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Fal Oil Co Ltd  Anor v. Petronas Trading Corp. Sdn Bhd., [2004] 2 CLC 1062

Fal Oil Co Ltd  Anor v. Petronas Trading Corp. Sdn Bhd., [2004] 2 CLC 1062
Table of Contents

Fal Oil Co Ltd & Anor v Petronas Trading Corp Sdn Bhd.

[2004] EWCA Civ 822

Court of Appeal (Civil Division).
Judge, Buxton and Mance L JJ.
Judgment delivered 7 July 2004.



33. What is, for whatever reason, absent in the reasoning in Suzuki is any acknowledgement of the theoretical basis on which, and the good reasons why, parties may construct an independent scheme regarding demurrage. It is now well-established that it is a breach of contract to exceed the specified laytime, and demurrage is the agreed damages to be paid for delay in loading or discharging arising from any breach: see the speech of Lord Guest in Union of India v Compania Naviera Aeolus SA [1964] AC 868, 899, adopted by Lord Diplock in Dias Co Nav SA v Louis Dreyfus Corp [1978] 1 WLR 261, 263 (quoted recently in Kronos Worldwide Ltd v Sempra Oil Trading SARL [2004] 1 CLC 136, 142-143). In the context of a C & F sale contract, where the seller is not the shipowner, the underlying rationale of the inclusion of any laytime and demurrage provisions (whether on an independent or indemnity basis) is that the seller will have to arrange carriage on terms which may expose the seller to liability for demurrage to a shipowner or other third party. Parties may, however, find it simpler and more acceptable to agree and operate an independent scheme which means that, in the event that delay occurs, they will know precisely where they stand, rather than to contract on a basis which makes their rights inter se depend upon the rights and liabilities of one of them, and possible disputes under some actual or future contract with a third party.

Referring Principles
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