Nglish Commercial Law and the Inter-relationship of International Trade Contracts

Please refer to the 5 task questions and associated problem, below. N.b. the essay will be judged as a whole piece, not as individual answers to the task questions.

Please cite as many examples of actual case law where possible. Please also consider Contracts of Sale, Contractual Negotiations and Certainty, Performance of the Contract, The contractual Matrix in Interanational Trade,

THE PROBLEM:
S sold 5,000 bottles of Italianred wine and 5,000 bottles of Italian white wine under one contract to B, on FOB terms, shipment from Naples (Italy) to London (UK). The contract was on Ss standard form and contained a clause saying that the contract was to be governed by English Law. The contract also incorporated incoterms 2000. These was no provision in the contract for a pre-shipment inspection by the buyer S and B have been trading for years and both were confident in the others proper performance of the contract. As had become usual in their dealings, payment was on a cash with order basis.

B entered into a contract of carriage with C, for C to carry the wine from Naples to London. They agreed that their contract should be governed by English Law.

S also sold to P 5,000 bottlees of Italian rose wine on CIF terms, English Law to govern the contracts. The goods were to be shipped from Naples to London and S managed to contract with C for this wine to be carried to London at the same time as Bs wine.

Bs wine was loaded as three separate consignments the red wine being loaded as two lots of 2,500 bottles and labeled respectively as Lot 1and Lot 2″. The white wine was labeled as Lot 3″. The master issued and signed clean bills of lading in respsect of each lot. The bills of lading were on Cs standard form and contained an English Law clause and a London Maritime Arbitration Association clause. The master gave the bills of lading to Bs agent who forwarded them on to B.

The 5,000 bottles of rose wine were also loaded, and the master issued a set of clean bills of lading for them, naming P as the consignee.

The ship set sail. Unknown to either C or the master of his ship, some members of an English wine society called AFWA (the Anit-Foreign Wine Association) had stowed on board the ship at Naples. Once the ship had set sail, they started to contaminate Bs red wine by injecting chemicals through the cork of each bottle. (They were very skilful and the damage will not be discovered until the wine had been opened. They were caught, however, before contaminating the white or the rose wine, although the master and crew had no idea what they had been doing).

S presented the documents in respect of the rose to P, who refused to accept them, having heard a rumour that members of AFWA were on board the ship with the intent of damaging the wine. P told S that this was not his risk and that it was not his responsibility to accept the documents unless S could prove the wine would be of satisfactory quality when it arrived in London.

B sold the red wine in lot 1E, who owns a trendy wine bar in London. B endorsed the relevant bill of lading in Es name and transferred it to him, along with a sale invoice. E accepted the documents and paid against them.

The ship arrived in London and the wine was discharged. B and E were at the port to collect their consignments.

When B and E had chance to open and inspect their red wine, they discovered that it had been contaminated by the injected chemicals and that it was undrinkable and, consequently, totally worthless. B also discovered that the white wine had turned into a horrible dirty brown colour. It transpires that the grapes which had been used in the making of the wine had been sprayed with a new pest control substance which does, over a period of time, react with the other ingredients used in the making of wine, causing this transformation. The wine was, however, still perfectly drinkable and had no alteration in taste.

The market price in wine had by this time dropped severely, owing to an upsurge in the popularity of drinking mineral water.

THE TASK:

1. B wants to know if he can sue anyone in respect of his losses due to the red wine having been injected with the chemicals. S has denied responsibility, saying that B must sue the carrier. B does not understand this he was under the impression that the seller has to deliver goods that are of satisfactory quality and maintains that as the goods arrived damaged, S has not complied with this obligation. Ss response to this was that his liability ended at the quayside, before the goods were loaded.

2. Can E sue anyone for his losses in respect of the red wine? E is concerned that if he cannot sue B, he will have no one to sue, as he himself did not contract with anyone else.

3. B cannot possibly re-sell the white wine it just looks so awful. B doubts that anyone would want to drink it, despiste the fact that it is actually drinkable. B has mentioned this to S, who has told B not to make such a fuss. S has suggested that B re-sell it to a disco or night-club, where the lights are low and the customers will not be able to see that the wine looks dreadful. S also suggested that B only wants to reject the wine because the market rate has changed what should B do?

4. Was P entitled to reject the documents tendered by S?

5. To what extent do you consider that Incoterms facilitate international sale contracts?
Please reference as standard, using footnotes where applicable. A full bibliography should also be included.

Please also try to include (and refer to) the following reference books:

Jason Chuah:Law of International Trade (3rd edn. Sweet & Maxwell);
Leo DArcy, Carol Murray and Barbara Cleave: Schmitthoffs Export Trade The Law and Practice of International Trade (10th edn., Sweet &Maxwell);
Paul Todd: Cases and Materials on International Trade Law (Thomson Sweet & Maxwell)
P S Atiyah, John N Adams, Hector MacQueen: The Sale of Goods (11th edn by John Adams and Hector MacQueen, Sweet & Maxwell, 2001)
Roy M Goode: Commercial Law (3rd edn., Penguin, 2004)
Dalhuisen: International Commercial, Financial and Trade Law (Hart Publishing, 2000)