Saturday, May 17, 2014

Biddell Brothers v. E Clemes Horst Co. case brief summary

Biddell Brothers v. E Clemes Horst Co. (UK Ct Appeals, 1911)

1) Facts: Seller Clemens Horst (San Francisco) enters into CIF k w/ Biddell Bros (buyer, London) to ship hops to UK. After k entered into BB insists upon right to inspect hops for quality prior to payment. Horst claims that payment due upon issuance of bill of lading. Horst claims BB’s demands invalidates k and doesn’t ship. BB sues for breach of contract. Terms of the K: net cash (if it would’ve said against documents, no problem)

2) What could’ve been done different? Draft in “against documents” and protect Seller. In a cif k the seller has guaranteed the price of the goods, the insurance and the freight – so any fluctuation risk is assumed by the seller. To protect against non-conforming goods: have a reliable 3d party inspect the goods; or have samples sent (could’ve written it into the contract). Once you put the cif k in, you can vary the terms.

3) Issue: When, under CIF contract, is payment due?

4) Reasoning: LJ Williams: payment is due when seller has done everything that was required of him. So where does a seller’s obligation end? UCC in 20th century is exactly the same as Williams said the obligations of a seller are. Once tender of documents payment is due.

    LJFarwell: insists on buyer’s right of inspection in determining actual delivery of goods is required before buyer may be compelled to make payment (English Sale of Goods Act § 34.1, 1893).  Is in line with common law. But that rule doesn’t tell us when payment is due. Buyer has a choice. Therefore, payment due upon “actual delivery” of goods.

    LJ Kennedy: There is symbolic and actual delivery. Kennedy insists that CIF k create obligation on buyer to make payment upon receipt of documents. Payment is due when “possession” passes to buyer (English Sale of Goods Act § 28 & § 61). Possession is defined as the “title” the goods contained in a bill of lading. Conflict exists among provisions of English Sale of Goods Act. Payment is due when bill of lading or other documents are delivered. Payment is due on “symbolic delivery”

5) Conclusion: Payment due upon delivery of documents. Protects the seller against non-payment. Buyer can still reject the goods and send them back (pay before accepting goods)
6. Delivery of goods to carrier: Risk of loss passes to buyer. ESGA §20, 32(1)
7. Delivery of Bill of Lading to Buyer: Possession passes to buyer (symbolic delivery), §28, 62  
8. Buyer receives goods: Acceptance by buyer (actual delivery). §34(1)

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