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COMMODITY SALES AND THE COMPENSATORY PRINCIPLE

Lloyd's Maritime and Commercial Law Quarterly

COMMODITY SALES AND 
THE COMPENSATORY PRINCIPLE

Paul Todd*
International commodity sales differ in important respects from other contracts. This article argues that a principled case can be made for exempting them from a strict application of the compensatory principle, that the analytical tools are in place for so doing, and that it is still possible to do so after the Supreme Court decision in Bunge v Nidera.

I. INTRODUCTION

The main actors in the international commodity market are among the world’s largest companies,1 and the overwhelming proportion of tonnage shipped internationally constitutes commodities in one form or another.2 To the extent that the Supreme Court decision in Bunge SA v Nidera BV 3 affects trading in international commodities, it is potentially of immense economic importance. The decision also points up deep-rooted problems of legal analysis, which have their origins in the earlier House of Lords decision in Gill & Duffus SA v Berger & Co Inc.4 The issue considered here is how the compensatory principle applies to international commodity sales: that in awarding damages for breach of contract, the injured party is entitled to such damages as will put him in the same financial position as if the contract had been performed but, crucially, not more than that.
Commodity sales and the compensatory principle

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