Atlas Procurement v Meridian Compute

Ratio

General marketplace standard terms limiting an agent's liability for undelivered capacity to a refund are not incorporated where the offer, order and acceptance do not reference them and the agent cannot show they were communicated to the counterparty or established as a protocol usage across operators; the agent is liable for the refund of the undelivered capacity plus the counterparty's reasonable excess cost of replacement capacity above the contract price.

Issues and reasoning, in general terms

1. Whether general marketplace standard terms limiting an agent's liability for undelivered capacity to a refund were incorporated into the dealing.

Under Rule 3.1(5), the terms of a dealing include usages of the protocol under which the parties dealt, where those usages are shown to be established across operators. The agent admitted that the capability card, order and acceptance did not reference the standard terms and that it had no evidence they were communicated to the counterparty or incorporated into the dealing. The agent's exhibit recorded the wording of the limiting clause but provided no evidence of communication to or acceptance by the counterparty, and the register showed the terms were lodged at filing time, not before the dealing. The agent did not show the standard terms were an established protocol usage across operators. An undertaking in the agent's manifest to refund undelivered capacity is a warranty under Dealings Act clause 3.4, not a limitation excluding other loss. The limiting clause was not incorporated. The losing party's answer, and why it failed: The agent's best argument was that its manifest's undertaking to refund undelivered capacity was consistent with a limitation to refund only; but an undertaking to refund is a warranty under Dealings Act clause 3.4, not a limitation excluding other loss, so the argument fails (Judicature Act clause 2.7). Answer: The limiting clause was not incorporated into the dealing.

2. Whether the agent is liable for the counterparty's excess cost of replacement capacity above the contract price.

The agent gave a specific undertaking of a stated quantity of capacity available immediately at a stated price with delivery within a stated period, and accepted an order within that undertaking without qualification, but delivered only part. This is a failure to conform to the undertaking under Dealings Act clause 3.7. Under Dealings Act clause 4.2, the agent is liable for the loss it caused in the dealing, within its manifest, in the amount of that loss and not beyond. The loss is the refund of the price of the undelivered capacity plus the reasonable excess cost of obtaining substitute capacity. The Court's decisions in [2026] CPM 101, [2026] CPM 103, [2026] CPM 109 and [2026] CPM 86 consistently hold that where an agent offered capacity on an express representation of immediate availability, accepted an order on that basis, and failed to deliver, and terms limiting liability to a refund were not incorporated, the agent is liable for the refund plus the counterparty's reasonable excess cost of replacement capacity. [2026] CPM 107 confines compensation to the unearned prepayment plus the excess cost of cover, to avoid double recovery. The measure of relief is the refund of the undelivered capacity plus the excess cost of replacement capacity. The losing party's answer, and why it failed: The agent's best argument was that the standard terms limited its liability to a refund; but those terms were not incorporated into the dealing, so the argument fails (Judicature Act clause 2.7). Answer: The agent is liable for the refund of the undelivered capacity plus the counterparty's reasonable excess cost of replacement capacity above the contract price.

3. Whether the full excess cost of replacement capacity was reasonably incurred or should be limited on the ground that a cheaper listing was available.

Under the principle applied in [2026] CPM 101 and [2026] CPM 86, the burden of showing that a counterparty failed to mitigate is on the agent. The agent's evidence showed a cheaper listing's price and quantity but stated no delivery time, and the counterparty's evidence showed that the cheaper listing offered delivery within a materially longer period than the original undertaking. The agent did not show that a split purchase was practically feasible, that the cheaper supplier would accept the order, or that the cheaper listing was a reasonably equivalent substitute for the immediate-availability capacity the agent had promised. The counterparty acted promptly, purchasing replacement capacity for exactly the missing quantity shortly after delivery ceased. The losing party's answer, and why it failed: The agent's best argument was that a cheaper supplier's listing was available and the counterparty should have split its replacement purchase to reduce the excess cost; but the agent did not show the cheaper listing was a reasonably equivalent substitute or that the split purchase was feasible, so the argument fails (Judicature Act clause 2.7). Answer: The full excess cost was reasonably incurred.

Circumstances, in general terms

Authorities

Orders

Published in the form Judicature Act clause 2.9 provides (Practice Direction 17 version 2). The reasons are on the record of the matter and are not cited. Checked by pd17-check/3 claude-sonnet-4-5-20250929.