The case The Lila Lisbon [2025] 1 Lloyd’s Rep 101, Orion Shipping and Trading Ltd (\u201cOSAT\u201d) agreed to sell the Capesize bulk carrier Lila Lisbon to Great Asia Maritime Ltd (\u201cGAM\u201d) under a Memorandum of Agreement (MOA) based on the Norwegian Saleform 2012. The delivery deadline was extended multiple times, but OSAT failed to deliver by the final deadline on 15.10.2021. GAM terminated the agreement and sought damages, claiming the difference between the contract price and the vessel\u2019s market price at termination. The tribunal awarded GAM USD1.85 million in damages under Clause 14 of the MOA. OSAT appealed, arguing that such damages were only recoverable in a case of repudiatory breach.<\/p>\n\n\n\n
i. Whether a buyer, who lawfully cancels a sale contract under Clause 14 due to the seller\u2019s \u201cproven negligence\u201d in failing to deliver by the cancellation date, is entitled to recover loss of bargain damages in the absence of a repudiatory breach?<\/p>\n\n\n\n
\u2022 The court ruled in favor of OSAT, setting aside the tribunal\u2019s award of loss of bargain damages.
\u2022 There was no positive contractual obligation on OSAT to tender notice of readiness by the cancelling date, only a right for the buyer to cancel if delivery was not made.
\u2022 Clause 14B of the MOA did not automatically entitle the buyer to loss of bargain damages unless the seller was in repudiatory breach.
\u2022 The failure to deliver did not amount to non-delivery under Section 51 of the Sale of Goods Act 1979, as the cancellation right in Clause 14 was a discretionary buyer\u2019s right rather than a seller\u2019s obligation.
\u2022 The case was distinguishable from traditional sale of goods disputes where non-delivery gives rise to market loss damages.<\/p>\n\n\n\n
\u2022 Buyers relying on a contract’s default clause to recover market loss damages must ensure the clause expressly provides for such a remedy.
\u2022 The judgment clarifies that cancellation under an MOA\u2019s default clause does not necessarily equate to repudiatory breach or entitle a buyer to market damages.
\u2022 Sellers can benefit from contractual language that limits liability, while buyers should ensure that compensation clauses clearly cover market loss.
\u2022 In a rising market, buyers must assess whether waiting to establish a repudiatory breach is necessary before terminating, as a wrongful termination could have legal and financial repercussions.<\/p>\n","protected":false},"excerpt":{"rendered":"
In \u201cThe Lila Lisbon\u201d [2025] 1 Lloyd’s Rep 101, the court ruled that a buyer cancelling under Clause 14 of the Norwegian Salesform Memorandum of Agreement is not automatically entitled to loss of bargain damages unless the seller is in repudiatory breach. The case clarifies that failing to deliver by the cancellation date does not constitute non-delivery under the English Sale of Goods Act 1979, as the clause grants the buyer a discretionary right rather than imposing a firm obligation on the seller. This decision highlights the importance of precise contract drafting, particularly in ship sale agreements, where buyers must ensure that compensation for market loss is explicitly provided for.<\/p>\n","protected":false},"author":1,"featured_media":5767,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1576],"tags":[],"class_list":["post-5766","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-admiralty"],"yoast_head":"\n