2010

Sale of goods - Implied terms - Term as to quality - Contaminated naptha sold "as is" - Whether the naphtha complied with the description - Satisfactory quality - Sale of Goods Act 1979

At the time of the event underlying this action, the claimant Choil was an oil trader. Choil claimed damages from Sahara, another oil trader, for a significant quality defect in a cargo of naphtha purchased by Choil from Sahara FOB Port Harocurt in Nigeria. The cargo was contaminated by an abnormally high quantity of the extraneous substance MTBE. Choil relied on an express provision as to quality in the July terms, namely that "Naphtha of normal running production as produced by Port Harcourt Refining Company with following actual specifications as determined at loadport on the basis of samples drawn from shore tanks" together with the other terms of the specification contained therein; and on the statutorily implied terms as to correspondence with description, satisfactory quality and fitness for purpose. Sahara contended that the product was sold "as is" without any warranty as to the quality of the naphtha. It was common ground that in the gasoil and gasoline trade the expression "as is" was used to signify that there will be no escalation of the price based on the density of the product. Sahara argued that it was not used in this sense in the naphtha trade, unless the naphtha was paraffinic and the counterparty was a petrochemical end-user.