Group Assignment Subject International Trade And Business Law.pdf

Under INCOTERMS 2020, FOB terms explicitly say the Seller's responsibility is to deliver the goods by placing them on board the designated vessel at the agreed port.. The incident occurr

MINISTRY OF JUSTICE HANOI LAW UNIVERSITY

GROUP ASSIGNMENT

SUBJECT:

INTERNATIONAL TRADE AND

BUSINESS LAW

TOPIC: 07

CLASS : 4733 GROUP : 07

Ha Noi — 2025

© Hanoi Law University

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TEAMMATES PERFORMANCE’S EVALUTION Date: 12/04/2025 Location: Hanoi Law University

Group: 07 Class: 4733

Total numbers of group’s members: 05

Content: Teammate performance’s evaluation

Subject: International Trade and Business Law

Topic: 07

Self — Teacher’s Student’s evaluation evaluation Signature

A B Cc

number word

1 473302 | Vương Thị Tuyết Liên v

2 473307 Ha Phuong Linh v

3 473309 | Dang Thao Ly v

4 473312 | Phạm Hoàng Minh v

5 473303 Lã Vũ Trà My v

Ha Noi, 12th April 2025 GROUP LEADER

@) Hanoi Law University

TABLE OF CONTENTS TNTRODDCTTH(ÌN cọ HT Họ Họ th nh Họ TH th nh 1 STATEMENT OF FAC TÍY ch TH họ Thư tư nhớ 2 ARGUMEIN TÔ cu TH HH HH h họ HH HT ghe 3 (A) Issue 1: The Buyer has properly and fully performed its obligations 3 (D Obligations to send the ship to the named port in time according to /LIug/:7x-( 1/8117 PEREEERERSSESAASASAEne 3 (II) The change of the loading location from the pier to the mooring

)80Ẵ,08/0 0/1) 00/0 08808 ố.ee 3 (B) Issue 2: The transfer of risk had not happened at the time of accident 4 (D The Seller failed to ensure that the goods were properly loaded onto the vessel, which is a [undamental requirement 0ƒ FOB delivery 4 (H) The Seller undertook additional delivery responsibilities (use of a lighter) without Buyer’s authorization and without ensuring proper

loading COMAILIONS «oo ec ec cece cece eee ec eee ce etna tee tee cd cea cea cece sees sees seessaeenaas 6 (IV) Seller* fullure to HOtIWÿ the DH€P ST Ăn HH» He 8 CONCLD SIOÌN HH HH HH TH HT Họ te tư 0010 9 INDEX OF LEGISLATIONS AND RE ch HH nh ng ngàn ngần 10

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INTRODUCTION

In today’s world, the rapid development of science and technology, along with

increasing global integration and interconnectivity among nations, has significantly reshaped market structures and business operations The growth of the trade economy

is being driven by strong trends of regionalization and globalization Countries can no longer confine trade and economic activities within their own borders; instead, they must actively participate in regional and international markets As a result, disputes and conflicts related to cross-border trade have become increasingly common, particularly concerning issues such as product quality, transparency, and mutual understanding in the economic cooperation process between parties In this group project, we will discuss scenarios that might arise in international trading between partners Our team's case was a dispute between a party from Washington and a party from Japan

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STATEMENT OF FACTS

1 A Seller agreed to ship 10,000 tons of potatoes FOB Tacoma, Washington, to a Buyer in Japan

2 The Buyer designated the SS Russet to take delivery at Pier 7 in Tacoma On the agreed-upon date for delivery, the Seller delivered the potatoes to Pier 7, but the ship was not at the pier

3 Because another ship using the pier was slow in loading, the SS Russet had to anchor at a mooring buoy in the harbour and the Seller had to arrange for a lighter

to transport the potatoes in containers to the ship The lighter tied up alongside the

SS Russet, and a cable from the ship’s boom was attached to the first container

4 As the container began to cross the ship’s rail, the cable snapped The container then fell on the rail, teetered, and finally crashed down the side of the ship, causing the lighter to capsize All of the potatoes were dumped into the sea The Buyer now sues the Seller for failure to make delivery

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ARGUMENTS (A) Issue 1: The Buyer has properly and fully performed its obligations

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(D)

Under INCOTERMS 2020, FOB terms explicitly say the Seller's responsibility

is to deliver the goods by placing them on board the designated vessel at the agreed port

Obligations to send the ship to the named port in time according to the contract of sale

Article A3: The Seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstance described in Article B3

On the agreed-upon date for delivery, the Seller delivered the potatoes to Pier

7, but the ship was not at the pier Because another ship using the pier was slow in loading, the SS Russet had to anchor at a mooring buoy in the harbour and the Seller had to arrange for a lighter to transport the potatoes in containers to the ship

According to Articles A3 of INCOTERMS 2020, this means that the risk had not yet been transferred from the Seller to the Buyer because during the process of loading the first container onto the SS Russet, the cable securing the container snapped, causing the container to fall This accident led to the capsizing of the lighter, which resulted in the complete loss of the 10,000 tons

of potatoes The incident occurred before delivering the goods either by placing them on board the vessel nominated by the Buyer at the loading point and the named port of shipment Therefore, The Seller was still responsible for the goods at the time of the accident

Besides, the Seller unilaterally decided to arrange for the lighter without consulting the Buyer This decision does not constitute an act that would legally transfer risk to the Buyer before the goods were properly loaded onto the vessel As a result, the Seller remains liable for any loss The SS Russet was not present at Pier 7 when the incident occurred, which further confirms that the Seller had not fulfilled their obligation to deliver the goods on board the designated vessel

(II) The change of the loading location from the pier to the mooring bouy is not the Buyer’s fault

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6 Article B3: The Buyer assumes risk from the moment the goods are loaded onto the vessel The Buyer does not bear any risk for incidents occurring before the loading is completed.”

7 The incident occurred when the first container was being loaded onto the SS Russet from a small ship The cable securing the container snapped, leading to the loss of the shipment before it was placed on board the vessel Under Article B3, the Buyer bears no risk or cost before the goods are fully loaded onto the ship The change in loading location from Pier 7 to a mooring buoy did not alter the risk transfer terms under INCOTERMS 2020 Since the goods were lost before reaching the vessel, the Seller retained responsibility Furthermore, Article B3 explicitly states that the Buyer is not responsible for any risk or costs associated with the goods before they are loaded onto the

vessel As a result, the Buyer cannot be held liable for the loss, as the accident occurred before risk had transferred under Articles A3 and B3

8 Since the goods were not fully loaded onto the SS Russet at the time of the

incident, the risk of loss remained with the Seller under Articles A3 and B3 of

INCOTERMS 2020 - part FOB Therefore, the Seller is fully liable for the loss

of the shipment, and the Buyer has no obligation to pay for or assume any risk related to the lost goods

(B) Issue 2: The transfer of risk had not happened at the time of accident (I) The Seller failed to ensure that the goods were properly loaded onto the vessel, which is a fundamental requirement of FOB delivery

9 The main issue is whether the Seller fulfilled its delivery obligation under the Free on Board (FOB) term in accordance with INCOTERMS 2020 when the goods were lost during the loading process

10 Under INCOTERMS 2020, Article A2 of the FOB states that: “The Seller

must deliver the goods either by placing them on board the vessel nominated

by the Buyer at the loading point, if any, indicated by the Buyer at the named port of shipment or by procuring the goods so delivered.” The FOB term defines the Seller’s responsibility as delivering the goods onto the vessel designated by the Buyer at the agreed port of shipment Furthermore, Article A2 of FOB states that the Seller is obligated to deliver the goods as specified

in the agreed trade term, within the stipulated time and place under the

contract

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Under the FOB terms, delivery is only considered complete when the goods have fully crossed the ship’s rail at the port of shipment, once the goods are placed on board the vessel nominated by the Buyer at the name port

Apply to this case, the Seller must deliver the goods either by placing them on board the vessel nominated by the Buyer, the SS Russet, or by ensuring the goods are available for loading onto that vessel at the agreed point, in this case Pier 7 in Tacoma The Seller fulfilled this initial step by delivering 10,000 tons

of potatoes to Pier 7 on the agreed-upon date However, the SS Russet was not docked at Pier 7 due to another ship’s delay; it was anchored at a mooring buoy in the harbor instead

The Seller arranged for a lighter (a smaller boat) to transport the potatoes to the SS Russet, indicating an effort to fulfill their obligation despite the ship’s absence from the pier; then, the cable snapping and the subsequent loss of the potatoes occurred during loading The Seller’s decision to arrange a lighter to move the goods to the SS Russet goes beyond standard FOB obligations, as the Seller is not typically required to transport goods to an anchored vessel unless the contract specifies otherwise

However, this does not change the FOB rule that delivery occurs only when the goods are “on board” Delivery under FOB is complete when the goods are placed on board the vessel Since the container had not fully crossed the rail

and landed securely on the deck, it’s reasonable to conclude the goods were

not yet "on board" The container was in transit over the rail when the cable failed It rested on the rail before falling, but it never reached a point where it was securely on the ship Legal interpretations of FOB often require the goods

to be fully loaded for delivery to occur and risk to transfer Because the potatoes were lost before this point, delivery was not completed per

INCOTERMS 2020

The ICC advises that in absence of port customs and practices between the

parties, the default position of “onboard” would be when the goods are “first at

rest on deck” in an undamaged condition (Question 37 “Incoterms Rules Q&A September 2011) As far as the documents show, the port of Tacoma exercised no custom regarding a different interpretation of “onboard” in FOB

terms Besides, the contract of sale mentioned no deformation to the FOB

clause (no specific interpretations of when the goods are considered

“delivered” by the Seller or when they are “on board”) Therefore, both parties

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must obey the rule strictly by understanding its standard meaning, further interpretation shall not be applied if there was no stipulation in the contract Based on INCOTERMS 2020, the Seller’s obligation was to deliver the potatoes on board the SS Russet at Tacoma The goods did not pass the ship’s rail and were not fully loaded onto the vessel before the cable snapped and the potatoes were lost Therefore, delivery was not completed in accordance with FOB terms, as the goods were still in the process of being loaded and had not

been “on board”,

(H) The Seller undertook additional delivery responsibilities (use of a lighter)

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without Buyer’s authorization and without ensuring proper loading conditions

The Seller is liable under the FOB delivery term for independently arranging a lighter without the Buyer’s consent and failing to ensure proper loading conditions Under Article A4 (Delivery) of the FOB term in INCOTERMS

2020, the Seller is required to deliver the goods by placing them on board the vessel nominated by the Buyer at the named port of shipment

Additionally, pursuant to Article A6 (Transfer of Risk), the Seller bears all risks of loss or damage to the goods until they have been delivered on board the vessel In the present case, the vessel designated by the Buyer, the SS Russet, was temporarily unable to dock at Pier 7 and had to remain at anchor offshore Without obtaining the Buyer’s consent, the Seller arranged for a lighter to transport the goods to the vessel This decision introduced a new method of delivery that was not agreed upon by the Buyer and therefore

exceeded the scope of the Seller’s obligations under FOB Furthermore, this

action deprived the Buyer of their right under Incoterms to control the vessel and determine how and when the goods should be loaded The Seller acted beyond their contractual duties by altering the delivery method unilaterally and is therefore liable for failing to deliver the goods in accordance with the delivery provisions of the FOB term under INCOTERMS 2020

Article 67 of the United Nations Convention on Contracts for the International Sale of Goods (CISG — 1980) reinforces this principle This article stipulates that if the contract requires the Seller to deliver the goods to a carrier for transport, the risk does not transfer to the Buyer until the goods are handed over to that carrier In this case, the goods had not yet been delivered

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Memorandum for RESPONDENT

on board the SS Russet when the accident occurred Therefore, the risk

remained with the Seller This aligns with the general legal principle of “risk follows delivery,” meaning the party responsible for the goods until delivery is completed also bears the risk of any loss or damage A typical case supporting this interpretation is Biddell Brothers vy E Clemens Horst Co (1911), the court ruled that under FOB contracts, the Seller’s responsibility ends only when the goods are successfully loaded onto the vessel Any loss occurring before this point remains the Seller’s liability Similarly, in the present case, the loss occurred during the loading process, and the goods had not yet crossed the ship’s rail Thus, the risk did not transfer to the Buyer, and the Seller remains liable Furthermore, the Seller’s decision to use a lighter — a method not explicitly agreed upon — without the Buyer’s authorization does not absolve them of their responsibilities under the FOB terms

(HI) The Seller’s actions directly contributed to the loss of the shipment, as the improper handling and defective lifting mechanism resulted in the accident

20 The Seller is responsible for the loss due to its failure to ensure the safe and

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proper handling of the goods during the loading operation Under Article A7 (Carriage) and Article A9 (Checking — Packaging — Marking) of FOB INCOTERMS 2020, the Seller must arrange delivery in a manner that ensures the safe handling and condition of the goods until they are loaded on board This includes ensuring that any equipment used in the loading process is appropriate and functions correctly The lifting cable used to load the first container broke during hoisting, indicating either a defect in the equipment or improper handling This failure in the loading process directly caused the loss

of the entire shipment When the goods are still at the Seller's risk, if they suffer an accident (in this case, it is the event that the cable snapped), the Seller must bear the loss and pay the price

ICC advice in Question 39 - INCOTERMS Rules Q&A 2011 has also affirmed this idea At first, the Seller, acknowledging the potential increase in risk of damage to the goods, had proactively initiated and agreed to alter the loading location from the pier to the buoy (by sending lighter), while the risk

of the goods remained their responsibility Although the loading process might involve various different parties, since it was under Seller responsibility and supervisor, that unfortunate cable breakage should also be one of the