Liability of the Seller under CIF Contract in the event of loss or damage to goods carried by SEA.

Abstract

In a CIF contract of sale when the seller has shipped the goods, procured shipping documents and tendered them to the buyer he/she is entitled to the full payment of the price. This is done immaterial of whether or not goods safely reach the buyer who bears the risk of loss or damage generally from the shipping time. This has triggered this research carried out with the objective of examining what happens when goods are damaged or lost in transit, whether the buyer can reject them if damaged in transit or whether the seller can claim full price where goods do not reach their destination and the means of compensation of the buyer in case of goods’ loss or damage. It was realised that the seller is not liable for the loss or damage of goods which occurs while they are in transit and he/she is entitled to the payment of full price. The buyer cannot reject goods that have been damaged in transit due to event beyond the seller’s control and he/she has to pay full price even if goods are damaged or totally lost. The buyer is however protected by the insurance cover subscribed for by the seller. In case the loss or damage is due to the carrier’s fault the buyer has an action against the former. There are, nonetheless, instances where the buyer is not protected; i.e when the loss or damage is due to a peril that is not covered by the insurance policy or when he/she is not named in the bill of lading and cannot therefore sue the carrier in case of the latter’s liability. It is suggested that the subscription of the additional insurance cover for uncovered risks and the recognition of the standalone action of the buyer in tort against the carrier in case of the latter’s fault would offer more protection to the buyer in a CIF contract.