Law Notes Shipping and International Trade Notes
Shipping and International Trade Law notes fully updated for recent exams at Oxford. These notes cover all the major LLB aspects and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written. Everything is conveniently split up by topic as you can see b...
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LOSS OF OR DAMAGE TO GOODS
Notes
The problem of the loss or deterioration of the goods in transit must be analysed partly in terms of the obligations of the parties as to quality, packing, shipment, etc.; and partly in terms of risk.
Therefore the cases for this week consider the obligations of the seller/buyer as to the goods, and also when risk passes
SUMMARY
RISK
When does risk generally pass?
FOB Contract
On shipment
(Ingliss v Stock)
Also Cunningham v Munro
CIF Contract
On or as from shipment
The Julia
As from -> there might be a sale of goods while goods are afloat
Thus as from indicates that risk is deemed to have passed when shipment occurred -> it’s retrospective in that sense
What does “on shipment” mean?
At the ship’s rail
This rule is crude but certain
Both parties know exactly when to get insurance
It’s crude but also clear -> that’s the attraction of the rule
Are there better alternatives?
What about linking risk to control -> if you have control of the goods, you can manage the risk better
Possibility for reform is discussed in your seminar notes (see your Benjamin readings)
General rule
General rule in S20(1) SGA is that risk passes with property
But there is significant departure from this rule in both FOB and CIF contexts
Important exceptions to the general rule
1) There is an important exception in S20(2) SGA
“where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of the party at fault as regards any loss which might not have occurred but for such fault”
Delivery = shipment (S32(1))
DN: unclear what “fault” means – but I think “fault” means breach
You could take a broader view of fault, but then the problem is where does fault end then
S20(2) is possibly important in a FOB context
In a standard FOB contract, if there is a delay in shipment, it’ll be because the buyer has failed to arrange for a suitable vessel to pick up the goods within the shipment period
So in that case, the risk would shift to the buyer even before shipment
But in that case, the buyer is already in breach of their contract with the seller to arrange a suitable seller
So they’ll already be liable to the seller for any loss arising from the breach
However, it is irrelevant in a CIF context
If shipment is delayed, likely to be due to the seller
You’ve got a straightforward breach of S13!
Implied term that goods will match description
So you could sue for damages, OR straight up reject the goods (if they’ve deteriorated)
2) S32(2) (reasonable CoC)
Essentially, risk stays with seller if he fails to make a reasonable CoC
Usually irrelevant in a strict FOB case, because there usually the buyer makes the CoC
It could be relevant in an extended services FOB, where the seller is involved in arranging the CoC
What about CIF? (or extended services)
Not really relevant – the seller is already obligated to make the CoC
But need to show that the failure to make a reasonable contract CAUSED the loss
But this is unclear – no case law
One possibility is that it reverses the burden of proof
i.e. seller needs to show that the loss was NOT caused by failure to make reasonable CoC
So it might strengthen the hand of the buyer
The provisions of s.32(2) apply even where there is no contractual obligation on the seller to make a contract of carriage—where he is merely “authorised” but not “required” to send the goods to the buyer
What is a reasonable contract appears to depend on what is usual in the trade in question.
Benjamin’s: In one case the seller had the option of sending the goods either at carrier’s or owner’s (i.e. buyer’s) risk; and it was held that he had not made a reasonable contract by choosing the latter method
3) S32(3) (notice of insurance)
Could be impt in a FOB contract because the buyer has to take out insurance
So they might need such information
But OTOH they might not need such information from the seller, because they’re the ones making the shipping arrangement -> so they already know everything they need to know to make the insurance arrangement!
So this would only be relevant where the SELLER is responsible for making shipping arrangements but the BUYER is responsible for taking out insurance
In a CIF context it’s usually not going to matter, the SELLER has to arrange the insurance and contract of carriage ANYWAY
So if it were a C and F contract, then maybe!
See your seminar notes (Benjamin’s) for case law on this
4) Cunningham v Munro Exception
Lord Hewart: “there may also be circumstances where, although the purchaser may be entitled to reject when the goods are being placed over the ship's rail, yet the vendor may be entitled to recover damages in respect of the deterioration of the goods”
Where the buyer informs the seller that the ship will be arriving on a particular day, and the seller brings the perishable cargo down to the docks, but the ship only arrives later, after the goods have deteriorated. Even if the ship arrives within the shipment period (and thus the buyer is not in breach), there can still be a cause of action
Indeed, Benjamin’s has argued that this would, for instance, clearly include storage charges as well as deterioration owing to ineffective shipping instructions given by the buyer, even where there is no breach
“If the time of shipment is at the buyer’s option, he may at one point in the shipment period give shipping instructions which are ineffective; and if as a result of such instructions the seller suffers loss he can no doubt recover damages, e.g. in respect of storage charges or deterioration of the goods before shipment. But such abortive shipping instructions do not put the buyer finally in breach, it being still open to him to give effective shipping instructions during the remainder of the shipment period; and the market may fluctuate during this time”
Benjamin’s explains this as a...
Buy the full version of these notes or essay plans and more in our Shipping and International Trade Notes.
Shipping and International Trade Law notes fully updated for recent exams at Oxford. These notes cover all the major LLB aspects and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written. Everything is conveniently split up by topic as you can see b...
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