Seller ----------- B1 ------------B2------------- B3
W X Y Z
Was end buyer (Z) right in notifying the previous buyer (Y) that he does not have to pay for the damaged cargo?
Look at INCO trade term🡪 E,F,C,D. In the CIF contract between Consignee Y and Z 🡪risk passed on loading on board. Whatever happened before loading is at the risk of seller and after is buyers risk.
Was Y (apart from refusing to pay in the first place) right in notifying X that he does not have to pay for the damaged cargo?
In the FOB contract between seller X and Y risk passed on loading on board.
(Only the last 2% of the damage occurred after loading on board. C would not have to pay for the other 8% damage)
Was Bates right in notifying Abrahams that he does not have to pay for the damaged cargo?
In the EXW contract between W and X risk passed at the moment when the cargo was put at the disposal of Y. So Y had to pay to W the full prize (even now the 3% damage was caused by the crane driver employed by Y).
Did Z (end buyer) acquire ownership of the cargo according to English and Dutch law?
Under English law Z would not have acquired ownership of the cargo. Ownership is transferred whenever the parties intend it to be transferred (s 17 SGA 1979). W obviously wanted to pass ownership to Y with the transfer of the MR. Seller X did not want to pass ownership to Y, because Y did not pay. So seller X remained owner of the cargo. As a main rule there is no protection of good faith for Z who buys from Y who has no right to dispose of the cargo.
Under Dutch law the B/L is seen as a negotiable instrument and there is protection of good faith. Z would have acquired ownership.
Is X going to succeed in his action against the owners of the carriers in conversion?
🡪Under English law the action in conversion (tortious interference with property) would succeed, because X was still the owner of the documents and B/L when the carrier delivered the cargo to Z.
Would end-buyer ‘Z’ be been allowed to reject the cargo on the fact that the Bill of Lading had been ante-dated by the captain (either FF or charterer) of carrier according to English law and CISG ?
English Law🡪Bunge v Tradax ‘Time is of the essence.’ Passing the prescribed date of loading is breaching of a condition that allows the buyer to reject the cargo and rescind the contract.
Hansa Nord (de minimis rule ) 🡪the breach was very small, the judge probably would not have seen a fundamental breach, necessary for rejection and recession.-
CISG🡪 Passing of the prescribed date of loading would also qualify as a breach of contract. Breach was very small. Rejection not allowed.
Would X (sellers) Bank have been entitled to refuse payment to seller on the ground of the fraud committed by the captain of the carrier?
United city merchants case 🡪 If seller would not know anything about the fraud, he would still be entitled to payment.
Dutch Law🡪Well usually they say that fraud unravels all, but it only applies to Dutch law it seems 🡪Reasonableness and Fairness
Suppose that Sellers Bank (Confirming) would have discounted the deferred payment before maturity i.e. of payment in 180 days time and that later on confirming bank would be informed by buyers bank (issuing bank) that seller did commit a fraud, would confirming bank still be entitled to reimbursement from advising bank? Discuss case law.
🡪Banco Santander case- The confirming bank discounts at its own peril, unless authorized by the opening or advising bank. Under the UCP 600 authorization is the rule, but in practice most opening banks still prohibit discounting if not for the risk of the confirming bank.
What if confirming bank bought sellers claim on advising bank and would thereafter have claimed payment as assignee of that claim?
🡪Suing as assignee would not help the confirming bank, since seller would not be entitled to payment from the opening bank and an assignee would not be in a better position than seller himself, since there is no protection of good faith here.
Suppose that the freight forwarder had not paid the freight to the owners of the carrier. Would owners be entitled to claim the freight from buyer in chain of contracts? Answer according to English law and Dutch law (or PECL).
In English law the doctrine of the UP would be applied. You cannot sue someone who is not privy to contract. The sea-carrier could claim that buyer (and not the FF) was his real contracting party, even though the freight forwarder acted in his own name.
Under Dutch (and PECL) law it is the freight forwarder acting in his own name who is the contracting party. Perhaps the sea-carrier could still hold buyer liable for the freight, but only if the freight forwarder was not willing to pay and only if buyer had not already paid to the freight forwarder.
Q1:When is there a contract under English law and CISG ?
Offer and acceptance and consideration. Without consideration no contract!!! Even if irrevocable!
CISG According to art. 16(2)(a) CISG there is a contract ….
Q2: If there are a chain of buyers and sellers in trade terms e f c d , who would be obliged to insure the cargo ?
the party bearing the major part of the risk during the voyage, unless the parties would agree to the contrary like in a CIF contract.
In the FOB contract that would be buyer,
in the CIF contract that would be seller,
DDP contract that would be seller.
In practice frequently only CIF seller contracts for insurance.
In this case it can be seen that the whole voyage, over land and over sea, is covered by the insurance contract concluded by seller xxxx. Parties coming after in the chain can benefit from this insurance by receiving the certificate to bearer.
Q3: who is obliged to arrange for transportation ?
FOB- seller arranges for inland transportation and buyer has to arrange for sea-transportation and further inland transportation.
CIF-seller to arranges for the sea-voyage, while buyer arranges for further inland transportation.
DDP- seller for sea transport and buyer for inland transport.
Q4: When does ownership pass ?
English law, s 17 SGA, when the parties intend it to pass.
🡪goods need to be ascertained under English.
B/L plays an important role🡪document of title, meaning that with the transfer of the B/L there is a transfer of possession of the cargo, unless the parties prove to the contrary.
In the case the B/L (with other documents) has been handed over to the advising Bank, which withheld the documents. Still, from a legal point of view the B/L (and the other documents) were transferred to buyer, since the banks act as agents for buyer in receiving the documents.
Their possibly existing rights of pledge do not stand in the way of buyer obtaining ownership.
Where parties have agreed to pay by L/C , the B/L plays a lesser part in the transfer of ownership,
This arrangement can be interpreted as a wish to pass ownership on the acceptance of the documents by the advising Bank as agent for the issuing Bank. This would be enough for the passing of ownership under English law.
Dutch law 🡪also demand a transfer of possession for the ownership to pass.
Parties would be supposed to have intended a transfer of ownership together with the passing of the possession, which in a E,F,C,D and where the delivery takes place and cargo received. factual delivery in Munich.
Q5: When do banks get a right of pledge ?
Banks need possession of the B/L in order to obtain a right of pledge.
If the B/L is made ‘to order’ for a specific bank, like penguin bank then only penguin bank can pledge.
Banks that are agents of head bank can also pledge of B/L. Any other bank who does not have possession cannot.
Q6: what happens when agents misdeliver cargo ?
If seller later on agrees that its agent can take the goods where they are delivered to the a party that would be retrospective authorization (maybe agency of necessity) then risk would pass on delivery to that consignee eg chauffeurs.
Q7: Who has an insurable interest at the moment of the various damages?
Owner of the goods at the moment of the damage who has an insurable interest under English law.
insurable interest depends on who is bearing the risk of the cargo at the moment of the damage. This would be the person who is finally bearing the risk and therefore truly suffering the loss.
(The damage by the sand occurred before loading, so the risk was for Gomez under the FOB contract, for Billings under the CIF contract and for Jansen under the DDP contract.
In the end the risk would be for Gomez, because Jansen and Billings could take recourse. The damage caused by the high temperature and the damage done by the theft occurred during the sea-voyage, presumably before delivering to Jansen. Under the FOB contract this risk would be for buyer Billings and under the CIF and the DDP contract the risk would be for Jansen.
In the end the risk would be for Jansen, because Jansen would have to pay the full price to Billings in spite of the damage to the cargo. The risk of delivering to the wrong address would normally in a DDP contract fall on seller Jansen. Because of the change in change in that contract the risk will now be for Meister.)
Q8: who qualifies for payment under an insurance contract ?
Requirements:
the claimant must be an insured
damage must be covered under the policy.
an insurable interest when the damage happened
NB: where a certificate to bearer is issued, the claimant must be the holder of the insurance certificate.
As every damage can be qualified as transportation damage, every damage is covered by the insurance policy.
A Sale contract between buyer 1 and buyer 2 can be assigned where parties intend so (s 50 BEA) who then could claim for all damage done.
insurable interest is not always for the same person. X, Y and Z can have an insurable interest at the time of the various damages.
End buyer ‘Z’ would be the rightful holder of the certificate, since Bank is holding the certificate on his behalf.
What about the damage done by the sand. The insurable risk was for Y since he bears the risk during that particular damage event.
Solutions:
Y received the certificate from his insurer, but that he held the certificate also on behalf of X.
The problem with the insurable interest on the part of Z is more serious. It is unlikely that Y held the certificate also on behalf of Z end buyer also. Sale contract between Y and Z would imply that Y would have to assign (s 50 BEA) the certificate to Z, who then could claim for all damage done.
Q9: Can advising bank be entitled to reimbursement from, or better: payment by advising bank?
Advising bank is a holder in due course of a B/E drawn by buyer on advising bank and is acting as agent of advising.
Advising bank was in good faith at the moment when it obtained the B/E. Since a B/E is a fully negotiable instrument hence advising bank is fully protected by s 38(2) BEA.
Advising bank is entitled to reimbursement (under the documentary credit) or payment of the B/E to the amount written on the B/E.
Q10: can advising bank be entitled to money from issuing bank if there would only have been a simple deferred payment without a B/E.
🡪 Banco Santander v Banque Parisbas 🡪 an advising bank that pays at its own peril i.e. risk where it does so without authorization from the issuing bank, before the deferred payment is due. Such a Bank is not entitled to reimbursement.
Who are parties to a contract of carriage which gives rise to the issuance of the bill of lading?
The (contractual) shipper (RR) into a contract of carriage with a carrier. issuance of the bill of lading is between (contractual) shipper and ship-owners as carrier.
Would bank be entitled to a refund from seller, as per sellers insolvency? (10 points)
The bank is not entitled to a refund. It has accepted the document and also pledged on them and is therefore estopped to go back on its taken position.
Is seller entitled to the Bill of Lading by contractual shipper under the contract of carriage (CAD)?
Under the contract of sale seller is entitled to the bill of lading because of the “cash against documents”payment term.
Under the contract of carriage it is the duty of contractual shipper to give instructions to ship-owners as carrier, as to how to fill in the bill of lading. As follows from the facts of the case, the bill of lading states mmmmm as (documentary) shipper, which implies that ship-owners as carrier had the consent of seller to issue the Bill of Lading to ooooo as documentary shipper under the bill of lading.
Who can become party to the Bill of Lading contract.
English law 🡪 consignee of a B/L does not receive contractual rights according to common law.
Section 2 COGSA does attribute such contractual rights to a consignee, who thereafter is treated as if he was a party to the B/L contract, but only if there is a proper endorsement.
NOTE🡪collateral, so-called Brandt v Liverpool-contract can be assumed, on the terms of the Bill of Lading. On the basis of this collateral contract consignee can claim for loss and damage.
Is ownership dependant on endorsement ?
not dependent on endorsement of the B/L, but only on the intention of the parties (Section 17 Sale of Goods Act 1979). The intention to transfer ownership!
Kum v Wah Tat Bank🡪If party still the owner of cargo, then they get contractual rights since, since ownership has priority above contractual rights (
Are ship-owners entitled to freight payable by consignee?
No, not if freight is already freight prepaid. A third-party consignee of a B/L may rely on the terms of the B/L. Since the B/L is a “freight pre-paid” B/L, ship-owners are estopped from claiming unpaid freight from the consignee. When consignee is a party to the collateral contract on B/L terms, ship-owners are likewise estopped from claiming unpaid freight from HT Import.
If stevedore is liable for cargo loss does that mean carrier is not liable for it ?
Liability of the stevedore does not take away the liability of the carrier, since the stevedore is an independent subcontractor of the carrier and his duties remain the duties of the carrier.
Is the before and after clause of any importance to carrier?
Yes, consignee is not party to the B/L, it is party to the collateral contract on the B/L terms.
ship-owners may invoke the protection of the Before and After clause in the bill of lading.
Can underwriters void the insurance certificate since it is to bearer ?
According to English law, a certificate to bearer is not a negotiable instrument and the insurer can hold the avoidance against a third party in good faith i.e. albeit in good faith they aren’t covered under the policy.
Dutch law an insurer cannot invoke avoidance of the insurance contract as against a third party, holder of a certificate to bearer, in good faith. Such a third party is under the protection of art. 6:146 Dutch Civil Code.
Does B have to pay the purchase price to A without a discount for the damage of first 5% and later 3% to the cargo?
Risk under C&F passes upon loading on board the sea-ship. So the 3% loss in Rotterdam is for the risk of B. However, the 5% loss before completion of loading if for risk of A, meaning that B could ask for a discount of these 5%.
Does C have to pay the purchase price to B without a discount for the damage of first 5% and later 3% to the cargo?
Risk under DDP passes at the delivery-point in Utrecht with the opening of the doors of the truck, meaning the 5% loss and the 3% loss are for the risk of B. So C is entitled to a discount to these percentages.
Could B and/or C have rejected the cargo on the basis of the damage to the cargo?
cargo does not fulfill the description 'in good condition', which is a condition according to s 13 SGA 1979, giving right to rescission and rejection.
Hansa Nord case it was decided that if no sensible businessman would reject such a cargo, because the damage was relatively small, the words 'in good condition' have to be interpreted as an intermediate term according to which the buyer is only entitled to damages if the loss is small.
Could B's bank have rejected the documents presented by A's bank with regard to loss of 8 % loss of cargo with the argument that a discount had to be made?
The documents could not have been rejected by B's bank because a documentary credit is an independent undertaking, abstracted from the sale contracts.
Presumed that B's bank would have rejected the documents and A had fallen into bancruptcy, how then would A's bank in practice had come into its money?
A's bank can sell the documents to a third party on the basis of a right of pledge that bank invariably stipulate from their clients.
How is it possible that the documentary credit, that was not a transferable credit, still has been transferred to A?
There was no real transfer in the proprietary sense. B's bank simply opened a new L/C on behalf of A, independent on every other contract, including the documentary transfer opened by C's bank.
Is carrier responsible for the theft by employees of the stevedore and if so, what would in practice be the defence carrier?
Carrier responsible/has to pay to the holder of the bill of lading, because he would be responsible for his independent contractor and his employees.
Carrier can raise the defence of a Before and After clause.
When sued by the Holder of the bill of lading for the damage by the theft, the stevedore invokes the Himalaya clause to his defence. Claimant, however, alleges that carrier was not authorized by the stevedore to stipulate the Himalaya clause on his behalf. This being true, how could the stevedore still defend himself?
Against the allegation that Pluto was not authorized to stipulate the Himalaya clause, the stevedore could ratify the unauthorized agency with retroactive effect. The stevedore could also argue that there was agency by necessity.
Subsidiary the stevedore invokes an exoneration clause in his contract with Pluto. What would be the judgement on that defence according to English and American law?
The stevedore can invoke his own exoneration clause. According to English law, however, only if A has consented in the contract with the stevedore on his terms.
Pioneer Container case.
The stevedore would be considered a sub-bailee on terms, which terms could be invoked towards A.
Under American law carrier would be seen as authorized to contract on behalf of the cargo as far as exoneration clauses.
Norfolk v Kirby case
If A would not have given his consent, the stevedore would be protected if he had believed in good faith that Pluto was authorized to contract as he did..
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