In KG Bominflot Bunkergesellschaft Fur Mineralole mbh & Co KG v Petroplus Marketing AG  EWHC 1088 (Comm) (22 May 2009) the court was asked to consider as a preliminary matter, whether a free on board contract (FOB contract) which contained a clause stating that there were no “guarantees, warranties or representations” contained an implied term that the oil would be of a satisfactory quality and meet the contractual specifications when delivered to the vessel and for a reasonable time thereafter.
The Defendants argued that the court was precluded from implying such a term as these types of terms could only apply to FOB contracts where the contract identified the journey that the goods would take, and that in any event, such terms were expressly excluded.
The court rejected the notion that such terms could only be implied in relation to an FOB contract which identified the journey. The court ruled that in the absence of any inconsistent term and relying on s14(2) of the Sale of Goods Act 1979, a term would be implied in FOB contracts that the goods would be of a satisfactory quality and/or meet the contract specifications both on delivery and for a reasonable period of time following the conclusion of the voyage. The court took the view that in cost insurance and freight contracts (CIF contracts) and cost and freight contracts (C&F contracts) where the seller knew the destination of the goods, a reasonable period of time following the voyage would be calculated by reference to the time taken to complete a normal voyage. In the context of an FOB contract where the seller did not know the journey the goods were to take, a reasonable period of time would depend upon the contractual provisions and the circumstances surrounding the delivery of the goods on board the vessel, the nature of the goods delivered and the extent of the seller’s knowledge of the buyer’s plans for the goods. Considering the exclusion clause, the court ruled that the implied terms were not excluded. The contract was expressly governed by English law and it would be assumed that parties were aware of the distinction between conditions and warranties and the requirement that any clause excluding liability for breach of a condition do so expressly. The exclusion clause made no reference to conditions.