Law of International Trade Element - Essay Example

Laws of International Trade Element al Affiliation The document addresses as scenario involving international tradeof goods that are sold on cash against documents after dispatch from the loading port. In the transfer of the shipping documents, this case the lading bills to the end consignee, the carrier and original exported decide to switch the bill to conceal the actual exporter/shipper from the consignee who implied not to have any transactions anymore with the original exporter. However, the shipper information changes by some information referring to Original exporter still remains. With reference to the rule under CIF contract the end consignee cannot reject the bill after its payment, despite unknowingly having no ideal due to the changed information. Nevertheless, there had no additional clause to exclude any transaction with the original shipper. He is hence left with accusations of the carrier which lie on false deceit and breach of contract for delivering false representation. Keywords: CIF, BOL (bill of lading), Shipper, Consignee, false information, seller, buyer, carrier, claims, damages Introduction The arising issues from the problem scenario between the original owner (Li) of the brown sugar goods and the last buyer (Xu) were as a consequent of rushed sales where an opportune buyer existed. The second seller (Chen) sought to sell the goods to Xu who allegedly had developed some poor reputation for any transaction with Li, due to poor delivery timing. The problems addresses the bill of lading, specifically the misconception of the actual shipper of the goods, accuracy in the bill of lading, and the issue of one bill at the time of payment in the agreed cash against documents transaction. Question 1. Can Xu reject the bill of lading and refuse to pay? The duties of the seller in the transaction The sellers of the goods under CIF contract have specific obligations they are required to fulfill with respect to shipment of the sold items at the load port. Under the CIF contract, the shipping documents and in this case the bill of lading is very crucial o enable future transactions of the buyer concerning the goods being shipped. The seller is responsible of acquiring or preparing the correct shipping documents and tender them to the consignee (buyer) to an individual he has nominated (Galdes, 2001). With respect to this statement both the sellers had made efforts to obtain the bill of lading for their buyers. Chen used the shipping documents that had been delivered to him from Li and no matter the hurry to sell the goods Xu while they were still on shipment, a bill of lading was presented to Xu. The seller had accomplished his mission in shipping the document though a single one. The other duties of the seller concern the shipped goods to the destination port. The seller is responsible for providing the all shipping documents, including of commercial invoices and goods that match with what was entered in contract of sale, necessary to facilitate exportation of goods (Spurin, 2004). The scenario records that the single bill of lading was presented to the buyer, two days after unloading; meaning the buyer (Xu) had received the goods and had all the rime to clarify whether they were of satisfactory quality. However, the goods had no damage and received in good condition just as stipulated in the bill of lading at the time of shipment. For the seller to be paid, CIF contract requires that he provides the buyer with commercial invoice, which states the involved parties, when the shipment was made, provides the state of goods, destination ports, and shipment number among other essential details that could assist the buyer to claim ownership. Besides the listed items, the bill of lading acts as a documented evidence of legal ownership of the shipped goods to the consignee upon sale. Issuer over timing in presentation of the BOL It was the responsibility of the buyer to check conformity of the goods with the details entered in the bill of lading. First of all, it is recommended that the buyer take reasonable time to go carefully go through the official document before entering into any agreements just like in the property law of exchange and completion (“Critically evaluate,” n.d). Xu’s case has no issue with quality or condition of goods and is on his part entitled to pay the seller for the shipped goods on the tender of the bill of lading if it conforms to the contract. However, the bill of lading was presented to him after the goods arrived and not before the shipment. It means he got to view the goods before he received the document, which acts as a trap for the buyer to be persuaded by the goods rather than the actual content facilitating ownership and conformity. Based on the CIF contracts, there is no written obligation of the sellers that require them to present it to the buyer before goods; instead, it demands them to obtain it from the carrier and send them to the buyer/the recipient of the cargo. It is quite clear that CIF contract is the sales of documents relating to goods, which gives maximum freedom to the seller when it comes to tendering the shipping documents (Galdes, 2001, p.36). Unlike the ordinary contacts, the failure to distinguish the time frame for delivery of the documents is the possible deviation from the ordinary seller’s duties. Despite the location of the goods on sale whether lost or still in transit, the tendered bill of lading remain valid if it conforms to the contract. Both the goods and the documents are of essential value just as the timing under commercial contracts. It could be common for the documents to be handed over to the buyer before goods arrive, but it is not restricted in the concept for commercial convenience in the internationals trade. More so, the buyer has no right to reject the bill of lading if it conforms to the contracts as earlier agreed. On the matter of sufficient shipping documents delivered to the buyer, depends on the mutual agreement made between the transacting parties, beside the CIF terms of contract. There are a variety of shipping documents that can be include in the contract as part of the sale procedures; they include the certificates indicating the origin and condition upon inspection, not to mention the insurance certificate and invoice document. The main aims of the bills of lading are to transfer title and direct rights against the carrier and insurer to the buyer. When dealing with documentary sale in CIF contract, the seller is expected to provide the minimal of a negotiable document of title from the buyer, in return for payment (Schaffer et al, 2009, 187). This is to enable the complete control of goods even while on transit. Xu was given just one bill of lading for the transfer of ownership and control, which is recommended in the contract. He is therefore obliged to pay for the seller at the presentation of the tender. There may exist different lading bills or other shipping documents, but the rule in the sales contract stipulates the usual transport document (negotiable bill of lading). Unless the involved parties have added some clause in the CIF contracts, setting some conditions where specific bills of ladings and other involved shipping documents are fully expressed to be part of the settlement in the sales, tendering of the negotiable bill of lading remains valid for the transaction. Though the bankers may demand for a full set of the lading bills to credit the documentary sales of goods, only a single negotiable bill would serve right for payment between the seller and buyer. Referring to Sanders Vs MacLean, the single bill is describes as the key and permit implying ownership and access to the goods (“Documents required,” n.d, p.2). In Chen and Xu’s scenario, there did not exist agreed upon variations of the CIF contract to provide a full set of the bills or other documents involved in the transaction, where Xu would have an opportunity to reject the tendered bill of lading. Considering the modern advances in security measures taken during international sales, no party in the transactions desire to deal with uncertainties or losses arising from exchange of property. In the contemporary world, common clauses in CIF are setting the conditions to involve the commercial invoices, insurance and inspection certificates besides the bill of lading to be part of the exchange least it’s a breach of contract. Some would recommend the tender of supportive documents to the buyer in electronic form to supplement the delivered bills of landing, while a good number have continue to use electronic means to transfer all these official documents, but only upon entered agreement over its viability, avoiding delays of commercial documents, subsequent risks and speed up transactions with the banking system. Modern CIF contract and court decisions should include an implied term to provide all the bills upon international trade so as to be in line with the trend requirement of most modern banking activities. Question 2. What claims does Xu have and what are Xu’s remedies? It was until later after Xu had made payment for the goods when he realized that Chen had bought the goods from Li and the later was the actual shipper. From the buyer’s perspective, Xu can claim for false information and invalidity of the lading bill, which can all to be decided in court. Presentation of accurate bills and claims The duty in line with presenting the buyer with the bill of lading requires the seller to acquire or prepare an accurate or ‘proper’ bill of lading as earlier recorded. Xu may claim of having accepted the deal with the knowledge of Chen as the shipper, but nothing of the source trader. The bill of landing should clearly state the involved parties under the CIF contract of sales, the shipper and the consignee, specifically. Other crucial details are the actual date of shipment and state of goods that would lead to buyer’s loss or damage in his future transactions. Following the court decision in Findlay vs Kwik Hoo case, Lord Wright held that it is implied that the seller has a duty to provide true and accurate bill of lading and documents to buyer, deprived to which would lead to call for remedies to recover the caused damages. It was a concealed misconception between the carrier agent and the seller to prevent disputes from arising on the buyer’s end at the time of cargo unloading. However, proven that the goods were received from Li to Chen and sold to Xu while on transit, it proves that Chen was the original consignee and the original shipper therefore presented an incorrect bill of lading. If Xu decide to claim for his payment when he discover the alteration of the document, the only argument he can rely on are forgery of information and perhaps undesired business dealing with Li, which both are quite weak to stand. One, though there forgery, it did not impair his ownership or cause evidence damage. For example, if the date of shipment was inaccurate and led to further buyer’s damage on his part, that would have been a breech f contract resulting from non conformity of BOL with the contract of sale, least to mention the subsequent losses. Reviewing the decision made in Kwei Tec Chao vs British traders, lord Devlin denied the claim to return the payment in the event of a forged bill of lading, holding that the alteration did not make “the contract wholly void; to occur it would have required absence of a document that enable the buyer/holder to get the cargo from the ship, invalid receipt from the shipmaster and absence of the terms of contract from affreightment” (1954, p. 260). Xu claim stand no chance when applying the principle since it at least gives him title to not only gave him access, but to also own the goods upon shipment. The issue here is dealing with first seller but not consequent damages. Even though Xu established Li as the shipper, the contract would still be termed valid for there was no clause in CIF contract added to state that dealings with or goods from Li would lead to termination of the contract. The argument would stand to be that whether the document was altered or remained original with Li as the shipper, and only to be changed later after goods were unloaded, Xu would still pay for the goods sub contracted from Chen. Two features arise from the scenario; first, the evidence that Xu depended on existed in the BOL information, but had identified Chen as the shipper. The sellers defence could well suit to be an error unless Xu had another valid document to substantiate his own claim. Second, based on Panchaud Freres SA v Establissments General Grain Co, buyer’s complaints of an existing error in the shipping documents after accepting them is precluded (Bradgate &White, p. 263). Same case, Xu’s complain and claim for damages could be rejected. Validity of switching bills Switching a bill of lading is not new; it follows specific conditions to make it valid. It is commonly applied in cases where the original trading condition is changes. In case goods on shipment are resold while on transit BOL can be switched to the new shipper and consignee. Same case, when the consignee of BOL referring to cargo on shipment requires reselling the goods, but needing to conceal the exporter/shipper from the new buyer. To be termed legal, it requires such substitution conditions to be included in the voyage charter party via a clause. Provided the charterer for vessels on demise charter, or ship owners and the shipper/seller (owner of goods before reaching unloading port) enter into a contract of carriage in the international trade (Holloway, 1999). Both Li (shipper) and Wang (carrier agent) consented to the deal, which holding all things constant makes the deal valid. In case of detected errors in BOL worth amendments, the carrier can correct and also cancel them, beside the involvement in switching role. Liability of the carrier Errors are part of the improperly amended bills, which are the responsibilities of the carrier to amend. While Xu would question Chen for tendering questionable official document, Chen would refer to the carrier who is responsible for issuing the BOL. The carrier did produce the full set of landing bills, but failed to supply the consignee with accurate information. It can be argued as negligent on the carrier’s part to produce accurate information, which results in breach of contract of carriage. The liability then falls with carrier as it was their agent who acted upon to amend and switch the bill. There is however no relation between the entered agreement between the carrier and last consignee because the he was not part of it, leaving the liability to be transferred to the carrier from the seller as the principal. On the other hand, the fact that Li appear in the document but a shipper is different gives the impression of an existing fraudulent action. Under the English law it can be implied to be a tort of deceit for the existence of false information whether made conscious or not. To support the claim false representation whether knowingly or recklessly or with an intention to deceive are required just as established in Derry vs Peek case. However, since a proven loss as a result of the deceit is necessary, Xu’s claim does not amount to that. Conclusion Answer 1: Xu has no right to reject the bill or payment at presentation of the tender. Answer 2: Essentially, his claim of deceit would fall short of the requirement and neither can could the bill of lading be cancelled as it not wholly void. He already accepted the lading bill much of the remedies he can get would be to seek the correct amendment of the document from the carrier Reference List Spurin, C. H. (2004). The Cost Insured Freight (CIF) Contract. Retrieved from http://www.nadr.co.uk/articles/published/shipping/005CHAPTERFIVETRADE2.pdf Critically evaluate whether a CIF contract is a contract for the sale of documents or a sale of goods related in international trade law. (N.d). Retrieved from http://www.lawteacher.net/free-law-essays/saleofdocuments.php Schaffer, R., Agusti, F., and Earle B. (2009).Top of Form Bottom of Form International Business Law and Its Environment. 7th Ed. Mason, OH: South Western Cengage Learning.  Documents required under the Credit. (n.d). Retrieved from http://www.dradamlawfirm.com/pdf/Documents%20Required%20Under%20The%20Credit.pdf James Finlay and Company, Limited v. N. V. Kwik Hoo Tong Handel. 1928 december, 12,13, 14. Retrieved from naralaw.com.ne.kr/FINLAY.DOC‎ The Modern law review, Vol 17, No 3: p. 197-292. Retrieved from http://www.jstor.org/discover/10.2307/1090680?uid=3738336&uid=2&uid=4&sid=21103345430763 Bradgate, R., and White F. (2012). Commercial Law 2012: LPC Guide. Oxford: Oxford University Press. Holloway, P. (1999, February 24). Ownership, Risk and Title to Sue with Respect to the Carriage of Goods by Sea — The Perspective of a South African Attorney Acting on Behalf of Cargo Interests. Retrieved from http://web.uct.ac.za/depts/shiplaw/hollotxt.htm Galdes, M. (2001, June). The Obligation of the Seller in C.I.F Contract. Retrieved from www.avukati.org/common/fileprovider.ashx?id=633105834853621250‎ Read More