FOB, CIF and Auction Sale PPT


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FOB, CIF and Auction Sale PPT


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FOB,CIF AND AUCTION SALES Presented by:- Vinay Iyer – PG-10-76 Ankit Lodia – PG-10-86 Pradhnya Naik – PG-10-97 Yogesh Punjabi – PG-10-100 Siddhi Koli – PG-10-111


FREE ON BOARD Seller Duties To deliver the goods on board the ship named by the buyer To give notice to the buyer of the shipment of goods Failure to give notice makes the seller liable for risk, unless the buyer waives the notice Buyers Duties Apply for license to export or import the goods Pay freight and insurance charges Name the ship on which goods are to be delivered or authorize the seller to select ship, failing to which seller can sue for damages for non acceptance Seller puts the goods on board at his own expenses Once goods are put on board the ship, they are at the risk of the buyer Seller gives notice of shipment to buyer to enable him to insure the goods


COST, INSURANCE & FREIGHT Sellers Duties Make out an invoice of the goods sold. Ship the goods described at port of shipment within time specified Procure a contract of affreightment . To arrange for an insurance. Send the buyer shipping documents like invoice, bill of lading, insurance policy etc. Buyers Duties To Accept document when tendered to him To pay the price of the goods and cost of unloading etc. Seller agrees to sell the goods inclusive of cost, insurance & Freight Tender of shipping documents is sufficient to entitle seller to claim payment Buyer not allowed inspection of goods


CASE FOR FOB In the case, Indian company A insured all risks with warehouse to warehouse. However, when the goods were carried to the shipping port, they suffered loss, which was in the area of the shipping company’s compensation. Nevertheless, the shipping company refused their request thought it was regulated in the contract.


CASE FOR FOB: ANALYSIS According to Sale of Goods Act, under FOB term, the buyer must buy the insurance at his own expenses. Once the seller has delivered the goods on the date at the named port of shipment to the buyer’s ship and acquired the necessary documents, he finishes the delivery. Naturally, the insurance company from which the buyer has insured has nothing to do with it. “So the risks referred to in this case is not in the obligation of the insurance company, and it may not pay for the compensation.”


CASE FOR CIF One Indian export company A exported a batch of clothes to Japan under CIF term. As regulated in the contract, company A had to insure all the risks to the Insurance Company of India and paid by credit. After delivering the goods on date, obtaining the Bill Of Lading from the shipping company, A paid the items at the Bank of India. The next day, the seller received a phone from his partner saying that all the clothes had been damaged because of the big fire burning out in the sea. And the buyer asked the seller for compensation from Insurance Company of India, or refunded all the payment.


CASE FOR CIF: ANALYSIS According to Sale of Goods Act, the division of risks or damage to the goods is based on such time as they have passed the ship’s rail at the named port of shipment. “So the buyer, instead of the seller, must undertake the responsibilities and ask the insurance company to cover the loss with the insurance which had been conveyed by the seller.”


AUCTION SALE A sale by auction is a public sale where different intending buyers try to outbid each other. The goods are ultimately sold to the highest bidder. The auctioneer who sells the goods by the auction is an agent of the seller, i.e. the owner.


RULES OF AUCTION SALE Completion of sale:- Sale is complete when the auctioneer announces its completion by the fall of the hammer. Right of Seller to bid: - The seller or any one person on his behalf may bid at the auction. “Bidding once made cannot be withdrawn” is not enforceable Sale Not Notified Subject To A Right To Bid is not lawful:- For the seller to bid himself or to employ any person to bid at such sale. For the auctioneer knowingly to take any bid from the seller or any such person. Any sale against this rule may be treated as fraudulent.

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Sale Not Notified Subject To A Right To Bid is not lawful:- For the seller to bid himself or to employ any person to bid at such sale. For the auctioneer knowingly to take any bid from the seller or any such person. Any sale against this rule may be treated as fraudulent. Use of Pretended Bidding: - If the seller makes use of pretended bidding to raise the price, the sale is void able at the option of the buyer.


RESERVE PRICE It is the price below which the auctioneer will not sell. Where the sale is subject to a reserve price, every bid is accepted conditionally on the reserve price being reached. But where the sale is without reserve, the goods will be sold to the highest bidder.


KNOCK OUT AGREEMENT Where a group of persons form a combination to prevent competition between themselves at an auction and arrange that only one of them will bid and share anything so obtained among themselves. This is called knock out which is legal.


UNION OF INDIA V. M/S. BHIMSEN WALAITI RAM The excised department auctioned the license to sell liquor in Delhi Clause 31: The chief commissioner is under no obligation to grant any license until he is assured of financial status of the bidder. Clause 33:All final bids will be made to the confirmation by the chief commissioner who may reject any bid without assigning any reasons Bhimsen offered the highest bid of Rs. 4,01,000 for the shop Clause 21: One sixth of the annual fee within 7 days of the auction. By the 7th of month in which he begins his business under his license and by the 7th every subsequent month the licensee shall pay on-twelfth of the annual fee till the whole fee is paid

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Bhimsen failed to make deposit As a result, the Chief Commissioner did not confirm the bid A resale of the shop was done. The right was awarded to highest bid of 2,20,000 The difference between two bids: Rs. 1,81,000 The Excise department was holding Bhimsen liable for this under clause 22 Clause 22: When the license has been cancelled, the collector may resell it by public auction or by private contract and any deficiency in price and all expense of resale shall be recoverable from the defaulting licensee in the manner laid down


JUDGMENT Supreme Court: The Contract of sale was not complete till the bid was confirmed by chief commissioner and till such confirmation the person whose bid has been provisionally accepted is entitled to withdraw his bid. Bidder will not liable for any damage on account of any breach of contract or for the shortfall of sale. In this case: The Chief Commissioner has disapproved the bid offered by the respondent If the commissioner had granted the auction sale in favor of the respondent That would have Completed the transaction and he would have been liable for any shortfall on resale The essential pre-requisites of a completed sales are missing Therefore no liability is imposed on the responded



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