In Ravennavi Spa v New Century Shipbuilding Company Limited [2007] EWCA Civ 58 the Court of Appeal upheld a decision in 2006 from Gloster J in the English Commercial Court (2006 EWHC 733) to the effect that a shipyard's obligation under an option agreement to make available an earlier delivery date for a vessel should one become available was not intended to be a continuing obligation; the shipyard was only obliged to offer the purchaser an earlier delivery date if one became available prior to the exercise of the option.
The purchaser, an Italian shipowner, had ordered 8 product tankers from a Chinese yard, with an option to purchase the last 2 vessels for delivery by particular dates. The purchaser exercised the option and separate shipbuilding contracts automatically came into effect with particular delivery dates. Having exercised the option the purchaser subsequently discovered that the yard was offering earlier delivery dates to other shipowners. The Judge's decision was based on a clause in the shipbuilding contract which extinguished all the parties’ obligations under the option agreement when the shipbuilding contract came into force. This is am important decision given the high level of current activity in the new building market, particularly in the Far East.
