Harvest Energy and Prax Petroleum

15 July 2025

It’s a sad fact of business life, but from time to time companies with which members trade will fail. Over recent days most members will have become aware of the failure of the Lindsey oil refinery and several related companies. As you would expect, we have been approached by several members for advice and assistance and so we have prepared the following article.

What Companies Are Involved

On 30 June 2025 the following companies entered insolvency

  • Harvest Energy Aviation Limited (08655019) – Administration,
  • Harvest Energy Limited (02999020) – Administration,
  • Prax Lindsey Oil Refinery Limited (00564599)- Liquidation
  • Prax Petroleum Limited (04595500)- Administration,
  • Prax Storage Lindsey Limited (14753508)- Liquidation,
  • Prax Treasury Limited (13167077)- Administration

However, one fact adding to the confusion is that  there are a significant number of group companies that are not at this time insolvent, including1

  • Harvest Energy (BLA) Limited (11835079),
  • Harvest Energy (Dealerships) Limited (04595498)
  • Harvest Energy (Fuel Cards) Limited (11853324)

Contractual Overview

Given the potentially complex arrangement, the first step should be to review any contracts you have. This is the main document that will determine the options open to members, including identifying which group company you contracted with and helping you understand how you are currently affected.

In order to assist members we have reviewed an example of the Harvest Energy Motor Fuel Supply Agreement from 2023 between a member and Harvest Energy (BLA) Limited (11835079). The agreement was relatively simple but there are 2 main clauses that members need to be familiar with.

Clause 11 and Force Majeure

  • “11.1. Subject to clause 11.3 below, the obligations of the Supplier to supply and of the Buyer to purchase the whole of the Buyer’s requirements of Fuel, as specified in Schedule 1 to this Agreement, shall be suspended in the event that, if directly or indirectly, there is an event of Force Majeure and the Supplier is prevented or hindered:
  • 11.1.1. from supplying the Buyer with the whole of its requirements of Fuel;
  • 11.1.2. from obtaining from its usual sources of supply all its requirements of Fuel or components thereof necessary for the production of Fuel; or
  • 11.1.3. from purchasing all its requirements of Fuel, or components thereof, necessary for the production of Fuel without paying an increased price when the Supplier is prohibited from increasing or for good commercial reasons the Supplier determines not to increase its wholesale price so as to compensate for such increased price.“

The above is what is commonly referred to as a Force Majeure clause, a common contractual provision designed to remove liability for unforeseeable or unavoidable events.  If the clause is drafted too widely, however, it can be unenforceable

Members should be aware of this provision as this is the only clause that a Prax group company can rely on to cease supplying fuel in the short term. The issue will be to what extent the failure of a related Prax Group company was unforeseeable or unavoidable.

Successfully arguing that the circumstances fall outside the scope of clause 11—or otherwise invalidating clause 11—will be required for any member looking to cancel a supply agreement on the grounds of breach.

Cause 7 and Fuel Supply

The supply of fuel under the contract is dealt with under clause 7, the most significant clauses of which are clauses 7.1 and 7.2

  • 7.1. The Supplier shall use reasonable endeavours to maintain sufficient stocks of Fuel to meet the Buyer’s orders.

This clause governs Prax Group companies’ requirement to maintain stocking levels. Whilst the requirement is to maintain sufficient stock, nothing in the contract further defines what counts as sufficient. Accordingly, determining if there’s been a breach may be challenging. However, as Prax Group companies are not currently supplying fuel, it appears they do not hold any stock to meet members orders.

A breach of clause 7.1 could be used to base a claim for cancellation of the supply agreement by the member. But recall that Prax Group companies will not be in breach where the issues are unforeseeable and/or outside of their control under clause 11 above. 

Clause 7.2 is more complex.  For ease, it helps to break it in two.

  • 7.2. The Supplier shall use reasonable endeavours to deliver Fuel to meet the Buyer’s orders for Fuel on the date specified in each order, but the time of delivery shall not be of the essence. …

The first part of clause 7.2 governs Prax Group companies’ requirement to deliver fuel, and the timing of such orders. As with 7.1 above, this clause requires Prax Group companies to use reasonable endeavours to deliver fuel; a requirement that Prax Group companies have so far failed to honour since around 30 June 2025.

Whilst the failure to deliver the fuel on the date specified on the order will not be a breach of contract, the question is whether the failure to deliver the fuel entirely will be. This again depends on clause 11. Prax Group companies will not be in breach where the issues are unforeseeable and/or outside of their control as this is likely to be caught by clause 11 above. 

Exclusion of Liability

If we move onto the second part of clause 7.2 we see that,

“…If, despite these endeavours, the Supplier is unable for any reason to fulfil any order for Fuel on the specified date, Supplier shall not be deemed to be in breach of this Agreement, nor shall the Supplier have any liability to the Buyer for loss or damage of any kind whatsoever whether direct or indirect (including, but not limited to loss of profit, loss of business, depletion of goodwill or otherwise) caused directly or indirectly by any delay in delivery. Any delay in delivery will not entitle the Buyer to cancel the order, unless and until the Buyer has given two (2) Business Days’ written notice to the Supplier requesting that the Fuel for that order is made available and the Supplier has not fulfilled the delivery within the specified term.

This portion of the contract is an exclusion clause. In its current format the contract excludes Prax Group companies’ liability to compensate members for failing to supply fuel. Unfortunately exclusion clauses are legal in business to business transactions and where members have signed the contract they will be deemed to have read this clause and agreed to is. As such it is binding unless it can be established that it is unreasonable for the purposes of the Unfair Contract Terms Act 1977.

A breach of clause 7.2, is one of the clauses that could be used to base a claim for cancellation of the supply agreement by the member. To succeed clause 7.2 would have to be an unenforceable exclusion clause for the purposes of the Unfair Contract Terms Act 1977

Frustration

Another option for any member looking to cancel the contract will be a fundamental breach of contract and the doctrine of Frustration.

Frustration applies where an unforeseen event makes performance of the contract so “radically different” to the situation contemplated by the parties at the time the contract was entered into that it would render it “unjust” for the contract to continue2.

If frustration applies, the contract effectively comes to an end and the parties are released from the obligations under the contract.  However, this is a very rare remedy and recent issues such as the closure of businesses during the pandemic have not been enough to establish frustration in business leases3. Similarly, Brexit has been insufficient to justify the cancellation of a European Institutions lease in London4.

Frustration is one of the arguments that could be used to base a claim for cancellation of the supply agreement by a member.

Is there anything to look out for

Whilst this will depend on your business, below are some common issues that will need to be considered.

  • Imaging costs and loans- It is not uncommon for imaging costs to be covered by a loan at the beginning of the supply agreement and then reduced over the course of the contract. Any member considering an early cancellation will need to pay back any such loan not yet written off.
  • Fuel cards – members need to be familiar with the mechanism that applies to any fuel card sales. Generally speaking, the fuel becomes the property of the fuel card company when dispensed and then paid for by the fuel card company in arrears within 30-90 days (depending on the contract). Where a member makes fuel card sales to a company who subsequently enters administration or liquidation, it is unlikely that any such sums will be recovered.

In Conclusion

Before we go any further, we must sound a note of caution. Contractual disputes are highly dependent on the facts of the case as well as the agreement reached between the parties. This advice is provided as guide to explain the issues that you may face but is general in nature and will need to be tailored to any one situation.

In a business to business transaction such as the one between RMI members and Prax Group companies, it will be assumed that any documents signed by the parties has been read, understood and agreed.

Whilst the Harvest Energy Motor Fuel Supply Agreement includes circumstances whereby Prax Group companies can terminate the Agreement; generally, in clauses 2.5 to 2.9, there are no such clauses which allow members themselves to terminate the Agreement before the end of the 5-year period.  Therefore, members may only cancel the contract at the end of the 5 years agreement or in the event of a fundamental breach by Prax Group companies.

Whilst non-delivery of fuel is a significant issue capable of being a fundamental breach, clause 7.2 does not guarantee fuel deliveries and clause 11 clearly envisages a scenario where there is a temporary interruption in fuel supply by Prax Group companies. The starting point should therefore be that these are 5 year agreements which will remain in force until mutually terminated or the 5 years has expired.  

Where members wish to cancel the contract, they would have to establish that the failure to deliver fuel is a fundamental breach of contract or establish that circumstances are such that the contract is no longer enforceable due to the doctrine of Frustration.

Where members wish to seek compensation for failure to deliver fuel, they would have to establish that clause 7.2 is an unenforceable exclusion clause. Whilst these arguments are complex and not without risk, the bottom line is that Prax Group companies have entered a contract with members for the sole supply of fuel over a 5-year period but have then purported to absolve themselves from failing to deliver any fuel where they have exercised reasonable endeavours to do so. As a result it is very difficult to justify clause 7.2 as a reasonable exclusion clause. 

That said, given the significant financial impact on Prax Group companies of clause 7.2 being excluded  members should expect a significant legal dispute with a commensurate risk of costs.

Our advice remains that maintaining the contract with Prax Group companies is the safest and least costly option in the short term. Anyone wishing to cancel the contract can put the arguments above to try and negotiate an early settlement. Anyone looking to force a cancellation will need to have their contracts and the facts of their case fully reviewed.

Don’t forget, as a MILS member you have access to the MILS Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

[1] This is a non-exhaustive list correct at 1500 on 09 July 2025
[2] The Sea Angel [2007] 2 Lloyd’s Rep 517
[3] Bank of New York Mellon (International) Ltd v Cine-UK Ltd [2021] EWHC 1013 (QB),
[4] Canary Wharf (fBP4) T1 Limited & ors v European Medicines Agency [2019] EWHC 335
(Ch)