$2 million sea cargo damages

Posted: 7th November 2012

The buyer of a large consignment of gasoil has won more than US$2 million damages after its deterioration whilst on board ship resulted in it falling below the satisfactory quality requirement laid down by section 14(2) of the Sale of Goods Act 1979.

ship2Prior to loading, the cargo was tested and certified by the buyer as being of the required specification. During a four-day voyage, the gasoil deteriorated due to oxidation and sediment formed to the extent that it could not be employed for any of the purposes for which gasoil is commonly used.

Upholding the buyer’s claim, the High Court awarded damages for losses it suffered as a result of the cargo’s deterioration and to reflect the difference between the sound and unsound value of the gasoil.

The court decided that the buyer could not be held responsible for an ‘inherent vice’ in the cargo which was not tested for at the port of lading but which meant that it was not of satisfactory quality by the time it arrived at its destination.