Statoil ASA v Louis Dreyfus Energy Services LP [2008] EWHC 2257 (Comm)
Facts
Statoil sold a cargo of liquefied petroleum gas to Louis Dreyfus. When settling demurrage, Statoil’s analyst mistakenly used a discharge date eleven days too early and agreed a much smaller figure than the correct calculation. The buyer’s analyst noticed the error but did not disclose it. After discovering the mistake, Statoil sought the balance. It relied both on mistake and on a later telephone agreement to settle the corrected amount. The parties also disputed whether their original sale contract contained a ninety-day time limit for submitting demurrage claims.
Legal Issue
Was the first settlement invalid for a known unilateral mistake in its calculation, and did a subsequent oral agreement nevertheless entitle Statoil to recover the outstanding demurrage?
Held
Aikens J held that the first settlement remained binding despite the known error. The parties had agreed its amount; the mistaken discharge date was a factual assumption behind Statoil’s decision, not a term of the compromise itself. The case therefore fell outside the rule concerning a known mistake about contractual terms. The judge also rejected the proposed separate equitable jurisdiction to rescind for that unilateral mistake. Nevertheless, Statoil succeeded because the evidence established a second oral settlement agreeing payment of the corrected amount, subject to the adjustment discussed. That agreement superseded the first. The original contract did not contain the alleged demurrage time bar. The award thus rested on the later contractual undertaking, not a successful application to undo the first bargain for mistake.
⭐ Legal Principle
A known mistake about a factual assumption behind an agreed settlement differs from a mistake about the settlement’s terms. The former did not invalidate this compromise or support a separate equitable rescission claim. A later agreement could nonetheless supersede the settlement and supply the claimant’s right to payment.
Significance
Statoil is particularly useful for separating reasons for contracting from the terms actually agreed. It also demonstrates why identifying the successful ground matters: the claimant recovered, but its mistake arguments failed. The court’s treatment of a second settlement prevents that outcome being misreported as relief for unilateral mistake. Its discussion of equity follows Great Peace while leaving distinct doctrines to their own requirements. A problem answer should examine each alleged agreement and its terms before assuming that a computational error determines the result.
Common exam questions about this case
Why was the wrong date not a mistake about a contractual term?
The compromise fixed the amount to be paid. The discharge date was part of the reasoning used to calculate that amount, but was not itself a term of the settlement. Both parties agreed the settlement figure, so the known factual error did not demonstrate a lack of agreement on the terms.
How did Statoil win if its mistake argument failed?
The judge found that the parties later reached an oral agreement to pay the corrected demurrage figure, subject to the agreed adjustment. That undertaking superseded the earlier settlement. Recovery therefore followed from a new contractual commitment, not from treating the initial compromise as void or rescinding it in equity.
Does Statoil exclude every equitable remedy connected with mistake?
No. The judge rejected the proposed separate rescission jurisdiction for the unilateral factual assumption at issue, where it did not form a term and no relevant misrepresentation supplied relief. Distinct doctrines, including rectification or misrepresentation when their requirements are met, should not be removed by an overbroad summary of that conclusion.