International Sale Contracts

International Sales Contract Ross T. Smyth and Co. Vs. TD Bailey Son & Co [1940] All ER This paper will examine and discuss the specific implications of Lord Wright's statement and how this related to the seller and buyer, specifically in the context of the c.i.f. And f.o.b. contractual meaning. In the historical case Ross T. Smyth and Co Ltd. Vs. TD Bailey, Son & Co.

[1940] 3 All ER 60, Lord Wright, upon considering a dispute between the parties is said to have stated: Now it is true that all these rules both under section 18 and section 19 are prima facie rules and depend on intention in this regarded by the parties is seldom or never capable of proof. It is to be ascertained, as already stated here, by having regard to the terms of the contract, the conduct of the parties, and the circumstances of the case.

What must be resolved in one's mind is Lord Wright's specific meaning by the statement above which he known for having stated. In order to examine exactly what he is saying to the buyer and seller, research precision must be explored as well as the definitions of the contracts for which either the buyer or seller has place themselves in. Contracts: The Sale of Goods The specific meaning of the term "goods' has posed many difficulties for the courts.

Goods refer to that which is "tangible, physical and movable." A sale consists in the transferring of the title of goods from the seller to the buyer for a price [2-106(1)]. The seller is under obligation to make transfer and delivery of the goods and the obligations of the buyer are to make acceptance and payment in adherence to the contract. [1-301]. Basically, parties to a contract can agree upon whatever terms they desire as long as they are both agreeable to the contract.

The Parties agreement is inclusive of the bargain, which they struck as well as any previous dealing of the parties, general trade custom and usage, as well as any past trail of performance in relation to the present contractual agreement. The next statement is very important in understanding what Lord Wright's statement in actuality expressed concerning the scope of contract law.

A course of dealing" is a sequence of prior conduct between the parties, which gives a form basis for interpreting their communications and conduct between themselves." This one statement conveys in a nutshell what Lord Wright's viewpoint on the contract protocol should be. Another term of importance is "usage of trade." This is simply a phrase that expresses that there are standards and protocols within every sector of the business world.

Just as some things would be tolerated in one area of the world the very same would be shunned by the trade practice of another. "Course of performance" is descriptive of a contract that will require repeat performances. Formation of the Contract: The contract can left open in the area of the price term providing that this is fixed at some later date or by some agreement of market standard solution.

Flexibility is allowed for in the Code and the Code also shows flexibility in terms of whether a contract is required to be written and as well in the scope of what is required to be written if indeed it is spelled out between the parties. The Code is designed to ensure fair and balanced dealing between the parties in the "output" and "requirements" of the contract. After he details for a price and delivery have been agreed upon then the mode of freight should be considered.

The seller has an obligation to make transfer and delivery of the goods and upon releasing the goods to the carrier the seller has completed those obligations of the contract. The proper contractual passing from the seller to the buyer of property is imperative. The general rules are located in the Sale of Goods Act, 1930 in Sections 18, 19, and 20. Interestingly, Section 18 contains the provision of property ownership in goods cannot pass "unless and until the goods are ascertained. Unascertained goods become ascertained once the buyer has agreed to the terms.

Section 19 Clause 1: makes provisions concerning the timing of the passing of the property as well as the establishing of the parties "intention" regarding what each considered to be the agreed upon terms of the contract. Section 19 Clause 2 addresses that "for the purpose of ascertaining the intention of the parties shall be as to the terms of the contract. In ascertaining what the intent was of the contracting parties the following can be obtained for proving prima facie intent. There are considered to be three types of f.o.b.

contracts as follows: Classic F.O.B.: Buyer nominates vessel and seller makes contract of carriage. Rarely Utilized F.O.B.: Seller nominates vessel, makes carriage of contract. Most Commonly Used Today: Buyer nominates vessel and makes contract of carriage. The Classic f.o.b. which, is the most common even in today's modern business world is the type of f.o.b.

In which the buyer is responsible for the proper and effective selection of the ship, however the seller's responsibility is to contract the shipment, charging that cost to the buyers account and after having loaded the goods and obtained a bill of lading the goods are shipped on to the buyer who will in most cases pay costs plus shipping expenses. This type is the most appropriate where the buyers good are required shipping on a certain type of vessel or foreign currency restrictions are involved.

In this instance the buyer would most likely prefer to receive shipment through a vessel of the buyer's own nationality. This is one reason that the buyer generally chooses the ship. In the event that shipping arrangements are hard to find, or where the shipped items are small then the seller may choose the ship upon consent of the buyer. III. Definition and Scope of the F.O.B. Contract: The f.o.b.

contract unless otherwise agreed to in the contract is taken to mean "free on board." F.o.b. refers to the place of shipment or the place the seller is required by the contract to have shipped the goods from and bear the expense or when the term is F.O.B. meaning the destination then the seller must pay expenses for shipping. This is an undesirable arrangement in most business contracts.

The seller's obligation for delivery of the goods has been concluded at the time the goods are delivered for shipment to the buyer's chosen carrier of the goods. This is deemed as delivery on the part of the seller. This is not always the case however, but will be true only when the seller has not made provisions to reserve the right to disposal. This generally will be the chosen method and is usually the chosen method even after the fact of shipping.

Therefore, it must be held that it is true that transfer of property does not take place until after shipment even if the goods have been completely purchased before shipment. In Section 2-319 of the U.C.C. And under either of the above terms then the proper term is F.O.B. Vessel. As is clearly seen here there does leave some room for confusion between the buyer and seller. There are several options that could result in this contract. Definition of the C.I.F.

Contract: The c.i.f. can be found in Section 2-320 of the Uniform Commercial Code. C.I.F. simply means that the price agreed upon between the two parties includes what is referred to as a "lump-sum" payment on the costs of the goods as well as any shipping, insurance freight or other expenses involved with the package arriving at the location requesting shipment. In other words, the C.I.F. is the inclusion of the following Costs Insurance Freight V.

Specific Aspects of the C.I.F.: Duties In the examination of C.I.F the understanding is gained that its purpose is only to be used in relation to costs and is understood to be used only in relation to costs and freight to the named destination. The term equating with C.I.F. point of arrival has to concern itself with the term as meaning "price = costs, friend and possibly insurance and shipping. In the event of a C.I.F.

destination the seller's responsibilities are inclusive of the following for fulfillment of contract by the seller: Place the goods within a carrier's possession in port for shipment and procure a bill or bills of lading that are negotiable that cover the entire shipping/transpiration for the goods to arrive at the selected destination.

Loading of the goods as well as obtaining a receipt from the carrier showing that transpiration, shipping costs and all other necessary expenses have been paid certificate of insurance should be obtained as well as any other risk coverage needs, for example during wartime the procurement of a "war risk insurance" is a sound procedure for shipping of goods. The current port shipment charge should be paid as well as insurance for and on account of loss before arrival at destination.

The preparation of an invoice is very important as well as the procurement of any other possible documents to legally affect a shipment as well as the complying with the contract and other governing laws. All documents relating to the shipment should be immediately "forwarded and tendered in "due form" and with any "endorsement that may be required for protection of the rights of the buyer. Unless agreed to otherwise the term C. & F.

Or the equivalent has the same effect and imposes upon the seller the same obligations and risks as a C.IF term except the obligation as to insurance. Also unless otherwise agreed upon between the seller and the buyer there must be a payment made or the seller shall not deliver the documents to the buyer. VI.

Section 20 Section 20 is in relation to the third and considered most important rule as it contains the framework for the unconditional contract for the sale of goods in a condition that is deemed to be "deliverable." The contract being made is simultaneous to that of the other. According to this Section it does not matter when the payment is made or of the price which is paid.

The conditions are that this contract must be an unconditional one and secondly, the sale must be comprised of that which is deemed to be "specific goods. Specific goods are those that are deliverable according to the terms of the contract." When goods arrive in a "deliverable" state then, at that time, the individual should take delivery. VII.

International Sales Contracts: The buyer and seller originate from different countries in what is termed "international sales." There is a presumption in this aspect of the law that the buyer does not intend to pay for the property until it has been delivered into the possession of the buyer. Many times the situation arises where there are conflicts or contradictions within the scope of the contract. Such was the case when Lord Wright made his well-remembered statement.

The statement of Lord Wright set a precedence in contract law that has great staying power in the very logic that is presented within that statement. VIII. Prima Facie: Prima facie within the scope of the law means "as it appears to be," "the facts as they appear to be" or in actuality "the logical conclusion" of what seems to be the agreement between the buyer and seller.

For example, if the bill of lading names the seller or the seller's agent the property will not transfer just on the fact of the shipment of the goods. There is no "unconditional appropriation" of the goods of the part of the seller or the seller's agent just because the goods have been shipped to the buyer.

On the other hand, if the goods had been shipped with the buyer's name on the bill of lading, then this creates a prima facie case of the property having been legally transferred to the possession and ownership of the buyer, unless, there is other contradicting evidence within the scope of the contract. Also, billing a buyer at the same time as delivery is another way of establishing that no transfer of ownership was intended until payment was made on the goods. IX.

The Issues of Risk in International sale contracts: The risks associated with international sales contracts are varied. For instance the buyer who has paid for and is in receipt of company goods and those goods appear to be in conformance guidelines according to prima facie evidence. However the buyer discovers that there are problems with the goods and rejects the said goods stating his rejection to the seller. On a general basis the risk associated with non-deliverable items will pass along with the property.

Therefore the seller holds the risk until the goods are carried to the carrier for shipment. Considering that the seller has delivered the goods back to the carrier, then at this time the seller and buyer are in agreement that the seller's obligations are released. States that the buyer assumes the risk at the moment of the handing over of the goods to the carrier. Usually the determination of the exact point that the goods were moved is unknown. In the F.O.B.

cases as well as the C.F.I. cases the only possible "deterioration of goods" are those that are "governed by the rule of risk." Also, if the seller ships the goods and request a higher price at a later date the buyer may reject the contract. Article 69 of CISG makes as a provision the failure of the buyer on taking of the goods, as deeming the buyer risk of loss.

Just exactly as has been mentioned in previous programs Further Examination of Lord Wright's Statement: The rulings and laws within the realm of contract law are very common sense based and very logical. As this paper has demonstrated the agreement between two parties, the buyer.