The High Court has recently considered the purpose and effect of
the GAFTA FOB contract "Extension of Delivery" clause,
which entitles a buyer to claim an extension to the delivery
period. This alert considers the conclusions reached in the
Nidera BV v Venus International Free Zone for Trading &
Marine Services SAE case.
Background
Extension clauses are a regular feature of both CIF and FOB
contracts, usually giving one party an automatic right to extend
the contract period. Without an express extension clause, a party
may find itself in breach of an important term for late performance
(unless reliance can be placed on a force majeure clause), leading
to a default.
In CIF contracts, extension is usually in a Seller's option,
giving a right to extend the shipment period, usually with some
financial cost to the Seller. Traders using "hybrid" CIF
contracts with some arrival terms – e.g. arrival dates rather
than simple shipment dates/range – should be aware
