Advising metal trading client Westbrook Resources in Court of Appeal

We achieved an important Court of Appeal win for Westbrook Resources Limited following a long-running dispute between Westbrook and Globe Metallurgical Inc concerning breach of contract when supplying goods. In a judgment on 8 April 2009, the Court of Appeal rejected all submissions by Globe Metallurgical, and upheld a previous decision by the High Court in which Westbrook was awarded damages against Globe.

The dispute arose out of a contract for Westbrook to supply Globe with 30,000 metric tons of manganese ore from the Defence Logistics Agency stockpile at Large, Pennsylvania, for use in Globe's Beverly, Ohio, plant. Globe refused to take delivery of the material and accused Westbrook of being in breach of contract.

Globe raised ten grounds of appeal against a liability judgment given in the High Court in October 2007 and a quantum judgment from early 2008. Two grounds of appeal were abandoned after Penningtons' counter-submissions had been received. Globe claimed that the trial judge had failed to deal properly with its contentions that Westbrook had not shipped goods by the date specified in the CIF contract and therefore Globe was entitled to reject the goods on that ground alone.

The Court of Appeal upheld the High Court's finding that Globe had effectively agreed to accept a later delivery date and had therefore waived any right to reject the first shipment on the grounds that it had not been loaded by the due date. The High Court judge had found that Globe had decided to stop production of silico manganese and then had no use for the ore which Westbrook was contracted to deliver. He ruled that Globe had repudiated the contract with Westbrook in an attempt to escape its commitment to accept material for which it had no further use.

Donald Lambert, dispute resolution partner in Penningtons' Business Services Division, commented: "In contracts for the sale of goods on CIF terms, dates of shipment are considered to be part of the description of the goods. In the absence of other terms to the contrary, a buyer will normally be entitled to reject the goods if the shipping and other documents show that they were not shipped within the time period specified by the contract. Companies selling on this basis are strongly advised to ensure that their contractual terms negate this right of rejection - otherwise they run the risk of making considerable losses from unforeseen delays."

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