Trade Law Issues - Essay Example

Trade Law The aim of the paper is to consider the case described in the task and to analyze it through the issues which have arisen in the case; it is essential to apply FOB trade law statements to find the solutions to each issue of the case. 10 issues have been found in the case and thus will need separate analysis: 1. Sammy was delivering the goods to the port, but according to the FOB contract law he has to put the goods across the ship rail; 2. Benny was asked by Carlos to make all shipping arrangements; though it is the buyer’s obligation to make such arrangements under FOB contract; 3. The two cases were destroyed during loading at the port; it is necessary to find out who is responsible for these losses; 4. The cases were also damaged in the storm; it is necessary to find out who has to carry the risks and the losses as a result of this storm; 5. Carlos refused to accept the ‘received for shipment’ bill – it will be useful to consider the details as for such bills’ acceptance under the FOB contract; 6. Carlos also refused to accept the goods; does he have the right to refuse to accept the goods under FOB contract; 7. The question of insurance; who carries the responsibility for insuring the goods; 8. Carlos states he has not been notified of the arrival; what FOB says about informing the Buyer of ship being loaded and sent to the destination port; 9. Who of the participants has to pay for export duties under FOB contract; 10. What issues are connected with the desire of Benny to reimburse a part of loading costs at the Newport port and does he have the right to reimburse them? Now each issue will be analyzed separately. 1. Sammy was delivering the goods to the port, but according to the FOB contract law he has to put the goods across the ship rail; It is essential to note at the beginning of the work that FOB English contract law and INCOTERMS 2000 law are somewhat different in their definition, and thus it will be necessary to use both to come to better solutions, though INCOTERMS is beneficial for better specifying obligations of both parties – the buyer and the seller. As for the present issue, under a classic FOB contract it is stated that the Seller has to deliver the goods to the destination specified in the contract, but his duties finish as soon as he puts the goods across the ship’s rail; however it is not clear through the case, whether Sammy delivered the goods to the port of Cardiff, or to the port of Newport; in the first case there would be no issues and the conditions of the FOB contract law are followed; in the second case the seller had the right to refuse to deliver the goods to another port. (ICC, 2000) 2. Benny was asked by Carlos to make all shipping arrangements; though it is the buyer’s obligation to make such arrangements under FOB contract. ‘Under an FOB sale, the buyer is responsible for making the arrangements for shipping the goods to their destination’. (Sassoon, 1995) Thus, it had to be Carlos’ obligation to make all shipping arrangements with him being the buyer of the goods. Moreover, according to the FOB contract law, the seller is not under a duty to ship the goods until he has received shipment instructions from the buyer; thus Benny was not obliged to arrange any shipment without Carlos giving him the necessary instructions. It should be added, that this is the Buyer’s responsibility to arrange the shipment of goods to the port of destination. 3. The two cases were destroyed during loading at the port; it is necessary to find out who is responsible for these losses. According to s 20 of the Sale of Goods 1979, risk passes with property and in FOB sales risk passes along with property upon shipment – that is, when the goods pass the ship’s rail. (Carr, 2005) This means, that the losses for the two cases damaged during loading are carried by the seller, and thus can be also reimbursed to the buyer on his demand. ‘Since the seller meets his obligations of delivery only when he places the goods on board the ship at the port of shipment, he is responsible for all loading charges until the moment the goods pass the ship’s rail’ (ICC, 2000), which proves the above statement about the losses for the two cases carried by the seller, as the loss took place before the goods crossed the ship’s rail. 4. The cases were also damaged in the storm; it is necessary to find out who has to carry the risks and the losses as a result of this storm. First of all, as soon as the goods crossed the ship’s rail, the seller does not carry any responsibility for them anymore; ‘the goods are at the buyer’s risk from the moment they have passed the ship’s rail at the port of shipment’ (Carr, 2005) Moreover, as in the present situation Carlos appeared not to give any information about the name of the ship, the required delivery date and other related information, he could bear the risk for the lost goods during the whole period fixed for delivery. (ICC, 2000); thus Carlos is fully responsible for the losses during the storm. 5. Carlos refused to accept the ‘received for shipment’ bill – it will be useful to consider the details as for such bills’ acceptance under the FOB contract From the viewpoint of both the seller and the buyer there exist certain obligations as for the proofs of delivery the goods. The seller must give sufficient notice to the buyer that the gods have been placed on board the ship. (Cunningham, 2005) The buyer, on his side, must accept the transport document provided by the seller as proof of delivery (Sassoon, 1995). However, the question in the present case arises – whether Carlos has the right not to accept the document being provided with it at the time the ship reached the port of destination and not earlier, though the Section 32(3) of the Sale of Goods Act 1979 does not impose any liability on the seller for the failure to notify the buyer of the shipment. (Carr, 2005) 6. Carlos also refused to accept the goods; does he have the right to refuse to accept the goods under FOB contract? Under the Sales of Goods Act 1979 the Seller has to deliver the goods which conform to the contract description. However, as in the present case under the conditions of the FOB contract the buyer (Carlos) has been responsible for the condition of goods during the sea transit and was not able to insure them, he has no right to refuse from acceptance the goods, and can also be sued by the Buyer for the damages of non-acceptance. (Jackson, 1997) 7. The question of insurance; who carries the responsibility for insuring the goods? INCOTERMS 2000 states, that there is no obligation of the seller to provide insurance for the goods. (ICC, 2000) The seller is obliged to provide the buyer with all information necessary for the buyer to obtain this insurance (Sassoon, 1995). In addition, it should be said, that as the buyer carries all risks for the goods as soon as they cross the ships rail, it is implied that it is in the buyers interests to insure the goods from possible loss during transit. 8. Carlos states he has not been notified of the arrival; what does FOB state about informing the Buyer of ship being loaded and sent to the destination port? INCOTERMS 2000 make it the sellers obligation to notify the buyer that the goods have been placed on the board of the ship. (ICC, 2000) According to the Sale of Goods Act 1979, s 32(3), where the goods are sent by the seller to the buyer by a route involving sea transit, in the circumstances which require insurance of goods, the seller has to notify the buyer of the shipment, and if the seller fails to do so, the goods are at his risk during the sea shipment; this leads us back to the previous issues of insurance obligations and the related ones; through the re-consideration of the Sales of Goods Act 1979 in part of notification, it appears that the seller was at risk for the goods during the transit for being unable to notify the buyer of shipment; thus Carlos is right in his statement that he was unable to insure the goods and as a consequence, he is not liable for the losses during transportation. (Carr, 2005) 9. Who of the participants has to pay for export duties under FOB contract? The seller is responsible for obtaining the export license and other official authorization; he must do so at his own risk and expense; he is also obliged to carry out all the customs formalities at his expense and pay any duties, taxes and other official charges (Carr, 2005) 10. What issues are connected with the desire of Benny to reimburse a part of loading costs at the Newport port and does he have the right to reimburse them? It is stated that the seller meets his obligation to deliver the goods as soon as they cross the ships rail; thus he is responsible for all loading charges before the goods pass the ships rail and in the present situation there is no right for charging the reimbursement of the loading costs. (Weiss, 1997) References Bacchus, J 2004, Trade and Freedom, London: International law Publishers Carr, I 2005, International Trade Law, Routledge. Cunningham, R 2005, Trade Policies and Strategies, Routledge. International Chamber of Commerce 2000, ICC Guide to Incoterms 2000: Understanding and Practical Use, ICC Publishing Jackson, J 1997, The World Trading System: Law and Policy of International Economic relations, The MIT Press. Lowenfeld, AF 2003, International Economic Law, Oxford University Press. Robinson, J & Barton, J 2006, Climate Change Law – Emissions Trading in the EU and UK, London: International Law Publishers. Trachtman, JP 2006, The International Economic Law Revolution and the Right to Regulate, London: International Law Publishers. Sassoon J 1995, CIF and FOB Contracts, Sweet and Maxwell. Weiss, K 1997, Building and Import/ Export Business, J Wiley & Sons. Read More