Question

Lina, a Malaysian citizen, is planning to expand her business of exporting Tupperware into Japan.
Kenji, a Japanese citizen, is very interested to be the distributor for Lina’s good. After nearly one
week of negotiation, both of them had agreed for the goods to be delivered through maritime mode of
transportation.
However, Lina is worried about the payment method and the cost incurred by her if the goods were
damaged while in transit.

(a) discuss whether the use of bill of lading in the contract between Lina and Kenji will provide
the necessary protection for Lina. Support your answer with relevant cases.
(b) in your opinion, does Incoterms 2010 manage to solve problem in relation to the obligation
and the liabilities of seller and buyer in international business contract. Support your answer
with relevant laws.

Answer 1

A) Bill of Landing (BoL) refers to an official or a legal document. It is document that contains details of the cargo on the ship. t is given by the head of the ship to the individual who is collecting the consignment. It serves as a proof of delivery of the goods to the buyer at a said destination.

B) This can be a solution to Lina’s worry that the she may face issues while receiving payments from Kenji. The bill of landing will be a proof that Lina can produced for legal actions if Kenji defaults on payments to states that the consignment was not received.

C)     Incotrems 2010 is a legal guide that helps interpret international trade. They are pre-defined rules and regulations that guide and assist buying and selling of goods across bounders. These generally include a detailed note of risks involved, transfer of goods, payment methods to name a few.

D) When goods are transported through a medium, there are chances of damage. Incoterms also prescribe the kind of damage and who will bear the damage cost. In the contract between Lina and Kenji where the transportation of the goods would take through maritime mode, Lina’s worry of bearing the cost of probable damage can be worked based on the different provisions made by the incoterms 2010. The provisions made for damage caused by sea ways can be specified in the open agreement. There are multiple conditions under which the risk will transfer from buyer to seller. If the buyer does not meet the agreed conditions of deliver, i.e time, date, location etc then the cost generally goes to the seller else after certain conditions it goes to the buyer.

Some terms are:

FAS - Free Alongside Ship

FOB - Free On Board

CFR - Cost and Freight

CIF - Cost, Insurance and Freight

FCA - Free Carrier

CPT - Carriage Paid To

CIP - Carriage and Insurance Paid To

DAT - Delivered at Terminal

DAP - Delivered at Place

DDP - Delivered Duty Paid