英国 international trade law 讲义

Swansea Law School

Ysgol y Gyfraith Prifysgol Abertawe

LLM

INTERNATIONAL TRADE LAW

Professor Andrew Tettenborn's Lectures

2013-2014

INTERNATIONAL TRADE LAW

I.

OUTLINE OF A SALE AND AN INTERNATIONAL SALE

Introductory reading

,

Commercial Law

(4

th

ed), Chaps 6 & 7

[reference]: ,

The International Sale of Goods

(3rd

ed), Chap 1.

General

Although this is a course on

international

trade law, the concentration will be on the rules of

English law (though for comparative purposes reference will be made to other legal systems,

and in addition to the US Uniform Commercial Code and the 1980 Vienna Convention

(CISG)). That is, we will generally assume that even if we are talking about a shipment of

Venezuelan oil from Brazilian sellers to German buyers, the oil to be transported on a Greek

ship time- chartered to an Italian company and delivered in Poland, the transaction is still

governed by English law.

Under the law of England sales, whether domestic or international, are governed by a

combination of the common law and the Sale of Goods Act 1979 (which is a partial, though

far from complete, codification). Note: unlike those jurisdictions

–

including most of Europe,

the USA and China

–

which have accepted the Vienna Convention (CISG), England makes

no distinction here between domestic and international sales. For a useful account of the

main differences between the two, see

?

evi

?

& P.V

olken eds,

The International Sale of

Goods Revisited

, Ch 4.

Sales tend to involve the following problems.

?

Contract

–

existence and interpretation

?

Goods

?

Delivery of goods

–

physical or constructive

?

Conveyance of title

?

Transfer of risk

?

Price

?

Obligations of seller and buyer

?

Consequences of breach

–

contractual remedies

Why are international sales different from domestic sales? Answer: the following matters

are often involved:

?

Distance, language and currency barriers

–

difficulty in negotiation and extra risks

?

How creditworthy is the buyer?

?

Transport element

–

sea/air/road/rail/inland waterways/multi-modal

?

Customs and bureaucratic problems

?

?

?

?

?

?

Insurance

–

goods and third party liabilities

Payment

–

complex forms of both payment (e.g. bills of exchange, letters of credit,

bank collection) and guarantee (e.g. personal security, performance bonds)

Buyers are on-sellers: especially, though not exclusively, re commodity trading and

contract strings and circles.

Sales often documentary

–

commercial, transport and insurance documents

Governing law may raise private international law dimension

International unification

–

Vienna International Sale of Goods Convention 1980

Contractual practices

?

Standard form contracts, especially commodity standard form contracts

–

eg GAFTA:

FOSFA

?

INCOTERMS

?

Extended role of brokers and agents

Applicable law

We assume in this course that English law applies. But it is important to know what the rules

are for choice of law.

See Reg (EC) No 593/2008 on the law applicable to contractual obligations (Rome I).

Essentially this provides as follows:

(a) Free choice of law: Art 3.1

(b) If no clear choice, contracts for sale of goods or services presumptively governed by law

of seller / provider's habitual residence: Art.4(1)(a),(b). ...

…

UNLESS it is clear from all the circumstances of the case that the contract is

manifestly more closely connected with a country other than that indicated: Art.4.4.

II. GENERAL SALES LAW

General reading:

,

Sale of Goods

, 12/e

rick,

Sale of Goods

1. Goods

The definition of goods is normally easy (SGA, s.61:

“

goods

”

includes all personal chattels

other than things in action and money... and in particular

“

goods

”

includes ... industrial

growing crops, and things attached to or forming part of the land which are agreed to be

severed before sale or under the contract of sale ...

”

). But a few borderline cases. Minerals &

growing crops? Yes (see above). Electricity? Probably no. Software? Yes if on CD / DVD,

but not otherwise (

St Albans City Council v ICL

[1995] F.S.R. 686; [1996] 4 All E.R. 481,

493 (Glidewell J)).

2. The terms of the contract

(,

Commercial Law,

(4th ed), Chapter 11).

(a) Express Terms

(Usually standardised contract on the buyer

?

s or seller

?

s terms or on a combination of

the two), relating to

1.

the goods

2.

payment

3.

shipment

4.

insurance

5.

choice of forum or arbitration

6.

choice of law

Some issues of effectiveness and incorporation:

(i) Virtually no judicial control over content of contract: see Unfair Contract Terms

1977, ss.26, 27 and

Frans Maas v Samsung Electronics

[2004] 2 Lloyd's Rep. 251,

(though liability for your own personal fraud may not be excluded:

HIH v Chase

[2003] 2 Lloyd's Rep. 61). No equivalent of general requirement of good faith, which

other systems may be used to control terms (e.g. German Civil Code, Art. 307:

“

provisions in standard contracts are ineffective if they unduly disadvantage the other

party, contrary to the requirements of good faith

”)

.

(ii) Signed term binding even if the buyer or seller has signed the contract without

reading them (

L

’

Estrange v. Graucob Ltd

[1934] 2 KB 394), unless other party knew

of the mistake (

Hartog v Colin

[1939] 3 All E.R. 566).

(iii) Term may be introduced by clear pre-contractual reference. But burden on person

seeking to rely can be heavy:

Spurling v Bradshaw

[1956] 1 W.L.R. 461, 466;

Interfoto v Stiletto

[1988] 1 All E.R. 348, 352. See Clarke [1976] C.L.J. 451.

(iv) Where parties each purport to deal on their own terms (the

“

battle of the forms

”

),

problems arise. See, for the English position,

Tekdata v Amphenol

[2010] 1 Lloyd's

Rep. 357. Much better handled in the US (UCC,

§

2-207(2)). The CISG solution

(CISG

, Art 19) looks better, but suffers from bad drafting.

(b) Implied Terms

On principle English courts imply terms sparingly:

Shell UK v Lostock

[1976] 1

W.L.R. 1187, 1200 (Ormrod LJ);

Ultraframe v Tailored Roofing

[2004] 2 All E.R.

(Comm) 692. Terms will be implied ad hoc only if either (a) so obvious that they go

without saying (

Shirlaw v. Southern Foundries

[1939] 2 KB 206, 227) or (b)

(particularly important for international sales) they are vital to give business efficacy

to the contract, i.e. to enable the contract to work in the manner it must have been

intended to (

AV Pound & Co v MW Hardy & Co Inc

[1956] AC 588;

The Playa

Larga

[1983] 2 Lloyd

?

s Rep 171). And a note for all students from non-common-

law backgrounds: there is no implied term or other

general

obligation of good faith

(compare eg the German civil code, Art 242 (obligations to be

“

performed in good

faith and in accordance with good commercial practice

” (

zu bewirken, wie Treu und

Glauben mit Rü

cksicht auf die Verkehrssitte es erfordern

)) or UCC, Art 1-304). Cf

Shell International v Transnor

[1987] 1 Lloyd's Rep 363.

See also the implied terms as to title and quality, referred to below.

(c) Terms brought in from previous course of dealings

A party cannot generally rely on terms the other party was never told about before he

contracted (

McCutcheon v David MacBrayne

[1964] 1 W.L.R. 125): so terms in

invoice dispatched with goods will not, as such, be incorporated.

BUT may (vitally) be different where parties deal repeatedly with each other, since

notice in previous dealings may count as regards the present transaction:

Hardwick

Game Farm v SAPP

A

[1966] 1 All E.R. 309.

(d) Terms from universal trade practice

If you order goods over the phone or by short email, it may be implicit that you

agree on those terms that are standard in the trade:

British Crane Hire v Ipswich

Plant Hire

[1974] 1 All E.R. 1059.

(e) Custom (occasionally)

May add a term to the contract which the parties had not considered necessary to

express, provided that such a custom is (a) definite, (b) uniformly adopted; (c)

reasonable; and (d) consistent with the contract and the law: see

Produce Brokers v.

Olympia Oil & Cake Mills

[1916] 2 K.B. 296. Custom may even bind persons that

are not aware of it; if you're new to the trade it's up to you to ask about nasty

surprises. See

Cunliffe-Owen v

Teather

[1967] 1 W.L.R. 1421;

Smith v Wilson

(1832) 3 B & Ad 728.

3. Implied obligations of the seller

A number of implied obligations need to be noted. All are independent of fault in the seller.

Remember also that, except for the obligation to give good title, all of these are default

terms and can be excluded.

(a) To deliver, and to do so at the right time

Duty to deliver in s.27 SGA. Time: as stipulated in the contract, or otherwise within a

reasonable time: SGA, s.29(3). Effect of refusal by buyer to accept, or to accept on

time? Depends on seriousness. See

Francis v Lyon

(1907) 4 CLR 1023 (High Ct of

Aust);

Warinco v Samor

[1979] 1 Lloyd's Rep. 450. Effect of late payment?

Presumptively does not relieve seller of duty: SGA, s.10(1).

(b) To deliver the right quantity

Must on principle be exact (SGA, s.30).

“

About

”

or

“

more or less

”

: see

Payne &

Routh v William Lillico & Son

(1920) 3 Ll. L. Rep. 110. Right of buyer to reject for

wrong quantity: see below.

Presumptively goods to be delivered all at once and not in instalments: SGA, s.31(1).

See

Cobec v Toepfer

[1983] 2 Lloyd's Rep. 386;

Rosenthal v Esmail

[1965] 1 WLR

1117.

(c) To give good and clear title

SGA, s.12(1): Condition that the seller has a right to sell the goods.

Rowland v Divall

[1923] 2 KB 500. Construed, surprisingly, as including an

obligation re infringement of intellectual property rights:

Niblett Ltd v Confectioners

’

Materials Co Ltd

[1921] 3 KB 387 (because of the phrase

“

right to sell

”

).

SGA, s.12(2) Warranty that the goods are free from undisclosed encumbrances (e.g.

liens), and that the buyer should enjoy quiet possession of the goods.

Can be surprisingly important, both generally (e.g. if seller sells goods stored in a

warehouse on which warehousing charges are unpaid), and in shipment cases: see e.g.

The Rio Sun

[1985] 1 Lloyd's Rep. 350;

The Playa Larga

[1983] 2 Lloyd

?

s Rep 171;

Louis Dreyfus v Reliance Trading

[2004] 2 Lloyd's Rep. 243

.

(d) The goods the subject of the contract

SGA, s.62: difference between specific, unascertained and ascertained goods.

Notices of appropriation may affect this:.

Grain Union v Larsen

(1933) 38 Com Cas

260; (1933) 46 Ll. L. Rep. 246.

(e) Description

S 13 (1): Condition that in sale of goods by description, the goods should correspond

with their description.

If engaged, can be very demanding:

Arcos Ltd v EA Ronaasen & Son

[1933] A.C.

470 (HL). But precise extent unclear:

Bowes v Shand

(1877) 2 App Cas 455, Hill v

Ashington Piggeries [1972] A.C. 442,

Harlingdon & Leinster Enterprises v

Christopher Hill Fine Art

[1991] 1 QB 564.

(f) Quality (partly reflected in both UCC

–

Art 2-312 etc

–

and the CISG

–

Art 35).

S 14 (2): Condition that goods will be of satisfactory quality where sold in the course

of business

Course of a business:

Macdonald v Pollock

[2012] 1 Lloyd's Rep. 425 .

Matters in account, s.14(2B). See

Jewson v Kelly

[2004] 1 Lloyd's Rep 505; [2004]

C.L.J. 22;

Harlingdon & Leinster v Christopher Hull

[1991] 1 QB 564.

The quality standard (SGA, s.14(2A)). Minimum standard consistent with

description:

Brown v Craiks

[1970] 1 W.L.R. 752 (HL). Price may have some

relevance:

Rogers v Parish (Scarborough) Ltd

[1987] Q.B. 933. With goods intended

for consumer use at least, attractiveness relevant:

Jackson v Rotax

[1910] 2 K.B. 937;

Rogers

, above.

Multi-purpose goods: see now SGA, s.14(2B)(a) (

Exceptions: Disclosed defects, and if the buyer examines the goods, any defects he

should

have

seen.

(See

s.14(2C):

and

Macdonald

v

Pollock

[2012]

1

Lloyd's

Rep.

425). But note: no duty to examine the goods (cf the more robust CISG

, Arts 35(3),

38, 39).

S 14 (3): Condition that, where the buyer

?

s purpose is made known to the seller, the

goods should be reasonably fit for this purpose.

Purpose made known: see

Jewson v Kelly

[2004] 1 Lloyd's Rep 505.

“

Reasonably

fit

…”

leaves some leeway: see

Hamilton v Papakura DC

[2002] UKPC 9, [2002] 3

N.Z.L.R. 308. Idiosyncrasy of buyer a special case:

Slater v Finning

[1996] 3 All

E.R. 398. Multi-purpose goods:

Kendall v Lillico

[1969] 2 A.C. 54 (must be fit for all

normal purposes).

Reliance on skill or judgment of seller. Presumed: see s.14(3)(b). Ambit of

“

no

reliance

”

defence: see

Sumner Pearmain v Webb

[1922] 1 K.B. 55 and

Hamilton v

Papakura DC

[2002] UKPC 9, [2002] 3 N.Z.L.R. 308.

What goods must be of proper quality?

Packaging? Yes:

Geddling v Marsh

[1920] 1 K.B. 688 (on which, compare

CISG

, Art.35(2)(d), which makes this explicit).

Unexpected extras:

Wilson v Rickett

[1954] 1 Q.B. 598 . Instructions:

Wormell v RHM

[1986] 1 All E.R. 769 (reversed on facts, [1987] 3 All E.R.

75); AMT [1986] C.L.J. 389.

Do the quality terms apply to pure informational defects? In instructions attached to

goods, yes: see above. In computer software, yes:

St Albans City Council v ICL

[1995] F.S.R. 686; [1996] 4 All E.R. 481. Elsewhere, probably not: compare the

colourful California case of

Winter v G

. Putnam

’

s Sons, Inc

., 938 F.2d 1033, 1034

(1991).

When must goods be of proper quality? Probably when risk passes: cf CISG

, Art.36,

which makes this explicit. Special rule when goods to be trucked or shipped to buyer:

Mash & Murrell v Emanuel

[1961] 1 W.L.R. 862; also

The Mercini Lady

[2010] 2

C.L.C. 637.

Damages for providing goods not of proper quality unaffected by delay in

notification to the seller (compare the very different CISG

, Art.39), and by

contributory negligence by the buyer. But a knowing user of defective goods is to

that extent regarded as responsible for his own loss:

Lambert v Lewis

[1982] A.C.

225.

(g) Correspondence with sample (if any)

Conditions that the bulk will correspond with the sample and will be free from any

defect making their quality unsatisfactory, which would not be apparent on a

reasonable examination of the sample. See SGA, s 15;

Steels & Busks Ltd. V

.

Bleecker Bik & Co

[1956] 1 Lloyd

?

s Rep. 228

Quality: general points

(h) Practicalities

In practice international sale contracts (especially for commodities) often

exclude these obligations and replace them with custom guarantees; on which

see

Cefetra v Toepfer

[1994] 1 Lloyd's Rep. 93, 102. But even with such

clauses they can occasionally matter: for instance, if the exclusion is badly

drafted (as in

The Mercini Lady

[2010] 2 C.L.C. 637, and

The Union Power

[2013] 1 Lloyd's Rep. 510). In addition, exclusions may not be construed to

cover express statements as to quality:

Total v Addax

[1996] 2 Lloyd's Rep.

333.

4. Obligations of the buyer

To take delivery and pay for the goods: SGA, s.27. Presumptive rule requiring

payment on delivery: s.28. But no duty in buyer to take delivery until he's had a

chance to inspect the goods: SGA, s.34. However, note that ss. 28 and 34 are

modified in the case of documentary sales, such as cif contracts, below.

5. The right to reject goods

(generally, shi,

Right to terminate (avoid)

international sales of commodities

[2003] JBL 102).

English law does not have the complex system of buyer's rights to be found in Arts 45-49 of

the CISG

, involving demands for performance, formal notice to the seller that he is in

default, and limits on the right of summary rejection (unless of course they choose to

incorporate some such procedure in their contract). Instead, the buyer faced with goods that

are not as required by the contract has essentially two remedies.

First

, whether or not he

accepts the goods, he can always claim damages for breach of contract in so far as he has

suffered loss. This is dealt with later on.

Secondly

, he may in some cases be able to reject

the goods.

(a) When can Buyer reject unsatisfactory goods?

[Background: general English law of contract. There, the presumptive rule is that

performance may be rejected only if the breach is serious (see the shipping case of

Hongkong Fir v Kawasaki

[1962] 2 Q.B. 26, 63-64 (Upjohn LJ), 65-71 (Diplock LJ)),

though this can always be the subject of contrary agreement (as in, e.g.,

Bunge v

Tradax

[1981] 1 W.L.R. 711) ].

Quality terms (and samples): SGA, ss.13-15

In sales, under the Sale of Goods Act 1979 the presumptive rule is that ss.13-15 are

all conditions, such that breach

–

any breach, however unimportant

–

ipso facto

gives

Buyer the right to reject. See cases like

Re Moore

[1921] 2 K.B. 470. [Note: this is an

absolutely crucial departure from the CISG: compare CISG

, Art.46

(2) (“If the goods

do not conform with the contract, the buyer may require delivery of substitute goods

only if the lack of conformity constitutes a fundamental breach of contract ...”) and

Art.49(1)(a) (“The buyer may declare the contract avoided … if the failure by the

seller to perform any of his obligations under the contract or this Convention

amounts t

o a fundamental breach of contract ...”)].

Now slightly qualified, in the commercial sales context, by the very limited

provision in SGA, s.15A (you can

?

t reject wholly unreasonably for very slight

defects unless you expressly stipulate for the right to do so). But not very

important in practice.

With other quality terms, a matter of fact. See

The Hansa Nord

[1976] Q.B. 44

(interestingly commented on in Weir [1976] Camb.L.J. 33);

R.G

.Grain v Feed

Factors

[2011] 2 Lloyd's Rep. 432. And in commodity contracts this is often dealt

with by specific provision.

What if one instalment of several is bad? Depends on how large a proportion of the

goods affected, and how likely repetition is: SGA, s.30(2) and

Munro v Meyer

[1930]

2 KB 312.

And another tiresome issue: if Seller tenders goods that won

?

t do, and Buyer rejects

them, can Seller later

–

but still within the time allowed

–

tender other goods that do

conform, and insist that Buyer accept these? In the United States and under the CISG

he explicitly can: see the UCC, §

2-508(1) and CISG

, Art 48. The position in

England is less clear. See

The Kanchenjunga

[1990] 1 Lloyd's Rep. 391, 399 (Lord

Goff); but cf SGA, s.11(3). Generally see Apps [1990] Lloyd's M. & C.L.Q. 525;

Mak [2007] Lloyd's M. & C.L.Q. 409.

Quantity

Delivery of right quantity presumptively crucial. Any shortfall (or, note, over-

delivery) allows Buyer to reject: SGA, s.30. Subject to (a)

“

de minimis

”

exception

(

Shipton Anderson & Co v Weil Bros & Co

[1912] 1 K.B. 574); and now also (b) to a

limit where wholly unreasonable (SGA, s.30(2A)).

Time.

T

heoretically whether late delivery allows Buyer to refuse goods depends on

intent: SGA, s.10(2). In practice, in commercial contracts time is likely to be

taken as vital:

Hartley v Hymans

[1920] 3 KB 475, 484;

Macpherson Train &

Co v Ross & Co

[1955] 1 W.L.R. 640;

Borthwick v Bunge

[1969] 1 Lloyd's

Rep. 17, 28. And where sale of goods to be shipped during a particular time,

the same applies:

Bowes v Shand

(1877) 2 App Cas 455.

(b) When does Buyer lose the right to reject?

See SGA, s.11. No right to reject if (i) right waived (for a recent example, see

Westbrook v Globe

[2009] 2 Lloyd's Rep. 224); or (ii) goods accepted.

Definition of acceptance: SGA, s.35:

Express acceptance or act inconsistent

–

s.35(1)(a), s.35(1)(b)

Unreasonable time

–

s.35(4), & compare

Truk (U.K.) Ltd. v. Tokmakidis

[2000]

1 Lloyd's Rep. 543;

Clegg v Andersson

[2003] 1 All E.R. (C) 721.

What isn

?

t acceptance:

Act done before chance to inspect: s.35(2): relevant if subsale (s.35(6)(b)).

Request to correct defects: s.35(6)(a). Position if defects actually corrected:

Ritchie v Lloyd

[2007] 1 W.L.R. 670.

Partial acceptance, as regards the rest: s.35A. (But re

“

commercial units

”

, see

s.35(7)).

Acceptance of documents in international sales (at least in certain cases): see

below.

Can you give one (bad) reason for rejection and then rely on another (good)

one in court? Yes:

Manbré

Saccharine v. Corn Products

[1919] 1 K.B. 198.

6. Passing of title

Important in respect of (i) bankruptcy; (ii) risk; (iii) (occasionally) rights of third parties

(a) Rules for determining when property passes.

Basic rule: property passes when intended - see SGA, s.17 (

Re Blyth

Shipbuilding

[1926] Ch 494;

Aluminium Industrie v Romalpa

[1976] 1 W.L.R.

676;

Re Anchor Line

[1937] Ch 1)

…

EXCEPT that under SGA, s.16, property cannot pass in unascertained goods,

save in the limited circumstances provided in s.20A. See

Re Wait

[1927] 1 Ch

303. (For definition of specific and ascertained goods, see SGA, s.61). This

can be very significant in international sales: buyers often, for example, buy

part of a bigger shipment of goods on a bulk carrier or reefer.

(b) Presumptions re passing of property.

(Note that all these are mere default rules: they give way to contrary intent).

Two, not very important, apply to specific goods:

SGA, s.18, rule 1.

Unconditional contract for specific goods in a deliverable state:

property passes at the time of the contract.

“

Unconditional

”

- i.e. unqualified duty to carry out contract.

“

Specific goods

”

- see SGA, s.61(1).

“

Deliverable state

”

. See SGA, s.61(5)

SGA, s.18, rule 2.

Specific goods to be put by seller into a deliverable state; property

passes when done, and notice to buyer.

And one very significant section re unascertained goods.

SGA, s.18, rule 5(1).

Unascertained or future goods: unconditional appropriation of goods

answering description in a deliverable state by seller with buyer's

consent or vice versa.

“

Unconditional appropriation

”

:

Noblett v

Hopkinson

[1905] 2 K.B. 214;

Carlos Federspiel v Twigg

[1957] 1

Lloyds Rep 240;

Wardars Import v Norwood

[1968] 2 Q.B. 663.

“

Consent

”

.

Pignataro v Gilroy

[1919] 1 K.B. 459.

... rule 5(2).

Delivery to carrier deemed unconditional appropriation:

Browne v

Hare

(1858) 4 H & N 822;

Carlos Federspiel v Twigg

[1957] 1

Lloyds Rep 240.

... rule 5(3).

Unascertained or future goods: appropriation by exhaustion,

where agreement for sale of specified quantity of goods out of

bulk identified then or later, and bulk later reduced (e.g. by

other deliveries) so that buyer is the only person entitled.

Undivided bulk: SGA, ss.20A, 20B.

Where sale of specified quantity of unascertained goods out of bulk

identified then or later, which are paid for by buyer, buyer becomes

owner in common with seller and/or other buyers. Deals with

problem in cases such as

Re Wait

[1927] 1 Ch 303. Share of buyer:

see s.20A(3). What if reduction in bulk so that not enough for

everyone? See s.20A(4).

Limited

?

free- for-all

?

re deliveries out of the bulk, even if it is

depleted and one buyer therefore gets more than his fair share: SGA,

s.20B.

Note also that whatever the contract says, a seller who is worried

about the buyer's solvency can always hand over the goods on the

basis that property will not pass: SGA, s.19(1) and

Wait v Baker

(1848) 2 Ex 1. Indeed, when he ships goods to a buyer but has the bill

of lading made out to himself, this is deemed to be the case: s 19(2).

(c) Passing of property is not the same as acceptance by buyer. See SGA, s.35;

McDougall v Aeromarine

[1958] 3 All E.R. 431. Effect of justified rejection by

buyer after property has passed:

Head v Tattersall

(1871) L.R. 7 Ex. 7.

7. Passing of risk

(Sealy [1972B] CLJ 225).

Prima facie tied to property:

Healy v Howlett

[1917] 1 K.B. 337. Qualified where

delay in delivery or acceptance due to fault of party invoking rule: s.20(2), and

Demby Hamilton v Barden

[1949] 1 All E.R. 435. Subject to contrary agreement.

This is easily inferred where part of a bulk and seller transfers some document to

buyer:

Stearns v Vickers

[1923] 1 K.B. 78, and invariably so in c.i.f. contracts: see

below.

If goods validly rejected, risk goes back to Seller:

Head v Tattersall

(1871-72)

L.R. 7 Ex. 7.

8. Impossibility / force majeure

Liability presumptively absolute: no general provision parallel to CISG

, Art 79

(party escapes liability for failure to perform

“

if he proves that the failure was due to

an impediment beyond his control and that he could not reasonably be expected to

have taken the impediment into account at the time of the conclusion of the contract

or to have avoided or overcome it or its consequences

”

).

Specific goods that never existed. Seller probably liable:

McRae v Commonwealth

Disposals

(1951) 84 C.L.R. 77; Atiyah (1957) 73 L.Q.R. 340).

Unascertained goods that never materialise. Normally the risk is on the seller here:

Blackburn Bobbin v Allen

[1918] 2 K.B. 467,

CTI Group v Transclear

[2007]

EWHC 2070 (Comm), [2008] 2 C.L.C. 112. But illegality, or de facto legal

impossibility, may excuse:

Re Badische Co

[1921] 2 Ch 331,

Socié

té

Co- operative

Suisse des Cé

ré

ales v La Plata Cereal

(1947) 80 Ll L Rep 530.

But ...

SGA, s 6.

Specific goods that did once exist but don

?

t at the time of the contract: see SGA,

s.6 (specific goods which perish before contract: for instance the JCB bulldozer which,

unknown to the seller, had been stolen and trashed an hour before the sale was agreed).

SGA, s 7.

Specific goods which later cease to exist: see SGA, s.7 (specific goods which

perish after contract).

(On

“

perishing

”

in the context of both s.6 and s.7, see

Barrow Lane v Phillips

[1929]

1 K.B. 574).

Frustration and impossibility.

There is a limited doctrine of impossibility under

the general law known as frustration, under which complete impossibility or

something close to it terminates all parties' obligations under the contract forthwith:

see generally

Davis Contractors v Fareham UDC

[1956] AC 696, 728-729. But this

in practice never applies to international sales of unascertained goods: see

Tsakiroglou v Noblee & Thorl GmbH

[1962] AC 93 and

CTI Group v Transclear

[2007] EWHC 2070 (Comm), [2008] 2 CLC 112. The only exception is illegality: eg

Socié

té

Co- operative Suisse des Cé

ré

ales v La Plata Cereal

(1947) 80 Ll L Rep 530.

Even if there might otherwise be frustration, a force majeure clause (see below) may

well exclude the doctrine: eg

Congimex Companhia Gê

ral v Tradax Export

[1983] 1

Lloyd's Rep 250.

Extensive use of force majeure clauses.

See eg GAFTA 100a:

legislative act done by or on behalf of the government of the country of origin or of the

territory where the port or ports of shipment named herein is/are situate, restricting export,

whether partially or otherwise, any such restriction shall be deemed by both parties to apply

to this contract and to the extent of such total or partial restriction to prevent fulfilment

whether by shipment or by any other means whatsoever and to that extent this contract or

any unfulfilled portion thereof shall be cancelled. Sellers shall advise Buyers without delay

with the reasons therefor and, if required, Sellers must produce proof to justify the

cancellation.

...

any Act of God, strike, lockout, riot or civil commotion, combination of workmen, breakdown of

machinery, fire, or any cause comprehended in the term

likely to occur for any of the above reasons, the Shipper shall serve a notice on Buyers within 7

consecutive days of the occurrence, or not less than 21 consecutive days before the commencement

of the contract period, whichever is the later. The notice shall state the reason(s) for the anticipated

delay.

...

If shipment be delayed for more than 30 consecutive days, Buyers shall have the option of cancelling

the delayed portion of the contract, such option to be exercised by Buyers serving notice to be

received by Sellers not later than the first business day after the additional 30 consecutive days. If

Buyers do not exercise this option, such delayed portion shall be automatically extended for a further

period of 30 consecutive days. If shipment under this clause be prevented during the further 30

consecutive days extension, the contract shall be considered void. Buyers shall have no claim against

Sellers for delay or non-shipment under this clause, provided that Sellers shall have supplied to

Buyers, if required, satisfactory evidence justifying the delay or non-fulfilment.

Strictly construed:

Avimex SA v Dewulf & Cie

[1979] 2 Lloyd's Rep 57. Burden of

proof on defendant:

Andre et Cie SA v Tradax Export

[1976] 1 Lloyd's Rep. 416,

Channel Island Ferries v Sealink UK

[1988] 1 Lloyd's Rep 323, 327. Defendant

must in addition prove absence of fault:

Channel Island Ferries v Sealink UK

[1988]

1 Lloyd's Rep 323, 327.

9. Non-owners and title

Not often relevant in international trade cases: but it may occasionally be important.

Basic rule: unlike the position in civil law countries, even a good faith buyer who

takes delivery gets no better title than his seller (SGA, s.21). If the buyer wishes to

succeed, must point to a specific exception (of which there are quite a few).

(a) Seller in possession (SGA, s.24). Seller sells to A but stays in possession

of goods or bill of lading: Seller then delivers goods or bills of lading to B. If

B is in good faith, B wins. Can matter if Seller has raised finance by selling

goods to financier or bank while remaining in possession, and then sells and

delivers them to Buyer.

(b) Buyer in possession (SGA, s 25(1)). A delivers goods or bill of lading to

Seller under a contract of sale, but Seller does not become owner at this stage.

Seller sells and delivers goods / bills to B. If B in good faith, he wins.

(c) Factors (Factors Act 1889, s 2(1)). Seller delivers to a dealer (

“

mercantile

agent

”

or

“

factor

”

) for sale on Seller's behalf. Seller bound by any sale made

by dealer in ordinary course of business, if buyer in good faith. Also taken to

mean that if Seller pledges goods or bills of lading to a bank but then gets

them back for disposal, Buyer takes free of bank's interest:

Lloyds Bank v

Bank of America

[1938] 2 K.B. 147.

10. Remedies

(a) Buyer

?

s remedies

Damages.

Non-delivery:

Where there is a market, that is in most ordinary commodity trades,

presumptively value less price (plus consequential loss): SGA, ss.51. Even if

buyer's loss more (

Williams v

.

Reynolds

(1865) 6 B. & S. 495) or less

(

Williams v Agius

[1914] AC 510,

Rodocanachi v Milburn

(1886) 18 QBD 67)

(though an exception where buyer subsells the very same shipment:

Hall v

Pim

(1928) 30 Ll. L. Rep. 159). NOTE: This applies whether or not the buyer

actually goes into the market: compare the more sophisticated CISG

, §

§

75-

76 and UCC, §

2-713(1), which says:

Subject to the provisions of this Article with respect to proof of market

price

...,

the measure of damages for non-delivery or repudiation by the seller is the

difference between the market

price at

the time when the buyer learned of the

breach and the contract price

together with any incidental and consequential

damages provided in

this Article ... but less expenses saved in consequence of the

seller's breach.

If no market, best estimate of loss:

The Marine Star

[1994] 2 Lloyd

?

s Rep 629;

Air Studios v Lombard North Central

[2013] 1 Lloyd's Rep. 63.

Quantity: the contract quantity. If at the discretion of the buyer, the amount he

would have taken: compare

Sudan Export v SGC

[1958] 1 Lloyd's Rep. 310.

If in the seller's discretion, the smallest quantity he could have got away with:

Thornett v Yuills

[1921] 1 KB 209

–

though even here custom may dictate

otherwise.

Timing: time when performance due (compare the sale case of

Shearson

Lehman v Maclaine Watson

[1990] 3 All ER 723, 731). Even where prior

refusal to perform:

Tai Hing Cotton Mill v Kamsing Knitting Factory

[1979]

AC 91. Where time for performance at seller's option, last moment: see

Bunge v Landbouwbelang

[1980] 1 Lloyd's Rep. 458.

Substandard goods: difference between price of good and bad goods, again

plus consequential loss (SGA, s. 53;

Kendall v Lillico

[1969] 2 AC 31),

though may be scope for adjustment here (

Bence v Fasson

[1998] Q.B. 87).

Late delivery: actual loss (

Contigroup v Glencore

[2005] 1 Lloyd

?

s Rep 241)

unless (possibly) bought for resale on something like the spot market

(

Wertheim v Chicoutimi

[1911] AC 301).

Where? Place of arrival:

Sharpe v Nosawa

[1917] 2 KB 814.

[Note something that is

not

here: namely, the lack of any parallel to CISG

, Art

39 (duty to examine and give prompt notice of problems)].

Specific performance:

SGA, s.52. Hardly ever re commercial goods:

S

’

té

Metallurgique v Bronx

[1975] 1 Lloyd's Rep. 465.

Return of payment if he gets nothing.

(b) Seller

?

s remedies

Suing for the price.

Available if EITHER property has passed (SGA, s.49(1),

Colley v Overseas

Exporters

[1921] 3 K.B. 302) OR if goods destroyed after risk has passed

(

Castle v Playford

(1872) LR 7 Ex 98).

Damages for non-acceptance.

Price less value, plus consequential loss (S.G

.A., s.50). Actual resale

irrelevant:

Texaco v Eurogulf

[1987] 2 Lloyd's Rep. 541. If no market,

possible claim for would-be profit, on the basis that seller has lost a sale. See

in England

Thompson v Robinson

[1955] Ch 177 and

Charter v Sullivan

[1957]

2 Q.B. 117; for a more commercial example, the Texas decision in

Nobs

Chemical, U.S.A., Inc. v. Koppers Co., Inc

., 616 F.2d 212 (1980).

L

ien (SGA, ss.38-39, 41-43).

Over all goods in instalment sale: s.42. Lost by surrender of goods or in some

cases by subsale:

SGA, ss.47(1), 47(2).

Stoppage in transit: SGA, ss.44-46.

III. AGENTS IN INTERNATIONAL SALES

An agent is a person appointed by another person, known as the principal, to act on his behalf., and

recognised by the law as having power to affect the legal rights, liabilities and relationships of

the

principal. Note: this is a rather narrow definition: many distributors, for example, are not agents.

General rules of agency

(1) If agent acts within actual authority, principal bound and entitled as against third

party.

Express

actual authority.

Implied actual authority:

Hely-Hutchinson v Brayhead

[1968] 1 Q.B. 549.

(2) If agent acts within apparent authority, principal bound.

Examples:

Pharmed Medicare Private Ltd v Univar Ltd

[2003] 1 All E.R.

(Comm) 321;

Pacific Carriers v BNP

(2004) 78 A.L.J.R. 1045. Need for

reasonable reliance:;

Overbrooke v Glencombe

[1974] 3 All E.R. 511.

(3) If principal ratifies unauthorised acts, principal bound and entitled as against

third party..

Effect:

Williams v N China Ins'nce

(1875) 1 C.P.D. 757. But you can only

ratify a contract made in your name: see

Keighley Maxsted v Durant

[1901]

A.C. 240.

(4) An undisclosed principal is bound and entitled

Rule:

Keighley Maxsted v Durant

[1901] A.C. 240. Except personal contracts or

those which exclude it

–

a narrow exception:

Drughorn v R/B Transatlantic

[1919]

A.C. 203;

Siu v Eastern Insurance

[1994] 1 All E.R. 213. Third party set-off where

undisclosed principal sues:

George v Claggett

(1785) 7 T.R. 359

(5) Agent acting within authority not liable in the absence of agreement

Rule:

Wakefield v Duckworth

[1915] 1 K.B. 215. Different with undisclosed

principal (for obvious reasons !):

Newall v Tomlinson

(1871) L.R. 6 C.P. 405.

But agent acting outside authority liable to third party:

Collen v Wright

(1857)

8 E & B 647.

(6) Agent presumptively cannot sue third party

Rule:

Fairlie v Fenton

(1870) L.R. 5 Exch 169. Exception: contrary

agreement and/or custom.

(7) Agent owes his principal a duty to take care

See

Marston Excelsior v Arbuckle Smith

[1971] 2 Lloyd

?

s Rep 306.

(8) Agent owes fiduciary duty (i.e. duty of good faith).

And thus not to take bribes, or engage in self-dealing (

Armstrong v Jackson

[1917] 2 K.B. 822).

(9) Agent has a right to commission and indemnity, and a lien over his principal's

assets

Commission:

Marsh v Jelf

(1862) 3 F & F 234;

HMH v CECAR

[2000] 1 All E.R. (C)

225.

Indemnity:

Overseas Transport v Titan

[1959] 2 Lloyd's Rep. 152;

Lage v Siemens

(1932) 42 Lloyd's LL Rep. 252.

Lien.

Types of agents in international sales

?

Factors (or Mercantile Agents)

?

Commission agents

?

Brokers

?

Distributors

?

Forwarding agents

Marston Excelsior v Arbuckle Smith

[1971] 2 Lloyd's Rep 306;

Geofizika v MMB

[2010] 2 Lloyd's Rep. 1.

Can sometimes be difficult to distinguish from (multimodal) carriers: compare

Marston Excelsior v Arbuckle Smith

[1971] 2 Lloyd's Rep 306 with

Ulster-Swift v

Taunton

[1977] 1 W.L.R. 625.

?

?

?

Reading

Jason Chuah,

Law of International Trade Cross Border Commercial Transactions

(Sweet

and Maxwell, 4

th

Ed), paras 2.04-2.06.

Commercial agents

Not dealt with in detail: in the EU, a code covers their rights as against the principal

(Commercial Agents (Council Directive) Regulations 1993 SI 3053 in England).

Del Credere agents

Confirming houses

IV

. DOCUMENTS OF TITLE IN INTERNATIONAL SALES

See generally Debattista,

Sale of Goods Carried by Sea

, 2/e (Butterworths), Ch 1.

1. Why use documents of title at all?

(a) Performance / insolvency risks. Seller unwilling to deliver the goods until he is assured

of payment; Buyer conversely reluctant to pay until he has control of the goods.

(b) Third party transfers. Buyer may wish either to dispose of the goods or raise finance

against them before their arrival.

(c) Bureaucratic demands. Some bureaucrats, who may demand certain types of document

to allow goods to be imported.

2. Types of document of title

(a) Transport documents.

Sea carriage: Bills of lading, sea waybills, ship's D/Os, mate

?

s receipts.

Air carriage: Air waybill (otherwise air consignment note)

Rail Carriage: CIM consignment note or waybill.

Road carriage: CMR consignment note or waybill.

Multimodal Transport: Multimodal Transport Document

(b) Warehouse receipts and delivery orders

3. (Ocean) bills of lading

Definition: a document issued by or on behalf of a carrier of goods by sea to a person

(shipper) with whom the carrier has contracted for the carriage of goods. Note: although

Americans sometimes speak otherwise, there is no such thing as a non- marine bill of lading.

(a) Some sub-types

(i) Received and shipped (sometimes called

“

on- board

”

) bills

A shipped bill of lading states that the goods have been shipped, i.e. put on

board the carrying vessel. A received bill of lading states that the goods

specified in it have been received by the carrier for shipment on a named ship

or on some other unspecified vessel: but makes no explicit statements about

whether the goods were shipped.