Citgo Petroleum Corp. v. Odfjell Seachem

YPF (defendant), a company with a place of business in Argentina, sold cyclohexane to Tricon. YPF agreed to ship the cyclohexane aboard the shipping vessel the BOW FIGHTER (defendant) to Houston, Texas by March 15, 2005. YPF’s contract with Tricon specified that YPF was to ship the cyclohexane “CFR,” a standard code for the International Commercial Term (Incoterm) “Cost and Freight.” Shipping CFR means the seller arranges the shipping transportation and pays for delivering the goods to the shipping vessel. Once the goods are on board the vessel, the risk of loss shifts to the buyer. In turn, Tricon sold the cyclohexane to Citgo (plaintiff). Tricon agreed to deliver the cyclohexane aboard the BOW FIGHTER to Citgo in Freeport, Texas by April 20, 2005. The BOW FIGHTER arrived late to Argentina, and then suffered engine problems as it sailed to Texas. The ship arrived nearly two months late to Houston and then to Freeport. During the two-month delay, the price of cyclohexane dropped significantly, causing Tricon to lose $450,000. Citgo sued both on behalf of Tricon, as Tricon’s subrogee, and on its own behalf. Among other claims, Citgo alleged that YPF had breached its duty under Article 32 of the United Nations Convention for the International Sale of Goods (CISG) to arrange for appropriate transport of the cyclohexane. YPF moved for summary judgment, arguing that the contract only required YPF to deliver the cyclohexane to the BOW FIGHTER, and, after that, the risk of loss for any transport issues fell on the buyer.