Corporate & Securities Law

A Recent English Commercial-Law Decision on Waiver Language

By Ken Adams

This Mace & Jones “Education Update” alerted me to the recent English case of KG Bominflot Bunkergesellschaft fur Mineralole MBH & Co KG v Petroplus Marketing AG (2009).

Here’s the gist of it: The buyers purchased from the sellers fuel oil that tested OK before shipping but was found to be unsatisfactory on arrival. The buyers claimed, among other things, that under section 14(2) of the Sale of Goods Act 1979 the sellers were in breach of an implied term that the cargo would be of satisfactory quality following a normal voyage.

The contract was governed by English law. The sellers pointed to the following contract waiver:

There are no guarantees, warranties or representations, express or implied, or (sic) merchantability, fitness or suitability of the oil for any particular purpose or otherwise, which extend beyond the description of the oil set forth in this agreement.

But the court held that because the Sales of Goods Act 1979 says that the implied term at issue was, for purposes of English law, a condition, and because the contract waiver didn’t include the word “conditions,” the waiver didn’t preclude the buyers’ claim. (Under English law, “breach” of a condition allows a buyer to repudiate a contract whereas “breach” of a warranty allows the buyer to claim damages but not to repudiate the contract.)

Here’s my problem with this. I’m used to thinking of conditions as being distinguishable, semantically, from other kinds of contract language-obligations, representations, and so on. But for purposes of English commercial law, that’s no longer the case, as what is or isn’t a condition is at least partly determined by statute. That renders even more abstract waiver provisions of the sort included in the contract at issue. Waiving implied representations gets you only so far; forget to waive implied conditions and you’re buggered, even though in semantic terms nothing in the contract looks particularly like a condition.

I don’t have a background in commercial law; I have yet to wrestle with waivers in my capacity as contract-language guy; and I’m a stranger to English law. But I’d have though that there must be a way to craft an all-encompassing waiver that, without listing different categories of provisions, says that the buyer waives all rights and remedies regarding the condition of the goods other than those rights and remedies stated in the contract. I welcome any suggestions.

By the way, I put “breach” in quotation marks above because I think it’s unhelpful to refer to “breach” of conditions or warranties. One breaches obligations, but a condition is satisfied or it isn’t; a factual assertion is accurate or it isn’t.

Full post as published by AdamsDrafting on June 05, 2009 (boomark / email).