Advise UK Commodities - Assignment Example

? Incoterms are a series of rules that regulate international commerce, and they are enacted by theInternational Chamber of Commerce. The main purposes of these rules, is to give information on the tasks, risks and costs associated with the delivery and transportation of the commodities. One issue that arises under the incoterms is the CIF1. This term refers to the Cost Insurance Freight. In this case, the issue of CIF Southampton arises, and this involves the costs, and Insurance Freights of delivering the products to Southampton. In CIF, the seller insures the products during the course of transportation and delivery. FOB Southampton on the hand denotes that the buyer will have to bear all the risks, and costs associated with the transportation of the goods once the goods pass through the ships rail. In this case, UK commodities contracted Dutch grains, to supplier 45,000 bags of wheat, in March. The supplier had to ship them directly to Southampton, from Rotterdam. As shippers, the company arranged to transport the cargo and the goods were at the port by 25th of March. However, the ship delayed till the 2nd of April and despite this, the ship master issued the goods with a clean bill of lading without checking. The ship used another route that of Calais, instead of that of Rotterdam. The result of this breach of the contractual agreement was that the price of wheat fell, and a large quantity of wheat under transit was damaged. Dutch Grains breached the contract in the following ways, 1. Did not transport the commodities at the required time. Section 29 of the 1979 sale of goods act outlines the rules concerning the delivery of a product or goods. Section 29 part 1 of the sale of goods act denotes that it is the stipulations of the contract to determine who will transport the goods to the buyer’s premises. Section 29, part 3 of the act denotes that the seller must send the goods to the buyer, at within the agreed time, and if the time period is not agreed, the seller must send the goods to the buyer within a reasonable time, and this time must depend on the matter of facts. Section 13 of the 1979 Sale of Goods act denotes that a buyer can refuse to accept the goods if they do not meet the description contained in the contractual agreement2, and this also includes the time when the goods are supposed to be delivered. In our case above, the carrier hired by Dutch grains did not transport the grains within a reasonable time, because they were to transport it on March, and they failed. They also used a longer route that contributed to the delay in delivery of the wheat. On this basis, they breached the provisions contained in section 29 parts 3 of the 1979 sale of goods act. Section 29 part 5 of the act denotes that if this is breached, the contract can be rendered void3, and thus the buyer can refuse to accept the goods. 2. Did not supply the goods in the right quality. Another breach by the carriers is that they supplied the wheat products when they were already damaged. Section 35 part 2 of the 1979 sales act denotes that a buyer who has never examined the goods under consideration has not accepted the goods until he has examined them in order to ascertain if the goods are in accordance to the agreements stipulated in the contract. Subsection (b) of part 2 denotes that if the sale of the goods is by sample, the buyer must ascertain that quality of the goods under consideration, matches the quality of the sample. In our case above, a large proportion of the wheat were damaged4. On this basis, the buyer can reject the goods under consideration. This argument is reinforced by the provisions contained in Section 35A part 1(a) which denotes that the buyer has a right to reject goods brought to him by a seller, if he breaches the contractual agreement. Part (b) of the same section denotes that a buyer can reject some of the goods that have breached his contractual obligation with the seller. In our case above, UK commodities can rejects the goods that were spoilt. The goods in question were shipped under the CIF, and according to this contractual method, a buyer pays for the goods as long as the shipping documents denote that the goods under consideration are of the right quality5. In this case, the documents which the buyer was relying on were the bill of lading. However, upon the arrival of the goods, and on his inspection, he found that the wheat was of low quality, and therefore the information contained in the bill of lading was wrong. UK commodities can therefore claim for damages against the carriage company. This is depicted in the 1911 case involving the Biddle Brothers against E. Clemens6. The House of Lords denoted that in a CIF contract, that a buyer pays the goods after receiving a document outlining the quality of the goods. If he insists on inspecting the goods before delivery, the buyer cannot claim any damages arising from non-delivery from the seller7.However after paying the goods upon receiving the documents, and on inspecting the goods at the delivery, he can claim for damages if the goods are not in a better condition as per the contractual terms8, and if due to their negligence, the prices of goods in question have changed affecting the interests of the buyer. On this basis therefore, UK commodities has every right to reject the goods, and institute a case claiming for damages against Dutch grains for their negligence. This is supported by the requirements of Incoterm on trades that are done under the CIF. Under the incoterms rule, the risks of damage and loss are transferred to the buyer once the goods pass over the ships rail line. However, this is after the company has inspected the goods and produced a bill of lading that outlines that the goods conform to the agreements in their contracts. However in this case, Dutch Grains did not inspect the goods, and the ship master wrote a report without inspecting the goods. The Rights of Action against Breach of the Contract: UK commodities can reject the spoilt goods, and institute a case demanding compensation for their loss against Dutch Grains. This position is supported by the provisions contained in Section 35 of the 1979 Sale of Goods Act, which denotes that a buyer can reject part of the goods that do not meet the contractual agreements they had with the seller. A common law principle that further strengthens this position is found in the case involving Truk Company, against Tokmakidis Lloyd’s representatives. This case was settled in 2000, and the court denoted that a buyer has a right to refuse the delivery of products that do not satisfy their contractual; agreements. He can thus claim damages against the supplier/ seller or the carrier company depending on the person who has breached the contractual agreement9. The correct way in claiming the damages that arise from the breach of this agreement is contained in the 2000 case law involving Jungwoo Logic, against A. C. Daniels and Company. In this case, the defendant manufactured and delivered a mould which the buyer refused to accept. In their view, and according to the contract in which the buyers had with the defendant, the mould in consideration was of low quality, and they demanded the money they had paid to the seller which was of 45,000 pounds, and plus other damages which could compensate the buyer from the breach of the contract under consideration. However, the defense team argued that the measure established under the common law system, is that a buyer had to be restored to the previous position he was, had the contract not negotiated. This principle was established in the 1954 case involving Cullinane, against British manufacturing company10. However, Justice Hicks denoted that this was a misinterpretation of the common law concepts, and that the principle in establishing the amount of damages to be awarded to a complainant is based on the position of the complainant in case the contract was successfully implemented. In the case of UK commodities, the goods in question were damaged, and the prices of wheat fell because of late delivery. Another case that explains better the amount of damages a seller has to pay a buyer in case of breach of their contractual agreements is the case involving Payzu against Saunders11. In this case, the defendant insisted on receiving cash first, before delivering the requested products. The seller breached his contractual agreement with the buyer, forcing the buyer to institute damages against him, claiming the difference in price between the goods at the time in which they made the contract agreement, and the prices of the goods at the current time12. However, the court found that the offer made by the seller was to the advantage of the buyer, and he was therefore not entitled to the differences in the market value of the products. However, in the 2004 case involving Louis Dreyfus against Reliance company, the courts was of the opinion that the real value of the damage must be ascertained to be the value of the goods in question at the fulfillment of the contract, and the position of the buyer had the seller fulfilled his part of the bargain13. Whether they should Pursue Action against Dutch Grain or the Carrier Company. In our case above, UK commodities can successfully institute a suit against Dutch grains and claim damages based on the amount of profits he would have made by selling the goods in question. This is if the Dutch grains company successfully implemented their contractual agreements. UK commodities suffered losses because of a breach of its contractual agreements with the seller and the carrier company and on this basis; the company can institute a legal challenge for purposes of recovering the money they lost. This position is reinforced in the common law precedent set up in the case involving Louis Dreyfus against Reliance Company. Just as discussed earlier, the courts allowed the buyer to institute damages against Reliance Company for failing to deliver the products on time, and this made him make losses because of the fall in prices of the sugar products. Bibliography: B, Hugh, Cases, materials and text on contract law. (2nd ed. Oxford [England: Hart Pub., 2010). B Hugh, Mistake and non-disclosure of fact models for English contract law. (Oxford: Oxford University Press, 2012). D Gerhard, The common European sales law in context: interactions with English and German law. (Oxford: Oxford University Press, 2013). H John, Global business law: principles and practice of international commerce and investment (Durham, N.C.: Carolina Academic Press, 2012). L Filippo and Y Baatz, C.I.F. and F.O.B. contracts. (5th ed. London: Sweet & Maxwell, 2012). S Ingeborg and Pl Hachem, Global sales and contract law. (Oxford: Oxford University Press, 2012). Smits, J. M, Daniel Haas, and Geerte Hesen, Specific performance in contract law: national and other perspectives. (Antwerp: Intersentia ;, 2008). S John and P Winship. International sales law: a problem-oriented coursebook. (2nd ed. St. Paul, MN: Thomson/West, 2012). Read More