Tutorial 9

1) Seller agreed to ship 10.000 tons of potatoes FOB Tacoma, Washington, to Buyer in
Japan.

Buyer designated the SS Russet to take delivery at pier 7 in Tacoma.

On the agreed date for delivery, the Seller delivery the potatoes to pier 7, but the ship was not
at the pier.

Because another ship using the pier was slow in loading, the Russet had to anchor at a
mooring buoy in the harbor and Seller had to arrange for a lighter to transport the potatoes in
containers to the ship.

The lighter tied up alongside the Russet and a cable from the ship’s boom was attached to the
first container.

As the container began to cross the ship’s rail the cable snapped.

The container the fell on the rail, teetered back and forth for awhile, and finally crashed down
the side of the ship and capsized the lighter.

All of the potatoes were dumped into the sea.

Buyer now sues Seller for failure to make delivery. Is Seller liable?

2) Suppose, in Question 1, the contract had been FAS Tacoma. Would Seller be liable?

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3) Seller agreed to deliver 1000 air conditioners to Buyer DES Port Moresby.

The air conditioners were transported by ship to Port Moresby, where they were off-loaded to
the customs shed for inspection.

The ship then sent a cable to Buyer stating that the air conditioners were in the customs shed
and that the ship was proceeding on its way.

Before the Buyer could arrive to pay the customs duties and collect the air conditioners, the
customs shed burned down, destroying all the air conditioners.

Buyer sues Seller for failing to make delivery. Is Seller liable?

Suppose, in Question 3, the contract had been DEQ Port Moresby. Would Seller be liable?

4) Seller in Sydney, Australia, agreed to ship goods on or before December 31 under a CIF
Sydney contract to Buyer in Honolulu.

The Seller was unable to assemble the goods for delivery in time to reach the ship in Sydney
and had to transship the goods by rail to Melbourne, where the ship was taking on goods on
January 3.

Seller did load the goods aboard railway cars in Sydney on December 29 and received a bill
of lading from the railway company on that date.

Seller later obtained a bill of lading from the ship, and together with an invoice and a marine
insurance policy, tendered both bills of lading to Buyer.

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Buyer refused to accept the documents or to pay Seller.

Seller sues to enforce the contract. Will Seller win?

5) Seller in San Francisco agreed to ship goods to Buyer in London under a CIF San
Francisco contract.

After the goods were load aboard the ship, but before it departed from San Francisco, Seller
tendered the documents required by the contract to Buyer and asked to be paid.

Buyer refused, asserting that it had a right to inspect the goods upon their arrival in London,
and that it did not have to pay until it did so and was satisfied that the goods were in
compliance with the contract.

Seller sues for immediate payment. Will Seller win?

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6)Seller in Bombay sells 5,000 bales of cotton to Buyer, C&F (Incoterms 1990) Liverpool.

Seller transports the cotton to the Bombay harbor and to the ship designated by Buyer, the SS
Allthumbs.

Due to an error in counting, there are only 4,987 bales loaded.

The ship’s B/L, however, shows a quantity of 5,000 bales.

Seller then signs over the B/L to Buyer in exchange for payment in full for the cotton.

When the Allthumbs arrives in Liverpool, the quantity error is discovered, and Buyer sues the
ship for the lost value of the missing bales.

Is the ship liable?

Would it matter if the Seller admitted that the error was not the ship’s fault, but that of the
Seller?

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8) The SS Anxious was transporting goods to several ports on the east coast of Africa, including
Beira in Mozambique.

WHile still several hundred miles at sea, the Anxious learned that rebel forces oppsing the
Mozambique givernment were attacking Beira.

The ship, nonetheless, pulled into Beira and tied up at a pier.

Immediately thereafter, it was struck by a mortal round.

The goods in the ship’s main cargo hold were destroyed. Is the ship liable for the loss?

9) Mr. Ess, the owner of the SS Skimpy and an American citizen, borrows money from
MultiBank in London to outfit his ship, giving the bank a maritime lien.

Mr. Ess sells the Skimpy to Mr. Tee, a Canadian.

Mr. Tee is unaware of the lien, and unaware that Mr. Ess has defaulted on the loan.

When the ship pulls into a British port the bank arranges for it to be arrested and sold to pay off
the balance due on the loan. Can the bank do this?