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

Facts
The case concerned the proposed purchase of three vessels. The buyer, Thoresen, claimed that a contract was concluded on 27 November 2003 at a global price of US$42 million, less 1% commission. The seller denied that any contract of sale was concluded.

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:
"otherwise basis sale form 93 sub details suitably amended to reflect also the above terms. Closing to take place in Piraeus".

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.

Judgment
The court held that no binding contract had been reached. The words "subject to details" or "sub details" have a recognised meaning when used in the context of the sale of ships. They are a maritime variation of the well known "subject to contract". Where they are used, there can be no binding agreement until all the details of the proposed formal agreement have been agreed (The Solholt [1981] 2 Lloyd's Rep 574, The Junior K [1998] 2 Lloyd's Rep 583). This applies equally to the negotiations for a charterparty (Ignazio Messina & Co v Polskie Linie Osceaniczne [1995] 2 Lloyd's Rep 566).

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.