Case report

Measure of damages and mitigation in sale contract dispute. In Sharp Corp Ltd v Viterra BV [2024] UKSC 14 the courts reconfirmed the measure of damages in case of buyer's default. A parcel of lentils and peas had been sold CFR Mundra on GAFTA terms, the buyer did not pay for the goods before discharge as required by the contract. The goods were discharged and stored. As a result of import tariffs, their value had substantially increased. The question was how to determine the value of the goods at the point of default. The Seller had calculated the value of the goods by reference to a substitute contract on similar terms whereas the buyer claimed that the relevant calculation had to be the difference between the contract price and the value of the goods as is where is, thus customs cleared in the domestic market. The Supreme Court, unlike the previous courts, found for the buyer!

Mitigation in this case was allowing the goods to be stored pending the buyer's default. It must include all reasonable steps to avoid the consequences of a wrong, there shall be no recovery for losses that could be avoided; losses incurred in mitigation will be recoverable; there shall be no recovery for avoided loss. In this case the buyer benefited from a successful mitigation.