The contract of sale

The contract of sale (references)

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Terms of international sales contracts, risk, property, documentary requirements.

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Terms of international sales contracts

c.i.f., f.o.b., main distinguishing features

C.i.f. contracts - general definitions

Original definitions can be found in E. Clemens Horst Co. v. Biddell Bros. [1912] A.C. 18, upholding the judgments of Hamilton J. and the dissenting judgment of Kennedy L.J. in Biddell Bros. v. E. Clemens Horst Co. [1911] 1 K.B. 214, 221 and [1911] 1 K.B. 934, 956,

but the definition is repeated in Manbre Saccharine v. Corn Products [1919] 1 K.B. 198;

See also

Arnhold Karberg & Co. v. Blythe, Green, Jourdian & Co. [1916] 1 K.B. 495; Groom v. Barber [1915] 1 K.B. 316; The Julia [1949] A.C. 293 (distinguishing c.i.f. from ex-ship); Gatoil International Inc. v. Tradax Petroleum Ltd, The Rio Sun [1985] 1 Lloyd's Rep. 350 (useful summary of duties of parties). Also Industria Azucarera Nacional SA (Iansa) v Empresa Exportadora de Azucar (Cubazucar), Queen's Bench Division (Commercial Court) 29 February 1980, upheld by the CA in The Playa Larga and Marble Islands [1983] 2 Lloyd's Rep 171.

On contracts peculiar to the oil trade, see C.E.P. Interagra SA v. Select Energy Trading GmbH, The Jambur LMLN 289; The Wise [1989] 2 Lloyd's Rep. 451 (C.A.), [1989] 1 Lloyd's Rep 96 (1st instance). These also have a bearing on The Julia, above.

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F.o.b. - general definitions

Pyrene v. Scindia [1954] 2 Q.B. 402 (Devlin J.'s three varieties of f.o.b. contract - an over-simplification?); Pyrene is a category 3 case; for a case the ratio of which is that is category 2 (or at least, not category 3), see The El Amria and El Minia [1982] 2 Lloyd's Rep. 28. Wimble Sons v. Rosenburg & Sons [1913] 3 K.B. 743 is also cited as classic f.o.b., but there the seller did not apparently undertake to ship.Compare Concordia v. Richco [1991] 1 Lloyd's Rep. 475, Carlos Federspiel & Co., S.A. v. Charles Twigg & Co. Ltd. [1957] 1 Lloyd's Rep. 240, and N.V. Handel My. J. Smits Import-Export v. English Exporters (London), Ltd [1957] 1 Lloyd's Rep 517, all of which are f.o.b. contracts.

Compagnie Commerciale Sucres et Denrees v. C. Czarnikow Ltd., The Naxos [1990] 1 W.L.R. 1337; [1990] 3 All E.R. 641 (H.L.); [1991] LMCLQ 147 (Treitel); (period of shipment case).

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Distinguishing c.i.f and f.o.b.

On distinction between c.i.f. and f.o.b. with additional duties, see Couturier v. Hastie (1856) 5 H.L.C. 673 (described as f.o.b. but probably in reality c.i.f.); The Parchim [1918] A.C. 157 (described as c.i.f. but probably in reality f.o.b.). C.i.f. includes freight and insurance in the price, for f.o.b. it is for buyer's account.

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Risk.

General rule, Sale of Goods Act, s. 32(3), s. 14(2), mistake, frustration

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Feltham [1975] JBL 273.

For the general rule:

For f.o.b., delivery was, and hence risk passed on shipment, as in Browne v. Hare (1858) 3 H. & N. 484, 4 H. & N. 822; 157 ER 1067, followed on the risk issue in Inglis v. Stock (1855) 10 App. Cas. 263 (even where property passed later.); but note the effect of J & J Cunningham v. Munro (1922) 13 Lloyd's Rep. 62 and 216.

C.i.f. developed from f.o.b., and hence risk also passes on (or as from) shipment: Tregelles v. Sewell (1862) 7 H. & N. 574, 158 E.R. 600; Groom (C.) Ltd. v. Barber [1915] 1 K.B. 316; Manbre Saccharine Co. Ltd. v. Corn Products Co. Ltd. [1919] 1 K.B. 198 (c.i.f.);

The Galatia [1980] 1 W.L.R. 495, [1980] 1 All E.R. 501 (c. & f. - consistent with above position).

Sale of Goods Act 1979, s. 32(3):

Law and Bonar Ltd. v. British American Tobacco Ltd. [1916] 2 K.B. 605 (c.i.f.); Wimble v. Rosenburg [1913] 3 K.B. 743 (f.o.b.).

Sale of Goods Act 1979, s. 14(2):

Mash & Murrell v. Joseph I. Emmanuel [1961] 1 W.L.R. 862 (reversed on other grounds [1962] 1 W.L.R. 16), heavily criticised by Sassoon; Atiyah 154; Cordova Land Corpn v. Victor Bros [1966] 1 W.L.R. 793. Lambert v. Lewis [1982] A.C. 225; Law Commission Working Paper No. 85 (1983), pp. 19-20.

Note that this section was amended by the Sale and Supply of Goods Act 1994, whose effect is probably to strengthen Mash & Murrell.

Mistake.

Couturier v. Hastie (1856) 5 H.L.C. 673; Sale of Goods Act 1979, s. 6.

Frustration

Sale of Goods Act 1979, s. 7.

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These references on risk were last updated on 10 Jan 98.

 

Property

Consequence of passing of property.

Colley v. Overseas Exporters [1921] 3 K.B. 302; Napier v. Dexters 25 Lloyd's Rep. 109, 26 Lloyd's Rep. 62, 184.

Bulk cargoes.

Sale of Goods Act 1979, s.16; Sale of Goods (Amendment) Act 1995.

The Elafi [1982] 1 All E.R. 208 (an exceptional case, which Bools argues is wrong, in The Bill of Lading: A Document of Title to Goods, LLP, 1997). The Aramis [1989] 1 Lloyd's Rep 213 (property did not pass until discharge, and consequently Bills of Lading Act 1855, s. 1 not triggered).

Law Commission Working Paper No.112, "Right to Goods in Bulk" (1989); The Gosforth (unreported, 20.02.85, noted [1986] L.M.C.L.Q. 4.)

Equitable property.

Re Wait [1927] 1 Ch. 606; The Aliakmon [1986] A.C. 785 (HL upholds Re Wait).

General position under sale contract.

Sale of Goods Act 1979, ss.17-20 (note especially 17, 19(2), 19(3) and 20). On appropriation see also Carlos Federspiel & Co., S.A. v. Charles Twigg & Co. Ltd. [1957] 1 Lloyd's Rep. 240.

The Parchim [1918] A.C. 157; The Kronprincessan Margareta [1921] 1 A.C. 486 (early cases);

Ross T. Smyth & Co. Ltd. v. T.D. Bailey Son & Co. [1940] 3 All E.R. 60; Also comments in The Future Express [1993] 2 Lloyd's Rep. 542; Ginzberg v. Barrow Haemetite Steel Co. [1966] 1 Lloyd's Rep. 343 (general position c.i.f., and desirable where payment by documentary credit).

For effect of payment by documentary or stand-by credit,

The Glenroy [1945] A.C. 124; Anonima Petroli Italiana S.p.A. and Neste Oy v. Marlucidez Armadora S.A., The Filiatra Legacy [1991] 2 Lloyd's Rep. 337 (another case which Bools argues is wrong), The Delfini [1990] 1 Lloyd's Rep. 252.

Retention of right of disposal

The Aliakmon (C.A.) [1985] 2 W.L.R. 289, noted [1985] 1 L.M.C.L.Q. 1 - this case was upheld in the House of Lords [1986] A.C. 785, but the property points are discussed only in the C.A.

Sale of Goods Act, s.19(2).

The Albazero in the Court of Appeal [1977] A.C. 774; The San Nicholas [1976] 1 Lloyd's Rep. 8; Mitsui & Co. Ltd. v. Flota Mercante Grancolumbiana S.A., The Ciudad de Pasto [1989] 1 All E.R. 951; The Delfini [1990] 1 Lloyd's Rep. 252; The Filiatra Legacy [1991] 2 Lloyd's Rep. 337.

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This page was last updated on 29 Sep 97.

 

Documentary requirements

The duty to send forward shipping documents within a reasonable time of shipment is discussed in Sanders v. Maclean (1883) 11 Q.B.D. 327 (c.i.f.) and Concordia Trading B.V. v. Richco International Ltd. [1991] 1 Lloyd's Rep. 475 (f.o.b.).

Clean shipped bill of lading

Yelo v. S.M. Machado & Co. Ltd. [1952] 1 Lloyd's Rep. 183 (f.o.b.); Diamond Alkali Export Corpn v. Fl. Bourgeois [1921] 3 K.B. 443 (c.i.f.). Both these case suggest that a shipped bill of lading is generally required. The Galatia [1980] 1 W.L.R. 495 (clean bill of lading).

Through bill of lading.

Hansson v. Hamel & Horley Ltd. [1922] 2 A.C. 36.

Charterparty bills.

Finska Cellulosaforeningen v. Westfield Paper Co. Ltd. [1940] 4 All E.R. 473; S.I.A.T. Di Del Ferro v. Tradax Overseas S.A. [1978] 2 Lloyd's Rep. 470; cf. Uniform Customs and Practice on Bankers' Commercial Credits, Art. 26(c)(i).

Delivery orders.

The Julia [1949] A.C. 293; Colin & Shields v. Weddel & Co. [1952] 1 All E.R. 1021; Cremer v. General Carriers S.A., The Dona Mari [1974] 1 W.L.R. 341 (for description, since the documentary requirements under the sale contract were not there in issue); Krohn v. Thegra [1975] 1 Lloyd's Rep. 146 (common law definition). See also the definition of a ship's delivery order in s.1(3) of the Carriage of Goods by Sea Act 1992.

Mates' receipts.

Nippon Yusen Kaisha v. Ramjiban Serowgee [1938] A.C. 429; Kum v. Wah Tat Bank [1971] 1 Lloyd's Rep. 439.

Insurance documents.

Borthwick v. Bank of New Zealand (1900) 6 Com. Cas. 1; Groom (C.) Ltd. v. Barber [1915] 1 K.B. 316; Manbre Saccharine Co. Ltd. v. Corn Products Co. Ltd. [1919] 1 K.B. 198; Wilson, Holgate & Co. Ltd. v. Belgian Grain and Produce Ltd. [1920] 2 K.B. 1; Diamond Alkali Export Corp. v. Fl. Bourgeois [1921] 3 K.B. 443; Donald H. Scott & Co. Ltd. v. Barclays Bank Ltd. [1923] 2 K.B. 1.

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This page was last updated on 29 Sep 97.