International Commercial Transaction revision notes

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.. SCRUTTONit 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
documentsKERRNO OVERSIMPLIFICATION TO SAY IT IS EXCHANGE OF
DOCUMENTSno 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!