Biddell Brothers v. E. Clemens Horst Co.
Facts: Seller
(U.S.) (brewing hops); Buyer (England). Contract terms: ”C.I.F. to
London, Liverpool, or Hull”, ”Terms net cash.” Buyer refused to pay
against documents because they wanted a sample and seller refused to
send samples. So instead, buyer stated that they will only pay against
goods. Seller argues that a third party (i.e. S.F. Merchant Exchange)
provided buyer with a certificate of quality. Buyer does not trust the
S.F. Merchant Exchange. Seller refuses to ship the goods arguing that
the buyer breached because they refused to accept the goods. Buyer
believes that they have a CIF contract and so they can decide whether
they want to accept goods and pay or accept documents and pay. Seller
argues that in a CIF contract you must pay against documents and that
this is a “terms net cash”, which means that payment must be made
against documents.
Issue: Must the buyer make payments against documents or against delivery of goods or either?
Holding: It
does not make any sense to give the buyer the choice of “symbolic
delivery” or “actual delivery”. By using a negotiable bill of lading,
which you must, and if the negotiable bill of lading is something of
value (i.e. title to the goods) and the seller delivered the bill of
lading, but the buyer asks for delivery of goods, then the
seller would be performing/paying twice (a. delivery of bill of lading
and b. delivery of goods). Further, CIF and “terms net cash” mean that
the “delivery of the bill of lading when the goods are at sea
can be treated as delivery of the goods themselves.” (i.e. lex
mercatoria = the customary law between merchants)
Reasoning:
-Rule: If it is a CIF contract, the buyers have to pay against documents
-The
fact that CIF was used does not make “payment against delivery” but the
fact that there was a bill of lading and they said CIF made “payment
against delivery” an option. 
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