South Caribbean Trading Limited (SCT) entered into a contract with Trafigura Beheer BV (Trafigura) under which SCT agreed to sell to Trafigura 484,000 US barrels plus or minus 5% of fuel oil.

SCT had also agreed to sell 350,000 US barrels of wet fuel oil blendstock to Trafigura, which SCT had further agreed to repurchase from Trafigura together with 134,000 US barrels of cutter stock.

The issue was whether under the agreement to deliver 484,000 US barrels SCT was obliged to deliver to Trafigura fuel oil exclusively derived from the quantity of 350,000 wet fuel oil blendstock and 134,000 US barrels of cutter purchased from Trafigura.

SCT informed Trafigura that they intended to deliver fuel oil not exclusively derived from the wet fuel oil blendstock and cutter stock purchased from Trafigura but that they intended to buy in from another source. SCT maintained that they were entitled to treat the agreement to deliver 484,000 US barrels as insulated from other agreements to sell and re-purchase of wet fuel oil blendstock and to purchase cutter from Trafigura.

The contract contained no express terms as to the required origin of the components used to produce the fuel oil to be delivered under the contract. Trafigura refused to accept delivery of the barrels and SCT claimed for breach of contract.