Statoil ASA v Louis Dreyfus Energy Services IP (LDES)

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This case is concerned whether to use objective approach or subjective approach in offer and acceptance chapter of contract law

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Facts of Statoil ASA v Louis Dreyfus Energy Services IP

The seller which is the claimant was the seller of the cargo of LPG. He came into negotiation with the defendant who was the buyer of the cargo LPG to carry it out by the vessel.

As the settlement between them was that the vessel would be completely dis-charged on 13 October, while the vessel was going to dis-charge on 24 October. As this was the mistake of the claimant.

But the defendant knew about this mistake and didn’t told the claimant about it. As the claimant sued the defendant for the amount demurrage payable to him.

Issue:

Whether the Defendant knew the mistake of the claimant would it lead to the formation of the contract on previous terms or not?

Decision:

The courts held that if we use the objective approach, then the contract would be formed. But the courts said that the defendant knew that the claimant was at mistake. So instead of using objective approach they relied on subjective approach and said that there was no contract on the previous terms.

And the defendant is liable to pay the amount of the demurrage to the claimant

Important Point in Statoil ASA v Louis Dreyfus Energy Services IP

Where the offeror has made a mistake and the offeree knows about it. The mistake must relate to the terms of the terms of the contract not the facts, then the subjective approach is applied.

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