Trefalcon (a commercial arm of the government of Ghana) entered into a contract with Supply Commission as a purchaser of residual fuel oil (RFO). Supply Commission agreed, among other things, to supply Trefalcon with RFO at competitive prices as reserves permitted. Approximately six weeks into the agreement, on May 3, 1974, Supply Commission wrote a letter to Trefalcon proposing a method for pricing the refined fuel it would sell to Trefalcon.
A dispute arose six months later when Supply Commission first began to raise the price of RFO to account for escalations. In an effort to continue the contract, the parties orally agreed to a so-called Standstill Agreement, pursuant to which Ghana temporarily would forgo payment of escalations. By May 12, 1975, Trefalcon had paid only the base price for each of the 26 residual fuel cargoes it had received.
On May 26, 1975, J.V.L. Mensah, a representative of Supply Commission, sent a letter to Trefalcon demanding payment of $7,885,523.12 for escalation charges and declaring that no further oil would be sold until payment in full was made. After receiving the Mensah letter, Trefalcon tendered two payments to Bank of Ghana—one in the amount of $1,617,682.29 (tendered June 10, 1975), the other in the amount of $1,185,000 (tendered June 27, 1975). With full payment still outstanding in July 1975, Supply Commission canceled the contract and sought damages for breach following the failure to provide assurances. Will Supply Commission recover? [Reich v Republic of Ghana, 2002 WL 142610 (SDNY)]