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GAFTA form 49 – FOB sale – buyers claiming 21-day extension of delivery period after vessel tendering NOR – extension valid


The Facts

Sellers agreed to sell 30 000 mt Ukrainian yellow corn, 2010 crop FOB stowed and trimmed 1 safe Black Sea or Ukrainian port in Sellers’ option, delivery “16-31 October 2010, in single deck bulk carrier in one or two vessels at Buyer’s option.   On/or before October 1st Buyer to declare one or two vessels”.

The following clauses were relevant:


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. In this event Sellers shall carry the goods for Buyer’s account and all charges for storage, interest, insurance and other normal carrying expenses shall be for Buyer’s account unless the vessel presents in readiness to load within the contractual delivery period. … Should Buyers fail to present a vessel in readiness to load under the extension period, Sellers shall have the option of declaring Buyers to be in default, or shall be entitled to demand payment at the contract price plus such charges as stated above, less current FOB charges against warehouse warrants and the tender of such warehouse warrants shall be considered complete delivery of the contract on the part of Sellers” …

“13.1      In case of prohibition of export, blockade or hostilities or in case of any executive or legislative act done by or on behalf of the Government of the country of the origin of the goods, or of the country from which the goods are to shipped, restricting export, whether partially or otherwise, any such restriction shall be deemed by both parties to apply to this contract and to the extent of such total or partial restriction to prevent fulfillment whether by shipment or by any other means whatsoever and to that extent this contract or any unfulfilled portion thereof shall be cancelled. Sellers shall advise Buyers without delay with reasons therefore and, if required, Sellers must produce proof to justify the cancellation.”

Sellers declared Yuzhny, Ukraine as the loading port. Buyers nominated a vessel with an ETA falling within the contractual delivery period.

The vessel tendered notice of readiness one day before the commencement of the contractual delivery period.

At the time of the nomination of the vessel, it was reported that the Ukrainian Government was considering export restrictions. During the delivery period, the Ukraine Government published an order setting a quota for corn export and prescribing an export license application procedure. Sellers notified buyers that they were investigating the possibility of obtaining a license. Shortly thereafter, buyers claimed an extension of the shipment period.

Well before the expiry of the extension period, the sellers invoked the prohibition clause.

Buyers claimed damages for repudiation.


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