31:
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However, it has also been pointed out that the majority decision also reinforced the risk allocation function of contract, and the rule stated in it is both socially desirable and it provides an incentive to inform the other party as early as possible of their intention to breach, thus creating a more efficient outcome from a
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purported cancellation as a repudiation, which it accepted on 11 August 2010. The following day the Seller offered to reinstate the contract on the same terms, but the Buyer would not agree. Instead, it began arbitration proceedings under the GAFTA rules in support of a claim for damages of US$ 3,062,500.
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A construction of the default clause that would place the Buyers in a financially far better position than if the breach had not occurred was most unlikely to have been intended by those drafting the clause. It was far more likely that the clause was intended to apply to the usual situation of a
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Damages clauses, such as the one incorporated in GAFTA 49, are not to be regarded as complete codes for the assessment of damage. It did not address the effect of subsequent events that would have resulted in the original contract not being performed in any event, nor did it exclude every other
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While damages clauses may prescribe a fixed measure of loss that differs from the measure of damages recoverable at common law, in the absence of clear words, a court will not conclude that a damages clause was intended to operate arbitrarily and produce a result unrelated to anything that the
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on exports of wheat from its territory (which ran from 15 August to 31 December 2010), Bunge (the "Seller") notified the Buyer of the embargo and purported to declare the contract cancelled. Nidera (the "Buyer") did not accept that the Seller was entitled to cancel the contract and treated the
310:
in my entire career in the legal profession..." Academics raised several concerns about the majority decision, stating that it damages the certainty which is one of the major advantages of
English commercial law, and it encourages the breaching party to delay settlement or prolong litigation.
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applies to both instalment contracts and one-off sale contracts and there is no logical reasoning for distinguishing the two. The fundamental principle for the assessment of damages in cases of breach of contract is, within the limits set out in
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is expected to have broad consequences. Most commentators point out that clear and express words will need to be incorporated into such contracts to oust the common law principles involved, which will make the relevant clauses more complex.
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Commercial certainty is undoubtedly important, although its significance will inevitably vary from one contract to another. But it can rarely be thought to justify an award of substantial damages to someone who has not suffered
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non-delivery or non-acceptance of goods for which there was an available market, rather than a situation where the contract would not have been performed due to supervening events leading to its inevitable cancellation.
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GAFTA's first-tier tribunal held that the contract had been repudiated, and its ruling was upheld by the GAFTA Appeal Panel, which awarded the Buyer its claim in full. The ruling was subsequently upheld by the
486:
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consideration that may be relevant to determine the innocent party’s actual loss. In those circumstances, common law principles on recoverable damages would continue to apply.
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cannot be distinguished from the present case. The principle that damages should be compensatory applied equally to a contract for a one-off sale and an instalment contract.
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The
Supreme Court found in favour of the Seller, reversing all of the lower tribunals, and awarded the Buyer nominal damages of only US$ 5. In his ruling,
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declaring that it was "‘the worst decision on any aspect of
English commercial law, and certainly shipping law, that has come out of the
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302:, when it was handed down, attracted considerable discussion among jurists and academics, with one former judge of the
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The parties entered into a contract for the supply of 25,000 metric tonnes of
Russian milling
569:"GAFTA default clause and assessment of damages: Supreme Court hands Sellers a golden victory"
516:
94:
8:
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613:
540:"Landmark UK Supreme Court ruling on default clauses and damages: Bunge SA v Nidera BV"
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385:
525:
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Payiataki, Vassia; Evagora, Kyri; Gandhi, Sejal; Archer, Rebecca (1 July 2015).
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As GAFTA 49 is a standard form that is widely used in commodities transactions,
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220:, which was to be shipped in the latter part of August 2010. It incorporated
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Form 49, which provided procedures for termination and default damages.
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127:, to put the parties in their position had the contract been performed.
384:. The Grain and Feed Trade Association. 1 January 2006. Archived from
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parties can reasonably have expected to approximate to the true loss.
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succinctly expressed the relevant principle in assessing damages:
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has resolved the uncertainty that had arisen from this ruling.
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160:(with whom Lord Neuberger, Lord Mance and Lord Clarke agree)
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a subsidiary of COFCO International
Limited, controlled by
487:"Shipping Law - Golden Victory has long-term consequences"
97:, 1 Lloyd's Rep 404 (12 December 2013), affirming
553:"Bunge SA v Nidera BV: Golden Victory All-Around?"
436:
424:
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485:Passmore, John; Thomson, Jeffrey (25 July 2007).
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173:, sale of goods, repudiation, measure of damages
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484:
469:
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551:Hutcheon, Andrew; Dhillon, Jemma (July 2015).
196:, providing guidance on the assessment of
105:, 1 Lloyd's Rep 621 (29 January 2013)
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599:Supreme Court of the United Kingdom cases
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581:
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442:
430:
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246:Court of Appeal of England and Wales
508:""Golden Victory" - A Pyrrhic one?"
42:Supreme Court of the United Kingdom
13:
521:perspective on the Golden Victory"
506:Walker, Robert (23 October 2013).
478:
14:
625:
103:[2013] EWHC 84 (Comm)
567:Shepherd, Stuart (6 July 2015).
609:Russia–United Kingdom relations
604:2015 in United Kingdom case law
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403:
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269:In that regard, he held that:
188:is a landmark decision of the
16:2015 UK Supreme Court decision
1:
517:"Damages for repudiation: an
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594:English termination case law
560:Watson Farley & Williams
190:United Kingdom Supreme Court
95:[2013] EWCA Civ 1628
7:
489:. Hardwicke. Archived from
470:Hutcheon & Dhillon 2015
455:Hutcheon & Dhillon 2015
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10:
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200:arising out of a wrongful
231:introduced a legislative
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589:English remedy case law
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204:of a contract for the
186:[2015] UKSC 43
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510:. Thomas Cooper LLP.
181:Bunge SA v Nidera BV
99:Bunge SA v Nidera BV
91:Bunge SA v Nidera BV
24:Bunge SA v Nidera BV
391:on 8 February 2016
300:The Golden Victory
287:The Golden Victory
124:Hadley v Baxendale
117:The Golden Victory
526:Sydney Law Review
515:Zhou, Qi (2010).
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357:Temasek Holdings
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343:a subsidiary of
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304:Commercial Court
242:Commercial Court
74:Neutral citation
61:27–29 April 2015
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493:on 4 March 2016
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573:Ince & Co.
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544:Reed Smith LLP
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308:House of Lords
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48:Full case name
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533:(4): 579–593.
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409:UKSC, par. 23
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379:"Gafta No.49"
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345:Bunge Limited
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315:perspective.
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258:Lord Sumption
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495:. Retrieved
491:the original
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386:the original
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295:Significance
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171:contract law
158:Lord Toulson
122:
115:
98:
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82:Case history
51:
18:
313:game theory
202:repudiation
165:Area of law
153:Lord Clarke
143:(with whom
69:1 July 2015
583:Categories
366:References
149:Lord Mance
614:Embargoes
497:21 August
443:Zhou 2010
431:Zhou 2010
419:Zhou 2010
395:21 August
252:Judgment
244:and the
137:Majority
519:ex ante
233:embargo
198:damages
110:Holding
77:UKSC 43
66:Decided
229:Russia
155:agree)
58:Argued
556:(PDF)
389:(PDF)
382:(PDF)
331:Notes
324:Bunge
317:Bunge
227:When
222:GAFTA
218:wheat
212:Facts
184:
101:
93:
38:Court
499:2015
397:2015
265:any.
151:and
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523:.
462:^
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208:.
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