Thoresen (Bangkok) v. Favom Marine
D Goldstone, instructed by Barlow, Lyde & Gilbert, for the Defendant (Favom)
SHIP SALE CONTRACT: SUBJECT DETAILS: WHETHER BINDING CONTRACT HAD BEEN CONCLUDED
The words "subject to details" or "sub details" are the maritime equivalent of the phrase "subject to contract". Until all the details of the proposed formal agreement have been agreed, there can be no binding contract.
DMC Category Rating: Confirmed
This case note is based on an Article in the April 2004 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website
Negotiations for the sale were carried out by brokers acting for both parties and there was no dispute that they each had full authority to conclude an agreement. The buyer claimed that the contract was concluded by a series of emails on 27 November 2003, in particular a recap email sent by its broker. It maintained that the email said that the contract would be on the Norwegian Sale Form 1993 terms, save that the details of the NSF were to be suitably amended so as to reflect specific terms agreed between the parties.
The seller's case relied on clause 10 of the buyer's broker's
recap email, which provided:
The words "sub details" were short for "subject to details". The seller argued that, as a matter of law and custom, these words had the effect of requiring the details of the contract to be agreed before a binding contract was created.
There was no real dispute that, by 27 November, the key terms had been agreed and neither broker was anticipating there would be a problem finalising the details. But by 4 December, the terms of the Memorandum of Agreement ("MOA") had still not been finalised. The seller’s broker gave the buyer a deadline of 1700 hours that day. When this was not met, the broker sent a further email saying the negotiations had failed.
Although the words in this case appeared in the context of lengthy exchanges about important aspects of the proposed sale agreement, not every matter of detail had been addressed or settled. No binding contract for the sale of the vessels had, therefore, been made. Thoresen's claim was dismissed.
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