The Naxos

On one view, the House of Lords in The Naxos 1 decided no more than the relatively narrow point that a term in an f.o.b. contract requiring the seller to have the goods ready for delivery at any time (after the expiry of a stipulated period of notice given by the buyer of the ship’s expected readiness to load) within the shipment period was a condition of the contract; so that, on the seller’s breach of that term, the buyer was entitled to rescind, even before the end of the shipment period. But the case also raises wider issues in relation to the criteria on which the courts will rely in determining whether a previously unclassified term is to be classified as a condition, so that any breach of it (whether serious or not) will justify rescission by the injured party.

Of the problems arising out of f.o.b. contracts, few give rise to as much difficulty as that of the time of shipment. The reason for the difficulty is that, in relation to such contracts, delivery is a joint operation, the seller supplying the goods and the buyer the receptacle (i.e., the ship) into which they are to be delivered. In this situation, it becomes hard to apply the rules which govern stipulations as to the time of delivery in contracts for the sale of goods generally. There is, indeed, no difficulty in applying the prima facie rule that stipulations as to the time of making delivery are of the essence of the contract, or (to put the same point in other words) are conditions,2 so that any failure to comply with them justifies rescission. But the prima facie rule that stipulations as to the time of taking delivery are not of the essence3 cannot readily be applied to f.o.b. contracts, since failure on the buyer’s part to comply with them will have obvious repercussions on the seller’s ability to make delivery within the time allowed by the contract. Still further difficulties are caused by the fact that such contracts do not generally specify a date on which delivery is to take place: what they normally specify is a period within which the goods are to be shipped; and it is settled that (unless the contract otherwise provides) any failure to make or take delivery within that period gives the injured party the right to rescind: that is, the buyer need not accept the goods if the seller cannot complete loading,4 nor need the seller ship if the goods cannot be put on board the ship, presented by