Interpretation of \”Notices\” Clause in GAFTA 64 Contract

In the Soufflet Negoce SA v. Fedcominvest Europe SARL[2014] EWHC 2405 (Comm) decision, the English courts have ruled on how the “Notices” Clause in the GAFTA contracts. The issue was when communications received after 4.oo p.m. on a business day are considered to have been received.

Background to the GAFTA Treaty

The background was a purchase contract under GAFTA 64 to sell French feed barley FOB. Under the terms of the contract, the buyer was entitled to extend the shipping period if the corresponding extension request is received by the seller no later than the next business day after the end of the delivery period.

In addition, the contract included “notices” as standard This is also reflected in many other GAFTA treaties.

The relevant provisions were as follows:

“8TH EXTENSION OF DELIVERY
The contract period of delivery shall be extended by an additional period of not more than 21 consecutive days, provided that Buyers serve notice claiming extension not later than the next business day following the last day of the delivery period. …

19. NOTICES
All notices required to be served on the parties pursuant to this contract shall be communicated rapidly in legal 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 e-mail, 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.”

Was the extension of delivery explained too late because after 4 pm?

The relevant date on which the renewal notice had to be received was a Monday. However, the buyer did not send the report until about 5 p.m. on Monday. The seller now cited the fact that the notice of renewal had only been received on Tuesday and accordingly too late. He therefore sued for damages for non-acceptance of the goods. The buyer, however, relied on his extension notice.

The court found that the provision in the “Notices” Clause only applies if it is a supply chain, only if it is necessary to receive communications in good time on a business day so that they can still be forwarded in the supply chain.

However, since there was no supply chain in the case to be decided, but only two parties were involved in the contract, the clause was not applied. The Court took the view that the wording was clear in so far as the sentence in which the timing was laid down clearly referred to supply chains.

Accordingly, the buyer had until midnight to give notice of renewal and had not breached the contract.

 

Lawyer Dr. Tristan Wegner

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