Quality terms in sale contracts—conditions or not? (Galtrade v BPOI)

Article summary

Commercial analysis: In this fuel oil trading dispute, the Commercial Court grappled with the question whether quality terms in a sale of goods contract that were not part of a product’s description should be classified as conditions or intermediate terms (finding the latter). It then determined whether the quality breach in question was sufficiently serious to entitle rejection of the cargo, exploring some of the critical factors that loom large in such a decision (it did not). In light of the buyer not having had a right to reject, the court considered whether a claim for wasted expenditure could be maintained (it could not). The buyer’s claim therefore failed. The seller’s counterclaim was correctly formulated as the difference between what it should have been paid but for the wrongful rejection, and what it was in fact paid under a mitigation sale. However, only nominal damages were recovered as overall the seller suffered no loss. Written by Oliver Caplin, barrister at Twenty Essex.