HOWZAT

First, it contained a reference to an International Association of Classification Societies (IACS) warranty. Second, it contained a payment terms clause which warranted the payment of the premium at the due quarter days. It also referred to a condition called Deferred Premium Clause, which had been part of the slip conditions.

The broker did not respond to the policy or debit note. The debit note was passed on to its accounting office in Cyprus, where it was stamped as received on April 26, 2005. The policy was not stamped received, and may have stayed in Beirut unread.

The claimant reinsured made two payments, one in April and another in late June, but they were directed to the broker’s office in Cyprus and were not paid on to the claimant.

On July 23, 2005, the Ocean Dirk, one of the tugs scheduled to the slip, suffered a casualty and became a constructive total loss. The claimant was notified of the claim and immediately replied repudiating liability on the ground that its policy automatically lapsed on May 31, 2005, due to nonpayment of premium as per payment warranty.

The question came down to the interpretation of the defendant’s final reply e-mail. The mutual indicia of finality about the e-mail exchange were so strong that it would be wrong to interpret them as ending in a mere offer and counter-offer.

The reasonable reader of those exchanges would conclude that the defendant was agreeing to the terms set out in the slip, on the basis that that was what the defendant had itself quoted.

Once a gap had opened up between what had been previously quoted and agreed and what had been defined on the slip as the determinative contract, a straightforward choice had to be taken between construing the e-mail reply by the defendant’s representative as a counter-offer which gave priority to previous stipulations, or an acceptance which gave priority to the agreement on the slip.

In his Lordship’s judgment, once the issue was so expressed, the correct answer was to say that it was to be construed as an acceptance. Although the e-mail did not refer expressly to the slip, it was clearly speaking by reference to it.

The e-mail was sent on the same document as contained the incoming e-mail from the defendant’s representative with reference to the attached slip. There was nothing to indicate the possibility that any attention was being given to the absence of the IACS warranty. No doubt it had gone undetected.

There was nothing to indicate that the appearance of finality and agreement was subject to a stipulation that the slip had correctly restated the basis of the defendant’s agreement. The only emphasis was on the rate, which was the one matter stated.

On a true construction of the defendant’s representative’s e-mail, the defendant was agreeing with the terms set out on the proffered slip, and in ignorance of the fact that the slip represented any difference from the terms quoted and previously agreed. It followed that there was a contract, but one which did not include the IACS warranty.

Accordingly, the defendants were bound as reinsurers to answer subject to the slip terms for the loss of the Ocean Dirk.

Lord Justice Moses delivered a concurring judgment and Lord Justice Laws agreed.

Solicitors: Holman Fenwick & Willan; Clyde & Co

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