In Kellogg Brown & Root Inc v (1) Concordia Maritime Ag (2) Stena Bulk AB (3) Concordia Maritime AB (4) Northern Marine Management USA LLC (Formerly Universe Tankships (Delaware) LLC) – Lawtel 4.1.07 the Claimant claimed that the first Defendant was liable for certain costs under a guarantee relating to the sale of a very large capacity carrier for conversion into a floating production storage and offtake vessel. The agreement for sale of the vessel was on amended Norwegian Sale Form terms. The agreement provided that the extent of steel to be renewed in the conversion yard to meet the Petrobras specifications was to be capped at a cost to the buyer of 150 tonnes and that any additional steel required would be for seller's account. The Claimant claimed that it had been required to renew substantially in excess of 150 tonnes in order to meet the applicable Petrobras specifications and that the Defendant was liable under the guarantee for the cost of all steel replacement in excess of the initial 150 tonnes. The Defendant's case was that much of the replacement steel was required because the Claimant misunderstood or misapplied the Petrobras specifications. The Claimant also made claims of negligent misstatement and collateral warranty based on certain statements allegedly made by other defendants associated with the Defendant during the negotiations leading up to the sale agreement. There was a dispute about the meaning of "original plate thickness" in the Petrobras specifications.

The Commercial Court held that none of the Defendants were liable to the Claimant for negligent misstatement. Any representations had been made on behalf of the relevant seller company. The Defendants did not voluntarily assume a duty of care and did not assume or undertake responsibility to the Claimant, applying an objective test. The contractual context and the opportunity to secure contractual safeguards militated against any duty of care on the part of the Defendants. As to collateral warranty, the parties did not intend that any pre-contractual statement would have contractual effect. It held that Petrobras took a conservative approach to bottom pitting repairs. To construe "original plate thickness" as meaning "as built thickness" would reflect a more conservative approach. That was the correct construction in the circumstances. It was consistent with the specifications and the ordinary meaning of the word "original". The reference thickness was not changed following a technical query by the Claimant. It had not been unreasonable and/or unfair and/or negligent of the Claimant to fail to agree less onerous criteria with Petrobras before the Claimant had in fact done so. The Claimant was entitled to recover from the First Defendant in respect of the plate replaced at a first dry docking and did not act unreasonably and/or unfairly and/or negligently in failing to defer carrying out any renewals at the first dry docking until the plate had been re-inspected. The Claimant acted reasonably in proceeding with a second dry docking based on the first inspection. The quantity of steel renewals that could be recovered under the guarantee after taking account of the requirements of the vessel's classification society was 1,200 tonnes. It also held that there was no implied term that to the extent that any concession to the Petrobras specifications was obtained which increased the Claimant's own costs of completing the work, that additional cost would be recoverable under clause 4.1 of the agreement.