Buyer and seller entered into a contract for the sale of sugar from the Philippi
ID: 364422 • Letter: B
Question
Buyer and seller entered into a contract for the sale of sugar from the Philippines to New York on CIF terms. They added language to the contract that delivery was to be “at a customary safe wharf or refinery at New York, Philadelphia, or Baltimore to be designated by the buyer.” Before the sugar arrived, the United States placed a quota on sugar imports. The sugar was not allowed to be imported and was placed in a customs warehouse. The buyer refused the documents and the seller sued, claiming that the import restriction was no excuse for the buyer’s nonpayment. The buyer argued that the language calling for delivery to a U.S. port converted a shipment contract into a destination contract. Was this a CIF contract or a destination contract? What was the effect of the additional shipping language the parties used? Why should the parties not attempt to modify a trade term or add other delivery language? Warner Bros. & Co. v. A.C. Israel, 101 F.2d 59 (2d Cir. 1939).
Explanation / Answer
This was a CIF (Cost Insurance and Freight) contract and not a Destination Contract. In a destination contract, it is clearly stated that buyer or seller will share the risk of loss or damage before the buyer obtains the goods from the seller and no party will be blamed for the loss.
So this is definitely not a Destination Contract. By mentioning the destination or naming it in the contract, it becomes a destination bound delivery, but it was not the intention and true spirit of the contract between the two parties.
The parties should not add or try to add delivery language because it might change the nature of the contract and the parties involved might use this as an opportunity to indulge in self-interest business decisions. Standard contract are legally forcible and the standard language leaves no room for confusion or understanding.
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