最近碰到Subject to下，船东被租家以某个理由给fail了；参阅早先写过的《如何判断合约是否已经缔结》，稍微整理了一下，相关法律问题供参阅。

A.   INTRODUCTION

1.  The general rule is that parties are not bound by an agreement until they have agreed all the terms that they regard as essential to the contract. Lord Blackburn, in Rossiter v. Miller (1878) 3 App. Cas. 1124, said, at page 1151: “If some particulars essential to the agreement still remain to be settled afterwards, there is no contract.”

2.   However, it is for the parties to decide what terms are essential to the contract; they decide at what stage in negotiations an agreement becomes binding. “Even if the parties have reached agreement on all the terms of the proposed contract, nevertheless they may intend that the contract shall not become binding until some further condition has been fulfilled. Conversely, the parties may intend to be bound forthwith even though there are further terms still to be agreed.There is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later”: per Lloyd, L.J., in Pagnan v. Feed Products [1987] 2 Lloyd’s Rep.601, at p.619. Similarly, in Global Container Lines v. State Black Sea Shipping [1999] 1 Lloyd’s Rep.127 (C.A.), at p.155, Hobhouse, L.J., said, “Where you have an agreement which provides for the parties to agree on something further, then it may be inferred as a matter of construction that the whole contract is conditional as a contract upon the further agreement of those particular points. But that is not a conclusive presumption because it is always possible to have a contract which does refer to a further agreement in such terms but nevertheless constitutes a binding agreement.” In practice, however, the parties’ freedom to leave matters over for later agreement, and yet be bound immediately, is limited by the principle that an agreement which leaves critical matters to be agreed at a later stage may be too uncertain to be enforced. See Time Charters, 7th ed, Informa law, at para.1.4.

3.   It is well established that when deciding whether a contract has been made during the course of negotiations the court will look at the whole course of those negotiations. See Hussey v. Horne-Payne (1878) 4 App Cas 311. Its rationale apply regardless of whether the negotiations are conducted in writing, orally or by conduct or by a combination of those means of communication. See Global & Anor [2017] EWCA Civ 37; Clydesdale Bank Plc v Duffy[2014] EWCA Civ 1260.

4.    The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. Even if certain terms of economic or other significance to the parties have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a pre-condition to a concluded and legally binding agreement. See RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh & Company KG (UK Production)[2010] UKSC 14.

5.    These principles apply to all contracts, including both sales contracts and construction contracts, and are clearly stated in Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601, both by Bingham J at first instance and by the Court of Appeal. In Pagnan it was held that, although certain terms of economic significance to the parties were not agreed, neither party intended agreement of those terms to be a precondition to a concluded agreement. The parties regarded them as relatively minor details which could be sorted out without difficulty once a bargain was struck. The parties agreed to bind themselves to agreed terms, leaving certain subsidiary and legally inessential terms to be decided later. See RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh & Company KG (UK Production)[2010] UKSC 14.

6.    The starting point must therefore be for the court to consider and determine the effect of the “subject” provision contained in bold text at the start of the fixture recap. The placement of this provision at the start, and the use of bold text, reflected the importance of this provision. It indicated, in my view, that it qualified everything which followed. That naturally includes the arbitration clause itself. See The Newcastle Express [2022] EWHC 181 (Comm), per Jacobs J at [83].

7.  The contractual significance of a “subject” clause of this kind is clearly explained by Foxton J in The Leonidas [2020] EWHC 1986 (Comm);[2021] 2 Lloyd’s Rep.165 at para.[53] of his judgment:

     “… there is a particular feature of negotiations for the conclusion of contracts for the employment of ships which should be noted. When the main terms for a charterparty have been agreed but the parties have yet to enter into contractual relations, this is generally referred to by shipowners, charterers and chartering brokers as an agreement on “subjects” or “subs”, an expression which signals that there are pre-conditions to contract which remain outstanding. The conclusion of a binding contract in respect of such an agreement is seen as dependent on the agreement of the relevant party or parties to “lift” (i.e. remove) the subjects.”

8.       In The Leonidas, the charter provides that:

“FOR ACCOUNT OF TRAFIGURA TRADING LLC OR NOMINEE WITH SUBJECTS TO CHTRS’ S/S/R/MGT APPROVAL LATEST 1700 HOURS HOUSTON TIME TUESDAY 12, 2016.”

9. Foxton J, in giving judgment, he said at [48]:

In contrast, there are cases in which an agreement is said to be “subject” to some event within the control of someone other than one of the parties, and in which it has been held that the “subject” is not a “pre-condition” which prevents a binding contract coming into existence, but instead has the effect that performance does not have to be rendered if the “subject” is not satisfied for reasons other than a breach of contract by one of the parties (“a performance condition”).

10. Foxton J accepted Mr Pearce’s submission that an important factor in determining whether a “subject” is a pre-condition or a performance condition is whether the satisfaction of the “subject” depends upon the decision of a contracting party, or on that of a third party.

11. Foxton J went on to observe at [50] that:

However, similar language has been held to create a performance condition, albeit in cases in which a seller has sought to rely on the buyer’s entitlement to conduct a survey as a reason why the seller is not bound. In Varverakis v Compagnia de Navegacion Artico SA (The Merak) [1976] 2 Lloyd’s Rep 250, the Court of Appeal held that an agreement incorporating the terms of the Norwegian Sale Form (“NSF”) for the sale of a ship, which was made “subject to superficial inspection”, was a binding contract which obliged the seller to offer the ship for inspection and the buyer to conduct a survey. The Court reached this conclusion because the NSF imposes an obligation on the buyer to inspect the ship, and to do so on a timely basis, and gives the buyer (but not the seller) the option to cancel or maintain the contract after the survey. Ee v Kakar (1980) 40 P&CR 223 is another case in which the seller wanted to rely on the words “subject to survey” to relieve it of liability for breach of contract, albeit Walton J was clearly of the view that the buyer was bound to perform such a survey, or lose the benefit of the condition, and was bound to act bona fide if presented with a report which was “basically a satisfactory one”.

12.Foxton J emphasized at [80]:

If I had concluded that the Suppliers’ Approval Subject was a performance condition, then I would have accepted Mr Pearce’s submission that Trafigura was under an implied obligation to take reasonable steps to obtain that approval. That conclusion is amply supported by authority, including cases such as Brauer v James Clark at p.154; Windschugel (Charles H) Ltd v Pickering (Alexander) & Co Ltd at p.93 and Hargreaves Transport v Lynch [1969] 1 WLR 215, 219-220.

Implied obligation to take reasonable steps

13.The vessel loaded cargo in Port Hedland in last 3 consecutive voyages smoothly, without any complains from port authorities. It’s reasonable to assume that vetting is not a matter by shipper in this case. Therefore, “sub” term is not a pre-condition, but a performance condition.

14.The owners have double checked with shipper, whom advised that the charterers never nominate the vessel to them, no vessel’s name or vessel’s itinerary.

15.The charterers therefore put them in breach such implied obligation to take reasonable steps to obtain shipper’s approval or reconfirmation.

16.In Charles v Alexdander(1950) 84 Ll.L.Rep.89, the case was an action in which Messrs. Charles H. Windschuegl, Ltd., of Leadenhall Street, London, E.C., sued Messrs. Alexander Pickering & Co., Ltd., of Crutched Friars, E.C., claiming £553 as damages for an alleged breach of contract to supply five tons of Mexican candelilla wax. Defendants denied that a firm contract was made, or that they were in any way liable.

17. Devlin J, as he then was, observed at p.93:

Accordingly, on this first point I am in the plaintiffs’ favour, and I think a contract was concluded subject to the condition about the import licence being granted. But the defendants have not in fact delivered, and have refused to deliver, the goods that were the subject-matter of the contract. Therefore, they must say one of two things: either they must say they were excused by the condition in the contract, "subject to licence," from being obliged to perform their part of it and tender the goods, or, alternatively, say that as in any event a licence would not have been granted no damage has been suffered.

18. Devlin J concluded that:

Accordingly, the position is that the condition precedent was not fulfilled. But it is not disputed that that condition "subject to licence being granted" is itself subject to the duty of the defendants who had undertaken to use reasonable endeavours to obtain a licence, and unless they can show that they have used such endeavours they cannot take advantage of the condition so inserted with regard to the licence. That is one way of looking at it. Whether one looks at it in that way, or whether one says they are liable for breach of damages for failing to use diligence, does not matter very much. The question becomes one of whether they have used diligence in applying for a licence; and I have to consider, therefore, how the evidence stands in regard to that.

19. It’s held by the Court in this case that a firm contract was made, subject to the granting of an import licence which had to be applied for by defendants; that there was a continuing obligation on defendants to take steps to obtain a licence which would enable shipment to be made within the contract period; that the fact that only a limited licence vas granted did not fully discharge defendants from their liabilities under the contract; and that defendants having failed to show that a full licence would not have been granted in such time as to enable shipment to have been made within the contract period, they were in breach, and plaintiffs were entitled to damages.

20.  In Brauer & Co. v James Clark [1952] 2 Lloyd’s Rep.147 (C.A.), anticipatory breach by sellers, buyers being informed on June 20, 1951, that it would be impossible to ship at contract prices owing to direction by Bank of Brazil that piassava should only be exported at certain minimum prices. Contract for sale of 90 tons of Bahia piassava at varying prices c.i.f. London, shipment to be from Salvador/Bahia/Brazil during February/July, 1951, providing (inter alia):

Should shipment be prevented or delayed owing to prohibition of export . . . force majeure . . . shipper shall be entitled at the termination of such cause . . . to an extension of time for shipment . . . but such extension shall in no case exceed one month . . . If, from any of the above causes, shipment be not completed within one month after the expiration of the original contract period then this contract is to be void for any unfulfilled quantity.This contract is subject to a Brazilian export licence.

21.Sellers J, at first instance, he held that in view of sellers’ admission that they could have performed the contract if they had paid the higher minimum prices, they could not rely on the force majeure clause, as there was no physical or legal prevention; but that the contract was also “subject to a Brazilian export licence,” which must be construed in conjunction with the remainder of Clause 9 and only required sellers to obtain an export licence to fulfil the contract at the prices specified therein, and not at the higher minimum prices (which would have been another contract), and that accordingly, in view of the restriction upon exports laid down by the Bank of Brazil, sellers were excused from performance.

22.In the Court of Appeal, Lord Denning, M.R. pointed out that the question for decision depends on the true construction of the words: “This contract is subject to a Brazilian export licence.” He observed at p.154:

Those words serve a most useful purpose. The parties to the contract knew that the goods could not lawfully be exported from Brazil without an export licence. If this clause had not been inserted, the buyer might have contended that the seller undertook absolutely to obtain a licence and ship the goods, and that it was no excuse for the seller to say that he could not get a licence. (See what Lord Porter said recently in Partabmull Rameshwar v. K. C. Sethia (1944), Ltd., [1951] 2 Lloyd's Rep. 89, at p. 97, when he commented on In re Anglo-Russian Merchant Traders, Ltd., and John Batt & Co. (London), Ltd., [1917] 2 K.B. 679.)

23.Lord Denning, M.R. continued to hold that:

They inserted the words “This contract is subject to a Brazilian export licence,” meaning that the contract only binds the seller if a Brazilian export licence can be obtained. It is, I think, clearly the duty of the seller to apply for an export licence, and to use due diligence and take all reasonable steps to get it. (See Charles H. Windschuegl, Ltd. v. Alexander Pickering & Co., Ltd., (1950) 84 Ll.L.Rep. 89; Société d'Avances Commerciales (London), Ltd. v. A. Besse & Co. (London), Ltd., [1952] 1 Lloyd’s Rep. 242.) If a licence is granted, no trouble arises. The seller must ship the goods.

24.Lord Denning, M.R. found that:

The answer to all these questions is, I think, that this clause is a special exemption inserted in favour of the seller. In order to enable him to take advantage of it he must show that, notwithstanding that all reasonable steps were taken by him, he could not obtain a licence to export during any part of the shipment period; or, alternatively, that it was useless for him to take any such steps, or any further steps, because it was quite impossible for him to obtain a licence. There is nothing to show that the licence could not have been obtained at some time during the shipment period. On the contrary, there is a specific finding that an export licence could have been obtained if the seller had been prepared to pay a higher price for the goods to his Brazilian associates.

25.It’s held in by the Court of Appeal that there was a specific finding that an export licence could have been obtained if the seller had been prepared to pay a higher price for the goods to his Brazilian associates - a price higher, that was, than the price at which he had contracted to resell them. Was that a step which he could reasonably be expected to take? This depended on how much was the price he had to pay to get the licence. If it was, to take the Judge’s illustration, one hundred times as much as the contract price, that would be “a fundamentally different situation” which had unexpectedly emerged, and he would not be bound to pay it. But if the price he had to pay was only the current market price, as we were told it was, then he ought to have paid it so as to get the licence.

26.In The Merak [1976] 2 Lloyd’s Rep.250 (C.A.), the sellers entered into negotiations for the sale of their ship Merak to the buyers, the negotiations being conducted by telex. By subsequent telex messages, the price was agreed at U.S. $210,000 and agreement was reached on all outstanding points “subject to inspection by the buyers at a port and date to be agreed”. The condition for inspection was not fulfilled and as the market for the sale of ships had risen the sellers contended that they were not bound to sell the ship to the buyers since no contract had been concluded.

27.At first instance, Donaldson J delivered the following judgment: Accordingly the agreement between the parties was governed by the term “Subject Inspection” which, divorced from the saleform contract, was the equivalent of “Subject to contract”. I entirely reject this argument. The agreement is not to be found in these two messages viewed in isolation but in them read against the background of the whole of the exchanges between the parties. Apart from any other consideration it is necessary to go back to a telex of Dec. 8, 1972, to find out what the price is. Accordingly I am fully satisfied that there was a binding contract for the sale of the vessel by, at the latest, Feb. 1, 1973.

28.It’s held by Lord Denning, M.R. in the Court of Appeal, he observed at p.255:

These clauses fit in well with the telex which says: "Subject superficial inspection        afloat". They show that the sellers are under an obligation to provide proper facilities    for the inspection of the vessel. If the sellers do not do so, they are in breach. Equally the buyers are under an obligation to make inspection of the vessel. If the buyers do not do so, they are in breach.

29.Lord Denning, M.R. at p.255 he stated:

So it seems to me that on those clauses, which are incorporated into this sale-and-purchase agreement, there was a binding contract. The seller was bound to go ahead and provide the opportunity for inspection. When he refused to go ahead, that was a breach.

Breach by the charterers

30.First, the cases given above addressing that the obligation to take reasonable steps to obtain an import or export licences suggest that if such steps are not taken, the burden of proving that the licence would not have been obtained even if the required steps had been taken lies on the defendant, and that it is a particularly onerous burden.

31.In Brauer v James Clark, p.154, Lord Denning, M.R. said that to avoid liability the party in breach was “required to show it was useless for him to take any such steps, or any further steps, because it was quite impossible for him to obtain a licence”. Other cases have suggested that the seller has to show there was “no reasonable possibility” of securing the licence, or that any attempt to obtain a licence would “necessarily” have been unsuccessful (see Professor Bridge, The International Sale of Goods (4th) para. 5.28).

32.Accordingly to Benjamin’s Sale of Goods (11th), at para.18-650, summarises the law as follows:

“Where a party is under a duty to take reasonable steps to obtain a licence, either because the contract expressly so provides or because the court implies a term to that effect or because the contract is “subject to licence”,that party must normally show that he actually did take such steps. If he takes no steps at all, he will be liable unless he can discharge the “difficult burden” of showing that any steps which he could have taken (in the performance of his duty to take reasonable steps) would have been useless.”

33.That formulation admits of a possible distinction between a party who takes no steps at all, and one who takes insufficient steps. However in Overseas Buyers Ltd v Granadex SA [1980] 2 Lloyd’s Rep.608, 612, Mustill J formulated the position as follows:

“(1) The seller must first set out to prove that he used his best endeavours to obtain any necessary permission to export, but nevertheless was unsuccessful.

(2) If the seller fails to satisfy this requirement, he is liable for failure to ship, unless he can prove that nothing which he could have done would have enabled him to ship.”

34.It will be seen that the second stage of the enquiry, on the cases as they now stand, postulates a stricter test than the first. The seller has to exclude the possibility that any steps, not any reasonable steps, would have been successful. The reasons for this contrast may one day have to be explored, but it is important to note that where (as here) the seller has tried to obtain permission to ship, he need do no more than prove that his efforts were reasonable.

B.CONCLUSION

35.In Pagnan S.p.A. v. Feed Products Ltd. [1987] 2 Lloyd’s Rep. 601 (C.A.), Lloyd L.J. summarized:

(1) In order to determine whether a contract has been concluded in the course of correspondence, one must first look to the correspondence as a whole (see Hussey v. Horne-Payne).

(2) Even if the parties have reached agreement on all the terms of the proposed contract, nevertheless they may intend that the contract shall not become binding until some further condition has been fulfilled. That is the ordinary “subject to contract” case.

(3) Alternatively, they may intend that the contract shall not become binding until some further term or terms have been agreed; see Love and Stewart v. Instone, where the parties failed to agree the intended strike clause, and Hussey v. Horne-Payne, where Lord Selborne said at p. 323:

. . . The observation has often been made, that a contract established by letters may sometimes bind parties who, when they wrote those letters, did not imagine that they were finally settling the terms of the agreement by which they were to be bound; and it appears to me that no such contract ought to be held established, even by letters which would otherwise be sufficient for the purpose, if it is clear, upon the facts, that there were other conditions of the intended contract, beyond and besides those expressed in the letters, which were still in a state of negotiation only, and without the settlement of which the parties had no idea of concluding any agreement. [My emphasis].

(4) Conversely, the parties may intend to be bound forthwith even though there are further terms still to be agreed or some further formality to be fulfilled (see Love and Stewart v. Instone per Lord Loreburn at p. 476).

(5) If the parties fail to reach agreement on such further terms, the existing contract is not invalidated unless the failure to reach agreement on such further terms renders the contract as a whole unworkable or void for uncertainty.

(6) It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word "essential" in that context is ambiguous. If by "essential" one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by “essential” one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by "essential" one means only a term which the Court regards as important as opposed to a term which the Court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the Judge, “the masters of their contractual fate”. Of course the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens every day when parties enter into so-called “heads of agreement”. Mr. Rokison submits that that is a special case, but I do not think it is.

36.The proper approach is to ask how a reasonable man, versed in the business, would have understood the exchanges between the parties. Nor is there any legal reason that the parties should not conclude a contract while intending later to reduce their contract to writing and expecting that the written document should contain more detailed definition of the parties' commitment than had previously been agreed. See Bear Stearns Bank Plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm).