International Trade Law: Analysis of Cherry Cherries PL Case

This report analyzes a case involving Cherry Cherries PL and fresh fruit importers in Singapore, focusing on international trade law principles. It examines the application of the Vienna Convention on International Sale of Goods, particularly regarding risk transfer and responsibilities of the parties involved in the sale and carriage of goods. The report also delves into the CIF Incoterms 2010, outlining the obligations of the seller and buyer in sea freight scenarios, including insurance and clearance responsibilities. Furthermore, it assesses the role of the Amended Hague Rules (COGSA 1991) in addressing the issue of carrier liability and negligence related to the shipment. The analysis considers the potential for resolving the dispute, including claims for damages under the Vienna Convention, CIF Incoterms, and the Hague Rules, and the liability of the parties involved. The report concludes by citing relevant legal articles, legislation, treaties, and Incoterms to support its analysis.

Running head: INTERNATIONAL TRADE LAW
1
INTERNATIONAL TRADE LAW
Name
Date

INTERNATIONAL TRADE LAW 2
Facts
In the Scenario, Cherry Cherries PL enters a contract for sale with fresh fruit importers
who are based in Singapore. The contract provides that the goods will be shipped, and they will
arrive in Singapore in less than two weeks. The cherries are loaded to the Keraisa by 30th of
November. But keraisa agreed to ship mangoes for another company, who arrive late and it
takes time to clear at the port. They hope to arrive at Singapore port by 15th of December and
set sail on 3rd of December. One of the refrigeration units is powered off when the generators
are blown by the storm. The main generators have been efficient, that no one has ever
bothered to fix the backup generators. The keraisa finally limps the port of Singapore in the
19th of December with a quarter of the cherries having not been refrigerated for our days. They
are below premium quality but still edible. It takes three days to clear at the port in Singapore;
hence the cherries are not available until the 22nd of December. CCPL considers delay to be
FFIL's fault for not making proper arrangement with the customs clearance.
1. The Vienna convention International Sale of Goods Act 198 application in the contract for
sale and Carriage.
The Vienna Convention on International Sale of Goods 1980 In Article 1 of the
convention provides the scope as parties contracting from different states. The convention
applies to sale of goods contracts. The convention excludes sales services or sales to

INTERNATIONAL TRADE LAW 3
consumers'. The convention applies to contracts concluded after offer and acceptance. Just like
the above agreement, both parties reach an agreement for sale1.
Article 6 (1)2 asserts that risk passes to the buyer when they take control of the goods3
or when they take possession of the goods. In the above scenario, the risk is passed when the
goods are loaded to the Keraisa on 30th of November. The first risk passes as soon as the
commodities are accepted. In a situation where the buyer does not take delivery on the
accepted date but goods were delivered, risk passes to the buyer4. In the scenario above, as
much as the goods are not shipped immediately due to the delays due to the mangoes'
shipment, the risk already passed. Similarly, when the goods arrive at the port, the risk further
passes to FFIL, because they were responsible for ensuring clearance was made as early as
possible. FFIL did not make such arrangements, and delays further occurred. 6 (2) 5provides that
risk is passed when it’s time for delivery. Most of the time risk passes when goods are the
buyer's possession, in this case, FFIL.
In the above scenario, CCPL wants to recover the $75000 it has lost from either of the
parties. This loss can be attributed to the ¼ spoilt cherries. We see negligence largely on the
part of the FAEE, one for delaying the shipment to 3rd of December and for not ensuring their
refrigeration was properly maintained. The risk Passes to them when they take possession of
1 Burnett, Robin, and Vivienne Bath. Law of international business in Australasia. Federation Press, 2009.
2 The Vienna Convention on The International Sale of Goods 1980
3 Malbon, Justin, and Bernard Bishop. Australian Export. Cambridge University Press, 2014.
4 Fawcett, James, Jonathan Harris, and Michael Bridge. "International sale of goods in the conflict of laws." OUP
Catalogue (2005).
5 The Vienna Convention on The International Sale of Goods

INTERNATIONAL TRADE LAW 4
the goods, and they do not take due diligence to ensure the cherries are not spoilt. ¼ of the
shipment is rejected by FFIL because they were not of premium quality. The shipment arrives
with the quarter already spoilt, which is not FFIL's fault but rather spoilt due to lack of
refrigeration for four days. FAEE could be solely liable for the damages if the ¼ rejected is due
to lack of refrigeration. However, if CCPL proves that the three-day delay affected the cherries,
they FFIL can be liable to pay to the extent of their contribution to the negligence. However,
from the facts, we can see that FAEE are mostly negligent, and they are the ones who should be
held liable for damages, for the 3day delay and not properly maintaining the necessary pieces
of equipment to ensure proper storage on transit. FAEE should be held liable.
2. CIF Incoterms 2010 on the responsibilities of the parties
The CIF Incoterms require that the seller covers their freight by insuring it by at least
110%6. The CIF covers the risk, pricing and leveraging responsibility in the agreement. CIF is also
used in sea freight which is not in a container. The Incoterms require that the seller delivers the
good to the vessel and covers the risks during carriage. Such risks include losses or damages.
The buyer's responsibility is to import and export clearance7. Based on the CIF Incoterms
responsibilities, the risks passed on during shipment will be covered by the insurance company;
however, because the buyer is not diligent on clearance FFIL could be liable for damages. If the
spoiling of the cherries is attributed to the process of shipment, the risk will be covered by the
insurance hence the insurance might pay for the $75000.
6 Cost Insurance and Freight (CIF) incoterms 2010.
7 Cost Insurance and Freight (CIF) incoterms 2010.

INTERNATIONAL TRADE LAW 5
3. What role do the Amended Hague Rules (as per COGSA 1991 (Cth) Australia) have the
problem?
The Hague rules apply to this contract because it applies to contracts of carriage by sea.
It applies to contracts from any part of Australia to other parts of Australia. It applies only to
carriages covered under the bill lading according to Article 1 (b)8. The bill of lading is evidence
that the shipper received the goods. Article 3 (1) of the Act requires that the shipper exercises
due diligence to ensure that the ship is seaworthy and appropriately eqquiped. The shipper is
also required to cool chambers and where goods are carried is properly maintained and
suitable for carriage. The carrier on part 2 of the article is required to properly load and
discharge the goods. Article 3 (8) 9provides that agreements' made to discharge the carrier from
liability due to negligent is null and void. The section further provides that if there is insurance
which benefits the carrier, shall relieve the carrier from liability. If damage or loss is cause sea
unworthiness, the carrier or the ship should not be held liable according to Article 4. With the
Hague rules, ignoring the insurance, the carriers are liable due to negligence10. Despite the fact
that the failure of a refrigerator was caused by the storm which affected the generator, they
still did not take adequate steps to ensure refrigerators were working. They did not properly
maintain the spare generator to ensure that incase of failure the other one is used. They did not
exhaust their resources to ensure that all parts of the carriage were safe and fit for carriage of
8 Carriage of Goods by Sea Act 1991, Amended Hague Rules (as per COGSA 1991)
9 Carriage of Goods by Sea Act 1991, Amended Hague Rules (as per COGSA 1991)
10 John Livermore. Transport law in Australia. Kluwer Law International, 2011. See Pg. 114

INTERNATIONAL TRADE LAW 6
goods. Therefore, in the absence of insurance claims, the Carriers are liable for the losses
incurred when ¼ of the cherries are spoilt.
4. How the parties can resolve the dispute
When the Vienna convention is applied, the aggrieved party in this case due to a fundamental
breach can seek specific damages for the 75,000 from FFIL and FAEE in proportions to their
contribution to the losses. When CIF Incoterms are used to distribute costs, then CCPL can claim
damages for risk from the insurer for the $75, 000. However, when the Hague rules are applied
in absence of the insurance, the carriers will be liable to pay for th $75,000. This is because ethe
hagure rules hold the carriers liable for negligence11.
BIBLIOGRAPHY
11 Gillies, Peter, and Gabriël Moens. International Trade & Business Law & Policy. Routledge, 1998. See pg. 175

INTERNATIONAL TRADE LAW 7
A. Articles/Books/Reports
Bianca, Cesare Massimo, Michael Joachim Bonell, and J. Barrera Graf. Commentary on the
International Sales Law: The
1980 Vienna Sales Convention. Giuffrè, 1987.
Burnett, Robin, and Vivienne Bath. Law of international business in Australasia. Federation
Press, 2009.
Fawcett, James, Jonathan Harris, and Michael Bridge. "International sale of goods in the conflict
of laws." OUP
Catalogue (2005).
Gillies, Peter, and Gabriël Moens. International Trade & Business Law & Policy. Routledge,
1998.
John Livermore. Transport law in Australia. Kluwer Law International, 2011.
Malbon, Justin, and Bernard Bishop. Australian Export. Cambridge University Press, 2014.
Yancey, Benjamin W. "Carriage of Goods: Hague, Cogsa, Visby, and Hamburg." Tul. L. Rev. 57
(1982): 1238.
B. Legislation
Carriage of Goods by Sea Act 1991, Amended Hague Rules (as per COGSA 1991)

INTERNATIONAL TRADE LAW 8
C. Treaties
The Vienna Convention on The International Sale of Goods, opened for signature on 11 of April
1980, (entered into force on 1 January 1988).
D. Other
Cost Insurance and Freight (CIF) incoterms 2010.