The Supreme Court addressed three central questions.
Was the contract a contract of sale of goods within the meaning of section 2(1) SOGA?
Section 2(1) defines a contract of sale of goods as “a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price”.
The Supreme Court held that although the basic form of contract was one of sale (i.e. it was a straightforward agreement to transfer the property in the bunkers to the Owners for the price), it was not a contract of sale within the definition of section 2(1) and so the SOGA did not apply.
Instead, the contract was a unique agreement with two key features:
(i) it permitted consumption prior to payment, without title ever passing in the bunkers consumed; and (ii) only
if and so far as the bunkers remained unconsumed, it transferred the property in the remaining fuel. Consequently, the price was not the price of the bunkers in respect of which property was passing; it was the price payable for all of the bunkers, whether or not consumed at the time of payment.
As the contract was not one of sale, the Owners could not seek to rely on section 49 of SOGA as a defence to a claim for the price.
If the contract was not one of sale, was there an implied term that OWB would perform its obligations to its parent, in particular by making payment in good time?
The Supreme Court held that OWB’s only implied undertaking in respect of the bunkers was that it was entitled to give the Owners permission to consume the bunkers before payment was made. OWB did not need to acquire title to the bunkers; it only needed to have acquired the right to authorise the use under the contractual supply chain which, the Supreme Court held, it had.
Should the Supreme Court overrule the Court of Appeal decision in FG Wilson (Engineering) Ltd v John Hold & Co (Ltd)  1 WLR 2365 (Caterpillar)?
Although the contract was not one of sale, because the case had been fully argued and has general significance, Lord Mance considered in his judgment whether he agreed with the Court of Appeal’s decision in Caterpillar.
In Caterpillar, it was held that section 49 of SOGA constituted a code which precluded an action for the price outside the section’s terms. Section 49(1) provides that where, under a contract of sale, the property in the goods has passed to the buyer but payment has not yet been made, the seller may bring a claim against the buyer for the price. Consistent with its general findings, the Court of Appeal found that the seller could not enforce payment of the price against the buyer because title to the goods had been reserved pending payment.
Lord Mance, however, disagreed. He considered a number of early authorities in support of his view that section 49 does not provide a complete code of circumstances where the price may be recoverable under a contract of sale. He also noted that in OWB’s case, the price would have been recoverable in any event due to the supply contract’s express terms, namely the complete consumption of the bunkers supplied.
While Lord Mance counselled that courts should be cautious about recognising claims to the price of goods in cases not falling within section 49 of SOGA, he said there was at least some room for claims for the price in circumstances other than those covered by the section. In respect of the scope for such claims though, in particular where a retention of title clause is combined both with physical delivery of the goods and the transfer of risk, he said the limits were to be left for “determination on some future occasion.”