International Law: Remedies For P
Remedies for P
It is apparent in this case that S violated key terms that had been incorporated in the contract with P. Under a CIF contract, the seller has an obligation to ship goods of the description contained in the contract (Carr, & Stone, 2009, p. 12). Further, the seller has an obligation to tender shipping documents to the buyer representing the goods, which should be in correspondence to the contract requirements. In addition, CIF contracts require that when the shipping documents are issued in several originals, all the copies must be presented to the buyer (Sealey, & Hooley 2003, p. 71). These principles are reiterated in Biddell Bros V E. Clemens Horst Co., Manbre Saccharine v Corn Products and Groom V Barber cases.
In this case, P agreed to accept the goods from S in the condition that they had not been shipped from United Kingdom (UK). Three original bills of lading had been issued prior to entering into the contract. After P issued this condition, S arranged with the carrier to issue another bill of lading naming Le Havre in France as the port of shipment, rather than Southampton, the true port of shipment. Consequently, the goods received by P from S were shipped from the UK, irrespective of P issuing the condition. S also failed to honor the terms of the contract by tendering the wrong shipment document and not the three original copies of bills of lading. It is therefore clear that S violated the terms of the contract.
Under CIF contract, the buyer has a right to reject shipment documents if they do not comply with the requirements of the contract (Bradgate & White, 2007, p. 260). Rejecting the documents means that the buyer is in a position to reject the goods represented by these documents. However, this right is lost if the buyer accepts the shipment documents and pays the price for the goods without any objection. In this case, P received the bill of lading tendered by S, accepted it and paid the price for the goods. He properly scrutinized the bill of lading afterwards and realized that the true port of shipment had been Southampton in UK. He discovered that the box on the front of the bill of lading named Le Havre in France as the port of shipment and also stated that the goods were “shipped on board in Southampton in apparent good order and condition…” Southampton is in UK and thus, it became clear to P that the goods had been shipped from there. But as mentioned, P had already lost the right to reject the bill of lading, given that he had already accepted it and paid for the goods.
The buyer also has a right to reject goods if they do not comply with contract requirements, irrespective of whether they arrive before or after the shipment documents (Bradgate & White, 2007, p. 261). In fact, a buyer has a right to reject them even after accepting the documents. However, the buyer can only reject the goods if the defects are not apparent in the shipment documents. In this scenario, P received the goods 10 days prior to the arrival of shipping documents. By the time he received the documents, he had already realized that the contract price was high and he could manage to purchase similar goods at much lower price. However, P went on to accept the shipping documents which stipulated the price for the goods. By accepting the documents, P lost the right to act on the price.
The Panchaud Freres SA v Establissments General Grain Co case provides a good example of how the above principles work. In this case, Panchaud Freres SA agreed to sell maize to Establissments General Grain Co CIF Antwerp. Both parties agreed that the maize would be shipped latest by 31 July 1965. The maize was loaded in August but the seller tendered a bill of lading which indicated that it was loaded on 31 July. Among the shipment documents tendered was a certificate of quality which indicated that the seller had drawn samples on 10 and 12 August. The buyer accepted the bill of lading from the seller and paid for the maize but later sued the seller for the late shipment and sought to reject the documents and the maize. It was held that by accepting the bill of lading, the buyer had already lost the right to reject the documents as well as the maize.
Even though P had lost the right to reject the goods, he could claim damages for S’s breach of contract. In practice, the buyer’s bank pays the price for the goods to the seller immediately after the shipping documents are accepted by the buyer (Bridge, 1997, p. 118). This leaves the buyer with the only option of pursuing the seller in order to recover the price. In such situations it is easier for the buyer to accept the goods and then sue the seller for the damages resulting from the breach of contract. Section 53 of the Sale of Goods Act (1979) stipulates that the buyer has a right for remedy in case of damages resulting from damages resulting from breach of warranty (Kelly, 2011, p. 327). P could take advantage of this clause and sue S for the damages resulting from the breach of contract.
The Marimex v Louis Dreyfus case clearly demonstrates how the buyer can receive remedies in such a case. In this case, Marimex agreed to sell an oil cargo that was already afloat to Louis Dreyfus, CIF Hamburg. The buyer received shipping documents and paid for the cargo but later realized that the seller did not obtain the cargo from the agreed source. The oil was contaminated and the buyer determined that he could obtain such oil at a lower price. Consequently, the buyer sued the seller for the damages resulting from breach of warranty. It was held that the seller should pay the buyer for the breach of contract and the damages were assessed arbitrarily. In the case of P, damages may be assessed as the difference between the actual price of the goods delivered and the price that the buyer would have paid if the seller had complied with the contract.
- Biddell Bros v E.Clemens Horst Co  A.C 18 House of Lords
- Bradgate, R. & White, F. (2007). Comsmercial Law, Oxford University Press, New York
- Bridge, M. G., (1997), The Sale of Goods, Oxford University Press, New York
- Carr, I. & Stone, P. (2009), International Trade Law, Taylor & Francis, London
- Groom v Barber  1 K.B 316.
- Kelly, D., (2011), Business law, Taylor & Francis, London
- Manbre Saccharine v Corn Products  1 K.B 198
- Marimex v Louis Dreyfus  1 Lloyds Rep 167
- Panchaud Freres SA v Establissments General Grain (1970) 1 Lloyd’s Rep 53
- Sealey, L.S. & Hooley R.J.A. (2003), Commercial Law – Text, Cases and Materials.
- Butterworths, London
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