Project Dispute

Wednesday, September 14th, 2016

PROJECT DISPUTE – PERFORMANCE AND PERFORMANCE GUARANTEE

We are always seeking to inform our readers of contractual ‘incidents’ from which there is extensive learning opportunities. There has been a long running saga between Todaysure Matthews Ltd & Anor v Marketing Ways Services Ltd. The latest reference is [2016] EWHC 147 in the Commercial Court. The defendant, Marketing Ways Services Ltd is a Saudi Arabian company.

The case is littered with learning for procurement and project specialists.  The purchase order stated that the ‘shipping to be arranged by the client (Marketing Ways) and subject to ‘Incoterm: exworks Todaysure Matthews Ltd’. You may believe it or not but a QC in the case said that there was confusion of ‘packaging’ on the one hand and ‘packing’ on the other. He said that packaging was putting equipment into the container or wrapping it securely, whereas packing was putting the equipment on the relevant transport.

The purchase price for the manufacture and supply of incinerator systems to Saudi Arabia was £8,570,000. The payment terms, in our experience, were quite novel. 50% with order; 10% 30 days; 10% 60 days; 10% 90 days; 10% 120 days from date of order; 10% to be withheld until the project was signed off. This was excellent cash flow for the manufacturer, but no mention of milestones is evident from the detail in the judgment.

There was a performance guarantee, that was drawn down by the individual in Saudi Arabia, despite him claiming otherwise. There was a separate hearing at which the individual has been sentenced to UK imprisonment for ‘egregious contempt’. It may be no surprise that he has not re-entered the UK since the sentence was passed down.

The ominous words from the Judge were ‘the project proved to be somewhat troublesome from the very outset.’ The equipment began to arrive in Saudi Arabia in August 2014. None of the civil works for which the defendant was responsible had been done.

The Judge found in favour of Todaysure with their claim of £11,066,566. The details are in the judgment. It is only 8 pages long and we urge that it be studied.

 

If you would like any assistance with Project Disputes please give us a call on 01744 20698 or email office@brianfarrington.com