Forward trading in Brent crude can be done in either of the two kinds of f.o.b. contracts, namely, “dry” or “wet”. This is because in this market trading in crude oil is done with reference to its delivery in a named month. The seller has the obligation to nominate a three-day range in that month for the buyer to take delivery of the cargo at Sullom Voe terminal. This nomination must be notified to the buyer 15 clear days before the first day of the three-day range. The contracts made in respect of this cargo of oil after the nomination are “wet” contracts; because eventual physical delivery is expected. Those made before are “dry” because in these contracts the parties who have bought and resold the cargo do not expect to take physical delivery of it.

The contract in question in The Aragon was dry and the three-day range was 8–10 February 1986. The contract was made on 27 November 1985. Coastal, the f.o.b. buyer, nominated the Aragon to take delivery of the cargo. However, for one reason or another, the Aragon did not berth at Sullom Voe until 21.24 hours on 10 February. In view of the fact that it would take about 21 hours to complete the loading of the cargo, it appeared clear to Phibro, the seller, that the Aragon could not have done so by midnight of that date. Phibro therefore declared to Coastal in a telex sent at 23.14 hours that it treated the latter as being in breach of a condition of the contract. The cargo, 600,000 barrels of Brent crude, was nevertheless loaded on board the Aragon but resold to one of Coastal’s affiliates at a price of some U.S. $10 a barrel less than the original contract price. It would not seem surprising that, facing this huge loss, Coastal concluded that the delay in the loading of the cargo meant, as it argued before the Court of Appeal, that the cargo did not correspond to the description in the contract, i.e., not “February 8–10 Brent crude”. This was rejected by the court because by the terms of the contract the parties incorporated the B.P. conditions, one of which was to the effect that “… any delay of any kind or from any cause whatever … howsoever without limitation … however the same may arise and whether or not under the Agreement … [the seller’s liability] shall be limited to the payment of demurrage … [the buyer] shall not be entitled to complain directly or indirectly except for the purpose of founding a claim to such