Facts
Norelf Ltd contracted to sell a cargo of propane to Vitol SA in 1991. The propane market had been very volatile. The cargo was being shipped (on the Santa Clara) from Houston, U.S. It was meant to leave before March 7. On March 8, while it was still being loaded, Vitol sent a telex to Norelf saying it did not wish the contract to continue because it was not going to arrive on time (i.e. Vitol repudiated the contract). The ship was loaded, and it sailed on March 9. The price of the cargo fell. Neither side did anything further to perform the contract. Norelf sold the cargo at a loss, and then claimed damages ($950,000) from Vitol for breach of contract.
The arbitrator held that Vitol's telex was an anticipatory breach of contract, but Norelf's failure to take further steps to perform the contract was sufficient communication to Vitol that they had accepted the repudiation. Vitol's appeal was dismissed in the High Court by Phillips J. But it succeeded in the Court of Appeal, who held that a mere failure to perform contractual obligations could not constitute acceptance of the repudiation. Norelf appealed to the House of Lords.
Read more about this topic: Vitol SA V Norelf Ltd
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