In Orion Shipping Trading LLC v Great Asia Maritime Ltd [2025] EWCA Civ 1210, the Court of Appeal (CoA) held that a buyer who lawfully cancels under clause 14 of Saleform 2012[1], can recover loss of bargain damages where the seller’s failure to deliver by the cancelling date was due to “proven negligence” and absent a repudiatory breach.
Factual Background
Great Asia Maritime Ltd (Buyers) agreed to purchase the bulk carrier Lila Lisbon (Vessel) from Orion Shipping Trading LLC (Sellers), for USD15M on Saleform 2012. The Buyers cancelled under clause 14, when the Vessel was not delivered by the extended Cancelling Date and commenced arbitration.
The arbitration tribunal (Tribunal) found that:
- the Sellers failed to take reasonable steps to arrange for delivery to take place;
- their failure to be ready to deliver was due to their proven negligence;
- that despite proven negligence, the Sellers’ actions did not amount to repudiation;
- the Buyers lawfully terminated under clause 14 (Sellers’ default);
- clause 14 entitled the Buyers to damages for loss of bargain.
The Sellers appealed, arguing that loss of bargain damages is not recoverable following cancellation for “proven negligence” absent repudiatory breach.
The High Court reversed the Tribunal decision, holding that clause 14 “does not … give rise to a right to claim loss of bargain damages where cancellation takes place in accordance with the clause, absent an accepted repudiatory … breach”[2]. It treated the relevant trigger as the specific failure to give notice of readiness by the cancelling date, limiting recovery to only those losses caused by that specific failure, rather than non-delivery.
The judge granted the Buyers permission to appeal.
The Central Issue
The issue was whether, on the true construction of clause 14, the Buyers’ recoverable “loss” includes the loss of its bargain.
Clause 14 provides:
14(A) Should the Sellers fail to give Notice of Readiness … or fail to be ready to validly complete a legal transfer by the Cancelling Date, the Buyers shall have the option of cancelling this Agreement.
14(B) Should the Sellers fail to give Notice of Readiness by the Cancelling Date or fail to be ready to validly complete a legal transfer … they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement.
The Court of Appeal’s Analysis
The CoA confirmed that “due compensation” “means compensation which is appropriate using the common law principles of causation, remoteness and mitigation…”[3]
It also held that clause 14(B) creates an express contractual obligation on Sellers to pay compensation, reflecting the drafters’ (of Saleform 2012) intention.
As to “their loss”, the CoA endorsed the Tribunal’s view that compensation extended to the consequences of cancellation, including loss of profit.[4] It agreed that this reflected both the ordinary meaning of the clause and established industry understanding that clause 14 permits recovery of damages at large, including loss of bargain.[5]
On the facts, the Buyers’ loss of profit arose from the Sellers’ failure to deliver, which led to termination and loss of the contractual benefit, namely the difference between the purchase price (USD15M) and the subsequent market value (USD16.85M).
The CoA rejected the view that losses crystallise at the point of cancellation, stating that recoverable losses depend on what actually happens, including whether the Buyers cancel or not.
By way of example, where a new Cancelling Date is agreed, loss of bargain cannot be claimed, but loss of profits for the period of delay may be (which the Buyers were successful in doing on the Sellers’ first default). Conversely, if the Buyers refused to accept the new Cancelling Date and cancelled the contract, they cannot claim for loss of profits because the contract has come to an end. Loss of bargain should not be excluded from recoverable damages.
The CoA also rejected the view that loss of bargain damages would be a “significantly enlarged right”, given that in this case loss of bargain was only slightly higher than the loss of profit.
What was the ‘trigger’ for the loss?
The CoA considered whether failure to be ready by the Cancelling Date should be treated as equivalent to non-delivery. In doing so, it compared clause 14 with the corresponding right given to Sellers under clause 13 (Buyers’ Default), noting their parallel structure and that loss of bargain is recoverable under clause 13.[6] It held that clause 14 should operate consistently and answered the question affirmatively.
The Sellers argued that loss of bargain is only recoverable where the breach is repudiatory. The CoA distinguished the leading authorities relied on, noting they concerned long-term contracts governing ongoing trading relationships as opposed to a single sale contract intended to be performed within a defined period, such as Saleform 2012.
Commercial Considerations
The CoA noted the Judge’s view of the inherent unlikelihood of Buyers cancelling in a rising market unless Sellers were in repudiatory or renunciatory breach, when loss of bargain would be available.
The CoA rejected the view that Buyers would only cancel in a rising market where repudiation exists. Where the Sellers have failed twice to meet the delivery deadline and the Buyers lose patience, clause 14(A) gives them the right to cancel. If loss of bargain were not available, that right under clause 14 would be of little benefit. This would create a ‘perverse incentive’ for Sellers to delay completing in a rising market in the hope that Buyers cancel and leave Sellers with a more valuable vessel, which is not a sensible commercial outcome.
Conclusion
The CoA allowed the appeal and reinstated the Tribunal’s decision. Where Sellers are not ready to deliver by the Cancelling Date and Buyers cancel under clause 14(A), Buyers can recover damages for loss of bargain under clause 14(B) if they can prove Sellers’ lack of readiness is due to negligence.
This outcome aligns with the long-held industry understanding of Saleform 2012. Parties wishing to avoid exposure to loss of bargain must do so expressly in the contract.
The Sellers appealed to the Supreme Court which was heard earlier this month on 2 June 2026 and, with judgment expected any day, it remains to be seen whether the Court of Appeal’s decision will be upheld.
If you have any questions about the assessment of damages or particular charterparty terms, please get in touch with our Marine or Transport & Logistics Teams or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] Adopted by BIMCO in 1956 and revised in 1966, 1983, 1986/7, 1993 and 2012. In The Griffon [2013] EWCA Civ 1567, [2014] 1 L1 Rep 471 Tomlinson LJ said at [1] that the Norwegian Saleform was the most commonly used form of contract for the sale and purchase of second-hand tonnage.
[2] [2024] EWHC 2075 (Comm) [47]
[3] [71]
[4] [74]
[5] [75]
[6] citing The Griffon [2013] EWCA Civ 1567
