KG BOMINFLOT BUNKERGESELLSCHAFT FUR MINERALOELE MBH & CO V PETROPLUS MARKETING AG (THE "MERCINI LADY")

[2010] EWCA Civ 1145, Court of Appeal, Civil Division, Lord Justice Maurice Kay, Lord Justice Rix and Lord Justice Patten, 19 October 2010

Sale of goods - Sale fob - Risk to pass on loading - Cargo of gasoil within contractual specification on loading and delivery - Sedimentation rate not conforming to specifications at destination - Implied terms of satisfactory quality, reasonable fitness for purpose and ability to withstand voyage and a reasonable time thereafter - Prospective warranty - Express exclusion of conditions - Whether cargo delivered in breach of contract in a matter going to its specification - Sale of Goods Act 1979, section 14

The defendant seller had sold gasoil to the claimant buyer fob Antwerp to be shipped on board Mercini Lady. At Antwerp, the gasoil conformed to specifications. The buyers rejected the goods, alleging that upon arrival to El Ferrol the gasoil no longer conformed to the sediment specifications in the sale contract, and brought proceedings alleging that the sellers were in breach of implied terms under the Sale of Goods Act 1979. The sale contract contained an express term, clause 18, to the effect that: "There are no guarantees, warranties or representations, express or implied, of merchantability, fitness or suitability of the oil for any particular purpose or otherwise which extend beyond the description of the oil set forth in this agreement". The buyer admitted that the gasoil was delivered on-specification, but alleged that it thereafter changed its quality and specification by arrival in Spain, so that it was to be inferred that the gasoil was not "capable of remaining" of satisfactory quality; that the seller was in breach of the implied terms in the Sale of Goods Act 1979 section 14(2) and (3); as well as an implied term at common law that the gasoil would be capable of enduring a reasonable voyage and for a reasonable time thereafter so that it would still then be of satisfactory quality and/or in accordance with contractual specification. The buyer did not argue that the implied terms were continuing warranties, but that they were prospective warranties. This was the appeal of the seller against the judgment of Field J in respect of preliminary issues. There were two issues on appeal. The first was whether, in addition to the statutory implied term of satisfactory quality (the "basic statutory implied term"), there was to be implied a further term, at common law, extending the quality clause containing the gasoil's specification, beyond the point of loading so as to reach prospectively into the future (the "special common law implied term"). The second issue was whether the basic statutory implied term could withstand clause 18. That clause did not refer explicitly to conditions but only to guarantees, warranties and representations.