Acceptance and Delivery


1 The Contractor may not wish to part with possession until its claim for price adjustments are satisfied and the Company has waived any claim for payment of liquidated damages, whereas the Company may wish to terminate and take over possession if the work is not completed to its satisfaction by the agreed deadline.

2 See Sale of Goods Act 1979, s 20.

3 See further ch 13 on termination and step-in rights.

4 Walford v Miles [1992] 2 AC 128, [1992] WLR 174 explains the common law position concerning agreements to agree and agreements to negotiate.

5 It is usual for the contract to provide expressly that if the Company does not serve notice of rejection, with reasons, within the agreed period, the Company is deemed to have accepted the vessel.

6 See the comments of Judge Gilbart QC in R (on the application of Halebank Parish Council) v Halton Borough Council [2012] EWHC 1889, applying the decision of Ouseley J in Midcounties Co-Op v Wyre Forest DC [2009] EWHC 964 (Admin).

7 [1976] 2 Lloyd’s Rep 621, [1976] 3 All ER 570.

8 At 626.

9 See ch 18 on warranty obligations.

10 The requirement, as specified by s 13 of the Sale of Goods Act 1979 is that the goods correspond to a description. Earlier case law (even prior to the Sale of Goods Act 1979) generally upheld the principle that where a contract contained an express specification/description, the buyer would be entitled to reject the goods if they did not comply with it, even if the non-compliance did not affect the buyer’s ability to use the goods for their intended purpose (see for example Arcos Limited v E A Ronaasen & Son [1933] AC 470, (1932) 45 Ll L Rep 33). However, this position has subsequently developed so that it is no longer necessary for complete conformity with a description (see The Diana Prosperity).

11 Although the specification may state a deck load figure without including margin of error, note that it is usual for those conditions for which the deck load has been guaranteed to state that, where the shortfall is within a stated margin of grace, no liquidated damages are payable. This may be evidence that the parties have contemplated that in each load condition any shortfall within a small margin is immaterial.

12 We are reliably informed by an eminent naval architect that nothing is impossible to rectify.

13 See ch 8 at para 8.116 onwards.

14 See ch 8 on the prevention principle.

15 This principle is discussed in para 10.91 above.

16 The Contractor is therefore a subcontractor of the Company. In relation to subcontracting, see ch 5.

17 The exception would be if the Contractor and end user enter into a direct agreement, as explained in ch 5. However, such agreements create a direct relationship between the Contractor and the end user, and its financing bank, only if the Company is in default.

18 The court hearing lasted almost a year.

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