International trade transaction is essential for the sale of goods with the addition of an international element. In practice, the seller and buyer are in different countries where the goods must travel from the seller's country to the buyer's country by various means of transports. In international sale of goods, they usually transit the goods by sea because of the international transactions. Therefore, contracts for the carriage of those goods must be procured between the seller or buyer and common carrier depending on different types of sale of contracts.
Moreover, in most of incidences, the agreed goods are usually insured at a reasonable amount in case of being loss or damaged during the transit. The goods must also be paid for by various methods of payment to facilitate international trade. This essay aims to analyse the possible claims from our advising buyer G arising from other parties to the contracts involved in this transaction.
The essay will also analyse the legal relationships of all parties created that their respective rights and duties may have in the transaction. In doing so, it will discuss sale of contracts on c. i. f. terms firstly, where it involves two other contracts respectively. Then, I will mainly analyse the duties of the shipper in the contract of carriage. Next, the most discussion will be referred to the contract of marine insurance on the relationship between the assured and insured, as well as the insurance cover. Finally, I will analyse letters of credit as a method of payment in international trade. The possible advice for G will be given in each respective contractual relationships. Part I 1) The sales contract on c. i. f. terms
As Lord Wright said in the case of T D Bailey, Son & Co v Ross T Smyth & Co Ltd1, c. i. f. contracts are the most common form of contract for sale of goods in the international trade transaction. When a sales contract is signed on c. i. f. terms, the seller's obligations ends only when he or she ships the agreed goods at the port of shipment specified in the contracts2. 2) Legal relationships between the seller and the buyer under Incoterms20003 The parties are bound to the Incoterms 2000 if expressly incorporated into their sale contracts. Therefore, their obligations differ slightly from the common law decisions.
Under the incorporations of the Incoterms, the seller's primary duty is to make a carriage contract with a carrier ensuring the goods safely transferred to the buyer. A seller also must insure the goods at his own expense in the favor of the buyer in the event of the loss or damage for the goods. A seller must also supply goods under the Sale of Goods Act 1979; delivery goods on board the vessel at the port of shipment. Moreover, a seller must also tender to the buyer the shipping documents: an insurance policy to cover the goods, an invoice with particulars of the goods and a bill of lading and other documents if required.
The buyer, on the other hand, must accept delivery of the goods and pay for the contract price against payment specified in the sales contract. A buyer is also obliged to accept the documents tendered by the seller. CIF contract gives the buyer two distinct rights of rejection4: 1) the right to reject the documents; 2) the right to reject the goods. However, a buyer may lose his right to reject the goods. If a buyer accepts the documents which will entitle him to reject the goods for non-conformity if it was not apparent on the face of documents.
In other words, if the defect is apparent on the face of the documents, the buyer will be taken to have waived his right to reject the goods because the defect will be estopped from asserting his right to reject the goods for that defect. 5 3) The buyer's possessory title for the goods A bill of lading is a document of title which entitles the holder to take possession of the goods loaded at the port of destination from the carrier. It should bear in mind that the bill of lading is a document of possessory title but not proprietary title6. Therefore, transfer of a bill of lading amounts to the delivery of the goods.
Under The Carriage of Goods by Sea Act 19928(the CGSA 1992), the person who wants to sue the carrier in contract for the goods of loss, or damage is the lawful holder of a bill of lading9or the person to whom delivery of the goods is to be made in the case of a sea waybill or a ship's delivery order. 10. As a result, the buyer is entitled to sue the carrier in the carriage of contract provided that he has become the lawful holder of a bill of lading defined as the consignee named in the bill of lading or the indorsee of the bill of lading who has possession of the bill of lading.