Default clause is a damages compensation mechanism built into standard GAFTA contracts. When one party commits a material breach (breach of condition), the injured party may declare default and demand compensation equal to the difference between the contract price and the market price of the goods on the date of default. The fundamental difference from the general rules for damages recovery under English law: the GAFTA default clause locks in a specific formula for calculating…
The English approach to contractual penalties stands in marked contrast to that prevailing across continental European jurisdictions. Where many legal systems permit parties broad latitude in specifying monetary consequences for non-performance, the courts of England and Wales will strike down stipulations whose primary purpose is punitive rather than compensatory. For practitioners operating in the sphere of cross-border commerce — particularly those advising on commodity supply agreements governed by GAFTA or FOSFA terms — a working…
English law has a long-standing tradition and a clearly structured system of awarding damages, developed over centuries through case law and precedent. An understanding of the principles governing damages under English law is essential for international contracts and disputes, as English law is often chosen as the applicable law in commercial agreements. In this article, we will examine the key aspects of the system of awarding damages under English law, including the different types of…
In international trade of agricultural commodities, issues of calculating damages for non-delivered goods are of key importance. In this article, we will consider how damages are calculated under Gafta and FOSFA contracts, as well as under English law. General Principles of Calculating Damages under English Law Under English law, damages for breach of contract are calculated on the assumption that the breaching party acts in the least favourable manner for the claimant. This rule is…
