Thursday, January 29, 2009

Oranges, Oral Contracts and the S.S. Ardennes

Oranges, Oral Contracts and the S.S. Ardennes

S.S. Ardennes
1951 blt 1945 J. Boel & Fils, Temse (1146)
1018 n 3195 dwt
301.4 x 44.3 x 18.5 ft
C 4 cyl by Borsig A.G., Berlin
1 deck + shelter deck
ordered: 8.3.43
built for Germany (Hansa A ship) intended owner:Schiffahrt Treuhand GmbH, Hamburg
9.1944 seized by Belgium

In Re Ardennes [1951] 1 K.B. 55, a Spanish exporter, Mr. Tornero, entered into an oral agreement with the defendants, owners of the S.S. Ardennes, to ship 3,000 cases of oranges from Cartagena, Columbia, direct to London, England: Discussions upon the S.S. Ardennes case are widely available on the internet with various interpretations regarding the plausibility of an oral contract agreement.

The ship arrived at Cartagena and the goods were loaded on board. A B/L was issued indicating that the goods had been received in good order: This is the point of the exporter which was supported by Lord Goddard that the bill of lading was not the contract itself but comprised the oral agreement which preceded it.

The B/L also stated (in the small print) that the ship was at liberty to call upon any other ports for any other purpose: This fine print would not have been known to the exporter as he neither saw nor signed the bill of lading prior to the departure of his produce and according to Lord Goddard which provided no time for the exporter to demand his goods back once the discrepancy between the oral terms and the B/L were known.

Unbeknownst to Mr. Tornero, the ship had previously picked up other cargo destined for other destinations, which the defendants commenced to deliver: This would have been clear if the ship owners had made the exporter aware prior to departure of the clause regarding calls at other ports prior to London.

Instead of sailing straight for London, the ship first went to Antwerp, where 374 cases of the oranges were mistakenly off-loaded: This occured due to the apparent misloading of the oranges which was described as impossible even for the carrier to offload prior to arrival at Antwerp.

As a result of the delay, the ship arrived in London several days after a competitor’s oranges flooded the London marketplace, causing a substantial drop in the price of oranges: The trial notes indicate that the carrier had sufficient experience in the seasonality and arrrival pricing requirements of the oranges to havee prior knowledge that making the oral agreement would be impossible and that significant damages would be brought upon the seller.

In addition, the import duty on oranges was raised several days before the ship arrived, resulting in further costs to Mr. Tornero: Lord Goddard also states, "The shippers would not have put these goods on the Ardennes unless assured of delivery by November 30."

He sued for his lost profit, the extra duty paid, and the lost crates of oranges: It would be within his rights pertaining to the oral contract which assured direct delivery from Cartagena to London prior to November 30th.

The defendant ship owner claimed reliance on the terms set out in the B/L: Lord Goddard trounced these claims as they were in direct contradiction to the oral contract.

Did the court agree? No the court did not agree. It awarded the damages to Mr. Tornero.

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