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The f.o.b. contract is a flexible instrument, and three main classifications were described by Devlin J. in Pyrene v. Scindia Navigation Ltd. These classifications are imperfect in a number of respects, in particular in that Wimble v. Rosenberg is probably wrongly classified, and in the view that for classic f.o.b. the seller should procure the bill of lading in the buyer's name. However it is clear that the term f.o.b. encompasses a wide range of contracts, including:
1. Where the buyer is shipper, as in Pyrene itself, or where the buyer has chartered the vessel, as in President of India v. Metcalfe, and the first contract in The Albazero. The buyer/shipper variety may well be the most common, and is the basis of the Incoterms definition.
2. Where the seller ships as principal, as in The El Amria and The El Minia, and presumably cases such as The San Nicholas and The Sevonia Team. Sometimes the seller is apparently under no obligation to ship, and does so as a favour to the buyer, which is probably the correct view of Wimble Sons v. Rosenberg & Sons [1913] 3 K.B. 743 itself. Sometimes the contract clearly requires the seller to ship as principal, as was probably the case in Concordia v. Richco [1991] 1 Lloyd's Rep. 475 (where certainly the seller was required to obtain and send forward the bill of lading), or even more clearly in Carlos Federspiel & Co., S.A. v. Charles Twigg & Co. Ltd. [1957] 1 Lloyd's Rep. 240, and sometimes the seller's undertaking is not absolute, as in N.V. Handel My. J. Smits Import-Export v. English Exporters (London), Ltd [1957] 1 Lloyd's Rep 517.
The main distinction between c.i.f. and f.o.b., however, is that the freight and insurance are included in the price c.i.f., whereas even where an f.o.b. seller makes all the necessary arrangements, they are for buyer's account f.o.b.: see, e.g., the discussion in The Parchim [1918] A.C. 157 (where the contract was described as c.i.f. but was probably - for this reason- in reality f.o.b., and treated as such to determine when property passed).
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The c.i.f. contract developed from the f.o.b., and delivery of the goods is therefore generally complete on shipment. However, the seller is responsible for freight and insurance, which (unlike f.o.b. with additional duties) are included in the price. The seller must also tender the appropriate documentation, which will normally be a clean shipped bill of lading, a policy of insurance and a commercial invoice.
The first reported case was Tregelles v. Sewell (1862) 7 H. & N. 574, 158 E.R. 600, which established that the seller was not required to deliver the goods to their destination. Other early cases defining the c.i.f. contract were Ireland v. Livingston (where Blackburn J. made clear that freight was included in the price, and described the shipping documents) and Biddell Bros v. E. Clemens Horst.
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Mail Paul Todd : toddpn2@cf.ac.uk
This page was last updated on 31 Dec 97.