Commercial Law

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Key features of C.I.F. contracts

CIF (cost, insurance freight) contract is an important shipment contract which helps out to provide the contractual legal features through which all the shipping of the goods are being managed. CIF indicates and provide all the prices that are being considered in the insurance, cost and freight of the goods. These are generally all such contracts which are being made for the commercial transportation in a Sea-borne where all the untold sums with the transactions can be implied. In CIF contract there is being provided all the applications through which the venders perform their rights and duties by considering all the tendering of documents to the purchaser. As according to article 155 of commercial transaction law, there is been given that CIF contract is not being framed for all the contracts that are being made to get into trading and the transportation it usually contains all the conditions regarding the liability of seller for the perishing goods and their shipment by making the performance in the contract to be conditional and also to provide the safe arrival of all the goods and services and the vessels to the buyer (Cranston, 2021).

As in the case of Re Denbigh Cowan & Co and R Atcherley &Co (1921) court held that all the substitution regarding to the delivery of orders of bill of lading will be under the contractual terms and will not impart any kind of obligations where the delivery of actual goods will be prevented in the contract which are not being true for CIF contractual terms.
The sellers and CIF contract will have some obligations which are like:

• For all the ship goods meeting made through the contract description in the port of shipment for procuring the goods and also to manage the contractual requirements.
• To manage goods which are being properly insured in the contract of insurance with which the buyer may avail.
• To append all the commercial invoice so as to manage the description of the goods to be confirmed.
• Put under bill of lading, invoice, insurance policy and all the relevant documents which are being required in the contract with the certificate of quality and origin
• Other than this the buyers will also have some obligations which are like:
• To take all the delivery of goods when the arrival is being made on the agreed Port of discharge (Kovač, 2020).
• To accept documents which are being tendered in conform of contract.
• To settle various custom dues in the port of entry.
• Manage import license when being required.

CIF contract applied in the English law which provides all the international standards and the analysis for the rights of the UN conventions in international sales of goods which determines that all the deficiencies are being covered. There is being analysed that bill of lading act 1855 provided the legislation through which all the expansion in the global market and the general international trading and commerce is being considered with the carriage of goods by seas act 1992. There is been covered some of the important documents which are like any bill of lading, sea waybill and Any delivery order of ship. There is also provided that all the legal axis statements will tender the CIF contract to be valid by the bill of lading is their invoice and the general insurance policy which are being ripped down from the goods and the descriptions the buyer will have the right to provide and require all the documents that are being presented at the time of transactions. There are certain rights relation to goods which are like confirming the goods through which all the general standards of quality are being managed in the seller tenders to deliver all the goods through the effort request and the examination with the ascertaining areas (Angheni, 2020). CIF contract can we provide to distant rights like the right to call for confirming documents and also the right for confirming goods so as to create the by nominal nature to outsource the legal difficulties. Some of the important features of CIF are like:

• All the parties will have to agree on the goods for the contract in the seller must deliver the optimum quality, quantity and the description to be given about the goods in the required contract with their packaging being efficiently made.
• The possessing of the quality of goods through the sellers will be made to the sample or model.
• The seller will not be liable for the lack of conformity of the goods when at the time of conclusion in the contract the buyer is being aware and could not have made any of the lack of conformity in shipment (Baharlou and Jafarzadeh, 2019).

Types of letters of credit

Letter of credit are mainly all the guarantee given by the bank for a particular seller that will receive all the payments due in any of the particular buyer. This is the guarantee given by the bank that all the sellers will on timely basis receive specified amount of monitory value or money on a proper time. And in return for it there is been given a guarantee of payment, in this the bank will provide and require all the stick terms that will help how to manage the documents for instance shipping confirmation. Important types of letter of credit are:

• Irrevocable and revocable letter of credit: All the letter of credits which can be changed and can be cancelled by the bank after being issued at any of the time and for any important reason are called revocable. And all the irrevocable letter of credits are which cannot be cancelled or changed unless there is being involvement of everyone for them for their agreement as this provide more security and safety.
• Confirmed and unconfirmed letter of credit: all the confirmed are where the buyer usually arrange a letter of credit where they manage their own bank and the issuance of the details and the seller insist and want the bank in their own region and country in order to check the details and the validity of the letter of credit. Whereas, for management of extra security the seller will also required to manage the confirmed of the bank and then the second bank agrees to provide the guarantee for the payments even when the issuance of the bank denies. In all such cases the confirm letter are more secured (Sokolov, 2018).
• Transferable of credit: All such credit which are being passed from person who has been receiving the payment or one beneficiary to the other these are generally all such intermediate trees who are being involved in the transactions.
• Standby letter of credit: This involves all the assurance from bang that is being able to manage the Pay from the seller the seller will not expect to have any of the drone in the letter of credit to be paid.
• Revolving letter of credit: It is generally the civil transaction which are being made between the buyer and seller. This involves all the basis areas through which civil letter of credit with alliance and working.
• Back-to-back letter of credit: these are being used at the intermediary in which all the transferable letter is being involved for the credit which is unsuitable.

The principles of letter of credit

Operation of the documentary credit is being harmonized highly by uniform customs and the practice for the documentary credits. Under UCP600 as well as common law, the documentary credit is mainly based on two of the fundamental principles which are the doctrine of strict compliance as well as the autonomy of the letter of credit. The latter is being naturally at the variance with a fraud exception. The letter of credit can be referred to as a documentation which is required for enjoying a facility of a credit in case of the international business transactions (LoPucki and et. al., 2020). There are different principles which regulate the letter of credit of which the first is the autonomy principle which mainly holds that the letter of credit is an independent of underlying transaction which is done between a creditor and the debtor. In the case of Hamerh Malas and Sone v. British Inez Industries Ltd, Jenkins LJ stated clearly that opening of the confirmed letter of credit mainly constitutes the bargain which is made between a banker and vendor of products that imposes on the banker an obligation for the payment irrespective of any of the dispute which may be between parties in respect of whether goods are being up to the contract or not.

The doctrine of autonomy is an essential need in the transaction of documentary credit which has been expressed by the English codes and in the provisions of UCP 600. In simple and short terms, the letter of credits may perform its role in a smooth manner only when they are to be operated without interference from the outside. It is often said that the documentary credits are termed as the lifeblood of international commerce and this has been declared in the case of United City Merchant Investment Limited v. Royal Bank Of Canada.

The doctrine of strict compliance requires that the relevant documentation should represent a complete compliance of all the terms which have been laid down in a contract of the credit. In case it is not been complying with completely, a bank is being required to make owner of it as per article 15 of UCP 600. Whenever any bank determines that the presentation is discrepant, it can also refuse to negotiate or honour it as per Article 16 a of UCP 600. This doctrine mainly demands the flawless documentation that the goods described as well as the terms which are being used in the contract that it must be expressed in the terminology which is understandable (Infantino and Wang, 2021). In the case of Bankers Trust Company v. Bank of India, almost half of the presentation of documents that are made under the terms of credit are being afflicted with the discrepancies. In a proceeding, when the standards of strict compliance are to be met, important question is being raised in respect of workability of the present documentary system. In another case of Glencore international AC v. Bank of China the invoice has been possessed with the detailed description of the information but it was not same but some additional information was being included in it. However the court declared it consistent with terms of credit.

In this scenario, a contract was being made for the sale of 2,00,000 pieces of the luxury metal furniture between Beta limited and Delta limited and the essential term of it included that the payment is to be made by the letter of credit. When Beta limited received the revocable letter of credit from confirming bank, it tender its document to it and then the confirming bank further passed documents to issuing bank which rejected it on the ground that the sale of contract was illegal and the description of goods included metal furniture while the letter of credit described it as the luxury metal furniture. If the doctrine of strict compliance is being applied in this scenario, then the terms of the letter of credit were not inconsistent with the sale of contract and hence it can be issued to the concern party.

Provisions of UCP600

The standard for examination of documents.

One of the important area in the documentary credit is examination of the documents and under Article 14 of UCB 600, the standard for the examination of documents is being discussed which is indicated by the title that there are some basic rules regarding it. It states that the goods are being shipped or the services or the performance are being provided as well as the stipulated documents are being collected or presented on behalf of the beneficiary to the confirming bank or nominated bank or issuing bank (Plass, 2020). The provision of article 14 states that a data in the document when it is read in respect of credit, the international standard and the document itself are needed not to be identical but it must not be in conflict with the data in the concerned document or any of the stipulated document or credit.

Another essential provision of UCP 600 is Article 18 which states that the description of the service or good or the performance in the commercial invoice should correspond with that which is appearing in credit. It also provides that the commercial invoice should appear to be issued by beneficiary and it must be made in the name of applicant and in the same currency and must not be signed. The nominated bank or the confirming bank or the issuing bank can accept the commercial invoice which is being issued for the amount that is being in excess of amount that is permitted by credit and the decision of it will be binding on all the parties, subject to the bank which is being in question has not negotiated or honoured the amount that is in exist of what is being permitted by credit (Lam, 2020). In this case scenario, the issuing bank rejected the letter of credit on 3 grounds which included that the sale of contract was illegal and the bill of lading was misdated. Moreover the description of the goods as per commercial invoice was metal furniture and the goods in the letter of credit were described as the luxury metal furniture. This made the issuing bank rejecting the documents and not accepting the letter of credit for Beta limited.

Therefore as per article 14 and 18 the issuing bank may permit the letter of credit as the provisions itself states that the description need not to be similar but identical and in this scenario the description of codes were not identical but of similar nature so the issuing bank can accept the documents for the letter of credit. The provisions of Article 14 clearly states that the document itself is not required to be identical but it should not be in conflict with the data in the document as well as the letter of credit. Here, in this case, there was no conflict in the description of goods in the commercial invoice and the letter of credit rather the description was identical and the issuing bank cannot reject it as per the principle of strict compliance. We provide the Assignment Helper in the UK for your exams with quality content.

CONCLUSION

It is concluded from this report that the commercial law is the legislation which regulates the trading of goods and services. The cost insurance freight contract is a shipment contract that helps in providing the legal features by way of shipping of goods and how it is being managed. The letter of credit can be referred to as the guarantee which is given by bank in respect of a seller that it will receive the payment that is being done from the buyer. There are different types of letter of credit which includes transferable of credit, irrevocable and the revocable letter of credit and many others. The UCP 600 is an essential regulation which regulates the contract between the buyer and seller in respect of letter of credit. It comprises of 2 principles which includes strict compliance and the autonomous principle.

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REFERENCES

• Angheni, S., 2020. The Autonomy of Commercial Law within the Romanian Private Law System.Analele Universității Titu Maiorescu,19(XIX), pp.28-42.
• Baharlou, J. and Jafarzadeh, S.Q., 2019. Concept and Domain of Fraud in Letters of Credit: Comparative Study in English, American and Iranian Law and Jurisprudence.Islamic Law & Jurisprudence Researches,15(55), pp.11-30.
• Cranston, R., 2021.Making Commercial Law Through Practice, 1830-1970. Cambridge University Press.
• Infantino, M. and Wang, W., 2021. Challenging Western Legal Orientalism: A Comparative Analysis of Chinese Municipal Social Credit Systems.European Journal of Comparative Law and Governance,8(1), pp.46-85.
• Kovač, M., 2020. Duty to renegotiate in international commercial law and uncontemplated behavioural effects.Maastricht Journal of European and Comparative Law,27(4), pp.445-464.
• Lam, C.S., 2020. Macao's gaming credit practices: 15 years after the gaming credit law.Asian Education and Development Studies.
• LoPucki, L.M., and et. al., 2020.Commercial Transactions: A Systems Approach. Wolters Kluwer.
• Plass, S.A., 2020. Federalizing Contract Law.Lewis & Clark L. Rev.,24, p.191.
• Sokolov, M., 2018. Smart legal contract as a future of contracts enforcement.Available at SSRN 3208292.
• Whaley, D.J. and McJohn, S.M., 2021.Problems and materials on commercial law. Wolters Kluwer.

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