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Contract Law Free on Board Fob Cif

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Contract Law Free on Board Fob Cif

Page 1 of 4
In this case study, Patina is the seller and Luca is the buyer under an FOB (Free on Board) agreement. General picture of a FOB contract can be congregated from the case of Wimble & Sons v Rosenberg & Sons which describes it as a contract for the sale of goods where the seller which in this case is Patina who agrees to deliver the goods over the ship’s rail and the buyer or Luca in this stance agrees to convey it overseas. According to English law, the case of Pyrene v Scindia defines a classic FOB contract which has occurred in this case study between Patina and Luca as the seller (Patina) draws up the contract with Luca who then nominates a vessel. If the buyer in a FOB agreement fails to nominate a ship within the actual contracted time then the contract may stand effectively repudiated. The seller or Patina in this case would have been legally allowed to sell goods to a third party thus recovering any losses from the buyer. The Incoterms definition of a FOB is basically deprived of the seller being the shipper or transporter of the goods and the buyer’s duty is to nominate a vessel as it is described in Pyrene’s case. The main issue in this case is the transfer of risk from the seller (Patina) towards the seller (Luca). And furthermore it will be argued in regard to case law and statues. According to an FOB agreement, risk is transferred at the point where the goods cross the ‘ships rail’. Plaintiff in the case of Pyrene & Co v Scindia Steam Navigation Co sued the defendant carrier and was victorious in recovering damages of £200 as the defendant was found to be liable as he showed negligence while loading the goods and therefore the goods were damaged when they reached the plaintiff. Develin J in Pyrene’s case judged that the liability of negligence would extend to cover up damages if the goods are damaged during the process of loading either side of the ship’s rail. This was the point in English law where the problem of risk bearing arose as it was...