Bulk Trading Co v Zenziper Grains

Bulk Trading Co v Zenziper Grains and Feedstuffs [2001] 1 Lloyd’s Rep. 357

Contract – Uncertainty – Void – Standard Terms – Obligations of the Parties

Facts

The buyers, the Bulk Trading Corporation, and the seller, Zenziper, had arranged for the sale of 6,000 tonnes of American corn, which were to be delivered by the seller Zenziper on Free-On-Truck (FOT) terms. The agreement provided for a price, the specification of the product to be delivered, a time for delivery and a quantity, but the agreement did not provide for a place of delivery. The sellers then refused to deliver and argued they had no binding contract because the place of delivery had not been nominated by the buyer.

Issues

Whether or not there was a binding agreement between the parties. Whether or not the agreement was void for uncertainty. Whether or not a contract on FOT terms could be analogous to a Free-on-Board (FOB) agreement. What the duties of the buyer and seller in FOT agreements are with regards to place of delivery.

Decision/Outcome

There was an enforceable agreement between the parties. In FOT agreements where there was a range of options available for delivery, the responsibility for specifying the place of delivery fell on the seller and not the buyer.  In this way, the FOT agreement could not be seen as similar to the FOB agreement, and it would make no commercial sense to expect the buyer to have to nominate this place. This was because although in an FOB agreement the buyer would be expected to provide the details, this assumed they had information from the sellers regarding the vessel and shipping dates that had been selected. In this case the sellers consistently refused to give the buyers any useful information regarding the truck and its status. The contract was not void for uncertainty because the terms were agreed, even if the parties were not aware of what their obligations were.