Biddell Brothers v E Clemens Horst Co

Under a CIF contract, the buyer must pay against tender of the shipping documents, and is not entitled to inspect the goods before paying.

Citation
[1912] AC 18
Court
House of Lords
Year
1912
Subject
Commercial Law
Topic
International sales and documentary credits

Facts

Clemens Horst agreed to sell hops to Biddell Brothers on CIF terms, with payment to be made against documents. The buyers refused to pay when the documents were tendered, arguing that they were entitled to inspect the goods before paying. The sellers refused to tender the documents unless the buyers paid, and the buyers sued for damages.

Legal principle

The House of Lords held that the buyers were obliged to pay on tender of the documents, without inspecting the goods. Kennedy LJ, whose dissenting judgment in the Court of Appeal was approved, said that the essence of a CIF contract is that the seller performs by shipping the goods and tendering the documents, which represent the goods, and that the buyer is bound to pay on tender of the documents. The buyer retains the right to reject the goods on arrival if they do not conform to the contract.

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