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Interpretation of contract – GAFTA standard form – plain language not yielding to business common sense.

The Facts

French feed barley was sold on FOB terms on a GAFTA 64 form with the following provisions:


            …In case of re-sales all notices shall be passed on without delay, where possible, by telephone and confirmed on the same day in accordance with the notices clause.


 The contract period of delivery shall be extended by an additional period of not more than 21 consecutive days, provided that buyers serve notice claiming extension not later than the next business day following the last day of the delivery period …


 All notices required to be served on the parties pursuant to this contract shall be communicated rapidly in legible form. Methods of rapid communication for the purposes of this clause are defined and mutually recognized as:- either telex, or letter if delivered by hand on the date of writing, or telefax, or email, or other electronic means, always subject to the proviso that if receipt of any notice is contested, the burden of proof of transmission shall be on the sender who shall, in the case of a dispute, establish, to the satisfaction of the arbitrator(s) or board of appeal appointed pursuant to the arbitration clause, that the notice was actually transmitted to the addressee. In case of resales/ repurchases all notices shall be served without delay by sellers on their respective buyers or vice-versa, and any notice received after 16h00 on a business day shall be deemed to have been received on the business day following. A notice to the brokers or agent shall be deemed a notice under this contract”. (Emphasis added).

Buyers’ nominated vessel was delayed and they tendered a notice claiming an extension at 17h09 (ie after 16h00) on the 21st consecutive day pursuant to clause 8 referred to above.

Sellers relied on the deeming provision in clause 19, claiming that buyers were out of time and refused to deliver.

Buyers claimed damages.


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Charter Party Casebook