International Commercial Transactions
Revision
1. FOB Contracts AND CIF Contracts
a) FOB
- Free on Board. Seller agrees to deliver “over the ships rail” after this
buyer has full risk and obligations. Therefore, cheaper than other
contracts for buyer
-Pyrene & Co v Scindia Navigation Co (1954)- outlines 3 types of FOB
Contracts
1) Classic FOB- buyer nominates ship and port/bill of lading
in seller name/seller puts goods on board
2) FOB with additional services- same but where seller
organises shipment
3) where a mates receipt is used
-Scottish v Newcastle International v Otham Ghalanos ltd (2008)Lord
MANCE—comparing FOB to C&F said: it specifies port of shipment,
cannot be bought afloat as it requires shipment to a specific port, and
although seller may pay for the freight, the buyer takes all the risk and
benefit of any fluctuation in price or damage to goods at sea
-SELLERS DUTIES: ship goods by description to port of shipment
nominated
Pay handling and transportation costs and ship
goods on time
Load goods over ships rail and notify buyer of
shipment
-BUYERS DUTIES: pay price
Arrange shipping space/charter ship
Arrange insurance for the whole trip
Cost of unloading and delivery
b) CIF
-Cost, Insurance, Freight. Seller has to organise all of these in conformity
with buyers wishes.
-Arnhold Karberg v Blythe, Green, Jourdain & Co (1915)- affirmed what a
CIF contract is.. SCRUTTONit is not a contract that the goods will arrive
but a contract to supply goods complying with the contract CIF is NOT
simply exchange of documents, it is the sale of goods, performed by the
exchange of correct documents
, Hindley & Co v East Indian Produce - (1973)- sellers bought off 3rd party-
on strength of documents sold onto the buyer- goods arrived and no cargo
on board---sellers tried to say they were protected by
documentsKERRNO OVERSIMPLIFICATION TO SAY IT IS EXCHANGE OF
DOCUMENTSno difference between seller at sea or at port
THEREFORE, the first case may have caused confusion but the second one
has cleared it up
S17 SOGA 1979- property in goods passes when parties choose too.
S18 – property only passes when goods are ascertained
HOWEVER, for CIF contracts presumption is that property passes when
documents exchanged
S20 SOGA 1979- General presumption that risk passes with property
-Manbre Saccharine v Corn Products co (1919)- NO FOR CIF it passes
different time to property, when crosses ships rail!
-Law and Bonar v British American Tobacco- if stated as CIF and has
inapplicable terms these will be struck out
SELLERS DUTIES:
-Goods match description (Manbre Sacharrine-the size of bags constitutes
part of description....Bowes v Shard- rice delivered in March/april when
supposed to be Feb
-Duty to procure adequate documents: Invoice + Bill of Lading +
Insurance Policy
-Bill of lading must be clean, insurance must be reasonably adequate and
cover entire journey
-Groom v Butcher- if the buyer wants a specific kind of insurance they
must make this clear- here wartime cover not included risk is buyers
-Horst v Biddell – these documents must be dispatched to the buyer in
good time, at least before the goods arrive and buyer pays price in
exchange of them
BUYER DUTIES:
-Pay contract on strength of documents (Manbre Saccharrine- submarine
sunk goods 2 days before documents arrived- still had to pay price AND
THEN go sue insurance)
-must name port of destination...must take delivery....must secure any
import licences required
SELLER REMEDIES:
S49 SOGA- action for the price if property has not passed BUT also if it has
S50 SOGA – damages for wrongful rejection of goods
BUYERS REMEDIES:
Can sue for breach if does not receive conforming documents and goods!
Kwei Tek Chao v British Traders (1954)- accepted documents upon
inspection later discovering they were forged...still able to sue!
Revision
1. FOB Contracts AND CIF Contracts
a) FOB
- Free on Board. Seller agrees to deliver “over the ships rail” after this
buyer has full risk and obligations. Therefore, cheaper than other
contracts for buyer
-Pyrene & Co v Scindia Navigation Co (1954)- outlines 3 types of FOB
Contracts
1) Classic FOB- buyer nominates ship and port/bill of lading
in seller name/seller puts goods on board
2) FOB with additional services- same but where seller
organises shipment
3) where a mates receipt is used
-Scottish v Newcastle International v Otham Ghalanos ltd (2008)Lord
MANCE—comparing FOB to C&F said: it specifies port of shipment,
cannot be bought afloat as it requires shipment to a specific port, and
although seller may pay for the freight, the buyer takes all the risk and
benefit of any fluctuation in price or damage to goods at sea
-SELLERS DUTIES: ship goods by description to port of shipment
nominated
Pay handling and transportation costs and ship
goods on time
Load goods over ships rail and notify buyer of
shipment
-BUYERS DUTIES: pay price
Arrange shipping space/charter ship
Arrange insurance for the whole trip
Cost of unloading and delivery
b) CIF
-Cost, Insurance, Freight. Seller has to organise all of these in conformity
with buyers wishes.
-Arnhold Karberg v Blythe, Green, Jourdain & Co (1915)- affirmed what a
CIF contract is.. SCRUTTONit is not a contract that the goods will arrive
but a contract to supply goods complying with the contract CIF is NOT
simply exchange of documents, it is the sale of goods, performed by the
exchange of correct documents
, Hindley & Co v East Indian Produce - (1973)- sellers bought off 3rd party-
on strength of documents sold onto the buyer- goods arrived and no cargo
on board---sellers tried to say they were protected by
documentsKERRNO OVERSIMPLIFICATION TO SAY IT IS EXCHANGE OF
DOCUMENTSno difference between seller at sea or at port
THEREFORE, the first case may have caused confusion but the second one
has cleared it up
S17 SOGA 1979- property in goods passes when parties choose too.
S18 – property only passes when goods are ascertained
HOWEVER, for CIF contracts presumption is that property passes when
documents exchanged
S20 SOGA 1979- General presumption that risk passes with property
-Manbre Saccharine v Corn Products co (1919)- NO FOR CIF it passes
different time to property, when crosses ships rail!
-Law and Bonar v British American Tobacco- if stated as CIF and has
inapplicable terms these will be struck out
SELLERS DUTIES:
-Goods match description (Manbre Sacharrine-the size of bags constitutes
part of description....Bowes v Shard- rice delivered in March/april when
supposed to be Feb
-Duty to procure adequate documents: Invoice + Bill of Lading +
Insurance Policy
-Bill of lading must be clean, insurance must be reasonably adequate and
cover entire journey
-Groom v Butcher- if the buyer wants a specific kind of insurance they
must make this clear- here wartime cover not included risk is buyers
-Horst v Biddell – these documents must be dispatched to the buyer in
good time, at least before the goods arrive and buyer pays price in
exchange of them
BUYER DUTIES:
-Pay contract on strength of documents (Manbre Saccharrine- submarine
sunk goods 2 days before documents arrived- still had to pay price AND
THEN go sue insurance)
-must name port of destination...must take delivery....must secure any
import licences required
SELLER REMEDIES:
S49 SOGA- action for the price if property has not passed BUT also if it has
S50 SOGA – damages for wrongful rejection of goods
BUYERS REMEDIES:
Can sue for breach if does not receive conforming documents and goods!
Kwei Tek Chao v British Traders (1954)- accepted documents upon
inspection later discovering they were forged...still able to sue!
