Lloyd's Maritime and Commercial Law Quarterly
EFFECT OF QUOTATION OF FREIGHT RATE
Aotearoa International Ltd. v. Scancarriers A/S
This decision of the Privy Council1 may seem, and probably is, a fairly routine one on the interpretation of facts. Nevertheless it deserves attention as an example of the way in which the courts interpret quotations and tenders, and as raising questions as to the extent to which such interpretations accord with reasonable commercial expectations.
The plaintiffs, exporters of waste paper in Auckland, New Zealand, were interested in shipping consignments of such paper to India. The defendant shipowners were introducing a new service from New Zealand to Dubai, from where goods could be transhipped to the Indian subcontinent, and apparently expected some surplus capacity on outward voyages. Two meetings were held in Auckland between the principal shareholder of the plaintiffs and the marketing operations manager of Scancarriers, who was based in Wellington, and representatives of the Auckland agents of Scancarriers. Four days later a telex was sent by the operations manager in Wellington to Aotearoa in Auckland reading as follows:
Flwg our discussion on Friday 29/1 we agree to a promotional rate of US $120 … and this rate will be held until 29/7/82.
This rate is to cover your paper waste which is to be shipped on your pallets or skids and will be loaded onto our vessels as unitised cargo. Overall pallet height (from ground to top of cargo) not to exceed 8.5 feet.
Aotearoa acted on this communication (which it was agreed referred to carriage through to Bombay), and the previous dealings to which it related, by entering into commitments in India. But when the first consignment was presented the carriers refused to take it. This action was the result of a policy decision by the carriers’ head office in Oslo that the rate quoted was too low. Aotearoa sued the carriers for breach of a contract alleged to be partly oral (arising from the Auckland meetings) and partly in writing (arising from the telex), though in the end the dispute was treated as turning almost entirely on the telex. The trial judge, Wallace, J., held that the carriers were not bound, though without any approval of their conduct2. The Court of Appeal of New Zealand reversed the decision, holding that they were in breach of contract3. The Privy Council restored the judgment of the trial judge on this point, holding that the telex was “a quote” and no more.
Obviously negotiations such as these, which have only been cursorily summarized here, can be interpreted in many ways. One way of viewing the matter is that two promises were involved. The first was a promise that cargo carried would be carried at the rate quoted. This Wallace, J., was willing to hold binding, and to detect consideration for it in the plaintiffs’ having made further efforts, which he was willing to regard as envisaged by the carriers, in reliance on it to obtain the orders which they were likely to ship with them. Indeed, it seems that the carriers themselves were willing to admit the binding nature of that promise. But such a promise is
1 Privy Council, 18 July 1985; [1985] LMLN 154.
2 High Court, Auckland, 1 July 1984.
3 28 September 1984.
412