Statoil ASA v Louis Dreyfus Energy Services LP [2008] EWHC 2...

Facts

• The dispute arose from a propane shipping contract involving Statoil ASA and Louis Dreyfus Energy Services LP.
• Louis Dreyfus chartered a vessel to transport propane, which Statoil subsequently leased.
• Both parties were under the mistaken belief that the vessel would be available to load by a specified date.
• Unanticipated delays at the port rendered the supposed availability date incorrect and resulted in additional costs due to delay fees.
• Statoil contended that this shared mistake invalidated the contract's delay clause.

Issues

1. Whether the parties’ shared mistaken assumption regarding the vessel's availability rendered the contract void.
2. Whether the allocation of risk for delays within the contract prevented the mistake from avoiding contractual obligations.
3. Whether the requirements for a shared mistake, as defined in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407, were satisfied in this case.

Decision

• The court found that both parties genuinely believed the vessel would be available by the stipulated date and were mistaken.
• It concluded, however, that the mistake did not make the contract impossible to perform; performance was still possible, albeit with increased costs from delays.
• The terms of the contract, particularly the delay clause, demonstrated that Statoil had accepted responsibility for the risk of delays.
• As a result, the mistake was not fundamental enough to void the contract, since risk had been contractually allocated.

Legal Principles

• For a shared mistake to render a contract void, the mistaken assumption must be fundamental, shared by both parties, and not accepted as a risk by either party.
• The risk allocation within a contract is critical; if a contract addresses the risk of mistake, allocation of that risk prevents the mistake from voiding the agreement.
• The requirements for a shared mistake were restated per Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd.
• Commercial contracts are supported by the principle that agreements with clear risk allocation should generally be upheld, even if mistakes affect performance or profits.

Conclusion

The court ruled that the contract between Statoil and Louis Dreyfus remained valid despite the shared mistake about the vessel’s availability, as the contract specifically allocated the risk of delay. The decision reinforces that commercial contracts are not void for mistake if risk is expressly assigned within their terms.