Liabilities of Carrier and Nominated Bank in International Sale Contracts

Running head: BUSINESS LAW ASSIGNMENT
BUSINESS LAW ASSIGNMENT
Name of the Student
Name of the University
Author Note

2BUSINESS LAW ASSIGNMENT
Question 1
Issue
A contract for sale of goods was executed between Beauty Bananas Ltd (BB) and Fresh
Fruit Inc. (FF) for the sale of 100 tonnes of Bananas in 2 respective shipments. The contract
provided that Fresh Fruit Inc. (FF) would nominate a carrier who the goods would be delivered
to by the suppler [Beauty Bananas Ltd (BB)] among other terms. On the designated date for the
first shipment Fresh Fruit Inc. (FF) stated that the first shipment was to be sent to a designated
carrier and that the second shipment was to be put on hold till the 17th of June. Beauty Bananas
Ltd (BB) delivered the same to the carrier. On receiving the shipment Fresh Fruit Inc. (FF) found
various discrepancies in the products however Beauty Bananas Ltd (BB) had furnished
documentary evidence of the complete shipment when delivering the goods to the carrier. The
issue here is to determine if all the obligations of the supplier have been met in the transaction
that transpired between the parties.
Rule
A shipment of goods from Brisbane, Queensland would be governed by common law
principles as Australia incorporates common law into its legal framework in addition to
international conventions that define the law of the sea and domestic legislations. In this case the
applicable legislations would be Carriage of Goods by Sea Act, 1991, Incoterms, 2010
(International Commercial Terms), the Hague-Visby Rules (as they stand amended) and the

3BUSINESS LAW ASSIGNMENT
Convention on International Sale of Goods1. In relation to these rules the concept and function of
the Bill of Lading must be clarified.
A bill of lading maybe defined as documentary evidence of receipt of goods from the
shipper given by the carrier or the master of a vessel that is being contracted to deliver the goods.
This has been clarified by the judgment delivered in the landmark case Glyn Mills v East & West
India Dock Co2.. The functions of a Bill of Lading are three fold, as a receipt for goods sold, as
evidence of a contract of carriage and as a document that establishes title. This was reiterated in
the judgment in Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd (the “SS Glengarry”)3.
The obligations of the seller in an international contract of sale of goods are defined and
regulated by Articles 30-37 of the Convention on International Sale of Goods4. These include
timely delivery and carriage and freight insurance obligations. These obligations must be
observed by the seller in order to ensure that the contract of sale executed between the parties is
performed considering all aspects incidental thereto.
Application
In the facts and circumstances stated above it can be inferred that Beauty Bananas Ltd
(BB) was acting in the capacity of a seller and supplier while Fresh Fruit Inc. (FF) was acting in
the capacity of a buyer. Thus the seller’s obligations embodied in the Convention on
International Sale of Goods at Articles 30-37 would be binding on Beauty Bananas Ltd (BB).
Thus in effect all responsibilities envisaged by the Convention on International Sale of Goods
would determine liabilities based on the performance of the contract by the seller. In this case
1 Johnson, William P. "Analysis of Incoterms as Usage under Article 9 of the CISG." U. Pa. J. Int'l L. 35 (2013):
379.
2 [1882] 7 App Cas 591
3 [1959] AC 576
4 Bridge, Michael G. The international sale of goods. Oxford University Press, 2017.

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when the first shipment was delivered to Fresh Fruit Inc. (FF) there were various discrepancies in
the order which were discovered. The discrepancies were that, of the contracted amount of the
product, the final goods delivered were 100 Kilograms short of the agreed quantity. The second
shipment which arrived was also found to be faulty as the quantity was short by 2 tonnes and 5
tonnes out of the received order turned out to be spoiled.
As seen from the agreement the sellers obligations were timely delivery, a delivery of
goods to the agreed carrier and marine insurance (and other incidental obligations). However as
far as the obligation of the seller in concerned, the quality and quantity of the goods delivered
would cease to exist once possession has passed from the seller to the carrier. This is because
when the goods are delivered to the carrier [designated by the buyer Fresh Fruit Inc. (FF)] the
carrier would be charged with verifying the quality and quantity of the goods tendered and thus it
would mean that the seller has tendered goods that adhered to the quality and quantity
contracted. In this case when Beauty Bananas Ltd (BB) delivered the contracted goods to the
designated carrier, China Fruit Shipping (CFS), the carrier in turn produced a specific kind of
documentary evidence stating that the goods delivered adhered to the quality and quantity
stipulated in the contract. This form of documentary evidence which acts as a receipt of goods
sold, an evidence of a contract of carriage and as an evidence of title is known as a Bill of Lading
following the judgment delivered in Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd (the “SS
Glengarry”)5. In admiralty law this form of documentary evidence is conclusive proof of the
good order and/or quantity as determined in the case of Glyn Mills v East & West India Dock
Co.6. This principle is also envisaged by the Hague-Visby Rules and embodied at Article 37.
Article 3 of the Hague-Visby Rules embodies an obligation on a carrier or a master of a vessel to
5 [1959] AC 576
6 [1882] 7 App Cas 591
7 Coetzee, Juana. "The Interplay between Incoterms and the CISG." JL & Com. 32 (2013): 1.