CIF Liverpool Contract - Essay Example

? DATA PROTECTION & CYBER SECURITY LAW By Data Protection & Cyber Security Law This is a law essay that seek to analyze and advise parties involve in “CIF Liverpool contract” (i.e. seller-A&W Ltd and buyer-N&Y Ltd). The problem arises when goods get lost on voyage and the buyer (N&Y Ltd) declines to pay despite seller having bill of lading documentation,1 the insurance policy and the invoice. The seller sues buyer believing they should be paid despite the loss of goods; on the other hand, the buyer does not pay since the goods are not delivered. This is a legal case that seeks proper analysis of the shipment documentations and the rights of seller, Shipment Company and buyer during the contract (Hinkelman & Shippey 2004). Parties’ rights in CIF Contract CIF contract: Cost, insurance and freight (CIF) denotes that the vendor delivers when the products pass the ship's bar in the port of consignment.2   A CIF contract needs the seller to ship at the port of consignment the required products in the underlying agreement of sale, to acquire a agreement of carriage (bill of lading) under which the products will be delivered to the established destination, to organize for insurance that will be obtainable for the advantage of the buyer, to formulate a commercial invoice and lastly to tender these papers to the purchaser who must be prepared and willing to pay the cost of the consigned products.3 In such a scenario, the ownership of the products may pass either on consignment or on delivery of the documents. The risk normally passes on consignments or as from shipments, but ownership does not pass pending the documents which symbolizes the products are provided in exchange for the cost.  As an outcome, the purchaser, after acceptance of the documents, can claim against the transporter for infringement of the agreement of carriage and against the underwriter for any loss enclosed by the policy. In this case, A&W Ltd is safe after tendering required documents to N&Y Ltd. In accordance to a CIF contract, the buyer is required to pay against the tender of a genuine bill of lading that guarantees the products contracted to be sold, an insurance document and a saleable invoice that indicates the price.4 The buyer is obliged to make payment against the tender of the respective papers of contract notwithstanding of fact that the products have been damaged or lost at maritime after the shipment.5 In the incident of loss, such as case of study, the buyer (N&Y Ltd) must pay the value on provision of the documents and necessary remedies, if any, will be against the transporter as indicated in the bill of lading or aligned to the underwriter as per the insurance agreement, but not against the seller (A&W Ltd) under the agreement of sale. If the purchaser declines to pay (as indicated in this case) against the papers without any legal justification, the buyer shall be legally responsible to compensate the seller for damage that may outcome, as enacted in Article 150 within the Commercial Transactions Law (Meiselles 2013). Under a CIF agreement, the seller performs the requirements by providing the documents to the buyer. The seller is not required to deliver the products to the agreed destination but the seller is under a negative responsibility not to avert the goods from being delivered to the buyer at their premises. This might be executed by deterring the carrier from delivering products to the buyer or by transferring them to a diverse destination (Meiselles 2013). However, if the agreement contains a section that imposes on the seller an obligation to transport the products to the contracted destination, it is not regarded as a CIF agreement, even if the documents of ‘CIF’ emerge in the contract.  Not all agreements that are expressed to be CIF agreements are such. According to Article 155 of the Commercial Transactions Law,6 it is stated that ’a contract which encloses such status as will make the seller accountable for the perishing of the products after shipment, or tenders the performance of the agreement conditional on the secure arrival of the ship, or which vests the purchaser with an alternative to accept the products according to the agreement or in accordance to the pro-forma provided to them at the instance of contracting, shall neither be a FOB sale nor a CIF, but shall be considered to be a sale provisional upon delivery at the destination.7 In consideration of the above, it is necessary to conclude that under a CIF contract the buyer cannot refuse the legal documentations and demand from the seller the genuine goods. Nor can the seller hold back the documents and tender the products.8 In addition, the performance of a CIF agreement is satisfied by delivery of the papers and not by the actual delivery of the products by the seller. Consequently, it has been debated that a CIF agreement is not a sale of products but a sale of documents. As a consequence, the characteristic of an ordinary CIF agreement is to be satisfied by delivery of the papers and not by the actual material delivery of the products by the vendor. A case law The feature of an ordinary CIF agreement is to be satisfied by tendering of the documents and not by the actual material delivery of the products by the vendor. This is why CIF contract is considered a sale of documents.9 In a CIF contract, the credentials which have to be delivered by the seller to the buyer will comprise a bill of lading. However, the agreement may specify for provision of a delivery order or provide the seller the option of issuing a delivery order. It has been acknowledged, since the English legal case of R Atcherley & Co and Re Denbigh Cowan & Co [1921] 90 LJKB 836,10 that the simple replacement of a delivery order for a bill of lading under the conditions of the agreements does not give any obligation to tender the actual products, so as to avoid the contract from being a genuine CIF contract. However, in one more English legal case, The Julia [1949] AC 293, an agreement for the sale of rye11 “CIF Antwerp” provided the vendor the alternative of tendering delivery orders or bills of lading.12 The vendor shipped the rye in mass and delivered a delivery order in deference of a quantity lesser than the whole shipment. This order was concentrating to the vendor’s agent in Antwerp. As a result, it was supposed that the agreement was not a CIF agreement but one for the delivery of the products in Antwerp. As the products were not so tendered, there was a totality failure of concern. Here it can be supposed that if the vendor in the Julia scenario had preferred to tender a bill of lading, he would have executed his requirements and it would have been a CIF agreement.13 Remedies associated with CIF contract parties. The remedies associated with CIF contracts are in regards to data protection and safety of investments during the shipment. The remedy associated to seller in this case (A&W Ltd) was that the contact they entered in protects him.14 The contract certain that A&W Ltd is not liable for loss of goods during shipment, thus the purchaser (N&Y Ltd) is obliged by law to pay for the products. The buyer (N&Y Ltd) on the other hand is protected against such losses by the bill of lading, giving an agreement privilege against the transporter, and the underwriter of insurance policy, covering most unintentional losses. This is a remedy that assist confirm to the buyer that insurance and carrier are liable for the losses. Case scenario Following the undertakings of the above requirement of the CIF contract, the parties involve N&Y and A&W ltd need to know that the contract is binding and the case is resolvable. The buyer should owner the deal and pay the seller since documentations are in support. The buyer should launch a claim against carrier and insurance the loss of goods. The condition of buyer paying can only be disputed if there is evident that the seller influenced carrier negatively to deliver the goods to a different destination.15 Conclusion In conclusion, the buyer should pay the seller and launch a claim from insurance and carrier since the spirit of the contract dictates so. The feature of an ordinary CIF agreement is to be satisfied by tendering of the documents and not by the actual material delivery of the products by the vendor (Lucas & Dickinson 2011). This is a confirmation that the seller tendered their obligation thus making it necessary for the buyer to oblige and make payment. In accordance to a CIF contract, the buyer is required to pay against the tender of a genuine bill of lading that guarantees the products contracted to be sold, an insurance document and a saleable invoice that indicates the price. This summarizes the case since all the parties have been advised accordingly and should know what cause of action to take for remedy. Bibliography BEALE, H. G., BISHOP, W. D., & FURMSTON, M. P. (2008). Contract: cases and materials. Oxford, Oxford University Press. CAMPBELL, D. (2007). Remedies for international sellers of goods. Austria, Yorkhill Law publishing. CARVER, T. G., & COLINVAUX, R. P. (1982). Carver's carriage by sea. London, Stevens & Sons. DIMATTEO, L. A. (2013). Commercial contract law: transatlantic perspectives. GASKELL, N., ASARIOTIS, R., & BAATZ, Y. (2000). Bills of lading: law and contracts. London [u.a.], Lloyd's of London Press. HENDRIKSE, M. L., MARGETSON, N. H., & MARGETSON, N. J. (2008). Aspects of maritime law: claims under bills of lading. Alphen aan den Rijn, The Netherlands, Kluwer Law International. HINKELMAN, E. G., & SHIPPEY, K. C. (2004). Dictionary of international trade: handbook of the global trade community includes 19 key appendices. Novato, Calif, World Trade Press. KIAPI, P. P. (2000). Commercial transactions. [Kampala], Uganda Law Books. KLOTZ, J. M. (2008). International sales agreements: an annotated drafting and negotiating guide. Alphen aan den Rijn, Kluwer Law International. LUCAS, D., & DICKINSON, H. (2011). Shipping & international law. Thomson Reuters. MEISELLES, M. (2013). International commercial agreements: an Edinburgh law guide. Edinburgh, Edinburgh University Press. RYDER, N., GRIFFITHS, M., & SINGH, L. (2012). Commercial law: principles and policy. Cambridge, New York; Cambridge University Press. SKAJAA, L., LORENZON, F., & SASSOON, D. M. (2008). Sassoon: CIF and Fob contracts. London, Sweet & Maxwell. WHINCUP, M. H. (2006). Contract law and practice the English system with Scottish, Commonwealth, and Continental comparisons. Alphen aan den Rijn, Kluwer Law International. WORTHINGTON, S. (2003). Commercial Law and Commercial Practice. Oxford, Hart Pub. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=270684. Read More