CLASS OF FOB There are three major classes of fob, as mentioned in the case of Pyrene Co Ltd v Scinda Navigation

Co Ltd and they are: 1. The Classic Fob: Under this type of contract, the buyer nominates the ship and where it will arrive, while the seller places the goods on the account of the buyer. The seller receives the bill of lading and transfer to the buyer. The marine insurance is arranged by the buyer, but the seller bears the cost. 2. Fob Contract with additional service: Here, all arrangement are made by the seller on the account of the buyer but the buyer unlike the classic fob is not obligated to nominate a suitable ship 3. Fob contract buyer contracting with the carrier or simply fob: The buyer here enters into a contract of carriage by sea directly or through an agent, he nominates the ship, the seller puts the goods, The bill of lading goes directly to the buyer, usually through the agent. THE NATURE OF FOB CONTRACT The seller often makes the contract of carriage. It must be reasonable in terms of the nature of goods and other circumstances, If not when the goods are lost or damaged in the course of transit; the buyer may decline to treat the delivery to the carrier as a delivery to himself or may hold the seller responsible in damages. [3] This is to say that the seller bears the burden the burden of the goods even though there is an existing contract between the parties involved but the general liability passes to the owner once the goods gets to buyer.[4] The seller has the general property in the goods at the time of the contracting and retains such property throughout the period of carriage. He is normally the proper party to sue on the contract and in tort.[5] However, where the buyer can acquire the right of sue is if he is lawfully the holder of a bill of lading irrespective of whether he has also acquired property in the goods. The buyer can also bring an action on the contract of carriage from the time when he takes possession of the consignment note, or accept the goods or ask the carrier for the consignment note for the goods or for a change to the terms of the contract of carrage.Again,a buyer who has bought goods under certain types of Fob contracts will be under a duty to make the contract of carriage and he will consequently be a party to that contract even before he comes to own the goods under a contract of sell.[6]

1. "classic or strict" fob, 2. fob "with additional services" and 3. "simple" fob.

These variations reflect different form legal point of view options, when in case of simple fob the buyer enters into contract of carriage and acquire the right to sue the carrier under this contract. In case of classic fob and fob with additional services, the buyer only becomes party to any contract of carriage and is able to sue on it when the bills of lading were endorsed to him and the only contract of which he could avail himself is that contained in or evidenced by the bill of lading. Such flexibility allows contracting parties to use fob contract as "skeleton" set of terms for any further amendment as better fits their requirements. Donaldson LJ in The El Amria and El Minia [1982] 2 Lloyds Rep. 28 referring with approval to classification of fob contracts provided by Devlin J In Pyrene & Co. v Scindia Navigation Co.[1954] 2 Q.B. 402, said at p.32: In the first, or classic type, the buyer nominates the ship and the seller puts the goods on board for account of the buyer, procuring a bill of lading. The seller is then a party to the contract of carriage and if he has taken the bill of lading to his order, the only contract of carriage to which the buyer can become a party is that contained in or evidence by the bill of lading which is endorsed to him by the seller. The second is a variant of the first, in that the seller arranges for the ship to come on the berth, but the legal incidents are the same. The third is where the seller puts the goods on board, takes a mates receipt and gives this to the buyer or his agent who then takes a bill of lading. In this latter type the buyer is a party to the contract of carriage ab initio. Classic type of fob contract where provision of the ship was the duty of the buyer was considered in Scandinavian Trading Co. A/B v Zodiac Petroleum S.A. and William Hudson Ltd., (The Al Hofuf) [1981] 1 Lloyds Rep. 81. It was varied by the custom of the oil trade to the extent that the buyer must give, in succession, notices of expected time of arrival of the vessel at the refinery or lifting port in question, 72, 48 and 24 hours in advance of the anticipated date of arrival.

The second type of fob contract differs from the classic fob in several respects. First, the seller nominates the ship and makes the carriage contract in his own name - as principal, secondly, the seller and not the buyer arranges the insurance. See as example of this type of fob contract considered in The El Amria and El Minia [1982] 2 Lloyds Rep. 28

Under the third type of fob the buyer or his agent nominates and charters the ship, in other words, enters into contract of carriage with the shipowner. The seller loads the goods on board, collects mates receipts from the vessel and gives them to the buyer or his agent, who obtains a bill of lading from the master in exchange for it. In this case the buyer and not the seller is the party to the contract of carriage, see example of such fob in President of India v Metcalfe Shipping Line [1970] 1 QB 289.

Types of FOB Contracts Pyrene v Scindia Navigation [[1954]] 2 QB 402 (per Devlliin J) 1. (The first type) (The classic FOB) The buyers duty is to nominate the ship, and the sellers to put the goods on board and procure a bill of lading. In such a case the seller may enter into the contract of carriage but it only will be as an agent of the buyer.

2. (The second type) is known as the extended FOB or FOB with additional services. Sometimes the seller is asked to make the necessary shipping arrangements (including entering into the contract of carriage). This differs from the classic FOB in two ways: (a) the seller makes the contract of carriage as principal, the buyer is normally not a

party to it. (b) it is the seller who nominates the ship. The extension of sellers duties may include an obligation to procure insurance.

3. The third type is the Strict FOB. The buyer engages his own forwarding agent at the port of loading to book space and to procure the bill of lading. The seller has no function in the making of the contract of carriage, whether as agent for the buyer or as principal.

In the strict FOB, the seller discharges his duty by putting the goods onboard, getting the mates receipt and handing it to the forwarding agent to enable him to obtain the bill of lading. Devlin Js division of the three types of FOB contract has been approved in The El Amira and The El Minia [1982] 2 Lloyds Rep. 28.

In the strict FOB, the buyer nominates the ship, procures the shipping space, and is the legal shipper ab initio.

Bunge Corporatiion v Tradex Export SA [[1981]] 2 Allll ER 513

The contract of sale required for the delivery of 15,000 tons of soya bean meal FOB an American port in the Gulf of Mexico. The buyer is to nominate an effective ship to take delivery of the goods and to give the seller at least 15 days notice of readiness of the vessel to load.

The notice was late for four days.The sellers selected to treat the contract as terminated. The court gave judgment for the sellers and held that the notice was a condition. It stated that in a contract for the sale of goods a stipulated time of delivery is of the essence. Nevertheless, if the buyer does fail to nominate an effective ship, the sellers remedy is damages and cannot claim for the price.

Colllley v Overseas Exporters [[1921]] 3 KB 302 - The buyer under a contract FOB Liverpool was unfortunate in that five ships successively nominated failed to arrive.

- The seller, who had delivered the goods at Liverpool, claimed the contract price and failed to recover it. - Since there had been no shipment, there had been no delivery to the buyer and the seller could not demand the price but merely damages for non-acceptance of the goods.

Substiitutiing the nomiinated shiip wiith another shiip Unless the buyers nomination is required by the contract to be final, he is not confined to it and may replace any nomination by a later one provided that it will be available for loading within the stipulated period. Agriiculltores Federados Argentiinos v Ampro SA [[1965]] 2 Llloyds L..R.. 290 - The contract calls for the shipment of maize on FOB terms between September 20 and 29. - The buyers nominated ship A. This ship was delayed by bad weather and would be unable to reach the port of loading within the shipment period. - They then made a second nomination at 16:30 on September 29. The sellers refused to load claiming that the buyers had breached the

contract. The buyers sued the sellers for nonperformance. On the facts, it would have been possible to complete loading before the end of September 29 (before midnight) if workers were made to work overtime. Held: The sellers were not entitled to treat the contract as repudiated. The buyers right to make a second nomination is valid so long as the goods could be shipped within the shipment period by the substitute vessel.