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Profindo v Abani
The main issue in Profindo Pte Ltd v Abani Trading Pte Ltd,1 a decision of the Singapore High Court, was the interpretation of a provision in a CFR sale contract providing for a discharge rate, and demurrage if the time for discharge was exceeded. There were side issues on the damages that could be awarded for breach by the buyer of the provision, and a counterclaim by the buyers regarding a small shortfall in the cargo discharged. The main issue, and the counterclaim, were heavily influenced by the time of transfer of risk in a CFR contract.
The CFR contract was accepted as a variation of CIF, “and … the differences between the two types of contract are not material for the purposes of this appeal”.2 Under a CIF contract the seller is responsible for making the carriage contract. If he charters a ship to carry the goods, he will in principle become liable under the charterparty for demurrage, whether incurred at loading or discharge.3 It is the buyer, however, who typically controls the discharge process,4 and sellers need to guard against incurring liability for delays which are beyond their control. The main issue in Profindo concerned an attempt by the seller to guard against just such a contingency, by the insertion of (in effect) laytime and demurrage terms into the CFR sale contract.
It should be observed, in passing, that similar problems can arise for FOB buyers who charter vessels to lift their goods, the need now being to protect against sellers delaying the vessel at the loading port.5 The problem is less acute in the FOB context, since, even without laytime and demurrage provisions, FOB buyers are to some extent protected from
1. [2013] SGHC 10 (District Court Appeal No 5 of 2012).
2. [2013] SGHC 10, [4]
3. He can also become liable if he ships on bill of lading terms. If he is a time charterer there is obviously no demurrage liability, but he will still have an interest in timely discharge. In Profindo, the sellers had chartered MV Athens for the voyage.
4. Or, if there is a chain, the ultimate receiver of the cargo. In any event, the original seller/charterer does not.
5. Assuming that this is a variant of FOB where the buyer is shipper.
CASE AND COMMENT
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