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Citation:
Aedit Abdullah, Issues in the Tranfer of Risk in CIF
Contracts, 14 Sing. L. Rev. 151 (1993)

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Issues in the Transfer of Risk
in CILF Contracts*
AEDIT ABDULLAH

1. INTRODUCTION
This essay is intended to examine issues of transfer of risk in cif
contracts of international sales. Cif contracts have been chosen for
examination as a large proportion of international trade is carried
out under cif terms.' The law which will be studied primarily
will be English law, which is applicable in Singapore by virtue of
s 5 of the Civil Law Act.2
The discussion will first deal generally with cif contracts, and
the concept of risk. It will then examine the rule in Mash &
Murrell, and deterioration or loss of the goods after shipment.
The discussion of these issues will initially be on the simple situ-
ation between buyer and seller without taking into account the

Aedit Abdullah, a third year law student, Faculty of Law, National University
of Singapore, Academic Year 1992-93, is third prize winner Singapore Law
Review Essay Competition 1992-93.
* The writer is extremely grateful to Mr Tan Yock Lin for his assistance

and comments. All errors whether of commission or omission, remain the

author's.
1 Paul Todd, Modern Bills of Lading, (2nd ed, 1990) at p 20.

2 Statutes of the Republic of Singapore, Cap 43, 1988 (Rev Ed).

3 Mash & Murrell Ltd v Joseph I Emanuel, Ltd [I961J 1 All ER 485.
 Singapore Law Review (1993)

possibility of there being a string of contracts. The effect of string

contracts on the simple contract situations will then be dealt with
last, as the modifications of the basic position are based primarily
on extra-legal considerations.
There are a number of other issues which will not be discussed
in this essay, such as the difficulties with bulk sales. It was felt
that while such issues merit discussion, lack of space precluded
discussion beyond those issues selected, which were regarded as
being the most important ones.

II. THE CIF CONTRACT

The cif contract is one in which the price includes the cost of the
goods, insurance during transit and freight to the port of destina-
tion. The obligations have been stated by Lord Wright in obiter
dictum in the case of Ross T Smyth & Co Ltd v TD Bailey, Son
& Co4 in which he stated that the seller has to ship or acquire
the goods, and if unascertained, to give a notice of appropriation;
obtain on or after shipment, proper bills of lading and insurance;
and the shipper fulfils the contract by transferring the bills of
lading and policies to the buyer, generally against payment of
the price.5 These obligations under the contract are modifiable to
suit modem requirements. 6 This ability to adapt cif contracts
means that it is difficult at times to state definitively what all the
obligations of both parties are. For the purposes of this essay,
the term cif will be used to refer to contracts which are generally
in line with the Incoterms definition of the obligations of the
parties.'

4 [1940] 3 All ER 60.

5 Ibid, at 67.
6 Per Lord Porter, The Julia [1949] AC 293, at 308.

7 ICC Incoterms 1990, at pp 52-53.

14 Sing LR Transfer of Risk in CIF Contracts

III. RISK
Risk is concerned with the bearing of total loss and damage
through deterioration during transit.8 In essence, the transfer
of risk to the buyer means that the buyer must look to parties
other than the seller for compensation if there is loss or damage.9
Thus, when risk passes, and the goods are damaged, the buyer
may attempt to seek compensation from the carrier 0 or payment
from the insurer. However, if for some reason,11 he is precluded
from doing so, he may not turn around and demand compensation
from the seller. And furthermore, the seller, if he has not been
paid, may still claim the price from the buyer, who would have
no defence. The consequences of the transfer of risk can therefore
be considerable.
At general law, the transfer of risk is governed by s 20(1) of
the Sale of Goods Act, 12 which states that:

[u]nless otherwise agreed, the goods remain at the seller's risk

until the property in them is transferred to the buyer, but when
the property is transferred to the buyer the goods are at the
buyer's risk whether delivery has been made or not.

Risk is thus tied to property.

However, in cif contracts, the position is different for it is

8 Cf L S Sealy, "'Risk' in the Law of Sale" (1972) 31 CLJ 225, at 228. Thus
this would exclude such other risks as risk of change of circumstances, the
solvency of the other party and swings in the market.
9 J D Feltham, "The Appropriation to a CIF Contract of Goods Lost or
Damaged at Sea", (1975) JBL 273, at p 273.
10 For negligence perhaps, ef The Aliakmon [1986] 2 Lloyd's Rep I.
11 There is no claim in tort for negligence if he does not at least have a
proprietary interest in the goods; see The Aliakmon [1986] 2 Lloyd's Rep 1.
Similarly, he may not claim the insurance coverage if the damage is not
covered by the policy.
12 1979 c 54 (UK).
 Singapore Law Review (1993)

otherwise agreed. 13 Property does not usually pass until tender of

documents. This occurs after the goods have been shipped. The
rule is that risk is to pass on shipment or as from shipment.14
Risk in cif contracts is thus separated from property. One sup-
posed justification for this is that the transfer of risk at such time
eliminates "difficult questions of proof of the time the goods
were lost or damaged while at sea".'5 While this may have been
true in the past, especially because of the duration of voyages
and the slowness of communication, it is unlikely that in this
day and age, that proof will be difficult, thanks to the advent of
modern communications technology and the faster speed of sea
voyages today.
Another rationalization that is given is that it facilitates the
transferability of the documents relating to the goods, for other-
wise the effectiveness of string contracts would be vitiated by
placing the burden on the first buyer, who would be unable to
accept documents without inspecting the goods.16 With respect,
this argument appears misdirected. The transferability of docu-
ments is crucial primarily in letters of credit transactions, which
are truly documentary in nature, ie. the parties are not concerned
with the goods as such. In this essay, however, we are concerned
with the cif contract itself and the risk borne as to the goods.
The transferability of documents cannot therefore be a relevant
consideration for the goods themselves are what constitute the
subject matter of the contract.
In fact the crux of the matter is that sellers are wary of assum-
ing responsibility for goods which are effectively out of their
control and in fact subject to another's.1i On the other hand,

13 See above, n 4.
14 See above, n 6 at p 309.
15 See above, n 9 at p 273.
16 See above, n 1 at p 30.
17 The carrier.
14 Sing LR Transfer of Risk in CIF Contracts

it must be queried why the buyer should necessarily be the one

to bear all the risk. The rule evolved at a time when judicial
sentiment weighed heavily on the seller's side, as it did for carriers
and other businesses as compared to buyers.'8
There is no doubt that this rule as it stands is pro-seller. Whether
it should remain so is another matter. While the buyer may at
present have recourse against the insurer if anything should happen
to the goods, the burden of obtaining the insurance payment
is no light one, and indeed, can be onerous where the claim is
resisted. The seller is practically absolved from bearing any of
this burden under the existing rule, which may not be entirely
equitable.

IV. THE RULE IN MASH & MURRELL 19

In Mash & Murrell,2 ° Diplock J (as he then was) held that there
was an implied term in cif and c & f contracts that the goods
would remain of merchantable quality from shipment through nor-
mal transit until a reasonable time for disposal had elapsed. The
Court of Appeal reversed his decision,21 but on factual grounds
alone, namely that the goods did not undergo normal transit. The
Court of Appeal failed to comment on the validity of Diplock J's
judgement and appeared to have accepted it as a matter of course.
The consequence of Diplock J's judgement is that the risk
is not on the buyer so long as the voyage is normal, but if it is
not, then the buyer bears the risk as to deterioration. There may
appear to be some apparent conflict between the rule in Mash &
Murrell22 and the general statement that risk passes on or as

18 I am indebted to Mr Tan Yock Lin for this point.

19 See above, n 3.
20 Ibid.
21 Mash & Murrell, Ltd v Joseph I Emanuel, Ltd [1962] 1 WLR 16.
22 See above, n 3.
 Singapore Law Review (1993)

from shipment.23 It must be kept in mind that the rule in Mash &
Murrell2 4 applies as to the condition of the goods as at the time
of shipment, ie. they must at that time be capable of enduring
normal transit. In that sense, therefore, there is no conflict with
the general rule of passing of risk in cif contracts, since any other
deterioration, caused by something other than their condition as
of shipment, is at the buyer's risk. The rule may also thus be
regarded as an exception to the general rule.25
The judgment of Diplock J may appear to be weakened by the
reliance placed on a pre-Sale of Goods Act case, Beer v Walker 6
and the absence of any reference to s 33 of the Sale of Goods
Act, which reads as follows:
Where the seller of goods agrees to deliver them at his own risk
at a place other than that where they are when sold, the buyer
must nevertheless (unless otherwise agreed) take any risk of
deterioration in the goods necessarily incident to the course
of transit.

It is submitted that there really is no such weakening. The mere

reliance on a pre-statute decision ought not to affect the validity
of the judgment where there is in fact no conflict between the
proposition of law and the provisions of the statute.
Section 33 does not contradict nor does it exclude the rule of
law in either Mash & Murrell" or Beer v Walker.2" One argument
which has been put forward is that s 33 is concerned with deteri-
oration which all goods of the contractual kind would undergo,

23 See above, n 6.

24 See above, n 3.

25 C Debattista, Sale of Goods Carriedby Sea (1990) at p 99.

26 (1877) 46 LJQB 677.

27 See above, n 21.

28 See above, n 26.
14 Sing LR Transfer of Risk in CIF Contracts

while the rule in Mash & Murrell" aims rather at deterioration

which would affect the particular goods in question.
It is submitted that while this is a reasonable distinction, it
does not appear to have been considered by Diplock J in his
judgment. In his summary of the reasoning in Beer v Walker,3
he stated that:

the implied condition as to merchantability was a condition

that they [the goods] remain merchantable for a reasonable
time, the time reasonable in all the circumstances, which means
3 1
a time for the normal transit to the destination.

The judge was therefore concerned with an implied obligation

as to merchantability for a reasonable time of transit. He was
concerned not with the goods as such, but with the transit of
those goods. It follows then, that there is no distinction made
between all goods of the contractual kind and the particular
goods.
Furthermore, it has been admitted that it may be difficult to
determine the distinction between damage which would occur to
all goods of the contractual kind and damage which would occur
only to the particular goods.32
It is submitted that a better alternative would be to read s 33
literally, which would indicate that the section covers deterioration
which does not go to endangering the merchantability of the
goods, that is deterioration which occurs because of wear and tear
of the transit. It is further submitted that this would amount to
a better test than the distinction between all goods and particular
goods suggested.

29 See above, n 21.

30 See above, n 26.

31 See above, n 3 at p 492.

32 D M Sasoon, "Deterioration of Goods in Transit" (1962) JBL 351 at p 354.

 Singapore Law Review (1993)

V. DETERIORATION AND Loss OF

THE GOODS AFTER CONTRACT
The primary issue which arises with regard to risk of the goods
during transit is deterioration and loss after the contract. While
the situation as to deterioration and loss before contract, which
brings the case of Couturier v Hastie33 to mind, may seem re-
lated, in actual fact, the 'risk' in that instance does not fall within
the core meaning of the concept which we are examining in this
essay. Section 6 of the Sale of Goods Act, which is taken to
embody the principle of the case at least as understood in 1892,
states simply that "[w]here there is a contract for the sale of
specific goods, and the goods without the knowledge of the seller
have perished at the time when the contract is made, the contract
is void." The voidness of a contract leaves the loss to be borne
where it falls. This may be described as 'risk' in one sense, but
is not of the same meaning as risk in this essay, which is taken
to be an agreed, whether impliedly or expressedly, distribution
made by the parties.

34
A. Couturier v Hastie
This case involved a c & f contract for wheat aboard a ship. The
goods had been sold by the master of the ship before the contract
was concluded. The subject matter of the contract therefore did
not commercially exist at the time of the conclusion of the con-
tract. It was held that the buyer was not liable for the price.
One view of this case, utilizing the concept of common mis-
take,35 was that the contract is void and unenforceable. The buyer,

33 (1852) 8 Exch 40.

34 Ibid.
35 But refer to the case of Associated Japanese Bank (International)Ltd v
Credit du Nord S A [1989] 1 WLR 255 for the present position on the
concept of common mistake.
14 Sing LR Transfer of Risk in CIF Contracts

on this analysis, was not liable for the price, nor was he at risk.
This has been viewed as unfortunate as making the sale of goods
afloat risky since the seller would have to bear the risk of damage
or loss to goods over which he has no control.
While it is submitted that there is nothing inherently wrong
with the risk being on the seller rather than the buyer, it must
nevertheless be noted that the better view of the case was that it
was merely a decision based on the construction of the particular
contract,36 and on that basis, the buyer was simply not taken to
be assuming the risk of the goods perishing and therefore could
not be liable for the price even on non-delivery.37 The case there-
fore did not decide the issue of whether the seller would be liable
for non-delivery to the buyer. No decision was made on a general
rule as to risk.
In any case, the authority of this decision is limited since firstly,
it concerned the sale of specific goods aboard a specific ship
(most cif contracts deal rather with unascertained goods) and
secondly, the specific contract in that case was of the c & f kind,
ie. cost and freight, rather than ci.

B. Risk of Loss and Deterioration through Transit

Returning to risk of loss and deterioration through transit, the
primary difficulty with this issue is the relevance of appropri-
ation to the contract to the passing of risk. The general rule as
mentioned before, is that risk passes on or as from shipment,
depending on whether the seller ships the goods or buys them
afloat.38 This statement raises some difficulties for in some in-
stances it may seem unfair that the buyer should bear the risk as

36 As agreed by Feltham as well, see above, p 3, n 9 at p 278.

37 P Atiyah, The Sale of Goods (8th ed, 1990) at p 74.

38 See above, n 4.
 Singapore Law Review (1993)

to loss, since risk may have actually passed retrospectively. The

law in this area is not settled, and the commentators are divided.
There are two views about risk of deterioration. The first re-
gards appropriation as irrelevant, and argues that risk passes
as from shipment in any situation. 9 The second states that risk
as to deterioration passes to the buyer as of appropriation. The
first view is based on slender inference from the statement of Ros-
kill J in Margarine Union GmbH v Cambray Prince Steamship,4"
which did not directly address the situation we are concerned
with here.
A proper examination of the relevance of appropriation is
better achieved by an examination of the position with regard to
loss. Again, one view is that transfer of risk of loss depends on
whether there has been appropriation to the contract. 41 If the
goods are lost before appropriation, the risk would not have passed
to the buyer. Risk would pass if the goods were appropriated,
but without retrospective effect. This view is premised on the
assumption that the seller should not be entitled to appropriate
goods to the contract which are lost though he had intended all
along to appropriate them.
The alternative conception is that cif contracts are a special
situation, where the general principle that one cannot appro-
priate goods which are destroyed is displaced, 42 and that the
seller remains entitled to tender the documents for payment.
The basis of this view is that the buyer still has rights under the
contract of insurance. A number of cases are usually cited as
authorities for this proposition.

39 See above, n 9 at p 279.

40 [1969] 1 QB 219.
41 Benjamin's Sale ofGoods, (4th ed, 1992) at paragraph 19-096; R M Goode,
Commercial Law, (1985) at p 595.

42 See above, n 9 and n 25.

14 Sing LR Transfer of Risk in CIF Contracts

43
C. C Groom, Ltd v Barber
The case involved a cif contract for cloth which was lost to enemy
action. The buyer received information about the ship carrying the
goods after the loss of the ship. In the course of his judgment,
Atkin J (as he then was) assumed that there was no appropri-
ation, and noted that "[the seller] need not have appropriated the
particular goods in the particular bill of lading to the particular
44
buyer until the moment of tender".
It has been argued that Atkin J was merely discussing appro-
priation in the proprietary sense and not as to the contract. 45
It is also argued that there was some appropriation to the contract
since the seller had given notice that he had appropriated some
shipment to the contract.46
Against this it has been pointed out that Atkin J did not give
any attention to the issue of appropriation as being crucial, and
that he was dealing in the quoted statement with appropriation
in the general sense.47
It is submitted that the notice given by the seller did amount
to notification that some goods had been shipped, but to go from
that to find that an appropriation to the contract had occurred
would be to make an unjustifiable leap. The appropriation to a
contract has to be of those goods which the seller intended to
so appropriate. It has been conceded by the proponents of the
view that appropriation had occurred that in that notice it was
merely probable and not conclusive that the seller intended to
appropriate those very goods which were lost. 4 Furthermore,

43 [1915] 1 KB 316.
44 Ibid, at p 324.
45 Benjamin's Sale of Goods, (4th ed, 1992) at paragraph 19-073.
46 Ibid.
47 See above, n 9 at p 275.
48 See above, n 45 at paragraph 19-073.
 Singapore Law Review (1993)

Atkin J had noted in the paragraph preceding the quotation that

the committee arbitrating the dispute did not deal as to whether
there had been appropriation to the contract.49 It is unlikely that
he would have committed an equivocation, whether intended or
otherwise, as to the meaning of appropriation. Therefore, the
case is not actually an authority that appropriation is irrelevant
to the passing of risk.
The discussion in the case itself was concerned primarily with
whether the seller was entitled to tender documents to the buyer
and whether there was good tender. Although the judgment of
Atkin J dealt with the transfer of property, which is a consequence
of a good transfer of documents, in the view of what he took
of what constituted a proper transfer of documents, property
considerations - and therefore, considerations of appropriation -
were irrelevant. And the issue of whether there was good tender
hinged on whether there had to be insurance coverage by the
seller. It is submitted that there was an agreement for the bearing
of 'war risk' on the buyer's account and to be borne by them. 0
Thus the decision was not concerned with the passing of risk
within the meaning adopted in this essay, and Atkin J may not
have directed his mind to the matter. The authority of this case
with regard to the determination of the issue of risk is therefore
doubtful.

D. Manbre Saccharine Company, Ltd v

Corn Products Company, Ltd"l
The next case to be considered is that of Manbre Saccharine, Ltd
v Corn Products, Ltd, 2 which was concerned with a cif contract

49 See above, n 43 at p 521.

50 Ibid, at p 317.
51 [1919] 1 KB 198.
52 Ibid.
14 Sing LR Transfer of Risk in CIF Contracts

for unascertained goods. McCardie J held that a seller could

make effective tender even though he had actual knowledge of
the loss of the ship or goods.5 3 He reasoned that the possibility
of such a loss is within the contemplation of the parties to a
cif contract, and that it would facilitate the performance of cif
contracts as there would be no need to be concerned about the
loss of ships or goods, and the possible relevance of the knowledge
of the seller as to the loss. 4 It has been pointed out that the case
was concerned with tender on loss, and did not discuss the posi-
tion as to appropriation, though it could be argued that there
was arguably some appropriation to the contract.55 The authority
of this case as to the issue in question is not strong, and still
leaves open the resolution of the difficulties.

E. In re Olympia Oil & Cake Company

56
& Produce Brokers Co
The next decision to be considered is that of Olympia & Pro-
duce. 7 This case involved the shipment sale of soya beans to
Hull. Despite being described in the divisional court as being a
cif contract," it was later pointed out not to be one.5 9 But what
is important about this case is the dicta of Rowlatt J who pointed
out the difficulties which would result if appropriation were
allowed after loss of the goods. He noted that:

53 Ibid, at p 204.

54 Ibid.

55 See above, n 45 at footnote 94 to paragraph 19-073.

56 [1915] 1 KB 233.

57 Ibid.

58 Ibid, at p 237.

59 See above, n 51 at 201.

 Singapore Law Review (1993)

[p]ushed to its logical conclusion this would involve that the

person in whose hands the ship was lost could afterwards enter
in to a contract to sell a cargo, and, if the price fell, buy a
cargo afloat, tender it, and pocket the difference; and, if the
price rose, tender the lost ship and escape from the speculation
60
without loss.

It must be noted that the dicta was concerned with the entering
into a contract, but it has been argued that it applies just as well
to appropriation.6 1
Against this it has been argued that what Rowlatt J regarded
as an anomaly is what any seller would do, at least in the falling
market, and that he is justified in appropriating lost goods to the
contract in a rising market as there should not be any distinction
between the position as to damage and loss. 62 However, this argu-
ment, as has been noted, is based on rather slender authority with
regard to the position as to damage to the goods. It is submitted
that the question whether loss needs to be distinguished from
deterioration is tied to the question as to the relevance of appro-
priation.63 It is therefore, further submitted that the argument
that appropriation is irrelevant in loss because it is irrelevant in
deterioration is untenable and circular.
Thus while the seller in a falling market may in any case do
what Rowlatt J objected to, to allow him to actually appropriate
lost goods would be repugnant to the actual nature of the cif
transaction. The argument that he should be able to do so is
ultimately founded on the view that the cif contract is not a
contract of sale simpliciter but a contract for the sale of goods or
the insurance policy. In this respect, the solution to the difficulties,

60 See above, n 56 at p 239.

61 See above, n 45 at paragraph 19-075.

62 See above, n 9 at p 276.

63 See above, n 45 at paragraph 19-096.

14 Sing LR Transfer of Risk in CIF Contracts

it is submitted, would be to treat the cif contract as a sale of

goods transaction,64 and not a sale of documents.

F. The Cases Considered

What is at the crux of the problem is whether the buyer should
bear the risk retrospectively, as at the time of shipment, whether
the goods are shipped or bought afloat by the seller. There is
some aversion to doing so,6" which is understandable in that it
does seem unfair: without appropriation, the buyer may not have
any claim against the carrier under the Bills of Lading Act,"
and against the insurer because he may have been given a policy
in which owners of other goods were interested.6 7
The difficulties which arise occur because of the need to balance
the sale of goods aspect of the cif contract with commercial
realities and the ability of the buyer to have claims against other
parties. As has been noted before, the cif contract is a contract
for the sale of goods, which is performed by the delivery of the
stipulated documents. The goods while in transit would be outside
the control of either party, and possibly subject to great risks of
damage (at least in the last century). That risk should generally
pass on shipment is, has been pointed out above, a great matter
of convenience. But to argue from this that appropriation to the
contract is irrelevant or should be disregarded is unwarranted
and unjustified.

64 R M Goode, Commercial Law, (1985) at p 590.

65 Per Rowlatt J, see above n 56.
66 1855 (18 & 19Vict)c 111; but he may still have aclaim intort, cfMargarine
Union GMBH v Cambay Prince Steamship Co Ltd [1968] 1 QB 219.
The carrier may also have contractual obligations under the Hague or
Hague-Visby Rules.The Carriage of Goods Act 1992 (c 50), which supersedes
the Bills of Lading Act, has improved the situation somewhat.
67 See above, n 64 at p 596. The question is, of course, who is to sue the
insurer.
 Singapore Law Review (1993)

Comparing deterioration and loss, it must be noted that con-

ceptually, goods which have deteriorated are still goods which
can be the subject matter of a contract. Goods which have been
lost cannot form the subject matter of any contract. Thus while
a contract may have been concluded, the actual subject matter
would not have been identified in the sale of goods afloat, until
they actually have been bought and appropriated to the contract.
If the goods are lost, whether with or without the knowledge of
the seller, before the appropriation, the contract of sale has not
yet been endowed with any subject matter, and the contract must
still be fed with some goods. Only after this has been done, does
the risk pass to the buyer for otherwise the buyer assumes the
risk of no subject matter of the contract being found and that
would be repugnant to the actual objective intention, which is the
purchase of goods.

VI. STRING CONTRACTS

Difficulties do arise with regard to string contracts, and it is
probable that most cif contracts do involve sub-sales. Indeed, it
is arguably the convenience of selling goods while they are afloat
which have made cif contracts so popular. The position as to
transfer of risk as to deterioration (as opposed to loss) is complic-
ated by this. For while the arguments canvassed in the preceding
sections may seem attractive - ie. that risk should depend on
appropriation - it is submitted that they are difficult to apply
to string contracts, and indeed to most purchases of goods afloat.
The basis of this is that since international sales generally involves
string contracts, there would be a litigational ripple all the way
down to the original seller, with all the consequent costs of lit-
igation and proof.68 One suggested solution to this is that each
seller in the series could insert a clause such that his buyer must

68 See above, n 25 at p 105.

14 Sing LR Transfer of Risk in CIF Contracts

accept the appropriation made by the original shipper.69 But this

depends on actual insertion of such a clause being made, with
risk seemingly falling otherwise on the first neglectful party who
has omitted to add in the clause. While the suggestion is workable,
it is not satisfactory for it is felt a better solution ought to operate
at general law.
There is the view that the intention of the parties should be
relevant in determining whether risk has passed. In this view, as
between a shipper and the buyer, the cif contract is a sale of goods
performed by delivery of documents, but as between sub-buyer
and buyer, it is a sale of the documents.70 This view does have
its attractions, namely that the difficulties of the string contract
situation are avoided, but it must be queried whether it adequately
reflects the commercial expectations of the parties. It is submitted
again that the transaction should be regarded as a sale of goods,
at least with regard to risk, rather than being a sale of documents.

VII. A SYNTHESIS
One possible solution is to distinguish between loss and deteriora-
tion. As noted above, the time of loss is generally more easily
definable, and the consequences are usually greater than deteriora-
tion. Therefore risk of loss should be only as of appropriation,
while risk of deterioration is of shipment. It should be pointed
out also that modern communications facilities ought to alleviate
many of the problems of proof envisaged by the commentators.
Indeed, one of the probable reasons for the view that risk should
pass as of shipment is that the sellers and buyers both could not
know at the time of contract the condition or existence of the

69 See above, n 45 at paragraph 19-074.

70 H J Herman and C Kaufman, "The Law of International Commercial
Transactions (Lex Mercatoria)" (1978) 19 HILJ 221, at pp 242-243. See also
P W Thayer, "CIF Contracts in International Commerce" (1940) 53 HLR 792.
 Singapore Law Review (1993)

goods and the ship. It is submitted that whatever the position

in the past where communication facilities did not allow for
instantaneous communication from one part of the world to
another, the present state of technology, including satellite com-
munications, should be taken into account. This position bridges
the gap between the majority view of Feltham, et al, and that of
the editors of Benjamin's, and indeed favours Benjamin's which
it is submitted is conceptually more attractive.
It must be added that the best assurance of equitability in
this regard is to require that a notice of appropriation must be
given. At present, it appears that this is often left unsaid. Such
a provision will ensure that there are no difficulties when faced
with the loss of goods. Of course, the seller has to determine
when to appropriate, but this is arguably fair since the seller
would have more knowledge of the goods, and their condition
than the buyer.
It is submitted that this is the most workable conceptually and
commercially. It may seem unsatisfactory to have to resolve the
conceptual difficulties of the passage of risk of loss and deteriora-
tion by reference to the state of technology, but it must be noted
that the cif contract is a creature of commerce, and should be
construed to facilitate commercial transactions.

VIII. IN SUMMARY
The position of transfer of risk as advocated in this essay is
summarised as follows. The loss of goods before the contract
is made is at the seller's risk. The transfer of risk of deterioration
of the goods is as of shipment even before the contract is made
(bearing in mind though the rule in Marsh & Murrell7 which is
submitted as being good law). The transfer of risk of loss is as of
appropriation to the contract.

71 See above, n 3.
14 Sing LR Transfer of Risk in CIF Contracts

It is submitted that the above summary best reconciles both legal

and practical factors in the transfer of risk in cif contracts. While
it might have been hoped that the legal and practical positions
were more consistent with each other, it must be kept in mind
hat the cif contract is a product of commercial usage, and should
reflect the demands of men of business.
The general rule as to the passing of risk as of or from ship-
ment72 should therefore be regarded only a primafacie position,
which must be modified in the circumstances described in the essay. It
is further submitted that the statement in that case was not intended
to apply to all circumstances, and did not address the difficulties of
transfer of risk before appropriation to the contract. As such, it
would be open to the courts to decide such issues of risk along the
lines advocated in this essay. However, at this time, the issues are still
open, and await judicial pronouncement. It is hoped that any such
decision will pave the way for greater certainty in this important area
of the law.

BIBILIOGRAPHY
1 Atiyah, P S, The Sale of Goods (8th ed) 1990.
2 Benjamin's Sale of Goods (4th ed) 1992.
3 Berman, H J and Kaufman, C, "The Law of International
Commercial Transactions (Lex Mercatoria)" (1978) 19 HILJ
221.
4 Debattista, C, Sale of Goods Carried by Sea (1990).
5 Feltham, J D, "The Appropriation to a CIF Contract of Goods
Lost or Damaged at Sea" (1975) JBL 273.
6 Goode, R M, Commercial Law (1985).

72 See above, n 6.
 Singapore Law Review (1993)

7 Sassoon, D M, "Deterioration of Goods in Transit" (1962)

JBL 351.

8 Sealey, L S, "'Risk' in the Law of Sale" (1972) 31 CLJ 225.

9 Thayer, P, "GIF Contracts in International Commerce" (1940)

53 HLR 792.

10 Todd, P, Modern Bills of Lading (2nd ed) 1990.

OTHER WORKS CONSULTED

1 Atiyah, P S, "Couturier v Hastie and the Sale of Non-existent
Goods" (1957) 73 LQR 840.

2 Honnold, J 0, Uniform Law for International Sales Under

the 1980 United Nations Conventions (1987).

3 Gotein, H, "The Passing of the Property and the Risk under

a CIF Contract" (1927) 43 LQR 6.

4 Note on Mash & Murrell Ltd v Joseph I Emanuel Ltd (1961)

JBL 293.

5 Sassoon, D M, "Damage Resulting From Natural Decay Under

Insurance and Sale of Goods Contracts" (1965) 28 MLR 180.

6 Sassoon, D M and Merren, H 0, CIF and FOB Contracts

(3rd ed, 1984).

7 Schmitthoff, C M, Schmitthoffs Export Trade (9th ed) 1990.

8 Slade, C J, "The Myth of Mistake in the English Law of

Contract" (1954) 70 LQR 385.