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Phillips Puerto Rico Core, Inc. v. Tradax Petroleum, Ltd.

United States Court of Appeals for the Second Circuit

April 8, 1985, Argued ; September 16, 1985, Decided

No. 84-7789


 [*315]  MANSFIELD, Circuit Judge:

Phillips Puerto Rico Core, Inc. ("Phillips"), which contracted to buy a cargo of naphtha, appeals an order and judgment of the Southern District of New York, Robert L. Carter, Judge, awarding over a million dollars in damages against it in favor of Tradax Petroleum, Ltd., for breach of its contract with Tradax. Phillips maintains that it was excused from performing because Tradax had failed to perform satisfactorily and because of the occurrence of an event of force majeure. We disagree and affirm.

This convoluted maritime [**2]  controversy had its origins in early September 1981 when Phillips, a corporation organized under Delaware law with its principal place of business in Puerto Rico, agreed to buy 25-30,000 metric tons of naphtha from Tradax, a corporation organized under Bermuda law, with its principal place of business  [*316]  in Switzerland. Tradax had just purchased the naphtha from another firm, Schlubach & Co., and the naphtha was located in Skikda, Algeria. The Tradax-Phillips contract, which was made by telephone and then confirmed by telex on September 3, 1981, specified that the sale was to be "C & F" (cost and freight) Guayama, Puerto Rico and that shipment was to be made between September 20-28, 1981. No dates for delivery were specified. The agreement incorporated the International Chamber of Commerce 1980 Incoterms, a set of standardized terms for international commercial contracts, which define a "C & F" contract as one in which the seller arranges and pays for the transport of the goods, but the buyer assumes title and risk of loss at the time of shipment. The contract was also to include Tradax's standard contract provisions "subject to [Phillips'] review and acceptance." These [**3]  standard terms, including a force majeure clause and an arbitration clause, were not recited in the telex but were subsequently mailed by Tradax to Phillips with a confirming letter and arrived several weeks later.

Soon after the original contract was entered into a September 8, 1981, telex from Phillips to Tradax provided documentation and delivery instructions, giving the destination in Puerto Rico and listing Phillips as consignee. The telex confirmed that "title and risk of loss to products shall pass to buyer at the time product reaches the vessel's flange at the load port." On September 16 Tradax nominated the Oxy Trader, an integrated tug barge, as the vessel for the journey, and after determining that the Trader would fit in the Puerto Rico berth and was available at the correct times, Phillips accepted the nomination.

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782 F.2d 314 *; 1985 U.S. App. LEXIS 23209 **; 41 U.C.C. Rep. Serv. (Callaghan) 1678; 1986 AMC 184

PHILLIPS PUERTO RICO CORE, INC., Plaintiff-Appellant, v. TRADAX PETROLEUM LTD., Defendant-Appellee

Prior History:  [**1]   Appeal from a judgment of the Southern District of New York, Robert L. Carter, Jr., Judge, awarding $1,039,330.99 in damages plus interest for breach of a Cost and Freight ("C & F") contract.

Disposition: Affirmed.


force majeure, delivery, shipment, ship, naphtha, documents, seller, buyer, telex, destination, vessel, terms, port, excused, freight, contracts, loaded, bill of lading, transport, shipping document, arrived, damages, barge, cargo, transshipment, arbitration, integrated, confirmed, Producer, tug

Admiralty & Maritime Law, Shipping, Carrier Duties & Obligations, General Overview, Business & Corporate Compliance, Sales of Goods, Performance, Delivery & Shipment by Seller, Contracts Law, Contract Conditions & Provisions, Types of Commercial Transactions, Risk of Loss, Commercial Law (UCC), General Provisions (Article 1), Definitions & Interpretation, General Provisions, General Provisions, Policies & Purposes, Sales (Article 2), Contract Provisions, Contract Terms, Subject Matter, Definitions, Standards of Performance, Impossibility of Performance, Standards of Performance & Liability, Breach, Excuse & Repudiation, Goods