Contracts Of Shipments

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Contracts of shipments

Contracts of shipments


FOB “free on board” and CIF “cost insurance freight” have both regulated the international sale of goods by sea for more than a century. These contracts have experienced over the years moments of rise-and-fall due to reasons which will be eleboratad below. The reasons for the periodic fluctuations in the use of these contracts are not purely legal but include influencing factors such as economical, political and technological.

Legal Case

Case: Manbre Saccharine Co. Ltd. v/s. Corn Products Co. Ltd.


The sales contract (CIF) was (among others) a series of 280 pounds bags of starch. Bag £ 140 and £ 220 were actually sent on board the Algonquin, which was later sunk by a German submarine with the loss of all cargo on board. Vendors accused, knowing this, two days later, the documents offered including a letter that stated that the properties were insured, but there is no insurance policy.

The buyers refused to accept the documents and the sellers sued for damages for breach of contract of sale (market value of equivalent goods have increased significantly above the original price).

In this context it is important that each party bears in mind the purpose of the transaction or, to use an English expression, that each party has fully aware of his "mission statement". For a seller, export success is not equivalent to sell as many goods as possible on foreign markets but to be paid by foreign clients and whether these possible profit.

Extract from McCardie J's judgment:

Export means, in other words, be paid for products go abroad and make a profit on this occasion. Conversely, the primary objective of the importer is not that the supplier is paid; what he wants is to actually receive the goods ordered and sell on the local market, use or consume and what the lowest price possible. Exporters are often masters of Arts degree in computing or price assessment and evaluation of market opportunities but do not always assess logistical problems correctly. They appeal to that effect to the senders. A banker manages perfectly the mechanisms of the documentary credit but do not control necessarily the legal implications of the sale contract. On the other hand, the lawyer is not always aware of the ins and outs of a declaration Customs.

If the boat was lost before the tendering, but without the information of the trader it was, I presume, habitually clear that he could make an productive proffer articles buyer. In my attitude, it is furthermore clear that he can make an effective whereas they have in the time of tendering genuine information of such decrease or property. For the purchaser in case of decrease obtain the articles I had anticipated, and if the principle is needed in the agreement, and if the decrease is enclosed, thus, double-check the protection money. The contingency of decrease is inside and not out-of-doors the contemplation of the parties to a cif contract.

The views I have expressed are, I feel, in full accord with ...
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