BP Oil International, Limited v. Empresa Estatal Petroleos de Ecuador
United States Court of Appeals for the Fifth Circuit
332 F.3d 333 (2003)
BP Oil (plaintiff) agreed to deliver gasoline CFR (cost and freight) to PetroEcuador (defendant), with a contractual gum-content limit tested before shipment; the gasoline passed that pre-shipment test but failed a second test at the destination port, leading PetroEcuador to refuse delivery, forcing BP to resell at a loss. BP sued for breach; the district court applied Ecuadorian law and ruled for PetroEcuador, but BP appealed, arguing the CFR term meant risk of loss passed to PetroEcuador once the gasoline was loaded for shipment.
Whether, under the United Nations Convention on Contracts for the International Sale of Goods, a contract for the sale of goods must be interpreted according to the established meaning of international commercial terms.