Business Trade Law and Regulation | Assignment

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

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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.

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BUSINESS TRADE LAW AND REGULATION
Rule:
The rule relating to shipment mentioned in the CIP sourced from the International
Chamber of Commerce (ICC), 2019, Incoterms 2020 and liability and ownership of parties
under COGSA 1992 has been discussed in this case. The further rule relating to shippers and
Carrier's liability under the general principles of contract law and principal-agent fiduciary
duty has also 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 by virtue of the fact that Australia and Japan both have incorporated CISG
into their legislation. The contract also specified that the order would have been reached to
Ali in Hobart by 10th March 2019 at the latest. According to the Carriage and Insurance Paid
to Incoterm (CIP) contract rules, a seller must get insurance for the goods during the transit of
the same to the named port of destination. CIP 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 CIP. The obligation of
the seller ends at the time when the goods are passed on to the carrier (Goldby 2019). The