Company wins damages plus interest over non-delivery of goods

A steel company has won damages of $7.4m plus interest from a supplier that failed to deliver materials on time.

The High Court heard that there had been a contract between the companies for the supply of four consignments of steel billets from Ukraine to Morocco, where the buyer had a factory. Difficulties arose and the two sides agreed to delay the shipment dates.

However, the revised date passed without delivery. The seller then said that the Ukrainian mill had been declared insolvent and asked the buyer to accept a reduced quantity of steel. It agreed to pay compensation to the buyer.

In spite of this, no delivery took place and no compensation was paid so the buyer took legal action, claiming that the lack of raw materials had prevented production at its Moroccan factory.

The seller argued that it was relieved of liability by a force majeure clause that held it would not be responsible for non-delivery for a reason outside of its control.

The court ruled in favour of the buyer. It held that that force majeure clause was irrelevant because the non-delivery pre-dated the Ukraine mill becoming insolvent. The seller was in breach of the contract.

Damages were assessed by calculating the difference between the contract price and the market price of the goods at the time they should have been delivered. This amounted to $7.4m. As the buyer’s factory was in Morocco, interest was awarded at the historical Moroccan rate of 3%.

Please contact Neil O’Callaghan if you would like more information about the issues raised in this article or any aspect of contract law and seeking damages.