Bunge SSA v Nidera [2015] UKSC 43

KEY POINTS

• Where there is an available market, the prima facie method for calculating damages is to compare the contract price with the market price of the goods at the expected delivery time.
• However, if the buyer had the opportunity to lessen the damages by finding a replacement contract in the market earlier, then the assessment of damages will consider the market price at that earlier date.
• The court also considered the effect of supervening events that occurred after the breach but before the assessment date. The court concluded that such a supervening event should be taken into account when assessing damages.

FACTS

• The case involves a dispute over a FOB sale contract between Nidera BV (the buyers) and Bunge SA (the sellers) for the purchase of 25,000 tonnes of Russian milling wheat. The contract was governed by the GAFTA Form 49, which is a standard form of FOB sale contract for goods delivered from central or eastern Europe.
• However, before the shipment could take place, Russia imposed an embargo on wheat exports from its territory. The sellers notified the buyers of the embargo and attempted to cancel the contract under GAFTA 49's Prohibition Clause. The buyers disagreed with the sellers' decision to cancel and treated it as a repudiation of the contract, which they accepted.
• The sellers later offered to reinstate the contract, but the buyers refused and initiated arbitration proceedings. At the arbitration, the parties agreed that the sellers were in breach of contract and that the buyers were entitled to damages. The main issue was the amount of damages the buyers should receive.

COMMENTARY

• This decision reinforces the importance of assessing damages in contract cases based on the circumstances that existed at the time of the breach as well as supervening events, ensuring a fair and objective approach to the calculation of damages.