Norelf sold the cargo at a loss, and then claimed damages ($950,000) from Vitol for breach of contract.
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.
The question was whether the innocent party's conduct did convey, unequivocally, that he was treating the contract as repudiated.
The criticism of the arbitrator's reasoning centres on his conclusion that 'the failure of [the sellers] to take any further step to perform the contract which was apparent to [the buyers] constituted sufficient communication of acceptance.'
By that statement the arbitrator was simply recording a finding that the buyers knew that the sellers were treating the contract as at an end.
It is now possible to turn directly to the first issue posed, namely whether non-performance of an obligation is ever as a matter of law capable of constituting an act of acceptance.
It seems to me that the contractor's failure to return may, in the absence of any other explanation, convey a decision to treat the contract as at an end.
To the knowledge of the buyer the seller does not apply for an export licence with the result that the transaction cannot proceed.
In such circumstances it may well be that an ordinary businessman, circumstanced as the parties were, would conclude that the seller was treating the contract as at an end.
Taking the present case as illustrative, it is important to bear in mind that the tender of a bill of lading is the pre-condition to payment of the price.
Why should an arbitrator not be able to infer that when, in the days and weeks following loading and the sailing of the vessel, the seller failed to tender a bill of lading to the buyer he clearly conveyed to a trader that he was treating the contract as at an end?
in the Golodetz case [1989] 2 Lloyd's Rep. 277 , 286, if it was intended to enunciate a general and absolute rule, goes too far.
108 , 116-117, that a failure to perform a contractual obligation is necessarily and always equivocal I respectfully disagree.
Sometimes in the practical world of businessmen an omission to act may be as pregnant with meaning as a positive declaration.
Thus in Rust v. Abbey Life Assurance Co. Ltd.[3] [1979] 2 Lloyd's Rep. 334 the Court of Appeal held that a failure by a proposed insured to reject a proffered insurance policy for seven months justified on its own an inference of acceptance: see also Treitel, The Law of Contract, 9th ed.
In truth the arbitrator inferred an election, and communication of it, from the tenor of the rejection telex and the failure, inter alia, to tender the bill of lading.