South Caribbean Trading Ltd v Trafigura Beheer BV [2004] EWHC 2676 (Comm)

[2004] EWHC 2676 (Comm)Case No 2001 FOLIO 822
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 22/11/2004
Before
THE HONOURABLE MR JUSTICE COLMAN
Between
South Caribbean Trading LtdClaimantTrafigura Beheer BVDefendant
Mr Adam Fenton QC and Mr Robert Bright (instructed by Messrs Fishers) for ClaimantMr Andrew Baker (instructed by Messrs Waterson Hicks) for DefendantsHearing Hearing dates: 14-20 and 29 July 2004
JudgmentMr Justice Colman :Introduction
[1]This judgment is in respect of a number of preliminary issues going to liability arising out of a claim by South Caribbean Trading ("SCT") for breach by Trafigura Beheer NV ("Trafigura") of a contract dated 3 November 2000 under which SCT agreed to sell to Trafigura 484,000 US barrels plus or minus 5 per cent of fuel oil. The underlying issue is whether, as Trafigura contend, SCT was obliged to deliver to Trafigura only fuel oil derived from a quantity of 350,000 US barrels of wet fuel oil blendstock ("WFOBS") which also on 3 November 2000 SCT had agreed to sell to Trafigura and which on the same date SCT had agreed to re-purchase from Trafigura together with 134,000 US barrels of cutter. SCT maintain that they were entitled to treat their agreement to sell 484,000 barrels to Trafigura as an engagement insulated from their other agreements of 3 November 2000 to sell and re-purchase WFOBS and to purchase cutter from Trafigura.[2]When on or about 23 March 2001 SCT informed Trafigura that they intended to deliver fuel oil which they were going to buy in as distinct from fuel oil derived from WFOBS and cutter purchased from Trafigura, the latter refused to accept delivery and SCT claims to have accepted Trafigura's refusal as a repudiation of the contract on about 24 March 2001.[3]The preliminary issues are set out in an order of Moore-Bick J. dated 25 June 2004 and are as follows, references to Contract 5536 being to SCT's agreement to sell fuel oil to Trafigura and to Contract 3508-2 being to SCT's agreement to purchase WFOBS and cutter from Trafigura, to which I have referred. “(1) whether SCT was entitled and obliged to deliver under contract 5536 fuel oil created only from products delivered to SCT under contract 5508-2 or whether it was also entitled to deliver under contract 5536(i) fuel oil created from a mixture of products delivered under contract 5508-2 and other product (ii) fuel oil bought in and not created using the products delivered under contract 5508-2 at all (assuming in each case that the fuel oil otherwise conformed in quality and quantity to contract 5536); (2) whether the last date for delivery under contract 5536 was varied to become 30 June or 30 April 2001, or whether Trafigura is estopped from asserting that the last date for delivery was 31 March 2001 and/or from denying that the last date for delivery was 30 June or 30 April 2001; (3) whether the last date for delivery under contract 5536 was extended (and if so until when) under clause 7 or clause 13 of the contract; (4) (subject and without prejudice to any question whether SCT could have performed contract 5536, if relevant) whether(a) Trafigura wrongfully repudiated contract 5536 and if so(b) whether that repudiation was accepted by SCT.”[4]It is common ground that the answer to question (3) is No.[5]The sale and purchase agreement in question, numbered 5536 ("Contract 5536") provided as follows. The buyer was described as Trafigura Beheer BV (Amsterdam) with a Branch Office address at Lucerne, Switzerland. The seller was described as South Caribbean Trading Ltd with an address in The Bahamas. All the relevant negotiations relating to this contract were conducted from Trafigura's London office by Mr Mark Loveland, who has given evidence in the course of this trial, and by Mr Fernando Marquez in The Bahamas who owns and controls SCT who has also given evidence.[6]By clause 3 the product was described as Fuel Oil.[7]By clause 4 the quality was defined in the usual manner for such contracts by reference to guaranteed maxima or minima for named contents (such as sulphur and water) or characteristics (such as viscosity and flashpoint) together with a set of typical as distinct from guaranteed figures and the agreed test method to be used.[8]Clause 4 further provided:
"PRODUCT MUST NOT CONTAIN PETROCHEMICAL RESIDUES OR SPENT CHEMICALS INCUDING BUT NOT LIMITED TO CAUSTICS AND ACIDS. GOODS MUST BE OF MERCHANTABLE QUALITY, HOMOGENOUS AND FIT FOR INTENDED PURPOSE. QUALITY SHALL BE DETERMINED BY INDEPENDENT INSPECTORS DRAWING A FULLY REPRESENTATIVE COMPOSITE SAMPLE OF EACH TANK (TANKS 8026, 8036, AND/OR ANY OTHER DEEMED TANKS), RESULTS TO BE FINAL AND BINDING SAVE FRAUD AND MANIFEST ERROR. IN THE EVENT THAT BOTH PARTIES MUTUALLY AGREE TO ALTERNATIVE BLEND QUANTITIES AND QUALITIES AS DESCRIBED IN CONTRACT 5508-2 RESULTING IN DIFFERING QUALITY TO THOSE DESCRIBED ABOVE THEN CLAUSE 10 OF THIS CONTRACT TO APPLY."
[9]The reference to numbered tanks is a reference to tanks located at the tank farm of the Bahamas Oil Refining Company ("BORCO") at Freeport, Bahamas. BORCO is a subsidiary of Petroleos de Venezuela SA ("PDVSA").[10]Further material terms were as follows:
"5.QUANTITY: 484,000 US BARRELS PLUS OR MINUS 5(FIVE) PER CENT OPERATIONAL TOLERANCE NET OF WATER AND SEDIMENT ABOVE 0.50% AT 50 DEG FAHRENHEIT. QUANTITY IS TO BE NET OF ANY TANK HEELS AND/OR NON-PUMPABLE PRODUCT AS PER BORCO'S ASSESSMENT AND CONFIRMED BY INDEPENDENT INSPECTOR. 6. DELIVERY: BY IN TANK TRANSFER AT BORCO TERMINAL, FREEPORT, BAHAMAS TO BE DELIVERED NO LATER THAN MARCH 31, 2001. EXACT NARROWED DATES TO BE MUTUALLY AGREED. SELLER (SCT) IS TO CONFIRM TO BUYER (TRAFIGURA) BY LATEST 15 DECEMBER, 2000 THAT THE FUEL OIL IS CONFIRMED ON SCHEDULE TO BE DELIVERED BY NO LATER THAN 31 MARCH, 2001. 7. LIFTING/STORAGE MATERIAL DELIVERED VIA IN-TANK TRANSFER TO BE FULLY SEGREGATED AND FOR THE SOLE ACCOUNT OF BUYER. SELLER TO PAY FOR STORAGE. IF BUYER DOES NOT REMOVE OR TRANSFER THE PRODUCT PURCHASED UNDER THIS CONTRACT IN A TIMELY MANNER, OR OTHERWISE IMPEDES SELLER IN THE PERFORMANCE OF SELLER'S BLENDING PROGRAM, THEN SUCH DELAY WILL AUTOMATICALLY EXTEND THE TIME ALLOWED FOR THE SELLER TO COMPLETE ITS BLENDING, AND NO CLAIM WILL BE PERMITTED AGAINST THE PERFORMANCE BOND (CONTRACT 5508-1, CLAUSE 10) AS A RESULT OF SAID DELAYS. IF THE BORCO FACILITY EXPERIENCES EQUIPMENT PROBLEMS, INCLUDING BUT NOT LIMITED TO PUMPS, TANKS OR BOILERS, WHICH DELAY SELLER'S ABILITY TO BLEND, SUCH TIME DELAYS WILL ALSO AUTOMATICALLY EXTEND THE TIME ALLOWED FOR THE SELLER TO COMPLETE ITS BLENDING AND NO CLAIM WILL BE PERMITTED AGAINST THE PERFORMANCE BOND (CONTRACT 5508-2, CLAUSE 10) AS A RESULT OF SAID DELAYS. IN THE EVENT OF SUCH DELAY OR EQUIPMENT PROBLEMS, SELLER (SCT) TO PROVIDE FULL DOCUMENTARY EVIDENCE OF SUCH DELAY OR EQUIPMENT PROBLEMS."
[11]The price of the fuel oil was to be calculated under clause 8 in the following manner: 8. PRICE: THE PRICE IN US DOLLARS BY IN TANK TRANSFER AT BORCO SHALL BE DETERMINED BY THE RATIO OF FUEL OIL BLENDSTOCK TO CUTTER AS FOLLOWS: BBLS OF CUTTER X CUTTER PRICE + BBLS OF FUEL OIL BLENDSTOCK X USD 12.75/(CUTTER BBLS + FUEL OIL BLENDSTOCK BBLS) THE INVOICING QUANTITY SHALL BE BASED ON A BORCO ENTITLEMENT EXCHANGE OF THE NOMINATED TANKS NET OF TANK HEELS AND/OR NON-PUMPABLE PRODUCT WHICH IS TO BE CONSISTENT WITH THE GAUGING OF SAME BY AN INDEPENDENT INSPECTOR SAVE MANIFEST FRAUD AND ERROR. IN THE EVENT OF ANY VARIATION IN THE BLEND RATIOS AS STIPULATED IN CONTRACT 5508-2, ADJUSTMENTS ARE TO BE MADE WITH REFERENCE TO CLAUSE 10."[12]Payment was to be effected 30 days after the date of title transfer as evidenced in BORCO entitlement transfer certificates and was to be by letter of credit in accordance with clause 9 which provided: “BUYER (TRAFIGURA) IS TO OPEN LETTER OF CREDIT TO SELLER (SCT) IN FORMAT ACCEPTABLE TO SELLER (SCT) BY 8 NOVEMBER 2000 (WORDING TO FOLLOW). BUYERS (TRAFIGURA) LETTER OF CREDIT TO REMAIN INOPERATIVE UNTIL SELLER (SCT) HAS OPENED LETTER OF CREDIT AS PER CONTRACT NO. 5508-2. UPON ISSUANCE OF LETTER OF CREDIT ACCEPTABLE TO SELLER (TRAFIGURA) UNDER CONTRACT NO. 5508-2, THE LETTER OF CREDIT ISSUED IN ACCORDANCE WITH THIS CONTRACT SHALL BECOME AUTOMATICALLY OPERATIVE.[13]Amongst the documents which had to be presented by the sellers in order to obtain payment was a BORCO entitlement exchange certificate in the same format as had been agreed under a previous deal dated 26 May 1999 together with other documents including "COPY OF SELLERS WRITTEN INSTRUCTION TO BORCO EVIDENCING SELLER'S REQUEST TO TRANSFER TITLE OF THE FUEL OIL TO [ISSUING BANK] FOR ACCOUNT OF TRAFIGURA BEHEER BV AMSTERDAM"[14]The format specified in the contract consisted of an instruction by SCT to BORCO to issue to Trafigura a certificate that title to a specified quantity of fuel oil would be transferred for value on a specified date. There was an agreed format of BORCO's certificate that SCT had title to a specified quantity of fuel oil as found in a specified tank or one to be named or a substitute tank.[15]Clause 10 provided as follows:
“IN THE EVENT THAT BOTH PARTIES MUTUALLY AGREE TO AN ALTERNATIVE QUALITY AND QUANTITY OF FUEL OIL TO BE PROVIDED BY THE SELLER SUCH AGREEMENT IS TO TAKE THE FORM OF AN ADDENDUM TO THIS CONTRACT WHICH WILL DESCRIBE THE RELEVANT ADJUSTMENT IN PRICE, QUANTITY AND QUALITY.”
[16]The passing of title and risk was provided for in clause 11: TITLE TO AND RISK OF LOSS OF THE PRODUCT DELIVERED HEREUNDER SHALL PASS FROM SELLER TO BUYER UPON ISSUANCE OF BORCO ENTITLEMENT EXCHANGE CERTIFICATE DETAILING QUANTITY OF PRODUCT AND DATE OF TRANSFER OF RISK AND TITLE FROM SELLER TO BUYER.”[17]It was further provided as follows:
“14. CROSS DEFAULT IT IS A CONDITION OF THIS CONTRACT THAT IF EITHER PARTY IS IN BREACH OF THEIR CONTRACTUAL OBLIGATIONS (HEREINAFTER REFERRED TO AS ‘THE DEFAULTING PARTY’) UNDER CONTRACT NOS. 5508-1 AND 5508-2. THEN THE OTHER PARTY (HEREINAFTER REFERRED TO AS THE ‘NON-DEFAULTING PARTY’) SHALL HAVE THE RIGHT BUT NOT THE OBLIGATION TO CANCEL THIS CONTRACT, UPON WRITTEN NOTICE BY THE NON-DEFAULTING PARTY TO THE DEFAULTING PARTY. FURTHERMORE THE NON-DEFAULTING PARTY SHALL HAVE NO FURTHER OBLIGATIONS HEREUNDER EXCEPT FOR THE OBLIGATION TO PAY ANY AMOUNTS DUE OR WITH WHICH THE PASSAGE OF TIME WOULD BECOME DUE TO THE DEFAULTING PARTY. IN THE EVENT THAT FOR WHATEVER REASON SELLER FAILS IN HIS CONTRACTUAL OBLIGATIONS UNDER THIS CONTRACT AND OR CONTRACT NOS. 5508-1 AND 5508-2 SELLER IS OBLIGED TO PROVIDE BUYER WITH THE OPTION TO HAVE ASSIGNED TO THEM SELLER’S PROCESSING AGREEMENT WITH BORCO INCLUDING ALL RELEVANT AGREEMENTS AND CONTRACTS, INCLUDING BUT NOT LIMITED TO STORAGE AGREEMENTS WITH BORCO. BUYER HAS THE RIGHT BUT NOT THE OBLIGATION TO EXERCISE SAID OPTION. IN THE EVENT THAT BUYER DOES EXERCISE SAID OPTION, FOR THE AVOIDANCE OF DOUBT SUCH ASSIGNMENT OF CONTRACT(S) AND ALL TERMS THEREIN WILL BE EXACTLY THE SAME IN ALL REGARDS AS THOSE THAT SELLER HAS CURRENTLY WITH BORCO. SAID AGREEMENT TO ONLY APPLY FOR ANY BALANCE PRODUCT LEFT UNDER CONTRACT 5508-1 AND/OR OFF-SPEC PRODUCT UNDER THIS CONTRACT. FOR THE AVOIDANCE OF DOUBT THIS DOES NOT PRECLUDE BUYER FROM CLAIMING UNDER THE PERFORMANCE BOND AS DETAILED IN CLAUSE 10 OF CONTRACT 5508-1”
[18]The second of the preliminary issues arises out of the submission by SCT that the date for delivery under Contract 5536 was agreed to be varied from 31 March 2001 to 30 June 2001 or alternatively 30 April 2001. It is said that in the course of two telephone conversations between Mr Marquez and Mr Loveland in March 2001 they agreed that the date for delivery should be put back to 30 June unconditionally. The case advanced by Trafigura is that they consistently indicated that they would be agreeable to an extension of time on condition that the method of calculating the price payable by Trafigura would not be by reference to the formula set out in clause 8 of Contract 5536 but by reference to the market price of fuel oil five days after the date of the bill of lading evidencing shipment. The effect of this condition would be that the price which would be payable to SCT would no longer be fixed by reference to the cost of WFOBS and cutter and which by early March 2001 could be calculated as US$20.91 per barrel but would thereafter depend instead on the market price of the fuel oil finished product at five days after the time of shipment.[19]It is submitted by SCT that, in the alternative, if the contract was not varied, Trafigura is estopped from asserting any delivery date earlier than 30 April 2001 by its response to certain of SCT's messages from 18 December 2000 and its subsequent conduct. Trafigura thereby represented that they were treating the delivery date as postponed for at least a month after 31 March 2001. SCT, having acted in reliance on those representatives, Trafigura is not entitled to go back to rely on the original delivery date of 31 March.[20]As regards Issue (4), this point arises independently of whether SCT was entitled to deliver fuel oil not derived exclusively from WFOBS and cutter delivered under Contract 5508-1 and independently of whether there was a variation of the date of delivery or there is a material estoppel. That issue depends crucially on the communications between the parties between 19 March and 24 March 2001. It will be necessary to consider these communications later in this judgment in some detail.

Issue (1) - Was SCT entitled to deliver bought-in Fuel Oil under Contract 5536?

[21]It is first necessary to investigate the background to the rather unusual series of transactions entered into on 3 November 2000. This is largely non-controversial but is relevant to resolution of the key issue as to how Contract 5535 could be performed.[22]Mr Fernando Marquez set up SCT in 1996. He is a qualified petroleum engineer. He has throughout been its President and only operating officer. He had previously worked for PDVSA and its subsidiaries including BORCO. Mr Marquez developed a technique for extracting most of the water from WFOBS. The latter is a substance which consists largely of fuel oil (about 70 per cent) and water (about 30 per cent). Because of the high water content WFOBS cannot economically be blended with other products by conventional means to produce marketable fuel oil. In consequence it can be acquired at a much lower price than on-spec fuel oil. The de-hydration process developed by Mr Marquez involved heating the off-spec fuel oil in one tank and then transferring it to a settling tank while injecting it in the course of transfer with a demulsifier or cutter. This would be straight-run fuel oil. The effect would be that the water separated out in the settling tank leaving the blended WFOBS marketable as fuel oil at a price appropriate for on-spec fuel oil.[23]SCT worked closely with an American petroleum products trading company called Eastern of New Jersey Inc ("Eastern") whose President was Joseph di Mauro, a witness called by SCT in these proceedings. Mr Marquez had a good business relationship with Mr di Mauro. In early 1997 in order to provide itself with working capital SCT entered into an agreement with Eastern and Eastern's bankers, UBS, under which SCT was permitted to utilise credit from UBS out of Eastern's credit line. That enabled SCT to procure the opening of letters of credit by UBS against Eastern's credit line but in SCT's name. SCT would assign to UBS any amount receivable from its buyer's letter of credit to offset the credit from UBS.[24]Mr Marquez had strong business links with Bitumenes Orinoco, SA ("Bitor") which was also a subsidiary of PDVSA. In 1997 and thereafter that company had for sale a substantial quantity of WFOBS. Eastern was interested in acquiring dehydrated WFOBS from SCT and in 1997-1998 SCT therefore took tank storage facilities at BORCO to enable it to carry out dehydration and purchased substantial quantities of WFOBS from Bitor. By mid-1998 SCT was marketing its first dehydrated WFOBS. In July of that year it sold a small quantity to Trafigura. The blending process at BORCO had taken about six months.[25]In the course of 1998 SCT sold a more substantial quantity (350,000 barrels) of dehydrated WFOBS blended with straight-run fuel oil to Trafigura. That company was a very substantial international trader in petroleum products, whereas SCT was in substance a one-man operation based on the technical expertise of Mr Marquez and the credit line derived from Eastern.[26]Following that transaction Trafigura became interested in negotiating for a significantly larger purchase. Negotiations took place in the first half of 1999. Mr Marquez made it clear to Trafigura that SCT had insufficient resources to carry the cost of the WFOBS and blending cutter and the storage and processing expenses and needed to rely on the continued financial support of Eastern. In the event, three contracts were negotiated, all dated 26 May 1999. Because they were expressly subject to New York law they are conveniently referred to as "the New York contracts". They were numbered 3055-1, 3055-2 and 3053b. Under contract 3055-1 SCT sold to Trafigura two lots totalling 650,000 barrels of WFOBS in tank at BORCO, the second lot to be delivered by 15 July 1999. Payment of the price was to be made to UBS, Geneva. Under contract 3055-2 SCT purchased from Trafigura three products - low sulphur fuel oil, cutter stock and WFOBS, the latter in the amount of approximately 650,000 barrels. It contained a cross-default clause (clause 12) in the following terms:
“IT IS A CONDITION OF THIS CONTRACT THAT IF EITHER PARTY IS IN BREACH OF THEIR CONTRACTUAL OBLIGATIONS (HEREINAFTER REFERRED TO AS ‘THE DEFAULTING PARTY’) UNDER CONTRACT NOS. 3053B AND 3055-2 THEN THE OTHER PARTY (HEREINAFTER REFERRED TO AS THE ‘NON-DEFAULTING PARTY’) SHALL HAVE THE RIGHT BUT NOT THE OBLIGATION TO CANCEL THIS CONTRACT, UPON WRITTEN NOTICE BY THE NON-DEFAULTING PARTY TO THE DEFAULTING PARTY. FURTHERMORE THE NON-DEFAULTIN G PARTY SHALL HAVE NO FURTHER OBLIGATIONS HEREUNDER EXCEPT FOR THE OBLIGATION TO PAY ANY AMOUNTS DUE OR WITH WHICH THE PASSAGE OF TIME WOULD BECOME DUE TO THE DEFAULTING PARTY.”
[27]Under contract 3053b SCT sold to Trafigura approximately 1,200,000 barrels of fuel oil. It is to be observed that this figure is roughly equal to the total number of barrels of WFOBS, low sulphur fuel oil and cutter stock sold to SCT under contract 3055-2. Like that contract, this contract also incorporated a cross default clause. The wording of that clause was the same as for contract 5536 except that the other contracts referred to were 3055-1 and 3055-2.[28]The New York contracts were performed in the course of September 1999 to July 2000, except for the final batch which, due to technical difficulties encountered by SCT in the blending process, to which I refer later in this judgment, was not delivered until 14 March 2001. In view of the fact that all the batches except the first one were delivered very late, the final contractual delivery date being 31 October 1999, the parties agreed on substantial extensions to the validity of the applicable letters of credit and it was not suggested that there should be any change to the price of the finished product to be delivered under Contract 3053b. Further, it is to be observed that, although under clause 3055-1 it was expressly provided that the WFOBS to be delivered to Trafigura would be derived from the contents of BORCO Tanks 8005 and 8013, the finished product which had been delivered under contract 3053b by November 2000, as Trafigura knew, had not been derived from any of the contents of tank 8013. Instead, in December 1999 and April 2000 SCT had bought in additional WFOBS from Bitor. Accordingly, only part of the WFOBS was derived from the WFOBS specifically referred to in contracts 3055-1 and 3055-2.[29]The three contract structure of the overall transaction would appear at first sight to be distinctly peculiar. In particular, there is no obvious reason why SCT could not simply have purchased WFOBS from Bitor and, in another contract, purchased cutter from Trafigura. It could then simply have sold the finished product derived from its blending operation to Trafigura under a third contract.[30]This issue was raised by Mr Loveland at the end of November 2000 in relation to the negotiation of the structure of the 3 November 2000 contracts, the subject of this trial. Mr Marquez declined to agree to that simpler structure and insisted on replicating the structure of the New York contracts even though that involved the apparently pointless first contract in the series (3055-1 and, on 3 November 2000, 5508-1) under which SCT sold WFOBS to Trafigura and then by the second contracts (3055-2 and 5508-2) an agreement to repurchase an equivalent quantity of WFOBS from Trafigura together with a quantity of cutter. Trafigura also insisted on SCT putting up a letter of credit to secure their performance of the second contract including purchases of WFOBS and that had to be paid for by SCT.[31]In the course of his cross-examination Mr Marquez was asked to explain his insistence on the three contract structure. He said that was the way it had been done under the New York contracts and it was that way that the bank wanted it done and he did not ask them why. This explanation is not entirely satisfactory. Nevertheless, in view of Mr Marquez's evidence that the cost to SCT of a letter of credit was US$20,000 to $25,000, it is right to conclude that UBS and not SCT originated the idea of three contracts and that UBS was at least partly motivated by a desire to maximise its charges.[32]Perhaps the more important point is that in the exchange of emails in November 2000 between Mr Loveland and Mr Marquez in which the issue of the three contract structure was raised it is Trafigura who is trying to get SCT to simplify matters by leaving out the sale and resale of WFOBS. This position was clearly inconsistent with any perception on the part of Trafigura that the transaction was to have the commercial purpose of ensuring that the finished product was derived exclusively from WFOBS sold by SCT to Trafigura and purchased back from it. In view of the manner in which SCT had performed the New York contracts by buying in substitute WFOBS from Bitor, referred to in paragraph (28) above, that perception of the transaction by Trafigura is hardly surprising.[33]The submissions on behalf of SCT can be summarised as follows.a. Although, the November 2000 transaction was entered into on the mutual assumption that the finished product delivered under 5536 would be derived from the same WFOBS as had been sold to Trafigura under Contract 5508-1 and purchased from them under 5508-2, there was no term of any of the contracts, and particularly of Contract 5536, which provided for this by imposing on SCT an obligation to this effect. There were three distinct and separate contracts all entered into on 3 November 2000 and until that time there was no binding contract. At no stage was there a single contract divided into three inseparable parts as suggested by Trafigura.b. The Cross Default clause expressly provided that if either party was in breach of its contractual obligations under contracts 5508-1 or 5508-2 the other non-defaulting party had "the right but not the obligation to cancel" Contract 5536. Accordingly, even if Trafigura defaulted by, for example, failing to effect delivery of either or both of the whole or part of WFOBS or cutter under 5508-2, SCT would in effect have an option whether to perform 5536 and, that contract would not automatically terminate. In that case, if SCT had not exercised its option to cancel 5536, it could perform that contract by producing finished product derived at least in part from WFOBS or cutter acquired otherwise than under 5508-2, provided that the finished product met the specifications as to quality set out in clause 4.c. The argument on behalf of Trafigura that the Cross Default clause could not apply if there were non-delivery under 5508-2 because of the impossibility of calculating the price of the finished product was mistaken. In that event the equation in clause 8 would be operated by applying to the input components the prices of US$12.75 for the WFOBS and the cutter price defined in clause 7 of 5508-2 - "the December Merc heating oil settlement on deemed dates to be agreed less a discount of US cents 5 per gallon”. If the Cross Default clause did not apply to breaches by failure to deliver it would have identified the scope of its application, but it did not do so. Further, the absence of any provision dealing with the automatic termination of Contract 5536 in the event of non-delivery under 5508-2 strongly pointed to the entitlement of the non-defaulting party to continue with the performance of 5536 if it chose to do so.d. Clause 6 and clause 7 of 5536, when read together, did not provide that the finished product could only be derived from blending the WFOBS and cutter delivered under 5508-2.e. Under clause 9 the letter of credit, which was the means of payment by Trafigura under 5536, was to be opened by 8 November 2000. Under 5508-2 SCT was to open its letter of credit by the same date. The date for delivery under 5508-2 was two days later – 10 November – and the date for delivery under 5536 was 31 March 2001. Thus the irrevocable letter of credit for payment under 5536 would already be opened before the date for delivery under 5508-2, yet there was no provision for what was to happen to that letter of credit on the assumption that 5536 automatically fell away if Trafigura failed to deliver under 5508-2.f. With regard to the final sentence of clause 4 and clause 10 dealing with what was to happen if the parties agreed to blend quantities and qualities which differ from those described in Contract 5508-2, namely an addendum to the contract describing the relevant adjustments, although the assumption underlying this and other provisions of the contract is that the WFOBS and cutter purchased by SCT would be the only components of the finished product delivered under 5536, this was not a contractually agreed constraint.g. These provisions simply meant that if there were any agreed quantitive or qualitive variance from that equivalent to the provisions of Contract 5508-2, that agreement would be formalised in an addendum, a provision entirely consistent with clause 16 – the entire agreement term.[34]The submissions of Mr Baker on behalf of Trafigura can be summarised as follows:a. As background circumstances relevant to construction of the agreements the following features were material. i. The trading relationship between SCT and Trafigura was much closer than that of arms length seller and purchaser as shown by Trafigura’s close interest in buying into the blending techniques of SCT as a “partner at ground level” and, as Mr Marquez put it in cross-examination, SCT was “happy to deal with Trafigura as its blending partner”. ii. The New York contracts were in substance a single transaction for the purchase and processing of WFOBS, but they were documented as three separate but interlinked contracts under which WFOBS was to be blended by SCT with cutter purchased from Trafigura and the finished product sold to Trafigura. iii. Under the New York contract the finished product delivered to Trafigura was to be derived exclusively from the WFOBS “sold” by SCT to Trafigura and then resold by Trafigura to SCT together with the cutter “purchased” by SCT from Trafigura. The substitution of different WFOBS by reason of the technical blending problems encountered in the course of 2000 with the content of tanks 8005 and 8013 at the BORCO Terminal (see paragraph (28) above) was effected with Trafigura’s consent to the reversal of the transfer of the WFOBS back to Trafigura. iv. Performance of the New York contracts up to November 2000 was by means of five separate batches, one following soon after the other. v. That the relationship between SCT and Trafigura was in essence a blending partnership was demonstrated by Trafigura’s willingness to accept the third and fourth batches, under contract 3053b although known to be off-spec by 3 November 2000 when the transaction in this case was entered into. Trafigura had never suggested that SCT should keep it and buy in on-spec fuel oil in order to perform its contract. vi. The substance of the 3 November 2000 transaction as agreed between Mr Marquez and Mr Long of Trafigura in October 2000 was “as per” the New York transaction (as Mr Marquez described it to UBS) save that delivery was to be in one batch and not in five consecutive batches. It was as if a sixth batch had been agreed under the New York transaction. The only other substantial change was that SCT’s processing fee was built into the WFOBS blending price rather than being paid separately. vii. The conduct of SCT and Trafigura in relation to batch 5 under the New York contract after 3 November 2000 suggested that the fuel oil to be delivered to Trafigura under 3053b could not be bought in and had to be the product of blending the WFOBS transferred under 3055-1 and 3055-2 with the cutter purchased under 3055-2 unless Trafigura consented to the substitution of other components. I interpose that this submission deploys evidence of the parties’ understanding of the New York contract at a time when they had already entered into the 3 November 2000 contracts. As such that is not evidence of the factual matrix of the latter but of their subsequent understanding of an analogous transaction. It is, therefore, irrelevant and inadmissible.b. As to the express terms of Contract 5536, the existing business relationship between the parties at the time when the contract was negotiated would lead to a mutual understanding that by “Fuel Oil” in clause 3 they intended to refer to end product the result of SCT’s blend operations.c. The last sentence of clause 4 of 5536 showed that the fuel oil was to be derived from blending only the components supplied under Contract 5508-2. If there were an agreed change in the blend quantities or qualities as described in 5508-2 and that resulted in a different quality of end product to that specified in clause 4, then by application of clause 10 there was to be an addendum to Contract 5536, as if the parties had agreed to an alternative quality and quantity, which would describe the adjustment in price, quantity and quality.d. The provision of “typical” quality characteristics in addition to the guaranteed quality characteristics in clause 4 was a clear indication that the source of the fuel oil was to be the blending of the WFOBS and the cutter derived from Contract 5508-2. The insertion of the typicals meant that the contract was limited as to source/origin and the only applicable source/origin here was Contract 5508-2. This point was linked to a submission by Trafigura that typicals could affect the price of petroleum products sold subject to quantity and quality characteristics and was sought to be supported by a passage in the witness statement of Mark Loveland, paragraph 36, in which he stated that, when Mr Marquez indicated in March 2001 that SCT would deliver low metric 380 cst fuel oil and not product resulting from blending WFOBS, this was not acceptable to Trafigura because the blended product would have a higher API gravity and low sulphur than normal USGL 3 per cent and as such might have a higher market value depending on the market.e. I interpose that it is as I understand it, common ground that it would not be a breach of contract for a seller to deliver fuel which complied with the guaranteed quality characteristics but varied from the typical characteristics. That is clearly correct as a matter of construction. If that is so, the fact that the product having the typical AST gravity and sulphur characteristics set out in clause 4 might be potentially more valuable to Trafigura than fuel oil which complied with the guaranteed characteristics but had lower gravity and higher sulphur content than the clause 4 typicals does not contribute anything to resolving the issue of construction under Issue 1. It is merely consistent with the mutual assumption, which SCT accept, that what was to be delivered under 5536 would be derived from the components delivered under 5508-2, but it does not support the proposition that this was mandatory. Had it been logically material to take into account evidence that the market price of fuel oil could be affected by typicals attributable to a particular origin, I should have declined to permit such evidence to be adduced. It was objected to by SCT on the grounds that this was essentially technical market evidence of an expert nature. The point was never pleaded and did not emerge until it was touched upon in Mr Loveland’s witness statement exchanged a few weeks before the trial. There had been no order for expert evidence and when it was put in cross-examination to Mr di Mauro, a very experienced oil trader, he did not accept it, even if Mr Marquez did. In my judgment this area of evidence cannot fairly be introduced into the trial at such a late stage. If it were to be justly and fairly dealt with it should have been pleaded or otherwise notified to SCT early enough for there to be proper consideration whether there should be an application to call expert evidence.f. Clause 4 in contracts 5508-1 and 5508-2 showed that the WFOBS component to be delivered under the latter contract was to be from the WFOBS acquired by SCT in tanks 8013 and 8005 at BORCO and supplied under 5508-1. The guaranteed quality characteristics as to sulphur and water under 5508-2 matched those under 5508-1.g. Under clause 5 of Contract 5536 the quantity of finished product to be delivered was 484,000 barrels plus or minus 5% operational tolerance. This total represented the aggregate of the quantities of WFOBS and cutter to be supplied under Contract 5508-2. That was a clear indication that the only components to be incorporated into the finished product were those supplied under Contract 5508-2.h. Under the last sentence of clause 6 SCT was to confirm to Trafigura by the latest, 15 December 2000 “that the fuel oil is confirmed on schedule to be delivered by no later than 31 March 2001”. It is submitted that the only possible purpose of this provision was to indicate the progress of the blending operations on the component materials delivered under Contract 5508-2; particularly against the background of the delays experienced in blending the components delivered under the New York contracts.i. It was further submitted that clause 7 clearly showed that the performance of Contract 5536 was inextricably linked to the blending operations of SCT, the substance being that if Trafigura’s failure to remove or transfer the finished product or other conduct were to impede the blending operation, time for completion of blending would be automatically extended and SCT’s performance bond could not be drawn down due to such delays and similarly with BORCO equipment problems. This is said to demonstrate not only that it was jointly anticipated that the finished product would be derived from blending the Contract 5508-2 components but that it could only be so derived. The “time allowed for the seller to complete its blending” could mean only that time of delivery was related to blending time.j. With regard to clause 8 the price under Contract 5536 was calculated by reference to the quantities and prices prescribed by Contract 5508-2. Thus, if there were a failure of Trafigura to deliver to SCT the whole or part of the Contract 5508-2 components, there would be no provision of a pricing mechanism for Contract 5536. The reference to clause 10 did not provide an alternative method of calculation unless the parties agreed on one.k. It is also argued that clause 9 shows that there had to be a contractual basis of a fixed price for the structure of the letters of credit to work. If there were no price established under clause 8 the letters of credit could not work.l. Because a total default by Trafigura in delivery of components under Contract 5508-2 would result in there being no automatic price calculation method for fuel oil delivered by SCT under 5536 and therefore a contract inoperable if the parties did not refix the price, the effect of clause 14 must be to refer to breaches other than non-delivery under Contract 5508-2. It was argued that the main purpose of that clause was to protect SCT from liability if, for example, Trafigura delivered off-spec cutter under 5508-2. In that event, SCT would incur no liability if it declined to make delivery under 5536 – a clear indication that it would otherwise be obliged to use the components delivered under 5508-2 and could not deliver fuel oil derived from other components. If there were no such underlying blending obligation, such protection would be unnecessary.m. Reliance was also placed on clause 10 of Contract 5508-1. This provided as follows: “SELLER’S BANK TO OPEN A STANDBY L/C (WORDING TO FOLLOW) BY 8 NOVEMBER 2000 TO COVER USD 1.50 PER BARREL OF INVOICED QUANTITY, STANDBY L/C TO BE REDUCED BY THE PURCHASED QUANTITY OF FUEL OIL BLEND STOCK BOUGHT BY BUYER UNDER CONTRACT NO. 5508-2 ON A BARREL FOR BARREL BASIS. FOR THE AVOIDANCE OF DOUBT THIS QUANTITY IS NOT THE QUANTITY OF THE FINALISED BLEND BUT RATHER THE COMPONENT OF THE OIL PURCHASED UNDER THIS CONTRACT USED IN THE BLEND, IE THE FUEL OIL BLENDSTOCK. IN THE EVENT THAT SOUTH CARIBBEAN TRADING LTD (SELLER) DOES NOT PERFORM HIS CONTRACTUAL OBLIGATIONS UNDER CONTRACT NO. 5508-2, BUYER HAS THE RIGHT TO CLAIM THE REMAINING AMOUNT OF FUNDS UNDER THE STANDBY L/C IN THE EVENT THAT BUYER CLAIMS UNDER THIS PERFORMANCE BOND, BUYER HAS THE RIGHT TO CANCEL ALL OUTSTANDING L/C’S UNDER THIS CONTRACT AND 5536.”n. It is said that the second paragraph is inexplicable except on the basis that that which is being purchased under that contract will be repurchased under Contract 5508-2 and then used in the blending operation.

Issue 1 – Discussion

[35]The fundamental issue is whether the fuel oil to be delivered under Contract 5536 was not only mutually assumed to be derived exclusively from the blending by SCT of the components delivered to it under Contract 5508-2 but had as a matter of obligation to be derived from such components. In investigating this point it is important not to confuse the parties’ mutual assumption as to the mode of performance of 5536 with their contractual obligations.[36]This distinction can be exemplified by the following. A expresses to B his wish to purchase from B widgets manufactured by B from certain metals and B informs A that he cannot acquire such metals on the market. A indicates his ability to acquire such metals and his willingness to sell them to B. They then enter into two contracts.(1) A sells to B quantities of metal calculated to be sufficient for manufacture of a given quantity of widgets and(2) B agrees to sell to A that particular quantity of widgets. Clearly both parties assume when they enter into the contracts that what is delivered under (2) will exclusively comprise the components purchased under (1). But if the question arises whether B is entitled to deliver widgets which otherwise comply with the contract specifications but do not incorporate components delivered under (1), the determinant is whether what was mutually assumed to be the mode of performance by B is reflected in a term of (2) whereby B is under a duty to perform only in that way.[37]Obviously, the starting point is to ask whether contract (2) expressly limits B’s mode of performance, for example, by a term which describes the widgets as comprising the components under (1) to the effect that their incorporation is part of the description of the widgets. In the absence of any such provision the existence of an obligation to that effect could only arise by implication. The conceptual basis for any such implication could consist either of that derived from the other express terms or that derived from business efficacy under the “officious bystander” approach in The Moorcock (1889) 4 PD 64.[38]In the present case there is no express provision defining the product to be sold by reference to the origin of its components. Clause 3 defines the product simply as “fuel oil”. Clause 4 identifies the guaranteed quality specifications. By the penultimate paragraph it also identifies the BORCO tank numbers where the product is to be sampled at delivery.[39]There are, however, numerous references in Contract 5536 which are consistent with the finished product being the result of the blending of the components delivered under Contract 5508-2, albeit some more oblique than others. Thus, there is the last sentence of clause 4, the third sentence of clause 6, the second paragraph of clause 7 (Trafigura impeding the blending programme), clause 8 (as to the calculation of the price of the finished product), clause 16, second paragraph (Trafigura to have an option to have SCT’s processing agreement with BORCO assigned to them in the event of SCT’s breach of any of contracts 5508-1, 5508-2 or 5536).[40]The relevant question in relation to each of those terms is, however, not whether it is merely consistent with the common assumption as to mode of performance, but whether it is inconsistent with any other mode of performance, specifically with the delivery by SCT of fuel oil which is not the product of the blending by SCT of the components delivered under Contract 5508-2. If that inconsistency arose it would be necessary to imply a term, as a matter of construction of the contract and in order to make its machinery work, that the finished product to be delivered could only be the product of blending the components delivered by Trafigura to SCT under Contract 5508-2.[41]In my judgment, there is only one provision which could be said to be not only consistent with the delivery of the product of SCT’s blending operation but structurally inconsistent with the delivery of extraneous fuel oil and that in clause 8, the term which deals with the calculation of the price. I repeat it here as a matter of convenience. 8. “PRICE: THE PRICE IN US DOLLARS BY IN TANK TRANSFER AT BORCO SHALL BE DETERMINED BY THE RATIO OF FUEL OIL BLENDSTOCK TO CUTTER AS FOLLOWS: BBLS OF CUTTER x CUTTER PRICE + BBLS OF FUEL OIL BLENDSTOCK x USD 12.75/(CUTTER BBLS + UEL OIL BLENDSTOCK BBLS) THE INVOICING QUANTITY SHALL BE BASED ON A BORCO ENTITLEMENT EXCHANGE OF THE NOMINATED TANKS NET OF TANK HEELS AND/OR NON-PUMPABLE PRODUCT WHICH IS TO BE CONSISTENT WITH THE GAUGING OF SAME BY AN INDEPENDENT INSPECTOR SAVE MANIFEST FRAUD AND ERROR. IN THE EVENT OF ANY VARIATION IN THE BLEND RATIOS AS STIPULATED IN CONTRACT 5508-2, ADJUSTMENTS ARE TO BE MADE WITH REFERENCE TO CLAUSE 10."[42]It will be observed that the formula for price calculation set out in the second paragraph involves the use of three unknown elements;(i) the precise quantity of cutter,(ii) the precise quantity of WFOBS and(iii) the precise price of the cutter. The only fixed element is the price of WFOBS (USD 12.75 per bbl). In order to arrive at the values of those three unknowns, it is necessary to look at Contract 5508-2, for there can be no doubt, in my judgment, that the references in clause 8 to barrels of cutter and cutter price as well as to barrels of fuel oil blendstock are references to the quantities actually delivered under Contract 5508-2. In this connection clauses 5 to 7 of that contract are relevant:
“5. QUANTITY: GRADE (A) 134,000 BBLS PLUS OR MINUS (FIVE) PERCENT OPERATIONAL TOLERANCE GRADE (B) 350,000 BBLS NET OF WATER UP TO 0.5% AT 60 DEG FAHRENHEIT PLUS OR MINUS 5 (FIVE) PER CENT OPERATIONAL TOLERANCE 6. DELIVERY: EXTANK AT BORCO TERMINAL, FREEPORT BAHAMAS AS FOLLOWS: GRADE (A) IN TWO LOTS, THE FIRST LOT OF APPROX 110,000 BBLS BY 10 NOVEMBER 2000 AND THE BALANCE OF APPROX 24,000 BBLS WHEN THE CUTTER TANK (F-7) ULLAGE PERMITS RESUPPLY AS THE FIRST 110,000 BBLS IS DRAWN DOWN FOR PROCESSING GRADE (B) IN THE ONE LOT BY 10 NOVEMBER 2000 EXACT NARROWED DATES OF DELIVERIES TO BE MUTUALLY AGREED BETWEEN PARTIES. IN THE EVENT THAT BOTH PARTIES MUTUALLY AGREE TO A DIFFERENT RATIO OF PRODUCTS TO BE DELIVERED IN ANY ONE BATCH SUCH AGREEMENT WILL TAKE THE FORM OF AN ADDENDUM TO THIS CONTRACT. 7. PRICE THE PRICE IN US DOLLARS EX TANK BORCO SHALL BE AS FOLLOWS GRADE (A) TO BE THE DECEMBER MERC HEATING OIL SETTLEMENT ON DEEMED DATES TO BE AGREED LESS A DISCOUNT OF US CENTS 5 PER GALLON GRADE (B) 12.75 US DOLLARS PER US BARREL FIXED AND FLAT NET OF WATER UP TO 0.5% AT 60 DEG FAHRENHEIT.”
GRADE (A) 134,000 BBLS PLUS OR MINUS (FIVE) PERCENT OPERATIONAL TOLERANCE EXTANK AT BORCO TERMINAL, FREEPORT BAHAMAS AS FOLLOWS: GRADE (B) IN THE ONE LOT BY 10 NOVEMBER 2000

THE PRICE IN US DOLLARS EX TANK BORCO SHALL BE AS FOLLOWS

[43]The total basic quantity of cutter and WFOBS to be delivered (484,000 bbls) is equivalent to the total quantity of finished product to be delivered under Contract 5536. Further, the amount of cutter (called “Grade A”) to be delivered under clause 5 was variable through plus or minus 5 per cent “operational tolerance”. The latter phrase is clearly intended to account for a greater or lesser requirement of cutter in order to achieve a blended fuel oil of the contractual specifications. So the quantity of cutter to be incorporated into the equation in clause 8 of Contract 5536 could vary from about 13,037 bbls to 13,373 bbls. The price of the totality of the cutter which was to be delivered to SCT at the times set out in clause 6, would in turn, depend on the market price on dates to be agreed under clause 7. However, the second lot of cutter was to be delivered when the ullage in the cutter tank (F7) at BORCO left enough ullage space for 24,000 bbls as the cutter delivered as the first lot was “drawn down for processing”. It is, in my judgment, quite obvious that the “processing” there referred to is the blending operation destined to produce the finished product to be priced by application of clause 8 under Contract 5536.[44]The quantity of WFOBS to be delivered under Contract 5508-2 was also subject to a 5 per cent "operational tolerance". This again was clearly designed to enable SCT to take delivery of the precise quantity needed to produce a finished product of the contractual specifications. In other words, the ratio referred to is the ratio deployed in a real blending operation producing an end product with the contract specifications.[45]Returning to the wording of clause 8, I have no doubt, having regard to the method of price calculation which I have described, and in the light of the express terms relevant to that calculation, that the words "the ratio of fuel oil blendstock to cutter" can only refer to the blendstock and cutter which are the components of that which was to be priced, namely the fuel oil actually to be delivered under that contract.[46]The last sentence of clause 8 supports this construction in as much as it is clearly inserted to deal with the situation that might arise if it became necessary to depart from the blend ratio assumptions underlying Contract 5508-2 in order to create a blend having the contract specifications. In that event, the quantity, quality and price might have to be adjusted under Contract 5536. This reflected the somewhat uncertain results of the blending process to be used by SCT in order to produce the product to be delivered.[47]The argument advanced by Mr Fenton QC on behalf of SCT that if bought-in fuel oil is delivered under Contract 5536 it can be priced by reference to the cutter and WFOBS quantities and price delivered by Trafigura under Contract 5508-2 is, in my judgment, misconceived for it involves the insulation of the delivered fuel oil from the product of the blending operation involving the quantities of cutter and blendstock forming the elements of the price of what is delivered. This is inconsistent with the meaning of clause 8 because it would price that which was delivered by reference to quantities of cutter and blendstock which had not been its components. Further, unless there had already been deliveries of cutter and blendstock in quantities finally determined by the requirements of SCT's blending operations, the price of bought-in fuel oil could not be calculated. The use of cutter prices, including that of the second lot derived from the market price of heating oil, as at dates which could not be determined unless it had been delivered in accordance with the ullage in the cutter tank as and when available in the course of blending strongly supports this construction. If there never had been a complete delivery of cutter, there would be no way in which the pricing formula could be used. It follows that the clause 8 pricing formula could only be used in limited circumstances in the manner put forward by SCT. The fact that outside those limits the formula could not be applied to arrive at a price strongly indicates that the construction of clause 8 at which I have arrived is correct.[48]Finally, it is necessary to refer to clause 14 - the cross default clause upon which Mr Fenton, on behalf of SCT, has so strongly relied. Reduced to its essentials, the argument is that if, in effect, SCT has the option of performing Contract 5536 even though Trafigura is in breach of Contract 5508-2, that has the effect that, if Trafigura fails to deliver the whole or part of the cutter or WFOBS to be delivered under that contract, it is open to SCT to perform 5536 by delivering bought in fuel oil which is not the product of components supplied under 5508-2.[49]This argument, in my judgment, gives too wide a scope to the wording of the clause. It could be correct only if the scope of that width were in all respects consistent with other express terms of the contract. For example, if it were to be open to SCT to deliver bought in fuel oil in the event of a breach of Contract 5508-2 by failure of Trafigura to deliver the whole or part of the required cutter or blendstock, then the pricing mechanism under clause 8 would have to cater for that eventuality. The breaches of contracts 5508-1 and 5508-2 referred to in clause 14 must be such that if one party exercises its option to perform Contract 5536, mutual performance of that contract in all necessary respects will still be possible in spite of the other party's breach of the other contracts.[50]I therefore conclude that non-delivery of the whole or part of the cutter and WFOBS deliverable under Contract 5508-2 does not fall within the scope of those breaches of Contract 5508-2 covered by clause 14. Accordingly, this clause does not support SCT's construction of Contract 5536.[51]The fact that the finished product delivered under Contract 3053b was derived in large part from components which SCT had bought in and not from components delivered by Trafigura under Contract 3055-2 does not support SCT's submissions. It is clear from the evidence that the substitution of bought-in components was agreed to by Trafigura. That agreement would necessarily result in an implied variation of Contract 3053b so as to permit the price of the finished product to be calculated by a method which differed from that prescribed by the price clause. Therefore, what happened does not demonstrate that 3053b could accommodate performance by the delivery of bought-in fuel oil derived neither from the blending by SCT of components supplied under contract 3055-2 nor from any blending operations by SCT at all.[52]I do not find that the absence of any express provision in the contracts dealing with what was to happen to the letter of credit to be opened by Trafigura under Contract 5536 if Trafigura failed to deliver the components or some of them under Contract 5508-2 provides an indication that Contract 5536 might yet be performed by delivery of bought-in fuel oil. If the construction of clause 8 which I have indicated is correct, it would not be open to SCT to present to the bank certificates covering the transfer to Trafigura of fuel bought-in and not the result of blending. The omission of the parties to agree that the documents to be presented under the letter of credit should include a certification that the product was the result of blending the components supplied by Trafigura is entirely understandable given the parties’ mutual assumption that such a situation would never arise.[53]I therefore conclude that on the proper construction of Contract 5536 it was not open to SCT to perform that contract by delivering bought-in fuel oil which did not exclusively consist of components supplied by Trafigura under Contract 5508-2 which had been blended at BORCO by SCT. If SCT needed to introduce any components other than those so acquired and so blended it could not do so unless it had Trafigura’s consent. Issue 2: Was there an agreed Variation as to the Time for Delivery under Contract 5536 or an Estoppel as to Time for Delivery?[54]It is SCT’s case that on 14 and 15 March 2001 it was agreed between Mr Marquez of SCT and Mr Loveland of Trafigura that the time for delivery by SCT under Contract 5536 was to be extended from 31 March to 30 June with Trafigura’s letter of credit to be amended consistently with the former to permit shipment up to 30 June and its validity for presentation of documents to be up to 15 July 2001. It is Trafigura’s case that no such agreement was ever entered into because it was a condition of Trafigura’s offer of an extension of time that the pricing formula under clause 8 should be replaced by a provision to the effect that the price should be calculated on a Platt’s Guide basis to reflect the market price of fuel oil at the date of delivery and that Mr Marquez had consistently refused to agree to this. SCT maintain that on 15 March 2001 Trafigura unconditionally agreed to an extension to 30 June.[55]In order to resolve this issue it is necessary to examine the numerous communications between the parties in some detail.[56]By December 2000 SCT was experiencing real problems in the blending operations relating to the last batch deliverable under the New York contracts. Previously to this the WFOBS originally supplied did not separate as it should have done into oil on water but had been inverted in the blending tank with the water at the top and the oil at the bottom (hence the need to buy an additional WFOBS from Bitor. Moreover, the oil still contained 4 per cent water. It had to be brought down to 1 per cent to comply with the contract specification. This blending problem, confined at it was to the New York contracts, had a serious impact on the performance of Contract 5536. The WFOBS for that contract had been delivered to Trafigura in accordance with Contract 5508-1 and by Trafigura to SCT under Contract 5508-2. It had been stored in tanks 8005 and 8013 at BORCO. The cutter delivered under Contract 5508-2 went into tank F7. However, the intended blending process was to take place by transferring the WFOBS into tank 8028 for blending and then to tank 8036 for settling. This process would probably have to be repeated more than once. The problem was that 8036 had an essential part in the blending operation under the New York contracts. For as long as it was being used for that purpose, the blending operation under 5536 could not begin and it is said by SCT that there were no other suitable tanks available to it at BORCO. It was for that reason that in December 2000 SCT indicated for the first time that there was likely to be a delay in delivery of the finished product under 5536.[57]As well as making delivery of WFOBS and cutter under Contract 5508-2, Trafigura on 8 November 2000 opened its letter of credit to secure the price under Contract 5536. The issuing bank was Credit Agricole Indosuez, London. It provided for delivery of the finished product by 31 March 2001 and validity for negotiation up to 15 April 2001.[58]On 18 December 2000 SCT (Mr Marquez) informed Trafigura by email that SCT would start the blend of the Contract 5536 material in January, adding “This moves the delivery of the finished product at least a month”.[59]This could only be understood as meaning that the period needed for delivery would extend for a further month – to 30 April 2001.[60]On 21 December 2000 Mr Loveland of Trafigura responded stating:
"We will move our hedges back a month. Do you think that will give you sufficient time to drop the rest of the water from the current 4%."
[61]This was a clear representation of Trafigura’s intention to alter its market hedging to cover the risk of adverse price movements relative to the contract price of the finished product at the date of delivery. That representation implicitly accepted that it would be open to SCT to deliver a month later than provided by the contract.[62]SCT were unable to reduce below 3.25 per cent the water content of the finished product to be delivered under the New York contract and it was Mr Marquez’s idea to buy in more cutter and further blend it with the product in its current state in order to cure the water content problem. However, in the course of February 2001 Mr Loveland indicated that Trafigura were prepared to take delivery of the product even with the excessive water content. By an email of 19 February he stated that they would start taking delivery from tank 8036 on 25 February 2001.[63]This would involve the need to extend the letter of credit effected by Trafigura under Contract 3053b since the original delivery dates were 1 June to 31 October 2000. Mr Loveland’s message therefore asked Mr Marquez to contact Patricia Reilly at Trafigura who was responsible for the setting up of documentary credits.[64]In the event, Trafigura did not extend their original letter of credit. Their bank was unwilling to do so. Mr Marquez by his message of 23 February 2001 made it clear that SCT would only be prepared to proceed with delivery under the New York contracts once a new letter of credit was in place. This was becoming a matter of urgency for SCT because, having made payment for the WFOBS and cutter delivered under contract 5508-2, they were carrying the storage cost until they received payment for the finished product upon delivery under 5536.[65]Trafigura encountered problems in providing available tanker capacity for lifting the contents of tank 8036 and in the course of the period 28 February to 7 March Mr Marquez had various email contacts with Mr Loveland as to what was to happen to the contents of that tank. On 28 February Mr Marquez pressed Mr Loveland to confirm to SCT’s bankers, UBS, that Trafigura would amend the letter of credit for the New York product and added:
"I also need from you to change the delivery and expiration date of the L/C 101308 to Deliver May 30, Expiration July 30."
[66]This was a reference to the letter of credit provided by Trafigura under Contract 5536. This was the first indication by SCT that it could not complete the blending under that contract by 31 March or 30 April but would be unable to deliver until 30 May. This was roughly consistent with their not being able to start blending by the end of January, as anticipated in their message of 18 December 2000, but having to delay until early March after tank 8036 had become available.[67]The wording of a new letter of credit to be issued by ING Bank, London, to pay for the New York contract product was agreed and the letter of credit was issued on 2 March 2000. Further delays developed in Trafigura lifting the product in tank 8036 and there was much doubt as to precisely when this might be accomplished.[68]On 7 March Mr Marquez again reminded Mr Loveland that SCT would be needing to use 8036 for the new batch (under Contract 5536) soon, that this product should be available for delivery at the end of April or early May and that Trafigura's letter of credit therefore needed to be extended as it was about to expire.[69]In his witness statement Mr Loveland said this:
"As I recall, it was after receiving this message that I discussed the position with Crandall about the ongoing delays with delivery of batch 5 and the fact that the new batch would not be delivered within 31 March as required by the contract. Crandall and I agreed that I should advise Marquez that we would extend the letter of credit but only on the basis that the pricing clause was changed from a fixed price to a floating price based on Platt’s quotations. Following this discussion, I advised Fernando that we would only extend the letter of credit if he agreed to a change in the pricing clause to a market related price. Fernando indicated that he could not do a marked related price. I do not recall mentioning at that time whether this would be based on a discount or premium to Platt's. I doubt that I would have done so as it was not clear at this time when he was going to deliver. However, I made it quite clear that this was the only basis upon which an extension would be granted because we could not extend without knowing the actual delivery date and he had not managed to deliver any of the finished fuel oil on time. By extending the delivery date market related, SCT could choose the actual delivery day during a time when the market price suited their economics and since we are buying "at market" it would have no impact on us. Fernando said he would think about it."
[70]Mr Marquez in his witness statement and in his oral evidence adamantly denied that any such conversation took place. Specifically, he said that there had been no mention of Trafigura only being prepared to take delivery if the price basis were changed to one dependent on market price.[71]By 12 March the position as to the contents of tank 8036 remained unresolved. SCT had indicated that it was contemplating acquiring more cutter, blending that with the remaining product and selling it on the market for its own account. On that day Mr Marquez sent an ultimatum to Trafigura stating that they must take an entitlement transfer and thereby take delivery of the product in tank 8036 by 14 March 2001 and pay for it promptly or SCT would blend the material and sell it to a third party. There was added the following:
"Please also be advised that the delivery date under the new contract needs to be extended to May-June as well as changing the financial documents accordingly."
[72]On 13 March 2001 Mr Loveland informed Mr Marquez that Trafigura would start loading from tank 8036 the following day on the ASPHALT GLORY and complete taking delivery during 18-20 March on the VICTORIA. Consistently with this message the ASPHALT GLORY arrived at the BORCO terminal on 14 March.[73]However, by an email sent late on 13 March, SCT stated that before Trafigura took the oil there were a number of "issues that need to be addressed". First was the issue of the letter of credit extension for the new batch, meaning that which was deliverable under Contract 5536. Mr Loveland replied the next morning "the L/C for the new batch is with finance and they are preparing an extension". It is to be observed that Mr Loveland's message made no reference back to the matter of changing the basis of price calculation under the contract.[74]On 14 March 2001 numerous messages passed between the parties. In summary, Mr Marquez was pressing for sight of an amended or new letter of credit for Contract 5536 "to read delivery in June (expiry) July" and Trafigura was responding that it had to discuss this with the bank, but the account manager was out of the office.[75]Mr Marquez was pressing for receipt of some amendment details in the ING letter of credit.[76]On the same day the ASPHALT GLORY arrived as promised at the BORCO terminal and her hoses had been connected that afternoon. Her tanks were later passed as ready to load.[77]However, Mr Marquez declined to authorise the entitlement transfer on the grounds that he had not received the final form of the ING letter of credit covering the product about to be loaded and had not received the amended letter of credit under Contract 5536.[78]Thus at 0830 local time Mr Marquez emailed Mr Loveland as follows:
"Can I see the outgoing message for the amendment to the L/C for the new deal?"
[79]Mr Loveland's immediate response was:
"Yes, as soon as they have it. What is the problem?"
[80]Mr Marquez then asked Patricia Reilly of Trafigura if she could guarantee that SCT would get to him the amended letters of credit before the vessel sailed.[81]That same afternoon there was a telephone conversation between Mr Marquez and Mr Loveland in which, as I find, Mr Loveland told him that the vessel was waiting ready to berth at BORCO and would incur demurrage if she was delayed. According to Mr Marquez's witness statement:
"He told me everything was coming. He said that the new batch L/C would be extended as I had requested with delivery by end of June and expiry July. He said nothing at all about any amendment to the purchase price formula. He just said let's get this vessel loaded and out. He said he had instructed his finance group to amend the L/C for the old batch with payment at sight. I said something like "
OK, Mark, I am going to let the vessel load on your word that the L/Cs are being amended." I considered this to be a binding commitment by him on Trafigura's behalf and I relied on it."[82]There is no material difference between this account and the oral evidence of Mr Loveland. Mr Marquez stated that he thereupon confirmed with Mr Steiger of UBS that he could release the fuel oil and issue an entitlement transfer. Loading duly commenced at 1648 local time (2148 London time). In the course of his cross-examination Mr Marquez accepted, in my judgment, quite rightly that he must have been mistaken about this conversation with Mr Steiger because the confirmatory conversation with Mr Loveland did not take place until about 2030 London time which was long after UBS would have closed in Geneva. Mr Marquez agreed that he must have next spoken to Mr Steiger on the morning of 15 March. I find that the more probable course was that it was not until after the conversation with Mr Loveland that evening that Mr Marquez instructed BORCO to effect the entitlement transfer. Thereupon loading of the cargo commenced, that operation having been held up by Mr Marquez for nearly two hours until 2118 London time "awaiting client's instructions".[83]On 15 March 2001 Mr Loveland sent an email apparently in response to a telephone call or message from SCT:
"Fernando - To confirm yes, I have requested our Finance Dept to extend the L/C for the new batch. Finance has been in direct phone contact with UBS - Mr Steiger."
[84]On 16 March 2001 Mr Marquez pressed again for the letter of credit amendments for Contract 5536 but apart from reassurance from Mr Loveland, apparently by telephone, that the extension was being procured, nothing further was heard. The vessel completed loading at 2024 local time that day.[85]On 19 March 2001 Trafigura sent an email to SCT as follows:
"Fernando - We are today in the process of extending the L/C as you have been requesting. It is noted you have also requested that we extend the delivery period to May-June 2001. As you know our agreement for this deal calls for delivery to be made no later than March 31, 2001 basis a fixed price of $12.75 for the wet fuel oil plus cutter. From experience we all now know that the delivery timing and intended quality (water spec) has been impossible to predict. In fact, not one delivery has been on spec as originally guaranteed nor has the delivery timing been as agreed. Because of these uncertainties our ability to make prior arrangements, including hedging, is virtually impossible. Despite these facts, which have been beyond our control. Trafigura has continued to lift your product. At this stage we are willing to accept your request for Trafigura to extend the L/C to June 30, 2001 with the proviso that Trafigura will pay for the finished oil on the basis of bill of lading quantity at the mean of Platt's published "
US Gulf Coast Waterbourne No 63%", fuel oil less $0.50 per barrel pricing 5 days after bill of lading (B/L day zero). We will expect the product to meet contractual specification but again, if it does not, we will work with you to reach a mutually agreeable price differential failing which you are fee to sell the cargo to a third party. We trust you understand our position and await your confirmation."[86]There followed some draft wording for the amendment of the letter of credit. "PLEASE DELETE PRICE CLAUSE IN ITS ENTIRETY AND REPLACE WITH THE FOLLOWING: PRICE: THE PRICE IN US DOLLARS BY IN TANK TRANSFER AT BORCO SHALL BE THE MEAN OF PLATT'S QUOTATIONS FIVE DAYS AFTER BILL OF LADING DATE (B/L = DAY 0) PUBLISHED US GULF COAST WATERBORNE NO. 6 3 PCT FUEL OIL LESS USD 0.50 PER BARREL."[87]Mr Marquez in his evidence described the requirement for an amendment to the price as “a bombshell”. He said that he was so angry that he prepared a response in draft but never sent it. In the event his immediate response was simply that SCT did not agree with or accept the amendment to the price. Trafigura replied that they would not amend the letter of credit. His evidence was that this was the first suggestion by Trafigura that extension of the delivery period under Contract 5536 was to be conditional on a variation of the price clause. In a message sent to Mr Loveland at 1655 local time on the same day Mr Marquez stated:
"In response to your first sentence, you have been in the process of extending the L/C validity for over a week. A multitude of excuses has been the only thing that South Caribbean has actually received. I released the entitlement to the 15.50 $/bbl oil to you on the basis of your personal promise to extend (without other amendments) the validity of the second L/C to July 30, 2001. We now insist that the L/C be extended as per your personal pledge."
[88]He further relied on time for delivery having been extended under clause 7 of the contract due to equipment problems at BORCO. He called for a reply to his request for extension of the letter of credit by 20 March, noon New York time.[89]Trafigura’s reply the following morning merely stated that they were discussing and reverting re the letter of credit. They added that it was the first they had heard of equipment problems at BORCO.[90]Three hours later Mr Marquez emailed Mr Loveland stating as follows:
"Yesterday in our correspondence to you we requested that you conform to your word and the extension provisions of the referenced contract by extending the validity of the letter of credit associated with the contract. Since you will not extend this validity, South Caribbean Trading will comply with your insistence on conformity to the contract. We herein nominate the delivery of 470,000 bbls of fuel oil to your account via entitlement transfer at Borco. Please indicate the inspectors you wish to survey these tanks."
[91]That message gave rise to the issue which I have already decided in Trafigura’s favour, namely that SCT was not entitled under Contract 5536 to deliver bought-in fuel oil not the product of their blending.[92]The underlying issues relevant to the question whether there was a concluded agreement to extend the time for delivery under Contract 5536 to 30 June 2001 can be stated as follows:a. Whether on 7 March 2001 Mr Loveland told Mr Marquez that Trafigura would only extend the letter of credit under Contract 5536 on condition that there was a variation of the price clause to provide for the application of the market price at the time of shipment instead of the pricing formula in clause 8 of that contract which was in substance a fixed price.b. Whether in the course of the communications in the period from 7 March up to and including Trafigura’s email dated 15 March 2001, 1453 local time, the parties unconditionally agreed to vary the delivery date to 30 June 2001.[93]As to a. it is necessary to test the evidence of the two main witnesses, Mr Marquez and Mr Mark Loveland, by reference to the factual background known to them both in the course of their communications, of the communications which they exchanged with each other and of the communications which they had with others at the time, notably in the case of Mr Loveland, his immediate superior at Trafigura, Mr Crandall, and in the case of Mr Marquez, the director of Eastern, Mr di Mauro.[94]With regard to the factual background I find that the following are directly material circumstances.a. The market price of fuel oil, even with about 3 per cent water content, in February/March 2001 was substantially higher than the fixed price payable by Trafigura to SCT under Contract 3053b. Accordingly, a substantial profit would be made by whichever party then sold it in the market.b. Trafigura was therefore very keen throughout February/March to obtain delivery of the contents of tank 8036 notwithstanding that the contractual date for delivery had long since passed and in spite of the fact that the blending operation had proved to be not wholly successful in dehydration of the product.c. The price payable by Trafigura under Contract 5536 was going to be about US$20.91 per bbl, calculated in accordance with clause 8 but by 19 March 2001 the market price of fuel oil had dropped well below that. Consequently, if that product were delivered by 31 March, Trafigura would almost certainly be taking delivery at a significant loss.d. It was the belief of Trafigura, notably Mr Crandall and Mr Loveland, that SCT was obliged to deliver the product under Contract 5536 by 31 March 2001 and that it would not be entitled to any contractual extension of time.e. If the time for delivery under Contract 5536 remained unchanged, it would be physically impossible as at 7 March for the blending operation to be completed by SCT in time to perform Contract 5536 by making delivery in full by 31 March.f. Trafigura knew at all material times that SCT needed access to tank 8036 to enable it to conduct the blending operation to produce product for delivery under Contract 5536 and they also knew that it was in reality likely to be impossible in practical terms for SCT to acquire additional suitable tank capacity from BORCO for this purpose. Consequently, Trafigura knew that, unless and until they took delivery under Contract 3053b and so vacated tank 8036, blending of the new batch for Contract 5536 could not begin.g. Trafigura also knew that SCT were exposed to UBS as the provider of credit to enable SCT to carry the cost to it of the acquisition of the components, namely cutter and WFOBS, required for the blending operation and the cost of the BORCO tank capacity. Thus, UBS would obviously be relying on the value of the finished product as collateral for whatever credit it had provided to SCT. If the price of the finished product payable by Trafigura under Contract 5536 were to be subject to market fluctuation instead of being fixed as it was, that would be a matter of great concern both to SCT and to UBS, particularly given that the market price of fuel oil was in March 2001 already below the contract price. Were the price payable under that contract to be reduced significantly, that might well prejudice UBS’s security.h. Trafigura, primarily by Mr Loveland, but with the support of Mr Crandall, were therefore anxious to avoid a situation arising where SCT made delivery of the product under Contract 3053b conditional upon Trafigura irrevocably committing themselves to an extension of the time for delivery under Contract 5536. I find that this was an underlying consideration in the manner in which those at Trafigura dealt with SCT.i. Mr Marquez was well aware that Trafigura wanted to take delivery of the contents of tank 8036 because he realised that they held a substantial profit for Trafigura.j. It was therefore Mr Marquez’s strategy to ensure that before he released control over that product Trafigura had not only procured an amended letter of credit from ING under Contract 3053b but also an amended letter of credit extending the time for delivery under Contract 5536.[95]As to the communications themselves and the internal responses to them, the following considerations are material: a. Mr Loveland’s reaction to Mr Marquez’s first request for an extension of time under the letter of credit on 28 February 2001 (see paragraph (65) above) was to comment in an internal message to Patricia Reilly at Trafigura:
“Here comes trouble”
. I have no doubt that he at once foresaw that Trafigura might not be willing to grant an extension and that, if there were a refusal, Mr Marquez might refuse to release the product under Contract 3053b. b. The second request for an extension of time by SCT was made on 7 March. Although there were two further emails from Mr Loveland to Mr Marquez that day, neither of them referred to any telephone conversation about Contract 5536. Both were concerned with the Contract 3053b product. Indeed, the telephone conversation on 7 March and the requirement by Mr Loveland that any extension of time was to be conditional on the price clause being replaced by a Platts-related market price was referred to by Trafigura for the first time in its Defence. c. Mr Marquez’s evidence was not that there had been no conversation about a time extension on 7 March but that he could not remember one. If this evidence is to be believed, it must presumably be that he had no such recollection in January 2003 (some 22 months later) when Trafigura’s Defence was served. Had the price variation point been raised at that stage it is hard to believe, given its absolutely fundamental importance that the conversation would not still have been in his mind. Accordingly, his lack of recollection may be due either to the fact that no such conversation took place or that he is concealing it. However, Mr Marquez does not appear to have contacted Mr di Mauro or UBS about a proposed change to a floating price. Such a change could not be agreed without their consent because of the risk it would create to the collateral security which was in effect provided by the Trafigura letter of credit. If the letter of credit were amended its immediate value would drop due to the market price of fuel oil being $3-$4 below the fixed contract price. No doubt it was for this reason that Mr Marquez consulted Mr di Mauro after receiving Trafigura’s message of 19 March specifically indicating that extension of time was to be conditional on variation of the price clause. d. In the Defence and in Mr Loveland’s statement it was said that there was a single conversation about extending the letter of credit. In the Defence it was said that Mr Marquez reacted by saying that changing the price would be difficult as he could not afford the price risk and the conversation ended without agreement. In Mr Loveland’s witness statement he stated that Mr Marquez had finished by saying that he would think about it. In his oral evidence, however, Mr Loveland said that on 7 March Mr Marquez had telephoned him about the extension and Mr Loveland had said “let me get back to you on that”. He had then discussed the position with Mr Crandall and then in a second telephone conversation he had proposed the condition of a price variation. e. It is to be observed that, according to Mr Loveland, the proposed price variation was stated in that 7 March conversation in general terms with the sense that, although it referred to Platts as the basis, it contained no indication of whether this was subject to a discount or premium and if so, how much. The proposal advanced by Trafigura in their email of 19 March did include very specific references to “the mean of Platt’s published US Gulf Coast Waterbourne No.6 3% fuel oil less $0.50 per barrel”. f. Trafigura did not engender any internal document referring to the conversation on 7 March. g. Following this conversation nothing further transpired about extending time for some five days. In particular, there was no message from Mr Marquez stating that a price variation was unacceptable. He simply repeated the request to extend time by his message of 12 March which made no mention of Trafigura’s proposed condition: see para (71) above. Nor did he request more details of the proposed amendment. h. Mr Loveland gave evidence that he believed that by this 12 March message Mr Marquez had agreed to the variation in the price. Mr Crandall’s evidence was that this is what Mr Loveland told him, although there is no mention of this in his witness statement. i. Mr Marquez’s next request for an extension on 13 March specifically tied the extension of the letter of credit to delivery of the oil in tank 8036, but simply referred to it as an issue to be addressed, again with no reference to any change of price. j. On 14 March Mr Loveland sent a message to Mr Crandall referring to that request from Mr Marquez in the following terms:
"Subject: FW: Issues to resolve. Need a little help here but my inclination is to tell him 1) the point is we need to move the oil in tank asap and this deal is tied to no other deal so we'll address the new batch once we get the old batch out." k. This message is on the face of it inconsistent with any belief on the part of Mr Loveland that Mr Marquez had already agreed to a price variation and is entirely consistent with a concern that there should be no commitment by Trafigura to take delivery under Contract 5536 until there had been delivery under contract 3035b. Mr Crandall’s evidence was to the effect that the issue of an extension remained to be discussed further with Mr Marquez. l. The reply sent later that day stated: "
I think we both agree getting the old batch out is actually the most important issue but yes the L/C for new batch is with Finance and they are preparing an extension." m. Its wording had been agreed between Mr Loveland and Mr Crandall. The finance department of Trafigura was responsible for preparing the text of letters of credit and dealing with the bank. The only possible meaning that this message could convey to Mr Marquez was that the task of preparing a wording for an amended letter of credit had been passed to the finance department. The effect of Mr Loveland’s and Mr Crandall’s oral evidence was that this wording was prepared with a view to placating Mr Marquez in the hope that he would release for delivery the fuel oil in tank 8036. n. The exchange of messages on 14 March quoted above at paragraph (74) amounted to a request by Mr Marquez to see Trafigura’s instructions to its bank to amend the letter of credit. However, at that stage, if there had been the telephone discussion on 7 March described by Mr Loveland, the detailed features of the amendment of the price clause had not been finalised with Mr Marquez, particularly whether there was to be a discount on the Platt’s price. Obviously, the existence and size of any such discount would be a potential problem for SCT, so they would have to know about it before it could be assumed that a price variation was acceptable. Moreover, if the price amendment was to be made, it would have to be incorporated in the letter of credit. Consequently, the wording could present SCT with very much of a problem. It is thus implicit in this response that the wording would contain nothing like this, but would simply cater for the extension of time. When asked by the court whether the instructions to the bank would have included an amendment of the price, Mr Loveland said it would. He said that Mr Marquez had already agreed to that but he also said that he believed that the reason Mr Marquez asked to see the wording was that he wanted to be sure that Trafigura would extend the time for delivery. “At that time I was assuming he was giving the go ahead to do something”. He was unable to explain in cross-examination how it could come about that Trafigura could instruct the bank to amend the price to incorporate a discount in Platt’s which he accepted had never been agreed with Mr Marquez. o. According to the evidence of both Mr Loveland and Mr Marquez as to their telephone conversation on the evening of 14 March, there was no mention by either of them of any variation of the price in the letter of credit, although Mr Loveland expressly stated that time would be extended. He appears to have told Mr Marquez that he was about to instruct the finance department to instruct the bank to extend the letter of credit. In the message sent by Mr Loveland on the morning of 15 March he stated that he had already done this. p. In his message sent on the morning of 16 March, Mr Marquez asked when he was going to get “the amendment agreed upon”. This suggests either that he believed that there was nothing left to agree upon or that he was, at the lowest, hoping that this was so. q. In response to that message Mr Loveland emailed the following:
“Fernando – To confirm yes, I have requested our Finance Dept to extend the L/C for the new batch. Finance has been in direct phone contact with UBS – Mr Steiger.” r. The statement that the letter of credit proposal was with Finance suggested that the text of the amended letter of credit had already been given to the Finance Department to prepare it for transmission to the bank and that the Finance Department had informed UBS of the proposed amendment. Further, in the course of a telephone conversation late on that afternoon Mr Loveland repeated that the extension under the letter of credit was being done. s. The email sent by Trafigura on 19 March (see para (85) above) was drafted in formal terms. It was put as an offer to accept SCT’s request to extend the letter of credit to 30 June 2001 but subject to the proviso as to market price less a 50 per cent per bbl discount. It made no reference to any previous mention of price variation or to any previous agreement to that effect. In the course of his cross-examination Mr Loveland said: "Q. It is the sort of thing, this, that one does setting out a formal position if one is sending what is likely to be an unpleasant surprise, is it not? A. No, this is for information, people in fact - the genesis of this particular email was that the finance people had not seen the specific wording, and if there was going to be a premium or discount - and in fact, as far as the premium or discount, we had not had that discussion based on the location of the oil. Q. The main reason for this email was because the finance people had not seen it; is that what you are saying? A. What I am saying is that the wording of US Gulf Coast Waterborne number 3, where it is put in parenthesis, this was - I was trying to spell it out in such a way that the finance people could effectively lift it and use it in the context of the L/C that they were preparing." t. In substance, this evidence indicates that the wording was formulated by Trafigura for the first time on 19 March and had not previously been passed to the Finance Department. As appears from the witness statement of Patricia Reilly, she first received instructions to send a request for the amendment to the bank on 19 March. It follows that the statements which Mr Loveland made to Mr Marquez on 15 and 16 March which suggested that he had instructed the finance department to prepare amendments to the letter of credit were completely untrue. I infer that they were made to extract from Mr Marquez the continuance of the loading of the ASPHALT GLORY which he had permitted following the assurance of the extension of time under the letter of credit given by Mr Loveland in the 14 March telephone conversation. In this connection, I have no doubt in finding that Trafigura entirely appreciated that Mr Marquez would immediately have attempted to halt loading if, on 15 March he had been sent the text of the amendments which he received on 19 March, although this might not have been possible in view of the prior issue by BORCO of certificates of entitlement to the product. u. When Mr Marquez received the text of the amendments on 19 March, he first sent a message to Patricia Reilly at the finance department of Trafigura saying that SCT did not accept the amendment to the price and later that day he sent to Mr Loveland the message set out at para (90) above. They represented an express allegation that Mr Loveland had gone back on his personal promise to extend the letter of credit “without other amendments”
. No message was sent by Trafigura refuting this allegation or referring to the fact that ever since 7 March any extension agreed to would be conditional on variation of the price clause or that Mr Marquez by pressing for an extension in the face of that conversation had impliedly accepted that condition.[96]Mr Marquez appeared to me to be genuinely trying to give accurate evidence and to answer the questions put to him as he understood them, given some limitation in his understanding and handling of English. His demeanour was essentially that of a truthful witness. His memory was fairly good, but certainly not perfect.[97]Mr Loveland’s recollection of events was clear in some respects and imperfect in others. There were discrepancies between his witness statement and his oral evidence in some respects. Much of his oral evidence was aimed at presenting Trafigura’s case of being much put upon by an essentially unreliable SCT bent on unfairly threatening to deprive Trafigura of product to which it was entitled. A similar comment could be made about Mr Crandall’s evidence. However, his recollection of the events was somewhat blurred and he did not attempt to be able to recall details as Mr Loveland did.[98]In evaluating the reliability of Trafigura’s witnesses it is also right to keep in mind the tactics adopted by Mr Loveland on 14 and 16 March in order to ensure that Mr Marquez permitted the product to be loaded on the ASPHALT GLORY. Mr Loveland quite deliberately gave Mr Marquez information about the instructions to the finance department of Trafigura which he must have known to be untrue. The overriding imperative for Trafigura was to obtain delivery of a profitable cargo and to avoid taking delivery of an unprofitable one. Their tactics were either to get out of Contract 5536 altogether or extend time only on the basis of a market-based price. The only way in which they would achieve these objectives would be by delaying as long as possible disclosure of their proposed amendments to the letter of credit so as to give the vessel enough time to complete loading.[99]Having regard to all the material considerations set out above and the submissions which I have summarised I have come to the conclusion that I cannot treat Mr Loveland as a reliable or credible witness. I conclude that, if, on 7 March, there was any discussion at all about extending the letter of credit under Contract 5536, nothing was said by Mr Loveland which made such extension conditional on variation of the price clause. I infer that the evidence as to this condition being put forward on that occasion was introduced in order to avoid the risk that it would be held on the evidence of the email and telephone exchanges that Mr Marquez had agreed to release the contents of tank 8036 against an unconditional promise or representation that the letter of credit would be extended, as pleaded in the particulars of claim.[100]I find as a fact that no such condition was brought to the attention of Mr Marquez until he received the email of 19 March.[101]On this factual basis it is submitted by Mr Fenton QC on behalf of SCT that in the course of the telephone conversation of 14 March Contract 5536 was varied so as to provide for delivery up to 30 June 2001 and the letter of credit was agreed to be similarly amended to provide for its validity up to the end of July 2001. On 14 March 2001 there was, in effect, a bargain between the parties that SCT would release the contents of tank 8036 for loading on the ASPHALT GLORY if Trafigura undertook to procure an extension of time under the letter of credit. The promise to amend the letter of credit was in substance an agreement that the Contract was to be varied to that effect.[102]Alternatively, it is submitted by SCT that Trafigura is estopped on the basis of Mr Loveland's promise to extend time. Mr Marquez would not have released the fuel oil without his assurance that time could be extended. There was therefore reliance by SCT in as much as it did release the cargo. The fact that refusal to deliver would have amounted to a breach of Contract 3053b was nothing to the point. Just as a promise to perform a subsisting contractual obligation could amount to sufficient consideration for a further contractual promise, so reliance upon a promise by performing a subsisting contractual obligation instead of breaking it ought in equity to be sufficient to give rise to unconscionability.[103]It is argued by Mr Baker, on behalf of Trafigura, that there was no reliance on the telephone conversation of 14 March. He argues that title was transferred to Trafigura at some stage on that day but that it is not established whether before or after the conversation and further that once title had been transferred, delivery to the vessel could not be prevented by Mr Marquez. Accordingly, SCT had failed to establish that title had not already been transferred at the time of the telephone call, relying particularly on Mr Marquez's evidence that the entitlement transfer was issued after he had spoken to Mr Steiger of UBS in Geneva. This had to have been before he spoke to Mr Loveland that evening at about 8.30pm London time.[104]Further, there was no unconscionability, because SCT's reliance consisted of performance as distinct from breach of a subsisting contractual obligation to Trafigura under contract 3053b.[105]There can, in my judgment, be no doubt that the assent of Mr Loveland to the extension of the letter of credit until 30 June expiring July 2001 was an effective variation of Contract 5536 to that effect. That is because it was a new agreement supported by mutual promises - on the part of Trafigura to accept delivery of product at a date different from 31 March at a fixed price and on the part of SCT that, the blending operation having been much delayed, would successfully be completed by the new delivery date. Given that SCT had encountered apparently insuperable problems in the de-hydration of the fifth batch under the New York contracts, even after more than three months, and that it was impossible to come anywhere near completion of blending under contract 5536 by 31 March, their promise to achieve effective blending by an extended date thus provided Trafigura with an enforceable right to obtain delivery of finished and effectively dehydrated product on a future agreed date. The fixed price, although below market price on 14 March, might exceed market price by 30 June. In these unusual circumstances, particularly the uncertainties inherent in the blending operation and the uncertainty of the movement of the market price, it could be said that sufficient consideration to support the variation moved from the promisee (SCT).[106]I therefore do not consider that it is necessary to deploy as sufficient consideration in itself the promise by Mr Marquez to release the cargo to be loaded on to the ASPHALT GLORY. Were that necessary I find as a matter of inference that BORCO's certificate of entitlement to the contents of tank 8036 was not issued until after the 14 March telephone conversation between Mr Marquez and Mr Loveland. It is simply inconceivable that Mr Marquez would have given his authority for that to happen unless and until he had Mr Loveland's promisee to instruct UBS to extend the delivery date in the letters of credit.[107]Had it been necessary to base the question of consideration exclusively on the promise to release the cargo, I should have held that this alone was insufficient to supply consideration. It was SCT's obligation to make delivery under Contract 3053b. In promising to do so they were promising to perform an existing obligation. The authorities on this issue starting with Stilk v. Myrick (1809) 2 Camp 317 and developing more recently in Syros Shipping Co SA v. Elaghill Trading Co Ltd (The Prodos C) [1980] 2 Lloyd's Rep 390 and Atlas Express Ltd v. Kafco (Importers and Distributors) Ltd [1989] 1 QB 833 indicate a firmly established rule of law that a promise to perform an enforceable obligation under a pre-existing contract between the same parties is incapable of amounting to sufficient consideration. The decision of the Court of Appeal in Williams v. Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB1 appears to have introduced some amelioration to the rigidity of this rule in cases where there has been refusal to perform amounting to economic duress by the party who might otherwise be in breach of any existing contract and where the other party will derive a practical benefit from such performance.[108]But for the fact that Williams v. Roffey Bros Ltd, supra, was a decision of the Court of Appeal, I would not have followed it. That decision is inconsistent with the long-standing rule that consideration, being the price of the promise sued upon, must move from the promisee. The judgment of Glidewell LJ. was substantially based on Pao On v. Lau Yin Long [1980] AC 614 in which the Judicial Committee of the Privy Council had held a promise by A to B to perform a contractual obligation owed by A to X could be sufficient consideration as against B. At page 15 Glidewell LJ. regarded Lord Scarman's reasoning in relation to such tripartite relationship as applicable in principle to a bipartite relationship. But in the former case by the additional promise to B, consideration has moved from A because he has made himself liable to an additional party, whereas in the latter case he has not undertaken anything that he was not already obliged to do for the benefit of the same party. Glidewell LJ substituted for the established rule as to consideration moving from the promisee a completely different principle - that the promisor must by his promise have conferred a benefit on the other party. Purchas LJ. at pages 22-23 clearly saw the nonsequitur but was "comforted" by observations from Lord Hailsham LC in Woodhouse AC Israel Cocoa Ltd v. Nigerian Product Marketing Co Ltd [1972] AC 741 at pages 757-758. Investigation of the correspondence referred to in those observations shows that the latter are not authority for the proposition advanced “with some hesitation" by Purchas LJ.[109]However, seeing that Williams v. Roffey Bros, supra has not yet been held by the House of Lords to have been wrongly decided, and approaching the validity of consideration on the basis of mutuality of benefit, I would hold that SCT's threat of non-compliance with its delivery obligation under Contract 3053b precluded its reliance on the benefit that its performance by effecting delivery would confer on Trafigura. This threat was analogous to economic duress as contemplated in Williams v. Roffey Bros, supra because it was not based on any argument that SCT was discharged from its delivery obligation: reliance on clause 7 of Contract 5536 only came later.[110]Further, it is pleaded in paragraph 16(3) of the Defence that under clause 16 of Contract 5536 any modification of that contract had to be in writing and therefore the contract could not be varied orally in the course of the conversation on 14 March. However, the email sent by Mr Loveland at 1453 on 15 March in response to Mr Marquez's request for news of the letter of credit, was in terms which could only have been understood as expressing assent to SCT's previous written and oral requests for an extension. The combination of these written messages satisfied the requirements of clause 16.[111]The question of estoppel only arises if, contrary to my conclusion, the contract was not varied on the grounds that the agreement of 14 March, although arrived at, was unenforceable due to want of consideration or non-compliance with clause 16. The main basis for Mr Baker's challenge to estoppel was that it was not proved that it was unconscionable for Trafigura to go back on its promise to extend the letter of credit. First, it had not been shown that SCT had relied on that promise to its detriment and secondly, unconscionability could not be founded on SCT performing a subsisting obligation and contract 3353b instead of failing to perform it.[112]It is clear, in my judgment, that, but for Trafigura's undertaking to extend the letter of credit, SCT would not have authorised the issue by BORCO of a certification of entitlement in favour of Trafigura and the fuel oil would not have been shipped. There was thus reliance in the sense that the undertaking caused SCT to do what it would not otherwise have done. However, its refusal to make delivery without valid excuse would have been a breach of Contract 3053b. Given that promissory estoppel, which this must be, could be made out only if it were in all the circumstances unconscionable for Trafigura to resile from its promise, the question arises whether this could be made out in circumstances where SCT would be relying on its own threat to breach its contract. I have not been able to find authority on this issue. However, I have reached the conclusion that unconscionability cannot normally be made out in a case where reliance consists of the promisee shifting his position from one of unjustifiably threatening to breach his contract with the promisor to one of performing that contract. If there were no contractual basis justifying the refusal, there would normally be a case of economic duress which is itself based in substance on principles of unconscionability. Accordingly, the balance of unconscionability as between the conduct of the promisor and that of the promisee would be left even to the effect that the court would not intervene to protect the promisee. Accordingly, I would not have concluded that Trafigura were estopped.[113]I therefore conclude that Issue 2 should be answered to the effect that the contract was varied to permit June delivery as contended for by SCT.

Issue 4

[114]It is agreed that the Court should approach this issue on the assumption, not conceded by Trafigura, that SCT could have delivered contractually compliant finished product within the delivery period under contract 5536.[115]It is further agreed that, if the answer to Issue(1) is that SCT was entitled to deliver bought in fuel oil not created from the components which it had purchased from Trafigura or the answer to Issue(2) is (as I have held) that the date for delivery was extended to 30 June 2001, Trafigura wrongfully repudiated contract 5536 and that, accordingly, the first part of Issue 4 is to be answered Yes. The second part of that issue (whether that repudiation was accepted by SCT) is directed to the correct analysis of the communications which passed between the parties.[116]It is submitted on behalf of SCT that by its message at 1756 on 23 March 2001 SCT accepted Trafigura’s conduct as terminating contract 5536. It is submitted on behalf of Trafigura that SCT’s message did not amount to acceptance of Trafigura’s conduct in refusing to extend the delivery date as a repudiation because it was exclusively directed to Trafigura’s refusal to accept bought in fuel oil which it was justified in rejecting and was not directed to any refusal to extend time. Alternatively, it was not an absolute refusal to perform but merely one contingent upon Trafigura’s future failure to confirm that it would perform and as such it amounted to an affirmation of contract 5536.[117]I now set out the relevant parts of the messages passing between the parties.[118]On 19 March 2001 Trafigura sent the messages quoted at paragraphs 85 and 86 above and SCT replied with the message part of which is set out in paragraph 87 and which stated in full:
“In response to your first sentence, you have been in the process of extending the L/C validity for over a week. A multitude of excuses has been the only thing that South Caribbean has actually received. I released the entitlement to the 15.50 $/Bbl oil to you on the basis of you personal promise to extend (without other amendments) the validity of the second L/C to July 30, 2001. We now insist that the L/C be extended as per your personal pledge. We call your attention to paragraph 7 of the above referenced contract which states that in the event of equipment problems, the time allowed for delivery will automatically be extended. As we have told you in different occasions, BORCO was unable because of boiler, heat exchanger, etc problems to complete the contemplated blend. South Caribbean will provide documentary evidence of such problems. In view that we purchased 43 $/Bbl cutter from you, you cannot unilaterally abrogate this agreement. In view of the above, Trafigura should immediately extend the L/C validity. We require a reply to the above by noon New York 03/20/001”
[119]On 20 March 2001 SCT sent the message set out at paragraph 90 above.[120]On 22 March 2001 Trafigura stated:
“During the past two years there has been a constant routine whereby SCT guarantees to provide oil during a specific time frame meeting a defined specification which never ever happens … We are now at another stage where, once again, SCT is unable to perform and wants Trafigura to make an exception to the contract. Frankly, we are just not prepared to agree to your request.”
[121]Later that day SCT replied:
“Thank you very much for your note … I have made arrangements at great personal cost to get the product you require under our contract. We have on test product for you and expect that you perform under this contract with you. Please confirm to me that you will take the 472,000 barrels … meeting all contractual specifications … prior to March 31, 2001.”
[122]On 23 March at 0812 London time Trafigura responded:
“Now with respect to contract 5536, it is clear under the contract that you are to deliver blended fuel oil, but that alternative delivery arrangements may be agreed between the parties … it is clear under the contract that alternative delivery arrangements need to be mutually agreed, and in this case, given your recent failures in performance and the losses we have incurred, we will not agree to this alternative delivery.”
[123]At 1350 London time that day SCT replied:
"Our financers require that you confirm in writing that you will take the title of the oil by Monday, March 26th, 2001. Should you not confirm to us by 10.00am New York time, then we will be forced to sell the entire position at market prices for this type of product. We therefore shall hold you liable for all losses and damages."
[124]At 1817 London time that day Trafigura replied:
"To confirm our previous discussions we have failed to reach agreement on an alternative delivery mechanism for Contract 5536. Your last note acknowledges this fact and informs us that you therefore intend to sell your inventory to a third party and claim damages against us. We take this as your notice that you are terminating the contract and confirm receipt of such notice of termination. It is obvious to us that because the termination has been advised by you, and because the underlying reason for the termination is your failure to perform, that you are therefore in repudiatory breach of our contract. This being the case we would obviously reject any claim by you for damages."
[125]Finally at 1756 London time on 23 March, SCT sent the following message to Trafigura:
"Due to your unwillingness to allow us additional time to blend the material in question (being time which we were contractually allowed under our agreement with you) we have gone to substantial expense and trouble to obtain product which conforms to the contractually agreed specifications and we are at this time ready, able and willing to deliver the product to you. It is clear from the correspondence to date that you are unwilling to accept the product not because of the conforming delivery we have arranged but because of alleged failures of performance and losses you have incurred unrelated to the present transaction. Your position in this regard cannot be supported in law or in business. If indeed you have suffered losses on other transactions (which we deny) you have an obligation to mitigate such losses. Your position with regard to this transaction will not mitigate your losses. It will only increase them. Since you have expressed no legally supportable position for your repudiation of our agreement, we urge you to reconsider your position. If we have not received notice of your intent to perform under our agreement by Saturday, March 24th, 2001 10.00am New York time, we shall have no alternative but to dispose of the product elsewhere in order to mitigate our damages and shall hold you liable for all costs, losses and damages which we may incur from your bad faith repudiation of contract 5536."
[126]Trafigura did not subsequently give notice of intent to perform.[127]In the context of that message SCT was proceeding on the basis that because there had been no amendment to the letter of credit there had been no variation of the time for delivery under the contract. By 15 March 2001 the delivery period under the contract was, as I have held, up to 30 June. However, in the context of that message the words "notice of your intent to perform under our agreement" would clearly be understood by Trafigura (and intended by SCT) as asking for confirmation of acceptance of delivery by 31 March of the bought-in fuel oil as distinct from fuel oil the product of SCT's blending operations. It follows that, by this message, SCT gave notice that, if within a period of time wholly unrelated to the delivery period in the contract as then amended, Trafigura did not confirm that it intended to perform, that is to say to accept delivery of fuel oil which, as I have held, was outside the scope of the contract because it was bought in, SCT would treat Trafigura's conduct as a repudiation of the contract.[128]The message sent out at 1756 on 23 March could only be an acceptance of any repudiation by Trafigura if it unequivocally treated contract 5536 as terminated.[129]In Vitol SA v. Norelf Ltd [1996] AC 800, it was confirmed by the House of Lords, in agreement with the judgment of Phillips J. at first instance that, although it is settled law that where a party has a right to elect to accept the repudiation or to affirm the contract, "an act of acceptance of a repudiation requires no particular form and a communication does not have to be couched in the language of acceptance": per Lord Steyn at pages 810-811; "it is sufficient that the communication or conduct unequivocally conveys to the repudiating party that that aggrieved party is treating the contract as at an end".[130]It is argued on behalf of Trafigura that the message of 1756 on 23 March 2001 would not be capable of amounting to an acceptance because it urged Trafigura to perform and did not terminate the contract there and then. Indeed, it affirmed the contract. However, in my judgment, the matter should be tested by asking whether, if Trafigura had failed to confirm performance by the deadline of 1000 New York time on 24 March (the next day) and had then been asked whether they understood the contract to have been terminated by SCT, they would have answered, Yes. Were this their answer, there would have been sufficient communication of acceptance by SCT. Otherwise, if Trafigura would then have been left justifiably in doubt as to whether the contract had been terminated, the message would not be an acceptance. I conclude that Trafigura would have been in no doubt whatever that if they did not confirm by the deadline the contract would be at an end in the sense that SCT would not thereafter perform by any means and would no longer look for performance by Trafigura. Consequently, the message at 1756 would have been capable of amounting to a valid acceptance of Trafigura's repudiation.[131]However, it is argued by Mr Baker on behalf of Trafigura that, whereas that message might have amounted to a valid acceptance of a repudiation by Trafigura’s refusal to accept bought in fuel oil (had that amounted to a breach) it did not amount to an acceptance as repudiation of Trafigura’s breach in refusing unconditionally to extend the letter of credit to provide for delivery up to 30 June 2001. In substance, it is said that SCT was telling Trafigura that the contract would be treated as terminated because of Trafigura’s refusal to confirm by the deadline acceptance of delivery of the bought in fuel oil and not because of is refusal unconditionally to extend the letter of credit until 30 June.[132]Before considering the authorities on this point it is to be observed that Trafigura’s message to SCT sent at 1817 London time quoted at paragraph 124 above referred to a failure “to reach agreement on an alternative delivery mechanism for contract 5536”. This was a reference to the failure of SCT to accept the pricing condition attached by Trafigura to its willingness to extend the delivery date to 30 June. The imposition of that condition and the reference to the contractual requirement for agreement as to an alternative delivery mechanism was inconsistent with the previous oral agreement between Mr Marquez and Mr Loveland unconditionally to extend the time for delivery. It was thus in substance a refusal to perform by accepting any fuel oil whatever after 31 March. Accordingly, the message from SCT of 1756 on the same day was a response both to Trafigura’s unjustifiable refusal to extend the letter of credit and to its justifiable refusal to accept bought in fuel oil.[133]It is clear from the decision of the Court of Appeal in Glencore Grain Rotterdam NV. v. Lebanese Organisation for International Commerce [1997] 4 All ER 514 that where one party is in repudiatory breach of a contract because of what may be conveniently described as conduct A and the other party purports to accept that the contract was terminated by reason of Conduct B (which is not a repudiatory breach) it is subsequently open to the innocent party to justify his termination of the contract on the wrong grounds as valid acceptance of Conduct A as repudiatory. In that case, sellers under an FOB contract had unjustifiably demanded an increase in the contract price and that demand amounted to a refusal to perform. However, the buyers had previously to that demand refused to provide a letter of credit except one which unjustifiably required presentation of freight pre-paid bills of lading, a refusal which was in itself repudiatory. It was held that the sellers’ demand for a price increase as a condition of delivery had the effect of accepting the buyer’s conduct as a repudiation even though it was founded only on the late arrival of the vessel (an invalid ground). The exceptions to the general rule in Taylor v. Oakes Roncoroni & Co (1922) 127 LT 267 that termination of a contract for repudiatory breach on an invalid ground is effective as a termination provided that a valid ground existed at the time did not apply. They are that the rule will not apply if the repudiatory breach could have been cured had the valid ground been given: see Heisler v. Anglo-Dal Ltd [1954] 1 WLR 1273 and in cases where the conduct of the innocent party gives rise to a waiver or estoppel.[134]In my judgment, the reasoning in Glencore, supra, applies to the present case. SCT was entitled to terminate on the grounds of Trafigura’s refusal to extend time, but it called for confirmation of performance by Trafigura by accepting an uncontractual delivery, failing which the contract was to be treated as terminated. Although it was not entitled to call for such performance or impose that deadline for confirmation, its conduct was, I have held, sufficient to constitute notice of termination. It was therefore a valid acceptance of Trafigura’s repudiatory breach. I do not accept that this case calls for a materially different approach to that in Glencore on the grounds that there was notice of a deadline. With or without a deadline, there was an effective notice of termination.[135]Accordingly, on the assumption identified in paragraph 114 above, Issue 4(b) should be answered in the affirmative.