Lord Mustill J:

This appeal from a decision of the Court of Appeal of Hong Kong springs from a contract whereby Hoecheong Products Limited ("the sellers") agreed to sell to Cargill Hong Kong Limited ("the buyers") 10,000 tons of cotton seed expellers.The sellers did not deliver the whole contract quantity.The buyers claimed damages.The sellers relied on a "force majeure" clause in the contract to exempt them from liability.The ground asserted was that the contract called for shipment of goods originating in Henan province, and that there had been such a severe drought in Henan during the growing season that it was impossible for them to procure goods from the only permitted suppliers, the China National Native Produce and Animal By- Products Import and Export Corporation ("CNNP"). The buyers denied that the force majeure clause applied to the facts of the case, or that the formalities which it prescribed had been complied with.There were numerous other points of contention between the parties.Although the sum in dispute was, by the standards of modern commercial litigation, comparatively modest, every issue was tenaciously fought.At the trial before Deputy Judge Sharwood the sellers won on sufficient of the points to obtain a judgment in their favour.On appeal many of the Judge's conclusions were upheld, but the buyers prevailed on two central issues, and judgment was given in their favour for US$108,000 with interest and costs.The sellers now appeal to their Lordships' Board.

It is convenient to begin with the two crucial documents.The first is the force majeure clause.This was admitted on the pleadings to be a term of the contract.

12. Force Majeure: Should seller fail to deliver the contracted goods or effect the shipment in time by reason of war, flood, fire, storm, heavy snow or any other causes beyond their control, the time of shipment might be duly extended, or alternatively a part/whole of the contract might be cancelled, but the seller has to furnish the buyer with a certificate issued by China Council for the Promotion of International Trade (CCPIT) or an independent and competent Chinese Authority attesting such event or events.

Secondly there is the certificate which the trial Judge found, although the buyers denied, had been tendered by the sellers at the appropriate time:

Hoecheong Enterprises Pte. Ltd.

It's certificated that Henan province has got heavy losses and reduction of cotton, grain and etc., as an exceptionally serious in history and force majeure drought in 1986 in Henan province of PROC.

China Council for the promotion of International Trade, Henan Sub-Council.

The papers before the Board include what is plainly a version in the Chinese language of the same certificate.No attention has been paid to this document during the litigation.

As found by the trial Judge the facts were as follows.The sale contract, which was dated 27 September 1986, required shipment between 15 December 1986 and January 1987 at sellers' option, the price being US$84.50 per MT FOB trimmed one safe PRC port.Clause 8 of the contract stipulated:

Certificates:

A) Certificate of origin

B) Certificate of weight issued by CCIC/CCIB in China as final

C) Certificate of quality issued by CCIC/CCIB in China as final.

The buyers and their associates re-sold the goods under a series of contracts and subcontracts which were important at the trial in relation to damages but are not material here.

In the event, the sellers were able to deliver only 1,000 MT of expellers under the contract.Negotiations ensued which led to the sale of 5000 MT expellers in substitution, at cost price, which was higher than the price fixed by the original contract.

Returning to the trial, after hearing evidence the Judge made findings as follows.In favour of the buyers he held that they were entitled to sue on the contract, although acting as agents for their Singapore principals; that the arrangement for the shipment of substitute goods did not am