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Duties of CIF Seller

to ship goods that correspond to the contract description


at the port of shipment
Under S.13 of the sale of goods Act 1979,
where a sale took place by description,
it was an implied condition that the goods would
correspond to that description Where the goods did
not match the description, the buyer could reject the
goods and obtain damage but according to S.15 A of
the Sale and Supply of Goods Acts 1994:
where the breach is so slight that it would be unreasonable for the
buyer to reject the goods, and the buyer does not deal as a
consumer, the breach is not to be treated as a breach of condition,
but may be treated as a breach of warranty”
Description - packaging- time of the shipment
-a notice of appropriation- identity goods- quality- name of the ship
Packaging
Terms relating to packaging are generally regarded as part of the
description of the goods.
Manbre Saccharine Co v Corn Products 1919
-The contract was for sale of starch in 280 pounds bags.
-The cargo was shipped partly in 280 pounds bags and partly in
140 pounds bags.
-The seller argued that the packaging of the goods was not a
material part of bargain.
-The court held that the packaging was a part of the description
of the goods.
-The seller were in breach of shipping goods that did not correspond
to the contract description
Time of shipment
It is a condition term in the contract. If the seller failed to perform it,
the buyer can repudiate the contract and obtain damages.
Bowes v Shand 1877
The contract was the shipment of rice from Madras.
Shipment to take place during March and/or April 1874.
Part of the cargo was shipped in February and the rest in March.
The court held that the buyer were not bound to take rice shipped
During Feb since it was not the same article for which they had
Bargained. Time is the important for sorting out payment arrangements
for both the seller and the buyer
Notice of appropriation
If the buyer asks the seller to provide a notice of appropriation, the
seller has to fulfil this obligation. The buyer can calculate the date of
arrival of the goods and arrange for their collection, or sub-sell them
to the third parties. Since the buyer use the notice of appropriations
to perform his obligation in respect of others, the law requires that the
seller comply with the terms of the notice of appropriations. The buyer
is entitled to reject where there is a breach of the notice of appropriation
requirement
Invoice
The seller has duty to tender to the buyer an invoice debiting the
consignee with agreed price.
(actual costs + commission + insurance premium +freight)
Insurance
The seller must obtain insurance cover and tender the insurance
documents to the buyer.
It must be from reputable insurer.
The contract might stipulate the kind of cover that seller is to obtain.
Otherwise, the seller must obtain insurance according to the current
custom in the trade.
All risks or a policy covering risks other than ‘capture, seizure and
detention’. Amount must be for a reasonable value of the goods.
The insurance obtained by the seller must cover those goods that
have been sold by him to the buyer. The insurance to cover entire
transit that is envisaged by the contract of sale. Where the insurance
covers only part of the voyage, the buyer will be able to reject the
documents upon tender.
The Lindon Tricotagefabrik V White and Meachan (1975)
The seller did not obtain insurance cover for the entire transit, the
seller could not claim the price of the goods when they were stolen
while awaiting delivery to the buyer’s correct address.
The seller must obtain insurance policy other than a written statement
for a substitute because only the insurance policies are transferable.
Licences
Necessary to obtain export and import licences.
Usually the contract of sales provides for obtaining licences.
Without any expressed agreement, the seller obtains export licences,
and the buyer obtains import licences.
Mitchell Cotts & Co Middle East Ltd V Hair Co Ltd (1943)
The contract was for purchase of goat-hair.
Payment to be made after approval of the goods at the port of arrival.
The contract did not contain a term about responsibility for obtaining
import licence. On arrival custom authorities seized the goods. The
buyer had already accepted the shipping document but refuse to pay
for the goods. It was a seller duty to obtain the necessary import licence.
The court held that the buyer was responsible for the licence.
The level of responsibility depend on the agreement between the parties.
There is no agreement, the parties must exercise reasonable care.