Consequential loss clauses: some comfort for contractors

By Clare Kempkens

The Commercial Court has ruled in Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm) that damages for non-acceptance of goods under section 50(2) and (3) of the Sale of Goods Act 1979 represent the seller’s ‘loss of bargain’ with the buyer, rather than any loss of profit.

The defendant purchaser was unable to rely on a loss-of-profit exclusion because of the distinction drawn between the two concepts. The measure of damages to be awarded under the act is calculated as the difference between the price agreed under the contract and the value of the goods on the open market at the time of the breach. In contrast, a loss of profit is the difference between the cost to the seller of producing or procuring the item and the anticipated sale price.

The claimant, Glencore, entered into a contract with the defendant buyer, Cirrus, for the sale of Ebok crude oil. Cirrus required the oil for a sub-sale to Tema Oil Refinery (TOR). The contract between Glencore and Cirrus included the following exclusion clause at section 32.1, which will look broadly familiar to many readers…

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