Past Exam Papers - International Trade Law

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 CONTENTS

Contents
Some past Exam Papers in Interntional Trade Law 1991 - 1997 1

Law Faculty of the University of Troms 1

Exam: International Trade Law 1

International Trade Law, IRV Exam Paper, Spring 1997 . . . . . 1
International Trade Law, IRV Exam Paper, Spring 1996 . . . . . 2
International Trade Law, IRV Exam Paper, Spring 1995 . . . . . 3
International Trade Law, IRV Exam Paper, Spring 1994 . . . . . 5

Harstad Polytechnic - Hgskolen i Harstad 7

Exam: International Trade Law 7

The Law of International Trade, HIH Exam Paper, Autumn 1994 7
The Law of International Trade, HIH Exam Paper, Spring 1994 . 9
The Law of International Trade, HIH Exam Paper, Autumn 1992 10
The Law of International Trade, HIH Exam Paper, Autumn 1991 10

Document Information 12
MetaData . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Information on this document copy and an unofficial List of Some

web related information and sources 12
Information on this document copy . . . . . . . . . . . . . . . . 12
Links that may be of interest . . . . . . . . . . . . . . . . . . . 13

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 Past Exam Papers - International Trade Law

1 S OME PAST E XAM PAPERS IN I NTERNTIONAL T RADE 3.200.000. Payment by letter of credit (UCP500), drawn on a French bank,
L AW 1991 - 1997 the documents required were the commercial invoice, insurance policy, a
marine bill of lading, and a certificate of quality given by a company ac-
2 L AW FACULTY OF THE U NIVERSITY OF T ROMS credited by the Norwegian Standards Organisation (NSO), stating that the
salmon exported is Superior quality with a fat content of 12% or below
3 E XAM : I NTERNATIONAL T RADE L AW and between 14 and 15 on the Roche scale. The Norwegian bank, act-
4 International Trade Law, IRV Exam Paper, Spring 1997 ing as an advisor informs that the documentary credit has fallen through
because the certificate of quality states:
10
Week 19, 1996 (9:00 Monday 5 May to 15:00 Friday 9 May Salmon Cut NS9401 sample fat content 12%; colour card 15. Anal-
5 The English text is the original and authoritative text. ysis NS9402 compliant.
6 Answer all questions. The rejection is based on the mention of NS9401 of which the bank knows 11

nothing, and reference to the colour card 15 which does not specify the
7 1. You are called in to advise NorFiskEksport A/S (NFE) a large Nor- Roche scale. These references are considered by the bank to be outside
wegian fish export company on the following problems with regard to the their mandate.
export of salmon:
The documents were presented directly to the buyer for payment who 12

8 A. First - NFE wants advice on issues related to the bill of exchange and insists first on examining the salmon upon their arrival, stating that the
sale of goods in the following situation in which they find themselves. agreement did not specify any special cut, NS9401 or otherwise. He is
NFE has a monthly 20 tonne instalment contract with Cutter AS for the not a very experienced salmon importer and usually deals with Scottish
delivery of salmon CIF Bremerhaven, (Germany) (Incoterms 1990). Cur- salmon, this being his first dealing with Norwegian exporters. Norwegian
rent price NOK 30 per kg. Payment is by bill of exchange drawn by the salmon is if anything better known than Scottish salmon on the French
seller on the buyer, payable after 30 days. The relationship between seller market. There is no dispute over the Norwegian firm that issued the cer-
and buyer is an old one, and there have been very few problems with Cut- tificate of quality being one approved by the NSO. On their arrival he
ter AS in the past. The bill of exchange from last months delivery, which announced that according to his tests, the fat content is 14% and that he
the seller has discounted at 10% below its face value, has been dishon- rejects this consignment and will accept substitute goods, but claims dam-
oured by Cutter AS. The current holder Bank of the bill of exchange Den ages for loss of profit of NOK 800.000 for missing the high demand and
Store Norske has given the NFE as drawer, notice of non-acceptance of consequently high prices, of the Christmas season. Meanwhile the goods
the bill of exchange and demands that it be honoured by NFE. Meanwhile are deteriorating due to inadequate packaging and improper storage.
this months delivery has been shipped and is en route to Cutter AS in Bre-
Use of the Roche colour is standard in Norway and France. Use of 13
merhaven. The seller has tried to contact the buyer with no success. There
NS9401 and NS9402 are standards used in the Norwegian salmon in-
are rumours that he is insolvent.
dustry and widely known in the salmon industry. The Roche scale is a
9 B. Second NFE wants advice on issues related to the letter of credit, in- standard colour scale used in the salmon industry to measure the pinkness
surance and contract of sale on the following set of facts. NFE contracted of salmon. E.g. 11 is very light pink 18 very dark pink, 14 15 is the
the sale to Bovin of 100 tonnes of salmon CIP Bologne (France) at NOK normally preferred range for Norwegian salmon. NS9401 is the standard

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Norwegian quality cut of salmon developed by the salmon industry for the arrival note issued by the carrier after the off-loading the equipment at the
(standard) assessment of fat content and colour. NS9402 refers to the way port, evidencing the goods arrival at their destination. The choice of law
in which the colour and fat analysis should be carried out. is Swedish law as applied to the international sale of goods with ad-hoc
arbitration in Stockholm under the UNCITRAL Arbitration Rules. BR
14 Disputes under both contracts of sale are to be settled by a single arbitrator
have informed your client that the time of delivery is important as it is at
by ad hoc arbitration Cyprus, which has been agreed because it applies the
that time that personnel will be available to do the necessary installation,
UNCITRAL Model Law. If the CISG applies assume that the arbitrators
and they hope to have the unit in production to supply caviar for certain
will use the original text of the CISG, on the grounds that any contracting
celebrations in Europe, mid April, which they expect to be particularly
State to the CISG must have fulfilled its treaty obligations. If required
lucrative.
for the determination of applicable sales law assume (for the purposes of
this paper) that the arbitrator(s) will apply the Convention on the Law Your client takes out insurance on their own behalf with a Norwegian in- 20

Applicable to International Sales of Goods (The Hague, 1955). surance company on terms identical to the Standard Institute Cargo Clause
A policy, with the exception of the choice of law clause which selects Nor-
15 2. Discuss damages under the CISG generally and in particular their mea-
wegian law.
sure. Compare Norwegian domestic sale of goods law.
The goods are aboard the SS Sonya which is caught in a storm as a result 21
Assume that the Norwegian Bill of Exchange Act or Convention Providing
of which she incurs some damage necessitating a stop for repairs at Mur-
a Uniform Law For Bills of Exchange and Promissory Notes (Geneva,
mansk, as a result of which SS Sonya arrives in Arkhangelsk 5 days later
1930) applies, specify what you use.
than scheduled, this being on April 3rd.
Claiming money from an insolvent or bankrupt foreign debtor is not a
The letter of credit opened by BR stipulates that the document evidencing 22
matter on which you are called upon to advise.
arrival of the goods should show that they did so on or before April 1.
Your client was in touch with BR to inform them of the ships delay, and to
16 International Trade Law, IRV Exam Paper, Spring 1996 request that they together with the bank alter the terms of the credit. BR
refuses. Your client presents the documents, including the CERT certifi-
Week 19, 1996 (9:00 Monday 6 May to 15:00 Friday 10 May)
cate of inspection to the banks who both likewise refuse to pay - because
17 The English text is the original and authoritative text. of the date of arrival of the goods. Your client then presented the docu-
ments directly to BR for payment together with an offer to send people
18 Answer both questions.
capable of doing the necessary installation. BR refused to take delivery of
19 1. Your client NORESTRA AS of Norway a producer of biotechnol- the goods or documents, and to pay for the goods. BR claim your client to
ogy food processing systems and BR of Russia a producer of caviar enter be in breach of contract and to avoid the contract. BR further claim dam-
into a contract for the sale of a large scale biotechnology food process- ages - informing your client that they now prefer and will be buying a rival
ing plant (for the enzymatic de-skinning of fish row) DDU INCOTERMS product costing NOK 100.000 more, which will take another 12 days to
Arkhangelsk NOK 1.750.000 by April 1. Payment to be by letter of credit arrive. BR claim the difference in price, plus 14 days lost production costs
confirmed with DnB against presentation of an invoice, a certificate of in- NOK 75.000 and loss of profit NOK 100.000. BR insist that the infor-
spection issued by an inspection company CERT, the bill of lading and an mation they provided as to the importance of the date of arrival, together

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with the contractual term specifying the date by which goods should be for the production of much larger amounts of the products produced in the
delivered, and choice that payment be by letter of credit against strictly processes in which it is used.
conforming documents all indicate that time was of the essence and that ENZYNOR is prepared in a viscous solution, that must be stored within 30
they were entitled to avoid the contract. a narrow temperature range, (between 1 and 4 degrees Centigrade) as it
23 Your client is of the opinion that the circumstances do not entitle BR to is destroyed by freezing, and rapidly deteriorates (if not being used in the
avoid the contract, and that payment was due on their presentation of the intended process) at temperatures above 6 degrees Centigrade. This is
documents to BR. As regards payment by letter of credit your client men- recognised by NORBIO as a problem for the international distribution of
tion that this method of payment was in fact insisted upon by themselves ENZYNOR which they are trying to overcome in various ways.
for their benefit, so to ensure that they received payment on delivery. BBB is a multinational enterprise, involved in the industries in which EN- 31

24 There is no general market for the food processing plant within Russia, ZYNOR can be used. BBB has for several years based several areas of its
the equipment in question being specialised. In any event your client does production on a similar product from another European manufacturer.
not think they can get the appropriate import licences for the goods. BR NORBIO being keen to market ENZYNOR outside Norway, are tri- 32

have put the goods in temporary storage in a bonded warehouse (awaiting umphant in having persuaded BBB to switch to the use of ENZYNOR.
import clearance or their re-export) on behalf of your client, who have had This is regarded as likely to make the marketing of ENZYNOR to other
to re-insure the equipment, (and do so on the same terms as before), and companies much easier. The deal is widely publicised in trade papers.
arrange for their reshipment to Tromsø. Costs of warehousing, insurance
By the agreement between BBB and NORBIO, NORBIO is to supply 33
and reshipment totalling NOK 75.000. The equipment was custom made
for 1 year, starting January, 1995, monthly installments of 100kg of EN-
for BR and much refitting is necessary for it to be possible to sell the
ZYNOR, CFR INCOTERMS 1990, Liverpool, at an agreed total price of
machinery elsewhere, estimated cost NOK 500.000.
NOK 1.200.000 (NOK 100.000 per installment). Payment to be by letter
25 Discuss the legal issues that arise from the sequence of events. Also com- of credit opened for each installment, against the presentation of a bill of
ment on the suitability of arbitration. lading, invoice and a certificate of quality issued after an analysis of sam-
ples of the shipment by CERT, a Dutch Company with offices Norway.
26 2. Discuss §275 of the Norwegian Sjøfartsloven. The contract does not include a termination or cancellation clause.
BBB accept that the agreement be governed by Norwegian law, as they 34
27 International Trade Law, IRV Exam Paper, Spring 1995
have experience with the United Nations Convention on Contracts for the
Week 19/1995: 9:00 Monday 8 May to 15:00 Friday 12 May 1995 International Sale of Goods (CISG) through their dealings in other coun-
tries. BBB however insist that reference be made to the original text of the
28 Answer both questions. CISG, as this is the text with which they are familiar and for which exper-
29 1. NORBIO is a Norwegian bio-technology company that produces EN- tise is readily available to them. The arbitration clause specifies commer-
ZYNOR on which it has worldwide patents. ENZYNOR is an enzyme that cial ad hoc arbitration in Stockholm.
can be used in a wide range of processes within the food manufacturing, NORBIO are aware that BBB intend to start using ENZYNOR immedi- 35

and pharmaceutical industries. Small amounts of ENZYNOR are required ately, on receipt of the first installment. BBB’s former supplier is not

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pleased about BBB having dropped their product and refuse to make fur- bank does not pay.
ther deliveries. The urgency of the situation has been made clear to NOR- The time for payment under the credit expires, and NORBIO send the 41
BIO. documents directly to BBB for payment.
36 NORBIO pack the ENZYNOR in containers that are kept in a special BBB in reply fax a long complaint. The fax sent by BBB states the fol- 42

refrigeration unit, to keep the ENZYNOR at the required temperature. lowing: 43

CERT perform their tests, are satisfied, and issue a certificate of quality. BBB claims against NORBIO loss amounting to NOK 900.000 sus-
37 There is a mishap with the first attempt to send the first installment when tained from closure of plant for 2 days, on the grounds the goods did
the stevedores operating a lift-van, knock the container with ENZYNOR not fit the sample, were not fit for purpose, and were inadequately
off the pier. NORBIO’s domestic insurance only covers them on their packed. As to inadequate packing they claim the refrigeration unit
business premises. used was faulty and could not be relied upon to the keep the strict
temperature regime that NORBIO indicate is necessary in their stor-
38 NORBIO have to hurriedly prepare a second shipment to replace the first
age instructions (which are written on the packaging of the product).
that was lost, and are able to deliver and have a new CERT inspection and
The amount claimed includes various overheads (NOK 200.000),
certificate of quality issued, within the contractually stipulated period for
and extra costs related to stopping and starting what should have
delivery of the goods.
been a continuous process (NOK 400.000), and loss of profit (NOK
39 After its arrival in Liverpool, BBB perform tests on the ENZYNOR and 300.000). 44
inform NORBIO that the ENZYNOR does not work. BBB state that they BBB regard the February shipment as substitute goods, and will not
are satsified on the strength of the CERT certificate of quality that it did pay for it. 45
on shipment. BBB reports that it will be making a claim against their In the alternative, to the February shipment being substitute goods,
insurance company, as they have taken out an Institute Cargo Clause all BBB claim the loss of the insured value of the first shipment of EN-
risks policy with Lloyd’s. They also inform NORBIO that it has cost ZYNOR, 180% of the CFR price, from NORBIO. Apparently the
them two days production, the period during which their plant was shut insurance company avoided the policy on the grounds that they had
down, until they could get a substitute product, and that such shutdowns not been made aware of the extreme temperature sensitivity of the
are particularly expensive as much equipment must be replaced due to goods, which they claim was material to their assessment of the risk.
strict hygene regulations. The insurance company stated further that in any event they would
40 The February installment arrives intact. But NORBIO have zealously not have had to pay out BBBs claim as it would have fallen under
changed the packaging of ENZYNOR so that details are provided in En- an exception being due to inherent vice in the goods and/or unsuit-
glish, and part of the name of the product which is entered on the bill able packing. BBB point to the fact that NORBIO should have made
of lading is translated, so that it does not match the name of the product this information available to them for insurance purposes when BBB
that is given to the bank on the opening of the letter of credit, which was requested such information. 46
in Norwegian. The bank which is English refuses payment unless BBB BBB further state that they will not require any ENZYNOR after
authorize the change, and this is requested. BBB refuse. NORBIO con- the sixth installment, and that NORBIO should consider themselves
tact the bank several times, adamant that payment should be made, but the notified of this fact.

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47 NORBIO admit that in the circumstances they did not have the time to an insurance policy issued by Lloyd’s of London underwriters for 150%
properly check the refrigeration unit in which they sent the first installment the invoice value of the goods. The contract for the drill bits specifies in
which arrived destroyed. As regards BBB stating they do not intend to addition that they are to be insured on Institute Cargo Clause A terms, and
continue the agreement after the sixth installment, NORBIO point out that this is reflected in the credit.
BBB’s failure to honour the agreement will probably cause NORBIO loss The contracts also specifically require Sechele to arrange carriage under 57
beyond this agreement as other manufacturers who were considering to bills of lading to which the Hague-Visby Rules apply and to declare the
switch to ENZYNOR are now less likely to do so. value of the goods in the bills of lading.
48 NORBIO seek your advise on the legal issues raised by the circumstances The goods are shipped aboard MS Volant. The bills of lading obtained are 58
described. expressly subject to the Hague-Visby Rules but Sechele fails to have the
49 2. Discuss the effects of deviation and delay in relation to goods. value of the goods stated in them. The bills of lading contain inter alia the
following clause:
59

50 International Trade Law, IRV Exam Paper, Spring 1994 “The carrier warrants that he will at all times keep the vessel regis-
tered with a recognised classification society. Production of a cur-
Week 18/1994 - 02/04 (09:00) - 06/04 (15:00) rent certificate of class shall be conclusive evidence that the vessel
51 Answer both questions. is seaworthy.”
52 January 1994, two instalment contracts are entered upon between Sechele [Candidates may assume that the ship has such a certificate.] 60

of Botswana* and Blink of Norway, both of whom are traders. All dis- Apart from the usual entries on a bill of lading, the bill of lading for the 61

putes arising under them are to be subject to arbitration in London, the beef also states that up to 40% of the consignment may have been heat
conclusion of which is to be final. damaged by a fire that occurred on board the ship.
53

The first contract calls for six instalments, each for: 10 tonnes of The drill bits are mostly of steel and are of relatively low value in them- 62

prime Botswana beef, NOK 200.000, CIF Stavanger, INCOTERMS selves, but each has a diamond impregnated segment, which is part of a
1990. smaller detachable unit, that is of extremely high value.
54

The second contract calls for six instalments, each for: 20 oil indus- MS Volant en-route to Stavanger makes a scheduled and permitted stop 63

try drill bits, NOK 500.000, CIF Stavanger, INCOTERMS 1990. in Lagos, Nigeria where she is detained. As is commonly known by
shipowners and carriers operating in the region the Nigerian authorities
55 The times of shipment for all six instalments are fixed in both cases. Ship-
require that every ship has a complete manifest together with certificates
ment of the first two instalments to take place in March and May respec-
of origin for all cargoes on board. The reason behind this this being Nige-
tively.
ria’s active role in the effort to prevent trade with South Africa. The con-
56 Both contracts of sale call for the immediate opening of letter of credit sequences of such non-compliance being the almost certain detention of
facilities confirmed by the Botswana National Bank, for the first two in- the ship for an indefinite period of time and, possible confiscation of any
stalments of each item. These are duly opened in conformity with the suspect goods. MS Volant has not complied with this requirement. The
contract. Payment is to be against an invoice, a marine bill of lading, and detention lasts six weeks.

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64 There is reason to believe that the beef may in fact be from South Africa [Candidates may assume there is no problem of jurisdiction over any of 74

and that Sechele was aware of its origin. the parties that Blink may wish to proceed against.]
65 Sechele has presented documents as described above to the Botswana Na- [The examiners are aware that Botswana is a landlocked country.] 75

tional Bank and been paid for the first instalment of both contracts.
[Consider the implications of the following alternative facts: Sechele has 76

66 On arrival in Stavanger: presented documents as described above to the Botswana National Bank
67
Norwegian authorities will not pass the beef as fit for human con- and has been paid for the first instalment of drill-bits. The bank refused
sumption though it may be used as animal feed or fertiliser. Apart payment of the beef against the documents tendered. Sechele has pre-
from the earlier fire damage to a portion of the beef, the whole con- sented the documents for the beef directly to Blink for payment.]
signment appears to have deteriorated during the detention of MS 2. Discuss Article 25 of the United Nations Convention on Contracts for 77

Volant in Lagos. Refrigeration on board was apparently unable to the International Sale of Goods 1980.
cope with the tropical heat over the extended period of the voyage.
68 NB. A short comment (subsequently added). Some general observations
The consignment of drill bits are found to be without any of the on the manner in which the question is set.
diamond impregnated segments. These appear to have been stolen
whilst MS Volant was detained in Nigeria, though whether by crew The problem not set in the traditional Norwegian form - where the can- 78

or others is unclear. didate is given two disputed sets of facts and expected to put themselves
69
in the position of a judge. The student is here given a set of facts and ex-
The drill bits are found not to be strictly in conformity with Blink’s pected to advise one party. Some differences are likely to arise out of this
contractual specifications requiring an additional piece to be fitted in mode of examination.
order for them to be connected to and made usable on the equipment
they were ordered for. There was some objection to the fact that a lawyers role is not neutral, 79

whereas that of a judge is. A neutral perspective being that which is sought
70 The underwriters have so far refused to pay on either claim pending their in Norwegian law examinations.
investigation of the circumstances of the case.
Whilst it is true that the role of a lawyer representing a party in court or 80
71 Blink is also extremely worried about future instalments based on this arbitration is to further his cause, and adverserial, at the stage of giving
first experience, the fact that the price of meat has fallen substantially, advice to a client the lawyers role should be neutral, explaining: the legal
and changes have been announced in the use of drill bit technology by issues that arise; the strengths and weaknesses of the case; against whom
the company he hoped to supply. The second instalment is now due for action may be taken; and with what chances of success. Such a “neutral
shipment. perspective” is expected to be displayed here.
72 Advise Blink. This mode of examination was regarded as far more appropriate in cir- 81

73 [* The question is set on the basis that Botswana is a Contracting State cumstances of an international sale of goods in which there are several
to the U.N. Convention for the International Sale of Goods 1980 as is different parties involved in several different contracts that are governed
suggested by the ratification table in Basic Documents on International by different national laws and jurisdictions. Depending on which claims
Trade Law, 2nd ed. Graham and Troutman Ltd., isbn 1.85333.359.X] the buyer in this question decides to pursue, he will appear in different

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courts. The same adjudicator will not be called upon to answer questions An interesting though obscure legal (or even far fetched) point or argu- 85

related to the sale of goods contract between the buyer and seller in this ment should be made, with whatever necessary qualification rather than
example which is expressed to be subject to arbitration in London; and/or overlooked, if there is any chance of its being argued successfully.
any legal proceedings involving the buyer and insurance company arising
I understand that this way of presenting facts for discussion differs from 86
from the contract of insurance; and/or proceedings between the buyer and
the norm here. It is well suited to the subject however. I hope it is not
carrier arising from the contract of carriage; and/or between the buyer and
regarded as being too revolutionary.
bank arising from the letter of credit.
Finally no offence is meant by using real country names, though I note 87
82 Without being asked specifically, students are expected to give legal ad- there was objection to a question in which the Norwegian parties were in
vice in relation to all the buyer’s problems/claims, in relation to whichever breach and recalcitrant. These are private law questions and individuals of
party is consequentially relevant; to elaborate on any uncertain legal issues all types exist in different parts of the world. Perhaps it would be better to
that they might be able to clarify (eg. why is it important that S indicate use fictitious place names.
the value of the goods in the bill of lading, apart from the fact that it was
a contractual specification).
H ARSTAD P OLYTECHNIC - H GSKOLEN I H ARSTAD 88
83 It is quite usual for examiners to present insufficient factual information to
reach a definite legal conclusion, and for students to be expected to point E XAM : I NTERNATIONAL T RADE L AW 89

this out, and explain what information they require, and why, ie. what
legal consequences knowing those facts would have. Also if as a conse- The Law of International Trade, HIH Exam Paper, Autumn 1994 90

quence of missing factual information there are alternative legal conse- Week 42*/1994
quences, it is usual to deal briefly with the alternatives (eg. if such an
event took place before this point in time, the result would be X, if after Answer the questions as instructed. Question 1 accounts for half the total 91

Y). Neither is it unusual to present some facts which are not directly rele- marks.
vant to answering the questions, and to expect candidates to dismiss them 1. NORTECH A/S is a small Norwegian high tech company with no 92
as such or ignore them altogether. previous experience in exporting.
84 It is not unusual to present unlikely or even far fetched circumstances, NORTECH A/S is the first company to produce X-Comm units that work 93

provided some point of law can be argued or discussed - for example I at 10 times the speed of other similar units on the market. X-Comm units
a not aware of any Nigeria specific practice in relation to ships, or in re- are required in the making of various types of highly profitable commu-
lation to South Africa. The bit about ships manifests and certificates of nications equipment. The competition appear to be at least a year away
origin is fictional. If true it would have certain legal consequences and from having a similar product on the market.
these should be discussed. I am quite sure that any reasons for Nigerian
NORTECH A/S seeks your legal advice after the following experience: 94
sanctions against SA have been removed/lifted (within the time frame set
in the question); although again, if Nigeria did have such a law, it would After lengthy preliminary negotiations an instalment contract is entered 95

quite likely outlive the original reason for its existence (as is provided in with Klauswirth Gmbh in Europia (an imaginary European country) for
the question). the purchase of X-Comm on monthly CIF (INCOTERMS) shipments of

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10.000 units of X-Comm, NOK 2.500.000 per shipment (NOK 250 per flawless and fit the contract description (when sent). They tell you that
unit) starting November 1994. they believe the problem is due rather to the incompetence of Klauswirth
96 NORTECH A/S sent the first consignment as contracted in November, Gmbh in the installation of the X-Comm units into their communications
and has just received a notice from Klauswirth that the X-Comm units are equipment. Meanwhile their investigations indicate a possibility that the
unusable, in which they claim substantial damages and threaten to avoid consignment may have been wet on board the Ms Breeze on which they
the contract unless replacement X-units are sent immediately. were shipped due to the negligence of the carrier, and if this was in fact
the case this would explain their not working as the units of X-Comm are
97 Klauswirth Gmbh state that the X-Comm units are not identical to the very sensitive to water.
samples provided to them during negotiations and that they are therefore
unusable. The December consignment has just been sent aboard the MS Cloud and 102

the CIF documents already handed over to Klauswirth Gmbh, who have
98 Klauswirth Gmbh state that whilst they believe the first explanation to refused to pay and is holding the documents because of his large claims
be case, there is another possibility which they are investigating, that the against NORTECH A/S on the previous consignment.
consignment was damaged during transit due to inadequacy of packing.
NORTECH A/S seeks your advise on this problem. 103
99 In any event a further examination is necessary to reveal whether the rea-
son for X-Comm units being unusable is because they in fact do not work, NORTECH A/S is currently negotiating with NISA in Conquador (an 104

or because their specifications are not the same as the sample, or their imaginary developing country in South America), to contract to supply
being as required by the contract. Klauswirth Gmbh state that they will CIF (INCOTERMS) instalments every other month of 50.000 units of X-
be claiming damages as follows: as a result of having to delay produc- Comm, NOK 12.750.000 per instalment (NOK 255 per unit) starting Jan-
tion for at least one month to have had to have lost NOK 1.000.000 (fixed uary (this contract has not yet been concluded)..
costs - employment of personnel, renting of factory space etc.); an addi- NORTECH A/S are worried about dealing with NISA because of their ex- 105

tional 500.000 for loss of one months profits; and a further 200.000 that periences with their first export sale, and are concerned in particular with
they claim they will have to pay a customer in damages for their failure regard to securing payment from a South American country. NISA states
to deliver on that contract in time; 1.750.000 in loss of future profits due that if NORTECH A/S are worried about payment that they are prepared
to loss of goodwill from their retailers and customers who are unlikely to to pay by letter of credit. NORTECH A/S require advice as to whether to
purchase their product in the future because they were unable to deliver accept this arrangement, and in particular want an explanation of the letter
on time. If they decide to avoid the contract they also claim restitution of of credit and how it works and any security that it might provide.
the amount that they have paid.
[ Candidates are to assume the countries concerned in the problem apply 106

100 They state that NORTECH A/S was made aware of their special require- the syllabus conventions. ]
ments and that NORTECH A/S are in any event aware of the nature of
2. Answer (a) or (b) 107
the industry in which they are dealing and that they as a result were aware
that the delivery of non-usable X-Comm units would bring about such (a) The Hague-Visby Rules imply terms with regard to carriage of goods 108

consequences, resulting in the damages claimed. by sea under a bill of lading. Discuss.
101 NORTECH A/S tell you they are confident that their X-Comm units are or 109

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110 (b) A bill of lading may be the contract of carriage, or may merely be Late in February, Brd nominated MS Yarn for the second instalment. 121

evidence of the contract of carriage. The same bill of lading may become Steven was unable to deliver, and requested that Brd secure his supplies for
the contract of carriage once transferred to a third party. Explain. this instalment elsewhere, but assured Brd that there should be no problem
111 3. Answer (a) or (b) with the final instalment.

112 (a) If possible using examples from any studied areas of international On 1st April, Brd nominated MS Zebra for the final instalment of Lin- 122

trade law, explain the division of contractual terms in the English law of drexite. Before the MS Zebra reached Copenhagen, Steven requested its
contract into conditions, warranties and innominate terms. Compare this master to load 10,000 litres of Lindrexite from Hamburg instead of Copen-
with the situation under the Vienna Sales Convention. hagen. The master was unable to communicate with the shipowner or Brd
and complied with Steven’s request under protest. Steven did not inform
113 or Brd of this change in plan.
114 (b) Discuss mistake under English contract law. MS Zebra is lost at sea with all her cargo while in transit from Copenhagen 123

to Bergen, because she was unseaworthy when she set sail. The reason for
115 The Law of International Trade, HIH Exam Paper, Spring 1994 her unseaworthiness being, when she was last overhauled (prior to her stop
in Hamburg), poor quality rivets were used by the independent contractor
Week 20/1994
engaged by the shipowner. The shipowner did not know this, and the fault
116 Answer all questions. could not have been easily discovered on any inspection by him.
117 1. Brd runs a factory in Bergen that produces the designer fabric Moretex. Brd found that his insurance policy did not cover the loss of Lindrexite on 124

An essential element in its manufacture is a special solvent sold under the board the MS Zebra because of the change of port of loading.
trade name Lindrexite.
On all three occasions Brd had to cut back his production of Moretex (loos- 125

118 Brd contracts with Steven for the purchase of 60,000 litres of Lindrexite on ing highly profitable sales), whilst he made arrangements to secure sup-
FOB terms, the Lindrexite to be loaded at Copenhagen, shipping arrange- plies elsewhere (from a local competitor) at a considerably higher price.
ments to be made by Brd, delivery in three equal instalments in February,
March and April. The contract of sale was expressed to be governed by
Brd seeks your advice as to his chances of recovery of his losses on all 126
the Convention on Contracts for the International Sale of Goods 1980.
three instalments. Advise Brd.
119 As regards each instalment, Brd arranges transport under a bill of lading
2. Discuss the following problems applying (i) English contract law 127
to which the Hague-Visby Rules applied, and takes out a voyage insurance
principles and (ii) the United Nations Convention on Contracts for the
on Institute Cargo Clause A terms with Lloyds of London underwriters.
International Sale of Goods 1980.
120 Late in January Brd nominated MS Xerxes “expected ready to load 16th
(a) Sly sells Bingo 10 cars for NOK 1 000 000. Civil unrest in Sly’s 128
February”, but the MS Xerxes did not arrive until 22nd February, and
country prevents all exports, and it is uncertain how long this will con-
Steven incurred expensive storage charges, for which he has charged Brd.
tinue. Bingo looses profits on valuable resale contracts.
Moreover the Lindrexite was badly damaged in storage and could not be
used by Brd on its arrival. (b) Sly sells Bingo 10 cars for NOK 1 000 000. Sly is unable to deliver 129

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on the date set by the contract. Bingo looses profits on valuable resale ring before the ship sails. The water penetration was due to inadequate
contracts. sealing of the hatch covers. The master before issuing the bills of lading
alters it with a marginal note “cargo wet by rain after loading.” Before
130 (c) Sly sells Bingo 10 cars for NOK 1 000 000 which Bingo has made
the bill of lading is tendered, Bjrn’s agents in Bombay inform him of the
known he needs for use in Norway. On receipt of the goods by Bingo he
rumours regarding the cargo. One week after the ship sails Steven tenders
finds that they are right hand drive, (the steering wheel is on the right side)
to Bjrn a bill of lading. Bjrn would like to refuse it on the grounds that it
and cannot be sold within Norway.
is not “clean”.
131 (d) Sly sells Bingo 10 cars for NOK 1 000 000. On the day on which
payment is due under the contract Bingo says he has changed his mind The cargo on arrival is found to be completely unfit for human or animal 139

and refuses to pay. consumption, and is of value only as fertilizer.

132 3. What are the requirements of formation of contract in English law and Discuss the legal position of the respective parties to the respective con- 140

under the United Nations Convention on Contracts for the International tracts (sale of goods; carriage of goods; marine insurance). Assume
Sale of Goods 1980? that the UN Convention for the International Sale of Goods 1980; In-
coterms1990; the Institute Cargo Clauses; an act very similar to the En-
glish Marine Insurance Act 1906; and the Hague-Visby Rules apply.
133 The Law of International Trade, HIH Exam Paper, Autumn 1992
2. Give an overview of the effects of the Hague Visby Rules in relation to 141
Autumn 1992 Bills of lading.
134 Each question carries equal marks. Attempt all questions. 3. Outline the operation of bills of exchange and letters of credit, and 142

135 1. Steven sells to Bjrn (a Norwegian merchant) 5000 tons of lima beans, the practical ways in which these payment mechanisms can facilitate the
CIF Bergen, Incoterms 1990, NOK1.000.000 cash against a clean shipped needs of the buyer and seller in an international sale transaction.
bill of lading, and other CIF documents. 4. What is the doctrine of frustration of contract in English law. Discuss 143

136 Steven ships all 5000 tons on the “Lucky Charm”. It is well known any similar provision under the UN Convention for International Sale of
amongst bean traders in Bombay, that the entire contents are suspect, hav- Goods 1980.
ing been the object of various abortive deals, and although usable within 5. Discuss briefly the nature of representations and terms in English 144
a few days are most unlikely to be merchantable after a voyage to Europe. Contract law, and the effects of a representation being untrue, as compared
This is however a matter of general gossip, and only an expert could tell with a breach of contract.
whether this was actually true by inspecting samples.
137 The master though he has heard the gossip signs a clean bill of lading. The Law of International Trade, HIH Exam Paper, Autumn 1991 145
Stephen takes out insurance on Institute Cargo Clause C terms for 110%
the invoice value of the lima beans. The insurance company is not in- Autumn 1991
formed of the gossip, or of any related facts.
Question 1 accounts for 50% of the total marks, so most time should be 146

138 The cargo is severely wetted during an exceptionally heavy storm occur- spent on this question. Attempt all questions as instructed.

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The following contract is entered into between Stig in Norway and Bond 147 tions or uniform sets of rules apply or are likely to apply to the sale of
in Nigeria: goods transaction, their transport, the marine insurance policy and the let-
148
ter of credit and explain why this is the case, and give a brief outline of
“1000 tons of ‘’grade A“ dried cod, NOK 1.500.000, CIF Lagos
what these do. (10%)
INCOTERMS 1990, as per sample submitted. Payment to be by ir-
revocable letter of credit confirmed by DnB Oslo opened by October (b) Discuss Stig’s obligations under the contract he has entered into. 156

3rd 1991 for a period of 2 weeks, and to be made against documents (15%)
evidencing the fulfilment of his CIF obligations, and a certificate of (c) Advise Bond as to any rights he may have with respect to the seller, 157
inspection stating the cod to be of grade A quality.” carrier, insurance company, bank and any other relevant parties. Inform
149 The letter of credit facility is duly opened and the relevant documents him of any further details you may require. (25%)
being specified to DnB bank and Stig proceeds to perform his obligations 2. What are the functions of the bill of lading in international trade? 158
under the contract. Mention briefly how these facilitate trade. (facilitate means to benefit, or
150 Bond in Nigeria hears rumours that the consignment shipped will not be make easier)
grade A but grade C, and that the certificate of inspection presented will 3. Answer any two of the following questions (a, b, c and d): 159
be a forgery, and instructs both banks not to pay against it.
(a) What is: a condition, a warranty, and an innominate term, in English 160
151 Stig presents DnB with the following documents: a received for shipment law? What is the meaning of “fundamental breach” under the United Na-
bill of lading for 1000 tons of grade A dried cod in apparent good order tions Convention on the International Sale of Goods 1980 (CISG)?
and condition; an invoice for the same goods; an insurance policy taken
on Institute Cargo Clause C terms; and a certificate of inspection. DnB (b) What are inherent vice; general average; seaworthiness? 161

bank pays particular attention to the certificate of inspection but is unable (c) What is an insurable interest? What is the duty of disclosure in relation 162
to find anything wrong with it as it appears to be in order and as described to contracts of insurance?
in their mandate (instructions for opening the credit). DnB pays Stig.
(d) What is meant by: the autonomy of a letter of credit, and; the doctrine 163
152 During the voyage the ship is in a collision and part of her cargo is wet, of strict compliance?
whilst another portion is deliberately thrown overboard by the crew in
order to reduce her weight. 4. What are the requirements of formation of contract under English law 164

and the United Nations Convention on the International Sale of Goods

153 When the consignment arrives it is found to be 200 tons short (i.e. there 1980 (CISG)?
are only 800 tons) and 100 tons of the consignment are damaged by water,
and the consignment is found not to be up to sample and not of grade A
quality.
154 1. Assume that Norwegian law is to apply to the sale of goods transaction.
Answer the following:
155 (a) In the situation described in the problem, what international conven-

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