By a contract dated 4 October 2010 Soufflet agreed to sell 38,000 mt of French feed barley to Fedcominvest on FOB terms. The terms of GAFTA 64 were incorporated. Clause 8 provided that the contractual delivery period should be extended by not more than 21 days “provided that Buyers serve notice claiming extension not later than the next business day following the last day of the delivery period”.
Clause 19 of the contract provided:
All notices required to be served on the parties pursuant to this contract shall be communicated rapidly in legible form. Methods of rapid communication for the purposes of this clause are defined and mutually recognised as: – either telex, or letter if delivered by hand on the date of writing, or telefax, or Email, or other electronic means, always subject to the proviso that if receipt of any notice is contested, the burden of proof of transmission shall be on the sender who shall, in the case of a dispute, establish, to the satisfaction of the arbitrator(s) or board of appeal appointed pursuant to the Arbitration Clause, that the notice was actually transmitted to the addressee. In case of resales/repurchases all notices shall be served without delay by sellers on their respective buyers or vice versa, and any notice received after 1600 hours on a business day shall be deemed to have been received on the business day following. A notice to the Brokers or Agent shall be deemed a notice under this contract.”
The delivery period was 10 November to 10 December 2010 at the Buyer’s option. 10 December 2010 was Friday and “the next business day following the last day of the delivery period” on which any notice claiming extension under clause 8 had to be served was Monday 13 December 2010.
Buyers tendered a notice claiming extension at 17.09 on 13 December 2010. Since the notice was served after 16.00 the Sellers refused to perform. The Buyers said that the deemed notice provision was concerned only with cases of “resales/repurchases” which was not the present case, and claimed damages for more than 1M USD.
The GAFTA Board of Appeal and the Commercial Court of the Queen’s Bench Division concluded that the deemed notice provision applied only to resales/repurchases. The goods were not resold back-to-back terms and therefore the provision was inapplicable. The Buyer’s notice extending the time was valid, and the Sellers had wrongfully rejected the contract.