1.

Simon agrees to sell to Bob 100 Christmas cakes, CIF Southampton, to arrive by 15th
December 2020. The Christmas cake market is highly seasonal, and a cake that arrives after
Christmas will be worthless. Simon loads 100 Christmas cakes on board The Happy Giant
(owned by Clarkson). The cakes are of apparent contractual quality when loaded, and a clean,
shipped bill of lading is issued for them. Bob pays against tender of documents. The Happy
Giant makes an unscheduled stop, so that the cakes arrive in Southampton only on 28th.

Carrier (Clarkson, The Happy Giant)

/ \
Carriage Bill of Lading
/ \
Seller (Simon) ------------ CIF ----------------------- Buyer (Bob)
\ /
\ -----Bill of Lading from Seller to Buyer-- /

How to go about with an answer:

- Type
- Terms
- Rights and Obligations
- Performance of such Rights and Obligations
- Remedies in case of Breach of such Rights and Obligations (Contract)

(i) Assuming there is no liberty to deviate in the carriage contract, and The Happy Giant
would have been expected to arrive on 12th had she not made the unscheduled stop, advise
Bob as to his actions against Simon.
- Type: CIF Contract (Shipment term)
- Terms: To arrive before 15th December, 2021
- Rights and Obligations:
Seller has the physical obligation to
- Performance of such Rights and Obligations
Seller: Provide contractual good of being a contractual quality, contractual carriage (no
mention of what type f carriage it should be)
RULE
- Remedies in case of Breach of such Rights and Obligations (Contract)

The Buyer would be responsible for such breach. (Bergerco USA v Vegoil Ltd [1984] 1
Lloyd’s Rep 440)

“... the seller would discharge his obligations by shipping on a contractual ship and
tendering documents which bound the ship to proceed direct. Thereafter the risk of deviation
would be on the buyer and his remedy would be against the carrier not the seller. This
approach conforms to the c.i.f. or c. & f. scheme...

The Wise

Section 32(2) of the SOGA (Case confirming the same)

(ii) Would your view be different if the carriage contract made by Simon allowed The Happy
Giant liberty to deviate by making stops en route, so that Clarkson was not in breach of the
carriage contract? Does your advice depend on whether such liberties are usual in the trade?
Reasonable carriage contract entered into by the Seller to the Carrier
(Usual Carriage Contract vs. Reasonable Carriage Contract)

Case: The Northern Progress (No. 2) [1996] 2 Lloyd’s Rep 319

The Seller has arguably breached 32(2). Buyer has the right to claim damages.

(iii) Would your answer to any of the above be different if Bob had not yet accepted and paid
against the documents?

Refuse the acceptance of the documents if the liberty to deviate clause appears on the bill of
lading IF the Buyer can argue under 32(2) is unreasonable allowance entered into by the
buyer; So,

Does your advice depend on whether the liberty to deviate clause appears on the bill of
lading?

If there is no liberty clause, the Buyer has to accept the documents and later on maybe reject
the goods.

If the buyer wrongly rejected the documents, the buyer would be in repudiation breach of the
contract between himself and the seller.

(iv) Assuming Bob refuses to pay against the conforming documents, what advice would you
give to Simon?
Wrongful Repudiation: Seller can sue for breach of contract and seek damages for such
breach. (Bring litigation)

Damages will be worth:

Full: In case cakes are resold
Gap: Lesser price made from such resale, the damages can be sought from such “loss” made
due to Buyer’s non-acceptance of such case

Para 30 of The Intan 6 [2003] 2 Lloyd’s Rep 700

Would your answer to be different if Simon had already commenced litigation against
Clarkson or resold the cakes to another buyer?
If you have resold the documents, then you can’t claim full damages. Because the documents
do not exist anymore.

2. ‘The CIF sellers just need to follow express requirements in the sale contract to make
carriage arrangements for the goods.
Where there is no express requirement, they can pretty much do whatever they like.’
This question has 2 parts.
Critically discuss this statement.

What is CIF Seller’s duties and obligations

Reasonable Carriage Arrangement
In favour: Does need to follow express requirement
Rebut: They don’t need to follow only express but also implied requirement (Section 32(2))