I. II. (1)
TYPES OF INTERNATIONAL CONTRACTS
I.
Ex words contract − Buyer takes delivery at the store
− Property and risk • Pass according to the rules in the SGA II.
FOB Contract − How does it work?
• Seller’s duty is to place the goods free on board a ship named by the buyer, A) After loading, S is given a mate’s receipt which he received and the price is payable by B in return for the mate’s receipt. Port names is the port where the goods are to be loaded
• • Contract of carriage is made between the seller and shipowners
− Seller’s duty • Ensure that goods conforming to the contract are put on board the ship nominated by the buyer • S.14(2) goods must be of a satisfactory quality A) S.14(2B)e Durability – in a FOB contract you don’t know where the goods are going so you can’t use the
actual length of the journey to assess durability so you look at a reasonable time KG Bominflot v Petroplus (2009)
− Buyer’s duty • Procure space on the vessel and nominate it. If not nominated in time, seller can treat the contract as repudiated Bunge v Tradax (1975)
− Passing of property • Property passes on shipment unless the seller has reserved a right of disposal A) If unascertained (1) Loading of the goods may be an unconditional appropriation, under s.18 Rule 5 (2) Or s.20A may apply if the buyer has paid • But usually there will be a reservation of aright of disposal – the seller will name himself as consignee on the bill of lading
A) So s.19(1) or s.19(2) applies and the seller is taking to be a reservation of right of disposal and so property does not pass.
− Passing of risk • Risk passes on shipment – as soon as the goods cross the ships rails even if the goods are not specific, per Sterns v Vickers (1923) e.g. 1000 tonnes of which 500 tonnes are for this buyer
• Literally when the goods cross the ship’s rail Pyrene v Scindia (1954) • When they are safely loaded on board, per INCOTERMS and American UCC
− Contract of carriage problems • If B is party to the contract of carriage ab initio A) there may be no privity of contract between S and shipowners, and this may cause difficulties when the goods are damaged in the course of lading by shipowners
B) Pyrene v Scindia (1954) Devlin J said that this could be solved in two ways (1) S had participated in the contract of carriage sufficiently for them to be bound by the Hague
•
Rules. S takes those benefits of the contract which appertain to his interest therein (2) There was a collateral contract between S and shipowners (a) By delivering the goods alongside, S impliedly invited shipowner to load them, and S by lifting the goods implied his acceptance. This implied contract incorporated the shipowner’s usual terms (3) Devlin J preferred the participation situation. The collateral contract would stretch creditability if there is nothing that carrier did to seller, and it is artificial doubtful that S intended there to be a separate contract If S is party to the contract of carriage ab initio A) S has to sue, and any surplus is held on trust for B, The Winkfield (1902)
I.
Ex words contract − Buyer takes delivery at the store
− Property and risk • Pass according to the rules in the SGA II.
FOB Contract − How does it work?
• Seller’s duty is to place the goods free on board a ship named by the buyer, A) After loading, S is given a mate’s receipt which he received and the price is payable by B in return for the mate’s receipt. Port names is the port where the goods are to be loaded
• • Contract of carriage is made between the seller and shipowners
− Seller’s duty • Ensure that goods conforming to the contract are put on board the ship nominated by the buyer • S.14(2) goods must be of a satisfactory quality A) S.14(2B)e Durability – in a FOB contract you don’t know where the goods are going so you can’t use the
actual length of the journey to assess durability so you look at a reasonable time KG Bominflot v Petroplus (2009)
− Buyer’s duty • Procure space on the vessel and nominate it. If not nominated in time, seller can treat the contract as repudiated Bunge v Tradax (1975)
− Passing of property • Property passes on shipment unless the seller has reserved a right of disposal A) If unascertained (1) Loading of the goods may be an unconditional appropriation, under s.18 Rule 5 (2) Or s.20A may apply if the buyer has paid • But usually there will be a reservation of aright of disposal – the seller will name himself as consignee on the bill of lading
A) So s.19(1) or s.19(2) applies and the seller is taking to be a reservation of right of disposal and so property does not pass.
− Passing of risk • Risk passes on shipment – as soon as the goods cross the ships rails even if the goods are not specific, per Sterns v Vickers (1923) e.g. 1000 tonnes of which 500 tonnes are for this buyer
• Literally when the goods cross the ship’s rail Pyrene v Scindia (1954) • When they are safely loaded on board, per INCOTERMS and American UCC
− Contract of carriage problems • If B is party to the contract of carriage ab initio A) there may be no privity of contract between S and shipowners, and this may cause difficulties when the goods are damaged in the course of lading by shipowners
B) Pyrene v Scindia (1954) Devlin J said that this could be solved in two ways (1) S had participated in the contract of carriage sufficiently for them to be bound by the Hague
•
Rules. S takes those benefits of the contract which appertain to his interest therein (2) There was a collateral contract between S and shipowners (a) By delivering the goods alongside, S impliedly invited shipowner to load them, and S by lifting the goods implied his acceptance. This implied contract incorporated the shipowner’s usual terms (3) Devlin J preferred the participation situation. The collateral contract would stretch creditability if there is nothing that carrier did to seller, and it is artificial doubtful that S intended there to be a separate contract If S is party to the contract of carriage ab initio A) S has to sue, and any surplus is held on trust for B, The Winkfield (1902)
