In Statoil ASA v Louis Dreyfus Energy Services LP – Butterworths Law Direct 29.9.08 the Claimant charterers entered into a charterparty for the LPG carrier 'Harriette N' with BW Gas, Oslo, as agents for her owners. The charter was for one voyage from Norway to a range of discharge ports to be nominated. The charter provided for demurrage at the rate of $US32,000 per day pro rata. The laycan range was 9-11 August 2006. The Claimant then negotiated as seller with the Defendant as buyer regarding the sale of a cargo of LPG to be carried by the vessel. Demurrage was stated to be $US40,000 per day. The disputes included the amount of demurrage due from the defendant.
(1) What where the terms of the contract for the sale of the LPG? In particular, did the contract contain a term that demurrage claims had to be submitted by the sellers to the buyers within 90 days of the completion of discharge of the vessel and, further, that any claim made after that time bar would not be valid? There was no dispute as to the legal principles to be applied, the court reviewed the parties actions and from that inferred the parties’ objective intentions as to the terms, as expressed to each other. Both sides accepted that it was possible for the parties to agree the principal terms of a contract, (making it a binding contract), whilst leaving other terms to be agreed at a later stage. The court noted that in an exchange of emails in which contract terms are negotiated on the basis of “accept/except”, the parties and the brokers do not have to spell out what is being accepted. Rather, they have to identify sufficiently where proposed terms are being rejected and another term is being put forward instead. On the facts of this case, the court decided that even if all the terms had not been agreed by the time the recap was sent out, the parties had agreed as shown by their objective intentions as expressed to one another that they had not agreed to a demurrage time bar provision in the contract
(2) Whether a settlement agreement that contained an error was void for unilateral mistake or voidable in equity for unilateral mistake. Initially, in January 2007, the parties agreed a sum by way of 'settlement', but the Claimant later tried to resile from the settlement, on the ground that it was made on the basis of a mistake as to the appropriate amount of demurrage actually due. It was accepted by the Defendant that the Claimant had erred in calculating the sum, because he had thought that the vessel had completed discharge on 13 October, when in fact she had not completed discharge until 24 October. The Defendant admitted that it had realised that the Claimant had made the mistake, but had decided to keep quiet about it prior to the settlement agreement. A further issue was whether, if the January 2007 agreement was valid, it had nevertheless been superseded by a second oral agreement in a telephone conversation in March 2007.
The Claimant accepted that, prima facie and viewed objectively, the parties had agreed the settlement amount in January 2007 regarding the demurrage due in respect of the contract. It argued, however, that that contract was not binding since (i) the unilateral mistake of its representative, made to the knowledge of the defendant, had the consequence that there was no binding contract, or that it was void for mistake at common law; or (ii) that in equity the contract was voidable and the court should accordingly declare the contract rescinded.
It was held that the common law rule on the circumstances when a unilateral mistake would mean a prima facie agreement was not binding was well settled: it only applied when there was a unilateral mistake as to a contract term. No such mistake existed in the instant case. It was not a term of the settlement agreement that the discharge had been completed on 13th October 2006.
There was no equitable jurisdiction to grant rescission of a contract where one party had made a unilateral mistake as to a fact or state of affairs which was the basis upon which the terms of the contract were agreed, but that assumption did not become a term of the contract. Previous authority was inconsistent with the existence of such a jurisdiction. Existing authority was strongly against there being such a rule in the case of common mistake. If there was no such jurisdiction in the case of common mistake, there was no logical rationale for an equitable jurisdiction in the case of unilateral mistake. In any event, any such equitable jurisdiction would not be exercised in the Claimant's favour in the instant case. The mistake was entirely the result of the Claimant's own carelessness and it would not be just and equitable to grant it.
On the facts, agreement for a greater sum had been reached in a telephone conversation of March 2007.
The Claimant would be entitled to the balance of the demurrage as sought