Under s.20 of the Sales of the Goods Act 1979 risk of property passes to buyer after the delivery of property to him, on the contrary in a CIF contract risk passes to the buyer at the time he pays and takes up the document. Generally if the seller ships goods for the buyer then the risk passes at the time of shipment. However, if the contract is made after shipment, risk passes at the time of contract but retrospectively the goods are deemed to have been at the buyer’s risk since the time of shipment, this seems to be very harsh on the buyer.
Moreover as the risk passes on shipment, if the goods are lost in sea or being damaged while loading into cargo still the buyer has to pay for all, although the seller may knew about the lost when he tenders the shipping document(Manbre Aaccharine CO Ltd v Corn Products Ltd)[1919]1KB198. The buyer is also unable to discharge the goods at his desired destination, because he cannot obtain an import license; but this is no concern of the seller and will not create a frustrating event (Congimex vTradax)[1983]2 Lloyd’s Rep250.
As a matter of international custom there is a risk transferred when goods pass the ship's rail. The seller's duty to ship may be performed by actually shipping goods, by allocating goods which he has already shipped , or by buying and allocating such goods afloat. According to CIF risk is transferred on shipment (if the goods are sold and then shipped) or as from shipment (if the goods are afloat at the time of sale or allocation without further specifying the exact point of the passing of risk. Such a situation occurred in Couturier v Hastie where it was held that the buyer was not bound to pay the price on tender of shipping documents where at the time of the contract there was nothing to be purchased. It is obvious that in English law the seller's fault or fraud is of importance only as regards tortuous liability. If specific goods (or part of them) have perished at the time the contract of sale is concluded, the contract is void for mistake.
Moreover sometime the CIF term in contract seems to be very vague, while determining whether it is a CIF contract or not. For example, where the goods are shipped in bulk and remain unascertained until the ships arrival, in that case the documents can not cover the goods sold. In those scenarios the question arise whether this is an CIF contract after passing of documents or is it an ‘arrived’ or ex ship contract ;e.g. Comptoir d’Achat v Luis de Redder[1949]1 LL E.R. 269(H.L.).
You may find these sites interesting to know:
P S Atiyah, John N Adams, Hector MacQueen, ATIYAH’S SALE OF GOODS, 12edn418.
http://www.jstor.org/pss/1089255
need ur help more on this topic.
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