KING'S BENCH DIVISION [1915] 1 KB 316.
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Risk passes on shipment under a c.i.f. contract. Atkin J. held that a seller may validly and effectively tender documents appropriating to the contract goods lost at sea at the time of the tender (in which therefore property could not pass).
Mail Paul Todd : toddpn2@cf.ac.uk
This page was last updated on 16 Feb 99.
The case concerned a c.i.f. sale, made in June 1914, for 100 bales of Hessian cloth, for shipment in stages from Calcutta during June and July 1914. The disputed documents were for 25 bales which had been shipped on board the City of Winchester on 15th July 1914 (shortly before the beginning of the First World War). The sale contract had also been entered into in peacetime (8 June 1914). The ship was captured by a German cruiser on August 6th and sunk soon after, before (or so Atkin J. assumed) the goods were appropriated to the buyer's contract. The seller tendered a bill of lading and an f.c. and s. policy of insurance (free of capture and seizure - in other words, the goods were uninsured against war risks). The issue arose, on an appeal from arbitration, whether the buyers were required to accept the documents, and Atkin J. held that they were.
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Mail Paul Todd : toddpn2@cf.ac.uk
This page was last updated on 16 Feb 99.
Atkin J. held that a c.i.f. seller may validly and effectively tender documents relating to goods lost at sea at the time of the tender. It was not clear, however, whether or not the seller knew of the loss at the time of tender of documents.
Another issue arose as to whether the seller had to procure insurance against war risk (he had not done so and it was held that he did not have to - the shipment was right at the beginning of the war). He was entitled to tender an f.c. and s. policy. "War risk for buyer's account" did not mean that the seller was to effect war risk at buyer's expense, but that war risk was the concern of the buyer alone. It should also be noted that the contract of sale had been made in peacetime (June 8th), and the loss occurred right at the beginning of the war.
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Mail Paul Todd : toddpn2@cf.ac.uk
This page was last updated on 16 Feb 99.
In my opinion the result is that the contract of the seller is performed by delivering to the buyer within a reasonable time from the agreed date of shipment the documents, ordinarily the bill of lading, the invoice, and the policy of insurance, which will entitle the buyer to obtain on arrival of the ship delivery of goods shipped in accordance with the contract, or in case of loss will entitle him to recover on the policy the value of the goods if lost by a peril agreed in the contract to be covered, and in any case will give him any rightful claim against the ship in respect of any misdelivery or wrongful treatment of the goods. It therefore becomes immaterial whether before the date of the tender of the documents the property in the goods was the seller's or buyer's or some third person's. The seller must be in a position to pass the property in the goods by the bill of lading if the goods are in existence, but he need not have appropriated the particular goods in the particular bill of lading to the particular buyer until the moment of tender, nor need he have obtained any right to deal with the bill of lading until the moment of tender. If it were otherwise the shipper of goods in bulk, or of goods intended for several contracts, or the intermediate seller who may be the last of a chain of purchasers from an original shipper, might find it impossible to enforce a contract on c.i.f. terms. The seller's obligation cannot depend upon whether the goods are lost or not, and if when there is no loss the property has to pass to the buyer before delivery of the documents, at what stage of the transaction must it pass? Unless it be at the time of shipment I can see no reason for fixing upon any other time than on delivery of the documents, and if it be the law that a tender of documents is ineffectual unless in fact at the moment of shipment the property actually passed to the ultimate buyer, it appears to me that business operations would be very seriously embarrassed.
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Mail Paul Todd : toddpn2@cf.ac.uk
This page was last updated on 16 Feb 99.
1. The justification for the position is therefore clearly in terms of convenience for chain sales. It was not clear whether or not the seller (who had himself purchased the same goods on identical terms from the person who actually shipped them, and who might therefore never have obtained property to them) knew of the loss at the time of tender of documents, but the reasoning in the above passage would be equally valid if he did. The seller clearly knew in Manbre Saccharine v. Corn Products, but McCardie J. held that in principle, the seller’s knowledge made no difference.
2. A bill of lading was later held in the CA not to be valid tender in Arnhold Karberg, where it could not pass any valuable rights to the buyer. Here the bill of lading could not pass property in the goods, so it was not entirely unreasonable for the buyers to argue, on an extension of the reasoning that later succeeded in Arnhold Karberg, that it should not be good tender here either. It is fairly clear, however, that Arnhold Karberg applies only where the contract of carriage is void because frustrated, and possibly only where it is frustrated by illegality of performance, and does not apply merely because it is otherwise incapable of transferring valuable rights to the buyer.
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Mail Paul Todd : toddpn2@cf.ac.uk
This page was last updated on 16 Feb 99.