Question

Seller sells 4,000 diamonds to Buyer under Incoterms 2010 and loads them onto the HMS Bounty, a ship that is designated by the Buyer. Seller’s agent replaces 10 of those diamonds with fake ones and is caught after the HMS Bounty has sailed and quartered. The ship’s bill of lading states that the 4,000 diamonds were in proper condition and are genuine. Seller sends an SOS to the HMS Bounty informing the captain of this discovery and informs Buyer as well before the ship arrives at port. However, when the HMS Bounty docks, Buyer demands 4,000 genuine diamonds and sues the ship for the value of the 10 replaced diamonds. Do you think the HMS Bounty and its crew are liable?

Answer 1

Incoterms 2010 governs the standards guidelines & responsibilities for traders, sellers, buyers, insurance & carriers when the goods are sold & transported. These rules are global benchmark for international trade which set the obligations for parties in the trade ans specifies who is responsible for what.

In the mentioned case the seller sells 4,000 diamond under the incoterms 2010, however its not clear which incoterms was selected (whether EXW, CIF, DDP, CFR and so on). It was also identified by the seller that the seller's agent has replaced 10 diamonds with fake ones and the same was communicated to both buyer & HMS Bounty. Based on this information, though the BL (bill of Lading mentions 4,000 diamonds and it genuinity, carrier does not certifies the same. So the buyer here cannot sue the carrier HMS Bounty & its crew for the value of 10 original diamonds.

Buyer has the ore hand information of the change of original diamonds with fake ones, so it incorrect to shift blame on other & can be easily proved & rejected in the court of law.