Certainty in international trade preserved - buyers' headache turns into migraine..

The Nounou confirms the strict approach to the certificate final clauses in international trade.

The buyer sought damages from the seller for off-spec fuel oil at disport despite the cargo being certified as “within the contractual specs” at loadport. The issue was whether the parties agreed that the certificate of quality issued at loadport was to be binding for all purposes or only for invoicing purposes.

A “Recap” clause provided:

“As ascertained at loadport by mutually acceptable 1st class independent inspector (…). Such result to be binding on parties save fraud or manifest error. (…)”

A “General” clause provided:

“.. the certificates of quantity and quality … of the Product … shall, except in cases of manifest error or fraud, be conclusive and binding on both parties for invoicing purposes and the Buyer shall be obliged to make payment in full…”

The CA rejected Buyers' submissions and held that the General clause was in conflict with the Recap term as they could not “fairly and sensibly be read together”. The former did not qualify/supplement the latter, it rather deprived it of all practical effect. The rationale behind the Recap term (“the mutually acceptable independent inspector”) was to prevent the buyer from suing on the ground that the quality of the product was off the specs. This is in line with international sales contracts, specifically when a letter of credit is involved.