Sellers successful in action for price where goods accepted and title had passed

Moeve Trading S.A.U. (formerly CEPSA Trading SAU) -v- Mael Trading FZ LLC [2026] EWHC 17 (Comm)

The Commercial Court has granted an application for summary judgment brought by Moeve Trading S.A.U., as Sellers, against Mael Trading FZ LLC, as Buyers, in an action for the price of goods under s.49(1) of the Sale of Goods Act 1979 (SoGA).

In doing so, the Court confirmed the position on a buyer’s liability for payment of the price where a letter of credit (LC) has been issued, but the bank has not paid out so that the shipping documents have not been transferred directly to the buyer.

The background facts

Under a contract dated 4 April 2024, the parties agreed to the sale of 9,000-9,500 metric tons (MTs) of gasoline and 5,000 MTs plus 5% of gasoil, both quantities in Buyers’ option, for delivery on Free on Board (FOB) terms at Algeciras, Spain (the Contract). The cargo was shipped on board the MV HARBOUR PROGRESS (the Vessel) on 12 July 2024 and bills of lading were issued.

One week later, the Vessel arrived at Freetown, Sierra Leone, and tendered notice of readiness. The cargo was discharged without presentation of the bills of lading under a letter of indemnity and was received by the Buyers and their purchasers. On shipment, property in the cargo transferred to the Buyers under the express terms of the Contract.

The purchase price was more than US$13 million and was to be paid on presentation of shipping documents, including the issued bills of lading. Payment was to be by way of an LC, which was issued in June 2024, and in any event payment was due within 60 days of the bill of lading date. However, when Sellers presented the shipping documents for payment, the issuing and confirming banks refused to make payment. No evidence was provided to the Court as to why payment was refused and that was not at issue in the proceedings.

Sellers applied for summary judgment on their claim for the price under s.49(1) of SoGA. Buyers resisted the application on the grounds that they had fulfilled their payment obligation by issuing the LC and, in any case, the relevant shipping documents had not been handed to them such that their payment obligation had not been triggered.

S.49(1) of the Sale of Goods Act 1979

S.49(1) of SoGA provides that where property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay, the seller can take action for the price of the goods. This is a valuable remedy, since a claim for the price is made in debt rather than in damages, so that the principles affecting damages claims (such as remoteness, and mitigation of loss) do not apply.

In this case, Buyers admitted that title had passed. Earlier in the proceedings, they had also admitted non-payment of the price, but they sought to withdraw that admission and pursue the defences set out above in response to Sellers’ application for summary judgment.

The Commercial Court decision

There were three key questions for the Court in deciding whether to grant summary judgment.

(1) Were the Buyers’ payment obligations under the sale contract fully discharged by the issue of the confirmed letters of credit even if payment was not made by the banks?

Sellers’ position was:

1. The opening of an LC is only conditional payment. If the payment under the LC fails, a seller’s remedy is a claim for the price against the buyer.

2. A buyer who has not rejected the goods or to whom property in the goods has passed, remains liable for the price even if the LC fails.

3. The passing of title under the contract was sufficient to engage s.49(1) of SoGA.

4. It did not make business common sense that a buyer could accept the goods and decline to pay the price.

In answer, Buyers’ position was:

1. Once a buyer has procured the opening of an LC, the seller cannot bypass that credit to seek payment directly from the buyer.

2. The LC was unconditional payment; opening the LC was accordingly sufficient under the terms of the Contract fully to discharge Buyers’ payment obligations.

3. If the LC fails due to the actions of the Sellers, the Sellers cannot recover the price from the Buyers.

4. Sellers’ remedy is not an action for the price under s.49(1) but by means of a claim for unjust enrichment or an argument based on waiver (arguments which were not advanced by the Sellers).

The Court held that there was a difference, as a matter of construction of the contractual clause, between an LC being an absolute payment (where the buyer’s obligation is discharged simply by issuing one) and a conditional payment (where the seller is entitled to proceed against the buyer for payment of the price or damages if the LC fails). The Court reiterated the authorities that there is no presumption that an LC will be a conditional or absolute payment: it will depend on the construction of the contract in question.

In this case, the Court held that the LC was a conditional payment on the terms of the Contract, partly because the Buyers were to be responsible for payment within 60 days of the bills of lading in any event. In those circumstances, even where Sellers could have been at fault for the bank not paying out (although there was no such finding in this case, because that was not an issue before the Court), Buyers had accepted the goods and title had passed to them, so Sellers were entitled to look to Buyers for payment of the price rather than pursuing the confirming or issuing banks. Buyers were liable to Sellers for the whole price.

(2) Were the Buyers not liable for the price unless and until the required documents were actually presented or transferred to the Buyers?

Sellers’ position was:

1. There was nothing in the Contract which obliged the Sellers physically to hand over the documents to the Buyers, where the LC had failed.

2. If the LC had succeeded, the shipping documents would have been handed to the bank and payment would have reached Sellers before the documents were given by the bank to Buyers.

3. The documents represented security for the Sellers and to give up that security before being paid would subvert commercial logic.

4. The parties’ respective obligations to pay for the cargo and to present the shipping documents were concurrent and when one party is ready, willing and able to perform their side of the bargain, it has discharged its obligation. Sellers had repeatedly stated, including in pleadings before the Court, that they “tendered” the documents (in the sense that they stood ready to transfer them to Buyers) in return for payment. Sellers contended a tender did not connote or necessitate physical transfer.

Buyers’ position was:

1. The shipping documents had to be physically produced by the Sellers in order to receive payment.

2. No liability arose to make payment prior to that physical presentation of the shipping documents.

3. Even if the obligations were concurrent, Buyers would need to be able to inspect the documents presented in order to decide whether to accept or reject the tender.

The Court found for the Sellers and held that, provided the Sellers were ready, willing and able to provide the Buyers with the shipping documents at the same time as the Buyers were to make payment, then Sellers were entitled to maintain their action for the price. Sellers had repeatedly tendered the documents in return for the price. The obligations were concurrent and there was no requirement for Sellers physically to present the shipping documents prior to receiving payment.

(3) Did Sellers succeed in their application for summary judgment?

The Court answered both questions 1 and 2 in the negative and sided with the Sellers on both. Sellers were, therefore, entitled to maintain their action for the price under s.49(1) of SoGA. The Court was satisfied that the Buyers’ defences had no real prospect of success and ordered summary judgment for the price against the Buyers.

Comment

While an LC will very often amount to conditional payment, that will not necessarily be the case under every contract. A seller should ensure the contract terms, and the LC itself, are consistent with the LC being conditional payment only. Doing so will allow a claim against the buyer, whether in debt for the price under s. 49 of SoGA or, where that is unavailable, in damages for non-payment.

Although not an issue for decision in this case, the judgment reflects earlier authority that, where an LC is unconditional payment but payment is not made because of a fault by the seller (such as the presentation of documents outside the validity of the LC), the seller will have no right of action against the buyer if the goods have not been accepted. It remains crucial for a seller to comply with the LC terms in its presentation of documents.

Finally, if the payment and presentation of shipping documents are concurrent obligations, it is sufficient for one party to be ready, willing and able to transfer the payment documents in order for an action for the price to be made. In that sense, a tender of documents does not require their physical transfer and, indeed, that would make no commercial sense where shipping documents are routinely retained as security for payment.