In Soufflet Negoce SA v Bunge SA [2010] EWCA Civ 1102, the Court of Appeal was required to consider whether GAFTA form 49 required a vessel to be fit to give notice of readiness under an associated voyage charterparty, or simply to be physically and legally read to load cargo.

The parties had entered into a FOB sale contract on GAFTA form 49 terms. The laytime provisions within the contract expressly required the valid tender of a notice of readiness, and a further provision stated “all other terms and conditions as per relevant C/P”. In order to perform the sale contract, the Buyer needed to enter into a charterparty. The sale contract entitled the Buyer to recover demurrage incurred under the charterparty from the Seller if loading exceeded the time stated in the charterparty.  

The vessel gave notice of readiness on the last day of the specified delivery period. The Seller stated that on that day the holds were unclean and so were not presented “in readiness to load” during the delivery period. The Buyer disputed this and called upon the Seller to load. The Seller’s refusal to do so was treated as repudiatory by the Buyer, who brought a claim in arbitration for damages for failure to load the cargo.

The Seller argued that the degree of readiness required was that the vessel should be ready to load as would permit a valid notice of readiness by a shipowner to a charterer for the commencement of laytime. The Buyer, however, argued that it simply had to be physically and legally possible for a seller to load even if the circumstances would not justify a shipowner giving such notice. The matter was heard by a tribunal and then by the GAFTA Board of Appeal who both found in the Buyers’ favour. The Seller appealed to the High Court, where their appeal was dismissed, and then to the Court of Appeal.

The question for the Court of Appeal to decide was whether the GAFTA form requirement that the seller was entitled to complete loading, provided it had presented a ship ready to load within the contractual delivery period, implied that the ship must be ready to load (a) as per the common law requirement that she be physically and legally ready to load, or (b) as per the charterparty, namely that she was fit to give notice of readiness.

The Seller’s appeal was dismissed. The court held that very clear words were needed to incorporate existing shipping law on laytime and demurrage into the contract of sale: implication would not suffice. The use of the expression “readiness to load” did not necessarily imply the technical and complex concept of the notice of readiness. Even though the technical rules relating to the notice of readiness had been incorporated into the sale contract as regards calculating laytime and demurrage, this did not mean that they had been incorporated for all purposes merely by the use of the phrase “readiness to load”.