Overview

The seller and buyer, once they have agreed on the specifications, quantity, price and mode of delivery of the goods, have to arrange insurance to cover the hazards likely to be encountered during the transportation of goods from the seller’s country to the buyer’s country. As to who arranges for insurance during transportation will depend on the terms of the contract. As gathered from Chapter 1 on standard trade terms where the goods, for instance, have been sold on cost, insurance, freight (CIF) terms, the seller obtains insurance. Where the sale is on free on board (FOB) terms, the buyer is likely to take out insurance if he wishes to protect himself against loss or damage to goods in the course of transportation. Chapter 14 illustrates, using marine insurance, the general principles underlying insurance contracts.

Other than insurance, the mode of payment for the merchandise sold is another important event in any international sale contract. Although it is the case that payment can be made by cash or through a bill of exchange, the most popular method is through letters of credit, described as the life blood of commerce. Chapter 15, in addition to providing a brief account of bills of exchange, examines the obligations of the various parties to a letter of credit arrangement against the backdrop of English common law and the current version of the Uniform Customs and Practices for Documentary Credit 600 (UCP 600) drafted by the International Chamber of Commerce (ICC). Chapter 15 also includes a brief section on the recently adopted Electronic Transmission Supplement Uniform Customs and Practices for Documents Credits (eUCP), which enables the use of electronic letters of credit. Chapter 15 concludes with a section on other means of minimising the risk of non-payment.

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