Early Settlement for Fuel Supplier
Nockolds acted for a company supplying fuel to a customer. The supply contract obliged the company to purchase a certain quantity of fuel each year. The customer failed to purchase the requisite quantities of fuel over a number of years and wrongly claimed that it was entitled to reject certain deliveries because of contamination and/or the moisture content of the fuel.
After meeting with the client to understand the background to this matter we prepared a detailed letter which set out our client’s claim and included a thorough breakdown of its losses. The customer argued that the contract was in effect, guidelines for the amount of fuel that might purchase each year but this argument was not supported by the drafting of the agreement. The commercial background to the contract also suggested that the contract required the customer to buy certain quantity of fuel because it had to invest heavily in its infrastructure to perform the contract. Due to the nature of the customer’s business, it needed to be able to demonstrate that it could meet its own fuel requirements in order to attract subsidies.
There was a willingness on both parties to settle a claim that would have been very expensive to litigate in the High Court. After an initial off the record meeting, negotiations continued for around 3 months until an agreement was reached which included a substantial payment to our client. The client’s case was articulated robustly in correspondence and when settlement negotiations commenced the power station was in no doubt as to the strength of our client’s case or its intention to litigate if a settlement could not be agreed. The case was settled at a modest cost to the client and perhaps as a result of avoiding court action, our client has retained a customer.