International Trade Law in the United Kingdom - Assignment Example

The Bill of Lading has three primary functions. It provides a document of receipt of goods and more importantly, it provides evidence of the existence of the contract for the carriage of goods.1 The receipt of goods as evidenced by the Bill of Lading makes provision for the carrier to deliver the goods in a manner previously agreed. As a document of title the Bill of Lading dictates the holder of the Bill of Lading is the proper owner of the goods. As a contract of carriage the Bill of Lading provides for the actual details of the carriage arrangements and includes such things as time and price of delivery.2 Obviously, these various functions of the Bill of Lading provide the recipient with a measure of adequate security against the carrier. By virtue of Article III (3)of the Carriage of Goods by Sea Act 1971 the Bill of Lading is required to contain the quantity of goods and the actual condition of the goods.3 As such the Bill of Lading is an authentic receipt of the goods contained in a sale of goods contract. The Bill of lading is evidence of a contract of carriage.4 Until such time as the goods are physically delivered to and received by the buyer the Bill of Lading will function as constructive possession of the goods under any sale of goods contracts.5 Typically, in contracts for the sale of goods, especially in circumstances where the Bill of Lading is drafted in a manner consistent with the seller’s specification, title to the property or goods under the contract will pass when the documents are tendered. Implicit in this transaction is the residual duty of the seller to deliver good title to goods and to assume liability for damages in respect of defective goods. Once the goods are placed with the carrier the seller is absolved of further responsibility if the goods conform to the Bill of Lading. The contract also makes provision for limitation of liability and for remedies for breach of the terms and conditions contained in the Bill of Lading.6 In a typical case, the buyer will undertake to receive and accept the goods together will all risks once the documents describing the goods have been tendered. Quite often the: “buyer is generally bound to pay on tender of documents, before he has had an opportunity to examine the goods.”7 As a result once the goods have been dispatched to the carrier the seller’s responsibility for preserving the integrity of the goods will come to an end. Schmitoff explains that even though the buyer is under a duty to pay for the goods, freight and insurance the goods are dispatched at the buyer’s risk.8 Under contracts for the sale of goods in International Law, goods are presumed to pass pursuant to the intention of the contracting parties.9 The law presumes that the parties intend that the goods will fit the description as provided for in the contract for the sale of goods. The buyer is at liberty to reject goods if and when the carrier fails to comply with his obligations under the terms of the CIF contract and the Bill of Lading.10 The Bill of Lading is therefore essential for the buyer’s protection against risks to the goods while in transit Article III of The Hague Visby Rules requires that the carrier use due diligence making sure that the transporting ship is properly manned and equipped.11 Article III of the Hague Visby Rules is important for the protection of the goods while in transit. Article 35 of the Vienna Convention commands that the seller deliver the goods in a manner consistent with: “the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract.”12 However, once the goods are delivered to the carrier, the seller’s responsibility ends with the Bill of Lading. By virtue of taking possession of the relevant documents “all the rights of suit against the carrier” will be vested in the buyer.13 The carrier’s liability under a Bill of Lading is demonstrated by the ruling in Suzuki & Co. v Burgett and Newsam. In this case a Bill of Lading required the shipment of peas by date and time designated for some time in January 1920. The seller provided a bill of lading which reflected that the peas were ‘received for shipment’ on January 31, 1920 and as a result the peas were not dispatched until the month of February. The buyer was entitled to reject the goods since they did not comport with the agreed upon January shipment.14 Rule 1, Section 18 of the Sale of Goods Act 1979 is demonstrative of the importance of the Bill of Lading with respect to the buyer’s protection. Rule 1 of Section 18 provides that: “where there is an unconditional contract for the sale of specific goods in a deliverable state the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed..”15 In Dennant v Skinner & Collom it was held that he parties to a contract cannot make the sale of the property conditional upon any event once the contract is complete.16 It therefore follows that the parties cannot provide for the integrity of the goods during transit since the contract for the sale of goods would have been completed once the goods are delivered for shipping. The Bill of Lading provides the only means of accountability for the goods in transit. The difficulty for the buyer is created by the implications of Rule 1 in that the goods are in a ‘deliverable state’ even if they are damaged and yet the buyer is bound to take possession of them. According to Underwood Ltd v Burgh Castle Brick and Cement Syndicate, goods are deemed to be a ‘deliverable state’ provided the seller has completed all that he needs to complete under the contract for the purpose of bringing that contract to a conclusion.17 Section 61(5) of the Sale of Goods Act 1979 provides that goods are in “deliverable state” when they are in: “such a state that the buyer would, under the contract, be bound to take delivery of them.”18 Section 18 Rule 5(2) once the seller delivers the goods to a carrier for the purpose of delivering the goods to the buyer, the goods have been “unconditionally appropriated” to the contract.19 The rationale of Section 18 Rule 5(2) is immediately obvious. Once the goods have been delivered to a carrier by the seller he no longer has control of the goods and has therefore “unconditionally appropriated” them pursuant to the contract for the sale of the goods. The cumulative impact of these provisions is that unless expressly provided for in the contract for the sale of goods, the title to goods will pass to the buyer once the property is ascertained and unconditionally appropriated to the terms of the contract.20 In the absence of a Bill of Lading the buyer will assume the risks of damages incurred during transit of the goods. A Bill of Lading requires that the carrier deliver the goods in a manner consistent with the terms of the Bill of Lading. If the carrier fails to do so he is liable as a matter of contract or tort to the holder of the Bill of Lading.21 In view of the dynamics of the law regulating the passing of title and possession of goods in cross border trade, the Bill of Lading is singularly important for the security of the goods. It provides security by operating as evidence that a contract for the delivery of the goods exists as well as evidence of the condition of the goods upon dispatch for delivery. The Bill of Lading provides further security by permitting the title to the goods to follow delivery and endorsement. A fundamental principle of contract law in the context of a contract for the sale of goods is that the goods sold should always correspond with the contract’s description of the goods. Under an ordinary contract for the sale of goods the right to reject non-conforming goods is a straightforward matter.22 However, in transactions where goods are delivered via a carrier, the Bill of Lading determines the liability to a carrier when non-conforming goods result from circumstances occurring during the transshipment of the goods. Invariably the time and expense involved in cross-border sales of goods’ dictate that time is of the essence. The law regulating the right to reject non-conforming goods attempts to balance competing financial interests against these international considerations. At the same time the law preserves the commercial integrity of the sale of goods contracts. In order to accomplish these goals the law demands that the documents, particularly the Bill of Lading, that accompany the goods or precede them are a manifestation of the intent and purpose of the actual contract. Bibliography Adams,John and Atiyah, P.S.(2001)The Sale of Goods. Longman, Bradgate, Robert. (2000) Sale of Goods. Oxford University Press Carr, Indiria.(2005) International Trade Law. Cavendish, Carriage of Goods by Sea Act 1971 Chauh, J.C.T. (2005) Law of International Trade. London: Sweet and Maxwell, Crooks v Allan (1879) 5 QBD 38 D’Arcy, Murray. Murray, Carole and Cleave, Barbara.(2000) Schmitthoff’s Export Trade the Law and Practice of International Trade. London: Sweet & Maxwell. Dennant v Skinner & Collom [1948] 2 KB 164 Gurney v Behrend (1854) 118 ER 1275 Guest, A.G.(2006) Benjamin’s Sale of Goods. London: Sweet & Maxwell, Hague /Visby Rules, www.www.jus.uio.no Viewed December 24, 2007 Miles, Richard.(2001) Blackstones Sale and Supply of Goods and Services. Blackstone Press Ltd. Sale and Supply of Goods to Consumer Regulations 2002 SI 2002/3045 cited in Guest, A.G.Benjamin’s Sale of Goods. London: Sweet & Maxwell, 2006 at 1575 Sale of Goods Act 1979 Sanders v Maclean (1883) 11 QBD 327 Suzuki & Co. v Burgett and Newsam [1922] 10 LI.L.R. 233 Underwood Ltd v Burgh Castle Brick and Cement Syndicate [1922] 1 KB 343 Wilson, J.F. (2004) Carriage of Goods by Sea. Pearson Longman Read More