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Opinion On Liability Contract 2 Notes

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This is an extract of our Opinion On Liability Contract 2 document, which we sell as part of our Opinion Notes collection written by the top tier of City Law School students.

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RE: NATIONAL SUPERMARKETS PLC OPINION ON LIABILITY

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1. I am instructed to advise National Supermarkets PLC, the Defendant to a breach of contract claim made by Thai Import Ltd, Claim No. 2017 Folio 5846 in the Commercial Court. I am specifically asked to advise on the availability of a valid defence to the allegation of unlawfully withholding payment. Those instructing me ask whether there is a legal basis for National Supermarkets' rejection of the goods delivered and whether that rejection could amount, in law, to a counterclaim against Thai Import. This advice is prepared on the basis of my instructions and the evidence contained therein, and is given subject to such further evidence as has been recommended or which will become available in due course.

SUMMARY OF FACTS

2. By a written contract entered into on 15 June 2016, incorporating terms from an exchange of emails beginning 10 June 2016, National Supermarkets ordered a consignment of 420 metric tonnes +/-1% of Thai 5% long grain rice from Thai Import at a price of US$720 per metric tonne, to be delivered in November 2016. Roy Gardener acted on behalf of National Supermarket and James Lloyd acted on behalf of Thai Import. The consignment was delivered and unloaded from SS Sumatra Bay on 8 November 2016 and received by Graham Alexander on 9 November 2016. The consignment weighed 421.37 metric tonnes totalling US$303,386.40 payable. On the basis of Mr. Alexander's finding that the sacks were marked 'Produce of Vietnam' and labelled in what he identified as Vietnamese, Christine Lambert rejected the goods on behalf of National Supermarkets by email on 9 November 2016. Thai Import take the view that there was no legal justification for the rejection, and allege that it was in fact a veiled attempt to evade a 'bad bargain' entered into in an unfavourable seller's market. National Supermarkets assert that they entitled to reject the goods as they did not meet the description. The consignment was resold for $198,043.90 to Rice & Grain Importers PLC.

SUMMARY OF ADVICE

3. It is advised that National Supermarket should plead that the provision of 'Thai rice' was an express term of the contract: those instructing me should seek to establish a

compelling scientific basis for the distinction between Thai rice and other varieties. Breach of this express term hinges on scientific evidence (through laboratory analysis for example) that Thai rice was not in fact provided. My advice is constrained in the absence of this evidence, and so my opinion is no more than a 50% likelihood of success on the matter. National Supermarkets are also encouraged to plead breach of Sale of Goods Act 1979 s.13, which I have advised is 95% likely to have been operating on the contract despite the exclusion clause. The chance of successfully proving breach has been suggested at 75%, contingent upon verification of the difference in financial value between Thai and Vietnamese rice, and any proven qualitative difference in the products. However I have warned that there is a 40% risk of the Court finding the breach of s.13 to be 'slight' within the meaning of s.15A. Those instructing me have also been advised to dispel any perceived or actual risk that the claim is brought tactically or as a result of market speculation. My overall opinion is that, on the present evidence, there is a 60%
likelihood of establishing a defence to the claim.

LIABILITY Formation of the Contract

4. It does not appear to be in dispute that a valid contract came into existence on 15 June 2016 evidenced by written Contract Note and Purchase Order. The agreement incorporated terms agreed by email over 10 to 15 June 2016. It appears that the 'offer' was made by the sellers' email of 15 June 2016 at 9.43am and that this was accepted by the buyers on the same day at 11.27am.

Express Terms

5. The express terms as pleaded by Thai Import in paragraph 3 of the Particulars of Claim, namely that the contract price was to be US$720 per metric tonne and that delivery was to be in Felixstowe, England, in November 2016, are uncontentious.

6. However, it is also clearly an express term of the contract that the goods ordered were 'Thai 5% white long grain rice' as stated in the Contract Note under 'Goods'. Whilst Mr. Gardener does not appear to use the term 'Thai rice' in the email of 15 June 2016 at

11.27 (which I have described as the 'acceptance' email), the term was clearly stated in the 'offer' email at 9.43am sent by Thai Import and is therefore incorporated. It will be necessary to establish what 'Thai rice' signifies in the commercial food produce industry so as to define the scope of obligations under the term. Indeed this will also be necessary below, to establish a failure to correspond with description, as much of the case hinges on whether there is in fact a material difference between Thai rice and other varieties. Mr. Alexander, who appears to have the necessary credentials and experience, certainly indicated a compositional difference to those instructing me on 20 December

2016. My instructions advise that Thai rice is synonymous with 'glutinous' rice and is called 'Khao Niao' in its country of origin, and this is not inconsistent with Thai Import's email of 10 November 2016 where Mr. Lloyd seems to accept that Thai rice is of a different kind to Vietnamese. A cursory inspection reveals that such a distinction is

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