Facts
Kolmar agreed to buy methanol from Traxpo for loading at Kandla in India, with payment by letter of credit. Kolmar had an American customer in urgent need of the cargo. It agreed to an initial amendment giving Traxpo the option over the five per cent quantity variation. As market prices rose and the ship waited, Traxpo threatened to withhold delivery unless Kolmar accepted less methanol at a higher price. Kolmar protested, but agreed to amend the credit again to obtain the cargo.
Issue
Did the threat amount to economic duress, entitling Kolmar to recover the extra payment? Kolmar also claimed for short delivery, demurrage and the cost of moving the ship off the berth.
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Decision
The Commercial Court held that the later amendment was procured by economic duress. Traxpo’s threat to break the contract was illegitimate and induced Kolmar’s agreement. Kolmar had no realistic alternative given its urgent supply commitment. The earlier amendment to the quantity option had been agreed freely and remained effective.
The court awarded US$1,405,566.61 in restitution or damages for intimidation. It also awarded US$468,583.93 for short delivery, US$356,424.60 for demurrage and US$5,162.13 for shifting expenses. The total was US$2,235,737.27 before interest and costs.
Reported citations: [2010] 1 CLC 256
Source: Full judgment
