Exam 5: The Documentary Sale and Terms of Trade

A entrusts a shipment of eel skins to an ocean carrier and obtains a bill of lading.The carrier delivers the goods to B without asking B to produce the document.Without knowledge of what has occurred,A sells the bill of lading to C,who is a good faith purchaser.In this case:

B is known in the trade as a trader and merchant of soybeans.A entrusts a load of soybeans to B for storage in B's warehouse.Secretly,B delivers the goods to an ocean carrier in return for a bill of lading.B then sells the document covering a shipment of soybeans to C,who has purchased soybeans from B in the past.C pays for the document through its bank.B absconds with the money.In this case:

Draft a bill of lading.

The risk of loss in a _____ contract passes to the buyer when the goods are tendered to the buyer at that place; and the risk of loss in a(n)_____ contract passes to the buyer when the goods are delivered to the carrier at the port or place of origin.

The bill of lading serves as a contract of carriage between the buyer and seller.

Under Incoterms,a sale on terms "DDP" represents the maximum responsibility of the seller and the maximum responsibility of the buyer.

Because negotiable bearer documents are transferred by delivery,they are not used in foreign trade.

Draft a contract that includes shipping terms.

In the U.S.,the use of bills of lading is governed by:

Seller in Georgia and buyer in the Netherlands enter into a contract for the sale of goods,CIF port of Amsterdam.The seller refused to ship.The buyer brings an action for damages.In the United States,a court would probably rule that:

If the seller wishes to make his goods available to the buyer at his place of business with the buyer arranging all transportation and bearing all risks from the time the goods leave the seller's door,the seller should quote his prices:

In an international transaction,the seller risk is called "credit risk" and the buyer's risk is called "delivery risk."

Inspection certificates are often used to assure that a shipment will conform to the specifications required by the buyer.

In a global trade transaction,Ricky ships goods under a clean bill of lading and submits all the necessary documents under a documentary letter of credit to the buyer Joe to his bank.While on traveling to Turkey in the Mediterranean Sea,the ship sinks.Is Ricky entitle to receive payment despite the loss of the cargo?

The "bill of lading" is issued by the seller (exporter)directly to the buyer (importer)in order to claim the goods upon arrival at the destination port.

As decided in the case presented in the text,Biddel Brothers v.E.Clemens Horst Co.,under a C.I.F.sales contract:

Bills of lading are negotiable instruments but cannot be used as collateral for an outstanding debt.

A good faith purchaser is one who purchases a document of title:

All Incoterms are intended for use with ocean cargo.

Most buyers in an international sale are now willing to pay cash in advance in order to reduce credit risk.