The Court of Appeal’s judgment in relation to the dispute between the owners of the RES COGITANS and OW/ING was handed down on 22nd October, 2015. In this case the Court effectively held that although the contract as between the owner and OW had all the hallmarks of a sale contract, the Sale of Goods Act did not apply.
The Court considered that: “It is a contract under which goods are to be delivered to the owners as bailees with a licence to consume them for the propulsion of the vessel, coupled with an agreement to sell any quantity remaining at the date of payment, in return for a money consideration which in commercial terms can properly be described as the price.”
Responding to the judgment, Kieron Moore, Senior Director of Claims for the UK Defence Club, says:
“Under this reasoning, as the bunkers had been consumed, the Member was obliged to pay for the bunkers as licensee, notwithstanding a retention of title clause in the underlying contract.
“As a consequence, an owner may be obliged to pay twice for the same bunkers.
“What the judgment fails to positively address is what occurs if some of the bunkers remain unconsumed: does the Sale of Goods Act apply in those circumstances?
“The Court of Appeal judgment seems to suggest that it would in certain circumstances. What if the bunkers are found to be defective after some have been consumed?
“What we have here is a decision which, far from providing clarity, raises more questions than answers and we believe the industry deserves better”
Source: UK Defence Club
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