Company asking for Loss of Profit
Querist :
Anonymous
(Querist) 23 July 2010
This query is : Resolved
My friend had signed an agreement in 2008 for purchase of Steel with a UK firm. He was supposed to open L.C. within 7 days of signing the agreement. He could not open the L.C.
There after there was no correspondence. Now the UK firm has appointed an arbitrator and is asking for compensation in loss of profit.
My question is - if when my friend was not able to open the L.C. within stipulated period- dosn't the contract becomes null and void? Can the UK firm ask for compensation when the first step of opening LC within 7 days was not fullfilled.
Kindly Suggest.
s.subramanian
(Expert) 23 July 2010
you have to see if the contract is executory and executed.if the contract is to come into effect only after the lc is opened as a condition precedent then there is no enforceable contract at all since no lc was opened within the stipulated period. therefore the present claim of the uk firm is legally unsustainable. you have to appear before the arbitrator and submit your objections.otherwise any exparte award by the arbitrator will put you in trouble.
