Assignment no2 needs to be completed

BS7312–I
nt
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nat
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Busi
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Assessmentont
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Ov
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Assessment–2el
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sofassessment
1.Assi
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cent
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Modul
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I
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Busi
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Modul
eCode
BS7312
Assi
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t
l
e
I
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nat
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Shi
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appendi
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I
ssueDat
e
1Jul
y2019
Submi
ssi
onDat
e
20Apr
i
l
2020at23:
59(
subj
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on.
CONDITIONS of CARRIAGE
LAW AND JURISDICTION CLAUSE
The contract evidenced by or contained in this Bill of Lading is governed by the laws of Switzerland, without regard to the conflict of law provisions thereof. Any claim or dispute whatsoever
arising under or in connection with this Bill of Lading shall in any case be determined exclusively by the competent courts of Basel-Stadt, Switzerland, and by no other court.
1.
DEFINITIONS
‘Carrier’ means the Company stated on the front of this Bill of Lading as being the Carrier and on whose behalf this Bill of Lading
has been signed. Carrier is an NVOCC.
‘Merchant’ includes the shipper, the consignee, the receiver of the Goods, the holder of this Bill of Lading, any person owning or
entitled to the possession of the Goods or this Bill of Lading, any person having a present or future interest in the Goods or any
person acting on behalf of any of the above mentioned persons.
‘Container’ includes any container, trailer, transportable tank, lift van, flat, pallet or any similar article of transport used to consolidate Goods and any equipment thereof or connected thereto.
‘Goods’ means the cargo, described on the face hereof and, if the cargo is packed into containers, loaded on pallets or unitised into
similar articles of transport not supplied or furnished by or on behalf of the Carrier, includes such articles of transport as well.
‘Package’ means any preparation for transportation whether or not that preparation conceals the Goods.
‘Combined Transport’ arises where the Carriage called for by this Bill of Lading is not Port to Port.
‘Port to Port Shipment’ arises where the Place of Receipt and the Place of Delivery are not indicated on the front of this Bill of Lading or if both the Place of Receipt and the Place of Delivery indicated are ports and the Bill of Lading does not in the nomination of
the Place of Receipt or the Place of Delivery on the front hereof specify any place or spot within the area of the port so nominated.
‘Shipping Unit’ includes (customary) freight unit and the term ‘unit’ as used in the Hague Rules or where the Visby Amendments
apply compulsorily, in the Hague-Visby Rules.
‘Sub-contractor’ includes owners and operators of any vessels, stevedores, terminal and groupage operators, Underlying Carriers,
road and rail transport operators, and any independent contractor employed by the Carrier in performance of the carriage.
‘Underlying Bill of Lading’ includes any bill of lading (negotiable or non-negotiable), waybill, cargo receipt or other document
pertaining to the transportation of the Goods issued by the Underlying Carrier.
‘Underlying Carrier’ includes any water, rail, motor, air or other carrier utilised by the Carrier for any part of the transportation
covered by this Bill of Lading.
An endorsement on this Bill of Lading that the Goods are ‘On Board’ shall mean, that the Goods are loaded on board the ocean
vessel named in this Bill of Lading, or loaded on board rail cars, trucks, lorries, feeder ships, barges or other means of transportation
and are in the custody of an Inland or ocean carrier for Through Transportation in accordance with the terms of this Bill of Lading.
2.
CARRIER’S TARIFF
The provisions of the Carrier’s applicable Tariff, if any, are incorporated herein. Copies of such provisions are obtainable from the
Carrier or its agents upon request or, where applicable, from a government body with whom the Tariff has been filed. In the case of
inconsistency between this Bill of Lading and the applicable Tariff, this Bill of Lading shall prevail.
3.
NEGOTIABILITY AND TITLE TO THE GOODS
This Bill of Lading shall not be a negotiable document of title unless consigned ‘to order’, to the order of a named person, or ‘to
bearer’. If instead consigned directly to a nominated person, delivery may be made, at the sole discretion of the Carrier, to the
nominated person only upon proof of identity, as if this Bill of Lading were a waybill. Such delivery shall constitute due delivery
hereunder.
4.
WARRANTY
The Merchant warrants that in accepting this Bill of Lading and thereby agreeing to its terms and provisions it is or has the authority
of the person owning or entitled to the possession of the Goods and this Bill of Lading.
5.
5.1
SUB-CONTRACTING
In addition to the liberties given to the Carrier under the other clauses hereof it is agreed that the Carrier shall be entitled to
sub-contract on any terms the whole or any part of the carriage, loading, unloading, storing, warehousing, handling and any and all
duties whatsoever undertaken by the Carrier in relation to the Goods and thereby subject the Goods to other agreements, including
but not limited to the Underlying Bills of Lading, which may, with the full consent of the Merchant, which the Merchant is deemed
to have given by accepting this Bill of Lading, lead, or have led, as the case may be, to third parties acquiring rights, defences and
immunities in regard of the Goods, including but not limited to the right to destroy, unload, store in the open or in a warehouse,
retain or lien the Goods, without any recourse or remedy unless set out in this Bill of Lading or the Underlying Bill of Lading.
Notwithstanding the foregoing the terms of any Underlying Bill of Lading shall be incorporated herein as if set forth at length (copies of said terms of an Underlying Bill of Lading being available to the Merchant at any office of the Carrier upon request) and the
Carrier may avail itself of and invoke any limitation or exclusion of liability, immunity, defence, right or remedy contained in such
Underlying Bill of Lading as if the Carrier were the carrier and the Merchant were the merchant referred to in the Underlying Bill of
Lading, save that the Carrier may always in addition thereto in its sole and unfettered discretion and without any prejudice invoke
and avail itself of all the provisions of this Bill of Lading and save that the Law and Jurisdiction above shall override any other provisions contained in any Underlying Bill of Lading as to the applicable law and jurisdiction.
Himalaya Clause: For the purposes and subject to the provisions of this Bill of Lading, the Carrier shall be responsible for the acts
and omissions of any person of whose services it makes use for the performance of the contract evidenced by this Bill of Lading.
The Merchant undertakes that no claim or allegation shall be made against any person or vessel whatsoever, other than the Carrier.
If any claim or allegation should nevertheless be made against any person or vessel other than the Carrier, the Merchant agrees to
indemnify and hold harmless the Carrier against all consequences thereof. Without prejudice to the foregoing, all defenses and
limitations of the Carrier shall be available to all persons of whose services the Carrier makes use for the performance of this contract. Such persons shall include, but shall not be limited to, the Carrier’s servants or agents, the Underlying Carrier, independent
contractors, including stevedores, terminal operators, carpenters, lashers, container repairmen, and all other persons of whose
services the Carrier makes use to perform this contract. In entering into this Contract, the Carrier, to the extent of these provisions,
does so not only on its own behalf, but also as agent or trustee for such persons and vessels and such persons and vessels shall to
this extent be or be deemed to be parties of this Contract.
5.2
5.3
6.
6.1
6.2
7.
7.1
7.2
7.3
7.4
7.5
8.
8.1
8.2
8.3
8.4
METHODS AND ROUTES OF TRANSPORTATION
The Carrier has liberty to deviate for the purpose of saving life or property, to call at any port or ports in or out of the customary or
advertised route, in any order whatsoever for the purposes of discharging and loading Goods and/or embarking and disembarking
passengers, or taking in fuel and other necessary supplies or for any other purposes whatsoever, to dry-dock with or without Goods
on board if thought necessary or convenient, to adjust compasses, to sail without pilots, and to tow and assist ships in all situations
and circumstances. Any action taken by the Carrier under this clause shall be deemed to be included within the scope of the contractual carriage and such action or delay resulting therefrom shall not be deemed to be a deviation.
The Carrier has the right to carry the Goods under deck or on deck. When the Goods are carried on deck and this is stated on the
front page of this Bill of Lading as being carried on deck, the Shipper shall be deemed to have agreed to carriage of the Goods on
deck. The Carrier shall not be liable in any capacity whatsoever for any non-delivery, mis-delivery, any delay or loss of or damage to
the Goods which are carried on deck, whether or not caused by the Carrier´s negligence or the vessel´s unseaworthiness.
DESCRIPTION OF GOODS AND MERCHANT’S PACKING
The Merchant shall be deemed to have guaranteed to the Carrier the accuracy, at the time the Goods were taken in charge by the
Carrier, of the description of the Goods, marks, numbers, quantity and weight as furnished by it and the Merchant shall indemnify
the Carrier against all loss, damage and expenses arising or resulting from inaccuracies in or inadequacy of such particulars.
The Merchant shall be liable for any loss, damage or injury caused by faulty or insufficient packing of Goods or by faulty loading or
packing within containers when such loading or packing has been performed by the Merchant or on behalf of the Merchant or by
the defect or unsuitability of the containers, when supplied by the Merchant, and shall indemnify the Carrier against any additional
expenses so caused.
Containers with Goods packed by the Merchant shall be properly sealed by the Merchant and the seal number shall be communicated in writing by the Merchant to the Carrier.
The term ‘apparent good order and condition’ when used in this Bill of Lading with reference to Goods which require temperature
control does not mean that the Goods when received were verified by the Carrier as being at the designated carrying temperature.
The weight of a single piece of package exceeding 1metric ton gross must be declared by the Merchant in writing before receipt by
the Carrier. In case of the Merchant’s failure to make such declaration, the Carrier shall not be responsible for any loss of or damage
to or in connection with the Goods, and at the same time the Merchant shall be liable for loss of or damage to any property or for
personal injury arising as a result of the Merchant’s said failure and shall indemnify the Carrier against loss or liability of any kind
suffered or incurred by the Carrier as a result of such failure.
DANGEROUS GOODS AND CONTRABAND
The Merchant shall comply with rules which are mandatory according to the national law or by reason of international Convention,
relating to the carriage of Goods of a dangerous nature, and shall in any case inform the Carrier in writing of the exact nature of the
danger, before Goods of a dangerous nature are taken in charge by the Carrier and indicate, if need be, the precautions to be taken.
If the Merchant fails to provide such information and the Carrier is unaware of the dangerous nature of the Goods and the necessary
precautions to be taken and if, at any time, they are deemed to be a hazard to life or property, they may at any place be unloaded,
destroyed or rendered harmless, as circumstances may require, without compensation, and the Merchant shall be liable for all loss,
damage, delay or expenses arising out of their being taken in charge, or their carriage, or of any service incidental thereto. The
burden of proving that the Carrier knew the exact nature of the danger constituted by the carriage of the said Goods shall rest upon
the person entitled to the Goods.
If any Goods shipped with the knowledge of the Carrier as to their dangerous nature shall become a danger to the vehicle or cargo,
they may in like manner be unloaded or landed at any place or destroyed or rendered innocuous by the Carrier, without liability on
the part of the Carrier, except to General Average, if any.
Whenever the Goods are found to be contraband or prohibited by any laws or regulations of the port of lading, discharge or call or
any place or waters during the carriage, the Carrier shall be entitled to have such Goods rendered innocuous, thrown overboard or
discharged or otherwise disposed of at the Carrier’s discretion, without compensation and the Merchant shall be liable for and indemnify the Carrier against any kind of loss, damage or liability including loss of freight, and any expenses directly or indirectly
arising out of or resulting from such shipment.
9.
INSPECTION OF GOODS
The Carrier or any person authorized by the Carrier shall be entitled, but under no obligation, to open any container or package at
any time and to inspect the Goods.
10.
REGULATIONS RELATING TO GOODS
The Merchant shall comply with all regulations or requirements of Customs, port and other authorities, and shall bear and pay all
duties, taxes, fines, imposts, expenses or losses incurred or suffered by reason thereof or by reason of any illegal, incorrect or insufficient declaration, marking, numbering or addressing of the Goods and indemnify the Carrier in respect thereof.
11.
PARAMOUNT CLAUSE
The Hague Rules contained in the International Convention for the Unification of Certain Rules relating to Bills of Lading, dated
Brussels, 25th August 1924, or, but only if compulsorily applicable the Hague Visby Rules contained in the Protocol of Brussels,
dated February 23rd, 1968, respectively as enacted in Switzerland, or, if the law of a different country is found to be compulsorily
applicable, as enacted or applicable in that country shall apply to all carriage of Goods by sea and where no mandatory international or national law applies, to the carriage of Goods by road and/or inland waterways also and such provisions shall apply to all
Goods whether carried on deck (without prejudice to clause 6.2 above) or under deck including the time following receipt prior to
loading and following discharge prior to delivery.
In the case of carriage of goods where the contract evidenced by this Bill of Lading is governed by the Carriage of Goods by Sea
Act of the United States approved April 16th, 1936 (COGSA) (if the port of loading or the port of discharge is in the United States)
or to the Water Carriage of Goods Act of Canada approved August 1st, 1936 (COGWA) (if the port of loading or the port of discharge is in Canada), then the provisions stated in these acts shall apply, respectively, and the Carrier shall have the benefit of any
and all rights and defences and limitations to which it is entitled under COGSA or COGWA, as the case may be, for the time the
Goods are in the possession of the Carrier or its subcontractors, including the time following receipt prior to loading and following
discharge prior to delivery whether carried on deck (without prejudice to clause 6.2 above) or under deck.
12. CARRIER’S LIABILITY
12.1 Port to Port Shipment
The Carrier shall be under no liability whatsoever for loss of or damage to the Goods, howsoever occurring, if such loss or damage
arises prior to loading on to or subsequent to the discharge from the vessel carrying the Goods. Notwithstanding the foregoing, in
the event that any applicable compulsory law provides to the contrary, the carrier shall have the benefit of every right, defence,
limitation and liberty in the Hague Rules as applied by clause 11 hereof during such additional compulsory period of responsibility,
notwithstanding that the loss or damage did not occur at sea.
12.2 Combined Transport
Save as otherwise provided in this Bill of Lading, the Carrier shall be liable for loss of or damage to the Goods occurring between
the time it takes the Goods into its charge and the time of delivery of the Goods from its charge.
12.3 In addition to all other defences contained in this Bill of Lading, the law incorporated into this Bill of Lading, and the law governing
this Bill of Lading, the Carrier shall be relieved of liability for any loss or damage caused by:
a) an act or omission of the Merchant or person other than the Carrier acting on behalf of the Merchant or from whom the Carrier
took the Goods in charge;
b) insufficiency or defective conditions of the packing or marks and/or numbers;
c) handling, loading, stowage or unloading of the Goods by the Merchant or any person acting on behalf of the Merchant;
d) inherent vice of the Goods;
e) strike, lockout, stoppage or restraint of labour;
f) a nuclear incident if the operator of a nuclear installation or a person acting for it is liable for this damage under an applicable
international Convention or national law governing liability in respect of nuclear energy;
g) any cause or event which the Carrier could not avoid or the consequences whereof it could not prevent by the exercise of reasonable diligence.
Conditions_Carriage_A4.indd 1
When the Carrier establishes that, in the circumstances of the case, the loss or damage could be attributed to one or more of the
causes or events specified in b) to d) above, it shall be presumed that it was so caused. The claimant shall, however, be entitled to
prove that the loss or damage was not, in fact, caused wholly or partly by one or more of these causes or events.
12.4 ‘Notwithstanding the aforesaid, if a Container has been delivered to the Merchant, the Merchant has to prove that the damage to
or loss of the Goods has occurred in the period in which the Carrier was responsible therefore in accordance with the terms of this
B/L and the law applicable hereto.’
12.5 The defences and limits of liability provided for in this Bill of Lading shall apply in any action against the Carrier for loss or damage
to the Goods whether the action can be founded in contract or in tort.
13. AMOUNT OF COMPENSATION
13.1 Without prejudice to any applicable limitation of liability in accordance with the provision set forth in clause 11, the basis of compensation shall be limited to the sound value of the Goods damaged or lost (excluding insurance) at the place and time they are or
should have been delivered to the Merchant and the freight on a pro rata basis, if paid.
13.2 A) Any liability of the Carrier shall be limited to the lesser of USD 500 per Package or Shipping Unit or USD 2 per kilogram
of gross weight of the Goods lost or damaged, unless clauses 13.2 B), 13.2 C) or 13.2 D) below apply.
B) Where the shipper can prove that the stage of carriage where the loss or damage occurred was a stage other than carriage by
sea, the liability of the Carrier shall be determined by the provisions contained in any international convention or national law
which
a) cannot be departed from by private contract to the detriment of the Merchant, and
b) would have applied if the Merchant had made a separate and direct contract with the Carrier in respect of the particular stage
of carriage where the loss or damage occurred and had received as evidence thereof any particular document which must be
issued in order to make such international convention or national law applicable.
With respect to the transportation in the United States of America or in Canada to the Port of Loading or from the Port of Discharge, the responsibility of the Carrier shall be to procure transportation by carriers (one or more) and such transportation shall
be subject to the inland carrier’s contracts of carriage and tariffs and any law compulsorily applicable as well as subject to any
liability limitations contained in said inland carrier’s contracts. The Carrier guarantees the fulfilment of such inland carriers’ obligations under their contracts and tariffs and the terms and conditions contained in these contracts and tariffs shall be incorporated into this Bill of Lading.
If there is no such international convention or national legislation applicable to the stage of carriage, the liability of the carrier
shall be determined in accordance with the provisions of clause 13.2 A) above.
C) Where it can be proven that the stage of carriage where the loss or damage occurred was the carriage by sea, then clause
13.2 A) above shall not apply and the amount of compensation shall be determined according to clauses 11. and 12. of this Bill
of Lading.
D) Where the stage of Carriage where the loss or damage occurred cannot be proven, compensation shall be determined in
accordance with the provisions contained in that compulsorily applicable international convention or compulsorily applicable
national law, the application of which would result in the lowest amount of compensation of all such international conventions
or national laws that are potentially applicable to individual stages of the carriage. However, if the carriage encompasses at least
one stage to which no compulsorily applicable limitation provision contained in an international convention or national law
applies, then clause 13.2 A) above shall apply.
13.3 If the Merchant, with the consent of the Carrier, has declared a higher value for the Goods and such higher value has been stated
in this Bill of Lading, such higher value shall be the limit. However, the Carrier shall not, in any case, be liable for an amount greater
than the actual loss to the person entitled to make the claim.
13.4 Where the Hague Rules, the Hague Visby Rules or any legislation making such rules compulsorily applicable (such as COGSA or
COGWA) to this Bill of Lading apply, the Carrier shall not, unless a declared value has been noted in accordance with sub clause
13.3, be or become liable for any loss or damage to or in connection with the Goods in an amount per Package or Shipping Unit in
excess of the Package or Shipping Unit limitation as laid down by such Rules or legislation. Such limitation amount, according to
COGSA is USD 500 per Package or Shipping Unit and according to COGWA is CAD 500 per Package or Shipping Unit. If no limitation amount is applicable under such Rules or legislation, the limitation shall be USD 500.
13.5 Where a Container is used to consolidate Goods and such container is stuffed by the Carrier, the Number of Packages or Shipping
Units stated on the face of this Bill of Lading in the box ‘total no. of containers/packages’ shall be deemed the number of Packages
or Shipping Units for the purpose of any limit of liability per Package or Shipping Unit provided in any international convention or
national law relating to the carriage of Goods by sea. Except as aforesaid the Container shall be considered the Package or Shipping
Unit.
13.6 (London Limitation Convention) It is hereby agreed by the Merchant that the Carrier qualifies as a person entitled to limit liability
under the 1976 Convention on the Limitation of Liability for Maritime Claims. Except to the extent that a mandatory law to the
contrary applies, the size of the fund to which the Carrier may limit liability shall be calculated by multiplying the limitation fund of
the carrying vessel at the relevant time by the number of TEUs (20 foot equivalent units) aboard at that time for which the Carrier
is the contracting Carrier and dividing that total by the total number of TEUs aboard at that time.
14. DELAY, CONSEQUENTIAL LOSS, BOTH TO BLAME COLLISION
14.1 Arrival times are not guaranteed by the Carrier. The Carrier shall in no circumstances be liable for direct, indirect or consequential
loss or damage caused by delay or any other cause, whatsoever and howsoever caused. Without prejudice to the foregoing, if the
Carrier is found liable for delay, liability shall be limited to double the freight applicable to the relevant stage of the transport, or the
value of the Goods as determined in clause 13, whichever is least.
14.2 The BIMCO Both-to-Blame Collision Clause shall apply and operate as if the Carrier were the actual carrier and not an NVOCC and
the Merchant shall indemnify the Carrier in regard of any and all claims brought against the Carrier by the actual carrier or any
other third party by virtue of a Both-to-Blame Collision Clause. A copy of the BIMCO Both-to-Blame Collision Clause may be obtained from the Carrier upon request at any time.
15.
NOTICE OF LOSS OR DAMAGE
The Carrier shall be deemed prima facie to have delivered the Goods as described in this Bill of Lading unless notice of loss of or
damage to the Goods, indicating the general nature of such loss or damage, shall have been given in writing to the Carrier or to its
representative at the place of delivery before or at the time of removal of the Goods into the custody of the person entitled to delivery thereof under this Bill of Lading or, if the loss or damage is not apparent, within three consecutive days thereafter.
16. DELIVERY/FCL MULTIPLE BILLS OF LADING
16.1 The Goods may be discharged, without notice, as soon as the Vessel is ready to unload, continuously day and night, Sundays and
holidays included. If the Merchant fails to take delivery of the Goods immediately after the Vessel is ready to discharge them, the
Carrier shall be at liberty to store the Goods, in warehouse or in the open, at the risk and expense of the Merchant. Optional delivery
is only granted when arranged prior to the shipment of the Goods and expressed in this Bill of Lading. The Merchant desiring to
avail himself of the option so expressed must give notice to the Carrier’s agent at the first port of the Vessel’s call named in the option, at least 48 hours prior to the Vessel’s arrival there, otherwise the Goods shall be discharged at any of the optional ports at the
Carrier’s choice and the Carrier’s responsibility shall then cease. If the Goods are unclaimed during a reasonable time, or whenever in
the Carrier’s judgment the Goods will become deteriorated, decayed or worthless, the Carrier may, at his discretion and without any
responsibility attaching to him, sell, abandon or otherwise dispose of the Goods solely at the risk and expense of the Merchant.
16.2 Goods will only be delivered in a Container to the Merchant if all Bills of Lading in respect to the contents of the Container have been
surrendered authorising delivery to a single Merchant at a single place of delivery. In the event that this requirement is not fulfilled,
the Carrier may unpack the Container and in respect of Goods for which Bills of Lading have been surrendered, deliver them to the
Merchant on a less than container load (LCL) basis. Such delivery shall constitute due delivery hereunder, but will only be effected
against payment by the Merchant of LCL service charges and any charges appropriate to LCL Goods (as laid down in the Tariff)
together with the actual costs incurred for any additional services rendered.
17.
NON DELIVERY
Failure to effect delivery within 90 days after the expiry of a time limit agreed and expressed in this Bill of Lading or, where no time
limit is agreed and so expressed, failure to effect delivery within 90 days after the time it would be reasonable to allow for diligent
completion of the transport operation shall, in the absence of evidence to the contrary, give to the party entitled to receive delivery
the right to treat the Goods as lost.
18.
FAILURE TO NOTIFY
No claim shall under any circumstances whatever attach to the Carrier for failure to notify the Consignee or others concerned of the
arrival of the Goods.
19. HINDRANCES ETC. AFFECTING PERFORMANCE
19.1 The Carrier shall use reasonable endeavours to complete the transport and to deliver the Goods at the place designated for delivery.
19.2 If at any time the performance of the contract as evidenced by this Bill of Lading is or will be affected by any hindrance, risk, delay,
difficulty or disadvantage of whatsoever kind, and if by virtue of clause 19.1 or cause, the liability for which the Carrier is excused
by this Bill of Lading, law, regulation or custom, the Carrier (whether or not the transport is commenced) may elect to
a) treat the performance of this contract as terminated and place the Goods at the Merchant’s disposal at any place which the
Carrier shall deem safe and convenient; or
b) deliver the Goods at the place designated for delivery.
In any event the Carrier shall be entitled to full freight for Goods received for transportation and additional compensation for extra
costs resulting from the circumstances referred to above.
20. FREIGHT AND CHARGES
20.1 Freight shall be deemed earned on receipt of the Goods by the Carrier and shall be paid in any event ship lost or not lost.
20.2 The Merchant’s attention is drawn to the stipulations concerning currency in which the freight and charges are to be paid, rate of
exchange, devaluation and other contingencies relative to freight and charges in the relevant tariff conditions. If no such stipulation
as to devaluation exists or is applicable the following clause shall apply: If the currency in which freight and charges are quoted is
devalued between the date of the freight agreement and the date when the freight and charges are paid, then all freight and charges
shall be automatically and immediately changed in proportion to the extent of the devaluation or revaluation of the said currency.
20.3 For the purpose of verifying the freight basis, the Carrier reserves the right to have the contents of containers inspected in order to
ascertain the weight, measurement, value, or nature of the Goods. If on such inspection it is found that the declaration is not correct,
it is agreed that a sum equal either to five times the difference between the correct freight and the freight charged or double the
correct freight less the freight charged, whichever sum is the smaller, shall be payable as liquidated damages to the Carrier notwithstanding any other sum having been stated on this Bill of Lading as the freight payable.
20.4 All dues, taxes and charges levied on the Goods and other expenses in connection therewith shall be paid by the Merchant.
20.5 The Merchant shall reimburse the Carrier in proportion to the amount of freight for any costs for deviation or delay or any other increase of costs of whatever nature caused by war, warlike operations, epidemics, strikes, government directions or force majeure.
20.6 If Containers supplied by or on behalf of the Carrier are unpacked at the Merchant’s premises, the Merchant is responsible for returning the empty Containers, with interiors brushed and clean, to the point or place designated by the Carrier, his servants or
agents, within the time prescribed by the Carrier. Should a Container not be returned within the time so prescribed, the Merchant
shall be liable for any detention, loss or expenses which may arise from such non-return.
20.7 All freight shall be paid without any set-off or counterclaim unless the claim is not in dispute or confirmed by final court decision,
deduction or stay of execution before delivery of the Goods.
21.
LIEN
The Carrier shall have a general lien on any and all property (and documents relating thereto) of the Merchant, in its possession,
custody or control or en route, for all claims for charges, expenses or advances incurred by the Carrier in connection with any shipments of the Merchant and if such claim remains unsatisfied for thirty (30) days after demand for its payment is made, the Carrier
may sell at public auction or private sale, upon ten (10) days written notice (counting from sending of the notice) by registered mail
to the Merchant, the Goods, wares and/or merchandise or so much necessary to satisfy such lien, and apply the net proceeds of
such sale to the payment of the amount due the Carrier. Any surplus from such sale shall be transmitted to the Merchant, and the
Merchant shall be liable for any deficiency in the sales.
22. GENERAL AVERAGE
22.1 The Carrier may declare General Average which shall be adjustable according to the York/Antwerp Rules of 1974 at any place at
the option of the Carrier and the Amended Jason Clause as approved by BIMCO is to be considered incorporated herein and the
Merchant shall provide such security as may be required by the Carrier in this connection.
22.2 Notwithstanding clause 22.1 above, the Merchant shall defend, indemnify and hold harmless the Carrier in respect of any claim
(and any expense arising therefrom) of General Average nature which may be made on the Carrier and shall provide such security
as may be required by the Carrier in this connection.
22.3 The Carrier shall be under no obligation to take any steps whatsoever to collect security for General Average contributions due to
the Merchant.
23.
TIME BAR
In any event the Carrier shall be discharged of all liability under this Bill of Lading unless suit is brought within one year after the
delivery of the Goods or the date when the Goods should have been delivered.
24.
VARIATION OF THE CONTRACT
No servant or agent of the Carrier shall have power to waive or vary any term of this Bill of Lading unless such waiver or variation is
in writing and is specifically authorized or ratified in writing by the Carrier.
25.
PARTIAL INVALIDITY
If any provision in this Bill of Lading is held to be invalid or unenforceable such invalidity or unenforceability shall attach only to such
provision. The validity of the remaining provisions shall not be affected thereby and this Bill Lading contract shall be carried out as
if such invalid or unenforceable provision were not contained herein.
5.9.2008 10:34:51 Uhr
CHAPTER 2
INTERNATIONAL SALE OF GOODS
P,RA.
Negotiating the Contract ……………………… .
Role of Agents in International Sales
Processing the Export Order .
Trade Terms .
Ex Works .
Ex Ship .
Free Alongside Ship .
Free on Board .
Cost. Insurance and Freight
International Sale Contracts and Frustration …
2-007
2–009
2-016
2-017
2..023
2-025
2-027
2-029
2-062
2-106
It ;~rn~s without saving that the centrcni•.'(>.’ or inkrnati.onal trade is the sale of
go~ds contrnct. This ~ontract between the hyyer and selie· is mostly likely to
have hcen made on their behalf by agents. For example, the buyer might have
sought the services of a confirming house to obtain the undertaking from the
seller. Similarly. the seller might rely on his commercial agent to rnarkGt the
goods to the buyer. Be that as it may, the relationship in question is one between
the seller and buyer, generally. However what makes the sale an international
rather than domestic sale’J
By and large a sale might be ,aid to be rossessed of an international character
where:
I. the tran”action involves the carriage of the goods from one country to
another; or
2. the transaction is entered into between parties who are situated in diffe,.r..tnt
countries, the place where the good~ arc si l1.wtcd and where they arc to be
delivered is immaterial.
The first type however might nevertheless not attract the application of any
private international law rules because if the buyer and seller are both situated in
the same country, say England, it is very likely that the applicable law to the
contract will be English law, and the place where any legal dispute is brought will
be England. The second appears to be the definition applied by the Vienna
Convention on Contracts for the International Sale of Goods 1980 (CISG).
Article l states that the Convention will apply to contracts e,f sale between parties
whose places of business are in different states. For example, if S is situated in
France and B is in England but the contract calls for the delivery of goods from
London to Liverpool, this might well constitute a sale to which the Convention
would apply. It should however be stressed that the Convention does not actually
define international sale-all it does is to specify what type of international sale
of goods contracts would fall within its governance. It should also be stated that
the United Kingdom has not implemented the Convention.
2–001
26
2-002
INTERNATIONAL SALE OF GOODS
One important aspect of the characterisation of a contract as an international
sale of goods contract lies in the fact that under the Unfair Contract Terms Act
1977 (UCTA) certain contracts are excluded from its application. The Act’s
provisions on reasonableness of a pre-imposed term will not apply to international supply of goods contracts. This is a critical provision because the 1977
Act contains some very potent rules on nullifying the effect of an “unreasonable”
or “unfair” term. Such terms in an international supply contract would not be
struck down by the Act. An international supply contract must meet the
following requirements (s.26(3)):
• it is a contract where possession or ownership of goods passes; and
• it is made by parties with their places of business in territories of different
states.
In addition, one of the following conditions should be satisfied (s.26( 4)):
111
the goods are, at the time of the contract, in the course of carriage or will be
carried from one state to another; or
• the offer and acceptance have been done in the territories of different states,
• the contract provides for the delivery to a state other than that within whose
territory the offer and acceptance were done.
2-003
2-004
Air Transworld Limited v Bombardier Inc [2012] EWHC 243 (Comm)
Facts:
Bombardier, a Canadian company, sold an aircraft to Angoil, an Angolan company
controlled by M. A representative of M signed the purchase agreement and faxed it to
Bombardier in Canada. The next day, Bombardier signed the agreement and sent it back
to M’s representative.
Some 14 months after delivery. the aircraft developed a serious fault with the main
engine driven pump. The contract contained a limitation of liability clause which
Bombardier wanted to rely on. If the contract was an international supply contract within
the terms of s.26 of the UCTA, the clause would not be subject to the reasonableness test
of the UCTA 1977. Naturally Bombardier wanted to persuade the court that the contract
was indeed an international supply contract.
Held:
The relevant starting point had to be the seeond condition where offer and acceptance
were “done” in different territories. A distinction has to be made between the plaee where
the offer/acceptance is made and the place where it is communicated-which, under
common law rules, happens in the place of receipt where there is instantaneous communication.
When_ M faxed the contract to Canada, he was making an offer in the UK, but
commumcated to Canada. When Bombardier signed and returned the contract, the
acceptance was made in Canada, but communicated in the UK.
. T?e judge consi?ered that “the acts constituting the offer and acceptance” took place
m different countnes, whether one looked at the making of the offer/acceptance or the
place of communication. In the judge’s view, “the act constituting the offer and
~ccept~nce” referred to the totality of acts which constituted the offer and acceptance,
mcludmg both the making and receiving of each. What was at issue was the “international” nature of the contract. What that condition (s.26(4)(b)) was intended to exclude,
as an international supply eontract, were cases where there was an international element
in the formation of the contract, so that all elements of the offer and acceptance had to
occur in the same state if the provisions of the UCTA were to apply.
INTERNATIONAL SALE OF GOODS
27
Thus, if any of the elements including the making of the offer, making the acceptance,
communication of the offer, or communication of the acceptance happened in different
Member States, then the contract was capable of being an international supply contract
under this condition.
As to the condition that the goods had been carried from one state to another, case law
showed that the requirements of this condition (s.26(4)(a)) would be satisfied even though
there was no express obligation to deliver the goods to another state. There simply had to
be an intention on the part of the parties that the goods will be used in another country. 1
The contract here contemplated delivery in Canada, and even if the agreement did not
expressly so provide, the intention of the purchaser was to use the aircraft elsewhere,
probably in Africa.
Lastly, as to the requirement that the offer and acceptance were made in one state whilst
delivery was made to another, the court held that as the section requires delivery “to” the
territory of another state, not delivery “in” another state, this subsection would not apply
if offer and acceptance had been in the UK, with delivery to be in Canada where the
aircraft was manufactured.
It appears from this case that as long as the parties are from different states, if 2-005
any part of the contract process happens in different countries, the contract is
likely to be an international supply contract.
Section 26(4) is problematic and cannot be said to have been properly thought
through, despite the laudable intentions of the legislators. Indeed, as Mance L.J.
said in Amiri v BAE Systems [2004] 1 All E.R. 385, “[s.26(4) is] open to the
comment that it has not been fully worked out”. This is because the common or
classical forms of international trading such as CIF, FOB, FAS, etc which should
be excluded from the Act, might fall foul of the wording in s.26(4). After all,
s.26(4)(a) requires the court to determine whether, at the moment of contract, the
goods supplied under it were still in the course of carriage from the territory of
one state to the territory of another. Take the case where there is a string of CIF
sales (namely that a sale is made on the basis of the bill of lading and other
documents) 2 and the last sale is made when the vessel is within the territory of
the state where the cargo is to be discharged. On one view the goods are not then
in the course of carriage from one state to another. Such a view is surely
inappropriate.
A better view is that the goods can be said to be in the course of carriage from
one state to another (just as a passenger may be said to be in the course of
carriage from London to Paris when the Eurostar stops and even is delayed for
several hours at Lille). In Ba/moral Group Ltd v Borealis (UK) Ltd [2006]
EWHC 1900 (Comm) (see also Kingspan Environmental Ltd v Borealis NS
[2012] EWHC 1147 (Comm)), the invoices had described Great Britain as the
“place of despatch”, the goods had originally been carried from Norway to Great
Britain. The warehouses where the goods were kept when they arrived in Great
Britain before further despatch were no more than transhipment centres. The
contracts were, therefore, international supply of goods contracts.
Without the application of the UCTA, the legal response to the use of terms 2-006
which are said to be unfair depends on whether the term in question has in fact
been properly incorporated into the contract and the clarity with which the term
has been set out. The more unusual a term is, the higher is the threshold for
1
See Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd [2010] Q.B. 86 and Amiri v BAE
[2003] 2 Lloyd”s Rep. 767.
2
See below, paras 2-064–2-096.
28
INTERNATIONAL SALE OF GOODS
incorporation (Thornton v Shoe Lane Parking [1971] I All E.R. 686; A Schroeder
Music Publishing v Macaulay [1974] 1 W.L.R. 1308). On the issue of
interpretation, the House of Lords held in Photo Productions Ltd v Securicor
Transport Ltd [1980] A.C. 827 that the term should be given a strict and narrow
reading, but if the term is sufficiently clear, it would be enforced. Recourse could
not be had to the reasonableness of the term in question. However, where an
ambiguity exists, the court would insist on a contra proferentem interpretation.
Freedom of contract or party autonomy is deemed by the law to be exceedingly
important in international commercial contracts. That freedom must necessarily
include the independence to negotiate.
Negotiating the Contract3
2-007
It is probably universally accepted that clear and effective communication
between buyer and seller is the cornerstone of a successful contract of sale. The
intentions of the parties should be unequivocal and clear to each other. This is to
ensure that the emerging contract accurately reflects the parties’ bargain despite
the fact that the law is concerned with the presumed intent, rather than the
parties’ subjective intent. This should warn traders to be careful when relying on
previous conduct and other tacit promises. An express provision would save
much time and costs later. The now-defunct Simpler Trade Procedures Board
(SITPRO) and other trade facilitation organisations have introduced certain proforma documents (including a pro-forma invoice, bill of lading, export order
form, etc) to remind traders of the essentials of the contract of sale.
An effectual communication should contain the following information in order
to avoid confusion or incompleteness:
NEGOTIATING THE CONTRACT
29
It is also important not to forget issues of foreign law and requirements-it can
be all too easy to concentrate entirely on the legal and commercial requirements
in the country of export and fail to look at such requirements in the country of
import. For example, it is vital to ensure that the importer has the legal capacity
to import under the laws of his home country. In Continental Enterprises Ltd v
Shandong Zhucheng Foreign Trade Group Co [2005] EWHC 92, the Commercial Court held that a contract for the import of soy bean into China which was
entered into by an importer who did not have an import licence or the power
under its articles of association to apply for an import licence was void for want
of capacity. Although the decision was controversial as a matter of law with
regard to whether or not failure to obtain an import licence under Chinese law
constitutes lack of legal capacity, it serves as a reminder that the exporter should
take care in such matters.
In general, the astute lawyer organising the international business negotiation 2-008
should ensure that the procedure adopted should:
1. allow room to work out problems, especially, those of a technical nature;
2. provide opportunities to clarify issues;
3. create future business opportunities if the negotiation m question falls
through;
4. not engender intimidation and confrontation-courtesy should be maintained
at all times;
5. be free from interruptions;
6. set clear objectives for what should be achieved;
1. terms of sale or trade, including any special conditions of sale;
7. adhere to the agenda although ensuring that there is some flexibility for
compromise; and
2. terms of payment;
8. observe cultural clifferences. 4
3. country of origin of the goods;
4. name, address of seller’s bank and account number, sort code, etc;
5. whether insurance is arranged or not arranged, and what kind of insurance;
6. methods of shipment (i.e. sea/air/road/rail/post) to named port or place of
destination as reflected in the terms of sale;
7. product or goods description, including any technical literature;
8. quantity, pack size, part or code number;
9. price and currency of sale; and
10. special stowage requirements, e.g. temperature control during and after
transit, dangerous goods information, possible hazards as may be caused by
the goods.
‘See generally, N. Horn, Adaptation and Renegotiation of Contracts in International Trade and
Finance (London: Kluwer, Deventer, 1985).
Cultural and language differences between the negotiatmg opposites can be
stumbling blocks for a successful relationship. The parties should therefore make
advance inquiries as to the cultural values and distinctiveness of the other. Parties
should recognise that delays may not always mean “no”: they might mean
“maybe, but … ” or “not today because it’s not an auspicious clay” or
something else. As far as language is concerned, avoid jargon, slang and
figurative language. For example, the English penchant for using terms such as
“level playing field” or “grasp the nettle”, etc, are frequently misunderstood and
such figures of speech are not always sympathetically appreciated. What is
4
For more on cultural factors and negotiation, see Brett, “Culture and Negotiation” (2000) 35(2)
International Journal of Psychology 97. The author finds: “Cultural values and norms also may affect
negotiators’ strategic negotiation processes. For example, negotiators from cultures where direct,
explicit communications are preferred may share information by stating and reciprocating preferences
and priorities, by commenting on similarities and differences, and by giving direct feedback.
Negotiators from cultures where the norm is to communicate indirectly and infer meaning may share
information by making multi-issue proposals and inferring priorities from subtle changes m
proposals. In our research contrasting US and Japanese negotiators, we found that the Japanese were
using a relatively large number of proposals, compared to the US negotiators, and the US negotiators
were using a whole array of direct communications relatively more frequently than the Japanese.”
30
important is the use of simple, nonfigurative and declarative sentences, possibly
bolstered by the use of charts, diagrams and statistics.
Flexibility is important to the parties; so it is not unusual for the parties to
agree to negotiate changes to the deal or a new bargain in the event of intervening
developments (such a change in the market or logistics). The promise is
sometimes expressed as an agreement to negotiate in good faith. 5 However, the
English law position is that such agreements cannot be enforced because they
lack certainty (Walford v Miles [1992] 2 A.C. 128). However, an agreement to
negotiate may be enforceable if the parties have set out objective criteria
(Petromec v Petroleo [2006] 1 Lloyd’s Rep. 121), or machinery for resolving any
disagreement (Barbudev v Eurocom Cable Management Bulgaria [2011] EWHC
1560 (Comm)). It might, however, be said that in reality is the court completing
the parties’ agreement by reference to the objective criteria or the machinery
rather than by enforcing the agreement to negotiate.
Role of Agents in International Sales
Agents important in international sales include:
Factors
2-009
A factor is a person in possession of goods belonging to his principal to be sold
for the benefit of the latter. It is customary for factors to sell those goods in his
own name without disclosing the identity of the principal. It was however held
in Stevens v Biller (1883) 25 Ch.D. 3 l that where he does disclose the identity of
his principal by selling in the latter’s name, that fact alone does not mean that he
would cease to be a factor. Under the Factors Act 1889, a factor who in the
customary course of his business has authority to sell goods, or to consign goods
for sale, or to buy goods or to raise money on the security of goods, is termed a
mercantile agent. The Act warrants that where a mercantile agent, with the
consent of the principal is in possession of goods or documents of title to the
goods, any sale or other disposition transacted by him in the ordinary course of
business in respect of these goods is as valid as if it were expressly authorised by
the principal, provided the third party did not know of the agent’s lack of
authority (ss.2(] ), 9).
In Lloyd’s Bank v Bank of America National Trust and Savings Association
[1937] 2 K.B. 631, the buyers had been given an advance for the purchase of
certain goods on the security of the bills of lading relating to the goods. The bills
were subsequently returned to the buyers to enable them to sell the goods on. The
buyers gave an undertaking to the bank that they were to hold the bills of lading
in trust for the bank. The buyers then pledged the bills in breach of their
undertaking to the Bank of America. The court held that the buyers had received
the documents of title as mercantile agents of Lloyd’s Bank and as such the
pledging of the documents with the Bank of America was binding on their
principal, Lloyd’s Bank.
5
ROLE OF AGENTS IN INTERNATIONAL SALES
INTERNATIONAL SALE OF GOODS
As to whether there is a general duty of good faith in English law, see below, para.2-058.
31
Brokers
A broker negotiates on behalf buyers and sellers. He is, however, not in 2-010
possession of the goods. His business is to introduce customers to selle’.s’ and
vice versa. He manages the signing of the contract between the two parties but
does not actually sell or buy in his own name.
Commission agents
A commission agent or merchant enters into contracts with third parties in his
own name, although he does so as an agent. He therefore is privy to the contract
with the third party and as far as the third party is concerned, recourse may .be
had to the commission agent. Professor Schmitthoff warns against confusing the
commission agent with the civil law term “commissionaires”:
2-011
“A commissionaire is a person who internally, i.e. in his relationship to his
principal, is an agent but externally, i.e., in his relationship to the third party,
is a seller or buyer in his own name. Where a commissionaire has a~te~ for the
principal, no privity of contract can be constituted between the pr:nc1~al ~nd
the third party. As an agent, the commissionaire is accountable to his pnnc1pal
for the profit from the transaction, must use reasonable diligence in the
performance of his duties, and must not make an undisclos_ed profit or ta~e a
bribe. The principal, on the other hand, cannot claim the pnce from the thlfdparty directly nor is he liable in contract for any defects of the goods .. : [A]
distinction is drawn between direct and indirect agency. A dJrect agent 1s an
agent who discloses his agency quality to the third party’. an indir~ct a~ent is
a person who, though being an agent, treats with the third party m his own
6
name. The commissionaire is an indirect agent” .
In English law, the commission agent is different from the commissionaire in th~t
he remains an agent. There is in effect only one contract-that between his
principal and the third party. The commissionaire arrangement involve~ t:”o
separate and distinct relationships-the contract of sale between t_he _comm1ss10naire and the third party, and the agency contract between the prmc1pal and the
commissionaire.
Confirming houses
A confirming house takes on the role of an agent for an over~eas_ buyer who is 2-012
interested in buying goods from a seller in the country. While m a sense the
confirming house might be perceived as a buying agent, t~is is not altogethe_r a
correct observation. This is because instead of simply adoptmg the task of buymg
goods on behalf of the overseas buyer, the confirming house can in fact buy in
its own name as a principal and then resell the goods to the buyer.
Frequently the confirming house takes on greater responsibility than that of,a
mere buying agent; in Sobel! Industries Ltd v Cory Bros & Co [1955] 2 Lloyds
Rep. 82 for example, the confirming house had acted not only as an agent f?r the
overseas buyer, but as guarantor of the buyer’s bona fides and solvency 111 the
6
C. Schmitthoff, Export Trade, ! Ith edn (London: Sweet & Maxwell, 2007), para.27-015.
32
INTERNATIONAL SALE OF GOODS
sale transaction. This act of confirming the sale is the main appeal of a
confirming house as an agent.
Del credere agent
2-013
The de! credere agent takes on additional risks, like the confirming house. He is
prepared, upon the payment of a satisfactory commission, to indemnify the
principal if the transaction falls through and the principal suffers loss as a result.
!he terms of the del credere agency are such that the agent only agrees to
mdernnify the principal in the event of the buyer not taking delivery of the goods
or becoming insolvent and unable to settle the purchase price. The del credere
remains an agent throughout; he is therefore not to be held liable for nonperformance of the contract by his principal (Churchill & Sim v Goddard [1937]
l K.B. 92).
There are no formal requirements to the formation or creation of a clef creclere
agency. Its existence can be implied from the parties’ conduct as is demonstrated
in Shaw v Woodcock (1827) 7 B&C 73. The de! c-reclere agency’s primary appeal
1s the comfort for principals that the transaction will be performed. That
attraction of the del credere agency is now suitably substituted by modern
mechanisms including the documentary credit system and the performance
bond.
Commercial agents
2-014
Commercial agents are a relatively new legal phenomenon in England and Wales.
Until the Commercial Agents Regulations 1993 ( which were required to be
mtroduced by EU Directive 86/653, the so-called self-employed commercial
agents directive), English law did not treat commercial agents (as defined by the
~U Directiv~) as anything other than ordinary agents whose rights and obligations are entirely governed by the agency contract. Following the Directive (and
the making of the 1993 Regulations), there is a legal definition for commercial
agents and certain statutory rights and obligations which may not be derogated
from have been introduced.
. A ~ommercial agent is defined by the 1993 Regulations as a self-employed
md1v1dual, partnership or company who has continuing authority to negotiate the
sale or purchase of goods on behalf of the principal. A commercial agent does not
need to be authorised to conclude sales on behalf of their principal and it is
usually sufficient that they are authorised to introduce customers to the business.
A party that buys products from a business and then resells them would not
generally be a commercial agency. Also, agents who sell services rather than
goods, or are just instructed to conclude a single transaction, are not subject to the
1993 Regulations.
Where the principal terminates the contract, the agent is entitled to receive his
commission/remuneration for the remainder of the contract until the date of
termination and also to be paid “compensation” (or “an indemnity” if the
contract so provides). This is to recognise the goodwill and business that the
agent has built up for the principal. In Lonsdale v Howard & Hallam [2007]
UKHL 32, Lord Hoffmann (with whom the other Law Lords agreed) said that the
agent .is .entitled. to be compensated for the deprivation of his rioht
to future
b
comm1ss10ns. Like any other exercise in valuation, much depends on the value of
TRADE TERMS
33
the agent’s business (which is being terminated) at the time the agency agreement
was terminated. The likely future performance of the agent’s business will also
be factored into the valuation-so if the business is likely to decline anyway, that
will mean a reduction in the compensation award. However, the fact that the
agent may have found additional work is not relevant. The agent may also be
entitled to recover any expenses incurred as a result of following the principal’s
advice.
An indemnity is payable in place of compensation where this is provided for 2-015
in the contract; under the 1993 Regulations, a commercial agent is entitled to an
indemnity if and to the extent that he fulfils two tests. First, the agent must have
introduced to the principal new customers or significant new business with
existing customers and the principal must continue to benefit from this business.
Secondly, the payment of an indemnity must be equitable having regard to all of
the circumstances (which includes any commission lost by the agent on such
business). The agent’s indemnity entitlement is capped at one year’s average
commission, calculated by reference to the preceding five years.
The agent must give the principal notice of his intention to claim compensation/an indemnity within one year of termination or he will lose this entitlement.
If the principal terminates the agency agreement because the agent has committed a serious breach of contract, the principal may be able to avoid paying the
compensation/indemnity.
.
However, if the agent terminates the agency agreement he has no nght to
compensation or an indemnity, unless:
(a) he is terminating the agency because of age, infirmity or ill-health;
(b) the agency comes to the end of its fixed term; or
(c) the agent terminates because the principal has committed a serious breach of
contract.
The compensation or indemnity includes the amount of commission the agent has
lost.
Processing the Export Order
Once the offer to sell overseas has been accepted, the trader will put his 2-016
management plan into action. A management plan ensures that the or~er is
properly processed, i.e. the manufacture or acquisition of the ~oods a~cordm? to
contract description, quality control, packing for export, pre-shipment mspect10n,
shipping, complete and accurate documentation, export invoicing, banking
facilities, and insurance if required are vital elements of the process. A good
management plan would also ensure that payment for the goods is made
promptly and that legal action is taken when problems arise.
Trade Terms
There are a number of special trade terms, such as INCOTERMS 2010, that
traders can apply to their contract of sale. These terms have been laid down by
2-017
34
INTERNATIONAL SALE OF GOODS
the relevant trade association, such as the International Chamber of Commerce
(or ICC, which sponsors the INCOTERMS). Traders, simply by referring to
them, could legitimately be deemed to have adopted the full range of duties and
rights these “trade terms” imply. For example, a trader may describe quite
simply in his contract that delivery is, say, “DDP Singapore (INCOTERMS
2010)” without needing to set out in full the duties and rights of both parties
because the full range of duties and rights attendant to this special term ” DDP”
would have been conveniently set out in INCOTERMS 20 I 0. Thus, as far as the
courts are concerned, this description will be taken to mean that the traders have
agreed to be governed by the published terms, INCOTERMS 2010, applicable to
DDP contracts. Any variation of the duties or rights adumbrated in INCOTERMS 2010 must be clear and precise. Otherwise, the presumption will be that
no variation was intended. In some countries, such pre-designated trade terms
(such as INCOTERMS 2010) form part of their national law and cannot thus be
departed from. In the United Kingdom however, these are but pure contractual
terms which may be varied subject to evidence of the parties’ intention to do
so.
INCOTERMS or similar special trade terms not only make clear to the parties
where delivery of the goods is to take place but are also important in aiding the
calculation of the purchase price. For example, where the contract calls for
“Delivery CIF Singapore”, the seller’s invoice would account for all incidental
charges incurred up until the delivery of the goods at Singapore, including
premium for the insurance and freight charges.
INCOTERMS were first published in 1936 under the auspices of the ICC. 7 The
newest set, INCOTERMS 2010, were published on January 1, 2011. For
contracts entered into pre-September 20 I 0, INCOTERMS 2000 will continue to
apply even if performance of the contracts was made in 2011. For contracts
entered into between September 16, 2010 and December 31, 2011, the parties
should specify which set of INCOTERMS is to apply. From January I, 2011 the
presumption is that any reference to TNCOTERMS in the contract is a reference
to INCOTERMS 2010.
They might be contrasted against trade terms established by common law and
trade practice.
7
For a general analysis, see J. Ramberg, Guide to INCOTERMS 20/0 (Paris: ICC, 2011); Oduntan,
“‘C.I.F. Gatwick’ and other such nonsense upon stilts: INCOTERMS and the Law, Jargon and
Practice of International Business Transactions” (2010) I.C.C.L.R. 6.
TRADITIONAL TERMS
35
TRADITIONAL TERMS
2-018
Examples of some common terms
Duties
Ex Works
Buyer or agent has to collect goods
from seller’s factory or warehouse.
FAS Port of Shipment
(FREE ALONGSIDE)
Seller is responsible for delivering the
goods to alongside the ship so that
they can be loaded by the buyer or his
agents.
FOB Port of Shipment
(FREE ON BOARD)
Seller is responsible for placing goods
on board ship and paying all charges
up to the point the goods are loaded
over the rails of the ship.
FOB Airport
Seller is responsible for delivering
goods into the charge of the air carrier
~r his agent or any other person
named by the buyer.
CIF Port of Discharge
(COST, INSURANCE & FREIGHT)
Seller is to arrange and pay for
contracts of freight and insurance for
the goods. He should produce an
invoice for the agreed sales price, an
insurance policy and a clean bi]] of
lading.
C&F Port of Discharge
(COST & FREIGHT)
Seller is to arrange and pay for the
carriage of the goods to the
destination port. He should also
provide an effective notice _of
shipment to the buyer to enable him
to arrange appropriate insurance for
the goods. The seller is also
responsible for the issue of a sales
invoice and a clean bill of lading.
Delivered Free, or
Free Delivery, or
Franco Domicile
Seller is responsible for a11 charges up
to the delivery of the goods at the
buyer’s address. This will include
import duties unless specifically
excluded by contract.
Ex Ship/ Arrival
Seller to deliver goods to buyer from
a ship that has arrived at the port of
delivery.
36
TRADITIONAL TERMS
INTERNATIONAL SALE OF GOODS
Examples of some common terms
Duties
Ex Quay/Port of discharge
Seller to deliver goods to buyer from
a ship that has arrived at the agreed
port, and additionally to pay import
duties and unloading charges payable
at the port.
passes when the goods are handed over to the first
carrier.
DAT-Delivered at Terminal (named terminal at place
of destination). The seller will cover the cost of carriage
to the terminal. However, the buyer will take on the
costs related to import clearance. The risk up to the
point that the goods are unloaded at the terminal will
remain with the seller. This new term replaces the old
INCOTERM DEQ (Delivered ex Quay). The view was
that DAT is more useful than DEQ in the case of
containers that might be unloaded and then loaded into
a container stack at the terminal, awaiting shipment.
Previously there was no term which expressly dealt
with containers that were not at the buyer’s premises.
INCOTERMS 2010
2-019 The pre-defined trade terms in the INCOTERMS 20 l O are grouped into two
categories depending on the mode of transport being used. The first group applies
to sale of goods to be carried by any mode of transport. The second applies only
to goods carried by sea or inland waterway.
DAP-Delivered at Place (named place of destination).
The seller pays for carriage to the named place.
However, the buyer will take on the costs related to
import clearance. The risk up to the point that the goods
are unloaded at the terminal will remain with the
seller.
2-020
Any mode of transport
EXW–Ex Works (named place of delivery). The buyer
is to take delivery of the goods at the seller’s premises.
The seller must ensure that the goods are made
available at his premises (shop, factory. warehouse, etc)
for collection at the agreed time. The term is usually
used when making an initial quotation for the sale of
goods without any costs included. The buyer pays all
carriage costs; he is responsible for carrying the goods
to the final place of discharge and as such. the risks of
the voyage arc borne by him. The contract may,
however. make the seller responsible for loading the
goods. but this must be made explicit.
FCA-Free Carrier (named place of delivery). The
seller undertakes to ensure that the goods are cleared
for export and delivered to the first canier chosen by
the buyer. The seller is responsible for the cost of
carriage to that named point of delivery. As soon as the
goods are handed over to the first carrier, the risk will
also pass to the buyer.
CPT-Carriage Paid To (named place of destination).
The seller is responsible for the cost of carriage. Risk
transfers to the buyer upon handing goods over to the
first carrier at the place of import/destination.
CIP-Carriage and Insurance Paid to (named place of
destination). The seller will be responsible for carriage
and insurance” to the named destination point. but risk
x In Geojizika v MME lntenwtional [2010] EWCA Civ 459, the seller was held to have failed to
obtain a conforming insurance cover for the buyer under the CIP contract. However. they were not
liable to compensate the buyer for the loss in question because even if they had obtained the ICC(C)
policy, the buyer’s loss would not have been covered. That was because the goods had been carried
below deck and it was a warranty of the insurance that goods carried below deck were not covered.
37
DDP-Delivered Duty Paid (named place of
destination). The seller must deliver the goods to the
named place in the buyer’s country. He also pays the
costs of conveying the goods to the destination;
including import duties and taxes. The buyer will
arrange for the unloading of the goods.
Sea and inland waterway
transport
FAS—Free Alongside Ship (named port of shipment).
The seller must deliver the goods to alongside the ship
at the named port. He is also required to clear the goods
for export. Heavy-lift or bulk cargo is likely to adopt
this trade term.
FOB-Free on Board (named port of shipment). The
seller is required to load the goods on board the vessel
nominated by the buyer. The traditional description
about the goods crossing the ship’s rail is removed.
Delivery is now signified by the placing of the goods on
board. The seller must clear the goods for export. The
buyer is required to inform the seller of his nominated
ship and port of loading. The ICC has also made clear
that this term should not be used for container goods
carried on a multimodal contract. The more appropriate
INCOTERM for container shipments is FCA.
38
[NTERNATIONAL SALE OF GOODS
CFR-Cost and Freight (named port of destination).
The seller is to pay the costs and freight to bring the
goods to the port of destination. However, risk passes to
the buyer when the goods are loaded on the vessel.
CIF-Cost, Insurance and Freight (named port of
destination). Essentially the same duties as CFR apply
except that the seller must, in addition, obtain and pay
for an appropriate insurance cover.
The following are some suggestions as to how traders might be able to substitute
certain traditional terms with the new INCOTERMS 2010:
TRADE TERMS
2-021
Traditional Terms
INTERCOMS 2010
In regular use
Possible altcrnative/s
Ex Works
EXW-Ex Works
FOB
FCA-Free Carrier
CFR-Cost & Freight
C&F
or
CPT-Carriage Paid To
CIF
CIP-Carriage and Insurance
Paid To
Franco Domicile
DDP-Delivered Duly Paid
QUICK REFERENCE CHART TO THE INCOTERMS® 2010 RULES
2
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!ncoterrns® 2010 do not deal w;th the parties’ obligations for stowage within a container and therefore, w!iere relevant, the parties should deal with this in the sales contract
FCA Seller’s Faci!lty -· Buyer pays inland freight; other FCA qualifiers. Seller arranges and loads pre-carnage carrier and pays inland freight to the “F’ delivery place
lncoterms{© 2010 does not ob!igatethe buyer nor must the seller to insure the goods, !herefore tnis issue be addressed elsewhere in the sales contract
Charges paid by Buyer or Seller depending on contract of carriage
Charges paid by Seller if throuQh Bill ol Lading or door-to-door rate to Buyer’s destination
INCOTERMS• IS A REGISTERED TRADEMARK OF THE INTERNATIONAL CHAMBER OF COMMERCE. THIS DOCUMENT IS NOT INTENDED AS LEGAL ADVICE BUT IS BEING PROVIDED FOR REFERENCE
PURPOSES ONLY. USERS SHOULD SEEK SPEOFIC GUIDANCE FROM INCOTERMs• 2010 AVAILABLE THROUGH THE INTfRNATIONAL CHAMBER Of COMMERCE Ar WWWJCCBOOKS.COM
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