The Commercial Law: Advice to Edith - Case Study Example

Advice to Edith In reference to the facts of the situation given Edith has to approach the shipment company Andy's vessel for compensation of the loss she has suffered arising out of ripping and split of her Soya beans Referring to the facts of the case and the terms or rules printed in the bill of lading it expressly provided that:- i. That the foods were shipped in apparent good order and condition ii. Freight was payable iii. The carrier had liability to tranship the goods and in the event of transhipment, he was not thereafter liable for the safety of the goods. In the light of above fact, we find that the goods were bespattered in good order. It is while on tranship that the sacks containing the dried Soya beans ripped off and the contents were split. On arrival at the destination by Solent, express that Edith discovers. In this case or situation Edith has a remedy under the law to sue Andy's vessel for compensation arising from the damage caused to the goods as well as the loss she has suffered. When a company accepts to tranship the goods of a shipper, they must take due care in ensuring that the goods are shipped in time and reach the owner in good order and condition, which Andy's vessel company failed to ensure. The company failed to take due care of the goods entrusted to it. Edith can hold back his freight charges, which she was entitled to pay for the discharge of goods until such a time when the matter is settled and thereafter pay for the discharge of the goods. In this case, Barry is absolved from any ability since; he played his role by enduring all the three bills of lading to Edith, which shows that ownership has changed. The freight payable to the shipment company by Edith should be held by her until the matter is settled. Liability solely lies to the company since it is apparent good order and condition. This means that they were damaged while on tranship. To conclude, Edith has to sue the shipment company Andy's vessel for the loss caused to her arising from damage caused so her arising from the damage caused to her goods. In this case, she should leave the goods in possession of the shipment company until her claim is full settled and discharged. From the point or rule three above, the shipment company is liable to tranship and after reaching the destination, they will not be liable. In other words they accept liability of goods while on tranship. Same way problem or damage was done while on tranship. The damage caused resulting to loss by Edith has to be compensated for since liability arises as per the rules of the carrier. Edith can sue the carrier for the reckless of her cases. Barry should have complied with all the formalities in ensuring that the goods were despatched in good order and in time but the carrier, company had the dispatched the goods in good form only to reach Edith damaged. A similar case studied is that of: Tool Metal Manufactures Co Ltd v Tungsten Electric Co Ltd (House of Lords) In April 1938 the appellant made a contract with the respondent whereby they gave they gave the respondents a license to import, make, use and sell ' hand metal alloys' in accordance with the patent rights held by them. The respondents were to pay royalties on the materials made and compensation if in any one month they sold more than the stated quantity of the alloys. In 1942, following the outbreak of the Second World War, the appellants voluntarily agreed to suspend their right to compensation, it being contemplated that a new agreement would be entered into. In 1944, negotiations for a new contract begun but broke down and, in 1945, the respondents sued the appellants (inter alias) for breach of contract and the appellants counter-claimed for payment of compensation as from June 1 1945. The respondent's action was dismissed. Regarding the counter-claims, the Court of appellants counter-claimed for payment of compensation as from June 1 1945. The respondent's action was dismissed. Regarding the counter-claim, the Court of Appeal held that the agreement of 1942 operated in equity to prevent the appellants demanding compensation until they had given reasonable notice to the respondents of their intention to determine the agreement. In September 1950, the appellants themselves sued for the compensation as from January 1, 1947. The respondents pleaded equitable estoppels and argued that no reasonable notice had given by the appellants regarding their intention to terminate the agreement of 1942. The House of Lords held that the counter-claim in the first action in 1945 amounted to reasonable notice. Since the appellants were not now claiming compensation as due to them before January 1, 1947. They were awarded 84,000 under the compensation clause. (Ogola, 1999) Another similar case studied is that of; Hong Kong Fir Shipping Company v Kawasaki Kisan Kaisha Ltd (1962) English Court of Appeal The defendants chartered the vessel Hong Kong Fir from the plaintiffs for 24 months; the charter party provided 'she fitted in every way for ordinary cargo service'. It transpired that the engine room staffs was incompetent and the vessel spent no less than nine weeks of the first seven months of charter at sea because of breakdowns and consequent repair required to make her seaworthy. The defendants repudiated the charter party and claimed that the term as to seaworthiness was condition of the contract. Held The term was neither a condition nor a warranty and in determining whether the defendants could terminated the contract, it was necessary to look at the consequences of breach to see if they deprive the innocent party of substantially the whole benefit he should have received under the contract. On the facts, this was not the case, because the charter party still had a substantial time to run. Diplock, L J "No doubt there are many simple contractual undertakings, sometimes express but more often, because of their simplicity ('It goes without saying'), to be implied, of which it can be predicted that every breach of such an undertaking must give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract. In addition, such a stipulation, unless the parties have agreed that breach of it all shall not entitle the non-defaulting party to treat the contract as repudiated, is a 'condition'. So too, there may be other simple contractual undertaking of which it can be predicted that no breach can be give rise to an even which it was intended that he should obtain from the contract; and such a stipulation, unless the parties have agreed that breach of it shall entitle the non-defaulting party to treat the contract as repudiated, is a, warranty'. There are, however, many contractual undertaking, of more complex character which cannot be categorized as being 'conditions' or 'warranties' if the nineteenth century meaning adopted in the Sale of Goods Act 1890 and used by Bowen, L J in Bentsen v Taylor Sons & Co be given to those terms. Of such undertakings, all that can be predicted is that some breaches will, and others will not, give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such and undertaking, Unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise and not to follow automatically from a prior classification of the undertaking as a 'condition' or a 'warranty'. For instance, to take Bramwell B's Example in Jackson v Union Marine Insurance Co Ltd itself, breach of undertaking by a ship owner to sail with all the possible dispatch to a named port, does not necessary relieve the chartered of further performance of his obligation under the charter party, but if the breach is prolonged that the contemplated voyage is frustrated, it does have this effect." (Ogola, 1999) Advice to Frank From the facts of the situation given in the case above between card and frank, the goods might to have been shipped in February W.E.F "C.I.F Southampton, February 2006". She tendered documents within 10 days of bill of lading date. In reference to the facts above carol performed her duty by getting ready the documents, which he tendered, to frank on 9th February 2006. Meaning goods had to be dispatched immediately and reach frank by 28th February 2006. However the goods were and they were dispatched for tranship on 1st March 2006 as per the information given to Frank by the ship's crew. By this time, the market price had fallen 20% since the time Frank had agreed to by the goods. In the situation, Frank has to demand for compensation arising from the delay caused by the shipment company Andy's vessel to deliver or tranship his goods in time as agreed. In the light of these facts, he (Frank) is free to hold his freight charges until the matter is settled. Here we find negligence on the part of Shipment Company for their failure to deliver the goods to Frank in time. Frank should sue the Andy's vessel for the award of damages he has suffered due to the delay. The compensation should be in proportion to the loss suffered i.e. 20%. From the facts, Carol's negligence on the delay could not be ascertained since she tendered all the shipping documents to frank on 9th 2006. As per the three bills of lading facts, he Frank passed the invoice price to Carol when he received the shipping documents this absolves card from any liability arising from any delay of goods caused to Frank. In this manner, Frank should be compensated for the damage he has suffered due to the unnecessary delay. The ship's crew confirmed to him the date, which silk rolls were, loaded which is too late, causing the market price to fall. To conclude, liability lies on the shipment company, Andy's vessel that should compensate Frank. Frank has a cause of action before the law to recover the damages for the loss he has suffered proportionate to the percentage of loss i.e. 20% of goods in the market price and other damages for the loss suffered to him arising from the delay of time. The delay caused to Frank is confirmed by the ships crew who told him that it was shipped on 1st March 2006 and not as he expected in February. To this, the carrier stands liable for his loss. Carol had tendered all documents in time and was the company's duty to have the goods shipped in time. Therefore, Solent express is a common carrier empowered a duty of delivering goods in a reasonable time. The unnecessary delay, which is inevitable due to unforeseen circumstances, makes the company liable. Accepting to deliver goods makes the shipment company an insurer which with or without negligence must be liable. In one of the interesting case is that of; Peek v Staffordshire Rail Co, 1863 The plaintiff intended to send three mantle pieces to London on the defendant railway. A printed notice was delivered to the plaintiff informing him that the goods were only carried subject to the conditions that liability for loss or damage was excluded unless declared and insured at a premium of ten percent. The plaintiff after lengthy negotiations wrote to the defendants "please forward three cases of marbles not insured". He signed this statement. The goods were damaged and the defendants relied on the exempt clause. It was held that the document in question did not constitute a contract in writing containing the conditions and signed by the plaintiff. Apart from this, the condition was unreasonable and therefore void. A similar case studied is that of: Raffles v Wichelhaus (1865) The defendants agreed to buy from the plaintiffs 125 bales of cotton to arrive 'ex peerless from Bombay'. There were two ships called peerless sailing from Bombay, one in October and one in December. The defendants thought they were buying the cotton on the ship sailing in October and the plaintiffs meant to sell the cotton on the ship sailing in October. The defendants refused to take delivery of the cotton when the second ship arrived and were now sued for breach of contract. None of the parties knew that there were two ships called peerless. Held Since there was a mistake as to the subject matter of the contract, there was in effect no contract between the parties. There were no circumstances, which would clearly indicate to a disinterested bystander that the contract made more sense if the December Ship was. Consequently, it was impossible to determine the sense of the promise. (Ogola, 1999) Advice to Commercial Bank. The commercial bank comes to picture from the transactions between Darren and Gill. C.I.F South Hampton, March 2006, shipment payment by irrevocable letter confirmed by America bank in Louisiana subject to I.C.C uniform customs and practice for documentary credits 1993 version" Gill Instructed brokers bank of London to issue the credit. They instructed commercial bank of New Orleans to confirm the credit, which they did by sending as letter to Darren, which he received to the 31st January 2006. The letter made expressly subject to the U.P.C 1993 version, and required Darren to tender shipping documents (including port-to-port bill of lading) for 1000x1kilo cans of "mid-west baby com." On 10th March 2005 Darren tendered to the commercial bank (i) Two of the bill of lading duly endorsed and dated 1st March 2006 describing the goods as "American Canned food" (2) A certificate of insurance for the goods and (iii) An invoice for the full C.I.F price describing the goods as "1000x) Kilo cans of mid-west baby can" From the above circumstances or facts, the credit. This is due to the fact that is the first statement above, the two bill of ladings, duly enclosed and dated 1st March 2006 describe the goods as "American Canned food" and in point (iii) above invoice for the full C.I.F Price describing the goods as "1000x1 kilo cans of mid-west baby com" In this scenario, there is a contradiction of description of goods shipped whereas the two bill of ladings describe the goods as "American canned food" the invoice describes it as "Midwest baby com" in the light of this it is very difficult for commercial bank to confirm the credit. The goods described are different and yet it is only one type of goods that was shipped. The commercial bank should therefore not confirm the credit and it should notify back the broker bank of London about the contradiction, the irrevocable letter American bank of Louisiana should stand cancelled due to this irregularity. Brokers bank of London should immediately notify Gill. In this ways, Darren must be held liable for all the liabilities arising out this. The commercial bank should further try to investigate whether the contradiction arose from ordinary slip of the pen or it was deliberate with an intention to defraud. The existence and identity of the goods shipped must also be ascertained. The records at the shipment company office should also scrutinize so as to find out what is recorded. To conclude, the commercial bank must not confirm the credit and if should inform brokers bank of London which in return should inform gill and the payment to Darren by American bank in Louisiana must be held. Her intention should be ascertained and she must pay for all the damages she has caused to Gill and other liabilities to the institutions involved. The commercial bank should advise the broker's bank of London and in furtherance of this all transactions terminated. Gill who should be compensated for the loss he will suffer if it is found out that Darren had intentionally contradicted the identity of the goods. His loss will be paid right from the time they agreed to transact with Darren. Further the documents sent by Darren to commercial bank stand ineffective. The certificate of insurance issued stands not effective since it cannot be able to insure two types of goods simultaneously. Conclusion In conclusion, the shipment company owes liability to Edith and Frank for the damage of goods and delay in dispatch of goods respectively. In both cases, the cause of action against the company arises. It is liable for the loss suffered by Edith in ripping and splitting her dried Soya beans. She should be compensated for the loss she has suffered. Equally, Frank should be compensated for the delay he has been caused by the company resulting in the fall of market price of the silk cloth. In both situations, a cause of action arises against the company and they should appropriately sue for damages. Commercial bank of New Orleans must not confirm the credit due to the contradiction in the shipping document where shipped as "American Canned food" and the invoice describe the goods as " Mid-west baby com." The bank should never confirm the credit as it is difficult to ascertain the real identity of the goods shipped and the extent of the error made where accidental or deliberate by the shipper, Darren. All the transactions involving payment should be put on hold and Gill are notified of the error immediately. The intention of the shipper in making of the said mistake should be establish. He will be held liable for the loss suffered by Gill and the institutions involved. References Bayles, M. D. (1990), Procedural Justice. Allocating to Individual, Dordrecht, Kluwer Academic Publisher Dhanrajlal, M and Ratanlal, N, (1999), Code of Criminal Procedures, 12th Edn New Delhi, Wadhwa Emanuel, S. L, (2004), Fundamental of Business Law, 4th Edn, Sydney, Educational Publisher Emerson R. W, (2003), Business Law, 5th Edn, Sydney, Educational Publisher Jertz, A, Miller L. R, (2004), Fundamentals of Business Law, 3rd Edn, Nairobi, Macmillan Publisher Hussain, A, (1993), General Principles and Commercial Law, 1st Edn, Nairobi, East Africa Educational Publishers Langhan, A. S, (1999), Maxwell on Interpretation of Statutes 12th Edn, New Delhi, Gopas Publishers Ogola, J. J, (1999), Business Law, 1st Edn, Nairobi, Focus Publications ltd Penrose, R, (2005), Road to Reality: A Complete Guide to the Laws of the Universe, Nairobi, Longman Publisher Saleemi, N. A, (1992), Elements of Law, 2nd Edn, Nairobi, N.A, Saleemi Publishers Read More