CIF contracts are one of the most popular trade agreements between a buyer and a seller in the sphere of international trade when sea carriage is used. CIF is a shortened form for cost, insurance, and freight. As a rule, the cost of goods depends on freight and insurance. As a rule, CIF contracts are attractive to either seller or buyer. A seller gets an opportunity to charge a high price for extra services (shipment and insurance), and a buyer is not bothered with such questions as finding shipping space and insurance (such issues are difficult to decide because of unawareness of local business). According to the CIF contract, both the seller and the buyer, have certain obligations and need to meet all of them.
The seller has to (1) ship goods according to the description, (2) arrange the carriage of goods according to the conditions discussed with the buyer, (3) check the quality of goods and mark all of them, (4) create an invoice, and (5) present all these documents to the buyer. (Cheng, 1990)
The buyer, in his/her turn, need to (1) notice to the seller (about the desirable timedeliveryiver), (2) inform the buyer about the desirable insurance, (3) accept all transport documents, (4) pay the cost of goods, and, finally, (5) pay other costs (duties, taxes, inspection, etc.) (Gillies and Moens, 1998)
Carr mentions that the seller bears all risks (goods’ damage or loss) until the goods are in the port of shipment and have not yet passed the ship’s rail, and the buyer bears all risks (goods’ damage and loss) from the time when the ship has passed the ship’s rail. (2005, pp. 106)
According to this theoretical data and the validity of this electronic document, CIF, the buyer has the right to ask for compensation from the seller’s side because of unmarked laptops if in the description, presented by the seller, is mentioned that all laptops, themselves, are marked “Made in China”, and the buyer was informed about it. Such compensation is obligatory according to the Sale of Goods Act of 1979. Even more, the buyer may break down the contract because of a discrepancy between the condition of goods in the description and the condition of goods in reality.
In the case of the instability of the hardware in 80 laptops that was discovered because of damp patches, the seller is not responsible here. According to the duties of the seller, he/she does not bear any risk soon after the ship leaves the port of the shipment. If the seller did not know anything about the possible damage of the goods at the time of its shipment, the buyer has no right to ask for any kind of compensation. This is why the risk of damage to the laptops, in this case, is borne by the buyer.
It is necessary to admit, that the delivery of the goods was delayed for one day. If the shipment and arrival of the goodoccurrs in the settled time, and the delivery was delayed because of force-majeure, the seller is not responsible for this delay and has not to pay any compensation.
One of the possible methods in order to dispute the problem that happens to the buyer, Ben, and the seller, Sam, is the following. The buyer should pay for all the laptops, but it is also necessary to ask for compensation because of the wrong description of the condition of the products during the shipment. This compensation needs to be paid by the seller. If the delay was the seller’s fault, the buyer should get compensation as well.
References
Carr, I. and Stone, P 2005, International Trade Law. Routledge Cavendish.
Ch,eng, C. J. and Cheng, J 1990, Basic Documents on International Trade Law. BRILL.
Gillies, P. and Moens, G 1998, International Trade and Business: Law, Policy, and Ethics. Routledge.