Al-Anbaki, Majid H. K. (1978) Passing of property in C.I.F. & F.O.B.

contracts (comparative study).

PhD thesis

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 PASSI
'ING OF PPCPYMTY
3T,

ColeFo e: FoOoB, COTITPACTS)

St-ý,
-(Comparative

Majid HoKe Al-Anbaki

LL. B., LL. M.

. Submitted for the degree of Ph, D.

Faculty of Lww.
Glasgow University

Au.-ust , 1978
 BEST COPY
AVAILABLE

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To:

The spirits who gave me life,

Yjy countryl

YV two flowers.,
 ACMI'MITUTTGEMENTS

I an indebted to Professor J* Bemiett Itiller for giving me

the opportunity to carry out this work at the Paculty of Law,

Glasgow University*, I would like to thank him for his time and

patience*
I am very grateful to 1-b7s.IbLean for her consistent advioe,

help and encouragement throug1hout the course of this work, YArse

McLean has also given me her valuable time during the writing of

this thesise

Thanks are due to many. other members of the Fraculty of Law

for their help and constructive discussions. Yorthanks also to

Professor Rodier and memebers of staff in (Droit Compare Institute)

in Pari s*

Finallyt I would like to express imy sincere gratitudetO the

Iraqi Goverment (Idnistry of Oil) for their financial SUPPOrt

during the period of My Studye

 COUTIMITS

pqýme

Summary I

Introduction 3
CHAPTER1
'Mocuments affecting Property in C*I*P*
and F*O. B. Contracts" 17

I The Bill of Lading: 18

Definitions: 18
UeKe(Scotland & England) 18
Iraq 19
Fý-ance 19
Contents 21
Functions of the Bill of Lading:
I-The Bill of Lading as a Document
of Title 23
Definition 23
UeK. (Scotland & England) 24
Eapt 24
Iraq 25
.
Rrance 26
A* A Bill of Lading mast symbolise
the goods: 27
The Intentional Theory 28
The Unification Theory 29
Be The holder of a Bill of Ladine is
entitUd to claim delivery of the
goods from the carriert 30
U*Xe (Scotland & England) 30
Iraq and Egypt 32
France 32
 page

Evaluation 33
Unilateral Undertaking 34
Co A bill of lading must be, to a
certain extent, negotiable: 35
UoK* (Scotland & England) 36
Iraq 39
Prance 41

2-The bill of lading as evidence of

the goods: 42
UsKe (Scotlamd& England) 42
1. The CommonLaw: 42
A. As evidence of shipment 42
B. As evidence of quantitY 44
C. As evidence of condition 46
In England 47
In Scotland 47
2. Carriage of Goods by Sea Act, 1971 48
Egypt 50
Iraq 51

3-The bill of lading as evidence of contract

of carriage: 52

4-The bill of lading as a contract of carriage! 55

Iraq 57
Prance 59

5-The bill of lading as an instr=ent to protect

the property 61

11 "Received" Bill of Lading: 64

U9K* (ScotlarA & England): 65
Ae The arguments of the practical attitude 65
Be The argments of the conservative attitude 67
Ce Kennedy's view 68
D. C&rriW of Goods by Sea Acts1924 and 1971:
 Pare

Iraq 70
Franoe 72
Oar Idea: 73
19 General Survey 73
2, The writ er' s vi ew 75

III Through Bills of Lading: 79

Definition 79
Forms 79

U*K- (Scotland & England) 80

Iraq 82
France 85

IV The delivery order: 88

Types of delivery order 88

Iraq 90

V The matells reoeipt 92

IiVI The effects of containers on the classic

rules of bills of lading 95

CHAPTER2
"Passing of Property in C. I. F. & F*O*Bo Contraots" log

Section 1
Passing of Property in 091*Po & P*OoB* Contracts
under Old Soots Law: i1o
I The general rtxle III
11 The concept of deliveryl 113
1. Bellts oanoeptl 113
A* Actual delivery 113
B, Constructive delivery 114
Notes on Bellts concept 116
e
2, The judicial concept 119.
Rates on the judicial concept 1.23
The results of the Judicial concept 124
 E=

Mercantile Law AmendmentAct, 1856 '126

III Passing of Property in C. I. F. & F, O*B. Contracts: 128

First: Where the goods are represented by a
bill of lading: 128
Bill of lading and bulk shipment 131
Bill of lading and stoppage in transitu 132
Second: Where the goods are not represented by
a bill of lading 139
Conditions and the contracts C*1*F* & F*O. B* 140
Rejection of the goods 142
Comments 143

Section 2
Passing of property under Sale of Goods Act 1893: 146
Passing of property in the home market sales 147

I Legal provisions 147

11 The meaning of intention 153

III The intention and the nature of the goods: 154
First: Asoertained goods: 154
le The expressed intention: 15-5
The expressed intention must be in
the contract before the passing of
property 155
2* The implied intention 155
The presumptions: 159
A. When nothing remains to be done
to the goods 159
Unconditional contract 16p,
Specific goods 161
.
Deliverable state 162
Be Where there is
something remaining
to be done to the goods
le When the sellgr is bound to do
something to the goods:
 Pe,-,e

a, 'to put the goods into a

deliverable state 164
be to weigh, measure, terst. 165
eetc,
2. When the ju Xer, is bound to do
'
something to the goods: 165
a. when he signifies his approval 165
b. when he does not signify his
approval 167
FIrst: the meaning of reasonable
time 167
Secondly: Special circumstances 168

Second: Unaseertained goodst 169

The effect of delivery order 169
Unconditional appropriation 170
The assent of the buyer 172
Delivery of the goods to the carrier 172
ftture good Es 173
Reservation of the right of disposal 176

Transfer of property in 0*19F* & F*O*B* contractst 177

FIrstt Where the goods are represented by a bill
of lading: 178
A* Bulk shipment 178
Bio Normal shipmenti 182
I- The expressed intention 182
2- The intention and the bill 6f
lading (Porm and dealing): 184
.
as the bill of lading in the
sellerlp name
boAhe bill of lading in -the
buyirt s num
I 186
ca LAorsement and transfer of
the bill-of lading 188
votioe of appropriation 191
Whic4 sort of property passes
,
to the buyer
 Parze

3- Intention and the bill of

exchange 193
4- Intention and the commercial
letter of credit: 195
Special property 195
Forn of bill of lading 196
General property: 197
(a)General property

remains in seller 197

(b)General property vests
in the buyer 198

Secondlylo. Where the goods are not represented by

a bill of lading 199

Comment
s 202

Section 3
"Passing of ownership in C*I,,F@& F*OeB*oontractus
205
under Iraqi Laws"
1 Legal provisions arA criticism 206
17 The process of passing ownership: 214
First: Unascertained goods 214
Second: Ascertained goods 216
Third: Special contracts: 220
Introduction 220
Hire purchase 221
Sale at the option 222
Sale on trial 223
III Passing of ownership in C*I*Fo & F. O.B. contractst 225
First: The meaningof imperative legal provisions 226
Secondi The commercial custom 228
Third: The rales of Iraqi Civil Code: 233
I- Uhascertained goods: 234
A- The bulk shipment 234
B- Special agreement 23$
11
2- Ascertained goods 237
 Paee
Fourth: What sort of ownership passes to
the buyer 238
Comments 240

Section a
'Passing of property in C*I*F* & F*O*Bo contracts
under Fý-enchLaw" 242

I The general rule 243

11 The application of the general rule: 245
A. Lump sum sale 246
Be Sale by weight, rn=ber or measure 246
Co %ture goods 248
D,, Alternative subject matter 249
III Types of sales: 250
I- Sale on trial 250
2- Sale with repurchase 252
3- Hire purchase 253
4- Sale with e eut 254
IV Passing of property in C*1*F* & F,*O*Bo cOntra0t'3*- 256
I- The property passes to the buyer at the time
when the contract is made 256
2- The property passes to the buyer when the
bill of lading is transferred to him 259
3- The property passes to the buyer on shipment 261
A* The appropriation must be done before the
opening of the ship's hatches 267
Be The appropriation and specification of
the ship 27
00 Pq*ment against documents on arrival of
'the sup. 272
D* Payment after examining the goods at their
arrival 273
comments
conclusion,
 Pame

CHAPTER3
"Passing of the risk in O. I. P. & F. O. B. contracts. 286
Theory and practice":
Section I
Passing of the risk in home market salest. 288
1 Sale of Goods Act 1893: 288
The general rule 288
Delay of delivery 289
Daties of bailee 290
Exceptions 291
3:1 Old Soots Law: 292
The general rule 292
Justifications 292
The time of completing the contract: 293
1- The ppice must be certain 293
2- The goods must be specific 299
Exceptions 299
.
III Iraqi Law: 301
The general rule 301
Exception 303'
Passing of the risk before the contract
is made 304
IV The Pý-enohCivil Code: 305
The general rule 305
The application of the general rule 306
Evaluation 308

Section 2
passing of the. risk in C*IeF* & F*OeB* Oontractst 310
It The general mle 310
11 Limitation -315
M The legal basis of the transferral of the
risk on shipment 321
IV The exact moment of shipment-. 325
First: The traditional view: 325
I* The go(As are pat 4)n bogrd & gbip
 Paime

2,, The goods cross the ship's rail 327

SeQqzdly,.*The modern views-* 330
1- The risk in F*O*B* contracts passes
to the buyer when delivery is completed 330
2- The risk in C*I*F* contracts passes
to the buyer when the responsibility
of the carrier starts 331
The orthodox opinion 334
V The partrof the rule that the risk. passes to the
buyer on shipment: 336
First: The risk is attached to the delivery of
the goods to the carrier: 336
1. The delay of the delivery is at the

risk of the party in fault 336

2, A term putting the whole risk on the
seller is inconsistent with 091*Po &
F*O*Bo contracts 342
3- A delivery of the goods to unnominated
carrier is not considered as a delivery 345
SecoiAly: The risk is separated from +,be PrOPertY*- 345
I* The risk in bulk shipment passes to the
buyer regardless of the property 345
29 The risk in the goods afloat passes to
the buyer "as from shipment" by

retrospective effecA MA
O-T-

3* The risk remains with the seller even

when the property has passed to the InVer
before shipment 350
There is no relationship between the
transferral of the risk and the dealings
with the documents 351
Conclusion 356
Final conclusion 357
 Paze

1:
-ApRendix
"A general outline of the Iraqi legal system" 359

Appendix 2:
"Maritime aspects of Hamurabi Laws" 377

APPemlix 3
"The bill of lading used by Iraqi Maritime
Transport Co, Ltd*" 383

&Rendix 4:
"Maritime Insurance Policy (Cargo) used by
Iracfi National Insurance Coolt 386

Bibliography 388
 SUMURY

Passing of property between the seller and the buyer in C*I*P9

and F*O*Bo contracts is a matter of significance in the event of

the insolvency of either party, and the liability to capture, and

seizure on the outbreak of war*

This problem has been left for solution according to the

domestic laws, despite the international characteristics of C,,I*Po

& F*O#B. contracts. The domestic laws have presented different

solutions, and therefore different consequences may result*

This thesis is an attempt to deal with the problem comparatively

in the light of the Sale of Goods Act, 18939 Old Soots Law, Iraqi Law

(and Egyptian Law), and Rrench Law* :Lt consists of an introductory

chapter (documents affecting passing of property in C*I*Fe & FeOeBe

contracts) and a supplementary chapter (passing of the risk). The

Problem itself has been dealt with in Chapter Two.

The first chapter is devoted to describing the functions of the
bill of lading and its characteristics as a document of title, In

the light of these characteristics the Received for shipment bill of

lading and the ship's delivery order are documents of title, whereas
the Through bill of lading is not, because it does not entitle the

consignee to claim delivery of the goods from the last oarriere

The container revolution has had a tremendous effect on the

classic rules of bills of ladingg therefore a compromise has been

presented by establishing an international matitime organization.,

Chapter Two is concerned with. the passing of propertys The
research has followed the process of passing of the property in

home market sales and the effect of that process on ColeFe & FoOsBo

contractso The problem has been discussed in four sectioneq each

devoted to a particular legal system. At the conclusion of this

chapter, the research has classified the legal thoughts into two

main theories: The objective theory and the subjectivel which are

both seen to be illfitted to modern practice* The correspondence

idea can be a good substitute because it has the advantages of both

the theories.

Passing of the risk, and whether the risk should be attached to

the property or the delivery of the goodal is the subject of Chapter

Three. In this chapter the problem concerning home market sales has

been presented separately in each legal system. But in ColeF4, & FoO.B.

contracts, it is internationally accepted that the risk should pass to

the buyer on shipment* The research has sought to ascertain the exact

moment of shipment, and analyses the different aspects of this

international rule,
 TlqTRODUCTICU

C*I*F* and P*O*Bo contracts are well known in international

trade. They have been in praotice for a long time. In this

introduction we wish to point out their main features as followse.

C*I*F* Contracts

"The initials indicate that the price is to include costo

insurance and freight. * It is a type of contract which is more

widely and more frequently in use than any other contract used

for the purpose of sea-borne commeroeo An enormous Mmber Of

transactions, in value amounting to -untold sumal are ca2vied Out

every year under ColoP4, contractse"

The authorities have established the main features of this

contract by which "***the vendor in the absence of any special

provision to the contrary is bound by his contract to do six things.

First to make oat an invoice of the'goods sold. Second, to ship at

In Prencht Cd4t, assurance, fret a C.A. F. This type of sale

appeared in France after the war of 1870., Georges Ripert,
M)roit maritime*" Tome 11 1952 at page 794. In Britain the
CoTA, torm evolved, though, as the first oases decided in
i862t Tregelles v. Sewell 7 H- IT- 5740 and in 1872 t' Ireland
v. Livingston L. R- 5 H- Lo; 395*
(I)- Per Lord Wright. in RQssTo Smyth A Co. Ltd. v, TeDe Bailey-a-
Son & 9.09 L1940J 3 All E* Ro 60*
It has be said that the reason which made O*I*F* contracts
very popular in international trade to the fact that the
Americenev since 1914, did not want to bear therisk of their
shipments, az& they also, wanted to. - help the, Frob*j B61Cj&*s:,,
aiA thelfttish in finding the ps whichý" c.arry the cargo and
tho- Ansurom" *oxpa4;, P4,
--
Professot-Rone- Rodiere, "Droit-maritiuePýftb
1, tiv, # IW4 Ot,
- 11'156. PrGoin-Dall6so
the porL of shipment goods of the description contained in the

contracte* Third, to procure a contract of affreightment under

which the goods will be delivered at the destination contemplated

by the contract, Fourth, to arrange for an insurance upon the

terms current in the trade which will be available for the benefit

of the buyer. Fifthly despatch to send

9 with all reasonable

forward and tender to the buyer these shipping documents, namely

the invoice, bill of lading and polieT of assurance, ** delivery

of which to the buyer is symbolical of delivery of the goods

PtLrohasedq placing the same at the buy ergs risk and entitling the

seller to payment of their price. These authorities are Ireland v.

1)
"in per Blackburn J; Brose vo- E. Clemens. Horat
Biddell
(2) 3),
Co. ; on appeal E. Clemens Horst Co. v. Bidd MA
(4)
0, SharDe & Co. v. Nosawa Co. These oases also establish that

if no place be named in the C*IvF* contract for the tender of the

shipping documents they must prima facts be lendered ai 'the

III-I (g'

residenoe or place of business of the buyers"""'

-'Within the time named In the contraott per Scratton J. in

Landover & Co. v. Craven & 82! eding Bros. [1912) 2 K. B. 94
at Page 105o
** This was first said by Lord Isher in Sandra v. WeLean (1883)
11 Q-B-D- 327 at Pme 337o
(1872) L. R. 5 R*L- 3959 406-
(I)
(2) &IJ I K*B. 934t 962.
[1:912] ALoCe-18a
Fi9l7'j 2 K*Bo814*
Per Lord-Atkinson in JolMaga v*-TMI*r Bros. [1920] AoCo144-
at nare 1550 bee aloof --

Rmason v. Hamel&-Roan Lt.. dL Ll922J.,9 ),*C* 36*

e -
deeiäiorl'of 7Tribunal de oomeroe'dt' la Seinel In 24-3-19544,
3)-X6Fo 1955 at pw 425- G. Ripert IlDroit maritime, at page
793 v, 2. R, Rodier Mroit maritimet at PW 356, Inootezus 1953*
'The obligations of the seller in 04,1*PocoMr~ , /over
The main features of CeI*F* contracts have been the subject, 'as

weill of many informal and formal agreements among those engaged

in international trading* Certain rules have been aooepted to

clarify the main features of C. I. Fe and other contracts 1d8edin

international sales.

The first of such agreements was arranged by 'The International

Law Association' which devised the : Rules for C*I9P* Contracts

(Warsaw-Orford Rules) 1928 - 1932.0)

The second attempt was made by the 'International Chamber of

Commerce F1 C ý* which Issued in 1936 the 'International rules

for the interpretation of trade terms'** which included the terms

CoI. Fe, FsOeBeq FeAeSol Co&*Fo and the like. Those rules were
[Inceterms Q3 (2)
amended in 1953 arA they are well known as 195_ *

(5) cont"d.
In this respect, it has to be mentioned that J. Heenen has said
that the origin of C*I*P* contracts is a sale called 'La vente
sons voilet - sale under a sail - which appeared in Belgium. at
the middle of the nineteenth century. The main features of that
sale were : l- The risk of maritime transport was on the buyer,
2- The had to transfer the docauents (Bill of lading,
and seller
insurance policy) to the Imyer.
Vents at Commerce Maritime, at P-132. Bruxelles, 1952.
This kind of sale has disappeared from international trade in
modern practice, and we do not have many details of its procedure
judgements. Therefore a comparison cannot be made to refer the
origin of modern C*I*F4, to that, of "La vente sous v6ilet.
(1) ( R; gles de Varsovie et d1oxford ) R4gles relatives aux contracts
COAOFO
The Nnglish text of th6se rules in published in v5 2rAL ed,,: *f tb*
'British Shipping Laust at ppe 1402-1409-
Chamberde CommerceInternational (CCI)
IR41es International pour l"JuterpretiticM des'.terms, commerejaw&
(2) Incaterms 1953 Is Published Ill 'Churterir*-! afid, obiWrt. *-ý~ý-tr
J., Pon- 5th ed-, L011dont1960 at PP 247-264.
It must be mentioned that Warsaw and Oxford rules and Incoterms

are not obligatory rules unless they are expreesely incorporated

by the parties into their contract* There is, also, the attempt

to formulate a standard C9I9F* contract. This has been done by

'The London Corn Trade Associationt and 'Chanbre arbitrale et de

conciliation de graine et de graines dtanverst. In these standard

contracts the main terms are printed, and spaces in between are

left to be filled up by the contracting parties concerning the

description of the goods and the price@ Finallyq there are the
(1) (2)
namely ULIS and UMS laws
conventions 1 which provide a code of
of general application to all international sales contracts*

However, the main features of C. I. Me contracts had been construed

(3),
in a very restricted way toontrat de droit strict' but the

modern tendency or the judiciary is to oonatrme Cel*F* tome in a

more flexible manner to imit modern requirements. This flexibility

means i
I- If the contracting parties evince-no olbar intention to vitiate

the preoise and definite meazdug of C*T*Fol their obligations

should be carried out according tothe principles governed by

C*IeAm contracts*

(1) toonvgMion relating to a Uniform law on the International Sale

of Goodst. The-UsK., instrument of ratification was deposited On
31 August 19679 and -the Convention entered into-foree on $8 kWet
1972. -Trexty Series Ito. 74 (197ý).
(2) 'Corrention relating to a Uniform I&w an the, Formation of 99#r&OtB
for the international Sale of Goods"... The VoKe,inxtroept
deposited _ 1'967
ratifloation, was on..31 Augait ýand ýtbq gonvention
out" into force on 23 August 1972,
(3) 04,RiVOrt tDroit maritime* v2 at P498.
2- If the contracting parties have incorporated in their contract,

a repugnant stipulation 'to that stipulation should be

applied, and consequently, contracts containing such terms are

(')
prima facie not C*T*Po contracts.

3- The circumstances of the case, sometimes, indicate that despite

the fact that the contract contains terms repugnant to 091*Pol

but the real intention of the contracting parties is to apply

C*I*F* rules regardless of those apparently repugnant

(2)
stipulations, or their real intention is to apply C*T*Fo rules

(1) The Parchim a9183 AeCe 157*

The Julia 949ý A. Co 293-
D, 14F, 1960 at p. 245*
D*XPF* 1959 at p. 627-
(2) For example t The following terms`are considered to be in harmony
with C*I*F* I
Onet landing weightel
Ishould the goods or my portion thereof not arrive from loss of
vessel either before or after declaration this 00ritra(Yt for such
Portion to be void'
"Payment cash (before delivery if, reqared) against documents or
delivery ordert
see Denbi h. Cowan& Co.. v. & Co. (1921) 90 L, Z, X, B,
836 kC*A*) -Atcherley
In A. Delaurter & Co, v, V*J* Wyllie &-Others (1889) 17 R (Ot.
of Sees*) 167, The CeIeFo contract provided that insurance to be
at the sellers' risko The clause holdto imply that the sellers
had undertaken to obtain cover and had guaranteed to effect the
necessary insurance,
In France i The following terms are in accordance with WeFe t
AClause d"agre'age all
D; N*F,o 1960 at Pe 50o
OClause some Palan arrivget
tPrix payable poids delivr. fi*
DoX.P. 1963 at ro 3479
Moreover the law of 3rd Jan* 1969 has made it clear in article 41
that the above mentioned clauses or similar do not change the
nature of C*IeF* contraciý,* Article 41 states I 'La mmle
insertion dans le contrat: des clauses (Ppide, reocnamA Warrivie)
(potdo -delivT6 au. port d'arriv6s) ou-natre, olausex'soublables ata,
pasPour offet do. modifier la, nature do la vente C*A@Pel,,
Sedtipi'201 - first pareoaph, ITaqui JALwof Comeroe NO*60 YW
19431(now repeald)
as long as the oircumstances envisaged by the repugnant stipulation

are not realized*

The nature of C*I. Fs contracts

This subjeat has been a matter of controversy for a long time*

In the following paragraphs we are discussing the theories said on

this point I

I- CeI*F* contract is a sale of documents:

According to this theory "Col*F* sale is not a sale of goods,

but a sale of documents relating to goods, It is not a contract

that goods shall arrive, but a contract to ship goods complying

with the contract of sale, to obtain, unless the contract

otherwise provides, the ordinary contract of carriage to the

Place of destinationg end the ordinary contract of insurance of

the goods on that voynge, and to tender these documents against

Payment of the contract price. The buyer then has the right to

claim the ftlfilment of the oontract-of'oarriageg ort if the

goods are lost or damaged, such indemnity for the lose as he

can claim under the contract of Jusuz-anae. He buys the

documents, not the goods, and it may be that mAer the term of

the contracts of inmmnee and affreightment he buys no indemnity

for the damage-that has happened to the goods* This depefits on

what domments he is wAitled. to under -the coutrant'of ftle, 0(2)

y.ariniee. jiranies & Co. v. William P,, ?kleolm &. yU (1926)

2SLlo Le Repo 26
The Gabbimo 09.40 p. 166o
(2) Per Samtton J. n Arnhold &&berMA Co. v. 'B3.
y!t
Joumdain& Coiý _!
L191512 X-Be 379ýii-D.
Ta ftance , IL pferre CkAret has- adopted - and defended. tbis th*03W
over
It is obvious that this theory depends on the important role of

the documents (Bill of lading, insurance policy, etc. ) in C*1*F*

contracts. There is no doubt that those documents are vital in

this kind of contractf but the buyer's main concern is to got the

documents as well as the goods and not the documents only.

Moreover, this theory does not appear to be acceptablet if justified,

it would mean that -the buyer would not be able to make any claim
(if the goods do not comply with the contraot of sale) when thel

documents in his possession are in conformity with the stipulations

of the contracto In fact, these days, it is a well established

principle that the acceptance of documents does not deprive the

buyer of the right to reject the goods, at their arrival, if they

0)
are not in conformity with the contract descriptionse

(2) Cont I d.
in his thesis, titled tLe contrat do vents Colwkt Asewmnce, Fret
Ventel C*A*Fo tq submitted toPAris University in 1925- X. Godret
statedt tl& vents C,,A*P, appaxvýt done oammeroialement comma une
vents de document regalierst. He reliedt in supporting this theory,
on I- The decision rendered by ITribunal do commerce do la Seine#
In 73 -I- 1922 which stated "... ltaoheteur ach'e'te an realit6 deý
doomentst iN
pe dans ces conditions otil set, soucieux de see intýfets
A
ltuniqtte p eoccupation de ltachatenr dolt Wtrs do no prandre qtxe des
documents rigoureusement conformse a= accords passes, paisque
lorequtil sera eirtre an possession de ces pieces at qtL'il aura pays
le prix convaim, la vents sera riplt6e r4alis6o". This decision
iras confirmed by tCour 4Appol do Parist in 22 -V- 1922.9
2- The decision-randered 1ýy.*L&, Cour do Casextiont in 21412 - 1922,
; hich stated t vents caf constitue on do
docwmmts an prettier rang deWols figare ja po1jo*, 4t%s1MTanc48'**
Pierre 09dret at ppe Ill 129 13o
(1) Paul Chaavwm *Traiti do Droit 3kritimet at p, 61ýw
rwei Tok-Choo v* BxýMA, Traders
4*33o459*
 -10-

2- C*I*Fo contract is a sale of goods to be performed by delivery

of documentst

This theory was presented by Bankes and Warrington L. JJ in the

Court of Appeal as a reaction against the previous theoryt and

in the same case*(') Banks L*J* statedt "I an not able to agree

with that view of the contractt that it is a sale of documents,

relating to goods. I prefer to look upon it an a contract for

the sale of-moods to be ýZ the deliv= of do cuments,

-performed .
and what those documents are must depend upon the terms of the
(2)
oo?rtraot itself" 0
This theory was adopted by the Belgian Cassation Court in
(3)
their decision dated 15 October 1925-

In fact this theory in more persuasive than the first one,

btrt it can be criticized in that it may lead to a result that

the property in C. I. F. contract passes to a bayer by thO

delivery of documents* Thus NoCardie Jog after describing the

difference between the two theories as "one of phrase only", -*

(1) Arnhold Karbere & Co. v. B14'ho. Green. Coo [1913

1 K. B- 4195e -igglML&
(2) rbid at p. 510e
Wo.rringt(m Lolm agreed with Baukee at V* 514*
(3) "1& cour do cassation, dans son arx4t du 15 Octalire 1,925,dit
que la vents n9eat pas une vents de doowmdst mit .uw *ento
do mutchanclinowl qwA doit Otre realiage par la d6livranee des
doowments A Ifachotear", Go Winkeloolon at,. p, t3,*
With r0speat the differeinceb6tWeen this tfieM SUd-jh6 fjM
to not "one of phrase only"* Wehave seen that acoor&ing to the
first theory the buyer. is not able u rojimot ý, tb* gooo ýevw Ar.
at their arrival -, ithw are nvt in confousity- t1l,* aw%jact
doisoriptioul. wherese-occording to tbig, theory, the buyw to &1)2e
to reject (a thw gromA th" 0.
*I. op* in o3d; in4-ly a "is of goods*
 -11-

said "*. * the obligation of the vendor is to deliver documents

rather than goods - to--transfersymboll; ather thin thl a

0)
PropertZ rei3resented thereby This result is not always the

case in C@I*P* contract.

C*I*F* contract is a sale of goods and documents:

This is another theory which has been suggested to explain the

nature of Col*F,, contract. It

says that C*1*F. is a sale of
(2)
goods and documents at the same timej on the ground that the
0)
seller is bound to deliver goods and documents.

The result of this theory is that C*I@F* contract has two

subjeot-matters, the goods and the documents. Therefore the

passing of property in the goods and the delivery of the goods

are distinct from transfer of rights in property or by delivery

of the doementst(4)
This result do
is a mootpoin'tt because the doonmerAs-t-114meelves

not have any property to be paissed to a buyer. The bill of lading

(1) Menbre SaocharinwCo. v. Corn. Pr2Luctq, Co*, [19193

1 K*Bo198
at pe 203-
(2) Go WIMIMDLE99 has adopted amAdefwAad this theory in his book
'Lee principes do I& vente CoI*F*fBruxellee 1926o He has stated
at P-141 "La vente Col*Po nfest done pan seulement une vente de
marchazAises et de doc=ents; et lea trois 6*16mentsqui composent
son'prixt le cdh-', la-prime at le fret; representent la valour
des trois choses our lea quelles elle portes la, marglWime. I&
Palloo 21- 20 ggwAjss2mPntj. "
(3) R11 ya done#-4&m la vente CoT.Po dtune part, vente at
d-elivrance do marchandises, d'antre partt dfilivrance deldoomentsoO
lbid at pa. 14-
1.1 y auraft un transfort do proprifiti, ot =0 W4..ivxM ; iso
documts izidgpizAante du transfert do la'pMriete at '' eU,
dolivrance des marchandises elles - meMGsOw
J9 Heenan "Vente at cornmeros,maritime' at P. 137.
 -12-

represents the possession of the goods and not their property,

besidesq it does not have any property In itself to be acquired

by a buyer.

4 ColoPe is a sale of goods:

(2)
In Del=er v. &llie(l) the Lord Ordinary (Tray ner) stated:

"In short, a contract coisfe is not to be read as imparting any

obligation or right which it does not express* Such a contract

binds the seller to pay something which otherwise would fall on

the buyer; but except in so far as it shifts the obligation to

pay# it-remains a contract of sale. subject to the ordinm rules

of law which rejMlate the rights and obliRations to which that

contract sives rise. "

It can be inferred from the statement above mentioned that the

nature of 0*109 contract is merely a "sale of goodsN This was

said an well by #Tribunal do commerce do Narsoillel in their

decision dated 2-12-1946,, *

This theory in very general, as all the contracts, in field of

sale of goods, are in the nature of sale of goodse Moreover, this

theory does not specify the important role of the doouments in

ColeFe contracts and their relationship with the goods.

(1) Sookion Cases 1889-90o 17Rat ppo 167-M,

(2) Ibid at pe Me
It statedt "Qae la, vents C*A*Podemewe lion une vents do
marchandisesX ltembarquementobligeant Is VwAour a no livr1jr
son acheteur qtte des marchand.
ises conforloes aux
 -13-

5 CoTeFe contract is a sale of goods which are protected by

document s:

The theories above discussed did not mention the main principle

which governs sale of goods contracts. These contracts are

governed by a principle called 'Protection of property". This

principle simply meanst conserving the property of both seller

and buyer* Tn other words, as far as sale of goods contracts

are concerned, tprotection of property' principle keeps the

balance between what we give and what we take. Consequently,

most of the rules of sale of goods contraots have been set up

according to that principle*

We have seen that the previous theories did not comply

completely with the true nature of CoTeVe contract, The reason

for that is the difficulty of defining the relationship between

the goods and the documents, i. e. whether they are distinct or

non-dietinato In this respect Col,, F* contract cannot be

conceived without documents, or a CoT*Po contract without goodso

Therefore the goods and the documents are ineeparableo The link

between the two is the idea of protection* Tu other words, the

do(mments are simply instruments to protect the property in the

goodso The buyer wants the goods to be in accordance with the

contract description and the seller wwts to reoejv* thsprjosý-

Therefore, it in thought, *bat the cal. elpe,oontr&crt, Ig e, jw2w, 0

goods wbich =-a pratected I)y doctments. ftis meamsl'bat Colo?*

contract 'in originally a sale of goodsq =A the doommuts am

Its instrmmen 8 to protect 'the property both of the seller and

of the buyer*
 -14-

This protection requires:

The seller must put on board at the port of shipment goods

in conformity with the contract description, and he must also

send forward documents, and those documents must comply with

(I)
the contract*

2 In the absence of special terms, the Imyer must M the price

(2)
against presentation of shipping docamentse payment of the

price does not deprive the buyer of his right to reject the

goodel on arrival, if they are not in conformity with the

contract descriptiono(3)

P,PO*Bo-Contracts t

'Free on boardt, according to the classic 86nset Means I

The seller, at hi s own expensel is to deliver goods on board

a sMp nominxted by the buyer, and mbsGqXLWAexPOns6s, Mainly

freig, tt arA jnsýrwoej are -to 'be borne by the Imyere 'In other

words : the buyerve duty is to nominate 'the shiPs and the seller's
to put the goods on board for acooun+.of the buyer aild ProOure &

per Devlin -jo in. Mlet Tgk Chao v-o British Trad=, " SMMgjEj Idd
E95] 2 Q*B* 459 at P. 450-,
(2) Per Scrutton L*JP ROIS Evans & Cc* (1924) 30 Cm*
Cas. M at Po Mal
(3) YweIT 0-k- To, St. EWE= Udi
pp*, 460 - 442*ý
In prencht Pranoo, bord, (Att Franco borde
 -15-.

O)
bill of lading in terms usual in the trade,

This classic P*O. Be is not the only one in the international

(2)
trade* The F*O*B. contract has become a 'flexible instrumenttl

Therefore the seller, in modern P*O,B, l can agree also to pay for

the freight and insurance of the goods. These C,I, P, features

(3)
are not necessarily inconsistent with the FoO.B. term.
Despite the fact that this interpretation of P*O*Bo has been

internationally acceptedt it seems that there is another point

of view, which states that the seller in F*O*Be contract is

bound to bring the goods in front of the ship "devant le bord

M
du navire.. This latter interpretation is more consistent

with F*A*S* contracts (Free along side)* and not to F*O*Bo where

the seller is bound to put the goods actually on board ship,

(1) Stack vo Inglis (1884) 12 Q*B*D* 564, affirmed by Helft in

0685) 10 App. Cas. 263.
Wimble. Sons & Coo Ltd. v. Rosenberg & Sons [19131 3 K*Bo 743-
Je Raymond Wilson I Co. Ltd. v, N. Soratgt2Ld. Ltdo (1944) 77
71. L. Rep- 373-
Incaterms Art 2-3*
Art 35 of the French Law No*2 year 1969
.
Art 230-1- of the Tunisian Maritime Law 1962 which statest
"La vents dit (FoOsBo) (Free on board) est une vents a
ltembarquement dans la quells le vendeur slengage a livrer la
marchandise livre do tomtes charges 44bord du navire".
Section 143 Iraqi 14w of Commerce No- 149 Year 1970-
(2) Devlin Js in Pffrene Cc* Ltdo v., Scindia Waviption Co. Ltd.
LlY>4j z 14*24 4UW*,
Carlof, IW%MLI al & Co. 'SOI6To awlep T%dia& Co.
LlYNJ I LIOYU'G NON Z4U*
HYMASI xr*, Jo, smite vi Englisk
-,
LUcl- L1957JI Ll- UP-* 517o---Th-aBoller has aareedito
secure the Mippint,,
(4)Ripert-, MDroit Yburitime " xt ps. 829 v*2,, This xttitude was
followed by 'the French Cassation Court in their decision dated
27-11-1957 which stateds "La, vente P, O*B, stanalyve, an me veake
a livror au port dtembarqtt=! mtt no compartant pour I* vAn&mr *W
2tob2igation d"amener-a son frais at risqtLes I& marabasAiss f"mO
devant le bord du a4ne" D.,X*P* 1958 at Pe 1469
* Valor F*A*S* contract, the seller wAortakes to deliver 40064
&I sa ship provided by Us bVw*
 -16-

At aW r&teq this attitude is not very popular in

Moreover, Article 35 of the law no,, 9 year 1969 has made it

clear that under P*O*Bq contract

the seller its bound to
(2)
deliver the goods on board ships

In other occasion the French Cassation Court rejected this attitude

in their decision dated 27-4-1957 which statedl wbien q0en
principe la responsibilit'O du vendear on FOO,B,, prerms foi lore
de la J-mek bod d, 1, ygrmdus.." 3)*X*Po 1958 at
p. 269,
(2) Article 35 states, "Toute clause (francc.. bord) oblige le VmAeur
I 11wer & bord ft navireg"
 CIMPTER1

AFFECTIMPROPERTY
DOCUNENTS

in

colore & F*00BOCONTRACTS

Bill of Lading
"Received" for Shipment Bill of lading
Through Bill of Lading
Delivery Order
Matet 8 Receipt
 -18-

*
I THE BILL OF LAMXG

Definition:

U*K* (Scotland and England

.ji

There is no definition of the bill of lading either In the

Bills of Wing Act 1855, or in any other of the varione Acts of

(')
Parliament in which the phrase to used. Bat Lord Blackburn

sWs: "A bill of lading is a writing signed on behalf of the Omer

of the ship in which goods are embarkedy aakmowledging the receipt

of the goods, and undertaking to deliver then at the and of the

voyageq subject to such conditions as may be mentioned in the bill

J2)
of ladIng. In other words, a bill of lading is a doeument which

is signed by the shipowner or his agent acknowledging that goods

haVe been shipped on bo=4 a particalar vessel which to boand for a

Particular destination and stating the term on which the goods so

O)
received are to be carried, These definitions have omitted an

important elemwrtq namely the condition of the goodet as the normal

For a hiertorio perspective of bill of ladIngt

V. B. Copp, "The bill-of lading as a docament. of title"o ; I*X6 thesis*
London School of"Zoonomiost 1952 at pp,, I an 6*
Sq Yankabadi, "The Dmosels Bills of TAM Conventiont Deficiencies
and Suggested Reforms" Ph*D thesiso London University, 197109'at PIP*7-8*
X*L* Hermaml "Lesvmtox a 1.1embarqttement an droit Allemand ot an
droi, t Francais st lee conditions requisex du connaissement"* PSAW
1963 at PP* 1-11 4o
Ro Rodeere '"Trait' 6ý1 do Droit Nwitime" p&rjq 19681.Vol*2
-at ppe 53--56*
(1) Scratton oft'dbart'OrPartiw(t 17th ad* at
(2) BjackVuiii', oxi imae (Ixt, I
P& 215;' ch61sere S''aaIa or Goob JL*tt
ýode)
18939 i4ili 4d* ' at p, 216*
Ie4&. C.Z. F.
sevoll V-2lkxrdigký
 -19-

oase of the bill of lading is to state that the gocds have been

shipped in apparent good order and condition*

Tag:

*
It can be inferred from Section 36 of the Iraqi Yoxitime Law

that the bill of lading is merely a receipt issued by the carrier,

acknowledging that the goods have been shipped* It providesi

"He [the carrier] to responsible for the goods which he receives

and he must issue a bill called a bill of lovding"o(l)

This definition is out of date, as the bill of lading is not

simply a receipt for the goods shipped, Its ftmotions have been

developed and it is becoming more important in international trade*

The judiciary and jurisprudence have accepted the new functions of

the bill of lading as they are set up in Brussels convention which make

this definition read strangely ard needs tobe modified*

Mmn6e:

Article 33 of the Lawdated 31-12-1966 providest

IThe 'bill of lading is delivex4 after receiving the 6odeq
it contains Us Inscriptions specifýing the Identity of the Wtiest
the goods tolbe -tramported, the elements of the journey to lob madel

and the freigbt to be Pajda"(2)

This Iew is officially called "Ottoman Yaritime Commercelaw".

Hwever this Law willbe repealed when the now draft of Iraqi
3kritime Law comes into force*
(1) The same definition can be inferred from Section 36 of the
MILritime JAWO
Saptian 6
(2) The French text B&T81 "Le oonnaisomeM Got d4liv" 0" r*0001491
des morchandinese 11 porte lea ineoripiJons propros a Itantifter, loo
Iso ft vapp 4
parties, lea marchandises a -tronsporter, elements
effectsur at Is fret a payer"*
 -20-

This article can be criticised as follows:

I- It does not specifically define the bill of lading, because

it states that the bill of lading is delivered after receiving

.
the goods., This Includes *Received' bill of lading also*

2- It has defined bill of lading through its contents without

mentioning its nature whather. it is document or receipt*

Professor Rodi6re has avoided those two okiticisms when he

states that the bill of lading is a receipt of defined goods shipped

on board a shipp and contains certain conditions to identify exactly the

(')
cargo azA the ship.

RMSVOrq the definition given by Professor Walker(2) seems -the

favoulurdblO
d Ones He states: "A bill of lading is a document j usually
in Printed fOrmi Completed in writing, stating that goods described

therein have been shipped in good order and condition in a particular

ship and -setting out 'the -term on which they bare been AelAmwed .-to

and accepted by tbe Wdpse

(1)
o4,o eirt un requ do mrobarAison definies embarVees a bord dtun
nsvire, dome, requ qai so preBente comme tel at qui Spond "a
certaines conlitions premettaut dtidentifier exactement I&
Wgaison at le navire, Somvmtg lti*rimO our lequel il ont
r&igiý se presents ouvertment come un "cormissament" cm un
"bill of ladizW",
Traits g4ý dAkDrait. ftri-time. v*2* 44 PP* 53
(2) Principles of Soottish Private Uw* Vol I at pp, 828 - 829
2nd ede 1975.
 -21-

The Contentst

The Brussels Convention has stated the contents of the bill

of lading in Article 3-3 as followsi

After receiving the goods into his charge the carrier or the

master or agent of the carrier shall, on demand of the shipper,

ismie to the shipper a bill of lading showing among other things"

(a) the leading marks necessary for identification of the goods

as the same are furnished in writing by the shipper 'before the

loading of such goods starts, provided such marks are stamped or

otherwise shown clearly upon the goods if uncoveredl or on the

oases or coverings in which such goods are containedt in such a

manner as should ordinarily remain legible until the end of the

voyage
(b) Either the vamber of pacim4ges or piecong or the quantityl,.: or

weightt an the moo may be, as furnished in wrkting by the, abippero

(c) The apparent order and condition of the goods*

As a matter of fact these oontmts hare been aocepted *&A

incorporated in the standard bills of lading all over the world.

Moreover, this Article hasbeen adopted by$

I- Carriage of goods by sea Act* 1924* Article 111-3-

The draft COMMeutiOn On the Carriage. Of Goods by Seaq adopted by

the Urdted Nations Commlseloftýon Inter lonal Tradeýtbi ``
(uNcITRAL) has stated the contents of bill of lading in Artiole
15- see the te"t in *aoufnal of Yariti" Law and COmOrOO
v*8. No. 2 Javaary, 1977 pp* 267 - 279.
Showing amongother things meansthe naus of the shipper, the
ship, the consignee, etco and list of 'excepted perils' &Md
EOW other things*
 -22-

2- Carriage of goodeby sea Act 1971, Article 111-7-.

(2)
3- French Law Decret, 31 Dece 1966 Article 35-

4- Iraqi maritime law, section 101.0)

In this respect it must be mentioned thatq although this

section has omitted to mention the apparent order and condition of

the goods as a contents in the bill of lading, but the form of the

bill of lading which is used by Iraqi maritime transport company

has mentioned thate Therefore the lacana in the law is avoided in

practiceo(4) Moreover the new Iraqi maritime law [which has not

yet come into foroej has specified that the apparent order and

condition of the goods is to be mentioned in the bill of lading

(5)
(Section 185).

(1) Commencement
23rd of June, 1977*
(2). The Xrench text "yet "Entre, autrest le oonualseeftent d0i't
indiquer:
(a) Los marques PrIncipales dentinq6e, sVidedificatift,
% den
marcbmAisee telles qmfelleg sont fournier par e"'crit par
le chargeur avant qme le obArgewen*de *Go MAroh#Mdi8e8
utait commence;lee marq%esdoivent Ure auffisantes poor
Videntifloation des marcharAteewet Ure aPPOffeesdo manie*'re
qtL'f)lles restent normalement lisibler jusqmfaý la fin du voyage*,
(10) Suivant lee
cang le nombre, den colis st objets (m lour quentite,
On lear poids, tele quOile scat foarnis par ecrit par Ie,
char
(0) PAM
at le conditionnement apparents des marebandisese
(3) Egyptian Wri-time Low Section (99)e
(4) In RaPtt Ible lxbk ban '00 Justified by 'the fact 'that tbiG
oovxtry has ratified the Brassels convention by the law Xo*18
year 1940*
360tiOn (180) of fte now draft of the Egyptian Nwitime Lwe
 -23-

Functions of the Bill of Ladi

The bill of lading has five functionse It is a document of

title, it is evidence of the goods, it is evidence of the contract

of carriage, it is -the contract of carriage and it is. an Instrument

to protect the property* These functions are discussed in the

following paragraphs:
(1) The bill of lading is a document of title?

Aefinition:

In Lickbarrow v. Mason(') -the court recognised a custom of

merchants that a bill of lading by which goods were stated to have

been shipped by any person or persons to be delivered to order or

assigns enabled the holder, 'by transferring the- bill, to transfer

(2)
the property in the goods to the transferee. Similarly? a pledge
(3)
of the bill can operate as a pledge of the goodse Therefore a

bill of lading as stated above to a document of title-to thegooAs

enabling the consignee to dispose of U6 goods by indorifement and

(4)
delivery of the bill of ladingp thetransfer of which operates

as a transfer ofthe constructive possession of the goodeq and may

operate as a -transfer of the property in them. Thus the bill of

lading as a docament. of title can be defined as followst

"It symb9lises the possession of-the goods in a form which enables

(1) (17802,124* 63'(1794) 5'T*R* 6830

(2) If 'that to the. intention of parties to the contmot Se-w-411-
ZL

(3) Sial AsstiMee 9; roantil! k biß

roant
3-2-6 Iraqi law

ArpM "Trod*#, - fth

the holder to dispose of the goods during their transit and

gives him the right to receive the goods from the carriero"

This idea is internationally accepted, and this definition

in in accordance with the commercial practiceo But the statutory

definition of "documents of title to goods" does not always meet

the commercial practices This point can be explained an followel

U*IC. and bigland)

-(Scotland

Documents of title are defined in the FaatOrs Acti 1889 Sole(4)

as d6cuments "used in the ordinary course of business as Proof Of

the possession or control of goods, or authorising or purporting to

authoriseq either by endorsement or by delivery, the possessor of the

document to transfer or receive goods thereby representede" This

definition includes not only bills of lading bat also delivery orders

and warrantst which are not documents of title in thevommm law

smixeg bat in modem meroantile praatice the tendency in to dexV

this quality to then (delivery orders, warrantst stoo) and Possession

aPPeare only to be, transforred under them when the bailey attorns or
0)
Intimates to the transfersee

Es"t

Section 954 of the F4mftian Civil Codeprovides i

"I- The delivery of the d664moutel, which are given for the goods

In the possession of the carrier or the warehousemen, is do ad to

andL&O"10diM, ý01dil4thO goods for the new awner*

AOCOPts
do i SI. 9 A*C* 2-93 311
14d i'i V*L*Ro 8"0817*
eter Eagnil & 2&* Ltd* ve !Iamau Min
W WýLdul & Co. Ltd* J6R* 337*
2 HoLe Case 3099 -S" p0o
 -25-

be a delivery of the goods themselves. "(')

According to this section the bill of lading arxi the delivery

or-der pass the possession of the goods to the buyer. The delivery

of these documents seems to be a delivery of the goods themselves

entitling the buyer to take actual delivery of the goods and to

dispose of them* But the judiciar7 in Egypt, particularly in

Alexandriat does not accept the idea of making all kinds of delivery

order have the same power of the bill of lading in transferring the

possession of the goods. The only kind of delivery order which is

oonsiderecl to be a document of title is that one which is signed by

(2)
the carrier or his agent* This argument in supported by
(3)
section 191 of the now Egyptian. Yaritime Lawo

Iracrt

According to section 150 of the Iraqi Law of Comm&ceWo,60

year 43 'the delivery of the Ull of lading was considered Jo be the

delivery of -the goods themselves. This was -in aocerdaws with

commercial practice, but section 194,-(2) of that law stated that

if the ship arrived before the documents, -the seller was bound to

procure a proper document enabling the buyer -to receive the goodse
Itseew that section 194 (2) was a strange one, as it did not

specifýr what kind of document the seller was bound to procurev

Tt mast be mentioned 'that it is beyond the scope of this

research to discuss the matters coneernitig-lbe, delivery in
CoIoP* and IFoOoBoocutrapt it, and whwther it takes pls*e an
:
shipment or 4 the time-w1mmthe. bmyer. receives. tbe, ýill
of Win&
(2) Alo2andria, Appes,
116A 1-1921- 3334-6
Almeandria,Apýý: 1ý-12-1927ýR40-neý"'
(3) see post at po 10 -
 -26-

whether it was a delivery order or something else. At any rate

that law was repealed, and section 197 of the new Iraqi Maritime

law has recognised the delivery order which is issued by the

carrier to be a docoment of titlee(l)

Francei

This problem does not appear in France* According to

jurisprudence. documents of title are those whibh represent the

goods during the maritime and the possession of which in

voyage,
(2)
the possession of the goods themselvese This definition is in

accordance with section (92) palmgraph 2 of the French Commercial

Law which has considered the creditor to have the Possession of the

goodev and therefore he am dispose of the goodst by the bill of

lading, while they are in a warehouse, a shiPt in OUGtOnst or a

(3)
public storee

T13methe Low and jurisprudence are in the same direction and

documents of title, in this context, do not include vM others than

bills of lading and those documents which might acquire the

charamteristics of bills of lading.

(1) seePostat P.
(2) "Un doc=ent represeMe la marchalldise embarquie lorsque durent
le voyage maritime, 1m;possession do as doement as confMA avoc
cello do la, marchandiso ell
J, A,)L U90nie "lo'CoMit8solmout A I& lot-tre do voiture
swritime" PPO
Z* Iffeenon
"'Voirteat oomercemarittlao"&t IT"
(3) Searkidn92-2- stat, 861 :"Le ar*majer owt,,r6poe amair,bw,,
mambsWises on+ma"Omm" ionv I*rmpl-eU*s sont I sa
disrOsition dans son m9asine ou navirerg la Domamou dans
PdbI
licý#-Ou Id &Vant qtttellem -sojent arriv4s 11 On*Vt
said-- Var un FV1,1-'MI ImInt Ou W =e lettre do volftme"o
 -27-

It is clear now that, apart from France, the statutory

definition of "documents of title to goods" has a much broader

sense than the commercial practice senset and this broader sense

is restricted either by the law itself or by practice to make it

in accordance with the definition stated above*(')

Conditions:

In the light of that definitiont three conditions are required

to make the bill of lading a doc=ent of title'

A, A bill of lading mist symbolise the goodst

(2)
A doement of title symbolises the goods to which it refers,

and, as we have seent(3) the bill of lading contains a fmll

description of the goods. possession of a bill of
Therefore,
(4)
lading is equivalent to possession of the goods, and transfer

of the bill transfers oonstrttcrtive possession of the gootle which

.a
places the good at the diMmeal' of the trmsfereeo(5)

(1) See Airtb at P. VS- t-+*

(2) Sanders Bros. v. McLean (1883) 11 Q*]B*D-327,341.
TLe Prinz Adalbert C1917)AeCe586,589*
fber ve Y47erstein (1870) L*R* 4 H9L* 317e
Ba;
(3) See Airte at pp. J_k- t. L-
(4) Walkerg Principles of Scottish Private Law* Vol*2 at V, 1687*
(5) A480tion 150 of the Ira# Lawof Commerce No,60-1943*
Meation 954 ofthe P47ptian civil code,
C-Artiole 92 of French ecomercial law,
D.X%Aersale of goods Act 1893, the transfer of the bill of
lading Is merely deemedto operate ama symbolical transfer
, possession of the goods,,bcrt not necessarily, an a traftrar
of
of the property, In them, whether the pr*perty -in: t--
dependis an _
the Intention Oartilse ofthe
Sewall vo- Dmrdick, 1884) 10 APP case 74
ýý V. Dmn4 (1845) 14 IT & Wo 403o
Section 17 Sale of Goods Ad 1893*
201-9vo New* Bank (1075) LqRq 10 C*P* 345,,
How does the bill Of lading transfer the possession of the goods?
In this respect two theories can be advanced to answer this question,

The first depends on the intention of the parties. The second

depends on the idea of unification between the right of possessing

the goods and the bill of lading. These are discussed in the

following paragraphs:

I The intentional theory:

According to this theory, the intention of the parties in the

major factor in this matter-, it either passes the possession of

the goods only or the possession and the property togethero

This theory is in accordance with section 17 of Sale of Goods

Act 1893* It this ftnotion of bill of lading according

explains

to the intention of the parties. Thereforeq the transfer of the

bill of lading passes such rights in the goods a& the Parties

intend to Thus where the Or IndOrs0s Of the bill

pass& consignee

is the agent of the shipper at the port of destination, it is

evident that the partiest by transferring the bill Of lading,

intend only to pass the right to claim delivery of the goods

from the shipowner upon arrival of the goods, but not the

property In them.. And where the consignee or indorsee is a

banker who advances money on the seaLrity of the goods

represented by the billl the parties are likely to intendt 1by

B-Onthe other bandthe transfer of -the'bill -to the transferee

was consideredto lhe-'-aconstructive delivery wAer Old Soots
Lawwhich passedthe property in the goods, and not Only
their possession,to -thebuier,
Bogle v*_Dumore&.Loo RoesL,C* 582, See post
 -29-

the transfer of the bill, the creation of a charge oi pledge on

the goods in favour of the Unker, but not the transfer of

property in them to him*(')

2 The unification theory:

In the light of this theory the right of possessing the goods

and the bill of lading have become united and ciumot be

separated. Therefore the theory that the bill of lading is the

goods themselves enables the transferee to receive the goods

and -to dispose of them while they are at sea@

This theory has been inferred from section 92-2- of the Fý-enoh

Commercial Law which has made the possession of the bill of lading
. (2)
equivalent to the possession, but not the PrOPertY9 of the goodso,

This theory can fit, to a certain extent, those legal systems

which are based on Roman lax (old Soots Lew and C;erman IW)0(3)

In these laws the property passes with the delivery of the goods.,

This means the possession of the bill of lading is the possession

of the goods themselves, as the bill of lading symbolises the

goods* Therefore, the delivery of the bill of lading is the

delivery of the goods, as, the possession of the goods is united

with the bill, of ladinge ftis unitybetween -the possession of

the goods ancl the bill of lading given the latter the ability to,

sebadtthoffl the Export Trade fthsed*mt ps 327*

...
(2) on comprend quo Itartiple 1 peper,
92"dit code'dir comberos ait pm 1,
le principe qae la POssession du conrudesAmunt,
A

posegesion do la wrohandisselle-meme.
(3) see Post ck"Pt"" two ,f C"*;O6" two.
-
 -30-

pass the property under Old Soots TALvand German Lmw* But it

mast be mentioned that the bill of lading passes the property

as a result of passing the possession of the goods. It does

not pass the propertyby itself. Thus the property is not

united with the bill of lading, but passes as a result of

passing the possession*

B-A person holding a bill of lading is entitled to claim delivery

of the goods from the carrier:

Uelfo and England)

-(Scotland

In the deliver the goods to

normal case the carrier will only

be bound to
the person in possession of the bill and will not
0)
bill* Ifh,
deliver the goods except on production of the

carrier be liable to the holder of the bill if he

will

wrongfully delivers the goods to another personP) Tbus Lord

(3)
Deming said:

"It in perfectly clear that a shipmmer who delivers without

(i) Short vo S wean 1866) L*R* I CePe 248

Te-rstein, (1870) L*R* 4 16L* 317*
IkLrber v., Y4, [1951:
Trucks & SRares Ltd. v. Yaritime Amen. cies L]2
td, All ER*982o
Barclave Bank Ltd. 2S9319sionersof 21stomsand Excise. r196D
r7laoyd's Repo819 v.
69*
(2) Bristol &V- of EnrU34 Bank v. Wdland ft Co., Ci891 ]2 Q*3*653o
* NYP
ze a d, vo Rambler Cycle Co. Ltd* 1195 A*C,576,
ý2LM --Mills & Coove Es & WoIndia Dock C&S_J1652 ) Cas*5919
The holder of the bill of lading was not entitled to the goods,
tut the shilxwner was discharged as he delivered the goods in
good faith and without notice of any defeat in the holderIG titlOo
(3) SSAIýM y"_&+ po
0
 -31-

production of thebill of lading does so at his peril. The

contract is to deliver, on production of the bill of lading,

to the person entitled under the bill of lading, "

In practice, shipowners rigorously insist on the production of

a bill of lading, but, where the bill is produced and the

identity of the consignee is in doubt, they sometimes deliver

the goods against of indemnity

letters which in some instancest
(1)
have to be provided by a banks

The reason which entitles the person holding the bill of lading

to claim delivery of the goods from the carrier is that the

is deemed to be the agent of the buyers In other words

carrier
he is the agent of the holder of the bill of lading* Thus

section 32 of the Act providesl

"I-where, in pursuance of a contract of sale, the seller to

anthorised. or required to send the goods to the buyer, delivery

of the goods to a carrier, whether named by the buyer or not,

for the pu2-posq of trmwlission to the buyer is prima facie

deemed to be a delivery of the goods to the buyere" Therefore

the agent must deliver the goods to the prinoipal when the latter

identifies himself by presenting the bill of lading.

Sobmi-ttboff at Ps 328* - *- -. '-

2gibm. va WhOmmol-1,915 soce,616w
 -32-

I. raj and rgMa

The jurisprudence in Iraq and Fgypt has reached this rule

through the idea of possession* The bill of lading represents the

goods, therefore it passes their possession to the buyer. This

means that the buyer is the real possessor of -the goods and the

carrier is only an ostensible possessor* Consequently he

(the
carrier) mast follow the orders of the real possessor and

nust be liable for any damage caused to the goods by hime Thus

when the carrier delivers the goods to the buyert he iev in fact,

fulfilling his obligation towards the real possessor*()

This rule is settled in seotion 188-2- of the new :Craqi

Writime Law which providest ".. *the 'bill of lading gives the

legal holder the right of receiving the goods and disposing of them.. "

FI=cml

(2)
This principle is clearlY established in prlmoe.. A number

of theories have been said to juvtjfýr the legal basis of this

principleo(3) The most acceptable theory. is the (me which depends

(1) Rueni,J* Thp Maritime Sales at P- 45o

A2.0gailie The bill of lading at py, 193 and 249.
(2) "Is function do legitimMion du comajesomout impliqa* qtLaI,*
porteur du titre uta, pas besoin do prouver son droit XtLr 1,98
merdhand4sonvon* obtanir lour delivrence au lx)rt do dextinatIon
ot quo le papitaine no droit dolivrer I& marchandise qtLoun
porteur legiýiud'*" 1490nie at P133.
.
(3) "Stira&*iOn Pmr autrui" Bald bY ITOn.Caenst Ronmjtj v95,
Pam 750&
Mk uan"V by Ripert v*2 pam 15869,
--said said by Silvio Bmtlorq in his thesig
w1hUar PrObanta ft Comai sament" vP&Tigj t,933i
ZAt P* 46*
 -33-

on the fact that the legal holder of the bill of lading has the

symbolic possession of the goods which gives him the right to

(') -
claim delivery from the carrier himself.

E." lu at i on

Neither the theory which says that the carrier is the agent

of the buyer, nox that one which says the carrier is the ostensible

possessor of the goods can interpret the position of the Carrier

internationally. The first one is based on the Sale of Goods

Act 1893, and the second one is based on Iraqi and Egyptian Laws.

Moreover, both of these two theories are not in accordance with

commercial practice,

The first theory can be criticized as follows:

I In the case of buyer's insolvency the seller is entitled to

eXercise his right of Istoppage in t ransitut while the goods are

still in the carrierse possession. In that event the seller

Changes the chal4kater of the carrierte custody from that of

agent of the buyer to that as agenIt for himself and therefore

the carrier is not the agent of the buyers If the carrier

were the agent of the buyer, the seller would not be able to

change his character.

2- The carrier is not the agent of the buyer, as he Cannot i4ute

what in wriften in -the bill of lading., The bill of lading to

(1) Possession symboliqueoe* "Elle donne vm droit & la djjivranoe

do la marthandise par I& capi-baine, qmj-ne doij
-steftý,-dogStWr
clutun profit du porteurow
Traite de Droit )britine at
 -34-

conclusive evidence in the relationship between the carrier

and the buyer* Therefore if the carrier was the agent of the
buyer, he would be able to rebut the bill of lading in his
[The buyer]
relationship with his principal .
Concerning the second theory, the bill of lading
represents the goods as it contains a full description of the
goods* Therefore possession of the bill is the possession of

the goods themselves enabling the buyer to claim delivery from

the ostensible possessor [The carrier] e

This theory cannot interpret this rule properly because

the delivery order, which is signed either by the seller or by
the buyerg contains a full description of the goods andq

oonsequently, it represents the goods, butit does not entitle

the holder to claim delivery from the oarriero Therefore this

interpretation is not cplite right.,

Unilateral Undertakinits

The carrier to neither the agent of the Imyer nor the

ostensible possessor of the goods* ReAs, simply, a carrier

who undertakes, by his own will, to take the goods rrom the

seller arA deliver them to the holder of the bill of lading,

This unilateral undertaking in shcvm by the oarriereg signstute

an thebill of lading, The obligation'of the carrier, in

literal (littefrale) "and indepwident (antonome), 14teral beasase

it to defined by the terms mentionedin the bill of ladingt and

consequspýl*, the oerrie* It 'prevented ýfirm d4liveringý'-6ther

goods than those stated in the bill of lading* Independent

 -35-

because the bona-fide third party (indorsee) is not affected

by the relationship between the carrier and the shippert and

consequently the carrier cannot prove contrary to the bill of

(')
lading. Therefore the right of the holder can be interpreted

through the obligation of the carrier by stating that the

carrier obliges himself by his signature to deliver the goods

to the holder of that document which is signed by him, and to

accept any responsibility for any damages caused to the goods

by his negligence during their transit*

It seems that the (UNCITRAL) draft convention on the

Carriage of Goods by Sea has adopted this theory., Thus

Article 1-6 providest

"Bill of lading means ... , and by which the carrier undertakes

to deliver the goods against surrender of the documents A

provision in the document that the goods are to be delivered

to the order of a named person, or to arderl or to bearer,

constitutes such an undertaking... "

A bill or lading must beg to a certain extertl negotiable:

Bills of lading can perform their principal function of enabling

a person to dispose of goods which are no longer in his-

possession only If they are, at least to some extent, negotiables

(1) Silvio Balter, ' "Valeur Probante Da Comajiggemnta thefte

Pu4st 1933 ai PP* 44--45*
 -36-

U.K, and EWand)

-(Scotland

Goods shipped under a bill of lading may be madedeliverable

to a namedperson, or to a name left blank, or tto bearer',

and in the first two cases may or may not be made deliverable
to 'order or assigns'. Bills of lading making goods
deliverable 'to order' or tto order or assigns* are by
0)
mercantile custom, to certain extent, negotiable inirtrumentg.

Thus the bill of lading must make the goods deliverable to

bearer, or to a named consignee "or order or assignst, or

simply to Oorder or assignst. If the bill of lading makes the

goods deliverable to a named person, without adding *or order

or assignst, it is not a negotiitble therefore

instrament, it
(2)
is not a document of title in the commonLaw sense.

- Indorsemeut in the way to accomplish the transferral. of the

(3)
bill of lading. Indorsement in effected either by the

shipper or consignee writing his name on the back of the bill of

lading, which is called an lindoreement in blankI or by big

writing "Deliver to I or order I" which is called an

"indoreamezrt in full". So long as the goods are deliverable to

a name left blank, or to bearer, or the indorsemwft in in blamkq

the bill of lading my pass from hand to hand by more delivery,

(i) Scration 180'st. at p. 181.-

(2) 4LeRLe;lg!.n &-Coe Vo The Comptoir dlesPOMvte do ftris (1873)
^ ose -%
LIOJEO 7 rovo
Sopnoma S P*A. v. Jkrine & Animal ME:Lroducts CorD,

(3)
I Lloyd' 9 Rep. 367
9"3
Or by an undertaking I.
SaA
to indoreat
A%
Dick v. Learide-a (1793) P*QM
rAmer v&. 2aux ae
.. .
 -37-

or'may be delivered without any indorsement to the original

(')
holder, so as to affect the property inthe goods.
A bill of lading is negotiable in a popular, and not in a
(2)
technical sense. The word *negotiable' was not used in the

sense in which it is Ased as applicable to a bill of exohangeg

(3)
but as passing the property in goods only,

In two respects, the negotiability of bille. of lading is

less developed than that of bills of exchange* First while a

bill of exchange is negotiable unless its negotiability in

expressly excluded, a bill of lading is only negotiable if made

*negotiable* by the shipper. Therefore the rules governing the

consideration for the transfer of a bill of exchange do not

apply to the transfer of a bill of ladinge SecOndl.T. the

-
transferee of a bill of ladingg as a general rule, only amMires

such intereft as the transferor had, and does not take free from

defects In the transferorts title* That is to say the indorsee

(4)
does not got a better title than his assignor. Thus the

bill of lading is not a truly negotiable instrument as is the

(1) Scrutton. at po 181o

(2) Numv. WakTait Bank C1971] I Ljoydto Reps 439 at
p. 446*
(3) UomiDsonve DgMLM (1845) 14N & We 4039 408.
(4) Gurneyvo-Wmend (1854) 3 Zo i 13- 622o
And if the'transferot has no titlet, no Utle will be trwwfirreC,
Barber ve erst! jp,, (1,5ý70 L*R* 4 HoLs 317,
Gilbert vo Gaignoft (1,72) 8 Cb, App. 16, -
 -38-

bill of exchange*(')*

In two exceptional cases, however, statutory provisions

enable the bona fide indorsee of a bill of lading to acquire,

upon certain carefully defined conditions, a 'better title than

his predecessor possessed. The Factors Act, 1889, S, 2 (1),

protects an indorsee who takes a bill from a factor acting in

excess of his authority, an& the Sale of Goods Act, 18931 S-47f

provides that the unpaid seller's right of stoppage in transitu

is defeated by a previous transfer of a bill from the buyer to

an indorsee who takes the bill in good faith and for valuable

(1) Waring v. Cox (1808) 1 Camp. 369,370* - (1868)

Dracachi v. Tmglo-Exmtian Navigation L*R- 3 C-P.
190,1929
WiRponTusen Kalsba vo Ramliban Scraw.-ee 47. 1938] A*C`* 429,449.
Bateman Green (1667) 1 Re 2 C*L9 166l
Senjaminv,at pe 4*
It was said under Old Soots Law that "A bill of lading is a
negotiable instrument like a bill of exchange, and assignment
of it to an onerous indorsee opera-tee as a complete transfer
of the property described in it" Rose LeCe at P- 580 v-II
This idea was rejected on the grounds that the effect of the
endorsement of the bill of lading was to assign "A right to
receive the goods, and to discharge the shipmaster as having
Performed his undertaking*", John NoLaren on Bill9a Com, v, J
at p* 215 N-13-
The true tiew can be stated an follows:
The bill of exchange and the bill of lading had similar effect
in transferring the property, but they worked on different
basest The bill of exchange represented mony and passed, by
itself, the property in money, whereas the bill of lading
represented goods and passed -the property in them an a result
of passing their possession, an the property in the goods
passed with delivery under the Old Scots Law, CSee post
Chapter two and onto at ppo tf-30 The unification tbecry:. 3
Therefore the watt erftL'ý
concerning the bon&'fido Ind6rsoe Mst
not affect -the -nature of the bill of I lading* ,These--Ugftsrs
are solved vader a different category, of rIllog*
 -39-

consideratione

Tracr

In the light of section 101 of the Iraqi Maritime Law, the

bill of lading mast be issued in the named person or his. order or

(2)
'to bearer'.

The transfer of the bill of lading depends on its form,

Therefore if the bill of lading is made deliverable to a named

person, it cannot be transferred by endorsement but by following

the procedure of tAssignment of right' 0(3)

The form which makes the goods deliverable to a named person
(4)
or order is transferred by mere endorsement which is effected by
(5)
the endorsor writing his signature on the billvilading,

whereas the form which makes the goods deliverable *to I)earerl or
to a name left blank, can be transferred by mere delivery from

hand to h&zA*

(I)
Alsot Fuentes v. Ibntis (1868) D-R- 3 C*P* 268 at p. 276.
Leduc ve Ward (1888) 20 QeB*DZI475
ýn S*S* Coo v. Tate & jZle ' 936) 41 Com- Cas* 350*
Pease ve Gloakee 0 66) L*R* I PC* 219,
(2) Section 99 FgYptian Maritime Law*
(3) Sections 362-374 Iraqi Civil Code* Sections 3031-305EaPtian
(4) Section 189-3, The now Iraqi Maritime Law (drwft). Civil Code.
(5) Section 429 Iraqi Law of Commercee
Section 189-4 Iraqi Maritime Laws
In Rgypt the endorsement is considered to be a new Janie
of the bill of lading# therefore the mere signature of the
endarner is not sufficient to Pass the rights incorporated
in the bill of lading to the endorses. The erAorser anst
put h1stiamag the name of the *vAors6e, or Or4*rtU_g sip"W9,
-the date of his signature and all other obligatory items
mentioned in Section 134 (Raptian Commercial Law)-, Tbas in
 -40-

It seem now that the bill of lading which makes goods

deliverable 'to ordert or tto bearert or to a name. left blank

(1)
is negotiable according to Iraqi law,
(2)
This negotiability, according to Jurisprudence is not

quite similar to that of a bill of exchange, On one side the

bill of lading purges the defects in the transferorts title and

the bona fide transferee acquires a better title than the
O)
transferor himself, On the other side the rule of the bill of

exchange, namely, "Solidair Garantiell is not applied to the bill

of lading. I
According to the new Iracfi Maritime Law, this negotiability

is quite similar to that of the bill of exchange on the ground

that the rule "Solidair Garantie" is applied to the bill of lading

which makes the goods deliverable 9to order', unless it is excluded

coirt Id
the lack of any or these obligatory items the bill of lading to
not a d6cument of title (Section 135 Egyptian Commercial Law),
As a result the form which makes the goods deliverable to a name
left blank is not a document of title according to Egyptian Law.
This argumetit him been criticised by Egyptian Jurisprudence on
the ground that the custom has recognised the form Ito ardert to
pass the rights by more signature of the endorsor.
Taha No, 299, Sharkewi No- 327-
(1) so it is In Egyptian Law except for that form Which
makes the
goods deliverable to a name left blank* This form is not
considered to be a document of title _
according to the lawl-'but
in practice it is considered to be each and can be iransfWed
by endorsement only* As a matter of fact the forms *to bearer'
or Ito a name left blank$, are rarely. used in practille. 43M,to,
the danger of loss*
(2) Hasni at Pe 40*
Al-Ugaili at p- 3629
Mejp*Aing on geotion, W2, of the LebameseNcritiale L@w.
 41-

by the partiese(l)

FTancel

Bills of lading which make the goods deliverable to a named

person are not documents of title, whereas those which make the

goods deliverablIto bearer* or $a name left blank' or 'Ito ordert

are documents of title* Documents of title are transferrable

either by mere delivery Eo bearer to a name left blank: 1 or by

indorsement (to The indorsement is effected by the holder

orde]O

writing his signature at the back of the bill* The negotiability

of the bill of lading is very much the same as that of .& bill of

exchange except for the rale "garantie solidair" which does not
(2)
seen to be applied on bills of lading*

An a matter of fact, the nature of the bill of lading is

different from that of the bill of exchange, and there is no need

to apply the rules of the latter to the former* The bill of lading

mast be understood as an instrument to pass the possession of the

goods and may pass the property. Therefore its rules must be

arranged according to commercial needs and protection of propertjr,,

Consequently the rule which says that the bill of lading passes

better title to a bona fide indorsee than the indorsor has himself

to an acceptable rule cm the ground that +,he- bona, fide indcrgge

must not be bound by the relationship', between the carrier &nd the

shippert and xmt. not be bound by somnihing wbich is no+ awltioned

Section 189-5 of the now Iraqi Maritime law. (draft)

seotion 182-6 of the now EgYPtilm Maritime l4w, (draft)
(2) Ripert, Vol,. 2 at pp- 758-762o
1* Vol. 2 at ppe 111-113o
Rodier,
 -42-

in the bill of lading. This rulev of course, must be subject to

the rules of forgery.

(2)-
The bill of lading is evidence for the goods.-

Bills of lading usually contain a statement as to the

description, quantity, nature, marks and packing of the goodog

and similar matters., These statements may confer important rights

on third parties who, in reliance on the statements, take up and

pay for the bills of lading under contracts of purchase or pledge.

Therefore, a bill evidence that the goods are

of lading is
(1) (2)
shipped. p the date of sh,ipment, the quantity of the goods,
(3)
and the condition of t he goods at the time of shipment& -In this

respect, a brief account mast be given of these functions of the

bill of lading in the following paragraphst

U*K* (Scotland and England)

(1) The Comon Iawt

A* As evidence of shipmentt

The bill of lading is prima facie evidence that the goods have
- it lies
Ibeen shipped, and burden of disproving on the shipowners(4)

(1) Smith v. BedoginStgo Xav tion Cgo 18963Aoc, 70-

(2) Jo Aron ve Comvtoir Wegluorit [ig2l] 3 X*B* 435*
-&'do*
(3) The Peter der Grosse (1875) 1 P*Do 414o,
(4) Smith ve Bedouln C1806
1 70. t.
4 -(-C-
Thrrowing ve Katz (189); 10 T#L,Ro 400; 896 AoC* 73
lmwý -13 F, v*-ýcon (1897) 2 Cam.
Bemett a?A-TY(-nm 107.
Att., Geno of CSXlon v* Scindia 1,06g AoCo 60 (P*Co)
v
 -43-

(I)
In Grant v. Worwav, it was held that tthe master had no

authority to give a bill of lading for goods which had not

been shippedv therefore the transferee of the bill of lading
(2)
had no claim against the shipowner* But a bill of lading
stating that a cargo which is not in fact on board has been
0)
shipped may become valid by subsequent shipment.

It is true that -the, 'received' bill of lading(4) does not

provide the buyer with the actual date of shipment, but it--

does not leave him. ignorant of the date of ishipmeritv because

the goods must be shipped within the contemplated period of
the contracto(5) Thus the tRaceivedl bill of lading Is prima

facie evidence that the goods will be shipped within a certain

time*

(1) (1851) 20 L*.T*CeP. 931 10 CoB, 665-

(2) Alsot
Colemanve Riches M75)
ý1855)16 C.B. 104-
The Emilien Mari; 44 LoJ. Adm.9.
Heskell ve C Ina"tal E=ss (1950) 83 Ll*L*Ro 438.
DMhOlmv- Halmoe (1887) H- 152oSo* LeRe112.
Hubbersty v. Ward 22 LoJeEic,1139 11598 Ezo 330.
Coventry x: G*EoRy, (1883) 11 Q*B*D-776.
Thormanv& Dart (1886) 54 LoT. 3491 5 Asp. X*C* 563.
Thill vo LiXIMooll etc* SoNeCoo (1901) 18 T*L*Ro 226.
(3) Gattir. 00 I-MMMIS (1862) 12 C*B. (NoS-) 560o
(4) See POIA&t P- S It -
(5) 12lLv# 599k YlachadO ! I.-d- [1952] 1 Lloyd'Is Rep. 1839 1929
33. As evidence of quantity:

The bill of lading is conclusive evidence of the statement of

quantity mentioned in it9 if the master or other person signing

-the bill of lading on behalf of the carrier is acting within

the scope of his authorityg on the ground that the master is

(')
only authorised to sign for goods which he receives. Thus

-the master of the ship has no authority to sign a bill of

lading for a greater quantity of goods than is actually put on

boardl and the shipowners can prove that the whole or some part
(2)
of it is in fact not shipped by very satisfactory evidence.

Lord Chelmsford in McLean v* Remi43) said: "The master is

the agent of the shipowner in every contract made in the usual

course of employment of the ship.. And though he has no

authority to sign bills of lading for a greater quantity of

goods than is actually put on board, yet9 as it is not to be

presumed that he has exoseded his duty, his signature to the

bills of lading to sufficient evidence of the truth of their

contents to throw upon the shipowner the onae of falsifying

them, and proving thathe received a lesser quantity of goods

(j) RoUM & Mwe V. plemiM, (1871) 9 No (114s) 38o

(2) '4'n S. S& CO* Vo jerdman & MoDOUMI0922) 11 Ll*L*R* 566
vo Walford -LAms ý1922) 12 Ll*LeRo 139s
0), 26 Can, Chm.
Sanday vo Strath SS- Coo 19; 163. (H*Lo)
Smith & Coo ve TL* S+,
= YSMLPI.&On C (1895) 2-3,R;
.
(3) SuPraILt P. 44o
 -45-

to carry than is thus acknowledged by his agente *

If such statements can be shown to be false, the buyer will

normally have his remedy against the seller; and he may also
have a remedy againatthe person who signed the bill of ladingg

or the person in whose name and with whose authority it has

(2)
been signedl(l) under seation, 3 of the Bills of Lading Act
(3)
18559 or for breach of warranty of authority*

Sometimes the shipowner is bound by the statement of crdantity

in the bill of ladi Ir 1; if o agreed:
LiBhman v. Christig 887)619Q*B*D*333-
Fisher v. Calder (T896) 1 ComeCase 06.
Orossfield v, Lyle Shi-opinr, Co Oltl 2 KoBe 885-
P,Man ve Burt 0 884) 1 Caba& E- 11 e
Mediterranean SS Co. v. MacKay E9011 -907I *KeDo 297-
Mes he can show fraud:
Su r Commission v* Flartlepools SS Co, P17o 1 27] 2 K@B*419.
ro=v*-Dr2Xfus, (1937) 59 la. L. R. 110,
And it may be a valid document even though the quantity of
goods shipped is left blank, and later correctly inserted by
the shippers
Cowdenbeath Coal Co*-Iitd. vk-Clvdesdale b& Ltd (1895) 22 R-687*
(I) ve Powell Coal Co- (1875) L. Re 10 CoPe 5621 568.
Parr-one v* New Zealaad Shimine Co. IIA K*B* 548-
Contrast Lord Esher XeRe in, Thorman Burt (1886) 54 LeTe 349,
e
350*
(2) S. 32 "Every bill of lading in the hand of a consignee or
indorsee for valuable consideration representing goods to have
been shipped on board a vessel shall be conclusive evidence
of
such shipment as against the mapter or other person signir4.
the same, notwithstanding that such goods or some part thereof
my not have been so shippedl unless such holder of the bill
of lading shall have had actual notice at the time of receiving
the s=9 that the goods had not been In fact laden on board;
provided that the master or other person so signing my, exonerate
himself in respect of Inch -misrepreseoftation by showing that it
was caused withowt-apy default an his part, and wholly lyy the
fraud of the shipper, or of 'the holder, Or some person under
whom the holder clalm*"
See alierev (1866) LeR. I CoPo 382o
(3) Parsons v. New Zealand Shiming Co. rigoll '' -QoBo548-
v/o Rasnoil2ort ve Guthrie & Cojw Ltd. 119W I la"40 a Ripi, i"
T! - v HA L-O-R-
Ummn1da- INQ (1QA71- 2W
 -46-

This remedy against the master, however, may be of little

practical value since most masters of ships are comparatively

poor people*(')

It seems very clear now that the bill of lading, in this

respect, is not conclusive as between the signer and the

shipper; nor between the shipowner and the holder for value,

unless the owner signed the bill personally or through a

servant who is acting within the scope of his authority.

Ce As evidence of condition:

It is necessary to distinguish between the "quality" of the

goods, which, in so far as it is not apparent to an unskilled

person, it is not the master's business to know, and their

"condition", which means their apparent or external condition,

which he is bound to notice. That means the word "quality"

has been taken to refer of the cargo

to the inherent character
(4)
and the word "condition" to the outward appearance, and this
10
seems the more reasonable view. --', '.

(1) Shipping Law, Chorley & Giles at p, 167-

(2) Neyer v. Drisser (1864) 16 C,B, (W, S, ) 646o
(3) "rhe person signing " does not mean only the person who
actually affixes the signature* It includes a person for whom
a clerk or servant signs in a purely ministerial capacity; it
does not Include a person-on Aose behalf an agent with
discretionary powers, such as a master or broker, signs the
bill*
Thorman vo (1886) 54 L*T* 349o
-B=4
(4) compagnia Waviera VascMg1da vo Churchill
- & Sim [19036 1 K. B* 237,
245*
National Petroleum (1934) 39 com. Caso 227*
o ve - helvis, punt
I er v. Ocean SS Co. 19321 1 IC.B- 4169
lno"29PWia of IN 113 of Scotland v, III, 1927 at pe 49-
(5) Chorley & Oiles at pe 163s
 -47-

It must be mentioned that the English Law is different from

Soots Law, as followst

In England:

The master does not, generally, bind the shipowner by a

(1)
description in the bill of lading of the quality of the goods,
But where the bill of lading states that the cargo was "shipped

in apparent good order and conditiorift, the shipowner is estopped.

(2)
as against an indorsee for value of the bill and against a

person rightfully presenting the bill of lading and taking

delivery therounder(3) from proving that they were not in

apparent good order and condition, unless it was clearly known

to the indorsee or person presenting the bill that the statement

was untrue or it is proved that he did not aWupon the faith of

(4)
the statement. -

In Sootlandt

A statement in the bill of lading that the cargo was shipped in

good order and condition did &gj estopthe owner from denying

this in a question with an indorsee of the bill who W become

an indorsee for value on the faith of the statement* A strong

illustration of the application of the rule is afforded by the

(1) ccmv. Bruce (1886) 18 Q*B*Do147-m-

(2) CoomPania
Vascangads,v. Churail -11, Supra.
ir-he TrompC19213 P-337.
The SkarD [19353 P-1349
(3) Br_andt v- Liverpool, [1924] 1 X-B- 5759
(4) '[19353 P-1349
 -AA
+W

oase of Craig & Rose v. Del2jgý') where oil was shipped in

leaky casks for which a clean bill of lading was granted, with

the result that a great part of the cargo had been lost before

the vessel arrived, The shipowner was held not responsible

for this leakage, he having proved that the casks were in bad
(2)
oondition when shipped.

(2, ) Gocds by Sea Act 1971

. -Carriage of

Article III Rule 3 of that Act provides:

"After receiving the goods into his charge the carrier or the

master or agent of the carrier shallg on demand of the shipper,

issue to the shipper a bill of lading showing anong other thingst

(a) The leading marks necessary for identification of the goods

as the same are furnished in writing by the shipper before

the loading of such goods starts, provided such marks are

stamped or otherwise shown clearly upon the goods if

uncovered, or on the cases or coverings in which such goods

are oontainedl in such a manner as should ordinarily remain

legible until the endo of the voyage.

(b) Either the number of packages or pieceel or the qtxantity,

orweight, as the case may beg as furnished inwriting by

the shipper,

(c) The apparent order and condition of the goods.

Provided that no carrier, master or agent of the carrier shall

be bourA to state or show in the bill of lading amy Marks,

(1) 1879 6 Re 1269,

(2) Encyclopaedia of-the Law of Scotland V, 117 at p, 49,
Contrast Walker vol at p. 832,
 -49-

number, quantity, or weight which he has reasonable ground

for suspecting not accurately to represent the goods actually

receivedt or which he has had no reasonable means of checking*

Such a bill of lading shall be prima facie evidence of the

receipt by the carrier of the goods as therein described in

accordance with paragraphs 3 (a), (b) and (c). However,

proof to the contrary shall not be admissible when the bill

of lading has been transferred to a third art actinR i

))
good faith.

The additional words in Article 1119 Rule 4 make an important

-change in the law. In cases governed by the Amended Rulesq

the principle of Grant v. Worwav(1) does not applyl and the

carrier is estopped, as against a transferee of the bill, from

denying shipment of the quantity or number of goods described

in the bill* That is to say, the bill of lading in the hands.

of a consignee or indorsee becomeag prima faciet evidence of

the truth of the statements made in it as against the others

(shipowner, master of the ship and the shipper)* Therefore

the transferee in in a substancially stronger position under

the Amended Bales, than he would be at CommonLaw.

(1) (1851) 10 C.Be 665o

 -50-

Ekmt .

Egypt has ratified the Brussels

convention relating to bills
*
of lading by the law No. 18-1940-, Article 3-4- of that

convention providesi

"Such a bill of lading shall be prima facie evidence of the

receipt by the carrier of the goods as therein described in

accordance with paragraph 3 (a), (b) and (o)*"(')

And Article 3-5 states:

"The shipper shall be deemed to have guaranteed to the carrier

the accuracy at the time of shipment of the markst namber,

quantity and weight, as furnished by him, and the shipper shall

indemnify the carrier against all lose, damages and expenses

arising or resulting from inaccuracies in such particulars.

The right of the carrier to such indemnity shall in no w;&.

v

11mit his responsibilitZ and liability under the-contract of

glMiasce to LiM person other than the ship-per. "

According to that law, the rules of-the convention must be

applied to those maritime contracts which contain a foreign
element, and since we are dealing with C. IsFe and P*O*B,,
contracts as international sales: therefore we are excluding
those contracts which do not contain a foreign element. Those
contracts are subject to section 101 of the Egyptian JILritime
Law which makes the bill of lading a mere evidence liable to be
refutted by contrary evidence, This situation has been critioised.
by jurisprudence, andthis seetion will be repealed by section 188
of the now Egyptian Maritime Law which makes the bill of lading
conolusive. evidence In the relationship between the carrier and
the Consignee*
(1) See Ante at pAI
 - I-
.5

It is obvious that the final words of this Article make the

bill of lading conclusive evidence of the relationship between

the carrier and the consigneeg whereas it is not so in the

relationship between the carrier and the shipper. This

interpretation has been adopted in a famous decision of

Egyptian Cassation Court. It was stated:

"In the relationship between the carrier and the shipper, it is

allowed for each of them to prove contrary to the bill of lading,

but, in the relationship between the carrier or the shipper and

the consignee, it is riot allowed for the formers to prove

contrary to the bill of lading against the latter, This is the

aim of the convention*"(')

Iracm

According to section 103 of the Iraqi Naritime Law, the bill of

lading is considered to be evidence of the goods, but it is not

clear whether it is conclusive evidence or liable to be rebutted

by contrary evidence* moreover there is no reported case on

this subject.

It seems that the bill of lading in not conclusive evidence

according to Iraqi T&ritime Law on the groundst

Section 102 of that Law has stated that the bill of lading is to

be issued In four copies for the shipper, the consignee, the

captain andLthe shipovner. This means.that these four people I

are the parties to the bill of ladingg theiýfore any'of' Ithem

(1) 14-12-1965, The collecrtim year 16 at p* 1249,

 -52-

can prove contrary to that bill against any of the other

three.,

2- The effect of the other Arabic Laws:

Ae In the light of section 199-6- of the Lebanese Yaritime

Law the bill of lading is not Conclusive evidence for the

goods*
B* According to section 101 of the Egyptian Maritime Law, and

apart from the convention, the carrier and the shipper are

entitled to prove contrary to the bill of lading in their

relationship with the consigneee

This positiong however, is going to be changed when the now

Iraqi Maritime Law comes into force. Section 194 of that law

providest
"I-The bill of lading is evidence for its contents in the

relationship between the carrier, the shipper and the other,

2-1t is allowed, In the relationship between the carrier and
the shipper. to prove contrary to the bill of lading, In the

relationship between the other and the carrierl, the other

only in allowed to prove contrary to the bill of ladinge"

3-) The bill of lading as evidence of contract of carriaget

Is the bill of lading a conclusive statement of the contract

- between the shipper and shipownerl or is it only one piece of

evidence wbi0h. assiste with others to show what that contract,

I
jej and so subject to be contradicted, or varied or added to,
by verbal or Mer evidenow, "to show the agreement betweejiýýthe

parties?
 -53-

It is often said that a bill of lading is not itself a contract

of carriage, for that has been made before the bill of lading

was signed and delivered, but it is excellent evidence of the

(')
terms of the contract.
(2)
Lush J. said in Crooks v. Allan:

"A bill of lading is not the contract, but only the evidence

of the contract; and it does not follow that a person who

accepts the bill of lading which the shipowner hands him

necesearilyg and without regard to circumstancesq binds himself

to abide by all its stipulations* If a shipper of goods is not

aware when he ships them, or is not informed in the course of

the shipment, that the bill of lading which will be tendered

to him will contain such a clausel he has a right to suppose

that his goods are received on the usual termag and to require

a bill of lading which shall express those termso"(3)

Thus the bill of lading is only evidence of the contract of

carriage, and in a number of senses this is no doubt true, but

It is liable to be rebutted by contrary evidence* Therefore

it in open to the shipper to show eveh oraly that the true

terms of the contract are not those mentioned in the bill of

(4)
lading, but are to be gathered from the ms:tes receipt,

(1) POr L=ýL 21'mwell in Slewell v- %rdick (1884) 10 APP-cas-74 at p. 105.

Reskell vo Continental ef's, 0950) 83 Ll, L*Ro 438 at P*449#4539455-
Thw-Arden-nesC1951ZOX*B- 55-
Pyrene v. Saindi WwrimationE1954] 2 Q,B- 402 at P*419v424*
(2) (079) 5 Q-3*14-389, 409,
(3) Alsol Jones v. Hough,(1879) 5. Ex. D. 115,124-
(4) De Clermont v. General Steam'Nav. Co. 0891) 7T-L-11- 187*
 () (2)
shipping cards, placardal handbills, announcing the
(3)
sailing of the ship, advice-notes, freight-notea, or

undertakings or warranties by the brokerg or other agent of

the carriero(4)

Bat if the bill of lading is handed over after the making of

the contract of carriage and contains an exemption clause not

originally Weed on, that clause might not form part of the
A5Llesa
contra, the original contract was made "subject to the

exceptions of our bills of lading"(O) or unless the clause'was

incorporated by a course of dealing between the parties.

The shipper must be aware of the terms of the chartert therefore

he cannut be required to accept bills of lading in accordance

with the charter, if

such charter contains unusual terms of
)
which he was ignorant*('.

(1) Peel v. Price (1815) 4 Camp- 243.

(2) Phillips ve Sdwards 0858) 3 No&Wo 813
ýines F19673
Anglo-Continental Wolidffs ve T.Ypaldoe 2 LloydIs
Repo 61o
(3) Liplon ve Jesoott Steamers (1895) 1 Com-Cas-32*
(4) Runemisty. (1800) 3 ESP- 64o
Sortrtton at-Ditohell
P- 53o
(5) Ollery v, WrlUrough Court Md* [1:949] 1 K*B- 532.
(6) Armour & Cc* Md* v. L92Rold tajgA (Iondon) Mdo [192JI 31-ID-473-
(7) Peck (1871) LoRA2 Eq-378s
The Stornow-w (1882 51 LoJoAdmo, 279,
V&ItkiTw_V, Rvmill ( '883) 10 Q-B-D- 178o
_
fh-arsis Su1pbur Coo ve Cullitord (1873) 22 W.R. 46,
The Dr4lign Xhrie, (1875 L*J*Mm, 9,
Armstrong vo Allan, (1892) 8 ToLoRo613*
Contrast: Halli v. Paddindon SoSo Co,, (1900) 5 Com- Can- 174#
 -55-

When the charterer himself ships the goods, these bills of

lading have been held to operate as receipts for them* But

they have not, as between the ship(mner and the chartel-erg

(')
been held to operate as new contracts, or as modifying the
(2 )
contract in the charterparty. The bill of lading is not

in auch a case a subsequent contract varying the charterpartyo(3)

(4-) The bill of lading as a contract of o&rriaget

In the relationship between the carrier and the indorsee of

the bill, the position appears to be that between these parties

the bill of lading is the contract of carriage and not merely

(1) Rodocanachi v. Milburn (1886) 17 Q.BO- 316; 18 Q.B. 67-

Wagstaff v. Anderso7nTI880) 5 C*P,De Mt 177o
2_=r v. Wallace 1 80) 5 Q-B- 163,166.
The San Roman(1872) L*R- 5 P. C. 301; LeR. 3 A* & E. 583o
stanes v. Allen (1852) 12 C*B* 202*
Sugar Commission v. Hartlepools S'So Coo [: 1927 2 K-Bo 419,42ge
Delaurier v. ýbrilie (1889) 17 Sess- C&O- (#Pseries) 167*
(2) ZpMp.erley SS Co. ve Swth 190512 K*B- 791,802.
,
LdM rv* 1hel T.Eyvan Ship Coo [19071 AoCo 2729 278-
Contrastt .Rederiaktiebolamet TransatlWtic vo- Board of Trade
(1924) 30 Com. Cas. 1179 1260
Gullischen vo sLewart (1884) 13 Q*B*Do 317*
Hill SS Co. vo-Stinnos 1941 S*C* 324,3351 340v 354,355-
(3) Sewell vo Aoick., ý1884) 10 App. Cas. 74,105.
0 k1k3W) 20 Q*B,,D* 4759 479*
Tazart. Be on I Co, ve James Fisher & Sons [19033 1 K*B* 391,#,,
Moltheg. R,,A-* v. Ellerma n's- Wilson Line Ltd* L1927:) I X-139710#7160
ELesident of India vo-Matealfe Ship2ing Co. Ltd. (The Dunelmia) .
0970: 11 We -2899 305,30do,
Ardgmei- r,19513 1 K&B* 559 60,
 -56-

evidence of its terms*(') Where a bill of lading has been

held to be the contract it was so either by reason of

(2)
section (1) of the Bills of lading Act 1855, or the

parties appear to have agreed that it should be 190.0) Thus-

in the hands of a buyer to whom a bill of lading has been

transferred by the seller the bill of lading will normally be

(1) Fr7 ve-Chartered Mercantile Bank of India (1866) L*R, ICP, 689,
(2) Section (1) provides:
"Every consignee of goods named in a bill of lading, and every
indorsee of a bill of lading to whom the property in the goods
therein mentioned shall pass, upon or by reason of such
consignment or indorsementg shall have transferred to and vested
in him all rights of suit, and be subject to the same liabilities
in respect of such goods as if the contract contained in the bill
of lading has been made with himself. "
"dee the effect of the clause incorporating the charter-party is
to make the indorsee (or consignee as the case may be) indirectly
responsible for claims of demurrage arising at the port of
loading, or of dead freight, even although he had no notice of
tbo existence of-such claims.. The effect of omitting the
clause Incorporating the conditions of the charter-party is that
the bill of lading, as between the shipowner and the indorsee,
contains the whole contract of oarriageg except in special
circumstances where the indorsee has notice of the terms of the
charter-partys" rThe Encyclopaedia vJII at PP- 51-55-3
Bmt this to no longer true. Professor Walker has stated rTh
Principles vel at P-833.: ] "Even where there is also a charter.
partyq the bill of lading is prima facie, as between shipowner
and 6ndorsee, the contract of carriage, Particularly when the
endorsee is ignorant of the -terms of tho c1tarter-party. and
possibly even if he knows of its terms. "
(3) Fraser ve-TeleM h ConstrmctiM... Cýoq(1872) LoR- 7 Q*B, 566.
both parties signed the bill of ladingo
Chartered Bank vo Netherlands Tndia SoXo_Co, (1883) 10 Q-Bo 5219
528d, the contract was reduced into the form' of a bill of lading
by the consent of the parties*
Armo_urI*. Walf or& C1921-13 KoBo 4734o
! he parties agreedt by the booking slip, tbat the gvodfj Pould- I*
shipped urAer the bill, of lading in question,
 -57-

the contract of carriageo(l) That Jig to say, third parties

such as consignees or their assigneel3t who acquire rights by

way of indorsement of the bills of lading are entitled to

assume that it contains all the terms of -the contract, *

Therefore the contract assigned by the indorsement is that

which is expressed in the bill of ladingi una ct ed by any

alterations which may have been agreed upon between the

shippers and the shipowners Thus, in Leduc v. Ward(2) it WM13

hold that no understanding with the shippers could affect the

right of the indorsee to have the goods carried as shown in

the bill of lading*

Tract .

There in a little confusion in Iraqi and POTtian JuriBMdencej

in dealing with this problem caused by -their method of dealing

with the bill of lading as evidence* They divide this aubject

into two partst

I. - The bill of lading as evidence of Its isubjeorts wA

2- The bill of lading as evidence between its parties.

In the first part they do not distinguish between the items

(i) BenJazin at P- 693*

It can be said that the bill Of lading MMYcontain a reference
Io other dOcMMents'wher9such terms may be found, :Ef that is
so, it mast be done with the consent Of the indorsee a3A those
documents mast be accomMantedby the 'bill of lading in order to
make the irKlorsee exare of them, otherwise that reference WMA
be voide
(2) (IM *Do 475o
20 Q*'B
ýý)
 which relate to the goods and those which relate to the

contract of carriage. In the second part they deal with the

shippert the carrier and the indorseee As a result of this

method, some of them have come up with a conclusion that the
bill of lading in all its contents (goods and
contract of

carriage) is not conclusive evidence and it is open to any

(1)
of its parties to prove contrary to that bill.

On the contrary some of them have reached the opposite view

13y stating that the bill of lading is conclusive evidence in
(2)
the relationship with the indorseee

As a matter of fact this problem = be solved from a different

point of view depending on the legal provisions of the laws.

We have seen(3) that section 103 of the 'Iraqi Maritime law(4)

makes the indorsee a party to the bill of lading together with

the shipper, the carrier and the shipmastere Thereftre the

bill of lading is not a conclusive evidence concerning the

items of the goodev an they are a matter of fact which make

any of the parties to tho'bill of lading able to prove contrary

to that bill according to Law of evidence., On the other hazA,

the bill of Wing is conclusive evidence concerning the terms

of the contract of carriage in the relationship with the

indorseet as they are not a matter of fact, azA since the

(1) Amin Bader Ticket of shipment at p. 20*

(2) Al-Ugaili at Pe 644*.
(3) Ante at P- 51 and lf*Bo* at P.
(4) Sildlar 'tc, section 101 of the Eaptiez Nu-mine Law.
 -59-

Indorsee is a party to the bill of lading, he is bound by

that bill which cannot be varied by the agreement between the

shipper and the carrier* Therefore if the bill of lading

stipulates that the arbitration is to take place in London,

and the charter-party stipulates New York, in this case

(1)
London is the right place*

This situation, however, will be altered when the. new Iraqi

and the Fgyptian Maritime Laws come into force* The bill of
lading will be conclusive evidence of its contents in the
(2)
relationship with the indorseee

Rranceo.

According to Article 283 (now repealed) of the French

Commerci&l Law, the bill of lading was an (evidence) between

(shipment) O)
-the parties concerned with freight and the insurers,

This Article was a controversial one concerning the precise

meaning of the parties concerned with. freighte

It is obvious that shippers, carriers and their agents are

within the meaning of "the parties concerned with freight".

A question was raised about the indorsee and if he was within

"the parties concerned with freight" or not., Three answers

were givew

The indorsee shocad. l)e within "the Part i 68'conoerne'd" an

(1) 17-.6-1965 Feyptian Cassation Court. The collection year 16

&I pe 778.
(2) Section 194 of the NewIraqi Maritime Law.
Section 188 of the new F47prtianMaritime Lew,
(3) "Le oomainsement rýdigeo' demo I& tome at-deswa* prescrile ftit,
fai mtre toates lea Parties iMjftZr,e..
ssees au gbWMRWtf at out"
*Iles at lea assureurse"
 -6o-

(')
grounds that he is an agent for the shipper.

b. The indorsee is sometimes within "the parties

concerned"
(2)
and sometimes he is not depending on the circumstancese
(3)
c. The indorsee is not within "the parties concerned".
However, Article 287 of the French Commercial Law was

repealed by Article 19 of law dated 18-.6-1966 which hai made

the bill of lading a conclusive evidence in the relationship

between the shipper and the carrier on one sideq and the
(4)
indorsee on the other side* Therefore the carrier, in his

relationship with the indoreeel cannot prove contrary to the

(I

items written in the bill of lading. Moreover Article 37

the law dated 31-12-1966 has stated that the bill of lading

should be issued in two copiest one for the shipper arA one

for the carrierg which meant excluding the indorsee from being

a party to the bill of lading*

(1) Bonnecase, Droit Commerciall parao 570e

(2) Lyon
- Caen at Renaultv V-5 Para 708*
(3) Balter at P. 37
Bellot Para 174-
Heenen at PP* 73-74-
(4) Article 19 states:
chargeur est garant do l1exactitude des mentions relatives
""lela inscrite declarations
a wrohandise sur ses au connaissemento
Touto inexactitude oommise par lui engage sa, responsibinte"a
104gard du transporteure Celui-ci ne Pjairt efen pr4valoir
SR!& 196".rd du chmmmr. "
(5) Article 37 statest
"Chaqueconnaissement eat kabli en duez origin&= au moins,
un pour le chargeur et ltautre pour le capitainseee"
 -61-

5ý The bill of lading as an instr=ezrt to protect the property:

A bill of lading operates to protect the propertyq not only

in favour of an indorsee who has purchased the goods, but

also in favour of the seller*

The bill of lading protects the property of the buyer by being

"clean". "Clean bill of lading" is one that does not contain

any reservation as to the apparent good order or condition of

(1)
the goods, or the packing. That is to say, if there is no

clause or notation in the bill of lading modifying or

qualifying the statement that the goods were "shipped in good

order amd condition" the bill is known as a "clean bill of

(2 )
lading"* Thereforeq where the marks inserted in the bill

of lading convey a meaning as to the character of the goods,

and are therefore essential to the identity of the goods, and

it is on the faith of these marks that an indorsee takes up

the bill of lading under a contract of sale, the person signing

the bill will be estopped by section 3 from proving that goods

(1) British Imex Tndustries Ltd* vo Wdland Bank Ltd* [1,958 IQ, B*5429
Incoterms 1953 Article 7-1,2-, The Unifo;; Rules
=1eA Art* 1
-1970-
Section 159-2- of the ýraqi Law of Commerce*
Franoet "Narohandises a bord sane reserver en oe qui concerne
leur istat et conditionnement apparent*"
Le oormaissement "clean on board" Paul Bertrand De La Grassiere
DeXeFe 1953 at pe 188.
Hermann at Po 72-73. German Lwo
(2) 22aLdian Coo ve. gan ] A*C* 469 54o
Steamehigs 1947
. Ladila
 -62-

(')
with those marks were not shipped under the bill. The

insertion of such marks in the bill of lading is prima facie

evidence of the shipment of goods so marked, and prima facie,

the shipowner will be liable if he fails to deliver goods 130

(2)
marked.

Moreover, the clausetweight, bontents and value unknown"

does not destroy the effect of the words "in good order, etc. "(3)

as an admission that the goods are in good order on shipment.

Such an admission makes the indorsee, on the faith of that

admission, pay the price.

According to Brussels Convention(4) ft... no carrierp master or

agent of the carrier shall be bound to state or show in the

bill of lading any marks, number, quantityt or weight which he

has reasonable ground for suspecting not accurately to represent

the goods actually receivedt or which he has had no reasonable

(5)
means of checking.,,

(1) Parsons E90-11 I K. B-

v. New Zealand Shippin Co. 5489 565-
9oumpa,
Rnia Importadora y P. & 0.1927) 28 LleLeR. 639 68.
.
(2) P2m2agnia Importadora, 63-
y P*&*O* Su
_pra
(3) The Peter der Grosse (1876) 1 P*D-414; 3 Asp. M-C- 195-
The_Tro 1-W1J -pý--337
The Skarp IL93OP-134-
Craig Line' y N. B. Storage Co. 1921 SoCo 114-
France:
Lorsque le port de charge est mmi de tous engins de pesage
utiles, lea reserves portees our le connaissement par le
capitaine en cer terms poids et qualite' inconrmaq sont
inoperantes comme non preceises et ne peuvent pas plus paralyser
une reclamation pour manquants que Justifier une r9tention
dlexcAente
Cour dtAppel dtAix, D*Wo 1961 at p. 21.
(4) Article 3-3-a
(5) Caxriage of Goods by Sea Act, 1924,1971, Article 3-3* Wench
Law Article 36* Decr. 31 deco 1966*
 -63-

On the other hwAj, the bill of lading protects the seller's

property by being a good representative for the goods, the

possession of -the bill operates as the possession of the

goods themselves, and its transfer may pass the property in

the goods to the -transferee., Thus the seller can keep the

bill of lading until the buyer tenders the price,

 -64-

"RECEIVED" BILL OF LADING

The older form of a bill of lading always began "shipped on

board the . #e" This form of the bill of lading was in widespread

use towards the close of the sixteenth century, and invariably

acknowledged that the goods were actually shipped on board a

particular vessel*(') But for many years, sinee the nineteenth

century when commercial practice changed, a form beginning

"Received for shipment on board the ... " has been employed.

Such bills acknowledged that the goods had been "received for

shipment" to be put on board a particular vessel, or such other

vessels as might be indicated. The difference between these forms

of bills may be seen from the following exampleal

"shipped in apparent good order and condition by oe. on board the

steam or motor vessel"

and

"Received in apparent good order and condition from ... for

shipment on board the ship ..... or other ship or ships either

belonging to this line or to other persons, "

Where the shipowner issues a "shipped" bill, he acknowledges

that the goods are loaded on board shipj where he issues a "received

for shipment" billq he merely confirnis that the goods are delivered

into his custody; in that case the goods might be stored in a ship

WcCardie T. In DjamorA 'Alkali Export 26riDneve rls Bwarg 1921

3 K. Be 443 at P- 449o
 -65-

or warehouse under his control*

The "received" bill is, thus, less valuable than the "shipped"

bill because it does not confirm that the shipment has already

begune(l)

U. K. (Scotland and %Rland)

The problem arises whether the later form "received for

shipment" is a bill of lading within a ColeFe contract or not.

In this respect, there are three attitudes, the first is the

2 (3)
practical attituAj4he second is the conservative one and
(4)
thirdly is Kennedlls view. In the following paragraphs we will

see the arguments of each attitude followed by the solution which

can be inferred from the Carriage of Goods by Sea Acts 1924 and 1971.

A, The arguments of the Bractical attitudel

This attitude has considered "Received for shipment" bill of

lading as a proper bill of lading within a C*I*P* contract, on the

grounds:

le It is a matter of commercial notoriety that shipping

instruments which are called bills of lading, and known in the

commercial world as such, are a6metimes framed in -the alternat , ive

form "received for shipment" instead of "shipped on board",. and

(j)scbmjtthoffq%The Erport Tradeq 6th ed. at P- 314-

(2)The MarlborgB& Hill ve Alex. Cowan& Sons Ltd* C192giA. C-444

is v. Produce Brokers Co. (1921) 70 Ll LR, 211,

?
Unit Baltic CgM* v. BargOt & Newsom i; 2el3 8 Ll, L, Rep*190*
- & Coo ve j3urgett & Newsomk1922) 10 Ll. L. Ren.
S_U&uki 221.
(3 Diamond Alkali E=Ort COM-o ve Flo 1ým-rReojs r482j3 3 XP3,43
U.,
(4)lemnedY'B C-I, -P,, contrauts, 3rd. ed. at pp 60t 61.
 -66-

further, with the alternative contract to carry or procure

(possibly
some other vessel with some limitations as to the

choice of the other vessel) to earryt instead of the original

P) (2)
ship, Therefore in Weir & Co. vo Produce Brokers Co.

Bankes L*J* said about "received" bill Of lading "oeo we are

told is quite usual in the trade - not universal but quite

usual. It is the usual form adopted by the owners of this

vessel, the Polyphemue, and it is in a form which has come

into use of recent years, and It states that the goods are

shipped or delivered for shipment in apparent good order and

condition*"

2. There can be no difference in principle between the owner, master,

or agent acknowledging that he has received the goods onwharf,

or allotted portion of the quay, or his storehouse awaiting

shipment, and his acknowledging that the goods have been actually
(3)
pat over the ship's rail.

3. As regards the obligation to carry either by the named ship or

by some other vessel, it is a contract which both parties may

well find it convenient to enter into and accept. The liberty

to tranship is ancient and well established, and does not

derogate from the nature of a bill of lading; and if the

contract begins when the goods are received on the wharf,

does not differ in principle (4)
substitution for transhipment,

ý(1) The Narlborough Hill, OuPraP-. 451-453.

(2) (1921) 7 Llel, *Rqý* 212*
(3) The- Narlbormigh Hill, impra
(4) lbido P-451-453o'
 -67-

B. The argq=ents of the conservative attitudet

This attitude has not considered "Received for shipment"

bill of lading as a proper bill of lading within a C.,I. F9

contract, on the grounds:

lo The phrase "bill of lading" in the practical attitude permits

of a broad interpretation. The phrase "bill of lading" as used

with respect to a C. I. F. contract meant a bill of lading in the

established senseq that is to say, a document which acknowledged

actual shipment on board the particular vessel, and that, as by

the document in the buyer was left in doubt as to

question
(')
actual shipment and the actual ship.

2. There is aprofound difference between the owner, master, or

both from If the

agent, a legal and business point of view-

is to its logical
view of the practical attitude carried

conclusion, a mere receipt for goods at a dock warehouse for

(2)
future shipment migýjwile called a bill of lading*

3* The substitution and the right of transhipment are distinct

things, and rest on differeni principles. The third argument of

,the practical attitude has no application at all to a 0,19P.

for date (3)

contract which provides a specific of shipment.

Wardle J. In Ditimond Alkalilbrport CgrLn.ve

71. Bourgeois 09213 3 K*Bo 443ý 452,
 -68-

Ken=Axls view:

(')
Kennedy J. tried to find a solution to this problem, His

view stands between the two attitudes stated above. He said:

But is not the question one of fact rather than of law? Is not

the test to be applied whether it is or is not the usage or

practice in the trade concerned to accept a bill of lading in the

particular form in question and is such usage or practice well

known and acted upon?

The true view., is that in each case it is a question of fact whether

the form of the bill of lading tendered is a form usual in the

trade; if it is not, the buyer is not bound to accept it. But where

the contract specifies a date for shipmentj it means actual shipment,

and the seller does not perform his obligation by producing a

document which shows that the goods were "received shipment" for on
(2)
the contract date. In Suzuki & Co. v. BurRett & Newsam the

contract was for a December/January shipmente The bill of lading

describing th e goods as "shipped or received for shipment" was

dated JanuarY 31, but it was proved that the goods were not actually

shipped until February, The buyers, wh6 had taken up the documents

and paid the priest were held to be entitled, on dii3covery of -the

-true fact as to shipment, to recover the price paid,

This view is quite similar to that one which is expressed 'br

C*I*Po contracts" (Wars0w--Ojcford *
the "Rules for rules).

(1) Kermedyte 0,1., F, Contracts 3rd ede 609 61.

(2) (1922) 10 la. L. Rep. 223.
Adopted by the Oxford Conference Of Augmet 12q 1932*
 -69-

Warsaw-Oxford rules recognise "received" bills of lading if the

contract of sale or the usage of the particular trade so allows* Thus

Rule 7 (11) provides:

"Where the contract of sale or the usage of the particular trade so

allows, the contract of carriage may, subject to the provisions and

qualifications hereinafter contained, be evidenced by a "received

for shipment" bill of lading or similar documents, as the case may

be, in good merchantable order, issued by the shipowner or his

official agent, or pursuant to a charter-partyg and in such

circumstances such "received for shipment" bill of lading or.

similar document shall for all purposes be deemed to be a valid

bill of lading, and may be tendered by the seller accordingly... "

D. CarriaRe of-Goods by Sea Acts 1924 and 1971.

It can be inferred from Article 3-3 of Carriage of Goods by

Sea Acts 1924 and 1971 that "Received" bill of lading is eqaivalent
to "Shipped" bill of lading on the grounds that the Article statest
"After receiving the goods into his charge the carrier *.. iSIMe to
the shipper a bill of lading eoe" withoat stating *,, * after the
goods are loaded.
 -70-

Tracr:

Received bill of lading has not been mentioned at all In the

existing Iraqi Maritime Law* The reason isthat the Received bill

of lading does not have the same characteristics as the bill of

lading, As we have seen, the bill of lading is considered to be

a document of title under three conditions:

1. To symbolise the goods*()
(2)
2& To entitle its holder to claim delivery from the carriere
(3)
3* To be, to a certain extent, negotiablee

The Received bill of lading has all the characteristics of the

bill of lading except for that of the date of shipment which makes

it unable to symbolise the goods while they are in transit*

This fact does not deny that the Received bill of lading can

be a proper bill of lading if the parties to the contract so agreed

or if the custom of the port so provides, on the ground that the

commercial matters, according to section 2, are governed by the

expressed agreement in the contract and the custom of the trade

as well as the lswo(4) Therefore the judgement of Rule (7)(11) of

.
the Warsow-Oxford(5) rules can be applied eastly to any case

involving a Received bill of lading. As a result, if there is no

special agreement and there is to local ca9tom which allows the

Received bill of lading to be used, the problem seems to be difficult

the same in the Fgyptian Naritime law.

(I)Seo Ante at
P..
(2)Se'e Arite M 'P. ID "
.3
(3)seo- Ante M p*
Mo
(5*49 Auto 'at
 -71-

as there is no law, no agreement and no custom make that kind of

bill of lading as good as "shipped" bill of lading. In this case,

we thinkt the problem can be solved under the rules of evidence by

considering the Received bill of lading as a mere commercial

document liable to be rebutted by contrary evidence quite apart

from the rules governing the problem if there was a shipped bill

of lading involved.

On the other hand, section 1930) of the new Iraqi Maritime

Law(draft)providese.

"The carrier must give the shipper a receipt for receiving the

goods before their shipment* This receipt can be exchangedby a

bill of lading after the goods are loaded if the shipper so demands.
This receipt is the sameas the bill of lading if it contains the
terms which are stated in section 185 and the word "shipped" is

mentioned in ite"
If we study this section carefully, we will see:
I- "Received" bill of lading has been reoognised and it is called

a "rec6ipt for receiving the goodso"

2- This receipt is not as good tender as the "shipped" bill of

lading unless it contains the terms of shipped bill of lading

stated in section 1185' mentioning the word "shipped" in ito

Obviously these terms will turn that "receipt for receiving

Section 187 of the now F47ptian Maritime Law (draf+. )*

it oould be said that the law means by this expression "Reoet#t
for reoeiving the goods" the mate's reoeipt, arA w6, -"RqOejvvr
-,
bill Of l8dingo
This interpretation cannot be adopted as this reasipt, am
, the shipped bill Of Wing where"i the matO w zwiftW
replaoe
wlet be exchanged for a bill of ladipgo Thorotowtba IW
the biU lWng. , %", ~
maw, '"Roceived" of *rA, ýmj
 -72-

the goods" into a proper "shipped" bill of lading,

The net result of these two observations is that -the received

bill of lading is not considered to be a document of title either
in Iraq or FMte

France:

The question of "received" bill of lading and whether it is

a document of title or not, divided French jurisprudence into two

groups:

The first group(') rejected the idea of equalizing "Received" bill

of lading with "Shipped" bill of ladingon the grounds that the

(2)
first one did not identify the goods properlyq. and therefore its

delivery did not imply any delivery of the goodal and oonsequently
O)
the buyer was entitled to reject it and not to pay the price,

The second group opposed this idea on ground that "Received" bill

of lading could idazrtifýr the gxmde when it contained the qwantity,

-the qualityq the marks, the numbers of the goods and therefore

"Received" bill of lading was as good tender as "Shipped" bill of

ladings But this type of bill of lading could not identify the

goods in bulk shipment and therefore it was not, in such a case,

(1) G* Ripert, "Droit Waritime" T*:E:l Parage 1859 and 19.32o

(2) "Los comnaissement rqýlier spo'cialise lee marchandices .'et lee
met sms la. garde du capitainef le reyn pottr embarqtteoient ile
A
pent jamor un tel, role*"
lbid at P- 757-
"La remise des doomerits no sort pas soulement altireammitre
S llacque"rour la 04'cialination dots msrchandises; alle a do plus
-Pwrojýjst do le mettre en possession dos amwcbandisog p= I&
delivrance du titre qui constate cette poSsossion gt repr "
tAtchazidisdoo 14 pidemaht -tilt stipale"' achtre domamts,
OV qui. no r"t
Ma"m6rattr pas Aes doemsute p4pajors U1104 pw
Ibid att ppe 8184190
 -73-

(')
a docament of title.

The division in the French jurisprudence Is over now,

The Law of 31-12-66 has adopted the second solution when defined

bill of lading in Article 33 as follows:

"The bill of lading is delivered after receiving the goods

without mentioning "after the goods are loaded*" This definition

implies that "Received" bill of lading is as good tender as the

"Shipped" bill of lading if it contains the terms mentioned in

(2)
Articles 35 and 36 .

Our Idea:

I- General Survey:

The bill of lading was created 'by the merchants themselves

and came into use in the sixteenth centurye A book* on meroantile

law, published in 1686 stated already that "bills of lading are

/ -!h )
commonly to be had inprint in all places and several langmages*

The law has reoognised the bill of lading in the sense in which the

merchants first used itq vize 'IShipped" bill of lading*(4)

(I)Ligonie at PP* 57-58-

Rodier at P-57, V24,
Heenen para 74o
(2)"ApAs hesitations, otest an favour do cefte sooonde 'Fjojution qtjq
I& v do 1966* Warticle 33 du dO'CrOtdu
stest amýtee
.4 r4forme
"Le mmaissoment
#4

31 ýecembre 1966 ports on-effet eart d6livre

apres reception des marchandises ooo" et ne parle pas de sa miss
a bordo 11 faut-en conclure que la rýglementatjon du comuillsementl
toile qatelle set presorite par Is deor6t de 1966, concerns aussi
bien is ponnaiasement reSu pour embarquement que Is oommissament
efflibnVus', lfun at ifautre doivent repondre w= crigences des
artiolOg 35 ot: 36 du ddozwt*"
Rodier at Pe 58o
iAx Naroatoria 3rde ede 16869 p. 97.
. nes.
ý3)Scbmitthoffi The REPOrt Trade at P*309*
4AIddemomm v- Nason (1794) 5 T*Rp 683e
 -74-

In the nineteenth century another form of bill of lading

was created by the merchants which is tervied the "Received for

shipment" bill of lading. This form has come into use for the

practical reason that "Received for shipment" is the proper

phrase for the practical business as where parcels of cargo are

placed on a general ship which will be lying alongside the wharf

taldng in cargo for several days, and whose proper StOWagewill

require that certain bulkier or heavier parcels shall be placed on

board first, while others, though they have arrived earlierg wait
(1)
for the convenient place and time of stowage*

The international convention for the unification of certain

rules of law relating to bi3lsof lading has recognised the

"Received" bill of lading as a proper bill of lading* Thus Article

3-3 providest

"After receiving the goods into his charge the carrier Or the EMStOr

or agent of the carrier shaill on demand of the 13hipPerl i8SIA6 to

(2)
the shipper a bill of lading 004,
And Article 3-4 provides:

leSucha bill of lading sha.11 be prima facie evidence of the receipt

by the carrier of the goods **0"
The provisions of Articles 3-3 and 3-4 refer to the state of the

goods before they are loaded* So the bill of lading which is

issuedl by the carrier must be the "received" bill of lading and

(1) The Marlborm-r-h Hill, ImPra Pe 452* ý

Biped at Brussels., on Augmet 25t 1924.,
(2) Compwe Article III. Rule Carriage of Goods Iýy Sea A0,1
 -75-

not the "shipped" bill of lading.

This inference can be supported by Article 3o-7 which states:

"After the goods are loaded the bill of lading to be issued by the

carrier, master or agent of the carrier, to the shipper, if the

shipper so demands, be a "shipped" bill of lading, provided that if

the shipper shall have previously taken up wW doc=errt of title

to such goods, he shall surrender the same as against the issue

of the "shipped" bill of lading

It is quite clear now that the Brussels Convention recognised

the "Received" bill of lading as a proper bill of ladingv and the

shipper, if he so demands, is able to exchange it with the "shipped"

bill of ladingg after the goods are loaded*

2- The Writer's View:

In rq humble view, if we want to consider the "Received" bill

of lading as a proper bill of lading, we must take into account the

characteristics of bill of lading as a document of title and the

Principle 'Trotection of property"o

As we have seen, three conditions are requiredl to make bill

of lading a document of title:

lo It must symbolioe the goods,

2'* It must give the holder a right to claim delivery of the goods

from the carrier*

3, It must be 4Wto a certain extent - negotiable,

"Received" 'bill of lading acquires these conditional it "mboUses

the goodog as it ýstates the natwft of the goods, +,b*1rzumOM*-'AmU*X

or the likeo Tt gives the holder-s. right toýcjsft, delivery frm the
 -76-

carrier, as it is signed by the carrier or his agent* It is -

to a certain extent - negotiable, as it makes the goods deliverable

to bearerg or to a name left blankg or to order.
"Received" bill of lading does not state the exact date of shipment,

but this fact should not prevent it from being a document of title
as long as it contains the conditions above mentioned.
As far as the principle "Protection of property" is concernedl
the seller retains some interests in the goods at least by way of

security until he has received, or been adequately assured of

receiving, payment* On the other hand, the buyer does not want to

pay for goods which he has not yet received, until he has acquired

an interest in the goods on which he can rely in the event of the

sellerts insolvency before actual delivery of the goodSo

In this context the principle trprotection of Property" requires:
1- The preshipment risk must be securede
2- The goods must be shipped within the contract period*
These are discussed as follows:
I- The preshipment, riski

A loss or damage might happen to the goods while they are in

the custody of the carriert waiting for shipment!, Who beare

the risk from the time when the carrier receives the goodsin

his custody until they are loaded on board ship? The shippev

is not the only one to decide the moment at which the risk in

transferred to the buyer; the buyer b; A some interests in the

goods too. When the shipper makes the contract of carriage

with the oarrierl he must comply with the provisions in the

o&,jgjml, cprAract between himelf and ihe buyer*

 -77-

(1)
In the light of Warsaw and oxford rules and Brussels
(2)
convention, the preshipment risk is subject to a special

arrangemento Accordingly the risk passes to the buyer when

the goods are actually put on board ship, whether the bill of
lading is "Received" or "Shipped" bill of lading. The

preshipment risk is subject -to a special arrangement between

the carrier, the shipper and the buyer which may be either

explicit or implicito

2- Shipment of the goods:

The buyer wants the goods to be shipped within 'the specified

time in the oontract, as. he may calculate his business according

to that date* Therefore it is, sometimes, very important to

state -the date of shipment or the name of the ship in the bill

of lading. The seller can put the name of the ship carrying
the goods and the date of shipment in the "Received" bill of
lading* In the light of Brussels Conventiong the effect of

this nomination is to change the "Received" bill of lading into

a "Shipped" bill of lading* Thus the last paragraph of

Article 3-7 provides:

but at the option of the carrier such document of title

iwky be noted at the port of shipment by the carrier, master,

or agent with the name or names of the ship or ships upon which

the goods have been shipped and the date or dates of shipmentt

and when so noted; If it shows the particulars mentioned in

(1) Rule 5-
(2) Article
 -78-

paragraph 3 of Article 3, shall for the purpose of this article be

deemed to constitute a "shipped" bill of lading, But in the light

of the Warsaw-Oxford Rules, that nomination makes the t%ceived"

bill of lading equivalent to a "shipped" bill of lading* Thus

the last paragraph of the Rules 7-(11) Provides:

", oe moreoverv in all cases where such a document has been duly

noted with the name of the ship and the date of shipment, it

shall be deemed in all respects equivalent to a "shipped" bill

of lading. "

The later solution seems more reasonable than the former one,

because -the former solution makes the "Received" bill of lading

less important than the "Shipped" bill of ladingo The net

result is that the "Received" bill of lading is a good tender

within CoI&Fe and FoOoBo oontraots on two conditions%

I- The risk of the goodst from the time they are received by the

carrier in his custody urrtil they are loaded on board shipj murrt

be subject to special agreement, explicit or implicit.

2- The goods mast be shipped within the contract periodo

 -79-

III THROUGH
BILI. S OF LADING

Definition:

"Through bill of lading" is an expression loosely used to

mean a docament containing a contract for the carriage of goods

from one place to another in separate stagesq of which at least one

stage is a conventional sea transit. The sea transit may itself be

divided into separate stages to be performed by different shipowners

by a process of transhipment, The sea transit is often coupled with

a stage of transit by some other means, e. g. by roadt rail or air,

in which case the through bill of lading is sometimes called a

"Combined transport bill of lading"*

The necessity for a through bill arises, eogo where goods have

to be carried from the United Kingdom to such places as Baghdad.

Formst

Through bills of lading can take various formt

1- The first carrier Or the agent Of the Ocean-going steamer may

sign a through bill of lading undertaking to carry the goods to

their ultimate destination by himself and other carrier. this

case the carrier signs as agent on behalf of the other carrier,

(2)
who may or may not be named,in the bill, This means, where

(i) Somtton I.Sth ad. at P*37lo

(2) 13, AmchAirt ar Bx. Oe 1873 -Re 8 Q.B* 186.
ý-vo- Co. (1875) L*R* 10 Qjje'43je'
-Worth
Barrat'-ve Great Forthi6m Rjr. Co-,(1904) 20 T*L*Ro175-
& ChathamRV,
ltoa4er v, BoutbmýEoRstern (1921)
-VToLeRe
Wjjs2n v, Darling Islo; A Stevedoring 0, [1ý5ý3i MW49a Rep.
A Ir 12 C -7
-. A.
-N
3AW etb -
po -?;; I*
 -80-

the company concerned issues a throughbill of lading, itwill

be responsible for the whole journeyq whereas other comaphies

concerned are usually to be treated as sub-contractors to that

(')
companyq and not as parties to the through bill of lading.
In this respect it must be mentioned that in exceptional

circumstances the companies concerned may be jointly liable

(2)
for the whole transit, but it is not uncommon for them to

be severally liable and jointly*(3)

2- The carrier who receives the goods undertakes to carry them to

the port of transhipment and there to arrange for the goods to

be forwarded to the ultimate destinationo(4)

Is a through bill of lading a document of title?

This question should be dealt with as followst

U*Xo and !Dngland)

-(Sc6tland

The difficulties spring largely from the fact that a through

bill of lading is not within the omstom as found in 1794 in

(5)
Mckbarrow v. Mason, by which bills of lading first became

Judicially recognised as transferable documents of title. And it

was not in commonuse at the time that the Bills of Lading Act 1855

wair passed* Dat it is submitted that there would now be little

(1) Briertol and Pketer Rr. ve- Collins (1859) 7 HoLOC*194,

(2) ! %yes yo-So Wales Ry. (1859) 9 Ir CoLeRs474.
-Co,
(3) The Hibernian [1:9073 P*2779
Crawford & Lawv. Allan Line S*So Coo [19123 AqC. 130.
Va'401"k"jr
v. Dover N2ýjýtioýn; Cog Ltd, 0950) 83 IA. LJt* 84', ý
(4) Sa f-.( v* It- 11-t
'P- IN
(5) 0794) 5 T*R* 683.
 -81-

difficulty in establishing that a through bill of lading is by

custom treated as a transferable document of title and within the

meaning of the expression "bill of lading" as used in the Bills of

P)
Lading Act 1855,

The law relating to through bills of lading is expressed in

(2)
four cases, and from these it would seem to be the rule that a

through bill of lading is to be issued whenever it is usual and

astomaryl in the particular trade to do 800(3)

In IT*.. yer 2. Annel, Branson J. in the course Of his

Vj ILe:,
(4)
judgement, said:

"Cases such as Hansson v. Hamel & Horley Ltd* and Landauer v. Craven

& Speeding Brothers have laid down as a matter of law the essential

characteristics which a bill of lading must possess if it is to be

good tender under a C,,I*P,, contract* It must have been procured on

shipment or not long aftemards, it must cover the contract goods,

and non other, from shipment to the port of destination, and it must

show shipment within the contract time If in any particular

trade, there is a custom that bills of lading should have other

characteristics in addition to, or in substitution for, those

generally required by the custom of merchants, then, in that trade,

bills of lading to be good tendert need only conform to that custom*"

With respectl if the through bill of lading is usual and

(1) Scrutton 18th ode at P*377-

(2) Cox, NoDgen& Co. v. Malcolm 12123 2'K. B. at p. 1070
Hansson Hamel& Horle Ltd. 1 192Q 2 A*C- 3
ýaýuer v. & Co. v. Graven & SpeTing Bros. D12 2 K*Bo 94*
W*lr* Me-yr v*. Aurie ff 939.3 3 All E*R* 16a.
(3) Kemedy's CoI*F* Contracts 3rd ode at pe 62o
(4) Supra at pg. 172o
 -82-

customary in the particular trade, that will never make it a

document of titlef it may make it a good tender if there is an

expressed agreement* A through bill of lading, in order to be a

document of title, must possess the characteristics of the bill of

lading by which the buyer will be entitled to take delivery of the

goods from the last carrier at their arrival*(') Through bill of

lading does not give such right to the consignee, as each carrier

is individually responsible, and he delivers the goods at the

(2)
presentation of the bill of lading issued by himself*
.

Iracr-.

Although the through bill of lading is unknown to the existing

Iraqi Maritime Law, provision is made for its operation by section

(3)
212 of the new Iraqi ftritime Law. This section provides:

(1) On this point see LandLuer & Co. v. Craven & Speeding Bros.
supra at p. 106. Ii.. * The buyer wants-Vh-e bill of lading for
Hansson v. Hamel
two purposes - first, to take delivery oe,," and
& Horlev Ltd. in the Court of Appeal (1920) 26 Com.Cas. at p. 239*
Is eee a right to receive the goods. "
(2) Each successive carrier may be estopped by statements in the
through bill of lading, or iii the ocean bills of lading
incorporated in the bill of lading, or by receipts issued by it
to the previous carrier, or by failure to notify damage or
shortages to the previous caxTierq from denying that he received
the goods from the previous carrier in apparent good order and
condition.
Crawford-& Iaw v. alga Line S*SS. Co., 191a A*C,* 130.
(3) Section 203 of the new Fýffptian Maritime Law,
 -83-

"I- The carrier can issue a through bill of lading by which he

undertakes to carry the goods from certain place in subsequent

stages. In this case he is responsible for all the obligation

arising from the bill until the transport is ended, and he is

responsible for the actions of the subsequent carriers who

receive the goods.

2- The subsequent carriers are responsible for the damage caused

to the goods when they are in their possession*'t

This section is based on the custom and the cases decided by the

courts*(')
According to that section the main carrier is the one who is

responsible for the whole journey. The subsequent carriers are

responsible for any damage caused to the goods when they are in

their possession only, In other words, the main carrier is the

agent of subsequent carriers, responsible for their actions and any

damages caused to the goods during their transit. Therefore the

through bill of lading gives the holder a direct right of action

against the main carrier, and the main carrier can sue any of the

subsequent carriers who caused the damage; according to the rules

of agency*

The subsequent carrier, in order to specify his responsibility,

must issue a bill of lading as soon as he receives the goods from

the former carrier, stating the conditions of the goods, obliging

himself to deliver them to the legal holder of -that bill of lading,

(1) Iraqi Cassation Court 5-io-1969.

00: " 30-10-1969.
Sykian " 28-4-1970-
 -84-

Thus the subsequent carrier is bound to deliver the goods as

they are stated in the bill of lading issued by himself.

If the goods have to be carried from Glasgow to Baghdad via

Syria, they will be carried first by sea from Glasgow to Syria,

and second by land or air from Syria to Baghdad. In this case

when the subsequent carrier receives the goods from the former one

he issuea a 'bill of lading stating the condition of the goods at

that time, and that bill of lading Must be sent to the buyer in

Baghdad in order to enable him to claim delivery*

The consequence of this process can be stated as follows:

I- The buyer can only claim delivery from the subsequent carrier

if he presents the bill of lading signed by that carriers

2- If the goods are stated damaged in the bill of ladingg the

buyer cannot sue the subsequent carrier for that particular

damage, but he must go directly to the principle carrier, as the

subsequent carrier does not cause that damage to the goods, and

he has specified his responsibility by mentioning the condition

of the goods in the bill of lading issued by him when he received

the goods*

It is obvious that the first consequence prevents the through

13111 of lading from being a document of title as it does not entitle

the holder to claim deliveTy from the last aorrier unless he presents

a bill of lading signed by that qarrier. As we have seen, three

are required to make the bill Of lading

conditions a document of

titlet

i- To symbolize the godLe,

2. To -entitle the holdeaý to ol'ilm delivery f2.0mthe'-

 -85-

3- To bet to a certain extent, negotiable.

The through bill of lading has the characteristics of the

first and the third conditions but it does not have the

characteristic of the second one, therefore it is not a document

of titlee

On the other hand it can be saidt under the rules of Iraqi

Law, that the holder of the through bill of lading can claim

delivery from the last carrier without need of a bill of lading

according to the rules of agency, This argument cannot make the

through bill of lading a document of title under Iraqi and

Egyptian Laws because the holder will claim delivery from the

carrier on the rules of agency and not on the through bill of

lading.

France:

When the shipper contracts separately with different carriers

to transport the goods, there will be no problem concerning through

bill of lading, as each bill covers one period of the voyage and

the responsibility of each carrier is to be decided separately

(la responsibilite'' de chaque transporteur doit etre appre"cie"a

Ir
separement)o On the other hand, when the first carrier undertakes

to arrange for the whole journey his responsibility will be

different from that of the subsequent carrier as follows:

I- The responsibility of the firit carrier:

The first carrier is responsible as a carrier and as an agent

for the subsequent carrier, This means that the first carrier
is liable for arW damW which say happen to the goods during
 their transit, whether that damage has happened while the

goods are in his possession or in the Possession of any

subsequent carrier, and he cannot escape liability unless

he proves Force Majeure-o

It must not be forgotten that the first carrier should take

from each subsequent carrier a bill of lbAing stating the

name of the consignee in order to enable the latter to claim

(')
delivery of the goods at their arrival.

2- The responsibility of the subsequent carrier:

This carrier is responsible only for any damage which may happen

to the goods while they are in his possessione In other words,

his responsibility is limited by the bill of lading which he

himself issued. Therefore the consignee cannot sue the last

(2)
carrier for any damage caused by the previous one*

The net result is that the through bill of lading is a document

of title while the goods are in the possession of the first

carrier only, as the holder of a through bill of lading cannot

claim delivery of the goods from the last carrier unless he

(1) "Le premier transporteurt celui a qui la marchandise a ýte

confiee, encourt une responsabilite certaine* 11 eat garant
de son fait personnel commatransporteur, at il est garant,
commacommissionairev du fait des transporteurs post4r
erieurs...
Le premier transporteur est libere Vil 'btablit qua la
marchandise a peri par force majeur.,, "
Ripert at pp*900-901. j v*11o
(2) "*go il ne repond, qua de son fait personnel
A at dans les lindtoo
de connaissement qulil a lui-meme delivre, Trx ntest pas
responsable du fait de co= qui Pont pr' ec A' a at il nvest memo I"
pas presumeavoir repu la marchandisean bon ekwt
Ibid at pp. 901-902,
 -87-

(')
presents the bill of lading signed by that carrier,
After this journey through different legal systems we must

return to our question: Is a through bill of lading a document

of title? In other words, how far does a through bill of
lading possess the same legal characteristics as a conventional
bill of lading?

A through bill of lading can represent the goods by stating

their nature, their apparent order and condition, etc.

It can, also, be - to a certain extent - negotiable by making

the goods deliverable to "bearer" or to "a name left blank" or

to "order". %t it does not give the holder a right to claim

delivery of the goods from the last carrier*

"PerAant le, premier parcourst la marchandies 04 1

(1) eat representee,
par le connaissement, direat nats le porteur nta p&s O(Mrtro
lee transporteure subse"quents led roit de d'livrance
e puisque
coo transporteurs n2ont pas signe . le connaissement et quvile
nvont pas dlobligation onvers le portsur. "
Legonie at Pe 42*
 IV THE DELIVERY ORDER
ý

The splitting up of a consignment shipped under one bill of

lading into smaller parcels sold to different buyers can further

be achieved by the use of delivery orders relating to specified

portions of the whole consignment#(') Thus where the buyer is

receiving only part of a parcel of goods shipped under a single

bill of lading, it will not be ptacticable to transfer to him the

bill of lading in respect of the whole parcel. In such a case the

contract would normally provide that the seller should perform his

obligations by delivering to the buyer a delivery order for the part

(2)
sold rather than a bill of lading.

T-ypes of-Deliver y Orden

There are various kinds of delivery order which are illustrated

followst
. as
I- A delivery order can be issued by an owner of goods to a person
in possession of themv eoge as carrier or warehousemang directing

the latter to deliver the goods to the person named in the order,

2- A delivery order can be issued by a person in Possession of the

goods stating that he will deliver the goods to a named'person,

or to the holder.
A delivery order can be issued by a seller of goods given to
his agent at the port of destinaticnt directing the agent to

(1) Sobetthoff, -The Bzp6rt Trade, 16th ed- at Po 321ý

(2) Kennedyte Col*F* Contracts 3rd ed. P- 51-52.
 deliver the goods, when they arrive, or to cause them to be

delivered, to some person there, usually to the buyer*(1)

It can be added to another kind of delivery order issued by

the bank which holds the bill of lading and the other doc=entse
The delivery order in the meaning of noo 1-3 and 4 do not give the
(2)
holder any right againErt the carrier* But the I'shipts delivery

order"t which is in the nature of meaning no.92t is of a higher

legal quality than delivery orders in the meaning of no* 1,3 and 4

in so far as it gives the holder in certain circumstances a direct

(3)
right of action against the carrier.

The delivery order in the meaning of no. 1-3 and 4 do not acquire

the three conditions of the bill of lading to make them document

of title* They may symbolise the goods and they may be negotiable,

(1) Benjamin at P-706.

Ligonie at pp* 42-43*
Heenen at pp. 112-1279
Lhe Julia, [1ý949-1A9C* 293*
(2) Despite the fact that delivery order is a "warrant or order for
the delivery of goods" within the statutory definition of
"document of title" in section 1(4) of the Factors Act 1889,
which applies for the purpose of the Sale of Goods Act 1893-
Bat this in no way affects the principle that, as between buyer
and seller, constructive possession of goods in the actual
possession of a third party will not be transferred by -the
issue or transfer of a delivery order, but only by attornment-
acknowledgement of the third party - rThis is in England*
See Banjamin at P-710.] In Scorland "A delivery note to a
purchaser is not negoRaSle like a bill of lading .... ; and
unless the sale be intimated to the actual oustodier of the
goods, no change in the ownership will be held to have taken
place*"
NoPwanve Smith (1849) 2 H. L. Co 309.
Roi-stv"LeadingCases v. 11 at P-591-
(3) Colin & Shields v. Wo'Xeddel & Co. [195] 1 All BeRO1021t
 -go-

but they do not give the holder a direct right against the carrier,

whereas the "ship's delivery order" acquires the same characteristics

of the bill of lading. It symbolises the goods as their quantity,

quality and conditions are stated in its It gives the holder a

direct right against the carrier as it is signed by him. it can

be - to a certain extent - negotiable when it makes the goods

deliverable to order or assignee or to bearer or -to a name left

blank* Therefore the 11shipts delivery order" has been internationally

recognised as a document of title*(')

The 'IshipIs delivery order" might mean a docament issued by

the shipowner promising to deliver goods from the ship to a named

(2)
person or to the holder of such order.

Ira, cr*

Section (197) of the new :Eraqj Maritime Law (draft) providesý3)

"The person who is entitled to receive the goods according to the

bill of lading can get a delivery order from the carrier if he so

demands and if that is stated on the contracte

The delivery orders can be issued to a named person or to his

order or to bearero At any rate they must be signed by the carrier

and demandero"

01
(j) "Lesdelivery-orders signes par un representaut de llamement
representent, les m chandises dans la mle"me
mesure quo le
Connaissement quIlils remplacente"
Reenen at pe 118o
Ligonie at po 43.,
Ripert, v. 11 at P. 484. '
(2) yarmrine Union Go? 4B*H,. vo CambgZPringe SS, Co, Ltd,, [1191a
i-Q*Bo 219,231o
(3) Section i5l Of the 116wFWIPtian Nwitime Low (drart)e
 -91-

According to this section the "shipts delivery order" is

considered to be a document of title on two conditions:

I- There must be an expressed agreement in the contracte

2- It must be signed by the carrier and the person who has

demanded it.

We think these two conditions are beside the point, and there is

no need to state them The 11shipts delivery order" aocplires the

characteristics of the bill of ladingg therefore it is a document

of title by its nature without any need to add unusual stipulations.

 -92-

v THE MATEISRECETPT

On delivery of goods by a shipper to the shipowner or his

agent, the shipper will obtain a doc=ent known as a I'matel's

receipt".. It acknowledges receipt of the goods and states their

CluantitY and conditiong and states the name of the shipper or

owner of the goodso As a general rule the person in possession

of the mate's receipt is the person entitled to bills of lading,

which should be given in exchange for that receipt, and he can

sue for wrongful dealing with the goodr. *(')

Is the mateva receipt a doc=ent of title?

2) L
In jaMon Yusen Kaisha v. Ranjiban Sero", e 'Ord Wri ght
0)
statede.

"rhe matets receipt in not a document of title to the goods shipped.

Its transfer does not pass property in the goodst nor is its

possession equivalent to possession of the goods* It is not

conclusive, and its statements-, do not bind the shipowner as do the

statements in a bill of lading signed within the mastees authority*

t' *94, unl ess there are special customs of the port to the
contrary. Tn the Port of London, for instance, the shipper
receives a matets receipt only if waterborne goods are delivered
alongside the ship. Where goods are sent to the docks by landl
they are stored in & shed of the Port of London Authority which
issues a whrfinger's note or dock receipt and later receives the
matets receipt when placing the goods on board ship. Tn some
foreign ports,, matelareceipte are issued for all cargo whother
received by water or larlde" Schmitthoff, The Export Trad*0 at
(1)
P-295.
Scrutton
at P- 172o
(2) ff9383 A*Co 429*
(3) Ibid at p* 445-6*
(4) Biddulph v- BipAam, (1874) 30 L*T* 30*
 -93-

It is, hwever, prima facie evidence of the quantity and condition

of the goods receivedt and prima facie it is the recipient or

possessor who is entitled to have the bill of lading issued to

him eee"

It is obvious now that the mate's receiprt is

not a document
(') (2)
of title, it is not even a contract of carriage, it is

merely evidence that goods have be-on received by the shipowner(3)

subject to the conditions and exemptions of his usual bill of

(4)
ladinge

As a matter of fact, the function of this document is to

acknowledge receiving the goods by the carrier, in order to

facilitate the procedure of issuing the bill of lading later on.

Therefore it is not originally issued to replace the bill of ladingg

but just to entitle the holder to exchange it with the proper bill

of lading* Moreover, it is not as negotiable as the bill of lading

*
because it, generally, makes the goods deliverable to a named person.

(1)HatheriM ve Laing (1873) LoR0 17 Eq- 929 105-

F*E* Ifa]2ier v, Dexters Ltd. (1926) 26 LI. L*R. 184,189.
(2)A*Re Brown. McFarlane & Co, ve Ce Shaw Lovell& Sons and ter
Lotts 1921) 7 Ll.; L.,R- 36v 37-
WKUM v- Wah Tat Bank Mde, [10
97D I Ll. L*R- 439o
.
WDe Clermont imd Donner ve General Steam EaLvIgzation Co. (1891)
7 T*L*Ro 1674,
For these reasonsq neither the Iraqi and the Egyptian lawas not,
the jurisprudence have recognised this document to be
as a
document of title*
In Prance, mate's receipt is not a document Of title either.
"Le reýqx du oapitaine ou I'matets receipt" et la note d9exp4ditiOn
on "sailing's bill" sont des titres nominatifs qui ne peuveirt dono
.1
pas representer la marchandise. "
Ligonie at P- 43*
 -94-

A question can be raised now: If the mate's receipt has made the

goods deliverable to "order" or to "a name left blank" or to

a
"bearer", will that change its nature to beAdocument of title?

This question is of some importance because the mate's receipt will

acquire the same characteristics of the bill of lading.

It has been said that the mate's receipt is not a document of

(')
title unless a oustom giving it this effect can be proved. Bat

one thing has to be taken into consideration, wb=h is the fact that

the matels receipt is not intended to replace the bill of lading,

it is only an evidence that the goods have been received, and to be

exchanged by bill of lading later on. On the other hand, if a

mate's receipt acquires the characteristics of a proper bill of

lading and the parties concerned have intended that mate's receipt

has to replace bill of ladingt in this respect, we think, matess

reoeipt should be treated sm a document of titlee

(1) K= v. Wah Tat Bank Ltd.. supra.

 -95-

vi THE EFTTM OF THE CONTAIXERSON THE

CLASSIC RULES OF BTLIS OF LADING

One of the most important technological developments in the

transportation of goods by sea since steam replaced sail is the

recent advent of the 'container revolution's

This radically novel concept of transferringo handling,

stowing, discharging and delivering hundreds of packages

simultaneously and mechanically by means of large reuBableg

permanent metal containers, containerships, special container

handling equipment and container terminals is so efficient a

labour-saving device that it has already, to a large extentj altered

conventional methods of shipping large numbers of packages individually.

In short, containerization has rendered shipping 1ýawhole new

kal ie
Llý
A container is a permanent reusable article of transport

equipment - not packaging of goods - durably, 'made of metal, and

equipped with doors for easy access to the goods and for repeated

uses It is designed to facilitate the handling, loading, stowage

aboard shipt carriage, discharge from ship, movement and transfer

of large numbers of packages simultaneously by mechanical means to

minimize the cost and risks of manually processing each package

individually* It functions primarily as shipts gear for cargo

(2)
handling, and is usually provided by the carriere

(1) Seymour Simon "The Law of Shipping Containers" Part I

Jourml of Maritime Law and CommerceVol-5, No*3, Apri1,, 1974*
at Po 5079,
(2) rbid at pe 513-
 -96-

The tremendous growth in the use of international containers

over the past several years is a matter of common knowledge. It

has been estimated that all bulk cargo and 80 per cent of all

general cargo shipments in foreign trade are containerizablee

Similarly a rapidly increasing volume of air cargo is being

transported in containers in jet freighter aircraft* Many of the

advantages of containerization such as cost savings, reduced damage

(')
and lossesq and simplification of trade already have been realized.

The containerized transportation is of three basic types:

The first is a container loaded and sealed at the shipper"s factory

and delivered intact to the consigneels warehouse or other place of

business. This it; termed a "door-to-door" container shipment* The

jseoand type of shipment is a container loaded by a freight consolidator

at an inland point and transported to an inland point overseael where

the container then is broken open and the contents distributed. This

is termed a "point-to-poi? rt" shipment, Thirdly, the movement of a

container consolidated at a port or air terminal and shipped to an

overseas port or air terminal where the contents then are sorted for

distribution, is termed a "port-to-port" or "ait terminal-to-terminal"

(2)
shipment *

It seems now thats

I. The container Involves a combined transport operation, land, sea,

and air*

2, Each carrier isq ummlly, w2aware of what the container containag

(1) E. Schmelizer &. Re Peary "Prospects and Problems of the

Oontainer Revolution" J*X*L*C. V0191 No*2 January 1970 at P*204*
(2) IWd at p, 206*
 and therefore he states "said to contain" in the bill of
*
lading.

3- The bill of lading is, normally? issued before shipment,

These facts do not comply with the classic rules of bills of

lading* As we have seen, the bill of lading is a document of

title because:

1- It represents the goods. This implies that the nature and the

condition of the goods must be stated in the bill of lading,

in order to enable the banks to pay the seller when the

commercial letter of credit is involvedP)

2- The holder of the bill

of lading is entitled to claim delivery
(2)
of the goods from the carrier.,

3- The bill of lading must be - to a certain extent- negotiable

by making the goods deliverable to bearerg or to a named

(3)
consignee "or order or assigns"l or simply to "order or assigns",

As far aa representing the goods is concernedl the long standing practice

of the ocean carrier industry has been to charge a higher or ad

valorem rate in all eases where the shipper exercises his option under

the "unless clause" of Article 4(5) - 11agueRules - and declares -the

nature and value of the goods before shipment inserting such a

declaration in his bill of lading* Therefore, the higher or ad

valorem rates charged by ocean carriers have been so high that they

have discouraged shippers from declaring the nature and value of their

This is If the carrier has had no reasonable means of checking*

And in the case where the 'carrier himself or his agent receives
the goods and packs then into the container, he must statethe
nature and the condition of thd goods,
I ýAnt e at p. Z.7.
2 Ante at p* 30-
(3). 4rtte at t*. IS.
goods in the bill of ladingp(l) and instead they ask the carrier

to state "said to contain" in the bill of lading.

Thus the bill of lading will be a receipt for the number of

containers, not for the number of bales or cartons they are "said

to contaie by the shipper. A purchaser of such a bill of lading

cannot rely on the "said to contain" quantity for the representation

(2)
is made by the shipper, not the carrier. Moreover, banks will

not accept such a bill of lading where payment is arranged through

a documentary letter of credit,

As far as the combined transport is concernedg thebill of

lading issued by the first carrier is considered tobe a document

of title as long as the goods are still in the possession of that

carriere As soon as the goods are transferred to another carrier, the

(3) *
first bill title* Therefore,
of lading is no longer a document of

since the container transport involves a combined transport operation,

the bill of lading issued by the first carrier will not be a

document of title covering the whole journey. This implies that the

holder of such a1ill of lading in not entitled to claim delivery

from the last carrier as the holder must present a bill of lading

(1) John DeGurse "The Container Clause" in Article 4(5) of the 1968
Protocol to the Hague Rules" J*X*L*Co at pe 133-135 v2, Noel
Oct - 70-
(2) 34 DeOrchis "The Container and-the Package Limitation" at P-951
v5, X*2 Jan-74-
(3) Ante at p. 917.
 -99-

issued by that last carriero

As far as the negotiability of the bill of lading is concerned,

some of the maritime transport companies have started using a

[Atlantic
computer in issuing the bill of lading Container Line Mý]*.

This type of bill of lading cannot be considered as a negotiable document

unless it makes the goods deliverable to a named person or order or to

a bearer or to a name left blank*

It is obvious now that the practice of container traffic does not

comply with the classic rules of bills of lading which satisfy the
**
interests of all of the participants in the transaction.

The great difficulty with container traffic is its inability to

accommodate a document such as the ocean bill of lading. Because

the goods are placed in a box at the point of origin, never to be

seen again until'they are unpacked at the final point of destination,

and moreover, since the container more likely than not is to be

stowed on rather than under deck, it is virtually impossible to

obtain either an "on board" or a "clean" bill of lading from the

Article 14-3 of UNCIMALhas recognised the use of mechanical or

electronic means as a method of signing the bill of lading. it
states: "The signature on the bill of lading may be in handwriting,
printed in facsimile, perforated, stamped, in symbols, or made by
any other mechanical or electronic meanst if-not inconsistent with
the law of the country where the bill of lading is issued. t,
**The seller relies on it to show that he has complied with his
0,1, ro contract and that the goods have been delivered to the
ocean carrier in apparent good Order and conditioný the banker,
-to obtain security for any money advanced 6n the goods-, the
buyer, to obtain possession at destination-, the insurert to
claim whatever benefits are available under the contract of
carriage after satisfying any claims which he has underwrittenj
and the carrier, to protect himself against any unfomAed claims
by relying On the terms stated therein or demarAing-i-ts *jrrender
prior to release of the goods*
 -100-

shipowner in respect of the package in question@ In other wordst

where the consignment consists of less than an entire container

load, the shipper will not be able to receive a satisfactory bill

of lading wherein the ship(nmer acknowledges receipt of his

individual pack-age in apparent good order and condition undertaking
to carry it under deck, and any other document will not satisfy his

obligations under a CeI. F., contract. As stated by Sohmitthoff:

"The seller of one of the packages included in the container cannot

tender the buyer a bill of lading relating to that package, and, if

the contract is a C. I*P* contractf thereby perform his contract*

Moreover, the seller cannot retain his property in the package by

retaining the bill of ladinge., *"(')

A solution to the problem is desparately needed* Thus many

efforts have been made to solve this problem:

(2)
I Professor David 14 Sassoon after stating the difficulties, said:

"What then is the remedy, and what is required to take advantage

of the container revolution?. A Rartiki, aw1wer would e- to shift

the point-of deliv= under the contract of sale from the 13ort

of shipment- to the of final destArwtion - in other words,

-point
to replace the traditional pattern of international trade by

moving from "shipment" to "destination" terms. Th-ael it is

quite possible that one of the flirst felt effects of the

container revolution will be in this field and that "free

delivered" or "ex terminal point" transactions will begin

(1) David Sassoon "Trade Terms and the Container Revolutim"

jourral of mari+ Jae Law & ýCommeroe
Vol*l I WOO octoberp 1969f
pp. 82
81..
(2) hi& pp- 8241o
 -101-

replacing the traditional FeO*Bo. and C, I,, F, terms,

This solution, as Professor Sassoon stated, would satisfy the

buyer, since he would not assume any risk for the goods until the

container was unpacked and inspection of their condition at

destination was possible. Bat it would not alleviate the problems

of the other interests involved.

In particular, the seller and banker would still be exposed and

forced to face the difficulty of establishing the locus of liability

andl lacking such a determination, the marine underwriter would not

be boundo Facing this uncertainty, they would not feel secure in

bill lading (craite apart

relying on a container-through of which

from the problems of its negotiablility or title attributes or the

lack thereof) applied different limits of liability to the various

segments of a multi-segment international shipment* This is

provided for in most through bills of lading under which container

business is presently conducted, sometimesbeing coupled with a

Presumption that if it cannot be established in whose custody the

goods were when loss or damage occurred,, it shall be presumed to have

occurred during the sea voyage, But to what avail? Surely such a

fiction is useless unless the marine underwriter agrees to be bound

by it and also to undertake the risk of any "on dock" stowage.

Howeverg this solution does not, seem to solve the problem properly*

Another effort was made in "Draft Convention ott the International

Combined Transport of Goods"(TeCoN. Convention) Geneve 1972p ty

establishing a "combined Transport Operator - C.T. O.

(1) Article 1-4(b)

 -102-

undertakes to perform, or in his own name to procure the

performance of the entire transport from the place at which

the goods are taken in charge to the place designated for

*
delivery in the C*T, Documentt including all services which

are necessary to such transport throughout the whole of the

time that the goods are taken in charge nntil the moment of
(') .
their delivery, "and he ECT9 11shall be responsible for

the acts and omissions of any person of whose services he

makes use for the performance of the contract evidenced by the

(2)
C*T* Document".

In order to perform his part the C*T*O* issues a C*T* Document

when he receives the goods*

C*T* Document means a document bearing either the heading

1%egotiable Combined Transport Document governed by the T*C*Mo

convention" or wHork-Negotiable Combined Transport Document governed

by the T9C*M* Convention! ' and evidencing a contract for the carriage

of goods by at least two different modes of transport I such as

transport by seaq inland waterway, air, rail or road, provided that

the place at which the goods are taken in charge and the place

designated for delivery are situated in two states.

Data recorded by a computer or other electronic or antomatic

data processing systems are equivalent pari passu to the document

referred to in the paragraphs above*(3)

* CombinedTransport Document see p.

(I)Artiole 2-1(a)e
(2)Artiole 2-2,
WArtiole 1.2*
 Where the CeTe Document is issued in negotiable form:

(a) it shall be made out to order or to bearer;

(b) if made out to order, it shall be transferrable by endorsement;

(0) it indicate the Lssued;

shall number of originals
(d) be marked IrNon-negotiable
each copy shall copy"I
(e) delivery of the goods may be demanded only from the C*T,, Oo

or his representative and against surrender of CT# Documento

Therefore the CoToO. undertakes to perform all necessary acts to

ensure delivery to the person designated in the CoTe Document or to

(2)
the bearer of that document, duly endorsed as appropriate*"

A CoTo Document may contain such particulars as the parties

(3)
agreeo

If the C*T* Document contains particulars concerning the

description, marks, number, quantity or weight of the goods which

the C*ToOo has reasonable grounds for suspecting not to represent

accurately the goods actually recbivedg or which he has no reasonable

means of checking, the C*T*O* shall

be entitled to enter his
(4)
reservations in the CeTe Documente
The C*T* Document shall be prima facie evidence of the receipt

by the C*T*O* of the goods as therein described in conformity with

(5)
Article 3*

(1) Article 6-1.

(2) Article 2-1(c)*
(3) Article 3-1-
(4) Article 3-2-
(5) Article 5-1.
 -104-

However, proof to the contrary shall not 'be admissible when

the CeTo Document is negotiable and has been transferred to a

(')
third party acting in good faith.

The idea presented by (T*C*Mo Convention) sounds attractive

as it seems a good solution to the problemo On the other hand,

this idea was rejected by the developing countries on the grounds

that C*Te Operator might monopolize the maritime transport industryl

which leads to a total destruction of the small commercial fleets

belonging to those countries*

The developing countries were right to fear such a body as the

ToCeMo Convention did not illustrate the structure of that 'body.

Therefore this fear could be negatived by building up the structure

of that body in such a way as to prevent the big companies from

monopolizing the maritime transport. This could happen. by estab3ishing

an international organization, which must have branches all over the

worldg undertakes to arrange the maritime transport through its

memberso The members must be all the transport companies in the

worldo Therefore if A in Glasgow wants to get certain goods

.
transported to B in Baghdad, he should first go to the branch of that

organization in Glasgow, The organization, theng arranges for

transporting the goods through its members by contracting with any

shipping company and Iraqi rail. And when that is complete the

organizationg after receiving the goods, issues a bill of transport

stating the description of the goods, the companies involved in: Ahe

transport operationLI the approximate time of the arrival of the

(1) Article 5-2,

 -105-

goods to their destination, the conditions of the contracts of

carriagel and many other things which the parties agreed upone

This bill should be given to the seller who in turn endorses it

to the buyer. The holder of that bill is entitled to claim delivery

of the goods from the branch of that organization in Baghdad.

This arrangement means:

1- The seller and the buyer deal directly with the international

organization as well as the carriers. In other words, there

no direct
will be dealing between the seller and the buyer on one

hand and the carriers on another. Therefore the organization

as an intermediate body undertakes to arrange and facilitate

the transporting of the goods.

2- The bill of transport acquires the same characteristics as the

bill of lading:

A. It represents the goods, as their description stated in the bill:

When the representative of the organization receives the goods,

he obviously knows the nature and the apparent order and

condition of those goods, and, therefore he is bound to state

*
the description of the goods in the bill of transport,

Practically speaking, the representative may issueg when he

receives the goods, a preliminary receipt stating the fact that

certain goods (nature and apparent order and condition) have

been delivered to him by - to be transported to

0
And when he completes contracting with the transport companies

I assume that the container is owned by the organization, and the

goods have to be packed in the container by the representativel
and. then the container in to be delivered *,a -the carrier*
 -106-

and packing the goods properly, he then issues the bill of

transport stating all the necessary terms required in that

bill. This practice will defeat that one of "said to contain"*

Moreover the fact that the goods have to be transported by

different carriers, does not affect the bill of transport as

a document of title representing the possession of the goods

because it is issued, not by an individual carrier, but by the

organization which controlsl not one part of the journey, but

the whole of it.

Bo It entitles the holder to claim delivery of the goods from the

representative:

Since there is no direct dealing between the seller-buyer and the

carrier, the holder of the bill of transport will be entitled to

claim delivery of the goods stated in the bill from the

representative of the organization at the place of destination*

The organization shall be liable, before the holderl for any

loss or damages caused to the goods* At the same time the

carrier shall be 1*4ble, before the organizations for any lose;

or dam s caused to the goods by his action. In this respectl

it must be mentioned that the limitation of the carrier's

liability is beyond the scope of this research*

0. It is - to a certain extent - negotiable by making the goods

deliverable to bearer, or to a named consignee "or order or

assignee"jor to "order or assigns".

The results of establishing an international orgudsation

will be:

Replacing the bill of lading by the bill of tranpyort Web

 -107-

aegairee the same characteristics as the bill of lading.

2- Solving the problem of combined transport operation in such

a way as to make the bill of transport unaffected by the

number of carriers*

3- Accepting the modern technology and practice "container"

which is very necessary for human progress,

4- Preventing the big companies from monopolizing the maritime

transport industry by arranging the transport between all the

companies involved.

The idea of establishing an international organization is

different from that one presented in (T*CoM* Convention) in

two ways:

1- The structure of this oragnization is devised so as to prevent

the big companies monopolizing the transport industry, whereas

the C*T*Oeg presented by TeCeMe Convention might lead to that

2- The organization has more power than the C*T*Ool by which the

modern technology and practice is accepted and the small fleets

are protected* Moreover, this organization is different from

the ."Freight Forwarder" as the latter cannot really issue ary

document of title, he is merely the agent of his client, and

not the agent of the carrier or one himself.

Finallyl the possibility of establishing an international

organization which undertakes to arrange the combined -transport

operation and to accept the modern practicel cannot be realised

"freight Forwarders" by D*Je Hill, London 1972, at p* 185.

 -108-

unless it is approved by an international conference at which

all the parties concerned 11carriersv shipperst bankers, etc*"

should participate. Therefore we would like to call an

international conference to adopt the idea of establishing an

international organization taking into consideration the

classic rules of bills of lading and modern technology and

practice, seeking the interests of all the parties concerned

in the transport world. As a matter of factt that conference

could also amend the T*C. M* Convention in such a way to avoid

the negative results which might occur by establishing CeT, O*

 CHAPTER2

PASSINGOF PROPERTY

in

Col*Fo & F*O*Bo COFTTRACTS

Old Soot s Law

Sale of Goods Act 1893
:Eraqi Law
Prench Lax
 SECTION 1

PASSING OF PROPERTYIN C. T. F, AND F*O*B, CONTRACTS

'UNDEROLD SCOTS LAW

 -111-

I The General Rule:

The property of the object sold was not considered by the law

of Scotland - before Ist January 1894 - to have passed to the buyer

by the completion of the agreement, and, till delivery, itcontinued

(2)
to be attachable by the creditors-of the sellers(') It was said:
"The principle of the law of Scotland as to the contract of sale

admits of no doubt, vize that while the obligations of the contract

are constituted by consent alone, yet if delivery is to be made at

a future period the property is not transferredq but remains with

the seller until delivery, This is the leading principle of our

lawt as it was of the civil law and of the general jurisprudence

originally of Europe. "

Therefore, it was not within the power of the contracting

Parties to transfer the property before deliverye

The reason behind that rule was that the concept of "property

imported"dominiumt dominoin over the

- the entire and exclusive

thing spoken of - the proprietor being the dominust and having the

sole disposal of it Therefore the term "property" was usedl in

Sootlandq in one uniform and unvaried sense, importing the right of

exclusive Possession and uncontrolled disposal.

(1) Je Lorimer, A. Ehnd Book of the Law of Scotland, 6th edo,

Elinbargh 1894.,,at p*24-7.,
(2) Per Lord JustIce Clerk In Boak Ze ftget Rose Leading Cases*
Vol.ý11 at P. 554*
(3) Bell, Comm.Voll at p* 177-
 -112-

Exception

As a matter of fact, it was open to the parties, by selling

under a suspensive conditiong to reserve to the seller the property

in the thing even after it had been delivered*(')

Effect of paymeyrt

It can be inferred from the general rule, above mentioned,

that the payment or nonpayment of the price has nothing to do with

tradition as the criterion of the transference of the property,

though, of course, it is essential in question as to stoppage. Thus

Lord Stair stated: "Sale being perfected, and the thing delivered,

the property therefore becomes the buyer's, if it was the sellerta,

and there is no dependence of it till the price*be paid or secured,

(2)
as was in the civil law, neither hypothecation of it for the pricee

Effect of appropriation

The effect of an appropriation and acceptance by the contracting

parties is to- perfect the contract of salel and to give the

parchaser a personal right to demand delivery of the goods from the

(3)
sellere

01 macartney v. Macredists Crokitors W99 No Appe Sale No. 2

)krdoQh v.. Creig (1889) 1.6 R-396, *
(2) Xp. Brom "rrestise on the. law of salt" F41nbmr*i 1621 at p. 394*
(3) Hansen ve CMI-9 (1659) 21 D 4%
 -113-

The Concept of DeliveT7:

Since the property passed, in Scots law, to the buyer by

delivery, it is necessary to understand the concept of delivery

as a criterion of passing the property and how it worked before

1st January 1894- In this respect, it can be said that there were

two concepts of delivery for mastery in the old Soots law.

striving
O)
The first one had a wide meaning declared by Professor Bell, and
(2 )
a few other judges in different cases. The second one had a

narrower meaning established by the judiciary* In between those

two attitudes, the Mercantile Law Amendment (Scotland) Acts 1856

came to solve the problem. These matters are discussed in the

following paragraphs:

1. Bells- Conenti

Professor Bellq in explaining his attitude, concentrated on the

distinction between actual delivery and constructive deliveryq and

paid most attention to the case of constructive delivery* His

attitude can be illustrated as followst

A. Actual deliveryt
0

The simple act is e.xemplified in purchasing a book in a shops

(1) Principles of the law of Scotland Val*II at pp. 204-214-

Commentaries on the law of Scotland Volel at PP-176-Me
di I A-
(2) In Gibson v. Forbes 1833)11,3; A6illY five Judges out of
thirteen agreed with this ooncept,
 -114-

and bringing it away; delivery into the buyerfs cart, or

warehouse, or shop, delivery into the buyerts ship, or into

a ship hired on times and entirely at his command; delivery

into a bonded warehouse for the buyer, and at his own risk; -

delivery into the warehouse of a public warehouseman, used by

the buyer as his own, or to a carrierts warehouse to be there

at the buyerts order; delivery of the key of a warehouse or

cellar in which the goods are placed; delivery to a third

person (servantj clerk, wharfinger) for behoof of the buyer,

and to abide the buyerfs orders for their future destiny, is

a complete delivery to all purposes.

In all these examples the delivery is held to be actual and

completes effectually to transfer the property beyond recall

0)
or Stoppage.

Be Construotive delivery:

This kind of delivery may Ibe effected in many other waye I

ý
I- Where standing trees are bought they cannot be instantly out

down and removedl and -the pracYtice jig to mark them for the

buyer* Such marking is good construotive deliveryo(2)

2- In the imae of cattle, the practice to extremely commonto

mark them with the buyer"s markq and leave them for gralging

Where the commodity is not a single article, but, like a cargo

of graing requir66 repeated acts, "azA a long protracted course
of deliveryq circumstances may fall out so critically an to
make it of importance to draw the line between what is actually
delivered and what $p,aot yet delivered* In such a oaseq even
where the price has been paid, -the delivery cannot on strict
principle be held complete, so as to prevent the oreditorB Of
thp seller, from taking the undelivered part, leaving the boyer
to claim a dividend on the price*
B611, comm, VoLl at p*183.
(1) Bell, Prin. Vol-II at PAW*
Wi. comm.Vol. i. pp. 183-184-185-186-2i6.
(2) Bell, Com. Vol, I at P*187@,
 -11

in the enclosure of the seller, the buyer paying rente

0)
This seems to be effectual delivery.

3- In selling a farm-stock of sheep, it is often difficult to

deliver them to the buyer, for they are scattered over many

miles of pasture hills, and cannot be collected, The

delivery is in parcels; the shepherd alone knows when they

have gone through the whole; and the sheep cannot

advantageously be removed from their native farm. Usage

seems to give the only rule where the question turns on

(2)
the completion of the transit,

Whatever changes the custodyq and makes him who originally

held for the seller continue his possession for the buyer,

alters the property as effectually as it eouldbe altered

by actual delivery. The change of custody may be proved in

many wayst as by a notice to the oustodierg a transfer in

the book, and acceptance of the order by the custodier

(intimating 0)
a delivery order to a third party) .

5- Where goods already in the hands of a manufacturer are sold,

and notice of sale givent with an order of delivery addressed

to the manufacturer, he will be heldl like any other oustodier

as the servant of the vandeeg to hold the goods for the

lmyero(4)

(1) Bell Com- Vol-1- at P-187-

(2)Bell Comm.Volal at P*187-
(3) Ibid pp-194-195a
(4) Tbid at P-197
 -116-

It should be mentioned that where anything remains to be

done by the sellers in the way of ascertaining the price or

quantity of the commodity sold, or in order to put it in a

deliverable state, the transfer is not completed by a delivery

note given to the buyer, addressed to the keeper of the goods,

with notice to the custodier, or even by a transfer in the custodierts

'books, Till the commodity is weighed, or till the other act,

whatever it may be, shall be performed, which remains to be done in

order to put the commodity in a deliverable state, the property. is

(1)
not transferred.

Notes on Bellts Concept:

It is obvious that most attention is paid by Bell to the case of

constructive deliveryl that Isq delivery which takes the form of an

order to'a third party to hold for the transferee instead of for the

transferore This means:

I- The meaning of delivery, in Bell's concept, is based on the idea

of "control" as a criterion to pass the property* The delivery

which passes the property to the buyer can be defined as follows:

Transfer of possession by which the commodity is placed in the

power of the buyer, and beyond the power of the seller, provided

this be done either at the sellerts instance or with his consent*

2- This seems a developmerA of the principle implicit in D-46.3*799

that there is delivery by jiving instructions which put the

thing out of the control of the present Possessor and into -the

(1) Bell, Comm.Vol-I at P097,

Constructive delivery is mentioned also in
Bell, Prin. V61911 at p*808.
control of the acquirerP)

This concept of delivery is quite similar to that of the

Rrench Civil Code. This similarity can be shown by stating

the Arts concerning "la delivranoell in the Mrench Civil Codes

Art, 1604:

If
"La delivrance est le transport de la chose vendre en la

puissance et possession de ltacheteur,. "

'Melivery is the transfer of the thing sold into the power

and possession of the buyero"

Art. 1605:

"Llobligation. de deliver les immeubles est remplie de la part

du vendeur lorequtil. a remis lee clefs, stil stagt d'un

A* lee titres de propriefte* it

batiment, ou lorsqnlil a remis

The seller has perfomrd his duty to deliver immovable property

when he has surrendered the keys, if a building is in question,

or when he has surrendered the documents of title*

Art, 1606:
A
'o,
"La delivranoe dets effets mobiliers slopere:

on par la, tradition reellet

ou par la remise des clefs des batiments qui lee contiennentv

A
ou meme par le seul oonsentemeýt des parties, si le transport

no peut pas slen faire au moment de la Vente, ou si Ifachete=

les avait deja en son pouvoir a un autre titre, "

Delivery of m(weables is affectede.

either by actual handing over,

Gordon at p, 2179 '

 -ii 8-.

or by surrender of the keys of the buildings containing the

thingsp

or by mere agreement of the parties, where transportation of

the things is impracticable at the moment of sale, or where
the buyer already had the things under his power. by another
title,

Art. 16o7-.
'Ila tradition des droits incorparels se faitl ou par lalremise

des titres, ou par llusage cpxe l9acquereur en fait du

consentemerrt clu vendeuroft

Delivery of incorporeal rights is affected either by s=ender

of the documents of title, or by the buyer making use of the

rights with the sellerts oonsent*-

Thereforeq it might be suggested that Professor Bell tri*d'tO

LOOSOOts,I&W as usarlY &B P"Sttl* in line vith the'Wenah

Civil Cod*, 'Imit- he 440sified, the delivery tof the keýrý-aoactual

delivery,, whereas it, is "-,
'n6t -olassified, as such, ill 11'rewh civil
CCKI9*-In other W02de, he t'rJ4-jo i#fo' an infamil
to scois low,
 -119-

2. The Judicial Concep_t:

In the light of this concept, it is not enoughq in tranferring

moveables, to give symbolical delivery, or delivery by an instrument

of possessiono If the things themselves remain in possession of the

person transferring the instrument will avail nothing. This concept

(2)
is fully discussed in Boak ve Megget(l) when Lord J*C* Hope stated:

"I allude to the security of parties dealing onerously with the

ostensible owner in cases where the property has not been transferred

by actual delivery. This is really the main benefit of the rule of

our law, which you cannot consistently obtaing without of course

adopting the principle, that although the obligation of the contract

of sale is perfected by consent, yet delivery is necessary to transfer

the property* **. it is important to remember that constructive

delivery, when possession remains with the seller, is in the general

case wholly unavailing. It is not enough to say that such and such

circumstances amount to constructive delivery as between seller and

buyer, Against third parties and creditors, constructive delivery

is in the abstract of no effect at all in law. And in the limited

class of cases in which the property has not actually 'been removed

from the sellert yet the article deemed to belong to another, the

delivery was truly not held-tobe constructive merelyt but to I)a

complete, and the separation of the property effectually made according

to the nature of the case, so as to avoid false credit to the seller

(1) (1844) Ross) Leading CasesV61.11 pp. 547-567-,

(2) lbid at PP-554-560*
 -120-

from possession,

The exceptions from the general rule are of this class - viz,

cases where the possession of the party is not really looked to,

in the usage and from the nature of his trade, as necessarily

proving that the stock apparently on hand is his, and not considered as

creating such a presumption in the'lactual business of that trade*

Por instance, goods in a printfield, a ship in the building dock,

goods in working artificers, or even grain in a granary, if the

granary is what is aelled a public store or warehouse, the mere

possession in these cases, from the nature of the tradep does not

necessarily import or impress the public with the conviction that

the stock is all the property of the party in whose hands the

articles are*

When it is said that the cases are illustrations of the effect

of constructive delivery, I think the use of this term somewhat

misleads the mind, and directs attention from the true state of the

facts* In these cases, I think'the pri, nciple really at the

foundation of the exceptions is as I have stated, viz. that the

possession does not, in the particular and notorious facts of the

trades and in the opinion of the public, and of creditors who are

to be protectedg import that the goods or stock are really the

property of the party in whose harAs they are seen; and therefOre,,

that to exclude proof of the actual fact, would give the publio &

benefit Whicht in dealing with the party, they did not truly believe

they We
 -121-

In many oasesq entries in the books can be of no avail, and

it'is unnecessary for the decision of the present case to say

whether entries in the tannerts books would have been sufficient to

protect the purchaser. An entry in books, in most cases, really is

no proof of delivery of any kind, constructive of symbolical. It

chiefly goes to make the evidence of the sale more patent. And if

a party has reason to know that the actual possession, in the

particular trade, does not import property in the ostensible owner,

and is called on to inquire before he gives credit, as in the case of

a printfield, then the entry in the books is to be taken as such

evidence of sale as avoids false credit. It seems to me to bear

little on the point of delivery. "

In the light of this concept the followin g cases were decided:

Broughton v. AiitchjEon 15th Nov. 1809*(')

In this case a quantity of wheat, of which the price had been paidt

was allowed to remain in therepositories of the vendort bat this

wheat, upon the vendorts bankruptcy, was held by the majority of the

Court to have been so far delivered to the purchaser by an order of

delivery upon the vendorts servant, that he was hold entitled to

enforce the delivery against the vendor"s other creditors, Bat

this judgment was strongly opposed by Lord President Blair, who held

it to be clear law that, though the price had been paid, yet, as

the goods had been allowed to remain in the possession of the, vendor

at the time of his bankruptcy, the purchaser was merely 4 personal

creditor for the value of these goodso

(1) Rosis'r Leading Cases Vol-11 pp. 486-498.

 -122-

(')
In the course of his judgment, he said:

in the prenent case, the wheat was not in the hands of a

consignee, or depository or third party. It was in the actual and

natural possession of the sellers; in their own lofts, or in lofts

rented by them, which was the same thing* This could hot be called

constructive or civil possession. It war. as clear, absolute,

unequivocal, and actual possession, as could be had, without holding

it themselves, or putting it in their pockets. It was the same

possession which every man had of the furniture in his house, and

every tradesman of the goods in his shop. It was the only possession

which merchants could have of the immense subjects of commerce. That-

in the present case, this possession never was transferredv and no

ostensible change of possession ever was accomplished., "

(2)
Gibson v, Forbes 9th July, 1833.

In this case, a pipe of port wine having been purchsed-and paid for,
had been bottled and placed in one of the vendor's binns for the
behoof of the purchaser, and one question, which was much agitated in

this case, was whether, as the wine had been laid aside in the binn,

and marked as the property of the purchaser, it was to be held as so

far delivered to him that he could claim this wine in a question with

the veiAor's other creditors? Bat though that question was fully

discussedl it did not properly arise in this easel because the wine

had been taken out of the vendorts cellars, and act-dally delivered

into those of the purchaser several days before the bankruptcyo It

was maintained that this operated as a preference in favour of the

(1), rbib at P!
1.4,96.
(2), Ross."ApeadingC&GeSVol-11 pp*320-547.
 -123-

purchaser, and fell within the provisions of the Act 1696, the
delivery having taken place within sixty days of the bankruptcy*

Put the plain answer to this was, that the wine was not delivered

in security or satisfaction of any other debt, to which alone the

Act 1696 applies, but merely in fulfilment and discharge of the

original contract of sale, If it. had been delivered the day before

the bankruptcy, it is difficult to see how that proper discharge

of the obligation incumbent on the vendor couldv by any construction

of the Act 1696, have fallen either within its letter or spirit*
It was like a payment in money of a debt actually due, which does

not fall within the purview of this statute. The decisiong therefore?

determines nothing as to the right of a purchaser to claim deliveryl

after the bankruptcy of the vendor, of goods which. have bean allowed
*
to remain possession.

Notes on the Judicial concevtt

It can be inferred now, that this concept is based on the rule

of law that in the case of corporeal moveables possession creates a

(')
presumption of ownership, and the test of passing the property is
(2)
the knowledge of the third party, whether it isq or ought to be,

clear to third parties that there has been a change of ownership,

despite the fact that there is no change in the physical situation

(3)
of the goods*

See also Lang v. Bruce July 7,1832.

RoselLeading Cases vol, ri PP-498-590.
(I)Gordont "Studies in the Transfer of Property by TjvAjtjw, jý, * 218
(2)",
** on what third parties might agoertai n" Per Lord J*Ce in
Boak ve-Megget (suPra) at P- 558*
(3)Gordon, at p*218*
 -124-

The meaning of delivery, in this concept , which passes the

property to the buyer can be defined as follows:

"Transfer of possession by which the third party knows that the

ownership passes to a new person. "

On this ground the intimation of a delivery order to the

custodier of goods sold when in the hands of a third party, is

recognised in Soots law as superseding the'necessity of an actual

delivery to the vendee. In other words, constructive delivery, by

means of delivery order, can only take place where there are three

independent persons - the vendor, the vendee, and the custodier of

the
the goods; and if the custodier of the goods Jr. identified with

he is the keeper of a warehouse belonging to the

vendor, e. g. if

vendorg in which goods are stored belonging to the vendor and to'

others, there is no independent third person who can becomeq on

(1)
intimation of the delivery ordert oustodier for the vendee.

Consequences of the judicial approach: *

The most important practical results of the general rule that

the propertfin the goods sold could not pass until they were

delivereilýwere the followings

(a) Tn the event of the bankruptcy of the seller before delivery

the buyers though he might have paid the price, could not obtain

(1) Wie v. MagKinja Ross'OLeadingCases Vol-11 PP-568-575-

Anderson ve 14--Call i866v 4 X- 765-
Mathison v. Alison , 1854t. 17 D. 274-
This paragraph in cited from the book "Introduction to the
Law of Scotland" b.
v Gloag and Henderson. 6th ed.. at P. 159*
 -125-

the article sold. It was still the property of the sellert

and passed, with the rest of his propertyg to the trustee in

his sequestration. The buyer had merely a claim for damages

for the non-fulfilment of the contract, his right being to rank

for a dividend on that claim with the other personal creditors of

(')
the seller.

(b) The seller, being still undivested owner, could, in a question

with the purchaser or in his bankruptcy, retain the thing sold

in security of any debt which might be due to him by the

(2)
purchaser.
(0) The seller had a similar right in a question with a sub-purchaser.

He was still the owner of the goods, the sub-purchaser had merely

a personiLl right to delivery, and that personal right was postponed

to the sellerts right to retain his position as owner, and

therefore to withhold delivery of the goodeq until he had received

payment, not only of the pricat(3) butýof any general balance

(4)
which might be due to him by the original purchaser.,

These results can be criticised as followss

I. They are inconsistent with the principle "protection of property",

According to this principle the property passes to the buyer as

soon as the seller makes sure that he will receive the right price,

and the buyer makes sure that he will receive the right, goods
(in conformity with the contract description) regardless of .
payment of the price or delivery of the goods, Therefere the

(1) Mathison vO Alison (1854) 17 D. 2749

(2) ýUer ve HaWeX, (1861) 23 D. 606o
(3) NcEwanv. Smith (1849) 6 Bellts APP- 340o
(4) Wslrciiie v, Hastle (1851) 13 D. 880j,
 -126-

results of the judicial concept of transfer seem to be

inconsistent with equity,,

2- This attitude is impractical* The modern practice of trade

provides certain modes of dealings by which the property must

be recognised as passed to the buyer although the goods remain

in the possession of the sellerg e. g. notice in the book and

so on*

Mercantile IAw AmendmentAct, 1856.

We have seen that 11traditio" is seen as involving a physical delivery

and obvious change of possession, so that possession and ownership

coincide. Thus in the conflict between the rule that possession

presumes property and the refined forms of traditiol it is scarcely

surprising that decisions favouring the conjunction of property and

possession should result, especially when the circumstances are such

that it is difficult for third parties to tell whether possession is

held as owner or on a "subordinate title"*(')

This Mercantile Law Amendment Act introduced an important

qualification of the doctrine of delivery which was clearly settled

in the law of Sootland and inconsistent with eqaityo

Section 1 provides:

"From and after the passing of this Act, where goods have been sold,

but the same have not been delivered to the purchaser, and have been

allowed to remain in the custody of the seller, it shall not be

competent for any creditor of such seller, after the date of such

sale, to attach such gpods as belonging to the seller'by any diligence

(i) Gordon, at po 220*

 -127-

or process of law, including sequestration, to the effect of

preventing the purchaser or others in his right from enforcing

delivery of the same; and the right of the purchaser to demand

delivery of such goods shall from and after the date of such sale

be attachable by or transferable to the creditors of the purchaser. "

It had been said that the rule of the common lawl that the

undelivered Goods remain the property of the seller, is not altered

by this section. Its effect is only to exclude the diligence of the

seller's creditors in competition with the buyer enforcing his

contract; and being intended to assimilate the law to that of

England, it applies only to the sale of a definite existing article

or quantity of goods (bargain and sale), and not to an executory

agreement, for a salee(l)

(1) Bell Prince by We Gathrie Vol. 11 gth ed. pp. 805-806,

 -128-

1IIIj Passing-of Property in CeleFe and FoOeBe Cortracts

In Scotland, as we have seeni no property passed to the buyerg

before 1ste Jano 1894, by the mere contract or by appropriation

without delivery as a result of following the Roman Lawo

How was this applied on matters involving sea transport?

In order to have a good answer, a distinct-ion must be made between

two cases:

1- Where the goods are represented by bill of ladingt

2- Where the goods are not represented by bill of ladinge

Where the goods are represented by a bill of lading*

Boots law went beyond the old civil rule in recognising a true

symbolical delivery In the case of bills of lading, delivery bf which

is equivalent to delivery of goods, and in the more complete

development of the so-called constructive deliverys. Bille of lading

are the only examples of "traditio instrumentorue having the effect

(')
of transfer of property by common law.

In 17659 Dunlopq in Virginia, consigned some tobacco to Hastie

and Jamieson, the proceeds to be applied in payment of the price of

goods which Dunlop had received from theme This bill of lading, was'

to R. & Jo and their assigns. The ship arrived, and the cargo was

arrested by a creditor of Dunlopq the oonsignor. The consignees

pleaded that the property was-transferredl and founded on, the

mercantile practioe of Holland, Britain andl America. The Lord

(1) Gordon, at p, 2159

 -129-

Ordinary and the Court of Session found, 'That there appears no

sufficient evidence that the said Archibald Dunlop was divested

of the property of the cargo in favour of Hastie & Jainieson, and

consequently that the same was liable to be affected by the

diligence of his creditors. ' Bat in the House of Lords the

judgment was reversed, and it was declared that the appellants

Hastie and Jamieson have a special property in the cargo, preferable

(1)
to the respondentts arrestments,
(2)
In another case, Monteith was consignee of a parcel of sugars,

and had a blank endorsed bill of lading. He sold the goods to Bogle

while they lay on board in the harbour of Greenockl and gave over to

him the bill of lading blank endorsed* Bogle gave an obligation to

Dunmore & Co., the shipowners, for payment of the-freight; and

Monteith having become bankrupt, Dunmore & Co., as creditors of

Monteith on-another accountq unshipped the goods, put them into their

own warehouset azA refused to deliver them up till Ibnteithts debt

was paid* There were two TLestions: t. wherthert supposing the

property not to be transferred to Bogle by the transference of the

bill of ladingg Dunmore & Co. could claim a lion or retention for a
former debt? And 2. whether there was a transference of the property

or not? "A majority of the Court was of the opinion that the proper

possession of the goods was held. 9 not by -the shipmaster or owner,

but througb them by the shipperv and then by the endorsee to the

bill of lading animo; delivery of possession being, made in an

(1) hClburxo Hastie Nor- 14209olossI Leading Cases vol, 11

pp. 580.. 5829
(2) Bor-le v* ore & So* Nor- 14216, Ross-vLeading Cases Vol&27
PP*562--555-
 -130-

effectual manner, and such alone as the case was capable of and

therefore they sustained Boglets claim for the goods as legally

transferred to him. "

Therefore the property in the goodsq represented by a 'bill of

lading is transferred by endorsing and sending the bill of lading

to the buyer (or his agent) even if the seller has taken the bill

of lading in the name of the buyer or his agent at the time of

shipment.
(')
Professor Bell said:

"Where the goods are delivered to the shipmaster of a general ship,

on a bill of lading taken in name of the seller or consignor, and

or on a bill of lading to the

afterwards endorsed to the biiver;

bearer, which is afterwards delivered to the ; or on a bill of,

lading to the buyer by-namev the goods are effectually delivered to

pass the property*"

It can be inferred from the phrase or on a bill of lading

to the buyer by name" that the property in the goods, represented

by a Dill of lading, passes to the buyer on shipment if the seller

has taken the bill of lading in the name of the buyer at the time

of shipment, 6n the ground that Professor Bell did not add "and

afterwards delivered to the buyer" after the above mentioned phrases

I do not agree with this interpretation, as it is not in harmony

with the basic principles of Scats law, This is demonstrated by the

fact that the property in the goods passes to the buyer by deliveryt

since the bill'of lading reprosýs the possession of the goqdvV-A3A

(1) Bell Com. Volel pp. 219-2209

 -131-

therefore the property passes to the buyer by the bill of lading

being endorsed and delivered to him as a result of passing the

possession, whether or not that bill of lading has been taken

originally in the name of the buyer or in the name of the seller*(I)

Bill of Ladi-nr,, and Bulk Shiýment

By the Roman Law, when the thing sold was a commodity which is

usually sold by weight, number, or measure, and when the sale was

made with reference to the weight, ruzbert or measurementj and not

of the commodity in the mass, or per aversionemp the contract was

not perfected until the operation of weighingg countingg or measuring

(2)
was performede
(3)
With regard to the law of Scotland upon this mat-ter, said Brown

I am not aware that the rule of the Roman Law above quoted has ever
been adopted into our lawl and there in yet no au-thori-ty'for holding

the rules established In the English oases to be applied heree

The question being thus open, it may be mentioned that in the

modern law of FTance, a middle oourse has been followed, and the

rule isq "Lorsque des marchandises no sont pas vendues en bloe,

mais au poids, au compteg ou'a la, mesure, la vwAe ntest point

parfaite, en ce sene qua lee choose vendues sont a= risques du

%I
vendurej jusqufa ce quVelles evient pesees, ý-comptees (YtLmetureeel

min Itacheteur pewt en clemmder ca la delivmnoe, an des dumo«itj'

(1) & Delaurier & Co. V, l 1ý- Wvllie & Others (1889) 17 R. at p. 167o
(2)Brown "Law of Sale" Edinburgh 1821,4t p. 44.
(3) Thid at P*53o
 -132-

et intere/tsg stil ya lica, en cas dfinexecution de ltengagemerrts

Cod- NaP- No- 1585-"

The adoption of such a rule would have been inconsistent with

the principles of the law of England, in cases where the thing sold
is a portion of a mass which is to be separated by weighing or

measuring* The effect of the completion of the contract there,

being to vest the property in the vendeeq the contract cannot be
held as complete while it is not yet known to what Particular

portion of the mass the vendeets right of property is to att0he

But there is no such difficulty or inconsistency in our law, in

holding the contract in each a case to be completedg according to

the general rule by consent of partiesoes"

It can be inferred from the paragraph, above mentionedg that

the bill of lading is capable of passing the property in the bulk

shipment, as the contract is complete and there is no need for the

goods to be separated by weighing or measuring. This attitude is

practical and important to todaytsýtrade.,

Bill of Lading and Stoppage In Transita.

0.00

is a modewhereby a seller who has lost

Stoppage in transitu
(')
his lien may at his own hand revive it,, Therefore, stoppage in

transitu and Lien are crai-te distinot rights* Lien is a right

enjoyed by the vendor in security of the pricet when the vendee fails,

while the goods remain in the vendor's possession.

(1) T.J. Gow, "The Mercantile, and Industrial Law of SiootlarAW,

1964 at P. 193.
 -133-

Stoppage in transitu arises when there is an interval of time

between the act by which the vendor loses the possession, and the
(')
act by which the vendee acquires it.

The principle of stoppage in transitu is thus stated by Lord

President Inglis in 1867:

"No law, either in England or Scotlandt gives any real countenance

to the idea that the state of transitus to which the equitable

remedy of stoppage applies, is anything but an actual state of

transit from the seller to the buyer soe The equitable remedy of

stoppage is applicable only to goods which are either In the hands

of a carrier, or of some person - such as a wharfinger - who is

doing something to render complete the contract of carriage. To

put goods in a-state of transitus the seller must have parted with

the possession of the goods and pat them into the hands of some

person who is to carry, or procure them to be carried and delivered

to the buyerl and the buyer must be in the position of not having

received the goods. Unless the seller has parted with the possession

his remedy is not stoppage in transitu, bmt in Sootlandt retention,

(2)
and in England, an exercise of the seller's right of lien. "

In the light of this principle it was decided:

I- The master either of a general shipt or of a ship chartered

- wholly by the vendee, is a carrier in whose hands goods may be

stopped after having been pat on board for the purpose of being

(1) X. P* Brown, ."A Treatise on the Law of Sale" 466,1821.

Im
(2) Black v. of Bakers (1867) 6 N. 136 at P-1409
-Incorporation
 -134-

(')
transported to the vendee.

The facts of the case were thus stated by Mr, Justice Lawrence

in delivering the judgment of the court.

"Crane the bankrupt, a merchant in London, entered into an

agreement with Usherwood, the master of a ship, for that ship

going to Petersbargh, and there receiving from the factors of

the bankrupt, a quantity of merchandise of various descriptions,

and proceeding from thence to London, in consideration of

certain freight to be paid per ton, half on the unloading, and

the remainder in three months; for which goods the master was to

sign the usual bills of lading, and Crane was fully to load the

ship* In consequence of this agreement, the ship sailed to

Petersburgh, and was loaded by Bohtlingk and Co. (the plaintiffs)

on the account and risk of Cranal and one part of the bill'of

ladingg directing the goods to be delivered to Crane or his

assigns, was sent to him; the other part, in conseqUence Of the

plaintiffs having information Of Cranets insolvencT9 was

afterwards sent to Mr. Schneider, their agentq with directions

not to deliver that part to Crane, unless he gave sufficient

security for the amount of the goods. And the plaintiffs, at

the same time that they sent this part of the bill of lading to

Schneider, informed Craneýof their having so done, azA required

him, in case he did not. give the security, to deliver to

Schneider the bill of lading that had been sent to himl, emneo

In faot, Crane had become a bankrupt before the goodivvvre-

(I) BOLtlins* v- Ingli s93 -East9 381-

 -135-

delivered on board -the ship in Russia; but after their

purchase, and on the arrival of the ship in the Thames,

Schneider demanded the goods of the master, who refused to.

deliver them to him, and delivered them to the defendentse

For the benefit of trade, a rule has been introduced into the

common law, enabling the consIgnorl in case of the solvency of

the consignee, to stop the goods consigned before they come into

the possession of the consignee; which possession, Mr. Justice

(1)
Bullerg in Ellis v. Hurt,, says9 means an actual possession;

that the possession of a carrier is not such a possessiong has

been repeatedly determined-9 and the question now is, whether

the possession of the master be anything more than the possession

of a carrier, and not the actual possession of the bankrupt?

As to this, it appears that Usherwood the master contracted with

the bankrupt to proceed from hence to Petereburgh, and to bring

in his ship a cargo of goods, which Crane engaged should amount

to the tonnage of the shipj which does not differ from a similar

contract entered into by the consignor by the directions of the

consignee at the loading port, for the conveyance of the goods

from him to the vendee, in which case it would hardly be

contendedt that a delivery by the consignor to the master of the

ship for thepurpose of carriage, would be such a delivery to

the vendee as to prevent the right of stopping in transitue

In each came the freight would be to be paid by the consignee;

in each ease the ship irould be hired byý him, and there' would""bi

(1) 1 R*R* 7439 747 (3 TeRe 464)o

 -136-

no differenceg except that, in this case, the ship, in

consequence of the agreement goes from England to fetch the

cargo; in the other case, the vessel would bring it immediately

from the loading port, Both in the one case and in the other?

the contract is with the master for the carriage of goods from

one place to another, and until the arrival of the goods at

their port of destination and delivery to the consigneev they

are in their passage or transit from the consignor to the

consignee. If a man contracts with the owner of a general ship

to take goods which are equal to half the tonnage of the shipj

and the master completes the loading of his ship with the goods

of others, there would be no question but that there might be

such a stoppage; and surely, it will not be saidl that the right

of stoppage depends on the quantity of the goods consigned*"

2- Where a ship had beon hired by the consignee for a term of years,

and was fitted out9 victualledgand manned by him# and goods

were put on board thereof, to be sent by-him an a mercantile

adventure, for which he had bought them, It was held that the

consignor could not stop them; the consignee being in that case
the owner of the ship pro temporep and the delivery of the goods

on board therefore being equivaient to adelivery into ei warehouse

belonging to hime

This doctrine was delivered in, a case which is not separately

reported, but of which the following account is given by

]Mbr.Justice Lawrence in BohtliMk 'The baz*xU

'ptst
Htmter and Company, were in possession of a ship let to them for

a term of three years at f-52 108* per month, they finding stcýk

(I)3 East, 396.

 -137-

and provisions for the shipq and paying the master, during

wbich time they were to have the entire disposition of the

ship, and the complete control over her. The ship had been

one voyage to Alexandriag and had the goods put on board her

to carry them on another voyage to the place, not for the

(vendors) to the
Purpose of conveying them from the plaintiffs

bankrupts (vendees) but that they might be sent by the bankrupts

upon a mercantile adventureq for which they had bought them.

There the delivery was complete*"

When the goods are sent by seaq and a bill of lading indorsed

has been transmitted to the the vendor loses his right

vendee,

in transitu, if the bill of lading has been assigned,

of stopping

before he exercises this right, to a bona fide onerous assignee,

although the goods are still. on their voyage and have not arrived

at their destination* This rule was established after solemn

argument and deliberation in the case of Lickbarrow V- WSOn-(1)

The assignee of a bill of lading, in order to be secure agaiiast

the claim of the original vendor, must not only have given a

valuable consideration for it, but must also have acted with

fairness and honesty. If, therefore, at the time when he takes

the assignation, he knows that the vendee is in Insolvent ,

circumstances, and has either accepted no bill for the, price,

or that a bill which has been accepted is not likely tobe paid,

the interposition of himself in that,. case between this vWdor M'j

vendee, in order to assist the latter to disappoint the just

ToRo63 1 ReBo357*
 -138-

rights and expectations of the formerv would be an act done

in fraud of the vendor's rightto stop in transitug and would

(1)
not be available to the asBignee.
(2)
In the following case it was held that a bill of lading,

which has been signed before the goods are actually on board,

was not such a document as could be assigned to the effect of

transferring the goods even to a bona fide onerous indorsee,

and of barring the original vendor"s right of stoppage,, the

granting of such a bill of lading being an act of a fraudulent

nature.

The action 150 puncheons of rum, The

was trover to recover

defendants being possessed of the ram in questiong which was at

the time in the West India docks, sold it to Meredith, who

directed it to'be shipped on board the Zealous, which he had

chartered. Having obtained a bill of lading from the captain

to the loading of the goods, Meredith indorsed it over to

prior
the plaintiffs, who gave him'a cheque an their bankers for the

price, which was duly paid-, but the'defendants, the original

vendors, not being paid by Meredith, and suspecting his solvency,

stop the goods of which a part were by this time on boardl and

a part still undeliverede The bill of lading was dated 28th

itovembert which was previous to the shipment of any part of the

goods. Burroughq Je said:

wUnder the circumstances of the case, I think the bill 'of lading

(1) per Lorel Ellenborough, C*Jo in Cuming vo Brown 9 Fiastt We

Nissen 2 T*R- 674 D'"Ptionj
compare S-olomons v.,
(2) Oseg v.. Gardnert Holtj 405s
 -139-

transferred no property to the plaintiffs. Can a bill of'

lading be considered to be made bona fide when no goods are

on board at the time that the captain signs it? Is not such

an instrument fraudulent? - Upon some of the Jury expressing

an opinion that they thought the bill of lading fraudulent on

that groundl the plaintiffs consented to be non-suited, "

Second: Where goods are not represented by a bill of lading

In this respectl it can be inferred from the doctrine of

"stoppage in tranBitu" in Scots lawo that the property in the goodsq

which are not represented by a bill of 1PAing, passes -to the buyer

on shipment in two cases:

1- Where a buyer sends his own ship for the goods, or a ship

chartered by him. for a definite period, and. entirely at his

own command, delivery into such ship is effectual to all intents

and purposes* In the former case, it is his own repository in

which the goods are placed; in the latter, the possession of the ship

being with his hired servants, not for a mere voyagel but for such

destination as he may choose to give, delivery into such vessel

i. s delivery into the hands of the buyero

2- But where a ship is on general freight only for a particular

voyageq and in order to bring home to the freighter those

particular goods from abroad, the freighter having no control

over the ship, the delivery, though not held as made into the

buyerve repositoryq is effectual to pass the property, the price

being paid, And in sucli a case it makes no difference whether

this aff'reightment is made by the buyer, the ship being sent frft
 -1 4C6-

Britain, or by the seller, freieut being got abroad; the

eneaging of the entire vessel not differing essentially from

(1)
engaging a part of a general ship.

In the first case, -the property passes to the buyer on shipment

without being subject to the right 'stoppage in transitut,

In the second case, the property also passes to the buyer on

shipment, but the vendor can exercise his right of Ostoppage in

(2)
trans itul if the price has not been paid yet.

FC.I. P. ]
Conditions ard the Contracts ard F. O. *B.

Old Scots law recognised. what have been called suspensive

conditions and resolutive conditions*(3) The vendor, after

delivering the article sold to the purchaser, couldq by means of

such conditions, enjoy the benefit

of a conventional hypotheo over
(4)
it for the payment of the stipulated price.,
The different nature of these two sorts of conditions, arA the

effect of each on the contraot of sale, is Ous noticed by Lord

Stair, "If such conditions or resolutive clauses do stop the

transmission of property, and be so meant and expressed, then the

bargain is pendent, and the property not transmittedt and the seller-

remains the proprietore But,, if by the contract and clause, the

buyer became once-the prdprietor, and the condition is adjected,

(1) Bell, comm., Vol-I 8-9 at P-185-

(2) Ante IT
(3) Ante
(4) Weantney v, Nacredie (Supra)o
 -141-

that he shall cease to be proprietor in such a case, this is but

personal, for property or dominion passes not 'by conditions or

provisions, but by tradition and other ways prescribed in law, so

that these conditions, however expressed, are only the foundation

on which the property might pass from the buyer, if the thing

bought remained his. "(')

According to this doctrine, if goods have been sold on the

condition of the price being paidg the vendor would be entitled to

reclaim them, even in a question with the creditors of the vendee,

if the condition should be violated.

(2)
In Bordie v, Todd& Coo Arnott of Leith agreed to purchase from

Todd & Coof Hall a quantity of clover seed, to be paid In London by

acceptance of their draft upon him at three months. The vendorsq in

transmitting the bill of lading, wrote "We liquidated the annexed

account by oar draft on you at three months from this day, payable

in London, which please return in course* The vendee received this

letter on 24th April, but did not return the acceptance till the 26th,

The vendors, who should have received the answer on the 26th, if it

had been sent in course, relanded the goods from the vesselt which
had not yet sailed. The court held first, that "it was a condition

of the bargain that Arnott should return the draft accepted in course

of post"I secondly, "That course of post meant the next post after

receipt of the letter*"

As a resultt this doctrine was an exception to the rmle that

'-(I) stair, 133 vide Prek- 3-3-ol-1.

Brown, at P-33.
(2) 2fth. *rg. 1814*-,
 -142-

property passed to the buyer by delivery or by bill of lading,

enabling -the seller to postpone the moment of passing of the

Property until payment of the price regardless of delivery of the

goods or delivery of the bill of lading.

Rejection of the Goods:

FInally it must be mentioned that if the article turns out,

within due time and after proper trialq not to be the article which

the purchaser had contracted to buy, not to be the article with

which it was intended he should be invested* He is in that event,

entitled to divest himself and to reinvest the seller with the

(')
property.

(1) lord Youngin Kinnear v. Brodie, (1901) 3 P-540.

at pe 543e
 -143-

Col"MM7=S

We have seen that there were two concepts of delivery'in the

old Scots law (before ist. Jan. 1894). The first one - Bellts

concept - tried to inforce an unfamiliar meaning of delivery on

the legal tradition of Scots Law. The second one (judicial

concept) had a very narrow meaning of delivery uhich was

impractical and inconsistent with the principle "protection of

property". In between those two attitudesq the Mercantile Law

Amendment Act 1856 came to rectify the situation 'by making the

judiciary concept more practical and consistent with equity.

2- Strictly speaking, Old Soots Lawt in this respect, did not

follow completely the Roman law*

On the one hand, neither the traditio longs, manat nor the

deliveryq which, in the Romkn Law, was supposed to have taken

place when the seller kept possession of the thing sold on the

title of liferent or lease, have ever been received in Scottish

practice@

On the'other hand, certain acts of constructive deljveT! 3ý, Which

were not known In the Roman Lawl wererecognised in the Old

Soots Lawl eeg., the intimation of a delivery order to a third

party* Admitting of &, billof lading having the effect of

(1)
passing the property by CommonLaw.

3- it was decided, in the Old Scots,, Law, that the property in the

goods, which are represented by a bill ýofladingo 40ý141j§

pas#3bd',,

(1) Brown, at. P-392-393*

 -144-

buyer by transferring the bill of lading to the buyer. This

attitude is similar to that of Warsa-w-Oxford Rules and German

Laws

Ae Rule 6 of Wareaw-Oxford Rules(') providest

(2)
"Subject to the provisions of Rule 20 (11)9 the time of the

passing of the property in the goods shall be the moment when

the seller delivers the documents into the possession of the

buyer. It

B. In the German Law, neither the sole obligation, nor the

individualisation of the goods, sufficient to pass the property

to the buyer (433 du B*G*B*), But, in this respect, the goods

must be delivered (929 BoGeBe), The delivery of the goods

themselves being impossible during their transPorto it is done

by the tradition of the bills of lading. The essential form

governing this function of the bill of lading is contained in

section 650 (HoG*B*) which has been in force since 1861.

According to this section*.

"The delivery of the bill of lading to the one who is qualified

by this document to take delivery has the same effect with

respect to the acquisition of the rights upon the merchandiees*"

Several vivid discussions ocurred concerning this function of

the bill of lading* However, those debates lost their substance

(1) Rules for C9IeF* contracts (Warsaw-Oxford Rules) adopted by -the

Oxford conference of August 12,1932*
(2) This rule provides: Nothing contained in these Rules shall affect
any right of lien or retention or stoppage in transitu -to which
the seller may
 -145-

since the theory of representation of Otto von Gierke

imposed itself definitively.

According to this theoryý the bill of lading represents the

goods in the process of passing the property during the voyage,

as long as the carrier is the possessor of the goods in the

name of the legitimate holder of the bill of lading. In the

light of the prevailing concept in jurispradencel the carrier

has a "direct possession" which he detains in the name of the

vendee of the bill of lading, who himself has only an

"irdirect possepsion"* And the captain, who is the employee of

the carrier, and who receives the goods on board9 is not the

possessor of the goods himself, but he is only the"servant of

the possession'le The transfer of the bill of lading leads to

to transfer of the "direct possession" but by

simultaneously

virtue of section 650 of the HoGeB., the effects of the

"directpossession" are similar to those of the "indirect

(1)
pOBS8BSiontt.

This attitude is influenced by the legal thoughts of the

Roman Law, mixing the transfer of possessionwith the transfer

of propertyg whereas they are quite distinct things. The

modern modes of trade require new rules which must be just and

flexible* The Roman Law and the civil code cannot supply such

rules, These rules must be derived from the principle

"protection of property"o

(1) Les Ventes a L"embarquement en Droit Allemand et en I)roi+..

Franp.ais et lea Conditions Requises du Cormissement,
Par: Karl-Ludwig Hermann, Paris 1963, at P-37-38.
 SECTION 2

PASSILM OF PROPERTT

UNDER

SALE OF GOCfDS
ACT

1893
 -147-

PASqTI%TG
OF PROPERTY
TN TBE HO'1-2
MARKET
SAIM

Legal Provisions:

Before the Sale of Goods Act 1893, Bovill, C*Jo, stated in

(2)
Heilbutt v. Hickson(') in relation to the passing of property:

"unless from other circumstances it can be collected that the

intention was that the property should not at once vest in the

purchaser. Such an intention is generally shown by the fact of

some further act being first required to be done; suchl for instance,
in most cases, as delivery - in some cases actual payment of the
price - and in other cases weighing or measuring in order to

ascertain the price, or making, packing, cooperingg filling up the

casks or the like. "

In Seath v. Moore(3) Lord Blackburn is purporting to state the

relevant principles of English Law in general terms* He stated in

(4)
relation to the passing of propertyi

"It is essential that the article should be specific and ascertained

in a manner binding on both parties', for unless that be go, it

cannot be construed as a contract to pass the property in that

article. And in general, if there are things remaining to be done

by the seller to the article before it is in the state in which it

is to be finally delivered to the purchaser, the contract will not

(1) (1872) L, Ro 7 C-Po 458.

(2) lbid at P. 449.
(3) (1886) 11 APP. Cas. 350.
(4) lbid at P. 370.
 -148-

be construed to be one to pass the property till those things are

doneo

But it is competent to parties to agree for valuable consideration

that a specific article shall be sold, and become the property of the

purchaser as soon as it has attained a certain stage: though if it is

part of the bargain that more work shall be done on the article after

it has reached that stage, it affords a strong prima facie presumption

against it being the intention of the parties that the property should

then pass* I do not examine the various English authorities cited during

the argument. It Is, I think, a question of the construction of the

contract in each case at what stage the property shall pass; and a

fact in that has been reached. "

question of each case whether stage

Lord Hanworth, M. Re summarized

After the Sale of Goods Act 1893,

Kursell-ve Timber-ODeratore
the question of passing of the property in
(') (2)
& Contractors. Ltd. when he said:

"It depneds first upon whether it is 'specific or ascertained goodst

within S. 17 of the Sale of Goods Act 1893, and next if it be such,

whether the parties intended the property in it to be transferred.

Furtherg by sub-S (2) "for the parpose of ascertaining the intention

of the parties regard shall be had to the terms of the contractv the

conduct of the parties and the circumstances of the case. "

In this respect, the law as stated in the Code is similar to

the proposition as to the passing of the property in specific and

ascertained goods laid down in the authorities before the Act*

(1) (1926)l 135 "Tý, 223.

(2) Jbidl at po 225-
 -149-

The Sale of Goods Act 1893 provides in

section 16. Goods mist be ascertained*

Where there is a contract for the sale of unascertained goods

no property in the goods is transferred to the buyer unless

and until the goods are ascertained.

section 17- Property passes when intended to pass.

(I)Where there is a contract for the sale of specific or ascertained

goods the property in them is transferred to the buyer at such

time as the parties to the contract intend it to be transferred.

(2)For the purpose of ascertaining the intention of the parties

regard shall be had to the terms of the contractj the conduct

of the parties, and the circumstances of the came.

section 18. Rules for ascertaining intention.

Unless a different intention appears, the following are rules

for ascertaining the Intention of the parties as to the time

at which the property in the goods is to pass to the buyer,

Rule 1, Where there Is an unconditional contract for the sale of

specific goods, In a deliverable state, the property in the

goods passes to the buyer when the contract is made, and it is

Immaterial whether the time of payment or the time of delivery,

or both be postponed.

Rule 2, Where there is a contract for the sale of specific goods

and the seller isbowA to do something to the goods, for'ýthe

purpose of putting them into a deliverable state, the property

does not pass until such thing be donet arA the buyer has

notice thereof*
 -150-

Rule 3. Where there is a contract for the sale of specific goods

in a deliverable state, but the seller is bound to weigh,

measure, test, or do some other act or thing with reference

to the goods for the purpose of ascertaining the price, the

property does not pass until such act or thing be done, and

the buyer has notice thereof.

Rule 4- When the goods ar e delivered to the buyer on approval

or "on sale or return" or 6ther similar terms the property

therein passes to the buyer:

(a) When he signifies his approval or acceptance to the seller

or does any other act adopting the transaction.,

(b) If he does not signify his approval or acceptance to the

seller but retains the goods without giving notice of

rejection, then, if a time has been fixed for the return

of the goods, on the expiration of such time, andq if no

time has been fixedq on the expiration of-a reasonable time.

What is a reasonable time is a question of fact*

Rule 5-0) Where there is a contract for the sale of unaseartained

or future goods by desorip-tiont and goods of that description

and in a deliverable state are unconditionally appropriated to

the contracit either by the seller with the assent of the

buyer, or by the buyer with the assent of the seller, the

property in the goods thereupon passes to the buyer. Such

assent may be express or implied, WA may be given eithet',

before or after the appropriation in made,

 -151-

(2) Whereq in pursuance of the contract, the seller delivers

the goods to the buyer or to a carrier or other bailee

E (whether
custodier] naned by the buyer or not) for the

purpose of transmission to the buyer, and does not reserve

the right of disposall he is deemed to have unconditionally

appropriated the goods to the contract,

section 19& Reservation of right of disposale

(1) Where there is for the of specific

a contract sale goods

or where goods are subsequently appropriated to the

contract, the seller may, by the terms of the contract

or appropriationg reserve the right of disposal of the

In
goods until certain conditions are fulfilled* such

case, notwithstanding the delivery of the goods to the

[or-
buyerg or to a carrier or other bailee custodierj

for the purpose of transmission to the buyerl the property

in the goods does not pass to the buyer until the conditions

imposed by the seller are fulfilled.

(2) Where goods are shippedg and by the bill of lading the goods

are deliverable to the order of the seller or his agent,

the seller is prima facie deemed to reserve the right of disposal*

(3) Where the seller of goods draws on the buyer for the price,

and transmits the bill of exchange and bill of lading to

the buyerg together to secure acceptance or paymeit of the

bill of exchange, the buyer is bound to return the bill of

lading if he does not honour the bill of exchangeq &TA if

he wroy4fully retains the bill of lading the property in

the goods does not pass to him,

 -152-

It is quite clear now that there is a very strong link between

the past and the present concerning the passing of property, The

two fundamental rules on this subject are thesee.

I* No property can pass in unascertained. goods (s. 16).
2* Property in ascertained goods passes when the parties intend
it to pass (S-17) and since the parties may have had no
Intentiong or expressed no intention, in this respectl a number

of presumptions have been evolved by the Sale of Goods Act 1893

(s*18*19)
which must be applied unless a different intention

appeared,

We can now pass on to examine the circumstances in which this

peculiar concept, the property9 passes under the contract, keeping

in mind that the moment at which the property passes is entirely a

question of intention to be gathered from the terms of the contract,

the conduct of the parties and the circumstances of the case*

 -153-

E
The Meaning-of Tntentione.

I* In the Contract:

For there to be a contract between the parties it must be

shown that they intended to enter into

with a relationship
(1)
legal consequences, and not one binding only in honour.
(2)
In Rose 8-.Frank Co. v. J. R* Crompton & Bros. Ltd* BankesL*J.

said. -M "There is, I think, no doubt that it is essential to

the creation of a contractl using that word in its legal sense,

that the parties to an agreement shall not only be ad idem as

to the terms of their agreement, but that -they shall have

intended that it shall have legal consequences and be legally

enforceable., " ThtLs it can be inferred that the meaning of

intention in the field of contract is that the parties to the

contract must 'be willing and serious in creating legal

relationship within the concept of "contraot"*

2* Tn the Sale of Goods:

There is not much assistance in the authorities as to the meaning

of interrtion in the field of sale of goods, But it can be said

that intention is a state of mindin which the parties to the

contract decide to lot the property in the goods pass to -the

buyer at a certain momente This state of mind can be shown by

their own will which can be either expressed or implied.

(i) In this respect:

Balfour ve Balfýur 1ý91VW*L*R'*286op
2 K*B*571*
Parker ve Clark LQ03
(2) [1-9243 All E.'R. ReVo 245*
(3) nidi -at p, 2484,
-"
 -154-

The Intention and the Nature of the Goods

Ascertained and specific goods must be distinguished from

unat3certained goods. "Specific" goods means goods identified and

agreed upon at the time a contract of sale is made*()

"Ascertained" probably means identified in accordance with

(2)
the agreement after the time a contract of sale is made.

"Uhascertained goods" are not so identified but referred to

by the parties by description only. Thus where there is a contract

for the sale of specific goods, the seller would not fulfil his

contract by delivering any other goods than those agreed upon*

Where there is a contract for unascertained goods the seller fulfils

his contract by delivering at the appointed time any goods which

answer to the description in the contract. :Et is clear that

"fa-ture goodall, even though particularly describedl do not come

within the definition of specific goods, bmt for most ýurposes

(3)
would be subject, to the same consideration as unasoertained goods.
Therefore a distinction must be made between the passing 'of property

in ascertained goods, and the passing of property in unascertained

goodse

nrst*. Ascertained Goods,

Owl".
6--mm

The transfer of property In ascertainedl amd specific goods

depends completely an the intention of the parties to the oor4tract

(1) Seation 62 S*G.A* 1893o

(2) Per Akin LqJo in Re Wýjt r19271 I Ch*60696309
Wý 043w Sale of GoodsI 176t-h
e*'dao
at pjV%
 -155-

which can be either expressed or implied:

1. The cxDressed intention:

The most common condition is paymerrt -to the seller shall be

madet and where the contract provides that the property does not

pass until the goods have been paid for or credit given to the

buyer, the normal indication is that property does not pass until

the condition as to payment is satisfiedP)

The expressed intention must be in the contract before the

passiri, g of property#
"in the case of a
By s*58(2) of the Sale of Goods Act 1893,

sale by auction, a sale by auction is complete when -the auetioneer

Property
armounces its completion 'by the fall of the hamero**"

in the goods passes at that moment to the buyer unless a different

intention appearse Therefore when the auctioneer knocks down to

the highest bidder the property passes to -the buyer on the fall of

'the hammere The auctioneer, after that momýrtj cannot stiptaate

(2)
that the property is not to pass until a cheque is paid.

2. The IMlied intentiont-

A great deal of attention is paid -to extracting the real

intention of the parties to the contract. 6. The Judges look-

carefully at the -transaction before them, then therstart -to',

awayse the terms of the oontract taking in-to consideration the

oorAuct of the parties and the cireum*tances of the case in order

[1904-7]
(1) Weiner v. Smith All E*Ro ReP- 773o
-
(2) Dermard v* Skinner & Colloml [1948] 2 All E*R* 29*
[1948j-2 10*- 164*
 -156-

to got the real intention which is called the implied intention*

The best illuattration in this respect is Re Anchor Line

0)
(Henderson Brothers Ltd. which facts can be summarized as
-)
foll(NIS:

The anchor Line, Ltd., signed an agreement with the Ocean S*S& Coo

Ltdo, for the purchase of an electric crane at a deferred purchase

price of 94,000. Annual payments in respect of "interest" and

"depreciation" viere to be made. The ar-ount paid for "depreciation"

was to be deduated from the purchase price on completion of the

purchase* In the meantime the Anchor Line Ltd., was to "have entire

charge of and responsibility for" the crane@ Payments in respect of

"interest" and "depreciation" were made regularly for some years by

the Anchor Line Ud* but it went into liquidations One of the

issues which arose was whether the property in the crane had Passed

to the Anchor Line Ude

Held, by the Court of Appealq that it had not passed* The

terms of the contract shorwed an intention that it was not 'to pass

until the purchase was completed.

(2)
Lord Wright X*R. said:
.
"The transaction, as I understand it, was simply this. The orsngl

being on the berth occapied by the Anchor 74ne, was in their

oompatione They wanted to use it in the course of their ordinary

businesse It was, I say, in their "occupation"; It was a chattel

and not a fixture to the realtyl but I use the word voccupatiW

(1) E930 2 All EoRe941 [1:937] 1 Che 1 CoAt,

o
sýt p. 945o
 -157-

for convenience, in the sense that they were possessing and using

it* They wanted to possess and use it* They were not, however,

prepared there and then to pay the price for the craneq namely,

C41000o They entered, therefore, into this agreement, which was

to operatel according to its language "in the meantime", that is

to sayq to tide them over their immediate financial difficulties*

They were not to pay the purchase price at the moment or in one

sum, but it was to be paid by the arrangement which is specified:

E350 per annum was to be paid for the first two yearr-, C450 per

Of
annum for the second two years, and C400 per a=mm thereafter*

those sums, I take itq C350 is the starting amount., The aum of

C2409 which was 6 per cent of the purchase price of the crane, was

to be regarded as depreciation* That I understarA to mean thist.

the carne, being treated as the property of the Ocean Steamship

Compamy, was year by year depreciatingg andq according to business

practice, they would write off, on the footing that it was their

property, a aum for depreciation year by yearg and that would have

appeared in their books as a debit. Bat tbatý amount year by year

was to be paid over to them, and paid in that way by the Anchor Line.

The amount of the purchase price was to be reduced proportionately,

just as the crane in-cluestion was being reduced year by year in

value* That explains, I thinkv the provision as to the payment of

depreciation*.

On the other hand, the payment appropriated to intereetwas on

a different footingo The word "interest" might seem to indicate

that there was a debt for the whole purchase price arýfcr tikk

balance e&oh year of the purchase price,, the p4qWen*..0f,,-whjWLýwW

 -158-

foreborne at interest., If thatWere its meaning, then it would

be rather consistent with the view that the debt of C41000 was due

and outstanding from beginning to end* Bat I do not so regard it,

I think the word "interest" is used here somewhat loosely an

indicating a payment year by year in the n&uure of rent, or for use

and occupation of the crane, As that was paid on that footing, it

was not to go in reduotion of the C4,0001 because the Anchor Idne

were getting value in return - namely, the use of the crane in the

meantime*

There is a further provision which to my mind is Only consistent

the that the in the orane was still vested in the

'with view property

the Anchor
sellers: that is the clause "in meantime you" - that is

Line "will have for the crane

- entire charge of and responsibility

in I think that indicates that the Anchor Line did

every aspecte"

not become owners of the crane but were merely baileesp andv as

bailees, were responsible for its safety and its preservation. to

the bailors, who were the owners - namely, the Ocean Companye

Finallyl I attach very great importance to the language

"completion of the purchase"l read with the remaining words* The

first clause states the agreement as one for "a deferred purchase

price of 49000". Now, a deferred purchase price might be construed

as meaning a price for a deferred purchase, or a price for a purchase

which was to become complete at once, though the payment of the

price was deferred* In that. state of ambiguity I attach importance

as solving the ambiguity, to. the words immediately following. "IMtil

the completion of the purchase" and to the similar words "balmoe

actually to be paid by you on completion of the purqh%oa2, xhen~

 -159-

that may take place". T agree that these words are not conclusive,

'but, read in -the context in which -they are, they support the view

which T otherwise arrive at: that wbat we have here is a contract,

the intention of which is that there should be an agreement to

purchaseq but that that agreement should not be completed or

carried out until some time "whenever that may take place" - the

time, it is implied in the contractq when the balance of the

purchase price is paid; and then, and then onlyq the property in

the crane is to vest in the Anchor Lines That certainly agrees

'with the business probabilities, It is always dangerous to rely

on business probabilities in corstraing any contract2 because it

does not necessarily follow that the parties have contemplated all

that might happen. 3: refer, thereforeq to rest BY judgment on the

construction which I attach to the terms of the contractq whicht

to my mindt show an intention within the meaning of 9,17 as to the

time at which the property is to be transferredo"(1

The Presumptions:

In order to assist in ascertaining the intention of the parties,

the Act lays down certain presumptions in sections 18 and 19 which

govern the passing of property in specific goods unless a different

intention appears* These presumptions can'ý"be shown as followst ,

(A) When there is nothing remaining to be done.

Uhder section (18-1) the property in the goods passes to the buyer

(1) See also: Heap v. kotorists' Advisorr-Agena Ltd* 119

1 K*B* 577-591-
 -16o-

when the contract is madel where there is an unconditional contract

for the sale of specific goods in a deliverable state, and it is

immaterial whether the time of payment or the time of deliveryt or

both, be postponed*

This rule gives rise to a number of perplexing questions:

"Unconditional contract"
By section (1) sub-section (2) of the Sale of Goods Act 1893:

"A contract of sale may be absolute or conditional#"

As the'oontraot it follows that it

of sale is consensual, may

be either absolute or conditional, as the parties may please* The

more natural interpretation for the word "unconditional" is that

unconditional means not subject to any condition suspensive of the

It is that this interpretation is

passing of the property. submitted
(1)
the correct one.

"In many sales of specific articles to be deliveredt the

property passes on the making of the contract, A man may select

and agree to buy a hat and the shopman may agree to deliver it at

the buyerts house. There, notwithetanding. the obligation to deliver

(2)
the hatq the property passes at the time of. the contract*"

The division of conditions into those which are suspensive and

those which are resolutive is convenient, because those terms mark

clearly the distinction between an agreementfor sale which is to

becomean actual sale on the fulfilment of a partimlar conditim,

Benjamin at p*149*
(2) Per Bankes L*J* in Underwood Ltd* v. Burgh Castle Brick and
SyrAicate at P.517 C19213A11E*R*
 -161-

and on actual sale passing the property to the buyert but subject
(')
to defeasance on the happening of some specified event. The

trouble arose largely from section 11(1)(c)(2) of the Act whicht

in its original form, deprived the buyer of the right to reject

goods for breach of conditiong "where the contract ia for specific

goodst the property in which has passed to the buyer. " Tf the term

"unconditional contract" in Rule I was given its natural meaning the

result appeared to be that in the vast majority of sales of specific

goods there was no real right to reject for breach of condition at

all* The juages tried to avoid this result by giving a forced

interpretation to the words "unconditional contract", eoge when an

is broken by the sellerv the property in

essential stipulation
and when he accepts the
specific goods passes to the buyer only if
(3)
goods.

Fortunately, these difficulties in England now seem to be a

matter of past history* The Misrepresentation Actt 19679 Section 4,

has replaced the words "where the contract is for specific goods the

property in which has passed to the buyer. ", Therefore, the buyer is

not deprived of his right to reject the goods*

1152ecific- Goods"

Under section 62(l) of the Actf specific goods means goods

identified and agreed upon at the time a contract of sale is made,

(1) Chalmers, Sale of Goods, 17th ed, at p, 80g

(2) This section is not applied to Sootland,
Leaf v. International Galleries C1950] 2K. B_*.
Varley- v., P.2 f19003 1QoB- 513-517-
-0-- . --Whi %. -
 -162-

(1)
In Kursell v. Timber 02erators & Contractors Ltd. the seller

agreed to sell to the buyers all the "merchantable timber" growing

in the forest in Latvia on Aug-ixst, In October the whole of the

forest became state property as a result of a law passed by the

Latvian Government, and all private rights in it were annulled.

It was held that the property in the timber had not passed

to the buyers on the ground that a. 18t R. 1t did not constitute a

sale of specific goods, for the sale of "merchantable-timber" as defined

above, which could only be determined and identified from time to

(2)
time as the trees grew.

Deliverable Stato

Under section 61(4) of the Act "goods are in a deliverable

state when they are in such a state that the buyer would under the

contract be bound to take delivery of them"* Bat in practice the

definition has received a more restrictive interpretation* Thus,

Bankes L*J, in Underwoocl Ltd. v. Ruýh Castle trick and Cement

Svndicatet(3) said:
"A tdeliverable statet does not depend upon the mere completeness

of the oubject-uatter in all its parts, but on the actual state of

the goods at the date of the contract and the state in which they

(J) (1926) 135 LeTe 223. [1927] 1 K. B. 298.

"Merchantable timber" vas defined as "all trunks and branches

of trees but not seedlirWs and young trees of less tbAI4 si*
inches in diameter at a height of four feet from-the
(2) See alsov Morison v, Lockhart (1912 S. C., 1017)-
(3) [1921] All E. R. Rep- 515-
[1922) 1 K*B* 343 C.A*
 -163-

are to be delivered by the terms of the contract. "

There is no doubt that the rule that property passes when

the contract is made does not fit easily into the pattern of

consumer sale. On a sale in a supermarketv for example, property

(')
does not pass until the price is paid. Thus in Lacis v. Cashmarts,,

Lord ParkeNaid: "In my judgment when one is dealing with a case

such as thisq particularly a shop of the superinarket variety or the

cash and carry variety, as this was, the intention of the parties

quite clearly as it seems to me is that the property shall not pass

until the price is paid* That as it seems to me is in accordance

with the reality and in accordance with commercial practice. "

It has been saidv to avoid that result, that the property in

English Law may pass by the contract itselfg if such be the intention
(3)
of the parties.

But such a conclusion is in practice most unlikely as the

parties will hardly even intend the property-to pass at the timeo(4)
Therefore "in modern times very little is needed to give rise to

the inference that the property in specific goods is to pass only

on delivery or payment. "(5)

(1) C1969]2 WoLeR.329*

12969J 2.Q.B- 400-411.
(2) lbid at p. 333-41 and at Po 407.
(3) Dixon v. Yates (1833) 5 BA Ad. 313 at P-340-
(4) 'Benjamin at p. 878*
(5) Per Lord Diplock L*J. in Ro v, Wardltd. v. Bigmall C19673
I QeBe534-551 at P*545-
 -164-

B. When There is Something Remal-ning to be Done

Sometimes either the seller or the buyer is bound to do

something to the goods* Therefore, we will see firsti

lo When the seller is bound to do something to the goods:

ao to put the goods into a deliverable statee

In this case the property does not pass until such thing be

done, and the buyer has notice thereof. The term "deliverable
(')
state" has been already discussed. Here it is sufficient to

point out that this rule is based on the common law prevailing
(2 )
before the Act, by the Court of Appeal in
and was applied
(3)
Underwood Ltd. v. Burgh Castle Brick. The engine, in this case,

was not in a deliverable state, because it needed two or three

weekst work by the sellers before it could be put on rail. The

sellers had to detach it and take it to pieces; both the expense

and the new work were to be provided by theme It is a well known

(4)
rule, now embodied in s. 18, v. 2 of the Act.

The final words "and the 'buyer has notioe thereof" were added

in Committee on a suggestion from Bootland that-it wall unfair that

the risk should be tranefdrred to the buyer without notioe*(5)

(6)
It is submitted that "notioe" means "knowledge%

(1) Ante - 16 1-
(2) Rugg va Mnett (18,09) il P.?
xt 210,
Acraman va Morrice (1849) 8'C'-"13-449-
(3) [1922] 1 K*Bo 343- Suprao,
(4) Per Scruttont-LJe in'Under"od, W4 Supra
Chalmaersq Sale of Goods 17th ed. at, P-150-
(6) BenJamin at P-1559
 -165-

b. to weigh, measure, test, or do some other act or thing with

reference to the goods for the purpose of ascertaining the

price*

Here again, the property does not pass until such act or thing
be done, and the buyer has notice there6fo

This rule codifies the common"law before the passing of the

(')
Act, but with the additional requirement (from Scotland) that

the buyer should have notice.

The duty to weigh, measure, test, etc. must be one which is to

be performed by the seller, otherwise this rule will not have its
(2)
effect.

2* When the buyer is bound to do something to the goods:

a* When he signifies his approval or acceptance to the seller

or does any other act adopting the transaction&

This is the normal case of (Sale or return) contractq This

(3)
contract means: the purchaser may return the goods within a

reasonable timet and the option of return belongs solely to the

purchaser; the other party cannot evenask for the return of the

goodst and his only right is to sue for the price if the goods are

not returned*(4) This contract does not pass the property in the

goods at the moment when the contract is made, but at a subsequent

(1) Hanson v. (18 5) 6 East,, 614,

--Meyer
Z-agua v.. Iýqrnell (1809) 2 Camp. 239-
(2) NankaýBruce v. CommonwealthTrust Ltd. F'9263 A. C.77-809
(3) Per Lord Esher in Kirkham vo Atterborg. Bgh F118
9r). gýj All, E JL'
Rep- 450 at P-451
(4) Comparethe definition of Fletcher Rmltonj L*J* in &= ve
Winkel E911-171 All EeRe Rep.910 at P. 911. am
 -166-

time on the happening of certain eventag(l) ioeo acceptance or

adopting the transaction. "Acceptance" means acceptance of that

part of the contract which makes him the purchaser absolutely*

Such acceptance gives the seller the right to be paid, and Eme for

the. price; that is the only right of the seller, and he cannot ask

for the return of the goods. The words "does any *,, * act adopting

the transaction" are difficult to construeo What "transaction"

is the buyer to adopt? It cannot be the transaction by which the

goods were delivered to him "on sale or return"* That transaction

had already been adopted. The words muett thereforeq mean an

adoption of the transaction so as to make the buyer the absolute

purchaser of the goods. That will be some act which signifies that

he intends to be the absolute purchaser. If he does some act which

would be consistent only if he were the absolute purchaser, that

signifies an ac ceptance or adoption within the statute;

It has 'been argued that the buyer must do something Which is

quite inconsistent with a power to return -the goods. That proposition

is too wide. The act must be an act whioh'Is Anoonsistent with his

not being the absolute purchaser of the goodse If a Man has become

a buyer under a simple contract of I'sale'or return", and nothing has

been said as to time of payment, the price must be paid within a

reasonable time, Thtt in a transaction on credit. Tn this caseq

an act was done by the man who was in possession of the goods'under

a contract of "sale or return"I he pawned the goodsq He had not

then the power of-returning the goodej unless he repaid the amount

Z a!"a the wumple given 'by Buckley, L, J,, in Germ vt

upra) at P-913*
 -167-

advanced by the pawnee,. That is inconsistent with his free power

to return the goods. He ought not so to deal with the goods unless

he means to treat himself as being the absolute purchaser. The

evident conclusion is that he has treated himself as the absolute

purehaser,

be If the buyer does not signify his approval or acceptance

to the seller but retains the goods without giving notice

of rejectiong theng if a time has been fixed for the return

of the goods, on the expiration of such time, and, if no

time hag been fixed, on the expiration of a reasonable time.

What is a reasonable time is a question of fact.,

Two important questions arise from this sectiong

First: the meaning of a "reasonable time"

Secondly: When special circumstances come up preventing the buyer

from doing anything.

These two questions are explained in the following Paragrapbe:

FIrst: The meaning of a "reasonable timeN

Reasonable time is a matter of faot to be gathered from the

circumstances of the casee(l) ]hxt, nevertheless "reasonable time"

can be defined as follows: "It is a sufficient period of time through

which the buyer is able to decide something concerning the goods.

The limits of this sufficient period depend completely on the

evidence of the case, the nature of the goods and the market of the

goods, "

E1962]
(1) Poole vo Smithts Car S41em I Ltd.
am 2 All F. R., 4821*
S ; Mlcular, -(Balham
Omerod L. J. at P-486*
 -168-

Secondly: Special circumstances:

Sometimes the buyer finds himself unable to retain the goods

for some reasons beyond his control. The case of Re Perrier, ex

pIrte stee v. Donald(l) is a good example of special

circumstances:

On November 12,13t 14,1941 Mrs* Donald sold some antique

furniture to Mrs, Perrier on approval for one week* On November

15 the sheriff levied execution on Ws. Ferrierts goods on behalf

of two of her creditorsq before she had the opportunity to see the

goods properly. It was held that the property in the goods had not

passed, and they still belonged to Mrs. Donald, for after November 15

they were "retained" by the sheriff, and not by MrSe Perriere

(1) (1944) 60 ToLoR*295- E94] ChO295*

 -169-

Second: Unasocrtained Goods

Although the Act does not distinguish between the types of

unascertained goods, but it would appear that three categories of

goods are included* Firstly, goods to be manufactured or grown by

the seller. Secondly, purely generic goods, and thirdly, an

unidentified portion of a special whole*(') The property in these

-types does not pass to the buyer unless or until the goods are

ascertained (s. 16). Thus Bovill C*J* said in Heilbutt and others
(2)
vo Hickson and others:

"In the case of executory contracts, where the goods are not

ascertained or may not exist at the time of the contract, from the

nature of the transaction no property in the goods can pass to the

purchaser 'by virtue of the contract itself; but, where certain goods

have been selected and appropriated by the seller, and have been

approved and assented to by the buyer, then the case stands, as to

the vesting of the property, very much in this same position as upon

a contract for the sale of goods which are ascertained at the time
(3)
of the bargain.,,

The effect the deliver 7 order in. pAssing; the Rrg32

erty In.
mm--Mý -of
unascertained poods

The delivery order isnot irafficient to pasa the property

(1) Benjamin at P. 166. AtlYah at P- 155o

; (2) (1872)-L. R. 7 C*P**438*
(3) Tbid at P- 449*
 -170-

(2)
without attornment(l) or intimation, Thus in Laurie and Mornwood
(3)
vo Dudin and Son-s,, it was held that the mere giving of the

delivery order by the vendor and the handing of it to the defendents

by the plaintiffs was not sufficient without more to pass the -

property in the 200 quarters to the plaintiffs before servance from

the bulk.

The attornment or intimation occurswhon the third person

(4)
acknowledges to the buyer that he holds the goods on his behalf.

Unconditional APPLo-2riation

It is to be noted that s. 16 does not state that the property

will Wss if and when the goods are ascertained* Property in

ascertained goods passes when'the parties intend it to pass (8,17)-

Again, although the passing of property is dependent upon the

intention of the partieug 'but in the absence of a different

intentiong the law imputes to them an inten-tion, that property is

not to pass unless and until the goods have 'been unconditionally

appropriated to the contract.

The meaning of unconditional appropriation:

It is very difficult to give a precise definition for that tem.

Rule 5*2 s*18 gives one illustration of an unconditional

(I) Laurie and Mr od Dudin and Sons, [192631 K*B*223,

r_1925J All E*Re RApp*4149
Witehouse vt Fbreýt Roost L*C* Vol, 17 at ppe&ý116.
(2) NoMwenv. Smi+,h Roset 6C* Vol. n at pp,6591.60
(3) (Supra),,
(4) W&Tdarvo-Iforwood. E9683
2 Q*B*663*
 -171-

(')
appropriation. But apart from that particular instance, the

meaning of that term has been discussed on many occasions by the

courts* It may well be that what is necessary to constitute an

unconditional appropriationwill vary according to the type of

goods in question and the general circumstances of the case. Therefore

(2)
it was quite right when Parke, 33o pointed out that appropriation

may be understood in different senses: "It may mean a selection on

the part of the vendor, where he has the right to ohooesethe article

'Which he has to supply in performance of his contract. Or the word

may mean that both parties have agreed that a certain article shall

be delivered in pursuance of the corrtract the property may

9 and yet
not pass in either case **9 tAppropriationt may also be used in

another sense, vize where both parties agree upon -the specific

article in which the property is to pasag and nothing remains to be

done in order to pass ito"

The appropriation must be unconditional, that is to 13ayg'the

Party appropriating must intend that the property shall pass by the

appropriation, if assented to by the other partyg and not upon the

occurrence of some further event, sego payment or Under of the

. (3)
price* Therefore the act of the party appropriating in simply

selecting the goods which he intends to be delivered cannot pass the

property in then by appropriationg something more is required* 'the'

(1) S. 18 Rule 5.2 providest

Where, in, PUrGUaZC*Of the cOntractl the seller delivers the
goods to the buyer or to a carrier or other bailee .. (whether
namedby the buyer or not) for the purpose of transmission to
the IMYer,, arA does Myt reserve the right of disposaig he in
deemed to have unoonditiomlly. APPropriated, to t4e,
-the goods
contrazte
(2) In Wait ve-Baker, (1849) 2 Ezoh. 118.
(3) ?or 4kin, J* in Stein. Forbes & Coo vo C
(1916) 86 L*J*Koý,
 -172-

selection will have subsequently to be approved by the other party,

so that both parties are agreed that those are the goods to be

sold*(')

The assent of the buyer:

It has been said that the assent of the buyer is in fact an

authority by him on the seller to pass the property in

conferred
(2)
the goods by appropriation* This assent which Rule 5 requires
(3)
for the appropriation may be expressed as in Rohde
..ON
ve Thwaites
(4)
or implied as in, PifMataro v, Gilroy*

The expressed or the implied assent may be given before the

appropriationg e, g., a bookseller orders certain books from a

publisher; when the bookeg properly packed and addreBsedl are

delivered to the railway they are deemed to have been iLneonditionally

appropriated by the seller (R-5.2) and since the buLYerq when placing

the order,, has impliedly assented to. such appropriationv property

passes at that time*

Delivery of the goods to the carrier:

Delivery of the goods to a oarrierl whether named by thebuyer or not,

for the parpose, of transmission to the buyer in Prima facie deemed to

be a delivery of goods to the buyer and property will paset on the

ground that "the moment the goods, which have been selected in

pursuance of the contract, a;re delivered to the carrier, the carrier

(1) Rahdev.. TkLaites (1827) 6 B* & Ce 388o

(2) jermer vo-smith (1869) 1,*Ro 4 C*P* 270,277t 278*
(3) Suprao
EIE1963I Q*Bv 519,9
plett s Lo Beattie
@
(4) (1919) 120. L*Te 480o E191. I KoBo 459*
 -173-

becomes the agent of the vendee; and if there is a binding

contract between the vendor and the vendee **& then there is no

doubt that the property passes by such delivery to the carriero"

But a mere delivery of the quayrtityof unaseertained goods,

(2)
eoge to a carrier, will not pass the property*

Future goods:
The question of appropriation has arisen in a rrimber of shipbuilding

cases, In such cases, as in the case of all goods to be manufactured

by the seller, the general presumption is that no property is to pass

(3)
until the article is completed*

Finally, it must be mentioned that T. in Carlos

Pearson,
,
(4)
Feder22iel & Co. S *A* v. TwiZ& & Lo. Ltd. mmed up the
-Charles
law relating to appropriation in the following passage:

"First, Rule 5 of Sect- 18 of the Act is one of the Rules for

ascertaining the intention of the parties as to the time at which

the property in the goods is to pass to the buyer unless a different

intention appearse Therefore -the element of'oommon intention has

always to be borne in minde A mere setting apart or selection by

the seller of the goods whioh he expects to use in performance of

the contract is not enough* If that is all, he can change his mind

and use those goods in performance of same other contract and use

(1) Per Parke, B., in Xait XL Baker (1849) 2 Exche 1979

(2) Realv v. Zowltt-
e: & Sons,(1917) 116 L*Te 591- D11j] 1 K*B*337*
-
(3) Reid V, IStcBeth E9041 A*Ce 223* But see Re BIVth Ship2aill ju
Co, P926 j Ch- 494 'Whenit was held by the Court of Appeal that
0000
the property in the inc2Mlete ship had passed to the buyer8 6ii
the ground that the contract provided that on the paymentof 09
first instalment "the vessel and all materials and things
appropriated for her should thenceforth becomeand remain thO
absolute property of the purchaser*"
(4) E19577]1 lacyd's Rep. 240 pp*255-256o
 -174-

some toher goods in performance of this contract* To constitute

an appropriation of the goods to the contract the parties must

have had, or be reasonably supposed to have had, an intention to

attach the contract irrevocably to those goods, so that those goods

and no others are the subject of the sale and become the property

of the buyer.

Secondly, it is by agreement of the parties that the appropriaion,

involving a change of ownership, is made, although in some oases the

buyerls assent to an appropriation is conferred in advance by the

contract itself or otherwise*

Thirdl, yl an appropriation by the seller with the assent of the

buyer may be said always to involve an actual or constractive

delivery. If the seller retains possessioni, he does so all bailee

for the buyer. There is a passage in Chalmerst Sale of Goods Act,

12the ed* at P-75 which states: "In the second place, if the decisions

'be carefully examinedg it will 'be found -that in every ease where the

property has been held to pass, there has been an actual or

constructive delivery of the goods to -the buyer*"

I think that is right, subject bnly to this possible

qualification, that there may be after such constructive delivery

an actual delivery still to be made by the seller under the contract*

Of course, that is quite possible, because delivery is the transfer

of possession, whereas appropriation transfers ownership. So there

my be first an appropriation, constructive deliveryl whereby the

seller becomes bailee. for the buyer, andthen a subsequent"

delivery involving actual possession, and when I say that I have in

no2d, in, particular the cases cited, namely AldriýM

 -175-

1) (2)
Johnson( and 12Won ve Hirdns .
Pour-thly, one has to remember Sect. 20 of the Sale of Goods Actq

whereby the ownership and the risk are normally associated.

Therefore, ior
as it appears that there is reason thinking, on the

construction of the relevant documents, that the goods were, at all

material times, still at the seller's risk, that is prima facie an

indication that the property had not passed to the buyer*

Fifthly. usually, but not necessarily, the appropriating act

is the last act to be performed by the Esellero For instancet if

delivery is to be taken at the seller's premises and the seller has

appropriated the goods when he has made the goods ready and

identified them and placed them in position to be taken by the buyer

and has so informed the buyer, and if the buyer agrees to come and take

them, that is the assent to the appropriatiom But if there is a

further act, an important and decisive act, to be done by the seller,

then there is prima facie evidence that probably the property does

nab pass until the final act is donee'!,

It can be inferred now, from all the circumstances above

mentioned, that the unconditional appropriation which passes the

property in the goods to the buyer occurs where the contract has

become irrevocably attached to the goods In question without

suspending the passing of Its property on any event* In other wordev

the term "unconclitional appropriationr means one of the stages in

the transaction in which tho'goods become ascertained, and the

intention of the parties to pass the property is clear and vmmspended

on amy event

(1) (1857) 7 IS! & Be,885-

(2) (1859) 4 He & No 402o
 -176-

Reservation of the Rig)jt- of DjsRoaal:

The cases which illustrate the reservation of the right of

disposal by unilateral action of the seller when appropriating the

goods have mostly arisen in connection with the sale of goods to be

carried by 3ea. In the light of section 19(1) the seller can, by

the terms of the contract or appropriation, reserve the property

in the goods until certain conditions are fulfilled, and-when he

has done so property does not pass until the conditions are

fulfilled though the goods might have been delivered to the buyer,

his agent, or a carrier for transmission to the buyer. The seller

may reserve the property in the goods until he has received the

purchase price. Therefore the seller can deragate from the

presumption contained in section 18. r-5(2) of the Act that such

delivery is deemed to be an unconditional appropriation of the goods

to the contract*

Subsection (2) raises a preswuption in favour of the sellerts

intention to reserve the property where the bill of lading is to

order of the seller or his agent, The result of that provision is

that the property will normally pass only when the bill of lading is

transferred to the buyer and the price is paid or tendered.

Subsection (3) applies to documentary bills of exchange where

the bill of lading is attached to the bill of exclumge drawn by

the seller on the buyer for the price, and the evident intention of

the seller is to reserve the property until the buyer has honoured

the bill of exchange*

 -177-

Transfer of Property in C*T*F. and F*O. B* Contracts

More co=only, C*I, P, and F. O*Bo contracts for Ithe sale of

un scertained goods, so that no property can pass before ascerta-Inment*

(9.16. ) Once the goods are ascertained, the overriding rule is that

property passes when intended to pass(r--17s, 'j Noreover, the bill of

lading plays an important role in this respect, because, by

mercantile law, it is the crjmbol of the goodea(l) The transfer of

the bill of lading operates as a transfer of the constructive

possession of the goodeq and may operate as a transfer of the

(2)
property in then if so intendede Therefore as the question of

passing of property is one of "actual intention! 's that means the

property passes when it is intended to pass, and every case must be

judged on its own meritse

In order to have a clear idea about this subject in the light

of the Sale of Goods Act, 1893, a distinction must take place between

two states* The first one is where t. he goods are represented by a

bill of lading as in the case of Cel*F* contracts and F*O*Bo contracts

where the seller has undertaken the additional duty to ship the goods,

The second one is where the goods are not represented by a bill of

lading as in the case of classic F*O*B*

(1) Per Lord Wright i Ross To Smyth & Co. TO, Bail= & C(5*Ltd
rL1114 All E*Ro 0 at p. 97- -v.
v03
(2) Barber v. Mejerstein (1870) L. R- 4 H. L- 317-
-
Sanders v. 4'.
býcLean(1583) 11 QoBoDo327 at P- 341-
 -178-

First,: I&ere the goods are represented by a 'bill of lading

The goods on board a ship which are represented by a bill of

lading can be either a cargo to different buyers (bulk shipment)

or certain cargo to a buyer. Therefore we deal first with the

bulk shipment and then vie will see the normal case of shipment*

A. Bulk Shipment:

In cases of overseas sales involving bulk shipment which are not

physically split up, it is necessary to see whether the bill of

lading is a good instrument in ascertaining the goods or note

The problem stems largely from the rule that property in goods

the goods are ascertained. In jLaý & Sor vo

cannot pass until
(2)
MoLintook(l) Lord Mclaren said:

"I think it must be taken as settled that, although the goods

are stored, the delivery of bills of lading has effect in all

respect, whether as a title of property or whether as a security

to the person to whom it has been indorsed or deliveredg exactly

as if the goods were on board the ship

.. *
Bills of lading have

been long in uset and as far back as we have any knowledge of

their use they were held to be negotiablee Such billsq expressed

to be for so many bags of flour or quarters of grain on board a

particular shipq would pass by blank indorsation from hand to hand

while the ship was at sea. How is it possiblel consistently with

such a state of the law, that the goods could be specifically

(i) igo6-07 S*ce PP-936-953-

(2) lbid at p, 952.
 -179-

aseertainedl or that the %-=rious persons who took such bills

of lading could examine an-d verify the good s while the ship

was in midocean? We kncn7 that bills of lading axe granted.

for portions of cargo in bulk- which cannot, of coarse, be

ascertained, and. where bills of lading are granted in these

circumstances they must operate as a transfer of an unascertained

quantity of goods on board the ship, until delivery is made in

terms of the obligation, "

In Re Wait(') a ColeFe buyer of 500 tons cut of a bulk cargo

of 19000 tons of wheat paid (althoug gh he was not bound to do so)

againat an invoice. Tho seller was thus left in possession of

the bill of lading which he hypothecated and delivered to his

bank; and he then became bankrupt. At this time the 500 tons

had not been separated from the bulk, so that no property had

passed to the buyer* The buyer attempted to evade the effect

of section 16 and to obtain delivery of the 500 tons Out of the

bankrupt's estate by claiming specific performance of the

contract of sale. A majority of the court of appeal rejected

the claim on the ground that the goods formed at all relevant

times an undifferentiated part of a larger bulk and were

therefore not "specific or aecertained" within section 52*

(2)
Akin LeZe said: "It will be noticed from the above statement

of facts -that no 500 'tons of wheat have ever been ear-ctarkedr

identified or appropriated as the wheat to be delivered to the

E1927]I Ch. 606.

(1)
(2) lbid at po 6299
 -180-

claimants under the contract. The claimants have never

received aanybill of lading, warrant, delivery order or any

document of -title representiAg, the goods&"

What does Atkin L.J. mean by "The claimants have never

received any bill of lading"'? It seems to me quite clear that

he meams: the bill of lading is a good instrument in ascertaining

the goods for t1he purpose of passing the property*

But, it must be mentioned that British Jný,:isprvtdence stands

against this ideat Thus in Benjaming(l) there is a comment

after the statement of Atkin LoJe in Re Wait(supra)says:

in
"It is submitted that receipt of such a document would n0tq

fact, have improved his position since-a delivery order or

warrant cannot pass property until actual ascertainment of the

goodsl and the same is probably true of a bill of lading for ail

undifferentiated part of a larger bulkf becanse it is inconsiErtent

with section 16. "

I think, that will lead us to a strange*result; which is the

property in the goods of bulk shipment cannot be transferred to

the buyer unless and until the goods are ascertained by

separating them from the bulk. This separationg usuallyq takes

place in the port of discharge* Therefore -the bulk shipment can

only be carried under 11ex ship" contracts where the property

"does not pass to the buyer until the goods have crossed the
(2)
shipts rail at the port of delivery*"

(1) at 1D&750o London, 19744,

[S I
(2) Yandsze insurance Asnociation ve jee 1918 Aece 5859 589o
 -181-

Thereforeq the bill of lading must be competent in ascertaining

the goods. But it is a moot point -that "warrant, deliveI7

order or any document of title representini; the goods are

competent in ascertaining the goods for the purpose of passing

the property in the goods without doing some more acts, We

have seen that the property in the goods cannot pass until the

goods are ascertained and generally it will not pass until they

are unconditionally appropriated to the contracts This

ascertainment and appropriation will often involve some act on

the paxt of the person in actual possession of the goods,.,.. 3uoh

as the aeparation of the quantity comprised in -the delivery

order from the bulkg and an acknowledgement that the goods so

separated are held for the person designated in the delivery

order. In this way attornment and passing of PrCPertY are in

practice closely linked, though there is no necessary connection

between theme This attorriment is implied in the I'shiple

delivery order" by the promising of the shipownerl who issues it,

to deliver the goods to a certain person or his order. This

implied attornment makes the I'shipts delivery order" of a higher

legal quality than other delivery orderse(l)

Buyers of parts of bulk shipment do sometimes pay against

delivery orders and even invoices(2) when they are not obliged
(3)
-to do so, but this praotioe exposes them to great risks.

(1) See ante at po qD

(2) Re Wait (supra).
(3) n-e-IThlon. G*M*B*Ho v. C!, ?p Prince
ýqbay SteamshU Co,
L969 1 Q. B* 219--.254o
 -182-

The buyer ecanprotect himself again-. t this disadvantage by

stipulating for a giiarantee (from the bank for instance) to

(1)
avoid the risky consequences of taking a delivery order*'

B* Normal Shipment:

Here we have a certain cargo to a buyerg and this cargo is

represented by a bill of lading, Inthis caseg the passing

of property depends or. the inference of an intention drawn

from the provision of the contract, the form of the shipping

documents, documents have been dealt

and the way in which the

with,, These matters can be discussed as follows:

1. The e;xpressed intention:

The most common intention is to the seller shall be

payment

madeq or adequately assured. Accordingly, if the contract

so provided, the normal inference is -that no property passes

until payment is satisfied, There is no doubt whatsoever

that a reservation of the property in the goods until payment

does not destroy the nature of a 04PI*F* & F*OeB-P contracts*

(2)
In Ross T. Smyth & Co. v, De-Bailoy & Co. Ltd Lord
-T.
(3)
Wright "The provided for cash or (at
said: contract

sellerst option) an acceptance of sellerst draft against

doouments* That condition for 'the transfer of the documents had

not been fulfilled* The bills of lading were the symbols of

the goods, and the appellants, by retaining them, retained as

(1) HeilLber. S=ons-& Co. Ltd. v. Harve Christie, Mller- &

(1922) 12 la. L. R. 455, _y
(2) F1940] 3 All We 60o
(3) Ibid at p. 66o
 -183-

against the regPondentfs title and control over the goods,

All the respondents had at that stage was a contractual right

to obtain control, and thereby become owners upon taking up

the d6miments. "(1)

IN FoOoBe Contracts, again, where the seller reserves a

right of disposal, he does so until the conditions of the

(2)
contract as-'-to payment are met; and before they are met

the property does not pass. \-J/

Difficulties begin to arise where the contract contains

apparently conflicting provisions, Thus in NiDDon Yusen Kaisha,

ve Ramjiban Serowgeet(4) the contract provided for payment by

and this provision would, had it

cash against mate's receipts,

stood alonel have postponed the passing of propertj until such

payment. But the contract went on to provide that so long as

of the seller, his

the matets receipts were in the possession

lien was to subsist until payment in full-, and this clause was

relied upon to show that the property passed before payment as

the seller could not have a lien over goods which were his own

property* In Barton, hoppson & Co. v. 2rs Bros. 1(5) the

_ _Vij;
contraat provided for payment by approved acceptanoe a;t three

months from the date of the bill of lading, in exchange for

(1) Also: Ihil.. ean & co-, (1883) 11 Q*B*D* 327-344*

Sanders Brothers-y.
(2) Tames vo The Commonwealth (1939) 62 C*L*R* 339.381.
(3) Ibid at pp. 384-385-
Also*. ORRv. hater, (1875) 1 C.P. D. 47.

(4) E193flA*C*429*
(5) (1906) 19 Com. Caso 175-
 -184-

shipping documents, and continued-O "Properby in goods to be

deemed for all purposes, except retention of vendor's lien

for unpaid price, to have passed to buyer when goods put on

board. " The buyer refased to accept the draft or pay for the

goods; and the actual decision was that he was not entitled to

retain, or deal with the shi.,pping documents. Dicta in the

case suggest-that the property in the goods had not pa:ssed to

the buyer though it does not seem that these dicta were

necessary for the decision. To the extent to which the

opinions expressed in these two cases conflict, one can only

say that the passingr of property is a question of intention in

(1)
each case.

2* The Intention and the bill of ladipg (form and dealing)-

It it, quite common for the seller to take the bill of lading

either In his name or in the buyerts name. Thus we will see first:
(a) The bill of lading is in the sellerts name:

By section 19(2) a seller is prima facie deemed to have reserved

the right of disposal where goods are shipped and the bill of

lading makes the goods deliverAle to the order of the'seller

or his agent. In such a case the seller may deal with the bill

of lading so as to "secure the contract price" then "the

presumption appears to be that the property is to pass only on

(2)
the performance by the buyer of his part of the contract "

(1) Benjamin at P- 715-

(2) [191fl
Per L*rd Parker in the Parchim A*C*
 -185-

or if the jus disponendi has been reserved by the vendor for

some other purpose that that of securing the contract price,

the property will not pass until that purpose will be fulfilled,
(2)
Thus in rarabita v. Ottoman Bank(') Cotton, L*J* stated:

"#.. the delivery by the vendor to a common carrier, or

(unless the effect of the shipment is restricted by the terms

of the bill of lading) shipment orboard a ship of, or

chartered for, the purchaser, is an appropriation sufficient

to pass the property, Tft however, the vendorg when shipping

the articles which he intends to deliver under the contrack.,

takes the bill of lading to his own order and does so not as

ag,ent or on behalf of the purchaser, but, on his own behalf, it

is held that he thereby reserves to himself a power of

disposing of the property, and that consecrientlY there is no

final appropriation, and the property does not on shipment pass

to the purchasers. When the vendor on shipment takes the bill

of lading to his own order, he has the powerý-of absolutely disposing

of the cargo and may prevent the purchaser from ever asserting any

right of property therein. "

Again, Barke B., said in. Var Casteel v. Booker(3) $too* where

goods are shipped under a bill of lading making them deliverable

to the shipper's own order, the property does not vest in the

consIgnee until the bill of lading has been delivered to and

accepted by him*"

(1) (1878) Ex. D* 164-1730

(2) lbid at P-172*.
(3) 2 Ex. 699. Revised*
 -186-

Now it is obvious that the taking of the bill of lading in

the name of the seller prevents the property from passing to

the lmyer, because there is no unconditional appropriation

sufficient to pass the property in the goods. Although the

seller delivers the goods to the carrier, but the property

does not pass to the buyer if the seller reserves the jus

disponendi. Therefore the delivery of the goods to a carrier

does not alone pass the property without the intention of the
(')
parties to pass it.

(b) The bill of lading is in the buyerts name:

It has been said under the Act thatq if the bill of lading

makes the goods deliverable to the buyer or his agent, the

property pass to the buyer immediately on shipments

will In
(2)
E. Clemens Horst Co. LrS Biddell Bros. Kemiedy L*J* said(3)

that where the bill of lading was made out in favour of the

parohaser or his agent or representative, the property in the

goods passed, unconditionally, to the consignee on shipment.

This attitude is not effective in the CommonLaw*

It has been said that if the bill of lading is indorsed in

blankq or to the buyer's order, and sent directly to the buyerv

then the property will pass on shipment if there is no intention

to the contrary which may appear from the provisions of the

(4)
contract or from the circumstances of the case.

(1) Wait v. Baker (1848) 2. &, 1. Revised Reports 76, pp-469-476.

(2) flol 11
L 1.-7 1 K*B*
(3) Jbid at P-956.
(4) Key and others V* Cotesworth and other_s (1852) 7 EX-595w6O8-
The Revised Reports 99. PP 750-7609
 -187-

Thus when the seller retains the bill of lading, which was

taken in the buyer*s nane, to Becure payment, the property

will not pass to the buyer on shipment merely because the bill

of lading makes the goods deliverable to the order of the

buyero In the Kronprinsessan YhrMretaj(1) goods had been

shipped under bills of lading making them deliverable to the

order of the purchasers. The bill of lading had not been

taken up until after the capture of the goodso It was said

in that case: "The passing of property being a question of

intention is ultimately a question of fact. There is no

evidence of the intention of these parties beyond the inference

I
to be drawn from their situation and interests and from the

they Importance
mercantile operation which conducted*ýýL*e

to the fact that the having loaded the

attaches shippers,

coffee on a general ship -a bailment to the carrier - took

(3)
the bills In these
of lading to the consignees' order. oo.

circumstances what can be inferred as tothe passing of the

general property? What is there to show an intention to pass

that property for anything less than paymentf and what motive
(4)
is there for such an intention? It seems clear that the
...

consignors desired to retain an interest in the goods, otherwise

why should they retain the bills of lading in their agentst hand? ý:ý

E192ýj I A. C. 486.
lbid at P- 511-
Ibid at P- 512.
lbid at P- 514*
lbid at P- 515-
 -188-

Certainly no case was found, in which it was held that taking

the bill of lading in the buyer's name, while withholding

delivery of it until presentation and taking -up of the

documents, would not be, as an appropriation, equally

(')
conditional**. The intention has still to be inferred,

principally from what was done and from the communications

made with reference to it, and these point to an intention

not to past; the property till the drafts were paid* It is

really rather a reason for intending to get the documents

presented and taken up as soon as ponsibleg than for an

intention not to retain the ownership even imtil that could be

(2)
effectede

The claims of Engwall, Bery & Hallgrent Levander and Ofverstorm

must be dismissed, for their ownership only arises by

documentary transfer of the goods while afloat, which was only

effected after seizure, and the goods, when seizedq belonged to

the owners of the parcel of conditional contraband in the same

ship, which had an ulterior enemy destination*

The result of this is that the property may pass on shipment

when the seller's intention to pass it at this point is clear.

(c) Indorsement and transfer of thebill of lading:

It can be inferred from the cases above mentioned that the

process of passing of property in the goods depends completely

on the intention of the parties to the contract to be drawn from

(1) lbid at P. 515-6-

(2) Ibid at P* 518o
 -189-

the dealing with the bill of lading and its form. Therefore

the bill of lading has no power- to pass the property in the

goods without the intention to pass it, Property in the

goods passes by such indorsement and delivery of the bill. of

lading, whenever it is the intention of the parties -that the

(') (2 )
property should pass, In Sewell v. Burdick Lord BlackInirn.
(3)"
stated: ooe no case was cited at the bar, nor am I aware of
any in which it has been held that a transfer of the bill of

lading for value necesaarilyt whatever might be the intention,

passed the whole legal property. " This decision has made it

clear that the effect of the indorsement of a bill of lading

depends entirely on the particular circumstances of each

indorsement and that there is no general rule that indorsement

passes the whole legal property in the goodso But it was said

in Lickbarrow v. Mason(4) that, by the custom of merchantst

bills of lading, expressing goods or merchandizes to have been

shipped by any person or persons to be delivered to order or

assigns, have been, and are, at any time after such goods have

been shipped, and before the voyage performedl for which they

have been or are shipped, negotiable and transferable by the

shipper or shippers of such goods to any other person or persons,

by such shipper or shippers indorsing such bills of lading with hist

her, or their name or nameov and delivering or transmitting the

(1) Sanders v. MacLean (1883) 11 Q*BeDesupra.

(2) (1884) 10 App. Cas- 74-'
(3) Ibid, at p. 102,
(4) English Reports 101 KeB* 382, (1794) 5 TeRe 683-
 -190-

same so indorsed, or causing the same to be so delivered or

transmitted to such other person or persons; and that by such

indorsement and deliveryp or transmission, the property in

such goods has been, and is t-ransferred and passed to such

other person or persons. And that, by the custom of merchantsv

indorsements of bills of lading in blank, that is to say, by

the shipper or shippers with their names only, have been, and are,

and may be, filled up by the person or persons to whom they are

so delivered or transmitted as aforesaid$ with words ordering

the delivery of the goods or contents of such bills of lading

to be made to such person or persons, andq according to the

practice of merchants, the same, when filled up, have the same

operation and effect, as if the same had been made or done by

ouch shipper or shippers when hev she, or they indorsed the

same bills of lading with their names as aforesaid. "()

This special verdict which recites -that "the property is

transferred by indorsement" must be read "the property which

it was the intention to transfer is transferredj tj(2) because

the "particular mode of dealing with a laill of lading must,

whenever it occurs and in whatever circumstancesq always prove

O)
a particular intention. t, And "The English cases on which
,,
the Sale of Goods Act was founded seem to show that the

appropriation would not be such as to pass the property if it

appears or can be inferred that there was no actual intention

(1) rbid at p* 3 9'2,.

(2) As suggested by Lord Selbourrie (1884) 10 App* Cas,74 at p. 80. Scmttono
(3) Per Lord Sumer in the Kronl2rinsessan Yarmreta E921J 1. A. C.486,
516-517. Approved in Ross T. SWh,
 -191-

to pass it. "(')

That means the thing-s to be looked at in Connection with the

documents are, first : the name to be inserted in the bill of

lading as the person to whom or to whose order the goods are

to be delivered at the end of the transit, and, at2ft, how the

document has been indorsedg forwarded and otherwise dealt with

(2)
in fulfilment of the contract of sale*

Yotice of ýMroj! riation

The sending of the notice of the appropriationg although it

will make the goods the =bject-matters of the contract ascertained,

is not an "unconditional appropriation" so as to pass the property

to the buyer if the seller retains the bills

against of lading
(3)
payment of the price and thus reserves the jus disponendi.
(4)
Lord Wright in the course of his judgment saide. "Tt is

impossible, in my opinion, to hold that the notice of appropriation

was, even apart from the express reservation, unconditional. Tt is

unfortunate that the attention of the Court of Appeal does not appear

to have been drawn to this aspect of the case, or to the fom of the

bills of ladingg which were to shipper"s order, and were indorsed in

blank and transferred to, and retained by, the appellants. In such

[191B
(I) Per Lord Parker in The Parchim A, C, 157 at P-170-
(2) Janes v. Commonwealth (1939) 62 C, L, R- 339 at P-381.
(3) Ross T. Smyth & Co. v. T. D. Bail & Coo Ltd, 1404 3 All E. R. 60
T-1940) 45 Com- Cas. 292 (H, L. )
(4) Ibid at p* 66.
 -192-

circumstances the appellants thus held the jus disponendi, whether

the goods were shipped by the shipper as their agents or were

transferred to them after shipment, at least from the time when

they received the bills of lading. "

Which sort of property passes to the buyer?:

(1)
In Barber v. Meyersteino Lord Westbury saidt

"Unquestionably the bill of lading is a living current instrument,

**

and no doubt the transfer of it for value passes the absolute

,
property in the goods. ' This statement must be taken as overruled,
(3)
or strictly limited to the circumstances of the particular caseq

because when the buyer receives the bill of lading, heq thereby

acquires the right of disposal of the goods, but normally he acquires

only conditional, property subject to the condition subsequent that

the goods-shall revest to the seller if, examination they are

upon
(4)
found to 'be not in accordance with the contract* As a result the

buyer has two rights to reject: (1) the documents if they are not in

order; and (2) the goods if they do not conform to the contract of

sale"9oo the two things are quite distinct *,. * the right to reject

the documents arises when the d6cuments are tendered, and the right

to reject, or the moment for rejecting, the goods arises when they

are landed and when, after examinationt they are found not to be in
(5)
conformity with the contracto"

(1) (1870) L, R- 4 H*L. 317-337-

(2) Ibid at P-335-
(3) See (1884) 10 Appo Cas- 74 at p, 81,104.
(4) Kwei Tek Chaov. British Traders and Shippers Ltd.
I All AO9;
V. -R- 51
77Q- AI 0-'R- Ar%Q AR7
-

Ibidt per Lord Devlin, J- at P-790.

 -193-

3. Intention and the bill of exc-hange:

It is provided by section 190) that, if the seller sends a

bill of exchange to the buyer with the shipping documents the

property does not pass unless the buyer accepts the bill of exchange.

Moreover, that subsection provieds that "the buyer is bound to return

the bill of lading if he does not honour the bill of exchange, and if
he wrongfully retains the bill of lading the property in the goods

does not pass to him, " Accordingly, if the buyer does not accept

a bill of exchange, the property in the goods does not pass to him.

This subsection is based on commercial custom "... when one

merchant. in this country sends to another ... a bill of lading and

a bill of exchange, it is not at all necessary for him to say in

words: We require you to take notice that our object in enclosing

these bills of lading and bills of exchange is, that before you use

the bills of lading you shall accept the bills of exchange* Merchants

know perfectly well what they means when they express themselves, not

in the language of lawyersy but in the language of courteous mercantile

communication; and I do not think that any merchant in England

receiving a bill of Idding and a bill of exchange *., *would feel any

doubt that he could not retain the one without accepting the other. "(')

The bill of exchange must be accepted by the buyer in order to

transfer the property, and if the seller discounts a bill of exchange

with a bank before it

hat; been accepted by the buyer, the property
(2)
will not pass. In The Prinz Adalbert, it was said: 11.. that the

(1) Per Lord Cairns in Shepherd v. Harriso_n (1871) L. R* 5 HoLo 116

pp. 132-133.
(2) E191fl A.C-' 586.
 -194-

ownership of the goods is to pass to the consignee when he accepts

the draft. That inference may be modified, or rebutted, by particular

arrangements between the shippers and the consignee, and is subject to

the rules which arise out of a state of war existing, or immenent at

the beginning of the transaction. The transfer of the property upon

the acceptance of the draft is consistent with the consignee being

either a purchaser from the shippers or their agent for the sale of

the goods. " Phren if the seller obtains payment, but he remains under

a secondary obligation as drawer of the bill of exchange and so

property remains in him as security for contingencyv on the ground

that "the sellers were still interested, and not only in theory but

in fact were very much interested in the final disposal of the goodsý2)

In the light of this subsection the buyer is not entitled to

(3)
retain or deal with the bill of lading, or to.. impose conditions

as to its return: eege repayment of any freight which he may have

(4)
paid.,

These rules also applied where the bill*of exchange is drawn on

(5)
a person nominated by the buyer, and not accepted by that person.

Moreovert there is no difference whether the bill of lading and the

bill of exchange are sent directly to the consignee or indirectly

(6)
through the sellerts agent* In other words the transfer of the

ý945 ]
H. M. Procurator-General v. MOCeSpencer AoC. 124-
(2) Ibidq Per Lord Porter at p. 135-
(3) Barton. & Co. v. Vigers Bros. (1906) 19 Com. Cas. 175-
-Thompson
(4) Rew ve PN
yne. Douthwaite A Co (1886) 53 L*T. 932.
- ,.
(5) Brandt v. Bowlby (1831) 2 Be & Ad- 932.
(6) Shepherd v. Harris2n (supra)*
 -195-

property by the bill of lading in such a case is conditional upon the

bill oLV exchange being honoured, and if, for example, the buyer

should become bankrupt with the bill of lading still in his possession,

not having accepted the bill of exchange, the seller will be able to
(1)
claim the goods.

Inter. -Lion and the commercial let-ter of credit:

Special Property-

When a bill of lading is indorsed to a bank, it is a question

of fact and intention of parties whether the whole property passes

to the bank under purchase or mortgage or whether the bank acquires

a special of property represented by a pledge*

right
(2)
In Sewell v. Burdick it was stated that advances agai net the

deposit of goods are probably some of the most common transactions of

commercial life and if there is delivery and there are no terms

expressed either verbally or in writing, giving any larger effect

to the contract, the latter is known as a contract of 'pawn or pledgelt

the legal effect of which is that only a special property passes from

the borrower to the lender, although coupled with the power of selling

the pledge ard transferring the whole property in it on default of

payment at the stipulated timeg if there be any, or non-payment if

no time for repayment has been agreed upon. " Therefore, where the

bill of lading is transferred to a bank as security for an advancet

(1) P. S. Atiyah "The Sale of Goods Act" 5th ed- at P&155*

(2)(1884) 10 A. 0- 74-
the bank will normally acquire only a special property as pledgee,
(')
that being the intention of the parties.

Tn, Rosenberg- v. International 2ý

Banking Corporation crutton L&Jo

said: "Bankers' liens or bankers pledges effected in such a way give,

according to the views of merchants, the bankers a right of sale.

Whether you talk about it as an e:ipress pledge, or whether, as Lord

Campbell does, you talk about it as an implied pledge, in my view such

a transaction gives an independqnt right, or right of property, to

the bank to secure the amount which they have advanced, and the bank

are not put on inquiry unless there is something obviously wrong with

the transaction, "

Form of bill of lading-

In order that the banker may exercise his power of sale,

however, the documents must be in such form as to be capable of

transfer by delivery and the transferor must have a good title to

pass* Bills of lading, for example, should be drawn in favour of

the shipper and endorsed in blank or in favour of the paying banker

himself where they are in favour of the buyer or of an overseas

issuing bank, the banker clearly has no enforceable pledgeol whether

in that case he obtains any property in the documents, as by way of

equitable charge or assignment, is a question of intention, but if,

on the instruction of theýbuyerj a banker is authorized to pay

against documents which include a bill of lading drawn in favour of

(1) Quaranty Trust Co. of WewYork v. Hannay

(2) (1923) 14 la. L. Rep- 344,347.
Egil 2*KIDB. 623,6319653
 -197-

the buyer, the paying banker has only a lien; he has no power to

sell, as the documents are not in transferable (merchantable) for. m*(1)

General Pr22erty:

Where a special property is, in this way, transferred to a bank

by way of security, does the general property remain in the seller?

In this respect a distinction must be made between two stages: The

first one is when the seller ships the goods and takes the documents

to the bank., The second one is when the seller delivers the documents

to the bank.

In the first stage? the general property must be in the seller In

(2)
order to be able to pledge the documents* Thus Lord Wright saide.

"The general property in the goods must be in the seller if he is to

be able to pledge them The whole system of commercial credits depends

on the sellerts ability to give a charge on -the goods and. the policies

of insurance, "

In the second stage, there are two opinions:

(a) The general property remains in seller.

It was said that the general property remained In the seller

precisely because the bank had not undertaken a binding obligation

3)
towards him* Thus it was stated in the Yronrrinsesslnn MarMet a( t

"The customer applying formally to the bank for the credit was in

(1) H. G. Gutteridge. Maurice Megrah - The Law of Bankerst Commercial

Creditse 5th ede Londonj'1976. at p. 169,
(2) [1940]
In Ross T* Smyth & Co. v. TO, Balley & Co. Ltd1.
3 r1l E. Re 60 at P*67-
(3) E923
1 A*C. 486-520 at P- 513*
 -198-

each case the buyer. There are some expressions in the letters

of the sellers' agents in the case of the Paranat which suggest

that they had made some arrangements on the sellers* behalf with

this bank prior to the completion of the agreement of sale, so as

to ensure an available credit ready to be operated upon, but no

such arrangement is forthcoming or is proved, nor is there any

suggestion of it in the other cases, and it does not ap2ear that

2n!y4
thirr -! -ýiore 2as2cd bet'ween the bank and the consi ors than a

cabled statement to the effect that "as requested we inform you

that Lundgren & Rollven have opened a credit with ust out of which

a draft with bills of lading can be met, " Their Lordships are

unable to infer that, by English law at any rate, any enforceable

obligation arose between the consignors and this bank, There was

no contract of gnarantee,. 11

(b) The general property in the buyer

vests

According to this opinion the general property vests in the

buyer where the seller delivers the documents to a 'bank under a

bankerts commercial credit under which the bank is bound to pay,

because he has no farther interest in retaining the general property

in the goods. Thual in Sale Continuation Ltd. ve AustIn TLIylor & Co,
(') ( 2)
Md. Paull, J, said: "In such a ease the seller parts with his

ownership in the documents as soon as he sends the documents to the

bank, His right is to be paid the draft. The ownership of the

E1968J2 Q,B. 849-862,

(1)
(2) lbid at p. 861*
 -199-

goods passes to the bq)rer but the bank has the possessory title

of a pledgee as against the buyer. He has that title until the

buyer puts the bank in funds in respect of -the draft and discharges

his liability for interest payable in respect of the draft. If the

pledgor does not do so the bank has the usual right of a pledgee to

sell as if he were the owner. "

This special verdict which recites that "The ownership of the

goods passes to the buyer" should read "The ownership which it was

the intention to transfer is transferred" in order -to be in harmony

with r--17 of the Sale of Goods Act 1893-

Secondly: Where the goods are not represented by a bill of lading

Under the classic P*O*B* contracts, where goods are not

represented by a bill of lading, the almost universal rule is that

property passes to the buyer on shipment* Thus it was said in

-Tamesv. Commonwealth(') "In a F*O*B* contract prima facie the

property passes to the buyer upon shipment, " And if it should be

material, the property and risk in each part of the cargo will pass

as it crosses the ship's rail. Therefore,

in Colonial Insurance Co.
(2)
of New Zealand v. Adelaide M%rine Tnmirance Co where the
__
charterers of a vessel were also the purchasers of a cargo of wheai

to be shipped on board, and the master of the vessel from time to

time received delivery from the vendors it was held that such
*..
delivery from time to time was a delivery to the purchasers, that it

(1) (1939) 62 C.L*R. 339 at P-385-

(2) (1886) 12 App. Cas. 128*
 -200-

vested in them a right of possession and propertyl and that,

consequently, they had an insurable interest in such wheat as haA

been so delivered.

It was said in that case: "From the ver-j nature of the contract

to supply a cargo of wheat for a ship of 1047 tons register, and

which it is admitted would consist of 13tOOO bags of wheat, it couldl

not have been intended that the whole supply should be completed at

the same moment or even in a single day- By the obarter thirty

days were to be allowed for the loadingt and upon a proper construction

of the contract of sale, in which nothing was stipulated as to the

time of delivery or payment, the sellers would have a reasonable time

to deliver it on board. By the chaiterp, -a-ty the cargo was to be

brought to and taken from alongi3ide at mercharitts risk and expense.

By vendorst contract they were to it free on board for the

put
it for the
charterer, and when put on board the master would receive
(')
purchasers and hold it for them".
(2)
In Colley v, Overseas Exporters McCardie, Jo saidt 'tit seems
..4.
clear that in the absence of a special agreement the property an&
the risk in goods does not in the ease of an P, O, Bo contract pass
from the seller to the buyer till the goods are actually put on
board. "

The reason of that is the customary course of business rests

on the assumption that shipment is an unconditional appropriation

with the assent of the buyerl which to be inferred from the nature

of the transaction itself*(3)

(1) nid at P-140-

(2) [192133 K.B- 302,
(3) James v. Commonwealth(1939) 62 C*L*R-339 at P-377.
Saffron ve Societe ffinlere Cafrika (1958) 100 C.L. R. 231 at p*242*
 -201-

That means, the seller seems to appropriate the goods

unconditionally to the contract by delivering the goods to the

carrier without showing PnWimplied or expressed intention to

retain the property or the jus disponendi.

 COIýSITNTS

After this general surveyt the following notes can be recorded:

1. Sale of Goods Act 1893 has adopted the rules which were prevailing

at that time in Scotland and, mostly, in England. Therefore there

is a very strong link between the past and the present in the Act.

2* Sale of Goods Act 1893 has made the intention of parties to the

contract of primary significance so that it follows that: -

(a) The appropriation does not pass the property in the goods to

the buyer unless it is unconditional* Therefore the delivery

of the goods to a carrier, whether named by the buyer or not,

for the purpose of transmission to the buyer is not sufficient

to pass the property in the goods, unless the

appropriation

parties to the contract intend it to be transferred at that

time.

(b) The bill of lading does not pass the property merelybecause

the seller takes the bill of lading in the buyer's name, or

indorses, and sends it to the buyer, unless his intention to

pass the property at that moment is clear* That means:

although the bill of lading is the symbol of the goods it

has no power at all to pass the property to the buyer by

itself but by the intention of the parties to the contract*

3. We have already seen that the meaning of the intention is the

will of the partieu to the contract, and it is obvious now that

the Sale of Goods Act 1893 is influenced by the 11individualism"O

The ruler. of that Act are basedon the philosophy of laissez-faire.

which sayst Let every man be free to seek his self-interest as he

 -203-

pleases, and maximum social good will be realized by his

attention to his own concerns. Therefore if two or more people

agree, why should you or I or aAyone else interfere? It follows:

there is no need for Parliament to interfere at all* Granted,

Adam Smith said, in effect, that nature has implanted in men the

six motives of sympathy, self. "interest, propriety, -the propensity

to truck and barter, a habit of labour so schooled as normally, to

prevent over-production, and a propensity to be freev and human

wants can be satisfied so long as fraud and violence are punished

and the nation safeguarded against external aggression* The real

purpose of government, in a word, is the blessing of security*

Thus the proptection of property was the main justification

of law according to Adam Smith, as he said: 1"rhe acquisition of

valuable and extensive property :requires the

*a* necessarily
establishment of civil government. Where there is property, or

at least none that exceeds the value of two or three days* labour,

civil government is not so necessary*"

Aocordingly-the property became a saorfA right for the

individual, Thus, Locks argued. no man's property could be taken

9
without his consent, and Kant*s argument that a thing is so connected,

with its owner that anybody who uses it without the ownerts consent
does the owner an injury* Similarlyt HW1, postulated that

property was one of those rights of an individual whic-

(2)
upon his being an wrtononons being.

(2) Peter Steinj- Jqbn Shand The, Legal Vaules:, Jn west ern S00isty *2
0) Harold, Jo Laski.*_ -TheRise of European Liberation 1958 'W79-=ý,
,
 -204-

ThoBe views accepted the principle "Freedom of contract"

as an essential le-gal an-pecti, of individual freedom*- This

philosophy has been changing gradually during thin eentux-Y,

Modern thoughts look upon the rigbt of property as one e(mditioned

by Gocial responsibility, 1by the need.s of society, by the

"balancing of interests" which looms so large In modern

jurisprudence, and not as a pro-ordained and untouchable

(1)
private right, 'lea* the rift between 'the reality of the

sale of goods, both in international markets and in the home

market, and -the legal

regulation of that topio in the United
(2.)
Kingdom has become wider. "

(1) Priedmann "Legal Theory" at p. 376.

(2) Schmitthoff "The Sale of Goods" at P-46.
 SECTION

PASSTNGOP 01MIMSHIP nT
-

Col*F & P*O*Bo CGINTRACTS

UTMER

IRýA LAW
 -206-

I Legal Provisions and Criticism'.

The provisions concerning the transfer 31jjp between

of mmer-.,
the seller and the buyer are set out in the Iraqi Civil Code NO-40,

1951 as follows:

Section 247!

"The obligation to pass the ownership or any other real right ,

passes by itself that right if the subject-matter of the

obligation is an ascertained thing and belongs to the obligatoro"(1)

Section 248-1- :

"The obligation to pass the ownership or any other real right,

does not pass by itself that right if the subject-matter of

the obligation is unascertained. That right can be passed by

(2)
asoertairmento"

Section 531:

"Where there is a contract for the sale of ascertained goocls or

a sale of a lump sum, the ownership is transferrecl by the sale

itself* And where there is a contract for the sale of

unascertained goocls, the ownership does not transfer until the

(3)
goocle are ideutified.,,

Section 1126-1- :
"The ownershipq in moveable and immoveable goods, passes

a... "

(1) This section is in hamony withsection 204 of the Egyptian Civil

Code*
(2) This section is in hamony with section 205-1- of the Eaptisih
Civil Code.
(3) Ye
ct( 0*4 f. C,ft
lcxre ic
We c, r f.. IAite- Simi titf 415
, -5?,
 -207-

to the buyer by the contract itself&, '(')

Section 1126-2- :

"The contract of selling immoveable goods does not come into

existence unleus it is made according to the way specified in

the law. "

It is quite clear when comparing sections 247 and 248-1 with

sections 531 and 1126-l-, that there is a contradiction between

these sections concerning the process of passing the ownership in

the Iracri Civil Code.

Sections 247 and 248-1- discuss "The obligation to pass the

ownership", whereas sections 531 and 1126-1- discuss "The contract

to pass the ownership. "

Does the obligation to pass the ownership mean the contract

itself or vice versa? That is to say, are they the same thine. This,

however, does not appear to be so. It seems that the obligation to

pass the ownership and the contract are quite distinct things. The

obligation to pass the ownership, if it exists, must come into

existence after the contract is made, as in the field of sale of

seller
goods, theAdoes not accept the obligation to pass his ownership to

the buyer without a prior agreement between them which is called

"contract'le

This distinction is not very clear in the light of sections

247,248-1-1 531 and 1126-1-, This is becausel according to

sections 247 and 248(l) the contract does not by itelf pass the

bLt mce'rl Ott ik-- ,,.

-eaw " Cc ovie), 113
-10 0 4- a. nW 2- 0 Jr -t- it
ownership to the buyer, but it creates an obligation ozi the part

of the seller to pass the ownership to the buyerg and according to

sections 531 and 1126(l) the ownership passes to the buyer by the

contract itself.

It is obvious now that the Iracri Civil Code is a little vague

in dealing with this subjecte Which of the two means pass the

ownership to the buyer? Is it the contract, the obligation or both?

If the ownership passes to the buyer by that obligationt two questions

can be raised:

1- What sort of obligation is that?

This obligation has no root in our legal tradition, and it has

no similarity with the other obligations set out in the Iraqi

Civil Code, These are discussed in the following paragraphs:

Ae In our legal tradition there is nothing that can be compared to

that obligation, The contract puts certain obligations on both

parties to the contractf iee. the seller to deliver the goods and

the buyer to pay the price and there is nothing to be called

obligation to pass the ownership.

In Islamic Law, as our legal tradition, the problem concerning

the passing of ownership can be summarized as follows:

The ownership in moveable and immoveable goods, passes to the

buyer by the contract itselfP) The only difference among the

school of thoughts in Islamic law is whether the buyer is able to

dispose of the goods before ozý after hepossess the goods. In

(1) Al-Kasani "Albadaiell V015, at p. 243*

 Al-1-Talikiyah, the buyer is entitledto dispose of the goods
(')
before the possession passes to him. In AIShafiyah and

Al-Hanbaliyah, the buyer is able to dispose of the goods after the

possession passes to him on the ground that the buyer will be

sure of his ownership after its possession and will be able to

(2)
deliver them to the third party. In Al-Hanafiyah, if the

goods are moveablet the buyer is not entitled to dispose of

them before he comes into possessionv and if -the goods are

immoveable the buyer is entitled to dispose of them before

possession, on the ground that the moveable goods might perish

before delivery which might damage the right's of the third

(3)
party, whereas the destruction of immoveable goods is improbable.

B. There is a lack of similarity between this obligation and the

other obligations set out in the Iraqi civil Code* This

obligation cannot be interpreted as an obligation to deliver the

goods, simply because this interpretation will lead us to a.

unanimous result that the Iraqi Civil Code is implying by that

obligation the idea of passing the ownership by delivery.

This result is not acceptable in the light of Iraqi Civil Code for

two reasons:

I- The obligation to deliver the goods is completely different

from the matters concerning passing of ownership*

2- The right of ownership and the right of possession are quite

1 Then Rushdl "Bidayat Almuchtahid" Vol, 2 at P-135-

2 Al-Shafei "Al-Um" Vol-3 at p. 60.
3 Al-Tahawi "AlmakhtasEar" PP-84-85-
 -2 1G-

dis-tinct riChtso

2. What is the need of sections 531 and 1126(l)?

If the ownership is transferred to the buyer by that obligation

according to sections 247 and 248(1), w1kyhas the Iraqi Civil

Code provided in sections 531 and 1126(1) that the ownership

passes to the buyer by the contract itself?

It can be said, as a compromise, that the ownership passes to

the buyer by both: the contract and its obligation, on the

grounds that the contract and the obligation to pass -the

ownership can be preformed at the same time, as the obligation

to pass the (nNmership is not the obligation to deliver the goods,

therefore that obligation comes into existence with the contract

and must be performed as soon as it emerges, so there is no time

between its birth and its deathJ')

If that is so, and since that obligation has no time to live, why

should we say that there is an obligation'oh the part of the

seller to pass the ownership to the buyer? Is there any necessity

for that obligation?.

To answer this question, a distinction must be made between the

Egyptian and the Iraqi Civil Codes:

The EgyTtian Civil Cod.e

The concept of the sale in the Egyptian Civil Code is defined

by section 418 which provides:

"Sale is a contract by which -the seller is bound to transfei, the

(1) AI-Sanhoori "Alwassitt" Vol. 2 at P- 770 and V01-4 at P-412*

 -211-

mmership or any other financial right to the buyer in retvrn

for the price. "

In the light of this section the contract of sale of geods

does not pass the ownership to the buyer by itself, but it

creates an obligation on the part of the seller to pass the

ownership to the buyer,,

(')
It has been said, that the reason for that concept, is

the fact that the Egyptian Civil Code is influenced, in a sense,

by the old civil code of France, which in turn, was influenced

by the Roman law. In the early stages of the Roman law the

contract had no effect in passing the ownership to the buyer, the

only effect of the contractwas to impose an obligation on the

part of the seller to pass the ownership to the buyer by

following certain procedure according to "jus civil".

The judiciary and the jurisprudence in Egypt oppose this

idea* The jurisprudence tried to justify this idea by saying

that the obligation to pass the ownership comes into existence

with the contract itself, and must be performed as soon as it

emerges* Therefore, the passing of ownership is the direct and

practical effect of the contract, but in theory

contract the
(2)
creates that sort of obligation to pass the ownership,
(3)
In the judiciary it was decided in the Court of Appeal, "The

(1) lbid VoI2 at P-770, V01-4 at P-413.

(2) lbid Vol. 2 at P-7702 V01-4 at P-412-413.
(3) 30-1-1925o
 -212-

sellerts obligation to pass the ownership to the buyer is considered

to be performed as soon as the sale is made. "

In another caseO) it was said in the court of first instance
"The ownership, in the sale of a lump sum, passes to the buyer as

soon as the Bale is completed. "

It is obvious now that that obligation is of little importance

(2)
in practice. But it was said, as a practical side for that

obligation, that the obligation to pass the ownership could be shown

when the seller has topresent the necessary documents of the goods,

or when he confirmed his signature, or when he identified the goods*

This argument is not an acceptable one, on the grounds that these

obligations are included in other sorts of obligations eog. obligation

to deliver the Goods, warranty against, evictions

The net result is:

Although the Egyptian Civil Code recognises an obligation created by

the contract on the part of the seller to pass the ownership, but in

practice that obligation has no effect. Thus, the ownership passes

to the buyer by the contract itself, when the goods are ascertained

and belong to the seller.

The Iracri Civil Code

The Iraqi Civil Code was based, originallyt on Islamic law,

then, on the Egyptian Civil Code and finally on the Ftench Civil Code**

(1) 22-4-19319
(2) Drafting Committee Knates VOI-4 at P-43-
Append:bc One.
Therefore the concept of sale in the Iraqi Civil Code was derived
(')
from Islamic law, and was defined by section 506. which provides:

"rho sale is an exchange of property by property, " The definition

is too wide and in it can be included: the sale of goods by money,

the money exchange and the barter. It is out of the scope of this

thesis to discuss how wide the concept of the sale is in the Iraqi

Civil Code, but the important thing here is to see that the contract

of sale does not create an obligation on the part of the seller to

pass the ownership to the buyer*

Thus it seems very strange for such an obligation to be

incorporated in sections 247 and 2480) of the Iraqi Civil Codet

especially when we know that the Islamic law was the main source of the

Iraqi Civil Codeq and in Islamic law the ownership passes to the buyer

by the contract itself*

It has been saidl as a reason for that confusion in the Iraqi

Civil Code, that the drafting committee cited section 247 literally

from section 204 of the Egyptian Civil Code without realizing the

difference in the concept of sale of goods between the Egypt iar. civil
(2)
Code and the Iraqi Civil Code. As a result, and since the contract

in the Iraqi Civil Code is consensual, there is no need at all for

section 247* Therefore that section must be neglected now in our

(3)
study and it should be eliminated from the code.

(1) Section 105 Majallat Al-Ahkam AI-Adliyah.

(2) Al-Windawi "The contract'of sale" at p. 12.
(3) Professor Al-Hakim, his paper in majallat Al-Cadah at p*
"The judiciary review*"
 -214-

The Process of Pass-illr,r the Otlner,212.

nrst: Unascertained goods:

In the light of section 5311 the ownership of unaseex-tained

goods does not pass to the buyei: -o-r-less they are identified, that

means the moment at which the oi-niership, of unascertained goods,

passes to the buyer is the roment of identifioati-or)s

The identification of the goods can be achieved by weighing,

counting, measuring, the goods. or *Ly allocating a certain quantity

Thus the passes to the buyer

of the goods from the rest, ownerqhip

the delivery has

at the moment when the idetificetion occurs whether
(')
been made or not.

As a result, the sale of 200 tons of corn out of 800 tons lying

in the warehouse does not pass the ownership to the b-ayer unless the

goods are separated from the rest.

In theory the delivery of the goods has no effect in identifying

the goodsq therefore the goods can be idetified and the ownership can

be passed without being delivered* But in practice, the identificc-Ition

of the goods and their delivery are closely connected, thus it seemzj

sometimes, that the ownership passes to the buyer by delivery on the

ground that the identificatioia of the goods and their delivery occur
(2)
at the same time.

In this respectj it mast be mentioned, that although the delivery

of the goods and their identification are closely connected in practice,

(1) Al-Windavi "The Contract of Sale" at p. 83.

(2) Al-Sanhoori V61.2 at P-777-
 -215-

there is nothing in the Iraqi Civil Code to pre-vent the ovnership,

.r

in unascertained goods, from passing to the buyer as soon as they

are identified even before delivery* Therefore the seller can keep

the identified goods. for the buyer, in his custody as a bailee if

he accepts to do so. Similarly, if the goods are lying in a

warehouse, and the warehouse man accepts to keep the goods after

being identified for the new buyer, the ownership will pass without

need for delivery*

The difficulties begin to arise when the seller or the

warehouse man do not have "space" for separating the goods from the

rest. In this case the aftornment will not be oufficient in

the and the only way to identify the goods, in

-identifying goods,

order to pass the Mmership, is by delivering them to the InVer.

Future Goods

Future goods and the goods to be manufactured are considered to

be unascertained goods* Therefore no ownership can be passed to the

buyer unless the goods are completed and identified, It follows:

1. The ownership of the materials is the ownership of the

manufacturer, and it does not pass to the buyer during the

course of manufacturing the goods on the grounds that the buyer

has contracted to buy goods not materials,

The ownership does not pass at the time when the contract is

made, but at the moment of completion and identification.

3o If the contract has been madeýfor manufacturing 100 fridges,

the ownerehip passes to the buyer as soon as the 100 fridges

 -216-

are completed* But if the factory produces 500 fridges, of the

same description, the (remership of 100 fridges passes to the

buyer 'by identifying the goods.

Pinally it mwt be mentioned that there is no provision

neither in the Iraqi nor in the Egyptian Civil Codes concerning the

passing of mmership in fiAure goods* These judgments have been

(1)
decided by the jurisprudence in Iraq and Egypt*

Seennde. Ascertained Goods:

The ownership in ascertained goods passes to the buyer by the

contract itself, Therefore if A sells his car to B, the ownership

of the car passes to B at the time when the contract is made. Thus

B can. dispose of the car even before its delivery, he can sell the

car to C who acquires the ownership by virtue of the second contract

although the car might have been still. 'An the possession of A.

Since the ournership in ascertained goods passes to the buyer by the

contract itself, A, in the example above mentioned, cannot sell his

car to C after he has sold it to B. If A sells his oar to C, B is

entitled to take the car from A, and B is entitled to claim damages

from A# If A sells his oar to C and delivers it to him, the

ownership will pass to C on the grounds:

1. Good faith. That means, C must be a bona fide purchaser, and

does not know about the first contract with B.

(1) AI-Sanhoori at P-418-

Al-Windawi at p. 108.
Al-Badrawi, paragraph 178o
suittang paragraph 16o.
 -217-

2* The possession of the car.

Under these circumstances the ownership passes to C by possession

with good faith, not by the contract, because A had nothing to

sell at the time when the contractwas made with C. Moreover the

ownership, in this case, passes from B to C by possession with

(1)
good faith and not from A to C.

In the light of the example above mentionedl two conditions can

be inferred to be required for passing the ownership by the

contract:
I- The seller must be the owner of the goods at the time when the

contract is made: If anyone sells something which belongs to

another person, that sale has no effect in passing the ownership

the owner of the goods permits that sales The

unless and until

owner of the goods has a period of three months after his knowledge

of the sale, to exercise his right in permitting or rejecting the

salee If the owner of the goods permits the sale or the time of

three months expires without any sign of rejecting the salel the

contract must be considered as a valid one and the ownership

passes to the buyer from the time when the sale is made by

retrospective effecto If the owner rejects the sale, the buyer

must return the goods and the seller must return the pricee

Moreover the buyer can claim he did not know, at the

damages if
(2)
time of sale, that the goods belonged to someone else.

The goods must be ascertained:

The ownership does not pass to the buyer by the contract itself

(1) This example seems to be a matter of consenses in Iraq and EVVto

(2) Sections 135-136 Iraqi Civil Code*
Sections 466-467 Euptian Civil Code.
 -218-

unless the goods are ascertained. Sometimes the law stipulates

for the contract of selling ascertained goods to be registered.

Does that registration effect the passing of oiniership by t1he

contract? This question is discussed as follows-.

A* The sale of machine:

Section 2 of the law NO-5ý, 1952 concerning the registration

of machines provides:

"The sold, gifted or pledged machine must be registered. "

The meaning of this section is this: Any dealing with the

(saleg is illegal it is
machine gift or pledge) unless
(')
registered. Therefore the ownership of the machine,

although it is ascertained goods, passes to the buyer when

it is registeredo

The registration of the machine has no effect in passing the

ownership* The ownership of the machine passes by the contract

itself on the ground that the contract of selling machine does

not come into existence unless it is-made according to the

in the law (registration)* Therefore the

method specified

contract of selling machine is just like a contract of selling

estate, as in the light of section 1126(2) the contrac-t- of

selling estate does not come into existence unless it is made

according to the method pr ovided by the law. Thus the

ownership in the estate and machines passes to the buyer by

the contract itself if the contract is made according to the

law*

(1) Cassation Court, 17-2-19669 Majallat Al-Kadhall "Judiciary Review"

year 21, pp. 66-67-
 -219-

B. The Sale of Cars:

Any dealing concerning a car must be registered in the

"Traffic Office". It was decided by the Cassation Court(')

-
that this registration is not a condition for the existence

of the contract of selling car, it is simply to help the

Traffic Office to control the traffic. Therefore the

ownership of the car passes to the buyer. by the contract

(2 )
itself before registration, As a result the seller is

not in breach of contract if he does not attend the Traffic

Office to register the care(3) And the court has the right

to order the Traffic Office to register the car in the name

of the buyer if the seller does not want to do so after he

(4)
entered into contract with the buyer,

It can be said in the light of these two sales above mentioned, that

the registration of the contract of selling asoertaired goods has no

effect in passing the ownershipo It seems a matter of interpretation

whether that registration is a condition for the contract to exist or

not, and this interpretation is practiced by the Cassation. Court*

(1) 25-2-1960 Iraqi Civil Judiciary V61*2 at P-5-

(2) Cassation Court 27-5-1970 Al-Nashrah at P-107t 1971-
(3) Cassation Court 24-2-1970 Al-Washrah at p. 106,1971-
(4) Cassation Court 3075-1970 Al-Nashrah at p. 107,1971-
 -220--

Third: SDecial Contracts

Tntroduction

In the light of section 286-1- the contract can be made either

under a suspensive condition or resolutive ones A contract is

considered to be-made under a suspensive condition when it depends

on a future event. This sort of contract is performable only after

the event occurs (section 288).

A contract is considered to be made under a resolutive condition

when it does not suspend the performance of the contract; it merely

obliges the creditor to restore what he has receivedg if the event

contemplated by the condition occurs (section 289).

The effect (event), when it goes back

of the condition occurs,

to the time the contract is made, unless it can be shown by the will

of the contracting parties or by the nature of the contract that the

effect takes place at the time when the event occurs (section 290).

Concerning the passing of ownership:

If the contract is made under a suspensive condition, the ownership

stays with the seller from the time when the contract is made until

-the -time when the event occurs&

If the contract is made undera resolutive conditionj the ownership

vests in the buyer from the time when the contract is made,

In the normal courset When the event occurs, in a contract made

under suspensive condition, it makes the Ownership Pass to the buyer

from the time when the contract is made by retrospective effect.

If the event does not occur, the contract, whether it is 'made under

suspensive or resolutive condition, is considered to have never been

 -221-

made, Bat there is not-hire, to prevent the ownership from passing

to the buyer at the time when the event takes place. This can

happen either by agreement or by the na-ture of the contract.

These matters are discussed in the following paragraphs through

certain contracts which can be made under either of these two

conditions.

Fire Purchase:

Section 5340) Provides:

"Where the is deferredt the seller is entitled
payment of -the price

to reserve the ownership until he receives the price even if the

delivery of the goods has been made. "

to the buyer on suspensive

In this case the ownership passes

is -the payment of the price, The same is true when

condition which

to be made by instalments (section 534(4))-

payment is

When the buyer pays the price, the ownership passes to him from

the time when the contract is made by retrospective effeett unless

agreed by stipulating in the contract that the ownership

otherwise
(section
passes to the buyer when he pays the price 5340)).

When the buyer does not pay the price, the sale seems to be

considered as never having been made.

 -222-

Sale at the oprtion:

Section 509 provides:

"The sale at the option within a certain time is validq whether the

sale is at the option of the seller, the buyer, both of them or

someoneelse* This condition does not prevent the ownership from

passing to the buyer. "

The sale at the option is considered to be madeunder resolutive

condition* It occurs when the sellert the buyer or both of them

stipulate for themselves or for someoneelse the right to accept or

to reject the sale within a certain timee

In this sort of contract the ownership passes to the buyer by,
the contract itself under a resoutive condition* The practical

example for this sale is this:

Wherethe seller says to the buyer "I agree to sell you my car if my
friend Ali agrees", if the buyer accepts this offer, the oontractvf

sale will not come into existence unless they (the seller and the
buyer) define a certain period of time for Ali to exercise his right,
If Ali (or the person who has the right) says nothing at the

expiration of that period the ownership passes to the buyer at the

time when the contract is made* If he says "no" within the time

stipulated in the contraett the sale seemsif it had never been made.

In the case of stipulating rights for both the seller and the
buyer, if one of them accepts the sale before the expiration of the
time the other party will not lose his right to accept or reject the

salel and if he rejects the sale, there will be no sale at all

(section 510)-
 -223-

Sale on trial:

"In the sale on triall the seller must enable the buyer to try

the goods. The buyer must accept or reject the goods within -the

period stipulated in the contract, and in the absence of special

agreement the seller must define that times If the buyer says

nothing at the expiration of the time, and has been able to try the

goods, his silence is considered to be an acceptance of the goodsn

(section 5240)).

"Sale on trial is considered to be made under a suspensive

conditiont unless it can be shown by the agreement or the circumstances

that it is (section 523(2)).

made under a resolutive condition"

Sale on trial is of twofold purposes:

19 To make sure that the goods comply with. -the personal need of the

buyerl as is the case in buying ready made clothes* In this

ease the buyer is free to accept or reject the goods after they

have been triedt because it is a matter of personal desire and

the seller cannot force the buyer to buy the goods on the grounds
that they are well made,

20 To make sure that the goods are fit and competent, as is the

case in buying a washing machine. In this case the buyer is not

free to accept or to reject the goods after their trial, because

it is not a matter of personal desire. The buyer is bound to

accept the washing machine if it

works properly, and lie is
M
entitled to reject it if it does not*

(1) Al-Windawi at p, 70-71

e
 -224-

Passing of =ership:

Sale on trial is co-,)sidered to be made under suspensive

condition. Therefore the ownership passes to the buyer when he

accepts the goods*

On the other hand, this sale can be made under resolutive

condition, either by the agreement or by the circumstances. Thus

the ownership passes to the buyer from the time when the contract

is made, and not from the time when the buyer accepts the goods,

In both cases, if the buyer does not accept the goods or if

they are not, fit for purpose, the contract is considered as never

having been made.

 -225-

III Transfer of Ownership in C*I*P* and P*Ce]3* Contracts

There is no section in the Iraqi law of CommerceNo. 149,1970

which makes any provision for the passing of ownership in C,,I*F* and

F. O.B. contracts. Moreover there is no reported case in Iraqi

judiciary concerning this matter. Therefore the problem is new and has

never been dealt with properly in the light of Iraqi laws,

In this respect, where there is no clear provision to be applied

to a specific commercial matter, section 2 of the Iraqi law of

to.; solve the problem*

commerce ITO-149,1970 provides some principles

It states:

1, "The special agreement between the parties to the contract must be

applied to the commercial matters. In the absence of special

must be applied: The rules of this

agreement, the following rules

law. The rules of commercial custom, the local commercial custom

is preferred to the public commercial custom*

2. The rules of Iraqi civil code must be applied where there is no

commercial custom.

3. The special agreement and the rules of commercial custom can 'be

applied only if they are in harmony with the imperative legal

provision*"

in the light of this section, the commercial matters are governed by:

1. The special agreement between the contracting parties,

2, The rules of Iraqi Law of CommerceNO-149,1970.

3. The commercial custom, local and then public.

4- The rules of Iraqi Civil Code NO-40,1951.

 -226-

This arrangement is Put in a hierarchial system* As a result,

and when the dispute arises, the Iraqi judge has to look first at

the to apply its provisions. In the absence of special

contract
(written in the contract) the judge has to turn to the
agreement

of the Iraqi law of Commerce. If that law does not contain

rules

the disputed point, the judge has to consider

any provision concerning

first, the local commercial custom and then the public commercial

Finally, the rules of Iraqi Civil Code NO-40,1951 must be

custom.

applied when there is no rule governing the disputed point, on the

(1)
of private law.
ground that the civil code is the original source

It should be noted that the special agreement and the commercial

legal
custom must be in harmony with the imperative provision*

This section gives rise to a number of problemst which are

discussed as follows:
First: The Meaning of Tmperative LeMl Provision

It is well known that the law organizes. the legal relationship

among the members of the societya This organization is either to be

in a strict form and must be followed by the people in their

transactions, or to be in less strict form by letting the people

their own affairs by themselves. As a matter of factl every

organize

law contains some certain rules which cannot be avoided and some ather

rules which can be avoided by expressed agreement, It is obvious now

In a case where there is no rule in the civil code which can be

applied on the disputed point, the judge has to apply, first, the
Islamic Law, and if there is no relevant rule concerning the dispute
in Islamic Law, the judge has to ap ly ' secondly, the general
of justice (section 1-(2ý). Thus the :Eraqi judge must
principles
solve the problem before him and he cannot say: There is no solution
to this problem because there is no provision.
 -227-

that the meaning of 'imperative legal provision* is this:

"The rules which are set up in the law in a strict form and cannot

be avoided by the people in their transactions. "

Therefore the people must comply with these rules and it is

incompetent to contract out of their expressed agreement. How can

we possibly know that these rules. are imperative ones and the others

are not?

The best criterion to distinguish between these two kinds of

rules is the law itself, It is quite often to see the statement:

"Unless otherwise agreed" at the beginning of the provisions in the

law, this statement makes the provision a non imperative one, as a

the to the contract are free either to follow that

result parties
their
provision or to decide whatever they want concerning point.

On the contrary, and at the absence of that particular Statement

"Unless otherwise agreed" from the provision, that provision is

considered to be as an imperative one*

Again, in the light of Iraqi Law, the special "expressed"

agreement and the commercial custom mast be in harmony with imperative

legal provisions. Thus the Iraqi judge has to be very careful in

applying the special agreement or the commercial Custom (local or

public).
 -228-

Second: The Commercial Custom*

The commercial custom concerning CeTePe and FO*Bo contracts

can be found only in Basrah, in south Iraq, which is the most

important and the oldest poxt at home.

This commercial custom can be divided into two different

periods: The first before 1970, and the second after 1970*

le The first period: before 1970-

Two features took place during that period:

A* The vast majority of the contracts had been carried under P*O*Bo

contracts. The reason for that, so far as I gather, is Iraq

did not have either a good commercial fleetv or a good

insurance oompamys Therefore the merchants used to export

goods under F*O., Bo contracts while importing goods under

that of ColoPo

Bo Most of the merchants during that period were representatives

or agents for other foreign firms abroad* Therefore the

qaestion of passing the ownership did not appear to be a

real problem*

2. The second period: after 1970-

Two major events have taken place during this period:

A. The government took control over the trade both foreign and
internal by establishing now state companies; and organizations

replaced some-of the individual merchants and the private large

Tn summer1976,1 had the opportunity to gather the information

about the commercial custom concerning C*I*F4, and F4,0*B* contracts
from the people who work in this field.
 -229-

companies**

B* The interpretation of section 7 of the National Insurance

Company Law NO-56,1950, by Ministry of Justiceo,

Section 7 of the National Insurance Company Law NO-56,1950

provides:

"The government organizations and its corporations, shall

insure with this company all their transactions concerning

insurance. "

This section wan interpreted to be a non imperative provision*

Therefore it was at the option of the organizations, corporations and

companies to insure with the national insurance company or with any

other insurance company.

At the time, interpretation has been given

present an opposite

to 7, The Legal Drafting Department in the Ninistry of

section

Justice stated in its decision Wo.,106,1972 that section 7 of the

National Insurance Company Law was an imperative legal provision, and

the government organizations and its corporations mast insure with

the National Insurance Company all th6ir transactions concerning insurance.

This interpretation has changed the situation in the Iraqi foreign trade

by making the vast majority of the contracts to be carried under co&ope

Zrm instead of P*O*B.

It is obvious now that the most important contracts used in

Basrah before 1970 were F. O,*B,,, while those after 1970 are C. I. p.

Therefore F*O*Bo contracts were the favomrite in the pastq and CAIP,

The companies with over one million Dinars as a capital, (-two million
pounds)o
 -230-

contracts are the favourite at the present time. * This statement

does not imply that C*I*Fo contracts have not been in use at all.

C*IoFe contracts have been in use for a long time in Basrah, but

not as much as F*O*B,, eaid CA Pe contracts. I gathered the commercial

custom in Basrah concerning the passing of ownership in Cel"Po and

P*O*B* contracts by asking many merchants that*
and companies about

Two answers were given:

The first, which had a few supporters, was that the ownership in

C9I&Fe and F*O*B, contracts is transferred at the time when the bill

of lading is indorsed and sent to the buyer*

The second, which was supported by a great majority, was that the

ownership in C*I*Po and FoOeBo contracts is transferred at shipment

and the bill of lading is a good instrument to secure payment#

As far as the first answer is concernedt it is semmingly based

Wo.60, Year 1943 (repealed).

on section 319 of the Iraqi Lawof Commerce
That section provides:

"The ownership is transferred by indorsement or delivery of the paper

of shipment whi6h is signed by the carrier and makes the goods

deliverable to "order" or to "bearer%,, Therefore the ownership is

transferred by indorsing and sending the bill of lading to the buyer*

This attitude has been supported by some of -the scholars in

At this stage I can forecast the future type of contracts which will
be used in Iraqi foreign tradeo Quite recently a new state company
has been established at home, which is called: Iraq Maritime
Transport Company. This company has about ten cargo ships and some
others under constructione In the near future the Iraqi merchants
and companies will find it easier to deal with this company@ As a
result the existing situation will be changed to make the vast
majority of the contracts in maritime trade to be carried under
C*I*Po contracts*
 -231-

(1) (2)
Egypt and Iraq on the ground that the ownership in C*I*Pe and

F*09B* contracts does not pass to the buyer at the time of identification
(shipment) but at the time of appropriation (indorsing
and sending the
bill of lading to the buyer)* They say that there are two requirements
for the appropriation to be achieved:

The first is the identification of the goods by which the goods become

ascertained, This can be done on shipment.

The second is the will of seller, which must be expressed in a

definite way, to sell certain goods to a certain buyer, this can be

done by indorsing and sending the bill of lading to the buyero This

second requirement deprives the seller from his ability to dispose

of the goods, which means that the seller expressed his will to pass

the ownership to the buyero

Although this opinion seems logical and in harmony with section

319, but there is no legal ground to support its Section 319, which

was the legal ground for this attitude, has been repealed; and the existing
Iraqi and Egyptian Laws do not contain the second requirement of the

appropriation and it is not reported in any case either in Egypt or

in Iraq*

As far as the second answer is concernedl namely: the ownership

in C#I&F. and F*O*Bo contracts passes to the buyer on shipment and

the billof lading is a good instrument to secure PaYment, has been

ad6pted, as far as I gathered, for two reasons:

1, The merchants and the companiet got used to P. O. B. contracts in

(1) Professor Awadh "Maritime Law" at P-789.

(2) Al-Ogaili "The Bill of Ladinel at P-317-
 -232-

carrying out their trade* The ownership, under F&O#Be contracts,

passes to the buyer on ehipment* This rule has been adopted to

be applied on CeleFe contracts too, on the ground that the passing

of ownership is the same under both F*O*Bo and C. T. Fe contracts,

and the differences between them arise in the duties and rights

of both the seller and the buyer.

20 The impact of the. other Arabic countries: Iraq has a great deal

of trade with Egypt, Syria, Lebanon and the other Arabic countries*

The legal solution which prevails in Egyptv Syria and Lebanon

concerning the passing of ownership in C.I*F* and PeCoBe contracts

is that the ownership passes to the buyer on shipments

E=ja and Lebanon,

It is well known in Syria and Lebanon that the ownership in

C*I*Fe and P*O*Bo contracts passes to the buyer on shipmentg this

(')
was deoided by the Cassation Court of Syria in 10-11-1933, and
(2)
in 30-10-1951- This judgment has been followed by the Cassation
(3)
Court of Lebanon in 25-5-19371 and by the judge of Beirut in
(4)
8-3-1951 . These judgments have been aocepted by the

jurisprudence in Syria and Lebanono(5) It must be mentioned -that

the judiciary and jurisprudence tn these two countries did not

justify their judgments in the light of Syrian and Lebanese laws*

They took them as a facto

(1) "Majallat Al-Tashrea Wal-Ichtihad" 1935 p. 18.

(2) t'Majallat Al. -Canoon" 1952 at P-5-
(3) I'Majallat Al-Mahakim Al-Lubnaniyah Al--Suriyah" 1937 at p. 173*
(4) "Al-Rashrah Al-yadaiYah Al-Lubnani7ah" 1951 at P*355-
(5) AI-Sibaee and Anttaki "Commercial Hiritime Rights" V01-5 19659
pp. 631-633-
 -233-

It was decided
in Eg", t by the Cassation Court that the
(2)
ownership in ColeFe(i) and FoO*B* contracts passes to the
buyer at shipment, when the goods are placed on board ship, on
the ground -that CoIeFe and P. 09B. contracts are commonly contracts
for selling unascertained goods. The ownership of unascertained

goods does not pass to the buyer by the contract itself but by

identification. The identification of the goods and the passing

of ownership to the buyer takes place when the goods are being

delivered to a common carrier* That moment is the moment of

(3)
shipment.

Third: The Rules of the T Civil Code

Here we are trying to examine the idea which says "the ownership

in Colo]?* and F*O*B* contracts passes to thebuyer on shipment" in

the light of the Iraqi Civil Codets rulest

We have seen that the ownership passes to the buyer by the contract itself

when the goods are ascertained and belong to the seller. The ownership

of unascertained goods passes when the goods are identified., This.

identification takes place usually, butnot necessarily, on delivery*

These two rules are imperative ones, as they do not contain the

statement "unless otheNrise agreed". Therefore the contracting parties

(1) 19-.6-1969 The oollftAionq year 20, Xoo2, at p, 1026.

(2) 27-12-1966 The collection, year 17, at P. 1979.
(3) Hasrd., Jo "Maritime Sales" at P-143*
 -234- -

must comply with these rales:

Io Ihiascertained Goodsl:

Mot commonly C*I@P9 and F*O*Bo contracts are contracts for

sale of unascertained goods. Therefore, the rule that the ownership

passes on shipment is in harmony with section 531 on the ground that

the identification of the goods takes place on shipment by which the

ownership passes to the buyer,

This rule gives rise to two important questionst

A* The Bulk Shipment:

In the light of the Iraqi Civil Codev the ownership of

unascertained goods does not pass to the buyer unless the goods

are idenlified by separating them from the rest of the goods and

specifying them as a certain quantity accupying a certain space*

It follows, in the case of bulk shipment, that the identification

of the goods does not occur on shipment, therefore no property can

be passed to the buyezoon shipment. As a result, if A in Iraq

ships 30,000 tons of wheat to B in Pakistan, C in India and D in

Ceylon, - let us assume here that each one of these three merchants

has made a contract with A for 10,000 tons of wheat - the process

of passing the ownership will be as follows:

The ownership will pass to B when the 10,000 tons are discharged

in Pakistanj as the identification of the 10tOOO tons will take

place in the port of dischargep

The ownership will pass to C and D at the same time in the Indian

port by reason of identifying the goods,, because when the second

10,000 tons are being discharged in India, ' the third 10,000 will
 -235-

stay on the ship identifiedo Thus, the ownership of D (from

Ceylon) passes to him neither at the time of shipment in Iraqv

nor at the time of discharge in Ceylon, but at the time when

the goods become identified in India* To avoid this result,

M
the jurisprudence in Iraq and 3ýgypt(2) cane up with an idea,

that the ownership in the bulk shipment passes to all the buyers

on shipment. That means that all the buyers own the cargo in

common, and there is no limitation between -their ownership.

Special Agreement o.

Special In other words,

agrrement means the expressed agreement.

that is written in the oontraot as distinguished from the

all

ordinary provision, Therefore the Iraqi Law does not ask the

judge to go behind the terms of the contract to infer the implied

intention of the parties to the contract. The task of -the judge

is only to apply that special agreement if it is in harmony with

the imperative legal provisions,,

In our specific subject, which is the transfer of the ownership

in C*I. F. and F*O*Bo contracts, can the special agreement affect

the rules concerning this subject? Can the passing of ownership

be postponed until payment? We have seen-under Sale of Goodil

Act 18931 that the parties to the contract are free in making

the ownership pass to the buyer on payment. But in the light of

(1) Al-Ogaili "The Bill of Ladinet at P-312.

(2) Ymemi, J& "Yaritime Sales" at p. 164o
 -236-

Iraqi Laws this question needs Airther discussion..

In the light of section 161 of the Law of Connerce No. 60,1943

(repealed), it was open to the contracting parties to postpone

the passing of ownership until paymento That has been

section

repealed by the Law of Commerce NO-149,1970- Neither the new

law nor the Tracri Civil Code contain any provision to govern

this particular state in postponing the passing of ownership

until payment.

In this respect it can be said: It is open to the contracting

parties to make the contract under suspensive condition. In

this case the ownership passes to the luyer when the condition
(payment) (section 290),
occurs

This opinion can be supported by analogy with section 534

concerning hire purchase, on the ground that since the Iraqi

law accepts the idea, under section 534, of entitling the seller

to reserve the ownership until payment in a certain type of

contract, that law will accept the idea of allowing the

contracting parties in C*I*P* and F*0*B* contracts to stipulate

that the ownership passes to the buyer when the payment is madeq
because there is no reason as to why they should do it,
not

On the contrary, it can be said that the idea Of Postponing the

passiftg of ownership until payment will destroy the nature of

C*T*F* and P*04PB* contracts as a sales On shipment and the

ownership must pass to the buyer at that moment,

2* Ascertained Goods:

If the goods are aseertainedl the rale that the ownership in

C*I*Fo and P*O*Bo contracts passes to the buyer on shipment is

not in harmony with section 531 and 1126-1-, In the light of

these two sections, the ownership must pass at the time when

-the contract is made. How can we justify the commercial custom

which says the ownership in C, IF* and POO* contracts passes

to the buyer on shipment. and sections 531 and 11260) which says

the ownership in ascertain(xl goods passes to the buyer by the

contract itself?

In this respect, it can be said that since the coods are

ascertained the ownership mast pass to the buyer at the time

when the contract is made, whether it is ColoPe contract or any

other sort. Therefore the commercial custom must be changed to

be in harmony with this rule,

On the other hand, it can be said that the preceeding judgment

destroys the nature of Col. P., and F*OB, contracts as a maritime

sale* If we said that the ownership in these two contracts passed

to the buyer before shipment, it would make no difference between

these two contracts and the home market contracts. Thus sections

531 and 1126(l) must be neglected and the rule of the commercial

castom must be followed.

FInally, a third opinion can be raised as a compromise: The

)
jurisprudence in Iraq(') and Fgypt(2 recognizeI3 the case when the

(1) Al-Windawi at P-115-

(2) Al--Sanhoori Vol. 4 at P-420.
 -238-

seller and the buyer Wee to postpone the passing of ownership

until delivery. Therefore, it is easy to assume, by analogy,

that in C*I*Fo and FoOoB* contractsl there is an implied

agreement between the contracting parties to postpone the

passing of ownership until delivery of the goods'which occars

on shipment* This argument can be rebutted by stating that the

implied agreement is not efficient in our laws*

The first and second opinions are very extreme, because there

is no need to inforce the rules of civil code in commercial

matters and vice versa, both of them must work in their own

fieldo

Pourth: What sort of ownership ]2asses to th2_lLu er?

It must be mentioned that the whole ownership passes to the

buyer. The distinction between general property and special property

..
does not exist. inthe Iraqi laws*
.
The question now is whether the buyer is entitled to reject the

goods. if they are. not in conformity with the contract description.

ýA, thisrespect, a distinction must be made between the civil

code and the law of commerce. Section 5170) of the Iraqi civil

code provides:

,
"The sale. isat the option of the buyer when he buys something without

seeing the subject matter of the contract at the tim4p when'the contract
,
is made, he is entitled to accept or to reject the-gooids if, when he
.
receives them, they are not In conformity with the contract desoriPti0n-"
.
 In the light of this section, it is obvious that the buyer is

able to exercise that right without being stipulated 'in the contract.

Therefore there is no need for the parties to the contract to

stipulate such condition in the contract because it is imposed by

the law.

According to (122)-Iraqi Law of Commerce No. 149,10,70-

section

If the goods are not in conformity with the contract description, the

buyer is not entitled to reject the goods or to breach the contract.

He must accept the goods and reduce the price* On the other hand,

the buyer is entitled to reject the goods if:

1- There is an agreement or custom entitling the buyer to reject the

contract.

2- There is a difficulty in marketing the goods9 or they are not

competent for the purpose of the buyer*

Concerning C,,I*Po and F. O*B*' contracts, section 122 of the

Iraqi Lau, of. Commeroe must be applied.

The importance of this section can be inferred from the following

example:

Let us assume. that there is a great need for tea in Iraq. If A in Iraq

has made a contract with B in Ceylon for 10,000 tons of a certain typ

of teal A will be bound to accept the goods even if they are not in

conformity with the contract description, on the ground that the

public interest of the people must be preferred on the private

interest of A, but the price must be reduced.

 COMMM

It is obvious that Iraqi Law neglects the implied intention of

the parties to the contract and considers their expressed
intention if it is in harmony with the imperative legal provisions

which exist in the Civil Code, It is extremely difficult to

justify the commercial matters in the light of Civil Code rules.

It is not surprising to see lots of conflicting thoughts trying

to justify certain commercial matters by-using the rules of the

Civil Code without reaching any satisfactory result:

- The conflict in the meaning between "identification" and

"appropriation"o

- The attempt to make C,,Io]Fo and F,,OoB* contracts as contracts

made under a suspensive condition.

- The analogy between certain cases in -the Civil Code and certain

cases in the commercial field.

All of these are striking examples to prove that the legal

thoughts in the Civil Code cannot respond to commercial matters.

2- Shipment is the crucial moment in passing the ownership to the

buyert as it is the moment of identifying the goods.

The bill of lading is only a good* instrument to secure payment*

This idea is a moot point as it deprives the bill of lading of

its other important functions.

3- The method which depends on the C; vil Code's rules in explaining

commercial matters-, does not comply with the changing needs of

commerce. Therefore this method does not explain the passing of

 ownership when the cormercial letter of credit is invelved.

As a ressult, CeI#F* and F&O*Bo contracts must be free from.

the Civil Code domain and must be arranged in the light of

commercial reality which is, in turn, governed by the principle

'Trotection of property, "

 8ECTION
.4

PASSTNG
OP Mi.OPP-ITY

IN C. I. F, & F, O. B. CONTRACTS

UNDERFRENCHLA14
 -243-

PASSTNGOF PROPPRT"A'
TN THE CIVTL CODE

I The Generpl Rule:

Section 1583 of the French Civil Code states the general rule

as follows:
"The agreement is complete between the parties, and property is

acquired by the buyer as against the seller by operation of law,

from the momentwhen the thing and the price have been agreed upon,

although the thing has not yet been delivered nor the price paide"(1)
According to thissection the contract, by itself, passes the
(2)
property to the buyer, although the thing has not been delivered

nor the price paid. Therefore if A wants to buy a oertain car,

the property in that oar passes to A as soon as the agreement upon

the thing and the price takes plaoe regardless of the deliver7l of
that car or payment of the prioeo(3)

/ 'F
(1) Art. 1583 "Elle
eut parfaite entre lee partie96 et la propriete
est acquise de droit a Itacheteur a ltegard du vendeur, des qu"on
eut converm de la chose A du prixg quoi--que la chose n9ait pas
encore ete livree ni le prix payee"
The translation of the French Civil Code articles is taken from
"The Roman Law of Sale" by F, D,,'Zubieta Oxford, 1966.

(2) La proprie"te"' de la chose vendue estj en general, transmise a

J% %
Itacquerear, meme a ltijard des tiers, par le seul effect du
contrat.
Aubry et Rau et Esmein., Droit Civil Francais. 6th edq 1952
v*5 at p*21*
Mazeaud et Mazeaud,. Lecons de Droit, Civil 3rd ed. v-3,2 at
P. 142.
0. Hubrecbte Notions essentielles de droit civil., 1970 at
P. 257.
(3) Planiol & Ripert "Traite Practique de Droit Civil ftancais"
V-10-1,1956 at p, 10.
"Principes et Pratique du Droit Civil" 2nd, ed, 1967 at P-53d,
 This process of passing of the property is different from that

of the Roman Law where certain things had to be done in order to pass
(')
the property to the buyer. As a matter of fact, section 1582* is,

more or less, affected by the old method of Roman Law, but the

jurisprudence has made it very clear that the property passes to the

buyer by the contract itself and nothing elsee

"Ce transfert nlest done pas une obligation qui p'e'se sur le

vendeur-t le vendeur ntest pas tenu de transferer la propriete a1

acheteur, car, des ltinstant de la formation du contrat: -et Pas le

ete"
seul effect de celui-ci, le vendeur a perdu ja proprie'te", crai a
(2)
acquise par llacheteure

Finally it must be mentioned:

1- If at the moment of the sale the thing sold has totally perished,

the sale will be void. If only part of the thing has perished,

the buyer has the option of either abandoning the sale, or claiming

the surviving part, causing the price to be assessed by arbitrationo(3)

2- The purported sale of anotherts thing is void I it may give rise to

damages when the buyer was unaware that the thing belonged to
(4)
another.

(1) Colin & Capitant I'Le Droit Civil FTancais" v. 2 2nd ed- 1953-
pp-547-548.
Pbrandiere "Droit Civil" v,, 3 1958 at P-7-
Aubr7 et Rau et Esmein at p,, 21*
It provides:
"Sale is an agreement whereby the one party binds himself to
deliver a thing and the other to pay for it. "
(2) Nazeaud et Nazeaud at P-142.
(3) Section 1601 Rrench Civil Code.
(4) Section 1599-
 -245-

II The ! 2pl-ication of the General Pale

The application of the general rule depends on the agreement

(I)
of the parties to the contract and on the nature of the goods.
These are discussed as follows:
1- The agreement of the parties to the contract:

The parties to the contract are free to define the exact moment

at which the property passes to the buyer. They may agree to

pass the property when the seller acquires the property or when

the bityer pays the price or when the handing over of the goods
(2)
takes place or the like.
(3)
This kind of agTeement has to be mentioned in the oontract,

otherwise the general rule must be applied.

2- The nature of the goods:

The goods sold are either ascertained or unascertained. if they

are ascertained, section 1583 will govern the passing of their

property. If they are unascertained, they will be sold either

lump sum or by weight, number or measure.

In the following paragraphs we are discussing the passing of

property when the goods are unascertained*

(1) Planiol & Ripert at P, 11.

(2) lbid*
(3) Aubr7 & Rau & Eamein at P-23.
 -246-

A, Lump EVente
sale
sum en.bl
In this
kind of sale the measurementt counting or weighing of
(')
the goods are not necessary to ascertain them, This sale is

governed by section 1586 which providest

"If .. the wares are sold for a lump sum, the sale is complete,
though they have not yet been weighed, counted or measured*"

According to this section the lump sum sale is considered to

be a sale of ascertained goods 11unevente de corps certain",,

Therefore, the property passes to the buyer as soon as the contract

is made. In other words, at the moment when the thing and the price

have been agreed upon.

"La vente est parfaite en ce sens qutelle produit des sa formation,

tous transferant 'a* 1tacheteur des cet instant la

sea effets, proprie"te
(2)
et lea risques. "

Be Sale by weight, =ber or measure

In this sale the weight 9 number or measure are necessary in

(3)
ascertaining the goods, Verrto a measure is governed by section

(i) Planiol & Ripert at p.&372,

Art. 1586 "Si 'ete vendues en bloc,
#oo leg marelmndises ont
U vente est parfaiteg cflabiquP- lee marobandisee ntaient pas encore
ke peseest comptees
.4 10ý .1 .1

ou mesureeso
(2) Nazeand A Mazeaud at P-147.
(3) Planiol A Ripert at P*372.
1585 which providesl*

"Where wares are sold not for a lump suml bat by weight, mober or

measure, the sale is imperfect, in the sense that the things sold

are at the sellerts risk until they have been wedghed. comted-or

measured-,but the buyer can claim either their delivery or damages,

if anyq in the case of non-performance of the engagemento"
According to this section it seems, at first eight, that the

weight, number or measure of the goods are required only for passing
the risk to the buyer and not the property, on the grounds that the

section says 11... in the sense that the things sold are at the sellerts

risk , *. " But the French judiciary and jurispr-adence do not interprert

section 1585 in that way* They say the ]2ropertv and the risk are both
(l)
postponed until the goods are weighed, counted or measured. Thus

the cassation cowrt stated:

"Wen vertu de oe 't«rte (Art-1585)t la vente au poidet au COMPteCM

a. la memre nfest rarfalte. au voint de vue tranafert- des rinnen

-&z
,/ j* I
ou du transfert de propriete,, que lorsque la marchandise a bte peseef
,e mesure"e, mais quIelle
compteeou oblige lee parties awc obligations-

qatelles ont contractees de's qtxlil ya ea accord sur la chose et, sur

le prix, 0(2)

O. D-N-M-Wý

*' Art. 1585 "Loreque deft marchandiaes ne sent pas vendues en blool
mais au poids, au compte ou 'a la meenire, la vente nlest point
parfaite, on ce sens que lee choses vendues sent a= risques du
jusquIa ce qutelles w
soient peseess... If
.4 ou mesurees;
comptees
verAeur
mais l9acheteur peut an demander ou la delivrance on des
dommages - intgrhs, stil ya lieu, en cas dtinexeeution de
12enge(gemento"
(1) Nazeand & Mazeaud at P-147-
(2) Cive Com- 4 die. 1957, Gaz. Pai. 1958.1.218. Ibid.
 -248-

As a result, the property in unascertained goods does not pass

(1)
to the bikyer by the contract itself, but by ascertaining the goods-

The appropriation of the goods can be done in any obvious manner

which makes the goods attached to a certain buyer. Therefore the

appropriation of 500 quintaux de ble can be done by putting them

into sacks with the buyer's name or mark on those sacks, and the

appropriation of animals can be done by marking them with the buyer's

(2 )
mark. Thus the appropriation need not necessarily be concurrent

with the delivery of the goodse

C. Future goods

The sale of future goods is validl and the property in the gooda

does not pass to the buyer by the contract itselfj but passes:

1- At the time when the goods have been completed if they are

ascertained. * Therefore if someone has ordered a machine of a

certain kind to be manufactured for him, the property in that

Fe"tat
machine passes to the buyer whenit is ready to worki de

marchi]e.

2- At the time of ascertaining the goods if they are unascertained:

The completion of the future goods does not pass the property to

-the buyer if the goods are unascertained. In this case the

property passes to the buyer at the time when the goods have been

(1) Planiol & Ripert at p. 12.

Go Babrecht at P-135-
(2) Mazeaud& Mazeaud at P-1469
Planiol & Ripert at p. 12.
Si la chose futurevendue est un corps certain, llacheteur on
acqmiert la proprijte et les. risques de*s son aýblvement*
 -249-

ascertained after their completion. * Therefore if a factory has

made 10,000 cars for 10,000 buyers, the property in each car does

not pass to any buyer at the time when it is rea4y, but at the time

of ascertaining each car to a particular buyer.

Do Alternative subject matter:

Where the subject matter of the contract is alternative, the

0)
property passes to the buyer at the time when he makes his choice.
Therefore if A agrees to sell one of his two care to B, the property

in a car does not pass to B until he makes his choice,

As a matter of factl this case can be classified under

"unascertained goods" and there is no need to specialize it*

Si la, chose ftture vendue eat une chose de genre, son achevement
ne saffit pas pour que la proprike et lee risques Passent a ltacheteur
ilo, faut , en outre, quI elle soit individualiage, cette condition btant
necessaire au transfert de la propriete et des risques dans toutes lee
ventes de chores de genre. Yazeaud at P-149.

(I)Planiol & Ripert at p. 12.

 -250-

III Zypes of Sale

Sale may be made absolutely or subject to condition, which may

be either suspensive or resolutivea(i)

A contract is subject to a suspensive condition when it depends

either on a future and uncertain event, or on an event which has

actually happened, but which is as yet unknown to the parties, In

the first case the contract be executed

ma3F7 only after the event.

In the second case the contract takes effect from the day on which
(2)
it was made.
A resollative condition is one whichv when it is realized,

produces rescission of the contract and restores matters to the

position in which they would have been, had there been no contract.

It does not suspend the performance of the contract; it merely obliges*

the creditor to restore what he has received, if the event contemplated

(3)
by the condition occurs*

According to these two conditions (susperisive and resolutive) the

following sales can be made:

Sale on Trialt Vente a ltessai

This sale is governed by section 1588 which provides: *

"S.ale on trial is always presumed to be made',under a suspensive

condition*"

(1) Section 1584 French Civil Code.

(2) Section 1181 French Civil Code.
(3) Section 1183 Rrench Civil Code.
Article 1588 "La vente faite 'a llessai est tonjours presumee
faite sous une condition easpensive*"
 -251-

In this kind of sale the buyer has the right to try the goods

to test whether they fit the Purpose designated for them or noto(l)

The period of this trial

is usually agreed upon in the contract,
(2)
otherwise the customary period or a reasonable time will be the
(3)
period for that trial.

The result of the trial may not be left to the buyer to decideý4)

The -seller is entitled to appoint an expert to decide the resultipb)

It has been said that the reason for entitling the seller to

appoint an expert to judge the result of the trial is based on the

difference between 1587 to by taste (ventes

section relating a sale
A
a gouterJ6) and section 1588 relating -to sale on trial* Section 1587

(1)
YgLzeaud
at PA57.
(2) "Par exemple, de huit jours dans leis vertes des cheva-ax"
Mazeaud at p91589
(3) Aubry et Rau et Esmein at P-13-
(4) "Wais lfachetear ntest pas souverain juge des reosultats de ltessai"
Yazeaud at PA59-
(5) "Le vendeur pourrait provoquer la nomination Vexperts, charge's de
verifier si la chose est susceptible de servir a llusage en vue du
qtLel elle a ýte achetee" Aubry ert Rau et Esmein at P-13-
(6) This sale is governed by section 1587 which provides:
"In regard to wine, oil, and other things which it is customary to
taste before buyingg there is no sale so long as the buyer has not
tasted and approved theme"
The buyerl in this sale, has a full right to accept the goods or to
refuse them, and the seller has no right to ask any expert to
taste the goods. In cnher words, the buyer is the only judge
(Nazeand at P*158)o
According to this section the sale is imperfect until the buyer
tastes and approves the goods. Therefore the property passel, -to
the buyer when he agrees to buy the goods and not beforee As a
result -the creditors of the seller can take the goods in the event
of his insolvency, if the buyer has not by then declared his
approval (Planiol at P-378)*
says "oe. there is no sale so long as the buyer has not tasted and

approvedEthe goý]"j and section 1588 says that the sale on trial
Is madG tfunder a waspensive condition" without adding the words of
(1)
section 1587-

ft, om the difference in the terms of the above mentioned sections,

the jurisprudence has inferred that the buyer is not the only judge
for the result of the trial*

At ary rate "sale on trial" is assumed to be made under

suspensive condition. Therefore if the result is satisfactory the

property passes to the buyer at the time when the contract is made by

retrospective effect. If it is not there will be no contracto(2)

2- Sale with Repurchaset

Section 1659 provides: *

'If .0 04
"The power of repurchase or remere is a contractual pr6vision

whereby the seller reserves the right to recover the thing Goldl upon
his returning the original price and making the compensation mentioned
in article 1673.11

According to this section the seller has the powerwhioh enables

him to repurchase the thing sold at the original price* Therefore
(3)
this sale is completely for the benefit of the seller.

(1) Planiol A Ripert at p. 250-

(2) Colin & Capitant at P-560-
Nazeaud at p. 158.
Art. 1659 "La faculte de rachat .4
ou de remere'est un pacte par
leqael la vendeur se reserve de reprendre la chose vendue, moyennant
la restitution du prix principal, et le remboursement dont il eat
parle a Particle 1673-"
Utzeaud at P. 160#
 -253-

In this respect two facts must be mentioned:

I- The right of the se ller ract not ex6eed 5 years-(1) This period
(2)
used to be 30 Years[trente an3 in the old French Civil Code.

2- The third party is protected by sect-ion 2279 which provides. **

"so far as movables are concernedt possession is equivalent to

title

There,Xore, if the third party has bought ary movables in good

faith, the original seller will be prevented from exerciaing his

right to repurchase the goods, as long as the goods are in the

possession of the new buyer.

At any rate this sale is considered to be made under a resolutive

condition. As a resultj the property passes to the buyer at the

time when the contract is made, and, if the seller exercises his

right in recovering the thing sold within the specified period-,

the property goes back to the seller by retrospective effect to the

time when the contract is made*(3)

Instalmeirt Sale:

(4)
This sale has been invented by practice, and it is commonin
(5)
buying cars, bicycles, radio, television and the like.

(i) Art. 1660 "La, facalte'de rachat ne pent %tre s+,Jptxle'e pour Un
terme exc4lant cinq anneeso"
(2) Planiol & Ripert at p*225-
* Art. 2279 "En fait do maeubles,la, possession vaut titre. "
(3) Colin & Capitant at p. 632e
Mazeand& ýkZeaud at p*162.
(4) Planiol & Ripert at p. 256-
(5) Planiol & Ripert at p. 257-
Mazeaudat p. 163.
Ripert & Boulanger at p*471*
 Vente a temperament is a sale where the price Is payable by

instalment after the delivery of the goods*(')

This arrangement is for the benefit of the seller in ciase of

the buyer's insolvency, as he is entitled to recover the property in

that event.
(2)
This sale is considered to be made under suspensive condition,
Therefore if the buyer fulfils his obligation in paying the whole

price, the property will pass to him at the time when the contract

is made by retrospective effect, and if the buyer does not fulfil

that obligation the property will remain with the seller,

Concerning the third party, he is, again protected by section

(3)
2279 if he possesses the goods in good faith*

Sale with earnest 0.

Section 1590 provides&*

"If the promise to sell has been accompaniedby earnest, either party

is free to withdraw from it*

The party who has given the earnest on the terms of forfeiting it.

The party who has received the earnest on terms of repaying double, "

lorsque le prix est payable en pInsieurs e*'che"ances qui, sanf

J# 'a la livraison,
generalement la premiere, sont posterieures "
Yhzeaud at p. 163 -
Aubry et Rau at P. 24*
(2) Planiol & Ripert at p. 257-
Yozeaud & Mameaudat p. 164-
Ripert & Boulanger at P-471-
(3) Planiol & Ripert at p*257.
*Art, 1590 "Si la promessede vendre a etp faite aveo des arrhes chaun
des contractants eat maitre de slen departirt celui qui lea a donnees,
en les perdantt et celui qui lea a requesq en reErtituant le double. "
 -255-

The earnest can be interpreted in three different ways:

I- it is a sanction of not fulfilling the promise*

2- it is evidence that the contract hats become irrevocable,

3- it is a part of the priceP)

It seems that the first interpretation is in accordance with

the words of section 1590. Thus the French Cassation Court has

adopted the first interpretation in the absence of special

(2 )
agreement, This interpretation leads to the result that the

sale with earnest is considered to be made under a resolutive

condition* Therefore the property passes at the time when the

contract is made. On the other hand the parties to the contract

are free to adopt any of the three interpretations above mentioned

and to change the result by making the sale under a suspensive

(3)
condition* As a results sale with earnest is considered to be

made under a resclutive condition in the absence or special

agreement, andq at the same time, it can be made under a suspensive

condition ir the parties to the contract so agreed.

(1) Planiol & Ripert at p. 245-

(2) "La Cour de Cassation a de"cide'qui 'a dei*faut de manifestation
contraire de la volonte des parties lee arrhes doivezrt 6tre
considerees, conformement a 11'art, 1590, cO=e Un moyen de
d6lit. "
Aubry & Rau & Eamein at p. 20.
(3) "mais lee parties peuvent decider de cOnclure une
vente amg
oonsition suspensive tout en donnant aux arrhes le caractere
d"un moyen de dedit. ",
Ibid at p. 20.
 -256-

IV Passing_ of Property in ColoP. and F. O. Bo Contracts

The French judiciary and jurisprudence consult their Civil

Code in a considerable number of legal matters. Thus it is not

surprising to see them seeking a solution to this problem by

analysing the Articles of passing of property set up in the Civil

Code* This attitude has led them to three different solutions

discussed as follows:

I- The property Passes to the buyer at the time when the contract

is made:

This has been stated by Bellote(l) His lrgtm,, t

opinion

depends on Article 1583 of the Civil Code which provides that the

property passes to the buyer at the time when the thing and the

price have been agreed upon. According to Bellot this Artiule is

very obvious and there is no need to postpone the passing of property

until certain acts are done. And since C*I*F* and P90*339 contracts

are consensual, the property must pass to the buyer at the time when

the consent of the contracting partieeg concerning the price and the
(2)
subject matter, takesplacee

Woreoverp and as. far as unascertained goods are concerned,

Article 1585 does not require weightf number 0r measure for passirl,

Rene Bellote Traite theorique et pratiqae de la vente. C*A*Fq

pp- 43-47- Paris 1951-,
le traneftrt de propriete par le seul. accord de volonte' Oul
lea parties sont d'accord sur la chose et le prix. tv
Ibid at p *47
 -257-

the property but for Passing the risk onlye(l)

Although the appropriation takes plaoe on shipment, it does

not effect the passing of property, on the ground that if the seller

does not ship the goods, the buyer will still have his right either

to "resiliation" the contract or to demand its fulfilment., This

right cannot be conceived unless the buyer has already got the
(2)
property*

In the light of this opiniont the clausest "Payment against

documents" or 'Mocuments against payment" have no effect on passing

of property. They relate only to the time at which payment must

(3)
be made.

(I) "La specialisation permettra seule oe reEmItatg et OfeBt en ce

sens que lfartiole 1585 de'cide que la vente nIest Paß Parfaitet
main il n9a jamais dit que le transfert de PropriGýe nlavait Paß
lieui Il regle simplement oette question de riscluen. "
Ibid at p947.
(2) "Qatimporte la specialisation. Elle a lieu, commenous le
*4
verrons plus loin, par I& miss a bord, ltembarquement de la
Ewchandise. Ella n1a aucune influence our Is transfert de
propri6te*'* La preuve an est que si le vendeur nta pas embarque,
Itacheteur peut demander Is resiliation aux torts at griefs de
ce vendeur mais aussi at surtout poursuivre l9ex4cation du
in chee 11 conserve un droit direct sur la ruLrehandise dont le
fondement ne peut se trouver ailleurs que dans le droit de
propribte". "
Ibid. at P-47*

(3) "Musage de la clause "Pajement contra docaments" nfinfirme pas

notre-raisonnement. De meme pour sa variante 19Paiement contra
ltacceptation. de la traite des vendeurs. 11 Vacheteur se reserve
un droit de, rkention our le prix pomr le cas OU'les doc=ents
no seraient pas conformes aux accords* A Vinverse, avoc la
clause "Documents contra paiement" le vendeur conserve un droit
do gage sur la marchandise an refusant de de'livrer a l1acheteur
la preuve de son droit de propriete tout qulil nta pas acquitte
le prix. "
Thid at P-46.
 -258-

As far as a floating C*I*F* is concerned, the property passes

to the buyer at the time when the contract is nade7 but the risk

passes to him from the time of shipment by retrospective effects(')

This opinion can be criticized aa follows:

1- P4 Bellot has ignored the interpretation of Article 1585 given

by the Cassation Court. According to that interpretation the

weightq count or measure of the goods are necessary to pass both

(2)
the property and the risk and not the risk only., Therefore,

and although Article 1585, which M, Bellot has depended on,

requires apparently weightt count or number of the goods for

passing the risk only, it does not help him In his argmento

2- There is no decision in the Prench judiciary to support X. Bellot's

opinion, Th is is obvious after the Cassation Courtts Interpretation

of Article 1585-

3- If the property in Ce:r*P* amd P*O*Bo contracts passed to the

buyer at the time when the contract was made (before shipment)

that would deprive these two contracts of their maritime

characteristics by which the contracting parties should face the

0)
sea and the marine adventure* Therefore, this opinion is

repugnant 'to the characteristics of CJ. P. ancl F. O. B. contractf,

as maritime sales.

(1) "Lleffet. normal du C*A*F* flottant nlest pas de transf" erer

reitroactivement la proprike' au jour de l9embarquementg maig
simplement lea risques. "
Jbid at P-45-
(2) Anti at, po
cette veirte est une4ente maritimet otest-e-dire tm-*wAs
de marohandises destineew9tre transportees par mer. "
Go Winkelmolen at P*23-
 -259-

2- The property passes to the buyer when the bill of lading is

transferred to him:

(')
This opinion has been put forward by M, Renard, He wished,

apparently, to free CoI*F@ contracts from the captivity of the

Civil Code on the ground that the acquisition of the property under
C*I*F* contracts suppose not simply the agreement Of two wills over
the thing and the price, Irat also a transfer of possession, a
(2)
tradition, Therefore, it is in vain that One has tried to derly

the mechanism which detaches the sale C*I*F* from 'the type of sale

consecrated by the Civil Code on the principle that the property, is

(3)
transferred by the sole consent of the parties. M, Renard has

drawn out the conclusion from this explanation by suggesting that

it is necessary to Imow that in the sale C*I. P. the property is not

transferred by the sole consent of the parties as Article 1138 of

the Civil Code requires* A double material element is necessary:

The material dispossession which is a result of shipment, and

The Nridioal dispossession which is accomplished by sending the

doc=entso

This symbolic delivery of possession is indispensable for the

(1) Renard, "La venýe caf en droit fran paiss" Rewe do droit
maritime compare 1925, t-34 PP- .
(2) "Pacquisition de Ia proprie'tS' dans un contract C,A,,F,, suppose
non pas simplement Vaccord de deux volontes sur Ia, chose et le
prixt mais encore un transfert de possession, une tradition, "
(3) "Ctest en vain que Iton a essayO*'de nier le
me/canisme qui dAache
Ia vente C*A*F* du type de vente cOnsacre'par le Code Civil sur
le principe que Ia propri6te eat transferere par le smi. consento...
ment des parties. "
 -260-

perfection of the contraCt-O(l) Farther on he adds "from this moment

(shipment) the contract is made precise and individually definitive.

It only remains for the buyer to become owner and the documents to

be transferred to him. It is by their acquisition that he receives

not only the possession of the thing but the right to dispose of it

This opinion can be criticized as follows:

1- Me Renard seems to disclose some degree of confusion between

transfer of property which takes place at the time when the

contract is made or at the time of appropriationy and transfer

of possession which takes place at the time of delivery*

Appropriation and delivery are quite distinct things with

(3)
different consequences*

la I
(1) C*A*Po, propri6te
"qu"il faut dono reconnaitre que dans la verte
ne se transfers pas par le seal consentment des parties o9mme le
Il faut double .1
element
Vents l1article 1138 du Code Civil. y un
face du dePuaillement du vendeurt
materiel correspondant a la double
d9"possession ma-te'riel - le qui results de llembarquement -
depossession juridique gai staccomplit par la tradition des
documentso Cette remise symbolique do la possession est
indispensable a la perfection du contrat. "
(2) "de ce moment (itembarquement), Italiment da contrat eat pro'oise
' 11 no rests plus pour quo
et definitivement individualise'.
Itacheteur devienne proprietaire qu* lui. transmettre lea
documents. Vest par leur acquisition qatil repoit non seulement
la possession de la chose main le c1roit dven disposer ... "
(3) "En reý61itet cette theorie de Renard us repose pan our un texts,
'e
main sur une confusion entre Is transfert do la propriee,.. qui as
realise de's ltindividualisatioS de la chose vendue, et Is transfert
de la possession, qui eat Itexecution dtune des obligations du
vendearl-. 1a livraisone Speoialisation et livraison constituent
deux, operations juridiques distinctes, ayeýnt chacme des resultate
diffdrentat ltune transf4rant la propribte, ltautre la, possessiono"
G* Winkelmolen at po2l.
 -261-

2- The transfer of property by tradition used to be the dominant

idea in the Roman Law. The French Civil Code has made it clear

in Article 1583 that the old rule of the Roman Law is no longer

applied in France. Therefore it is really a moot point to try

and revive the old rule of the Roman Law under the French Civil
(')
Code.

3- The property passes to the buyer on shipment:

This opinion is'the most common one in the French judiciary and

juriepradenceo It, simply depends on the idea of appropriation which

(2)
takes place on shipment*

According to this opinion the documents do not pass the property

(3)
to the buyer but they pass the possession of the goods only.

Moreover the documents good instruments to prove that

are very
(4)
appropriation has taken place.

(1) "La these quOil sautient revient en somme 'a' exiger la remiss de
la possession pour realiser le transfert de la. proprigteo Et
olest la' quelque chose de tout a fait inattendu ot contraire a
nos conceptions modernes eloignees du formalisme antique de la.
tradition r6elle ou symbolique de la chose vendueo Comment cet
auteur a-t-il pa revenir a ce systeme romain-et pretendre que la
transmission de la possession constituait a nouveau un element
#I au transfert de la proprike? "
necessaire
Benard, Le transfert de propriete dans les ventes maritime
at p. 161..
(2) "La speeialisation des marchandises vendues slopere par la delivranee
at la delivrance a lieu par 1'embarquement du lot vendull Ripert at
p. 816., "Le transfert de propriete slopere a 1'embarquement. Clest
un point inconteste aujourdhui" Ibid at P-815- "Mindividualisation
(an la specialisation) de la marchandise stopere par la delivrance
x
qui a lieu elle-meme par ltembarquement du lot vendW' Godret pp31-32.
"Ciest dones a ce moment precis, appele"mise a* Dord au embarquement,
que la,, marchandise vendue cif est specialiseect. queg partantg Is,
propri, 6te de cette marchandise passe du vendeur a Vachateur".
Winkelmolen at p. 22.
(3) "Nais la remise des documents lut, assure la. possession do la
marchandise" Ripert at p. 824.
"Nous avons vu. que Vacheteur caf, repoit la possession de I& chose
jar la remis des documentsoll Godret at p. 19.
(4)
over
 -262-

Thereforet transferring the possession of the goods to the buyer,

transferring the property of the goods to the buyer, and proving the

appropriation are quite distinct things and must not be confused with
(1)
each others

In fact it is a well known practice in French jurisprudence to

divide the subject of maritime sales into two major parts:

I- the sales on shipment, by which the property and the risk pass

to the buyer at the port of loading (shipment); as in C*I*Fo and

P9O#B* contracts, and

2- the sales on arrival, by which the property and the risk pass to

the buyer at the port of discharge; like the sale by a designated

(2)
ship (la vente par navire de'signe),

It is obvious now that the appropriation is the major factor in

(3)
passing the property to the buyer*

Cont9d /
(4) "La preuve de Ilembarquement, et partant de la specialisation qui
en resulte, eat fournie par le connaissement*" Winkelmolen at p. 24-
"Ces documents, ces modes de preuve" Godret at P. 36.
(1) Godret at P-41#
(2) "11 existe dans les ventes maritime une division fondamental:
1-les ventes au debarquement avec transfert de la propriete au
d6barquement- 2-ies ventes a" ltembarquement avec transfert de la
,
propri6te a Ilembarqaement. " 4.4

Ge Fraikin, I'Du transfert de la propriete et des risques dans la vente

fob*" D*XeFo 1950 at p. 109*
(3) X. Bellot has rejected this idea on the ground that the property
should pass to the buyer by the contract itselfe
Antel pp
No Ripert has depfendledthis idea and addedthat if the appropriation
takes place before shipmentl the property should pass to the buyer
before shipment.
"Ilj# %pourrait remonter au momentdu contrat si la marehandiseitait
d eja specialisee a ce moment-li. 11 Vol. 2 PP815--816.
Me Ripert has reached the same result as M. Bellot by using a
different route* However, the better view is that the property
does not pass to the buyer before shipment.
 -263-

Appropriation is, simply, an act by which the goods become

ascertained anc! attached to a certain buyer by marking or numbering

(')
them. In the words of the French Cassation Court, the appropriation

is "transformation de'la chose en corps certain, qu*elle est exclusive

(2 )
du transfett ,e/
de proprieteoll Therefore, the appropriation has two

steps:

1- Ascertaining the goods,

2- Attaching them to a certain buyer by marking and numbering them

This fact is well understood by the judiciary and has been

deu,-. choses bien distinotes:

(I) "Il ya a on effet
de la sa
une specialisation
transformation en corps
vis4-vis marchandisep clest
certain, et une sPecialisation vis-. 1pavis de Vacheteur, o"est
l9application. "
Bellot
at P. 140*
(2) Cass. Civ. 4 decembre 1934o
(3) Chauveau, Heenenq and Ligonie have refuted this argument on the
ground that the marking or numbering of the goods does not
indicate the intention of the seller in fulfilling his obligations.
"Le soul fait de mettre 'a part certaines marchandises dans les
magasins du vendeurg ou de lee marquer, n1a aucune signification si
rien. ptindique que le vendeur a 11intention de lee affecter a
ltexecution de ses obligations. "
In this respect the seller mast express his intention In such a way
that he cannot change his decision. This can happen by marking the,
goods with the buyerts name or mark, or sending him a letter
containing distinguished marks or numbers of the goods.
Chauveau ventes maritimes prara, 304-
Heenen vente et commerce maritime pararag 31.
Ligonie Le connaiseement et la lettre de voiture maritime PP51-54,.
The reason behind that is the fact that Chauveaul Reenen and Ligonie
have said that the property in C*I*P* and PO,, B, contracts passes -to
the buyer at the time when the bill of lading is transferred to him.
They have depended onthis element of appropriation to support their
opinions This opinion has been stated by M. Renard but it is not
influential in Prance. Ante pp. I-S-1
-Zý1.
 -264-

decided many times*(') Yoreover, the buyer is bound to appropriate

the goods even if the contract does not stipulate that in order to

prevent the risk of error and confu3ing with other goods of the same
(2)
nature on the same ship*
As a result, and since the appropriation takes place on shipment,

the property in C*I*Fo and FoOeBo'contracts passes to the buyer on

(3)
shipment.

(1) "Le vendeur en caf, tena dtindividualiser la marchandise, doit

apposer sur les emballa goo de la marchandise livrde a llembarqu ement
des marques et des numeros, ., de telle fapon que la marchandise soit
toujours individualisee a Itarrivee an port do destination. "
Cour dIAppel de Paris 6-6-1952 D, 14*F* 1952 at P-532.
See also: Cour de Cassation 6-7-1955 D*14P* 1955 at p*647-
(2) ".,. le contrat impose cependant au vendeur l"obligation esseiTtielle
de speCilier la marchandise par naxques et numeroog de telle sorte
gullelle devienne corps certain et puisse'sans A risque dlerreur, ou
de confusion avec d1autres marchandises de Memenature et de meme
consistance chargees dans le me"menavir e**11
Tribunal de Commercede la Seine 12-11-1952 DoM*F* 1953 at p. 657-
(3) "La conclusion dtun marche"'Ifob" limite lee obligations du vendeur
do '*
la marchandise vendue a Ibord du navire et le
an chargement
transfert de propri6te de la marchandise slopere lore du
chargement*11
Tribunal de Commercede la Seine 31-3-1952. D*M*Po 1953 at p,, 292,
"wee en matiere% de vente fob, le transfert de proprie 'ý e' 131
opere
effectivement a ltembarquement"o
Cour de Cassation 15-5-1972. D*M*Fo 1972 at P-714.
"La proprie"te de la marchandise veridue on caf btant transferee a
ltacheteur des le chargement a bord du navir transporteur is
...
Tribunal de Commercedo la,, Seine 31-5-1954 D*M,,F. 1955 at p. 627-
"Le transfert de la propriete de la marchandise vendue oaf fitopere
au momerrt de ltembarquement.
Tribunal de Commercede la S: ine 16-1-1956. D. M.Fe 1957 at P-574-
"La marchandise vendue caf devenue la propri4te'de l1acque'reur
par sa mise ai' Ibord du navire e*, "
Cour dtAppel de Rouen 14-4-1967- D*M*F, 1968 at P-1419
 -265-

.11 le 0*1
The olauses "nous palan arriveell, "poids delivre" et "qualite
I""
delivree this
9 do not affect principle on the ground that they are
"compatibles avec la regle essentielle en la matiere du transfert de

la propriete au de"part. "(1)

In the case of bulk shipment, if the cargo is sent to one buyer.,

the bill of lading is efficient to appropriate the goods by stating

the name of the ship and the date of shipment. But if the cargo is

sent to different buyersv none of them acquires "un droit de propriete

privatif" until the arrival, and the bills of lading delivered to each

buyer have the effect of appropriating the whole cargo to the whole
(2)
buyers in common.

Whenthe appropriation is made, the seller is bound to deliver

the appropriated goods and the buyer is obliged to receive theme There-

fore the seller is not allowed to deliver other than the appropriated

goods, and the buyer is not allowed to claim goods different from those
(3)
which are appropriated*

If the goods are not in conformity with the contract description,

the buyer will have his right to reject theme But, on the other hand,

(1) Cour d'Appel dtAix 19-10-1962. D, X. F, 1963 at P-347-

x
(2) "Mais si la oargaison set destineeJ* a plusieurs acheteurs, ce=-ci
.f%.
ne peuvent acque'rir, avant ltarrivee a destination, un droit de
proprifte privatif sur la portion destinee a chacun dlle=, I)nrant
le transport, ils sont coproprietaires de la cargaison entie're, "
Reenon para. 164 and 33.
Ligonie at P. 32.
Ripert PP416-817,
(3) "Mapplication de la marchandise vendu leaft, Une fois fait, ne
pout plus etre modifies par le vendeur sane VaCcord do l"acheteur
et lie lee parties de facon irre'vocableg .4
le verdeur ne pouvant
livrer et l9acheteur ne pouvant reclamer que ce qui est conforme
a la specialisation ainsi faitee"
Tribunal do Commercede Yarseille 9-1-1951,, D, W, 1951 at p. 250-
 -266-

% 01
(l/
if the goods are alightly different egere inferioriter) in their
(')
quality, the buyer must accept them with reduction of the price.

This reduction should be calculated according to the original price

(2)
and not according to the value of the goods at their arrival ,
When the bill of lading states that the quantity of the shipped

goods is not as much as the contracted qmantityl the buyer has no

[L%
right to reject the documents if the "about clause" clause

enviro]n is mentioned in the contract. This clause allows the seller

to ship the goods within 10 more or less than the contracted quantity,
(3)
Sometimeel the custom defines that clause and its percentage.

It has been decided that the seller can correct the information

sent to the buyer by the 'bill of lading or any other dooument, For

the name of the shipq the weight of the goodal their numbers,
er-amplel

their marks or the like. The reason is mainly practical, especially

when a "Received for shipment" bill of lading is involved* In this

kind of bill of lading the following statement can be found "repue

A .1
pour 6tre embarquee a bord de tel navire on llun des saiventse" The

confusion happens when the seller dispatches the "Received" bill of

lading to the buyer, and another ship "different from that mentioned

"La jurýsprtxdence a decide, des 11origine de la vents caf, pus

la difference de quali-te ne devait pas entrAner la. rei4siliation
do la vents, mais une simple r4luotion du prix. "
.
Ripert PP-799400.
(2) "Le monteont do la bonification doit ttre Oalcule' our le prix de-
vents et non our la, valeur des marchandises au moment de 19arrivee
a destinatiom"
Reenen.at p*234o
(3) RipertPP-798-799-
Reenen-atP.M.
 -267-

in the bill" carries the cargoe In this case the seller, by

correcting the information, is appropriating the goods properly.

(1)
This correction must be done within a reasonable timee
The appropriation can be proved. by many different ways. Ale,

far as C*I*F* and F*O*B* contracts are concerned, the bill of lading

is the most favourable way to pr6ve the appropriatione On the other

hand, the appropriation can be proved by arq "piece certaine et

probanteg dument datee et signee, apte a servir de titre a ltacheteur

(2 )
en cas de contestation. " This includes even the certificate of

origin and the invoice *(3)

It is obvious now that the bill of lading is an instrument

required to prove the appropriation and not an instrument to

(4)
appropriate the goods .

A. The appropriation mmet be done before the opening of the ship's hatches:

(Spe'eialisation avant ltouverture des panneaux)

Since the buyer acquires the property in the goods at shipment,

the goods mast be appropriated 'lading

at that time, and the bill of

should be sent to the buyer before he examines the actual state of the

"Bien que le connaisement fasse foi entre lea parties .0

inte"ressees
au chargementl ltacheteur. en "oaf" pr6tend a tort annuler la vente
lorsque Verreur matgrielle portee our ce document, concernant
Vindication du port de destinationt a iite sane retard rectifiee,
iglegraphiquement, par le vendeur, quo cot acheteur nta subi aucan
0'
prejudice
Tribunal de Commercedo la Seine 1-6-1960. D. M.P,. 1961 at P-6312.
(2) Tribunal de Commercede Marseille 25-2-1907,
(3) "--- certificat d9origine et de la facture" Bellot at p. 147.
(4) Ripert, para 1630-
Bellot , para 371-
 -268-

goods. This rule is called "The appropriation before the opening

of the hatches@"(')
The principle has been established by Yarseille Commercial
(2)
Court, and applied by the other French Courts. It has been said

that the reason for this principle is to prevent fraud which might

be practised by the seller. Sometimes a seller ships one type of

cargo to different buyers, and at the time of arrival he keeps the

undamaged part of the cargo to himself or resells it again at a

higher price, leav-ing the original buyers with the damaged part of
(3)
the cargo. In this case the sale C*19F* will be a premium bond
(4)
in which the buyer has the bad number,

(1) of depuis le moment de

"Paisque ltacqUereur est proprietaire
llembarqnement, il faut que le lot do marchandisesq qdi a bte'
vendu, soit nettement spe'Cialise. 41 11 faut done lui donner un
connaissement distinct, .
qui represente exactement le lot qui lui
a ýrtO venduo La jurisprudence decide que le,, connaissement doit
Ure remis avant que llon ait pu verifier lletat de la marchandise.
Clest la regýe de lao: rcialisation avant Vouverture des panneaux. n
Rodiere (Precis Dall at P-358.
(2) "Lý, tribunal de commerce de Marseille a eioitabli la re"gle de la
specialisation de la marchandise avant l'ouverture des panneaux,
4te'suive lea tribimaux
et cette jurispradence a par autres fran pais. "
Winkelmolen at P, 23-
"Il fa ut bien comprendre,cette regle cMi est destinee a dejouer une
fraude, Le navire arrive au port de deErtination; il contient deet
lots semblables de marchandises; slil i4ait permis au vendeur, apres
dechargementg do faire remettre lee doements, il pOurrait faire une
'a Ilautre. D'ou' la ragle quvil doi-t
remise arbitraire a l'un on
specialiser lee marchandises vendues en remettant lee connaissements
avant que 11on ait ouvert lee pannea= du navire of eat-41,-dire avant,
que lton ait pu constater lt6tat des lots. "I
Rodiere (Precis Dalloz) at Pe358-
.11%
"Cette garantie eat indispensable pour cpie la vente oaf no degenere
pas en une loterie dans laquelle l2acheteur ritcuvrait que lee
manvais rnmeros. "
Heenen.at p. 18i.
 -269-

Marsel3le Commercial Court is very restricted in applying this

principle. Therefore, the buyer must actually receive the documents

before the opening of the hatches even if the seller, in good faith,

has delayed sending the documents, and even if there is only one
(')
share on board ship.

This tendency does not serve the aim of the principle

"appropriation before opening the hatches", on the ground that this

principle has been established to prevent the fraud which mijght be

carried out by the seller, and therefore it is unfair to apply this

principle when the seller, in good faith, delays sending the documents.

Fortunately, the French judiciary and jurisprudence have abandoned

this restrictive attitude of the Marseille Commercial Court. Wantes and

Havre Courts demand only the good faith of the seller in sending the

documents diligently, Thereforeq it is in harmony with -the principle

if the buyer receives the documents after the opeing of the hatches,
(2)
as long as the seller has sent them before that event*

Noreover, the seller is allowed to appropriate the goods even

after the opening of the hatches in the following cases:

(1) "La Jurisprudence du tribunal de Marseille consid'ere cette re"gle

come essentiellej elle exige que la remise des docaments ait lieu
avan-t ltouverture des panneaux... "
Ripert at p, 821.,
See alsot Marseille Commercial Court 20-4-1926.
(2)"Les tribLummx do Nantes et du Havre so montrent moins severes et
demandent seulement. au vendeur d'6tablir qttlil a fait de borme
foi toutes diligences pour l1expAition des documents. "
Ripert at p. 821.
See also: The Iffavre 18-11-1927*
I- If he can prove his ignorance of the actual state of the goods

at their arrival*(')

2- If he can prove the Force Majeure which prevented him from

(2)
appropriating the goods at -the right time.

A question canbe raised now:

Can the seller appropriate the goods after the opening of the

hatches, if he and the buyer so agreed?

It has been said that as long as the buyer is safe (not under

the mercy of the seller) this clause is compatible with C. I. P.

O)
contracts and can be considered as non written olause,,

In fact this proposition is not in harmony with the principles

of French Law. The property passes to the buyer at the time when the

goods are appropriated, and if the parties to the contract are free to

postpone the appropriation until after the opening of the hatches, the

property will pass to the buyer at the time of arrival and that will

change CJ*P* contract into an "en disponible" saleo Therefore, the

modern tendency of the judiciary is to oppose -this idea because it is

repugnant to C*I*Po oontractse(4)

(1) "*a, * si le vendeur sleet trouveodans 19impossibiliteabsolue de

specialiser avant llouverture des parmeaux at qulil soit reste
dans Vignorance du sort de la marchandise, il peut encore attribmer
valablement celle-oi a ltacheteurese"
Heenan at p. 183-
(2) "Aulsi, la jurisprudence nladmet-elle pas la remise des documents
apres ltouverture, alors make que le vendear aurait ýte empeche par
force majeure de lee remettre auparavanto"
Ripert at p9821e
(3) INLa clause autorisant la, spe"cialisation apres llouverture des
panneaux nlest done incompatible avec la. vente oaf qua si, en fait,
elle place l1acheteur al la, discretion du vendeur. Dana c6tte
hypotheset elle doit Gtre consideree commenon ge'rita. "_
Heenen,at P-173o
(4) "es. et elle decide qalune clause du contrat retardant la. special-
isation eat an contradiction avec la--nature de la vente oaf*"
Ripert-at p*821* See alsot Marseille 24-2-1949* D*YoP. 1950 at P249-
Appel dtAix 7-7-1957. D. W. 1959 at p. 627.
 Finally it mast be mentioned that opening the hatches and

transferring the goods from one ship into another does not effect

this principle*(')

Be The appropriation and specification of the ship:

Sometimes the contract stipulates that the seller should inform

the buyer of the name of the ship which transports the goodeq and

sometimes the name of the ship is mentioned in the contract, In

this case the seller is bound to fulfil his obligation according to

the contract, and if he cannot do that he must modify the stipulation

with the consent of the buyer.

According to the older decisions of the French judiciary,

specification of the ship changed the contract from a C*T*Po into a

(2)
"designated ship" sale, and accordingly the property and the risk

passed to the buyer at the time of arrival, But the modern tendency

is to consider this stipulation consistent with the nature of C. I. P.

contracts, on the ground that the designation of the ship is an element

0)
of the appropriation.

04

"Mouverture des panneaux en cours de route, pour aerer lea cales

ou pour transborder lee marchandises our un autre navire, Berait
done sane consequence. "
Reenen. at p,, 182*
(2) "Pourtaryt la designation du navire lie lo vendeur; elle eat
definitive at la jurisprudence decide quIelle, transforme an 8omme
la vente oaf an vente par navire designO*"
Ripert at P*809*
(3) ffLa stipulation en question ntest nullement incompatible &MM la
vente oaf **9 La designation du navire eat, an effet, -tM'el4jMt
de la speeialisation$ qui doit 9tre acoomplie avant lt*VVjV; jj 'a'
destination dans toute vente oaf*"
Heenan-at PP-174-175-
 -272-

Some scholars have considered this element to be essential in

(1)
the process of appropriation, whereas others take a different
(2)
viewo

At any rate specifying the ship does not really change CeI*F*

contract into a "designated ship" sale, on the ground that the legal

consequences of each sale are different, and therefore it seems that

the intention of the contracting parties, when they stipulate that

condition, is not to change the legal consequences of their C*I*Fo

contract, but is simply to help the buyer to calculate the time of

arrival, or for some other reasons. Were it otherwiset they would

have made it clear that their contract was a "designated ship" sale,

Moreover, whether specifying the ship is an essential element

in the process of appropriation or not depends entirely on the

nature of the transaction whether it is a bulk shipment or nott(3)

or whether the seller has sent an equal quantity of the same cargo

on different ships to different buyers. In these two cases specifying

the ship is essential in the process of appropriation.

C. Payment against doements on arrival of the ship:

It is a well known fact that the price in C,,I*Fo contracts is

payable at the time when the documents are presented to the buyer.

(1) Chauveaupara, 6?7-628.

(2) Bellotpara- 392-393.
loreque le connatenement a e/te"ita'bli ä lltorder du vendeur
et se rapporte a%une portion dlune eaLrgaison chargee en varo. En
effet, dans ce eas, la designation du navire est le Eieul moyen
Vindividualiser la marchandise. 11 convient done citexaminert
dans chaque casq si oette designation 0
est neceseaire pour
speCialiser la chose vendue. 11
Reenen, at p. 181
 -273-

The above mentioned clause has the effect of postponing the

presentation of the documents and then payment of the price until

the ship reaches her destination. On the other hand this clause

has no effect on passing of the risk on the ground that the buyer

is bound to pay the price against documents regardless of the

arrival of the ship as long as th e documents are presented to him

(')
at the expected time of the arrival of that ship.

D. Payment after examining the goods at their arrival:

This clause modifies the rule of payments But it does not

modify the rales of risko Tt has the effect of making the price
(2)
payable only after examining the goods.

(1) "Cette clause a pour objet de retarder la presentation des

documents et le payment jusqu'a Parrivee du navire, alors que,
normalement, le vendeur caf peut reclamer le prix contre lea
documents des ltembarquement de le. merchandise* Mais elle ne
permet pas a l1acheteur d'examiner les marchandises avant de
payerl elle ne le dispense pas non plus de payer le prix en Dag
de perte on dfavarie. "
Reenen-at p, 191,
Bellot-Para- 438.
Ripert-para. 1897.
(2) "Son seul obiSt owk d0autoriser 19achateur 'a retarder le
payment Jusqu I%a ce quOil ait pu verifier si les marchandises
sont conformes aux conditions du contratt alore qua, normajeamt,
Itacheteur caf doit payer avant toute verification, deiis que lea
documents lui sont presenteS. "
Heenen. at P*191,.
Chauveausparae 1408*
 -274-

COMý

French pride in their legal system is founded on the history

and traditions of France itselfl particularly since the Napoleonic

codification of 1804, This codification has created a conflicting

state between the restrictions of legal rules and developing facts

of commercial life, which have forced the Prench to modify their

legal rules to suit modern changes in society*

As far as the legal rules which govern passing of property are

concernedl they have been subject to many modifications until they

their state. These rules were originally enacted to

reached present

home market but the French have applied them to COIOF,

govern saleal

and P*O*Bo contracts as well.

The result is that the in Col, P,

of their application property

and P*O,,,Bo passes to the buyer, generally speakingt on shipment, on

the ground that the appropriation takes place ut that time*

This result can be criticized as followst

1- According to the French Civil Code the property in unascertained

goods passes to the buyer. at the time when the appropriation

takes place.

The logical result of this rule is that the property passes to

the buyer as soon as the appropriation takes places and it does

not require any moment or place for the appropriation, Therefore

the property in C. I. F. and F. O. B. contracts passes to the buyer at

the time of appropriation whether it takes place on shipment or

before This result is logical in the light

shipment* of the

French Civil Codet but is not consistent with the nature of CeI*F9
 -275-

and FoO9B* contracts as maritime sales. Thus the French judiciary

and jurisprudence have rejected this result by modifying it to

suit modern, practice, and they have criticized Ripert and Bellot
for adopting that approach.

In fact, the French have either to agree with Ripert and Bellotp

or must find a more convincing argument to support their opinion.

2- The intention of the contracting parties has been totally

neglected and even criticized by the French@()

[payment ]ee Lpayment
The clauses I ltarrive,
contre documents a and
%
% le
apres verification de marchandise a destinati OE have been

interpreted in Frach a way as to avoid their effect on passing of

property on the grcnmd that payment of the price has nothing to

do with the passing of property (Article 1583)9

The modern practice of commercial letters of credit prevents the

property from passing to the buyer on shipment, because the seller

usually takes the bill of lading in his name and not in the buyer's

name* In these circumstances the property in the goods does not

pass to the buyer on shipment. Moreover if the property had

passed to the buyer on shipment, the seller would not have been

able to pledge the documents with the bank on the ground that he

would not be the owner of the goods any more.

(1) "Riende plus arbitraire que cette distinction fonde"e' ear un

criterium psychologique? " Sur la plus secrgte intention du
vendeur et qui met ltacheteur absolument entre lea mains du
vendeur et a sa discretion, "
Bellot at P. 49*
 -276-

It has been said that the special agreement between -the buyer

and the bank is the legal basis for the bank pledgee

This argument is a moot point because it leads to the result

that the bank will have the pledge as soon as the property passes

to the buyer, and since the property, according to this opinion,

passes to the buyer on shipment, therefore the bank will have the

pledge from the time of shipmentl and nobody has said that before*

At any rate the solution of the French Civil Code to the

problem of passing of the property in Col@Fe and P, O*Bo contracts

does meet the modern practice.

 -277-

CONCL13SION

Wehave seen in this chapter many thoughts striving for mastery

in the matter of passing of property. These thoughts can be classified
into two main theories: the objective theory and the subjective one,,
which are discussed as follows$
I- The Objective Theory:

This theory, which has been adopted by the French, the Iraqi and
the Egyptian Lawst depends or, the idea of "appropriation" which exists
in the civil code and has great influence on it. The moment, according

to this theory, at which the property in C*I*F* & F*O*Be contracts

passes to the buyer is the momentof "appropriation"* 11orecommonly,

C*I*Pe & F*O*Bo contracts are contracts for a sale of unascertained

goods, so that no property can pass before ascertainmento Then it is

necessary to know the momentof appropriation in order to be able to

define the exact momentat which the property is transferred. In this

respect two differing points of view have been stated: The first one
says that the momentof appropriation is the momentof shipmente The

second says that the momentof appropriation occurs at the time of

indorsing and sending the bill of lading to the buyer.
The difference between these two opinions is the meaning of

"appropriation"* First of all, both agree that the appropriation

has two elements: the first one is the identification of the goods
by which the goods berome aseertainedl the second, the declaration

of the seller's will to sell certain goods to a certain buyer. The

first opinion considers 'the momentof shipment as a crucial moment
for achieving the two elements of appropriation, so the property
 -278-

passes to the buyer at that moment. The seconrl opinion considers

the mcment of indorsin g and sending the bill of lading to the buyer

or his agent as a aracial moment for achieving the two elements of

appropriation, so the property in transferred at that moment. This

(although it is not the favourite in France

second opinion either or

in Iraq or in Egypt) has been adopted by the Old Soots law through

the idea of delivery. According to the Old Soots Law the property

used to pass to the buyer by delivery, and since the bill of lading

represents possession of the goods, therefore the property passed to

the buyer at the time when the seller endorsed and sent the bill of

lading to the former.

At any rate the opinion which states tha; t the prope rty passes to

the buyer on shipment is difficult to justify when the seller takes

the bill of lading in his own name or in-his agentts name. Moreover,

the property does not pass to the buyer on shipment when a commercial

letter of credit is involvedl because the seller should be the owner of

the goods when he pledges the documents with the bank*

The second opinion which states that the property passes to the

buyer at the time when the bill of lading is indorsed and sent to him,

is the more practical and achieves the principle "Protection of

property", but it should be based on the idea of "correspondence" and

not on the restricted ideas of a civil code "appropriation" or "delivery"s

2- The Subjective Theory:

This theory looks at the intention of the parties to the contract to

define the moment at which the property Passes to the buyer, an it is

theoretically presented in the Sale of Goods Act 180.3, Section (17-1)-

In the light of this theory, the moment at which the property passes

to the buyer is entirely a question of Intention to be gathered from

the terms of the contract, the conduct of the parties and the

circumstances of the case (Section 17-2), and since the parties may

have had no intention, or expressed no intention, the Act has stated

a number of presumptions which must be applied unless a different

intention appears (Sections 18-19).

Because of these presumptions the subjective theory can be said

to be presented theoretically in the Sale of Goods Act 1893. That is

to say, the Act does not leave the matter of passing of property

unfettered, the intention of the parties to the contract must be drawn

through these presumptions.

On the other hand, it should be noted that all these presumptions

have formulated the intention of the parties to the contract after that

intention had been extracted from dealings. They are just like d light

guiding us to the real intention, when the parties may have had no

intention, or expressed no intention. Thereforo, the presumptions

are subjective rules as well with the exception of rule 1 and rule

5ý-l of Section 18t because they depend on the idea of appropriation

to define the moment of passing of property.

At the present time it is very difficult to Justify the

"Subjective theory" by insisting on saying that the question of

passing of property depends on that invisible idea% the Intention of

the parties to the contract., The methods of 'buying and selling in use

in the last century were in many respects very different from those
employed today. This is particularly true of the domestic retail

market where the advent of the supermarket and s'elf-service, of new

synthetic materials and goods of great technical complexity, of the

mail order business and sophisticated advertising techniques have

produced almost revolutionaz7 changes*

In international sales such as ColeFe & FeO*B# sales, intention

plays no important role in the process of passing of the property*

Payment, in the vast majority of these sales, must be made by commercial
letter of credit, In this respect, intention does not appear at all,

simply because the seller must follow certain procedures which have

been already arranged. He must first put the goods on board a ship

in conformity with the contract description* Secondly, he must take

the bill of lading in his own name. At this stage the property must

be vested in the seller so that he may be able to pledge the documents

with the bank, and he cannot say that he intends to pass the property

on shipment* In the third stage, the bank acquires the pledge and

the property passes to the buyer when the bill of lading is honoured

by the bank.

Now, in what respect may intention operate in these procedures?

However, the two theories seem to be illdesigned to modern practice,

and a new basis of law is required ýo

suit commercial changese

As a matter of fact mercantile transactions are, generally

speaking, governed by the principle "protection of property" which

consists of two elements:

A- Protection of the buyer*s property in receiving the goods in

conformity with the contract's description,

 -281-

B- Protection of the sellerts property in receiving the price.

In the matter of passing the property between the seller and

the buyer, the general principle can be achieved through the idea

of "correspondence". In other words, the property of the seller

when the (go in harmony)

and the buyer is protected actual goods correspond

with their descriptions in the contract, because at this moment the

buyer will be sure that he is receiving the contractual goods, and the

seller will be sure that he is receiving the price as this correspondence

obliges the buyer to pay the price in the normal circumstances.

Therefore the property passes to the buyer at the time when the

correspondence between the actual goods and their descriptions in

the contract takes place.

'"he differs from transaction to

L moment of correspondence

transaction am follows:

1- In the normal case of a contract for ascertained goods, the

correspondence takes place simultaneously with the time of

concluding the contract. When the contracting parties agree upon

the goods and the priest the buyer is sure that the subject-matter

of the contract satisfies the descriptions of what he wants, and the

seller is sure that he is receiving or will receive the right price,

2- In the light of the idea of correspondence there is no need for

-the two conditions, namely:

resolutive and suspensivee,

in the sale on trial for instance, the correspondence takes place

at the time when the buyer realizes that the subject-Catter of the

oontract meets his requirements, and the property should pass to

him at that time without being suspended,

 -282-

3- In the supermarket sale the property passes to the buyerg

regardless of payment of the price, when he takes possession of

the article, because at that tiem, the actual goods and their price

correspond with their description in the buyer's mind.

4- If the goods are unascertained the property passes to the buyer when

the goods are separated from the rest and marked with the buyer's

mark. In other words, the property is transferred by the normal

method of appropriation*

5-- When the goods are kept in a warehouse the property passes to the

buyer when their owner issues the delivery order,

6- In C*I*Fo & P*O*B. contracts, when a commercial letter of credit()

is involved, the buyer usually completes an "application foTW1 which

contains his instructions to the issuing banker as to the docaments

to be tendered by the sellert the descriptions of the-goods in these

documents and the type of credit to be opened., The issuing banker

notifies the seller, either directly or through a "correspondent

banker" of the opening of the documentary credit in his favour.

The correspondent bankerg if required to do so by the issuing

banker, adds his "confirmation" by whioh he gives the seller an

undertaking of his own in terms similar -to that of the issuing banker.

(1) There are various types of documentary credit, e. c. revocable and

irrevocable, confirmed and unconfirmed, transferable and non-
transferable. The irrevocable and confirmed letter of credit is
the most widely accepted form of payment in international trade*
Four parties are involved: the buyer, the issuing banker, the
correspondent banker and the seller*
Benjamin pp*1025-1029*
Sa,ssoon at P*399*
&G, Gutteridge. Yaurice 1bgrah. The Law of Bankerst Commercial
Credits. 5th ed# London, 1976.
 When the seller ships the goods and acquires the documents

specified in the documentar7 credit, he tenders these doc=ents

to the correspondent bankerP)

If the documents comply with the terms of the documentary credit,

the correspondent or issuing banker is obliged to accept the

tender and to perform his promise to pay the specified amount or

to accept or to negotiate the seller's draft. A set containing

faulty documents will be rejected by the correspondent banker or

by the issuing banker*

In Erp_lish, & Australian Bank Ltd. v-Bank of South Africa(2)

_Scottish
Bailhache J. said:

"It is elementary to say that a person who ships in reliance on a

letter of credit must do so in exact compliance with its terms. it

is also elementary to say that a bank is not bound or indeed

entitled to honour drafts presented to it under a letter of credit

unless those drafts with the accompanying documents are in exact

accord with the credit as 'opened., #(3)

The moment at which the bank is sure that the nature of the goods

mentioned in the bill of lading correspond with their descriptions

stated in the instructions, is defined when the banker acquires the

pledge over the goodst arA the buyer acquires the Property, because

at that time the right of the buyer to acquire property in the

contractual goods and the right of the seller to receive the price,

(1) In certain cases the seller asks his Own bankers to handle the
documents and to present them on his behalf to the issuing "banker.
(2) (1922) 13 LI, L*R* 219 24.
(3) Article 7 of the Uniform Customs and Practice for Documentary
Credits* U*C*Po
and the right of the banker in securing his money will be

protected.

When the actual goods are not in conformity with the contract

description, there will be no correspondence and consequently

there will be no property to pass from the seller to the buyerg

and therefore the seller will not be entitled to the price.

According to this argument it can be said that "Lack of correspondence"

is the legal basis of the buyer's right to reject the documents and

the goods if they are not in accordance with the contract's

description. Lack of correspondence entails that no property can

pass to the buyer. This interpretation helps us to avoid the

complexity of general property and special property.

Psychologically speaking, the seller in C*I*F* & F*O*Bo contracts

seeks, at the first place, his own protection, he wants to get the

price. In order to protect his own property, the seller will fulfil

his contractual obligation in shipping the contractual goods properly.

Therefore, when the commercial letter of credit is not involved, the

correspondence takes place when the seller endorses and sends the
bill of lading to the buyer. In other words, the property, in this

case, is transferred at the time of indorsing and sending the bill

of lading to the buyer and not at the time when the buyer receives

the documents. The reason is based on psychological assumption that

if -the seller wants -to protect his property in getting the price,

he must protect the property of the buyer in getting the right goods.,

Thus the correspondence occurs when the seller indorses and sends the
bill of lading to the buyer.
 -285-

These facts, above mentioned, explain why the property in olassic

F*O*Bo contract passes to the buyer or, shipment*

 CHAPTER

PASSTNGOF THE RTSK IN

C*I*Po & F, O,B. CONTRACTS

THEORYM PRACTICE
 Passing of the risk from a seller to a buyer differs from

country to country. It passes with property according to Sale

of Goods Act 1893 section 209 and the Prench Civil Code Article
(1)
1138- It passes at the time when the contract is complete
(2)
according to Old Soots Lawo nnally it passes with the delivery

of the goods to the buyer In the light of Iraqi Civil Code, Sections
(3)
5470) and 1790-22).

These matters are discussed in the first section, whereas the

second section is devoted to the passing of the risk in CeI*F* and

F*O*Bo contracts.

(1) Also Section 138, Soviet Civil Code 1964-

(2) Also Section 185, Swiss Civil Code of Obligations.
(3) Also Para 3801 Czechoslovak Code of International Trade (1963)-
Section 446, German Civil Code (1896).
Dre Stojan Cigoj "Transference of risk under comParative and
internationally unified law*"
Lloydfs Yaritime and Commercial Law Quarterly PP56-64.
February 1978*
 -288-

SECTIONONE

I fassing of the Risk in HomeMarket Sales

Sale of Goods Act 1891

The General Rule

As a general rule in a contract for the sale of goods the property

and the risk pass at the same timeg(l) thus section 20 provides:

"Unless otherwise agreed, the goods remain at the sellerts risk until

the property therein is transferred to the buyerg the goods are at the

buyer's risk whether delivery has been made or not. "

In other words, the effect passing is that from

of the property
(2)
that time the goods are at the risk of the buyer*
(3)
In Underwood Ltd* v. bLrZh Castle Brick and Cement
-Syndicate,
while the main engine was being loaded on a railway tmckl part of it

was aecidentally broken. The Court of Appeal held that the property

had not passed at the time of the acoident and that the engine was
(4)
still at the sellerts risk*
(5)
In Healey v. Howlett & sons, the defendant ordered twenty

(i) Following the rale in Marltineau ve Xitching (1872) L. R- 7 Q-B*

4369 454-
(2) 'BenJamin at P-513*
it is submitted that the benefits should normally be regarded as
belonging to the owner of the goodsl rather than to the person who
is in possession of them or who bears the risk.
Mirabita v. TmPerial Ottoman Bank (1878) 3 Rx. D. 164,169*
Seath v. Moore (1686) 11 App. Cas. 350,380.
(3) -[lý23 1 KoBe3439
(4) Alsog &cramm i£. Xo£Uee (1849) 8 C*B* 449-
(5) [191g7 1 K*B. 337.
 . 289-

boxes of mackerel from the plaintiff, a fish exporter carrying on

business in Ireland, The plaintiff disptched 190 boxes and instructed

the railway officials to earmark twenty boxes for the defendant and

the remaining boxes for two other consignees. The train was delayed

before the defendantts boxes were earmarked, and by the time this was

done the fish had deteriorated. It was held that the property in the

fish had not passed to the defendant before the boxes were earmarkedl

and that they were still therefore at the seller's risk when they

deteriorated.

In Sterns. Ltd. ve Vickers Ltdol(l) the defendants sold to the

plaintiffs 120,000 gallons of spirit which was part of a total quantity

to a third The
of 200,000 gallons in a storage tank belonging party*

plaintiffs obtained a delivery order which the third Rarty acceptedg

btrt the plaintiffs decided to leave the spirit in the tank for the

time being for their own convenience. The spirit deteriorated in

quality between the time of sale, and the time when the plaintiffs

eventually took delivery of the 120,000 gallonse It was hold by the

Court of Appeai that the risk had passed to the Imyerse*

Delay of Deliverys

The second part of section 20 provides:

"Provided that where delivery has been delayed through the fault(2) of

(1) E923ý1I K.B- 343o

In this case, it can be seen that the acceptance of the delivery
warrant was regarded as the crucial factor in the case,. since it
was this which gave the buyer an immediate right to possession.
(2) Fault is "wrongful act or default" S. 62.
 -290-

either buyer or seller the goods are at the risk of the party in

fault as regards any loss which might not have occurred but foi such
fault a"
In DeM]= Hamilton & Co., v. BardenP) an agreement for sale of
30 tons of apple juice to be delivered weekly on buyerts instruction*

Buyer fails to give instructions for last 10 tons, which seller has

put in casks ready for delivery. The juice goes putrid as a result*
Although property remains in the sellerg the loss was the fault of

the buyer and is at his risk.

Daties of Baileel:

The last paragraph of section 20 provides:

"Provided also that nothing in this section shall effeet the duties

of liabilities of-either seller or buyer as a bailee

Eir custodie: r]

of the goods of the other party. "

The duty of a bailee is to take reasonable care of the goods,

and to have them available undamaged for delivery up when agreed or

recluired he is prevented
unless from doing so without any fault on
(2)
his or his servantst part.

(1) E19ý1,
]9 I All.,E*Ro435-
(2) jgghland vo RoRo LawIlu=rv Coaches) Ltd., F196]2 1 Q-3- 694,
C*Ae
See also Treatise on the law of sale. We Brown at P-367-1821.
Bell's Comm*V#I at p. 488.
 -291-

Exceptions:

1- The risk does not normally pass to a potential buyer where goods

are delivered on sale or return* In Head v. Tattersall(') the

plaintiff bought a horse from the defendantl warranted to have been

hunted with the Bicester houndst and the Plaintiff was given a week

in which to return the horse if it did not answer the description.

The horse was accidentally injured before the week was upq and the

plaintiff claimed to return it, having discovered that it had not been

hunted with the Bicester hounds. It was held that the plaintiff was

entitled to return the horse and recover the price. The risk was

thus held to be on the seller although the property had probably

passed to the buyert subject to the possibility of being divested.

Today, the property does not pass until the expiry of the time fixed

in accordance with section 18t rule 4(b). However, the decision may

well illustrate that the risk always remains on the seller when the
(2)
buyer has a right of rejectione

2- The general rule to not an imperative one* Therefore it to open

to the contracting parties to avoid the general rule expressly or

(3)
impliedly.

(1) (1870) L, R, 7 Eko 7*

(2) Contrast BeInrington v. Dale (1902) 7 Com. Cas, 112,
where a
trade custom to the contrary was proved,
(3) See the opening words of section 20.
and
Castle v*- Pla-vford (1872) R 5 Ex 165-
1119
Horn v. Minister of roodl _1,, 2 EeR, 1036*
 -292-

11 Old Scot a Law

The General Rule:

In Scotland the separation of the risk from the property was

(')
established at least as far back as the seventeenth century, the

risk of the thing sold is, by the common law of Scotlandt on the

buyerl according to the maxim, "Periculum, rei vanditae nondum

)
traditae est emptori B"n(2 The rule being that as soon as the

contract was complete, goods were at the risk of the buyer?

specific
(3 )a
Thus in Hutcheson v. McDonald parcel of spirits in the Kines

warehouses was sold, and a bill given for the price, but the spirits

not deliveredl and next day the warehouse was broken, and the spirits
(4)
taken away; yet the buyer was found liable for the price*

Justifications
0ý

The reason for this says Mr. Erskine (inste 11:1-3-7-) is "that

the property, which contirmes in the seller until after deliveryt is

but nominal; he is truly no better than the keeper of the subject for

behoof of the purchaser, and so he is debtor for its deliveryl and no

debtor for the delivery. of a special subject cang in equity, be

(1) Richard Bzxwnl Sale of Goods Act 1893 at p. 6.1895-

(2) Bell* Princio vI at p*42*
(3) 3rd- Jan- 1744- Elch Sale TO-5*
(4) See alsot. Campbell M. j= I 5th Julv, 1748- I(ilk 377#
 -293-

answerable for the causal misfortunes to which it may be exposed. "

Another equitable consideration in. support of this rule is,

that the purchaser receives the whole benefit arising from the

improvement of the subject sold, and ought, thereforeq to run the

risk of its deterioration; cujus est commodumejus debet ease

0)
periculum.

The Time of Coppleting the Contract:

As we have seen, the risk, according to Old Scottish Law, passed

to the buyer A question can be

as soon as the contract was complete.

the time of the contract, In other

raised concerning of completion

words, when is the contract complete?

_
In the light of Old Soots Law, two conditions were required to

complete a contract:

I- The price mast be certain, and

2- The goods must be specific*

These are discussed in the following paragraphs.

I. The price mmst be certain:

In this respect the word certain can be iiTterpreted in two

different wayal it either means -the price must 'be fixed (absolutely)

or discoverable (it mast be made capable of being ascertained), The

first interpretation was adopted in Hansen ve Cr%JRwhich wag critioized

(1) Transference of risk in sale* Article in the Journal of

Jurisprudence for May 1859 at pe250.
A compendiumof English and Scotch Law, Jo Paterson a;t p. 187.
Richard Brown4Lt P*107
X.P. Brown(more dertails) at P. 355- 18219
 -294-

by jurisprudence.

In Hansen's. Enk andI others. vs Crej and 20os e. the defendants

-e. _g
having agreed to purchase from the pursuers all the merchantable oil,

the entire cargo of the ship "Polar Bear" then lYing in a boiling-yard

at Borrowstounneset bought and sold notes were exchanged, in which the

oil was described as of two kindog boild and pale, and as consisting

of "about" T28 : 11 :0: 9 of the first, and T54 :3: 3t 24 of the

second, and the price fixed was C44- 5s- overhead per tone The

boiling-yard where the oil was stored was made the place of delivery.

At the date at which the bought and sold notes were exchanged the oil

had been prepared and put into casks, its quantity had been ascertained

by the sellers, and tickets stating the weights Put on the casks; and

no operation remained to be performed in regard to the oil, either by

seller or buyer, which was necessary, according to the practice of

trade, to make it ready for delivery.

By the custom of the oil trade, however, the purchaser was entitled

either before or after delivery of the oil, to check the weights

previously ascertained and stated in the tickets attached to the casks,

and also to search for 'Ifoots' or sedimentg and claim a reduction from

the price on account of 9footst, if the amount turned out to be

considerable. It was also arranged at the time of the sale (as appears

to be usual in such transact ions), that a written statement or

specification of the weights corresponding with the weights marked on

the casks should be furnished by the seller to the purchaser, and that

the oil might be searched by him on a certain deq following, After the

(1) 31 So. Jur. 236 121 D*432o

 -295-

bought arA sold notes had been exchanged, but previous to a search

having been madel or the weights having been checked by the purohaser,

-the oil was destroyed by accidental fire in the boiling-Tard,

The present action was brought to ascertain with whom, in the

circumstances, the risk lay, whether it remained with the sellers, or

was transferred to the buyers.,

The purchasers pled that the sale was not rendered complete by

the mere interchange of the bought and sold notes, in respect thýt

several things remained to be done before the contract could be

implemented, to ascertain the quantity of the oil, its merchantable

quality, and the total amount of the contract price; and that,

therefore, the risk was not transferred from the seller to them.

The Court repelled this plea; holding that the fact, of the

quantity having been ascertained by the sellerst and stated in the

contract, removed all uncertainty as to the prioel and -that the

m%bject being a specific corpus (the cargo of a certain ship), and

the cumulo price being ascertainable by a simple arithmetical process

from the data furnished, - the number of tons, and the price per ton

there wast consequently, no uncertainty either as to the Erabject or as

to the pricee They therefore held the personal contract to be complete,

and the risk to be transferred to the purchaser*

The right to check the weightst and to search for tfootst or

sediment, was regarded as not a condition suspensive of the contracts

although it might, in the one case (if a material deficiency was

found to exist), entitle the buyers to rescind the contract, orl in

the other (if the amount of sediment was considerable), to claim a

corresponding abatement from the price* It being within the option

 -296-

of the 'buyer to make his examination either before or after delivery,

and to take delivery when he pleased, the were postponement of delivery

to suit his convenience, and enable him to exercise his right of check,

was held not to affect the transference of risk, the contract being

othen-rise complete. The use of the word llabout"q which might in other

circumstances have been important, was held to be explained by that

usage of trade which entitled the buyers to check the weights as

ascertained by the sellersi,

The Lord Justice-Clerk, although regarding its settlement as not

absolutely necessary for the decision of the case before the Court,

delivered an opinion on the important general questionj whether the

sale of a certain and known mass of fungibles, by general desoriptiont

but of unascertained amount, at a rate_of price according to measure,

weight, or number, is such a complete personal contract as to transfer

the risk to the buyer, previous to the mass having been measured,

weighed, or counted, and the camulo price so ascertainede He held

thatj in such a case, the uncertainty of the price rendered the

(')
contract incomplete, and prevented the risk passing.

On the other hand, the jurisprudence stood against this idea,

The price, according to jurispradencel is necessary to complete the

personal contract of salej but it is not absolutely essential that a

defirite price be presently fixed., It is sufficient if means be

afforded for ascertaining the price.

Professor Bell says (Princ. 92) "The price must be certain-, or

referred to such standard or criterion as to fix it beyond cplestiong

(1) See also: &MM ve Parnell, 2 Compli 240.

 . -297-

as to the sheriff-fiars fixing the price of grain; or the award of

a third party-, or even of one of the parties subject to the control

of equity; or the market or current price at a particular time or

place. " For instance, where no price has been fixed at all, and
delivery has been made, the contract is not void for want of a price.
The law of Scotland presumes that. the goods were sold for their

reasonable or fair markert value, Therefore, '"11he price may be either

a sum for the whole subject sold, or rateably at so much per ton, or

pipe, or hogshead, or quarter of grain; ancl then the only question

that can be raised will relate either to the denomination of wrong

specifiedt or to the rate of exchange between one country and another,

or to the measurement of the_ goods to-which the stilMlated rate of

2=ent is Mlicablee, but the degree of uncertainty depending on

these circumstances does not unfix the-pIfteet or enable the party to

withdraw from the contract (Bell. The Contract of Sale P4,19)0

The subject being specific, if the price is not unfixed 'by the

uncertainty attaching to the amount, the contract in complete, and

none of its essential elements are awanting,

Accordingly the rational criterion for determining the passing

of the risk is the, possibilitZ of ascertaining the amount of the corpus

destroyedt and thus fixing the price, No essential element 'of the

contract of sale is awanting where a specific M"s of fungibles is

sold at a fixed rate per weight or measure, and means exist for

ascertaining the quantity* As a result the undoubted principle of

law "There is no sale without price" has some exceptions.:

I. An exception to this rule occurs where, in a sale of a speoifio

subject at a rate per measure, delivery has taken place, and the
 subject has accidentally perished in the hands of the purchaser.

before the cumulo amount has been ascertained. The property

wouldl in such a ease, be at the risk of the purobaser, and the

seller would have his claim for the price* The amount of the

subjeett and consequently the cumulo price due, would fall to

be ascertained by the ordinary legal methods of proof.

2- Where also the rate of price has been referred to a standard,

its non-ascertainment prior to the loss of the subject does not

necessarily avoid the contract.

An example offers in the sale of a specific heap of grain of

known quantity at fiaxts prices, where the destruction of the

grain before the fiars have been struckg would not affect the
(1)
completion of the contract, or the transferance of the risk.

This attitude seems similar to the one which has been adopted by

the Sale of Goods Act 1893. Thus section 8 provides:

"(I) The price In a contract of sale may be fixed by the contract,

or may be left to be fixed in manner thereby agreed, or may

be determined by the course of dealing between the parties,

(2) Where the price is not determined in accordance with the

foregoing provisions the buyer mast pay a reasonable price.

What is a reasonable price is a question of fact dependent

an the circumstances of each particular case. n(2)

(1) M*P- Brown PP148-152-

Transference of risk in sales Article in the Journal of
jV#sprudence. Ifty 1859 v-171 pp, 248-254-
(2) :rn -the Prench Law, the ascertaiment of the price is as foLlowas.
Art-15910- "Le prix de la vente'doit 9tre dke--Mine
et, designs'
par lea parties*"
The price must be fixed and specified by the parties*
Art*1592: "11 peat ceperAant 6tre laisse a l9arbitrage dfun tierml,
si. le tiers ne veat ou ne peut faire Itestimation, il nty a pointe
do vente. " It mayt howevert be left to thwarbitration of a third
person: if that person will not or camot make the valuations there
is no sale*
 -299-

2- The Goods Mist be Specifies.

In order to transfer the risk to the buyer, the thing nrast be

specifically appropriated as under the contract: i9e, the thing sold

mast be ascertained and identified so that the buyer is creditor for

0)
delivery of a specific thing. In other words, the transference

or non-transference of risk depends upon natural possibility viz.

where the subject is specific, there is a determinate corpus to

which risk may attach, where, on the other hand, no specific subject
has been agreed upon, the risk cannot by possibility be transferred,
(2)
there being nothing to which risk can attach*

Excerrtionso.

The general ralel that the risk of the thing sold lies upon the

vendee, from the time when the contract is completed, is to be

received under the following exceptions and qualifioationst

1- The subject is no longer at the risk of the vendee after the

vendor is in moraq by not delivering it when he was bound to

deliver it*

2- Another exception to the rule takes place when the loss has

happened by the fault of the vendort because, although the

subject is at the risk of the vendee from the time of the sale,

the vendor is nevertheless bound to take care of it as long as

it remains undeliverede

3- A third exception to the general rule, in regard to pericalum,

is that the lots falls upon the verAor, if the subject perishes
(1) Green v. &4horng I Starkie 447,
HodgEonv, Le Bret, 1 Camps233*
Anderson& Cromptonvo Ykils I LO*t 18709 9 lboph 122*
(2) Transference of risk at p*250
 -300-

from a vice of such a nature that the vendor would have been

liable under his obligation or warrandice, had the subject

perished from the same cause after delivery.

Finally, it must be mentioned that the general rule is not an

imperative one, therefore when it has been agreedt either

expressly or by implication, thatl contrary to the general rule,
the risk shall continue with the vendor until delivery, such an
(')
agreement will be effectual.,

As a resultj the following rule can be formed:

Where there is an express or implied undertaking of the risk by the

seller, as to deliver at a certain place, or where anything remains

to be done in completing, ascertaining, or identifying the thing to

be delivered, or fixing its pricee The matter may be stated tbus:

Under the former low of Sootland, the risk passed to the buyer when
he acquired by the contract a jus ad rem, or special right to have

delivery, as against -the seller, of a specific thing, and it passes

to him with transference of the property, unless it is continued

with the seller either (I)by mora or other fault on his part or
(2) by the intention
of the parties expressed in the bargain, or
(2)
implied in its terms,

(1) XqPeBrown pp. 366-387.

(2) Bell Prime voi, 1899 at P-43,
 -301-

III Iraqi Law

The General Rale:

The risk passes from the seller to the buyer at the time when

the goods are delivered to the buyerP) Therefore the risk is

transferred with the delivery of the goods to the buyer, and not

with the passing of property* As a resultt although the property

itself (when the goods are

may pass to the buyer by the contract
(when the goods are not
ascertained) or by the identification

ascertained) - Seo-531 - bat the risk lies with the seller before

delivery.

This general rule can be explained as followet

The risk, before the delivery of the goodol can be caused either by:

I- Action of the seller.

2- Action of the buyer.

3-- Force majeure.

These reasons are discussed in the. following paragraphat

I- When the risk is caused by the action of the sellers

Tz this case the seller mast bear the risk and the buyer is entitled
to olaim damageswA to reclaim the prioe if it las been paid,

Sootions 5470) ad 17904) Iraqi Civil Wise

Sootion 437. Fovtian Ciyil Code*
Seoticm 405- SYrUm civil Oddeo
This general- rao Is bas4 on Islamto Law* Thus Seajgm., 293..,
QS,
Nlkjallat AI-AhlcýA -AdIllyW provided-.
."The -A3. by
risk mut- be bome -the s4ller Imfore the dq
,ý gmäe, to the bvj«, um'ý ,
 -302-

2- Whenthe risk is caused by the action of the buyer. -

In this case the buyer must bear the risk, consequently he must

pay the price if it has not been paid yet, and he is not entitled
to reclaim the price if it has been paid@ (Sectioil 547-2-).

3m-Whenthe risk is caused by Force Majeure:

In this respect a distinction must be made between the partial

loss and the total loose*

A* The partial loss:

It is obvious that the partial loss makes the goods less

valuable. The buyer, in this case, is entitled either to

breach the contract or to accept the goods having reduced the

price to that amount which mist be relevant to the remaining

goods4, It should be noted that when the risk occurs by the

Force Kajeure, the buyer has no right to claim damageog as the

loss is not caused by the action of the sellero(l) (Section

547-l-)*

B" The total lose:

The total lose of the goods before delivery must be borne by
the seller. The obligation to deliver the goods is the sellerts.

Since the seller is not able to deliver the goods after their

total lose, the contract will be repudiated. As a result the

buyer is entitled to reclaim the price if it has been paid, and

* LebaneseCivil Codeq does-not have this distinction.

(1) The fluctuation of the price is not a Poroe Majeuree Therefore
when the value of the goods deteriorates duýeto
before their delivery, the seller is not liable. economical reason
Al-Windavi "Contract of sale" at p. 154.
 -303-

he is not bound to pay the price if it has not been paid*

Moreoverl damages cannot be claimedP) (Section 547-1-)

Exceptions:

The general rule that the risk passes to -the buyer with the

delivery of the goods has some exceptions which can be summarized

as follows:

I- The risk passes from the seller to the buyer, yet the goods are

still in the possession of the sellerl when the seller notifies

the buyer to receive the goods, although the buyer delays in

themo(2) (Section 547-1-)-

receiving

Similarly, when the time of delivery is defined either by the

agreement or by the seller himself (which must be adequate) and

the buyer neglects to receive them at the defined time, the risk

passes to the buyere

2. When the buyer does not pay the p; -Joeg the seller is entitled to

exercise his right of "Lein" over the goods. The risks after the

"Lein" has been exercisedt passes to the buyer, on the grounds

(3)
that the buyer has committed a cývil wrong by nore-paymento
(Section 428).

It is open to the oontracting parties to stipulate in the oontract.

(1) In the light Ot Syrian arid EgYPtian Civil Codes the buyer is
entitled to breach the coixtract only when the goods have suffered
"severe dam!%es", otherwise he unat accept the goods aner
reducing the price,,
Section 406. S. C. Code, and Section 438 E*C. Code.
(2) Sections 335 and 437 Egyptian Civil Oode*
(3) Section 460 Egyptian Civil code.
 -304-

that the bayer should bear the risk from any time they agreel

regardless of the delivex7 of the goods, because the rules of

(')
risk are not imperative legal provisions,

Passing of -the Risk before the Contract is Made

I- When the goods are received by someone with no intention of

buying them, but merely to have a look at them or to show them

to someone else, the possessor in this ease is not liable if the

loss occurs by Force Majeure, whereas he is liable if the lose

occurs by his action. (Section 548-2-)#

2- Vlhen the goods are received by someone with the intention of

buying them: in this case, if the price is fixedq the possessor

will be liable, no matter how the loss has occurred; either by

his action or by Force Majeure.

If the price is not yet fixedq the possessor will be liable when

the lose occurs by his action only (Section 548-1-).

(1) Al-Windawi at P-157*

 -305-

IV The F%,
ench Civil Cod.e:

The General Rule:

. According to the French Civil Code the risk passes to the buyer

with the property. TIras section 1138 provides: *

"A contract to deliver a thing is made complete by virtue of the

simple consent of the contracting parties*

Such a contract makes the creditor owner and puts the thing at his

risk from the very moment that the alltv of deliverz arige , even
though the handing over has not taken placel unless the debtor has

defaulted in delivering, in which case the thing remains at his risk. "

The duty of delivery arises at the time when the contract is

made, as an obligation on the part of the sellerg and since the

property passes to the buyer at the time when the contract is made,

therefore the risk and the property pass to the buyer simultaneously,

namely at the time when the contract is made*

It has been said that the reason for that rule is the fact that

thebuyer has the benefit and the fruits of the thing sold as soon as

he acquires the propertyg therefore it

is fair to let him bear the
(')
risk as soon as the property passes to him,

Art-1138: "Llobligation, do livrer Ia, chose est parfaite par le

seal consentement des parties con-tractazrtes.
Elle rend le creancier prqprigtaire et met la, chose a ses risques
des 11instant ou",elle d4 6tre livree, encore que la tradition n1en
bte faite, 'a le dibiteur
ait point a moins que ne soit en demeare de
la livrerl auquel cas la. chose reste a= risques de ce derniere"
(1) Ripert & Boulanger at p94729
 -3o6-

II The Application of the General Rule

There are certain facts which have to be taken into consideration

in applying the general rale. There facts are discussed in the

following paragraphs:

1- If the things sold are unaseertained, the risk does not pass to

the buyer until they are ascertained. 'Section 1585, This rule
(')
applies to future goods and goods to be manufactured.

This rule does not extend to govern the lump sum sale where

weight, number, or measure of the goods are not necessary in

ascertaining the goods. Section 1586.

2- Whena contract is subject to a suspensive condition, the thing

forming its ffabject-matter remains at the risk of the debtor, for

he has engaged to deliver it only in the event of the condition

being realized* If the thing has perished in entirety without

fault of the debtor, the contract is discharged* If the thing

has deteriorated without fault of the debtor, the creditor has

the choice of either rescinding the contract or claiming the thing

in its actual statet without reduction of the price.
If the thing has deteriorated through the fault of the debtor, the

creditor has the right of either repudiating the contract, or of

claiming the thing in its actual state, with damages. Section 1182.
According to this section, the riskj when a contract is subject to

a suspensive condition, passes to the buyer at the time when the

(1) Yazeandat P-149*

 -307-

('ý
condition occurs. In this respect, it must be mentioned,.,

A. This section is considered to be an exception to the general

rule, We bave seen that the property in this type of contract

passes to the buyer not at the time when the condition occurs

but at the time when the contract is made by retrospective

effect. Therefore the risk in such a contract is not subject

to "retrospective effect", and passes to the buyer at a

different time to the passing of propertyo

Bo According to section 1137, the buyer, in a sale on triall for

instance, must take care of the thing sold while it is in his

possession* It provides:
of the obligation of safeguarding the thing imposes on the
*eel

party on whom it lies the duty of exercising in the matter all

the care of a prudent man. "

3ý- Delay in delivering the goods at the agreed date, imposes the risk

on the party in defaulte Thus section 1139 provides:

"The debtor is put in default either by means of a mimmons to

deliver or other equivalent document, or, where the agreement

provides that the debtor shall be in default without need of WW

document and by the mere arrival of the due date, by the operation

of the agreement. "

Therefore if the buyer, in a sale on trial, for instance, does not

return the thing sold at. the agreed date, the risk will pass to
(2)
him after the expiry of that date.

(1) Planiol & Ripert at p. 248-

Mazeaud& Mazeaudat p. 158.
(2) Nazeaud& Mazeaudat P*158-
 -308-

Finally, the general rule is subject to modification by contrary

agreement* Therefore, in a sale on trial, the parties are free

to let the buyer bear the risk while he tests the thing sold, and

so one(')

Evaluation

As we have seen, the risk passes to the buyer with the property

according to Sale of Goods Act 1893 section 20, and French Civil

Code Art. 1138. In the light of Cid Scots Law it passes at the time

when the contract is complete (certain pricef specific goods).

Finally, it passes with the delivery of goods to thebuyer according

to Arabic Laws.

In fact the practical results of these rules are quite similar,

on the ground that the seller is bound - in all these laws - to take

reasonable care of the goods until their delivery, that means he must

bear the risk when it is caused by him. On the other hand, the buyer,

also, must bear the risk when it is caused by his action before

delivery* The real difference between these laws is when the risk

is caused by the Force Majeure. Who bears the risk of the Force

Majeure?

In the light of S*Ge Act 1893, French Law and Old Scots Law,

the buyer does*

In the light of Iraqi, Egyptian and Syrian Lawsl the seller does.

(1) Ibid at P-170*

 -309-

The rpoblem of passing of the risk depends, as I see it, on its

cause* In other words the risk must be borne by the one who created

it* Therefore the seller is responsible for the safety of the goods,

by taking their delivery, and the buyer is

good care of them, until

liable for the risk if his action is the reason*

In the ease of Force Majeure the seller must bear the risk on

the ground that this solution prevents the fraud and makes the

seller do -his beat in taking real care of the goods.

 -310-

SECTION TWO

of the Risk in Cjs'Pe and P. O.B* Contracts

-Pasqina

I The General Rule

"The risk passes to the buyer on shipmente"

The almost universal rule in this respect is that:

"The risk in C. I. P. and P9O,B9 contracts passes to the buyer when

the goods are shipped. " Therefore, the goods are normally at the

buyerts during transit, and the seller does not in.:, practice
risk

agree to deliver them (actual delivery to the buyer) at his own

risk, so that he is not responsible for the risk of transit* This

rule has been adopted in the following laws:

U*K9 (Scotland and %cland):

The convention relating to a Uniform Law on the International

Sale of Goods provides thatq as a rule,, the risk shall pass an

delivery of the goods. Thus Artiole 97 states:

I- "The risk shall pass to the buyer when delivery of the goods is

effected in accordanoe with the provisions of the oontract and the

present law*"

The Hague, 1 July 1964 - 31 December 1965-

Treaty Series No*74 0972),
The Uniform Law on Sales deals only with the obligations of the
seller and buyer arising from a contract of sale, and not with
related matterst such as the validity of the contract itself or
its provisions or any usage, or the effect which the contract may
have on the property in goods *sold, such qtLel3tions fall to be
determined in accordance with the appropriate governing law, as
determined by the normal principles of the conflict of laws.
Benjamin at P-17-
 -311-

The Uhited Kingdom in-strwnent of ratification was deposited

on 31 August 1967 and the convention entered into force on 18 August

(1)
1972.

This rule has been applied in Scotland and Migland for a long
(2)
time* on the ground that the buyer's normal assumption would be

that the goods are at his risk when his insurance cover begins, as
the rules concerning the risk are not imperative*

(1) On depositing their ins-trament of ratification the government of

the United Kingdom of Great Britain and Northern Ireland made the
following declarations:
(a) In accordance with the provisions of Article III of the
convention, the United Kingdom will apply the Uniform Law
only if each of the parties to the contract of sale has hie
place of business if he has no place of business, his
or,
habitual residence in the territory of a different contracting
state. The United Kingdom will in consequence insert the word
"contracting" before the word "states" where the latter word
first occurs in paragraph 1 of Article 1 of the Uniform Law.
(b) In accordance with the provisions of Article V of the convention
the United Kinglomwill apply the Uniform Law only to contracts
in which the parties thereto have, by virtue of Article 4 of the
Uniform Law, chosen that law as the law of the contract.
(2) A. F. O. B, contracts:
Carlos Federspiel-& Co. S*A., v Charles Twigg & Co. Ltd. 11957]
1a; 7ts Repo 240*
Stock v Inglis, (1884) 12 Q*B. D564,573,5751 577-
Ynglis
v St .ock (1885)
3
10 App. Cas. 263,273.
The Parchiq77L918:
%58) A. C. 157t 168.
Brown v YeTre 3 H. & N. 484 (1859) 4H&N 822*
Broome v ardess Co-operative
All E, Re 603-
Society of Orange G owers F194ý1
I -
Je Raymond Wilson & Co. Ltd. v Norman Scra-tchard Ltd. (1944)
77 Ll. L. R- 373,374*
212nMrnock Tron and Steel Co. Ltd. v Cooper & Co,
-Ion) ee it kcT. oi sesr,.
B. ColoP, contracts:
Julia LD42J A.C. 293y 309.
Be ClemensHorst CooLtd. v Biddell Bros. E91] 1 K-'B-'934v
959o
BovdenBros & Co. Ltd. v Little (1907) 4 C.L, R, 1364,
Shij)ton Anderson& Co. v johve ýWeston
& Co. (1922) IOLI. 110'
762o
 -312-

Old Soots Law:

A conclusion can be drawn from Old Scots Law about the transferral

of the risk, which is as follows:

The risk in Cel*F, and P, O, B, contracts passes to the buyer on shipment,

because C*I*F. and F*O*B* sales are, more commonly, sales of

unascertained goods and in order to transfer the risk to the buyer,

under Old Scots Law, the goods must be specifically appropriated as

under the contract "must be ascertained and identified" and because

the appropriation takes place on delivery of the goods to the carrier-,

this means that the risk passed to the buyer on shipment. Thus in.

Rat_ton X Solomonson(l) Lord Alvanley saide. "to be a proposition as

well settled as any in the law, that if--a tradesman orders goods to be

sent by a carrier, though he does not name any particular carrier, the

moment the goods are delivered to the carrier, it operates as a delivery

to the purchaser, he alone can bring an action for arW injury done to

the goods, and if any accident happens to the goods it is at his risk.

Irs4l

Law of CommerceNo.60.1943 (now reps &led 12)

Section 183 of -the Iraqi
(3)
and sections 149 and 158 of the Iraqi Law of CommerceNo. 149,1970,

(1) 3B and P, 582*

Accordingly, in an earlier case, it had been decided by the court of
Kines Benchy that if the consignor of goods delivers them to a
partieftlar carrier by order of the consignee, and they be afte- ards
lost, the consilMor cann6t maintain an action against the carrier
for the loss* The action can be brought by the consiAmee only,
Dawesv Peck, 8 T-R- 330-
jgý See post PP7 r 1- 7-
3 See post pp. r ?_ re - 1ý0,
 -313-

have made it clear that the risk in C&I. F. and F*O*B* contracts

passes to the buyer on shipment.

Egyptian Courts have mentioned this rule as a law ill Several

occasions. Thus Alexandria Court saidNIn C*I*Po contracts the

property passes to the buyer on shipment and the risk en route in on

him. "

Prance:

It is a well established rule in FTance that the risk in C. I. F.

and P*O*Bo contracts passes to the buyer on shipment* This rale has been

justified on the ground that the property and the risk pass to the buyer

simultaneously (Article 1138)9 and since the property in C*I*Fo and

FoOeB, contracts passes to the buyer on shipment, therefore the risk

(2)
should pass at that time as well*

This justification is a moot point 'because -the property in the

goods afloat passes to the buyer at the time when the contract is made

whereas the risk passes to him from the time of shipment by retrospective

effecte(3)

However, this rale has been enacted in Article 32 of the law

W%
Wo. 69-8 du janvier 1969, (Relative a Itarmement et a= ventes M&ritimes)

(1) 30-11-1958 Ykjallat Al-Iblamah (AdvocacyReview) Wo.2 Year 39-

(2) "La vents avazrt lien "a 1'embarquementet.,le transport etant effectue'
pour le oomptede l2acquefreur, cet acquereur supporte lea risques de
'*
route ... La regle est tout simplementla consequencedu principe du
transfert de propribte, " Ripert at p. 825-
"Oest dono an momentde I& specialisation clue lea risclaes pasneront
%
a Itachetear. " Bellot at P-125-
(3) Post at P- "14- &-
which provides:

"The sale on shipment puts the risk of the thing sold at the buyer

from the day it io delivered according to the conditions of the

(')*
contract.

(1) I'La vente au depart met la chose vendue w= risVes et a la charge

do ltacheteur, a compter du jour OU elle a bte livree dans les
conditions du contrate"
We wish to point out that Article 33 needs to contain the phrase
"to the carrier" in order to be more specific when it talks about
delivery. The problem of delivery and whether it takes place on
shipment or at the time when the buyer receives the documents has
not yet been settled down. Therefore, and after the suggestion,
Article 32 will be read as follows:
"The sale on shipment puts the risk of the thing sold at the
buyer from the day it is delivered (to the carrier) aocordingto
the conditions of the contract*"
 -315-

11 Limitation:

The risk of transit and accidental loss should not be confased

with the risk of deterioration of the goods in transit. The seller

must pack the goods in a reasonably careful manner having regard both

to the nature of the goods and of the transit, because there is an

implied warranty on the part of the seller that the goods will remain

merchantable during normal transit and a reasonable time thereafter.

Thus rule 11 of (Warsaw-Oxford Rules) providest.

Duties of the seller as to condition of goods:

I-The goods contracted to be sold must be shipped or delivered into

the custody of the carriert as the case may beg in such a condition

as, subject to risk of deterioration, leakage or wastage in balk or

weight inherent in the goods (and not consequent upon the goods

having been defective at the time of shipment or of delivery into

the custody of the carrier, as the case may be, or incident to

loading or transit) would enable them to arrive at their contractual

destination on a normal journey and under normal conditions in

merchantable conditione In allowing for ordinary deterioration,

leakage or wastage in bulk or weight due regard shallbe had to any

usage of the particular trade*"

This rule has been recognised by the following Laws:

M=K. (Scot IlMd mid Da lgnd)

Uhder these two laws the seller,. in C. I. F. and F*O. B. contracts,

in under an obligation to ship the goods in such a condition as would

enable the goods to arrive at their destination
on a normal voyaget
(1)
and under normal condition, in merchantable condi-bion,
(2)Diplook
In Yask &- Tfurrell Ltd. y joseEh 1. Dranual ILtd. Jo said:
(3) (4)
"when goods are sold under a contract such as a Col. p. or r-*OoBo

contractst which involves transit before use, there is an implied

warranty not merely that they shall be merchantable at the time they

are put on the vessel, but that they sball be in such a state that

they can endure the normal journey and be in a merchantable condition

on arrival; and for a reasonable time thereafter to allow for disposal,

or use, as the case may be. "

The sellerls undertaking of fitness for a particular purpose will,

when it have a similar scope, In A*B* KeMR Ltdl, Tolland(5)

arises, --v
Devlin J. said that the effect of this implied undertaking was that

"the seller warrants that the goods, at the time of sale, are in such

a condition thatt unless that condition is unnaturally changedg they-

will, at the end of the normal period of journey be still fit for
...
human consumptione"

Old Soo-to Law:

It was made very clear under Old Soots Law that the seller must

deliver the goods in the proper and usual manner, and with the usual

(1) NoCardie Jo in EZaýnelinos v Leslie & AndersM (1920) 4 U. L* Repo

ýllqa6l]pl*
i It$*T
(2)
,. R. 862f 865 at p. 865-
w..

Gardano and Giamoieri v Greek Petroleum Geor;+,e Yanidakis-A Co*

9621 1 WaL.Re 40.
Broome v PgdjM 2_sTgRaratin Sooietv [1940 1 All W* 603#
5 -LI95ýj 2 Lloy&'WsRepo 681-685*
 -317-

precautions to inm,.re the safety of the goods and the claim of the

vendee agaiml. the party ineared with them. Thus Loxd Ellenborough
(')
said: "The plaintiff camot be said to have deposited the goods

in the usual and ordinary way, for the purpose of forwarding them

to the defendant, unless he took the usual and ordinary precautions

which the notoriety of the carriers general undertaking required,

with respect to goods of this value, to insure them a safe conveyances.

that is, by making a special entry of theme He had an implied

authority and it was his duty to do whatever was necessary to secure

the responsibility of the carriers for the safe delivery of the goods,

and to put them into such a course of oonveyanoeq as thatj in case of

a loss, the defendant might have his indemnity against the oarrierse"

Ir Law

There is no clear provision dealing directly with this problem*

Oar task now is to discuss this obligation in the light of the

provisions of Iraqi Law of CommerceWoO149,1970*

(2)
Section 122 provides:

"If the goods are not in conformity with the contract description,

the buyer is not entitled to reject the goods or to breach the contract.

He =at accept the goods and reduce the priceo On the other bandl the

buyer to entitled to reject the goods ift

i. There is an agreement or custom entitling the buyer to reject the

contract*

(1) Cla3+,e v Hutchins 14 Easts 475.

(2) This section is similar to section 182 of Iraqi Law of Commeroe
Noi,60,1943 (now repealed),
2- There is a difficulty in marketing the goods, or they are not

competent for the Inirpose of the buyer. "

It can be inferred from this section that the seller in C. I. F.

and F. O. B. contracts is under obligation to ship the goods which must

be, at the time of delivery:

1- In accordance with the contract description,

2- Fit and competent to the purpose of the buyers

3- Easy marketing.

Otherwise the buyer is entitled to reduce the price in case

No. 1 and to breach the contract in the cases Nos, 2 and 3.

Moreover section 206 of the Iraqi Maritime Law(') provides:

"The carrier is not responsible for damages of the goods caused by:

hidden defecti, special nature of the goods, inherent vice or unproper

package. "

The net result of this discussion is that the seller in ColoPi,

and F*O*B* contracts is boundl under Iraqi Laws, to ship the goods in

a way which enables them to endure a marine voyage and to be fit for the

purpose of the buyer at the time when they arrive at their destination.

rgWian Laws

Egypt, has adopted Brussels Conveirtion of bills of lading*. by +,he

law Wo.189 1940. This obligation can be inferred from Article 4(2)

(1) It has not come izrto force yete

International convention for the tLnification of certain rules of
law relating to bills of ladingg signed at Brussels an A:ugmst 259
1924*
 -319-

which states:

Meither the carrier nor the ship shall be responsible for loss or

damage arising or resulting from:

(i) Act of omission of the shipper or owner of the goods, his agent

or representative,
(m) Wastage in bulk or any other loss or damage arising
or weight
from inherent defect9 quality or vice of the goods.
(n) :Insufficiency of packing*
(P) Latent defects by due diligence*
not discoverable

Fý-ance:

According to the Rrench judiciary the seller in C*I*Fq and F*O, B,

contract is bound to deliver the goods in such a condition which enables

(')
them to endure the whole journey until the port of destination.
Moreover the seller is responsible for any damage caused to the goods
(2)
because of bad packing. This 'bad packaging has been held to be an

inherent vice in the goods, and, of course, that will hold the seller

responsible on the growA that he knows the nature of the Products and
their destination and this knowledge obliges him to pack the goods

properlyeW

(1) "Le verAeur en caf eat term do deliver des marobandises de

qaalits'
saine, loyale et marchandet aptes a parvenir an cot otst au port
do livraison. "
La Seine 21-1-1954 D*JLP* 1955 at p. 244.
(2) 1'*** le vendeur reste responsable de sa
negligence a soigner
ltemballage de la marchandise vendue est il est tenu des
dues au maivais kat des saose" avaries
Cour de Cassation 30-7-1951 DX*Fo 1951 at P-535-
(3) "Bien, que le contrat de vente naritime ait
prow quo les marohand-
ises e'iaient vendues depart Paris, le veladeur nlest pas degage'de
sa responsibilite par la livraison, des lore qtLtil est 6tabli clus
/Cvwer
Conttd
Ne%
les avaries 01
constatees a llarrivee a destination ne, sont pas
'a
consecutives un accident surverm au cours du transport maritime,
mais sont dues au vice propre des emballages, fournis par leclit
vendeur, qui btait au courant de la nature du produit vendu et do
sa destinatione Il lui appartenait de fournir un emballate
repondant aux conditions d"itancheite et de solidite exigees. La
vente doit en consequence Stre resiliee .1%a see torts ot griefs*"
Tribunal do Commercedo la Seine 17-6-1954 DeMeP. 1955 at p. 691.
 -321-

III The Legal Basis of the Transferral of the Risk on ShiRment

Under this title we are trying to find out the answer 'to the
following question:

Why does the risk pass to the buyer on shipment?

In other words, What is the legal'basis of the rule that the risk in

C*T*Po and F*O*B, contracts passes to the buyer on shipment?

In this respect, mary theories have been proposed which are discussed

in the following paragraph:

I- Deliver, -l of the Roods:

In the light of this view the legal basis of the rule that the

risk is transferred on shipment can be found in the civil codes The

risk, in the civil oodev is attached to the delivery of the goods to

the buyer, and since the delivery of the goods in C91sFe and F*O&B.

contracts takes place on shipment, the risk, in turn, is transferred

0)
on shipment with the delivery.

This view can be criticized from the following points of viewi

I- The risk in Iraqi and Fgyptian Civil Codes passes to the buyer when

the goods are delivered to him, and there is no indication that the

carrier is the buyer or his agent* Thereforet delivery of the goods

to the carrier is not delivery of the goods to the buyers

2. The delivery of the goods means th&t the goods become under the
(2)
power of the, buyers whereas the delivery of the goods t the
,o

(1) Hasni Je "The Ybritime Sales" pp 186-187. Cairo, 1972.

(2) Section 1604 Prench Civil Code.
Section 435 EgyPtiall Civil Code*
-
Section 402 Lebumse Civil Code.
Section 5380) Iraqi Civil Code,
 carrier does not put the goods under the power of the buyert as

the seller is still holding the documents which enable him to

dispose of the goods*

It has not been settled yet at what exact moment the delivery in

ColoPo and P, O*B* contracts takes place, whether when the goods

are delivered -to the carrier or when the documents are tendered

to the buyer.

As a result this view cannot be taken as a correct legal basis

for the rule that the risk is transferred on shipmento.

2- PassinR of the Property

.I

According to this view the legal basis which 9OVems the

transferral of the risk in C*I*Pe and FoOeBe contracts is the passing

of property and since the property passes to the buyer on shipment,

(1)
the risk, in turn, is transferred on shipment with the property.

It may be said that this view is in accordance with section 94 of

Egyptian Coomercial Law which providem.

'Wess otherwise agreed, the risk of the goods whioh leave the
(2)
warehouse of the seller is on the buyer.

This section can I)e criticized easily by mentioning the fact

thal the property does not always pass on shipment*

If 40
(1) "Macheteur quig an droit franpais, aoqaiert la, propriete des
marchandlises vendues 'a 1'embarquementf rmpporte ausse les risques
a partir de ce moment*"
Benard at p.,217--
Ripert at p*825-
Bellot at p. 125,,
(2) This section is very general and leads -to -_tosay tbg* the risk
passou to-the buyer after leaving the waxelmse,
 -323-

3- C*I*Fe is an Aleatory (aleatoireY-Cont_ract(l)

This view says that the CI,, F, contract is a sale of goods

which the seller is bound to ship within a certain timeq or it is

a sale of goods afloat, In both cases the buyer is not entitled

(2)
to reject the goods after the appropriation, even if they are
lost or damaged. Thus the risk passes to the buyer on shipment on
the ground that the seller is not aware of the physical situation of
the goods at the time. of appropriation, and the buyer is bound to

accept the goods after appropriation bearing the risk between the

time of shipment and the time of appropriationo

This view cannot*be taken as a good interpretation for C*:[*Fo

contracts, simply because C*I*Fo contracts cannot be classified

under aleatoire contractso

Hiring Adventure and the AbilijX to Pass the L3=eýy-

We think that the legal basis of the rule that the risk In

091*Ft and F*O*Bo corrbraats passes to -the buyer on shipment, is a

combined one. It depends on two elements:

1- The marine adventure:

ColoPo and FoO.Bo contracts are maritime contracts which implies

that the seller, carrier, buyer and the goods are facing the sea

andl its dangere Therefore the marine adventure is essential in

these two oontractso The marine risk in the maritime contracts

(CoIoPo and FoOoBo) begins when the marine beginsq
adventure and

ý1ý J, Heenen. Vente et commercemaritime* PP149-150, Brussels, 1952*

2 According to Heenen's view the appropriation taken place at the
time when the documents are tendered to the buyer*
 -324-

since the marine adventure begins on shipment, the riskj in turn,

is transferred to the buyer on shipment*

2- The ability of the seller to pass the property to the buyer. 0

The second element is that the seller must be able to pass the

property to the buyer (to correspond actual goods to the

descriptions of the contract) because the buyer usually accepts

the risk of the goods which either belong to him or will belong

to him, when they are actually in the possession of the carrier.

 -325-

IV The Exapt Yzmerrt of Shipment

As we have seen, it is well established that the risk in C*IeFe

and F*OoB# oontracts passes to the buyer on shipment with an implied

warranty, on the part of the sellerg that the goods can endure normal

voyageo But what is the exact moment of shipment?

In this respect, many opinions have been heldl azA we can classify

them into two groups. The first one is the traditional viewt and the

second one is the modern*(')

First: The traditional view

There are two arguments in the traditional viewl the first one says

that the risk passes to the buyer when the goods are actually put on

board a shipe The second one says that the risk passes to the buyer

at the time when the goods cross the ship's rail., These two arguments

are discussed in the following paragraphst

I- The goods are put on board a ship:

In Treglles v Sewell(2) plaintiffs bought of deft. "300 tons old

(1) It should be notedl that our discussion about the risk is in the
absence of special agreement, In PýTene Co, Ltd. v Scindia,
Wavietion Coo Ltd* 11954 @2 Q*33*462* a Fire t65Rer wh3-;E
been Sold foo*bo rondon was damaged through the fault of the
carrier while, being lifted on board* The damage occurred before
the tender had crossed the sbip9s raile The problem arose
between the sellerAM'L the carrier and it was hold that "the
FHagu2j
operati Ion of the rules is determined by the limits of the
contract of carriage by sea and not by any limits of timeg, " that
the parties were free to define their respective obligations as to
"loading" and that in this case the carrier's obligations in this
respect began before the. tender crossed the ship's rail,
(2) (1862) 7H& & W* 574* Revised cases 125 at P*558-
 -326-

bridge rails at CL514s 6d per ton, delivered at Harburgh, cost

freight and insurance; payment by net cash in London, less freight,

upon handing bill of lading and policy of insurance; a dock Co.ts

weight not or captain's signature for weight to be taken by buyers

as a voucher for the quantity shipped. Held: according to the

true construction of the contract, deft* did not undertake to

deliver the iron at Harburgh, but when he put- it on board a ship

bound for that place and handed to pltfs,, the Policy of insurance

and other dooments, his liability ceased and the goods were at
the risk of the purchaser.
(2)
Similarly in Collery v Overseas Fbmorter(l) NeCardie J. said-.

"It seems clear that in the absence of special agreement the property

arA risk in goods does not in the case of an F*O*Bo contract pass

from the seller to the buyer till the goods are ad3jally mt- Qn

board*" As a result the seller must tender a shippedt or an on

,
board bill of lading and he does not satisfy the contract by
(3)
furnishing a "received for shipment" bill*

Lloyd's Polio_yt

In the ligM of standard Lloydts Policy the risk passes to the

buyer at the time when the goods are put an board a ship. it provides,
beginning the advezrture upon the said goods and merohandiseg Cron

-the loading thereof on bosid the said ship, " That meMS "Where goods

(1) E92] 3 ý*B- 3029.307o

(2) lbid at P-307.
E195]
(3) Xglg x &gWo Co. L-td 2 1 Iaoydttj Rep, 183.
-&
.
 -327-

or other moveables are insured from the loading thereof" the risk

does not attach until such goods or moveables are actually on board

and the insurer is not liable for them while in transit from the
(1)*
shore to the ship.

Inagi Law (the repealed one)

This attitude has been adopted in Iraqi Law of CommerceWo*60,

1943. Thus section 183 providea:

"The risk in C*I*Fo contracts is on the buyer from t he moment at

which the goods are loadede"

This section did Act provide that the risk passes to the buyer

when the goods are actually put on board, bat this was implied by

the word "loaded"*

2- The Goods Cross the ShJI2*s Rail

According to this argument the exact momentof shipment occurs

when the goods cross the shipts rail, as the duty of the seller with

respect to loading ceasesq or is performed at that point, and the

buyer's interest normally commencessince the risk normally passes
to him at that point* The ship's rail is the legal frontier between
(2)
the seller9s 'and buyerts I&zA*

(1) Chalmerel 1krine, Insurance Act 1906. E. R.

1krdy Ivany. 8th ed. 1976 at P-147 arld 152.
This policy hasbeen. followed by Iraq ifational Insurance Co.
(2) Sohmitthoffo Legal Aspects of Export Sales (1951) P-43.
Schmitthoff. The Export Trade 5th ede 1969 at P,,70*
 -328-

Thus section A. 6 of 111nooterms 1953" provides:

Ehe
"Subject to the provisions of Article B. 4* selleýbear all

risks of the goods until such time as they shall have effectively

passed the shipts raillat the port of shipment. "

Similarly, section B-3 provides:

[The
buye "bear all risks of the goods from the time when they shall
_]r
have effectively passed the ship's rail at the port of shipment. "

Accordingly, it has been decided in R:-ance that the buyerts

action against the carrier, in ease of damage happened to the goods

at the port of shipment and on the day of shipmentv is acceptable on

the ground that the buyer is the one who bears the risk as soon as
(1)
the goods cross the ship's rail*

This rule has been followed by the new :Iraqi Law of Commerce

NO-149v 1970 which has made it clear that the risk in Co:[*Fo and

P*O*Bo contracts passes to the buyer when the goods cross the shiple

It provides: "In case he kthhe buyer 19 may have reserved to himself

a period within which to the goods shipped and or the right
'to choose the port of destination, and he fails to give instructions
in time, bear the additional costs thereby incurred and all risks of
the goods from the date of the expiration of the period fixed for
shipment, provided always that the goods shall have been duly
appropriated to the contractl that is to sayqý clearly set aside
or otherwise identified as the contract goods*"
(1)"An cas d"avaries survenues an port de charge, le lendemain du
chargement do la marchaMise, Itaction on reeponsabilite do 1fachotour
en caf contre le transporteur maritime est re cevable, puisquItil
egpporte tous lee risques de la marchandise ai partir du moment
elle a passe le bastingwe du navire au port de charge. "
Tribunal de Commerce de Rouen 23-6-1958-
1D.N. Fe 1959 at P-5474o
rail, thus section 149 states that the seller in P,,O*Bo contracts

is bound to pay all the expenses of shipment and to'bear the risk

until the moment that the goods cross the shipts rail* And section

158 provides that the seller in C91*P* contracts bears the risk of

arq damage until the moment that the goods cross the ship's rail and
the responsibility of the goods passes to the buyer after that pointý')
It is obvious that these two sections are based on Incoterm 53, This

attitude is not exactly identical to the first one(iee pat on board

a ship)9 therefore, a contradiction can be inferred between the

provision of the new Iraqi Law of CommerceWo*1491 1970 and the form

of Iraq National Co. which says that the insurance begins

Insurance
(2)
when the goods are put on board a ship. It can be said to justify

this contradiction that :

I- There is no difference between the terms (shipts rail) and (put on

board a ship), both of them mean the same thing*

2- In practice, the form (from warehouse to warehouse policy) to more

commonin uie, therefore this point will disappear in practice,

These arg=ents are moot pointm

I- There in a huge differencebetween the (shiPts rail) and (but on
board a ship),, The difference appears when the problem of loss or
damage to the goods arises during the actual process of loadingt say

as a result of an accident while still in mid-air after having crossed

the rail*

(1) This attitude has been :followedby Egyptian Jurisprudenoe.

Hasni Je "Maritime Sales" pp. 188-189.
(2) Following the Lloydts policyo
 -330-

2- It is a matter 6f principle and not of practice, therefore the

practice is of some importance in relating to this point,

The net result is that the contradiction still exists between

the provisions of the new Iraqi Law of CommerceNo-149,1970 and the

form of Iraq National Insurance Co., This can be solved by amending

the new law to adopt the term used by the old law which is "loaded".

Secondly: The Modern Views

In practicel it seems very difficult for the traditional view

to be applied@ Therefore the modern views have come to moderate the

rigidity of the traditional view, and they are as follows:

is
1- The risk in F*09B* contracts passes to the buyer when delivery

completed:

In the light of this view the risk should pass, not when the goods

pass the shipts rail, but whenevertthe seller's duty with respect

to loading is performed, and where, for example, the buyer agrees

to accept a "received for shipment" bill of lading there is a

strong implication that delivery has been performed as soon as

the goods have been taken into the custody of the shipowner on

shore*(')

This view certainly looks less arbitrary than the traditional view.,
Bat it may also be lose convenient since it may lead to a situation

in which the risk'can pass to the buyer before he is likely to be

(1) David Bassoon O*l*F* and P*O*;Bo Contracts at p. 3849

Londont 1975*
 -331-

covered by insurance, or at least to considerable uncertaintk

as to which of the parties should insure against lose or damage
during that part--of the process of loading
for which the carrier
(1)
is entitled to the protection of the Hague Rulea.
In addition, the point at which delivery occurs may be the only
distinguishing factor between F*A.,So and P*O*Bo contracts in

many cases*

2- The risk in C. I#F* contracts passes to the buyer when the

responsibility of the carrier starts:

In the light of this view, the risk in C*IePe contracts passes to

the buyer at the moment when the responsibility of the carrier

starts according to the bill of lading and charterparty, on the

ground that -the transferral of the risk is a result of the sellerlef

acquiring the rights against the carrier., Therefore the C*:E*Fo

seller is Wt free in making the contract between himself and the

carrier, but is restriotedl by the provisions in the contract of

sale between himself and the buyer* Moreover if there is no

provision in this respect, the contract between the C*I*F9 seller

and the carrier is governed by the custom of the port,

Usually the responsibility of the sorrier starts when the carrying

sling tightens around the merchandise, either the shipping is =40

(2)
at the blue'stone of the quay or by transhipmait of barge.

(1) Benjamin at p, 891.

(2) Qmel est le moment exact ou' se produit le transfert%des risq'ne-ef
Ct est dit-(m, "It embarquement" des marobandises. Faut-il eMVROO,
par 1ý.. le, placement des sarchandises dans lee cales du navire?
Nullement* Le momentdeterminant est celui ou commencela, respons-
abilite'du tran2gorteur maritime, en vertu de connaiesgent. Cleat

/O"r
 -332-

The result of this at.titude is inconsistent with main features

of C*I*F9 contracts, because the C*I. F, seller cannot compel the

InWer to bear the risk before shipment on the ground that the cuatom

of the port provides so, unless there is an express or implied term

abo-xt that e. g. an insurance of the preshipment risk*

The common element, which can be inferred from these two

attitudes is that the risk in C. I*Fo and FoOeBe contracts passes to

the buyer when the delivery of the goods is complete accordiM to the

provisions of the contract, This attitude has been adopted in TJLIS.

Thus Article 037provides:

"I- The risk shall pass to the buyer when delivery of the goods is

effected in accordance with the provisions of the contract and

the present law,, "(')

This view gives rise to certain problemst

It is obvious that this attitude deals only with the passing of

the risk when there in a special agreement in the contract about it-

Therefore this attitude does not solve the problem when there is no

ContIde
.0
le moment determinant., pnisque le transfert des risqueel dans la vente
caft stexpliqme par le fait qae celle-ci comprend lea droits et actions
contre le transporteur et contre 11assurear maritimes de la, marchandise.
J.
lea oonditions du contrat d"affreatement ne sont pas abandonnees au
libre choix du vendeare Elles doivent ttre celles prevues par Is
contrat de vents; et ei oelui--ci est mmet sur ce point, lea conditions
du contrat dtaffretement doit conclure le- vendear' sont celles
-&wi resultent _Mae_
des usages et des possibilit6s de t ransport existant
au ]2ort dreM&Mement .
Rabituellement la responsabilite ledu transporteur commence au moment
ou Ite'lincme as serre autour de la marehandise, cme le chargement
se fasse sar la ]2ierre blene du quai. m -Dar transbordemerýfdlgae
; 1116Re* -
77 ýHeeneneVents st Commerce Maritime* Bruxelles, 1952. at P9187-188o
(i)"The present ism" refers -to other articles concerning passing of
the risk&
 -333-

special agreement on this subject, As a result three solutions

can be given:

I- The risk passes to the buyer when the delivery of -the goods
is complete regardless of amy agreement*
In the Old Scottish Case(') Lord Ellenborough saidt
"A delivery of goods to a carrier or wharfinger, with due

care and diligence, is sufficient to charge the purchaser;

but he has a right to require thatl in making this delivery,

due care and diligence shall be exercised by the seller*"

It can be inferred from the paragraph above mentioned that the risk

passes to the buyer as soon as the delivery of the goods is

complete either to the carrier or to the wharfingere

2- In the absence of special agreement the custom of the port must

govern this point

3. In the absence of special agreement the risk passee to the buyer

when the goods are actually put on board a ship, Thus Rule 5

of (Warsaw-Wcrd Rules) provides:

"rho risk shall be transferred to the buyer from the moment the

goods are loaded on board the vessel in accordance with the

provisions of Rule 2 or, should the seller be entitled in

accordance with the provisions of Rule 7(111) azA (10 in lieu

of loading the goods on board the vessel to deliver the foods

into the oustody of the carrier, from the time such delivery
him effectively taken -place.

(I) Bug!M v Wv-i

-3 CamPb * 414
(2) J4, Reenenat P. 188.
Benjanin at P-859-
This idea was rejeoted in Hendersonand Glass v Radmore& Coo
(1922) 10 Ll. L. Re 727, where no suoh
customwas proved*
 -334-

The Orthodox 22inion

In fact the rules concerning the risk are not Imperative,

thereforet the Lloydts (from warehouse to warehouse)01s

policy more
(2)
common in use than -the standared one, as a resultt the exact moment

of ishipment is not important when the goods are covered by (from

warehouse to warehouse policy)q but the exact moment of shipment is

still important as a matter of principle to be applied when the goods

are covered by normal policy and in the absence of spebial agreement.

In this respect the orthodox opinion can be stated as follows:

"The risk in C. T*F. to the buyer

and F*O. B* contracts passes when -the

delivery is complete according to the provisions of the contract. In

the absence of special agreement the local custom of the port of

shipment must 'be applied if the buyer is aware of that custom,

otherwise the risk is transferred when the goods are actualll put on

board a ship or lighter. "(3)

The reason wby the local custom has to be applied when the buyer

is aware of it, is the fact that the rules of the risk are not

imperativee Therefore when the buyer knows the local custom the

(1) See the form in Charlmers Wrine Insurance Act 1906. H. Ivamy
)
at P-171 (F. P*A. London 1976*
(2) It is out of the scope of this research to discuss the question
whether the buyer hag any insurable interest on the goods before
shipment or not* But you can see Je Aron and Co. (Incorporated)
v Mall (1928) 34 Come Case 18, where It was held that by virtue
; -f the assignment of the policy the assignee became to
entitled
use on any claim of the assignor thereunder, whether or not he had
an interest in the subject-matter insured at the time of lose.
(3) Go2Wn. Ferreira v IgMort-&-Holt 34 Lloyd L. R. 192.
 -335-

inference is of acceptance of it unless rejection is intimated.

The reason why the risk shall pass to the buyer when the goods

are actually put on board a ship or lighter is the fact that the

marine adventure begins at that time*

This opinion seems very practical, taking into consideration

the local custom of the port of shipment when'it is known by the

buyer, and it can fit easily into different legal systems, as the

rules of risk are not imperative. *reover it is in harmony with

the provisions of Lloydts policy which has been followed by many other

countries including Iraq.

 -336-

V The Parts of the Rule that the Risk Passes to the Riyer on 'Shipment

It is a matter of consensust as we have seen, that the risk is

C*l*F* and F*O*B. contracts passes to the buyer on shipment, This

rule can be divided into two main parts which are as follows:

First: The risk is attached to the delivery of the goods to the

carrier*(')
(2)
This part has many consequencese These are discussed in the

following paragraphs:

1- The delay of the delivery is at the risk of the party in faultt

Sale of Goods Act 18931

Under section 20 of the Sale of Goods Actl. "Where the delivery

has been delayed through the fault of either buyer or sellerg the

goods are at the risk of the party in fault as regards any lose which
(3)
might not have occurred but for such fault,
The reason for that is this: if goods perish in the hands of the

seller when they ought to have been in the hands of the buyer, it ?nay

be impossible to prove that they "would" not equally have perished had

delivery taken place*(4)

(1) In -this respect, the delivery of the goods m-dst be made by isming
any considered kind of bill of ladinge Therefore the acceptance
of the goods by the shipowner on the shore, does not relieve the
seller from the risk,
British Columbia and Vancouvers Island Lumber and Sawmill Co, Lt
tdo
v Nettleship (IE 3r L9R9 (N. S. ) CoP*235-
(2) The consequences number 1 and 2 are commonboth to the Cojopo and
F. O. Be contracts. The consequence Wo-3 is related to classic
P*O,,Bo contracts*
(3) land'v NaLKa (1829) 859 18t
IYembv Hamilton & Cc v Barden, 1949j 1 All E*R9
ULIS Article 98-1- -9
(4) Richard Brown at P-1059 106o
 -337-

It may be observed that -this section differs from the proviso

to section 32(2)(1) which is in certain respects parallel to this

provision* Under section 32 (2) it appears that the bnyerl's remedies

for the damage to or lose of the goods operate whether or not the loss

or damage was the consequence of the seller's failure to make a

reasonable contract with the carrier, whereas under section 20, if

either party is at fault in taking delivery of the goods the goods are

at the risk of the party in faultj but only in respect of damage which
(2)
might not have occurred but for such fault.
Under a classic F. O. B. contracts the buyer is bound to nominate

a ship and to give notice of the nomination in good time to enable the
(3)
seller to have the goods ready for shipment by the nominated ship,,

The seller is then obliged "to load in a reasonable time and in the

customary manner. "(4) Therefore a failure to load within the contract*

time because of the sellerts fault is a ground for rejectionv(5) and

vice versa. Alternativelyq the party who is not at fault can affirm the

contract and claim damages for loss occasioned by the delay. This may

include demurrage which the buyer has to pay to the carrier in

(6)
consequence of the delay.

(1) This provides: "Unless otherwise authorised by the Irttyer, the

seller
must make such contract with the carrier on behalf of the buyer as
may be reasonable having regard to the nature of the goods and the
other circumstances of the casee If the seller omits so to do, and
the goods are lost or damaged in course of transit, the buyer may
decline to treat -the delivery. to the carrier as a delivery to himself,
or may hold the seller responsible in damages. "
A 2ý P*S* Atiyah. The Sale of Goods 5th ed. at p. 223*
Harlow & Jones Ltd, v Peneic Unternation591- E1967 ]
Ltd., Lloydts
Rep- 509,526* .1
4 Einar Bugg A*S* v W.Ho Bowater Ltd. (1925) 31 Com. Cas-. 1., 9.
5 Telo v SeMo Wchado L19523 1 Lloyd's- Rep. 183.
6 J. and J. VGGingham Ltd. v Robert A. Nomro,& Goe Ltd. (192,2)
28 Com: C; - 429
 -338-

This proviso to section 20 is not directly applicable to C*I*F*

contracts* For the "delivery" referred to seems to be delivery of

the goodsq(1) and the C*I9F* seller is not under any obligation to

deliver the goods at the agreed destination; while delay in shipment

normally justifies rejection and so makes the question of risk

academic* Where tender of documents is delayed through the fault of

the sellert he may be in breach of contract; and the result of this

breach may be to entitle the buyer to reject the goods or only to

claim damages, These remedies do not necessarily lead to the same

results as the proviso, Thus, on the one hand, a buyer could reject

a late tender even though it caused no loss at all; and on the other

hand, he could only claim damages for a loss which was caused by the

breach (and not for have occurred but for

one which merely might not
(2)
the breach) .

Old Boots Lawt

According to Old Scots Lawl the subject is no longer at the risk

of the vendee after the vendor is in moral by not delivering it when

(3)
he was bound to deliver it*

(I) [1949]
41ton &-Co. Md. Bard-en 1 All E*R* 435-
-v
(2) Benjamin at p,,812*
Also: Kwei Tek Chao v British Traders & Shipptre Ltd, [1954]
2 Q-B; 4599 480-
Jo Ar n& Co. (Ince) v Cqpptoir Wegimont 1921 3 K.
7%R- B.
-T-0.4 T -T-Pe w

James Finlay & Co. Ltd. 'v Kwik Roo Z= E9219

-I''k*B*4009414o
U) 3ee Brown at p*3bb, for More detaile,
 -339-

Iraai Law:

This tendency had been adopted in the Iraqi Law of Co=erce

Wo, 60,1943. Thus section 165 providedt

"In exception of Force Majeure, if the seller does not ship the

goods at the defined timet the buýer will be entitled to breach the

contract and must notify the seller immediately. "

The new Iraqi Law of Commerce No-149,1970 has adopted the same

principle* Thus it provides in sectionst

145: "The seller (in P*O*B* contracts) is under obligation to pack

the goods, transport them to the port of shipment and ship them

at the defined ship by the buyer at the date or during the

defined time for shipment*"

155t "The seller (in C*I*Po contracts) is under obligation to pack

the goods and ship them during the stipulated time or the time

defined by custom*"

It is obvious now that the seller in CaleFe and F*O*Bo contracts

is under obligation to ship the goods at the stipulated time or at the

time defined by the custom on the growA that the custom must be applied

in the absence of special agreement (section 2)e

Moreover, the bmyer in F*O*B* contracts in liable for the risk

when the seller is ready to ship the goods:

I- if the ship does not come to the port during the defined time or

she left the port before the defined time expires (section i5O)i`

2- if he (the buyer) does not notifýr the seller of the nume of

ship or he does not define the time of shipment (Bection-151). *

 -340-

Similarly, if the buyer in C*14,F, has a certain time

contracts

to define the time of shipment, and he does not instruct the seller

within that time, he will bear the additional expenses of the goods

and he will be liable for the risk if the goods are ascertained

(section 163).

The word "ascertained" in section 163 may raise an important

question:
Does section 163 mean that the buyer will not bear the additional
expenses, and he will not be liable for the risk if the goods are not,

ascertained?
Apparently: yes, on the ground that the risk must attach to the

ascertained goods* I think it is fair to say that in the case of

unascertained goods the buyer mast 'bear the additional expenses rather
than the risk, as he is in breach of duty to define the time.

Mrances

The goods must be shipped within the stipulated time. The buyerl

in the case of delay, has the right to annul the sale whether this

delay has caused the goods any damage or not beeause the buyer is in

fault as soon as the period of shipment expires* Moreover, if the

(1) "Le vencleur en cafg reaponeable du de,fant

envern ltacheteur
d9embarqtt«ent ý la date inezactemeM indicluee, commet une faute
Jutlifiant la reiosiliation de la vente a-a profit de ltachetear en
Mmcifiant dann le contrat "embarquement chargeant
chargg"t alors
qtte la marchandise btalt GimPleMent Prke al itre charg4a sur le,
navire transporteurg atteMu au port dt«barquemente, ýUne telle
marchanclise nIest en effet paaL.Ilchargeante" mais simplement a
chargeroff
Ccmr d#Appel d#äUx 21-3-1950 D*N*P* 1950 at P-541-
seller has delayed shipping any part of a bulk cargo sent to

different buyers,
those buyers will be, individually entitled to
( 1)
amml, the contract. On the other hands the buyer is not entitled

to annul the contract if a Force Majeure has prevented the seller

(2)
from fulfilling his obligation in the right time* Furthermore,

the sellerv as long as he ships the goods within the contemplated

period, is not responsible for any damage which might happen to the
(3)
goods because of the late arrival of the ship.

A question can be raised now: Is the buyer entitled to annul the

contract if the seller ships the goods before -the stipulated time?
(4)
The majority of jurisprudence answer affirmativelyl but M. Ripert

says that the buyer, in this easel does not have his right to annul
(5)
the contract unless he proves damages.

In fact Ripert's opinion is practical and protects the interests

of both the seller and the buyer,

(1) ffDlautre part, il a ete' decide" "a bon droit que loregalune oargaison
destinee a kre repartie entre plusieurs acheteurs eat embarquee
'a'bord tardivement,
en vrac, at qutune partie en a Ae mise tons
lea a,oheteurs sont en droit de se prgýaloir de oe retard pour
refuser la, marchandise .. *"
Reenen at p. 213-
(2) "Si celui-ei ove"nement de force majeure, le
eat provoqu8 par un
contrat eat dissous et chacune des parties eat degagee de sea
obligations*"
Thid. at p*213-
(3) Tribunal de Commerce do Narseille 1-7-1957 D. X. Fq 1958 at P-197-
(4) Godret at p*26q,
(5) "An cas do tardivete"'de ltembarquement, llacquereur
tý.1--
-It peut toujours
cLvmanuer,.La&reu3. jja;-..L5jon
4
2 -- -1-"- la
ae --- --
VeIrge, sa ---%-..
renonciation a ce ýrovt
no se preewsani pas* r

An cas dtanterioriti de ltembarcfaementl ltacquereur ne pourrait

demwAer la resiliation qtLIen dimontrant 19 prejudice, ".
Ripert at p, 804-
 -342-

2- A Term Puttina the Vnole Risk on the Seller is Tneonsistent with

C*IeF* and F. O. B. Contracts

A contract putting the whole risk(of deterioration as well as

of loss) on the seller until actual delivery is probably not a C*I*F4,

or F*O*Bo contract,

U-K--ýScotland and Enpjandj

It is theoretically possible for a seller expressly to agree to

deliver the goods at his own risk, Bat if he did so, the contract

would not, properly speaking, be a CeI*F* or F*O*Bo contract at all;

and for this reason such provision in the contract is restrictively

interpreted. Thus in Law & Boanan v British American Tobacco Co. T d,

9
Rowlatt J. rejected a printed clause in these terms as repugnant to
the nature of a CeT*F* contracte On the other hand, effect is

o6mmonly given to clauses which putt not the whole risk, but only the

risk of lose, on the sbllerl e. g. by providing that part of the price

is to be paid only on deliveryq or that any quantity which cannot be
(3)
delivered is to be written off the contract quantity, Contracts

containing such clauses are considered to remain C. I. F. or F*o*B,

contracts, though with variation*(4)

1 163 2 KoB* 605-

2 Calcatta. etc. SteamITaviRation Cos I-De Mattos (1863) 32 L*J*
QeBe214-a 31Z-, T 1Lv-
2=tont v British South-a-1?
Africa Co. (1901) 18 T*L*Re 24*
HwIder Bros* & Coo-Ltd. v Commissioner of Public Works

4
The Gabbiano L1940J P. 177
Produce Brokers New Coma pnv ý1924).. Md.
A. C. 276.
Elq(ý]
v Wrav. Sanderson & C' Ltd.
(1931) 39 T*L*Ro 257,
 -343-

IrMl Law:

According to Iraqi Law, the risk in Col*Po and F. O. B. contracts

passes, generally speakingg to the buyer when the goods cross the

shipts rail (seotions 158 & 149). In other words the buyer must bear

the risk after that moment. The agreement to put the whole risk on
the seller, during the transit -turns the contract into the 11sale on

safe arrival condition*"(')

The conditions which have given effect in British judiciapy

can be justified in the Iraqi Law by (section 2) and go in harmony

with the nature of C*I*Ps and F,,O*Bo contracts*

France:

it is very rare for the contracting parties to stipulate that

the seller should bear all the risk of the voyage, but ifthey dog
(2)
that will be against the nature of CeI. P. and F*O*Bo contraorts,

and will change the transaction into a "designated ship" sale*

However, the following stipulations are considered to be

inconsistent with CeIeFe and FeO*B* oontractst

I- "If the goods do not arrive due to loss of the vessel# the
(3)
contract shall be void. "

(1) Section 164 New Iraqi Lew of Commerce,

Section 203 the repealed one.
(2) "La clause mettaut a*'charge du vendeur t(mg les
risques du
voyage maritime est incOnciliable aveo la clause oaf., "
Comm.Marseille 31-8-1937 D*M.F* at P-307.
(3) "Eft Cas dO Perte du vaPeur, la. vente
est annuleifee"
 -344-

2-1"rhe existance of the sale depends on the safe arrival of the ship

to her destination where the delivery Bhould take place*"(')

3-I'The buyer shall receive all the goods which are damaged by the

water of the sea or whatever, and the seller shall reduce the
(2)
price*"

4-111n case of non-oz-rival due to a war the contract shall be void. "(3)

There is no doubt that the clauses above mentioned are repugnant

to ColeFe and PeO. B. contracts where the risk should pass to the buyer

on shipment* But Professor Heenen has stated that some of those clauses

can go in harmony with the nature of C9I. F# and P*O*Bo contracts on the
(4)
ground that they do not pat the whole risk on the seller. Bellot

has redected idea because those clauses cannot be classified

this
(5)
under any type of matritime sales.

I% If
(1) "Vexistence du marche" est subordonnee a la bonne arrives du
navire transportew at la livraison aura lieu a' ltarrivee. 11
(2) "Vacheteur recevra toute marchandise endommageepar ean de
mer am autrement, mais le vendeur an bonifiera la moins-valuell '
(clause "Rye terms")*
(3) Ma cas de non-arrivae de la marchandise .par faits de guerre, la
vents sera annulee*"
Heenanat p.,169.
Ripert at p*828,
(4) "En. effet, lea clauses an question ne mettent I charge du
vande-ar
qtLe certains risques dlkermineseo* Elles ne d6o 9ant donc qua
Partiellement a la regle de la vente caf, d1apres laquelle tous
lee risques maritimes incombent a llacheteur. "
Heenan at p, 169-170-
(5) "En lletat de telles "a
irtipulations, on ne peut plus, vrai dire,
soutenir qatil slagit encore de ventes caf, WOM8avons affaire
, des
a ventes maritimes qui n1entrent dans aucune classification, "
Ballot at P*139.
 -345-

3- A DelivejZ of the Goocls to Unnominated Carrier is not Considered

as a Deliver7:

Uhder Classic FeO*Be contractst if the buyer names a particular

carrier, there is no delivery if the seller ignores the direction mid

gives the goods to another carrier and the risk remains with the
(')
seller.

It is a universal rule that the seller in classic F*O*B* contracts

is under obligation to ship the goods on the defined ship by the brqer,

otherwise the risk would remain with hime

Secondly,: The Risk is Separated from the Propertyt

This second part of the rule that the risk passes to the buyer

on shipment, has consequences which are as follows. 0

I- The risk in bulk shipmeirt passes to -the buyer regardless of the

propertys

The Sale of Goods Act 1893:

The risk in C*I*F9 and F*O*B* contracts, unlike the property,

may pass to the bmyer although the goods are unascertained goods which
(2)
have not been appropriated, so that it would not Ibe surprising if
risk in part of a balk shipment could Pass to the buyer before the
.
goods had been ascertained so as to pass the property in themo(3)

(1) Harle v Ogilvie (1749) M- 10095o

Ullock v Reddelein (1828), 5 LoJo (oov ; ) IIC*Be208.
wmý [1947]
(2) Croom-Johnson Jo, in ComiDtoir d'achat bais de Ridder
2 All EaRe 443,453. .-
(3) Ster-im [1923]
d. v Ttakw,
ro L+,
d 1 K*Bo 78*
 -346-

Thus it appears that the risk in part of a bulk passes at the

(1)
normal timet that is on shipment.

Old Scots Lawt

In the case of a sale of a oommodily in bulk, it would seem that

the risk is not transferred until a quantity corresponding to the

agreement has been measured or set apart for the parchasere(2)

It is obvious now that the risk in balk shipment does not pass

to the buyer on shipment, This result can be altered to make the ridc

in bulk shipment pass to the buyer on shipment an the grourA that the

contracting parties were free to define the moment at which the risk

passes to the buyer* Moreover the modern practice of insurance makes

the insurance co"w begin, in the case of colope and P*O*B# contracts,

from -the time whom the goods are actually put on board a'ship# This

repr sezrke a strong indication that the parties agreed for the risk

to be passed on shipment whether it is bulk br normal shipmente

Irat d Law:

In the light 'of the Iraqi Civil Code the risk has attached to

delivery qf'tho goods* Th other i! ords,. thqre. itj no comectim

I)etween fte,,, p"ning of the risk andl the, passing'of proper Ijy.
ý
Therefore. .tb1s-, 4udgm6n* a iogical. result'of the rule

(1) Inzlie >Xý

(2) Brat Uiv 31 `79ý
Polift Prbu 80-m.
-
EmmenI gWjS-&-RpM 21 Dq 43ý*
 -347-

which separated the passing of the risk from the passing of property*

France:

It is not very clear if passing of the risk in bulk shipment

has been separated from passing of property. We have seen that the

property, in bulk shipmentv passes to the buyer on shipment on the

ground that the bill of lading can appropriate the goods. Therefore,

and since the buyers own the whole cargo in common while the goods

are at sea, the risk passes to them on shipment*

At azW rate the risk in bulk shipment passes to the buyer on

shipment, although the goods are not being weighedt counted or

measured.
(1)
This rtae is obviously against the requirements of section 1585,

and that to wby Khreeille Court rejeeted it* 3kt Marseille decision

was altered by Aix Appeal and the rmle (the in balk shipment, risk
(2)
Passes to the buyers an shipment) has been sirttled ever sinoe.

(I) Ante at p. 7
(2) "Pour lee derwees chargees en greier
... lee tribunaux de commerce
ont 6to asses embarrasses pour admettre la. speoialination, le
oootage at In mevuxage no, Be fai sane qul 11arriVO*. 11 *at
asses gendraliftent ý
adn1s"qd6-16 connalsefftent d6livre vaut
speci4ioatiw4 bien Ve les marchandisen no sojent pas-
separees duýreftant Ao I&
epargaison. le 6cjjjajjjw**ý
Le. tribwml. Aw, Narsaille, aindt'dt abord ditidd'cVle
. lee ý
no speoWisait pas suffisamairt marchundises in grwder
(4, eAt 18WL . Ykia 1e. 4ugeMnt aA e-rif mi; -(Aj3*t. to L im) I
I&-,oour ayant admin In droit do coproprjj*_jF Los
&4618i6m tv
Ripert at p*817*
 -348-

2- The Risk in the Goods Afloat Passes to the Buyer "as from shipment"

by Retrospective Effects

(')
In the Julia, Lord Porter said thatunder a C*IeFO
risk,
(2)
contract, generally passes "on shipment or as from shipment".
This statement contains two rules, where the goods are sold and then

shippedv the risk passes on shipment (the normal time); *but where they

are already afloat at the time of sale it is more apposite to refer

to the risk as having passed as from shipment* The second rule means

that the sellerts undertakings as to quality being referred to the

time of shipmentO) viz# the risk passes "retrospectively" to the

moment of shipment*
This urAertaking relates to the deterioration of the goods and

the partial lose which leads to a mere shortage, would be treated in

(4)
the same way as deterioration. Therefore where goods are shiPPedv
lost and then soldý51here is no+ way to apply the role that the risk

passes as from shipment, because this rule does not relate to a total
lose in. the sense of a total destruction of the commercial character

of the shipment,

(1) [1949 A*Oi 293,309.

(2) Also*., & Qgmens pd
9349'--956,959-
Go kj.
.jZ
11
iMfil
E1911] J. K. &

Bowdw-lb!oss & Coo-TAdov Liftle (1970) 4 C*LeR*1364e

(3) Oleificio Zwachi SeP*A*v Northern Ealee Ltd, [1965] 2 Lloydto ROP
AOA C4R-

CordonaLand CoeLtd. v Ylator Bros, 1196611 W*L*Rq,,

793#
Hamm
d-ne-- LBaA
-i
IQ.
(5) cmtSAer vikeltil (1856) 5 H*L*Co673o
 -149

Old Soots Iaw and Iracri Law

In the light of these two laws the general principle is that the

risk passes to the buyer on shipment, no matter which form the

contract takesq ioes normal C*I*Fe or float, and there is no indication

to that "retrospettive effecto"

On the other hand, it must be mentioned that the general principle

does not apply in the case of totitl lose, simply because the buyer

undertakes to bear the risk when there is a contract between the

(goods).
seller and himself, and the contract requires a subjecrt-Catter

Therefore when there are no goods there will be no contract and

consequently there will be no risk to pass to the buyerg As a result

the general principle governs the case of partial loss in the case of

goods afloate

Prmoet

The distinction between passing of the risk and passing of the

ty appears so clearly in this oasse Despite the fact that the

property and the risk are transferred on WApment, but In anoa; t goods
the risk and the property pass to the buyer in different times. The'

property pamm to *,he buyer at the tiaw, whft the contract is mades

and the, 'risk pass" to ýhim from the time of shipment by retrospective

offe0to(l)

4
(1) "Peftet uivtal-dix CAP florhant n0est pas do transf4ror
rAroactivement I& proprike ýu jour do Itembarquementf
mais simplement lee rinques*"
Ballot at P*45,,
 -350-

This is a strong indication that passing of the property and

the risk should be separated even in the Prenchlaw, and that is why

passing of the property cannot be a legal basis for passing of the

risk.

(')The
3- Risk Remains with the-Seller, even 'when the Propertl has
-
Passed to-the 2mer before ShiPm

It is submitted that, in the rare cases in which property passes

before shipment under C*I*F* contracts, the risk should nevertheless

prima facie remain with the seller until shipment* In Wiehe v Dennis
(2)
Rotterdam,
IIXOQ- where a Shetland pony which had been sold C*I*P*

was paid for and injured before shipmentl the actual decision was that

the seller was liable for the injury as he had broken his jut as baileel,

These daysp under ULIS, this justification has to be as follows:

the seller is liable for the injury as he has not delivered the

goods yet to the carrier.

(1) The consecinences Wo-3 oamot be raised under Old Soots Law and
Ir"LLawl as the passing of the risk is separated from the
Passing of property. This consequence oannot be raised under the
Rrench Law either, because the property passes to the buyer on shipm4mt,
and since the risk to attached to the propertyq therefore the, pre.
eldpment risk is on the seller* --wLes risqmes anterieures
Itembarquopnentsont & I& charge du vendeure"

Winkelmolen at p, 25*
Upert " at - ýMG'
Ibremer, according to Article 32 Of the Law Wo.69-8 year 1969,
the ýbuyer Wmll- bear all the risk from the time of delivery and

(2) (1913) 29 TAX* 250*

 -351-

4- There is no Relationship Between the Tranaferral of the Risk

and- the Dealings with the Documents

It is submitted that the risk would also be on the buyer

between shipment and the issue of the bill of lading, in accordance
(')
with the statement in Inglis v Stock, and the mere retention of
the bill of lading by means of which the seller reserves the right

of disposal of the goods until the contract terms of payment have

been performed, or he only endeavours to protect himself against a

hypothetical defaultl cannot therefore lead to the conclusion that
(2)
the risk of loss or damage to the goods has not been transferred,

the risk should again be held to pass at the normal time (that is

on shipmezrt)o British jurisprudence does not reject this notion,

The loest destruction or enemy seizare, of the goods does not relieve
the buyer or his obligation to pay the price where the proper
documents are tendered to him, even if the goodis are at the bottom
(3)
of the sea.

Riccertion:

Is the seller entitled to recover the Price from the buyer, if

at the of'tender of dooments he has known already that the, ghl,

(1) 08851) ib
St6ck v I=Iio ý(1884) 12- Q.B. Do 564
151 f Wio'316.
J.kZ_T_a.
*.L Mthej GreeneLL_.!
JEo=,q&jn
i X-2- 495t, ýVoý
'Ross
3 All E*R* 60o 69o 70o
lav and Dm
d% d% -n
Ltd, v->It-Ish
£: d%"
Amim T
00-0 lAde

4 V40DO 'OV.70
 -352-

has been sunk?

It can be said that the physical situation of the goods

themselves and the knowledge of such loss by the vendor at the time
(1) 2)
of transfer of the documents are irrelevant. "If" said McCardie Tý

"the vendor fnlfils his contract by shipping the appropriate goods in

the appropriate manner under a proper contract of carriage, and if he

also obtains the proper documents for tender to the purchaser, I am

unable to see how the t-ightis and duties of either party are affected

by the loss of ship or goods or by knowledge, of such loss by the

vendor prior to the actual tender of the doc=ents*"

The reason for this as McCardie Je said is that the contingency

of loss is written and not outside the contemplation of the parties. "(3)

Bmt the balance of convenience to that the seller cannot appropriate

(4)
generic-goodo to Ia: C*T*Fo contract after loss, and if each a seller

wishes to proteort himself against the risk of such losof he can

ezpressly Oovide against this'in his contract -with-the buyere(5)

1 Vhiibre Saccharine Co'* Ltd*'v Corn Products Coo-Ltd*

2 lbidogig] 1 K*B* 198*
3 This terAency to the one applied in Nance. The property and the
risk pass to the buyer on shipment regardless of the awareness of
the seller: as long as the latter has appropriated the goods properly,
"Le vendeur zxeýsera pas ,responable I as lipeftitotiLIe de la marchandise
dne **&ýdh incident
, 'de la'navigation,
objet dii corrtrat , qd' elle Oloit
risque de merg incendie "a'bordl torpillige, qtýe le, pert Ie soit
matAriellw oiame -dans'les cgs pro'cidents on l4gaIe, lorsque la
marchandlij'sa&jfAnt 4 destinat ov n 'I, *at PlAis libre entre 108 mains
10
du propri-6taire 1ý-.
dwune 1, OV 'w"
k
W mite reordistilbui .,
Bellot ýpi"'-12TV"and the oases cited at the same page.
(4) "The seller must be in a position to pass the property in the goods
by the bill of lading if the goods are in existence, but he need not
have appropriated. the particular goods in the particular bill of
lading to the particular buyer until the moment of tendert nor need
he have obtained any right to deal with the bill of lading until
the moment of tenders"
Per Atkin J. in C. Groom Ltd. v Barber F-191ý3 I K-Be-324y-
(5) Re 01:ympla 2L1 amid,Cake Coo and P-rodu--ceBrokers Oo, 1191qI
-*
X*B*233*
 -353-

Thus in the absence of clear authority to the contrary, it is

submitted that a C*1*F* seller of generic goods cannot claim the price,

if the goods have been lost, unless at the time of loss he had

appropriated them to the contract in the sense of binding himself

contractually to deliver, or tender documents relating to the

particular goods which have been lostq or the particular bulk of which
(1)
they form a parte

This attitude has been adopted in UIZS., Thus Article 100

provides:
(2)
"If9 in a case to which paragraph 3 of Artidle 19 appliesl the

seller, at the time of sending the notice or other documents referred

to in that paragraph, knew or ought to have known that the goods had

been lost or had deteriorated after they were handed over to the

carrier, the risk shall remain with-the seller until the time of

sending 'such notice or document. " It is quite clear now that the

balance of convenience is against allowing appropriation after lose

(1) Benjamin at p- 799-801*

(2) Article 19(3):
"Where the, goods havdýA over to the carrier are not
olwxly appropriated to performance of the contract
by Ibeing marked with an address or by some other
agans,,,the seller shall, in addition. to handing
over the goodef send to the buyerýnvtioe of the
consigrneut ud if necessaryt some document specifying,
the goodso"
 -354-

as a general rule under Col*Po and F*O*B, contracts*(')

(2)
Rowlatt J. pointed out that to allow appropriation after
lose might lead to some strange reBultso "ftshed to its logical

conclusion, this wculd involve that the person in whose hands the

ship was lost could afterwards enter into a contract to sell a

cargo, and, if the price fell, buy a cargo and tender it and pocket

the difference; and, if the price rosel tender the lost ship and

escape from the speculation without losso"

We think that this problem can be solved as followst

We have seeNhat the legal basis of transferral. of risk in Color*

and P*O*Bo contracts is the marine adventure and the ability of the

(1) In this respect the Scottish case: Woodburn v Andrew Motherwell Ltd.
1917 S-C-533 cannot be taken as an authority because:
I-It does not relate to C*I*F- ;f or FeOeBe contracts*
2-It was decided In the Sale Goods Act 1893 (the risk passes
with; the, property).
The facts of the case can be stated as follows:
Ricks of hay were purchased from a faruer at a certain price per
'Long but the total weight was not ascertained. The contract between
the parties provided that the bay should-be placed at the disposal
of the purchasers in the seller's stackyard, in order that they
might pack it, for their own conveniencet into bales of a certain
size., It waB further provided that the seller should cart the
bales to a railway-sidingt and'tha;; t-the w6ight ascertained there
by the railway-oompamy for carriage should be accepted for the.
purpose of determining the total purchase price. The hay. was
baled in the sellerts stackyardf but before it was all removed
a number of ýthe bal6s were . d*stroyed by firpo_, Tný.an- aotýj on at '
the instance of the seller for payment of the .purchase price ' '
heldt 1hat the contract disclosed an Intention that the property
In the hay should pass to the purdmers when it was placed at
their dispiosal1a bo bia6d; and accordingly that the riskvV,
lose by fire being with them, the seller was entitled to recover
the price-, of th6'. hay1hxt-wae destroj*sdow
(2) 0a Oil [1915:1 1,,KoB*,,
at p*239.
-.
Ante at P-: rL3.
 -355-

seller to pass the property to the buyer, Therefore, if the seller

takes the bill of lading in the buyer's name, and he keeps it until
the contract terms of payment have been performed, but meanwhile the

ship has been sunk and the seller is aware of it, in this case the
buyer is bound to pay the price where the proper documents are

tendered to him and it does not matter whether or not the seller

knows about the lossq because the risk has already passed to the

buyer: Firatt the goods had faced the marine adventure by being

actually on board a ship. Secondly, the seller was able to pass the

property to the buyer and he fulfilled this by taking the bill of

lading in the buyerts name* Converselyt if the seller takes the bill

of lading in his own name and he reserves the right of disposal of

the goods, but in the meant ime the ship has been lostj in this case,

if the seller to aware of it and sends the documents to the buyer after

the loss of the shipq the buyer in not bound to pay the prioeq because

the seller in not ablo, to pass the property to the buyer when he knows

that the goods are at the bottom of the seal and vice versa*

After all, it is easy to decide that the buyer does not bear the

risk of the goods where they are shipped, lost and then sold whether

'the proper documents are tezAerecl to., him or not,,, or whether the parties
)ýa
have already known, aboutý the lose - or not. I In Cout?irjer v 1hatie(l

cargo of oorn on-&ý-nsmed ship was sold on C. I. F. terms I)ut hadt unknown

to the parties, ceased to exist as a oomercial entityt 'before -the

time of the sale, It was held that the bVer was not in these

circumstances bound to pay the price,

(1856) 5 H*LoC*673e
 -356-

CONCLUSION

After the proceeding discussion about the passing of the risk

in C. I*P* & P. O. B. contractst the following rules can be stated:

I- The risk in home market sales should pass to the buyer with the

delivery of the goods,

2- The risk of goods (in bulkq ascertained or afloat) passes to the buyer

on shipment and not before*

3- Shipment takes place at the time when the delivery of the goods to

the carrier is complete according to the provisions of the contract.

In the absence of special agreement the local custom of the port of

shipment must be applied if the buyer is aware of that custom,

otherwise the risk is transferred when the goods are actually put

on board a ship or lighter.

4- The goods must be shipped in such a condition as would enable them

to endure normal journey and to arrive at their contractual

destination in merchantable oonditiono

5- ArW delay on shipment is at the risk of the. party in fault.

6- The whole risk must not be borne by the seller after shipment.

7- Theknowledge, by the sellerr-of loss of the, goods during the

transit does not affect the trar*erral of the risk if the property

has already Wqed to the 1myer.

I
 -357-

FINAL CONCLUSION

After the Second World War mercantile methods used in the

context international trade have been developing very fast* The pace

of this development requires a new look by the law, because it affects

existing legal rules either where they are too restrictive or unsuited

to modern transport.

The container revolution has challenged the classic rules of

bills of lading. Should we abandon the classic rules and create new

ones, or should we compromise? In the light of contemporary practice

the idea of establishing an international body which undertakes to

organise maritime transport on an international scale seems to be the

preferred response.

Passing of property in C*I*Fo & P*O*Bo contracts requires a fresh

assessment as a consequence of the involvement of and reliance on the

commercial letter of credit as the usual methods of payment. The

correspondence idea has given us a now interpretatione.

Finallyt the shipts rail is not as important as it used to be.

Generally speakingg law is the science of legal rules to be

invented, interpreted and applied to achieve justice according to the

surrounding circumstances. This implies that legal rules are subject

to change, but the general principle of justice is eternal,
In the field of mercantile transactions, Justice is achieved when

the property of both the seller and the buyer is protected. This

protection should take different forms according to the mercantile

methods being used at the time to suit modern practice. In car

time the international conventions can play an important rol*. te

 -358-

bring harmonisation between the international practice and

domesiie laws&
 APPENDIX 1

A GENERALOUTLTNEOF THE

Mqj LEGAL SISTEN

 -360-

LEGAL DEVELOPENTS

I- Constitutional DeveloRments:

After the First World War, Iraq emerged as a monarchical state.

Due to 'the political circumstances of the time, a constitution to the

new Iraqi State was not declared till March 21,1925* That

Constitution, or the Iraqi basic law (al-qanoon allasaai al-Iraqi),

provided that the sovereignty of the Iraqi kingdom is for the people,

and entrusted it to King Feisal ibn al-Axssein, and after him, to

the direct male descendants succeeding him according to the law of

succession (Arts. 19 and 20). The form of the government was said

to be monarchical and representative (Art. 2)o

Since 1958 Iraq has entered a new*epoeh of political history.

On July 149 1958, the Hashemite moratrohioal regime collapsed as a

rem lt of a revolution* Three other major political events followed

on February 8,1963, November18,1963, and July 171 1968. It is not

untrue to assert that great instability has been the dominant feature

Of 'the constitutional de"loPments in Iraq since 1958* So fart five

oonstitutional instruments have anearedwý These are: the Interim

Constitution of July, 271 19599 the law of this National Comoil Of
the Revolution's Command No*25,1963 (the Constitution of APril- 4, t,

1963)s the I&W ofAhb National Council of the Revolutions& CommarA

Wo.61j 1964 (Jko Coustitution of April 22,. 1964). the Interi

Owstitution of Aps4l 299 1964, and, the Interim cqmstjtutj4M., Vr.--
 -361-

The main features of these Constitutions are the following:

1. The form of the State has been changed from a monarchical into

republican regime as from the Constitution of 1958-

2* The element of permanency existing in the monarchical Constitution

of 1925 has been lacking within the constitutional framework set

up since 1958. No political regime has ever since issued a

permanent constitution to the people*

3. ITo clear line of demarcation exists between the exercise of the

legislative and the executive authorities in the riew constitutions.

2- Ordinary Legislations Developments Since-1917

When the British forces of occupation landed in Traqq it was

subject, like most of the Arab countriesl to the Ottoman laws. The

Briti .sh authority'of occupation promulgated in August 1918 a law for

the organization of criminal and civil courts'in the occupied regions

of tBe country, Some thirty four Statutory Re&lati-ms vere annexed

to that law, all of which were taken from Indian law. By the end of

1918, six appendioes to it had been promal'ji Ited, and tta

hue h

application of all the Ottoman laws was suspended.

However a11 tho so le gislative enaatub nt a were' itp.pli .ed in the

Baerah region ý'arA no attempt for their

oky, aIPPlication was made in
the Regidvi of .badh6do 'Whentheý occupatioti of ýthe whole cmititry was

eventually coftletid, tbi 'Ottoman I*wflremMn'ýd in foroe in t6

r6jions in 'the *Msh authority msAe no &ttebiplt Uý'iii Ifbill" ý.0%

1'ýgislidive enab-t After the . ofetti ng up of the fjwjj

:t te
authority under t6 070'nstItUtiOn of Narch- 21,
enactments began to appear. But the Ottoman laws were not

immediately replaced*

The most important Ottoman legislative enactments which

remained in force for a considerable time werei

I. "Majallat (The Review of Just Judgments or
al-Ahkam al-Adliyah"
the Ottoman Civil Code). The judgments of this law were derived

completely from "Al-Hanafiyah" which is one of the school of

thoughts in Islamic religion.,
2. The law of Civil Procedure of 1880.
Those were eventually replaced by the Iraqi Civil Code, 1951,

and the law of Civil and Commercial Procedurel 1956, which in

turn was repealed recently by the law of Civil Procedure No.83,1969.

Similarly, legislation of the British occupying authority remained

applicable. The outstanding example of the British legislations

1970 is the Baghdad law of Criminal Procedurej 1919.,

enforced until
A third legislation emanating from the same authorityl namely the

Companies Law, 1919, remained applicable till the promulgation of the

law of Commercial Companies, 1957-

The Iraqi Legislative Authority set up under the Constitution of

March 21,1925, assumed its legislative function and has naturally

promulgated as time went on, an enormous number of laws in various

fields* It is impossible to refer to all these laws in this

c=ection* But among them the Iraqi Civil Code, 19511 stands out

as the most important piece of legislation, Next follows. those ofs

the law of Commerce, 1943, repealed by the new law of Commeroe,,

ý'jqToj'

the law of Civil and Commercial Procedure, 1956; the 1wof Comeroial

Ccupanies, 19571 the Commereial law, 1970. V&rjoujs. vtjWr.

 -363-

acts of legislations? dealing with the various activities of

individuals and state officialsl the military and the police,

commerce and transportation, the judicial system, the corporate

bodies, etc. have been applying in Iraq since its independence,

 -364-

Sources of Iraqi Law:

The division of sources of law into formal and informal sources

is the most important, and will accordingly be adopted in our study.

If we look at the various branches of the Iraqi legal system, we find

that the legislation and principles of Islamic law are the formal

sources in matters of personal laws while religion as represented by

the "Shariall, is the historical source of provisions in such matters.

Legislation also, is the sole formal source of Criminal law. But,

the law of labour has internal sourcesl both formal and informall and

international sources, Again, Commercial law states its sources to be:

agreements sanctioned by law, legislative provisions of the commercial

law, commercial customs and usages, and, finallyg the provisions of

the Civil Code,

In arw case,, it is possible to say that the general basis of

gradation of sources in the Iraqi legal, vywtem is that adopted by

the Iraqi Civil Code, beemse civil law seems to indicate a unity

between the totality of sources, to which the sources of the other

legal branches of the system could be referrede Section (1) of the

Iraqi Civil Code No-40t 1951, provides that the formal sources of law

are the followingi

I- Legislation

2- Custom

3- Islamic Law

4- Equity

Informal sources provided for by the same section are

following two:

1- Judicial Decisions

2- Juristic Opinions*

All these sources will be briefly discussed in the following

pageso

FTRST,.,Formal Sources of Tracri Lawt.

1. Legislation

A. Definition:

Legislation is the formulation of law by the appropriate organ or

organs of the State, in such a manner that the actual words used are

themselves part of the lex, The lex which has its source in

1ýgislatlon is called "statute law". It includes the making of- lawq

and the alternation o:O repeal of eiisting law*

B. Kinds of Legislationt

In the sense of the definition of legislation adopted at the

.
MtBet Of Our inquiry, it is possible to oonceive three kinds of

legislation! There, are: -

,
i- Constitutional ýegislvtion* This is the most 811Premekind

It regulatee'the constitution of the statee

2-r Ordinuy Legislation. This category inoludes all the lepl

rales. enacted by the, lagislature in a0cordance with the

oonatitution.
3ý-Subordinate legislatiom, This kind degoribos jhe I

rules onact ad by the executive aatbwjVq wa&

 -366-

regulations, and executive orders.

It is important to note that the strength of these three

kinds of legislation is not the same in the legal ordere
Constitutional legislation is the stringest kind and ordinary

legislation is stringer than subordinate legislation.

Por example, if there is anyoontradiotion between the

Constitutional Law and the Criminal Law (ordinary legislation)

the Constitutional Law must be appliedg andl again, if there is

any contradiction between the Commercial Law (ordinary legislation)

and the Regalations (subordinate legislation) the

of Commerce
Commercial Law must be applied*

In Iraq, the constitution of September 21,1968, provides in

Article (58) for entrusting the legislative authority 'to the Council

of the Revblutionts Command,till the -time when -the National Assembly

be convened* This assumes that this Council is the legislative,

authoritye But the Article (44) of the constitution seem 'to assign

a wide range of executive functions to the council as well* This would

seem to mean that ordinary and subordinate legislation could emanate

from the same authority, namely, the Counoil. of the Revolution's

Command* Yetv Articles (60), (64)(A)(3), and (64)(A)(4), collectively

give to the goverment the execative authority in the country,

with the powers of putting into effect the general Policies of the

state, issuing administrative and executive orders in accordance with

ordinary and idbordinate legislation, and consenting to the draft

laws and regulationeo All this means, in fact, that no clear line of
demarcation between the legislative and executive autharitles exists

within the constitutional framework in Iraq for the +.jag beingo

 -367-

2* Custom

A. Definition:

Custom is a usage followed by individuals in society in their

affairs and dealings, and believed by them to be obligatory. It

must be remembered that when we speak of custom in legal studies,

we mean "legal custom" as distinct from other social customs. A

legal custom is a rule of lawl and its obligatory character appears

in its legal sanction.

Bo Kinds of Custom:

All custom which has the force of law may be of two kinds, The

first kind is "legal custom". which is the custom operative per Be

as a binding rule of law, independently of any agreement on the part

of those subject to it. The second kind is "conventional custom"

which in the one operating only indirectly through the agreements

of the parties.

3e lplamic Law:
.
Islamic Law is the third formal source of law in the Iraqi

legal system. It, is the law of the religion of Islam.

It is iWoitaut to rememberthat religions differ in the

of regulating matters of law. 'In facts Islam does not only inclvAe

matters of purely religious flavour - that is, regulating the

relationship of the individual to God, such as prayers, fastiýW. j

pilgrimage and the like - but also legal rules for the regulstiM Of

human conduct between the individuals themselves* SMh M" the rules
 -368-

regulating marriage, divorcel inheritance, civil transactions, crimes,

matters of public law, such as the doctrine of government and the

state, and the principles to be observed in international relations.

The main traditional source of Islamic law are the following:

1- The Qurlanj which includes the revblations of God unto the Prophete

2- The Sunna, which is the traditions of the Prophet, be it his spoken

words or aatione

3- A1-1jma, that is consensus of opinion*

4- Al-Akil, that is human mind*

5- Al--Qiyasj that is reasoning by analogyo

Howeverl there are other subsidiary sources recognized only by

some schools of thougIrt. Thus the Rianafis recognize the source of

"istihsan" (juristic preference), and the Maliklo know the source of

"iftislah" (consideration of publio Interest),,

49 Equityr

This its the final source bf law' in IrA49 toý wbich resort -should
be madewhen-the Judge finds no rule of law to apply in the previous

sources*
34mity- to an ideal ISM wblxlhýCM CnlY-I* khmn through reasom

It to that- wbtvh, justice

I- gpod, faithl , ard , good conscience requijjý in &

certain cassil; i
 -369-

Secondly: Informal Sources of IrEi Law:

Section 1(3) of the Iraqi Civil Code specifies two informal

sources Of lawl namelyl judicial decisions arA juristic opinion in

Iraq and other countries having laws approximating those of this

countrye

I- Judicial Decisions-.

The normal function of the courts is the application of the

law- When they apply the law to a case, they issue a judgment

embodied in a judicial decision*

In some countries, like UeKe and U*S*A9I courts' judgments have

a binding force upon all judges sitting in various courts in

accordance with special and highly technical rules. This system is

called "the system of the binding f orce of judicial precedentelle

In Iraqt howeverg.this syst6m is not-Iollowede A Judgment, or

a judicial precedentl has no binding authority upon the various courts*

The judge in rendering his decision doIes' not legisiate'ar make a new
lawq bmt 8111plyapplies the law.
Teti ocurts in Iraq usually take Judicial decisions into

oonsiderstion, and parties, generall: ý'invdke them in support of their

claimst efMeoially when they *r'e d6oj6jotg of, a higher oourt,,

weans thtt' jidicial detdsionio &To Wdy a gaide in the process" of the

applicAtift of law$ aIA nof''A Souroaftom whiýh ruibi ý#' 1a;w ocftlh, "i's
olytalned* `:'Tiab 14 ilso wby they are an mouroGof low.
 -370-

2- Juristic Opinionst

Law is not the concern of courts only* It is also discussed by

jurists and particularly by law teachers in universities, The opinions

of jurists in the field of law can be a helpful guide to the legislature

in legislating and reforming the law, and to the courts in the

application of law. But such opinions are not bindingl neither the

legislature, nor the courts are required to follow them. This Is

why this source of law is considered to be informale

Tracri Civil Code:

Introduction

We have mentioned already that the Ottoman Civil Code "Majallat '

al-JUm al--AdliyW applied in Iraq until 19511 and this codt derived

completely from the judgments of one of the schools of thought in the

Islamic religion which in. called "Al-HanafiyW. In 1951 -the

legislative authority in Iraq enaoted the Irsi4i-ftvi 1 Code to replace

"majallat al-Abkam. al-Mliyah"o The dhairman'df the drafting committee,

was Professor "U. Sanhouri" (died 1970), who was influenced'in his view

by the opinion of his French professor "lambert" who, in turn, was

imfluenced. by-tbo. rales of-Womoh law* Professor "Al-Sanhouri" caýe

frm EMptt arA tried to make the Iraqi Civil Code a oopýr of the

Egyptian and Prench Mvil C;od*SJLbut, the other the

drafting committee objected to this attempt on the grounds that they

wanted to t&k&---tkA* judgments from all -the sohoolt-, 4 4W0Q1fitAVi -ibe

rsiamio religion and to adopt Imitable Judgmesitsfor tb* #ms being*

 -371-

After that they came to a compromise which was to use the same

method of presentation in French and Egyptian Civil Codes, but with

the provision that the judgments of the Iraqi Civil Code must be

drawn, first: from Islamic Law, secondly: from the French and the

Egyptian Civil Codes,

Thus, after 1943 to 1951, the Iraqi Civil Code

eight years,

came into existance.,

Definition

In its wider sensel civil law is "the body of rules which

regulate the private relationship of individuals in society, whether

these relationships appertain to the family or to ordinary transactions. "

In Iraq, Civil Law to the original source of Private Law, Thus,

Commercial Law, ' the lawýof Civil Procedureq Private International Law,

Labour Law, Agricultural Law, arein fact nothing more than aspects

of civil law regarded as special branches merely to emphasize their

importance, either because they relate ,to a speoial: class of persons

or affairs, or because they can be distinguished by certain

oharactieristios which necessitated'i 4epirate treatment, This is

wby it in always poosil)lg to fall tack on the pysoýsjons of the Civl

Code in all "tiers a fjp66fýl rule in the other 'Oýeq

not co4bred'by

of civil Aaw*
Ordinarl-, ', ' 66aes reigalate the kinds 6f relationibipso'

These arei

Fmily relMlai&Jp8ý'wbich are. in Iraq regal&+.ga'ly tM law of

 -372-
personal status No,1889 1959v as amendedby the law Wo.119 1963.
2. Ordinary transactions, which are in Iraq regulated by the
Iraqi Civil CodeNo-4091951-
The best way for exposing the subjects of civil law is to

illustrate the topics regulated by the Iraqi Civil Code. The code

is divided into an Introductory Part, and two main parts.

The Introductory Part includes General Provisions concerning

-the application of lawg conflict of laws in time and placeg persons,

things, property and rights. The first part deals with Personal

Rights (obligations) as follows:

(1) Book 19 concentrates on "Obligations Generally". This is

sub-Aivided into six chapteraq as follows:

1- Sources of obligations which encompass:

a- Contracts.
I>- Unilateral Undertakings.

4>-Uhlawful Aotse
d- Airichment without just Cause,..

e- The Law.
2- The effects of obligations, which deal with:

a- Obligatory: performanceo
1- Meansof securing the Rights of Creditorso

1- Conditions modifýlng the Effects of Obligational which are:

ap- Conditional obligations and Time Clauses.

b- PIxo*11ty of Parties to an Obligation.

4- Transmi9sibb, of an'bbligationi, the two means of which gret

mdgnbmt ý-of a Right

I)... Thio-Asd4mmt of, ;&.Debt.
 -373-

5o- The Extinction of Obligationsl by means of:

a- Payment*

b- Methods of Extinction Equivalent to Payment.

o- Extinction of Obligations without Payment.

6- Proof of Obligationsl which deals with:

a- General Maxims of Evidence*

b- Documents.

c>--Admission.

d- Oath*

e- Evidence by Witnesses*

f- Presumptions.

(2) Book IT, deals with Speoifio Contractsl and it is sub-divided

iixto five chapters as followst

i- Contracteas regards Ownership, such as:

a,- Sale.

b- Gift,

o- Partnership.

d- leans and Annuities.

a- Compromise*
2- Contracts relating tathe use Gf: &+AiMgj which includes

b-ý-,-14am Use.
-for
3- ftirtraas-tor *M Hire of Services, which are:

so- OmstroAts for Work and Conoesetone for Pub3.to; Utllit, *,,.i$ervices.

bi.. Contriat a 'of Setvi

o..
d. Deposit&
 -374-

4- Aleatory Contracts, such as:

a- Gaming and Betting.

b- Life Annuities.

o-- Contracts of Insurance*

5- Suretyship.

The second main part of the code, entitled real Rightsq includes
Books III and IV, which are set up for dealing with these rights as
follows:

(3) Book III for the principal real rights; it is sub-

provides
divided into two chapters, as follows:
1- The Right of Ownershipj which is dealt with as follows:

a- The Right of Ownership in General.

1>- Acquisition of Ownership*
2- Rights derived from the right of ownership,, which include:

am,The Right of "Hekr",

b- The Rights of Ustifrual, of the Usiair, of. 0comp4tion and of

Masatahae

0- Servitudes.
(4) Book :Mgorverniracoessory Righle
real or real securities.
This book in divided into thre a chaptere, as follows-.
Imp Mortoges.

2-- PlWgegb

3-- Privileged Rights,.

EýAt It 10ýP0111% out that the Ira#, cim,

br. sIds with eivil

containeg 9Mhk.. law proVisi. onis
I
persoml status, swýh'aw those **noel-nj1W,, tbp,, AI
-1
 -375-

personality, nationality? the familyq the name, the title, domicile,

ýhe age
of majority and the like*

Commercial Law

Rules of commercial law regulate legal relationships between

merchants and all commercial business activities* It is thusl like

civil law in dealing with financial relationships. But the difference

between them is that the financial relationships which are governed by

commercial law are determined either in accordance with the

characteristics of a certain class of individuals, or on the basis of

the nature of transactions. Thus, it may be the case that the

Provision of commercial law apply to transactions commercial by

nature, although the individuals concerned in it are not merchants.

The separation of commercial law from the rest of the civil law

is convenients It is convenient to group together the rules which

have particular reference to matters of trade* The nature of

commercial activity requires speed in transacting itj and special

principles to be developed in consonance therewith* Great hardships

will ensue if we insist on the application of the more strict and highly
formal rules of civil law In this respect.

Commercial law-includes the rules applicable to the determination

of the characteristics of commercial activity, It specifies the

criteria which establishes the status of a merchant, such as capacity,

professional character, legal Personality in the case of corporate

entities* Connercial law also deals with the duties jVoged vM=

as tho dut;r to keep,oertajjý

merchants,, sNL04,
 -376-

and to assume a commercial address. Moreover, it is in commercial

law that students come across the study of the various kinds of

commercial association like corporations, companies with limited

liabilityl partnerships, and the like, in addition to the rules

governing bankruptcy and commercial paper like cheques, bills of

exchange, bonds, notes and shares*

Finallyl side by side with commercial lawl there is the special

branch of 'maritime lawt, This branch deals with the carriage of

goods by sea, marine insurance, and all that relate to the sale of

sea vessels their gear, and provisionse(i)

(1) Dro Riyaal. Al-Qaysie Elementary Study of Law, Bggbdsds

ý1970,,
Dr. Malik Doban., Al-&Aans Souroes of. Lw. ýBagbdadl:.1965.
 APPMOIX 2

MITIME ASPECTSOF

RAxwRar uus
 -378-

The Code of Hammarabi is one of the most important monuments

in the history of the human races Containing as it. does the laws

which were enacted by a king of Babylonia whose rule extended over

the whole of Mesopotamia from the mouths of the rivers Tigris and

Euphrates to the Mediterranean coast*

The great ruler Hammurabil the sixth king of the first

Babylonian dynasty, flourished about 2250 B. Co His long reign of

fifty-five years was celebrated for its brilliant achievementst high

civilization, and extensive literature#

The Code of Hammurabiq though written in Babylonian script and

languaget strange as it my seem, was discovered not in Babylonia or

Assyria, but in $usaj Persia* Susal the Shushan of the Bible, was

for a long time a royal residenoee Its location made it a central

'battlefield of the nations; this accounts for the fact that it was

captured and recaptured repeatlodlY*

Elan and Babylonia bad fraMent warse The Elamites conquered

Babylonia more than once* It was probably during one of these

invasions that the Hanwrabi stele was. tranaferred irk triumph to the

Elamite capital, azA placed in one of its great Assiples as a trophy

of war,

The stole, or stones- (m whiah thans laws ýwere written, Orra-kher

cuts ia a, rude pisoo, pf. Ulack diorite, slightly rounded at the top,

nearly OW.
- feet high, and rather more than seven feet in width,

Both sides, of Ahe womment are owqý

.
with -the ingoriptAos.

Xammarabi in as -starAing before Shamash, the Sunwigod of

Sippar, the ancient seat of ýhe E4Hansurabidynartye The ýgqd-,** seated

upon his throne, and is in the very act ()f JLOIivsring this 00&6,toýt
 -379-

king, who humbly and reverently stands before him. Shamash is clad

in loose-flowing robes, and so is Hammarabi, his representative on

earth* Both god and king wear long beards* The former holds something

in his hand, which many have regarded as a soeprtre, while

others call
it a stylus, symbolic of 'wisdom.
Dir ectly under this pictorial. representation, on the obverse,
follow sixteen columns of cuneiform writing, making 1114 lines.
It is much to be regretted that five columns on this side have been

erased, so that no one can indulge in a happy guess at the meaning,

Nothing but the discovery of another copy can replace these lost lines.

Why and when the erasure was made can be a matter of conjecture only.
The reverse has twenty-eight columneq which make a little more than
2500 lines, The code as we now have it contains 247 distinct laws*

The number is sometimes given as 2829 but from this latter nuaber we

mnat deduat 35, -the supposed number of laws erased. The laws are

umbered 1 66 to the erased portion, then 100 - 282 to the end. Of

these 247 laws, by far the greater n=ber*ha; v:e been correctly deciphered,

and the correct meaning has beent without dotLbtt ascertained.

The mo==mt itself now stands in, the. Louvre Weeam, (paris),

Our main voncern bore is to state-Vie Arti6les which deal with

.,
maritime aspects. as: follixmt'

Article 234-1
wir a bostan b": havigmted a iddp- ce- mitt am rol. a 11mm, dMal
give hi's tW *%iitlw fýr bits tees"
 -380-

Article 235:

"If a boatman has navigated a ship for a man and has not made his

work trustworthy, and in that same year that he worked that ship
it has suffered an injury, the boatman shall exchange that ship
or shall make it strong at his own expense and shall give a strong

ship to the owner of the ship*"

Artible 236:
"If a man has given his ship to a boatman, on hire, and the
boatman has been carelessl has grounded the ship, or has oaused
it to be lost, the boatman shall render ship for ship to the owner, "

Article 2371
"If a man has hired a boatman and ship, and with corn, wool, oil,
dates, or whatever it be as freight, has freighted her, that

boatium has been careless and gromAed the shipq or has caused

what is' In her to, ýe lost, -the boatman shall raAer-baok the ship
P)
w1dch he has gromAed and whatever in her he has caused to 'be lost.,

Artiole 2381

"If a boatimanMe grounded the ship 61%,

ai iý wA h" refloat e& her,
he slall give moneyto wr her pri'040*

(1) COMWOArta 3-6 -of Brussels COMMOiM1924t.

conowming,thg
M I's leaug Wiwi
qbýprovius I
ior
14us&t' in
-00wengut op. ag"Outut a oontracrt of oa=4
"U"141be ýCW*W Of ,the -4hip. IjAility
for lqqM _W
#A=W-Itql 'A*M i4s,
or, in 9n 9 9*odx ýva-stag ft I g] I IR*"*,
I 4um
fW" -t or- :r4u=G in't 440 ý-Vith
ox -404.OGligut i one
article or lessening such liability ýýtlait"
ctherwise t han as provided
in this coxvention, shall be rmll and void and
benefit of irumranee in favour. of the carrier orof Gn,, no effect &A
lsr GUUse
shall be deemedto be a clause relieving the oarrier, fto 114bility*",
 -381-

Article 239:
"If a man has hired a boatman, he shall give him six GM of corn

per year. "

Article 240:

"If a ship that is going forward has struck a ship at anchor

and has sunk her, the owner of the ship that has been mmk,

whatever he has lost in his ship shall recount before God, and
that of the ship going forward which sunk the ship at anchor

shall render to him his ship and whatever of his was lost, ln(')

Article 2759.
"If a (boat? ) per diemy her hire is three NE
a man has hired

of silver. "

Article 276:
"If a man has hired a fast shipq he shall give two and a half SE

of silver per them as her hire. "

Article 277:
"If a man has hired a ship of sixty GM, he shall give one-sixth

of a shekel of silver per diem as her hire*"

.(1) ComPar'aArt* I Ot "'0 COlliBiOng C4m"'ýtiOn 1910, which providess

"Where &, ooLjjsj=
. oocurs-between, sea-going vessels or between
sea, going vessels and vessels, of inland navigation, the compensm-
tion ýfte f*r 4amages afteed 'to 'tbe 'O*seels 9 or Io or,
peroqm 04,15(mad-, therea; sWaj
AF, be soMed in acoordep
follw4ng provisional in whatever waters the oolliglia'U tjjms
 . 382-

It is a matter of surprise to know that some of the maritime

aspects like collision, charter-party and the like were known-in

simple Hammurabi time 2250 B*Co This fact may indicate

form-at that
A
the human bein&%mind works in the same methodq using the available

materials and inventing the legal rules to achieve justice at his

(')
time and his place.

(1) WW. Davies. The Codes of Hmmurabi and Moses, 1905#

C*H*We Johnse The Oldest Code of Laws in the world. lKiabiml
19030
 APPENDIX

THE BILL OP'LADTNGUSEDBY

I&AM MARITTMETRANSPORT
CO, LTD*
0 na conaliv, ý,.,
, 1 0. Lzi (Ii-. g with
jjSTTIU
ý1'4u-tcd lo[ ""C 1
va I,.,
1ý1,
dvcrous ()r
vp )n thcir roods. ', ýOr
n-tuic, ai Id,
ýy so
hirw. -% are 'a'1601led agaills!
oin-, t I icy bc-com, c., l... nýible for IN, AQ) 1 1,1 N F,
jf,q by Statute.
drnlasc also rendcr tliernscives liAk to I C.1"Itin inlýosed
ft"d
(-)
Bill of Lading No.

Shipper's Ref.

F/Agcnt's Ref.

Consignee(If 'Order' state Notify Party)

0

Notify Patty (ONLY if not stated above; otherMse leave blank) IP,,,
AQI MARITIME TRANSPORT CO., LTD
BAGFIDAD-REPUBLIC OF IRAQ
Cables: BAWAKMR
The freight re4eived is inclusive of the cost of on-carriage by rail to Daghd3d,
Mosul or Kirkuk, if stated opposite, which will be arrin&cd through the pre,, cnt carrier
acting as Agent for the shipper andlor consignees of the goods without any iiaH:! v
whatioever, the conditions of such forwarding to be covered by tha current la fu'i
IA>-.;
a vessti 0 From (Local port of loading) forms of contract.
To avoid the tendering ofseparate documents at each stage ofthe journey, dcUvery
at destination unto the consignee mentioned herein or to his or their assigns w::! be
&iVCJJ Only On due presentation of one of this set of Bills of Lading and noti-c to jzis
ocean vessel Port of loading ficight
effect shall be included in the oncarrier's contract.
0 Applicable Cidy when document used =a Through Bill of lAding.

Nmt of dischup 0 Final destination (ifon-ArriRge) Freight Nwnber of ori&al Bs/L.

payablo
at
Description of goods Gross Wei& Mc,.
Marks and Number and kind of pulages . .; ct
N=berz c I
JAI Z)j
, ý, ji

V.:
;I IT, MEASUREMENT,INIAPaS,NUNJEERS,QUANTITY, CON'TENTS,BP-kND, QUALITY AND VALUE UiNK..
"O%N'NTOTHE CARRIERS
SlUPPED in apparent good order and condition (unless otherwisest,,ttd hercin) on board the above named ves:41 at or off cee
it at the pert of loading tamed above,the go s escriii)od hcr-in (tbd Particulars r: vca being supplied by the Shipper and the m'=UrMcnt
wcijbt, qu2ntity, brand, contents, moads rk numorrs. quality and value being unknown to the carri. r) ii.ýd to be delivered in th6
L-',o j;ocid order and condit: oa at the po; t of di;
................................tr. -ritiomd c4DnSi7, -liar24 rimmed above or so near thercunto as sh-3 n13aAcfLadin3.
sifily go unte) the above.
...........
. .................. aeccr to his or their as'igns su*: t to the terms, conditions
said goods with priwar.. if any to become du- and to ba paid on shipment
and exemptions of th1i; Fre: ýht for t; jc
in cash without deduction %t-wl of car-o lost or not
.................................. ................................ lc5t. In occe,"int, this bill of Lading, the Stdr, ý. rs. ComiratesaadOwimers ofth* goods expressly accept aridcgrze to all its, s"pu! a.
tions and ciauses whether vizitten, printed. stamped or o rwise incorporated. Sao Clauses overlew'.
.................................. ................................IN VJITNESS whereofthe Mister or Agentof thesaid -
vesselhassignedthenumberof date, OriginalBills of Lading Numberof Packagn(in words)
.................... . ............ ........................statedabove,allthe
of thistcaorand oneof whichbeing
;es accomplished. others to standvoid.If requiredby tho
.............................. Catrier or his Agent,one of the Bills of Ladingmustbe
................................even up. fully endorsedin exchange for the goods.
........................... ................................
:ting Charges. ........
TOTAL Dated M............................... 19
. .............................................................
F- aa - khW Qr the Mw: cj,
 TERMS Or- CAPIrIVIIAGE
"
1)!:; ýINITIOVS: In this Pill c,' bcth on tLt or on the back the hirý)Drl the ship undr.i lk manytrement and cantl;,; m-%ill be acknowledyed b rI it C.
for dramage a ri "c rr*,zr
c_-- h., e the , bi-c I, , -i-d to I I- -i "I v, ly, that is to say: In, a it: iI ibid lir: nt; zny c the. pit t of transport, even Jboui; tt, fxýuht
for the h. le It,, L-o -11,, ted by flo.
-r- mcl. do the M- ,, ,7,11ý AIwl of!,
The S!lipi,-
SheC""v. -, -, I: S C)w..cr cf the goods. a, s the Curritr I-) cottr 1:itn bw ra. I on his 1,thalf for Cie It. tclriare
P. 11crl_-, ý, . -c3-ar. c',,, f 0I ,
ýn V. t End,--d I andlear and t; r storlag, transporting or cthciw- dcalinit
wch:& I theCc,, - ..a -I xýi 0-- of il: t sit. the Endorsee with such. r, i, r 1. -
-pnol. bdity fit arly ti7l.
,, I --.. of or . o-, -1 ,, it,. eteri. ire I. I's -1, p ., Ihoat
'r ,fI he V;ll of71.J.ýýi-. or Jifitaft on Ili. p,,: of illeC-ii, ir yin Ill.,.: % 11, tzrints
2 OF C,'3141n_CT: , llýý!
o(L.,!: rp is Ila, . I, %on J!ill. of of , lath contracts i, li, %f-w. al It: in any resp-,;t vi, il -cr to theS%ir;, er tlan Oc L-mit
Lýadi,, ; t,,-3 t 2$th Aýsi.,! t. 1ý- 0,1 , 11cor,, ý,jso, y r-I i, io,, Oft to -hich of th: s Hill of I'd,,, -
11,;,!" be Ilt, 1% 11 t-9 -4 c"", -d 0. t If tl., ,, -- of his IfIll of "f:,c -ivo to ýc carried on is soon as poss'Hebta! IhcCarr; cr not tote li, b: c r', r e-, Y.
tjaý _! be Irl Me Cf(! C!3Y Or 01' in, ircren-t in the
LAI, rv Ie %hr, J , or rarity c., nirrD i'ý : -. I-, I. IS It'll of I ad;,. 'htI lead a, If wit t! - to any cause b, -.., nd tlhe
itual riý Lm a, cý, <týc ;I,. y -o eo,, "o. c=trol of the CArrier. tht adlit, onal charges must be paid by flitRecti- before cf
3. Ili re ,- ýý W, ty ortile CArrier sýjjj corijoilote only when the
it,! CrIT"I'l,
li"p or, i 14 rarmio for Jc"u,, Ir the goods nor Urwarde, i by more than one conveyance, the Recciscr must like ee!ive. y
IM 1, cf,! c If t and cave-', absolutely
ril I., to, . Plc.,,, It d-ha, 3. r,. .. 'each roawn i-, J: -l, afw
-1 tl: C--r el h-1 VILOIS.
--- 1, Fr, l-::, - And 0,, di, cl,.,,. 19. ICAVAGL. CRYDOCKING. ARMAMENT. CONNOY: 'III,
ýrd to of I 1ý, at ip or výtlhrr 1". ), liz, e liberty to Sit, -. l c' 'ilhcut
whctl, tr be Ii fojv,; a-mog snir-nt, lao,: cd or pilots, to low ;, clraviot vcsiria urJer all clr"m, iarco, %
ipto h,,: k or craft brl-Iz. n; to 1!; c Call or rot or r !, nq transhipirint and in all 34-tior! or I(pancript to do so. in be
stated, or 11-ý w-J, to c!. ydocg It any time f. o, any
hclc ere io S- 11 rulojy 6 -i
At A, st ý!r cf file at C Sol, ::, k cC Co sh. ppcr nJ P-, P-- wtou"'C' -1th or cargo on board, l, ha to i
ýa, a; ricd or. 3,riar-J. ia,, ý. r
ISa ao , for lo: Ii or U-1130 at: sinz or co'lloy. not.
the cýl let lhell not 1. Sult: r,; Irora any cause : 0. NOI ICE: (V CL AI MS: Notice Ia; Bill
of ms rising under this ct 1,34ini; or
VOYAGE: The CatriT, liýs the lihe, ty her,,, I. Ral claims must bi 110ýt, ] -1 later than d4red
4. SCOPE OF or anf,, risaldirts: to t1w Haeoc Rules.
j, or -- i, i t it,? poll to fal! _ ,, y eu:, j to and stay 7he Cbrt; cr tl, ill not bc liable to pay any wirip-sation
to-,
or rj: ýý,S %ratwvcr a10 in a comrs. Oil to rfc,,. ifthc nature Or 1111va'uz of die
At any roils d. fcctwn to Or out cf 0, beyond good; h,, It- ril- '4d.
she r ., 1, :;, id So I, tart o'c' I, Iny 21. Fit IDENCE * Tht shirl's PrOtelt anitfor true copy of the ship's ! cý shill be
a
-1 kr s- a"
n"a"iairý Iý l"I'l or lh, rloe I. fa 1- !ýý,, I, !IV.;
ý cr. I OR derated coll -i-ze of th= farts and circurr, lances stated th, pl. n.
In case tf;, 1.: L! I-
-iog bilriken-g, of liý -hip a,, ] or IhcCalF,, ind also it, c-, sI crabwnc or tj, 'Ina
care., ýr J, r any pur-sý it ;, I'll ay is ptovLd
.! -W
croneet 'I(" "'I j or -rl' that tht 1-1 of the itio ard'or th- -- ras
All such roll, Wa, ji bo, I ý-rd by t" Or by the 8,1ý11 f4u; t Of rri., ity of thcCa! or by
ri, locwl' 't to te in -i eJ i, r; O ihe r, -nt -r
Voylge-Suchirn, JJ-t1Y 113tto be011err-
Cr`- oý,.! SýIVUICICJ IS any -rd ý ii.i th, 10i of L. dials,
IC
I-a draw
the flat, 'L Or nCll.
: 2. INOI
I ý` th-
MM 1Y. Any clain,
ai; -(y ýl, 1-ants ofthe Carrier.
for Ins' of dan,, ', c under this Bill
0, b, ,y -l: r, lOOn lihich mic t ify, -m! this h. Ia or from to
of
lidi-tl on the of li - i'll-c -11c 01 the 91161 at the port and tinit roent
J1. XNJ [IF-S: Loss or damage a, fo, h (.; Ih 't, l'pinq "r., ,,, the, ". ) .,. due proportion ýz n
k"I the d,, 1--d I. lu, (Cl! IP,, is. ýl shall ote lc, %: prov, dej also tliat the shot, 'th-A in on
or chars. In
d jy
Q. I ly m-: ýTd-o ýh 'I. he , a,, Lz Ixld Intbl: I`- v. n,, J; ol Illy cle-trtior, exceeding in %alc one hor- J
LI i-
torn. th. F-d , , Ii ur-ýIobu Of I- In -"crc, ýJ and, or urit -I J L, p, rk, vý or -, , unl- ckJtrýta .in it. I On this Bill Of L,, 1,ri;
I -,,, ,1
, f,, l: ton "o, ir'. $, I.; o 'et" rz, :r bjý, i or cantons. I I'C'Em is ill'y he ty, -I upon be 11-1. ri
Irons Is!, or othir c,irlo-': in ally iv, for any cmnmls: 0b. profit.
""no ., C."'t on -y palt a- 1-11 c", "1 it rac, Ils or --,; d, ty. Volarl. finding
S hi, ls _Oc or base mr-r. -l -e. or Other 61.1olar charges, nor for any loss or
b-n ., bci. Il, III f,, ra, -, r. ",
r-'t ,ýI.. ac 1, I-Ior tcý, Or d, 'a Otani,? capýhlc .1 lw; ' " fly Insurance.
or no, I'! Iii "-1o 01 star It li', co if t1tey do vo, k on boa. d mr,ý'. on W"It. btýlij to It the , it ,, r., pl. cing any lost or ilamiged 50ods,
V., from OF CAkCO;
of ths 1h. " -1 -oY c: -1 11 laAmitt ., ill -kle, Jl, 23. nI'(-OND! lpy%JNU Ali cost ot mending, repAirilit, bI; il, Z,
-r, ilcl. is 2rJ'nr c-ling plart oLolhrr r; pua, aanzes at all be coopef'r, 't, i: to be ý`rf r, account of the F "J'.
&-d 1. he due IV s. b 21., K G U L, 0 urc.: IlIslorperand Flacel,, rare
up 110 told i. cluJLIIZ P'Of 11-6 tabligedt.
1;c", comply -! h Lt rc_olation. a-d rcluireni-is of --. --n or any . 1hil, audit, an I
1% bin -.,. cd h-in is Out -Ilod ;: -
by 'I l1ali ly the Carrir and or tile ()ý,, is of thý cafgo
. Co, op'ny. to pay and or un board for . 11
LisoitiT 11.3 li 11It ',.all :atc c: ': ct 3ý a contrat or for, in-roed
a,. [% with the ow.. er oftlic said ship. ý'l'n'stgr". ; l'u, cr -ture Or sutlerid in co-juc-c
as pri-ciral. IS ýr throuFli the av,-y of " Irr, jj ljrtjt_'jra,,, '1a(c,"" n' in' Itaf If th' ý-Jt
cn C ...... any. Lirritcd " c""'. a Icun- are net I,, be
, fiach 'a I, A-t oli ILI hall bc n. I-, bil,, y AS hr_f. it. fic--r, -I or i otrort"J. ý'
I!, v Latricr flittl te at I blily to Co"n thancor. "in by
. d 'hat any PJ
it . 1,_ be x ill ncr 1ý cirrier bLj; such goods to tl, c purl of load,., S Or by et, -,
st.nd or ce of the r-os, it. to t, irg, bra., or to wiýiv SOrt sit at It..
Ili,: 'Ors foreseen by Law III the terms lliercof I
shall ri, k ao, c., rn,. Zrvi,
b.. -; I. hjv I. Such 9ELPI 21. (iI: N. I,,KA 1, A URAGE: General A-rafe shall bc adjusted at 112s%dad or at on-,
6. LIF LAN' IN ERY: Th, C-ierix Ill. Cirpil by
not FaIA! for arv loss or damage caused otber cI' is he p v-; -! 1, li-teot t', h- arrinom', I by It t, z
to Vilt Sl, ipýrr ill CýWqucnirc ilic lcn t to b--, dlao. or, I- 'or fing to she Y., l, An, -
of any 4ýlrly In Ilia Worry if con dj-,. Kid- 19110 (-lh t!,: idhý;;.,,.,
of cargo wisirs g
any ca--. , hit in ý!j c, -.,, h- the Sit,,I -c ra,horo, all ex-nditure, nlo: I and damage sulija, jcý by
Oclocry b, G-tral
us originally mis%in, c ; O,o can take place rt all limeq. it,, '11,;; in wj ....... bit to rictiost he( -I? 1-1-iry 4ilo-d in A,,eraipi).
7: 1 ARKS: G-Ods WI en Will cafthe cargo the G,..,
'. are not Oý be Ocr-d marked UOlitsl the part or ", Recro, c; isb, -il ai Alrer3c, Rýnd its
d"tin lhlý,,,, I iI Lýf. j.
on bý lh, I Shirpe, fi-I by the Carrier as a
in I. jjr, a at ]cast use -tl' the Carrier ind to rllý a "'i-at to the atioint for
5 cos. " I'll Ia In ki, bllf larall dl,. r,,.
in file 1, be d, it -th
th- contribution ulti-714111) ult --yd-b4 it, Ive r-nz. or
C_; " cxpt for dcl:, cry to otlirr h, 0II ( hiye
than lading roarks. h.
I - p are of alio-t- I to - LJJ all- -Slat -1, -, h
&. ILEAVY II PI S: Aný onc itcni of carý:, a %i-h ý1 Carrior being to ha,,, he dIpo-s
s,c: rbý 1,66ý I. I',, or Or , vd, Or uoihe-riters -pIct thercof. the a .1 ta,
Is Or I ul II bl!, thm is is too aI,,, *srd I, r the ciýi:, 's tackle to hi. ndir. in I',. StatIrittal he
n-ust to marked m Ili coolcltcU llot, ý: iim, the curre-y , hich, ý, c', a! 'All ! ri, vn ip,
She *cight are. ,r dt. lin, i'an, c1ra, l y io'j bo! jý, by Sh iN_' O""r, j if tile R-i%cr f. ill, to rosts (it, Citric, -ith tilt req regarding in. .: ue
lo., dird ds, t by rsne or ;: . a, ý;, will I in Ilia C-, r,' of-ton
I sr. I ýt S
Pllco. at lh,, ri, k and rispcnwe 0 'o, 1,,. or the , ..ijc ., ect-i -- in-rect. the vante of g-42
by Cari,,
or ,,, . Ind
it, ,0 ,e ýo -ý 'or Holdcr of [L., 0,; I .(I ding. If any , halli Ir, io, d by st --ýIai - u-, om appitoo--d Ire r,., the io, tralý-
to!, b0ay 1. if e iilip,
"'hornsce's, Li; ur. %hrof. quay, crdne%.no, t:,.; tac;. 1, or prorcrty 1h, C, o., c: s are he kilr the (,
ý'J tý, is sair-la, to ,, o, -e of ar A.
a or t! _-' . -g to I, odt, g. . 6. n p-iw; Illi
,, incorrect %cight or o, cssurchicni. or no p., po-, h
u,SALVA', L! 1zl S In catc of salvage, accident
-Cht W no ineasuremsoit hn, ing been iarkti. Il, c Sý, ýP. r. Coasig, -. Owner of the F. 11" L; or tt littr
La,!, ng . sliallbe ,ht.
or lril): ýCE Of this ikilof stapur. -bic for s-s uamije. loss of special cirruinianot, : tir a. caores and abroo3cmir- ul tt,. c Corr- in rc; irl to sh., and or
thiall be c ju. 'ý I the
INCORRrcrsiAIFNIENTS! Incorrect U219ments from thcShippZrI 'Ai ION: In so far Is ar, thitir, has not been dealt iv: th by tLe
shall in all 27. LANV (,'ý A
Class be ell s: 11: fed As wilfully ulilcsn the contrary 1% pro, ed. provision of this Bill I' t-loi, thi Law of th, Villubic f Iraq s. lal! aPPiY.
It RýDLKCARGO. AS has 1. the weiFlit 29. JUKIý Ail a, wns unde, this ell of Shall be b-lant
Of bulk ";. 93, an) reference; to such sscig; it'lij Bill Of Lading Sliall be deemed to be tisr befiallitte Coops of kiaghdat rlrJ uttiothr Ccnarýthall la. %;i-idalt,
lie
only but a 1211. COT.SWUC in no us/ c%. Jence against .1 with ret3rd M A,.y
tire coraNcrience of the ýhippcr the su.'h a. tic., vitless the Ca-er arrial. to another full or volunlarily submits hLIIs:, r
CA, I ter. I
If. CAIRIAGEANDSTO%%'%Gr! The Carrier has the right to accept cargo of all I h. r. t..
kinds : 1. Anythinl! done or rot done by reason or or ;it ronrla4anza with th. f-gohl
davilicrous for 0Ampr of 'he &.)ads
C. Plo, i"C' ;I niuO. Orns a, , , *like
or othicrwiIii, carr; age on or uo"r deck, including corstr2band, shall be clcm. d to Uc within PaI CoAlract NOPirl Jd It& ( 0iijigibeir
if , hall pay all call ard c .1-tes :ocurr! d bý "a Cairlir anti th. ýh.,) all'MiOrtil tý Us
connection -13 aosi Fort regulation. dangerous is
or objectionable cargo which cold otiýrýiw hi,. c cerealinal"llicil.
submitted to any calls hnitnt, en route or at Anai dicitioaion, A l1expens. 's thc:. 01710 be for
scratiost of the road,.
The Canwr is at liisýenv to stow the lionds In Poillp, Forecastle. dcclt,, uw, shellor-d"k. ADDITIONAL CLAUSES
sparebuotrn. tonnage open; n,, any other cowieu. in Space and linods so slowed hall
be ýk Anit purposes -cr slowed
to be linderdeck: -! I- to C-r4 to. goods below dc,; k A. SPECIAL CIRCUNISI'ANCES: If according to the or,. ros r: ' the (%;1-. r1 ! hc
too; 0CCr`o`n`dm, connecting ships and m lighters and or soy craft wit Oine%er.
12. DEC K CARGO. be, risivuea ird-lcii. t1h.
IXvL SICICK AND PLANTS-- Larqap- deck and Ilse stork loading. felt by the inimincrice
on Or el-thcre or cluiteni us - or ýadika a; iliratior,.
&Is M.., ed , liandled. stowe. l. cart, ed. kept and ullrh4Cird At StOrritt"S IISK and the ci%il Ar. tiols or cots -m :, jhons. or by blockade or se share ý,f or cm1buio on %%&. ) and or
C-icr il .h not be liable for loss thereof or damage_ one, clo. ccn from cargo, or sooh, bit-
though rejulting cf inirort Or exp, ft or va-it or oth- measures tak, - tv A-/
wo-11 fill. ship or firms the fl-IttEct. " of the Carricr, his scri, cisits or Agents. Go-stincat body purpttrij or
or ot- a, 111,1-ty or or nrialnution -irinril t, : xerc-
3. no or the sl,, r. the r-er, of a G., ýr, ocrtt or autho. ay or by quararaing. stinaary. Cslorr, s or ur
13. CLIF: Freight to be paid in ad%itnzý is clut on shipment together with legulat, ont or distur- -%, or 1,y týv or k-! --th, r ,ý by to I.; P anJ or
V, Jilrs'n. -d II., , hall in no sa-e - W-III&d.
_., and .., the, lot. 11, nor p,,. Iy, -hal, -r or by coripstion or at-tri. 'to I Ariv cause of faciiii `1 for -J, rf, d,, 02, j_. " uti; ýe, y.
may befali slop mid or cjcgo. If not prcriiJ. thjul, la stipulated, It-. Ire, gh I* fioiiag IS and or bi, tire onmarience us. c! ., tissr to ship and or crew and or cireo it, J or pas,:. -rs aid
increased by thtccq
ibirlta orad-c ofisiso-raýmern must he pa: 1 lie R -sr. in at circumstan, h in me opini- of Cie Masier arc s-lir v) anv of the 't'o. es, d,
ftiejl. ý ostanic it destination IS di.ai on artival iiage -- ulýtn;to uts.
I-19crIker %ith pri: a led charges and the Carrier is at hbrly h. u4c into -1k or craft -ad'o, Ul lairs; -ý r state ln,
Also I", :J bef, . ;., Ol, i-, ý OF 'he c4110. SMIria. 1ale I he condition of -. c, ther at or off fix port -!. ere it.: ship is it at city ofh,. r rirt: 31 hit - , ý.,; n an., -
1 nM-vju-fanm. tIle hipria remains responsible forthe freight, prinlact isisticlaw-h., ts fair-d...
and charges andors, I-waird the All& to little vIu. Jan. -j-
until it,, I -e been P-l.
a o. zi the conjolons of trin-;, irt in force for the means at conveyanze ;, Mpicting the trj, -,: t_
I be I c, It be compute I, either upon the basis or the particulars in the Bill of ? to return the floofs to tire port of Waii
ffaisy or to sit - of the goods or any PA ý,
I-Aclind or I",. file g. ass eight. stersureMirrst. ' Th.
%al, le or nurotacr slacermuird at the port or Ii; A, way. all -1 the -k end -p- -, Ihe 'thirr-. an,, &., If zitriles,
dud_Ei. at " .1-. or he car,.,. .. I_ ... lie Zs i" thcmurvn be consjdcicJ co-, 101ýlcd aid ths Carrier to hzve comP,; ed sj, tk AU bull Oblilia%crics
14. PENAL1 Y FREIGHT; I he Carrier thý'r`i`ghdt*tc, ha, Ic the v2ltm estimated or full r,,,, ht terms --led -J r"A01c.
to lifto c the coo, -,. mease; rement or se'llIt %trified by experts and if toc, particulars H. WAk RISK CLAUSL:
; ...... !. rj L, I,, 11, n" turn out to tv itloerrect lis Carrier is chtal, cl to harge double the 41) No bilk of Lading to he sicneJ fnr ary blockaded poa and if the port or di,, hL,,,,,
fiýiýb, Ilb, --h h, 3 t..a,. been chargers had th. cargo coca. cotte. Ely JewribW, together be declared biricka, litcl after thlis of Lading ha, c t-, cn stilneJ, of ;f the Port_to h_h toe
with tt. e cost In gi: ship ;- be,. ordered to J., el-ae either on , geo,, lot% of L., lons 11 C1.11a. t.
15. 7z-lar r a, ,;. e to
the or his Afcsts %:iall have A lien on Ihe gordl. and the right %hic% the hip I% or ihiall te promkined fro-, ssý,in'! 1h) t'.. G. 'e. -ý;. nt A hý N.Att-
isy 'l. b:,: &Wt. . "i-r
to u:: sare. as their option for freight (Includtog Additional whow liag the ship isih or Any ash, Uc-rnrnent. the Owilt r sha! j d W, Ilec 111, at,,,
f"'ght O! a on Or primage, c. ad ficight. demurrage. 1,li-ythe Bill of Lan. 11111t.311 rWvf%: d Its ! 'it Shii., ler, "Wrl"'W'd
at any other port co-ed
t%pn.!. firs., 1114
I S` , , age dep. s. 1, ., 4 far th. -11'. 4,11 oth. r rort is lot a bt,, "jjcJ or oro! libited rOfL IS a, jovc mentior. idl anr shall bj en-j; lstj
'J'at" Arx. o; a;.. 5 S_h L... and cle rn; $,, all I, hai. A lien fu A It to ficikht as if the strip Into at she port or ports or dischl, ". 1t to W'iicl she "s
cvsrI unsatisP. 0 debts at th,, abol, c SIA-uh; due to them by the Consignees or orijsihtslý 01,1411J.
0.. _a c,. it" , ad., II The ship shrill ha%e libtrty to corarly , ith any ordLrs or directions
DrLIVERY: As to departure.
16. D&HARGE AND Discharge comý, ncc without previous
may arri%af. routes. Puts% at' 431. stoppage& destination. dcli, ery ýr Othe' ,sa hav, -
11"' Carrier cr IM11
notice. shall be .; Ltclty at say Urns, to send Lk ga-ls to shore by shilos, by tht: irimernatent of tile Nition under whosir ; 119 :: 4 %C%,,'i 14.1; or ... -Pacroiin-
,art at his option.
lighters t; -x of
0, any .! her inji " to store this goads an %hruf or qpayý " any per- acting or Pirrorting to act not me -, hoir, j) If such a.., 0. any
et Ortr; sla"s, open or custincil, or in lightols or other craft, &! I at the risk and 4XISCAM at dcpa4tnlCnt hitalief. Of by An, loln Inter of r- ni ha, nj, V rider tic terms at C- I" vi a -
the Kc. "Cir. Risk Insurance on th, r thin. tt.. ve. n. to ui,, s-h d
a' ý- And If by re-
I . 1w., ciesla may be di! ci! arr: d and must be taken mccirt 1.1-1 . or
orsither ashere or cossrside at and in compitatics: %ltr ý ., %.tell ordicti or direction% Ai dors, r '. net done. the
Lhec". 9f 6001 ia%, hCShIPI6 NZ-) to -'ojdAIjd.,, i jss%c is ablc todischarSe. same Sýiall not he dtie., i, i a -iation. And delivery in azc,,;; 1jo, c .,: r scýh orders ir
in aný *! &to of Sitather. cuntinuously day Ara mal Sundays and bolidj)s irazlisdad, any directions shall be a of th, consfalt o), gs, and the fatit. it st,It 11 c PaY"j.
c., to. aftlIc front not., thstandmil. ac,,, o, dv +, WON
I he saahe conditions and cxm. tions Apply correspe-Idip.gly also to iclistry of cargo C. MW CJLAýIJISE AND BOTH TO 81-4,10E. COLLISION CLAUSE: 'Ne, v
lisibit"', mcr as %c3 u to loading cl "me. J-Son Clan"a, and &111 !0 Wqn! e Cl! iis; on Clause will apply. I he lanes, to sc, "a it. giracg
If the Resolver fists to takc igi of the, cargo Is stipulated abel-e. the contract of c, en W-ifýtf late "I it.. U. S. I A. i-n;.,.
ca;:: jgt al,.311Ire cc isidervill 14 liI-Ing trial fulfilled and the Urner shall ha-,c the riant to V. STRME CLAUS, `, If tile hl,, is pievented or is likely to be prevcrted from enterinic
Caurn demorrast, anu, or to dischar. c and oilirc I" cargo as son out sa-c 3nJ, or to carry on the port or -Ittse ofL-, tiy n djj, hAfgc or cdlýyed th, r,., to 5t, _s, t, &aft
ýr.
tig ia:! zo to kom&. t wn%cnK-t Plitt, at it's aiscittion. to, al;wb4t&j at ::, at port all at the risk shsvý-- of -) kind th, ý -l*,, - par,, tj I, no, 0, it opit- '"it,
&ad C.- riaseor R_-r. of l4s; jur from cautif. ship sr,,! j t4i At ii-:
the y to proýsczd to anotrer Port of
% trar%cr it It coinrulloflf Of C'Jst0r. a'Y at any port to deliver the carria to the Custom Par" afthenstsh in Car Zrai, I! "'h, 1.1 to Of out cf or bev-i Inc
or Port autioraic, Or body isf thA C. e,. s, . 1.11 route t3 the S314 pýn or
or to ari, rcrwn. corromiran piace of del, cry or , vas-. -ch he C, rr,,,, , 01, soie chwattort MAY C. 1c.11c. : ad
1'.3. t V%e r; ght to Appoint th, s -, -0-1. cc, resrAtSrSn, or early or at! niioistration and delivery there 'ýIrtd sn4 or transtup ttýc goods of 2r, 7 par, a, And ar store let her ariost or
so wadi Iýzl " considered As final dch%try, the Rccc! %rr to pay 1.11 it"Pen! cs consaicmd )r., an, at forward
atharv, and, or ir-tst, %Arac to in,,, v-, b, land ortry -t, rn. At this
ti Art. ah jo,;, udirij; qx3y oues. -I. fis", 1,f the L: C-91iiii. .1 0--,
- at ! -c A! a, too Is. at wil HiH Lada. -.,
Ariy stiattstrportersat to be V. oliarmej by tt a rally ap; oiatcd i; y the Carrier at the It" V-tIv $hall PAY 211 cvfA Vc , it chArs; e:, if
And As Mis.5e of the liteccocir. con, d by this CItuce.
vic t. irritr to h3%A An At).jolu'. hir, for .. ", Isn't. fit rt, And
All txpcrs-conmc; cJ uith dixharge and deti%wy to be paiJ by tt-o Rcýchvr as per A Ird the `011P'S rctPon,, ibifity isý33 cease at tn. sh; p's fait 11,m t!,A goods are so
Urifr r. ý at -q ýf 11-hAt71. "xPAMaM
ixrirsL,, d, full fici 'or Item, ý,, A_l-:, in a. cor ' dar,
%,. gýmg a. board du-q di, hme is Vly ai! o. %J by pirmissionolithaShip'b All. atu I!. CLAUSE FOll. - IRAN: Ints it'samon at St, %;,.. in tner Sol of Lading.
It pcrvission lie S, crk at! a4dition,! vrýnws by t;, c Wp in eor. ýqucnc* of s,4ch r.J. Ar Ftelah-er, is dra., v to t_a.
ancu-d cisiliarig d! l11CUl: it,; of dlf_ýsllc as K-11amill, ,h, al, d Wri -1-h Totry
r.ýr ;ihi,,; n bo,. -d ht, h., nf c-a ch-z,, a, ---c &hall be nece-sitioc oncharg:..ng cl'',
-ouht of kvc-m. not%tths! artý'Af AnY Lustom, to the car. u. ity. N, rn-ion may be d . l! e cargo at calitt, Kt-ran,. lA.nr or Bandar Sriallpstur. Sata
1.. h., sfall on -o'! I Muo-; of Cs. tics s rl,:, jA:: on%under I! - tovrt! act.
by t!, S. up% AS-IS At 41Y Uý!I. rc -tho. t prejudice to bhi, - EXEMPTIONS
fischarlin, ANr INIMUNITILS OF SLRVANIS
. ALL AND AGENTS OP
O*r. 1,Spl; 1 I to ý,J, a, "A. C-pen- .!,.. ., ,ý 'n. roed.
it It, Car,, is Wt , akcn receipt of. the CArrwr is as l, bcc: y to -cU same %1: h of without e%cry indepent! urvt contractor from time to Unite catp]F,, ýcd by file Cv:, 61) se. ý!I in stay
IgSAI aulhurity; due disShipptr -haft be
of me pta,, zeds should not CoNer tlas total arnount circit-tainces w;;, %:sOcss; r be under zr y !: ability what-er to t: ic Shipstor. Cons. stam or
&able fer ux d01,11-e. Owner or the lt, itlid. or to any Ho; of this Bill 0 f L.,ailing lot any Is,Iss. dant or dtlay
17. EXPENSES, DUTIrS. 177C.: The exp,: nses conmcled, % ith disch3rge and dtlkety of %ft.111caver kind brisir, djmZ dirce4ily at nisdir"VY
L,or , cj, from any A= trustees or default
to be raid by t, x Rc, ei%er &% per diouic 16 Ste 110J to imludc all expcnws for mauunna, On It's Put %bile a"ll"111 the : Oý of of in connection with his emPloymelt and, but
sic-11-uts. %tackirc. tjýmz samrlcý SWIU-1 -.. $*.AMP$ and all other sim,! ir %ithetit prejudic. - t., she inocialily of this forIzoing PrQVIIHOrys in this Cý41il. -. City ticunp-
04,69s. -sorainy.
Fuv"tr-re the Receiver to PAY -'y d, &,%ihe t2%. scrtax Cr tmN-. L levied, under any 1,-_ lintItAtiOn. cOn&;i4i,, M 3, ýd liberty hemin coolaiiad and c-ty rijht. cuMptuln from
Panic and for ulate%cr Peters on t:; c lgaous or usi shit by'scason of IQ*ir. g them goo" I; abtl; tY. defence Asia immunity aj what-, sair r, atuic ap., t-We to th4 Czrrscr Or to wb; zh
iýj Carrier
alain if lc%sed by ria, - o( the goAL ha%, ni been t. An, J,. pXd
On t-d. Juring " voyage is citt; tlcJ heivu. idgr isball also be mailahle Anti shall catead to VfO! -. t c, cry
of cattad cr d. u; izTt, rJ under cl-ram. i. c. such Als, ant or ASCII of [list Ca,: kr Acting As aforesaid finJ for the Pu(: )-)Se at WI the fQr,.
18. FURWARDI%(jAý, L)IltAý-SitiFNir-. N'T- lbec4trooranyportthcrmi'may, Carrier is lj he deoviel
to; ag provisi., ns .f this Ll, uýc ibst or jhý. to be ricial Ft
M the vj tion, of the Carrier t. be
and I vften as may 1re,;, Lny %-c dwined -P-Qwnt, trustee cri Lzi, ilf ol'ar. d for she ticassfit at IR persons . 1na ale of might be
CSeri9d in a substituted sh, or I. W1.1cred anU., i,r landed amil er storc. 1 fur J.he purpos, r of apsin. s from. t. aýe to film (Imiedistat isideparident contractual, as atorgirsid) and XtI suýh
mitc in the same at oLr
sm'.. shu, or by any o1her ni-ans ofcaa%cyamv. chalint lhall to this exacht be of be disewd to be parties to the contract in or sio. ders"d ty
The respomsbilicy a( the Cattorr ihall be lueuwd to the part of the transport performed by an. Bill or ". 1ig.

Pointed by WilkiAllm 3106. Ull.. 12*16 I'llt'll S1,16% Woodo". LCA

 APPE-nlx

POLICY (CARGO)TISEDBY
MARINE11MURANCE

IRAU NATIOTTAL
MURANCE COe
 ; I*i.N:))! St.
DA I)

."ATNAIIN-

PO L.IC )
-ly

It TX

F-U! : TO.

C)ý all an,! evvrý, Otlý,ýr Pt I ýon r,v to tiv, 30 111a

AL TNý. (, 0,. TT,AXY
! I' to 6c, :ýssuiod. loý-I or mot lcýt, it', aad from

or C:I.Ped Ow
V,'h`Cf(; f Undcr God. for this ncs,, nt Voyage
Or ý:hMl fc," Afastei il'i Shij, (,,I- h.v
k C'.' sh, Ill Ki. I- i -!aid - t I!
Okh, -T ";; wkO or
upoii -' :ýaid ds and
thc -ild 6hip

onntini:, ý ý!Ild onýlurt, lier "')l)C"Jt. ýIwre' up"n the &C.:

d! -ýIid ; in(] ljjjtjýfý'-. uIltil tjjp S-ýid ship.
ta rL i-, vd it
thon, A NMI S0 ly hmd"O no A QQJ h yl fm- M,
alv,! alld toxwh and mg at any p" or Wa" "n"Y" FAd Eby
Wrowncp-, &". ' willaut MMwli-e W IFIN Aymnn&n TKI,
. am! .: lcý- ý"- -ý '' ý- '' :f-ý--t tlý" ý1N, ý,, I. III,,,,
.ý-.. ý.: II

'Ti "''i t : i. (
ry or h,
01,
!::, I:, F, t ý,1,ý., ýý

, -4 ý,.- ýAt-"'

p' .I. -.. I- .I. I. ý. -, -I'T'. ., --ý., - -ý -I.,.

'. '.
I. ýT V
P, k. I; Ix "'ria ,t I* tý %%', E7,1 () I- tt
nt. ý 1ýIýI-,!.:
It IýIf! -Iý *'I -, 1 1A,,, .
.., !: ". ..
on(, r Cr-ri-, *,,
D-!n-i i's pcr-(, ý,.,
'c,, tlllýCSS GOM-ral, ov lhe Ship' t, e
,,jj r hý I'lit.
if -ttly, nt
iý
.ý ";

&T! O; r i: u
 11'arranfed free of capture, Acizure, arrest, rest-,aint or detainment and the consequenccs thereof or of any attempt thereat; also/rom th*
consequencesof hostilities or war-like operatio5m, whether there be a dedaration of war or not; but this warranty shall not exclude,collili('n,
contact with any fixed or 'floating obita (o, 4r than a irnine or torpedo), stranding, heuvy weather or firr u-,dess caused dirr. ctly ýand
independently of the nature of the. voyage or service wItich the vessel concerizcd or, in the case of a collision, any other vessel involved
therein is perloming) by a hostile act by or against a bcl! igetert power; and for thr. purpon of (his warranty "Power" includes any
authority maintaining ttaval, military or air forces in association with a power.
Further warranted free from the consequencesof civil war, revolu tion, rcbelljon, insurrection, or civil strife arising ths.-reftom, or piracy
I Warranted free of loss or damage :
rj) Caused by strikers, locked-out irorkinen, or persons (aking part in labour disturbances, Tiots or civil commotions.
b) Resulting from strikes, lock-nuts labour disturbances riots or civil conirnotions.

I.
(a) Should the, risks excluded by Clause I (F. C. & S. Claime) be 7rinsfated in this Policy by deletion of the said Clause or should thý risks
or any of them mentioned in that clause or the risks of mines, lort, rdoes, bombs, or other engines at war be insured under thi. j j)r"i('y.
Clause (b) MOM shall become operative and anything contained in this contract which is inconsistent with Clause (b) or which offordii
more extpnsive protection against the aforesaid riiks than that at'joulrd by the Institute War Clause rclerant to the particular loyin of
transit covered by this insurance. is nuil and void.
(Ii) This Policy is warranted free of any claim based upon loss of, or 1rustration of, the insured voyage or adventure caused by arrests
festraints or detainments of Kinys, Princes, Peoples, UnsurpeTs or persons attempting to usuip porver.

INSTITUTE DANCEROUS DRUGS CLAUSE

Is understood and agreed that no claim under this Policy will be paid in respect of drugs to which the various International Con-
ntion relating to Opium and other dangerous drugs apply unless,
The drugs sliall be expressly declared in the Policy and the name of the country from which, and the name Of the
as such country
to which they are consigned shall be specifically stated In the Policy;

I. and
The proof of loss is acconipanied either by a licence, certificate or authorization issued by the Government of the country to which
the drugs are consigned showing that the importation of the consignment into that country has been approved by that Govern-
ment, or alternatively by a licence, certificate or authorization issued by the Government of the country from which the drugs
are consigned showing that export of the consignment to the destination stated has been approved by that Government.

and

F The route by which the drugs were conveyed was usual and customary.

*-*-a
 -388-

BIBLI OCL'tRAPHf*

In Arabi c:

AIATAJAFT "The International Sales". Baghdad, 1973.

AL--OGAILI "The Role of the Bill of Lading in Performance
C,I*F, Contracts"o Cairo, 1971.
AL-SAITHOORI "Al-Wassitt" Vol. 2-4. Cairo, 1968.
A1,-SIBAEEand ATITMI "CommercialMaritime Rights" Vol-5-
Damasbus,1965-
AL-WnTDAITI "The Contract.,of Sale". Baghdad, 1973*
AWADH"The Maritime Law". Cairo, 1970-
IMNI "The Maritime Sales% Cairo, 1972.

In Engli sh,*.

ATIyAH9 p. S. "The Sale of Goods" 5th ede 1975-

BELL "Principles of the Law of Scotland" V0111@
', Commentaries on the Law of Scotland" V01010
BEUJAIMTts Sale of Goods@ London, 1974-
BRO'V, 11.1), "Tre, %tise on the Lau, of Sale". Edinbarghl 1821.
CARVERfs Carriage by Sea. Vol. l. London, 1971,
CHAIJOUS "Sale of Goods" 17th ede
GLOAGand ]HENDERSON"Introduction to the Law of Scotland". 6th ed.

GORDW, W*14@ "Studies in the Transfer of Property by Tradition".

GOW, JoJ& "The Mercantile and Industrial Law of Scotland% Edinburgh,
1964-
MJTTERIDGEt H. G. and 110MAH, Maurice "The Law of Bankers' Commercial
Credit" 5th ede London, 197"
XMTEDYfs C,T*P* Contracts- 3rd. ed.
LORDCHORLEYand GILE39 O*C. "Shipping Law" 6th ed. London, 1970-
PAM and IVAIE "Carriage of Goodaby Sea". London, 1976.
I. Fe & F*O*Bo Contracts"
SASSMT, Do 11C. 2nd. ed. London, 1975-

The cases and other references are mentioned at the

appropriate place*
 -389-

SCIBUTTHOFF, C4,1% "The Sale of Goods" 2nd ed. London, 1966.

flThe Export Tradelt 6th ed. London, 1975-

SCRUITON on Charterparties 18th ede

STEINt Po and SHAND,J* "Legal Values in Western Society'14,
Edinburgh, 1974-
WTALKERtDeMe "Principles of Scottish Private Law" Vol. l. 2nd ede 1975-

In French:

AIJIMY et RAIJ et ESTM IrDroit Civil Franpais". 6th ed. 1952.

BALTIRt So "Valeur Probante du Connaissement". These, 1933, Paris.
BETIOT "Traite The-oricrue et Pratique de la Vente CAP. Le Credit

Documentaire". Paris, 1951-

CHATREAU,P, "Trait; de Droit Mwitimelle Paris, 1958.
COLIN and CAPITAPT "Le Droit Civil Franpais".
2nd ed. V02. 1953.
GODRET,P, "Le Contrat de Vente Cout, Assurance, Fret"cafff it 4,

These* Paris, 1925-

HE11UN I'Vente et Commercelbxitime". Bruxelles, 1952.
LIGOITIE, JeAs"T I'Le Connaissement et la Lettre de Volture Nbritimell.
Paris, 1962.
INIAMLM et =EDID I'Lepons de Droit Civil" 3rd ed. V. 312.
RIPERTj Go I'Droit Maritime" Tome II. Paris, 1952.
RCDIER9 Re "Traite General de Droit Maritime" Tome iio Paris, 1968.
IqDroit Maritimell 6th (Precis Dalloz).
ede 1974-
WIMUIDLEN, 0. "Les Principes de la Vente C. I*P*II Bruxelles, 1926.

Tnternational Rules and Conventions:

International Convention for the Unification of Certain Rules of

Law Relating to Bills of Ladingt signed al Brussels on August 251
1924o

Rules for ColeFe Contracts (Warsaw-Oxford Rules), adapted by the

Word Conference of August 12,1932.

Incoterms 1953-
 -390-

The Draft Convention of the Carriage of Goods by Sea, adopted

by (IJITICITRAL).

Convention relating to a Uniform Law on the International Sale

of Goods (UIZES), 1967-

Draft Convention on the International Combined Transport of

Goods (T*C*1,1.), Genevet 1972.

Uniform Customs and Practice for Documentary Credits, Revised

1974-

Periodicals:

1- Lloydts Maritime
and Commercial Law Quvxterly.
2- Journal of Maritime Lavy and Commerce*
3- Droit Maritime Franpais (D, I,.
I*P*)*

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