1. Company A in Guangdong of China exported a consignment to Company B from the
ID: 1116394 • Letter: 1
Question
1. Company A in Guangdong of China exported a consignment to Company B from the US on CIF. The total amount in contract is USD 12.000,000. Payment is made within 120 days after receiving goods by the buyer. In May 201X, Company A signed container shipping contract with Company C Line, which stipulated that water stain is prohibited. The shipping contract showed that goods are equipments. Company A and Company C Line loaded the goods jointly and sealed the containers after delivery of goods by Company A to Company C. In August 201X, the goods arrived at the port of destination. But the consignee told Company A that the equipments in containers suffered from water stain and were scrapped. Company A made preliminary survey and found leaks in containers, which caused to the damages. Company C Line asserted that since Company A didn't raise any objection while sealing the containers, it was not responsible for such matter. Company B refused payment to Company A on account of unusable goods, Please analyze the case and state which party should be responsible for the damages.Explanation / Answer
CIF means Cost, Insurance and Freight. Under this kind of contractual arrangement of trade, seller is responsible for paying cost of transportation and insuring the goods on board. However, the ownership shifts from seller to the buyer as soon as goods are loaded on the cargo ship at the port of shipment.
As per above understanding of CIF, Company B has to pay Comapny A. And whatever, damages are there has to be recovered from the insurance company.
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