Case of Cif Law

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Commercial and International trade law

1. Introduction

Carter plc. agreed to carry Scrutton plc.’s goods on board Carter’s ship from Portsmouth to Santander in Spain. And then sold it to Todd, but in the voyage, there are accidents, the goods were lost and damaged. The problems arose in this case involve international maritime transport and sales of goods, while Carter.plc,(the carrier) Scrtton.plc(the shipper) and Todd(the buyer) are companies in British or Spain, and each country is the member of International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading (HAGUE RULES: HR), Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of lading (VISBY RULES: VR) and United Nations Convention on Contracts of International Sales of Goods(CISG), since they didn’t make any decision on the laws or rules that should be applied in case of disputes, according to the international rules and practices, the Hague-Visby Rules and CISG should be applied to resolve the problems in this case. Besides, there was CIF term in this case, therefore, International Rules for the Interpretation of Trade Terms 2010(Inco terms 2010) shall also be applied. In summary, we should make comprehensive use of Hague-Visby Rules, the Inco Terms 2010 and the related international rules and practices to solve the problems that Todd met.

2. Case analysis

In this part, three questions will be answered which include whether Todd must accept the documents and pay, what Todd’s rights against the carrier and whether Todd may have a claim against anyone else? But before these questions, the duties of the parties’ should be cleared:

By the study of the Handbook, Scrutton plc. as the seller, has some duties:

1. Give a shipped transferable clean Bill of Lading to Todd. Todd will get this from the carrier once the goods have been shipped on board the ship. 2. Obtaining a contract of Marine Insurance for the Goods. Scrutton plc. will get this from an insurer. 3. Providing a commercial invoice to the Todd.

As the carrier, Cater plc.’s duties mainly include four aspects:

As to the ship, as to the treatment of the cargo, as to the documents and Exclusions. In this case, Carter must make space available when Scrutton plc. has booked the space. And properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.

2.1 Whether Todd must accept the documents and pay.

In a sales contract for goods, the buyer shall have the obligation to accept the documents and pay for the goods. According Inco Term 2010, under the clause of CIF, The seller is entitled to be paid (unless the parties agree to the contrary) once he has delivered the documents. This is true even if the goods never arrived. And in accordance with Article 66 of CISG, loss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price, unless the loss or damage is due to an act or omission of the seller. In the case Manbre Saccharine v Saccharine Products 1919, the ship was sunk and the goods never arrived, but the buyer still need to accept the documents and pay, for the risk of damage and lost of the goods had been transferred to him. So in this case, if the documents are right and exactly confirm to the letter of credit, which we can tell is true in this case, then Todd must accept the documents and pay. However, there are two separate sets of obligations the first relating to documents the second relating to the goods. Whilst the buyer may accept the documents he can still reject the goods if they are not as set out in the contract. For example they are not of the right quality or were shipped on the wrong date. In the case of Kwei Tek Choa v British Traders and Shippers, the buyer had already accepted the documents, but he could still reject the goods when he found that the bill of...
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