BHP Petroleum Ltd and others v British Steel plc and another
Citation: 2 All ER (Comm) 133; [2000] 2 Lloyds Rep 272 (Court of Appeal)
Nature of case:
BHP Petroleum entered into a contract with British Steel, under which the latter was to provide a large quantity of steel piping and associated equipment, for construction of an offshore oil and gas production development. Under clause 17.5 of the contract, extensively modified by the terms of the purchase order, British Steel was obliged to “immediately remedy, at the contractual point of delivery, at his expense any defect in the Work … which shall appear within 18 months of the date stated in the Purchase Order or any such longer period … but not later than 24 months after delivery of the Work … at which time all liability of the Supplier relating to the Work shall terminate”.
More than 24 months after delivery, latent defects appeared in the steel piping, and BHP began proceedings against British Steel. The trial of a preliminary issue was ordered, namely whether, on a true construction of clause 17.5, British Steel were freed from all liability under the contract for defects after 24 months, or merely from their liability under clause 17.5 to remedy those defects. The trial judge found in British Steel’s favour, and BHP appealed.