1、商务英语casestudycase study【Case 1】CIF or Not?An import and export company H in China signed with a British company D a contract on CIF basis, whereby company H exported some light industrial products to company D. There were two special clauses in the contract: (1). “The goods must be shipped to a port
2、 in Britain from Shanghai in October 1996; the relevant L/C opened by company D should reach company H by the end of August; company H must guarantee that the loaded vessel arrive at the destination not later than December 1. (2) should the loaded vessel arrive at the port of destination later than
3、December 1, company D is entitled to cancel the contract. If the payment has been made at the time, it must be returned to company D exactly the amount.” After that, in the course of clearing up contract files, a controversy arose in company H about the nature of this CIF contract. Some people held
4、the opinion that the contract was on CIF basis in spite of the two particular terms, giving following reasons: firstly, the contract was signed under the trade term of CIF, which indicated the nature of the contract; secondly, company D made such special requirements only to protect their benefits;
5、thirdly, the contract provided payment by L/C, which was in accordance with CIF terms characteristic of payment against documents. Others believed that according to INCOTERMS 2000, the sellers delivery obligations are fulfilled as long as the seller has completed shipment of goods at the appointed p
6、oint and handed over to the buyer documents stipulated in the contract and so the seller is not required to guarantee the arrival of goods at the destination. Therefore, this contract was a false CIF contract, as it changed the nature of CIF term by taking physical delivery as a condition of fulfill
7、ment. The contract must be renegotiated. Finally, company H reached a common perception and got the two special clauses amended through negotiation with company D. The contract was carried out smoothly.Analysis:Although the contract was concluded on CIF basis, it was not a genuine CIF contract. This
8、 case indicates the significance of CIF terms sphere of application. The two special clauses in the original contract not only contradicted with the nature of CIF term, but also disagreed with the practices of international justice and arbitration.First, the original contract not only set a limit to
9、 the date of arrival, but also stipulated that the buyer was entitled to cancel the contract or demand back the payment that had already been made. Evidently, the restrictive date of arrival served not as the date of payment, but as a condition of payment. Therefore, legally the contract was not a g
10、enuine CIF contract as it made physical delivery a condition of payment.Second, under CIF terms, the risk of loss of or damage to the goods passes from the seller to the buyer when the goods have passed the ships rail at the port of shipment. A contract that expands the buyers risk from the port of
11、shipment to the port of destination is not a CIF contract. According to the provision in the original contract, company H was obligated to refund the payment in case of natural calamities or accidents during the course of delivering the goods, which evidenced that the seller assumed all the risks du
12、ring the transport.Third, under CIF terms, the buyer must make payment against documents rather than against the arrival of the goods at the port of destination, provided that the seller has fulfilled his delivery obligations and presented the required documents. As per the original contract, whethe
13、r company H could receive the payment for goods or not depended on buyers receiving on schedule. Although the seller might receive the payment by means of L/C, the payment would be taken back by the buyer if the goods could not duly arrive at the port of destination. Besides, company D could take ad
14、vantage of relevant L/C clauses that are in accordance with those in the contract to deny the seller the payment for goods. Company H could hardly make a claim for his rights under a normal CIF contract since this contract was the one “in name but not in reality”.【Case 2】CFR & Shipping NoticeAn impo
15、rt and export company in China signed an export contract with an importer in Marseilles, France on drawnwork tablecloth with an amount of USD80, 000, payment by D/P at sight. On the morning of January 8, 1997, the goods were all loaded onto the named vessel. The export salesperson in charge of this
16、contract got so busy that he did not remember to send the buyer the shipping advice until the next morning. Unexpectedly, when the French importer went to the local insurance company to insure the goods, the latter had already learned that the ship suffered a wreck on January 9 and refused to underw
17、rite the goods. The French importer immediately sent a telex saying, “owing to your delayed shipping advice, we are unable to insure the goods because the vessel has been destroyed in a wreck. The loss of goods should be for your account. At the same time, you should compensate our profit and expens
18、e losses which amount to USD8, 000.” Soon all the shipping documents sent through the collecting bank were returned to the export company, for the reason that the importer refused to take up the documents. Being a regular client of the exporters, the French importer did not insist on claiming for co
19、mpensation after the exporter explained his difficult situation and apologized for the whole thing. However, the exporter should learn his lesson from this experience.Analysis:1. Under CFR terms, all the risks, duties and expenses after goods passing ships rail are normally borne by the buyer. Howev
20、er, Incoterms 2000 provides that “the seller must give the buyer sufficient notice”. Here the word “sufficient” refers to both “sufficient” content and “sufficient” time. The latter means the seller must give the shipping notice in a timely manner to allow sufficient time for the buyer to effect ins
21、urance of the goods. The later the seller sends the shipping notice, the less time the buyer has to insure the goods. In this case, the buyers failure to send the “sufficient notice” led to his loss of both goods and money. On the other hand, if the seller had informed the buyer immediately after sh
22、ipping the goods, the buyer would have insured the goods in time at the local insurance company. In that case, the insurance company would have assumed its liability for compensation even if the accident had happened prior to the buyers effecting insurance as both the buyer and the insurance company
23、 were ignorant of the accident. Thus, it can be seen how important it is to send the shipping advice to the buyer in time under CFR terms. That is why shipping advice is often referred to as “insurance notice” in trade practices.2. When CFR terms or FOB terms are used in combination with payment by
24、collection, the buyer may cover the goods against “sellers interest risk” before exporting the goods to counteract the buyers failure to effect insurance or the buyers refusal to retire the documents. Had the seller in this case covered the shipment against the said risk, the loss would have been so
25、mewhat mitigated.【Case 3】CFR & Goods QualityA French company imported a batch of wheat on CFR basis. The contract provided that the landing quality of the goods should be taken as final. However, when the goods arrived at the destination, the import quarantine bureau detained the goods as they had f
26、ound that the goods contained a great deal of bacterium forbidden to enter the country. Unfortunately, the goods were consumed by a fire while in detainment. A dispute broke out between the buyer and the seller. AnalysisUnder CFR terms, the buyer should bear all the risks after the goods have passed
27、 the ships rail and been loaded on board. However, should the seller be held responsible for any default before that point?In this case, it was the seller who should assume the risks. The reason is that although this was a CFR contract, the seller breached it by delivering the goods which failed to
28、meet the quality standard provided in the contract. This fundamental default has caused the detainment and then the loss of the goods. Therefore, while the risks had been transferred to the buyer, the sellers default returned the risks to the seller.Of course, under CFR contract, when the sellers de
29、fault is not fundamental, the buyer should bear all the risks for any loss of the goods at the port of destination. Meanwhile, the seller should make due compensation to the buyer as per the contract and relevant laws. 【Case 4】The buyer delays the sending of the vessel under FOB.Company A in China s
30、igned a contract on FOB basis to export wheat to Company B in Africa. It was contracted that shipment should be made in four lots. The shipping clause ran as follows: “the vessel nominated by the buyer should reach the port of shipment within eight days before the date of shipment. Otherwise, any of
31、 the sellers loss or damage thus incurred shall be borne by the buyer.” The contract also specified, “The buyer must give the seller a notice of vessel name and the estimated date of arrival by telecommunication five days before the vessel arrives at the port of shipment.” During the course of fulfi
32、llment, the first three lots were shipped smoothly according to the contract. However, the buyer was slow to send the vessel for the last shipment. In reply to Company As repeated urges, company B said that they were unable to book shipping space because of shipping companys busy schedule and asked
33、for postponing delivery for two months. Company A replied as follows: “according to the contract, you are bound to send the vessel to pick up the goods. In case of any difficulties in this aspect, we may allow you to delay the shipment on condition that you make a compensation which amounts to USD200, 000.” Finally, the bargain of c
