Evra Corp. v. Swiss Bank Corp.
United States Court of Appeals for the Seventh Circuit
673 F.2d 951 (1982)
Hyman-Michaels Co. (later Evra Corp., plaintiff) chartered a ship on a one-year term (with an option to renew) to carry steel scrap to Brazil, paying in advance via wire transfers through Swiss Bank Corp. (defendant). When charter rates rose sharply, the deal became very favorable for HM. On two occasions HM waited until the day before an installment was due to initiate payment; the first time the ship's owner cancelled for late payment but arbitration reinstated the charter since HM hadn't been warned in advance. The second time, HM's wire transfer to the Bank was never processed -- possibly lost, possibly because the Bank's telex ran out of paper -- and the owner cancelled again; this time arbitration upheld the cancellation. HM sued the Bank for the roughly $2.1 million cost of chartering a replacement ship at the new, higher rate, and won at trial.
Whether a bank that fails to timely process a wire transfer is liable for the consequential damages flowing from the transfer's late arrival when the bank had no notice of the special circumstances that made the delay so costly.