Business Trade Law and Regulation | Assignment -2

Running head: BUSINESS TRADE LAW AND REGULATION
BUSINESS TRADE LAW AND REGULATION
Name of the Student
Name of the University
Author Note

1
BUSINESS TRADE LAW AND REGULATION
Facts:
In the present case, Ali has hired the Hajima Co. of Yokohama for the supply of
Harajuku style clothing for his business and therefore contacted Benji from the Hajima Co.’s
side. Ali agreed to purchase 2,500 pieces of clothing from the company and entered into a
contract the contract incorporated under the rule of incoterm CIP on Monday the 14th of
January 2019. The value of the order was AUD 35,000. The contract also specified that the
order had to reach Ali in Hobart by 10th March 2019 at the latest. However, during
negotiation, Benji informed that the shipper will be another company operating in Thailand
which is a subsidiary of Hajima Co. When the shipment left Thailand, there was an enclosed
Bill of Lading stating that there were 20 damaged pcs, which is known to Benji. On the sea
carriage, and as a result, more 1,000 pcs of the clothes became moldy due to water seeped
into some of the boxes. On arrival at the Port of Melbourne on the 7th March 2019, Ali's agent
failed to carefully inspect the goods before forwarding the order from Melbourne to Hobart.
Due to another unfortunate event, the shipment through water got delayed till 10th March
2019. Therefore, the agency hired an air service to deliver the goods to Hobart, which cost
around AUD 5,000. During the arrival, Ali found only 1,480 pcs in merchantable condition
along with the 20 torn pcs and 1,000 mouldy ones. He further received a bill of AUD 40,000.
Ali refused to accept and pay for the order.
Issue:
The issue in this case whether Ali is liable to pay AUD 40,000 or not. Another issue is
that whether Ali can claim damages for the loss of clothes during shipment and from whom
and what would be the money recovery liability of the agent of Ali, who has arranged the
shipment through the air.

2
BUSINESS TRADE LAW AND REGULATION
Rule:
The rule relating to shipment mentioned in the CIF sourced from the International
Chamber of Commerce (ICC), 2019, Incoterms 2020 and CIG has been discussed in this
case. The further rule relating to shippers and Carrier's liability in Hague-Visby Rules and
Hamburg Rules have been discussed.
Analysis:
It can be seen from the fact of the case that Alhob Co. and Benji of Hajima Co.
entered into a contract incorporated under incoterm CIP rules and directed the delivery to the
Port of Melbourne. The contract also specified that the order would have been reached to Ali
in Hobart by 10th March 2019 at the latest. In this regard, it is necessary to mention about CIF
or Cost, Insurance, and Freight (CIF) contract rules. Under this rule, a seller must get
insurance for the goods during the transit of the same to the named port of destination. CIF
contract rules further require that the seller needs to make an insurance for the shipped goods
which covers the price of the contract with an extra 10% rate, that is a total of 110%
complying with the rule of the least protection of the Institute Cargo Clauses of the Institute
of London Underwriters (Yaakub and Szu 2017). The policy should be made following the
identical currency referred to in the contract. The duty of the seller is to proceeds with the
documents that are required to get goods from a carrier or to declare a claim in opposition to
the insurer to the buyer. The mandatory documents consist of the invoice, the bill of lading
and the insurance policy. These three documents further signify the cost, insurance, and
freight regarding CIF. The obligation of the seller ends at the time when the documents are
passed to the buyer and the buyer pays the agreed price (Goldby 2019). The CIF contract
should only be utilized for the non-containerized sea freight. It has been seen that CIF has