Transfield Shipping Inc. v. Mercator Shipping Inc.

[2008] UKHL 48, [2009] 1 A.C. 61 (2008)

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Transfield Shipping Inc. v. Mercator Shipping Inc.

House of Lords
[2008] UKHL 48, [2009] 1 A.C. 61 (2008)

CS

Facts

Mercator Shipping Inc. (plaintiff) chartered its vessel to Transfield Shipping Inc. (defendant) for a time charter. Transfield was scheduled to return the vessel to Mercator on May 2. On April 20, Transfield informed Mercator that it would return the ship between April 30 and May 2. Mercator entered into a subsequent charter agreement with another charterer that was scheduled to begin on May 8. Transfield did not return the vessel until May 11, and the start of the second charter was therefore delayed. Mercator was forced to agree to a significant reduction in the rate of hire for the second charter to induce that charterer not to cancel the charter as a result of the delay. Mercator sued Transfield for the profits it lost in reducing the rate of hire for the second charter. An arbitration decision awarded Mercator those lost profits, and that decision was affirmed by the High Court and the Court of Appeal. Transfield appealed to the House of Lords.

Rule of Law

Issue

Holding and Reasoning (Baroness Hale, J.)

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